**Exhibit 10.1**

 

**STOCKPURCHASE AGREEMENT**

 

 

**by andamong**

 

**TULSA WINCH, INC.,**

 

**BLOUNT, INC.**

 

**AND**

 

**DOVER INDUSTRIAL PRODUCTS, INC.**

 

----

 

**TABLE OF CONTENTS**

 
| ** **           | ** **                                               | ** ** | **Page**   |
|----------------------|----------------------------------------------------------|------------|------------|
| ** **           | ** **                                               | ** ** | ** ** |
| **ARTICLE I**   | **DEFINITIONS; INTERPRETATION**                          | ** ** | **1**      |
| Section 1.1     | Definitions                                              |       | 1          |
| Section 1.2     | Additional Defined Terms                                 |       | 6          |
| Section 1.3     | Interpretation                                           |       | 7          |
| ** **           | ** **                                               | ** ** | ** ** |
| **ARTICLE II**  | **PURCHASE AND SALE; CLOSING**                           | ** ** | **7**      |
| Section 2.1     | Purchase and Sale                                        |       | 7          |
| Section 2.2     | Purchase Price                                           |       | 8          |
| Section 2.3     | The Closing                                              |       | 8          |
| Section 2.4     | Adjustment of the Initial Purchase Price                 |       | 8          |
| Section 2.5     | Payment of the Initial Purchase Price by Purchaser       |       | 10         |
| ** **           | ** **                                               | ** ** | ** ** |
| **ARTICLE III** | **REPRESENTATIONS AND WARRANTIES OF SELLER**             | ** ** | **10**     |
| Section 3.1     | Organization; Power; Authorization                       |       | 10         |
| Section 3.2     | Binding Effect; Non-contravention                        |       | 11         |
| Section 3.3     | Ownership of Stock                                       |       | 11         |
| Section 3.4     | Litigation                                               |       | 11         |
| Section 3.5     | Broker                                                   |       | 11         |
| ** **           | ** **                                               | ** ** | ** ** |
| **ARTICLE IV**  | **REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY** | ** ** | **11**     |
| Section 4.1     | Organization, Qualification and Organizational Power     |       | 11         |
| Section 4.2     | Non-contravention                                        |       | 12         |
| Section 4.3     | Capitalization; Subsidiaries                             |       | 12         |
| Section 4.4     | Financial Statements                                     |       | 12         |
| Section 4.5     | Events Subsequent to the Reference Balance Sheet         |       | 13         |
| Section 4.6     | Title to Assets                                          |       | 13         |
| Section 4.7     | Compliance with Laws                                     |       | 14         |
| Section 4.8     | Litigation                                               |       | 14         |
| Section 4.9     | Tax Matters                                              |       | 14         |
| Section 4.10    | Environmental Matters                                    |       | 16         |
| Section 4.11    | Intellectual Property                                    |       | 17         |
| Section 4.12    | Real Estate                                              |       | 17         |
| Section 4.13    | Employee Benefits                                        |       | 18         |
| Section 4.14    | Contracts                                                |       | 19         |
| Section 4.15    | Labor Matters                                            |       | 20         |
| Section 4.16    | Insurance                                                |       | 20         |
| Section 4.17    | Affiliate Transactions                                   |       | 21         |
| Section 4.18    | Licenses and Permits                                     |       | 21         |
| Section 4.19    | Customers and Suppliers                                  |       | 21         |
| Section 4.20    | Brokerage                                                |       | 21         |
| Section 4.21    | Accounts Receivable                                      |       | 21         |
| Section 4.22    | Powers of Attorney; Authorized Signatories               |       | 21         |
| Section 4.23    | Product Warranties                                       |       | 21         |

 

i

----

 

**TABLE OF CONTENTS**

 
| ** **            | ** **                                                 | ** ** | **Page**   |
|-----------------------|------------------------------------------------------------|------------|------------|
| ** **            | ** **                                                 | ** ** | ** ** |
| **ARTICLE V**    | **REPRESENTATIONS AND WARRANTIES OF PURCHASER AND PARENT** | ** ** | **22**     |
| Section 5.1      | Organization, Power and Authorization                      |       | 22         |
| Section 5.2      | Binding Effect and Non-contravention                       |       | 22         |
| Section 5.3      | Consents                                                   |       | 22         |
| Section 5.4      | Litigation                                                 |       | 23         |
| Section 5.5      | Parent Financial Statements                                |       | 23         |
| Section 5.6      | Broker                                                     |       | 23         |
| Section 5.7      | Investment                                                 |       | 23         |
| ** **            | ** **                                                 | ** ** | ** ** |
| **ARTICLE VI**   | **PRE-CLOSING COVENANTS**                                  | ** ** | **23**     |
| Section 6.1      | Further Actions; Commercially Reasonable Efforts           |       | 23         |
| Section 6.2      | Conduct of Business                                        |       | 24         |
| Section 6.3      | Access                                                     |       | 25         |
| Section 6.4      | Contact with Customers and Suppliers                       |       | 26         |
| Section 6.5      | Notifications; Schedule Updates/Corrections           |       | 26         |
| Section 6.6      | Funds Available                                            |       | 27         |
| Section 6.7      | Purchaser Actions                                          |       | 27         |
| Section 6.8      | Releases                                                   |       | 27         |
| Section 6.9      | Public Announcements                                       |       | 27         |
| ** **            | ** **                                                 | ** ** | ** ** |
| **ARTICLE VII**  | **CONDITIONS TO CLOSING**                                  | ** ** | **27**     |
| Section 7.1      | Conditions to Purchaser’s Obligation                  |       | 27         |
| Section 7.2      | Seller’s Closing Deliveries                           |       | 28         |
| Section 7.3      | Conditions to Seller’s Obligation                     |       | 29         |
| Section 7.4      | Purchaser’s Closing Deliveries                        |       | 30         |
| ** **            | ** **                                                 | ** ** | ** ** |
| **ARTICLE VIII** | **POST-CLOSING COVENANTS**                                 | ** ** | **30**     |
| Section 8.1      | Further Assurances                                         |       | 30         |
| Section 8.2      | Books and Records                                          |       | 30         |
| Section 8.3      | Employees; Employees Benefit Plans                         |       | 31         |
| Section 8.4      | Litigation Support and Products Liability Claims           |       | 31         |
| Section 8.5      | Used Oil Sump Closure and Remediation                      |       | 33         |
| Section 8.6      | Covenant Not to Compete and Not to Solicit                 |       | 34         |
| Section 8.7      | Heat Treat Machine                                         |       | 35         |
| ** **            | ** **                                                 | ** ** | ** ** |
| **ARTICLE IX**   | **TERMINATION**                                            | ** ** | **35**     |
| Section 9.1      | Termination                                                |       | 35         |
| Section 9.2      | Effect of Termination                                      |       | 36         |
| ** **            | ** **                                                 | ** ** | ** ** |
| **ARTICLE X**    | **INDEMNIFICATION**                                        | ** ** | **36**     |
| Section 10.1     | Indemnification                                            |       | 36         |
| Section 10.2     | Procedures for Indemnification                             |       | 37         |
| Section 10.3     | Construction of Representations and Warranties             |       | 37         |
| Section 10.4     | Limitations on Indemnification                             |       | 38         |
| Section 10.5     | Adjustments to Final Purchase Price                        |       | 40         |

 

ii

----

 

**TABLE OF CONTENTS**

 
| ** **           | ** **                                                           | ** ** | **Page**   |
|----------------------|----------------------------------------------------------------------|------------|------------|
| ** **           | ** **                                                           | ** ** | ** ** |
| **ARTICLE XI**  | **TAX MATTERS**                                                      | ** ** | **41**     |
| Section 11.1    | Tax Returns                                                          |       | 41         |
| Section 11.2    | Liability for Taxes                                                  |       | 42         |
| Section 11.3    | Apportionment of Taxes                                               |       | 42         |
| Section 11.4    | Cooperation                                                          |       | 43         |
| Section 11.5    | Tax Contests                                                         |       | 43         |
| Section 11.6    | Amended Tax Returns                                                  |       | 44         |
| Section 11.7    | Tax Refunds                                                          |       | 44         |
| Section 11.8    | 338(h)(10) Election                                             |       | 44         |
| ** **           | ** **                                                           | ** ** | ** ** |
| **ARTICLE XII** | **MISCELLANEOUS**                                                    | ** ** | **45**     |
| Section 12.1    | Transaction Expenses; Transfer Taxes                                 |       | 45         |
| Section 12.2    | Amendments and Waivers                                               |       | 45         |
| Section 12.3    | Entire Agreement                                                     |       | 46         |
| Section 12.4    | Successors and Assigns                                               |       | 46         |
| Section 12.5    | Governing Law; Consent to Jurisdiction; Venue; Waiver of  Jury Trial |       | 46         |
| Section 12.6    | Notices                                                              |       | 46         |
| Section 12.7    | Time of the Essence                                                  |       | 48         |
| Section 12.9    | Schedules                                                            |       | 48         |
| Section 12.10   | Counterparts                                                         |       | 48         |
| Section 12.11   | No Third-Party Beneficiaries                                         |       | 48         |
| Section 12.12   | No Strict Construction                                               |       | 48         |
| Section 12.13   | Headings                                                             |       | 48         |

 

iii

----

 

**SCHEDULES AND EXHIBITS**

 
| Schedule  1.1(a)  |   | Seller’s  Retained Liabilities                 |
|-------------------|--------|-----------------------------------------------------|
| Schedule  1.1(b)  |   | Working  Capital Schedule                           |
| Schedule  4.2     |   | Approvals  and Consents                             |
| Schedule  4.3(d)  |   | Outstanding  Indebtedness                           |
| Schedule  4.4     |   | Financial  Statements                               |
| Schedule  4.5     |   | Events  Subsequent to Reference Balance Sheet       |
| Schedule  4.6     |   | Title  to Assets                                    |
| Schedule  4.7     |   | Compliance  with Laws                               |
| Schedule  4.8     |   | Litigation                                          |
| Schedule  4.9     |   | Tax  Matters                                        |
| Schedule  4.10    |   | Environmental  Matters                              |
| Schedule  4.11    |   | Intellectual  Property                              |
| Schedule  4.12(a) |   | Owned  Real Property                                |
| Schedule  4.12(d) |   | Leases  or Grants of Owned Real Property            |
| Schedule  4.13    |   | Employee  Benefits                                  |
| Schedule  4.13(e) |   | Benefit  Plan                                       |
| Schedule  4.14    |   | Material  Contracts                                 |
| Schedule  4.16    |   | Insurance                                           |
| Schedule  4.17    |   | Affiliate  Transactions                             |
| Schedule  4.18    |   | Licenses  and Permits                               |
| Schedule  4.19    |   | Customer  and Suppliers                             |
| Schedule  4.21    |   | Accounts  Receivable                                |
| Schedule  4.22    |   | Powers  of Attorney; Authorized Signatories         |
| Schedule  4.23    |   | Product  Warranties                                 |
| Schedule  5.3     |   | Purchaser  Consents                                 |
| Schedule  5.5     |   | Parent  Financial Statements                        |
| Schedule  6.2(b)  |   | Existing  Contracts Mandating Payments to Employees |
| Schedule  7.2(d)  |   | Required  Consents                                  |
| Schedule  7.2(e)  |   | Agreements  to be Terminated                        |
| Schedule  10.4(k) |   | Environmental  Documents                            |
|              |   |                                                |
| Exhibit A    |   | Release                                             |
| Exhibit B    |   | Assignment  and Assumption Agreement                |

 

iv

----

** **

 

**STOCKPURCHASE AGREEMENT**

 

THISSTOCK PURCHASE AGREEMENT (this “Agreement”) is made as of September 30,2010, by and among Tulsa Winch, Inc., a Delaware corporation (“Purchaser”),Blount, Inc., a Delaware corporation (“Seller”), and, solely forthe purposes set forth in Article V, Article VI, Article Xand Article XII of this Agreement, Dover Industrial Products, Inc.,a Delaware corporation (“Parent”). Purchaser, Seller and Parent are each sometimes referred to herein as a “Party”and, collectively, as the “Parties.” Capitalized terms used but nototherwise defined herein are defined in Section 1.1.

 

**WHEREAS**, Seller owns all of the issued and outstandingcapital stock (the “Outstanding Stock”) of Gear Products, Inc., anOklahoma corporation (the “Company”);

 

**WHEREAS**, Purchaser is an Affiliate of Parent; and

 

**WHEREAS**, the Parties desire to enter into this Agreementpursuant to which, at the Closing, Seller shall sell to Purchaser, andPurchaser shall purchase from Seller, the Outstanding Stock, on and subject tothe terms and conditions contained herein.

 

**NOW**,**THEREFORE**, inconsideration of the representations, warranties, covenants and agreementscontained herein and for other good and valuable consideration, the receipt andsufficiency of which are hereby acknowledged, the Parties hereby agree asfollows:

 

**ARTICLE I**

 

**DEFINITIONS; INTERPRETATION**

 

Section 1.1             Definitions.  For the purposes of this Agreement, thefollowing terms have the meanings set forth below:

 

“AccessAgreement” means the Access Agreement by and between Purchaser and theCompany dated as of August 4, 2010.

 

“Affiliate”means, with respect to any Person, any other Person who directly or indirectlycontrols, is controlled by, or is under common control with, such Person. Theterm “control” means the possession, directly or indirectly, of thepower to direct or cause the direction of the management and policies of aPerson, whether through the ownership of voting securities, by contract orotherwise, and the terms “controlled” and “controlling” havemeanings correlative thereto.

 

“Business”means the business of the Company as conducted on the date of this Agreement.

 

“BusinessDay” means any day excluding Saturday, Sunday, any day that is a legalholiday under the laws of the State of Oklahoma, and any day on which bankinginstitutions located in the State of Oklahoma are authorized or required by lawor other governmental action to close.

 

----

 

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

 

“CompetitiveBusiness” means any business that consists of selling, marketing,manufacturing or servicing rotational swing drive bearings, worm and planetarygear drives, hoists, hydraulic pump drives or winches for original equipmentmanufacturers in North America.

 

“ConfidentialityAgreement” means the Confidentiality Agreement by and between Seller andDover Corporation dated April 20, 2010.

 

“Contract”means any written agreement, contract, obligation, commitment or undertaking.

 

“CustomerSurvey Agreement” means the Customer Survey Agreement by and among theCompany, Purchaser and Clarity Consulting dated as of August 3, 2010.

 

“EnvironmentalLaws” means all federal and state statutes or regulations concerning thepollution, protection or cleanup of the environment, including those relatingto the treatment, storage, disposal, handling, transportation, discharge,emission or release of Hazardous Substances, and those relating to the healthand safety of workers and the public as affected by environmental conditions,including the Clean Air Act, the Clean Water Act, the Toxic Substances ControlAct, the Solid Waste Disposal Act, the Resource Conservation and Recovery Act,the Comprehensive Environmental Response, Compensation, and Liability Act and,to the extent related to environmental conditions, the Occupational Safety andHealth Act.

 

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

 

“ERISAControlled Group Member” means any Person that, together with Seller, theCompany or any of their Affiliates, as of the relevant measuring date, is (orwas) required to be treated as single employer under Section 414 of theCode.

 

“ERISAEvent” means, with respect to Seller, the Company or any ERISA ControlledGroup Member, (a) any event described in Section 4043(c) ofERISA with respect to a Title IV Plan; (b) the withdrawal of Seller, theCompany or any ERISA Controlled Group Member from a Title IV Plan subject to Section 4063of ERISA during a plan year in which it was a substantial employer, as definedin Section 4001(a)(2) of ERISA, (c) the filing of a notice ofintent to terminate a Title IV Plan or the treatment of a plan amendment as atermination under Section 4041 of ERISA; (d) the institution ofproceedings to terminate a Title IV Plan; (e) the failure by Seller, theCompany or any ERISA Controlled Group Member to make, when due, requiredcontributions to a Title IV Plan; (f) the loss of the qualified status ofany Benefit Plan; or (g) the termination of a Benefit Plan described in Section 4064of ERISA.

 

“EstimatedWorking Capital Adjustment Amount” means Estimated Working Capital minusTarget Working Capital.

 

“ForeignOfficial” means any foreign government official, any official of apolitical party in a foreign country or any candidate for political office in aforeign country, and any employee of a company which is owned directly orindirectly in whole or in part by a foreign government.

 

2

----

 

“FundamentalRepresentations” means the representations set forth in Sections 3.1,3.2(a), 3.3, 3.5, 4.1, 4.2, 4.3, 4.6and 4.20.

 

“GAAP”means accounting principles generally accepted in the United States as ineffect from time to time.

 

“GovernmentalEntity” means any United States or foreign federal, state or localgovernment or any court, administrative agency, or government authority actingunder the authority of the United States federal, state or local government.

 

“HazardousSubstance” means any waste, pollutant, contaminant, hazardous, radioactive,or toxic substance, asbestos, petroleum, petroleum products or by-products, thepresence of which requires investigation or remediation under any EnvironmentalLaws.

 

“HeatTreat Machine” means the G10-01 New Induction Hardening Machine, also knownas the GearPro Machine, which the Company has purchased from InductoHeatpursuant to purchase order number 551227.

 

“Indebtedness”of any Person means, without duplication, all indebtedness of such Person forborrowed money.  Indebtedness shall notinclude trade liabilities and accrued expenses incurred and payable in theordinary course of business.

 

“IntellectualProperty” means (i) United States patents, patent applications,continuations, continuations-in-part, divisions, reissues, patent disclosures,inventions (whether or not patentable) and improvements thereto, (ii) UnitedStates trademarks, service marks, logos, trade dress and trade names or othersource-identifying designations or devices, (iii) United States copyrightsand design rights, whether registered or unregistered, and pending applicationsto register the same, (iv) Internet domain names and registrationsthereof, and (v) confidential ideas, trade secrets, computer software,including source code, know-how, works-in-progress, concepts, methods,processes, inventions, invention disclosures, formulae, reports, data, customerlists, mailing lists, business plans or other proprietary information.

 

“Knowledge”means, with respect to the Company or Seller, the actual knowledge afterreasonable inquiry of Ervin Rock, David McCarthy, Brian Shrum, Tim Simmons,Bill Alford, Cal Jenness, Dick Irving, Mark Allred and Chad Paulson.  For these purposes, “actual knowledge” refersto the actual (and not imputed and constructive) knowledge and consciousawareness of specific facts or circumstances related to the applicablerepresentation or warranty.  For thesepurposes, “reasonable inquiry” means (i) review of the relevant sectionsof this Agreement and corresponding schedules, (ii) inquiry of individualemployees of the Company likely to have knowledge of a particular subject (withno obligation to make any inquiries outside of the Company or to any thirdparties), and (iii) review of Company documents consisting of non-archivedfiles that are reasonably anticipated to be relevant to the inquiry.

 

“LegalRequirement” means any requirement arising under any action, law, treaty, rule orregulation, determination or direction of a Governmental Entity.

 

“Liens”means any mortgage, pledge, lien, security interest, charge, claim, or otherencumbrance.

 

3

----

 

“Losses”means, with respect to any Person, any liabilities, costs, damages,deficiencies, penalties, fines or other losses or expenses incurred by suchPerson.

 

“MaterialAdverse Effect” means any effect or change that would be materially adverseto (i) the financial condition or results of operations of the Company, (ii) theBusiness or (iii) the ability of the Company to perform its materialobligations under this Agreement; *provided that*none of the following shall be deemed to constitute, or taken into account indetermining whether there has been, a Material Adverse Effect: (x) anyadverse change, event, development or effect arising from or relating to(1) general business or economic conditions, including such conditionsrelated to the industry in which the Company operates, (2) national orinternational political or social conditions, including the engagement by theUnited States in hostilities, whether or not pursuant to the declaration of a nationalemergency or war, or the occurrence of any military or terrorist attack uponthe United States, or any of its territories, possessions, or diplomatic orconsular offices or upon any military installation, equipment or personnel ofthe United States, (3) financial, banking, or securities markets(including any disruption thereof and any decline in the price of any securityor any market index), (4) changes in GAAP, (5) any change oramendment to any law or other Legal Requirement or any change in the manner inwhich any law or Legal Requirement is or may be enforced, or (6) theannouncement or performance of this Agreement or the transactions contemplatedby this Agreement, including any reaction of customers, suppliers or employeesof the Company, and (y) any action taken by Purchaser or any of itsAffiliates or representatives.

 

“PermittedLiens” means (i) Liens for Taxes not yet delinquent or that are beingcontested by appropriate proceedings, (ii) statutory Liens of landlordsfor amounts not yet delinquent, (iii) Liens of carriers, warehousemen,mechanics and materialmen incurred in the ordinary course of business foramounts not yet delinquent, (iv) Liens attaching to inventory held byconsignees in the ordinary course of business, (v) zoning, building codesand other land use regulations imposed by any Governmental Entity,(vi) Liens created by any act of Purchaser, (vii) such rights, ifany, of any utility company to construct and/or maintain lines, pipes, wires,cables, poles, conduits and distribution boxes and equipment in, over, under,and/or upon any portion of the Owned Real Property, (viii) matters of platwith respect to the Owned Real Property, (ix) oil, gas, and mineral rightsof record against the Owned Real Property, and (x) easements,rights-of-way, covenants, conditions, restrictions and other similar matters,all of which do not materially impair the use or occupancy of the Owned RealProperty or other assets in the operation of the Business by the Company.

 

“Person”means an individual, a partnership, a corporation, an association, a limitedliability company, a joint stock company, a trust, a joint venture or anunincorporated organization.

 

“Post-ClosingTax Period” means any Tax period (or portion thereof) beginning after theClosing Date.

 

“Pre-ClosingTax Period” means any Tax period (or portion thereof) ending on or beforethe Closing Date.

 

4

----

 

“ReferenceBalance Sheet” means the unaudited balance sheet of the Company as ofJune 30, 2010, a copy of which is attached hereto as Schedule 4.4.

 

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

 

“Seller’sRetained Liabilities” means those liabilities which are identified on Schedule 1.1(a) attachedhereto.

 

“Subsidiary”means, with respect to any Person, any corporation, limited liability company,partnership, association or other business entity of which (i) if acorporation or a limited liability company (with voting securities), a majorityof the total voting power of shares of stock or interest entitled (withoutregard to the occurrence of any contingency) to vote in the election ofdirectors, managers or trustees thereof is at the time owned or controlled,directly or indirectly, by that Person or one or more of the other Subsidiariesof that Person or a combination thereof, or (ii) if a limited liabilitycompany (without voting securities), partnership, association or other businessentity, a majority of the partnership or other similar ownership interestthereof is at the time owned or controlled, directly or indirectly, by anyPerson or one or more Subsidiaries of that Person or a combination thereof. Forpurposes hereof, a Person or Persons shall be deemed to have a majorityownership interest in a limited liability company, partnership, association orother business entity if such Person or Persons shall be allocated a majorityof limited liability company, partnership, association or other business entitygains or losses or shall be or control any managing director or general partnerof such limited liability company, partnership, association or other businessentity.

