Asset Purchase Agreement dated as of March 4, 2005 among HK Machined Parts,
      LLC, HK Weston Properties, LLC and Hatch & Kirk, Inc.


    

      Exhibit
        10.31

       

      


       

      Asset
        Purchase Agreement

       

      This
        Asset
        Purchase Agreement
        (the
“Agreement”) is made and entered into this 3rd day of March, 2005, by and among
HK
        Machined Parts, LLC,
        an
        Indiana limited liability company (“HK Parts”), HK
        Weston
        Properties, LLC,
        an
        Indiana limited liability company (“HK Weston” and collectively with HK Parts,
        the “Purchaser”) and Hatch
        & Kirk, Inc.,
        a
        Washington corporation (“Seller”).

       

      Background:

       

      A. Seller
        is
        engaged in the business of manufacturing, distributing and installing diesel,
        natural gas and duel-fuel engine parts and accessories, with facilities in
        Seattle, Washington, Houston, Texas, and Hagerstown, Maryland and with a
        partially-owned subsidiary, HK Castings, Inc., located in Weston, West
        Virginia.

       

      B. Seller
        desires to sell to Purchaser, and Purchaser desires to purchase from Seller,
        substantially all of the operating assets, properties and rights of Seller
        used
        in the operation of the Hagerstown, Maryland facility (the “Division”) and
        certain real property owned by Seller in Weston, West Virginia, pursuant
        to the
        terms and conditions set forth in this Agreement.

       

      NOW
        THEREFORE,
        in
        consideration of the promises hereinafter made, and other good and valuable
        consideration, the receipt and sufficiency of which are hereby acknowledged,
        the
        recital provisions above are incorporated into the body of this Agreement
        as if
        fully set forth therein, and the parties agree as follows:

       

      ARTICLE
        I. PURCHASE
        AND SALE OF ASSETS

       

      1.01 Purchased
        Assets.
        On the
        Closing Date (as defined below), Seller shall sell, assign, convey, transfer
        and
        deliver to Purchaser, and Purchaser shall purchase from Seller, free and
        clear
        of all mortgages, liens, charges, adverse claims, restrictions, agreements,
        encumbrances, security interests and rights of other persons of every nature
        and
        description whatsoever (“Liens”), except for those Liens listed on Schedule
        1.01,
        all of
        the assets and properties of every kind and nature, real and personal, tangible
        and intangible, wherever situated, whether or not carried or reflected on
        the
        books and records of Seller, which are owned by Seller and used
        in
        or necessary for the operation of
        the
        Division as presently conducted, except for the Excluded Assets (as defined
        below) (the “Purchased Assets”). The Purchased Assets shall include, without
        limitation, the following:

       

      (a) Equipment.
        All of
        Seller’s machinery, equipment, tools and dies, hand tools, motor vehicles,
        rolling stock, leasehold improvements, furniture, supplies, office equipment,
        computers and other data processing hardware, improvements, parts and other
        tangible personal property used
        or held
        for use in the operation of the Division,
        including, without limitation, all items listed on Schedule
        1.01(a)
        attached
        hereto (collectively, the “Equipment”);

       


      
        
          
          

        

        
          
            

          

        

        
          
          

        

      


      (b) Inventory.
        All of
        Seller’s inventory relating to the Division, including, without limitation, all
        supplies, raw materials, work in progress and finished goods, prepaid inventory
        and inventory in transit (collectively, the “Inventory ”);

       

      (c) Prepaid
        Expenses and Customer Deposits.
        All
        prepaid expenses, advance payments, deposits and claims for refunds (other
        than
        refunds pertaining to any liabilities which are not assumed by Purchaser)
        relating to the Division and existing as of Closing (the “Prepaid Expenses”), as
        well as any cash advances and/or deposits provided to Seller by any customers
        of
        the Division (“Customer Deposits”), a schedule of which shall be attached hereto
        as Schedule
        1.01(c)
        at
        Closing;

       

      (d) Contract
        and Other Rights.
        All of
        Seller’s rights, title and interest in and to all agreements, contracts, leases
        and other agreements relating to or used in the conduct of the Division
        (including contracts with customers, purchase orders and quotations, vendor
        contracts and equipment and vehicle leases) which are listed on Schedule
        1.01(d)
        (collectively, the “Contracts”), and any and all claims, causes of action,
        rights of recovery or refund, rights of set-off and other rights of every
        nature, including without limitation, any and all rights against debtors
        of
        Seller;

