**Exhibit10.1**

 

CONFIDENTIAL TREATMENTHAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT.  THE CONFIDENTIAL PORTIONS HAVE BEEN REDACTEDAND ARE DENOTED BY [***].  THECONFIDENTIAL PORTIONS HAVE BEEN SEPARATELY FILED WITH THE SECURITIES ANDEXCHANGE COMMISSION.

 

 

**ASSETPURCHASE AGREEMENT**

 

 

**BYAND AMONG**

 

 

**STEWART& STEVENSON SERVICES, INC.,**

 

**STEWART& STEVENSON PETROLEUM SERVICES, INC.,**

 

**STEWART& STEVENSON INTERNATIONAL, INC.,**

 

**SIERRADETROIT DIESEL ALLISON, INC.,**

 

**S&STRUST**

 

**AND**

 

**HUSHANGANSARY**

 

 

**DATEDSEPTEMBER 27, 2005**

 

----

 

**TABLE OF CONTENTS**

 
| ** ** | ** **                                | **Page**                                 |
|------------|-------------------------------------------|------------------------------------------|
|       |                                      |                                     |
| 1.         | Definitions and Usage                     | 1                                        |
|       |                                      |                                     |
|       | 1.1                                       | DEFINITIONS                              | 1 |
|       |                                      |                                     |   |
|       | 1.2                                       | USAGE                                    | 11 |
|       |                                      |                                     |   |
| 2.         | Sale and Transfer of Assets; Closing      | 13                                       |
|       |                                      |                                     |
|       | 2.1                                       | ASSETS TO BE SOLD                        | 13 |
|       |                                      |                                     |   |
|       | 2.2                                       | EXCLUDED ASSETS                          | 14 |
|       |                                      |                                     |   |
|       | 2.3                                       | CONSIDERATION                            | 16 |
|       |                                      |                                     |   |
|       | 2.4                                       | LIABILITIES                              | 16 |
|       |                                      |                                     |   |
|       | 2.5                                       | PRORATIONS OF CERTAIN PROPERTY TAXES     | 17 |
|       |                                      |                                     |   |
|       | 2.6                                       | SALES AND TRANSFER TAXES; RECORDING FEES | 18 |
|       |                                      |                                     |   |
|       | 2.7                                       | ALLOCATION                               | 19 |
|       |                                      |                                     |   |
|       | 2.8                                       | CLOSING                                  | 19 |
|       |                                      |                                     |   |
|       | 2.9                                       | CLOSING OBLIGATIONS                      | 19 |
|       |                                      |                                     |   |
|       | 2.10                                      | ADJUSTMENT AMOUNT AND PAYMENT            | 22 |
|       |                                      |                                     |   |
|       | 2.11                                      | ADJUSTMENT PROCEDURE                     | 22 |
|       |                                      |                                     |   |
|       | [***]                                     |                                     |   |
|       |                                      |                                     |   |
| 3.         | Representations and Warranties of Sellers | 25                                       |
|       |                                      |                                     |
|       | 3.1                                       | ORGANIZATION AND GOOD STANDING           | 25 |
|       |                                      |                                     |   |
|       | 3.2                                       | ENFORCEABILITY; AUTHORITY; NO CONFLICT   | 25 |
|       |                                      |                                     |   |
|       | 3.3                                       | FINANCIAL STATEMENTS                     | 26 |
|       |                                      |                                     |   |
|       | 3.4                                       | BOOKS AND RECORDS                        | 27 |
|       |                                      |                                     |   |
|       | 3.5                                       | CONDITION AND SUFFICIENCY OF ASSETS      | 27 |
|       |                                      |                                     |   |
|       | 3.6                                       | DESCRIPTION OF REAL PROPERTY             | 27 |
|       |                                      |                                     |   |
|       | 3.7                                       | TITLE TO ASSETS; ENCUMBRANCES            | 28 |
|       |                                      |                                     |   |
|       | 3.8                                       | ACCOUNTS RECEIVABLE                      | 28 |
|       |                                      |                                     |   |
|       | 3.9                                       | INVENTORIES                              | 28 |
|       |                                      |                                     |   |
|       | 3.10                                      | [INTENTIONALLY DELETED]                  | 29 |
|       |                                      |                                     |   |
|       | 3.11                                      | TAXES                                    | 29 |
|       |                                      |                                     |   |
|       | 3.12                                      | LABOR MATTERS; COMPLIANCE                | 29 |
|       |                                      |                                     |   |
|       | 3.13                                      | EMPLOYEE BENEFITS                        | 30 |

 

----

 
| ** ** | ** **                                                | **Page**                                                         |
|------------|-----------------------------------------------------------|------------------------------------------------------------------|
|       |                                                      |                                                             |
|       | 3.14                                                      | COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL  AUTHORIZATIONS | 31 |
|       |                                                      |                                                             |   |
|       | 3.15                                                      | LEGAL PROCEEDINGS; ORDERS                                        | 32 |
|       |                                                      |                                                             |   |
|       | 3.16                                                      | ABSENCE OF CERTAIN CHANGES AND EVENTS                            | 33 |
|       |                                                      |                                                             |   |
|       | 3.17                                                      | CONTRACTS; NO DEFAULTS                                           | 34 |
|       |                                                      |                                                             |   |
|       | 3.18                                                      | INSURANCE                                                        | 36 |
|       |                                                      |                                                             |   |
|       | 3.19                                                      | ENVIRONMENTAL MATTERS                                            | 37 |
|       |                                                      |                                                             |   |
|       | 3.20                                                      | INTELLECTUAL PROPERTY                                            | 38 |
|       |                                                      |                                                             |   |
|       | 3.21                                                      | RELATED PARTY TRANSACTIONS                                       | 39 |
|       |                                                      |                                                             |   |
|       | 3.22                                                      | BROKERS OR FINDERS                                               | 39 |
|       |                                                      |                                                             |   |
|       | 3.23                                                      | LETTERS OF CREDIT                                                | 39 |
|       |                                                      |                                                             |   |
| 4.         | Representations and Warranties of Buyer and Buyer  Entity | 39                                                               |
|       |                                                      |                                                             |
|       | 4.1                                                       | ORGANIZATION AND GOOD STANDING                                   | 39 |
|       |                                                      |                                                             |   |
|       | 4.2                                                       | ENFORCEABILITY; AUTHORITY; NO CONFLICT                           | 39 |
|       |                                                      |                                                             |   |
|       | 4.3                                                       | CERTAIN PROCEEDINGS                                              | 41 |
|       |                                                      |                                                             |   |
|       | 4.4                                                       | INVESTIGATION                                                    | 41 |
|       |                                                      |                                                             |   |
|       | 4.5                                                       | BROKERS OR FINDERS                                               | 41 |
|       |                                                      |                                                             |   |
| 5.         | Covenants of Buyer and Sellers Prior to Closing           | 42                                                               |
|       |                                                      |                                                             |
|       | 5.1                                                       | REQUIRED APPROVALS                                               | 42 |
|       |                                                      |                                                             |   |
|       | 5.2                                                       | NOTIFICATION                                                     | 42 |
|       |                                                      |                                                             |   |
|       | 5.3                                                       | COMMERCIALLY REASONABLE EFFORTS                                  | 42 |
|       |                                                      |                                                             |   |
|       | 5.4                                                       | BULK SALES LAWS                                                  | 43 |
|       |                                                      |                                                             |   |
|       | 5.5                                                       | LETTERS OF CREDIT                                                | 43 |
|       |                                                      |                                                             |   |
|       | 5.6                                                       | UPDATING                                                         | 43 |
|       |                                                      |                                                             |   |
| 6.         | Covenants of Sellers Prior to Closing                     | 43                                                               |
|       |                                                      |                                                             |
|       | 6.1                                                       | ACCESS AND INVESTIGATION                                         | 43 |
|       |                                                      |                                                             |   |
|       | 6.2                                                       | OPERATION OF THE BUSINESS                                        | 44 |
|       |                                                      |                                                             |   |
|       | 6.3                                                       | NEGATIVE COVENANT                                                | 45 |
|       |                                                      |                                                             |   |
|       | 6.4                                                       | TAX CLEARANCE CERTIFICATES                                       | 45 |
|       |                                                      |                                                             |   |
| 7.         | Conditions Precedent to Buyer’s Obligation to Close  | 45                                                               |
|       |                                                      |                                                             |
|       | 7.1                                                       | ACCURACY OF REPRESENTATIONS; SELLERS’ PERFORMANCE           | 45 |

 

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| ** ** | ** **                                                      | **Page**                                              |
|------------|-----------------------------------------------------------------|-------------------------------------------------------|
|       |                                                            |                                                  |
|       | 7.2                                                             | HSR ACT                                               | 46 |
|       |                                                            |                                                  |   |
|       | 7.3                                                             | ADDITIONAL DOCUMENTS                                  | 46 |
|       |                                                            |                                                  |   |
|       | 7.4                                                             | NO PROCEEDINGS                                        | 46 |
|       |                                                            |                                                  |   |
|       | 7.5                                                             | NO CONFLICT                                           | 47 |
|       |                                                            |                                                  |   |
| 8.         | Conditions Precedent to each Seller’s Obligation to  Close | 47                                                    |
|       |                                                            |                                                  |
|       | 8.1                                                             | ACCURACY OF REPRESENTATIONS; BUYER’S PERFORMANCE | 47 |
|       |                                                            |                                                  |   |
|       | 8.2                                                             | HSR ACT                                               | 47 |
|       |                                                            |                                                  |   |
|       | 8.3                                                             | ADDITIONAL DOCUMENTS                                  | 47 |
|       |                                                            |                                                  |   |
|       | 8.4                                                             | NO PROCEEDINGS                                        | 48 |
|       |                                                            |                                                  |   |
|       | 8.5                                                             | NO CONFLICT                                           | 48 |
|       |                                                            |                                                  |   |
| 9.         | Termination                                                     | 48                                                    |
|       |                                                            |                                                  |
|       | 9.1                                                             | TERMINATION EVENTS                                    | 48 |
|       |                                                            |                                                  |   |
|       | 9.2                                                             | EFFECT OF TERMINATION                                 | 49 |
|       |                                                            |                                                  |   |
| 10.        | Additional Covenants                                            | 49                                                    |
|       |                                                            |                                                  |
|       | 10.1                                                            | EMPLOYEES AND EMPLOYEE BENEFITS                       | 49 |
|       |                                                            |                                                  |   |
|       | 10.2                                                            | NONSOLICITATION                                       | 51 |
|       |                                                            |                                                  |   |
|       | 10.3                                                            | CUSTOMER AND OTHER BUSINESS RELATIONSHIPS             | 51 |
|       |                                                            |                                                  |   |
|       | 10.4                                                            | RETENTION OF AND ACCESS TO RECORDS                    | 51 |
|       |                                                            |                                                  |   |
|       | 10.5                                                            | FURTHER ASSURANCES                                    | 52 |
|       |                                                            |                                                  |   |
|       | 10.6                                                            | PROVISIONS RELATING TO CERTAIN ASSETS                 | 52 |
|       |                                                            |                                                  |   |
|       | 10.7                                                            | SUPPORT                                               | 53 |
|       |                                                            |                                                  |   |
|       | 10.8                                                            | BUYER ACKNOWLEDGMENT                                  | 54 |
|       |                                                            |                                                  |   |
| 11.        | Indemnification; Remedies                                       | 54                                                    |
|       |                                                            |                                                  |
|       | 11.1                                                            | SURVIVAL                                              | 54 |
|       |                                                            |                                                  |   |
|       | 11.2                                                            | INDEMNIFICATION AND REIMBURSEMENT BY SELLERS          | 54 |
|       |                                                            |                                                  |   |
|       | 11.3                                                            | INDEMNIFICATION AND REIMBURSEMENT BY BUYER            | 55 |
|       |                                                            |                                                  |   |
|       | 11.4                                                            | LIMITATIONS ON AMOUNT — SELLERS                  | 56 |
|       |                                                            |                                                  |   |
|       | 11.5                                                            | LIMITATIONS ON AMOUNT — BUYER                    | 56 |
|       |                                                            |                                                  |   |
|       | 11.6                                                            | TIME LIMITATIONS                                      | 56 |
|       |                                                            |                                                  |   |
|       | 11.7                                                            | PROCEDURE                                             | 57 |
|       |                                                            |                                                  |   |
|       | 11.8                                                            | PAYMENT                                               | 59 |

 

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| ** ** | ** **         | **Page**                                          |
|------------|--------------------|---------------------------------------------------|
|       |               |                                              |
|       | 11.9               | NO SET-OFF                                        | 59 |
|       |               |                                              |   |
|       | 11.10              | INSURANCE                                         | 59 |
|       |               |                                              |   |
|       | 11.11              | NO DUPLICATION                                    | 59 |
|       |               |                                              |   |
|       | 11.12              | REMEDIES                                          | 59 |
|       |               |                                              |   |
|       | 11.13              | NO SPECIAL DAMAGES                                | 60 |
|       |               |                                              |   |
| 12.        | Confidentiality    | 60                                                |
|       |               |                                              |
|       | 12.1               | DEFINITION OF CONFIDENTIAL INFORMATION            | 60 |
|       |               |                                              |   |
|       | 12.2               | RESTRICTED USE OF CONFIDENTIAL INFORMATION        | 61 |
|       |               |                                              |   |
|       | 12.3               | EXCEPTIONS                                        | 62 |
|       |               |                                              |   |
|       | 12.4               | LEGAL PROCEEDINGS                                 | 62 |
|       |               |                                              |   |
|       | 12.5               | RETURN OR DESTRUCTION OF CONFIDENTIAL INFORMATION | 63 |
|       |               |                                              |   |
|       | 12.6               | ATTORNEY-CLIENT PRIVILEGE                         | 63 |
|       |               |                                              |   |
| 13.        | General Provisions | 63                                                |
|       |               |                                              |
|       | 13.1               | EXPENSES                                          | 63 |
|       |               |                                              |   |
|       | 13.2               | PUBLIC ANNOUNCEMENTS                              | 64 |
|       |               |                                              |   |
|       | 13.3               | NOTICES                                           | 64 |
|       |               |                                              |   |
|       | 13.4               | DISPUTE RESOLUTION                                | 65 |
|       |               |                                              |   |
|       | 13.5               | ENFORCEMENT OF AGREEMENT                          | 65 |
|       |               |                                              |   |
|       | 13.6               | WAIVER; REMEDIES CUMULATIVE                       | 66 |
|       |               |                                              |   |
|       | 13.7               | ENTIRE AGREEMENT AND MODIFICATION                 | 66 |
|       |               |                                              |   |
|       | 13.8               | ASSIGNMENTS, SUCCESSORS AND NO THIRD PARTY RIGHTS | 67 |
|       |               |                                              |   |
|       | 13.9               | SEVERABILITY                                      | 67 |
|       |               |                                              |   |
|       | 13.10              | CONSTRUCTION                                      | 67 |
|       |               |                                              |   |
|       | 13.11              | TIME OF ESSENCE                                   | 67 |
|       |               |                                              |   |
|       | 13.12              | GOVERNING LAW                                     | 67 |
|       |               |                                              |   |
|       | 13.13              | EXECUTION OF AGREEMENT                            | 67 |

 

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Exhibits
| Exhibit 2.9(a)(i)    |   | Form of Bill of Sale,  Assignment and Assumption Agreement |
|----------------------|--------|------------------------------------------------------------|
| Exhibit 2.9(a)(ii)   |   | Form of Supply  Agreement                                  |
| Exhibit 2.9(a)(iii)  |   | Form of Assignment of  Registered Intellectual Property    |
| Exhibit 2.9(a)(vi)   |   | Form of Lease Agreement                                    |
| Exhibit 2.9(a)(vii)  |   | Form of Transition  Services Agreement                     |
| Exhibit 2.9(a)(xi)   |   | Form of Confirmation of  Closing                           |
| Exhibit 2.9(a)(xvi)  |   | [***]                                                      |
| Exhibit 2.9(a)(xvii) |   | [***]                                                      |

 

Sections of Seller Disclosure Letter
| Section 1.1        |   | Knowledge                                                                     |
|--------------------|--------|-------------------------------------------------------------------------------|
| Section 2.1(j)     |   | Domain Names                                                                  |
| Section 2.1(k)     |   | Cash In Bank Accounts                                                         |
| Section 2.2(c)     |   | Excluded Deposits,  Prepaid Expenses, Claims for Refunds and Rights to Offset |
| Section 2.2(e)     |   | Excluded Seller  Contracts                                                    |
| Section 2.2(o)     |   | Excluded Claims Against  Third Parties                                        |
| Section 2.2(p)     |   | Excluded Business  Property                                                   |
| Section 2.2(q)     |   | Other Excluded Property  and Assets                                           |
| Section 2.4(a)(v)  |   | Other Assumed  Liabilities                                                    |
| Section 3.2(b)     |   | Conflict                                                                      |
| Section 3.2(c)     |   | Notices or Consents                                                           |
| Section 3.3        |   | Financial Statements                                                          |
| Section 3.5(a)     |   | Assets With an Original  Cost in Excess of $10,000                            |
| Section 3.5(b)     |   | Leased Assets with  Monthly Payments in Excess of $2,500                      |
| Section 3.5(c)     |   | Sufficiency of Assets                                                         |
| Section 3.6        |   | Description of Real  Property                                                 |
| Section 3.7(b)(i)  |   | Non-Real Estate  Encumbrances                                                 |
| Section 3.7(b)(ii) |   | Real Estate  Encumbrances                                                     |
| Section 3.8        |   | Accounts Receivable as  of September 7, 2005                                  |
| Section 3.9        |   | Inventories                                                                   |
| Section 3.12(a)    |   | Labor Disputes;  Compliance                                                   |
| Section 3.12(b)    |   | Compensation of  Affected Employees                                           |
| Section 3.13(a)    |   | Seller Benefit Plans                                                          |
| Section 3.13(b)    |   | ERISA Matters                                                                 |
| Section 3.14(a)    |   | Compliance with Legal  Requirements                                           |
| Section 3.14(b)    |   | Governmental  Authorizations                                                  |
| Section 3.15(a)    |   | Legal Proceedings                                                             |
| Section 3.15(b)    |   | Orders                                                                        |
| Section 3.15(c)    |   | Compliance with Orders                                                        |
| Section 3.16       |   | Certain Changes and  Events                                                   |
| Section 3.17(a)    |   | List of Certain Seller  Contracts                                             |
| Section 3.17(b)    |   | Enforceability of  Certain Seller Contracts                                   |

 

----

 
| Section 3.17(c)     |   | Compliance of Certain  Seller Contracts             |
|---------------------|--------|-----------------------------------------------------|
| Section 3.17(d)     |   | Warranty Claims                                     |
| Section 3.18(a)     |   | List of Insurance  Policies                         |
| Section 3.18(c)     |   | Self Insurance; Third  Party Insurance Arrangements |
| Section 3.18(d)     |   | Loss Experience                                     |
| Section 3.19        |   | Environmental Matters                               |
| Section 3.20(a)(i)  |   | Owned Intellectual  Property                        |
| Section 3.20(a)(ii) |   | Intellectual Property  Encumbrances                 |
| Section 3.20(b)(i)  |   | Licenses                                            |
| Section 3.21        |   | Related Party  Transactions                         |
| Section 3.23        |   | Letters of Credit                                   |

 

Sections of Buyer Disclosure Letter

 
| Section 1.1    |   | Knowledge |
|----------------|--------|-----------|
| Section 4.2(c) |   | Conflicts |
| Section 4.2(d) |   | Consent   |

 

----

 

**ASSET PURCHASE AGREEMENT**

 

This Asset Purchase Agreement (“Agreement”) is dated September       ,2005, by and among Hushang Ansary (the “Buyer”), and Stewart & StevensonServices, Inc., a Texas corporation (“Parent”), Stewart & StevensonPetroleum Services, Inc., a Delaware corporation (“SSPS”), Stewart &Stevenson International, Inc., a Delaware corporation (“SSI”), Sierra DetroitDiesel Allison, Inc., a Nevada corporation (“SDDA”), and S&S Trust, aPennsylvania business trust (“S&S Trust,” and together with Parent, SSPS, SSIand SDDA, the “Sellers” and each, a “Seller”).

 

**RECITALS**

 

Sellers desire to sell, and Buyer desires to purchase,substantially all of the assets constituting the Business (as defined below),and Buyer is willing to assume certain obligations of Sellers relating to theBusiness, for the consideration and on the terms set forth in this Agreement.

 

The parties, intending to be legally bound, agree asfollows:

 

# 1.                                       Definitionsand Usage

#  

## 1.1                                 DEFINITIONS

##  

For purposes of this Agreement, the following termsand variations thereof have the meanings specified or referred to in thisSection 1.1:

 

“Accounts Receivable” — (a) all trade accountsreceivable and other rights to payment (including progress payments) fromcustomers of Sellers related to the Business and the full benefit of allsecurity for such accounts or rights to payment, including all trade accountsreceivable representing amounts receivable in respect of goods shipped orproducts sold or services rendered to customers of each Seller, (b) all otheraccounts or notes receivable of each Seller related to the Business and thefull benefit of all security for such accounts or notes and (c) any claim,remedy or other right related to any of the foregoing.

 

“Adjustment Amount” — as defined in Section 2.10.

 

“Affected Employees” — all employees of Sellers employed principally in connection with theBusiness, including persons on vacation, approved leave of absence, sick leave,family medical leave under the Family and Medical Leave Act, or short-termdisability leave; and excluding persons on long-term disability leave under along-term disability plan maintained by any Seller.

 

“Affidavit of Occasional Sale” — as defined in Section2.6(b).

 

“Affiliate” means, with respect to any Person, anyother Person directly or indirectly controlling, controlled by or under commoncontrol with such Person, and in the case of any natural Person shall includeall relatives and immediate family members of such first Person.

 

----

 

For purposes of this definition, a Person shall bedeemed to control another Person if such first Person directly or indirectlyowns or holds fifty percent (50%) or more of the ownership interests in suchother Person.

 

“Agreed Accounting Principles” — GAAP, applying thepolicies and procedures on a consistent basis, and as modified by theexceptions to GAAP, as set forth on Section 3.3 of the Seller DisclosureLetter.

 

“Agreement” — as defined in the first paragraph ofthis Agreement.

 

“Armored Cab Business” — the business of manufacturingand assembling Low Signature Armored Cabs, a special troop protection cab thatfits on top of an army truck chassis built and manufactured by Stewart &Stevenson Tactical Vehicle Systems, L.P., a Subsidiary of Parent.

 

“Assets” — as defined in Section 2.1.

 

“Assignment and Sublicense (Varco)” — as defined inSection 2.9(a)(xvii).

 

“Assumed Liabilities” — as defined in Section 2.4(a).

 

“Bids”  — asdefined in Section 2.1(e).

 

“Bill of Sale, Assignment and Assumption Agreement” —as defined in Section 2.9(a)(i).

 

“Bulk Sales Laws” — as defined in Section 5.4.

 

“Business” — as defined in Section 2.1.

 

“Business Day” — any day other than Saturday, Sundayor any other day on which banks in Houston, Texas are authorized or required tobe closed.

 

“Business Intellectual Property”  — as defined in Section 3.20(a).

 

“Business Property” — as defined in Section 3.6.

 

“Business Records” — as defined in Section 2.1(g).

 

“Buyer” — as defined in the first paragraph of thisAgreement.

 

“Buyer Contact” — as defined in Section 12.2(a).