 

“TargetWorking Capital” means $2,434,610.82.

 

“TaxReturn” means any return, declaration, report, claim for refund, orinformation return or statement relating to Taxes, including any schedule orattachment thereto, and including any amendment thereof.

 

“Tax”means any and all income, excise, real or personal property, sales, use, grossreceipts, service, value added, license, net worth, transfer, withholding,employment and recording taxes, charges, fees, levies or other assessmentsimposed by the Internal Revenue Service or any other taxing authority, togetherwith any interest, penalties or additional amounts attributable to, or imposedupon, or with respect to, any such taxes, charges, fees, levies or otherassessments.

 

“TitleIV Plan” means any Benefit Plan subject to Title IV of ERISA.

 

“UnfundedPension Liability” means, at any time, the aggregate amount, if any, of thesum of (a) the amount by which the present value of all accrued benefitsunder a Title IV Plan exceeds the fair market value of all assets of such TitleIV Plan allocable to such benefits in accordance with Title IV of ERISA, alldetermined as of the most recent valuation date for such Title IV Plan usingthe actuarial assumptions for funding purposes in effect under such Title IVPlan, and (b) for a period of five years following a transaction whichmight reasonably be expected to be covered by Section 4069 of ERISA, theliabilities (whether or not accrued) that could be avoided by Seller, theCompany or any ERISA Controlled Group Member as a result of such transaction.

 

5

----

 

“WorkingCapital” means, as of the Closing Date and subject to the adjustments setforth in the next succeeding sentence, the current assets of the Company minusthe current liabilities of the Company (other than the current portion ofIndebtedness, including accrued interest). Working Capital shall be calculated(i) in accordance with GAAP and (ii) in the same manner, using thesame accounting principles, methods, assumptions, practices and categories aswere used in the preparation of the Working Capital Schedule. Notwithstandingthe foregoing, Working Capital shall exclude (i) amounts due to or fromthe Company’s Affiliates, and (ii) Seller’s Retained Liabilities.

 

“WorkingCapital Schedule” means Schedule 1.1(b) attached hereto.

 

Section 1.2             Additional Defined Terms.

 

Eachof the following terms is defined in the Section set forth opposite suchterm:

 
| Allocation  Schedule         |   | 11.8(c)  |
|------------------------------|--------|----------|
| Agreement                    |   | Preamble |
| Benefit  Plan                |   | 4.13(a)  |
| Cap  Amount                  |   | 10.4(b)  |
| Closing                      |   | 2.3      |
| Closing  Date                |   | 2.3      |
| Company                      |   | Recitals |
| Deductible                   |   | 10.4(c)  |
| Defaulting  Party            |   | 9.2      |
| Designated  Accounting Firm  |   | 2.4(d)   |
| Environmental  Documents     |   | 10.4(k)  |
| Environmental  Permits       |   | 4.10(b)  |
| Estimated  Working Capital   |   | 2.4(a)   |
| Excess  Working Capital      |   | 2.4(f)   |
| Final  Purchase Price        |   | 2.2      |
| Final  Working Capital       |   | 2.4(f)   |
| Financial  Statements        |   | 4.4      |
| GECC                         |   | 7.2(c)   |
| Indemnified  Person          |   | 10.2(a)  |
| Indemnifying  Person         |   | 10.2(b)  |
| Initial  Purchase Price      |   | 2.2      |
| Interest                     |   | 2.4(f)   |
| IRS                          |   | 4.13(b)  |
| Material  Contracts          |   | 4.14     |
| Notice  of Claim             |   | 10.2(a)  |
| Objection  Notice            |   | 10.2(a)  |
| Outside  Date                |   | 9.1(b)   |
| Outstanding  Stock           |   | Recitals |
| Owned  Intellectual Property |   | 4.11     |
| Owned  Real Property         |   | 4.12(a)  |
| Parent                       |   | Preamble |
| Parent  Financial Statements |   | 5.5      |

 

6

----

 
| Party  P                                     |   | Preamble |
|----------------------------------------------|--------|----------|
| Permits                                      |   | 4.18     |
| Phase  II ESA                                |   | 10.4(k)  |
| Post-Closing  Straddle Period                |   | 11.3(a)  |
| Pre-Closing  Straddle Period                 |   | 11.3(a)  |
| Products  Liability Claim                    |   | 10.1(b)  |
| Purchaser                                    |   | Preamble |
| Purchaser  Indemnification Claim             |   | 10.1(a)  |
| Purchaser  Indemnified Persons               |   | 10.1(a)  |
| Purchaser  Plans                             |   | 8.3      |
| Purchaser’s  Closing Date Certificate   |   | 2.4(b)   |
| Purchaser’s  Closing Date Balance Sheet |   | 2.4(b)   |
| Recognized  Environmental Conditions         |   | 10.4(k)  |
| Release                                      |   | 6.8      |
| Response  Actions                            |   | 10.4(k)  |
| Section 338  Election                   |   | 11.8(a)  |
| Seller                                       |   | Preamble |
| Seller  Indemnified Persons                  |   | 10.1(c)  |
| Seller  Objections                           |   | 2.4(d)   |
| Seller’s  Closing Date Certificate      |   | 2.4(a)   |
| Straddle  Period                             |   | 11.2     |
| Tax  Claim                                   |   | 11.5(a)  |
| Tax  Contest                                 |   | 11.5(b)  |
| Third-Party  Notice                          |   | 10.2(b)  |
| Transfer  Taxes                              |   | 12.1(b)  |
| Work                                         |   | 8.5(a)   |
| Working  Capital Shortfall                   |   | 2.4(f)   |

 

Section 1.3             Interpretation.  Unless otherwise indicated (a) allreferences in this Agreement to Articles, Sections, Schedules and Exhibitsrefer to Articles, Sections, Schedules and Exhibits of thisAgreement, (b) the words, “herein,” “hereto,” “hereof” and words ofsimilar import refer to this Agreement as a whole (including the Schedules andExhibits hereto) and not to any particular Section or paragraphhereof, (c) the word “including” means “including, but not limited to”, (d) wordsimporting the singular will also include the plural, and vice versa, (e) anyreference to any federal, state, local, or foreign statute or law includesreference to all rules and regulations promulgated thereunder, allamendments thereof and any successor or replacement statute, law, rule orregulation, (f) words of any gender include the other gender, (g) referencesto a number of days refer to calendar days, unless such reference isspecifically to “Business Days,” and (h) all monetary amounts areexpressed in U.S. dollars.

 

**ARTICLE II**

 

**PURCHASE AND SALE; CLOSING**

 

Section 2.1             Purchase and Sale.  At the Closing, upon the terms and subject tothe conditions set forth herein, Purchaser shall purchase from Seller, andSeller shall sell, assign, transfer, and deliver to Purchaser, the OutstandingStock.

 

7

----

 

 

Section 2.2             Purchase Price.  At the Closing, Purchaser shall pay to Sellerfor the Outstanding Stock an aggregate purchase price of $24,900,000, plusor minus the Estimated Working Capital Adjustment Amount set forth onthe Seller’s Closing Date Certificate (the “Initial Purchase Price”).****The Initial****Purchase Priceshall be payable at the Closing in the manner described in Section 2.5below and shall be subject to adjustment after the Closing as provided in Section 2.4below (such adjusted Initial Purchase Price being the “Final Purchase Price”).

 

Section 2.3             The Closing.  Subject to Article VII, theclosing of the transaction contemplated hereby (the “Closing”) shalltake place at the offices of DLA Piper LLP (US) in Chicago, Illinois (orat such other location as the Parties may agree upon), commencing at 10:00 a.m.local time on September 30, 2010; *provided* thatall of the conditions set forth in Article VII have been eithersatisfied or waived. The date of the Closing is referred to as the “ClosingDate.”

 

Section 2.4             Adjustment of the InitialPurchase Price.

 

(a)           Prior to the Closing Date, Seller shall deliver toPurchaser a certificate (the “Seller’s Closing Date Certificate”)setting forth Seller’s good faith estimate of the Company’s Working Capital asof the close of business on the Closing Date (the “Estimated Working Capital”),calculated in accordance with GAAP and in the same manner, using the sameaccounting principles, methods, assumptions, practices and categories as wereused in the preparation of the Working Capital Schedule.  The Working Capital Schedule shall include(i) the amount of $649,674.98 for inventory surplus/obsolescence (GPIacct. #13486100), and (ii) the amount of $69,709.12 for inventoryshrinkage (GPI acct. #13486000).  The Seller’sClosing Date Certificate also shall include a calculation of the EstimatedWorking Capital Adjustment Amount and the Initial Purchase Price, in each casebased upon the Estimated Working Capital.

 

(b)           Not later than ninety (90) calendar days after the ClosingDate, Purchaser shall deliver to Seller a statement setting forth Purchaser’scalculation of the Working Capital as of the close of business on the ClosingDate (the “Purchaser’s Closing Date Certificate”), together with thebalance sheet of the Company prepared as of the close of business on theClosing Date from which such Purchaser’s Closing Date Certificate was derived(the “Purchaser’s Closing Date Balance Sheet”). The Purchaser’s ClosingDate Balance Sheet for purposes of the calculation of the Working Capital setforth in the Purchaser’s Closing Date Certificate shall be calculated inaccordance with GAAP and in the same manner, using the same accountingprinciples, methods, assumptions, practices and categories as were used in thepreparation of the Working Capital Schedule. The review of the calculation ofthe Working Capital set forth in the Purchaser’s Closing Date Balance Sheet inaccordance with this Section 2.4 shall be limited to a review ofthe changes, if any, in the Estimated Working Capital from the amount used tocalculate the Initial Purchase Price and not a review of any changes inaccounting policy or any other matter.

 

(c)           During the sixty (60) calendar day period followingdelivery of the Purchaser’s Closing Date Certificate to Seller, Purchaser shallpermit Seller and Seller’s authorized representatives complete and timelyaccess to the books and records, accountant’s work papers, personnel, andfacilities of the Company in order to complete their review of the Purchaser’sClosing Date Certificate, the calculation of the Working 

 

8

----

 

Capital reflected thereinand the Purchaser’s Closing Date Balance Sheet and Seller and any suchrepresentatives shall have the unrestricted right to make copies, extracts orcompilations of any such books, records and work papers.

 

(d)           Within (i) sixty (60) calendar days after its receiptof the Purchaser’s Closing Date Certificate, or (ii) thirty (30) daysafter the date upon which Seller and Seller’s authorized representatives shallhave received the access referred to in Section 2.4(c) above,whichever is later, Seller may either inform Purchaser in writing that thePurchaser’s Closing Date Certificate is acceptable, or object thereto inwriting, setting forth its objections (the “Seller Objections”).  If Seller fails to either accept thePurchaser’s Closing Date Certificate or submit the Seller Objections withinsuch period, the Purchaser’s Closing Date Certificate shall be deemed final andacceptable.  If Seller delivers theSeller Objections and Purchaser and Seller do not resolve all such SellerObjections on a mutually agreeable basis within thirty (30) Business Days afterPurchaser’s receipt of the Seller Objections, then any Seller Objections as towhich Purchaser and Seller cannot agree upon may be submitted by eitherPurchaser or Seller to a mutually acceptable accounting firm (the “DesignatedAccounting Firm”) for resolution as provided herein; *provided**that*the Designated Accounting Firmshall not have provided attestation services to either Seller or Purchaser orany of their respective Affiliates during the prior three (3) year period.If Seller and Purchaser cannot agree on a Designated Accounting Firm, thenDeloitte LLP shall be the Designated Accounting Firm. The Designated AccountingFirm shall have the power, authority and duty to resolve any outstanding SellerObjections and the decision of the Designated Accounting Firm shall be finaland binding upon Seller and Purchaser; *provided, however, that*the Designated Accounting Firm is hereby expressly prohibited from making adetermination of the Final Working Capital which is outside of the range of theWorking Capital set forth in the Seller’s Closing Date Certificate and thePurchaser’s Closing Date Certificate. Upon the resolution of all SellerObjections (whether by agreement of Purchaser and Seller or the decision of theDesignated Accounting Firm), the Purchaser’s Closing Date Certificate shall berevised to reflect the resolution and the Purchaser’s Closing Date Certificate,as so revised, shall be final and binding on Seller and Purchaser. Providedthat Purchaser has fully complied with its obligations under Section 2.4(c),if Seller fails to deliver any Seller Objections to Purchaser prior to theexpiration of the applicable time period set forth in the first sentence ofthis Section 2.4(d), the Purchaser’s Closing Date Certificate asdelivered by Purchaser shall be final and binding on Seller and Purchaser.

 

(e)           In resolving any disputed item, the Designated AccountingFirm (i) shall be bound by the provisions of this Section 2.4,(ii) may not assign a value to any item greater than the highest valueclaimed for such item or less than the lowest value for such item claimed byeither Purchaser or Seller, (iii) shall restrict its decision to suchitems included in the Seller Objections which are then in dispute,(iv) may review only the written presentations of Purchaser and Seller inresolving any matter which is in dispute, and (v) shall render itsdecision in writing within thirty (30) days after the disputed items have beensubmitted to it. The Designated Accounting Firm’s fees, costs and expensesshall be shared by Purchaser and Seller in inverse proportion to the aggregatedollar 

 

9

----

 

amount of the SellerObjections resolved in favor of Seller compared to the aggregate dollar amountof the Seller Objections resolved in favor of Purchaser.

 

(f)            If the Working Capital as of the close of business on theClosing Date as finally determined in accordance with this Section 2.4(the “Final Working Capital”) exceeds the Estimated Working Capital (the“Excess Working Capital”), Purchaser shall pay an amount equal to theExcess Working Capital to Seller within five (5) Business Days after suchfinal determination by wire transfer of immediately available funds inaccordance with instructions provided by Seller to Purchaser prior to theClosing Date. If the Final Working Capital is less than the Estimated WorkingCapital (the “Working Capital Shortfall”), Seller shall pay an amountequal to the Working Capital Shortfall to Purchaser within five (5) BusinessDays after such final determination by wire transfer of immediately availablefunds in accordance with instructions provided by Purchaser to Seller not lessthan two (2) Business Days prior to the date upon which such payment isdue.  In addition to the payment ofExcess Working Capital or Working Capital Shortfall, Purchaser or Seller, asapplicable, shall pay to the other Party interest calculated from the ClosingDate until the date of payment of such Excess Working Capital or WorkingCapital Shortfall, as applicable, at the rate of six percent (6%) per annum (“Interest”).  Notwithstanding the foregoing, if there is aWorking Capital Shortfall and Purchaser failed to timely (i) provideSeller with the Purchaser’s Closing Date Certificate in accordance with Section 2.4(b),or (ii) permit Seller access to the Company’s books and records in accordancewith Section 2.4(c), Purchaser shall not be entitled to the paymentof any Interest.

 

(g)           Purchaser and Seller shall treat any payments of ExcessWorking Capital or Working Capital Shortfall in accordance with Section 2.4(f) asan adjustment to the Initial Purchase Price.

 

Section 2.5             Payment of the Initial PurchasePrice by Purchaser.** **At the Closing, subject to thesatisfaction or waiver of each of the closing conditions specified in Article VII,Purchaser shall pay to Seller the Initial Purchase Price by wire transfer ofimmediately available funds in accordance with instructions provided by Sellerto Purchaser prior to the Closing Date.

 

**ARTICLE III**

 

**REPRESENTATIONS AND WARRANTIES OFSELLER**

 

Sellerhereby represents and warrants as of the date of this Agreement and as of theClosing Date (except to the extent any such representation or warranty speaksas of an earlier date) as follows:

 

Section 3.1             Organization; Power;Authorization.  Seller is acorporation duly incorporated, validly existing and in good standing under thelaws of the State of Delaware. Seller has the requisite corporate power andauthority necessary to enter into, deliver and perform its obligations pursuantto this Agreement.  Seller’s execution,delivery and performance of this Agreement and each other Contract executed inconnection herewith to which it is a party has been duly authorized by Seller.

 

10

----

 

Section 3.2             Binding Effect;Non-contravention.

 

(a)           This Agreement has been duly executed and delivered bySeller. Assuming the due authorization, execution and delivery by the otherParties, this Agreement constitutes a valid and binding obligation of Sellerwhich is enforceable against Seller in accordance with its terms, except assuch enforceability may be limited by applicable insolvency, bankruptcy,reorganization, moratorium or other similar laws affecting creditors’ rightsgenerally, and applicable equitable principles (whether considered in aproceeding at law or in equity).

 

(b)           Neither the execution and the delivery of this Agreementnor the performance by Seller of the transactions contemplated hereby will (i) conflictwith or result in a breach of the terms of, (ii) constitute a defaultunder, or (iii) result in the creation of any Lien (other than PermittedLien) upon the Outstanding Stock pursuant to (A) any material Contract towhich Seller is a party, (B) the certificate of incorporation or by-lawsof Seller, or (C) any Legal Requirement to which Seller is subject.

 

Section 3.3             Ownership of Stock.  Seller holds good and valid record andbeneficial title to the Outstanding Stock, free and clear of any Liens (otherthan restrictions on transfer arising under the Securities Act and state orforeign securities laws).

 

Section 3.4             Litigation.  There are no judicial or administrativeactions, suits, proceedings (including any arbitration proceedings), orders,claims or investigations pending, affecting or, to the Company’s or Seller’sKnowledge, threatened, against Seller that question the validity, legality orenforceability of this Agreement or any action taken or to be taken by Sellerin connection herewith, or seek to restrain or prohibit or to obtain damages orother relief in connection with the transactions contemplated hereby.

 

Section 3.5             Broker.  No broker, finder, agent, representative orsimilar intermediary has acted for or on behalf of Seller in connection withthis Agreement or the transactions contemplated hereby, and no broker, finder,agent or similar intermediary is entitled to any broker’s, finder’s or similarfee or other commission in connection herewith, based on any agreement orunderstanding with Seller or any action taken by Seller.

 

**ARTICLE IV**

 

**REPRESENTATIONS AND WARRANTIESREGARDING THE COMPANY**

 

Exceptas set forth on any schedule, Seller hereby represents and warrants toPurchaser as of the date of this Agreement and as of the Closing Date (exceptto the extent any such representation or warranty speaks as of an earlier date)as follows:

 

Section 4.1             Organization, Qualification andOrganizational Power.** **The Company is a corporation dulyincorporated, validly existing and in good standing under the laws of the Stateof Oklahoma. The Company is duly authorized to conduct business and is in goodstanding under the laws of each jurisdiction where such qualification isrequired, except where the lack of such qualification could not reasonably beexpected to have a Material Adverse Effect. The Company 

 

11

----

 

has all necessary corporate power and authority tocarry on the businesses in which it is engaged and to own and use theproperties owned and used by it.

 

Section 4.2             Non-contravention.  Except as set forth on Schedule 4.2,neither the execution and the delivery of this Agreement nor the performance bythe Company of the transactions contemplated hereby will (i) conflict withor result in a breach of the terms of, (ii) constitute a default under, (iii) resultin the creation of any Lien (other than Liens created by or on behalf ofPurchaser) upon any assets of the Company pursuant to, or (iv) require anyauthorization, consent, approval, exemption or other action by or declarationor notice to any Person or Governmental Entity pursuant to (A) anyMaterial Contract to which the Company is a party, (B) the certificate ofincorporation or by-laws of the Company, or (C) any Legal Requirement towhich the Company is subject.

 

Section 4.3             Capitalization; Subsidiaries.

 

(a)           The authorized capital stock of the Company consists of500,000 shares of common stock. On the date hereof, 442,936.75 shares of commonstock of the Company are issued and outstanding. All of the Outstanding Stockhas been duly authorized, is validly issued, fully paid and nonassessable, andon the date hereof is held of record by Seller.

 

(b)           There are no outstanding or authorized options, warrants,purchase rights, subscription rights, conversion rights, exchange rights, orother contracts or commitments that could require the Company to issue, sell,or otherwise cause to become outstanding any of its capital stock. There are nooutstanding or authorized stock appreciation, phantom stock, profitparticipation or similar rights with respect to the Company. The Company is nota party to, and there are no, voting trusts, proxies, or other agreements orunderstandings with respect to the voting or transfer of any equity interestsof the Company which will survive the Closing Date.

 

(c)           The Company does not have any Subsidiaries or any equityinvestments in any other entity.

 

(d)           Except as set forth on Schedule 4.3(d), the Companydoes not have any outstanding Indebtedness or guarantees of Indebtedness.

 

Section 4.4             Financial Statements.

 

(a)           The following financial statements for the Company areattached hereto as Schedule 4.4 (collectively, the “FinancialStatements”): (i) the Company’s unaudited balance sheet and relatedstatement of income as of and for the year ended December 31, 2009 and (ii) theCompany’s Reference Balance Sheet and related unaudited statement of income asof and for the six (6) months ended June 30, 2010. Each FinancialStatement has been prepared in accordance with GAAP applied on a consistentbasis throughout the periods covered thereby and fairly presents in allmaterial respects the financial condition of the Company as of such dates andthe results of the Company’s operations for the periods specified; *provided, however, that* the Financial Statements lackfootnotes and other presentation items required by GAAP and the Financial Statementsdescribed in clause (ii) above are subject to normal year-end adjustments.

 

12

----

 

(b)           The Company does not have any liability required to be setforth on a balance sheet prepared in accordance with GAAP, except for (i) liabilitiesdisclosed in the schedules hereto, (ii) liabilities reflected, reservedagainst, or otherwise described in the Reference Balance Sheet, and (iii) liabilitiesincurred in the ordinary course of business since June 30, 2010.

 

Section 4.5             Events Subsequent to theReference Balance Sheet.** **Except as set forth on Schedule4.5, since June 30, 2010 the Company has operated the Business in allmaterial respects in the usual and ordinary course and consistent with pastpractices, and the Company has not done any of the following:

 

(a)           except for Permitted Liens, suffered or permitted any Liento arise or be granted or created against or upon any of the assets of theBusiness;

 

(b)           amended its certificate of incorporation or by-laws or othergoverning documents;

 

(c)           made or permitted any amendment, supplement, modificationor termination of any Material Contract (as defined below);

 

(d)           sold, leased, transferred, assigned or otherwise disposedof any of the assets of the Business that, individually or in the aggregate,had a net book value at the time of such sale, lease, transfer, assignment ordisposition of $25,000.00 or more; provided, however, that this Section 4.5(d) shallnot apply to products sold, leased, transferred, assigned or otherwise disposedof in the ordinary course of business and consistent with past practices;

 

(e)           increased benefits or benefit plan costs or changed bonus,insurance, pension, compensation or other benefit plans or arrangements orgranted any bonus or increase in wages, salary or other compensation or madeany other change in employment terms of any employee of the Company (except inthe ordinary course of business and consistent with past practices);

 

(f)            suffered any change in its financial condition (includingchanges in working capital, assets, properties, liabilities, obligations orreserves) or experienced any event or failed to take any action whichreasonably could be expected to result in a Material Adverse Effect; or

 

(g)           agreed, whether in writing or otherwise, to do any of theforegoing.