       

      (e) Real
        Property.
        The
real
        property owned by Seller located in Weston, West Virginia, which is more
        fully
        described on Schedule
        1.01(e),
        together with all rights and appurtenances pertaining thereto, including
        all
        right, title and interest of Seller, if any, in and to adjacent streets,
        roads,
        alleys, easements and rights of way, and all improvements thereon (the “Real
        Property”);

       

      (f) Licenses
        and Permits.
        All of
        Seller’s rights and benefits under licenses (including without limitation,
        licenses to use computer software), permits, distribution and/or franchise
        rights, registrations, governmental and other licenses, certificates and
        permits
        used in or necessary for the operation of the Division (collectively, the
        “Licenses and Permits”);

       

      (g) Records.
        All of
        Seller’s books and records, customer files, customer lists and records, vendor
        files, vendor lists and records, cost files and records, credit information,
        distribution records, business records and plans, studies, surveys, reports,
        correspondence, sales and promotional literature and materials, advertising
        and
        advertising copy, and other similar materials, computer and other records,
        and
        all computer software used in or necessary for the operation of the Division,
        except for the computer software listed on Schedule
        1.02
        (collectively, the “Books and Records”);

       

      (h) Intellectual
        Property.
        All of
        Seller’s right, title and interest in and to any copyright, trademark, trade
        name, brand name, service mark, logo, symbol, trade dress, product or other
        design or any expression thereof, and any invention, patent, trade secret,
        technical information, know-how, proprietary right or intellectual property,
        technologies, methods, designs, drawings, software (including documentation
        and
        source code), processes and other proprietary properties or information
used
        in
        or necessary for the operation of the Division (collectively,
        “Intellectual Property”). The parties acknowledge 

       


      
        
          
          

        

        
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      and
        agree
        that Purchaser shall not acquire Seller’s right to the name “Hatch & Kirk”
        at the Closing;
        provided that
        Seller
        (i) hereby grants Purchaser a non-exclusive and royalty-free right and license
        to use the name
        “Hatch & Kirk” in Purchaser’s operations of the Division during the ninety
        (90) day period following Closing, and (ii) will transfer to Purchaser
        all of
        its rights, title and interest in and to the name “Hatch & Kirk” at the
        closing of the sale of Seller’s assets located at its facilities in Seattle,
        Washington and Houston, Texas to Purchaser in accordance with the terms of
        the
        Second Agreement, as defined in Section 6.01(f) below (the “Other
        Assets”);
        and

       

      (i) Goodwill.
        All
        goodwill associated with Seller and the Division.

       

      The
        Real
        Property and Improvements shall be purchased by HK Weston. The remaining
        Assets
        shall be purchased by HK Parts.

      


      1.02 Excluded
        Assets.
        The
        parties acknowledge and agree that the Purchased Assets shall not include
        Seller’s tangible personal property located at and related solely to Seller’s
        Seattle, Washington or Houston, Texas facilities, cash or cash equivalents,
        accounts receivable, minutes book and stock records, Seller’s deferred and
        prepaid income tax assets and any assets specifically listed on Schedule
        1.02
        (collectively, the “Excluded Assets”).

       

      ARTICLE
        II. LIABILITIES

       

      2.01 Assumption
        of Liabilities.
        At the
        Closing, HK Parts shall assume and agree to discharge and perform when due
        only
        the
        liabilities and obligations of Seller accruing and arising from and after
        the
        Closing Date under (i) the Contracts, and (ii) the responsibility to provide
        parts and labor as required to honor Seller’s standard warranty, as set forth on
Schedule
        2.01,
        on
        sales of the Division occurring before the Closing (collectively, the “Assumed
        Liabilities”).