 

“Buyer Disclosure Letter” — the disclosure letterdelivered by Buyer to Sellers concurrently with the execution and delivery ofthis Agreement, as amended pursuant to the terms of this Agreement.

 

“Buyer Entity” — the Person directly or indirectlycontrolled by Buyer that assumes this Agreement pursuant to Section 13.8.

 

2

----

 

“Buyer Group” — as defined in Section 6.1.

 

“Buyer Indemnitees” — as defined in Section 11.2.

 

“Closing” — as defined in Section 2.8.

 

“Closing Balance Sheet” — as defined in Section2.11(a).

 

“Closing Date” — the date on which the Closing actuallytakes place.

 

“Closing Net Asset Value” — as defined in Section2.11(a).

 

“Closing Payment” —nine million dollars ($9,000,000),plus a cash amount equal to the Estimated Closing Net Asset Value of theBusiness on the Closing Date.

 

“COBRA”  —  the Consolidated Omnibus BudgetReconciliation Act of 1985, as amended.

 

“Code” — the Internal Revenue Code of 1986, asamended.

 

“Confidential Information” — as defined in Section12.1(a).

 

“Confirmation of Closing” — as defined in Section2.9(a)(xi).

 

“Consent” — any approval, consent, ratification,waiver or other authorization.

 

“Contemplated Transactions” — all of the transactionscontemplated by this Agreement.

 

“Contract” — any agreement, contract, Lease,commitment or other undertaking or arrangement.

 

“Customer Performance Assurance” — any guaranty, cash,letter of credit or other property of any kind or nature deposited as orotherwise constituting collateral security for the performance by any party(other than a Seller) to any Seller Contract.

 

“Damages” — as defined in Section 11.2.

 

“DES Business” — all of any Seller’s and itsAffiliates’ right, title, and interest in and to all of such Seller’s or itsAffiliate’s property and assets belonging to such Seller or any of itsAffiliates and all Liabilities of any Seller and its Affiliates that in eachcase relate to the business conducted by the former Distributed EnergySolutions segment of Parent that has been classified as a discontinuedoperation in Parent’s publicly disclosed consolidated financial statements.

 

“Disclosing Party” — as defined in Section 12.1(a).

 

“Dispute” — as defined in Section 13.4.

 

3

----

 

“Effective Time” — the time on the Closing Date specified in the Confirmation of Closing.

 

“Election Period” — as defined in Section 11.7(c).

 

“Encumbrance” — any charge, claim, condition,equitable interest, lien, option, pledge, security interest, mortgage, right ofway, easement, encroachment, servitude, right of first option, right of firstrefusal or similar restriction, including any restriction on use, voting (inthe case of any security or equity interest), transfer, receipt of income orexercise of any other attribute of ownership.

 

“Environmental Condition” — any pollution,contamination, degradation, damage or injury caused by, related to, arisingfrom, or in connection with the generation, handling, use, treatment, storage,transportation, disposal, discharge, Release, or emission of any “HazardousMaterials.”

 

“Environmental Laws” — all applicable laws,regulations, enforceable requirements that have the effect of law, orders,decrees, judgments, injunctions, permits, licenses, approvals, consents orauthorizations issued, promulgated or entered into by any Governmental Bodypertaining to the protection of human health or the environment, including theComprehensive Environmental Response, Compensation, and Liability Act, asamended by the Superfund Amendments and Reauthorization Act, 42 U.S.C. § 9601et seq. (“CERCLA”), the Solid Waste Disposal Act, as amended by the ResourceConservation and Recovery Act, 42 U.S.C. § 6901 et seq. (“RCRA”), the FederalWater Pollution Control Act, as amended by the Clean Water Act, 33 U.S.C. §1251 et seq., the Clean Air Act, 42 U.S.C. §7401 et seq., the Toxic SubstancesControl Act, 15 U.S.C. § 2601 et seq., and any similar state or local statutes,in each case where such laws are in effect on or prior to the Closing Date.

 

“Environmental Liabilities” — any and all liabilities,responsibilities, claims, suits, losses, costs (including remedial, removal,response, abatement, clean-up, investigative, or monitoring costs and any otherrelated costs and expenses), other causes of action, damages, settlements,expenses, charges, assessments, liens, penalties, fines, pre-judgment andpost-judgment interest, attorneys’ fees and other legal fees: (i) pursuant toany agreement, order, notice (including notices of violation or noncompliance),or responsibility, directive (including directives embodied in EnvironmentalLaws), injunction, judgment, or similar documents (including settlements),arising out of or in connection with any Environmental Laws, or (ii) pursuantto any claim by a Governmental Body or other Person for personal injury,property damage, damage to natural resources, remediation, or payment orreimbursement of response costs incurred or expended by the Governmental Bodyor other Person pursuant to Environmental Laws.

 

“Environmental Material Adverse Effect” shall mean anyEnvironmental Liabilities that are reasonably expected to exceed $25,000 peroccurrence or series of related occurrences, or $100,000 in the aggregate.

 

“ERISA” — the Employee Retirement Income Security Actof 1974, as amended.

 

4

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“ERISA Affiliate” — any other entity that, together with any Seller, would be treated as asingle employer under Section 414 of the Code or Section 4001(a) or (b) ofERISA.

 

“Estimated Closing Balance Sheet” — an estimatedbalance sheet of the Business as of the Closing Date prepared in good faith bySellers applying the Agreed Accounting Principles, in form and substance asmutually and reasonably agreed to by Sellers and Buyer.

 

“Estimated Closing Net Asset Value” — the Net AssetValue calculated from the Estimated Closing Balance Sheet.

 

“Exchange Act” — the Securities Exchange Act of 1934.

 

“Excluded Assets” — as defined in Section 2.2.

 

“Financial Statements” — as defined in Section 3.3.

 

“GAAP” — generally accepted accounting principles forfinancial reporting in the United States.

 

“Governmental Authorization” — any Consent, license,registration or permit issued, granted, given or otherwise made available by orunder the authority of any Governmental Body or pursuant to any LegalRequirement, which consent, license, registration or permit is used in theoperation of the Business or necessary for the consummation of the ContemplatedTransactions.

 

“Governmental Body” — any:

 

### (a)                                  nation,state, county, city, town, borough, village, district or other jurisdiction;

###  

### (b)                                 federal,state, local, municipal, foreign or other government;

###  

### (c)                                  governmental,quasi-governmental or regulatory authority of any nature (including any agency,branch, department, board, commission, court, tribunal or other entityexercising governmental, quasi-governmental or regulatory powers); or

###  

### (d)                                 bodyexercising, or entitled or purporting to exercise, any administrative,executive, judicial, legislative, police, regulatory or taxing authority orpower.

###  

“happening or manifested” — refers to the actual timeat which the circumstance, condition, occurrence, event, physical accident orinjury giving rise to a Liability occurs (regardless of when the productdesign, manufacture, distribution or sale or related service occurs).

 

“Hazardous Material” — any substance, material orwaste that is regulated by any Governmental Body, including any material,substance or waste which is defined as a “hazardous waste,” “hazardousmaterial,” “hazardous substance,” “extremely hazardous waste,”

 

5

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“restricted hazardous waste” or “toxic substance”under any provision of Environmental Law, and including petroleum, petroleumproducts, asbestos, friable asbestos-containing material or asbestos-containingmaterial, urea formaldehyde and polychlorinated biphenyls.

 

“HSR Act” — the Hart-Scott-Rodino AntitrustImprovements Act of 1976, as amended.

 

“Hybrid Bus Business” —  that business of Parent and any of itsSubsidiaries arising out of, relating to or associated with hybrid electromotivation for wheeled vehicles.

 

“Indemnitee” — as defined in Section 11.7(a).

 

“Indemnitor” — as defined in Section 11.7(a).

 

“Independent Accountants” — KPMG LLP, or if KPMG LLPis not independent in the reasonable determination of Buyer or Parent, then anindependent auditing firm of nationally or regionally recognized standingselected by the mutual agreement of Buyer and Parent within 15 days of the dateon which the Independent Accountants are proposed to begin serving or, if Buyerand Parent are unable to agree within such period, an independent auditing firmof nationally or regionally recognized standing selected jointly by two othersuch firms, one of which shall be specified by Buyer and one of which shall bespecified by Parent, within 15 days after the expiration of such period.

 

“Initial Balance Sheet” — as defined in Section 3.3.

 

“Initial Net Asset Value” — $51,897,000, which is theexcess of total assets over total current liabilities of the Business, asreflected on the Initial Balance Sheet.

 

“Intellectual Property” — (a) all inventions (whetherpatentable or unpatentable and whether or not reduced to practice), allimprovements thereto, and all patents, patent applications, and patent andinvention disclosures, together with all reissuances, continuations,continuations-in-part, divisionals, revisions, extensions, and reexaminationsthereof, (b) all trademarks, service marks, slogans, trade dress, logos, icons,designs, trade designation, trade names, and corporate names all registered orunregistered, together with all translations, adaptations, derivations, andcombinations thereof and including all goodwill associated therewith, and allapplications, registrations and renewals in connection therewith, (c) allcopyrightable works, all copyrights, and all applications, registrations andrenewals in connection therewith, (d) all mask works and all applications,registrations and renewals in connection therewith, (e) all trade secrets andconfidential information (including ideas, research and development, know-how,formulas, compositions, manufacturing and production processes and techniques,technical data, designs, drawings, specifications, customer and supplier lists,pricing and cost information, and business and marketing plans and proposals),(f) all Software (including data and related documentation), (g) all otherproprietary rights, including internet web sites and internet domain names and(h) all copies and tangible embodiments thereof (in whatever form or medium).

 

“Intellectual Property Licenses” — as defined inSection 3.20(b).

 

6

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“Inventories” — all inventories of Sellers related toor used in the operation of the Business, wherever located, including allfinished goods, work in process, raw materials, spare parts and all othermaterials and supplies to be used or consumed by Sellers in the production offinished goods for the Business.

 

“IRS” — the United States Internal Revenue Serviceand, to the extent relevant, the United States Department of the Treasury.

 

“Knowledge” — with respect to Sellers, Sellers will bedeemed to have Knowledge of a particular fact or other matter if any individualnamed in Section 1.1 of the Seller Disclosure Letter is actually aware of thatfact or matter; and with respect to Buyer, Buyer will be deemed to haveKnowledge of a particular fact or other matter if any individual named inSection 1.1 of the Buyer Disclosure Letter is actually aware of that fact ormatter.

 

“Lease” — any Real Property Lease or any lease orrental agreement, license, right to use or installment and conditional saleagreement to which any Seller is a party used in the operation of the Businessand any other Seller Contract pertaining to the leasing or use of any TangiblePersonal Property.

 

“Lease Agreement” — as defined in Section 2.9(a)(vi).

 

“Legal Requirement” — any federal, state or municipallaw, ordinance, regulation, statute or treaty.

 

“Liability” — with respect to any Person, anyliability or obligation of such Person of any kind, character or description,whether known or unknown, absolute or contingent, reserved or unreserved,accrued or unaccrued, disputed or undisputed, liquidated or unliquidated,secured or unsecured, joint or several, due or to become due, vested orunvested, executory, determined, determinable or otherwise, and whether or notthe same is required to be accrued on the financial statements of such Person.

 

“Net Asset Value” — the excess of total assets overtotal current liabilities of the Business, as reflected on the Initial Balance Sheetor on the Closing Balance Sheet, as required by the context.

 

“Non-Real Estate Encumbrances” — as defined in Section3.7(b).

 

“Notice of Dispute” — as defined in Section 13.4.

 

“Order” — any order, injunction, judgment, decree,ruling, assessment or arbitration award of any Governmental Body or arbitrator.

 

“Owned Intellectual Property” — as defined in Section3.20(a).

 

“Owned Property” — as defined in Section 3.6.

 

“Parent” — as defined in the first paragraph of thisAgreement.

 

7

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“Permitted Encumbrances” — as defined in Section3.7(b).

 

“Permitted Non-Real Estate Encumbrances” — as definedin Section 3.7(b).

 

“Person” — an individual, partnership, corporation,business trust, limited liability company, limited liability partnership, jointstock company, trust, unincorporated association, joint venture or other entityor a Governmental Body.

 

“Pre-Closing Property Taxes” — as defined in Section2.5.

 

“Proceeding” — any action, arbitration, audit,hearing, investigation, litigation or suit (whether civil, criminal,administrative, judicial or investigative, whether public or private)commenced, brought, conducted or heard by or before, or otherwise involving,any Governmental Body or arbitrator.

 

“Purchase Price” — as defined in Section 2.3.

 

“Real Property Lease” — as defined in Section 3.6.

 

“Receiving Party” — as defined in Section 12.1(a).

 

“Record” — information that is inscribed on a tangiblemedium or that is stored in an electronic or other medium and is retrievable inperceivable form.

 

“Registered Intellectual Property”  — all Business Intellectual Property, whetherowned by a Seller or owned by a Third Party who has granted a right of any sortwith respect to such Intellectual Property to a Seller, that is: (i) a patentor patent application, (ii) an application or a registration for a trademark,service mark, trade dress, trade name, logo, icon, design, trade designation,slogan, corporate name or internet web site or internet domain name, or (iii) acopyright registration or application.

 

“Related Person” — with respect to a specified Person:

 

(a)                                  anyPerson that directly or indirectly controls, is directly or indirectlycontrolled by or is directly or indirectly under common control with suchspecified Person;

 

(b)                                 anyPerson that holds a Material Interest in such specified Person;

 

(c)                                  eachPerson that serves as a director, officer, partner, executor or trustee of suchspecified Person (or in a similar capacity);

 

(d)                                 anyPerson in which such specified Person holds a Material Interest; and

 

(e)                                  anyPerson with respect to which such specified Person serves as a general partneror a trustee (or in a similar capacity).

 

8

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For purposes of this Agreement, (a) “control”(including “controlling,” “controlled by,” and “under common control with”)means the possession, direct or indirect, of the power to direct or cause thedirection of the management and policies of a Person, whether through theownership of voting securities, by contract or otherwise, and shall beconstrued as such term is used in the rules promulgated under the SecuritiesAct; and (b) “Material Interest” means direct or indirect beneficial ownership(as defined in Rule 13d-3 under the Exchange Act) of voting securities or othervoting interests representing at least ten percent (10%) of the outstandingvoting power of a Person or equity securities or other equity interestsrepresenting at least ten percent (10%) of the outstanding equity securities orequity interests in a Person.

 

“Release” — any release, spill, emission, leaking,pumping, pouring, dumping, emptying, injection, deposit, disposal, discharge,dispersal, leaching or migration on or into the environment.

 

“Representative” — with respect to a particularPerson, any director, officer, manager, employee, agent, consultant, advisor,accountant, financial advisor, legal counsel or other representative of thatPerson.

 

“Representative Party” — as defined in Section 9.1(a).

 

“Restrictive Covenants” — as defined in Section11.12(a).

 

“Retained Liabilities” — as defined in Section 2.4(b).

 

“Securities Act” — the Securities Act of 1933, as amended.

 

“Seller” or “Sellers” — as defined in the firstparagraph of this Agreement.

 

“Seller Benefit Plans” — all (i) employee welfarebenefit plans or employee pension benefit plans as defined in sections 3(1) and3(2) of ERISA, including plans, programs or arrangements that provideretirement income or result in deferrals of income by employees for periodsextending to their terminations of employment or beyond, and plans that providemedical, surgical or hospital care benefits or benefits in the event ofsickness, accident, disability, death or unemployment and (ii) other employeebenefit agreements or arrangements that are not ERISA plans, including anydeferred compensation plans, incentive plans, bonus plans or arrangements,stock option plans, stock purchase plans, stock award plans, golden parachuteagreements, severance pay plans, dependent care plans, cafeteria plans,employee assistance programs, scholarship programs, retention incentiveagreements, vacation policies and, or other similar plans, agreement orarrangements that (a) are maintained by any Seller, any ERISA Affiliate or anyof its Related Persons for the benefit of Affected Employees, (b) have beenapproved by any Seller, any ERISA Affiliate or any of its Related Persons butare not yet effective for the benefit of Affected Employees or theirbeneficiaries, or (c) were previously maintained by any Seller, any ERISAAffiliate or any of its Related Persons for the benefit of the AffectedEmployees or their beneficiaries and with respect to which, in each case, anySeller, any ERISA Affiliate or any of its Related Persons may have anyliability, contingent or otherwise. However, “Seller Benefit Plans” shall not include any agreements betweenany Seller

 

9

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and any Affected Employees pursuant to which suchSeller has agreed to pay Affected Employees any compensation in considerationof their services rendered in connection with the sale of the Assets or theBusiness (“Transaction Bonuses”). 

 

“Seller Contact” — as defined in Section 12.2(a).

 

“Seller Contract” — any Contract related primarily****to or used in the operation of the Business (a) under whichany Seller has or may acquire any rights or benefits; (b) under which anySeller has or may become subject to any obligation or liability; or (c) bywhich any Seller or any of the Assets may become bound.  The term Seller Contract includes anyCustomer Performance Assurance.

 

“Seller Disclosure Letter” — the disclosure letterdelivered by Sellers to Buyer concurrently with the execution and delivery ofthis Agreement, as amended pursuant to the terms of this Agreement.

 

“Seller Indemnitees” — as defined in Section 11.3.

 

“Snow Blower Business” —  that business of Parent or any of itsSubsidiaries arising out of, relating to or associated with snow removalequipment.

 

“Software” — all computer software and subsequentversions thereof, including source code, object, executable or binary code,objects, comments, screens, user interfaces, report formats, templates, menus,buttons and icons and all files, data, materials, manuals, design notes andother items and documentation related thereto or associated therewith.

 

“Subcontract” — as defined in Section 2.9(a)(viii).

 

“Subsidiary” — with respect to any Person (the “Owner”),any corporation or other Person of which securities or other interests havingthe power to elect a majority of that corporation’s or other Person’s board ofdirectors or similar governing body, or otherwise having the power to directthe business and policies of that corporation or other Person (other thansecurities or other interests having such power only upon the happening of acontingency that has not occurred), are held by the Owner or one or more of itsSubsidiaries.

 

“Supply Agreement” — as defined in Section 2.9(a)(ii).

 

“Survival Period” — as defined in Section 11.6.

 

“Tangible Personal Property” — all machinery,equipment, tools, furniture, office equipment, computer hardware, supplies,materials, vehicles and other items of tangible personal property (other thanInventories) of every kind owned or leased by any Seller and used in theoperation of the Business, together with any express or implied warranty by themanufacturers or sellers or lessors of any item or component part thereof andall maintenance records and other documents relating thereto.

 

10

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“Tax” — any federal, state, local or foreign income,gross receipts, license, payroll, employment, excise, severance, stamp,occupation, premium, property, environmental, windfall profit, customs,vehicle, airplane, boat, vessel or other title or registration, capital stock,franchise, employees’ income withholding, withholding, social security,unemployment, disability, real property, personal property, sales, use,transfer, value added, alternative, add-on minimum and other tax, fee,assessment, levy, tariff, charge or duty of any kind whatsoever, whethercomputed on a separate or consolidated, unitary or combined basis or in anyother manner and including any interest, penalty, addition or additional amountthereon imposed, assessed or collected by or under the authority of anyGovernmental Body or payable under any tax-sharing agreement or any otherContract.

 

“Tax Return” — any return (including any informationreturn), report, statement, schedule, notice, form, declaration, claim forrefund or other document or information filed with or submitted to, or requiredto be filed with or submitted to, any Governmental Body in connection with thedetermination, assessment, collection or payment of any Tax or in connectionwith the administration, implementation or enforcement of or compliance withany Legal Requirement relating to any Tax.

 

“Termination Date” — as defined in Section 9.1(e).

 

“Third Party” — a Person that is not a party to thisAgreement.

 

“Third Party Claim” — any claim against any Indemniteeby a Third Party that could give rise to a right of indemnification under thisAgreement.

 

“Transaction Agreements” — as defined in Section11.12(a).

 

“Transaction Bonuses” — as defined in the lastsentence of the definition of Seller Benefit Plans.

 

“Transferred Employee” — as defined in Section10.1(a).

 

“Transition Services Agreement” — as defined inSection 2.9(a)(vii).

 

[***]

 

## 1.2                                 USAGE

##  

### (a)           Interpretation.In this Agreement, unless a clear contrary intention appears:

###  

#### (i)                                           thesingular number includes the plural number and vice versa;

####  

#### (ii)                                        referenceto any Person includes such Person’s successors and assigns but, if applicable,only if such successors and assigns are not prohibited by this Agreement, andreference to a Person in a particular capacity excludes such Person in anyother capacity or individually;

 

11

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#### (iii)                                     referenceto any gender includes each other gender;

####  

#### (iv)                                    referenceto any agreement, document or instrument means such agreement, document orinstrument as amended or modified and in effect from time to time in accordancewith the terms thereof;

####  

#### (v)                                       referenceto any Legal Requirement means, unless expressly indicated otherwise, suchLegal Requirement as amended, modified, codified, replaced or reenacted, inwhole or in part, and in effect from time to time, including rules andregulations promulgated thereunder, and reference to any section or otherprovision of any Legal Requirement means, unless expressly indicated otherwise,that provision of such Legal Requirement from time to time in effect andconstituting the substantive amendment, modification, codification, replacementor reenactment of such section or other provision;

####  

#### (vi)                                    “hereunder,”“hereof,” “hereto,”  and words of similarimport shall be deemed references to this Agreement as a whole and not to anyparticular Article, Section or other provision hereof;

####  

#### (vii)                                 “including”(and with correlative meaning “include”) means including without limiting thegenerality of any description preceding such term;

####  

#### (viii)                              “or”is used in the inclusive sense of “and/or”;

####  

#### (ix)                                      withrespect to the determination of any period of time, “from” means “from andincluding” and “to” means “to but excluding”; and

####  

#### (x)                                         referencesto documents, instruments or agreements shall be deemed to refer as well to alladdenda, exhibits, schedules or amendments thereto.

####  

### (b)           AccountingTerms and Determinations. Unless otherwise specified herein, all accountingterms used herein shall be interpreted and all accounting determinationshereunder shall be made in accordance with GAAP.

###  

### (c)           LegalRepresentation of the Parties. This Agreement was negotiated by the partieswith the benefit of legal representation, and any rule of construction orinterpretation otherwise requiring this Agreement to be construed orinterpreted against any party shall not apply to any construction orinterpretation hereof.