 

Section 4.6             Title to Assets.** **Except as set forthon Schedule 4.6, the Company has good and marketable title to, or avalid leasehold interest in, all material items of tangible personal property,free and clear of all Liens except for Permitted Liens.  The assets owned, leased or licensed by theCompany, or owned, leased or licensed by Seller and used by the Company in theoperation of the Business, constitute all of the property, rights and assetsnecessary for the Company to own and operate the Business for the same orsimilar purposes for which, and in the same or similar manner in which, theBusiness has been owned and operated by the Company prior to the Closing.

 

13

----

 

Section 4.7             Compliance with Laws.** **Except as set forthon Schedule 4.7 (and other than Tax matters addressed in Section 4.9,environmental matters addressed in Section 4.10 and employeebenefits matters addressed in Section 4.13), the Company is in compliancein all material respects with all Legal Requirements applicable to theoperation of the Business, including, to the extent applicable to the operationof the Business, the Foreign Corrupt Practices Act, the Arms Export Control Actand the International Traffic in Arms Regulations thereunder.

 

Section 4.8             Litigation.** **Except as set forthon Schedule 4.8, there are no claims, actions, suits, arbitrations,inquiries, proceedings (including any arbitration proceedings), orders, orinvestigations by or before any Governmental Entity pending, affecting or, tothe Company’s or Seller’s Knowledge, threatened against the Company. Except asset forth on Schedule 4.8, the Company is not subject to any materialoutstanding order, judgment or decree of any Governmental Entity.

 

Section 4.9             Tax Matters.** **Except as set forthon Schedule 4.9:

 

(a)           The Company has timely filed, or timely filed forextensions to file, all material Tax Returns for all years and periods and forall jurisdictions (whether federal, state, local or foreign) in which any suchTax Returns were due and all such Tax Returns were complete and correct in allmaterial respects.

 

(b)           The Company has timely paid in full all Taxes that are dueand payable by the Company.  The totalamounts accrued as current liabilities for Taxes in the Financial Statementsand the total amounts accrued as current liabilities for Taxes as of theClosing Date are and will be sufficient to cover the payment of all Taxes,whether or not assessed or disputed, which are, or are hereafter found to be,or to have been, due by the Company as of the date of the applicable FinancialStatement or as of the Closing Date, as applicable.  Without limiting the foregoing, the Companyhas paid all applicable sales taxes required to be paid by the Company inOklahoma and the other states in which it sells its products.

 

(c)           The Company has complied in all material respects with allapplicable laws, rules and regulations relating to the payment andwithholding of Taxes, and the Company has timely withheld from employee wagesand paid over to the proper Governmental Entity all amounts required to be sowithheld and paid over.

 

(d)           The Company is not a party to any Tax allocation orsharing agreement.

 

(e)           The Company has not received written notice of any auditsor proceedings currently pending with regard to any Taxes or Tax Returns beforeany Governmental Entity.

 

(f)            The Company is not (and has never been) a “United Statesreal property holding corporation” within the meaning of Section 897(c) ofthe Code.

 

(g)           The Company has not received written notice of anyoutstanding subpoenas or written requests for information from any taxingauthority with respect to any Taxes. There are no agreements in effect to extend the time to file any TaxReturn or 

 

14

----

 

the period of limitationsfor the assessment or collection of any Taxes for which the Company may beliable.

 

(h)           Seller has made available to Purchaser complete copies ofall Tax Returns filed by the Company with respect to any Taxes and all taxaudit reports, statements of deficiencies, and closing or other agreements withrespect thereto for tax years 2005, 2006, 2007, 2008 and 2009.

 

(i)            The books and records of the Company, including the TaxReturns, contain accurate and complete information with respect to all materialtax elections in effect with respect to the Company.

 

(j)            The Company has not entered into any compensatoryagreements which would result in a nondeductible expense pursuant to Section 280Gof the Code.

 

(k)           The Company has not received written notice of any claimspending against the Company for any Taxes or of any assessment, deficiency oradjustment with respect to any Tax Return of the Company.

 

(l)            The Company has not received written notice of any claimsby a Governmental Entity that are pending and unresolved in any jurisdictionwhere the Company does not file Tax Returns that the Company is or may besubject to taxation in that jurisdiction.

 

(m)          The Company and Seller are members of an affiliated groupfiling a consolidated income Tax Return, within the meaning of Section 1504of the Code, with Blount International, Inc. as the common parentcorporation. The Company has no liability for the Taxes of any other Person underTreasury Regulation Section 1.1502-6 (or any similar provision of state,local or foreign law), as a transferee or successor, by contract or otherwise.No payment is due or will become due by the Company pursuant to any Tax sharingor similar agreement or arrangement or any Tax indemnification agreement.

 

(n)           The Company is not a party to any joint venture,partnership or other arrangement which could be treated as a partnership forFederal income tax purposes.

 

(o)           During the past five (5) years, neither the Companynor any predecessor of the Company has participated in a transaction that wouldbe reportable by, or with respect to, the Company pursuant to TreasuryRegulation Section 1.6011-4 or any predecessor thereto.

 

15

----

 

 

Section 4.10           Environmental Matters.

 

(a)           Except as set forth on Schedule 4.10(a), sinceSeller has owned the Company, the Company is, and has been, in materialcompliance with all applicable Environmental Laws and has not received anywritten notice regarding any actual or alleged violation of any EnvironmentalLaw that has not been fully and finally resolved.

 

(b)           Since Seller has owned the Company, the Company hasobtained, and is in material compliance with, all permits, licenses and otherauthorizations that are required pursuant to Environmental Laws to operate theBusiness (“Environmental Permits”).

 

(c)           Except as set forth on Schedule 4.10(c), sinceSeller has owned the Company, there has been no material release, spill ordischarge of any Hazardous Substances on, upon, into or from any site currentlyor, to the Company’s Knowledge, previously owned, leased or otherwise operatedby the Company that has resulted in material liability or that would reasonablybe expected to result in material liability to the Company under any applicableEnvironmental Law.

 

(d)           There is no action or proceeding pending or, to theCompany’s or Seller’s Knowledge, threatened by any Governmental Entity or anyother Person against the Company alleging violations of, or liability under,Environmental Laws.

 

(e)           Since Seller has owned the Company, the Company has notentered into any consent decree or other written agreement with anyGovernmental Entity in settlement of any alleged material violation of, ormaterial liability under, any applicable Environmental Law, under which decreeor agreement the Company has any unfulfilled obligations.

 

(f)            Except as set forth on Schedule 4.10(f), sinceSeller has owned the Company, the Company has not received written notice ofpotential liability under any Environmental Law for any site that has beenincluded in any published U.S. federal, state or local “superfund” site list orany other similar list of hazardous or toxic waste sites published by anyGovernmental Entity in the United States.

 

(g)           Except as set forth on Schedule 4.10(g), to theCompany’s Knowledge, there are no underground storage tanks located on, no PCBs(polychlorinated biphenyls) or PCB-containing equipment used or stored on, andno hazardous waste as defined by the Resource Conservation and Recovery Act orany other Environmental Law stored on, any site owned or operated by theCompany, during the time in which the Company has owned or leased such site,except in material compliance with Environmental Laws.

 

(h)           To the Company’s Knowledge, Seller has given Purchaseraccess to copies of all material environmental site assessment reports,Environmental Permits and pending Environmental Permit applications which arein writing and which were prepared by or for the Company, in each case asamended and in each case as in the possession or control of the Company.

 

(i)            There are no products in the current product line of theCompany, nor, to the Company’s Knowledge, since Seller has owned the Companyhave there been any 

 

16

----

 

products in any product lineor product offering associated with, manufactured by or sold by the Company,that have contained, or contain, asbestos. There are no actions or proceedings pending, or to the Company’s orSeller’s Knowledge, threatened, in which health related claims relating toasbestos are asserted. To the Company’s or Seller’s Knowledge, since Seller hasowned the Company, there have been no actions or proceedings in which healthrelated claims relating to asbestos were asserted.

 

(j)            Seller acquired the Company on March 3, 1991.

 

Section 4.11           Intellectual Property.  Schedule 4.11 sets forth a listof each registered, applied for or issued patent, patent application, domainname, trademark, service mark and registration and application therefor of theCompany that are material to the operation of the Business (collectively, the “OwnedIntellectual Property”).  The Companyhas good and marketable title to the Owned Intellectual Property, free andclear of all Liens except for Permitted Liens. Except as set forth on Schedule 4.11, the Company has notreceived any written notice from any third party claiming that:  (a) the Company does not and has notmaterially infringed any Intellectual Property of any third-party, (b) tothe Company’s or Seller’s Knowledge, no third-party is currently infringing onthe Intellectual Property of the Company, except for any such infringement thatwould not reasonably be expected to have a Material Adverse Effect; (c) theCompany has not received any written notice from any third party pertaining toor challenging the right of the Company to use any Intellectual Property; (d) thereare no material Intellectual Property rights that are necessary for theoperation or continued operation of the Business for which the Company does nothold valid and continuing authority in connection with the use thereof; (e) theCompany does not own or use any Intellectual Property pursuant to a license andhas not granted any Person any rights to use Intellectual Property; and (f) allOwned Intellectual Property that is registered with the U.S. Patent andTrademark Office is currently in compliance with all formal legal requirementsand filings.

 

Section 4.12           Real Estate.

 

(a)           Schedule 4.12(a) lists all real property thatis owned by the Company and used in the Business (collectively, the “OwnedReal Property”) and any real property owned or leased by the Company at anytime during the past ten (10) years. The Company holds marketable fee simple title to the Owned RealProperty, free and clear of all Liens other than Permitted Liens.

 

(b)           The Company does not lease any real property.

 

(c)           The Company has not received from any Governmental Entityany written notice of any condemnation of the Owned Real Property or anyportion thereof. There is no material writ, injunction, decree, order orjudgment outstanding, nor any material action, claim, suit or proceeding,pending or, to the Company’s or Seller’s Knowledge, threatened, relating to theCompany’s and/or Seller’s use, occupancy or operation by any Person of theOwned Real Property.  The use andoperation of the Owned Real Property in the present conduct of the business ofthe Company does not violate in any material respect any instrument of recordor agreement to which the Company or Seller is a party.  No damage or destruction has occurred (whichhas not been repaired) with respect to the Owned Real Property since June 30,2010, that would, individually or in the aggregate, 

 

17

----

 

have a Material AdverseEffect.  Except for items that would not,individually or in the aggregate, have a Material Adverse Effect, the OwnedReal Property is in compliance with all applicable building, zoning, subdivisionand other land use and similar laws affecting such real property, and theCompany has not received any written notice of violation or claimed violationof any such law.

 

(d)           Except as disclosed on Schedule 4.12(d), theCompany and/or Seller has not leased or granted any right to use (including anyeasement rights) any of the Owned Real Property.

 

Section 4.13           Employee Benefits.** **Except as set forthon Schedule 4.13:

 

(a)           Schedule 4.13 contains a list of any pension,retirement, savings, disability, medical, dental, health, life, death benefit,group insurance, profit sharing, deferred compensation, stock option, stockpurchase, stock ownership, restricted stock, supplemental retirement, bonus,incentive, vacation pay, tuition reimbursement, severance pay, or otheremployee benefit plan, trust, agreement, contract, policy or commitment(including any pension plan as defined in ERISA § 3(2) and any welfareplan as defined in ERISA § 3(1)) sponsored or maintained by the Company, Selleror any ERISA Controlled Group Member and covering any active or formeremployees (or such employee’s dependents or beneficiaries), active or formerofficer or director (or such officer or director’s dependents or beneficiaries)of Seller, the Company or any ERISA Controlled Group Member, or to which theCompany, Seller or any ERISA Controlled Group Member may otherwise have anymaterial liability (each a “Benefit Plan”).

 

(b)           To the Company’s Knowledge, each Benefit Plan has been administered and operated in allmaterial respects in accordance with its terms and with the applicableprovisions of ERISA, the Code and other applicable Legal Requirements. EachBenefit Plan intended to qualify under Code § 401(a) has received afavorable determination, opinion, notification or advisory letter, asapplicable, from the Internal Revenue Service (“IRS”) stating that suchBenefit Plan meets the requirements of Code § 401(a).  Each Benefit Plan that is a definedcontribution plan is intended to be an “ERISA Section 404(c) Plan”within the meaning of the applicable Department of Labor regulations.

 

(c)           At no time has Seller, the Company or any ERISA ControlledGroup Member maintained, established, sponsored, participated in, orcontributed to, any (i) multiemployer plan as defined in ERISA § 3(37)),or (ii) “multiple employer plan” as defined in ERISA or the Code.

 

(d)           All required contributions to, and premium payments onaccount of, each Benefit Plan have been made on a timely basis.

 

(e)           There is no pending or, to the Company’s or Seller’sKnowledge, threatened action relating to a Benefit Plan, other than routineclaims in the ordinary course of business for benefits provided for by theBenefit Plans.  Except as set forth on Schedule4.13(e), no Benefit Plan is, or within the last three (3) years hasbeen, the subject of an examination or audit by a Governmental Entity, and noBenefit Plan is the 

 

18

----

 

subject of an application orfiling under, or is a participant in, a government-sponsored amnesty, voluntarycompliance, self-correction or similar program.

 

(f)            No Benefit Plan in which any active employee, officer ordirector of the Company participates is a nonqualified deferred compensationplan subject to Section 409A of the Code.

 

(g)           Except as could not reasonably be expected to result in aMaterial Adverse Effect and to the Company’s Knowledge: (i) no Title IVPlan is subject to any benefit restrictions under Code section 436, (ii) noERISA Event or event described in Section 4062(e) of ERISA withrespect to any Title IV Plan has occurred or is reasonably expected to occur; (iii) withinthe last five years, no Title IV Plan has been terminated; (iv) noUnfunded Pension Liability has, within the last five years, been transferredoutside the “controlled group” (within the meaning of Section 4001(a)(14)of ERISA) of Seller, the Company or any ERISA Controlled Group Member, (v) noLien has been imposed against Seller, the Company or any ERISA Affiliate under Section 412of the Code or Section 302 of ERISA, and (vi) neither Seller, theCompany nor any ERISA Controlled Group Member has failed to make anycontribution or pay any amount due as required by either Code section 412 or Section 302of ERISA or the terms of any Benefit Plan.

 

(h)           Neither the execution nor delivery of this Agreement northe consummation of the transactions contemplated by this Agreement will(either alone or in conjunction with any other event) result in an increase inthe amount of compensation or benefits or accelerate the vesting or timing ofpayment or cause the funding or delivery of any compensation or benefitspayable under any Benefit Plan to or in respect of any person renderingservices to the Company or require the Company to make a larger contributionto, or pay greater benefits under, any Benefit Plan.

 

Section 4.14           Contracts.  Except as listed or described on Schedule 4.14,as of the date hereof, the Company is not a party to or bound by any Contractsthat are of a type described below (such Contracts that are required to belisted on Schedule 4.14 are referred herein to as the “MaterialContracts”):

 

(a)           any Contract evidencing Indebtedness of the Company;

 

(b)           any Contract involving revenues or expenditures in excessof $25,000 per annum (excluding purchase and sale orders entered into in theordinary course of business consistent with past practice);

 

(c)           any Contract relating to employment, compensation,severance, consulting or indemnification officer, director, employee orconsultant of the Company who is entitled to annual compensation thereunder inexcess of $25,000 per annum;

 

(d)           any collective bargaining arrangement with any laborunion;

 

(e)           any Contract that relates to the disposition oracquisition of the assets of, or any interest in, any business enterprise whichrelates to the Business entered into during the past five (5) yearsinvolving payments in excess of $25,000, other than the 

 

19

----

 

purchase and sale ofinventory in the ordinary course of business or where there is no continuingmaterial liability of the Company;

 

(f)            any Contract for capital expenditures or the acquisitionor construction of fixed assets in excess of $25,000;

 

(g)           any Contract granting any Person a material Lien on all orany part of the material assets of the Company, other than Permitted Liens andLiens that will be released at the Closing;

 

(h)           any Contract under which the Company is (i) a lesseeor sublessee of any machinery, equipment, vehicle or other tangible personalproperty, or (ii) a lessor of any tangible personal property owned by theCompany, in any single lease involving payments in excess of $25,000 per annum;

 

(i)            any Contract under which the Company has granted orreceived a material license or sublicense or under which it is obligated to payor has the right to receive a royalty, license fee or similar payment in anamount in excess of $25,000, other than licenses for commercially availableprepackaged software;

 

(j)            any joint venture or partnership Contract;

 

(k)           any Contract with a sales agent, representative, dealer ordistributor of any products or services of the Company; or

 

(l)            any Contract limiting the ability of the Company tocompete or otherwise conduct its business in any geographical area.

 

Except as set forth on Schedule 4.14,each Material Contract is a valid and binding obligation of the Company,enforceable in accordance with its terms, subject to bankruptcy,reorganization, receivership and other laws affecting creditors’ rightsgenerally and applicable equitable principles (whether considered in aproceeding at law or in equity). Except as set forth on Schedule 4.14,neither the Company nor, to the Company’s or Seller’s Knowledge, any otherparty to such Material Contract is in breach of, or default under, suchMaterial Contract.

 

Section 4.15           Labor Matters.** **Within the past five(5) years, the Company has not experienced any, material strike,picketing, boycott, work stoppage or slowdown or other labor dispute,allegation, charge or complaint of unfair labor practice, employmentdiscrimination or, to the Company’s or Seller’s Knowledge, union organizationalactivity; nor, to the Company’s or Seller’s Knowledge, is any such actionthreatened against the Company.  TheCompany is not subject to any collective bargaining agreements or other laborunion contract.

 

Section 4.16           Insurance.** **Seller, on behalf of the Company,maintains the types and dollar amounts of insurance coverage described on Schedule4.16 under the policies or contracts listed on Schedule 4.16.  There is no material default by the Companywith respect to any provision contained in any such policy or contract, and theCompany has not failed to give any notice or present any claim under any suchpolicy or contract as required by such policy or contract.  There are no premiums which are past dueunder any such policy or contract.

 

20

----

 

Section 4.17           Affiliate Transactions.** **Except as set forthon Schedule 4.17, there are no Contracts (other than benefit mattersdescribed on Schedule 4.13) between the Company and Seller or betweenthe Company, on the one hand, and any equityholder, manager or executiveofficer thereof, or any member of such executive officer’s, director’s orstockholder’s immediate family, or any Person controlled by such executiveofficer, director or stockholder, on the other hand.

 

Section 4.18           Licenses and Permits.  Schedule 4.18 sets forth a listof all material licenses, permits, approvals and other similar documents and authorizations(collectively, the “Permits”) held by the Company and issued by anyGovernmental Entity. The Company holds the Permits that are required for theCompany to operate the Business as presently conducted by it, except where thefailure of the Company to hold any such Permit would not reasonably be expectedto have a Material Adverse Effect.

 

Section 4.19           Customers and Suppliers.  Schedule 4.19****setsforth a list of the Company’s top ten (10) customers and suppliers as of December 31,2009 and June 30, 2010 (determined by the amount of total purchases orsales, as applicable).

 

Section 4.20           Brokerage.** **The Company has no liability orobligation to pay any fees or commissions to any broker, finder, or agent withrespect to the transactions contemplated by this Agreement for which Purchasercould become liable or obligated, or for which the Company could become liableor obligated after the Closing.

 

Section 4.21           Accounts Receivable.** **Except as set forthon Schedule 4.21, all of the accounts, notes and loans receivable thathave been recorded on the books of the Company are bona fide and representaccounts receivable validly due for goods sold or services rendered in theordinary course of business.

 

Section 4.22           Powers of Attorney; AuthorizedSignatories.  Schedule 4.22sets forth a list of (a) the names and addresses of all Persons holdingpowers of attorney on behalf of the Company; and (b) the names of allbanks and other financial institutions in which the Company currently has anaccount, deposit or safe deposit box, along with the account numbers and thenames of all persons authorized to draw on such accounts or deposits or to haveaccess to such boxes.

 

Section 4.23           Product Warranties.  Schedule 4.23 sets forth a descriptionof the warranties given by the Company in connection with product sales.  No other or additional warranty has beengiven in connection with any such sale. Except as set forth on Schedule 4.23, to the Company’s Knowledge,the Company has not received notice of any claims against the Company (a) resultingfrom alleged over-shipment, defective products, or products in the hands ofcustomers, retailers or distributors under any understanding that such productswould be returnable, or (b) with respect to any product warranty or productliability, which in either of (a) or (b) are reasonably anticipatedto exceed the Company’s reserves therefor.

 

21

----

 

**ARTICLE V**

 

**REPRESENTATIONS AND WARRANTIES OFPURCHASER AND PARENT**

 

Eachof Purchaser and Parent, solely with respect to themselves, hereby representsand warrants as of the date of this Agreement and as of the Closing Date(except to the extent any such representation or warranty speaks as of anearlier date) as follows:

 

Section 5.1             Organization, Power andAuthorization.** **Purchaser is a corporation, dulyincorporated, validly existing and in good standing under the laws of the Stateof Delaware.  Parent is a corporation,duly incorporated, validly existing and in good standing under the laws of theState of Delaware.  Each of Purchaser andParent has the requisite power and authority necessary to enter into, deliverand perform its obligations pursuant to this Agreement. Purchaser’s execution,delivery and performance of this Agreement and each other Contract executed inconnection herewith to which it is a party has been duly authorized byPurchaser.  Parent’s execution, deliveryand performance of this Agreement has been duly authorized by Parent.

 

Section 5.2             Binding Effect andNon-contravention.

 

(a)           This Agreement has been duly executed and delivered byPurchaser and Parent. Assuming the due authorization, execution and delivery bythe other Parties, this Agreement constitutes a valid and binding obligation ofPurchaser or Parent, as the case may be, which is enforceable against Purchaseror Parent, as the case may be, in accordance with its terms, except as suchenforceability may be limited by applicable insolvency, bankruptcy,reorganization, moratorium or other similar laws affecting creditors’ rightsgenerally, and applicable equitable principles (whether considered in aproceeding at law or in equity).

 

(b)           Neither the execution and the delivery of this Agreementnor the performance by Purchaser or Parent, as the case may be, of the transactionscontemplated hereby will (i) conflict with or result in a breach of theterms, conditions or provisions of, (ii) constitute a default under orresult in a violation of, (iii) result in the creation of any Lien uponthe assets of Purchaser or Parent, as the case may be, pursuant to, or (iv) requireany authorization, consent, approval, exemption or other action by ordeclaration or notice to any Person or Governmental Entity pursuant to (A) anymaterial Contract to which Purchaser or Parent, as the case may be, is a party,by which it is bound, or to which any of its assets are subject, (B) thecertificate of incorporation or by-laws of Purchaser or Parent, as the case maybe, or (C) any Legal Requirement to which the Purchaser or Parent, as thecase may be, is subject.