       

      2.02 Excluded
        Liabilities.
        Except
        for the Assumed Liabilities, Purchaser shall not assume or be responsible
        for
        any debts, liabilities, obligations or commitments of Seller or the Division
        whatsoever, whether actual, absolute, accrued, fixed, contingent, asserted
        or
        unasserted, known or unknown, and whether related or unrelated to Seller’s
        business. Without in any way limiting the generality of the foregoing, Purchaser
        shall not assume, nor shall Purchaser be responsible for, any obligations
        or
        liabilities arising out of or relating to any pending litigation, third-party
        claims, unfunded pension liabilities, taxes, fees or other charges, tort
        liabilities, warranty liabilities, environmental liabilities, criminal claims,
        worker’s compensation liabilities, or any liabilities arising outside the
        ordinary course of business or otherwise incurred prior to or after the Closing
        Date. Seller agrees to pay or otherwise provide for all liabilities and perform
        all obligations after Closing, other than the Assumed Liabilities, relating
        to
        the operation of the Division prior to Closing, including, but not limited
        to,
        all continuation coverage under any group health plan or plans pursuant to
        the
        relevant provisions of the federal Consolidated Omnibus Budget Reconciliation
        Act (COBRA) with respect to any employees who do not apply for or accept
        employment and are otherwise not hired by Purchaser after Closing; all costs
        associated with any employee pension, profit sharing, 401(k) or similar
        retirement plans of Seller; and obligations and liabilities (if any) arising
        under the Worker Adjustment and Retraining Notification Act with respect
        to any
        employees not hired by Purchaser after Closing.

       


      
        
          
          

        

        
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      ARTICLE
        III. PURCHASE
        PRICE AND CLOSING

       

      3.01 Purchase
        Price.
        The
        total purchase price (the “Purchase Price”) for the Purchased Assets shall be
        Two Million Two Hundred Thirty Thousand Five Hundred Seven and 65/100 Dollars
        ($2,230,507.65).

       

      3.02 Payment
        of the Purchase Price.
        

       

      (a)
         At
        the
        Closing, Purchaser shall pay (i) One Million Seven Hundred Seventy-three
        Thousand Two Hundred Sixty-three and 29/100 Dollars ($1,773,263.29) of the
        Purchase Price to General Electric Capital Corporation (“GE Capital”), on behalf
        of Seller, in
        partial satisfaction of the debt and obligations, including but not limited
        to
        obligations under letters of credit, owed to GE Capital by Seller (the “GE
        Indebtedness”); and Three Hundred One Thousand Four Hundred Forty-six and 57/100
        and (ii) Dollars
        ($301,446.57) of the Purchase Price to Haynes Corporation (“Haynes”), on behalf
        of Seller, in
        complete satisfaction of the debt and obligations owed to Haynes by Seller
        (the
“Haynes Indebtedness”).
        The
        Purchase Price also includes the payment by Purchaser of certain vacation
        pay of
        Seller pursuant to Section 6.01(a) in the amount of Fifty Thousand Three
        Hundred
        Seventy-one and 14/100 Dollars ($50,371.14) and the assumption of certain
        lease
        obligations of Seller to HKM Properties pursuant to the lease described in
        Section 6.03(a) or other arrangement with HKM Properties in the amount of
        One
        Hundred Five Thousand Four Hundred Twenty-six and 65/100 Dollars
        ($105,426.65).

       

      (b) The
        GE
        Indebtedness includes a Fifty Thousand Dollar ($50,000) penalty payable by
        Seller. In return for Purchaser’s payment of such amount, Seller agrees to
        execute and deliver a Demand Promissory Note of even date herewith (the “Note”)
        and make certain amendments to existing loan documents between Purchaser
        and
        Seller. The GE Indebtedness also includes the payment by Purchaser of Four
        Hundred Forty-five Thousand Three Hundred Eleven and 11/100 Dollars
        ($445,311.11) to GE to replace collateral for the Letter of Credit obligations
        of Seller, which amount is equal to 110% of the face amount of the Letter
        of
        Credit obligations (the “Letters of Credit”). The parties acknowledge that
        Egyptian National Railway (“ENR”) may draw upon the Letters of Credit in
        satisfaction of certain obligations of Seller to ENR. In the event ENR draws
        upon the Letters of Credit in any amount in excess of One Hundred Ninety
        Thousand Dollars ($190,000), the amount of such excess shall immediately
        be
        added to the principal balance of the Note. Upon the request of Purchaser,
        Seller immediately shall execute an amendment to the Note to reflect the
        new
        principal balance. The parties also acknowledge and agree that, upon termination
        of the Letters of Credit, any amounts remaining under the Letters of Credit
        shall be refunded immediately to Purchaser. Seller acknowledges that it does
        not
        have any right to any amounts under the Letters or Credit.

