EX-10.1






Exhibit 10.1




STOCK PURCHASE AGREEMENT




Dated as of October 3, 2008




By and Among


APPLEBY TRUST (MAURITIUS) LIMITED,

acting solely in its capacity as Trustee of the Bison Purpose Trust,



as the Trustee,


BISON ACQUISITION CORPORATION,


as BAC,


SCM METAL PRODUCTS, INC.,


as SCM,


GIBRALTAR PACIFIC, INC.,


as Pacific,


GIBRALTAR INTERNATIONAL, INC.,


as International


and


GIBRALTAR STEEL CORPORATION OF NEW YORK,


as GSCNY





 









 








TABLE OF CONTENTS




	 	 	 	 	 	 	 
	 	 	 	 	Page
	 
	 	 	 	 	 	 
	ARTICLE 1. DEFINITIONS	 	 	1	 
	 
	 	 	 	 	 	 
	1.01

	 	Definitions
	 	 	1	 
	1.02

	 	Rules of Construction
	 	 	10	 
	 
	 	 	 	 	 	 
	ARTICLE 2. PURCHASE AND SALE	 	 	10	 
	 
	 	 	 	 	 	 
	2.01

	 	Deposit In Escrow; Purchase and Sale of the Shares
	 	 	10	 
	2.02

	 	Payment of Purchase Price
	 	 	11	 
	2.03

	 	Closing
	 	 	11	 
	2.04

	 	Closing Deliveries by the Sellers
	 	 	11	 
	2.05

	 	Closing Deliveries by the Purchasers
	 	 	12	 
	2.06

	 	Adjustment to the Purchase Price at Closing
	 	 	13	 
	2.07

	 	Post Closing Adjustment to Purchase Price
	 	 	13	 
	2.08

	 	Purchase Price Allocation. Of the total
	 	 	15	 
	 
	 	 	 	 	 	 
	ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE SUBSIDIARIES AND THE
SELLERS	 	 	16	 
	 
	 	 	 	 	 	 
	3.01

	 	Organization, Authority and Qualification of the Sellers
and the Subsidiaries
	 	 	16	 
	3.02

	 	Subsidiaries
	 	 	16	 
	3.03

	 	Capitalization; Officers and Directors
	 	 	16	 
	3.04

	 	Due Authorization
	 	 	17	 
	3.05

	 	No Conflict
	 	 	18	 
	3.06

	 	Governmental Consents and Approvals
	 	 	18	 
	3.07

	 	Financial Information
	 	 	18	 
	3.08

	 	No Undisclosed Liabilities
	 	 	18	 
	3.09

	 	Governmental Authorizations and Regulations
	 	 	18	 
	3.10

	 	Conduct in the Ordinary Course; Absence of Certain
Changes, Events and Conditions
	 	 	19	 
	3.11

	 	Litigation
	 	 	19	 
	3.12

	 	Compliance with Laws
	 	 	20	 
	3.13

	 	Material Contracts
	 	 	20	 
	3.14

	 	Intellectual Property
	 	 	21	 
	3.15

	 	Owned Real Property
	 	 	21	 
	3.16

	 	Leased Real Property
	 	 	22	 
	3.17

	 	Customers and Suppliers
	 	 	23	 
	3.18

	 	Taxes
	 	 	23	 
	3.19

	 	Environmental Matters
	 	 	25	 
	3.20

	 	Employee Benefits Plans
	 	 	26	 
	3.21

	 	Labor Matters
	 	 	28	 
	3.22

	 	Insurance
	 	 	29	 
	3.23

	 	Tangible Personal Property
	 	 	29	 
	3.24

	 	Product Warranties
	 	 	29	 
	3.25

	 	No Brokers
	 	 	30	 






i









 






	 	 	 	 	 	 	 
	 	 	 	 	Page
	3.26

	 	Corporate Books and Records
	 	 	30	 
	3.27

	 	Related-Party Transactions
	 	 	30	 
	3.28

	 	Bank Accounts; Lockboxes
	 	 	30	 
	3.29

	 	Bonds and Letters of Credit
	 	 	30	 
	3.30

	 	Obligations and Rights under Prior Acquisition Agreements
	 	 	31	 
	 
	 	 	 	 	 	 
	ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS	 	 	31	 
	 
	 	 	 	 	 	 
	4.01

	 	Organization and Authority and the Purchaser
	 	 	31	 
	4.02

	 	No Conflict
	 	 	31	 
	4.03

	 	Governmental Consents and Approvals
	 	 	32	 
	4.04

	 	No Brokers
	 	 	32	 
	4.05

	 	Litigation
	 	 	32	 
	4.06

	 	Investment Intention
	 	 	32	 
	 
	 	 	 	 	 	 
	ARTICLE 5. COVENANTS AND ADDITIONAL AGREEMENTS	 	 	32	 
	 
	 	 	 	 	 	 
	5.01

	 	Conduct of Business Prior to the Closing
	 	 	32	 
	5.02

	 	Access
	 	 	35	 
	5.03

	 	Confidentiality
	 	 	35	 
	5.04

	 	German Regulatory Approval.
	 	 	35	 
	5.05

	 	Non-Competition
	 	 	35	 
	5.06

	 	Further Action
	 	 	36	 
	5.07

	 	Legal Privileges
	 	 	37	 
	5.08

	 	Preservation of Records
	 	 	37	 
	5.09

	 	Employee Benefits/Severance
	 	 	37	 
	5.10

	 	Credit Support and Loan Agreement
	 	 	39	 
	5.11

	 	Cash Collections
	 	 	39	 
	5.12

	 	Intercompany Arrangements
	 	 	39	 
	5.13

	 	Contribution of Assets Prior to the Closing
	 	 	40	 
	 
	 	 	 	 	 	 
	ARTICLE 6. CONDITIONS TO CLOSING	 	 	40	 
	 
	 	 	 	 	 	 
	6.01

	 	Conditions to Obligations of the Parties
	 	 	40	 
	6.02

	 	Conditions to Obligations of the Purchasers
	 	 	40	 
	 
	 	 	 	 	 	 
	ARTICLE 7. INDEMNIFICATION	 	 	41	 
	 
	 	 	 	 	 	 
	7.01

	 	Survival; Remedies for Breach
	 	 	41	 
	7.03

	 	Indemnification of the Sellers
	 	 	42	 
	7.04

	 	Procedures for Indemnification
	 	 	42	 
	7.05

	 	Additional Limits on Rights to Indemnification
	 	 	43	 
	7.06

	 	Procedures for Third-Party Claims
	 	 	44	 
	7.07

	 	Indemnification for Pre-Closing Environmental Matters
	 	 	45	 
	7.08

	 	Effect of Indemnification
	 	 	46	 
	 
	 	 	 	 	 	 
	ARTICLE 8. TERMINATION	 	 	46	 
	 
	 	 	 	 	 	 
	8.01

	 	Termination
	 	 	46	 
	8.02

	 	Effect of Termination
	 	 	47	 
	 
	 	 	 	 	 	 
	ARTICLE 9. TAXES	 	 	47	 






ii









 






	 	 	 	 	 	 	 
	 	 	 	 	Page
	9.01

	 	Preparation of Tax Returns
	 	 	47	 
	9.02

	 	Cooperation with Respect to Tax Returns
	 	 	47	 
	9.03

	 	Review of Tax Returns
	 	 	48	 
	9.04

	 	Payment of Taxes
	 	 	48	 
	9.05

	 	Tax Audits
	 	 	49	 
	9.06

	 	Refund Claims
	 	 	50	 
	9.07

	 	Tax Indemnification. The
	 	 	50	 
	9.08

	 	Discontinuation of Tax Sharing Arrangements
	 	 	51	 
	9.09

	 	Disputes
	 	 	51	 
	 
	 	 	 	 	 	 
	ARTICLE 10. GENERAL PROVISIONS	 	 	51	 
	 
	 	 	 	 	 	 
	10.01

	 	Expenses
	 	 	51	 
	10.02

	 	Notices
	 	 	51	 
	10.03

	 	Headings
	 	 	53	 
	10.04

	 	Severability
	 	 	53	 
	10.05

	 	Entire Agreement
	 	 	53	 
	10.06

	 	Assignment
	 	 	53	 
	10.07

	 	No Third Party Beneficiaries
	 	 	53	 
	10.08

	 	Amendment and Waiver
	 	 	53	 
	10.09

	 	Governing Law
	 	 	53	 
	10.10

	 	Consent To Jurisdiction
	 	 	54	 
	10.11

	 	Waiver of Jury Trial
	 	 	54	 
	10.12

	 	Public Announcements
	 	 	54	 
	10.13

	 	Counterparts; Effectiveness
	 	 	54	 







iii









 








STOCK PURCHASE AGREEMENT




     THIS STOCK PURCHASE AGREEMENT (this “Agreement”), dated as of October 3, 2008, is by and among
Bison Acquisition Corporation, a Delaware corporation (“BAC”), Appleby Trust (Mauritius) Limited, a
company organized under the laws of Mauritius, acting solely in its capacity as trustee of the
Bison Purpose Trust (the “Trustee” and, together with BAC, the “Purchasers”), SCM Metal Products,
Inc., a Delaware corporation (“SCM”), Gibraltar Pacific Inc., a Mauritius corporation (“Pacific”),
Gibraltar International, Inc., a Delaware corporation (“International”), and Gibraltar Steel
Corporation of New York, a New York corporation (“GSCNY” and together with International, the
“Sellers”).



R E C I T A L S:




     SCM is engaged in the manufacturing, marketing and distributing of non-ferrous metal powder
products for use by customers in various industries. Pacific is the owner of all of the Ownership
Interests of SCM Metal Products (Suzhou) Co., Ltd., a wholly foreign-owned enterprise organized
under the laws of the People’s Republic of China (“SCM Asia”), which is engaged in the business of
manufacturing, marketing and distributing of non-ferrous metal powder products for use by customers
in various industries.



     GSCNY is the owner of all the issued and outstanding capital stock of SCM and International is
the owner of all of the issued and outstanding shares of ordinary stock of Pacific.



     GSCNY desires to sell all of the issued and outstanding capital stock of SCM to BAC on the
other terms and conditions set forth herein and BAC desires to purchase all of the issued and
outstanding capital stock of SCM from GSCNY on the other terms and conditions set forth herein.



     International desires to sell all of the issued and outstanding shares of ordinary stock of
Pacific to the Trustee on the other terms and conditions set forth herein and the Trustee desires
to purchase all of the issued and outstanding shares of ordinary stock of Pacific from
International on the other terms and conditions set forth herein.



CONSIDERATION:




     NOW, THEREFORE, in consideration of the foregoing and the mutual agreements and covenants
hereinafter set forth, the parties hereto hereby agree as follows:



ARTICLE 1.

DEFINITIONS




     1.01 Definitions. In this Agreement, unless the context otherwise requires, the following
terms shall have the following meanings:



     “Acceptance Notice” shall have the meaning ascribed to such term in Section 2.07(c).



     “Action” means any judicial, administrative, regulatory or arbitral action, suit,
proceeding (public or private), claim or governmental proceeding.



1









 





     “Adjusted Established Net Working Capital” shall mean, in the event that there is an
adjustment to the Purchase Price at Closing in accordance with the provisions of Section 2.06
hereof, an amount equal to the Estimated Deposit Date Net Working Capital as finally agreed (or
deemed agreed) in accordance with the provisions of Section 2.06(b).



     “Affiliate” means, with respect to any Person, any Person directly or indirectly
controlling, controlled by, or under common control with such other Person. For purposes of
determining whether a Person is an Affiliate, the term “control” and its correlative forms
“controlled by” and “under common control with” shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of a Person, whether
through ownership of securities, contract or otherwise.



     “Agreement” shall have the meaning ascribed to such term in the first paragraph
hereof.



     “Ancillary Agreements” means the Note, the Transition Services Agreement and any other
documents or instruments required to be executed and/or delivered pursuant to the terms of this
Agreement.



     “BAC” shall have the meaning ascribed to such term in the first paragraph hereof.



     “Basket Amount” shall have the meaning ascribed to such term in Section 7.05(a)(i).



     “Business” means: (a) the manufacturing, marketing and distributing of non-ferrous
metal powder products for use by customers in various industries by SCM; (b) the rights and
liabilities of Pacific arising in connection with its ownership of all of the Ownership Interests
of SCM Asia; and (c) the manufacturing, marketing and distributing of non-ferrous metal powder
products for use by customers in various industries by SCM Asia.



     “Business Day” means a day other than a Saturday, Sunday or other day on which
commercial banks in New York, New York are authorized or required by law to close.



     “Business Real Property” shall have the meaning ascribed to such term in Section
3.19(a).



     “Cash Settle-Up” shall have the meaning ascribed to such term in Section 5.01(c).



     “Closing” shall have the meaning ascribed to such term in Section 2.03.



     “Closing Date” shall have the meaning ascribed to such term in Section 2.03.



     “Code” means the Internal Revenue Code of 1986, as amended.



     “Competitive Business” shall have the meaning ascribed to such term in Section
5.05(a)(i).



     “Continuing Employees” shall have the meaning ascribed to such term in Section
5.09(a).



2









 





     “Contract” means any written or oral contract, agreement, mortgage, deed of trust,
bond, indenture, lease, license, note, franchise, certificate, option, warrant, right, instrument
or other commitment or obligation.



     “Credit Support Arrangements” shall have the meaning ascribed to such term in Section
5.10.



     “Current Assets” means, on a particular date, without duplication, the Subsidiaries’
aggregate accounts receivable, inventory, prepaid expenses and other assets that are likely to be
converted into cash, sold, exchanged, or expensed in the ordinary course of business of the
Subsidiaries, within one year of such date consistent with past practices of the Subsidiaries, but
excluding cash and any deferred Tax asset, and in each case as determined in accordance with GAAP;
provided, however, that (i) up to One Million U.S. Dollars (U.S.$1,000,000) of cash held by SCM
Asia shall be included on a dollar-for-dollar basis in determining Current Assets, and (ii) if and
to the extent the aggregate amount of cash held by SCM Asia exceeds One Million U.S. Dollars
(U.S.$1,000,000), 90% of the amount of such cash in excess of One Million U.S. Dollars
(U.S.$1,000,000) shall be included in determining Current Assets.



     “Current Liabilities” means, on a particular date, without duplication, the
Subsidiaries’ aggregate Indebtedness (whether any such Indebtedness is a current or a long term
liability under GAAP), accounts payable and accrued expenses payable, including the Transaction
Bonus Accrual and any real estate and other current Taxes payable by the Subsidiaries, but
excluding any deferred Tax liabilities and any current U.S. income Taxes payable, in each case as
determined in accordance with GAAP.



     “Default Amount” shall have the meaning ascribed to such term in Section 2.06(b).



     “Deposit Date” shall mean the date of this Agreement.



     “Deposit Date Balance Sheet” shall mean the balance sheet of the Business as finally
determined, as of the close of business local time on the Deposit Date, pursuant to Section 2.07.



     “Deposit Date Net Working Capital” means the Net Working Capital as of the close of
business local time on the Deposit Date, as finally determined pursuant to Section 2.07.



     “Dispute Notice” shall have the meaning ascribed to such term in Section 2.07(c).



     “Employee Plans” shall have the meaning ascribed to such term in Section 3.20(a).



     “Encumbrance” means any security interest, pledge, mortgage, lien, charge,
encumbrance, adverse claim, impairment, conditional sale agreement, retention agreement, easement,
servitude, restriction or limitation of any kind or nature.



     “Environmental Laws” means all Federal, state, local and foreign Laws (as hereinafter
defined), orders, judgments and consent decrees as in effect on or prior to the Deposit Date
relating to or governing the protection of health, safety or environment or that otherwise imposes
liability or standards of conduct concerning: (i) protection of the indoor or outdoor environment;
(ii) pollution or pollution control; and (iii) the management, containment, manufacture,



3









 







possession, presence, use, processing, generation, transportation, treatment, storage,
disposal, Release, abatement, removal, remediation or handling of or exposure to any hazardous,
toxic, deleterious, carcinogenic, mutagenic, radioactive, corrosive, reactive, injurious or
otherwise harmful chemical, constituent, substance, material, product or waste, and including,
without limitation, the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. 136 et seq.),
the Federal Water Pollution Control Act (33 U.S.C. 1251 et seq.), the Resource Conservation and
Recovery Act (42 U.S.C. 6901 et seq.), the Comprehensive Environmental Response Compensation and
Liability Act (“CERCLA”) (42 U.S.C. 9601 et seq.), the Clean Air Act (42 U.S.C. 7401 et seq.), the
Toxic Substances Control Act (15 U.S.C. 2601 et seq.), the Occupational Safety and Health Act (29
U.S.C. 651 et seq.), the Hazardous Material Transportation Act (49 U.S.C. 1801 et seq.), and any
similar Federal, state, local or foreign Laws and all rules and regulations promulgated according
thereto, all as amended from time to time.



     “Environmental Permits” means any and all Permits required pursuant to any
Environmental Law.



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



     “Escrow Account” shall mean the escrow account established by the Escrow Agent to hold
the Purchase Price and the Shares pending Closing.



     “Escrow Agent” shall mean Lippes Mathias Wexler Friedman LLP.



     “Established
Net Working Capital” means Thirty One Million Four Hundred
Twenty Three
Thousand U.S. Dollars (U.S. $31,423,000).



     “Estimated Deposit Date Working Capital” shall have the meaning ascribed to such term
in Section 2.06(a).



     “FCO Approval” means the expiration of all required waiting periods with respect to
the application for approval from the German Federal Cartel Office or a written statement from the
German Federal Cartel Office confirming that the application referred to in Section 5.04 will not
be reviewed.



     “Financial Statements” shall have the meaning ascribed to such term in Section 3.07.



     “GAAP” means U.S. generally accepted accounting principles consistently applied with
the historical practices of SCM.



     “Gibraltar” means Gibraltar Industries, Inc., a Delaware corporation, which is the
direct or indirect owner of all the issued and outstanding capital stock of the Sellers.



     “Governmental Authority” means any government or governmental, administrative or
regulatory body thereof, whether Federal, state, local or foreign, any agency or instrumentality
thereof and any court, tribunal or judicial or arbitral body thereof.



     “Governmental Order” means any order, writ, judgment, stipulation, determination or
award made, issued or entered into by or with any Governmental Authority.



4









 





     “GSCNY” shall have the meaning ascribed to such term in the first paragraph hereof.



     “Hazardous Material” means any: (a) “hazardous waste” as defined in the Resource
Conservation and Recovery Act of 1976 (42 U.S.C. § 6901 et seq.), as amended through the Deposit
Date, and regulations promulgated thereunder; (b) any “hazardous substance” as defined in CERCLA;
(c) petroleum and any constituent, derivative or by-products thereof; and (d) any hazardous, toxic,
carcinogenic, mutagenic, radioactive, corrosive, reactive or otherwise harmful chemical,
constituent, substance, material, product or waste, the use, handling, presence, exposure to or
Release of which is regulated by or pursuant to any applicable Environmental Law.



     “Holdings” means Bison Holding Corporation, a Delaware corporation.



     “Indebtedness” means, with respect to any indicated Person, in each case on a
consolidated basis: (i) all indebtedness for borrowed money of such Person and its subsidiaries,
(ii) all indebtedness secured by any Encumbrance on property owned by such Person or its
subsidiaries, whether or not the indebtedness secured has been assumed, (iii) all obligations of
such Person for the deferred purchase price of property or services other than trade payables
incurred in the ordinary course of business and not overdue, (iv) all leases of such Person and its
subsidiaries required to be capitalized in accordance with U.S. generally accepted accounting
principles, (v) all obligations of such Person and its subsidiaries evidenced by bonds, debentures,
notes, mortgages or other similar instruments, (vi) all pension and post-retirement related
liabilities of such Person and its subsidiaries, (vii) all amounts owing by such Person to
Affiliates, (viii) any letters of credit and any obligations of such Person and its subsidiaries
thereunder, (ix) all outstanding checks, overdrafts and similar obligations, (x) all guarantees of
or other assurances of payment by such Person or its subsidiaries with respect to any obligations
described in clauses (i) through (ix) immediately above of another Person, and (xi) any premium,
accrued interest and prepayment penalties, if any, with respect to any of the foregoing.