###  

# 2.                                       Saleand Transfer of Assets; Closing

#  

## 2.1                                 ASSETS TO BE SOLD

##  

Upon the terms and subject to the conditions set forthin this Agreement, at the Closing and effective as of the Effective Time, eachSeller shall sell, convey, assign, transfer, and deliver to Buyer, and Buyershall purchase and acquire from such Seller, free and clear of any

 

12

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Encumbrances other than Permitted Encumbrances, all ofsuch Seller’s right, title, and interest in and to all of the following:

 

### (a)                                  allReal Property Leases described in Section 3.6 of the Seller Disclosure Letter;

###  

### (b)                                 allTangible Personal Property, including those items described inSection 3.5(a) of the Seller Disclosure Letter;

###  

### (c)                                  allInventories;

###  

### (d)                                 allAccounts Receivable;

###  

### (e)                                  allSeller Contracts, including those listed in Section 3.17(a) of the SellerDisclosure Letter, and all outstanding offers or solicitations made by or toany Seller to enter into any Seller Contract (“Bids”), other than SellerContracts or Bids described in Section 2.2(e);

###  

### (f)                                    allGovernmental Authorizations related to or used in the operation of the Businessand all pending applications therefor or renewals thereof, including thoselisted in Section 3.14(b) of the Seller Disclosure Letter, in each case to theextent permitted by applicable Legal Requirement and otherwise transferable toBuyer;

###  

### (g)                                 thedata and Records of each Seller related primarily to or used in the operationof the Business and located at a Business Property including client andcustomer lists and Records, referral sources, research and development reportsand Records, production reports and Records, service and warranty Records,equipment logs, operating guides and manuals, engineering design drawings usedin the operation of the Business, financial and accounting Records, creativematerials, advertising materials, promotional materials, studies, reports,correspondence, files relating to the preparation, prosecution, registration,enforcement or defense of any Business Intellectual Property and other similardocuments and Records (“Business Records”). In addition, to the extent any such data or Records are not located at aBusiness Property, copies of any particular data or Records followingreasonable request therefor, and, subject to Legal Requirements, copies of allpersonnel Records;

###  

### (h)                                 allof the intangible rights and property of Sellers that relate exclusively to theoperation of the Business, including any such goodwill and BusinessIntellectual Property, as well as the right to sue, at law or in equity, orotherwise recover damages for any and all infringements, misappropriations ordilutions of any Business Intellectual Property;

###  

### (i)                                     allrights of Sellers relating to deposits and prepaid expenses, claims for refundsand rights to offset in respect thereof, in each case related to or used in theoperation of the Business, that are not listed in Section 2.2(c) of the SellerDisclosure Letter and that are not excluded under Section 2.2(h);

###  

### (j)                                     allrights in internet domain names used, reserved or owned by any Seller or itsAffiliates that are expressly set forth in Section 2.1(j) of the SellerDisclosure Letter;

 

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### (k)                                  allcash in the bank accounts listed in Section 2.1(k) of the Seller DisclosureLetter; and

###  

### (l)                                     allof such Seller’s other property and assets, real, personal, or mixed, tangibleand intangible, of every kind and description, wherever located, belonging tosuch Seller and which relate primarily to or are used primarily****in the operation of the business currently conducted by theEngineered Products Segment of Sellers that is reported in Parent’s publiclydisclosed consolidated financial statements as the Engineered Products Segment,including the design, manufacturing, service and sale of equipment for coiledtubing, acidizing, fracturing, pumping (including nitrogen pumping equipment),railcar movers, seismic equipment systems, silicon controlled rectifiers andswitchgear equipment as well as any goodwill associated therewith (butexcluding the Excluded Assets) (collectively, the “Business”).

###  

All of the property and assets to be transferred toBuyer hereunder are herein referred to collectively as the “Assets.”

 

## 2.2                                 EXCLUDED ASSETS

##  

Notwithstanding anything to the contrary contained inSection 2.1 or elsewhere in this Agreement, the following assets of Sellers(collectively, the “Excluded Assets”) are not part of the sale and purchasecontemplated hereunder, are excluded from the Assets and shall remain theproperty of Sellers after the Closing:

 

### (a)                                  allcash, cash equivalents, securities, money on deposit with banks, certificatesof deposit and similar instruments and short-term investments, other than asprovided for in Section 2.1(k);

###  

### (b)                                 allminute books, stock Records and corporate seals;

###  

### (c)                                  thoserights relating to deposits and prepaid expenses and claims for refunds andrights to offset in respect thereof listed in Section 2.2(c) of the SellerDisclosure Letter;

###  

### (d)                                 allinsurance policies and rights thereunder and all insurance benefits, includingrights and proceeds, arising from or relating to the Assets and the AssumedLiabilities prior to the Effective Time;

###  

### (e)                                  allSeller Contracts listed in Section 2.2(e) of the Seller Disclosure Letter;

###  

### (f)                                    allpersonnel Records and other Records that any Seller is required by LegalRequirement to retain in its possession;

###  

### (g)                                 alldata and Records that do not constitute Business Records;

###  

### (h)                                 alldeposits or claims for refund or credit of Taxes and other governmental chargesof whatever nature to the extent relating to periods prior to the EffectiveTime;

 

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### (i)                                     allrights in connection with and assets of the Seller Benefit Plans;

###  

### (j)                                     allGovernment Authorizations that are not transferable;

###  

### (k)                                  allrights of Sellers under this Agreement, the Bill of Sale, Assignment andAssumption Agreement and the other Transaction Agreements;

###  

### (l)                                     exceptto the extent set forth in Section 3.20(a)(i) of the Seller Disclosure Letterand except for [***] each Seller’s right, title and interest in or to anypatent, patent applications, corporate names, assumed fictional business names,trade names, registered and unregistered trademarks, service marks,applications, logos, icons or designs, including any trade designation thatcomprise or are similar to “Stewart & Stevenson,” the Stewart &Stevenson logo or any derivative or abbreviation thereof;

###  

### (m)                               eachright in internet web sites and internet domain names other than the internetdomain names expressly set forth in Section 2.1(j) of the Seller DisclosureLetter;

###  

### (n)                                 accounts,notes or debts owed to the Business from, or by the Business to, a RelatedPerson of any Seller prior to the Effective Time;

###  

### (o)                                 allclaims of any Seller against Third Parties relating to the Business or theAssets, whether choate or inchoate, known or unknown, contingent ornoncontingent, listed in Section 2.2(o) of the Seller Disclosure Letter, exceptto the extent such claims relate to Assumed Liabilities;

###  

### (p)                                 allreal property and interests in real property other than the Business Property,including, without limitation, the real property and interests in real propertyidentified on Section 2.2(p) of the Seller Disclosure Letter and all othertangible personal property located on such premises; provided that this Section2.2(p) shall not limit Buyer’s right to receive copies of certain data orRecords pursuant to Section 2.1(g); and

###  

### (q)                                 allother assets not used in the Business, including, for the avoidance of doubt,the Armored Cab Business and the Snow Blower Business, as well as the DESBusiness and any other business reported as discontinued operations in theParent’s publicly disclosed consolidated financial statements dated January 31,2005 and any other property, assets and rights designated in Section 2.2(q) ofthe Seller Disclosure Letter.

###  

## 2.3                                 CONSIDERATION

##  

The consideration for the Assets (the “Purchase Price”)will be (i) the Closing Payment, (ii) plus or minus the Adjustment Amount,(iii) plus the assumption of the Assumed Liabilities. In accordance withSection 2.9(b), at the Closing, the cash portion of the Purchase Price, priorto adjustment on account of the Adjustment shall be delivered by Buyer toSellers by wire transfer of immediately available funds.  The balance of the Purchase Price shall besatisfied by the execution and delivery of the Bill of Sale, Assignment andAssumption Agreement.  The AdjustmentAmount shall be paid in accordance with Section 2.10.

 

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## 2.4                                 LIABILITIES

##  

### (a)           AssumedLiabilities. On the Closing Date, but effective as of the Effective Time, Buyershall assume and agree to discharge the Liabilities reflected on the ClosingBalance Sheet that are unpaid as of the Effective Time and the followingLiabilities of Sellers (the “Assumed Liabilities”):

###  

#### (i)                                           anyLiability (other than a liability to a Related Person of any Seller) to any ofSellers’ customers incurred by such Seller in the ordinary course of theBusiness for Bids outstanding as of the Effective Time;

####  

#### (ii)                                        anyLiability to any Seller’s customers under warranties implied by law and anywarranty agreements and indemnities given by any Seller to its customers priorto the Effective Time in connection with the Business;

####  

#### (iii)                                     anyLiability arising out of or relating to any circumstance, condition, occurrenceor event first happening or manifested at or after the Effective Time andarising out of or relating to (A) products of the Business designed,manufactured, distributed or sold or services provided prior to the EffectiveTime or (B) the Business or any action or inaction thereof or related theretoor to the Assets after the Closing Date, except in the case of clause (B), tothe extent such Liability is a Retained Liability;

####  

#### (iv)                                    exceptfor the Liabilities covered by subparagraphs (ii) and (iii) above, anyLiability to be performed or discharged at or after the Effective Time undercontract or law as to any Seller Contract entered into (A) prior to the date ofthis Agreement, and assigned pursuant to Section 2.1(e), or (B) after the datehereof in accordance with Section 6.2; and

####  

#### (v)                                       anyLiability of any Seller expressly described in Section 2.4(a)(v) of the SellerDisclosure Letter.

####  

### (b)           RetainedLiabilities. The Retained Liabilities shall remain the sole responsibility ofand shall be retained, paid, performed and discharged solely by Sellers. “RetainedLiabilities” shall mean every Liability of Sellers, disclosed or undisclosed,other than the Assumed Liabilities, including:

###  

#### (i)                                           anyLiability for Taxes arising as a result of any Seller’s (A) operation ofthe Business, (B) ownership of the Assets or (C) inclusion in a consolidated,affiliated, combined or unitary group (except as provided in Section 2.5) priorto the Effective Time;

####  

#### (ii)                                        anyLiability under any Contract or Bid not assumed by Buyer under Section 2.4(a);

####  

#### (iii)                                     anyLiability arising out of or relating to any circumstance, condition, occurrenceor event first happening or manifested prior to the Effective Time and arisingout of or relating to the products of the Business designed, manufactured,

 

16

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#### distributed orsold or services rendered prior to the Effective Time, including any Liabilityarising out of any Proceeding (including the obligation to handle suchProceeding) relating thereto, but excluding any Proceeding described in Section2.4(a)(v) of the Seller Disclosure Letter;

####  

#### (iv)                                    anyLiability of any Seller under the Seller Benefit Plans or relating to payroll,sick leave, workers’ compensation or unemployment benefits for any of Seller’semployees;

####  

#### (v)                                       anyEnvironmental Liabilities of the Business arising out of or relating to anycircumstance, condition, occurrence or event happening or manifested prior tothe Effective Time;

####  

#### (vi)                                    anyLiability under any Transaction Bonuses or any employment, severance, retentionor termination agreement with any employee of any Seller or any of its RelatedPersons, including, but not limited to, sponsorship of any Seller Benefit Plan;

####  

#### (vii)                                 anyLiability of any Seller to any Related Person of such Seller;

####  

#### (viii)                              anyLiability to indemnify, reimburse or advance amounts to any officer, directoror employee of any Seller to the extent not reflected as a liability on theClosing Balance Sheet;

####  

#### (ix)                                      anyLiability of any Seller under this Agreement or any other document executed inconnection with the Contemplated Transactions; and

####  

#### (x)                                         anyLiability of any Seller caused by such Seller’s ownership of the Assets oroperation of Business, or such Seller’s acts or omissions occurring prior to orafter the Effective Time, including without limitation any liability related toor arising out of the matters described in item 2 on Section 3.14(a) of theSeller Disclosure Letter.

####  

## 2.5                                 PRORATIONS OF CERTAIN PROPERTY TAXES

##  

Any general real or personal property Tax assessedagainst or pertaining to the Assets for the Tax period that includes theClosing Date shall be prorated between Buyer and Sellers as of the Closing Datein accordance with this Section 2.5.  Todetermine Sellers’ liability for any real and personal property Taxes for theperiod ending as of the Closing Date (the “Pre-Closing Property Taxes”), thetotal amount of such Taxes allocable to Sellers shall be the product of (i)such Tax for the entirety of the Tax period including the Closing Date,multiplied by (ii) a fraction, the numerator of which is the number of days insuch Tax period prior to the Closing Date, and the denominator of which is thetotal number of days in the Tax period, and the balance of such Taxes shall beallocable to Buyer.  For purposes of theInitial Balance Sheet, the Estimated Closing Balance Sheet and, if necessary,the Closing Balance Sheet, an estimate of the Pre-Closing Property Taxes shallbe based on the immediately preceding Tax period assessment.  When the actual amount of real or personalproperty Taxes estimated under this Section 2.5 is known, Buyer shall promptlyadvise Sellers of the proportionate share of actual real or personal propertyTaxes which constitute Pre-Closing Property Taxes and furnish Sellers withreasonably

 

17

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supporting documents evidencing the actual amount ofsuch Taxes.  If the estimate ofPre-Closing Property Taxes made pursuant to this Section 2.5 was less than theactual Pre-Closing Property Taxes and such deficiency is not taken into accountin the Adjustment Amount, Sellers shall pay in cash to Buyer such deficiencywithin thirty (30) days of receipt of such notice and reasonably supportingdocuments, and if such estimate was more than the actual Pre-Closing PropertyTaxes and such increase is not taken into account in the Adjustment Amount,Buyer shall, at the time such notice is given (which shall be no later thanthirty (30) days from Buyer’s receipt of documentation evidencing the actualamount of real and personal property Taxes for the Tax period including theClosing Date), refund such excess in cash to Sellers.  Any disputes related to the allocation ofreal and personal property Taxes under this Section 2.5 shall be resolved bythe Independent Accountants, in accordance with the procedure prescribed fordisputes relating to the calculation of Closing Net Asset Value under Section2.11.

 

## 2.6                                 SALES AND TRANSFER TAXES; RECORDING FEES

##  

### (a)                                  Allsales and use, motor vehicle sales and use, transfer and documentary Taxes, ifany, payable in connection with the sale, conveyances, assignments, transfersand deliveries to be made to Buyer hereunder shall be borne fifty percent (50%)by Buyer and fifty percent (50%) by Sellers, unless such Taxes are imposed as aresult of a party’s failure to provide the documentation described in Section2.6(b) or Section 2.6(c), in which case such Taxes shall be borne one hundredpercent (100%) by the party failing to provide the appropriate documentation atClosing.  Buyer and Sellers shall eachpromptly pay any such Taxes directly to the Governmental Body assessing themand shall join in the execution of any necessary Tax Returns.  In the event that either Buyer or any Selleris audited in connection with such Taxes, the party being audited will notifythe other parties of such audit and will not object to the other parties’appearance in the audit.

###  

### (b)                                 Sellersrepresent and warrant to Buyer that the exchange of the Assets and the Businessto the extent located in Texas qualifies for the occasional sale exemptionprovided under Section 151.304(a) and (b)(2) of the Texas Tax Code and 34 TexasAdministrative Code Section 3.316(d), and Sellers shall deliver to Buyer at theClosing an Affidavit of Occasional Sale in the form promulgated by the TexasComptroller of Public Accounts (the “Affidavit of Occasional Sale”) forpurposes of establishing such exemption. Upon the receipt of, and in reliance on, such Affidavit of OccasionalSale, Buyer shall deliver to Sellers a valid Texas exemption certificatecorresponding to the Texas occasional sale exemption at Closing.

###  

### (c)                                  Sellershave disclosed in Section 3.5(a) of the Seller Disclosure Letter the UnitedStates locations of any Assets located outside of Texas.  In reliance of such disclosure, Buyer shalldeliver to Sellers all state or local resale or exemption certificates requiredto claim valid exemptions, if any, from sale and use, motor vehicle sales anduse, transfer or documentary Taxes otherwise payable in connection with thesale, conveyances, assignments, transfers and deliveries of the Assets to theBuyer.  Subject to Section 2.6(a),applicable sales Taxes shall be collected and due at Closing if valid exemptioncertificates are not provided by the appropriate party.

 

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## 2.7                                 ALLOCATION

##  

Buyer and Sellers shall agree upon the allocation ofthe Purchase Price among the Assets in accordance with Section 1060 of the Codeand the Treasury Regulations promulgated thereunder (as well as any similarprovision of state, local or foreign law, as appropriate), and a draft of IRSForm 8594 shall be delivered at Closing (the “Allocation Schedule”).  The Allocation Schedule shall be binding uponBuyer and Sellers.  Buyer and Sellers andtheir Affiliates agree to amend the Allocation Schedule as necessary to reflectthe Adjustment Amount, and a final Allocation Schedule (the “Final AllocationSchedule”) shall be prepared by Buyer and Sellers on a basis consistent withthe Allocation Schedule within thirty (30) days following the final determinationof the Adjustment Amount under Section 2.11. Buyer and Sellers and their Affiliates shall report, act, and file allTax Returns (including, but not limited to, IRS Form 8594) in all respects andfor all purposes consistent with the Final Allocation Schedule.  Buyer and Sellers shall each timely andproperly prepare, execute, file and deliver all such documents, forms, andother information as either Buyer or Sellers may reasonably request inpreparing the Allocation Schedule or the Final Allocation Schedule.  Neither Buyer nor Sellers shall take anyposition (whether in audits, Tax Returns or otherwise) that is inconsistentwith the Final Allocation Schedule unless required to do so by any applicableLegal Requirement.

 

## 2.8                                 CLOSING

##  

Unless this Agreement shall have been terminatedpursuant to Section 9.1, the purchase and sale provided for in this Agreement(the “Closing”) shall take place as promptly as practical following thesatisfaction or waiver (subject to applicable Legal Requirement) of all conditions(other than those conditions which by their nature are to be satisfied atClosing, but subject to the fulfillment or waiver of those conditions) setforth in Articles 7 and 8 (and, in any event not more than ten Business Daysfollowing the satisfaction or waiver of all such conditions), at the offices ofSellers’ counsel at 1301 McKinney, Suite 5100, Houston, Texas, unless Buyer andSellers otherwise agree.

 

## 2.9                                 CLOSING OBLIGATIONS

##  

In addition to any other documents to be deliveredunder other provisions of this Agreement, at the Closing:

 

### (a)           Sellersshall deliver to Buyer:

###  

#### (i)                                           abill of sale, assignment and assumption agreement with respect to theassignment of the Assets to Buyer and the assumption of the Assumed Liabilitiesby Buyer in the form of Exhibit 2.9(a)(i) (the “Bill of Sale, Assignment andAssumption Agreement”) executed by Sellers;

####  

#### (ii)                                        aSupply Agreement in the form of Exhibit 2.9(a)(ii) executed by Parent (the “SupplyAgreement”);

####  

#### (iii)                                     assignmentsof all Registered Intellectual Property that is part of the Assets in the formof Exhibit 2.9(a)(iii) executed by the applicable Seller;

 

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#### (iv)                                    suchother bills of sale, assignments, documents (including the estimates oftransfer tax obligations of Buyer based on the Allocation Schedule) and otherinstruments of transfer and conveyance of the Assets as may reasonably berequested by Buyer, each in form and substance reasonably satisfactory to Buyerand its legal counsel and executed by the applicable Seller;

####  

#### (v)                                       theEstimated Closing Balance Sheet;

####  

#### (vi)                                    theIndustrial Lease Agreement in the form of Exhibit 2.9(a)(vi) (the “LeaseAgreement”), executed by Parent or one of its Affiliates, as lessor;

####  

#### (vii)                                 theTransition Services Agreement in the form of Exhibit 2.9(a)(vii) executed byParent (the “Transition Services Agreement”);

####  

#### (viii)                              oneor more subcontracts in form and substance reasonably satisfactory to Sellersand Buyer covering each of the Seller Contracts that is subject to theprovisions of Section 10.6(c), executed by each applicable Seller and, ifnecessary, one or more of its Affiliates (each, a “Subcontract”);

####  

#### (ix)                                      thecertificate required by Section 7.1;

####  

#### (x)                                         acertificate of the Secretary of each Seller certifying, as complete andaccurate as of the Closing, attached copies of the Articles of Incorporation inthe case of the Parent, Certificates of Incorporation in the case of SDDA, SSPIand SSI, Deed of Trust in the case of S&S Trust, and bylaws of such Selleras in effect on the date thereof, certifying and attaching all requisiteresolutions or actions of such Seller’s board of directors (or its equivalent)approving the execution and delivery of this Agreement and the consummation ofthe Contemplated Transactions and certifying to the incumbency and signaturesof the officers of such Seller executing this Agreement and any other documentrelating to the Contemplated Transactions;

####  

#### (xi)                                      theConfirmation of Closing in the form of Exhibit 2.9(a)(xi) executed by Parent(the “Confirmation of Closing”);

####  

#### (xii)                                   copiesof all Consents which have been obtained by Sellers in connection with theContemplated Transactions;

####  

#### (xiii)                                theAffidavit of Occasional Sale;

####  

#### (xiv)                               acertificate signed by each Seller stating that such Seller is not a “foreignperson” as defined in Section 1445 of the Code;

####  

#### [***]

####  

### (b)           Buyershall deliver to Sellers:

 

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#### (i)                                           theClosing Payment by wire transfer of immediately available funds to an accountspecified by Sellers in a writing delivered to Buyer at least three (3)business days prior to the Closing Date;

####  

#### (ii)                                        theBill of Sale, Assignment and Assumption Agreement executed by Buyer;

####  

#### (iii)                                     thesales tax exemption certificates described in Section 2.6(b), each in form andsubstance reasonably satisfactory to Sellers and their legal counsel andexecuted by Buyer;

####  

#### (iv)                                    theLease Agreement executed by Buyer, as tenant;

####  

#### (v)                                       theTransition Services Agreement executed by Buyer;

####  

#### (vi)                                    eachSubcontract executed by Buyer;

####  

#### (vii)                                 thecertificate required by Section 8.1;

####  

#### (viii)                              acertificate of the Secretary of Buyer certifying, as complete and accurate asof the Closing, attached copies of the Certificate of Incorporation and bylawsof Buyer as in effect on the date thereof and certifying and attaching allrequisite resolutions or actions of Buyer’s board of directors approving theexecution and delivery of this Agreement and the consummation of theContemplated Transactions and certifying to the incumbency and signatures ofthe officers of Buyer executing this Agreement and any other document relatingto the Contemplated Transactions;

####  

#### (ix)                                      theSupply Agreement executed by Buyer; and

####  

#### (x)                                         theConfirmation of Closing executed by Buyer.

####  

## 2.10                           ADJUSTMENT AMOUNT AND PAYMENT

##  

The “Adjustment Amount” will be equal to the amountdetermined by subtracting the Closing Net Asset Value from the EstimatedClosing Net Asset Value. If the Estimated Closing Net Asset Value exceeds theClosing Net Asset Value, the Adjustment Amount shall be paid by wire transferof immediately available funds by Sellers to an account specified by Buyer. Ifthe Closing Net Asset Value exceeds the Estimated Closing Net Asset Value, theAdjustment Amount shall be paid by wire transfer of immediately available fundsby Buyer to an account specified by Sellers. Within five (5) business daysafter the calculation of the Closing Net Asset Value becomes binding andconclusive on the parties pursuant to Section 2.11, Sellers or Buyer, as thecase may be, shall make the wire transfer payment provided for in this Section2.10.  For the purposes of this Section2.10, the “Estimated Closing Net Asset Value” will equal the amount of theEstimated Closing Net Asset Value that was paid at Closing.