       

      3.03 Allocation.
        The
        Purchase Price shall be allocated among the Purchased Assets as set forth
        on
Schedule
        3.03
        attached
        hereto. Purchaser and Seller agree to furnish each other and the Internal
        Revenue Service with such applicable information as may be required under
        Section 1060 of the Internal Revenue Code, as amended (the “Code”), and to
        cooperate in the completion 

       


      
        
          
          

        

        
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      and
        timely filing of IRS Form 8594 (Asset Acquisition Statement). A party may
        change
        the agreed-upon allocations only in order to be consistent with any
        finally-adjudicated adjustments made to the federal tax returns of the other
        party. 

       

      3.04 The
        Closing.
        The
        closing of the transactions contemplated by this Agreement (the “Closing”) shall
        take place at the offices of Barnes & Thornburg in South Bend, Indiana, on
        March 3, 2005, or at such other location or on such other date as the parties
        may mutually agree (the “Closing Date”).

       

      3.05 Actions
        at the Closing.
        At the
        Closing, the Seller and Purchaser shall deliver to each other the various
        certificates, instruments and documents as specified in Article VII
        below.

       

      ARTICLE
        IV. REPRESENTATIONS
        AND WARRANTIES OF SELLER

       

      As
        of the
        date hereof and as of the Closing Date, Seller hereby represents and warrants
        to
        Purchaser as follows:

       

      4.01 Organization;
        Power and Authority.
        Seller
        is a corporation duly organized, validly existing and in good standing under
        the
        laws of the State of Washington and is duly qualified to do business and
        in good
        standing under the laws all other jurisdictions in which its ownership or
        use of
        property for the conduct of its business requires it to qualify. Seller has
        all
        necessary corporate power and authority to own all of its properties and
        assets,
        to conduct its business as now being conducted, and to make, execute, deliver,
        and perform this Agreement and the other documents and instruments contemplated
        hereby. 

       

      4.02 Execution,
        Delivery and Validity.
        The
        execution, delivery and performance of this Agreement, and the consummation
        of
        the transactions contemplated hereby, by Seller has been duly authorized
        by all
        requisite action of Seller’s Board of Directors, shareholders, participants
        under Seller’s employee stock ownership plan and any other party that is
        required to authorize the transactions contemplated herein by Seller. This
        Agreement and all other agreements contemplated hereby have been duly and
        validly executed and delivered by Seller, and each constitutes the legal,
        valid
        and binding obligation of Seller, enforceable against Seller in accordance
        with
        its terms.

       

      4.03 Non-contravention.
        Except
        as set forth on Schedule
        4.03,
        the
        execution, delivery and performance of this Agreement and the other agreements
        contemplated hereby and the consummation of the transactions contemplated
        hereby
        or thereby or compliance with or fulfillment of the terms and provisions
        hereof
        or of any other agreement or instrument contemplated hereby or thereby, do
        not
        and will not: (i) conflict with or result in a breach of any of the provisions
        of the Articles of Incorporation or By-Laws of Seller; (ii) contravene any
        law,
        rule or regulation or any order, writ, award, judgment, decree or other
        determination which affects or binds Seller or any of its properties; (iii)
        conflict with, result in a breach of, constitute a default under, or give
        rise
        to a right of acceleration, termination or the imposition of penalties under
        any
        contract, deed of trust, mortgage, trust, lease, governmental or other license,
        permit or other authorization, contract, agreement, note or any other agreement,
        instrument or restriction to which Seller is a party or by which any of their
        properties may be affected or bound; or (iv) 

       


      
        
          
          

        

        
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      require
        the approval, consent or authorization of, or the making of any declaration,
        filing or registration with, any foreign, federal, state or local court,
        governmental authority or regulatory body (“Governmental Authority”) or with any
        lender, customer or other third party.