     “Indemnified Party” shall have the meaning ascribed to such term in Section 7.04(a).



     “Indemnifying Party” shall have the meaning ascribed to such term in Section 7.04(a).



     “Independent Accounting Firm” shall have the meaning ascribed to such term in Section
2.07(c).



     “Intellectual Property” means all Software (as hereinafter defined), patents,
copyrights, works of authorship, technology, trade secrets, including methods, techniques,
processes and know-how, inventions, proprietary data, formulae and research and development data;
all trademarks, trade names, trade dress, logos, domain names, service marks and service names; all
registrations, applications, recordings, licenses and common-law rights relating thereto; all
rights to sue at law or in equity for any infringement or other impairment thereof, including the
right to receive all proceeds and damages therefrom, all rights to obtain renewals, reissues,
continuations, reexaminations, divisions or other extensions of legal protections pertaining
thereto, and all goodwill relating to the foregoing.



     “International” shall have the meaning ascribed to such term in the first paragraph
hereof.



5









 





     “June 30 Balance Sheet” means the balance sheet of the Business, dated as of June 30,
2008, a copy of which has been delivered to the Purchasers.



     “Law” means any statute, law, ordinance, regulation, rule, code or other requirement
of any Governmental Authority in effect on or prior to the Deposit Date.



     “Leases” means any and all leases of tangible personal property used in the conduct of
the Business or to which any of the Subsidiaries is a party or by which the properties or assets of
any of the Subsidiaries are bound.



     “Liability” means any debt, loss, damage, adverse claim, fine, penalty, liability or
obligation of any kind, whether direct or indirect, known or unknown, asserted or unasserted,
accrued or unaccrued, absolute, contingent, matured or unmatured, liquidated or unliquidated,
disputed or undisputed, due or to become due and whether in contract, tort, strict liability or
otherwise.



     “Losses” shall mean damages, liabilities, deficiencies, claims, fines, penalties,
actions, demands, judgments, interest, losses, or costs or expenses of whatever kind including
reasonable attorneys’ fees; provided, however, that “Losses” shall not include punitive damages or
other special damages except to the extent imposed in connection with a Third-Party Claim. For the
avoidance of doubt, in the event that an Indemnified Party incurs any additional Liabilities or
expenses other than as a result of a Third Party Claim which it is determined that the Indemnified
Party is entitled to be indemnified from and against, the amount of the Losses which the
Indemnified Party shall be entitled to recover from the Indemnifying Party shall not be calculated
by using a multiple of earnings that may have been used in arriving at or that may be reflective of
the Purchase Price.



     “Material Adverse Effect” means a change, event, occurrence, violation, inaccuracy or
circumstance, the effect of which is or would be reasonably expected to be both material and
adverse to: (a) the business, assets, properties, results of operations or condition (financial or
otherwise) of the Subsidiaries taken as a whole; or (b) the ability of the Sellers or the
Purchasers to consummate the transactions contemplated by this Agreement; provided,
however, that, Material Adverse Effect shall not include any such change, event,
occurrence, violation, inaccuracy or circumstance that the Sellers can demonstrate resulted from:
(i) changes in business or economic conditions affecting the U.S., Chinese or global economies;
(ii) changes in the industry in which SCM operates generally; (iii) changes in the industry in
which SCM Asia operates generally; (iv) changes in stock markets, credit markets, Tax (as
hereinafter defined) rates or new Taxes, interest rates, exchange rates or other matters affecting
the U.S., Chinese or global economies generally; (v) the enactment or implementation of any new
Law; (vi) the adoption of any required change in U.S. generally accepted accounting principles;
(vii) the issuance after the date hereof of any orders, decrees, policies, consents or judgments of
any regulatory authority or court; (viii) any act, omission or event to which the Purchasers have
explicitly consented in writing; and (ix) the execution and delivery of this Agreement (including
any event occurring as a result of any announcement relating to this Agreement); but, with respect
to each of the foregoing exceptions, only if and to the extent such change, enactment,
implementation, adoption or event does not have a disproportionately material effect on the
Subsidiaries as compared to similarly situated companies in substantially the same industries.



6









 





     “Material Contracts” shall have the meaning ascribed to such term in Section 3.13.



     “Net Working Capital” means Current Assets minus Current Liabilities as of the close
of business local time on the Deposit Date. For the avoidance of doubt, and notwithstanding the
use of the term “GAAP” in the definitions of Current Assets, Current Liabilities and Indebtedness,
(i) the financial statements of SCM Asia used in the calculation of Net Working Capital shall be as
of as of the close of business local time on the Deposit Date and not in arrears and (ii) the
amount of any retiree medical liability shall be determined in accordance with FAS 106).



     “Note” means that certain subordinated promissory note of Holdings in substantially
the form of Exhibit A attached hereto.



     “Objection Period” shall have the meaning ascribed to such term by Section 2.07(b).



     “Owned Real Property” shall have the meaning ascribed to such term in Section 3.15(a).



     “Ownership Interests” means Pacific’s investment ownership in SCM Asia and shall be
construed to be within the meaning of “Ownership Interest” as defined and used in the Regulations.



     “Pacific” shall have the meaning ascribed to such term in the first paragraph hereof.



     “Pacific Share” means one (1) share of ordinary stock, par value $1.00 per share, of
Pacific.



     “PBGC” shall have the meaning ascribed to such term in Section 3.20(e).



     “Permit” means all approvals, licenses, permits, authorizations, certificates,
qualifications, registrations and authorizations issued by any Governmental Authority, and
applications therefor.



     “Permitted Liens” means each of the following: (a) liens for Taxes that are not yet
due or delinquent; (b) easements, covenants, restrictions and/or rights of way which do not
individually or in the aggregate materially interfere with the right or ability to use or operate
the Owned Real Property as such Owned Real Property is currently used; (c) statutory liens created
in the ordinary course of business that are not yet delinquent or which are being contested in good
faith and which are not, individually or in the aggregate, material to the Business; (d)
imperfections of title or encumbrances, if any, which are not substantial in amount, do not
materially detract from the value of the property subject thereto and do not materially restrict or
impair the use of such property; and (e) zoning, building or similar restrictions relating to or
affecting the Owned Real Property provided that the Owned Real Property is in compliance therewith.



     “Person” means any individual, corporation, general partnership, limited partnership,
limited liability company, limited liability partnership, association, trust or any other entity or
organization, including a government or political subdivision or an agency or instrumentality
thereof.



7









 





     “Personal Property Leases” shall have the meaning ascribed to such term in Section
3.23(a).



     “Prior APA” shall have the meaning ascribed to such term in Section 7.07(e).



     “Proposed Deposit Date Balance Sheet” means a balance sheet of the Business, prepared
by BAC in accordance with GAAP and containing a statement of the Net Working Capital.



     “Purchase Price” shall mean Forty Seven Million Two Hundred Fifty Thousand U.S.
Dollars (U.S.$47,250,000,000).



     “Purchaser Health Plans” shall have the meaning ascribed to such term in Section
5.09(a).



     “Purchaser Indemnified Party” shall have the meaning ascribed to such term in Section
7.02(a).



     “Purchasers” shall have the meaning ascribed to such term in the first paragraph of
this Agreement and “Purchaser” shall mean either of the Purchasers.



     “Purchasers’ 401(k) Plan” shall have the meaning ascribed to such term in Section
5.09(c).



     “Regulations” means the Several Regulations Regarding Change of Ownership Interest of
the Investors in Foreign Investment Enterprises, promulgated on May 29, 1997 by the Ministry of
Foreign Trade and Economic Cooperation and the State Administration for Industry and Commerce of
the People’s Republic of China.



     “Release” means any release, spill, emission, leaking, pumping, injection, deposit,
disposal, discharge, dispersal, dumping of Hazardous Materials into the environment.



     “Requisite Consents” shall have the meaning ascribed to such term in Section 3.05.



     “SCM Asia” shall have the meaning ascribed to such term in the recitals.



     “SCM Health Plan” shall have the meaning ascribed to such term in Section 5.09(a).



     “SCM Shares” means one hundred (100) shares of common stock, no par value per share,
of SCM.



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



     “Seller Indemnified Party” shall have the meaning ascribed to such term in Section
7.03.



     “Sellers” shall have the meaning ascribed to such term in the first paragraph hereof
and “Seller” means either of the Sellers.



     “Sellers’ 401(k) Plan” shall have the meaning ascribed to such term in Section
5.09(c).



8









 





     “Shares” means the Pacific Share and the SCM Shares.



     “Software” means any and all: (a) computer programs including any and all software
implementations of algorithms, models and methodologies, whether in source code or object code,
including all software developed by, for, or in connection with the Business and all software that
any Subsidiary licenses, leases or otherwise obtains, directly or indirectly, from third parties;
(b) databases and compilations, including any and all data and collections of data, whether machine
readable or otherwise; (c) descriptions, flow charts and other work product used to design, plan,
organize and develop any of the foregoing, screens, menus, buttons and icons; and (d) all
documentation, including user manuals and other training documentation related to any of the
foregoing.



     “Specified Representations” means the representations and warranties of the Sellers
and the Subsidiaries contained in Sections 3.01, 3.03, 3.04 and 3.25 and the representations and
warranties of the Purchasers contained in Sections 4.01 and 4.04.



     “Straddle Period” shall have the meaning ascribed to such term in Section 9.01(b).



     “Subsidiary” or “Subsidiaries” means each of Pacific, SCM and SCM Asia.



     “Survival Period” shall have the meaning ascribed to such term by Section 7.01(a).



     “Tax Authority” means a Federal, state, local or foreign Governmental Authority having
jurisdiction over the assessment, determination, collection or imposition of any Tax, as the
context requires.



     “Tax Returns” means all returns (including information returns), declarations,
reports, estimates and statements regarding Taxes, required to be filed with any Tax Authority.



     “Tax or Taxes” means all Federal, state, local or foreign taxes, charges, fees, levies
or other assessments, including without limitation, all net income, gross income, gross receipts,
value added, activity, capital, capital stock, inventory, sales, use, ad valorem, transfer,
franchise, profits, license, withholding, payroll, employment, excise, estimated, severance, stamp,
occupation, property or other taxes, customs, duties, fees, assessments or charges of any kind
whatsoever, together with any interest and any penalties, fines, additions to tax or additional
amounts imposed by any Tax Authority.



     “Termination Date” shall have the meaning ascribed to such term in Section 8.01.



     “Third Party Claim” shall have the meaning ascribed to such term in Section 7.04(a).



     “To the knowledge,” “known by” or “known” (and any similar phrase)
means, with respect to the Sellers, to the actual knowledge of any of Brian Lipke, Henning
Kornbrekke, Kenneth Smith, Paul Murray, Barton White, Susan Montgomery, Thomas Murphy, Jill
Spaulding and Anil Nadkarni.



     “Transaction Bonus Accrual” means an accrual in the amount equal to the aggregate
amount of the transaction bonuses to be paid by the Purchasers as provided in Section 5.09(b)



9









 







plus the employer portion of any payroll Taxes and other amounts payable by SCM in connection
therewith.



     “Transition Services Agreement” shall mean the Transition Services Agreement in
substantially the form attached hereto as Exhibit B attached hereto.



     “Trustee” shall have the meaning ascribed to such term in the first paragraph hereof.



     “WARN Act” means the United States Worker Adjustment and Retraining Notification Act
and the rules and regulations promulgated thereunder.



     1.02 Rules of Construction.



          (a) Unless the context of this Agreement otherwise clearly requires: (i) references to the
plural include the singular, and references to the singular include the plural; (ii) references to
any gender include the other genders; (iii) the words “include,” “includes” and “including” do not
limit the preceding terms or words and shall be deemed to be followed by the words “without
limitation”; (iv) the term “or” has the inclusive meaning represented by the phrase “and/or”; (v)
the terms “hereof”, “herein”, “hereunder”, “hereto” and similar terms in this Agreement refer to
this Agreement as a whole and not to any particular provision of this Agreement; (vi) the terms
“day” and “days” mean and refer to calendar day(s); and (vii) the terms “year” and “years” mean and
refer to calendar year(s).




          (b) Unless otherwise set forth herein, references in this Agreement to: (i) any document,
instrument or agreement (including this Agreement) includes and incorporates all exhibits,
schedules and other attachments thereto; and (ii) a particular Law means such Law as in effect
(including any amendments, modifications or supplements thereto) on the date hereof and the Deposit
Date. All Article, Section, Exhibit and Schedule references herein are to Articles, Sections,
Exhibits and Schedules of this Agreement, unless otherwise specified. This Agreement shall not be
construed as if prepared by one of the parties, but rather according to its fair meaning as a
whole, as if all parties had prepared it.




ARTICLE 2.

PURCHASE AND SALE




     2.01 Deposit In Escrow; Purchase and Sale of the Shares.



          (a) Concurrently with the execution of this Agreement, (i) the Sellers shall deposit with the
Escrow Agent the certificates evidencing the SCM Shares, accompanied by appropriate stock transfer
powers and with all requisite stock transfer tax stamps attached, and (ii) the Purchasers shall
deposit with the Escrow Agent (x) the Note, fully executed by Holdings and counter-signed by GSCNY,
and (y) funds (to be paid by wire transfer of immediately available funds to such account as may be
specified by the Escrow Agent) in an aggregate amount equal to (A) the Purchase Price minus (B) the
principal amount of the Note minus (C) the difference between the Established Net Working Capital
and the Default Amount. As soon as possible following the execution of this Agreement and in any
event prior to the Closing, (x) the Sellers shall deposit with the Escrow Agent the certificate
evidencing the Pacific Share, accompanied by an appropriate stock transfer power and with all
requisite stock transfer tax




10









 






stamps attached and (y) the Purchasers shall deposit with the Escrow Agent the certificate
evidencing the outstanding shares of BAC (which is the collateral securing the Note), accompanied
by appropriate stock transfer powers executed in blank. The Escrow Agent shall hold the Shares,
the Note and the deposited funds pending the Closing in accordance with the terms of that certain
letter agreement of even date herewith by and among the Escrow Agent, BAC and GSCNY.



          (b) Subject to the terms and conditions of this Agreement, on the Closing Date: (a) GSCNY
shall sell, assign, transfer, convey and deliver the SCM Shares to BAC, and BAC shall purchase,
acquire and accept the SCM Shares from GSCNY; and (b) International shall sell, assign, transfer,
convey and deliver the Pacific Share to the Trustee, and the Trustee shall purchase, acquire and
accept the Pacific Share from International, in each case free and clear of all Encumbrances.




     2.02 Payment of Purchase Price. The Purchase Price may be adjusted pursuant to Section
2.06 and Section 2.07 at and subsequent to the Closing. At the Closing, the Purchase Price as
adjusted pursuant to Section 2.06, if applicable, shall be paid by the Purchasers to the Sellers in
accordance with the allocation in Section 2.08 and shall be paid by instructing the Escrow Agent to
(i) deliver the Note to the Sellers and (ii) pay, by wire transfer of immediately available funds
to an account or accounts specified by GSCNY and International, respectively, in an aggregate
amount equal to (A) the Purchase Price, as adjusted pursuant to Section 2.06, if applicable, minus
(B) the principal amount of the Note. If and to the extent that the funds deposited with the
Escrow Agent (exclusive of any interest on such funds) are less than the amount required to be
funded as provided above, the Purchasers shall pay, by supplemental wire transfer of immediately
available funds to an account or accounts specified by GSCNY and International, respectively, the
amount of such shortfall. If the funds deposited with the Escrow Agent (exclusive of any interest
on such funds) are greater than the amount required to be funded as provided above, the Escrow
Agent shall be authorized to remit such excess funds to the Purchasers, by wire transfer of
immediately available funds to an account or accounts specified by the Purchasers. Any interest
that may accrue with respect to funds deposited with the Escrow Agent shall be for the account of
the Sellers; provided, however, that in the event any funds are remitted by the Escrow Agent to the
Purchasers at Closing, the Purchasers shall be entitled to receive a proportionate share of the
accrued interest in the Escrow Account.



     2.03 Closing. Subject to the terms and conditions of this Agreement, the sale and purchase
of the Shares shall take place and become effective at a closing (the “Closing”) to be held at the
offices of Lippes Mathias Wexler Friedman LLP. The parties may also agree to close the
transactions contemplated hereby through the mutual exchange of documents and funds in a manner
acceptable to the parties and their respective counsel without the need for a meeting of the
parties to conduct the Closing. The Closing shall take place on the date that is one (1) day
following the satisfaction or waiver in writing of the conditions precedent to the Closing
described in Article 6 (other than those conditions that by their nature can only be satisfied at
the Closing) or on such other date as may be mutually agreed to by the parties (the date on which
the Closing occurs being hereinafter the “Closing Date”).



     2.04 Closing Deliveries by the Sellers. At the Closing, subject to satisfaction or waiver
of each of the conditions to the obligations of the Sellers set forth in Section 6.01 of this



11









 







Agreement, Sellers shall deliver or cause the Escrow Agent to deliver to the Purchasers the
following:



          (a) stock certificates representing the Shares, duly endorsed in blank or accompanied by stock
transfer powers and with all requisite stock transfer tax stamps attached




          (b) the Transition Services Agreement signed by the Sellers;




          (c) the certificates referred to in Section 6.02(a);




          (d) a FIRPTA certificate, if requested;




          (e) a copy of (i) the Certificate of Incorporation of SCM, as amended, certified by the
Secretary of SCM and accompanied by a certificate of the Secretary of SCM, dated as of the Closing
Date, stating that no amendments have been made to such Certificate of Incorporation since such
date; (ii) the By-laws of SCM, certified by the Secretary of SCM; and (iii) Good Standing
Certificates for SCM from the Secretaries of State of the State of Delaware and North Carolina;
(iv) the organizational documents of Pacific, as amended, certified by the Secretary of Pacific and
accompanied by a certificate of the Secretary of Pacific, dated as of the Closing Date, stating
that no amendments have been made to such organizational documents; and (v) a copy of the
organizational documents of SCM Asia, certified by the Secretary (or equivalent) of SCM Asia and
accompanied by a certificate of the Secretary (or equivalent) of SCM Asia, dated as of the Closing
Date, stating that no amendments have been made to such organizational documents;




          (f) copies of all Requisite Consents that have been obtained;




          (g) a written resignation from each director and officer of each of SCM, Pacific and SCM Asia;




          (h) the minute books (or equivalent) of the Subsidiaries;




          (i) any payment required to be made by the Sellers to the Subsidiaries under the Cash
Settle-Up; and




          (j) such other documents as the Purchasers shall reasonably request.




     2.05 Closing Deliveries by the Purchasers. At the Closing, subject to satisfaction or
waiver of each of the conditions to the obligations of the Purchasers set forth in Section 6.02 of
this Agreement, the Purchasers shall deliver or instruct the Escrow Agent to deliver to the
Sellers:



          (a) the Note (together with the certificate evidencing the outstanding shares of BAC, as the
collateral securing the Note, and the related stock powers executed in blank) and the funds
referred to in Section 2.02;




          (b) the Transition Services Agreement signed by BAC;




12









 








          (c) a Good Standing Certificate of BAC issued by the Secretary of State of its jurisdiction of
organization;




          (d) any payment required to be made by the Subsidiaries to the Sellers under the Cash
Settle-Up; and




          (e) such other documents as the Sellers shall reasonably request.




     2.06 Adjustment to the Purchase Price at Closing.



          (a) No later than four (4) Business Days after the Deposit Date, GSCNY shall cause to be
prepared and delivered to BAC a good faith estimate of the Net Working Capital of the Business as
of the Deposit Date (the “Estimated Deposit Date Net Working Capital”), which shall be prepared
from the books and records of the Business and shall represent a best estimate of the matters set
forth therein based on the most current financial information available as of such date. Based on
the Estimated Deposit Date Net Working Capital prepared and delivered to BAC pursuant to the terms
hereof, GSCNY shall also cause to be prepared and delivered to BAC a statement of the amount, if
any, by which such Estimated Deposit Date Net Working Capital is expected to be greater than or
less than the Established Net Working Capital.