 

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## 2.11                           ADJUSTMENT PROCEDURE

##  

### (a)                                  Buyershall prepare a Closing Balance Sheet (“Closing Balance Sheet”) of the Businessas of the Closing Date applying the Agreed Accounting Principles.  Buyer shall then determine the Net AssetValue as of the Effective Time (the “Closing Net Asset Value”) based upon theClosing Balance Sheet.  Buyer shalldeliver the Closing Balance Sheet and its determination of the Closing NetAsset Value to Sellers within forty-five (45) days following the ClosingDate.  The Closing Balance Sheet (i) willnot account for or reflect in any manner any assets that do not constituteAssets and (ii) will account for and reflect all Assumed Liabilities that arerequired to be accounted for or reflected on such Closing Balance Sheetapplying the Agreed Accounting Principles. Sellers and their independent auditors and other Representatives shallhave the right to review and verify the Closing Balance Sheet and determinationof the Closing Net Asset Value when received and Buyer shall provide Sellerswith access to all (i) work papers and written procedures used to prepare theClosing Balance Sheet and the determination of Closing Net Asset Value and (ii)books and Records and personnel to the extent necessary to enable Sellers andtheir independent auditors and other Representatives to conduct a full reviewof the Closing Balance Sheet and for them to fully evaluate Buyer’s calculationof the Closing Net Asset Value.  By wayof clarification and amplification with respect to Buyer’s preparation of theClosing Balance Sheet (and to ensure that it is prepared on the same basis andapplying the Agreed Accounting Principles as was done by Sellers in preparingthe Initial Balance Sheet), special mention is made of, and Buyer (A)understands and accepts as binding with respect to its preparation of theClosing Balance Sheet the Sellers’ judgments as to valuation and reservematters pertaining to such accounts in the Initial Balance Sheet, (B) acceptsand agrees with Sellers’ application of the Agreed Accounting Principlesincluding the valuations of current assets in respect thereof, and (C) will notcontest or otherwise propose any change to the reserves established inconnection with any Asset and valuation thereof in the Initial Balance Sheetexcept to the extent that any further reserves as to such Asset and valuationthereof are clearly required by application of the Agreed Accounting Principlesas a result of the passage of time or changes in conditions, facts or circumstancessince the date of the Initial Balance Sheet.

###  

### (b)                                 Ifwithin thirty (30) days following delivery of the Closing Balance Sheet and theClosing Net Asset Value calculation Sellers have not given Buyer written noticeof their objection as to the Closing Net Asset Value calculation (which noticeshall state the basis of Sellers’ objection), then the Closing Net Asset Valuecalculated by Buyer shall be binding and conclusive on the parties and be usedin computing the Adjustment Amount.

###  

### (c)                                  IfSellers duly give Buyer such notice of objection, and if Sellers and Buyer failto resolve the issues outstanding with respect to the Closing Balance Sheet andthe calculation of the Closing Net Asset Value within thirty (30) days of Buyer’sreceipt of Sellers’ objection notice, Sellers and Buyer shall submit the issuesremaining in dispute to the Independent Accountants, for resolution applyingthe Agreed Accounting Principles.  Ifissues are submitted to the Independent Accountants for resolution, (i) Sellersand Buyer shall furnish or cause to be furnished to the Independent Accountantssuch work papers and other documents and information relating to the disputedissues as the Independent Accountants may request and are available to thatparty or its agents and shall be afforded the opportunity to present to the

 

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### IndependentAccountants any material relating to the disputed issues and to discuss theissues with the Independent Accountants; (ii) the determination by theIndependent Accountants, as set forth in a reasonably detailed notice to bedelivered to both Parent and Buyer within forty-five (45) days of thesubmission to the Independent Accountants of the issues remaining in dispute,shall be final, binding and conclusive on the parties and shall be used in thecalculation of the Closing Net Asset Value; and (iii) Sellers and Buyer willeach bear fifty percent (50%) of the fees and costs of the IndependentAccountants for such determination.  Inconnection with the retention of the Independent Accountants, Sellers and Buyeragree that they will enter into a customary engagement agreement therewith,including appropriate provision for joint and several indemnity of suchIndependent Accountants as to their services and conclusions.

###  

# [***]

#  

# 3.                                       Representationsand Warranties of Sellers

#  

As of the date hereof, except with respect to therepresentations and warranties in Sections 3.2(c) and 3.17(a), as of August 5,2005, Sellers, jointly and severally, represent and warrant to Buyer asfollows:

 

## 3.1                                 ORGANIZATION AND GOOD STANDING

##  

Parent is a corporation duly incorporated, validlyexisting and in good standing under the laws of the State of Texas, SSPS andSSI are corporations duly incorporated, validly existing and in good standingunder the laws of the State of Delaware, each with full corporate power andauthority to own, operate and lease their respective properties and assets andto carry on their respective businesses in the places and in the mannercurrently conducted.  S&S Trust is abusiness trust duly formed, validly existing and in good standing under thelaws of the Commonwealth of Pennsylvania, with full trust power and authorityto own, operate and lease its properties and assets and to carry on itsbusiness in the places and in the manner currently conducted.  Each Seller, other than S&S Trust, isduly qualified to do business as a foreign corporation and is in good standingunder the laws of each state or other jurisdiction in which either theownership or use of the properties owned or used by it, or the nature of theactivities conducted by it, requires such qualification, except where thefailure to do so would not have a material adverse effect on such Seller or theBusiness.

 

## 3.2                                 ENFORCEABILITY; AUTHORITY; NO CONFLICT

##  

### (a)                                  EachSeller has all requisite corporate or trust power and authority to enter intothis Agreement and the documents to be delivered by such Seller at the Closingand to perform its obligations hereunder and thereunder, including the ContemplatedTransactions.  This Agreement has beenduly executed and delivered by each Seller and constitutes a legal, valid andbinding obligation of each Seller, enforceable against each such Seller inaccordance with its terms, except as enforceability may be limited byapplicable bankruptcy, insolvency, reorganization, moratorium or similar lawsfrom time to time in effect that affect creditors’ rights generally and bylegal and equitable limitations on the availability of specific remedies. ThisAgreement and the Contemplated Transactions have been duly authorized by allnecessary action

 

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### by each Seller’sboard of directors or trustees, as applicable. No further corporate, trustee or shareholder action is necessary on thepart of Sellers to execute and deliver this Agreement or to consummate theContemplated Transactions.

###  

### (b)           Except asset forth in Section 3.2(b) of the Seller Disclosure Letter, neither theexecution and delivery of this Agreement nor the consummation or performance ofany of the Contemplated Transactions will, directly or indirectly (with orwithout notice or lapse of time):

###  

#### (i)                                           Conflictwith or violate the Articles of Incorporation of Parent or Certificate ofIncorporation of SSPS or SSI or Deed of Trust of S&S Trust or bylaws of anySeller;

####  

#### (ii)                                        Conflictwith, result in a breach, violation or termination of any provision of,constitute a default under or give rise to any right of termination,cancellation or acceleration, or loss of any right or benefit or both, underany Seller Contract;

####  

#### (iii)                                     Resultin an acceleration or increase of any indebtedness or other amounts due withrespect to the Business or the Assets;

####  

#### (iv)                                    Resultin the imposition or creation of any Encumbrance (other than a PermittedEncumbrance) upon or with respect to any of the Assets; or

####  

#### (v)                                       Tothe Knowledge of Sellers, contravene, conflict with or result in a violation orbreach of any Governmental Authorization, Legal Requirement or Order applicableto Sellers, the Business or the Assets or to which Sellers, the Business or anyof the Assets may be subject.

####  

### (c)           Except asset forth in Section 3.2(c) of the Seller Disclosure Letter, no Seller isrequired to give any notice to or obtain any Consent or Governmental Authorizationfrom any Person in connection with the execution and delivery of this Agreementor the consummation or performance of any of the Contemplated Transactions,other than (i) those notices and Consents and Governmental Authorizations thathave been obtained and are in full force and effect at the Effective Time, (ii)those notices and Consents required under the Seller Contracts not required tobe disclosed in Section 3.17(a) of the Seller Disclosure Letter, and (iii) suchnotices and consents as may be required under foreign laws.  Notwithstanding anything herein to thecontrary, the list of Consents set forth in Section 3.2(c) of the SellerDisclosure Letter that relate to Seller Contracts only relate to those SellerContracts set forth in Section 3.17(a) of the Seller Disclosure Letter.

###  

## 3.3                                 FINANCIAL STATEMENTS

##  

Set forth in Section 3.3 of the Seller DisclosureLetter is an unaudited balance sheet of the Business as of September 3, 2005(the “Initial Balance Sheet”) and a related unaudited statement of income ofthe Business for the seven month period then ended (collectively, the “FinancialStatements”).  The Financial Statementsfairly present in all material respects the financial condition and results ofoperations of the Business as of and for the seven month period

 

24

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ended on the balance sheet date, in accordance withthe Agreed Accounting Principles.  TheFinancial Statements do not account for or reflect in any manner any assetsthat do not constitute Assets.  TheFinancial Statements account for and reflect all Assumed Liabilities that arerequired to be accounted for or reflected on such Financial Statements applyingthe Agreed Accounting Principles.  TheFinancial Statements reflect the consistent application of the accountingprinciples applied in the financial statements of the Business as included inthe consolidated financial statements of Parent, except as disclosed in thenotes to the Financial Statements and except as set forth in Section 3.3 of theSeller Disclosure Letter.  The FinancialStatements have been prepared from and are in accordance with the accountingRecords of Sellers.

 

## 3.4                                 BOOKS AND RECORDS

##  

The Business Records of Sellers, all of which havebeen made available to Buyer, are complete and correct and represent actual,bona fide transactions and have been maintained in accordance with soundbusiness practices.

 

## 3.5                                 CONDITION AND SUFFICIENCY OF ASSETS

##  

### (a)                                  Section3.5(a) of the Seller Disclosure Letter lists all Assets consisting ofmachinery, equipment, vehicles, furniture or other Tangible Personal Propertyowned by any Seller having an original cost in excess of $10,000 and thelocation thereof as well as all locations in the United States (other thanTexas) where any Assets (including any inventory and inventory on consignment)are located, regardless of their original cost.

###  

### (b)                                 Section3.5(b) of the Seller Disclosure Letter lists all Assets consisting of propertyand assets (other than the Business Property) used in the Business that areleased by any Seller and that involve payments by such Seller in excess of$2,500 per month.

###  

### (c)                                  Exceptas specifically enumerated in Section 3.5(c) of the Seller Disclosure Letter,the Assets constitute all of the assets, tangible and intangible, of any naturewhatsoever, necessary to operate the Business immediately after the Closing insubstantially the same manner in which it is presently operated by Sellers.

###  

### (d)                                 Allequipment, vehicles, furniture and other Tangible Personal Property owned orleased by Sellers comprising part of the Assets and currently used in theoperation of the Business are in good operating condition and repair (subjectto normal wear and tear) and when transferred will be adequate for theoperation of the Business, and none of such assets are in need of maintenanceor repairs except for ordinary, routine maintenance and repairs consistent withpast practice.

###  

## 3.6                                 DESCRIPTION OF REAL PROPERTY

##  

Section 3.6 of the Seller Disclosure Letter sets fortha complete list of (i) all real property and interests in real property ownedin fee by any Seller and that are used in the operation of the Business(individually, an “Owned Property” and collectively, the “Owned Properties”),(ii) all real property and interests in real property leased by any Seller andthat are used in the operation

 

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of the Business (individually, a “Real Property Lease”and the real properties specified in such leases, together with the Owned Properties,being referred to herein individually as a “Business Property” and collectivelyas the “Business Properties”) as lessee or lessor.  The Business Properties constitute allinterests in real property currently used or currently held for use in the operationof the Business.  Sellers have deliveredor otherwise made available to Purchaser true, correct and complete copies ofthe Real Property Leases, together with all amendments, modifications orsupplements, if any, thereto.

 

## 3.7                                 TITLE TO ASSETS; ENCUMBRANCES

##  

### (a)                                  Theapplicable Seller has a valid and subsisting leasehold interest in the realestate in the Real Property Leases described in Section 3.6 of the SellerDisclosure Letter.  No Seller is indefault of any material covenant to be performed by such Seller under the RealProperty Leases.

###  

### (b)                                 Sellersown good and transferable title to all of the Tangible Personal Property freeand clear of any Encumbrances other than those described in Section 3.7(b)(i)of the Seller Disclosure Letter (“Non-Real Estate Encumbrances”).  At Closing, all such Tangible PersonalProperty shall be free and clear of all Non-Real Estate Encumbrances other than(i) those identified in Section 3.7(b)(i) of the Seller Disclosure Letter, and(ii) Encumbrances or other rights of Governmental Bodies or other Persons inrespect of property or assets delivered by any Seller for repair, maintenance,or other improvements (“Permitted Non-Real Estate Encumbrances” and, togetherwith those described Encumbrances on Business Property set forth in Section3.7(b)(ii) of the Seller Disclosure Letter (none of which, individually or inthe aggregate, materially and adversely effect the operation of the Business ascurrently operated), “Permitted Encumbrances”).

###  

## 3.8                                 ACCOUNTS RECEIVABLE

##  

All Accounts Receivable that are reflected on theInitial Balance Sheet or that will be reflected on the Closing Balance Sheetrepresent or will represent valid obligations arising from sales actually madeor services actually performed by Sellers in the ordinary course of theBusiness consistent with past practices, and Section 3.8 of the SellerDisclosure Letter contains a complete and accurate list thereof as of September7, 2005, which list sets forth the aging of each such Account Receivable.  To Sellers’ Knowledge, there is no contest,claim, defense or right of setoff, other than those in the ordinary course ofthe Business consistent with past practices, under any Seller Contract with anyaccount debtor of an Account Receivable relating to the amount or validity ofsuch Account Receivable.  All AccountsReceivable relate solely to the sale of goods or services to customers ofSellers, none of which are Related Persons of any Seller.

 

## 3.9                                 INVENTORIES

##  

Except as set forth in Section 3.9 of the SellerDisclosure Letter, all items included in the Inventories consist of a qualityand quantity consistent in all material respects with past practices orreasonable future expectations, except for obsolete items, slow-moving itemsand items of

 

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below-standard quality, all of which have been writtenoff or written down to net realizable value in the Initial Balance Sheet inaccordance with the Agreed Accounting Principles.  Inventories on hand that were purchased afterthe date of the Initial Balance Sheet were purchased in the ordinary course ofthe Business consistent with past practices or reasonable future expectationsat a cost generally not exceeding market prices prevailing at the time ofpurchase.

 

## 3.10                           [INTENTIONALLY DELETED]

##  

## 3.11                           TAXES

##  

### (a)                                  Exceptas set forth in Section 3.11(a) of the Seller Disclosure Letter, each of theSellers has filed or will file when due all Tax Returns required to be filedwith respect to the Business or the Assets. All such Tax Returns were, or will be, correct and complete in allmaterial respects.  All Taxes owed byeach of the Sellers (whether or not shown on any Tax Return) with respect tothe Business and the Assets have been, or will be when due, fully paid.  There are no Encumbrances on any of theAssets that arose in connection with any failure (or alleged failure) to payany Tax.  No deficiency or adjustment inrespect of any Tax that might result in an Encumbrance on any of the Assetsremains unpaid and no Proceeding is pending or, to any of the Sellers’Knowledge, threatened with respect to any Taxes whose assessment might resultin an Encumbrance on any of the Assets.

###  

### (b)                                 Thereis no Tax sharing agreement, Tax allocation agreement, tax indemnity obligationor similar written or unwritten agreement, arrangement, understanding orpractice with respect to Taxes (including any advance pricing agreement,closing agreement or other arrangement relating to Taxes) that will require anypayment by any Seller as a result of the sale of the Business.

###  

## 3.12                           LABOR MATTERS; COMPLIANCE

##  

### (a)           Except asset forth in Section 3.12(a) of the Seller Disclosure Letter,

###  

#### (i)                                           noSeller is a party to or bound by any collective bargaining agreement withregard to the Affected Employees;

####  

#### (ii)                                        eachSeller and its Related Persons are in substantial compliance with all LegalRequirements applicable to the Affected Employees with regard to employment andemployment practices, terms and conditions of employment, wages, andoccupational safety and health; and are not engaged in any unfair labor orunfair employment practices;

####  

#### (iii)                                     thereis no unfair labor practice charge or complaint against any Seller or any ofits Related Persons involving or related to Affected Employees pending (withservice of process having been made, or written notice of investigation orinquiry having been served, on such Seller or any of its Related Persons), orto Sellers’ Knowledge, threatened before the National Labor Relations Board orany analogous state or local agency or any court and no charge, complaint orgrievance is pending or, to Sellers’ Knowledge, threatened to be filed;

 

27

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#### (iv)                                    forthe past five years, no Seller has experienced any labor strike or othermaterial labor dispute, slowdown, stoppage or lock-out with regard to theBusiness;

####  

#### (v)                                       thereis no labor strike or other material labor dispute, slowdown, stoppage orlock-out pending, or to Sellers’ Knowledge, threatened against any Sellerinvolving the Affected Employees; and

####  

#### (vi)                                    nounion certification or decertification petition has been filed (with service ofprocess having been made on any Seller or any of its Related Persons), or toSellers’ Knowledge, threatened, that relates to Affected Employees and no unionauthorization campaign has been conducted, in each case, within the past 18months.

####  

### (b)           Sellershave delivered to Buyer a list of all Affected Employees, the rate of allcompensation payable to each such employee in any and all capacities, includingany compensation that will be payable to each such employee in any and allcapacities other than the then current accrual of regular payroll compensation,except in each case for any Transaction Bonuses.  Any of the Affected Employees can bedismissed immediately for any reason or no reason without notice and withoutfurther liability, subject to applicable laws, rules and regulations relatingto employment discrimination.  To Sellers’Knowledge, none of the Affected Employees intend to terminate their employmentrelationship with the Business.

###  

## 3.13                           EMPLOYEE BENEFITS

##  

### (a)                                  Section3.13(a) of the Seller Disclosure Letter contains a list of all Seller BenefitPlans.  Sellers have made available forreview by Buyer copies of all Seller Benefit Plans (including all relatedtrusts, funding arrangements, most recent valuation reports and most recentannual reports).

###  

### (b)                                 No“pension plan” as defined in section 3(2) of ERISA that is maintained orcontributed to by any Seller or any ERISA Affiliate or with respect to whichany Seller or an ERISA Affiliate may have any liability (i) has an accumulatedfunding deficiency as defined in section 302 of ERISA and section 412 of theCode, whether or not waived; (ii) no waiver of minimum funding standards hasbeen requested or granted by the IRS; and (iii) no Encumbrance in favor of anySeller Benefit Plan, the IRS or the Pension Benefit Guaranty Corporation existsor has been threatened.  Except as setforth in Section 3.13(b) of the Seller Disclosure Letter, neither Sellers norany ERISA Affiliate contributes to, has any obligation to contribute to, or hasany liability under or with respect to any “multiemployer plan,” as defined inSection 3(37) of ERISA.  No material “reportableevent,” within the meaning of Section 4043 of ERISA, for which the thirty-dayreporting requirement has not been waived, and no event described in Sections4062 or 4063 of ERISA, has occurred in connection with any Seller Benefit Planof the Sellers or any ERISA Affiliate. Neither Sellers nor any ERISA Affiliate have (1) engaged in, or is asuccessor or parent corporation to an entity that has engaged in, a transactiondescribed in Sections 4069 or 4212(c) of ERISA or (2) except as set forth inSection 3.13(b) of the Seller Disclosure Letter, incurred any liability orpotential liability under Title IV of ERISA arising in connection with thetermination of, or a complete or partial withdrawal from, any plan covered orpreviously covered by Title IV of ERISA.

 

28

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### (c)                                  NoSeller or any ERISA Affiliate has incurred any withdrawal liability underSection 4201 of ERISA that could result in any liability to Buyer orEncumbrance on any of the Assets.  Therequirements of COBRA have been met with respect to each such Seller BenefitPlan which is an “employee welfare benefit plan,” as defined in Section 3(1) ofERISA, subject to COBRA.

###  

## 3.14                           COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTALAUTHORIZATIONS

##  

### (a)           Except asset forth in Section 3.14(a) of the Seller Disclosure Letter:

###  

#### (i)                                           Sellershave complied with all Legal Requirements applicable to the conduct andoperation of the Business and the ownership or use of any of the Assets;

####  

#### (ii)                                        Withregard to the Business and the Assets, to Sellers’ Knowledge, no event hasoccurred or circumstance exists that (with or without notice or lapse of time)would be reasonably expected to constitute or result in a violation by anySeller of, or a failure on the part of any Seller to comply with, any LegalRequirement relating to the Business or the Assets; and

####  

#### (iii)                                     NoSeller has received, at any time since January 31, 2002, any notice from anyGovernmental Body regarding any actual, alleged or potential violation of, orfailure to comply with, any Legal Requirement with respect to the Business orany of the Assets.

####  

### (b)           Section3.14(b) of the Seller Disclosure Letter contains a list of each materialGovernmental Authorization that is held by any Seller relating to or used inthe operation of the Business or the Assets. Each Governmental Authorization listed in Section 3.14(b) of the SellerDisclosure Letter is in full force and effect. Except as set forth in Section3.14(b) of the Seller Disclosure Letter:

###  

#### (i)                                           EachSeller is in compliance in all material respects with all of the terms andrequirements of each Governmental Authorization identified in Section 3.14(b)of the Seller Disclosure Letter;

####  

#### (ii)                                        ToSellers’ Knowledge, no event has occurred or circumstance exists that will(with or without notice or lapse of time) (A) constitute or result directly orindirectly in a violation of or a failure to comply with any term orrequirement of any Governmental Authorization listed or required to be listedin Section 3.14(b) of the Seller Disclosure Letter or (B) result directly or indirectlyin the revocation, withdrawal, suspension, cancellation or termination of, orany modification to, any Governmental Authorization listed or required to belisted in Section 3.14(b) of the Seller Disclosure Letter;

####  

#### (iii)                                     NoSeller has received, at any time since January 31, 2002, any notice from anyGovernmental Body regarding (A) any actual, alleged, possible or potentialviolation of or failure to comply with any term or requirement of any

 

29

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#### GovernmentalAuthorization or (B) any actual, proposed, possible or potential revocation,withdrawal, suspension, cancellation, termination of or modification to anyGovernmental Authorization; and

####  

#### (iv)                                    allapplications required to have been filed for the renewal of the GovernmentalAuthorizations listed in Section 3.14(b) of the Seller Disclosure Letter havebeen duly filed on a timely basis with the appropriate Governmental Bodies, andall other filings required to have been made with respect to such GovernmentalAuthorizations have been duly made on a timely basis with the appropriateGovernmental Bodies.

####  

### (c)           TheGovernmental Authorizations listed in Section 3.14(b) of the Seller DisclosureLetter collectively constitute all of the Governmental Authorizations necessaryto permit each Seller to lawfully conduct and operate the Business in themanner in which it currently conducts and operates such Business and to permiteach Seller to own and use the Assets in the manner in which it currently ownsand uses such Assets.

###  

## 3.15                           LEGAL PROCEEDINGS; ORDERS

##  

### (a)           Except asset forth in Section 3.15(a) of the Seller Disclosure Letter, there is nopending or, to Sellers’ Knowledge, threatened Proceeding:

###  

#### (i)                                           byor against any Seller that relates to or would reasonably be expected to affectthe Business or the Assets in a materially adverse manner; or

####  

#### (ii)                                        thatchallenges, or that may have the effect of preventing, delaying, making illegalor otherwise interfering with, any of the Contemplated Transactions.

####  

Except as set forth in Section 3.15(a) of the SellerDisclosure Letter, to Sellers’ Knowledge, no event has occurred or circumstanceexists that is reasonably likely to give rise to or serve as a basis for thecommencement of any such Proceeding.

 

### (b)           Except asset forth in Section 3.15(b) of the Seller Disclosure Letter, since January 31,2003:

###  

#### (i)                                           therehas been no Order to which the Business or any of the Assets is subject; and

####  

#### (ii)                                        toSellers’ Knowledge, no agent or employee of any Seller has been subject to any Orderthat prohibits such agent or employee from engaging in or continuing anyconduct, activity or practice relating to the Business.