       

      4.04 Capitalization.
        The
        issued and outstanding capital stock of Seller is owned as of the date hereof
        as
        set forth on Schedule
        4.04.
        Other
        than as set forth in Schedule
        4.04,
        there
        are no voting trusts or other agreements or understandings related to the
        capital stock of Seller. Other than its interest in HK Castings, Inc., as
        set
        forth in Schedule
        4.04,
        Seller
        does not own any subsidiaries. No person or entity, other than shareholders
        set
        forth on Schedule
        4.04,
        owns or
        holds, has any interest in, whether legal, equitable or beneficial, or has
        the
        right to purchase, any capital stock or other security of Seller. 

       

      4.05 Financial
        Statements.
        Attached as Schedule
        4.05
        are true
        and complete copies of: (i) an audited balance sheet and audited statements
        of
        operations, stockholders’ equity and cash flows of Seller for the period ended
        June 30, 2000 (the “Audited Financials”), (ii) unaudited balance sheets and
        statements of income, stockholders’ equity and cash flows of Seller for the
        periods ended June 30, 2001, 2002, 2003 and 2004 (the “Unaudited Financials”),
        and (iii) unaudited balance sheets and statements of income for each month-ended
        from July 2004 through Closing (the “Monthly Financials”; and together with
        Audited Financials and the Unaudited Financials, the “Financial Statements”).
        The balance sheet delivered to Purchaser for the month-ended immediately
        prior
        to the month during which Closing occurs is referred to in this Agreement
        as the
“Balance Sheet.” The Financial Statements are true and correct representations
        of the financial condition and operating results of Seller with respect to
        the
        Division as of the dates and for the periods then ended, and are prepared
        on a
        consistent basis for all periods covered and in accordance in all material
        respects with generally accepted accounting principles (“GAAP”). Except as set
        forth on Schedule
        4.05
        and to
        the best knowledge of Seller, Seller has no unrecorded liabilities or
        obligations of any type, nature or description, known or unknown, asserted
        or
        unasserted, direct or indirect, absolute or contingent with respect to the
        Division, except as set forth in the Financial Statements.

       

      4.06 Operations
        Since June 30, 2004.
        Except
        as set forth in Schedule
        4.06,
        since
        June 30, 2004 and up to and through the Closing Date, Seller has conducted
        the
        business and operations of the Division in the ordinary course of business,
        and
        (except as otherwise contemplated by this Agreement) has not:

       

      (a) written
        off as uncollectible any account receivable, or reduced any reserves, other
        than
        in the ordinary course of business;

       

      (b) made
        any
        change in the accounting methods or practices employed by Seller or change
        in
        depreciation or amortization policies;

       

      (c) issued
        or
        sold, or contracted or made any other commitment for the issuance or sale
        of any
        shares of capital stock or securities convertible into or exchangeable for
        capital stock of Seller;

       


      
        
          
          

        

        
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      (d) terminated
        or amended any material contract or license or other instrument, or suffered
        any
        loss or termination or threatened loss or termination of any material
        contractual or business arrangement;

       

      (e) sold,
        leased to others, licensed to others, disposed of, or otherwise transferred
        any
        assets of Seller, including without limitation, the right to use any and
        all
        secrets or Intellectual Property of Seller; 

       

      (f) made
        any
        loans, advances or capital contributions to or investments in any person
        or
        entity;

       

      (g) subjected
        any assets, tangible or intangible, to any lien, encumbrance or restriction
        of
        any nature whatsoever; 

       

      (h) modified
        or amended any relationships with suppliers or customers of the Division,
        which
        would adversely affect the business and operations of the Division;

       

      (i) increased
        the compensation or benefits of any employee other than in the ordinary course
        of business;

       

      (j) moved,
        removed or caused to be moved or removed, any of the Equipment or Inventory
        (other than the sale of Inventory in the ordinary course of business consistent
        with past practice) located in or at the facility of the Division;
        or

       

      (k) entered
        into any agreement to sell or granted any option to any party other than
        Purchaser, to purchase any of the Purchased Assets.

       

      4.07 Employment
        Compliance.
        Seller
        has (i) complied with all applicable laws relating to employment or
        labor,
        including provisions relating to wages, hours, employment benefits, equal
        opportunity, occupational safety and health, collective bargaining, and the
        payment of Social Security and other taxes; and (ii) fully disclosed in writing
        to Purchaser all relevant facts and issues regarding Seller’s labor and
        employment matters. There are no policies or practices relating to employment
        matters other than those described in the Employee Handbook dated June 1,
        2000.
        There have been no attempts to organize or unionize Seller’s employees within
        the last five (5) years.