          (b) BAC shall review such statements and shall provide GSCNY with notice of any disagreement
with such calculations within two (2) Business Days of the BAC’s receipt of such statements. Upon
the receipt by GSCNY of any such notice of disagreement from BAC, BAC and GSCNY shall attempt to
resolve in good faith any disagreements concerning such calculations prior to the Closing Date.
GSCNY shall provide BAC with access to all documents, books and records used by GSCNY in preparing
such statements. If BAC and GSCNY are able to resolve any disagreements as to such calculations
prior to the Closing Date, then the amount of the Estimated Deposit Date Net Working Capital as
mutually agreed to by BAC and GSCNY shall be conclusive and binding on the Sellers and BAC and
shall be used to adjust the Purchase Price at Closing. If BAC and GSCNY are unable to resolve any
such dispute prior to the Closing Date, then BAC and GSCNY shall be deemed to have agreed that the
amount of the Estimated Deposit Date Net Working Capital is Thirty
One Million One Hundred Forty
Three Thousand U.S. Dollars (U.S.$31,143,000) (the “Default Amount”).




          (c) The Purchase Price will be adjusted at Closing as follows: (i) the cash portion of the
Purchase Price payable at Closing as provided in Section 2.02 shall be increased, on a
dollar-for-dollar basis, by the amount, if any, by which the agreed to (or deemed agreed) Estimated
Deposit Date Net Working Capital exceeds the Established Net Working Capital; or (ii) the cash
portion of the Purchase Price payable at Closing as provided in Section 2.02 shall be decreased, on
a dollar-for-dollar basis, by the amount, if any, by which the agreed to (or deemed agreed)
Estimated Deposit Date Net Working Capital is less than the Established Net Working Capital,
subject to further adjustment as provided in Section 2.07 below.




     2.07 Post Closing Adjustment to Purchase Price. The Purchase Price shall be subject to
adjustment after the Closing as follows:



13









 





          (a) BAC shall prepare and deliver the Proposed Deposit Date Balance Sheet to GSCNY no later
than the end of the one hundred and twenty (120) day period beginning on the first day following
the Closing Date.




          (b) The Proposed Deposit Date Balance Sheet and the Net Working Capital as stated therein
shall be deemed to be final, binding and conclusive on the parties (at which time the Proposed
Deposit Date Balance Sheet shall be deemed to constitute the Deposit Date Balance Sheet and the Net
Working Capital reflected in the Proposed Deposit Date Balance Sheet shall be deemed to be the
Deposit Date Net Working Capital) upon the earliest of: (i) the date that GSCNY delivers an
Acceptance Notice to BAC; (ii) in the event that GSCNY does not deliver an Acceptance Notice or a
Dispute Notice to BAC before the end of the sixty (60) day period beginning on the first day
following the date on which the Proposed Deposit Date Balance Sheet is delivered by BAC to GSCNY
(the “Objection Period”), the first day following the expiration of such Objection Period; and
(iii) in the event that GSCNY delivers a Dispute Notice to BAC within the Objection Period, the
date on which all disputes between GSCNY and BAC concerning the amount of the Net Working Capital
have been resolved in writing, whether by agreement of BAC and GSCNY or by the Independent
Accounting Firm as provided for by Section 2.06(c).




          (c) During the Objection Period, BAC shall provide GSCNY with reasonable access to all of the
applicable documents, books and records used by BAC in preparing the Proposed Deposit Date Balance
Sheet. GSCNY shall have the right to either accept or dispute the amounts reflected on the
Proposed Deposit Date Balance Sheet, including the amount of the Net Working Capital as reflected
therein, by delivering written notice (as applicable, an “Acceptance Notice” or a “Dispute Notice”)
to BAC before the expiration of the Objection Period. The Dispute Notice shall identify with
reasonable particularity each disputed item on the Proposed Deposit Date Balance Sheet, specify the
amount of such dispute and set forth the general basis for each item in dispute. In the event of
such a dispute, GSCNY and BAC shall attempt in good faith to reconcile their dispute, and any
resolution by them as to any disputed items shall be final, binding and conclusive on GSCNY and
BAC. If GSCNY and BAC are unable to reach a resolution of their differences within thirty (30)
days following the date GSCNY delivers the Dispute Notice to BAC (or such longer period as they may
agree in writing), then GSCNY and BAC shall promptly submit any remaining disputed items to any
independent accounting firm of at least regional reputation mutually acceptable to GSCNY and BAC
(the “Independent Accounting Firm”). If any remaining disputed items are submitted to the
Independent Accounting Firm for resolution: (i) each party will furnish to the Independent
Accounting Firm such workpapers and other documents and information relating to the remaining
disputed items as the Independent Accounting Firm may reasonably request and are available to such
party, and each party will be afforded the opportunity to present to the Independent Accounting
Firm any material relating to the disputed items and to discuss (in the presence of the other
party) the resolution of the disputed items with the Independent Accounting Firm; (ii) the
Independent Accounting Firm will use its good faith efforts to resolve the disputed items within
thirty (30) days of submission of the disputed items to the Independent Accounting Firm; (iii) the
determination by the Independent Accounting Firm, as set forth in a written notice to GSCNY and BAC
setting forth the reasons underlying such determination, shall be final, binding and conclusive on
GSCNY and BAC; and (iv) the fees and disbursements of the Independent Accounting Firm shall be
split equally between BAC on the one hand and Sellers on




14









 






the other hand. If GSCNY delivers a Dispute Notice to BAC before the expiration of the
Objection Period, the Net Working Capital as determined by written agreement of GSCNY and BAC, or
as determined by the Independent Accounting Firm, shall be deemed to be the Deposit Date Net
Working Capital and shall be conclusive and binding on the Sellers and BAC.



          (d) The provisions of this Section 2.07(d) shall apply only in the event that the Purchase
Price is not adjusted at Closing in accordance with the provisions of Section 2.06 above. In the
event that the Deposit Date Net Working Capital is less than the Established Net Working Capital or
greater than the Established Net Working Capital, within ten (10) Business Days after the Proposed
Deposit Date Balance Sheet is deemed to be final, binding and conclusive on the parties, a cash
adjustment to the amount of the Purchase Price shall be made, on a dollar-for-dollar basis, as
follows: (i) in the event that the Deposit Date Net Working Capital is less than the Established
Net Working Capital, then the Sellers shall pay the Purchasers (allocated between BAC and the
Trustee as they may so request) the amount by which the Established Net Working Capital exceeds the
Deposit Date Net Working Capital, together with interest thereon as determined below in immediately
available funds by wire transfer to an account or accounts specified by the Purchasers; and (ii) in
the event that the Deposit Date Net Working Capital is greater than Established Net Working
Capital, then the Purchasers shall pay to the Sellers the amount by which the Deposit Date Net
Working Capital exceeds the Established Net Working Capital together with interest thereon as
provided below in immediately available funds by wire transfer to an account or accounts specified
by the Sellers.




          (e) The provisions of this Section 2.07(e) shall apply only in the event that the Purchase
Price is adjusted at Closing in accordance with the provisions of Section 2.06 above. In the event
that the Deposit Date Net Working Capital is less than or greater than the Adjusted Established Net
Working Capital, within ten (10) Business Days after the Proposed Deposit Date Balance Sheet is
deemed to be final, binding and conclusive on the parties, a cash adjustment to the amount of the
Purchase Price shall be made, on a dollar-for-dollar basis, as follows: (i) in the event that the
Deposit Date Net Working Capital is less than the Adjusted Established Net Working Capital, then
the Sellers shall pay the Purchasers (allocated between BAC and the Trustee as they may so request)
the amount by which the Adjusted Established Net Working Capital exceeds the Deposit Date Net
Working Capital, together with interest thereon as determined below in immediately available funds
by wire transfer to an account or accounts specified by the Purchasers; and (ii) in the event that
the Deposit Date Net Working Capital is greater than the Adjusted Established Net Working Capital
then the Purchasers shall pay to the Sellers the amount by which the Deposit Date Net Working
Capital exceeds the Adjusted Net Working Capital together with interest thereon as provided below
in immediately available funds by wire transfer to an account or accounts specified by the Sellers.




          (f) The amount payable by Sellers to the Purchasers or by the Purchasers to Sellers as
determined by the provisions of Section 2.07(d) or (e) above, as applicable, shall bear interest
from the Closing Date to the date that any such payment is made at an annual rate equal to five
percent (5%).




     2.08 Purchase Price Allocation. Of the total Purchase Price, as adjusted from time to
time, 78% of such amount shall be allocated to the SCM Shares and 22% of such amount shall be
allocated to the Pacific Share. The forgoing allocations shall be used in reporting the Tax



15









 







consequences of the transactions contemplated by this Agreement and neither the Sellers nor the
Purchasers shall take any position (whether in connection with audits, Tax Returns or otherwise)
that is inconsistent with such allocations, except as may otherwise be required pursuant to
applicable Tax Law.



ARTICLE 3.

REPRESENTATIONS AND WARRANTIES OF THE SUBSIDIARIES AND THE SELLERS




     Each of the Sellers and the Subsidiaries hereby, jointly and severally, make the following
representations and warranties, as of the date hereof, which representations and warranties shall
be qualified and added to by the Schedules; provided that, the disclosure of an item in one section
of the Schedules shall be deemed to modify both: (a) the representations and warranties contained
in the Section of this Agreement to which it corresponds in number; and (b) any other
representation and warranty of the Sellers and the Subsidiaries in this Agreement to the extent
that it is or should be readily apparent from a reading of such disclosure item that it would also
qualify or apply to such other representation and warranty:



     3.01 Organization, Authority and Qualification of the Sellers and the Subsidiaries. Each
of the Subsidiaries is duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization and each Subsidiary has, all necessary power and authority (i) to own,
operate or lease all the properties and assets now owned, operated or leased by it and to carry on
its respective business as it has been and is now being conducted and (ii) except for SCM Asia,
which is not a party to this Agreement, to execute and deliver this Agreement and each of the other
related documents and to perform its obligations hereunder. The Sellers have all requisite
corporate power and authority to consummate the transactions contemplated hereby and thereby. Each
Subsidiary is, duly licensed or qualified to do business and is in good standing in: (a) each
jurisdiction in which the properties owned or leased by such Subsidiary are located; and (b) where
the operation of its business makes such licensing or qualification necessary or desirable, except
for those jurisdictions in which the failure of any Subsidiary to be so qualified would not have a
Material Adverse Effect. Schedule 3.01 attached hereto contains a list of the
jurisdictions of organization of the Sellers and the Subsidiaries and a list of all jurisdictions
in which each of the Subsidiaries is duly licensed or qualified to do business.



     3.02 Subsidiaries. Other than: (a) Pacific’s ownership of all of the Ownership Interests
of SCM Asia; and (b) SCM’s 20% membership interest in Cupron Advanced Materials, LLC, a Delaware
limited liability company, none of the Subsidiaries own any capital stock or other equity interest
in any Person. Except as provided in Schedule 3.02, the 20% membership interest in Cupron
Advanced Materials, LLC is owned by SCM, free and clear of all Encumbrances.



     3.03 Capitalization; Officers and Directors.



          (a) The authorized capital stock of SCM consists of an aggregate of one hundred (100) shares
of common stock, no par value per share. The SCM Shares constitute all of the issued and
outstanding capital stock of SCM. The SCM Shares were duly authorized for issuance and are
validly issued, fully paid and non-assessable.




16









 








          (b) The Pacific Share constitutes the only issued and outstanding share of Pacific. The
Pacific Share was duly authorized for issuance and is validly issued.




          (c) The Ownership Interests constitute all of the ownership interests of SCM Asia. The
Ownership Interests were duly authorized for issuance and are validly issued.




          (d) Except as required by applicable Law, there is no existing option, warrant, call, right,
commitment or other agreement of any character to which any of the Sellers or the Subsidiaries is a
party or which are binding on any of the Sellers or the Subsidiaries requiring, and there are no
securities of any of the Sellers or the Subsidiaries outstanding which upon conversion or exchange
would require, the issuance, sale or transfer of any additional shares of capital stock or other
equity securities of the Subsidiaries or other securities convertible into, exchangeable for or
evidencing the right to subscribe for or purchase shares of capital stock or other equity
securities of the Subsidiaries. GSCNY is the record and beneficial owner of the SCM Shares,
International is the record and beneficial owner of the Pacific Share and Pacific is the record and
beneficial owner of the Ownership Interests of SCM Asia. Except as required by Law and the liens
securing certain credit facilities described in the Second Amended and Restated Credit Agreement by
and among Gibraltar and GSCNY, KeyBank National Association as Administrative Agent and Lead
Arranger and the Lenders named therein dated as of August 31, 2007, which liens will be released at
Closing, all of the Shares are owned by the Sellers free and clear of any and all Encumbrances and,
at the Closing, the Purchasers will acquire good and valid title to the Shares, clear of all
Encumbrances (other than as contemplated by Section 4.06). Other than this Agreement, and except
as described in Schedule 3.05 none of the Shares or Ownership Interests are subject to any
voting trust agreement or other contract, commitment, agreement or arrangement restricting or
relating to the voting or dividend rights or disposition of the Shares or Ownership Interests.




          (e) Schedule 3.03(e) sets forth, a list and the identity of all of the officers and
directors of each of the Subsidiaries.




     3.04 Due Authorization. The execution and delivery of this Agreement and the Ancillary
Agreements by each of the Sellers and the Subsidiaries (other than SCM Asia), the performance by
each of the Sellers and each of the Subsidiaries (other than SCM Asia), as applicable, of its
respective obligations hereunder and thereunder, and the consummation by such Persons of the
transactions contemplated hereby and, as applicable, thereby have been duly authorized by all
requisite corporate action on the part of each such Person. This Agreement and each Ancillary
Agreement have been duly executed and delivered by the Sellers and the Subsidiaries (other than SCM
Asia) and (assuming due authorization, execution and delivery by the Purchasers and any other
parties thereto other than the Sellers and such Subsidiaries), this Agreement and each such
Ancillary Agreement constitutes a legal, valid and binding obligation of each of the Sellers and
such Subsidiaries enforceable against each such party in accordance with its terms, subject to
applicable Law, bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors rights and remedies generally and subject, as to enforceability, to rules of law
governing specific performance, injunctive relief and to general principles of equity.



17









 





     3.05 No Conflict. Except as described in Schedule 3.05, assuming that all
consents, approvals, authorizations and other actions described in Schedule 3.05 have been
obtained and all filings and notifications listed in Schedule 3.05 have been made, the
execution, delivery and performance of this Agreement and the Ancillary Agreements by each of the
Sellers and the Subsidiaries, as applicable, does not and will not: (a) violate, conflict with or
result in the breach of any provision of their respective organizational documents; (b) conflict
with or violate any Law or Governmental Order applicable to the Sellers or the Subsidiaries, or any
of their respective assets, properties or businesses; or (c) conflict in any material way with,
result in any material breach of, constitute a material default (or event which with the giving of
notice or lapse of time, or both, would become such a default) under, require any consent under, or
give to others any rights of termination, amendment, acceleration, suspension, revocation or
cancellation of, or result in the creation of any material Encumbrance on any of the assets of any
of the Subsidiaries under the terms of any Material Contract. Except as set forth in Schedule
3.05, the Sellers have obtained all third party consents shown as being required in
Schedule 3.05 (collectively, the “Requisite Consents”).



     3.06 Governmental Consents and Approvals. Except as otherwise described in Schedule
3.06, the execution, delivery and performance of this Agreement and the Ancillary Agreements by
the Sellers and the Subsidiaries, as applicable, does not require any consent, approval,
authorization or other order of, action by, filing with or notification to any Governmental
Authority.



     3.07 Financial Information. Prior to the date hereof, Sellers have delivered to the
Purchasers true and complete copies of (a) the June 30 Balance Sheet and the related statements of
income for the six (6) month period then ended, and (b) true and complete copies of a balance sheet
for the Business as of December 31, 2007, and the related statements of income for the twelve (12)
month period then ended (together with the financial statements referred to in subdivision (a) of
this Section, collectively referred to herein as the “Financial Statements”). The Financial
Statements (x) were prepared in good faith from the books and records of the Business and, except
as otherwise described in Schedule 3.07, in accordance with U.S. generally accepted
accounting principles, (y) are accurate and present fairly the financial condition and results of
operations of the Subsidiaries as of the dates thereof or for the periods covered thereby and (z)
include and identify all adjustments that are necessary for a fair presentation of the financial
condition of the Business and the results of the operations of the Business as of the dates thereof
or for the periods covered.



     3.08 No Undisclosed Liabilities. Except as set forth in the Financial Statements, in the
Schedules hereto generally and on Schedule 3.08 specifically, there are no material
Liabilities of the Business other than Liabilities which have been incurred since June 30, 2008 in
the ordinary course of business, consistent with past practices. This Section 3.08 shall not apply
to undisclosed Liabilities with respect to those matters set forth in Section 3.18 (Taxes) or
Section 3.19 (Environmental Matters).



     3.09 Governmental Authorizations and Regulations. Set forth on Schedule 3.09 is a
true and complete list of all material Permits held by a Subsidiary or relating to or necessary for
the operation of the Business as currently conducted. Except as set forth on Schedule
3.09, (i) the Subsidiaries have obtained, and are in compliance in all material respects with,
all such



18









 







Permits, (ii) all such Permits are in full force and effect, (iii) the Sellers and the Subsidiaries
have not received any written notice from any Governmental Authority that any such Permits will be
or are threatened to be modified, suspended or revoked, and, to the knowledge of the Sellers, there
is no reason to believe, that any such Permits will be modified, suspended or revoked, or that any
such Permits have not been timely renewed or reapplied for by a Subsidiary, or cannot be renewed,
transferred or otherwise obtained by the Purchasers in the ordinary course of business. The
Permits held by the Subsidiaries and listed on Schedule 3.09 are all the Permits necessary
to the conduct of the Business as presently conducted.



     3.10 Conduct in the Ordinary Course; Absence of Certain Changes, Events and Conditions.
Since June 30, 2008, except as disclosed in Schedule 3.10, each of the Subsidiaries has
conducted its respective business in the ordinary course and consistent with past practices. As
amplification and not limitation of the foregoing, except as disclosed in Schedule 3.10,
since June 30, 2008, none of the Subsidiaries have: (a) made any change in tax or accounting
methods, principles or practices or any method of calculating any bad debt, contingency or other
reserve for accounting, financial reporting or Tax purposes or made or changed any material Tax
election, or settled any tax controversy matter or matters; (b) made any material changes in the
customary methods of operating its business including, without limitation, practices and policies
relating to marketing, selling and pricing; (c) amended, terminated, cancelled or compromised any
material claims; (d) entered into any material agreement, arrangement or transaction with any of
its directors, officers, employees or shareholders other than those contemplated by this Agreement
or for compensation in the ordinary course of business consistent with past practices; (e) granted
any general increase in the compensation payable or to become payable to its officers, employees or
consultants (including any such increase pursuant to any bonus, pension, profit-sharing or other
plan or commitment), of any Subsidiary or any special increase in the compensation payable or to
become payable to any such officer, employee or consultant, or made any bonus payments to any such
officer, employee or consultant, except for normal, bargained, merit or cost of living payments or
increases made in the ordinary course of business; (f) made capital expenditures or commitments on
behalf of or relating to its business in excess of $500,000 in the aggregate or failed to make any
capital expenditures in accordance with existing commitments or budgeted amounts; (g) sold,
transferred or disposed of, or agreed to sell, transfer or dispose of, any material assets of the
Business other than in the ordinary course of business, consistent with past practice; (h) acquired
any material assets of the Business except in the ordinary course of business, nor acquired or
merged with any other business; (i) incurred or created any material Encumbrances on any of the
assets of the Business; (j) experienced any destruction, damage or other loss (whether or not
covered by insurance) of any material asset or material property of the Business; (k) incurred any
material Liability outside the ordinary course of business; (l) initiated any litigation other than
as required to protect and preserve the Business and its assets where the failure to initiate such
litigation would result in expiration of statutes of limitations or waivers of contractual rights;
(m) agreed, whether in writing or otherwise, to take any action described in this Section 3.10; (n)
taken any action or agreed to take any action provided for in Section 5.01(b) below; or (o)
suffered any Material Adverse Effect.