 

Section 5.3             Consents.  Except for the filings and approvals setforth on Schedule 5.3, no notice to, filing with, or authorization,registration, consent or approval of any Governmental Entity or other Person isnecessary for the execution, delivery or performance of this Agreement or theconsummation of the transactions contemplated hereby by Purchaser or Parent, asthe case may be.

 

22

----

 

Section 5.4             Litigation.** **There are nojudicial or administrative actions, suits, proceedings (including anyarbitration proceedings), orders, claims or investigations pending, affectingor, to Purchaser’s or Parent’s actual knowledge, threatened, against Purchaseror Parent, as the case may be, that question the validity of this Agreement orany action taken or to be taken by Purchaser or Parent in connection herewith,or seek to restrain or prohibit or to obtain damages or other relief inconnection with the transactions contemplated hereby.

 

Section 5.5             Parent Financial Statements.  The following financial statements for theParent are attached hereto as Schedule 5.5 (collectively, the “ParentFinancial Statements”): (i) the Parent’s unaudited balance sheet andrelated statement of income as of and for the year ended December 31, 2009and (ii) the Parent’s unaudited balance sheet and related statement ofincome as of and for the eight (8) months ended August 31, 2010.  Each Parent Financial Statement has beenprepared in accordance with GAAP applied on a consistent basis throughout theperiods covered thereby and fairly presents in all material respects thefinancial condition of the Parent as of such dates and the results of theParent’s operations for the periods specified; *provided,however, that* the Parent Financial Statements lack footnotes andother presentation items required by GAAP and the Parent Financial Statementsdescribed in clause (ii) above are subject to normal year-end adjustments.

 

Section 5.6             Broker.** **No broker, finder, agent,representative or similar intermediary has acted for or on behalf of Purchaserin connection with this Agreement or the transactions contemplated hereby, andno broker, finder, agent or similar intermediary is entitled to any broker’s,finder’s or similar fee or other commission in connection herewith, based onany agreement or understanding with Purchaser or any action taken by Purchaserfor which the Company or Seller could become liable or obligated.

 

Section 5.7             Investment.  Purchaser is acquiring the Outstanding Stockfor its own account, for investment only, and not with a view to any resale orpublic distribution thereof. Purchaser shall not offer to sell or otherwisedispose of the Outstanding Stock in violation of any Legal Requirementapplicable to any such offer, sale or other disposition. Purchaser acknowledgesthat (a) the Outstanding Stock has not been registered under theSecurities Act, or any state or foreign securities laws, (b) there is nopublic market for the Outstanding Stock and there can be no assurance that apublic market shall develop, and (c) it must bear the economic risk of itsinvestment in the Outstanding Stock for an indefinite period of time. Purchaserhas all requisite legal power and authority to acquire the Outstanding Stock inaccordance with the terms of this Agreement and is an “Accredited Investor”within the meaning of the Securities and Exchange Commission Rule 501 ofRegulation D of the Securities Act, as presently in effect.

 

**ARTICLE VI**

 

**PRE-CLOSING COVENANTS**

 

Section 6.1             Further Actions; CommerciallyReasonable Efforts.  Subject to theterms and conditions hereof, the Parties agree to use their commerciallyreasonable efforts to take, or cause to be taken, all actions and to do, orcause to be done, all things necessary, proper or advisable to consummate andmake effective as promptly as practicable the transactions contemplated by thisAgreement and to cooperate with each other in connection with the foregoing,including using their commercially reasonable efforts to (a) obtain allnecessary 

 

23

----

 

waivers, consents and approvals from other partiesto the Material Contracts, (b) obtain all consents, approvals andauthorizations that are required to be obtained under any applicable LegalRequirement, (c) prevent the entry, enactment or promulgation of anythreatened or pending injunction or order that would adversely affect theability of the Parties to consummate the transactions contemplated hereby,(d) lift or rescind any injunction or order adversely affecting theability of the Parties to consummate the transactions contemplated hereby, and(e) effect all necessary registrations, applications, notices and filingsand submissions of information requested by Governmental Entities. Notwithstandingthe foregoing or anything else in this Agreement, nothing in this Agreementshall require Seller or the Company to agree to or execute any material changesto any Contracts or make any payments to any third-party in order to obtainthird-party consents to the transactions contemplated by this Agreement, exceptin the case where such material change shall only be effective upon the Closingand where such payments are expressly contemplated by a Contract between theCompany and such third-party.

 

Section 6.2             Conduct of Business.  Seller covenants and agrees with Purchaserthat, from the date of this Agreement until the Closing, the Company willconduct the Business in all material respects only in the ordinary and usualcourse consistent with past practices. Notwithstanding the preceding sentence, Seller covenants and agrees withPurchaser that, except as specifically contemplated in this Agreement, from thedate of this Agreement until the Closing, without the prior written consent ofPurchaser:

 

(a)           the Company will not (i) acquire any corporation,partnership or other business entity or any interest therein; (ii) sell,lease or sublease, transfer or otherwise dispose of, mortgage, pledge orotherwise encumber any assets that have a value at the time of such sale,lease, sublease, transfer, disposition or encumbrance in excess of $25,000.00,individually, or $100,000.00, in the aggregate (other than sales of products inthe ordinary course of business); (iii) make any material loan, advance orcapital contribution to, or investment in, any Person (other than loans oradvances in the ordinary course of business); (iv) enter into any Contractnot terminable by the Company upon notice of 30 days or less and withoutpenalty or other obligation; (v) pay or declare any dividends ordistributions or purchase, redeem, acquire or retire any indebtedness, stock orother securities from its stockholders (other than the non-cash settlement ofintercompany accounts between Seller and its Affiliates, on the one hand, andthe Company, on the other hand); (vi) engage in any transaction or incurany obligation or liability outside the ordinary course of its business; or (vii) enterinto any Contract, commitment or arrangement with respect to any of theforegoing;

 

(b)           the Company will not (i) enter into, or otherwisebecome liable or obligated under or pursuant to (A) any employee benefit,pension or other plan (whether or not subject to ERISA), (B) any incentiveor deferred compensation plan or arrangement or other fringe benefit plan, or (C) anyconsulting, employment, severance, termination or similar Contract with anyPerson, or amend or extend any such plan, arrangement or Contract; (ii) exceptfor payments made pursuant to any Benefit Plan, grant, or otherwise becomeliable for or obligated to pay, any severance or termination payments, bonusesor increases in compensation or benefits (other than payments, bonuses orincreases that are mandated by the terms of Contracts existing as of the datehereof which are described on Schedule 6.2(b) or that are paid inthe ordinary course of 

 

24

----

 

business, consistent withpast practices) to, or forgive any indebtedness of, any employee,representative, dealer, distributor or consultant; or (iii) enter into anyContract, commitment or arrangement to do any of the foregoing;

 

(c)           the Company will keep and maintain accurate books, recordsand accounts on an accrual basis consistent with past practices;

 

(d)           the Company will not create, incur, assume or permit toexist any Lien on any of the assets of the Company, except for Permitted Liens;

 

(e)           the Company will (i) pay all Taxes, assessments andother governmental charges imposed upon any of its assets or with respect toits franchises, business, income or assets before any penalty or interestaccrues thereon; (ii) pay all claims (including claims for labor,services, materials and supplies) that have become due and payable and which bylaw have or may become a Lien upon any of its assets prior to the time when anypenalty or fine shall be incurred with respect thereto or any such Lien shallbe imposed thereon; and (iii) comply in all material respects with therequirements of all applicable laws, rules, regulations and orders of anyGovernmental Authority, obtain or take all governmental actions necessary inthe operation of its businesses, and comply with and enforce the provisions ofall Contracts of the Company, including paying when due all rentals, royalties,expenses and other liabilities relating to its business or assets; provided,however, that the Company may contest the imposition of any such Taxes,assessments and other governmental charges, any such claim, or the requirementsof any applicable law, rule, regulation or order or any Contract of the Companyif done so in good faith by appropriate proceedings and if reserves required byGAAP are established;

 

(f)            the Company will preserve and keep in full force andeffect its legal existence and material rights and franchises;

 

(g)           the Company will maintain in full force and effect thepolicies and contracts of insurance listed on Schedule 4.16;

 

(h)           neither Seller nor the Company will engage in anypractice, take any action or permit any inaction that would cause any of the representationsor warranties contained in Article III or Article IV tobecome untrue; or

 

(i)            the Company shall be solely responsible for providingcontinuation coverage under the Consolidated Omnibus Budget Reconciliation Actof 1985, as amended, to all of its employees and former employees, and suchemployees’ and former employees’ beneficiaries, who are entitled to receivesuch continuation coverage, and shall maintain sufficient health insurance forsuch purpose.  In addition, Seller shallimmediately notify Purchaser in the event Seller or the Company terminates ormodifies its health insurance policy or policies.

 

Section 6.3             Access.** **From the date hereof through theClosing, Seller and the Company shall (a) provide Purchaser or itsauthorized agents or independent contractors with reasonable access to suchinformation as Purchaser may from time to time reasonably request with respectto the Company, the Business and its assets and properties and shall providePurchaser or its authorized agents or independent contractors reasonable accessduring regular 

 

25

----

 

business hours and (b) upon reasonable noticeduring regular business hours and under reasonable circumstances in a manner soas not to interfere with the normal business operations of the Company, providePurchaser or its authorized agents or independent contractors with reasonableaccess to the premises, management, books, records (including tax records),contracts and documents of or pertaining to the Company as Purchaser may fromtime to time reasonably request. Any disclosure whatsoever during suchinvestigation by Purchaser shall not constitute any expansion of or additionalrepresentations or warranties of Seller concerning the Company beyond thosespecifically set forth in this Agreement. All such information and access shallbe subject to the terms and conditions of the Confidentiality Agreement.Notwithstanding the foregoing, Seller and the Company shall not have anyobligation to provide Purchaser with any information the disclosure of which isprohibited or restricted under applicable Legal Requirement, or which wouldresult in any waiver of the attorney-client privilege.

 

Section 6.4             Contact with Customers andSuppliers.  Except as permitted bythe Customer Survey Agreement, Purchaser acknowledges and agrees that it is notauthorized to, and shall not (and shall not permit any of its employees,agents, representatives or Affiliates to), contact any employees of the Company(excluding executive officers), customers, suppliers, distributors or othermaterial business relations of the Company prior to the Closing without theprior written consent of Seller and the Company.

 

Section 6.5             Notifications;Schedule Updates/Corrections.

 

(a)           Seller will give prompt written notice to Purchaser uponbecoming aware of any development occurring after the date of this Agreementthat causes or reasonably could be expected to cause the condition in Section 7.1(a) tonot be met as of the Closing Date. Purchaser will give prompt written notice toSeller and the Company of any development occurring after the date of thisAgreement that causes or reasonably could be expected to cause the condition inSection 7.3(a) to not be met as of the Closing Date.

 

(b)           Prior to the Closing, Seller and the Company maysupplement and update the Schedules to this Agreement to reflect anymatter or information arising after the date of this Agreement which, ifexisting, occurring or known at the date of this Agreement, would have beenrequired to be set forth or described in the Schedules hereto.

 

(c)           Prior to the Closing, if Seller or the Company becomesaware of any matter existing, occurring or known as of the date of thisAgreement that was required to be set forth or described in theSchedules to this Agreement, but that is not so set forth or describedthereon, Seller may amend the Schedules to this Agreement in any mannerwhich is necessary to correct any existing inaccuracy or incorrect orincomplete information in such Schedules.

 

(d)           No such amendment to the Schedules pursuant to Section 6.5(c) shallbe deemed to have modified the representations, warranties or covenants ofSeller regarding the Company herein for purposes of determining whether thecondition set forth in Section 7.1(a) have been satisfied, orshall affect whether a breach of such representations, warranties or covenantshas occurred for purposes of determining Purchaser’s rights under Article Xwith respect thereto.  From and after theClosing, any supplement to the Schedules hereto pursuant to Section 6.5(b) (butnot any amendment 

 

26

----

 

pursuant to Section 6.5(c))shall be deemed to have modified the Schedules and the representations,warranties and covenants of Seller regarding the Company contained herein forall purposes, including any determination of Purchaser’s rights under Article X.

 

Section 6.6             Funds Available.  Purchaser and Parent shall take all actionsnecessary to have available as of the Closing Date funds sufficient to pay theInitial Purchase Price at the Closing and to fulfill their other obligationsunder this Agreement.

 

Section 6.7             Purchaser Actions.** **Any acts oromissions of Purchaser, any of its Affiliates or any Person acting for thebenefit or at the direction of Purchaser or any of its Affiliates before orafter the date hereof, shall not be a basis upon which the condition set forthin Section 7.1(a) shall fail to be satisfied and shall notexcuse Purchaser or Parent from performing its obligations under this Agreementand consummating the transactions contemplated hereby.

 

Section 6.8             Releases.  On the Closing Date, Seller shall execute anddeliver to Purchaser, and Purchaser shall cause the Company to execute anddeliver to Seller, a mutual release in the form attached hereto as Exhibit A(the “Release”).

 

Section 6.9             Public Announcements.** **Neither Seller, theCompany, Purchaser, Parent nor any of their respective Affiliates shall issueor cause the publication of any press release or other public announcement withrespect to this Agreement or the transactions contemplated hereby without priorconsultation with Purchaser and Seller, except as may be required by applicableLegal Requirement. Notwithstanding the foregoing, Purchaser and Seller shallcooperate to prepare a joint press release to be issued on the Closing Date,which press release shall be mutually acceptable to Purchaser and Seller.

 

**ARTICLE VII**

 

**CONDITIONS TO CLOSING**

 

Section 7.1             Conditions to Purchaser’sObligation.** **Purchaser’sobligation to consummate the transactions contemplated by this Agreement issubject to the satisfaction (or written waiver by Purchaser) at or prior to theClosing of the following conditions precedent:

 

(a)           Representations, Warranties and Covenants.  The representations and warranties of Sellerin Article III and regarding the Company contained in Article IV,as subsequently modified by the provisions of Section 6.5, shall betrue and correct as of the Closing with the same force and effect as thoughmade on and as of the Closing (other than those representations and warrantiesthat address matters only as of a particular date or only with respect to aspecific period of time, which need only be accurate as of such date or withrespect to such period), except where the failure of such representations andwarranties to be so true and correct does not have, individually or in theaggregate, a Material Adverse Effect on the Company. Seller and the Companyshall have performed and complied with, in all material respects, all of theagreements and covenants in this Agreement that are required to be performed orcomplied with by Seller or the Company on, prior to, or as of the Closing Date.

 

27

----

 

 

(b)                                 No LegalProhibition.  No statute,rule, regulation, ruling, consent, decree, judgment, injunction or order shallbe enacted, promulgated, entered or enforced by any Governmental Entity thatwould prohibit the consummation by Seller and the Company of the transactionscontemplated hereby.

 

(c)                                  ClosingDeliveries.  Sellershall have caused the deliveries set forth in Section 7.2 to bedelivered to Purchaser at or prior to the Closing.

 

(d)                                 No MaterialAdverse Effect.  Since thedate of this Agreement, there must have been no event which has had or couldreasonably be expected to have a Material Adverse Effect.

 

Section 7.2                                      Seller’sClosing Deliveries.  At theClosing, Seller shall deliver the following documents to Purchaser:

 

(a)                                  a certificateof the Secretary or Assistant Secretary of the Company certifying as to (A) (1) thecertificate of incorporation of the Company and (2) certificates of goodstanding of the Company certified by the Secretary of State of the State ofOklahoma and of each other jurisdiction in which the Company is qualified to dobusiness, in each case certified not later than ten (10) days prior to theClosing Date, (B) the by-laws of the Company, and (C) resolutions ofthe board of directors of the Company, authorizing and approving the withdrawalof the Company from any Benefit Plan;

 

(b)                                 a certificateof the Secretary or Assistant Secretary of Seller certifying as to (A) (1) thecertificate of incorporation of Seller and (2) the certificate of goodstanding of Seller, in each case certified by the Secretary of State of theState of Delaware not later than ten (10) days prior to the Closing Date,(B) the by-laws of Seller, and (C) resolutions of the board ofdirectors of Seller, authorizing and approving (i) the execution, deliveryand performance by Seller of this Agreement and any other Contract executed bySeller pursuant to this Agreement and (ii) the withdrawal of the Companyfrom any Benefit Plan;

 

(c)                                  evidencereasonably satisfactory to Purchaser that all Lien releases with respect to theCompany have been filed or will be filed immediately following the Closing; *provided*, *however*, *that* Purchaser understands and acknowledges that the assetsof the Company are encumbered by Liens in favor of General Electric CapitalCorporation (“GECC”) pursuant to a credit facility extended to Sellerand that, at the Closing, GECC will only deliver a release of Lien as itrelates to the assets of the Company;

 

(d)                                 evidence thatthe consents identified on Schedule 7.2(d) have been obtained;

 

(e)                                  evidence thatthe agreements identified on Schedule 7.2(e) have been or willbe terminated effective as of the Closing;

 

(f)                                    a certificateduly executed by an authorized officer of Seller that the condition set forthin Section 7.1(a) have been satisfied.

 

28

----

 

(g)                                 resignationsfrom the officers and directors of the Company;

 

(h)                                 evidence thatthe Company has been released of liability from GECC;

 

(i)                                     evidence thatthe Company has been released of liability from the 87/8% Senior Subordinated Notes due 2012 issued bySeller;

 

(j)                                     evidence thatthe Company has withdrawn from all Benefit Plans that are Seller’s RetainedLiabilities, effective as of the Closing;

 

(k)                                  an assignmentand assumption agreement relating to Benefit Plans that are Seller’s RetainedLiabilities, in the form attached hereto as Exhibit B;

 

(l)                                     all of theminute books and records of the Company in the possession of Seller or theCompany;

 

(m)                               a summary ofvesting status for each employee of the Company participating in the Blount 401(k) RetirementSavings Plan;

 

(n)                                 a FIRPTAcertificate with respect to Seller;

 

(o)                                 the Release,duly executed by Seller; and

 

(p)                                 inconsideration of the receipt of the Initial Purchase Price, the original stockcertificate(s) evidencing the Outstanding Stock (or affidavit of lostcertificate), duly endorsed in blank or accompanied by a duly executed stockpower transferring the Outstanding Stock to Purchaser.

 

Section 7.3                                      Conditions toSeller’s Obligation.  Seller’sobligation to consummate the transactions contemplated by this Agreement issubject to the satisfaction (or written waiver by Seller) at or prior to theClosing of the following conditions precedent:

 

(a)                                  Representations,Warranties and Covenants.  The representationsand warranties of Purchaser and Parent contained in Article V shallbe true and correct as of the date of this Agreement and on the Closing Datewith the same force and effect as though made on and as of the Closing (otherthan those representations and warranties that address matters only as of aparticular date or only with respect to a specific period of time, which needonly be accurate as of such date or with respect to such period), except wherethe failure of such representations and warranties to be so true and correctdoes not have, individually or in the aggregate, a material adverse effect onPurchaser. Purchaser shall have performed and complied with, in all materialrespects, all of the agreements and covenants in this Agreement that arerequired to be performed or complied with by Purchaser on, prior to, or as ofthe Closing Date.

 

(b)                                 No LegalProhibition.  No statute,rule, regulation, ruling, consent, decree, judgment, injunction or order shallbe enacted, promulgated, entered or enforced by any Governmental Entity thatwould prohibit the consummation by Purchaser or Parent of the transactionscontemplated hereby.

 

29

----

 

(c)                                  ClosingDeliveries.  Purchasershall have caused the deliveries set forth in Section 7.4 to bedelivered to Seller at or prior to the Closing.

 

Section 7.4                                      Purchaser’sClosing Deliveries.  At theClosing, Purchaser shall deliver the following to Seller:

 

(a)                                  the Release,duly executed by the Company;

 

(b)                                 a certificateof the Secretary or Assistant Secretary of Parent certifying as to (A) (1) thecertificate of incorporation of Parent and (2) certificate of goodstanding of Parent, in each case certified not later than ten (10) daysprior to the Closing Date by the Secretary of State of the State of Delaware,(B) the by-laws of Parent, and (C) resolutions of the board ofdirectors of Parent, authorizing and approving the execution, delivery andperformance by Parent of this Agreement and any other Contracts executed byParent pursuant to this Agreement;

 

(c)                                  a certificateof the Secretary or Assistant Secretary of Purchaser certifying as to (A) (1) thecertificate of incorporation of Purchaser and (2) certificate of goodstanding of Purchaser, in each case certified not later than ten (10) daysprior to the Closing Date by the Secretary of State of the State of Delaware,(B) the by-laws of Purchaser, and (C) resolutions of the board ofdirectors of Purchaser, authorizing and approving the execution, delivery andperformance by Purchaser of this Agreement and any other Contracts executed byPurchaser pursuant to this Agreement;

 

(d)                                 a certificateduly executed by an authorized officer of Purchaser that the condition setforth in Section 7.3(a) have been satisfied; and

 

(e)                                  the Phase IIEnvironmental Site Assessment of the Owned Real Property prepared on behalf ofPurchaser by HDR/e2M, dated August 26,2010.

 

**ARTICLE VIII**

 

**POST-CLOSING COVENANTS**

 

Section 8.1                                      FurtherAssurances.  Purchaserand Seller agree to (a) furnish upon request to each other such furtherinformation, (b) execute and deliver to each other such other documents,and (c) do such other acts and things, as the other Party may reasonablyrequest for the purpose of carrying out the intent of this Agreement and thedocuments referred to in this Agreement.

 

Section 8.2                                      Books andRecords.  For a period of seven (7) yearsfrom the Closing Date:

 

(a)                                  Purchasershall, and shall cause the Company to, provide Seller and Seller’s authorizedagents or independent contractors access to the personnel, representatives,attorneys, accountants, properties, books and records of the Company uponreasonable advance written notice during regular business hours for the purposeof obtaining information respecting any matter, issue, claim or proceedingarising from, in connection with, or relating to, this Agreement or anytransaction contemplated hereby, 

 

30

----

 

and will permit Seller andSeller’s authorized agents or independent contractors to make copies,compilations or extracts of any such information; and

 

(b)                                 Seller shallprovide Purchaser and Purchaser’s authorized agents or independent contractorsaccess to the books and records of Seller directly pertaining to the Companyupon reasonable advance written notice during regular business hours for thepurpose of obtaining information and will permit Purchaser and Purchaser’sauthorized agents or independent contractors to make copies, compilations orextracts of any such information.