       

      4.08 Employees.
        All of
        Seller’s employees are employees “at-will” and may be legally terminated without
        prior notice and without cause at no cost to Seller or the Division, other
        than
        its obligation to pay employees for wages and unused or unpaid and earned
        vacation and other time off, which liabilities are properly recorded on the
        Financial Statements. Schedule
        4.08
        contains
        a complete listing of: 

       

      (a) current
        employees of the Division, their compensation, accrued vacation, and employee
        benefits for which the employee qualifies;

       

      (b) retired
        employees of the Division who receive benefits of any kind from
        Seller;

       


      
        
          
          

        

        
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      (c) any
        employee of the Division or director of Seller who is subject to a
        confidentiality, non-disclosure or proprietary rights contract that in any
        way
        adversely affects or will affect that employee’s performance of his or her
        duties for Seller or the ability of Purchaser to conduct the business and
        operations of the Division in substantially the same manner as currently
        conducted; and 

       

      (d) any
        key
        employee or group of employees of the Division that have given notice of
        termination or for whom any Seller has reasonable grounds to expect to give
        notice of termination 

       

      4.09 Licenses
        and Permits.
        The
        Licenses and Permits constitute all local, state and federal licenses and
        permits necessary for Seller to occupy, operate and conduct the business
        and
        operations of the Division, and there do not exist any defaults, waivers,
        investigations or exemptions relating thereto or which would be caused by
        the
        transactions contemplated by this Agreement. There exists no grounds for
        revocation, suspension or limitation of any of the Licenses and
        Permits.

       

      4.10 Assets.
        Except
        as set forth in Schedule
        4.10,
        Seller
        owns all of the assets reflected on the Financial Statements (including any
        patents, copyrights, trade names, service marks and other names and marks
        used
        in or necessary the business and operations of the Division), and Seller
        owns
        all Purchased Assets with good and marketable title free and clear of all
        mortgages, security interests, liens, leases, covenants, assessments, easements,
        options, rights of refusal, restrictions, reservations, defects in title,
        encroachments, and other encumbrances. All of the Purchased Assets of a tangible
        nature are located at or in transit to Seller’s Hagerstown, Maryland
        facility.

       

      4.11 Insurance.
        Schedule
        4.11
        includes
        a complete and accurate listing of all insurance policies (including
        self-insurance) to which Seller is a party related to the Purchased Assets,
        which policies are either currently in force or were in force since January
        1,
        2000, and also any policies for which Seller was denied coverage since January
        1, 2000. Schedule
        4.11
        also
        includes a list of all claims made against such insurance policies since
        January
        1, 2002. Except as set forth on Schedule
        4.11,
        the
        insurance coverage for Seller and all Purchased Assets:

       

      (a) is
        valid,
        outstanding and enforceable; 

       

      (b) is
        obtained through policies issued by an insurer that is financially sound
        and
        reputable; 

       

      (c) shall
        not
        be delinquent as of the Closing Date; and

       

      (d) complies
        with any requirements for insurance under any contract to which any Seller
        is
        bound.

       

      4.12 Intellectual
        Property.
        Schedule
        4.12
        lists or
        describes all patents, trademarks, trade names, service marks, copyrights
        and
        applications for such items used in or necessary to the business and operations
        of the Division. Seller owns or has a valid right to use the Intellectual
        Property, and may transfer the Intellectual Property to Purchaser without
        the
        need for third party 

       


      
        
          
          

        

        
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      agreements
        or consents. There
        is
        no claim or proceeding pending or threatened by any third party against or
        relating to Seller, nor does Seller know or have reasonable grounds to know
        of
        any basis for any such action, with respect to the Intellectual
        Property.