####  

### (c)           Except asset forth in Section 3.15(c) of the Seller Disclosure Letter:

###  

#### (i)                                           eachSeller is in compliance with all of the terms and requirements of each Order towhich it or any of the Assets is or has been subject;

 

30

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#### (ii)                                        noevent has occurred or circumstance exists that is reasonably likely toconstitute or result in (with or without notice or lapse of time) a violationof or failure to comply with any term or requirement of any Order to which anySeller (with respect to the Business) or any of the Assets is subject; and

####  

#### (iii)                                     noSeller has received, at any time since January 31, 2003, any notice from anyGovernmental Body regarding any actual, alleged or potential violation of, orfailure to comply with, any term or requirement of any Order to which suchSeller (with respect to the Business) or any of the Assets is or has beensubject.

####  

## 3.16                           ABSENCE OF CERTAIN CHANGES AND EVENTS

##  

Except as set forth in Section 3.16 of the SellerDisclosure Letter or as otherwise permitted by this Agreement, since January31, 2005, each Seller has conducted the Business only in the ordinary course ofthe Business consistent with past practices or reasonable future expectationsand there has not been any:

 

### (a)                                  payment(except in the ordinary course of the Business consistent with past practices)or increase by any Seller of any bonuses, salaries or other compensation to anyemployee of the Business or entry into any employment, severance or similarSeller Contract with any employee of the Business;

###  

### (b)                                 materialdamage, destruction, theft or loss affecting the Assets, except to the extent thatany Asset damaged, destroyed, stolen or lost has been replaced or repaired;

###  

### (c)                                  entryinto, termination of or receipt of notice of termination of (i) any license,distributorship, dealer, sales representative, joint venture, credit or similarSeller Contract to which any Seller is a party used in the operation of theBusiness or Assets other than in the ordinary course of business, or (ii) anySeller Contract described in Section 3.17(a) other than in the ordinary courseof business;

###  

### (d)                                 sale,lease or other disposition of any Asset or property of any Seller (includingthe Business Intellectual Property Assets) or the creation of any Encumbrance(other than a Permitted Encumbrance) on any Asset, in each case other than inthe ordinary course of business;

###  

### (e)                                  cancellationor waiver of any claims or rights relating to the Business or the Assets havingan aggregate value in excess of $100,000;

###  

### (f)                                    notificationby any significant customer or supplier of the Business of an intention todiscontinue or materially change the terms of its relationship with theBusiness;

###  

### (g)                                 materialchange in the accounting methods used by any Seller, which relates to theBusiness or the Assets; or

###  

### (h)                                 Contractentered into by any Seller to do any of the foregoing.

 

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## 3.17                           CONTRACTS; NO DEFAULTS

##  

### (a)           Other thanthe Seller Contracts set forth in Section 2.2(e) of the Seller DisclosureLetter, Section 3.17(a) of the Seller Disclosure Letter contains an accurateand complete list, and Sellers have made available to Buyer accurate andcomplete copies, of:

###  

#### (i)                                           eachSeller Contract (A) that involves performance of services or delivery of goodsor materials by any Seller of an amount of value in excess of $100,000; or (B)that has a remaining term of more than one (1) year and that involvesperformance of services or delivery of goods or materials by any Seller of anamount of value in excess of $50,000;

####  

#### (ii)                                        eachSeller Contract (A) that involves performance of services or delivery of goodsor materials to any Seller of an amount of value in excess of $100,000, or (B)that has a remaining term of more than one (1) year and that involvesperformance of services or delivery of goods or materials to any Seller of anamount of value in excess of $50,000;

####  

#### (iii)                                     eachSeller Contract that was not entered into in the ordinary course of theBusiness consistent with past practices and that (A) involves an amount ofvalue or expenditures or receipts of any Seller in excess of $100,000, or (B) hasa remaining term of more than one (1) year, and is not subject to terminationwithout penalty;

####  

#### (iv)                                    eachSeller Contract affecting the ownership of, leasing of, title to, use of or anyleasehold or other interest in any real or personal property (except personalproperty leases and installment and conditional sales agreements having a valueper item or aggregate payments of less than $75,000 and with a term of lessthan one year);

####  

#### (v)                                       eachSeller Contract with any labor union or other employee representative of agroup of employees relating to wages, hours and other conditions of employment;

####  

#### (vi)                                    eachSeller Contract (however named) involving a sharing of profits, losses, costsor liabilities by any Seller with any other Person;

####  

#### (vii)                                 eachSeller Contract containing covenants that restrict any Seller’s businessactivity or limit the freedom of such Seller to engage in any line of businessor to compete with any Person;

####  

#### (viii)                              eachSeller Contract providing for payments to or by any Person based on sales,purchases or profits, other than direct payments for goods;

####  

#### (ix)                                      eachpower of attorney of any Seller relating to the Business or the Assets that iscurrently effective and outstanding;

####  

#### (x)                                         eachSeller Contract for capital expenditures in excess of $100,000;

 

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#### (xi)                                      eachSeller Contract not denominated in U.S. dollars;

####  

#### (xii)                                   eachwritten warranty, guaranty and/or other similar undertaking with respect tocontractual performance extended by any Seller with respect to the Businessother than in the ordinary course of the Business consistent with pastpractices;

####  

#### (xiii)                                eachBid that involves the performance of services or delivery of goods or materialsby any Seller of an amount of value in excess of $100,000, or that has aremaining term of more than one (1) year and that involves performance ofservices or delivery of goods or materials by any Seller of an amount of valuein excess of $50,000; and

####  

#### (xiv)                               eachamendment, supplement and modification (whether oral or written) in respect ofany of the foregoing.

####  

### (b)           Except asset forth in Section 3.17(b) of the Seller Disclosure Letter:

###  

#### (i)                                           eachSeller Contract or Bid identified or required to be identified in Section3.17(a) of the Seller Disclosure Letter or which is to be assumed by Buyerunder this Agreement is in full force and effect and is valid, binding andenforceable in accordance with its terms; and

####  

#### (ii)                                        eachSeller Contract or Bid identified or required to be identified in Section3.17(a) of the Seller Disclosure Letter or which is being assumed by Buyerunder this Agreement is assignable by the applicable Seller to Buyer withoutthe Consent of any other Person except as disclosed in or pursuant to Section3.2(c).

####  

### (c)           Except asset forth in Section 3.17(c) of the Seller Disclosure Letter:

###  

#### (i)                                           eachSeller is in compliance with all applicable terms and requirements of eachSeller Contract which is being assumed by Buyer;

####  

#### (ii)                                        noSeller has released any of its rights under a Seller Contract which is assumedby Buyer under this Agreement;

####  

#### (iii)                                     toSellers’ Knowledge, each other Person that has or had any obligation orliability under any Seller Contract which is being assumed by Buyer is incompliance with all applicable terms and requirements of such Seller Contract;

####  

#### (iv)                                    toSellers’ Knowledge, no event has occurred or circumstance exists that (with orwithout notice or lapse of time) would reasonably be expected to contravene,conflict with or result in a breach of, or give any Seller or other Person theright to declare a default or exercise any remedy under, or to accelerate thematurity or performance of, or payment under, or to cancel, terminate ormodify, any Seller Contract that is being assumed by Buyer under thisAgreement;

 

33

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#### (v)                                       toSellers’ Knowledge, no event has occurred or circumstance exists under or byvirtue of any Contract that (with or without notice or lapse of time) wouldcause the creation of any Encumbrance (other than a Permitted Encumbrance)affecting any of the Assets; and

####  

#### (vi)                                    toSellers’ Knowledge, there is no Seller Contract listed in Section 3.17(a) ofthe Seller Disclosure Letter to be assumed by Buyer on which Sellers are behindschedule with respect to the timely delivery of any products or services.

####  

### (d)                                 Section3.17(d) of the Seller Disclosure Letter sets forth a list of the SellerContracts described in Section 3.17(a)(i)(A) in respect of which any Seller hascurrent or future warranty obligations and, to Sellers’ Knowledge, a list ofall warranty claims of customers of the Business asserted in writing (includingby facsimile or electronic mail) against Sellers in respect of which thenecessary repairs or replacement have not been completed.

###  

### (e)                                  Eachof the Seller Contracts or Bids entered into since August 5, 2005 through thedate hereof have been entered into or issued in the ordinary course of businessconsistent with past practice.

###  

## 3.18                           INSURANCE

##  

### (a)                                  Section3.18(a) of the Seller Disclosure Letter sets forth a list of all policies offire, casualty, liability, burglary, fidelity, workers’ compensation and otherforms of insurance held by each Seller that are material to the Business andmaterial details regarding each, including limits of liability, deductibles andself insurance retentions.

###  

### (b)                                 Allpremiums due and payable for the insurance listed in Section 3.18(a) of theSeller Disclosure Letter have been duly paid, and such policies or extensionsor renewals thereof in such amounts will be outstanding and duly in full forcewithout interruption until the Closing Date.

###  

### (c)                                  Section3.18(c) of the Seller Disclosure Letter describes, with respect to the Businessor Assets as of the date of this Agreement, by year, for the current policyyear and each of the two (2) preceding policy years (i) any self-insurancearrangement by or affecting any Seller, including any reserves establishedthereunder, and (ii) all obligations of any Seller to provide insurancecoverage to Third Parties (for example, under Leases or service agreements) andidentifies the policy under which such coverage is provided.

###  

### (d)                                 Section3.18(d) of the Seller Disclosure Letter sets forth as of the date of thisAgreement, by year, for the current policy year and each of the two (2)preceding policy years with respect to the Business or Assets:

###  

#### (i)                                           asummary of the loss experience under each policy of insurance;

####  

#### (ii)                                        astatement describing each claim under a policy of insurance for an amount inexcess of $100,000, which sets forth:

 

34

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##### (A)                              thename of the claimant;

#####  

##### (B)                                adescription of the policy by insurer, type of insurance and period of coverage;and

#####  

##### (C)                                theamount and a brief description of the claim; and

#####  

#### (iii)                                     astatement describing the loss experience for all claims that were self-insured,including the number and aggregate cost of such claims.

####  

## 3.19                           ENVIRONMENTAL MATTERS

##  

### (a)                                  Exceptas set forth in Section 3.19 of the Seller Disclosure Letter or except as wouldnot have an Environmental Material Adverse Effect, each Seller is in compliancein all material respects with all applicable limitations, restrictions,conditions, standards, prohibitions, requirements and obligations ofEnvironmental Laws;

###  

### (b)                                 Exceptas set forth in Section 3.19 of the Seller Disclosure Letter or except as wouldnot have an Environmental Material Adverse Effect, there are no EnvironmentalLiabilities pending or, to Sellers’ Knowledge, threatened by or before anycourt or any other Governmental Body directed against any Seller relating tothe operation of the Business that pertain or relate to (i) any obligations ofany Seller under any applicable Environmental Law, (ii) violations by anySeller of any Environmental Law, (iii) personal injury, property damage, or naturalresources damage claims relating to a Release of Hazardous Materials, or (iv)response, removal, or remedial costs under CERCLA, RCRA or any similar statelaws;

###  

### (c)                                  Exceptas set forth in Section 3.19 of the Seller Disclosure Letter or except as wouldnot have an Environmental Material Adverse Effect, all permits required underEnvironmental Laws that are necessary for the lawful operation of the Businessby any Seller have been obtained and are in full force and effect and no Sellerhas Knowledge of any basis for revocation or suspension of any such permits;

###  

### (d)                                 Exceptas set forth in Section 3.19 of the Seller Disclosure Letter, no portion of anyof the Owned Property is listed on the National Priorities List or theComprehensive Environmental Response, Compensation, and Liability InformationSystem list under CERCLA, or any similar ranking or listing under any statelaw;

###  

### (e)                                  Exceptas set forth in Section 3.19 of the Seller Disclosure Letter or except as wouldnot have an Environmental Material Adverse Effect, no Seller has disposed orReleased any Hazardous Materials on, at, or under the Owned Property, otherthan in compliance with Environmental Laws, and no Seller has Knowledge of anyEnvironmental Conditions on, at, or underlying such Owned Property other thansuch Environmental Conditions that do not require remediation underEnvironmental Laws; and

###  

### (f)                                    Exceptas set forth in Section 3.19 of the Seller Disclosure Letter, there are nowritten notices of violation, non-compliance, or similar notifications relatingto Environmental Liabilities currently pending or, to Sellers’ Knowledge,threatened, relating or

 

35

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pertaining to the Business or the Owned Property that would reasonablybe expected to have an Environmental Material Adverse Effect.

###  

## 3.20                           INTELLECTUAL PROPERTY

##  

### (a)                                  AllIntellectual Property, including the Intellectual Property Licenses, thatrelates exclusively to the Business (the “Business Intellectual Property”) andthat constitutes Registered Intellectual Property is set forth in Section3.20(a)(i) of the Seller Disclosure Letter (the “Owned Intellectual Property”).  Except as set forth in Section 3.20(a)(ii) ofthe Seller Disclosure Letter, Sellers own, free and clear from all Encumbrances(other than immaterial Encumbrances) or otherwise possesses legally enforceablerights to all of the Business Intellectual Property.

###  

### (b)                                 Section3.20(b)(i) of the Seller Disclosure Letter sets forth, with respect to theBusiness, a complete list of all licenses (i) pursuant to which the use by anyPerson of Intellectual Property is permitted by any Seller, or (ii) pursuant towhich the use by any Seller of the Intellectual Property of a Third Party ispermitted by any Person (other than commercial software) (collectively, the “IntellectualProperty Licenses”).  The IntellectualProperty Licenses are in full force and effect.

###  

### (c)                                  Exceptas set forth in Section 3.20(a)(ii) of the Seller Disclosure Letter, there areno claims of infringement, misappropriation or other violation of theIntellectual Property rights of a Third Party that are pending or, to Seller’Knowledge, will occur as a result of the continued operation of the Business aspresently conducted.

###  

### (d)                                 ToSellers’ Knowledge, no Business Intellectual Property is being infringed ormisappropriated by a Third Party.  Thereis no material claim or demand of any Third Party, or any Proceeding which ispending (with service of process having been served on any Seller) or, toSellers’ Knowledge, any basis for or threat of any material claim or demandthat (i) challenges the ownership rights in respect of any Owned IntellectualProperty, (ii) challenges the validity, enforceability or inventorship of theBusiness Intellectual Property or (iii) claims that any default exists underany Intellectual Property License.

###  

### (e)                                  ToSellers’ Knowledge, all of the Owned Intellectual Property (i) is enforceableand valid; (ii) has not been cancelled, expired or abandoned; and (iii) hasbeen duly prepared, filed, prosecuted, registered and, as applicable,maintained, including without limitation with respect to all duties of candorowed to the United States Patent and Trademark Office and any foreign patentoffice.  To Sellers’ Knowledge, none ofthe Business Intellectual Property that constitutes Registered IntellectualProperty is the subject of any reissue, reexamination, interference,opposition, cancellation, or similar proceeding.

###  

### (f)                                    TheAssets include all of the Intellectual Property used in the Business other thanany Intellectual Property which is used only incidentally in the Business andother than any Intellectual Property included in the Excluded Assets.

 

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## 3.21                           RELATED PARTY TRANSACTIONS

##  

Except as set forth in Section 3.21 of the SellerDisclosure Letter, no Seller or any of their respective Related Persons, nor,to Sellers’ Knowledge, any current director, officer or employee of any Selleror any their Related Persons, (a) has any direct or indirect interest (otherthan owning two percent (2%) or less of the equity interests of a publiclytraded entity without any control of management) (i) in, or is a director,officer or employee of, any Person that is a client, customer, supplier,lessor, lessee, debtor, creditor or competitor of the Business, or (ii) in anymaterial property, asset or right which is owned or used by any Seller in theconduct of the Business, or (b) is a party to any agreement or transaction withany Seller relating to the Business.

 

## 3.22                           BROKERS OR FINDERS

##  

Except for PPHB, L.P., no Seller has used any brokeror finder in connection with the transactions described in this Agreement, andneither Buyer nor any of its Related Persons shall have any liability orotherwise suffer or incur any loss or expense as a result of or in connectionwith any brokerage or finder’s fee or other commission of any Person retainedby any Seller or any of its Related Persons in connection with the ContemplatedTransactions.

 

## 3.23                           LETTERS OF CREDIT

##  

Section 3.23 of the Seller Disclosure Letter containsall guaranties, letters of credit or other similar performance assurances ofthe Business that benefit the customers or suppliers of the Business.

 

# 4.                                       Representationsand Warranties of Buyer and Buyer Entity

#  

Buyer (with respect to himself) and Buyer Entity (withrespect to itself) represent and warrant to Sellers as follows:

 

## 4.1                                 ORGANIZATION AND GOOD STANDING

##  

As of the Closing Date, Buyer Entity is an entity dulyorganized, validly existing and in good standing under the laws of the State ofDelaware, with full power and authority to own, operate and lease itsproperties and assets and to carry on its business in the places and in themanner currently conducted.

 

## 4.2                                 ENFORCEABILITY; AUTHORITY; NO CONFLICT

##  

### (a)                                  Asof the date hereof, Buyer has all requisite power and authority to enter intothis Agreement and the documents, to the extent required by this Agreement, tobe delivered by Buyer at the Closing and to perform his obligations hereunderand thereunder, including the Contemplated Transactions.  This Agreement has been duly executed anddelivered by Buyer and constitutes a legal, valid and binding obligation ofBuyer, enforceable against Buyer in accordance with its terms, except asenforceability may be limited by applicable bankruptcy, insolvency,reorganization, moratorium or similar laws from time to time in effect thataffect

 

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creditors’ rights generally and by legal and equitable limitations onthe availability of specific remedies. No further action is necessary on thepart of Buyer to execute and deliver this Agreement or to consummate theContemplated Transactions.

 

### (b)                                 Asof the Closing Date, Buyer Entity has all requisite power and authority to assumeBuyer’s obligations under this Agreement and to enter into the documents to bedelivered by it at the Closing and to perform its obligations hereunder andthereunder, including the Contemplated Transactions.  This Agreement has been duly executed and deliveredby Buyer Entity and constitutes a legal, valid and binding obligation of BuyerEntity, enforceable against Buyer Entity in accordance with its terms, exceptas enforceability may be limited by applicable bankruptcy, insolvency,reorganization, moratorium or similar laws from time to time in effect thataffect creditors’ rights generally and by legal and equitable limitations onthe availability of specific remedies. As of the Closing Date, this Agreementand the Contemplated Transactions have been duly authorized by all necessaryaction by Buyer Entity’s board of directors or comparable governing body.  No further corporate, shareholder or similaraction is necessary on the part of Buyer Entity to execute and deliver thisAgreement or to consummate the Contemplated Transactions.

###  

### (c)                                  Exceptas set forth in Section 4.2(c) of the Buyer Disclosure Letter, neither theexecution and delivery of this Agreement nor the consummation or performance ofany of the Contemplated Transactions will, directly or indirectly (with orwithout notice or lapse of time):

###  

#### (i)                                           Conflictwith or violate the constituent documents of Buyer Entity as of the ClosingDate;

####  

#### (ii)                                        Conflictwith, constitute a breach, violation or termination of any provision of, orgive rise to any right of termination, cancellation or acceleration, or loss ofany right or benefit or both, under any material Contract to which Buyer, BuyerEntity or any of their respective Affiliates is a party or to which any of themis bound; or

####  

#### (iii)                                     ToBuyer’s Knowledge, contravene, conflict with or result in a violation or breachof any Governmental Authorization, Legal Requirement or Order applicable toBuyer or, as of the Closing Date, Buyer Entity or to which Buyer or, as of theClosing Date, Buyer Entity may be subject.

####  

### (d)                                 Exceptas set forth in Section 4.2(d) of the Buyer Disclosure Letter, neither Buyernor Buyer Entity is required to give any notice to or obtain any Consent fromany Person in connection with the execution and delivery of this Agreement or theconsummation or performance of any of the Contemplated Transactions.

###  

### (e)                                  Asof the Closing Date, Buyer Entity has assumed all of the obligations of Buyerunder this Agreement, subject to the terms of Section 13.8.  Buyer Entity is controlled directly orindirectly by Buyer.

 

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## 4.3                                 CERTAIN PROCEEDINGS

##  

There is no pending or, to Buyer’s Knowledge,threatened Proceeding that challenges, or that may have the effect ofpreventing, delaying, making illegal or otherwise interfering with, any of theContemplated Transactions.  To Buyer’sKnowledge, no event has occurred or circumstance exists that is reasonablylikely to give rise to or serve as a basis for the commencement of any suchProceeding.

 

## 4.4                                 INVESTIGATION

##  

Buyer and, as of the Closing Date, Buyer Entity haveconducted their own independent review and analysis of the Business,operations, assets (including inventories), liabilities, results of operations,financial condition, software, technology, Business Intellectual Property andprospects of the Business and acknowledges that it has been provided access tothe personnel, properties, premises and records of the Business for suchpurpose.  In connection with Buyer’s andBuyer Entity’s respective investigation of the Business, Buyer and Buyer Entityhave received certain projections, forecasts, plans and other forward-lookinginformation with respect to the Business and acknowledges that there areuncertainties inherent in attempting to make such projections, forecasts andplans, that Buyer and Buyer Entity are familiar with such uncertainties andthat Buyer and Buyer Entity are taking full responsibility for making their ownevaluation of the adequacy and accuracy of all projections, forecasts, plans andother forward-looking information so furnished to it (including thereasonableness of the assumptions underlying such projections, forecasts, plansand other forward-looking information). In entering into or, in the case of Buyer Entity, assuming Buyer’s obligationsunder, this Agreement, each of Buyer and, as of the Closing Date, Buyer Entityacknowledges that each such Person has received offering and other marketingmaterials, but that each such Person is a sophisticated and experienced buyerin transactions similar to the Contemplated Transactions and has relied solelyupon its own investigation and analysis and the specific representations andwarranties of Sellers set forth in this Agreement.

 

## 4.5                                 BROKERS OR FINDERS

##  

Neither Buyer nor, as of the Closing Date, BuyerEntity has used any broker or finder in connection with the transactionsdescribed in this Agreement, and neither Seller nor any of its Related Personsshall have any liability or otherwise suffer or incur any loss or expense as aresult of or in connection with any brokerage or finder’s fee or othercommission of any Person retained by Buyer, Buyer Entity or any of theirrespective Related Persons in connection with the Contemplated Transactions.

 

# 5.                                       Covenantsof Buyer and Sellers Prior to Closing

#  

## 5.1                                 REQUIRED APPROVALS

##  

### (a)                                  Subjectto the terms and conditions of this Agreement, the parties hereto agree to useall reasonable efforts to take, or cause to be taken, all action and to do, orcause to be done, all things necessary, proper or advisable under LegalRequirements to consummate and

 

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### make effective the Contemplated Transactions,including cooperating fully with the other parties, including by provision ofinformation and making of all necessary filings in connection with, among otherthings, the HSR Act.  The parties heretoshall cooperate to cause to be filed as promptly as practicable, but no laterthan ten calendar days, following the execution of this Agreement, with theFederal Trade Commission and the Department of Justice the notification andreport form required under the HSR Act for the Contemplated Transactions and toseek early termination of the waiting period thereunder, and shall usereasonable efforts to provide any supplemental information that may bereasonably requested in connection with those filings (it being understood thatthe filing fee shall be borne by Buyer).

###  

### (b)                                 Buyerand Sellers shall make as promptly as practicable following the date of thisAgreement the other notifications required in connection with this Agreementand the Contemplated Transactions, and shall use commercially reasonableefforts to obtain the Consents of all Third Parties required in connection withthe consummation of the Contemplated Transactions.  Subject to Legal Requirements, Buyer andSellers shall coordinate and cooperate in exchanging information and assistancein connection with obtaining Consents of Third Parties and making all filingsor notifications necessary to transfer any Governmental Authorizations toBuyer, or in connection with any applications for new GovernmentalAuthorizations relating to or used in the operation of the Business.