 

Section 8.3                                      Employees;Employees Benefit Plans. Purchaser shall have no obligation to continue the employment of anyCompany employee on any term or condition after the Closing Date.  Purchaser acknowledges that Bill Alford shallnot continue in the employ of the Company following the Closing Date.  Following the Closing Date, Purchaser shallcause the Company to continue to make available to Company employees and theirrespective eligible dependents all employee benefits and compensation plans,programs and arrangements (other than post-retirement medical andpost-retirement life coverage and a defined benefit pension plan) that areavailable to similarly-situated, eligible employees under the employee benefitsand compensation plans, programs and arrangements sponsored or maintained byPurchaser or its Affiliate (the “Purchaser Plans”)). Purchaser shallensure that the Purchaser Plans grant to each such Company employee or eligibledependent, as the case may be, full credit for all service or employment with,or recognized by, the Company or Seller in connection with a Benefit Plan forpurposes of eligibility, participation and vesting with respect to anyPurchaser Plan that is an employee pension benefit plan as defined in ERISA § 3(2) andfor purposes of eligibility, participation and determining the amount of anybenefit with respect to any Purchaser Plan that is a vacation or other programthat is affected by seniority and any Purchaser Plan that is an employeewelfare benefit plan as defined in ERISA § 3(1).  Purchaser shall cause the Company to continueresponsibility for the vacation time benefits due to the Company employees asof the Closing Date.  Purchaser shallcause the Company to pay severance benefits to any Company employeeinvoluntarily terminated by the Company or any of its Affiliates within twelve(12) months following the Closing Date in an amount which is equal to thegreater of (i) the aggregate amount of severance benefits which would havebeen payable to such employee as of such employee’s termination date under theCompany’s severance policy or plan currently in effect, or (ii) theaggregate amount of severance benefits payable to such employee under anyseverance policy or plan of the Company or any of its Affiliates which are ineffect on the date such employee shall receive notice of termination, in eachcase granting full credit for all service or employment of such employee by theCompany.  As of and after the ClosingDate, Seller shall maintain sole responsibility for any liabilities related tothe Seller’s Retained Liabilities.  As ofand after the Closing Date, Purchaser shall assume all responsibility withrespect to Company “qualified beneficiaries” whose “qualifying event” (eachwithin the meaning of Code Section 4980B) occurs after the Closing.

 

Section 8.4                                      LitigationSupport and Products Liability Claims.

 

(a)                                  In the eventand for so long as Purchaser or Seller actively is contesting or defendingagainst any action, suit, proceeding, hearing, investigation, charge, complaint,claim, or demand (including, without limitation, any Products Liability Claimand any 

 

31

----

 

proceeding that is a Seller’sRetained Liability) in connection with any fact, situation, circumstance,status, condition, activity, practice, plan, occurrence, event, incident,action, failure to act, or transaction prior to the Closing Date involvingSeller, Purchaser or the Company, each of Seller, Purchaser or the Company, asapplicable, shall (a) reasonably cooperate with the contesting ordefending Party and its counsel, (b) as applicable, make reasonablyavailable their employees to provide testimony, to be deposed, to act aswitnesses and to assist counsel, and (c) provide reasonable access to itsbooks and records as shall be necessary in connection with the defense orcontest; *provided that* the contesting ordefending Party shall pay the out-of-pocket expenses reasonably incurred by theParty so cooperating, excluding salary, wages, benefit, other compensation orTaxes attributable to its own employees (unless the contesting or defendingParty is entitled to indemnification from such Party under Article X);*provided*,*further*,*however*, that Seller shall not have to pay any suchout-of-pocket expenses of Purchaser, Parent or the Company when contesting ordefending a Products Liability Claim.

 

(b)                                 If Purchaser,Parent or the Company becomes aware of a Products Liability Claim, Purchasershall promptly give written notice thereof to Seller, including any informationPurchaser possesses about such Products Liability Claim.  Seller (with counsel selected by Seller andreasonably acceptable to Purchaser, such acceptance not to be unreasonablywithheld, conditioned or delayed) shall be entitled to contest or defend anyProducts Liability Claim. Seller shall have the right to compromise and settleall matters related to any Products Liability Claim, except to the extent thatsuch settlement would involve relief other than monetary relief. Seller shallfrom time to time apprise Purchaser of the status of any Products LiabilityClaim and shall furnish Purchaser with such documents and information filed ordelivered in connection with such Products Liability Claim as Purchaser mayreasonably request.  Subject to Article X,(i) until the Deductible is reached, Purchaser or the Company shall pay orreimburse Seller for all amounts related to the settlement or resolution of anyProducts Liability Claim (including attorneys’ fees, court costs, costs ofinvestigation and other costs of defense), and (ii) Seller shall pay allamounts related to the settlement or resolution of any Products Liability Claim(including attorneys’ fees, court costs, costs of investigation and other costsof defense) in excess of the Deductible. Notwithstanding anything hereinstated, Purchaser shall at all times have the right to participate in suchdefense at its own expense directly or through counsel; *provided*that Purchaser shall not interfere in any manner with Seller’s defense. Untilsuch time as Seller has delivered a notice of intent to defend a ProductsLiability Claim to Purchaser, Purchaser shall, at the expense of Seller,undertake the defense of (with counsel selected by Purchaser and reasonablyacceptable to Seller, such acceptance not to be unreasonably withheld,conditioned or delayed) such Products Liability Claim, and shall have the rightto compromise or settle such Products Liability Claim with the prior writtenconsent of Seller.

 

(c)                                  Following theClosing, the Company will maintain responsibility, and retain liability, forproduct warranty claims, subject to the indemnityobligations of Seller in this Agreement.

 

32

----

 

Section 8.5                                      Used Oil SumpClosure and Remediation.

 

(a)                                  Promptly following theClosing and subject to the conditions set forth in this Section 8.5,Seller shall close the sump located in the used oil storage shed and shallremediate the release of petroleum hydrocarbons from the sump identified byPurchaser’s pre-closing investigation in accordance with applicableEnvironmental Laws (the “Work”). Upon completion of the Work, Seller shall repair and restore disturbedareas with like materials.  Seller shallperform the Work diligently and in a workmanlike manner in accordance withapplicable laws and regulations.  Subjectonly to applicable legal restrictions, Seller may elect in its sole discretionto close the sump in place or to remove the sump.  Seller may remediate the petroleum releaseusing the least restrictive remediation standards applicable to the release,including risk-based standards applicable to properties with a continuingindustrial use.  Purchaser shallcooperate fully with Seller’s closure and remediation activities and, ifrequested by Seller, shall record in the deed records****or stateregistry of environmental covenants, if applicable, such engineering andinstitutional controls as reasonably proposed by Seller to complete theremediation, provided that such engineering and institutional controls shallnot prevent future development of the Owned Real Property for industrialpurposes.  A prohibition on future use ofground water from the Owned Real Property shall be deemed reasonableengineering and institutional controls under the immediately precedingsentence.  Following the Closing,Purchaser shall, and shall cause the Company to, grant Seller and itsauthorized agents and representatives access to the Owned RealProperty as reasonably required by Seller to perform the Work, providedthat Seller shall take reasonable steps to avoid undue interference with theongoing operations of the Company. Seller shall keep Purchaser reasonably informed as to the progress ofthe Work and shall provide to Purchaser Seller’s work plan, Seller’s closurereport and any approvals from or other material correspondence with anyGovernmental Entity relating to the Work.  Seller’s right ofaccess and its obligation to perform the Work shall continue until suchtime as Seller receives written approval of Seller’s report ofthe sump closure and remediation from the appropriate Governmental Entityor other confirmation reasonably satisfactory to Seller and Purchaser thatno further action is required by Environmental Law to complete theWork.  Seller shall not have theauthority to enter into settlements or consent orders in connection with theWork, but, to the extent that any settlement or consent order is reasonablyrequired to complete the Work or any portion thereof, Purchaser shall cause theCompany to execute any such settlement or consent order.

 

(b)                                 With respect to any ResponseAction for which Seller has an indemnification obligation pursuant to thisAgreement, Purchaser shall promptly give written notice thereof to Seller,including any information Purchaser possesses about such Response Action.  Seller (with counsel and environmentalconsultants and engineers selected by Seller and reasonably acceptable toPurchaser, such acceptance not to be unreasonably withheld, conditioned ordelayed) shall be entitled to control the process related to such ResponseAction, including correspondence and dialogue with any GovernmentalEntity.  Seller shall perform any suchResponse Action diligently and in a workmanlike manner in accordance withapplicable laws and regulations.  Sellermay remediate any Response Action using the least restrictive remediationstandards applicable to comply with Environmental Law, including risk-basedstandards applicable to properties with a continuing industrial use.  Purchaser shall cooperate fully with Seller’scontrol of any such Response Action and, if requested by Seller, shall recordin the deed records****or state registry of environmentalcovenants, if applicable, such engineering 

 

33

----

 

andinstitutional controls as reasonably proposed by Seller to complete theremediation, provided that such engineering and institutional controls shallnot prevent future development of the Owned Real Property for industrialpurposes.  Purchaser shall, and shallcause the Company to, grant Seller and its authorized agents andrepresentatives access to the Owned Real Property as reasonablyrequired by Seller in connection with any Response Action for which Seller hasan indemnification obligation pursuant to this Agreement, provided that Sellershall take reasonable steps to avoid undue interference with the ongoingoperations of the Company.  Seller shallkeep Purchaser reasonably informed as to the progress thereof and shall provideto Purchaser Seller’s work plan, Seller’s closure report and any approvals fromor other material correspondence with any Governmental Entity relating to theResponse Action.  Until such time as Seller has delivered a notice ofintent to control a Response Action to Purchaser, Purchaser shall, at the expenseof Seller, undertake the Response Action (with counsel selected by Purchaserand reasonably acceptable to Seller, such acceptance not to be unreasonablywithheld, conditioned or delayed).

 

Section 8.6                                      Covenant Not toCompete and Not to Solicit.  As an inducement for Purchaser to enter intothis Agreement, Seller covenants and agrees that (a) from and after theClosing, and continuing for the lesser of five (5) years from the ClosingDate or the longest time permitted by applicable law, Seller shall not,directly or indirectly, control, manage, operate, participate or engage in anybusiness, or own any interest in, any Person or any other form of businessentity, whether as a proprietor, partner, shareholder, joint venturer, trustee,or in any other capacity whatsoever, if such entity is engaged, in the UnitedStates, in the Competitive Business; and (b) for twelve (12) months fromthe Closing Date, Seller shall not solicit for employment, recruit or employany employee of the Company or Purchaser, or otherwise persuade or attempt topersuade any Person to leave the employ of the Company or Purchaser; *provided,**however*, thatthis Section 8.6(b) shall not prohibit Seller from (x) engagingin any general advertising or general solicitation not targeted specifically tothe Company’s or Purchaser’s employees (including general advertising viaperiodicals, the Internet and other media) or (y) soliciting foremployment or recruiting any employee of the Company or Purchaser who hasprovided the Company or Purchaser, as applicable, with a notice of terminationof employment..  Notwithstanding theforegoing, nothing contained in this Agreement shall restrict Seller or itsAffiliates from: (i) owning five percent (5%) or less of the equitysecurities of any Person in competition with Purchaser, which securities arelisted on any national securities exchange or authorized for quotation on theAutomated Quotations System of the National Association of Securities Dealers, Inc.,as long as such party has no other business relationship, direct or indirect,with the issuer of such securities, or (ii) acquiring (whether by stockpurchase, asset purchase, merger, consolidation or otherwise) any Person whoserevenues attributable to the Competitive Business do not exceed ten percent(10%) of the aggregate revenues of such Person. If the final judgment of a court of competent jurisdiction declares thatany term or provision of this Section 8.6 is invalid orunenforceable, the parties hereto agree that the court making the determinationof invalidity or unenforceability will have the power to reduce the scope,duration, or area of the term or provision, to delete specific words orphrases, or to replace any invalid or unenforceable term or provision with aterm or provision that is valid and enforceable and that comes closest toexpressing the intention of the invalid or unenforceable term or provision, andthis Agreement will be enforceable as so modified after the expiration of thetime within which the judgment may be appealed. Seller hereby agrees that Purchaser, in addition to any other remediesavailable to it, may seek preliminary and permanent injunctive 

 

34

----

 

relief against any breach or threatened breach bySeller of any of the covenants contained in this Section 8.6,subject to equitable principles applied by a court of competentjurisdiction.  The terms of the foregoingobligations shall be extended for a period equal to the period of any breachesof such obligations by Seller.

 

Section 8.7                                      Heat TreatMachine.  Purchaser shall notify Sellerin writing when the Heat Treat Machine has been installed and accepted by theCompany and the Company has made the final payment for the Heat Treat Machine.  Upon receipt of such notice (which shallinclude proof of final payment), Seller shall pay to Purchaser $267,500.00within ten (10) Business Days.

 

**ARTICLE IX**

 

**TERMINATION**

 

Section 9.1                                      Termination.  This Agreement may be terminated by theParties at any time prior to the Closing as follows:

 

(a)                                  Purchaser andSeller may terminate this Agreement by mutual written consent at any time priorto the Closing;

 

(b)                                 Purchaser mayterminate this Agreement by giving written notice to Seller at any time priorto the Closing, if, by October 15,****2010 (the “OutsideDate”), the conditions set forth in Section 7.1 are notsatisfied, complied with or performed (unless such failure of satisfaction,compliance or performance is the result, directly or indirectly, in whole or inpart, of any action or failure to act on the part of Purchaser or Parent), andPurchaser has not waived such failure of satisfaction, compliance orperformance;

 

(c)                                  Seller mayterminate this Agreement by giving written notice to Purchaser at any timeprior to the Closing, if, by the Outside Date, the conditions set forth in Section 7.3are not satisfied, complied with or performed (unless such failure ofsatisfaction, compliance or performance is the result, directly or indirectly,in whole or in part, of any action or failure to act on the part of Seller),and Seller has not waived such failure of satisfaction, compliance orperformance;

 

(d)                                 Purchaser mayterminate this Agreement by giving written notice to Seller at any time priorto the Closing if Seller has materially breached or failed to comply with itswarranties, representations or covenants or the warranties, representations orcovenants regarding the Company under this Agreement such that the conditionset forth in Section 7.1(a) would not reasonably be expectedto be satisfied, and such breach or failure to comply is not cured within aperiod of thirty (30) calendar days after Purchaser gives written notice toSeller of such breach or failure to comply; or

 

(e)                                  Seller mayterminate this Agreement by giving written notice to Purchaser at any timeprior to the Closing, if Purchaser has materially breached or failed to complywith its warranties, representations or covenants under this Agreement suchthat the condition set forth in Section 7.3(a) would notreasonably be expected to be satisfied, and such breach or failure to comply isnot cured within a period of thirty (30) calendar days after Seller giveswritten notice to Purchaser of such breach or failure to comply.

 

35

----

 

Section 9.2                                      Effect ofTermination.** **Termination of this Agreementpursuant to this Article IX shall terminate all liabilities andobligations of the Parties, except for the obligations under the penultimatesentence of Section 6.3, Section 6.9, this Section 9.2,Article XII and the Confidentiality Agreement, *provided,however, that* nothing in this Section 9.2 shall relieveor limit the liability hereunder of one Party (the “Defaulting Party”)to the other Party on account of a breach of a covenant contained herein by theDefaulting Party. In the case of such a breach, in addition to any damages forwhich the Defaulting Party may be liable, the Defaulting Party shall reimbursethe other Party for any expenses incurred by it to enforce its rights underthis Agreement (including reasonable attorneys’ fees and expenses).

 

**ARTICLE X**

 

**INDEMNIFICATION**

 

Section 10.1                                Indemnification.

 

(a)                                  Subject to thelimitations set forth in this Article X, Seller agrees from andafter the Closing Date to indemnify, defend and hold harmless Purchaser and itsofficers, managers, directors, shareholders, members, Affiliates, employees andagents (the “Purchaser Indemnified Persons”) from and against any Lossesincurred by such Purchaser Indemnified Persons arising out of or resulting from(i) any breach by Seller of any representation or warranty of Sellercontained in Article III or Article IV of thisAgreement, and (ii) any breach by Seller or the Company of any covenant ofSeller or the Company contained in this Agreement; *provided*,in each case, that the relevant Purchaser Indemnified Person has submitted toSeller a Notice of Claim or Third-Party Notice, as applicable, in respectthereof prior to the date of expiration of the applicable survival periodspecified in Section 10.4 (each, a “Purchaser IndemnificationClaim”).

 

(b)                                 Subject to thelimitations set forth in this Article X, Seller further agrees fromand after the Closing Date to indemnify, defend and hold harmless the PurchaserIndemnified Persons from and against any Losses incurred by such PurchaserIndemnified Persons arising out of or resulting from (i) the Seller’sRetained Liabilities and (ii) any products liability claim received inwriting by the Company prior to the second anniversary of the Closing Date, butonly if such claim relates to a product shipped by the Company prior to theClosing (each, a “Products Liability Claim”).

 

(c)                                  Subject to thelimitations set forth in this Article X, Purchaser and Parent,jointly and severally, agree from and after the Closing Date to indemnify,defend and hold harmless Seller, the Company and their respective officers,managers, directors, shareholders, members, Affiliates, employees and agents(the “Seller Indemnified Persons”) from and against any Losses incurredby the Seller Indemnified Persons arising out of or resulting from (i) anybreach by Purchaser or Parent of any representation or warranty of Purchaser orParent contained in Article V of this Agreement, (ii) anybreach by Purchaser or Parent of any covenant contained in this Agreement; *provided*, in each case, that the relevant Seller IndemnifiedPerson has submitted to Purchaser and Parent a Notice of Claim or Third-PartyNotice, as applicable, in respect thereof prior to the date of expiration ofthe applicable survival period specified in Section 10.4.

 

36

----

 

Section 10.2                                Procedures forIndemnification. 

 

(a)                                  If anyPurchaser Indemnified Person or Seller Indemnified Person (each, an “IndemnifiedPerson”) claims indemnification hereunder for any claim (other than athird-party claim) for which indemnification is provided in Section 10.1,the Indemnified Person shall promptly give written notice (a “Notice ofClaim”) to Seller, on the one hand, or Purchaser and Parent, on the otherhand, setting forth the basis for such claim and the nature and estimatedamount of the claim, all in reasonable detail. If Seller, on the one hand, orPurchaser and Parent, on the other hand, dispute any claim set forth in theNotice of Claim, it or they, as applicable, may at any time deliver to theIndemnified Person that gave the Notice of Claim a written notice indicatingits or their dispute (an “Objection Notice”).

 

(b)                                 If anIndemnified Person claims indemnification hereunder arising from any claim ordemand of a third-party for which indemnification is provided in Section 10.1,the Indemnified Person shall promptly give written notice (a “Third-PartyNotice”) to Seller, on the one hand, or Purchaser and Parent, on the otherhand (each, an “Indemnifying Person”), of the basis for such claim andsetting forth the nature of the claim or demand, all in reasonable detail. TheIndemnifying Person, upon notice to the Indemnified Person, may at any timeafter receiving a Third-Party Notice, at its own cost (with counsel selected bythe Indemnifying Party and reasonably acceptable to the Indemnified Person),defend any claim or demand set forth in a Third-Party Notice. The IndemnifyingPerson shall have the right to compromise and settle all indemnifiable mattersrelated to claims by third parties that are susceptible to being settled, exceptto the extent that such settlement would involve relief other than monetarydamages. The Indemnifying Person shall from time to time apprise theIndemnified Person of the status of the claim, liability or expense and anyresulting suit, proceeding or enforcement action and shall furnish theIndemnified Person with such documents and information filed or delivered inconnection with such claim, liability or expense as the Indemnified Person mayreasonably request. The Indemnified Person shall not admit any liability to orsettle any claim with any third-party in connection with any matter which isthe subject of a Notice of Claim and shall cooperate fully in the mannerrequested by the Indemnifying Person in the defense of such claim.Notwithstanding anything herein stated, the Indemnified Person shall at alltimes have the right to fully participate in such defense at its own expensedirectly or through counsel. Until such time as the Indemnifying Person hasdelivered a notice of intent to defend a third-party claim to the IndemnifiedPerson, the Indemnified Person shall, at the expense of the IndemnifyingPerson, undertake the defense of (with counsel selected by the IndemnifiedPerson and reasonably acceptable to the Indemnifying Person) such claim, liabilityor expense, and shall have the right to compromise or settle such claim,liability or expense with the prior written consent of the Indemnifying Person.

 

Section 10.3                                Construction ofRepresentations and Warranties.  For purposes of determining whether a breachhas occurred and calculating Losses in connection with a claim forindemnification under this Article X, each of the representationsand warranties that contains any qualifications as to “materiality” or “MaterialAdverse Effect” shall be deemed to have been given as though there were no suchqualifications, and any such qualifications shall be 

 

37

----

 

disregarded for purposes of this Article X;*provided*, *however*,that notwithstanding the foregoing, for purposes of determining whether abreach has occurred of a representation or warranty contained in Sections4.5, 4.14 and 4.18, such representations and warranties shallbe deemed to have been given as drafted and to include, for purposes of this Article X,all qualifications as to “materiality” or “Material Adverse Effect.”

 

Section 10.4                                Limitations onIndemnification.

 

(a)                                  Except as setforth below, all representations and warranties of Seller, the Company andPurchaser under this Agreement will survive the Closing until, and will expireat 5:00 p.m. Central Time upon, the date that is eighteen (18) months fromthe Closing Date.  All FundamentalRepresentations will survive the Closing indefinitely.  The representations and warranties containedin Section 4.9 (Tax Matters) and Section 4.13 (EmployeeBenefits) will survive the Closing until thirty (30) days following theexpiration of the respective statute of limitations. The representations andwarranties contained in Section 4.10 (Environmental Matters) willsurvive the Closing until the fifth anniversary of the Closing Date. Allcovenants requiring performance by any Party after the Closing shall survivethe Closing in accordance with their terms.

 

(b)                                 Seller’saggregate liability to Purchaser Indemnified Persons for indemnification(including costs incurred in the defense of such claim) under Section 10.1(a)(i) shallnot exceed $5,000,000****(the “CapAmount”); *provided*, *however*,that in no event shall the limitation set forth in this Section 10.4(b) applyto Losses arising out of or resulting from breaches of any of the FundamentalRepresentations, which shall be subject to an aggregate limitation of the FinalPurchase Price as to all such breaches; *and provided further*,that Seller’s aggregate liability to Purchaser Indemnified Persons for breachesof the representations or warranties under Section 4.10 shall notexceed eighty percent (80%) of the Cap Amount, which when combined with allother liabilities under Section 10.1(a)(i) shall not exceed$5,000,000.

 

(c)                                  No PurchaserIndemnified Person shall be entitled to indemnification pursuant to Section 10.1(a)(i) orSection 10.1(b)(ii) unless and until the aggregate Lossesincurred by all Purchaser Indemnified Persons in respect of all claims under Section 10.1(a)(i) andSection 10.1(b)(ii) collectively exceed $250,000 (the “Deductible”),whereupon Purchaser Indemnified Persons shall only be entitled toindemnification hereunder (subject to the other provisions of this Article X)from Seller for all such Losses incurred by Purchaser Indemnified Persons inexcess of the Deductible;*provided*, *however*, that in no event shall the limitations set forth inthis Section 10.4(c) apply to Losses arising out of orresulting from breaches of any of the Fundamental Representations.