     3.11 Litigation. Except as set forth on Schedule 3.11, there is no Action pending
or, to the knowledge of the Sellers, overtly threatened against the Sellers or the Subsidiaries, or
the Business or its properties or assets, before any court, or before any Governmental Authority.
Furthermore, there is no Action pending or threatened before any court, arbitrator, or



19









 







governmental, regulatory, or administrative official, body, or authority against the Sellers or the
Subsidiaries, or, to the knowledge of the Sellers, against any other Person, that is reasonably
likely to prevent or materially delay the consummation of the transactions contemplated by this
Agreement.



     3.12 Compliance with Laws.



          (a) Except as described on Schedule 3.12(a), each of the Subsidiaries has, in all
material respects, conducted and continues to conduct, in all material respects, its business in
accordance with all Laws and Governmental Orders applicable to it and no Subsidiary is in material
violation of any such Law or Governmental Order, or any judicial or administrative interpretation
thereof.




          (b) No Subsidiary has, and to the knowledge of the Sellers, no agent of the Business has,
directly or indirectly, agreed to give, or has given, offered, authorized, promised, made or agreed
to make, any gifts of money or similar benefit (other than incidental gifts of articles of nominal
value) to any actual or potential customer, supplier, governmental employee or any Person in a
position to assist or hinder such Person in connection with any actual or proposed transaction
other than payments required or permitted by Law of the applicable jurisdiction and in compliance
with the U.S. Foreign Corrupt Practices Act.




          (c) This Section 3.12 shall not apply to those specific matters set forth in Section 3.18
(Taxes) or Section 3.19 (Environmental Matters).




     3.13 Material Contracts. Schedule 3.13 sets forth all of the following Contracts
to which any of the Subsidiaries is a party or by which the property or assets of any of the
Subsidiaries is bound (collectively, the “Material Contracts”): (a) Contracts with the Sellers, any
Affiliate or any current or former officer or director of the Sellers or any of the Subsidiaries;
(b) Contracts pursuant to which any party is required to purchase or sell a stated portion of its
requirements or output from or to another party; (c) Contracts for the sale of any assets of a
Subsidiary other than sales of inventory in the ordinary course of business; (d) Contracts
containing covenants of a Subsidiary not to compete in any line of business or with any other
Person in any geographical area; (e) Contracts relating to the borrowing of money, including
indebtedness under capital leases; (f) any other Contracts that: (i) involve, individually, the
expenditure by a Subsidiary of more than $250,000 annually, (ii) are not cancelable upon 30 or
fewer days notice without any liability or (iii) require performance by any party more than one
year from the date hereof; (g) Contracts that provide for the receipt of payment by a Subsidiary of
$250,000 or more annually; (h) Contracts requiring a Subsidiary to pay, perform, discharge or
otherwise guarantee any debt or obligation of any Person; (i) Contracts relating to ownership of
equity interests in any Person, other than an Affiliate, by any of the Sellers or the Subsidiaries;
(j) Contracts containing any provisions that are contingent upon the occurrence of or prohibit any
change in ownership of a Subsidiary; and (k) Contracts (other than those disclosed pursuant to
clauses (a) through (j) above) that (i) are material to the Business, (ii) were entered into other
than in the ordinary course of business or (iii) are to be performed other than in the ordinary
course of business. Except as set forth on Schedule 3.13, all of the Material Contracts to
which any of the Subsidiaries is a party: (i) are the legal, valid and binding obligation of such
Subsidiary, enforceable against such Subsidiary in accordance with their respective terms,



20









 







subject to applicable Law, bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors’ rights and remedies generally and subject, as to enforceability, to rules of
law governing specific performance, to injunctive relief, and to general principles of equity
(regardless of whether enforcement is sought in a proceeding at law or in equity) and (ii) are in
full force and effect. Unless otherwise stated in Schedule 3.13, none of the Subsidiaries
is in default in any material respect under any Material Contract and, to the knowledge of the
Sellers, no other party is in default under the terms of any Material Contract. Prior to the date
hereof, true, correct and complete copies of all Material Contracts have been provided to the
Purchasers.



     3.14 Intellectual Property.



          (a) Except as set forth on Schedule 3.14(b)(a), each Subsidiary owns or has rights to
use all the Intellectual Property which is used or owned by such Subsidiary in its respective
business, free and clear of any Encumbrance (other than any license or other agreement under which
such Subsidiary obtains its rights from third parties). Schedule 3.14(a) sets forth a list
of all material Intellectual Property (other than know-how and trade secrets) owned, used, held for
use or licensed by any of the Subsidiaries, and any licenses or other agreements relating thereto,
and, for Intellectual Property owned by any of the Subsidiaries, indicates whether and where any
such Intellectual Property has been registered or filed with the United States Patent and Trademark
Office, the United States Copyright Office or the corresponding office of any other jurisdictions.
To the knowledge of the Sellers, neither the Intellectual Property nor the conduct of Business
materially conflicts with or infringes upon, and to the knowledge of the Sellers no one has
asserted to any of the Subsidiaries or the Sellers in writing that the Intellectual Property or the
conduct of the Business materially conflicts with or infringes upon, any intellectual property
owned by any third party. Except as disclosed in Schedule 3.14(a), none of the
Subsidiaries has granted any outstanding licenses or other rights, or obligated itself to grant
licenses or other rights in or to any of the Intellectual Property.




          (b) Except as set forth on Schedule 3.14(b), at the Closing, the Subsidiaries will own
valid title to, or hold a valid license to use, the Intellectual Property set forth in Schedule
3.14(a), free and clear of all Encumbrances other than Permitted Liens. Such Intellectual
Property constitutes all of the proprietary rights necessary for the lawful and efficient operation
of the Business as currently conducted. The Sellers and the Subsidiaries have taken commercially
reasonable steps to protect the proprietary Intellectual Property of the Subsidiaries, including
without limitation paying all filing and maintenance fees and filing all required documents to
maintain in effect all patents and registered trademarks included in such Intellectual Property.




          (c) No Seller or Subsidiary is in default under and, to the knowledge of the Sellers, no third
party is in default under, any license, sublicense or agreement by which a Seller or a Subsidiary
holds or has given to others the right to use any Intellectual Property related to or necessary for
the conduct of the Business.




     3.15 Owned Real Property.



          (a) Schedule 3.15(a) lists the street address of each parcel of real property owned by
SCM, together with a general description of the use of each such facility (collectively,


21









 







the “Owned Real Property”). Except for the Owned Real Property and as otherwise set forth on
Schedule 3.15(a), neither Pacific nor SCM Asia owns any real property or improvements
thereon, and no other real property is used in the conduct of the Business by the Subsidiaries.
The use by SCM Asia of any real property in connection with the operations of its business complies
in all material respects with the provisions of applicable Law relating to the use of real property
in the People’s Republic of China.




          (b) SCM has good and valid title to the Owned Real Property, free and clear of all
Encumbrances other than Permitted Liens or as disclosed in Schedule 3.15(b).




          (c) There are no parties other than SCM in possession of any parcel of Owned Real Property or
any portion thereof, and there are no leases, subleases, licenses, concessions or other agreements,
written or oral, granting to any party or parties the right of use or occupancy of any of the Owned
Real Property or any portion thereof. There are no outstanding options or rights of first refusal
to purchase the Owned Real Property or any portion thereof or interest therein.




          (d) The Owned Real Property used by SCM is supplied with utilities adequate for the use and
operation of SCM’s business in the manner currently conducted, including, without limitation, gas,
electricity, water, telephone, sanitary sewer and stormwater management.




          (e) To the knowledge of the Sellers, there are no proceedings in eminent domain or other
proceedings pending or threatened, affecting any portion of the Owned Real Property or any means of
ingress or egress thereto.




          (f) The Owned Real Property and the present uses and operations thereof comply in all material
respects with, and neither SCM nor the Sellers have received written notice from any Governmental
Authority that a portion of the Owned Real Property, or any building or improvement located
thereon, currently violates in any material respect, any Law, (other than any Environmental Laws,
as to which the representations and warranties of the Sellers and the Subsidiaries are solely
contained in Section 3.19), including those Laws relating to zoning, building, land use, health and
safety, fire, air, sanitation and noise control and all deed and other title covenants and
restrictions. The Subsidiaries have maintained the buildings, structures and other improvements
located at each Owned Real Property in the ordinary course and have not deferred the maintenance of
any such assets.




     3.16 Leased Real Property. Except as set forth on Schedule 3.16, none of the
Subsidiaries lease, license or otherwise occupy any real property or improvements thereon other
than the Owned Real Property. The use of any real property used by SCM Asia in connection with the
operations of its business complies in all material respects with the provisions of applicable Law
relating to the use of real property in the People’s Republic of China. Without limiting the
generality of the foregoing, SCM Asia has obtained the land use rights to the real property used by
SCM Asia in accordance with all applicable Laws of the Peoples Republic of China and has paid the
land use premium with respect thereto in full. There are no parties other than SCM Asia in
possession of any parcel of real property used by SCM Asia or any portion thereof, and there are no
leases, subleases, licenses, concessions or other agreements, written or oral, granting to any
party or parties the right of use or occupancy of such real property or any



22









 







portion thereof. Such real property is supplied with utilities adequate for the use and operation
of SCM Asia’s business in the manner currently conducted, including, without limitation, gas,
electricity, water, telephone, sanitary sewer and stormwater management. To the knowledge of the
Sellers, there are no proceedings in eminent domain or other proceedings pending or threatened,
affecting any portion of such real property or any means of ingress or egress thereto. The
Subsidiaries have maintained the buildings, structures and other improvements located at such real
property in the ordinary course and have not deferred the maintenance of any such assets.



     3.17 Customers and Suppliers. Schedule 3.17 sets forth a list of: (a) the names
of the top ten (10) customers of each of SCM and SCM Asia by revenue during the preceding two (2)
years and the percentage of revenue represented by each such customer during the preceding two (2)
years; and (b) the top five (5) suppliers of each of SCM and SCM Asia by payments during the
preceding two (2) years and the percentage of payments represented by each such supplier during the
preceding two (2) years. There are no outstanding material disputes with any customer or supplier
of the Business, and no material customer or supplier has notified a Seller or a Subsidiary in
writing that it will not do business or that it will materially reduce its business with SCM or SCM
Asia, or that it will require any modification of the terms of its agreements with the Business or
a Subsidiary and, to the knowledge of the Sellers, no material customer or supplier has notified a
Seller or Subsidiary that it intends to materially reduce its business or requires any modification
in terms of its agreements with the Business or a Subsidiary.



     3.18 Taxes.



          (a) Except as set forth on Schedule 3.18: (i) All Tax Returns required to be filed
with respect to the Business or any Subsidiary have been timely filed; (ii) all Taxes shown on such
Tax Returns or otherwise due or payable have been timely paid except as expressly and correctly
reserved on the June 30 Balance Sheet for current taxes payable; (iii) neither the Internal Revenue
Service nor any other Tax Authority is currently claiming or asserting in writing, or, to the
knowledge of the Sellers, orally, against any of the Subsidiaries, any adjustment, deficiency or
claim for payment of additional Taxes, nor, to the knowledge of the Sellers, is there any basis for
any such claim or assertion; (iv) there are no Tax examinations, audits, proceedings, deficiencies,
refund litigation or proposed adjustments, and to the knowledge of the Sellers, no such matters
threatened, by which any Tax Return of the Business or any Subsidiary is currently being or has in
the past three (3) years examined by any Tax Authority; (v) there are no pending or, to the
knowledge of the Sellers, threatened Actions or proceedings for the assessment or collection of
Taxes against any of the Subsidiaries; (vi) there are no Tax liens on any assets of a Subsidiary or
the Business; (vii) there is no contract, agreement, plan or arrangement covering any employee or
former employee of SCM that would result, separately or in the aggregate, in the payment of any
amount that would by reason of the transactions contemplated hereby (A) not be deductible under
Section 162(a)(1) or 404 of the Code or (B) constitute an “excess parachute payment” within the
meaning of Section 280G of the Code; (viii) none of the Subsidiaries has, at any time, been a
member of any partnership or joint venture or the holder of a beneficial interest in any trust for
any period for which the statute of limitations for any Tax potentially applicable as a result of
such membership or holding has not expired; (ix) all Taxes required to be withheld, collected or
deposited by the Business or a Subsidiary have been timely withheld, collected or deposited and, to
the extent required, have




23









 






been timely paid to the relevant Tax Authority, and without limiting the foregoing, each of
the Subsidiaries has (A) properly withheld all income, social security and similar Taxes and paid
all payroll Taxes to the proper Tax Authority with respect to all persons properly characterized as
employees of the Business for Tax purposes, (B) properly obtained all certifications, and made all
applicable filings, relating to exemptions from Taxes required by Law to be obtained or made in
connection with the Business, and (C) collected any and all sales, use, transfer and similar Taxes
required or permitted to be collected in connection with the Business, or has on hand documented
evidence of the applicable purchaser’s exemption from the payment of same; (x) SCM is a United
States Person as defined in Section 7701(a)(30) of the Code; (xi) the Sellers have delivered to the
Purchasers true and complete copies of all Federal, State and local income Tax Returns of SCM and
all applicable foreign Tax Returns for each of Pacific and SCM Asia for all open taxable years;
(xii) no claim has been made since January 1, 2003 by a Tax Authority in a jurisdiction in which
Tax Returns are not filed by a Subsidiary, that such Subsidiary is subject to taxation by that
jurisdiction; (xiii) none of the Subsidiaries has at any time been treated (including under any
double taxation arrangement) as resident for any tax purpose, or as subject to tax by virtue of
having a permanent establishment or other place of business, in any jurisdiction other than the
jurisdiction of its incorporation; (xiv) none of the Subsidiaries constitutes a permanent
establishment of any other Person, business or enterprise for any tax purpose; and (xv) SCM does
not have any “deferred gains” with respect to any “intercompany transactions” within the meaning of
Treas. Reg. § 1.1502-13.



          (b) Schedule 3.18(b) contains a list and description of: (i) any outstanding waivers
or agreements entered into or obtained at any time extending the applicable statute of limitations
with respect to the assessment of any Tax or the audit of any Tax Return due from the Business or a
Subsidiary; (ii) any power of attorney that is currently in force and has been granted with respect
to any matter relating to Taxes that could affect the Business or a Subsidiary; (iii) any
deficiencies proposed or agreed to (plus interest and any penalties) as a result of any ongoing
audit of any Tax Return of the Business or a Subsidiary and the extent to which such deficiencies
have been paid, reserved against, settled, or are being contested in good faith by appropriate
proceedings; (iv) any outstanding Tax sharing, Tax allocation or Tax indemnity agreement or similar
contract or arrangement to which any Subsidiary is a party or by which any Subsidiary is bound; and
(v) any Tax “holiday” or similar Tax incentive program available to any of the Subsidiaries.




          (c) No Subsidiary has any liability for the Taxes of any other Person (other than another
Subsidiary) under Treas. Reg. Section 1.1502-6 (or any similar provision of state, local or foreign
Law), as a transferee or successor, by contract, applicable Law or otherwise. No Subsidiary has
been a United States real property holding corporation within the meaning of Section 897(c)(2) of
the Code during the applicable period specified in Section 897 of the Code.




          (d) No Subsidiary has constituted either a “distributing corporation” or a “controlled
corporation” in a distribution of stock qualifying for Tax-free treatment under Section 355 of the
Code (i) in the two (2) years prior to the date of this Agreement, or (ii) in a distribution which
could otherwise constitute part of a “plan” or “series of related transactions” (within the meaning
of Section 355(e) of the Code) that includes the transactions contemplated by this Agreement.




24









 








          (e) None of the assets of SCM (i) are property that is required to be treated as being owned
by any other Person pursuant to the so-called “safe harbor lease” provisions of former Section
168(f)(8) of the Code, (ii) directly or indirectly secure any debt the interest on which is tax
exempt under Section 103(a) of the Code or (iii) are “tax-exempt use property” within the meaning
of Section 168(h) of the Code.




          (f) No Subsidiary has been or will be required to include any material adjustment in taxable
income for any Tax period (or portion thereof) pursuant to Section 481 or Section 263A of the Code
or any comparable provision under state or foreign Tax Law as a result of transactions, events or
accounting methods employed prior to the Deposit Date.




          (g) SCM has (i) not been a “reporting corporation” subject to the information reporting and
record maintenance requirements of Section 6038A of the Code and the regulations promulgated
thereunder; (ii) disclosed on its federal income Tax Returns all positions taken therein that could
give rise to a substantial understatement of federal income Tax within the meaning of Section 6662
of the Code; and (iii) not engaged in a transaction that the Internal Revenue Service has
identified by regulation or other form of published guidance as a listed transaction, as set forth
in Treas. Reg. § 1.6011-4(b)(2).




          (h) No Subsidiary has any net operating loss, net capital loss, or any credits, for federal
(and each state) income tax purposes and under any comparable provisions of foreign law. Except as
may result from the consummation of the transactions contemplated hereby, no federal Section 382
limitation (or state or local equivalent) exists with respect to the net operating loss
carryforwards, if any, of SCM.




     3.19 Environmental Matters.



          (a) Except as set forth on Schedule 3.19(a), no Release in violation of any
Environmental Law has occurred on any Owned Real Property or other real property occupied by the
Business or a Subsidiary (collectively, the “Business Real Property”) during the period of the
Business’ or a Subsidiaries’ ownership, occupancy, or operation thereof in a manner or quantity
which triggered a reporting obligation under any Environmental Law or constituted a reportable
event under an existing Environmental Law or Environmental Permit, or in a manner which would
require remediation under any Environmental Law, nor, to the knowledge of the Sellers has there
been any such Release prior to the ownership, occupancy or operation by the Business or a
Subsidiary of any Business Real Property.




          (b) The operations of the Business presently comply and, except as set forth on Schedule
3.19(b), to the knowledge of the Sellers have at all times complied in all material respects,
with applicable Environmental Laws, and the Subsidiaries have no material liabilities under any
Environmental Laws. Except as set forth in Schedule 3.19(b), there is no condition in or
under any Business Real Property that would require remediation under applicable Environmental
Laws. Neither a Seller nor any Subsidiary has received any written communication in the last three
(3) years (or that is still pending, regardless of when received) from or on behalf of any
Governmental Authority or other third party: (i) of any material noncompliance of any Business Real
Property with Environmental Laws or of any condition thereon that would require remediation under
applicable Environmental Laws or (ii) that any




25









 






Business Real Property or any property to which SCM has directly or indirectly transported or
arranged for the transportation of any Hazardous Material is currently on any federal or state
“Superfund” list.



          (c) Except as set forth on Schedule 3.19(c), no administrative order, consent order,
settlement agreement, suit or material citation to which a Subsidiary is a party with respect to
any Environmental Law, Hazardous Materials or Releases has been received by the Sellers or a
Subsidiary with respect to or in connection with the operation of any Business Real Property or any
off-site location to which Hazardous Materials used or generated by the Business have been
transported or disposed of or have come to be located.




          (d) Except as set forth on Schedule 3.19(d), all Hazardous Materials used, generated
or disposed of by the Subsidiaries have been disposed of in compliance in all material respects
with all applicable Environmental Laws.




          (e) Schedule 3.19(e) contains a list of any operations or locations of the
Subsidiaries that are implementing any remedial requirements under the federal Resource
Conservation and Recovery Act, as amended, or under any comparable Law.