###  

## 5.2                                 NOTIFICATION

##  

Between the date of this Agreement and the Closing,Buyer shall give prompt notice to Sellers, and Sellers shall give prompt noticeto Buyer, of (i) the occurrence, or non-occurrence, of any event theoccurrence, or non-occurrence, of which would be reasonably likely to cause (x)any representation or warranty of such party contained in this Agreement to beuntrue or inaccurate or (y) any covenant, condition or agreement of such partycontained in this Agreement not to be complied with or satisfied; or (ii) thefailure by it to comply with or satisfy in any material respect any covenant,condition or agreement to be complied with or satisfied by it under thisAgreement.

 

## 5.3                                 COMMERCIALLY REASONABLE EFFORTS

##  

Buyer and Sellers shall use their commerciallyreasonable efforts to cause the conditions in Articles 7 and 8 to be satisfied.

 

## 5.4                                 BULK SALES LAWS

##  

Buyer and Sellers hereby waive compliance with thebulk-transfer provisions of the Uniform Commercial Code (or any similar law) (“BulkSales Laws”) in connection with the Contemplated Transactions.

 

## 5.5                                 LETTERS OF CREDIT

##  

From and after the Closing, to the extent that anyguaranty, letter of credit or other performance assurance set forth in Section3.23 of the Seller Disclosure Letter is drawn upon or otherwise results in anyLiability to Sellers, Buyer shall promptly reimburse Sellers following the

 

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receipt of an invoice therefor; provided, that Buyer shall make suchreimbursement no later than ten (10) Business Days following receipt of suchinvoice.  All amounts due under this Section5.5 that are not paid on or before the due date shall bear interest at the rateof ten percent (10%) per annum.  Buyershall not have any right to setoff any amounts due and payable to Sellers underthis Section 5.5 against any other payments to be made pursuant to thisAgreement or otherwise.  Nothing in thisSection 5.5 shall be deemed to affect Buyer’s rights under Article 11.

 

## 5.6                                 UPDATING

##  

Sellers may from time to time notify Buyer of anychanges or additions to the Seller Disclosure Letter and Buyer may from time totime notify Sellers of any changes or additions to the Buyer Disclosure Letterby the delivery of amendments or supplements thereto, if any, as of areasonably current date prior to the Closing, but each party shall in any eventat least once not earlier than ten (10) Business Days or later than three (3)Business Days prior thereto so notify the other party; provided, however, thatsuch delivery shall not affect any rights of Buyer under this Agreement, unlessthe updated disclosure would cause Buyer to have the right of termination underSection 9.1(b) and Buyer does not exercise such right of termination underSection 9.1(b) and the Closing occurs, in which case any such supplement orsupplements shall be deemed to become a part of the Seller Disclosure Letter asof the date of this Agreement.

 

# 6.                                       Covenantsof Sellers Prior to Closing

#  

## 6.1                                 ACCESS AND INVESTIGATION

##  

Between the date of this Agreement and the ClosingDate, and upon reasonable advance notice received from Buyer, each Seller shall(a) afford Buyer and its Representatives (collectively, “Buyer Group”) access,during regular business hours, to Sellers’ personnel, properties, SellerContracts, Governmental Authorizations, books and Records and other documentsand data related to the Business and Assets, such rights of access to beexercised in a manner that does not unreasonably interfere with the operationsof Sellers; (b) furnish Buyer Group with copies of all such Seller Contracts,Governmental Authorizations, books and Records and other existing documents anddata related to the Business and Assets as Buyer may reasonably request; (c)furnish Buyer Group with such additional financial, operating and otherrelevant data and information regarding the Business and Assets as Buyer mayreasonably request; and (d) otherwise cooperate and assist, to the extentreasonably requested by Buyer, with Buyer’s investigation of the properties,assets and financial condition related to the Business and Assets. In addition,Buyer shall have the right to have the Business Property and Tangible PersonalProperty inspected by Buyer Group, at Buyer’s sole cost and expense, forpurposes of determining the physical condition and legal characteristics of theBusiness Property and Tangible Personal Property.  Upon notice to Sellers, Buyer shall have theright to conduct an environmental assessment of the Assets; provided that suchenvironmental assessment shall not unreasonably interfere with normal operationof the Assets.  Buyer shall not, however,be permitted to conduct any sampling, boring, drilling or other invasiveinvestigative activity with respect to the Assets.  Each Seller shall have the right to bepresent during any environmental assessment of the Assets.  Buyer shall maintain, and shall cause itsofficers, employees, Representatives, consultants and advisors to maintain, allinformation obtained by Buyer

 

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pursuant to any environmental assessment or other due diligenceactivity as strictly confidential, unless disclosure of any facts discoveredthrough such environmental assessment is required under any EnvironmentalLaws.  In the event that any necessarydisclosures under applicable Environmental Laws are required with respect tomatters discovered by any environmental assessment conducted by, for or onbehalf of Buyer, Buyer agrees that Sellers shall be the responsible parties fordisclosing such matters to the appropriate Governmental Bodies, unless Buyer isrequired by Legal Requirement to make such disclosure, in which case Buyershall so notify Sellers and allow Sellers a reasonable time to prepare suchdisclosure.

 

## 6.2                                 OPERATION OF THE BUSINESS

##  

Between the date of this Agreement and the Closing,with respect to the Business and Assets, unless Buyer otherwise consents inwriting, each Seller shall:

 

### (a)                                  conductthe Business only in the ordinary course of the Business consistent with pastpractices or reasonable future expectations;

###  

### (b)                                 withoutmaking any commitment on Buyer’s behalf, use its commercially reasonableefforts to, in all material respects, preserve intact the current Businessorganization, keep available the services of its employees and agents andmaintain its relations and goodwill with suppliers, customers, landlords, creditors,employees, agents and others having business relationships with it;

###  

### (c)                                  exceptfor cause, make no material changes in management personnel of the Business;

###  

### (d)                                 nothire any management personnel of the Business, make any changes to any SellerBenefit Plan affecting the Affected Employees, or increase the wages, salariesor benefits of any Affected Employee, other than in the ordinary course ofbusiness;

###  

### (e)                                  maintainthe Assets in a state of repair and condition that complies with LegalRequirements, is consistent with the requirements and normal conduct of theBusiness and consistent with the recent normal and routine maintenance scheduleperformed by Sellers;

###  

### (f)                                    useits commercially reasonable efforts to keep in full force and effect, without amendment,all material rights relating to the Business;

###  

### (g)                                 complywith all Legal Requirements and use its commercially reasonable efforts tocomply with all contractual obligations applicable to the operations of theBusiness;

###  

### (h)                                 continuein full force and effect the insurance coverage under the policies set forth inSection 3.18(a) of the Seller Disclosure Letter or substantially equivalentpolicies;

###  

### (i)                                     notenter into a Seller Contract or Bid described in Section 3.17(a) or relating toBusiness Intellectual Property other than in the ordinary course of business;

 

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### (j)                                     notdispose of or permit to lapse any rights to the use of any BusinessIntellectual Property or permit any Governmental Authorization to expire; and

###  

### (k)                                  maintainall books and Records of Sellers relating to the Business in the ordinarycourse of the Business consistent with past practices.

###  

## 6.3                                 NEGATIVE COVENANT

##  

Except as otherwise expressly permitted herein,between the date of this Agreement and the Closing Date, each Seller shall not,without the prior written Consent of Buyer, (a) take any affirmative action, orfail to take any reasonable action within its control, as a result of which anyof the changes or events listed in Section 3.16 would occur or be reasonablylikely to occur; or (b) make any modification to any material Seller Contractor Governmental Authorization.

 

## 6.4                                 TAX CLEARANCE CERTIFICATES

##  

Promptly after the date hereof, Sellers shall applyfor tax clearance certificates from the State of Texas related to the state orlocal sales or use Taxes with respect to the Business.

 

# 7.                                       ConditionsPrecedent to Buyer’s Obligation to Close

#  

Buyer’s obligation to purchase the Assets and to takethe other actions required to be taken by Buyer at the Closing is subject tothe satisfaction, at or prior to the Closing, of each of the followingconditions (any of which may be waived by Buyer, in whole or in part):

 

## 7.1                                 ACCURACY OF REPRESENTATIONS; SELLERS’ PERFORMANCE

##  

The representations and warranties of each Seller setforth in this Agreement will be, if qualified by materiality, true and correctin all respects, and if not so qualified, shall be true and correct in allmaterial respects (without giving effect to any supplement to the SellerDisclosure Letter not approved in writing by Buyer), as of the Closing Date asthough made on and as of the Closing Date (except to the extent suchrepresentations and warranties speak as of an earlier date).  Each of the agreements and covenants ofSellers to be performed and complied with by Sellers pursuant to this Agreementprior to or as of the Closing Date will have been duly performed and compliedwith in all material respects.  EachSeller shall have delivered to Buyer a certificate signed by one of its dulyauthorized officers, dated the Closing Date, certifying, as of such date, (i)that all representations and warranties (individually and collectively) ofSellers in Article 3 are, if qualified by materiality, true and correct in allrespects, and if not so qualified, true and correct in all material respectsand (ii) that Sellers have performed and complied in all material respects withall covenants and agreements (individually and collectively) contained in thisAgreement required to be performed and complied with by them at or prior to theClosing Date.

 

## 7.2                                 HSR ACT

##  

The waiting period under the HSR Act shall haveexpired or been terminated.

 

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## 7.3                                 ADDITIONAL DOCUMENTS

##  

Each Seller shall have caused the documents andinstruments required by Section 2.9(a) and the following documents to bedelivered (or tendered subject only to Closing) to Buyer:

 

### (a)           Thearticles of incorporation, as amended (in the case of the Parent), orcertificate of incorporation, as amended (in the case of SSPS, SDDA and SPI),or deed of trust (in the case of S&S Trust), duly certified as of a recentdate by the Secretary of State of the State of Texas or Delaware, as applicable,or the Secretary of the Commonwealth of the Commonwealth of Pennsylvania;

###  

### (b)           Releasesof all Encumbrances on the Assets, other than Permitted Encumbrances;

###  

### (c)           Such otherdocuments as Buyer may reasonably request for the purpose of:

###  

#### (i)                                           evidencingthe accuracy of any of Seller’s representations and warranties;

####  

#### (ii)                                        evidencingthe performance by any Seller of, or the compliance by any Seller with, anycovenant or obligation required to be performed or complied with by suchSeller; or

####  

#### (iii)                                     evidencingthe satisfaction of any condition referred to in this Article 7.

####  

## 7.4                                 NO PROCEEDINGS

##  

There shall not be any Proceeding pending orthreatened against any Seller (other than by or at the direction of Buyer orany of its Affiliates) or Buyer or against any Related Person of any such party(a) involving any challenge to, or seeking Damages or other relief inconnection with, any of the Contemplated Transactions or (b) that may have theeffect of preventing, delaying, making illegal, imposing limitations orconditions on or otherwise interfering with any of the ContemplatedTransactions.

 

## 7.5                                 NO CONFLICT

##  

Neither the consummation nor the performance of any ofthe Contemplated Transactions will, directly or indirectly (with or withoutnotice or lapse of time), contravene or conflict with or result in a violationof or cause Buyer or any Related Person of Buyer to suffer any material adverseconsequence under (a) any applicable Legal Requirement or Order or (b) anyLegal Requirement or Order that has been published, introduced or otherwiseproposed by or before any Governmental Body, excluding Bulk Sales Laws.

 

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# 8.                                       ConditionsPrecedent to each Seller’s Obligation to Close

#  

Each Seller’s obligation to sell the Assets and totake the other actions required to be taken by such Seller at the Closing issubject to the satisfaction, at or prior to the Closing, of each of thefollowing conditions (any of which may be waived by such Seller in whole or inpart):

 

## 8.1                                 ACCURACY OF REPRESENTATIONS; BUYER’S PERFORMANCE

##  

The representations and warranties of Buyer set forthin this Agreement will be, if qualified by materiality, true and correct in allrespects, and if not so qualified, shall be true and correct in all materialrespects (without giving effect to any supplement to the Buyer DisclosureLetter not approved in writing by Seller), as of the Closing Date as thoughmade on and as of the Closing Date (except to the extent such representationsand warranties speak as of an earlier date). Each of the agreements and covenants of Buyer to be performed andcomplied with by Buyer pursuant to this Agreement prior to or as of the ClosingDate will have been duly performed and complied with in all materialrespects.  Buyer shall have delivered toSellers a certificate signed by one of its duly authorized officers, dated theClosing Date, certifying, as of such date (i) that all representations andwarranties (individually and collectively) of Buyer are, if qualified by materiality,true and correct in all respects, and if not so qualified, true and correct inall material respects and (ii) Buyer has performed and complied in all materialrespects with all covenants and agreements (individually and collectively)contained in this Agreement required to be performed and complied with by it ator prior to the Closing Date.

 

## 8.2                                 HSR ACT

##  

The waiting period under the HSR Act shall haveexpired or been terminated.

 

## 8.3                                 ADDITIONAL DOCUMENTS

##  

Buyer shall have caused the documents and instrumentsrequired by Section 2.9(b) and the following documents to be delivered (ortendered subject only to Closing) to each Seller:

 

### (a)           TheCertificate of Incorporation and all amendments thereto of Buyer, dulycertified as of a recent date by the Secretary of State of the State ofDelaware;

###  

### (b)           Such otherdocuments as any Seller may reasonably request for the purpose of:

###  

#### (i)                                           evidencingthe accuracy of any of Buyer’s representations and warranties;

####  

#### (ii)                                        evidencingthe performance by Buyer of, or the compliance by Buyer with, any covenant orobligation required to be performed or complied with by Buyer; or

####  

#### (iii)                                     evidencingthe satisfaction of any condition referred to in this Article 8.

 

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## 8.4                                 NO PROCEEDINGS

##  

There shall not be any Proceeding pending orthreatened against any Seller or Buyer (other than by or at the direction ofSellers and their Affiliates) or against any Related Person of such Seller (a)involving any challenge to, or seeking Damages or other relief in connectionwith, any of the Contemplated Transactions or (b) that may have the effect ofpreventing, delaying, making illegal, imposing limitations or conditions on orotherwise interfering with any of the Contemplated Transactions.

 

## 8.5                                 NO CONFLICT

##  

Neither the consummation nor the performance of any ofthe Contemplated Transactions will, directly or indirectly (with or withoutnotice or lapse of time), contravene or conflict with or result in a violationof or cause any Seller or any Related Person of such Seller to suffer anymaterial adverse consequence under (a) any applicable Legal Requirement orOrder or (b) any Legal Requirement or Order that has been published, introducedor otherwise proposed by or before any Governmental Body, excluding Bulk SalesLaws.

 

# 9.             Termination

#  

## 9.1                                 TERMINATION EVENTS

##  

By notice given prior to or at the Closing, subject toSection 9.2, this Agreement may be terminated as follows:

 

### (a)                                  bymutual written agreement of Buyer and Parent (each, a “Representative Party”);

###  

### (b)                                 byeither Representative Party (provided that neither the terminatingRepresentative Party nor any of its Affiliates is then in material breach ofany representation, warranty, covenant, or other agreement contained in thisAgreement) in the event of a material breach by the other Representative Partyor a party Affiliated with the other Representative Party of any representationor warranty contained in this Agreement which cannot be or has not been curedwithin thirty (30) days after the giving of written notice to otherRepresentative Party of such breach and which breach is reasonably likely, inthe opinion of the terminating Representative Party, to permit suchRepresentative Party to refuse to consummate the transactions contemplated bythis Agreement in accordance with the terms hereof;

###  

### (c)                                  byeither Representative Party (provided that neither the terminatingRepresentative Party nor any of its Affiliates is then in material breach ofany representation, warranty, covenant, or other agreement contained in thisAgreement) in the event of a material breach by the other Representative Partyor a party Affiliated with the other Representative Party of any covenant oragreement contained in this Agreement which cannot be or has not been curedwithin ten (10) days after the giving of written notice to other RepresentativeParty of such breach and which breach is reasonably likely, in the opinion ofthe terminating Representative Party, to permit such Representative Party torefuse to consummate the transactions contemplated by this Agreement inaccordance with the terms hereof;

 

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### (d)                                 byeither Representative Party in the event (i) any Consent of any GovernmentalBody required for consummation of the transactions contemplated hereby shallhave been denied by final nonappealable action of such authority or if anyaction taken by such authority is not appealed within the time limit for appealor (ii) the consummation of such transactions shall have been permanently andrestrained, enjoined or otherwise prohibited by force of law; or

###  

### (e)                                  byeither Representative Party in the event that the Closing shall not have beenconsummated by December 31, 2005 (the “Termination Date”); provided that thefailure to consummate the transactions contemplated hereby on or before suchdate shall not have been caused by any breach of this Agreement by theRepresentative Party electing to terminate pursuant to this Section 9.1(e) oran Affiliate of such Representative Party.

###  

## 9.2                                 EFFECT OF TERMINATION

##  

Each party’s right of termination under Section 9.1 isin addition to any other rights it may have under this Agreement or otherwise,and the exercise of such right of termination will not be an election ofremedies. If this Agreement is terminated pursuant to Section 9.1, allobligations of the parties under this Agreement will terminate, except that theobligations of the parties in this Section 9.2, Sections 13.1 (Expenses), 13.2(Public Announcements), 13.3 (Notices), 13.4 (Dispute Resolution), and Articles11 (Indemnification; Remedies) and 12 (Confidentiality) will survive, provided,however, that, if this Agreement is terminated because of a breach ofthis Agreement by the nonterminating party or because one or more of theconditions to the terminating party’s obligations under this Agreement is notsatisfied as a result of the nonterminating party’s failure to comply with itsobligations under this Agreement, the terminating party’s right to pursue alllegal remedies will survive such termination unimpaired.

 

# 10.                                 AdditionalCovenants

#  

## 10.1                           EMPLOYEES AND EMPLOYEE BENEFITS

##  

### (a)                                  Asof the Closing Date, Sellers shall terminate the employment of all of theAffected Employees (other than those who are on short-term disabilityleave).  As soon as practicable after thedate of this Agreement, Buyer shall offer employment, effective as of theEffective Time, to all persons who are or will be Affected Employees on the dayimmediately preceding the Closing Date (other than those on short-termdisability leave).  Each AffectedEmployee who accepts any such offer of employment shall be referred to in thisAgreement as a “Transferred Employee.” The offer of employment, including wages, salaries and benefits, shallbe, in the aggregate, substantially comparable, but excluding for this purposeTransaction Bonuses, with the terms and conditions under which the TransferredEmployees were employed immediately before the Closing Date.  Any Affected Employee who is on short-termdisability leave as of the Closing Date shall remain employed by Sellersthrough the Affected Employee’s short-term disability leave; provided, however,that if he or she recovers from his or her disability within the period of hisor her short-term disability leave or the six-month period following theClosing Date (whichever is shorter), Buyer shall at that time make an offer of

 

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employment to him or her on the same employment terms and conditions asare applicable to similarly situated Transferred Employees, subject to theproviso above.

###  

### (b)                                 Sellersshall be responsible for the payment of all wages and other remunerationaccruing to any Affected Employee prior to the time any such Affected Employeebecame a Transferred Employee, except to the extent the liability therefor isreflected as a liability on the Closing Balance Sheet.

###  

### (c)                                  Sellersshall be liable for all claims made by Affected Employees and theirbeneficiaries under and all other liabilities of the Seller Benefit Plans.

###  

### (d)                                 Coveragefor Transferred Employees under all “employee welfare benefit plans,” asdefined in Section 3(1) of ERISA, maintained by Sellers shall cease as of theEffective Time.  Sellers shall be solelyresponsible for any continuation coverage required by COBRA for those AffectedEmployees of Sellers who are not Transferred Employees.  Buyer shall waive all pre-existingconditions, limitations or exclusions and waiting periods for the TransferredEmployees under all employee welfare benefit plans and fringe benefit programsof Buyer, including vacation, bonus and other incentive programs maintained byBuyer.

###  

### (e)                                  Sellersshall retain all assets in the pension and retirement funds of Sellers, andshall distribute pension and retirement benefits that the Transferred Employeesshall become entitled to receive from Sellers in accordance with the applicableplan document and the Transferred Employees’ elections, as applicable; provided,however, that effective as of the Effective Time, to the extent requiredby Legal Requirement, Sellers shall amend the Stewart & Stevenson Services,Inc. Defined Benefit Pension Plan and any other Seller Benefit Plan that is a “pensionplan,” as defined in Section 3(2) of ERISA, to provide that each TransferredEmployee’s benefit that has accrued as of the Closing Date is fully vested andnonforfeitable as of the Closing Date.

###  

### (f)                                    Effectiveas of the Closing Date (or as to employees on short-term disability leave onthe Closing Date, as of the date of employment by Buyer), Buyer shall take suchactions as are necessary to grant past service credit for all the TransferredEmployees for purposes of determining vesting, eligibility and benefit accrualsunder all Buyer’s employee benefit programs in which Transferred Employees areeligible to participate, including employee retirement plans, severance,vacation, bonus, incentive compensation and employee welfare benefit plans ofBuyer equal to that which such Transferred Employees were credited with bySellers as of the Closing Date for service with Sellers and their current andformer ERISA Affiliates, but excluding benefit accruals for Buyer’s definedbenefit pension and post-retirement medical benefit plans.

###  

### (g)                                 Withrespect to events following the Closing, Buyer shall be responsible for sendingtimely and appropriate notices to all Transferred Employees required under allapplicable Legal Requirements relating to plant or facility closings orotherwise regulating the termination of employees.  To the extent that any liability is incurredunder any such Legal Requirements based on Buyer’s failure to comply withSection 10.1(a) or Buyer’s actions after

 

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the Closing, Buyer will be solely and exclusively responsible for allobligations and liabilities incurred under such Legal Requirements relating tothe Contemplated Transactions.

###  

### (h)                                 Sellersshall make available to Buyer records which provide information regardingemployees’ names, Social Security numbers, dates of hire by Sellers, date ofbirth, number of hours worked each calendar year, attendance and salaryhistories for all Transferred Employees. Sellers shall not provide records to the extent prohibited by anyapplicable Legal Requirement, including the Health Insurance Portability andAccountability Act of 1996.

###  

## 10.2                           NONSOLICITATION

##  

### (a)                                  Untilthe date three (3) years after the Closing Date, no Seller shall (and eachSeller shall cause its Affiliates not to), without the prior written consent ofBuyer, directly or indirectly, knowingly hire, retain or attempt to hire orretain any employee or contract employee of Buyer or interfere with therelationship or prospective employment relationship between Buyer and anyAffected Employee, or any of Buyer’s employees or contract employees; provided,however, that such Seller shall not be prohibited from hiring, retainingor attempting to hire or retain any person who responds to a generalsolicitation or advertisement.

###  

### (b)                                 Untilthe date three (3) years after the Closing Date, Buyer shall not (and Buyershall cause its Affiliates not to), without the prior written consent ofSellers, directly or indirectly, knowingly hire, retain or attempt to hire orretain any employee or contract employee of any Seller or interfere with therelationship between any Seller and any of its employees or contract employees;provided, however, that Buyer shall not be prohibited fromhiring, retaining or attempting to hire or retain any person who responds to ageneral solicitation or advertisement.