 

(d)                                 The amount ofany Losses for which indemnification is provided for under this Agreement shallbe reduced by (i) any insurance proceeds or other amounts actuallyrecovered by the Indemnified Person from third parties with respect to such Losses,and (ii) any Tax benefit actually realized by the Indemnified Person fromthe incurrence or payment of any such Losses (where “actually realized” forpurposes of this Section 10.4(d)(ii) includes such Tax benefitas calculated on a stand-alone separate return basis for the Company).  In valuing a Loss, no adjustment shall bemade as a result of any 

 

38

----

 

multiple, increase factor,or any other premium over book value which may have been paid by Purchaser forthe Outstanding Stock whether or not such multiple, increase factor or otherpremium had been used by Purchaser at the time of, or in connection with,determining the purchase price for the Outstanding Stock.

 

(e)                                  The IndemnifiedPerson agrees to take all reasonable actions to mitigate all Losses and totimely make and diligently pursue any claims for insurance, Tax benefits and/orother payments available from third parties with respect to Losses for which itwill seek indemnification hereunder.  Tothe extent an Indemnifying Person indemnifies the Indemnified Person withrespect to any Loss that is later mitigated by any insurance, Tax benefitsand/or other payments from third parties, the amount of such mitigation shallbe returned to the Indemnifying Person.

 

(f)                                    TheIndemnifying Person shall be subrogated to the Indemnified Person’s rights ofrecovery to the extent of any Losses satisfied by the Indemnifying Person. TheIndemnified Person shall execute and deliver such instruments and papers as arenecessary to assign such rights and assist in the exercise thereof, includingaccess to the books and records of the Company.

 

(g)                                 No claim forindemnification may be made by a Purchaser Indemnified Person and noindemnification shall be required to the extent that (i) the Lossessustained or incurred by such Purchaser Indemnified Person for whichindemnification is sought were accrued or included as current liabilities forpurposes of computing the Final Working Capital, or (ii) such Losses aredue to Purchaser or the Company filing a Tax Return, or taking a position forTax purposes, that is inconsistent with a position taken on a Tax Return for aPre-Closing Tax Period, unless the position taken by Purchaser or the Companyis required by any applicable Legal Requirement subject to the consent ofSeller that will not be unreasonably withheld or delayed.

 

(h)                                 Other than withrespect to third-party claims, neither Seller, on the one hand, nor Purchaseror Parent, on the other hand, shall have any obligation to indemnify any otherParty or their respective Indemnified Persons from and against consequentialdamages, incidental damages, indirect damages, punitive damages, diminution invalue or lost profits; *provided*, *however*, that any claim brought or asserted by any bona fidepurchaser of all or any portion of the Owned Real Property shall not beconsidered a third-party claim.

 

(i)                                     Theindemnification provisions provided in this Article X are inaddition to, and not in derogation of, any statutory, equitable, or common lawremedy that an Indemnified Person may have for breach of any representation,warranty, covenant or agreement; *provided, however,*in the absence of fraud, the limitations on rights of indemnification set forthin this Article X shall apply to such remedies.  For the avoidance of doubt, nothing containedin this Article X shall limit the rights, remedies or claims of anyParty with respect to any actual fraud or willful misconduct in connection withthe transaction contemplated by this Agreement by any Party hereto.

 

(j)                                     Purchaser willhave no liability to Seller Indemnified Persons for indemnification (includingcosts incurred in the defense of such claims) under Section 

 

39

----

 

10.1(c)(i) unless anduntil the aggregate Losses incurred by all Seller Indemnified Persons inrespect of such claims collectively exceed $250,000, whereupon SellerIndemnified Persons shall only be entitled to indemnification hereunder(subject to the other provisions of Article X) from Purchaser forall such Losses incurred by Seller Indemnified Persons in excess of suchamount.  Purchaser’s aggregate liabilityto Seller Indemnified Persons for indemnification (including costs incurred inthe defense of such claims) under Section 10.1(c)(i) shall notexceed $5,000,000.

 

(k)                                  Subject to thelimitations set forth in this Article X, the amount of any Lossesfor which indemnification is provided under Section 10.1(a)(i) ofthis Agreement with respect to any breach of representations contained in Section 4.10,shall include those Losses incurred by Purchaser Indemnified Parties withrespect to any environmental investigation, monitoring, cleanup, containment,restoration, removal or other corrective or response action (collectively “ResponseActions”) as the result of a release of Hazardous Substances on or from theOwned Real Property, to the extent such Response Action is required byEnvironmental Law for the continued industrial use of the Owned Real Property; *provided, however,* that Seller shall have no obligation toindemnify any Purchaser Indemnified Party with respect to any Response Actionarising from any conditions of contamination unless identified through anyenvironmental sampling or analysis by or on behalf of the Company or anyPurchaser Indemnified Party which is (i) affirmatively required byEnvironmental Laws or (ii) reasonably necessary for the prudentenvironmental management of the Owned Real Property, including the lawfulconduct of a site development or construction project, without regard to theavailability of indemnification hereunder. The foregoing shall not restrict a prospective bona fide purchaser ofthe Owned Real Property from performing a Phase II Environmental SiteAssessment of the Property (“Phase II ESA”); *provided*that Seller shall have no obligation to indemnify any Purchaser IndemnifiedParty with respect to any Response Action arising from conditions ofcontamination identified through the Phase II ESA unless (i) allinformation and reports concerning the environmental condition of the OwnedReal Property in the possession or control of Purchaser Indemnified Parties orthe Company (“Environmental Documents”) shall have been provided to thebona fide purchaser prior to the Phase II ESA, and (ii) the scope of thebona fide purchaser’s Phase II ESA shall have been reasonably related to areasof environmental concern identified in the Environmental Documents or anyRecognized Environmental Condition identified in any Phase I Environmental SiteAssessment prepared for the bona fide purchaser in accordance with 40 CFR Part 312.  As used in this Section 10.4(k), “EnvironmentalDocuments” shall consist of those documents listed in Schedule 10.4(k);and “Recognized Environmental Conditions” shall have the meaning setforth in ASTM E1527-05, Standard Practice for Phase I Environmental SiteAssessment Process.

 

Section 10.5                                Adjustments toFinal Purchase Price.  Allpayments under this Article X shall be treated as adjustments tothe Final Purchase Price, unless otherwise required by applicable LegalRequirements.

 

40

----

 

**ARTICLE XI**

 

**TAX MATTERS**

 

Section 11.1                                Tax Returns.

 

(a)                                  Seller shallprepare and cause to be filed all Tax Returns of the Company for all Taxperiods ending on or before the Closing Date. Seller shall deliver to Purchaser for its review a draft of each TaxReturn of the Company to be filed after the Closing Date that may give rise toany Tax liability of the Company for which Seller is not liable under thisAgreement not fewer than sixty (60) days before the deadline for filing suchTax Return, including extensions. Purchaser shall notify Seller in writing if it objects to any portion ofthe draft Tax Return within thirty (30) days after the draft Tax Return isdelivered to Purchaser.  If Seller doesnot receive a written objection (specifying in detail the nature of suchobjection) by the end of the thirty (30) day period, Seller may file the TaxReturn and such Tax Return shall be deemed final and binding as between theParties.  If Purchaser notifies Sellerthat it objects to any portion of the draft Tax Return (specifying in detailthe nature of such objection) on or before the end of the thirty (30) day period,Purchaser and Seller shall attempt to mutually resolve any disagreements ingood faith regarding such draft Tax Return. Any disagreements regarding the draft Tax Returns that are not resolvedwithin an additional ten (10) day period by Seller and Purchaser shall beresolved by the Designated Accounting Firm, whose decision shall be final andwhose fees shall be shared equally by Seller and Purchaser.  The Tax Returns that are subject to anydisagreement shall not be filed until such disagreement is resolved; *provided that* if such Tax Returns must be filed in order toavoid a penalty, such Tax Returns may be filed as prepared (with any changes towhich Seller and Purchaser agree prior to the date of filing reflectedtherein), and if further changes are agreed upon or required by the Designated AccountingFirm, then Seller shall amend such Tax Returns promptly to reflect suchchanges.  Purchaser shall cause theCompany to cooperate fully and promptly in connection with Seller’s preparationof and the filing of all Tax Returns under this Section 11.1(a).

 

(b)                                 Except asprovided in Section 11.1(a), Purchaser shall cause the Company toprepare and file all Tax Returns of the Company due after the ClosingDate.  Purchaser shall deliver to Sellerfor its review a draft of each Tax Return of the Company to be filed after theClosing Date that may give rise to any Tax liability of the Company for whichSeller is liable under this Agreement not fewer than sixty (60) days before thedeadline for filing such Tax Return, including extensions.  Seller shall notify Purchaser in writing ifit objects to any portion of the draft Tax Return within thirty (30) daysafter the draft Tax Return is delivered to Seller.  If Purchaser does not receive a writtenobjection by the end of the thirty (30) day period, Purchaser may file theTax Return.  If Seller notifies Purchaserthat it objects to any portion of the draft Tax Return on or before the end ofthe thirty (30) day period, Purchaser and Seller shall attempt to mutuallyresolve any disagreements in good faith regarding such draft Tax Return.  Any disagreements regarding the draft TaxReturns that are not resolved within an additional ten (10) day period bySeller and Purchaser shall be resolved by the Designated Accounting Firm, whosedecision shall be final and whose fees shall be shared equally by Seller and 

 

41

----

 

Purchaser.  The Tax Returns that are subject to anydisagreement shall not be filed until such disagreement is resolved; *provided that* if such Tax Returns must be filed in order toavoid a penalty, such Tax Returns may be filed as prepared (with any changes towhich Seller and Purchaser agree prior to the date of filing reflectedtherein), and if further changes are agreed upon or required by the Designated AccountingFirm, then Purchaser shall amend such Tax Returns promptly to reflect suchchanges.

 

Section 11.2                                Liability forTaxes.  Within thirty (30) BusinessDays after Seller receives a written request from Purchaser, Seller shallreimburse Purchaser or the Company for all Taxes of the Company for anyPre-Closing Tax Period and for Seller’s portion (as determined under Section 11.3)of all Taxes of the Company for any Tax period that begins before the ClosingDate and ends after the Closing Date (a “Straddle Period”) to the extentsuch Taxes are not included as a current liability for purposes of computingthe Final Working Capital (but excluding any and all Taxes incurred by theCompany as a result of the Section 338 Election).  Purchaser shall be responsible for all Taxesof the Company for any Post-Closing Tax Period and for its portion (asdetermined under Section 11.3) of all Taxes of the Company for anyStraddle Period.

 

Section 11.3                                Apportionmentof Taxes.

 

(a)                                  With respect toany Straddle Period, the Taxes of the Company attributable to such StraddlePeriod shall be apportioned between the portion of the Straddle Period thatbegins on the first day of the Straddle Period and ends on the Closing Date(the “Pre-Closing Straddle Period”), which portion shall be theresponsibility of Seller (to the extent provided in Section 11.2),and the portion of the Straddle Period that begins on the day immediatelyfollowing the Closing Date and ends on the last day of the Straddle Period (the“Post-Closing Straddle Period”), which portion shall be theresponsibility of Purchaser.

 

(b)                                 In the case ofincome Taxes, sales and use Taxes, and Taxes based on gross or net receipts orpayments, the portion of the Tax allocated to the Pre-Closing Straddle Periodshall equal the amount that would be payable if the Straddle Period ended onthe last day of the Pre-Closing Straddle Period by means of closing the booksand records of the Company as of the last day of the Pre-Closing StraddlePeriod; *provided that* all permitted allowances,exemptions and deductions that are normally computed on the basis of an entireyear or period (such as depreciation and amortization deductions) shall accrueon a daily basis and shall be allocated between the Pre-Closing Straddle Periodand the Post-Closing Straddle Period in proportion to the number of days ineach such period.  Taxes of the Companyshall be calculated on a stand-alone separate return basis.

 

(c)                                  In the case ofTaxes not described in Section 11.3(b), the portion of the Taxallocated to the Pre-Closing Straddle Period shall equal the amount of Tax forthe entire Straddle Period multiplied by the ratio of the number of days duringthe Pre-Closing Straddle Period to the number of days during the entireStraddle Period.

 

(d)                                 Notwithstandingthe foregoing provisions of this Section 11.3, (i) anydeductions for income Tax purposes that are attributable to the payment ofbonuses, other 

 

42

----

 

compensation, the write-offof capitalized financing fees and any other deductions that arise on theClosing Date as a result of the transaction contemplated by this Agreement,shall be taken into account in the Pre-Closing Straddle Period and (ii) Sellershall be responsible for any Taxes of the Company attributable to the deemedsale of assets under the Section 338 Election.

 

Section 11.4                                Cooperation.

 

(a)                                  In connectionwith the preparation of Tax Returns, audit examinations, and any administrativeor judicial proceedings relating to the Taxes imposed on the Company for allPre-Closing Tax Periods, Purchaser and the Company, on the one hand, andSeller, on the other hand, shall cooperate fully with each other, includingfurnishing or making available during normal business hours records, personnel(as reasonably required), books of account, powers of attorney or othermaterials necessary or helpful for the preparation of such Tax Returns, theconduct of audit examinations or the defense of claims by Governmental Entitiesas to the imposition of Taxes.  Purchasershall provide Seller, and Seller shall provide Purchaser, with the informationthat each is respectively required to report under Section 6043A of theCode.

 

(b)                                 Purchaser shall(i) retain all books and records with respect to Tax matters pertinent tothe Company relating to any Pre-Closing Tax Period until the expiration of thestatute of limitations (including any extensions thereof) applicable to suchtaxable periods, and to abide by all record retention agreements entered intowith any taxing authority, and (ii) to give to Seller reasonable writtennotice prior to transferring, destroying or discarding any such books andrecords and, if Seller so requests, Purchaser will allow Seller to takepossession of such books and records.

 

Section 11.5                                Tax Contests.

 

(a)                                  If anyGovernmental Entity issues to Purchaser or the Company (i) a notice of itsintent to audit, examine or conduct another proceeding with respect to Taxes orTax Returns of the Company for any Pre-Closing Tax Period or (ii) a noticeof deficiency, notice of reassessment, proposed adjustment, assertion of claimor demand concerning Taxes or Tax Returns of the Company for any Pre-ClosingTax Period (each, a “Tax Claim”), Purchaser shall notify Seller of thereceipt of such communication from the Governmental Entity and shall deliver acopy of any such written communication to Seller within five (5) BusinessDays after receiving such Tax Claim.

 

(b)                                 Purchaser andthe Company shall control any proceeding relating to any Tax Claim with respectto Taxes or Tax Returns of the Company (a “Tax Contest”); *provided that* (i) Seller shall have the right toparticipate in any such Tax Contest to the extent it relates to Taxes or a TaxReturn for a Pre-Closing Tax Period and in such case Purchaser and the Companyshall promptly provide Seller with copies of all written communicationsrelating to the Tax Contest, (ii) Purchaser shall keep Seller informed ona timely basis regarding the progress of any Tax Contest and consult withSeller with respect to any issue relating to such Tax Contest that could affectSeller, and (iii) Purchaser and the Company shall not settle or otherwiseresolve any Tax Contest (or any issue raised in any Tax Contest) if suchsettlement or other resolution relates to Taxes 

 

43

----

 

for which Seller is liableunder this Agreement without the prior written consent of Seller (which shallnot be unreasonably withheld, conditioned or delayed).

 

(c)                                  At the requestof Seller, Purchaser and the Company shall settle any issue related to Taxesfor any Pre-Closing Tax Period on terms acceptable to Seller and the applicableGovernmental Entity; *provided that*(i) Seller shall pay when due all Taxes (and other amounts) for whichSeller is liable under this Agreement as a result of such settlement, and(ii) the settlement would not result in Purchaser or the Company payingany increased Taxes for which Seller is not required to fully indemnifyPurchaser or the Company under this Agreement.

 

Section 11.6                                Amended TaxReturns.  Purchaser shall not file orcause to be filed any amended Tax Returns covering any period or adjusting anyTaxes for a period that includes any Pre-Closing Tax Period without the priorwritten consent of Seller, which consent may not be unreasonably conditioned,withheld or delayed.  Purchaser shall nottake and shall not cause or permit the Company to take any action that couldincrease the liability of Seller for Taxes under this Agreement or otherwisewithout the prior written consent of Seller, which consent shall not beunreasonably withheld or delayed.

 

Section 11.7                                Tax Refunds.  Purchaser and the Company shall cooperatewith Seller in obtaining any Tax refunds for any Pre-Closing Tax Periods.  Any refunds for Taxes of the Company forPre-Closing Tax Periods shall be the property of Seller.  If Purchaser or the Company receives a refundof Taxes that is the property of Seller, Purchaser shall pay the full amount ofthe refund to Seller within ten (10) Business Days of the receipt of therefund.

 

Section 11.8                                338(h)(10) Election.

 

(a)                                  Seller andPurchaser shall jointly elect under Section 338(h)(10) of the Codewith respect to the purchase of the Outstanding Stock, on IRS Form 8023 orin such other manner as may be required by the IRS, and shall jointly make anelection in the manner required under any analogous provisions of state, local,or foreign law (collectively, the “Section 338 Election”).

 

(b)                                 Seller, withthe assistance and cooperation of Purchaser, shall prepare IRS Form 8023 andall requisite attachments thereto (and all forms under analogous provisions ofstate, local, or foreign law) in accordance with Tax laws. Seller shall deliversuch forms and attachments to Purchaser within thirty (30) days after theClosing Date or at least sixty (60) days prior to the due date for filing,whichever is the earlier date.  Purchasershall execute and return such completed forms and attachments to Seller.

 

(c)                                  Within ninety(90) days after the Final Purchase Price is finalized under Section 2.4,Seller shall prepare and deliver to Purchaser schedules (the “AllocationSchedule”) allocating the aggregate deemed sales price (as defined inTreasury Regulation Section 1.338-4) among the assets of the Company.  The Allocation Schedule shall be prepared inaccordance with Section 338(h)(10) of the Code and the TreasuryRegulations thereunder.  The AllocationSchedule shall be deemed to be accepted by and shall be conclusive and bindingon Purchaser unless, within thirty (30) days after the Allocation Schedule isdelivered to Purchaser, Purchaser delivers a written notice to 

 

44

----

 

Seller stating each andevery item to which Purchaser objects (it being understood that any amounts notso disputed shall be final and binding). If a change proposed by Purchaser is disputed by Seller, then Seller andPurchaser shall negotiate in good faith to resolve such dispute.  If, after a period of thirty (30) daysfollowing the date on which Purchaser gives Seller notice of any such proposedchange, any such proposed change still remains disputed, then a determinationregarding the disputed item(s) shall be made by the Designated AccountingFirm, whose decision shall be final and whose fees shall be shared equally bySeller and Purchaser. Promptly upon receiving the final Allocation Schedule,Purchaser and Seller shall return an executed copy thereof to the other suchparty.

 

(d)                                 Purchaser andSeller shall file (or cause to be filed) all federal, state and local income TaxReturns in accordance with the Allocation Schedule, and shall take no positioncontrary thereto or inconsistent therewith (including, without limitation, inany amended Tax Return or claim for refund, any examination or audit by anyGovernmental Entity, or any other proceeding), except to the extent otherwiserequired by any Legal Requirement and after written notice thereof to the othersuch Party.

 

**ARTICLE XII**

 

**MISCELLANEOUS**

 

Section 12.1                                TransactionExpenses; Transfer Taxes.

 

(a)                                  Purchaser shallbear all fees and expenses incurred by Purchaser and its Affiliates andrepresentatives in connection with the negotiation and execution of thisAgreement and each other agreement, document and instrument contemplated bythis Agreement and the consummation of the transaction contemplated hereby andthereby. Seller shall bear all fees and expenses incurred by Seller or theCompany prior to Closing in connection with the negotiation and execution ofthis Agreement and each other agreement, document and instrument contemplatedby this Agreement and the consummation of the transaction contemplated herebyand thereby.

 

(b)                                 All sales, use,gross receipts, transfer, intangible, recordation, documentary stamp or similarTaxes or charges of any nature whatsoever (including any penalties andinterest) (collectively, “Transfer Taxes”), applicable to, or resultingfrom, the transaction contemplated by this Agreement, if any, shall be paid byPurchaser when due, and Purchaser shall, at its own expense, file all necessaryTax Returns and other documentation with respect to all such Transfer Taxesand, if required by applicable Legal Requirements, Seller will, and will causeits Affiliates to, join in the execution of any such Tax Returns and otherdocumentation.

 

Section 12.2                                Amendments andWaivers.  This Agreement may be amendedor modified only by a written agreement executed by each of the Company, Sellerand Purchaser. Any right, power or privilege under this Agreement may be waivedonly in a writing executed by the Party having such right, power orprivilege.  No other course of dealingbetween or among any of the Parties or any delay in exercising any rightspursuant to this Agreement shall operate as a waiver of any rights of any Party.

 

45

----

 

Section 12.3                                EntireAgreement.** **This Agreement, together with theConfidentiality Agreement, the Access Agreement, the Customer Survey Agreementand the other agreements referred to herein, constitute the entire agreementamong the Parties with respect to the matters covered hereby and supersedes allprevious written, oral or implied understandings among the Parties with respectto such matters.

 

Section 12.4                                Successors andAssigns.  Except as otherwise expresslyprovided in this Agreement, all covenants and agreements set forth in thisAgreement by or on behalf of the Parties shall bind and inure to the benefit ofthe respective successors and permitted assigns of the Parties, whether soexpressed or not, except that neither this Agreement nor any of the rights,interests or obligations hereunder may be assigned by Purchaser or Sellerwithout the prior written consent of the other Party, except that Purchaser mayassign this Agreement and its rights, interests and obligations hereunder to oneof its Affiliates; *provided*, *however*, that notwithstanding any such assignment, Purchaserand Parent shall remain liable to Seller for all of their respectiveobligations arising hereunder.