          (f) The Sellers have disclosed or made available for inspection all material environmental
audits, investigations, assessments and studies by third parties relating to the environmental
condition of the Business Real Property, contamination of the Business Real Property by Hazardous
Material, or the compliance of the Business with, or potential liability under, any Environmental
Laws which are in the Sellers’ or the Subsidiaries’ possession or control.




     3.20 Employee Benefits Plans.



          (a) Schedule 3.20(a) sets forth a list of all employee benefit plans (within the
meaning of Section 3(3) of ERISA) and all other material employee benefit, pension, profit-sharing,
bonus, stock option, stock purchase, share appreciation right, restricted stock, incentive,
deferred compensation, retiree medical or life insurance, supplemental retirement, severance,
retention, “stay” or other benefit plans, programs or arrangements, written or oral, in which any
officer, consultant or employee, whether active or terminated, of the Subsidiaries participated,
with respect to which a Subsidiary has any Liability or which are maintained, contributed to or
sponsored by a Subsidiary or any of its Affiliates for the benefit of any current employee or
officer of a Subsidiary or any former employee of a Subsidiary (hereinafter the “Employee Plans”).
Except as disclosed in Schedule 3.20(a), each Employee Plan is in writing and, prior to the
date hereof, Sellers have made available to the Purchasers a true and complete copy of each
Employee Plan and, with respect to each such Plan, true, correct and complete copies of (i) any
associated trust, custodial, insurance or service agreements, and any written policies or
procedures used in Plan administration, (ii) any annual report, actuarial report, or disclosure
materials (including specifically any summary plan descriptions) submitted to any governmental
agency or distributed to participants or beneficiaries thereunder in the current or any of the
three (3) preceding calendar years and (iii) the most recently received IRS determination letters
and any governmental advisory opinions, rulings, compliance statements, closing agreements, or
similar materials specific to such Plan. Except as set forth in Schedule 3.20(a), a
Subsidiary has




26









 






not contributed to or been obligated to contribute to any “multiemployer plan” within the
meaning of Section 3(37) of ERISA. Except as otherwise disclosed in Schedule 3.20(a), a
Subsidiary has made no express or implied commitment to modify, change or terminate any Employee
Plan other than a modification, change or termination required by Law.



          (b) Each Employee Plan which is intended to be qualified under Section 401(a) of the Code has
received a favorable determination letter from the IRS that it is so qualified, and each related
trust which is intended to be exempt from federal income Tax pursuant to Section 501(a) of the Code
has received a determination letter from the IRS that it is so exempt, and no fact or event has
occurred since the date of such determination letter that has or would be reasonably likely to
adversely affect such qualification or exemption, as the case may be, or requires or would be
reasonably likely to require action under the compliance resolution programs of the Internal
Revenue Service to preserve such qualification.




          (c) With respect to each Employee Plan, a Subsidiary is not currently liable for any material
Tax arising under Section 4971, 4972, 4975, 4979, 4980 or 4980B of the Code, and no fact or event
exists which would give rise to any such liability. No Subsidiary has incurred any liability under
or arising out of ERISA (other than any liability for premiums to the Pension Benefit Guaranty
Corporation arising in the ordinary course), and no fact or event exists that would result in such
a liability. None of the assets of a Subsidiary are the subject of any lien arising under Section
302(f) of ERISA or Section 412(n) of the Code and no Subsidiary has been required to post any
security under Section 307 of ERISA or Section 401(a)(29) of the Code with respect to any Employee
Plan, and no fact or event exists which would give rise to any such lien or requirement to post any
such security. Except as set forth on Schedule 3.20(c), timely payment has been made of
all amounts required of the Subsidiaries under the terms of each such Employee Plan or applicable
Law (determined without regard to any waiver of legally applicable funding requirements), and no
accrued liability under the terms of such Employee Plans or applicable Law exist with respect to a
Subsidiary. There exists no event or condition that has or will subject any Subsidiary to any
liability under the terms of any Employee Plans, ERISA, the Code, or any other applicable Law,
other than contributions, benefits or liabilities contemplated by such Employee Plans.




          (d) Each Employee Plan is now and has been operated in all material respects in accordance
with the terms of such Employee Plan and the requirements prescribed (whether as a matter of
substantive law or as necessary to secure favorable tax treatment) by all applicable Laws,
including, without limitation, ERISA and the Code. Except as set forth on Schedule
3.20(d), the Financial Statements reflect accruals of all material amounts of employer
contributions and premiums accrued by the Subsidiaries in respect of employees employed or Persons
formerly employed by a Subsidiary but unpaid with respect to the Employee Plans as of the date of
such statements.




          (e) Without limiting the foregoing, (i) there is no pending or threatened legal action,
proceeding or investigation, other than routine claims for benefits, concerning any Employee Plan
or to the knowledge of the Sellers any fiduciary or service provider thereof and, to the knowledge
of the Sellers, there is no basis for any such legal action, proceeding or investigation; there is
no Liability to the Pension Benefit Guaranty Corporation (“PBGC”) that has been incurred by the
Subsidiaries or any Affiliate thereof (other than insurance premiums




27









 






satisfied in due course); and (ii) the Company has no liability, including under any Employee
Plan, arising out of the treatment of any service provider as a consultant or independent
contractor and not as an employee.



          (f) The execution of this Agreement and the consummation of the transactions contemplated
herein will not, by itself or in combination with any other event (regardless of whether that other
event has or will occur), (i) entitle any current or former employee or officer of any Subsidiary
to severance pay, (ii) accelerate the time of payment or vesting, or trigger any payment or
funding, through a grantor trust or otherwise, or increase the amount of, compensation or benefits
due any such employee or officer or trigger any other material obligation pursuant to, any Employee
Plan, or (iii) result in any breach or violation of, or a default under, any Employee Plan.




          (g) Without limiting the other provisions of this Section 3.20, each Employee Plan subject to
the laws of any jurisdiction outside of the United States (i) if intended to qualify for special
tax treatment, meets all requirements for such treatment; (ii) is fully funded and has been fully
accrued for on the Financial Statements; and (iii) if required to be registered, has been
registered with the appropriate authorities and has been maintained in good standing with the
appropriate regulatory authorities and no fact or circumstance exists that could adversely affect
the tax-exempt status (where applicable) of any such Employee Plan.




          (h) Each plan, program, arrangement or agreement which constitutes in any part a nonqualified
deferred compensation plan within the meaning of Section 409A of the Code is identified as such on
Schedule 3.20(h).




          (i) For purposes of this Section 3.20, “Affiliate” includes any entity which under Section 414
of the Code is treated as a single employer with a Subsidiary.




     3.21 Labor Matters.



          (a) Schedule 3.21(a) contains a list, as of the date hereof, of (i) the names,
positions, locations, dates of hire and compensation and employer of all employees providing
services to the Business, (ii) which of such employees are currently classified as “exempt” for
wage and hour purposes and which of such employees are currently classified as “non-exempt” for
wage and hour purposes and (iii) the names and current compensation levels of all consultants or
independent contractors who provide services to the Business. To the knowledge of the Sellers, no
executive, key employee or significant group of employees plans to terminate employment with the
Business.




          (b) Except as set forth on Schedule 3.21(b), no Subsidiary is a party to any
collective bargaining agreement or union contract recognizing any labor organization as the
bargaining agent of any employees. To the knowledge of the Sellers, except as set forth in
Schedule 3.21(b), there is no union organization activity involving any of the employees of
the Business, pending or threatened. The Subsidiaries and the conduct of the Business is in
material compliance with all Laws relating to the employment of labor, including all such Laws
relating to employment practices, terms and conditions of employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, classifications, benefits and collective bargaining,




28









 






the payment of social security and similar Taxes and occupational safety and health, the WARN
Act and any similar state or local “mass layoff” or “plant closing” Law. There has been no “mass
layoff” or “plant closing” (as defined by the WARN Act) with respect to the Business within the six
months prior to date of this Agreement. Except as set forth on Schedule 3.21(b), the
Business has not, during the last three (3) years, experienced any material labor disputes or any
material work stoppages due to labor disagreements. There is no material unfair labor practice
charge or complaint pending, or, to the knowledge of the Sellers, overtly threatened against the
Subsidiaries or the Business and there are no administrative charges or court complaints relating
to alleged employment discrimination or other employment related matters pending, or, to the
knowledge of the Sellers, threatened before the U.S. Equal Employment Opportunity Commission or any
other Governmental Authority. Schedule 3.21(b) contains a list and description of all
outstanding workers compensation claims currently pending against the Subsidiaries or with respect
to the Business.



     3.22 Insurance. Each Subsidiary maintains insurance coverage in amounts sufficient to
operate and protect their respective assets and to conduct their respective businesses as intended
and consistent with past practices. Schedule 3.22 contains a list of all policies of
insurance, including property, casualty, fire, liability, workers’ compensation and all other types
of insurance, currently held by each of the Subsidiaries. All such policies are in full force and
effect and all premiums due thereon have been paid and no Subsidiary has agreed to modify or cancel
any such insurance policies or received notice of any actual or threatened modification of
cancellation of any such insurance policies.



     3.23 Tangible Personal Property.



          (a) Schedule 3.23 contains a list of each Lease requiring annual payments from the
Subsidiaries of $100,000 or more (collectively the “Personal Property Leases”).




          (b) Prior to the date hereof, a copy of each of the Personal Property Leases listed on
Schedule 3.23 has been delivered to the Purchasers. Each of the Subsidiaries has a valid
leasehold interest under each of the Personal Property Leases under which it is a lessee, subject
to applicable Law, bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors’ rights and remedies generally and subject, as to enforceability, to general principles
of equity (regardless of whether enforcement is sought in a proceeding at law or in equity). There
is no material default under any Personal Property Leases by any of the Subsidiaries or, to the
knowledge of the Sellers, by any other parties thereto.




          (c) Except as set forth on Schedule 3.23, each of the Subsidiaries has good and valid
title to all of the items of tangible personal property reflected in the June 30 Balance Sheet
(except as sold or disposed of subsequent to the date thereof in the ordinary course of business
consistent with past practice), free and clear of any and all Encumbrances other than Permitted
Liens. The Subsidiaries have maintained all such tangible personal property in the ordinary course
and have not deferred the maintenance of any such assets.




     3.24 Product Warranties. The standard product or service warranties, indemnifications and
guarantees which the Subsidiaries or the Business extends to customers in the ordinary course of
business, copies of which have been delivered to the Purchasers, are identified and



29









 







described in Schedule 3.24. No warranties, indemnifications or guarantees are now in
effect or outstanding with respect to the products or services manufactured, produced or performed
by the Subsidiaries or the Business, except for the warranties, indemnifications and guarantees
identified and described in Schedule 3.24. Except for product returns, the scope and
magnitude of which are consistent with the product returns experienced by the Subsidiaries prior to
the date hereof, the products sold by the Subsidiaries and the Business prior to the date hereof do
not have any defects or failure rates that have given rise to material warranty, product liability
or related claims.



     3.25 No Brokers. Other than as disclosed in Schedule 3.25, no broker, finder or
investment banker is entitled to any brokerage, finder’s or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements made by or on behalf
of the Sellers and the Subsidiaries or their respective Affiliates.



     3.26 Corporate Books and Records. The books of account, stock or ownership transfer
records and other records of SCM are and, to the knowledge of the Sellers, the books of account,
stock or ownership transfer records and other records of each of Pacific and SCM Asia are complete
and correct in all material respects and have been maintained in accordance with sound business
practices.



     3.27 Related-Party Transactions. Except as set forth on Schedule 3.27, no officer,
director or stockholder of any of the Subsidiaries or any member of his or her immediate family is
currently indebted to any of the Subsidiaries, nor is any of the Subsidiaries indebted (or
committed to make loans or extend or guarantee credit) to any of such individuals. Except as set
forth on Schedule 3.27 hereto, none of such Persons has any direct or indirect ownership
interest in any firm or corporation with which any of the Subsidiaries is affiliated or with which
any of the Subsidiaries has a business relationship, or any firm or corporation that competes with
any of the Subsidiaries except that officers or directors of any of the Subsidiaries and members of
their immediate families may own stock in an amount not to exceed 5% of the outstanding capital
stock of publicly traded companies that may compete with the Subsidiaries following the
consummation of the transactions contemplated hereby. Except as set forth on Schedule 3.27
hereto, no director, officer or stockholder of any of the Subsidiaries and no member of the
immediate family of any such Person is directly or indirectly interested in any Material Contract.



     3.28 Bank Accounts; Lockboxes. Schedule 3.28 contains a true, correct and complete
list of each bank account maintained by the Subsidiaries together with a true, correct and complete
list of each bank or other financial institution at which any lock box for the collection of
accounts receivable of the Subsidiaries is maintained. Prior to the Closing, the Sellers will
deliver to the Purchasers a list of all Persons authorized to withdraw any funds contained in such
accounts or lockboxes.



     3.29 Bonds and Letters of Credit. Schedule 3.29 contains a true, correct and
complete list of all bonds and letters of credit or other credit arrangements, including surety and
performance bonds and similar documents, agreements or arrangements, (i) issued or entered into by
or on behalf of, or in support of any liability or obligation of, the Business or any Subsidiary,
or (ii) that would be required to be issued under any proposals, bids or other commitments
outstanding as of the date hereof, in each case indicating the contract or agreement



30









 







or situation requiring the provision thereof, together with the issuer, amount, principal terms and
conditions, beneficiaries and expiration date thereof (or, in the case of pending proposals, bids
or other commitments outstanding as of the date hereof, the anticipated amount, principal terms and
conditions, beneficiaries and term thereof).



     3.30 Obligations and Rights under Prior Acquisition Agreements. Schedule 3.30 sets
forth each of the agreements by which a Seller or a Subsidiary or any of their Affiliates has
acquired or divested any material portion of the Business (a) in the past five (5) years or (b)
with respect to which any liabilities, obligations or rights remain outstanding. True and complete
copies of all such agreements have been made available to the Purchasers, and except as set forth
in Schedule 3.30, there are no pending claims for indemnification or other payments under
any such agreements.



ARTICLE 4.

REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS




     The Purchasers hereby make the following representations and warranties as of the date hereof:



     4.01 Organization and Authority and the Purchaser. BAC is duly organized, validly existing
and in good standing under the laws of the Delaware and has all necessary power and authority to
enter into this Agreement and the Ancillary Agreements to which it is a party, to carry out its
obligations hereunder and to consummate the transactions contemplated hereby. The Trustee has all
necessary power and authority to enter into this Agreement and the Ancillary Agreements to which it
is a party, to carry out its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the
Ancillary Agreements (to the extent the Purchasers are parties thereto), the performance by the
Purchasers of their respective obligations hereunder and thereunder and the consummation by the
Purchasers of the transactions contemplated hereby and thereby have been duly authorized by all
requisite action on the part of the Purchasers. This Agreement and the Ancillary Agreements (to
the extent the Purchasers are parties thereto) have been duly executed and delivered by the
Purchasers, and (assuming due authorization, execution and delivery by the Sellers and the
Subsidiaries, as applicable) constitute legal, valid and binding obligations of the Purchasers
enforceable against the Purchasers in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors rights and remedies
generally and subject, as to enforceability, to rules of law governing specific performance,
injunctive relief and general principles of equity laws and general equitable principles.



     4.02 No Conflict. The execution, delivery and performance of this Agreement and the
Ancillary Agreements (to the extent the Purchasers are parties thereto) by the Purchasers does not
and will not: (a) violate, conflict with or result in the breach of any provision of the
Certificate of Incorporation, By-laws or other similar organizational documents of the Purchasers;
(b) conflict with or violate any Law or Governmental Order applicable to the Purchasers or any of
its properties or assets; or (c) materially conflict with, result in any material breach of,
constitute a material default (or event which with the giving of notice or lapse of time, or both,
would become such a default) under, require any consent under, or give to others any



31









 







rights of termination, amendment, acceleration, suspension, revocation or cancellation of, or
result in the creation of any material Encumbrance on any of the assets or properties of the
Purchasers pursuant to, any note, bond, mortgage or indenture, contract, agreement, lease,
sublease, license, permit, franchise or other instrument or arrangement to which either Purchaser
is a party or by which any of its assets or properties are bound or affected.



     4.03 Governmental Consents and Approvals. Except as described in Schedule 3.05,
the execution, delivery and performance of this Agreement and the Ancillary Agreements (to the
extent the Purchasers are parties thereto) by the Purchasers does not and will not require any
consent, approval, authorization or other order of, action by, filing with, or notification to, any
Governmental Authority.



     4.04 No Brokers. No broker, finder or investment banker is entitled to any brokerage,
finder’s or other fee or commission payable by the Sellers in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of the Purchasers.



     4.05 Litigation. There is no Action pending or, to the knowledge of the Purchasers,
threatened against the Purchasers or its Affiliates, which, if adversely determined, is reasonably
likely to prohibit or restrain the ability of the Purchasers to enter into this Agreement or
consummate the transactions contemplated hereby.



     4.06 Investment Intention. The Purchasers are acquiring the Shares for their own account,
for investment purposes only and not with a view to the distribution (as such term is used in
Section 2(11) of the Securities Act). The Purchasers understand that the Shares have not been
registered under the Securities Act and cannot be sold unless subsequently registered under the
Securities Act or an exemption from such registration is available.



ARTICLE 5.

COVENANTS AND ADDITIONAL AGREEMENTS




     5.01 Conduct of Business Prior to the Closing.



          (a) Each of Subsidiaries covenants and agrees that, except as set forth in Schedule
5.01(a) at all times from and after the date hereof through and to the Closing Date it will:
(i) operate its respective business in the ordinary course and consistent with past practices; and
(ii) use commercially reasonable efforts to: (A) preserve its present business operations,
organization and goodwill; and (B) preserve the present relationships which it has with its
vendors, customers and other Persons having business relationships with it.




          (b) Each of the Sellers and the Subsidiaries covenants and agrees that, except as set forth in
Schedule 5.01(b) at all times from and after the date hereof, through and to the Closing
Date, it shall not take any action or fail to take any action which would cause any representation
or warranty contained in Article 3 to be untrue in any material respect or result in any breach of
any covenant. Without limiting the foregoing, except to the extent required by Law, without the
prior written consent of BAC, the Sellers and the Subsidiaries shall not:




32









 








               (i) declare, set aside, make or pay any dividend or other distribution in respect of the
capital stock, shares or Ownership Interests, as applicable, of the Subsidiaries or repurchase,
redeem or otherwise acquire any outstanding shares of the capital stock, shares, Ownership
Interests or other securities of, or other ownership interests in, the Subsidiaries, including any
dividends to Gibraltar or International of any amounts, whether as a dividend or as payment of any
intercompany accounts payable;



               (ii) transfer, issue, sell or dispose of any shares of capital stock, shares, Ownership
Interests or other securities of the Subsidiaries or grant options, warrants, calls or other rights
to purchase or otherwise acquire shares of the capital stock, shares, Ownership Interests or other
securities of the Subsidiaries;



               (iii) acquire any property, plant, facility, furniture or equipment in excess of Five Hundred
Thousand U.S. Dollars (U.S.$500,000) individually or commit to make any such acquisition in any
amount after the Closing;



               (iv) sell, lease, license, encumber or dispose of any material interest in any of its
properties or assets, except use of supplies or sales of inventory in the ordinary course of the
business consistent with past practices;



               (v) make any loans, advances or capital contributions to, or investments in any Person other
than intercompany loans made by the Sellers to SCM in a manner consistent with the past cash
management practices of Gibraltar;



               (vi) terminate or amend any Material Contract;



               (vii) enter into any Contract or agreement that would have been required to be disclosed in
Section 3.13 if such Contract or agreement had been in effect on the date of this Agreement other
than customer contracts, product purchase agreements or renewals of existing agreements in the
ordinary course of business consistent with past practice;



               (viii) enter into any employment agreement with any employee or increase in any manner the
compensation of any of the officers, directors, consultants or other employees of the Subsidiaries
other than normal, bargained, merit or cost of living payments or increases made in the ordinary
course of business;



               (ix) adopt or amend any bonus, profit sharing, compensation, employment or other Employee
Plan, trust, fund or group arrangement for the benefit or welfare of any employees of SCM or any
bonus, profit sharing, compensation, stock option, pension, retirement, deferred compensation,
employment or other Employee Plan, agreement, trust fund or arrangements for the benefit or welfare
of any director of SCM;



               (x) (A) make any change in Tax or accounting methods, principles or practices or any method of
calculating any bad debt, contingency or other reserve for accounting, financial reporting or Tax
purposes, except as required by changes in U.S. generally accepted accounting principles or
applicable Law, or make or change any material Tax election, or settle any tax controversy matter
or matters; or (B) make any material changes in the customary



33









 







methods of operating its business including, without limitation, practices and policies
relating to marketing, selling and pricing;



               (xi) except for advances under working capital lines of credit in existence as of the date
hereof in the ordinary course of business consistent with past practices, incur any indebtedness
for borrowed money, issue any debt securities or assume, guarantee or endorse the obligations of
any other Persons;



               (xii) take any action that would render any representation or warranty made by the Sellers or
the Subsidiaries in this Agreement untrue, including any actions referred to in Section 3.10;



               (xiii) cancel or terminate its current insurance policies or allow any of the coverage
thereunder to lapse, unless simultaneously with such termination, cancellation or lapse,
replacement policies providing coverage equal to or greater than the coverage under the canceled,
terminated or lapsed policies for substantially similar premiums are in full force and effect;



               (xiv) amend or authorize the amendment of its organizational documents;



               (xv) delay or decrease the rate of expenditures (as compared with the past practices of the
Business) on repairs or scheduled maintenance to the Owned Real Property;



               (xvi) knowingly take or fail to take any action which would result in a Material Adverse
Effect;



               (xvii) effect or agree to effect any merger, acquisition, recapitalization, reclassification,
stock split or like change in the capitalization of any of the Subsidiaries or change of control
transaction with respect to any of the Subsidiaries; or



               (xviii) agree or commit to any of the foregoing, whether in writing or otherwise.