###  

## 10.3                           CUSTOMER AND OTHER BUSINESS RELATIONSHIPS

##  

For a period of ninety (90) days after the Closing,each Seller will cooperate with Buyer on a commercially reasonable basis atBuyer’s sole cost in its efforts to continue and maintain for the benefit ofBuyer those business relationships of such Seller existing prior to the Closingand relating to the Business after the Closing, including relationships withlessors, employees, regulatory authorities, licensors, customers, suppliers andothers.

 

## 10.4                           RETENTION OF AND ACCESS TO RECORDS

##  

### (a)                                  Forthe greater of five years from the Closing Date and any period as may berequired by any statute, regulation or Governmental Body or any then pendinglitigation, Buyer shall maintain in the same manner that it currently maintainsits business records and files the business records and files of Sellers thatare transferred to Buyer in connection herewith, and in anticipation of, orpreparation for, existing or future Proceeding or any Tax audit in which Sellersor any of its Affiliates is involved and which is related to the Business orthe Assets, permit Sellers and their Representatives reasonable access to suchrecords and files during regular business hours and upon reasonable notice atBuyer’s principal places of business or at any location where the records arestored; provided, however, that (i) any access shall be had ordone in a manner so as not to interfere with the normal conduct of the Businessand (ii) Buyer

 

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shall not be required to provide access to any confidential record orrecords, the disclosure of which would violate any governmental statute orregulation or applicable confidentiality agreement with any Person.  Buyer shall notify Parent in writing at leastten days prior to any destruction of such transferred records and files priorto the end of the period referenced in the preceding sentence, and at Parent’soption, deliver such records and files to Parent.

###  

### (b)                                 Uponreasonable request therefor by Buyer, Sellers shall deliver to Buyer copies ofany original Business Records not delivered to Buyer at the Closing as promptlyas reasonably possible at Sellers’ sole cost and expense.  Further, for a period of five (5) years fromthe Closing, Sellers (i) shall maintain, and shall cause their Affiliates tomaintain, at Sellers’ sole cost and expense, those Business Records notdelivered to Buyer at the Closing and (b) shall not (and shall cause each ofits Affiliates not to) destroy any such Business Records without firstnotifying Buyer in writing at least 30 days in advance of such destruction andgiving Buyer the opportunity to take possession of such Business Records.

###  

## 10.5                           FURTHER ASSURANCES

##  

The parties shall cooperate reasonably with each otherand with their respective Representatives in connection with any steps requiredto be taken as part of their respective obligations under this Agreement, andshall (a) furnish upon request to each other such further information; (b)execute and deliver to each other such other documents; and (c) do such otheracts and things, all as the other party may reasonably request for the purposeof carrying out the intent of this Agreement and the Contemplated Transactions.

 

## 10.6                           PROVISIONS RELATING TO CERTAIN ASSETS

##  

### (a)                                  Tothe extent that a Seller Contract or Governmental Authorization is not capableof being sold, assigned, transferred, subcontracted or conveyed without theapproval, consent or waiver of the issuer thereof or the other party thereto,or any Third Party (including a Governmental Body), and such approval, consentor waiver has not been obtained prior to the Closing, or if such sale,assignment, transfer or conveyance or attempted sale, assignment, transfer orconveyance would constitute a breach thereof or a violation of any LegalRequirement, neither this Agreement nor any other Transaction Agreement shallconstitute a sale, assignment, transfer or conveyance thereof, or an attemptedsale, assignment, transfer or conveyance thereof.

###  

### (b)                                 Anythingin this Agreement to the contrary notwithstanding, a Seller is not obligated tosell, assign, transfer or convey to Buyer any of its rights or obligations inor to any of the Seller Contracts or Governmental Authorizations without firstobtaining all necessary approvals, consents or waivers; provided, however,that the foregoing shall not limit Sellers’ liability for a breach of Section3.14 or Section 5.1.  Buyer and Sellersshall cooperate with each other to obtain all approvals, consents or waiversnecessary to convey to Buyer each such Seller Contract or GovernmentalAuthorization, as soon as practicable; provided, however, thatneither such Seller nor Buyer shall be obligated to offer or pay anyconsideration or concession therefor to the Third Party from whom suchapproval, consent or waiver is requested. Other than the Consents set forth on Exhibit 7.2, the failure by anySeller to obtain any such approval, consent

 

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or waiver necessary to convey any Seller Contract or GovernmentalAuthorization to Buyer shall not affect the obligations of the parties to closehereunder; provided that such Seller uses commercially reasonable efforts tocause the economic benefit of each Seller Contract to be furnished to Buyer.

###  

### (c)                                  Tothe extent any of the approvals, consents or waivers necessary to convey anySeller Contract or Governmental Authorization to Buyer have not been obtainedby any Seller as of the Closing or to the extent any Seller Contract orGovernmental Authorization cannot be transferred to Buyer by the Closing, thenBuyer and such Seller shall enter into a Subcontract with respect to any suchSeller Contract, and such Seller shall, during the remaining term of suchSeller Contract or Governmental Authorization, use commercially reasonableefforts, to (i) at the request of Buyer, cooperate with Buyer to obtain theconsent of any such Third Party; provided, however, that neither such Seller nor Buyer shall be obligated tooffer or pay any consideration to any Person, (ii) at the request of Buyer,cooperate with Buyer in any reasonable and lawful arrangements designed toprovide the benefits of such Seller Contract or Governmental Authorization toBuyer, (iii) as it pertains to Seller Contracts, enforce, at the request ofBuyer and at the expense and for the account of Buyer, any rights of suchSeller arising from such Seller Contract against the issuer thereof or theother party or parties thereto (including the rights to elect to terminate anysuch Seller Contract in accordance with the terms thereof upon the request ofBuyer); and (iv) as it pertains to Governmental Authorization, at the requestand expense of Buyer, apply for any necessary renewals or extensionsthereof.  To the extent that any Sellerenters into lawful arrangements satisfactory to Buyer in its sole discretiondesigned to provide the benefits of any such Seller Contract or GovernmentalAuthorization to Buyer as set forth in clauses (i) through (iv) above, suchSeller Contract or Governmental Authorization shall be deemed to have beenconveyed to Buyer for the purposes of this Agreement.

###  

## 10.7                           SUPPORT

##  

### (a)                                  Fromand after the Closing, in the event and for so long as any Seller actively iscontesting or defending against any action, suit, proceeding, hearing,investigation, charge, complaint, claim, or demand in connection with (i) anytransaction contemplated under this Agreement or (ii) any fact, situation,circumstances, status, condition, activity, practice, plan, occurrence, event,incident, action, failure to act, or transaction relating to the Business(including during such period prior to Closing), Buyer will cooperatereasonably with Sellers and Sellers’ counsel in the contest or defense, makeavailable their personnel, and provide such testimony and access to their booksand records as shall be reasonably requested in connection with the contest ordefense, all at the reasonable out-of-pocket expense of Sellers (unless Sellersare entitled to indemnification therefor hereunder).  This Section 10.7 is not intended to alterapplicable discovery procedures in connection with any litigation between oramong the parties hereto.

###  

### (b)                                 Fromand after Closing, Buyer will cooperate reasonably with Sellers and Sellers’counsel, make available their personnel, assist in preparing and makingfilings, and provide such access to their books and records as shall bereasonably requested in connection with the closing, termination,de-registration or other activities associated with Sellers’ closing of

 

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the foreign branches or offices of the Business that are registered orotherwise held in the name of or on behalf of any Seller or its Affiliates.

###  

## 10.8                           BUYER ACKNOWLEDGMENT

##  

Buyer acknowledges and understands that, except to theextent expressly set forth in the Transition Services Agreement and the SupplyAgreement, benefits that the Business realizes as a result of arrangements thatParent and its Subsidiaries have with third parties will not be available toBuyer after the Closing Date.

 

# 11.                                 Indemnification;Remedies

#  

## 11.1                           SURVIVAL

##  

All representations, warranties, covenants andobligations in this Agreement, the Seller Disclosure Letter, the amendment(s)or supplement(s) to the Seller Disclosure Letter, the Buyer Disclosure Letter,the certificates delivered pursuant to Section 2.9 and any other certificate ordocument delivered pursuant to this Agreement shall survive the Closing and theconsummation of the Contemplated Transactions, subject to Section 11.6. Thewaiver of any condition based upon the accuracy of any representation orwarranty, or on the performance of or compliance with any covenant orobligation, will not affect the right to indemnification, reimbursement orother remedy based upon such representations, warranties, covenants andobligations.

 

## 11.2                           INDEMNIFICATION AND REIMBURSEMENT BY SELLERS

##  

Sellers will jointly and severally indemnify, defendand hold harmless Buyer, and its Representatives, shareholders, subsidiariesand Related Persons (collectively, the “Buyer Indemnitees”), and will reimburseBuyer Indemnitees for any loss, Liability, claim, damage, expense (includingcosts of investigation and defense and reasonable attorneys’ fees andexpenses), whether or not involving a Third Party Claim (collectively, “Damages”),arising from or in connection with:

 

### (a)                                  anybreach of any representation or warranty made by such Seller in (i) thisAgreement, (ii) the Seller Disclosure Letter, (iii) the amendment(s) orsupplement(s) to the Seller Disclosure Letter, (iv) the certificate deliveredpursuant to Section 2.9(a)(ix), (v) any transfer instrument or (vi) any othercertificate, document, writing or instrument delivered by such Seller pursuantto this Agreement;

###  

### (b)                                 anybreach of any covenant or obligation of such Seller in this Agreement or in anyother certificate, document, writing or instrument delivered by such Sellerpursuant to this Agreement;

###  

### (c)                                  ifthe Closing occurs, any Liability arising out of the ownership or operation ofthe Assets prior to the Effective Time, except to the extent such Liabilityarises out of or relates to an Assumed Liability;

 

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### (d)                                 ifthe Closing occurs, any brokerage or finder’s fees or commissions or similarpayments based upon any agreement or understanding made, or alleged to havebeen made, by any Person with such Seller (or any Person acting on such Seller’sbehalf) in connection with any of the Contemplated Transactions;

###  

### (e)                                  ifthe Closing occurs, any Seller Benefit Plan; or

###  

### (f)                                    ifthe Closing occurs, any Retained Liabilities.

###  

## 11.3                           INDEMNIFICATION AND REIMBURSEMENT BY BUYER

##  

Buyer will indemnify, defend and hold harmlessSellers, and their Representatives, shareholders, subsidiaries and RelatedPersons (collectively, the “Seller Indemnitees”), and will reimburse SellerIndemnitees for any Damages arising from or in connection with:

 

### (a)                                  anybreach of any representation or warranty made by Buyer or Buyer Entity in (i)this Agreement, (ii) Buyer Disclosure Letter, (iii) the amendment(s) orsupplement(s) to the Buyer Disclosure Letter, (iv) the certificate deliveredpursuant to Section 2.9(b)(viii), (v) any transfer instrument or (vi) any othercertificate, document, writing or instrument delivered by Buyer pursuant tothis Agreement;

###  

### (b)                                 anybreach of any covenant or obligation of Buyer in this Agreement or in any othercertificate, document, writing or instrument delivered by Buyer pursuant tothis Agreement;

###  

### (c)                                  ifthe Closing occurs, any Liability arising out of the ownership or operation ofthe Business or Assets following the Effective Time except to the extent suchLiability constitutes a Retained Liability;

###  

### (d)                                 ifthe Closing occurs, any brokerage or finder’s fees or commissions or similarpayments based upon any agreement or understanding made, or alleged to havebeen made, by any Person with Buyer (or any Person acting on Buyer’s behalf) inconnection with any of the Contemplated Transactions;

###  

### (e)                                  ifthe Closing occurs, any Assumed Liabilities; or

###  

### (f)                                    ifthe Closing occurs, except with respect to any Proceeding arising out of orrelating to the Liabilities retained pursuant to Section 2.4(b)(iii), anyLiability arising out of any Proceeding (including the obligation to handlesuch Proceeding) commenced after the Effective Time and arising out of orrelating to any occurrence or event happening at or after the Effective Time.

###  

## 11.4                           LIMITATIONS ON AMOUNT — SELLERS

##  

From and after the Closing, Sellers shall have noliability (for indemnification or otherwise) with respect to claims underSection 11.2(a) until the total of all Damages with respect to such mattersexceeds [***] in the aggregate and then only for the amount by which

 

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such Damages exceed [***]; provided, however,that in no event shall Sellers’ aggregate liability (for indemnification orotherwise) with respect to claims under Section 11.2(a) exceed [***].  Notwithstanding anything to the contraryherein, the limitations set forth in this Section 11.4 will not apply if theClosing does not occur or to a breach of any representation or warranty setforth in Section 3.1, 3.2, 3.7, 3.11(a) or 3.22.

 

## 11.5                           LIMITATIONS ON AMOUNT — BUYER

##  

From and after Closing, Buyer shall have no liability(for indemnification or otherwise) with respect to claims under Section 11.3(a)until the total of all Damages with respect to such matters exceeds [***] inthe aggregate and then only for the amount by which such Damages exceed [***]; provided,however, that in no event shall Buyer’s aggregate liability (forindemnification or otherwise) with respect to claims under Section 11.3(a)exceed [***].  Notwithstanding anythingto the contrary herein, the limitations set forth in this Section 11.5 will notapply if the Closing does not occur or to a breach of any representation orwarranty set forth in Section 4.1, 4.2 or 4.5.

 

## 11.6                           TIME LIMITATIONS

##  

The several representations and warranties of theparties to this Agreement shall survive the Closing Date for a period ofeighteen (18) months from the Closing Date; provided, that the (a) therepresentations and warranties set forth in (a) Sections 3.1, 3.2, 3.22, 4.1,4.2 and 4.5 shall survive the Closing Date without limitation, (b) Section 3.11and Section 3.13 shall survive for 180 days following the expiration of anystatutes of limitation under applicable law and (c) Section 3.19 shall survivefor five years from the Closing Date (the period during which therepresentations and warranties shall survive being referred to herein withrespect to such representations and warranties as the “Survival Period”), andshall be effective with respect to any inaccuracy therein or breach thereof(and a claim for indemnification under Article 11 hereof may be made thereon)if a written notice asserting the claim and specifying the factual basis of theclaim in reasonable detail to the extent then known by the notifying partyshall have been given within the Survival Period with respect to such matter.  Any claim for indemnification made during theSurvival Period shall be valid and the representations and warranties relatingthereto shall remain in effect for purposes of such indemnificationnotwithstanding such claim may not be resolved within the Survival Period.  The agreements and covenants set forth hereinshall survive without limitation.

 

## 11.7                           PROCEDURE

##  

All claims for indemnification under this Article 11shall be asserted and resolved as follows:

 

### (a)                                  APerson entitled to indemnification under Section 11.2 or 11.3 (an “Indemnitee”),promptly after it becomes aware of facts giving rise to a right ofindemnification under this Agreement, shall give written notice thereof to thePerson obligated to indemnify under such section (an “Indemnitor”), stating theamount of the Damages, if known, and method of computation thereof, all withreasonable particularity, and stating with particularity the nature

 

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of the matter and basis of the claim for indemnity under thisAgreement.  For purposes of this Section11.7(a), receipt by a party of written notice of any demand, assertion, claim,action or proceeding (judicial, administrative or otherwise) by or from anyPerson other than a party to this Agreement that gives rise to Damages on behalfof the party shall constitute the awareness of facts giving rise to a right ofindemnification by it under this Agreement and shall require prompt notice ofthe receipt of such matter as provided in the first sentence of this Section11.7(a).  Failure to provide the noticeshall not affect the right of the Indemnitee to indemnification except to theextent the Indemnitor is materially prejudiced by the Indemnitee’s failure togive such notice.

###  

### (b)                                 Ifan Indemnitee should have Damages against any Indemnitor hereunder that doesnot involve a Third Party Claim, the Indemnitee shall provide the Indemnitor awritten notice with respect to the Damages. If the Indemnitor does not notify the Indemnitee within 30 calendar daysfrom its receipt of the written notice of Damages that the Indemnitor disputesthe Damages, the Damages specified by the Indemnitee in the claim notice shallbe deemed a liability of the Indemnitor hereunder.  If the Indemnitor has timely disputed theDamages as provided above, such dispute shall be resolved subject to theprovisions of this Agreement.

###  

### (c)                                  Ifan Indemnitee shall have a Third Party Claim asserted against it, theIndemnitee shall provide the Indemnitor written notice of the Damages relatingto the Third Party Claim (a “Third Party Claim Notice”).  Within 15 Business Days following receipt byan Indemnitor of a Third Party Claim Notice (the “Election Period”), theIndemnitor shall advise the Indemnitee in writing (i) whether the Indemnitordisputes its potential liability to the Indemnitee under this Article 11 withrespect to the Third Party Claim and (ii) whether the Indemnitor elects, at itssole cost and expense, to defend the Indemnitee against such Third Party Claim.

###  

### (d)                                 Ifthe Indemnitor notifies the Indemnitee within the Election Period of itselection to assume the defense of the Third Party Claim in accordance withSection 11.7(c) above, the Indemnitor shall have the obligation to defend, atits sole cost and expense, the Third Party Claim by all appropriate proceedings,which proceedings shall be prosecuted diligently by the Indemnitor to a finalconclusion or settled at the discretion of the Indemnitor in accordance withthis Section 11.7(d); provided, that the Indemnitor shall not settle orcompromise any such Third Party Claim without the prior consent of theIndemnitee (which consent shall not be unreasonably withheld conditioned ordelayed) unless (i) the terms of such compromise or settlement require no morethan the payment of money (i.e. such settlement or compromise shall not requirethe admission of wrongdoing by the Indemnitee, impose any obligations upon theIndemnitee or deprive the Indemnitee of any rights), (ii) the full amount ofsuch monetary settlement or compromise will be paid by the Indemnitor, and (iii)the Indemnitee receives as part of such settlement or compromise a legal,binding and enforceable unconditional satisfaction and/or release from any andall further actions or liabilities relating to the subject matter of the ThirdParty Claim.  The Indemnitor shall havefull control of such defense and proceedings, including, subject to thepreceding sentence, any compromise or settlement thereof.  The Indemnitee is hereby authorized to file,during the Election Period, any motion, answer or other pleadings that theIndemnitee shall, in good faith, deem necessary or appropriate to protect itsinterest or those of the Indemnitor and not prejudicial to the Indemnitor (itbeing understood and agreed that if the Indemnitee takes any such action thatis prejudicial and conclusively causes a

 

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final adjudication adverse to the Indemnitor, the Indemnitor shall berelieved of its obligations hereunder with respect to the Third Party Claim tothe extent so adjudicated).  If requestedby the Indemnitor, the Indemnitee agrees, at the sole cost and expense of theIndemnitor, to cooperate with the Indemnitor and its counsel in contesting anyThird Party Claims, including by making of any related counterclaim against thePerson asserting the Third Party Claim or any cross-complaint against anyPerson.  The Indemnitee shall have theright to participate in, but not control, any defense or settlement of anyThird Party Claim controlled by the Indemnitor pursuant to this Section11.7(d), and shall bear its own costs and expenses with respect to any suchparticipation.

###  

### (e)                                  Ifan Indemnitor fails to notify an Indemnitee within the Election Period that theIndemnitor elects to defend the Indemnitee pursuant to Section 11.7(c) or ifthe Indemnitor fails to diligently defend or settle the Third Party Claim or toprosecute any appropriate counterclaim against the Person making the ThirdParty Claim or any cross-complaint against any Person, or if the Indemniteereasonably objects to such election on the grounds that counsel for suchIndemnitee cannot represent both the Indemnitor and the Indemnitee because suchrepresentation would be reasonably likely to result in a conflict of interest,then the Indemnitee shall have the right but not the obligation to defend, atthe sole cost and expense of the Indemnitor (but only if the Indemniteeactually is entitled to indemnification hereunder), the Third Party Claim bysuch proceedings deemed reasonably appropriate by the Indemnitee and itscounsel.  The Indemnitee shall have fullcontrol of such defense and proceedings, including any compromise or settlementof the Third Party Claim; provided, that the Indemnitee shall not enter intoany compromise or settlement of such Third Party Claim without the Indemnitor’sconsent, which shall not be unreasonably withheld or delayed.  If requested by the Indemnitee, theIndemnitor shall, at the sole cost and expense of the Indemnitor, cooperatewith the Indemnitee and its counsel in contesting any Third Party Claim thatthe Indemnitee is contesting, or, if appropriate and related to the Third PartyClaim in question, in making any counterclaim against the Person asserting theThird Party Claim or any cross-complaint against any Person.  Notwithstanding the foregoing in this Section11.7(e), if the Indemnitor has delivered a written notice to the Indemnitee tothe effect that the Indemnitor disputes its potential liability to theIndemnitee under this Article 11 and if such dispute is resolved in favor ofthe Indemnitor, the Indemnitor shall not be required to bear the costs andexpenses of the Indemnitee’s defense pursuant to this Article 11 or of theIndemnitor’s participation therein at the Indemnitee’s request, and theIndemnitee shall reimburse the Indemnitor in full for all reasonable costs andexpenses of the Indemnitor in connection with the Third Party Claim, excluding,however, any litigation with respect to its indemnity obligationhereunder.  The Indemnitor shall have theright to participate in, but not control, any defense or settlement controlledby the Indemnitee pursuant to this Section 11.7(e), and the Indemnitor shallbear its own costs and expenses with respect to any such participation.

###  

## 11.8                           PAYMENT

##  

### (a)                                  Paymentsof all amounts owing by an Indemnitor as a result of a Third Party Claim shallbe made within five Business Days after the earlier of (i) the settlement ofthe Third Party Claim and (ii) the expiration of the period of appeal of afinal adjudication of the Third Party Claim.  Payments of all amounts owing by an Indemnitorother than as a result of a

 

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Third Party Claim shall be made within five Business Days after thelater of (i) 30 days after the expiration of the Election Period or (ii) ifcontested through dispute resolution proceedings, the expiration of the periodfor appeal of a final adjudication of the Indemnitor’s liability to theIndemnitee under this Agreement. Notwithstanding the foregoing, if the Indemnitor has not contested itsindemnity obligations hereunder and has not elected to assume the defense of aThird Party Claim, the Indemnitor shall reimburse (promptly after the receiptof each invoice therefor) the Indemnitee for the reasonable and documentedout-of-pocket costs and expenses incurred by the Indemnitee in contesting theThird Party Claim.

###  

## 11.9                           NO SET-OFF

##  

Neither Buyer nor any Seller shall have any right tosetoff any Damages against any payments to be made by either of them pursuantto this Agreement, any other Transaction Agreement or otherwise.

 

## 11.10                     INSURANCE

##  

The Indemnitor shall be subrogated to the rights ofthe Indemnitee in respect of any insurance relating to Damages to the extent ofany indemnification payments made hereunder for such Damages.

 

## 11.11                     NO DUPLICATION

##  

Any Liability for indemnification hereunder shall bedetermined without duplication of recovery by reason of the state of factsgiving rise to such Liability constituting a breach of more than onerepresentation, warranty, covenant or agreement.