 

Section 12.5                                Governing Law;Consent to Jurisdiction; Venue; Waiver of Jury Trial.  THIS AGREEMENT WILL BE GOVERNED BY ANDCONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF DELAWARE FORCONTRACTS ENTERED INTO AND TO BE PERFORMED IN SUCH STATE WITHOUT GIVING EFFECTTO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OFDELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THELAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE.  THE PARTIES HEREBY IRREVOCABLY SUBMIT TO THENON-EXCLUSIVE JURISDICTION OF THE FEDERAL COURTS WITHIN TULSA,****OKLAHOMA, OVER ANY DISPUTE ARISING OUT OF OR RELATING TOTHIS AGREEMENT OR THE TRANSACTION CONTEMPLATED HEREBY AND EACH PARTY HEREBYIRREVOCABLY CONSENTS TO THE JURISDICTION OF SUCH COURTS IN ANY ACTION ORPROCEEDING IN RESPECT OF SUCH DISPUTE. THE PARTIES HEREBY IRREVOCABLY WAIVE ANYOBJECTION OF VENUE LAID THEREIN.  THEPARTIES AGREE TO ACCEPT SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER INITIALPLEADING MADE IN THE MANNER PROVIDED FOR THE GIVING OF NOTICES IN THISAGREEMENT. NOTHING IN THIS SECTION 12.5 HOWEVER, SHALL AFFECT THERIGHT OF ANY PARTY TO SERVE SUCH SUMMONS, COMPLAINT OR INITIAL PLEADING IN ANYOTHER MANNER PERMITTED BY LAW. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANYAND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF ORRELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

Section 12.6                                Notices.** **All demands,notices, communications and reports provided for in this Agreement shall be inwriting and shall be either sent by facsimile with confirmation to the numberspecified below or personally delivered or sent by reputable overnight courierservice (delivery charges prepaid) as follows:

 

46

----

 
| (a)                                  If to Purchaser or to the  Company after the Closing to: |   | Tulsa  Winch, Inc.  11135 S. James Ave., P.O. Box 1130  Jenks, Oklahoma 74037-1130  Attention: Mr. Steve Oden  Tel: (918) 298-8312Fax: (918) 298-8300Email: soden@team-twg.com                    |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                               |   |                                                                                                                                                                                                             |
| If  to Parent:                                                                                                                                                                                                                                                     |   | Dover  Industrial Products, Inc.  3005 Highland Parkway, Suite 200  Downers Grove, IL 60515  Attention: Mr. Robert Scheuer  Tel: (630) 743-2609  Fax: (630) 743-2674  Email: rfs@doverip.com |
|                                                                                                                                                                                                                                                               |   |                                                                                                                                                                                                             |
| with  a copy (not constituting notice) to:                                                                                                                                                                                                                         |   | Conner &  Winters, LLP  4000 One Williams Center  Tulsa, Oklahoma 74172  Attention: Mr. R. Kevin Redwine  Tel: (918) 586-8540  Fax: (918) 586-8640  Email: kredwine@cwlaw.com                      |
|                                                                                                                                                                                                                                                               |   |                                                                                                                                                                                                             |
| (b)                                 If to Seller, or to the  Company prior to the Closing to:      |   | Blount, Inc.  4909 SE International Way  Portland, Oregon 97222-4679  Attention: Mr. Dick Irving  Tel: (503) 653-4569Fax: (503) 789-2027Email: rhi@blount.com                                          |
|                                                                                                                                                                                                                                                               |   |                                                                                                                                                                                                             |
| with  a copy (not constituting notice) to:                                                                                                                                                                                                                         |   | DLA  Piper LLP (US)  203 North LaSalle Street  Suite 1900  Chicago, Illinois 60601  Attention: Stephen A. Landsman  Tel: (312) 368-4050  Fax: (312) 630-6330Email: stephen.landsman@dlapiper.com       |

 

orto such other address or fax or telecopy number as such Party may hereafterspecify for the purpose by notice given to the other Parties in accordance withthis Section 12.6. Each such notice, request or other communicationshall be effective (a) if given by facsimile, when such facsimile istransmitted to the facsimile number specified in this Section 12.6and the appropriate facsimile confirmation is received, (b) if byovernight delivery service, with proof of delivery, 

 

47

----

 

thenext Business Day, or (c) if delivered personally, when delivered at theaddress specified in this Section 12.6.

 

Section 12.7                                Time of the Essence.  Time is of the essence in thisAgreement.  If the date specified forgiving any notice or taking any action is not a Business Day (or if the periodduring which any notice is required to be given or any action taken expires on a date which is not a Business Day), then the date forgiving such notice or taking such action (and the expiration date of suchperiod during which notice is required to be given or action taken) shall bethe next date which is a Business Day.

 

Section 12.8                                Schedules.** **The schedules tothis Agreement constitute a part of this Agreement and are incorporated intothis Agreement for all purposes as if fully set forth herein. Any disclosuremade in any schedule to this Agreement shall be deemed to be disclosures madewith respect to all representations, warrants, covenants and schedulescontained in this Agreement, regardless of whether or not a specific crossreference is made thereto. The disclosure of any item or matter in any schedulehereto shall not be taken as an indication of the materiality thereof or thelevel of materiality that is applicable to any representation or warranty setforth herein.

 

Section 12.9                                Counterparts.  The Parties may execute this Agreement inmultiple counterparts, each of which will be deemed an original and all ofwhich, when taken together, will constitute one and the same agreement.  The Parties may deliver executed signature pages tothis Agreement by facsimile or e-mail transmission.  No Party may raise (a) the use of afacsimile or e-mail transmission to deliver a signature, or (b) the factthat any signature, agreement or instrument was signed and subsequentlytransmitted or communicated through the use of a facsimile or e-mailtransmission as a defense to the formation or enforceability of a contract, andeach Party forever waives any such defense.

 

Section 12.10                          No Third-PartyBeneficiaries.** **Except as otherwise expresslyprovided in this Agreement, no Person which is not a Party shall have any rightor obligation pursuant to this Agreement, including, without limitation, anysubsequent purchaser of the Owned Real Property.

 

Section 12.11                          No StrictConstruction.  The Partiesacknowledge that this Agreement has been prepared jointly by the Parties, andshall not be strictly construed against any Party.

 

Section 12.12                          Headings.** **The headings used inthis Agreement are for the purpose of reference only and shall not affect themeaning or interpretation of any provision of this Agreement.

 

* * * * *

 

48

----

 

INWITNESS WHEREOF, the Parties have executed this Stock Purchase Agreement as ofthe date first written above.

 
|   | PURCHASER:                                                                                                        |
|--------|-------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                              |
|   | TULSA  WINCH, INC.                                                                                           |
|   |                                                                                                              |
|   | By:                                                                                                               | /s/  Steve Oden |
|   | Name:                                                                                                             | Steve  Oden |
|   | Title:                                                                                                            | President |
|   |                                                                                                              |
|   |                                                                                                              |
|   | SELLER:                                                                                                           |
|   |                                                                                                              |
|   | BLOUNT, INC.                                                                                                 |
|   |                                                                                                              |
|   |                                                                                                              |
|   | By:                                                                                                               | /s/  Richard H. Irving, III |
|   | Name:                                                                                                             | Richard  H. Irving, III |
|   | Title:                                                                                                            | Senior  Vice President, General Counsel and Secretary |
|   |                                                                                                              |
|   |                                                                                                              |
|   | And,  solely for the purposes set forth in Article V, Article VI,  Article X and Article XII: |
|   |                                                                                                              |
|   |                                                                                                              |
|   | PARENT:                                                                                                           |
|   |                                                                                                              |
|   | DOVER  INDUSTRIAL PRODUCTS, INC.                                                                             |
|   |                                                                                                              |
|   |                                                                                                              |
|   | By:                                                                                                               | /s/Thomas  W. Giacomini |
|   | Name:                                                                                                             | Thomas  W. Giacomini |
|   | Title:                                                                                                            | President |

 

SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT

 

----

 

**Schedule 1.1(a)**

 

**Seller’s Retained Liabilities**

 

Seller will retain liabilityfor:

 

1.                                       All BenefitPlans set forth on Schedule 4.13 and marked with an asterisk (*);

 

2.                                       Litigationrelating to the matter entitled Wayne Paul Duncan and Belinda Duncan v. ChevronU.S.A., Inc. et al., United States District Court of Eastern District ofLouisiana, Case No. 2:10-cv-00298 and, in the event of a dismissal,consolidation or separate filing of such matter, any case filed orre-filed by solely the same plaintiffs or their estates related to the eventsdescribed in such litigation; and

 

3.                                       Litigationrelating to the matter entitled Gerald Delacerda and Karen Delacerda v. ChevronU.S.A., Inc. et al., United States District Court of Eastern District ofLouisiana, Case No. 2:10-cv-01455 and, in the event of a dismissal,consolidation or separate filing of such matter, any case filed orre-filed by solely the same plaintiffs or their estates related to the eventsdescribed in such litigation.

 

----

 

**Schedule 1.1(b)**

 

**Working Capital Schedule**

 

**Gear Products, Inc.**

**Working Capital Schedule**

 

1

----

 

**DISCLOSURE SCHEDULE TO**

** **

**STOCK PURCHASE AGREEMENT**

 

 

**By and among**

 

 

**TULSA WINCH, INC.,**

** **

**BLOUNT, INC.**

** **

**AND**

** **

**DOVER INDUSTRIAL PRODUCTS, INC.**

 

 

Dated as of September 30, 2010

 

 

 

1

----

 

**INTRODUCTION**

 

Referenceis made to the Stock Purchase Agreement dated as of September 30, 2010(the “Agreement”), by and among Tulsa Winch, Inc., a Delawarecorporation (“Purchaser”), Blount, Inc., a Delaware corporation (“Seller”),and, solely for the purposes set forth in Article V, Article VI, Article Xand Article XII of the Agreement Dover Industrial Products, Inc., aDelaware corporation (“Parent”). Purchaser, Seller and Parent are each sometimes referred to herein as a “Party”and, collectively, as the “Parties.” Terms used herein and not otherwise defined shall have the respectivemeanings ascribed to such terms in the Agreement.

 

ThisDisclosure Schedule (including all of the individual Schedules comprising thisDisclosure Schedule) is qualified in its entirety by reference to specificprovisions of the Agreement, and is not intended to constitute, and shall notbe construed as constituting, representations or warranties of Seller or theCompany except as and to the extent provided in the Agreement.  Matters reflected in this Disclosure Scheduleare not necessarily limited to matters required by the Agreement to bereflected in the Disclosure Schedule. Such additional matters are set forth forinformation purposes and do not necessarily include other matters of a similarnature.  The provision of an item in thisDisclosure Schedule as an exception to a representation or warranty in theAgreement will not, by itself, be deemed an admission by Seller or the Companythat such item is material, that such item is reasonably likely to result in aMaterial Adverse Effect, that such item is outside the ordinary course ofbusiness, or that such item was required to be disclosed herein.  Except for purposes of disclosure to thePurchaser, no reference in this Disclosure Schedule to any agreement ordocument shall be construed as an admission or indication to any Person that isnot a party to the Agreement that such agreement or document is enforceable orcurrently in effect or that there are any obligations remaining to be performedor any rights that may be exercised under such agreement or document.  No disclosure in this Disclosure Schedulerelating to any possible breach or violation of any agreement, law orregulation shall be construed as an admission that any such breach or violationexists or has actually occurred.  Thedisclosures in any section or subsection of this Disclosure Schedule shallqualify other sections and subsections in this Disclosure Schedule to theextent it is obvious and apparent on its face. Headings have been inserted on the Schedules comprising this DisclosureSchedule for convenience of reference only and shall to no extent have theeffect of amending or changing the express description of the Sections as setforth in the Agreement.  The informationcontained herein is in all events subject to the Confidentiality Agreement.

 

2

----

 

**Schedule 4.2                                         Approvalsand Consents**

 

None.

 

3

----

 

**Schedule 4.3(d)                                    OutstandingIndebtedness**

 

Companyis included as a guarantor under the Seller’s credit agreement with GeneralElectric Capital Corporation, but Company will be removed as a guarantor atClosing.

 

4

----

 

**Schedule 4.4                                         FinancialStatements**

 

5

----

 

 

**Schedule 4.5                                         EventsSubsequent to Reference Balance Sheet**

 

None.

 

6

----

 

**Schedule 4.6                                         Titleto Assets**

 

None.

 

7

----

 

**Schedule 4.7                                         Compliancewith Laws**

 

None.

 

8

----

 

**Schedule 4.8                                         Litigation**

 
| **Name**                | ** ** | **Jurisdiction** | ** ** | **Type**         | ** ** | **Description**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|-------------------------|------------|------------------|------------|------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ENERGY  CRANES/ CHEVRON |       | LOUISIANA        |       | PERSONAL  INJURY |       | ON  10/4/09 A SWING BOX ASSEMBLY FAILED ON A CRANE MANUFACTURED BY GEAR.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                    |       |             |       |             |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| DELACERDA,  GERALD      |       | GULF  OF MEXICO  |       | PERSONAL  INJURY |       | DELACERDA  WAS EMPLOYED BY CORRPRO COMPANIES AS AN INSPECTOR TO WORK ON AN OIL AND GAS  PRODUCTION PLATFORM OWNED AND OPERATED BY CHEVRON, U.S.A., INC.  WHILE BEING LIFTED BY A CRANE ON THE PLATFORM FROM A VESSEL, ON 10/4/09  THE CRANE FAILED AND THE PERSONNEL BASKET STRUCK A LEG OF THE PLATFORM.  DELACERDA FELL 70-80 FEET INTO THE WATER. DELACERDA ALLEGES INJURIES TO HIS  LOW BACK, HEAD, NECK. SUED CHEVRON. HE IS EXPECTED TO AMEND TO ADD GEAR,  MANUFACTURER OF THE SWING GEAR BOX, AND SPARROWS, MANUFACTURER OF THE CRANE.  THE SHAFT IN THE GEAR BOX BROKE. IT WAS ORIGINALLY SOLD BY GEAR TO THE CRANE  MANUFACTURER TITAN IN 1992. SPARROWS IS THE NEW NAME FOR A SUCCESSOR OF  TITAN. |
|                    |       |             |       |             |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| DUNCAN,  WAYNE          |       | GULF  OF MEXICO  |       | PERSONAL  INJURY |       | DUNCAN  WAS EMPLOYED BY WAVELAND SERVICES, INC. AS A BLASTER/PAINTER TO WORK ON  AN OIL AND GAS PLATFORM OWNED AND OPERATED BY CHEVRON, U.S.A., INC.  WHILE BEING LIFTED BY A CRANE ON THE PLATFORM FROM A VESSEL, ON 10/4/09  THE CRANE FAILED AND THE PERSONNEL BASKET STRUCK A LEG OF THE PLATFORM.  DUNCAN ALLEGES INJURIES TO HIS BACK AND NECK. SUED CHEVRON. AMENDED COMPLAINT  TO ADD SPARROWS CRANE LTD. AND SPARROWS OFFSHORE GROUP LTD. AS MANUFACTURER  OF CRANE AND GEAR AS MANUFACTURER OF SWING GEAR BOX. THE SHAFT IN THE GEAR  BOX BROKE. IT WAS ORIGINALLY SOLD BY GEAR TO THE CRANE MANUFACTURE TITAN IN  1992. SPARROWS IS NEW NAME FOR A SUCCESSOR OF TITAN.                        |

 

9

----

 

**Schedule 4.9                                         TaxMatters**

 

(b) On December 16, 2009, GPI entered into an agreement with the Iowa Departmentof Revenue resolving any income tax liabilities for taxable years or periodsending prior to and including the period ending December 31, 2008.  Also, the Illinois Department of Revenue hasnotified the Company that it had not received the state withholding taxes forthe Company during the second quarter. The taxes were paid by the Company to the automatic data processingvendor (“ADP”) but were not paid to the Illinois Department of Revenue.

 

(g) Seller entered into a Statute of Limitation extension agreement with the IRSthat runs through September 17, 2010 affecting the December 31, 2002,December 31, 2004 and December 31, 2005 calendar years.

 

10

----

 

**Schedule 4.10                                      EnvironmentalMatters**

 

(a) Purchaser conducted a Phase II investigation on the Owned Property during thedue diligence period.  The limited PhaseII investigation data provided to Company indicated the potential presence oftotal petroleum hydrocarbon contamination beneath the waste oil and chipstorage shed located to the southeast outside the main manufacturingbuilding.  The potentially contaminatedarea may also have an Underground Storage Tank (“UST”) as defined byEnvironmental Laws, which was not registered as such by GPI.  Subsequently, GPI did not comply with anyreporting requirements that may have been applicable to a UST.

 

Also,the facility on the Owned Real Property may require disclosures, updates ormodifications relating to asbestos-containing products, Spill Prevention andControl Countermeasures and waste from its air compressors.

 

(c) In addition to those items listed in subsection (a) above, in 1991 adiesel spill occurred on the Owned Real Property as a result of a third party’stractor-trailer.  On October 12,1992, Gear obtained a “no further action” letter regarding known soilcontamination related to a product drum storage area that was remediated. InFebruary 25, 1993, Gear received a “no further action” letter regarding awaste oil trench and sump system that was remediated.

 

(f) Gear was a named third party in the Sand Springs Petrochemical ComplexSuperfund Site.

 

(g) Seeresponse to (a) above.

 

11

----

 

**Schedule 4.11                                      IntellectualProperty**

 

RegisteredMarks

 
| **Mark**                        | ** ** | **Registration Number** | ** ** | **Date**  |
|---------------------------------|------------|------------------------------|------------|-----------|
| DESIGN GEAR IN A  PARALLELOGRAM |       | 2,353,146                    |       | 5/30/2000 |

 

DomainName

“gearproducts.com”

 

DomainRegistration with Go Daddy

 

DomainRegistration with Network Solutions

 

12

----

 

**Schedule 4.12                                      Owned RealProperty**

 

(a) 1111 North 161st East Avenue, Tulsa Oklahoma, 74116.

 

(d) Gear has allowed a neighbor’s horses to graze on the Owned Real Property.

 

13

----

 

Schedule 4.13                                        EmployeeBenefits

 

(a) Company’s employees are provided the opportunity to participate certainbenefits offered either by Seller or the Company either pursuant to Plans orPolicies:

 

**PLANS**

 

The Blount 401(k) Retirement Savings Plan*

Blount International, Inc. SupplementalRetirement Plan*

BlountAnnual Incentive Plan*

BlountExecutive Management Annual Incentive Plan*

BlountInternational, Inc. 2006 Equity Incentive Plan*

BlountWelfare Benefit Plan for Retired Employees (not Medicare eligible)*

MedicalPlan for Retirees Under Age 65

MedicalPlan for Retirees Eligible for Medicare

KaiserMedical Plan Option for Retirees located at Int’l Way/Ptd

LifeInsurance

TheBlount Retirement Plan*

BlountSenior Management Severance Plan*

BlountWelfare Benefit Plan for Active Employees*

DeltaDental

FlexibleBenefits

HighmarkMedical

HighmarkBenefits Administrator

·Vision

Kaiser

·Medical

·Dental

OregonDental Service

Prudential

·Life

·AccidentalDeath and Disability

·Optional Life

·VoluntaryAccidental Death and Disability,

UNUMDisability

·Short Term Disability(ASO Only)

TakeoverLong Term Disability (ASO Only)

UNUMLong Term Disability

ZurichBusiness Travel Accident

CascadeCenter EAP

 

**POLICIES**

 

Leaveof Absence Policy

ContributionsPolicy

CreditUnion Policy

EmergencyBusiness Closure Policy

EducationalAssistance Policy

HolidaysPolicy

Lengthof Service Credits Policy

MovingExpenses — New Employees Policy

MovingExpenses — Transferred Employees Policy

OvertimePolicy

SeverancePay Policy

SickLeave Policy

STDand LTD Policy

 

14

----

 

Vacation Policy

 

----

*Seller will retain liability for the Plans set forth on this schedule 4.13(a) markedwith an asterisk (*).

 

(e) TheDepartment of Labor conducted an audit of Blount’s Retirement Plan in August of2008, which is now closed with no material findings.

 

15

----

 

 

**Schedule 4.14                                      MaterialContracts**

 

(a) through(l)

 
| **Third Party to Agreement**   | ** ** | **Type**              | ** ** | **Entered Into** |
|-----------------------------------------------|------------|-----------------------|------------|-----------------------|
| Great America Leasing  Corporation            |       | Copier Lease          |       | 1-9-09                |
| Drake Systems, Inc.                      |       | Copier Lease          |       | 5-21-10               |
| JDH Pacific, Inc.                        |       | Supplier Agreement    |       | 7-9-03                |
| UniFirst Corporation  [Uniform Agreement]     |       | Services Agreement    |       | 5-28-10               |
| CoxCom, Inc.,  Cox Oklahoma Telecom, LLC |       | Services  Agreement   |       | 1-9-09                |
| Vault  Management Incorporated                |       | Management  Agreement |       | 9-25-07               |
| UniFirst Corporation  [Floor Mat Agreement]   |       | Services Agreement    |       | 5-28-10               |
| MAPICS, Inc.                             |       | License Agreement     |       | 4-25-05               |
| Infor Global Solutions                        |       | Maintenance Invoice   |       | 2-22-10               |
| O.M.E. Corporation                            |       | Maintenance Agreement |       | 2-8-06                |

 

(f) The Company ordered a New Induction Hardening Machine via purchase order on December 17,2009 for $535,000.  The company paid$214,000 down (on December 17, 2009) and $267,500 is due prior to shipmentand $53,500 is due upon successful start up (not to exceed 60 days fromshipment).

 

16

----

 

**Schedule 4.16                                      Insurance**

 
| **Insurer**                                              | ** ** | **Type**                                                              | ** ** | **Coverage**            |
|----------------------------------------------------------|------------|-----------------------------------------------------------------------|------------|-------------------------|
| Lexington  Ins. Co.                                      |       | General  Liability                                                    |       | $2M  General Aggregate  |
| Lexington  Ins. Co.                                      |       | Umbrella  Liability (Primary)                                         |       | $25M  General Aggregate |
| ARCH  Ins. Co/Swett & Crawford                  |       | Umbrella  Liability (Excess)                                          |       | $25M  Excess of $25M    |
| Great  American/Swett & Crawford                |       | Umbrella  Liability (Excess)                                          |       | $25M  Excess of $50M    |
| Liberty  Mutual Fire Ins. Co                             |       | Automobile                                                            |       | $1M  Combined Single    |
| Federal  Insurance Company (Chubb)                       |       | Business  Travel Accident                                             |       | $250,000  Principal Sum |
| AXIS Ins.Co./Media Prof. Ins.                            |       | Media  Liability                                                      |       | $5M  Each Loss          |
| Liberty  Mutual Ins. Co.                                 |       | Workers’  Compensation - Deductible                              |       | $1M  Per Accident       |
| Federal  Ins. Co. (Chubb)                                |       | Directors &  Officers Liability (Primary) and Executive Risk |       | $15  Each Claim         |
| ACE  American Ins. Co.                                   |       | Directors &  Officers Liability (Excess)                     |       | $10M  Excess of $15M    |
| National  Union Fire Inc. Co of Pittsburgh, PA (Chartis) |       | Directors &  Officers Liability (Excess - Side A DIC)        |       | $5M  Excess of $25M     |
| FM  Global                                               |       | Property                                                              |       | $772,447,000            |
| Federal  Insurance Co. (Chubb)                           |       | Cargo                                                                 |       | $2M  Per Occurrence     |

 

Gearalso provides its own Flood Insurance through Selective Insurance Company ofSoutheast covering up to $500,000 for the building and $500,000 for thecontents in the building.

 

17

----

 

**Schedule4.17                                      AffiliateTransactions**

 

None.