          (c) The foregoing notwithstanding, although it is the intent of the parties that, if the
Closing occurs, all cash generated by the Business after the Deposit Date shall be for the account
of the Purchasers and the Subsidiaries and all cash requirements of the Business shall be charged
to the Purchasers and the Subsidiaries, in each case to the same extent as if the Closing had
occurred on the Deposit Date, the Sellers shall have the right to maintain and apply their current
cash management systems from the Deposit Date to the Closing Date; provided, however, that, during
the period from the Deposit Date to the Closing Date, the Sellers shall record all cash receipts
and all cash expenditures of the Business on a daily basis and shall provide BAC with a daily
reconciliation of all such receipts and expenditures. If and to the extent that, for the period
from the Deposit Date through the Closing Date, the Sellers and their Affiliates (other than the
Subsidiaries) have received, on a net basis, cash from the Business, then the Sellers shall pay
over the amount of such net cash receipts to SCM on the Closing Date, and if and to the extent
that, for the period from the Deposit Date through the Closing Date, the Subsidiaries have
received, on a net basis, cash from the Sellers and their Affiliates (other than




34









 






the Subsidiaries), then the SCM shall pay over such net cash amount to the Sellers on the
Closing Date (such payments, the “Cash Settle-Up”).



     5.02 Access. Prior to the Closing Date, the Purchasers shall be entitled, through their
respective officers, employees and representatives (including, without limitation, its legal
advisors and accountants), to (i) make such investigation of the properties, businesses and
operations of the Business and such examination of the books, records and financial condition of
the Business as they reasonably request and to make extracts and copies of such books and records
and (ii) have access to the facilities and personnel of the Subsidiaries. Any such investigation
and examination shall be conducted during regular business hours and under reasonable
circumstances, and the Sellers shall cooperate, and shall direct the Subsidiaries to cooperate,
fully therein.



     5.03 Confidentiality. No party hereto shall, without the prior written consent of the
disclosing party, disclose or acquiesce in the disclosure by any Person, or use or enable the use,
to the competitive detriment of the disclosing party of any non-public information regarding the
disclosing party or the financial condition of such party, contained in any documents or otherwise
furnished at any time pursuant to the provisions of this Agreement, including, without limitation,
all information and documents furnished pursuant to Article 7, except to the legal counsel,
accountants, financial advisors, investment bankers and the other authorized agents and
representatives of the parties hereto, and to such Persons only to the extent required for
activities directly related to the obligations of the receiving parties under this Agreement,
except to the extent such information has been publicly disclosed or is otherwise in the public
domain or is required to be disclosed by Law or by a court of competent jurisdiction or
Governmental Authority.



     5.04 German Regulatory Approval. . Promptly after the execution of this Agreement, and in
any event within five Business Days, each of the parties will make all filings required under the
rules and regulations of the German Federal Cartel Office.



     5.05 Non-Competition.



          (a) From the Closing Date through the end of the five (5) year period beginning on the first
day following of the Closing, the Sellers and its Affiliates agree not to, whether individually or
in their capacity as a director, officer, manager, member, partner, shareholder, agent or
representative of or to a Person or entity (other than the Purchasers) or otherwise, directly or
indirectly:




               (i) engage in a “Competitive Business”, which for the purpose of this Agreement, means a
business located in or transacting business in the United States or the People’s Republic of China
that is competitive with the Business as conducted as of the Closing Date; or



               (ii) either (A) solicit for a Competitive Business or endeavor to entice away, any Person who
is a current customer of the Subsidiaries as of the Closing Date; (B) (1) solicit, recruit or hire
any employees of the Purchasers (or any of their Affiliates) or Persons who work for any of the
Subsidiaries as of the Closing Date, and/or (2) encourage any employee of



35









 







the Purchasers (or any of their Affiliates) to leave the employment of the same; or (C) assist
any Person or entity in any way to do, or attempt to do, anything prohibited by this Section
5.05(a)(ii) (except for responding to requests for reference checks).



          (b) The Sellers acknowledge that a material breach of any of the covenants contained in this
Section 5.05 would result in material irreparable injury to the Purchasers for which there is no
adequate remedy at law, that it may not be possible to measure damages for such injuries precisely
and that the Purchasers will be entitled to obtain a temporary restraining order and/or a
preliminary or permanent injunction restraining the Sellers from engaging in activities prohibited
by this Section 5.05, and such other relief as may be required to specifically enforce any of the
covenants in this Section 5.05.




          (c) If any provision or portion of this Section 5.05 is found by a court of competent
jurisdiction to be invalid or unenforceable, any such invalid or unenforceable provision or portion
thereof shall be deemed, without further action on the part of the parties hereto, modified,
amended or limited to the extent necessary to render the same valid and enforceable.




          (d) Nothing in this Section 5.05 shall preclude or prohibit the Sellers or any of their
Affiliates from acquiring the stock (or other securities) or assets of any Person which derives
(both at the time of acquisition and at all times thereafter) less than (i) five (5%) of its
revenues and (ii) less than $20 million per annum from the conduct of a Competitive Business. In
addition, nothing in this Section 5.05 shall preclude or prohibit any Person which is engaged in
any Competitive Business from continuing to conduct such Competitive Business from and after any
acquisition of either of the Sellers or any successor in interest to either of the Sellers, by
merger, purchase of stock, purchase of assets or other transaction.




     5.06 Further Action. Each of the parties hereto shall use all reasonable efforts to take,
or cause to be taken, all appropriate action, to do or cause to be done all things necessary,
proper or advisable under applicable Law, and to execute and deliver such documents and other
papers, each as may be required to carry out the provisions of this Agreement and the Ancillary
Agreements and to consummate and make effective the transactions contemplated by this Agreement and
the Ancillary Agreements. Without limiting the generality of the foregoing, (i) prior to the
Closing, the Sellers shall use their best efforts, at their sole cost and expense, to obtain all
rights in and to the domain names used by the Subsidiaries as of the date hereof, (ii) at any time
after the Closing, upon request of the Purchasers, the Sellers will execute such documentation and
take such actions as may be reasonably required to make effective, record or otherwise confirm any
of the resignations provided for in Section 2.04(d) under applicable Law or as may be necessary to
appoint new directors and officers for the Subsidiaries; and (iii) prior to the Closing, the
Sellers shall use commercially reasonable efforts to obtain any Requisite Consents that have not
been obtained as of the date of this Agreement. If, prior to the Closing, the Sellers have not
been able to obtain for the Subsidiaries the rights to any of the domain names used by the
Subsidiaries, the Sellers shall continue to use their best efforts to obtain such rights following
the Closing until such rights are obtained and shall pay any and all amounts that may be required
to be paid to enable the Subsidiaries to continue use such domain names until such rights can be
obtained.



36









 





     5.07 Legal Privileges. The Sellers and the Purchasers acknowledge and agree that all
attorney-client, work product and other legal privileges that may exist with respect to the
Subsidiaries shall, from and after the Closing Date, be deemed joint privileges of the Sellers and
the Purchasers. Both the Sellers and the Purchasers shall use all commercially reasonable efforts
after the Closing Date to preserve all privileges and neither the Sellers nor the Purchasers shall
knowingly waive any such privilege without the prior written consent of the other party (which
consent shall not be unreasonably withheld or delayed).



     5.08 Preservation of Records. Subject to Section 9.02 (relating to the preservation of Tax
records), the Sellers and the Purchasers shall preserve and keep the records held by them relating
to the business of the Subsidiaries for a period of five (5) years from the Closing Date and shall
make such records and personnel available to the other as may be reasonably required by such party
in connection with, among other things, any insurance claims by, legal proceedings against or
governmental investigations of the Sellers, the Subsidiaries or the Purchasers or any of their
Affiliates or in order to enable the Sellers or the Purchasers to comply with their respective
obligations under this Agreement; provided, however, that a Person may dispose of
any such records at any time during such period if such Person first provides sixty (60) days’
prior written notice to the other parties hereto of the intent to so dispose of such records and
affords such other parties an opportunity, at their expense, to take possession and control of such
records.



     5.09 Employee Benefits/Severance.



          (a) For a period of twelve (12) months from the Closing Date, the Purchasers shall (i) cause
SCM to offer and/or maintain employee compensation and benefit plans (other than equity incentive
plans) to Continuing Employees (as defined below) that are substantially comparable in the
aggregate to the compensation and benefits (as provided by the Employee Plans other than equity
incentive plans) provided by SCM to Continuing Employees immediately prior to the Closing, (ii)
cause SCM to expend commercially reasonable efforts to grant to any persons that were employees of
SCM immediately prior to the Closing Date (“Continuing Employees”) credit for past service for
purposes of initial eligibility to participate, vesting and benefit accrual under, any employee
benefit plans established or maintained by the Purchasers and/or SCM for Continuing Employees after
the Closing Date, except to the extent that such credit would result in a duplication of benefits
with respect to the same period of service, and (iii) cause SCM to take such actions as are
reasonably necessary to give Continuing Employees credit for their past service for purposes of
determining the amounts of sick pay, holiday pay and vacation pay they are eligible to receive
under any sick pay, holiday pay and vacation pay policies and programs established or maintained by
the Purchasers and/or SCM for Continuing Employees after the Closing Date. With respect to each
Continuing Employee who is an active participant in a group health plan (as defined in Section
5000(b) of the Code) (a “SCM Health Plan”) immediately prior to the Closing Date, after the Closing
Date, BAC shall cause SCM to expend commercially reasonable efforts to ensure that the group health
plan established or maintained by BAC and/or SCM after the Closing Date for Continuing Employees
(“Purchaser Health Plans”), to the extent permitted by the terms of the applicable Purchaser Health
Plans, shall (i) waive any preexisting condition restrictions and waiting period requirements to
the extent that such preexisting condition restrictions and waiting period requirements were waived
or satisfied under the applicable SCM Health Plan in which such Continuing Employee participated
immediately prior to the Closing Date. Sellers shall retain, or shall cause an


37









 







Affiliate to retain, all Liabilities arising under any group life, accident, medical, dental,
disability plan or similar arrangement (whether or not insured) covering any Continuing Employees
as of the Deposit Date to the extent that such Liability, directly or indirectly, relates to claims
incurred (i.e., services provided) prior to the Deposit Date and Seller shall cooperate with the
Purchasers in making available to any Continuing Employee the benefits of any third party insurance
(e.g., umbrella policies) that may be available for claims incurred prior to the Deposit Date. If
the Closing occurs, the Purchasers shall be responsible for providing group life, accident,
medical, dental, disability plan and similar arrangements (whether or not insured) covering the
Continuing Employees after the Deposit Date for claims incurred (i.e., services provided) after the
Deposit Date (it being understood that such benefits will be provided under the Transition Services
Agreement at the Purchasers’ expense through December 31, 2008). The foregoing notwithstanding,
any Continuing Employee who is receiving long term disability benefits under a long term disability
plan offered by the Sellers or an Affiliate of the Sellers other than the Subsidiaries shall
continue to participate in such plan and to receive benefits thereunder in accordance with the
terms thereof, and the Sellers shall take any and all actions as may be necessary to ensure that
(i) no such Continuing employee ceases to be covered by such plan as a result of the consummation
of the transactions contemplated hereby and (ii) that any Continuing Employee who is in the waiting
or qualifying period for long-term disability benefits as of the Closing Date shall not cease to be
eligible for such benefits (if he or she satisfies the waiting or qualifying periods therefore) as
a result of the consummation of the transactions contemplated by this Agreement.




          (b) Schedule 5.09(b) attached hereto contains a summary of the terms and conditions
upon which certain Continuing Employees will become entitled to payment of severance benefits in
connection with the transactions contemplated by this Agreement, a list of the Continuing Employees
that may become entitled to payment of severance benefits in connection with the transactions
contemplated by this Agreement, and the dollar amount of the severance benefit which each such
Continuing Employee may become entitled to receive. BAC agrees to take such action as may be
necessary to cause SCM to pay the transaction bonuses payable to certain Continuing Employees as
set forth in Schedule 5.09(b).




          (c) Nothing in this Section 5.09 or this Agreement shall require the Purchasers to continue to
employ any Continuing Employee for any specific length of time, or shall confer upon any past or
present employee of the Business or a Subsidiary, or his or her representatives, beneficiaries,
successors and assigns, nor upon any collective bargaining agent, any rights or remedies of any
nature; nor shall the Purchasers, the Subsidiaries or their Affiliates be precluded or prevented
from terminating or amending any employee benefit plan or policy.




          (d) As soon as practicable following the Closing Date, the Purchasers shall cause to have
established for the employees of SCM a 401(k) plan intended to be qualified under Section 401(a) of
the Code (“Purchasers’ 401(k) Plan”). Upon the receipt by the Sellers of written evidence of the
establishment of Purchasers’ 401(k) Plan, the Sellers shall direct the trustee of the Sellers’
401(k) plan (“Sellers’ 401(k) Plan”) to transfer to the trust under Purchasers’ 401(k) Plan all the
assets and liabilities that relate to the accounts of the participants in Sellers’ 401(k) Plan who
have not terminated employment on or before the Closing Date subject to and in accordance with the
following: (i) Purchasers’ 401(k) Plan shall not eliminate or reduce any participant’s protected
benefits under Section 411(d)(6) of the Code under Sellers’




38









 








401(k) Plan; (ii) the Sellers shall value the account balances, including loan balances, of
the participants in accordance with the terms of Sellers’ 401(k) Plan, and (iii) subject to
applicable Law and the terms of the relevant plans, the Sellers shall transfer and assign, and the
Purchaser shall accept and assume the value of such accounts and credit them to the participants’
account in Purchasers’ 401(k) Plan. The operations of Purchasers’ 401(k) Plan shall at all times
be the sole responsibility of the Purchasers. The operations of Sellers’ 401(k) Plan shall at all
times be the sole responsibility of the Sellers. The Sellers shall, coincident with the transfer
of such account balances, furnish the Purchasers with the individual account balances of each
participant and such other records as the Purchasers may reasonably request. It is intended that
the transfer of assets and corresponding accrued benefits contemplated hereby shall comply with
Sections 401(a)(12) and 414(l) of the Code and any ambiguities herein shall be construed in
furtherance of that objective. The Purchasers shall indemnify the Sellers from any Losses arising
from any failure by Purchasers’ 401(k) Plan to comply with applicable Law.



     5.10 Credit Support and Loan Agreement. The Purchasers shall, or shall cause the
Subsidiaries to, as promptly as practicable after the Closing, but in no event later than six
months after the Closing, replace, substitute itself as obligor on, or otherwise cause to be
cancelled each of the guarantees (including of performance under contracts or agreements), letters
of credit or other credit arrangements (including the Credit Agreement with HSBC Bank (China)
Company Limited), including surety and performance bonds (collectively, “Credit Support
Arrangements”), issued by or for the account of the Sellers or their Affiliates (other than the
Subsidiaries) or with respect to which Sellers or their Affiliates (other than the Subsidiaries)
are the primary or secondary obligors on debt instruments or financing or other contracts or
agreements, in any such case to support or facilitate business transactions of the Subsidiaries,
and shall cause Sellers and their Affiliates to be fully discharged and released therefrom.
Sellers have provided a list of the Credit Support Arrangements as part of Schedule 3.29.
Subject to the foregoing, Sellers shall after the Closing maintain, or cause to be maintained, each
of the Credit Support Arrangements. After the Closing, the Purchasers shall indemnify and hold
harmless Sellers and their Affiliates from any Liabilities under the Credit Support Arrangements to
the extent arising out of or related to events occurring after the Closing.



     5.11 Cash Collections. To the extent that the Sellers or any of their Affiliates (other
than the Subsidiaries) receive any payments after the Deposit Date that belong to the Subsidiaries,
the Sellers shall deliver and pay over such payments to BAC by wire transfer as promptly as may be
practicable but in any event no later than by the close of business on the third Business Day after
receipt thereof. Similarly, to the extent the Subsidiaries receive any payments after the Deposit
Date that belong to the Sellers or any of their Affiliates, the Purchasers shall deliver and pay
over such payments to the Sellers by wire transfer as promptly as may be practicable but in any
event no later than by the close of business on the third Business Day after receipt thereof by the
Subsidiaries.



     5.12 Intercompany Arrangements. All intercompany and intracompany accounts, debts,
agreements or arrangements between the Sellers and their Affiliates (other than the Subsidiaries),
on the one hand, and the Subsidiaries, on the other hand, shall immediately prior to the Deposit
Date be capitalized or cancelled without any consideration to the Sellers or their Affiliates
therefor, without any liability to a Subsidiary therefor, without the need for any further
documentation, and without any material adverse economic, business or Tax effect on the



39









 







Business or the Subsidiaries as a result thereof; provided, however, that the foregoing shall not
be deemed to require the Sellers to provide any services to the Subsidiaries or the Business
following the Closing, including, but not limited to, insurance coverage, except as may otherwise
be required by the Transition Services Agreement or this Agreement.



     5.13 Contribution of Assets Prior to the Closing. If and to the extent that any assets
used in or necessary to the conduct of the Business are titled in the name of, licensed or leased
by, or located at a facility of, a Seller or an Affiliate of a Seller (other than a Subsidiary),
the Sellers shall cause such asset or such license or lease to be contributed or transferred to the
applicable Subsidiary immediately prior to the Closing, without any consideration to a Seller or
such an Affiliate therefor, without any liability to the applicable Subsidiary therefor, without
the need for any further consideration or documentation, and without any material adverse economic,
business or tax effect on the Business or the Subsidiaries as a result thereof; provided, however,
that the foregoing shall not require the Sellers to transfer any assets that they will retain to
provide transition services under the Transition Services Agreement.



ARTICLE 6.

CONDITIONS TO CLOSING




     6.01 Conditions to Obligations of the Parties. The obligations of the Parties to
consummate the transactions contemplated by this Agreement shall be subject to the following
conditions:



          (a) No Proceeding or Litigation. No Action shall have been commenced by or before any
Governmental Authority seeking to restrain or materially alter the transactions contemplated by
this Agreement; and




          (b) FCO Approval. The Purchasers shall have obtained FCO Approval.