 

## 11.12                     REMEDIES

##  

### (a)                                  Theparties agree that, except as provided in Section 13.5, the sole and exclusiveremedy of any party hereto or their respective Affiliates with respect to thisAgreement and in any other agreement delivered by any Seller or Buyer inconnection with the Contemplated Transactions (collectively, the “TransactionAgreements”) or any other claims relating to the Business, the events givingrise to this Agreement and the other Transaction Agreements and theContemplated Transactions shall be limited to the indemnification provisionsset forth in this Article 11; provided that this limitation shall notapply in the event of fraud; and provided further that if an Indemnitorshall breach or threaten to commit a breach of any of its restrictive covenantsset forth in this Agreement or any other Transaction Agreement (the “RestrictiveCovenants”), any Indemnitee shall have the right in addition to, and not inlieu of, any other rights and remedies available to such Indemnitee, under lawor in equity, to have the Restrictive Covenants specifically enforced by anycourt, including the right to seek entry against such Indemnitor, any of itsAffiliates and any shareholder, officer, director, employee of each of theforegoing of restraining orders and injunctions (preliminary, mandatory,temporary and permanent) against violations, threatened or actual, and whetheror not then continuing, of the Restrictive Covenants, it being acknowledged andagreed that money damages will not provide such Indemnitee an adequate remedy.

 

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### (b)                                 Theparties hereto intend that, even though indemnification and other obligationsappear in various sections and articles of this Agreement, the indemnificationprocedures and limitations contained in this Article 11 shall apply to allindemnity and other obligations of the parties under this Agreement, except tothe extent expressly excluded in this Article 11.

###  

## 11.13                     NO SPECIAL DAMAGES

##  

IN NO EVENT SHALL ANY PARTY BE LIABLE UNDER THISARTICLE 11 OR OTHERWISE IN RESPECT OF THIS AGREEMENT FOR EXEMPLARY, SPECIAL,PUNITIVE, INDIRECT, REMOTE, SPECULATIVE OR CONSEQUENTIAL DAMAGES EXCEPT TO THEEXTENT ANY SUCH PARTY SUFFERS SUCH DAMAGES TO AN UNAFFILIATED THIRD PARTY IN CONNECTIONWITH A THIRD PARTY CLAIM, IN WHICH EVENT SUCH DAMAGES SHALL BE RECOVERABLE.

 

# 12.                                 Confidentiality

#  

## 12.1                           DEFINITION OF CONFIDENTIAL INFORMATION

##  

### (a)                                  Asused in this Article 12, the term “Confidential Information” includes any andall of the following information of any Seller or Buyer that has been or mayhereafter be disclosed in any form, whether in writing, orally, electronicallyor otherwise, or otherwise made available by observation, inspection orotherwise by either party (Buyer on the one hand or Sellers on the other hand)or its Representatives (collectively, a “Disclosing Party”) to the other partyor its Representatives (collectively, a “Receiving Party”):

###  

#### (i)                                           allinformation that is a trade secret under applicable trade secret or other law;

####  

#### (ii)                                        allinformation concerning product specifications, data, know-how, formulae,compositions, processes, designs, sketches, photographs, graphs, drawings,samples, inventions and ideas, past, current and planned research anddevelopment, current and planned manufacturing or distribution methods andprocesses, customer lists, current and anticipated customer requirements, pricelists, market studies, business plans, computer hardware, Software and databasetechnologies, systems, structures and architectures;

####  

#### (iii)                                     allinformation concerning the business and affairs of the Disclosing Party (whichincludes historical and current financial statements, financial projections andbudgets, tax returns and accountants’ materials, historical, current and projectedsales, capital spending budgets and plans, business plans, strategic plans,marketing and advertising plans, publications, client and customer lists andfiles, contracts, the names and backgrounds of key personnel and personneltraining techniques and materials, however documented), and all informationobtained from review of the Disclosing Party’s documents or property ordiscussions with the Disclosing Party regardless of the form of thecommunication; and

 

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#### (iv)                                    allnotes, analyses, compilations, studies, summaries and other material preparedby the Receiving Party to the extent containing or based, in whole or in part,upon any information included in the foregoing.

####  

### (b)                                 Anytrade secrets of a Disclosing Party shall also be entitled to all of theprotections and benefits under applicable trade secret law and any otherapplicable law. If any information that a Disclosing Party deems to be a tradesecret is found by a court of competent jurisdiction not to be a trade secretfor purposes of this Article 12, such information shall still be consideredConfidential Information of that Disclosing Party for purposes of this Article12 to the extent included within the definition.  In the case of trade secrets, each DisclosingParty, hereby waives any requirement that the other party submit proof of theeconomic value of any trade secret or post a bond or other security.

###  

## 12.2                           RESTRICTED USE OF CONFIDENTIAL INFORMATION

##  

### (a)                                  EachReceiving Party acknowledges the confidential and proprietary nature of theConfidential Information of the Disclosing Party and agrees that suchConfidential Information (i) shall be kept confidential by the Receiving Party;(ii) shall not be used for any reason or purpose other than to evaluate andconsummate the Contemplated Transactions; and (iii) without limiting theforegoing, shall not be disclosed by the Receiving Party to any Person, exceptin each case as otherwise expressly permitted by the terms of this Agreement orwith the prior written consent of an authorized Representative of Sellers withrespect to Confidential Information of Sellers (each, a “Seller Contact”) or anauthorized Representative of Buyer with respect to Confidential Information ofBuyer (each, a “Buyer Contact”). Each of Buyer and Sellers shall disclose theConfidential Information of the other party only to its Representatives whorequire such material for the purpose of evaluating the ContemplatedTransactions and are informed by Buyer or Sellers, as the case may be, of theobligations of this Article 12 with respect to such information.  Each of Buyer and Sellers shall (A) enforcethe terms of this Article 12 as to its respective Representatives; (B) takesuch action to the extent necessary to cause its Representatives to comply withthe terms and conditions of this Article 12; and (C) be responsible and liablefor any breach of the provisions of this Article 12 by it or itsRepresentatives.

###  

### (b)                                 Unlessand until this Agreement is terminated, Sellers shall maintain as confidentialany Confidential Information (including for this purpose any information ofSellers of the type referred to in Sections 12.1(a)(i), (ii) and (iii), whetheror not disclosed to Buyer) of Sellers relating to any of the Assets or the AssumedLiabilities. Notwithstanding the preceding sentence, Sellers may use anyConfidential Information of Sellers before the Closing in the ordinary courseof the Business consistent with past practices in connection with thetransactions permitted by Section 6.2.

###  

### (c)                                  Fromand after the Closing, the provisions of Section 12.2(a) above shall not applyto or restrict in any manner Buyer’s use of any Confidential Information ofSellers relating solely to any of the Assets or the Assumed Liabilities.

 

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## 12.3                           EXCEPTIONS

##  

Sections 12.2(a) and (b) do not apply to that part ofthe Confidential Information of a Disclosing Party that a Receiving Partydemonstrates (a) was, is or becomes generally available to the public otherthan as a result of a breach of this Article 12 or the ConfidentialityAgreement by the Receiving Party or its Representatives; (b) was or isdeveloped by the Receiving Party independently of and without reference to anyConfidential Information of the Disclosing Party; or (c) was, is or becomesavailable to the Receiving Party on a nonconfidential basis from a Third Partynot bound by a confidentiality agreement or any legal, fiduciary or otherobligation restricting disclosure. Sellers shall not disclose any ConfidentialInformation of Sellers relating to any of the Assets or the Assumed Liabilitiesin reliance on the exceptions in clauses (b) or (c) above.

 

## 12.4                           LEGAL PROCEEDINGS

##  

If a Receiving Party becomes compelled in anyProceeding or is requested by a Governmental Body having regulatoryjurisdiction over the Contemplated Transactions to make any disclosure that isprohibited or otherwise constrained by this Article 12, that Receiving Partyshall provide the Disclosing Party with prompt notice of such compulsion orrequest so that it may seek an appropriate protective order or otherappropriate remedy or waive compliance with the provisions of this Article 12.In the absence of a protective order or other remedy, the Receiving Party maydisclose that portion (and only that portion) of the Confidential Informationof the Disclosing Party that, based upon advice of the Receiving Party’scounsel, the Receiving Party is legally compelled to disclose or that has beenrequested by such Governmental Body, provided, however, that theReceiving Party shall use reasonable efforts to obtain reliable assurance thatconfidential treatment will be accorded by any Person to whom any ConfidentialInformation is so disclosed. The provisions of this Section 12.4 do not applyto any Proceedings between the parties to this Agreement.  Notwithstanding anything to the contrary inthis Article 12 or elsewhere in this Agreement, any Seller may disclose anyConfidential Information to the extent it reasonably believes such disclosureis required to comply with the requirements of any applicable LegalRequirement, including the rules and regulations of the New York StockExchange.

 

## 12.5                           RETURN OR DESTRUCTION OF CONFIDENTIAL INFORMATION

##  

If this Agreement is terminated, each Receiving Partyshall (a) destroy all Confidential Information of the Disclosing Party preparedor generated by the Receiving Party without retaining a copy of any suchmaterial; (b) promptly deliver to the Disclosing Party all other ConfidentialInformation of the Disclosing Party, together with all copies thereof, in thepossession, custody or control of the Receiving Party or, alternatively, withthe written consent of a Seller Contact or a Buyer Contact (whicheverrepresents the Disclosing Party) destroy all such Confidential Information; and(c) certify all such destruction in writing to the Disclosing Party, provided,however, that the Receiving Party may retain a list that containsgeneral descriptions of the information it has returned or destroyed tofacilitate the resolution of any controversies after the Disclosing Party’sConfidential Information is returned.

 

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## 12.6                           ATTORNEY-CLIENT PRIVILEGE

##  

The Disclosing Party is not waiving, and will not be deemedto have waived or diminished, any of its attorney work product protections,attorney-client privileges or similar protections and privileges as a result ofdisclosing its Confidential Information (including Confidential Informationrelated to pending or threatened litigation) to the Receiving Party, regardlessof whether the Disclosing Party has asserted, or is or may be entitled toassert, such privileges and protections. The parties (a) share a common legaland commercial interest in all of the Disclosing Party’s ConfidentialInformation that is subject to such privileges and protections; (b) are or maybecome joint defendants in Proceedings to which the Disclosing Party’sConfidential Information covered by such protections and privileges relates; (c)intend that such privileges and protections remain intact should either partybecome subject to any actual or threatened Proceeding to which the DisclosingParty’s Confidential Information covered by such protections and privilegesrelates; and (d) intend that after the Closing the Receiving Party shall havethe right to assert such protections and privileges. No Receiving Party shalladmit, claim or contend, in Proceedings involving either party or otherwise,that any Disclosing Party waived any of its attorney work-product protections,attorney-client privileges or similar protections and privileges with respectto any information, documents or other material not disclosed to a ReceivingParty due to the Disclosing Party disclosing its Confidential Information(including Confidential Information related to pending or threatenedlitigation) to the Receiving Party.

 

# 13.                                 GeneralProvisions

#  

## 13.1                           EXPENSES

##  

Except as otherwise provided in this Agreement, eachparty to this Agreement will bear its respective fees and expenses incurred inconnection with the preparation, negotiation, execution and performance of thisAgreement and the Contemplated Transactions, including all fees and expenses ofits Representatives.  Buyer will pay allHSR Act filing fees. If this Agreement is terminated, the obligation of eachparty to pay its own fees and expenses will be subject to any rights of suchparty arising from a breach of this Agreement by another party.

 

## 13.2                           PUBLIC ANNOUNCEMENTS

##  

Except as may be required to comply with therequirements of any applicable Legal Requirement or the rules and regulationsof any stock exchange or national market system upon which the securities ofany Seller or Buyer are listed, no party will issue any press release or otherpublic announcement relating to the subject matter of this Agreement or theContemplated Transactions without the prior approval (which approval will notbe unreasonably withheld or delayed) of the other party; provided, however,that, after the Closing, any Seller or Buyer will be entitled to issue any suchpress release or make any such other public announcement without obtaining suchprior approval if it has previously provided a copy of the press release orother public announcement to the other party for a reasonable period of timefor review and comment.

 

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## 13.3                           NOTICES

##  

All notices, Consents, waivers and othercommunications required or permitted by this Agreement shall be in writing andshall be deemed given to a party when (a) delivered to the appropriate addressby hand or by nationally recognized overnight courier service (costs prepaid);(b) sent by facsimile with confirmation of transmission by the transmittingequipment; or (c) received or rejected by the addressee, if sent by certifiedmail, return receipt requested, in each case to the following addresses,facsimile numbers and marked to the attention of the person (by name or title)designated below (or to such other address or facsimile number or person as aparty may designate by notice to the other parties):

 
| Sellers:                   | Stewart & Stevenson  Services, Inc. |
|----------------------------|-----------------------------------------|
|                       | 2707 North Loop West,  Suite 800        |
|                       | Houston, Texas 77008                    |
|                       | Attention: General  Counsel             |
|                       | Facsimile: (713)  868-2130              |
|                       | Confirm:  (713) 868-7700           |
|                       |                                    |
| with a mandatory  copy to: | Fulbright &  Jaworski L.L.P.        |
|                       | 1301 McKinney, Suite  5100              |
|                       | Houston, Texas  77010-3095              |
|                       | Attention: Charles H.  Still            |
|                       | Facsimile: (713)  651-5246              |
|                       | Confirm:  (713) 651-5151           |
|                       |                                    |
| Buyer:                     | c/o Parman Capital  Group, LLC          |
|                       | Attention: Hushang  Ansary              |
|                       | 1000 Louisiana, Suite  5900             |
|                       | Houston, Texas 77002                    |
|                       | Facsimile:  713-659-3137           |
|                       | Confirm:  713-650-0071             |
|                       |                                    |
| with a mandatory  copy to: | Jones Day                               |
|                       | Attention: William F.  Henze II         |
|                       | 222 East 41st Street                    |
|                       | New York, NY 10017                      |
|                       | Facsimile: 212-755-7306                 |
|                       | Confirm: 212-326-3939                   |
|                       |                                    |

##  

## 13.4                           DISPUTE RESOLUTION

 

In the event of any dispute or controversy (except forany dispute or controversy arising out of (i) the allocation of related andpersonal property Taxes that is to be resolved in accordance with Section 2.5or (ii) the calculation of Closing Net Asset Value that is to be resolved inaccordance with Section 2.11) arising out of or relating to this Agreement, orany matter relating hereto or the Contemplated Transactions (the “Dispute”),the parties shall first try

 

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to resolve the dispute by mutual agreement.  If the parties are unable to resolve theDispute by entering into a written settlement agreement within 30 daysfollowing a party’s delivery of a written notice of a Dispute, setting forth inreasonable detail the circumstances and basis for the Dispute (“Notice ofDispute”), the Dispute shall be determined by binding arbitration in accordancewith the rules for commercial arbitration of the American ArbitrationAssociation then in effect (subject to any contrary provision in thisAgreement).  Judgment upon the awardshall be final and may be entered in any court having jurisdiction thereof.  The place of arbitration shall be Houston,Texas.  The arbitrators shall determinethe arbitrability of any and all Disputes arising out of or related to thisAgreement, including the existence, validity, and scope of this agreement toarbitrate.  The arbitrator(s) shall bequalified by education, experience, or training to decide the matters in theDispute.  The arbitrator(s) shall applyany statutes of limitations applicable under Texas law to the claims anddefenses asserted in the Dispute Delivery of the Notice of Dispute shall tollthe running of any applicable statutes of limitations.  Notwithstanding the foregoing, in the eventthat a Dispute requires emergency relief before the matter may be resolvedpursuant to the arbitration provisions provided herein, the provisions of thisSection 13.4 shall not prohibit an action for injunctive or other forms ofancillary relief or a writ of mandamus filed in connection with such Dispute; provided,however, the arbitration provisions provided herein shall still govern theresolution of the Dispute.

 

All negotiations and any arbitration relating to aDispute, including any Notice of Dispute, settlement, arbitral award, decision,or order, documents exchanged or produced, and any briefs or other documentsprepared for the arbitration, are confidential and may not be disclosed by anyparty, their employees, officers, directors, counsel, consultants, and expertwitnesses, except to the extent necessary to enforce any settlement agreementor arbitration award, to enforce rights of a party, as required by law orregulation, or for a bona fide business purpose, such as disclosure toaccountants, shareholders, or third-party purchasers; provided, however, that breachof this confidentiality provision shall not void any settlement or award.

 

## 13.5                           ENFORCEMENT OF AGREEMENT

##  

### (a)                                  EachSeller acknowledges and agrees that Buyer would be irreparably damaged if anyof the provisions of this Agreement are not performed in accordance with theirspecific terms and that any breach of this Agreement by such Seller could notbe adequately compensated in all cases by monetary damages alone. Accordingly,in addition to any other right or remedy to which Buyer may be entitled, at lawor in equity, it shall be entitled to enforce any provision of this Agreementby a decree of specific performance and to temporary, preliminary and permanentinjunctive relief to prevent breaches or threatened breaches of any of theprovisions of this Agreement, without posting any bond or other undertaking.

###  

### (b)                                 Buyeracknowledges and agrees that Sellers would be irreparably damaged if any of theprovisions of this Agreement are not performed in accordance with theirspecific terms and that any breach of this Agreement by Buyer could not beadequately compensated in all cases by monetary damages alone. Accordingly, inaddition to any other right or remedy to which any Seller may be entitled, atlaw or in equity, it shall be entitled to enforce any provision of thisAgreement by a decree of specific performance and to temporary,

 

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preliminary and permanent injunctive relief to prevent breaches orthreatened breaches of any of the provisions of this Agreement, without postingany bond or other undertaking.

###  

## 13.6                           WAIVER; REMEDIES CUMULATIVE

##  

The rights and remedies of the parties to thisAgreement are cumulative and not alternative. Neither any failure nor any delayby any party in exercising any right, power or privilege under this Agreementor any of the documents referred to in this Agreement will operate as a waiverof such right, power or privilege, and no single or partial exercise of anysuch right, power or privilege will preclude any other or further exercise ofsuch right, power or privilege or the exercise of any other right, power orprivilege. To the maximum extent permitted by applicable law, (a) no claim orright arising out of this Agreement or any of the documents referred to in thisAgreement can be discharged by one party, in whole or in part, by a waiver orrenunciation of the claim or right unless in writing signed by the other party;(b) no waiver that may be given by a party will be applicable except in thespecific instance for which it is given; and (c) no notice to or demand on oneparty will be deemed to be a waiver of any obligation of that party or of theright of the party giving such notice or demand to take further action withoutnotice or demand as provided in this Agreement or the documents referred to inthis Agreement.

 

## 13.7                           ENTIRE AGREEMENT AND MODIFICATION

##  

This Agreement supersedes all prior agreements,whether written or oral, between the parties with respect to its subject matter(including any letter of intent, exclusivity agreement and any confidentialityagreement between Buyer and any one or more of the Sellers) and constitutes(along with the Seller Disclosure Letter, the Buyer Disclosure Letter, theExhibits and other documents delivered pursuant to this Agreement) a completeand exclusive statement of the terms of the agreement between the parties withrespect to its subject matter.  None ofthis Agreement, the Seller Disclosure Letter or the Buyer Disclosure Letter maybe amended, supplemented, or otherwise modified except by a written agreementexecuted by the party to be charged with the amendment.

 

## 13.8                           ASSIGNMENTS, SUCCESSORS AND NO THIRD PARTY RIGHTS

##  

No party may assign any of its rights or delegate anyof its obligations under this Agreement without the prior written consent ofthe other parties; provided, however that Buyer may assign itsrights or delegate its obligations hereunder to any Person that is directly orindirectly controlled by him, and upon the later of any such Assignment or thepayment of the Purchase Price (including the Adjustment Amount) be releasedfrom all obligations under this Agreement. Subject to the preceding sentence, this Agreement will apply to, bebinding in all respects upon and inure to the benefit of the successors andpermitted assigns of the parties.  Exceptsuch rights as shall inure to a successor or permitted assignee pursuant tothis Section 13.8, nothing expressed or referred to in this Agreement will beconstrued to give any Person other than the parties to this Agreement any legalor equitable right, remedy or claim under or with respect to this Agreement orany provision of this Agreement, including, with respect to any TransferredEmployee or legal representative thereof, any right to employment for anyspecified period or of any nature or kind whatsoever.

 

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## 13.9                           SEVERABILITY

##  

If any provision of this Agreement is held invalid orunenforceable by any court of competent jurisdiction, the other provisions ofthis Agreement will remain in full force and effect. Any provision of thisAgreement held invalid or unenforceable only in part or degree will remain infull force and effect to the extent not held invalid or unenforceable.

 

## 13.10                     CONSTRUCTION

##  

The headings of Articles and Sections in thisAgreement are provided for convenience only and will not affect itsconstruction or interpretation. All references to “Articles,” and “Sections”refer to the corresponding Articles and Sections of this Agreement, the SellerDisclosure Letter and the Buyer Disclosure Letter.

 

## 13.11                     TIME OF ESSENCE

##  

With regard to all dates and time periods set forth orreferred to in this Agreement, time is of the essence.

 

## 13.12                     GOVERNING LAW

##  

Except as set forth in the next sentence, thisAgreement will be governed by and construed under, and any Dispute determinedin accordance with, the laws of the State of Texas without regard toconflicts-of-laws principles that would require the application of any otherlaw.

 

## 13.13                     EXECUTION OF AGREEMENT

##  

This Agreement may be executed in one or morecounterparts, each of which will be deemed to be an original copy of thisAgreement and all of which, when taken together, will be deemed to constituteone and the same agreement. The exchange of copies of this Agreement and ofsignature pages by facsimile transmission shall constitute effective executionand delivery of this Agreement as to the parties and may be used in lieu of theoriginal Agreement for all purposes. Signatures of the parties transmitted byfacsimile shall be deemed to be their original signatures for all purposes.

 

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IN WITNESS WHEREOF, the parties have executed thisAgreement as of the date first written above.

 

 
|       |  /s/ Hushang Ansary                                   |                      |
|------------|------------------------------------------------------------|---------------------------|
|       | Hushang Ansary                                             |
|       |                                                       |
| ** ** | **Stewart  & Stevenson Services, Inc.**                |
| ** ** | ** **                                                 |
| ** ** | ** **                                                 |
|       | By:                                                        |  /s/ John B. Simmons |   |
|       | Name: John B. Simmons                                      |
|       | Title: Senior Vice President, Chief Financial  Officer and |
|       |  Treasurer                                            |
|       |                                                       |
| ** ** | **Stewart  & Stevenson Petroleum Services, Inc.**      |
| ** ** | ** **                                                 |
| ** ** | ** **                                                 |
|       | By:                                                        |  /s/ John B. Simmons |   |
|       | Name: John B. Simmons                                      |
|       | Title: Vice President and Treasurer                        |
|       |                                                       |
| ** ** | **Stewart  & Stevenson International, Inc.**           |
| ** ** | ** **                                                 |
| ** ** | ** **                                                 |
|       | By:                                                        |  /s/ John B. Simmons |   |
|       | Name: John B. Simmons                                      |
|       | Title: President and Treasurer                             |
|       |                                                       |
| ** ** | **Sierra  Detroit Diesel Allison, Inc.**                   |
| ** ** | ** **                                                 |
| ** ** | ** **                                                 |
|       | By:                                                        |  /s/ John B. Simmons |   |
|       | Name: John B. Simmons                                      |
|       | Title: Vice President                                      |
|       |                                                       |
| ** ** | **S&S  Trust**                                         |
| ** ** | ** **                                                 |
| ** ** | ** **                                                 |
|       | By:                                                        |  /s/ Don Mueller     |   |
|       | Name: Don Mueller                                          |
|       | Title: President                                           |

 

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Schedules are omitted inaccordance with Item 601(b)(2) of Regulation S-K. Schedules will be provided bythe Company to the Securities and Exchange Commission upon request.

 

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