 

18

----

 

**Schedule4.18                                      Licensesand Permits**

 

AirEmissions Inventory Turnaround

OklahomaManufacturer Sales Tax Exemption Permit

StormWater Discharge Permit

 

19

----

 

**Schedule4.19                                      Customersand Suppliers**

 

**Top 10 Customers by salespercentage (Through June 2010)**

 

ALTEC INDUSTRIES, INC.

CAT FOREST PRODUCTS 

IOWA MOLD TOOLING

BRODERSON MANUFACTURING

TIME MFG. CO.

STELLAR INDUSTRIES, INC.

HYDRADYNE HYD.

ATLAS COPCO

BADGER EQUIPMENT CO

EQUIPMENT TECH INC

 

**Top 10 Customers by salespercentage for Calendar Year 2009**

 

ALTEC INDUSTRIES, INC.

IOWA MOLD TOOLING

BRODERSON MANUFACTURING

TIME MFG. CO.

CAT FOREST PRODUCTS (1)

MANITEX, INC.

STELLAR INDUSTRIES, INC.

TEREX UTILITIES (TELELECT)

EQUIPMENT TECH INC

BADGER EQUIPMENT CO

 

**Top 10 Vendors by purchases(Through June 2010)**

 

JDH PACIFIC, INC.

McINNES STEEL COMPANY

G&S FOUNDRY &MFG. CO.

HONGTENG HEAVY EQUIPMENTINDUSTRIES LTD.

METALTEK INTERNATIONAL

FRISA

SPECIAL METALS, INC.

FOUR STATE INDUSTRIAL SUPPLY

GLEASON CUTTING TOOLS

AFS LOGISTICS INC

 

**Top 10 Vendors by purchases forCalendar Year2009**

 

JDH PACIFIC, INC.

G&S FOUNDRY &MFG. CO.

McINNES STEEL COMPANY

DIXIE MACHINERY, INC.

INDUCTOHEAT

FRISA

SPECIAL METALS, INC.

FOUR STATE INDUSTRIAL SUPPLY

ACCURATE SPECIALTIES INC.

GLEASON CUTTING TOOLS

 

20

----

 

**Schedule 4.21                                      AccountsReceivable**

 

TheCompany’s balance sheet reflects an amount described as “Interco advances”within the Company’s Shareholders equity section, which will be settled andreleased between the Seller and the Company immediately prior to closing.  Following Closing, the amount reflected inthe balance sheet will not be a valid receivable of the Company.

 

21

----

 

**Schedule 4.22                                      Powers ofAttorney; Authorized Signatories**

 

(b)

 
| Bank of Oklahoma (Payroll)      |   | 207916218    |   | Wendy J. Gilligan

Timothy D. Simmons

William C. Alford |
|---------------------------------|--------|--------------|--------|----------------------------------------------------------|
| Bank of America  (Disbursement) |   | 003299809196 |   | Wendy J. Gilligan

Timothy D. Simmons

William C. Alford |
| Bank of America (Lockbox)       |   | 003284002880 |   | Wendy J. Gilligan                                        |

 

22

----

 

**Schedule4.23                                      ProductWarranties**

 

GearProducts, Inc. and Altec Industries, Inc. letter Warranty Agreementdated November 8, 2007.

 

Inaddition to the Warranty provided to Altec, the Company issues the followinggeneral limited warranty regarding its products:

 

“GEARPRODUCTS, INC. (“GPI”) warrants each new product to be free from defectsin material and workmanship for a period on one (1) year from date ofshipment by GPI’s factory when properly installed and maintained in anapplication consistent with its intended normal use.  However, each GPI Gear Box which remainsunused for a period of one hundred eighty (180) days after date of shipment byGPI’s factory will not be warranted for leakage due to seal aging.

 

Noproduct will be eligible for warranty if rust or corrosion has started oninternal surfaces due to lack of lubrication in the assemblies.  Otherwise, should any product be found undernormal use and service during the warranty period to be defective, GPI will, atits option, repair or replace such product f.o.b. Tulsa, Oklahoma, providedsuch product is returned to the location designated by GPI, freight prepaid,and inspection by GPI establishes the defect to the satisfaction of GPI.  Any replacement provided under this warrantywill be warranted for the remainder of the warranty period applicable to theproduct in which it is installed or which it replaces.

 

Thiswarranty shall not apply to a product upon which repairs or alterations havebeen made, unless authorized by GPI, or to a product which has been misused,neglected, improperly maintained or incorrectly installed; nor shall thiswarranty apply to any product manufactured in accordance with specifications ofbuyer, and GPI shall have no responsibility or liability for such product.

 

Buyer’sremedy under this warranty is exclusive and is limited to repair or replacementas provided herein.  GPI shall not in anyevent be liable for consequential or incidental damages, regardless of whethersuch damages arise from contract or tort, including negligence, nor shall GPIbe held liable for any expenses, attorneys’ fees or delay caused by defectivematerial or workmanship.  No allowancewill be made for repairs, replacements or alterations unless made with thewritten consent of GPI.

 

THISWARRANTY IS EXPRESSLY IN LIEU OF ANY OTHER WARRANTIES, WHETHER WRITTEN OR ORAL,EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESSFOR A PARTICULAR PURPOSE.”

 

23

----

 

**Schedule 5.3                                         PurchaserConsents**

** **

**None.**

 

24

----

 

**Schedule 5.5                                         ParentFinancial Statements**

 

25

----

 

**Schedule 6.2(b)                                    ExistingContracts Mandating Payments to Employees**

 

None.

 

26

----

 

**Schedule 7.2(d)                                    RequiredConsents**

** **

**None.**

 

27

----

 

**Schedule 7.2(e)                                    Agreementsto be Terminated**

 

None.

 

28

----

 

**Schedule 10.4(k)                                 EnvironmentalDocuments**

 

Oklahoma Department of Environmental Quality AnnualComprehensive Site Compliance Evaluation Report for Industrial Facilities,April 2, 2007

Storm Water Discharge Permit, March 7, 2007

Tier II File Submission Receipt, February 8, 2010

Generator Waste Profile Sheet, April 15, 2004

2009 Air Emissions Inventory Turnaround Document

1991 Air Monitoring Program

1991 Diesel Fuel Spill at Gear

1991 Environmental Review

1991 Medical Surveillance Program

1991 Paint Booth Water Curtain Sampling andEvaluation Steam Cleaning Effluent Sampling and Evaluation

1991 Remedial Action Plan

1991 Remediation Plan Progress Report

1991 Transportation of Waste Materials

1992 Closure of the Product Drum Storage Area

1992 Draft Hazard Communication Program

1992 Medical Surveillance Program for Lead Exposure

1992 OSHA programs

1992 Product Drum Storage Area Closure Approval

1992 Product Drum Storage Area letter, October 12,1992

1992 Product Storage Areas Closure Report

1992 Shop Area Sumps letter, February 11, 1992

Summons and Complaint of Gear as 3rd Party Defendantwith October 12, 1992 Oklahoma State Department of Health letter regardingProduct Drum Storage Area

1992 Summons and Complaint of Gear as 3rd PartyDefendant

1992 Sump System Closure Site Specific/CharacteristicEvaluation

1992 US EPA Strom Water Permitting Requirements

1992 USBCI Agreement

1993 Memo Re Environmental Matters

1993 Memo Re Pit Closure

1993 Memo Re Product Storage Area Completion

1993 Simon Hydro-Search, Inc., Remedial ActionPlan

1993 Sump System Closure Approval, February 25,1993

1993 Sump System Closure Report Supplement

1993 Sump System Closure SARA Title III Reporting

1993 letter from Simon Hydro-Search regarding TexasWater Commission Rules for Self Classification Industrial Solid Waste andMunicipal Hazardous Waste

1994 Bill from Simons Hydro-Search Inc.

1998 OSHA Cooperative Compliance Program

1998-1999 Vanguard Environmental Agreement

2006 Reminder to File Tier 2 Reports

MSDS GPI Master List

Raybestos Friction Materials Asbestos Memo,September 13, 2010

Limited Phase II Soil and Groundwater Evaluation ofthe Owned Real Property prepared on behalf of Purchaser by HDR/e2M, DatedAugust 26, 2010.

Phase I Evaluation of Owned Real Property preparedon behalf of Purchaser by HDR/e2M, Dated August 2010.

 

29

----

 

 

**ASSIGNMENT AND ASSUMPTION AGREEMENT**

 

ThisAssignment and Assumption Agreement (“Assignment and Assumption”) ismade as of September 30, 2010, by and between Blount, Inc., aDelaware corporation (“Seller”),and Tulsa Winch, Inc., a Delaware corporation ( “Purchaser”).  This Assignment and Assumption is executedpursuant to the terms of the Stock Purchase Agreement dated as of September 30,2010 by and among Seller, Purchaser and Dover Industrial Products, Inc., aDelaware corporation (the “Purchase Agreement”).

 

Inconsideration of the foregoing premises and other good and valuableconsideration, the receipt and sufficiency of which are hereby acknowledged,Seller and Purchaser agree as follows:

 

1.                                       Capitalizedterms used but not defined herein shall have the respective meanings attributedto them in the Purchase Agreement.

 

2.                                       Upon the termsand subject to the conditions set forth in the Purchase Agreement, Sellerhereby assumes and agrees to pay, perform and discharge when due and on atimely basis all liabilities relating to Benefit Plans that are Seller’sRetained Liabilities.

 

3.                                       Nothing in thisAssignment and Assumption, express or implied, is intended or shall beconstrued to expand or defeat, impair or limit in any way the rights,obligations, claims or remedies of Seller or Purchaser as set forth in thePurchase Agreement.

 

4.                                       Nothing in thisAssignment and Assumption, express or implied, is intended or shall beconstrued to confer upon, or give to, any Person, other than the parties tothis Assignment and Assumption, any rights, remedies, obligations orliabilities.

 

5.                                       This Assignmentand Assumption shall bind and inure to Seller and Purchaser and theirrespective successors and assigns.

 

6.                                       This Assignmentand Assumption may be executed in counterparts, each of which shall be deemedan original and all of which shall together constitute one and the sameinstrument.

 

[signature page follows]

 

----

 

IN WITNESS WHEREOF, Seller and Purchaser have executed this Assignmentand Assumption Agreement as of the date first written above.

 
| ** ** | **SELLER:**                 |
|------------|-----------------------------|
|       |                        |
| ** ** | **BLOUNT, INC.**       |
|       |                        |   |
|       | By:                         | /s/  Richard H. Irving, III |
|       | Name:                       | Richard  H. Irving, III |
|       | Title:                      | Senior  Vice President, General Counsel and Secretary |
|       |                        |   |
| ** ** |                        |
| ** ** | **PURCHASER:**              |
|       |                        |
| ** ** | **TULSA  WINCH, INC.** |
|       |                        |   |
|       | By:                         | /s/  Steve Oden |
|       | Name:                       | Steve  Oden |
|       | Title:                      | President |

 

----

 

**GENERAL RELEASE AND COVENANT NOT TO SUE**

 

ThisGeneral Release (this “Release”) is entered into this 30th day ofSeptember, 2010, by and between Blount, Inc., a Delaware corporation (“Seller”), and Gear Products, Inc.,an Oklahoma corporation (the “Company”). Seller and the Company are collectively hereinafter referred to as the “Parties”and each, individually, as a “Party.”

 

**RECITALS**

 

WHEREAS, pursuant to the terms andconditions of that certain Stock Purchase Agreement dated as of September 30,2010 (the “Purchase Agreement”), by and among Seller, Tulsa Winch, Inc.,a Delaware corporation (“Purchaser”), and Dover Industrial Products, Inc.,a Delaware corporation, Purchaser will purchase from Seller all of the issuedand outstanding capital stock of the Company (the “Contemplated Transaction”);and

 

WHEREAS,in accordance with Section 6.8 of the Purchase Agreement, the Parties aredesirous of amicably resolving forever any and all matters, issues andcontroversies relating to the Company and arising from or related to any event,fact or circumstance, occurring before or at the Closing.

 

NOW,THEREFORE, in consideration of the mutual promises, covenants, representationsand agreements hereinafter set forth, the receipt and sufficiency of which arehereby acknowledged by the Parties, and intending to be legally bound, theParties covenant, promise and agree as follows:

 

1.             Recitals: The foregoingrecitals are true and correct and are incorporated herein by reference.  Capitalized terms used butnot defined herein shall have the respective meanings attributed to them in thePurchase Agreement.

 

2.             Release.

 

(a)           For and in consideration of the mutual promises andcovenants contained herein and other good and valuable consideration, thereceipt and sufficiency of which are hereby acknowledged, Seller, on behalf ofitself and its agents, representatives, successors, executors, estates, heirs,administrators, attorneys, insurers and assigns hereby releases, remises andforever discharges the Company and its past, present and futurerepresentatives, directors, officers, employees, agents, predecessors,successors, assigns, parent company, subsidiaries, affiliates, attorneys andinsurers (hereinafter collectively the “Company Releasees”) from any andall proceedings, demands, rights, causes, causes or manners of action, suits,obligations, liabilities, debts, sums of money, accounts, bills, dues,covenants, undertakings, promises, contracts, agreements, charges, complaints,controversies, grievances, damages, judgments, actions, claims, losses, costsor expenses (including attorneys’ fees and costs), known or unknown, suspectedor unsuspected, matured, unmatured or contingent, potential or direct, at lawor in equity, based in statute, common law or otherwise, that Seller has had ormay now have against any Company Releasee, relating to the Company and arising from or related to anyevent, fact or circumstance, occurring before or at the Closing.

 

----

 

(b)           For and in consideration of the mutual promises andcovenants contained herein and other good and valuable consideration, thereceipt and sufficiency of which are hereby acknowledged, the Company, onbehalf of itself and its agents, representatives, successors, executors,estates, heirs, administrators, attorneys, insurers and assigns herebyreleases, remises and forever discharges Seller and its past, present andfuture representatives, directors, officers, employees, agents, predecessors,successors, assigns, parent company, subsidiaries, affiliates, attorneys andinsurers (hereinafter collectively the “Seller Releasees”) from any andall proceedings, demands, rights, causes, causes or manners of action, suits,obligations, liabilities, debts, sums of money, accounts, bills, dues, covenants,undertakings, promises, contracts, agreements, charges, complaints,controversies, grievances, damages, judgments, actions, claims, losses, costsor expenses (including attorneys’ fees and costs), known or unknown, suspectedor unsuspected, matured, unmatured or contingent, potential or direct, at lawor in equity, based in statute, common law or otherwise, that the Company hashad or may now have against any Seller Releasee, relating to the Company and arising from or related to anyevent, fact or circumstance, occurring before or at the Closing.

 

(c)           This Release shall not apply to any rights either Partyhas pursuant to the Purchase Agreement, the Contemplated Transaction or anyother documents contemplated thereby.

 

3.             Covenant Not to Sue**.**  After the Closing, each Party will not, andwill not permit any of its Affiliates, agents, representatives, successors andpermitted assigns to, initiate or maintain any action, suit, proceeding,investigation, charge, complaint, claim or demand against any Company Releaseeor Seller Releasee, as applicable, before any court, governmental authority orother forum relating to any claim released hereby.  If any court or governmental authorityassumes jurisdiction with respect to any action, suit, proceeding, investigation,charge, complaint, claim or demand against any Company Releasee or SellerReleasee relating to any claim released hereby, then Seller or the Company, asapplicable, will or will cause its applicable Affiliates to, direct that agencyor court to withdraw from or dismiss such action, suit or proceeding withprejudice.  If, after the Closing, Selleror the Company, or any of their respective Affiliates, as applicable, initiatesor maintains any action, suit, proceeding, investigation, charge, complaint, claimor demand against any Company Releasee or Seller Releasee, as applicable, withrespect to any claim released hereby, then Seller or the Company, or any oftheir respective Affiliates, as applicable, will promptly pay all costs andexpenses (including attorneys’ fees and costs) incurred by such CompanyReleasee or Seller Releasee, as applicable, in defending against such action,suit, proceeding, investigation, charge, complaint, claim or demand.

 

4.             No Assignment or Transfer of Claims**.**  Each Party representsthat it has not assigned or otherwise transferred any claim released hereby.

 

5.             Acknowledgements and Agreements of the Parties.  In signing this Release, each Partyacknowledges and agrees that:

 

(a)                                  this Releasewill be effective as a bar to all claims released hereby;

 

2

----

 

(b)                                 this Releasewill be given full force and effect according to its express terms andprovisions (including those relating to unknown and unsuspected claims,notwithstanding any state law expressly limiting the effectiveness of a generalrelease of unknown, unsuspected or unanticipated claims);

 

(c)                                  if Seller orthe Company, or any of their respective Affiliates, as applicable asserts anyclaim released hereby against any Company Releasee or Seller Releasee, asapplicable, then this Release will serve as a complete defense to such claim;

 

(d)                                 there does notcurrently exist any claims and such Party is not aware of any pending orthreatened claims;

 

(e)                                  neither thisRelease nor the furnishing of consideration for this Release will be deemed anadmission by Seller, the Company, any of their respective Affiliates and anyCompany Releasee or Seller Releasee, as applicable, of any improper or unlawfulconduct; and

 

(f)                                    after the Closing,the Parties may discover facts different from or in addition to those now knownor believed to be true regarding the subject matter of this Release, and thisRelease will remain in full force and effect, notwithstanding the existence ofany different or additional facts.

 

6.             Additional Acknowledgements and Agreements of theParties.  In signing this Release,each Party further acknowledges and agrees that such Party:

 

(a)                                  has carefullyread and fully understands all of the provisions of this Release and has hadthe opportunity to discuss the same and their consequences with such Party’sattorney;

 

(b)                                 is, throughthis Release, releasing any Company Releasee or Seller Releasee, as applicable,from all claims that such Party and its Affiliates may have against suchCompany Releasee or Seller Releasee, as applicable;

 

(c)                                  knowingly andvoluntarily agrees to all of the terms of this Release;

 

(d)                                 knowingly andvoluntarily intends to be legally bound by the terms of this Release;

 

(e)                                  was advised,and is hereby advised in writing, to consult with an attorney of such Party’schoice before signing this Release concerning its meaning and application; and

 

(f)                                    agrees that theprovisions of this Release as they relate to such Party and its Affiliates maynot be waived, amended or restated except by an instrument in writing signed byauthorized representatives of the Parties.

 

3

----

 

7.             General Provisions**.**

 

(a)           Entire Agreement. This Release constitutes the complete agreement and understandingregarding the subject matter of this Release and supersedes any priorunderstandings, agreements or representations regarding the subject matter ofthis Release.

 

(b)           Amendments**.**  The Parties may amend this Release onlypursuant to a written agreement executed by the Parties.

 

(c)           Binding Effect; Benefit.  This Release will inure to the benefit of andbe binding upon the Parties, their respective Affiliates, the Seller Releasees,the Company Releasees and their respective successors and permitted assigns,and this Release and all of its provisions and conditions are for the sole andexclusive benefit of the Parties, their respective Affiliates, the SellerReleasees, the Company Releasees and their respective successors and permittedassigns.

 

(d)           Severability. If any court of competent jurisdiction holds any provision of thisRelease invalid or unenforceable, then the other provisions of this Releasewill remain in full force and effect. Any provision of this Release held invalid or unenforceable only in partor degree will remain in full force and effect to the extent not held invalidor unenforceable.

 

(e)           References. The headings of sections are provided for convenience only and will notaffect the construction or interpretation of this Release.  Unless otherwise provided, references to “Section(s)”refer to the corresponding section(s) of this Release.  Reference to a contract, instrument or otherdocument as of a given date means the contract, instrument or other document asamended, supplemented and modified from time to time through such date.

 

(f)            Construction. The Parties participated in the negotiation and drafting of thisRelease, assisted by such legal counsel as they desired, and contributed to itsrevisions.  All pronouns and anyvariation thereof will be construed to refer to such gender and number as theidentity of the subject may require.  Theterms “include” and “including” indicate examples of a foregoing generalstatement and not a limitation on that general statement.

 

(g)           Governing Law. THIS RELEASE IS GOVERNED BY THE LAWS OF THE STATE OF DELAWARE, WITHOUTREGARD TO CONFLICT OF LAWS PRINCIPLES.

 

(h)           Consent to Jurisdiction.  The Parties hereby (i) agree to thenon-exclusive jurisdiction of the federal courts within Tulsa, Oklahoma withrespect to any claim or cause of action arising under or relating to thisRelease, (ii) waive any objection based on *forum nonconveniens* and waive any objection to venue of any such suit, actionor proceeding, (iii) waive personal service of any process upon them, and (iv) consentthat all services of process be made by registered or certified mail (postageprepaid, return receipt requested) directed to each Party at the addressprovided on the signature page hereto, and service so made will becomplete when received.  Nothing in this Section 7(h) willaffect the rights of any person to serve legal process in any other mannerpermitted by law.

 

4

----

 

(i)            Waiver of Trial by Jury.  EACH PARTY HEREBY WAIVES ITS RIGHT TO A JURYTRIAL IN CONNECTION WITH ANY SUIT, ACTION OR PROCEEDING SEEKING ENFORCEMENT OFITS RIGHTS UNDER THIS RELEASE.

 

(j)            Counterparts. The Parties may deliver an executed signature page to this Releaseby facsimile or e-mail transmission.  TheParties may not raise (i) the use of a facsimile or email transmission todeliver a signature or (ii) the fact that any signature, agreement orinstrument was signed and subsequently transmitted or communicated through theuse of a facsimile or email transmission as a defense to the formation orenforceability of a contract, and the Parties forever waive any such defense.

 

[signature page follows]

 

5

----

 

**IN WITNESS WHEREOF,**the Parties hereto, intendingto be legally bound hereby, have caused this Release to be executed as of theday and year first above written.

 

 
| ** ** | **SELLER:**                          |
|------------|--------------------------------------|
| ** ** |                                 |
| ** ** | **BLOUNT, INC.**                |
|       |                                 |   |
|       | By:                                  | /s/Richard  H. Irving, III |
|       | Name:                                | Richard  H. Irving, III |
|       | Title:                               | Senior  Vice President, General Counsel and Secretary |
|       |                                 |   |
|       | Address:                             |
|       | 4909  SE International Way           |
|       | Portland,  Oregon 97222-4679         |
|       | Attn:  Richard H. Irving, III   |
| ** ** |                                 |
| ** ** | **THE  COMPANY:**                    |
| ** ** |                                 |
| ** ** | **GEAR  PRODUCTS, INC.**        |
|       |                                 |   |
|       | By:                                  | /s/  Steve Oden |
|       | Name:                                | Steve  Oden |
|       | Title:                               | President |
|       |                                 |   |
|       | Address:                             |
|       | c/o  Tulsa Winch, Inc.          |
|       | 11135  S. James Ave., P. O. Box 1130 |
|       | Jenks,  Oklahoma 74037-1130          |
|       | Attn:  Steve Oden                    |

 

----