     6.02 Conditions to Obligations of the Purchasers. The obligations of the Purchasers to
consummate the transactions contemplated by this Agreement shall be subject to the fulfillment, or
written waiver by BAC (in its sole discretion), at or prior to the Closing, of each of the
following conditions:



          (a) Conduct of the Business During the Escrow Period. The Sellers shall have complied
in all material respects with the covenants set forth in Section 5.01, and BAC shall have received
a certificate from each of the Sellers to such effect; and




          (b) Release of Encumbrances. Prior to or on the Closing Date, the Sellers shall have
fully discharged and paid any and all indebtedness or other obligations with respect to the Shares
or the assets of the Subsidiaries in order to render the Shares and such assets free and clear of
all Encumbrances, and at Closing the Sellers shall deliver evidence of the foregoing reasonably
satisfactory to the Purchasers.




40









 








ARTICLE 7.

INDEMNIFICATION




     7.01 Survival; Remedies for Breach.



          (a) Each and every representation and warranty made by the Sellers, the Subsidiaries and the
Purchasers in this Agreement or in any Exhibit, Schedule, instrument of transfer or other document
delivered pursuant hereto or in connection herewith shall survive the Closing for a period of
eighteen (18) months beginning on the first day following the Deposit Date, except that (i) the
representations and warranties of the Sellers and the Subsidiaries contained in Sections 3.18 shall
survive until sixty (60) days after the end of the statute of limitations (including any extensions
thereof) applicable to the matters that were the subject to such representations and warranties,
(ii) the Specified Representations shall survive the Closing without limitation as to time and the
representations and warranties of the Sellers and the Subsidiaries in Section 3.19 shall survive
for the period provided in Section 7.07. Each and every covenant and agreement of a party set
forth herein shall survive the Closing without limitation as to time; provided, however, that the
agreement in Section 7.02(c) shall only survive for a period of eighteen (18) months beginning on
the first day following the Deposit Date. Except as otherwise provided in Section 7.01(b),
following the expiration of the period during which the representations, warranties and (in the
case of Section 7.02(c)) agreements survive the Closing as set forth in this Section 7.01(a) (such
period being hereinafter the “Survival Period”), the representations, warranties and agreements
shall be of no further force or effect and the right to indemnification under Section 7.02(a),
7.02(c) or Section 7.03(a) shall expire as to any claim that is not made prior to the expiration of
the applicable Survival Period.




          (b) Any representation, warranty or agreement that would otherwise terminate at the expiration
of the Survival Period with respect thereto shall survive if written notice of the breach or
inaccuracy thereof shall have been given to the party against whom indemnification may be sought on
or prior to the expiration of the applicable Survival Period; provided that such survival
shall only apply to the portion of any such representation, warranty or agreement with respect to
which such breach or inaccuracy has occurred.




          (c) After the Closing, the indemnities set forth in this Article 7 shall be the exclusive
remedies of the Sellers and the Purchasers for the breach of any covenant, agreement,
representation or warranty in this Agreement by the Sellers and the Subsidiaries or by the
Purchasers, as the case may be, and the parties shall not be entitled to a rescission of this
Agreement or to any further indemnification rights or claims of any nature whatsoever in respect
thereof, all of which the parties waive, except the Sellers and the Purchasers shall have the right
to seek equitable relief for any breach of a covenant, including injunctive relief or specific
performance.




     7.02 Indemnification of the Purchasers. Subject to the provisions of this Section 7.02 and
the other Sections of this Article 7, the Purchasers and each of their respective Affiliates,
officers, directors, employees, agents, successors and assigns and, after the Closing, the
Subsidiaries and each of their respective Affiliates, officers, directors, employees, agents,
successors and assigns (each hereinafter a “Purchaser Indemnified Party”) shall be indemnified



41









 







by the Sellers from and against the amount of any and all Losses incurred or sustained by or
imposed upon them with respect to or by reason of:



          (a) any failure, breach or inaccuracy of any representations or warranties made by the Sellers
and the Subsidiaries under this Agreement or the Ancillary Agreements or contained in any
certificate, document or instrument delivered by the Sellers hereunder; and




          (b) any breach, default or lack of performance on the part of the Sellers or the Subsidiaries
of any of their covenants or agreements under this Agreement or the Ancillary Agreements.




          (c) any amounts paid in connection with litigation brought by a party seeking recovery for
damages suffered by such party arising from the operation of the Business prior to the Closing or
that are based on or arose in connection with events, facts or circumstances that existed at or
prior to, or occurred prior to the Closing, but excluding payments to any Governmental Authority
(e.g., fines and penalties); provided, however, that any such litigation that otherwise falls
within the scope of Section 7.07 shall be addressed under that Section and not under this Section.




     7.03 Indemnification of the Sellers. Subject to the provisions of this Section 7.03 and
the other Sections of this Article 7, the Purchasers agree to indemnify, defend and hold the
Sellers, and each of their respective Affiliates, officers, directors, employees, agents,
successors and assigns, (each a “Seller Indemnified Party”), harmless from and against any and all
Losses incurred or sustained by or imposed upon any of the Seller Indemnified Parties with respect
to or by reason of:



          (a) any failure, breach or inaccuracy by the Purchasers of any representations or warranties
made by the Purchasers under this Agreement or contained in any certificate, document or instrument
delivered by the Purchaser hereunder; and




          (b) any breach, default or lack of performance on the part of the Purchasers of any of its
covenants or agreements under this Agreement.




     7.04 Procedures for Indemnification.



          (a) If any Purchaser Indemnified Party or any Seller Indemnified Party (hereinafter an
“Indemnified Party”) shall claim to have suffered a Loss (other than with respect to any claim
asserted, demand or other Action by any Person who is not a party to this Agreement (hereinafter a
“Third-Party Claim”)) for which indemnification is available under Section 7.02 or 7.03, as the
case may be (for purposes of this Section 7.04, regardless of whether such Indemnified Party is
entitled to receive a payment in respect of such claim by virtue of the provisions of Section
7.05), the Indemnified Party shall notify the party required to provide indemnification
(hereinafter an “Indemnifying Party”) in writing of such claim within the applicable time periods
provided in Section 7.01, which written notice shall describe the nature of such claim, the facts
and circumstances that give rise to such claim and the amount of such claim if reasonably
ascertainable at the time such claim is made (or if not then reasonably ascertainable, the maximum
amount of such claim reasonably estimated by the Indemnified Party). In the event that within
thirty (30) days after the receipt by the Indemnifying Party of




42









 






such a written notice from the Indemnified Party, the Indemnified Party shall not have
received from the Indemnifying Party a written objection to such claim, such claim shall be
conclusively presumed and considered to have been assented to and approved by the Indemnifying
Party following receipt by the Indemnifying Party of a written notice from the Indemnified Party to
such effect.



          (b) If within the thirty (30) day period described in Section 7.04(a) above, the Indemnified
Party shall have received from the Indemnifying Party a written notice setting forth the
Indemnifying Party’s objections to such claim and the Indemnifying Party’s reasons for such
objection, then the parties shall negotiate in good faith for a period of ten (10) Business Days
from the date the Indemnified Party receives such objection. After such ten (10) Business Day
period (or such longer period as they may agree in writing), if the parties still cannot agree on
the claim, the Indemnified Party may, at any time thereafter, until the expiration of the
applicable statue of limitations with respect to its claim for indemnification, commence legal
proceedings against the Indemnifying Party to enforce its rights to indemnification from and
against any Losses described in the written notice described in Section 7.04(a) above.




     7.05 Additional Limits on Rights to Indemnification.



          (a) Notwithstanding anything to the contrary in this Agreement, except as provided in Section
7.05(b), an Indemnified Party shall not be entitled to indemnification:




               (i) for any Losses under Section 7.02(a), Section 7.02(c) or Section 7.03(a), as the case may
be, as to which the Indemnified Parties otherwise may be entitled to indemnification hereunder
(without giving effect to this clause (i)), until such indemnifiable Losses exceed Three Hundred
Thousand U.S. Dollars (U.S.$300,000) (the “Basket Amount”), provided that, after the aggregate
amount of all indemnifiable Losses exceeds the Basket Amount, the Indemnified Parties shall, in the
aggregate, be entitled to indemnification for all such Losses (including the Basket Amount); and



               (ii) for any Losses under Section 7.02(a), Section 7.02(c) or Section 7.03(a), as the case may
be, as to which the Indemnified Parties otherwise may be entitled to indemnification hereunder to
the extent that the aggregate amount of such Losses exceeds Five Million U.S. Dollars
(U.S.$5,000,000). (For the avoidance of doubt, indemnification claims under Sections 7.07 or
Article 9 shall not be taken into account for the purposes of applying the foregoing clauses (i)
and (ii)).



          (b) Notwithstanding the provisions of Section 7.05(a), the Purchaser Indemnified Parties shall
be entitled to be indemnified by the Sellers for Losses without reference to or the application of
the limitations in Section 7.05(a) if and to the extent that such Losses are attributable to a
breach or inaccuracy of the Specified Representations or any of the representations and warranties
of the Sellers and the Subsidiaries contained in Sections 3.18.




          (c) An Indemnified Party shall not be entitled to double recovery for any Losses. Without
limitation of the foregoing, an Indemnified Party shall not be entitled to indemnification for
Losses (and the amount of any such Losses shall not be includable in determining whether the
aggregate amount of the Losses exceeds the Basket Amount) if and to




43









 






the extent that the amount of any Losses from any matter have been taken into account in the
determination of the Deposit Date Net Working Capital.



          (d) Any payment made by an Indemnifying Party to an Indemnified Party shall be net of any
insurance proceeds to which the Indemnified Party actually receives as a result of any such claim.




          (e) For the avoidance of doubt, the provisions of this Section 7.05 shall not apply to claims
for indemnification under Section 7.07 (Indemnification for Pre-Closing Matters) or Article 9
(Taxes).




     7.06 Procedures for Third-Party Claims.



          (a) Any Indemnified Party seeking indemnification pursuant to this Article 7 in respect of any
Third-Party Claim shall give the Indemnifying Party from whom indemnification with respect to such
claim is sought: (i) prompt written notice (but in no event more than thirty (30) days after the
Indemnified Party acquires knowledge thereof) of such Third-Party Claim; and (ii) copies of all
documents and information relating to any such Third-Party Claim within ten (10) days of their
being obtained by the Indemnified Party; provided, that the failure by the Indemnified
Party to so notify or provide copies to the Indemnifying Party shall not relieve the Indemnifying
Party from any liability to the Indemnified Party for any liability hereunder except to the extent
that such failure shall have prejudiced the defense of such Third-Party Claim.




          (b) The Indemnifying Party shall have thirty (30) days (or such lesser time as may be
necessary to comply with statutory response requirements for litigation claims that are included in
any Third-Party Claim) from receipt of the notice contemplated in Section 7.06(a) to notify the
Indemnified Party whether or not the Indemnifying Party will, at its sole cost and expense, defend
the Indemnified Party against such claim. If the Indemnifying Party timely gives notice that it
intends to defend the Third-Party Claim, it shall have the right, except as hereafter provided, to
defend against, negotiate, settle or otherwise deal with the Third-Party Claim and to be
represented by counsel of its own choice, and the Indemnified Party will not admit any liability
with respect thereto or settle, compromise, pay or discharge the same without the consent of the
Indemnifying Party, which consent shall not be unreasonably withheld or delayed, so long as the
Indemnifying Party is contesting or defending the same with reasonable diligence and in good faith;
provided, that the Indemnified Party may participate in any proceeding with counsel
of its choice and at its expense; provided further, that the Indemnifying Party may
not enter into a settlement of any such Third-Party Claim without the consent of the Indemnified
Party, which consent shall be not unreasonably withheld, unless such settlement requires no more
than a monetary payment for which the Indemnified Party is fully indemnified by the Indemnifying
Party or involves other matters not binding upon the Indemnified Party; and provided
further that, in the event the Indemnifying Party does not agree in writing to accept the
defense of, and assume all responsibility for, such Third-Party Claim as provided above in this
Section 7.06(b), then the Indemnified Party shall have the right to defend against, negotiate,
settle or otherwise deal with the Third-Party Claim in such manner as the Indemnified Party deems
appropriate, in its sole discretion, and the Indemnified Party shall be entitled to indemnification
therefor from the Indemnifying Party to the extent provided under this Article 7.




44









 








Notwithstanding the foregoing, if in the reasonable opinion of the Indemnified Party such
Third-Party Claim, or the litigation or resolution of such Third-Party Claim, involves an issue or
matter that could have a Material Adverse Effect on the Indemnified Party, including the
administration of Tax Returns of the Indemnified Party or a dispute with a significant supplier or
customer of the Indemnified Party, or there is a conflict of interest in the defense of such action
between the Indemnified Party and the Indemnifying Party, the Indemnified Party shall have the
right to control the defense or settlement of any such claim or demand and its reasonable costs and
expenses shall be included as part of the indemnification obligations of the Indemnifying Party.
If the Indemnified Party elects to exercise such right, the Indemnifying Party shall have the right
to participate in, but not control, the defense or settlement of such claim at its sole cost and
expense.



     7.07 Indemnification for Pre-Closing Environmental Matters.



          (a) Subject to the provisions of this Section 7.07, the Purchaser Indemnified Parties shall be
indemnified by the Sellers from and against the amount of any and all Losses incurred or sustained
by or imposed upon them with respect to or by reason of (i) the presence, prior to the Closing, of
any Hazardous Material in, on, at or under any Business Real Property (including, without
limitation, all soil, sediments, water, groundwater, buildings or equipment at, on or under any
Business Real Property) in violation of, or that gives rise to an action under, any Environmental
Law, (ii) the Release, prior to the Closing, of any Hazardous Materials from any Business Real
Property (including, without limitation, from any soil, sediments, water, groundwater, buildings or
equipment on any Business Real Property) in violation of, or that gives rise to an action under,
any Environmental Law, (iii) any other pre-Closing violation of any Environmental Law by the
Sellers (in connection with the Business) or any of the Subsidiaries or (iv) any failure, breach or
inaccuracy of any representations or warranties made by the Sellers and the Subsidiaries in Section
3.19.




          (b) The rights of the Purchaser Indemnified Parties to indemnification under this Section 7.07
will expire on the sixth anniversary of the date of this Agreement; provided, however, that any
claim for indemnification that would otherwise terminate after the sixth anniversary of the date of
this Agreement shall survive if written notice of such claim is given on or prior to such sixth
anniversary.




          (c) Notwithstanding anything to the contrary in this Agreement, the Sellers shall not be
obligated to indemnify the Purchaser Indemnified Parties for any Losses under Section 7.07(a) as to
which the Purchaser Indemnified Parties otherwise may be entitled to indemnification under Section
7.07(a) (without giving effect to this clause (c)), (i) until such Losses exceed One Hundred
Thousand U.S. Dollars (U.S.$100,000), provided, however, that, after the aggregate amount of all
such Losses exceeds such amount, the Purchaser Indemnified Parties shall be entitled to
indemnification for all such Losses (including such amount) or (ii) to the extent the aggregate
amount of such Losses exceeds Five Million U.S. Dollars (U.S.$5,000,000). For the avoidance of
doubt, these limitations are separate from the limitations on other indemnification claims under
Section 7.05.




          (d) In connection with any claim for indemnification under Section 7.07(a) that involves a
claim asserted by, or an Action by, a Person other than a Purchaser Indemnified




45









 






Party, the procedures set forth in Section 7.06 shall be followed by the Purchaser Indemnified
Party in seeking indemnification hereunder. In connection with any other claim for
indemnification under Section 7.07(a) (i.e., a direct claim by any Purchaser Indemnified Party
against the Sellers that does not involve a claim asserted by, or any Action by, a third party),
the procedures set forth in Section 7.04 be followed by the Purchaser Indemnified Party in seeking
indemnification hereunder.



          (e) Notwithstanding any other provisions of this under Section 7.07, if, with respect to any
matter as to which the Purchaser Indemnified Parties are entitled to indemnification under Section
7.07, SCM has a right to be indemnified for such matter under that certain Asset Purchase Agreement
by and among North American Höganäs High Alloys LLC, North American Höganäs Holdings Inc. and SCM
dated June 4, 2004 (the “Prior APA”), the Purchaser Indemnified Parties shall seek to enforce the
indemnification obligations under the Prior APA (including bringing and diligently prosecuting
litigation if SCM reasonably believes that such litigation would be cost effective) before Sellers
shall be obligated to provide indemnification under this Section 7.07; provided, however, that the
Purchaser Indemnified Party may give notice of such claim so as to ensure that such claim does not
terminate as provided in Section 7.07(b). If SCM determines at any time that it has a right to be
indemnified for any matter under the Prior APA but determines in good faith that it would not be
cost effective to pursue litigation to enforce such right, the Sellers shall be offered the right
to pursue litigation under the Prior APA with respect to such matter in the name of SCM but at the
Sellers’ sole expense; provided, however, that in such event, (i) if attorneys’ fees are awarded to
SCM in connection therewith, SCM shall reimburse the Sellers for their attorneys’ fees up to the
amount of such award and (ii) the Sellers shall not have the right to settle any such litigation
without the prior written consent of SCM, which consent shall not be unreasonably withheld or
delayed. If SCM at any time commences litigation under the Prior APA with respect to any matter,
SCM shall not have the right to settle such litigation and thereafter seek indemnification from the
Sellers under this Section 7.07 with respect to such matter unless the Sellers have consented to
such settlement, which consent shall not be unreasonably withheld or delayed if requested.




     7.08 Effect of Indemnification. Any indemnity payment made hereunder shall be treated by
the Parties as an adjustment to the Purchase Price.



ARTICLE 8.

TERMINATION




     8.01 Termination. This Agreement may be terminated at any time prior to the Closing Date
(the “Termination Date”):



          (a) by the Sellers or BAC, effective upon written notice, if the Closing shall not have
occurred by November 15, 2008; provided, however, that the right to terminate this
Agreement under this Section 8.01(a) shall not be available to any party whose failure to fulfill
any obligation under this Agreement shall have been the cause of, or shall have resulted in, the
failure of the Closing to occur on or prior to such date;




          (b) by either BAC or the Sellers, effective upon written notice, in the event that any
Governmental Authority shall have issued an order, decree or ruling or taken any other


46









 







action restraining, enjoining or otherwise prohibiting the transactions contemplated by this
Agreement and such order, decree, ruling or other action shall have become final and nonappealable;
or




          (c) by the mutual written consent of the Sellers and BAC.




     8.02 Effect of Termination. In the event of termination of this Agreement as provided in
Section 8.01, this Agreement shall forthwith become void and there shall be no liability on the
part of any party hereto arising under or out of this Agreement except: (a) as expressly provided
in this Article 8, (b) as set forth in Section 10.01, and (c) that nothing herein shall relieve
either party from liability for any breach of this Agreement.



ARTICLE 9.

TAXES




     9.01 Preparation of Tax Returns.



          (a) The Sellers shall prepare or cause to be prepared and file or cause to be filed all Tax
Returns of the Subsidiaries for all Tax periods ending on or prior to the Closing Date which are to
be filed after the Closing Date. All Tax Returns described in this Section 9.01(a) shall be
prepared in a manner consistent with prior practice and in accordance with applicable Law.




          (b) BAC shall prepare or cause to be prepared and file or cause to be filed all Tax Returns of
the Subsidiaries (i) for Tax periods which begin before the Closing Date and end after the Closing
Date (each such period, a “Straddle Period”), and (ii) for Tax Periods which start after the
Closing Date.




          (c) For U.S. Federal income tax purposes, the taxable year of SCM shall end at 11:59 p.m.,
Eastern Standard Time, on the Closing Date. Neither the Sellers nor BAC shall take any position
inconsistent with the preceding sentence on any Tax Return.




     9.02 Cooperation with Respect to Tax Returns. BAC and the Sellers shall furnish or cause
to be furnished to each other, and each at their own expense, as promptly as practicable, such
information (including access to books and records) and assistance, including making employees
available on a mutually convenient basis to provide additional information and explanations of any
material provided, relating to the Subsidiaries as is reasonably necessary for the filing of any
Tax Return, for the preparation for any audit, and for the prosecution or defense of any claim,
suit or proceeding relating to any adjustment or proposed adjustment with respect to Taxes. The
Purchasers or the Subsidiaries shall retain possession of, and shall provide the Sellers reasonable
access to (including the right to make copies of), such supporting books and records and any other
materials that the Sellers may specify with respect to Tax matters relating to any taxable period
ending on the Closing Date, until the relevant statute of limitations has expired. After such
time, the Purchasers may dispose of such material, provided that if such disposition is prior to
the third anniversary of the expiration of the relevant statute of limitations, BAC shall give the
Sellers a reasonable opportunity to take possession of such materials prior to such disposition.



47









 





     9.03 Review of Tax Returns.



          (a) The Sellers shall, prior to the filing of any Tax Returns after the Closing Date, permit
BAC to review and approve such Tax Returns, and shall make such revisions to such Tax Returns as
are reasonably requested by BAC and are consistent with the Code and other applicable Tax Laws.
The Sellers and BAC shall attempt in good faith mutually to resolve any disagreements regarding
such Tax Returns prior to the due date for the filing thereof. Any disagreements regarding such
Tax Returns which are not resolved prior to the filing thereof shall be promptly resolved pursuant
to Section 9.09 below; provided, however, that such disputes shall not prevent the timely filing of
any such Tax Return. To the extent reasonably requested by the Sellers, the Subsidiaries will sign
any such Tax Returns requiring their signature.




          (b) BAC shall, prior to the filing of any Tax Returns for Straddle Periods, permit Sellers to
review and comment on such Tax Returns, and shall make such revisions to such Tax Returns as are
reasonably requested by the Sellers and are consistent with the Code and other applicable Tax Laws.
The Sellers and BAC shall attempt in good faith mutually to resolve any disagreements regarding
such Tax Returns prior to the due date for the filing thereof. Any disagreements regarding such
Tax Returns which are not resolved prior to the filing thereof shall be promptly resolved pursuant
to Section 9.09 below; provided, however, that such disputes shall not prevent the timely filing of
any such Tax Return.




     9.04 Payment of Taxes.



          (a) The Sellers shall, to the extent not paid by the Subsidiaries prior to the Closing Date
and not taken into account in the final determination of Current Liabilities, pay to the applicable
Tax Authority, or remit or cause to be remitted to the Subsidiaries for payment to the applicable
Tax Authority (in which case the Subsidiaries shall timely pay such amount to the applicable Tax
Authority) an amount equal to all Taxes shown as due and payable in respect of Tax Returns
described in Section 9.01(a) no later than five (5) Business Days prior to the due date for payment
of Taxes with respect to such Tax Returns.




          (b) The Sellers shall remit or cause to be remitted to BAC (or the Subsidiaries at BAC’s
direction) an amount equal to that portion of the Taxes shown on Tax Returns for Straddle Periods
for which Sellers are responsible pursuant to Section 9.04(c) below or have an indemnification
obligation pursuant to Section 9.07 below not later than five (5) Business Days prior to the due
date for payment of Taxes with respect to any such Tax Returns.




          (c) The Sellers shall be responsible for all Taxes payable with respect to the operations of
the Subsidiaries prior to the Closing to the extent not taken into account in the final
determination of Current Liabilities, and the Purchasers shall be responsible for all Taxes payable
with respect to the operations of the Subsidiaries after the Closing and for all Taxes taken into
account in the final determination of Current Liabilities. In the case of Taxes that are payable
with respect to a Straddle Period, the portion of any such Tax that is allocable to the portion of
such Straddle Period ending on the Closing Date shall be:




               (i) in the case of Taxes that are either (x) based upon or related to income or receipts, or
(y) imposed in connection with any sale or other transfer or assignment of



48









 







property (real or personal, tangible or intangible) (other than conveyances pursuant to this
Agreement), deemed equal to the amount which would be payable if the taxable year ended on the
Closing Date; and



               (ii) in the case of Taxes imposed on a periodic basis with respect to the assets or otherwise
measured by the level of any item, deemed to be the amount of such Taxes for the entire period (or,
in the case of such Taxes determined on an arrears basis, the amount of such Taxes for the
immediately preceding period), multiplied by a fraction the numerator of which is the number of
calendar days in the period ending on the Closing Date and the denominator of which is the number
of calendar days in the entire Straddle Period.



               (iii) In the case of any Tax based upon or measured by capital (including net worth or long
term debt) or intangibles, any amount thereof required to be allocated under this Section 9.04
shall be computed by reference to the level of such items on the Closing Date. All determinations
necessary to effect the foregoing allocations shall be made in a manner consistent with prior
practice.



     9.05 Tax Audits.



          (a) In the event that either of the Purchasers or any of the Subsidiaries receives notice from
any Tax Authority of any audit of any Tax Return or Taxes of any Subsidiary with respect to which
the Sellers are liable pursuant to Section 9.07 below, BAC shall promptly provide written notice to
the Sellers of the date on which such audit is to begin, but in no event later than thirty (30)
days following the receipt of any such notice. In the event that the Sellers receive notice from
any Tax Authority of any audit of any Tax Return or Taxes of any of the Subsidiaries, the Sellers
shall promptly provide written notice to BAC of the date on which such audit is to begin, but in no
event later than thirty (30) days following the receipt by the Sellers of any such notice.




          (b) After the Closing Date, the Sellers shall control all Tax audits and administrative or
court proceedings relating to any Tax period ending on or prior to the Closing Date, but BAC shall
have the right to participate in any such audits or proceedings that may have the effect of
increasing BAC’s or a Subsidiary’s Tax liability for any Tax period, and the Sellers shall not
settle or compromise any such proceeding without the prior written consent of BAC, which consent
shall not be unreasonably withheld, conditioned or delayed. In connection with any such
proceeding, BAC shall bear its own costs and expenses.




          (c) After the Closing Date, BAC shall control all Tax audits and administrative or court
proceedings relating to any Straddle Period or to any Tax period that starts after the Closing
Date, but the Sellers shall have the right to participate in any such audits or proceedings
relating to any such Tax period that may have the effect of increasing either Seller’s Tax
liability for any such Tax period, and BAC shall not settle or compromise any such proceeding
without the prior written consent of the Sellers, which consent shall not be unreasonably withheld,
conditioned or delayed. In connection with any such proceeding, the Sellers shall bear their own
costs and expenses.




49









 








          (d) If any Tax Authority notifies either of the Purchasers or any of the Subsidiaries that it
is asserting any claim, making any assessment or otherwise disputing or affecting any Tax for which
either of the Sellers is responsible hereunder, BAC shall, promptly upon receipt of notice thereof,
inform the Sellers thereof. If any Tax Authority notifies either Seller that it is asserting any
claim, making any assessment or otherwise disputing or affecting any Tax for which either of the
Purchasers or any of the Subsidiaries is responsible hereunder, such Seller shall, promptly
following receipt of such notice, inform BAC thereof.




     9.06 Refund Claims. The Purchasers and the Subsidiaries shall, upon reasonable written
request of the Sellers, file a claim for a refund with the appropriate Tax Authority for any
taxable period ending on or before the Closing Date, but only if and to the extent that such a
claim would not, or would not be reasonably likely to, result in any Tax liability to the
Purchasers and the Subsidiaries for full or partial periods after the Closing. The Sellers will
provide the Purchasers or the Subsidiaries with such information as may reasonably be necessary to
enable the Purchasers or the Subsidiaries to file a claim for a refund of such Taxes. To the
extent any determination of Tax liability of the Subsidiaries, whether as the result of an audit or
examination, a claim for refund, the filing of an amended return or otherwise, results in any
refund of Taxes paid which are attributable to any Tax period ending prior to or on the Closing
Date, any such refund that is actually received by a Subsidiary within four (4) years after the
Closing Date shall belong to the applicable Seller, but only if such claim is not the result of any
carrybacks from Tax periods or partial periods beginning after the Closing Date. Any payments made
under this Section 9.06 shall be net of any Taxes payable with respect to such refund, credit or
interest thereon (taking into account any actual reduction in Tax liability realized upon the
payment pursuant to this Section 9.06).



     9.07 Tax Indemnification. The Sellers shall be liable for, and shall indemnify and hold
the Purchasers and the Subsidiaries harmless against (without taking into account any of the
limitations elsewhere in this Agreement):



          (a) All income Taxes imposed on any member of any affiliated group that includes Sellers with
which any of the Subsidiaries files or filed a Tax Return on a consolidated, combined or unitary
basis for a taxable year (of a Subsidiary) beginning before the Closing Date and for which any of
the Subsidiaries is liable pursuant to Treas. Reg. 1.1502-6 or a comparable provision of state,
local or foreign Law, solely as a result of its inclusion in such a consolidated, combined or
unitary Tax Return;




          (b) Except to the extent such Taxes were taken into account in the final determination of
Current Liabilities, Taxes imposed on any of the Subsidiaries (including, but not limited to, as a
transferee, successor, by contract, or otherwise) with respect to taxable periods ending on or
before the Deposit Date; and with respect to any Straddle Period, Taxes imposed on any of the
Subsidiaries (including, but not limited to, as a transferee, successor, by contract, or otherwise)
which are allocable, pursuant to Section 9.04, to the portion of such period ending on the Deposit
Date;




          (c) Any breach of or inaccuracy in any representation or warranty on the part of the
Subsidiaries or the Sellers contained in this Agreement or the Schedules hereto or in any




50









 






other Ancillary Agreement or any certificates required by the terms hereof to be delivered by
Sellers to the extent related to Taxes or Tax Returns; and



          (d) All fees, costs and expenses incurred by the Purchasers or a Subsidiary in connection with
the determination or resolution of any Taxes (but not in connection with reviewing any Tax Return
provided to BAC for pursuant to Section 9.03(a)) that are the responsibility of the Sellers under
this Section 9.07, including without limitation for attorneys, accountants and experts.




The indemnification provisions of this Section 9.07 are the exclusive indemnification provisions
with respect to Taxes and Tax matters and, except as specifically referenced in Article 7 (e.g.,
with respect to survival of Tax representations and warranties), Article 7 shall not apply with
respect to any Taxes and Tax matters that are the subject of this Section 9.07.



     9.08 Discontinuation of Tax Sharing Arrangements. All Tax sharing agreements or similar
agreements with respect to or involving the Subsidiaries shall be terminated as of the Closing Date
without any resulting obligation or liability due from the Subsidiaries to Sellers or any of their
Affiliates and, after the Closing Date, the Subsidiaries shall not be bound thereby or have any
liability thereunder.



     9.09 Disputes. Any dispute as to any matter covered by this Article 9 shall be resolved by
the Independent Accounting Firm and the fees and expenses of such accounting firm shall be borne
equally by the Sellers, on the one hand, and the Purchasers, on the other hand.



ARTICLE 10.

GENERAL PROVISIONS




     10.01 Expenses. Except as otherwise provided in this Agreement, the Sellers and the
Purchasers shall each bear its own expenses incurred in connection with the negotiation and
execution of this Agreement and each other agreement, document and instrument contemplated by this
Agreement and the consummation of the transactions contemplated hereby and thereby;
provided, however, that the Sellers, on the one hand, and the Purchasers, on the
other hand, shall each be responsible for payment of one-half of all sales, use, transfer,
intangible, recordation, documentary stamp or similar Taxes or charges, of any nature whatsoever,
applicable to, or resulting from, the transactions contemplated by this Agreement. For the
avoidance of doubt, the transaction bonuses to be paid by SCM pursuant to Section 5.09(b) shall not
be deemed to be expenses of the Sellers.



     10.02 Notices. All notices, requests, claims, demands and other communications hereunder
shall be in writing and shall be given or made (and shall be deemed to have been duly delivered,
given, made and received): (a) if delivered in person, when delivered; (b) if delivered by
facsimile, upon written confirmation of transmission; (c) if by overnight courier, one (1) Business
Day following the day on which such notice is sent; (d) if by U.S. mail, five (5) days after being
mailed, certified or registered mail, with postage prepaid to the respective parties at the
following addresses or facsimile numbers (or at such other address or facsimile number for a party
as shall be specified in a notice given in accordance with this Section 10.02):



51









 





	 	 	 
	If to the Sellers:
	 
	 	 
	 

	 	Gibraltar Steel Corporation of New York
	 

	 	3556 Lake Shore Road
	 

	 	Buffalo, New York 14219
	 

	 	Attn: Henning Kornbrekke
	 

	 	Facsimile Number: (716) 826-1578
	 
	 	 
	with a copy to:
	 
	 	 
	 

	 	Lippes Mathias Wexler Friedman LLP
	 

	 	665 Main Street
	 

	 	Suite 300
	 

	 	Buffalo, New York 14203
	 

	 	Attn: Paul J. Schulz, Esq.
	 

	 	Facsimile No. 716-853-5199
	 
	 	 
	If to the Purchasers:
	 
	 	 
	 

	 	Bison Acquisition Corporation
	 

	 	c/o Platinum Equity Advisors, LLC
	 

	 	360 North Crescent Drive
	 

	 	Beverly Hills, California 90210
	 

	 	Attn: Executive Vice President and General Counsel
	 

	 	Facsimile No.: 310-712-1863
	 
	 	 
	with a copy to:
	 
	 	 
	 

	 	Bingham McCutchen LLP
	 

	 	600 Anton Boulevard, 18th Floor
	 

	 	Costa Mesa, California 92626
	 

	 	Attn: James W. Loss, Esq.
	 

	 	Facsimile No.: 714-830-0700
	 
	 	 
	If to the Trustee:
	 
	 	 
	 

	 	Appleby Trust (Mauritius)
	 

	 	8th Floor, Medine Mews
	 

	 	La Chaussee Street
	 

	 	Port Louis, Mauritius
	 

	 	Attn: Malcolm Moller
	 

	 	Facsimile: (+230) 210 8792






52









 






     10.03 Headings. The descriptive headings contained in this Agreement are for convenience
of reference only and shall not affect in any way the meaning or interpretation of this Agreement.



     10.04 Severability. If any term or other provision of this Agreement is invalid, illegal
or incapable of being enforced by any Law or public policy, all other terms and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner materially adverse
to any party. Upon such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as possible in an
acceptable manner in order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.



     10.05 Entire Agreement. This Agreement, together with all Exhibits to this Agreement and
the Schedules, constitutes the entire agreement of the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements and undertakings, both written and oral, between
the Sellers and the Purchasers with respect to the subject matter hereof.



     10.06 Assignment. This Agreement may not be assigned by operation of law or otherwise
without the express written consent of the Sellers or the Purchasers provided,
however, that upon prior written notice to the Sellers, the Purchasers may (a) assign this
Agreement and its rights and obligations hereunder in whole or in part (provided that the
Purchasers shall not be relieved of its obligations hereunder in connection with any such
assignment) to any Affiliate or as collateral to any financing source and (b) assign this Agreement
to any successor-in-interest to all or substantially all of the assets or business to which this
Agreement relates.



     10.07 No Third Party Beneficiaries. This Agreement shall be binding upon and inure solely
to the benefit of the parties hereto and their permitted assigns and, except as expressly provided
in Article 7 with respect to Purchaser Indemnified Parties and Seller Indemnified Parties who are
not parties to this Agreement, nothing herein, express or implied, is intended to or shall confer
upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever
under or by reason of this Agreement.



     10.08 Amendment and Waiver. This Agreement may not be amended or modified except by an
instrument in writing signed the Sellers, SCM, Pacific and the Purchasers; provided, however, that
any extension or waiver of the requirements hereunder shall be valid if set forth in an instrument
in writing signed by the party to be bound thereby. Any waiver of any term or condition shall not
be construed as a waiver of any subsequent breach or a subsequent waiver of the same term or
condition, or a waiver of any other term or condition, of this Agreement. The failure of any party
to assert any of its rights hereunder shall not constitute a waiver of any of such rights.



     10.09 Governing Law. This Agreement shall be interpreted in accordance with and governed
by the laws of the State of New York (without giving effect to any choice or conflict of laws
provisions thereof).



53









 





     10.10 Consent To Jurisdiction. In the event of any controversy or claim arising out of or
relating to this Agreement or the breach or alleged breach hereof, each of the parties hereto
irrevocably (a) submits to the exclusive jurisdiction of any State and Federal courts sitting in
New York, New York, (b) waives any objection which it may have at any time to the laying of venue
of any action or proceeding brought in any such court, (c) waives any claim that such action or
proceeding has been brought in an inconvenient forum or that there is a more convenient forum for
such action or proceeding, and (d) agrees that service of process or of any other papers upon such
party by registered mail at the address to which notices are required to be sent to such party
under Section 10.02 shall be deemed good, proper and effective service upon such party.



     10.11 Waiver of Jury Trial. Each party hereto hereby waives, to the fullest extent
permitted by applicable Law, any right it may have to a trial by jury in respect of any litigation
directly or indirectly arising out of, under or in connection with this Agreement. Each party
hereto acknowledges that it and the other parties hereto have been induced to enter into this
Agreement, by, among other things, the mutual waivers and certifications in this Section 10.11.



     10.12 Public Announcements. Prior to the Closing Date, none of the Sellers, the
Subsidiaries nor the Purchasers shall issue any press release or public announcement concerning
this Agreement or the transactions contemplated hereby without obtaining the prior written approval
of the other party hereto, which approval will not be unreasonably withheld or delayed, unless, in
the sole judgment of the Purchasers or the Sellers, as applicable, disclosure is otherwise required
by applicable Law or by the applicable rules of any stock exchange, provided that, to the extent
required by applicable Law, the party intending to make such release shall use its best efforts
consistent with such applicable Law to consult with the other party with respect to the text
thereof.



     10.13 Counterparts; Effectiveness. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Agreement shall become effective when each party
hereto shall have received a counterpart hereof signed by the other parties hereto. For the
convenience of the parties, any number of counterparts hereof may be executed, each such executed
counterpart shall be deemed an original and all such counterparts together shall constitute one and
the same instrument. Facsimile transmission (including the e-mail delivery of documents in Adobe
PDF format) of any signed original counterpart and/or retransmission of any signed facsimile
transmission shall be deemed the same as the delivery of an original.



[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]




54









 








[Signature Page to Stock Purchase Agreement]




     IN WITNESS WHEREOF, each of the parties hereto has executed, or has caused to be executed by
its duly authorized representative, this Agreement as of the date first written above.



	 	 	 	 	 
	 	 	GIBRALTAR STEEL CORPORATION OF NEW YORK
	 
	 	 	 	 
	 

	 	By:	 	/s/ Henning Kornbrekke
	 

	 	 	 	 
	 

	 	Name:	 	Henning Kornbrekke 
	 

	 	Title:	 	President 
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	GIBRALTAR INTERNATIONAL, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Henning Kornbrekke
	 

	 	 	 	 
	 

	 	Name:	 	Henning Kornbrekke 
	 

	 	Title:	 	President 
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	SCM METAL PRODUCTS, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Henning Kornbrekke
	 

	 	 	 	 
	 

	 	Name:	 	Henning Kornbrekke 
	 

	 	Title:	 	President 
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	GIBRALTAR PACIFIC INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Henning Kornbrekke
	 

	 	 	 	 
	 

	 	Name:	 	Henning Kornbrekke 
	 

	 	Title:	 	President 
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	BISON ACQUISITION CORPORATION
	 
	 	 	 	 
	 

	 	By:	 	/s/ Eva M. Kalawski
	 

	 	 	 	 
	 

	 	Name:	 	Eva M. Kalawski 
	 

	 	Title:	 	Vice President & Secretary 
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	APPLEBY TRUST (MAURITIUS) LIMITED,

acting solely in its capacity as Trustee

of the Bison Purpose Trust
	 
	 	 	 	 
	 

	 	By:	 	/s/ Patrick Lee MoLin
	 

	 	 	 	 
	 

	 	Name:	 	Patrick Lee MoLin 
	 

	 	Title:	 	Director 







55