       

      4.13 Contracts
        and Commitments.
        Schedule
        4.13
        lists
        all contracts related to the Division to which Seller is a party and which
        obligates Seller to pay in excess of $5,000 per year during any one year
        period
        after Closing. Each contract or agreement listed in Schedule
        4.13
        is a
        valid and binding obligation of Seller and is in full force and effect,
        enforceable in accordance with its terms. Seller has performed all obligations
        required to be performed by it under each contract or agreement to which
        it is a
        party. Except as set forth on Schedule
        4.13,
        neither
        Seller nor any other party is in breach or default in any respect under any
        contract or agreement. Seller has no contracts with any shareholder of Seller
        which may not be terminated immediately upon notice by Purchaser following
        the
        Closing, without cost or penalty. The Contracts are assignable to Purchaser
        without the consent of any other party.

       

      4.14 Condition
        of Inventory and Equipment.
        

       

      (a) The
        Equipment is adequate for the uses for which it is being put. The Equipment
        is
        sufficient for the continued conduct of the business and operations of the
        Division after the Closing in substantially the same manner as conducted
        prior
        to the Closing. Except for the representations and warranties set forth in
        the
        Agreement, the Equipment is being sold “AS
        IS, WHERE IS.”

       

      (b) All
        Inventory, whether or not reflected in the most recent Financial Statements,
        consists of a quality and quantity usable and salable in the ordinary course
        of
        business, except for obsolete items and items of below standard quality,
        all of
        which have been written off or written down to net realizable value in the
        most
        recent Financial Statements. 

       

      4.15 Personal
        Property.
        Except
        as listed on Schedule
        4.15

       

      (a) All
        of
        the tangible property used in the business and operations of the Division
        is
        located at Seller’s facility in Hagerstown, Maryland;

       

      (b) No
        person, firm or corporation other than Seller has any right to the use or
        possession of any of the Purchased Assets. Except for financing statements
        filed
        by GE Capital with respect to the GE Indebtedness (which will be terminated
        on
        or before the Closing), no currently effective financing statement under
        the
        Uniform Commercial Code with respect to any of the Purchased Assets has been
        filed in any jurisdiction and no agent of Seller has signed any financing
        statement or security agreement authorizing anyone to file any financing
        statement.

       

      4.16 Customers.
        Except
        as listed on Schedule
        4.16,
        Seller
        has not received any notice nor has knowledge that any of its customers with
        respect to the Division intends to terminate or materially reduce its commercial
        relationship with Seller, and no customer of the Division has 

       


      
        
          
          

        

        
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      terminated
        or materially reduced its commercial relationship with Seller in the last
        twelve
        (12) months.

       

      4.17 Product
        Warranty.
        Except
        as
        listed on Schedule
        4.17,
        Seller
        has no liability (whether known or unknown and whether absolute or contingent)
        for the replacement of products sold or delivered by the Division or other
        damages in connection therewith, and no product sold or delivered by Seller
        relating to the Division is subject to any guaranty, express warranty or
        other
        indemnity.

       

      4.18 Litigation.
        No
        litigation or claims, governmental or other proceedings or investigations
        are
        pending or to the best knowledge of Seller, threatened, nor is there any
        valid
        basis for such claims by or against, or relating to Seller or the Division,
        or
        against or affecting the Purchased Assets, except as listed on Schedule
        4.18.

       

      4.19 Environment,
        Health and Safety.
        

       

      (a) Except
        as
        set forth on Schedule
        4.19,
        to the
        best knowledge of Seller, Seller, the Division and the Real Property are,
        and at
        all times prior hereto have been, in compliance with any and all Environmental
        Laws and Health and Safety Laws (as defined below), and no Claim (as defined
        below) relating to a violation of any such laws has been made with respect
        to
        Seller, the operation of the Division or the Real Property.

       

      (b) Except
        as
        set forth on Schedule
        4.19,
        to the
        best knowledge of Seller, there is no Environmental or Health and Safety
        Circumstance (as defined below) related to the Real Property or to past or
        present operations of Seller or the Division on or off any of the properties,
        facilities or premises on which the Division has been operated. 

       

      (c) Except
        as
        set forth on Schedule
        4.19,
        Seller
        has not, either expressly or by operation of law, assumed or undertaken any
        liability, including without limitation, any obligation for corrective or
        remedial action, of any other person or entity with respect to any Environmental
        Law, nor has any Seller caused, permitted or allowed any “release” (as defined
        in 42 U.S.C. § 9601(22)) of any Hazardous Substance, Pollutant or
        Contaminant (as defined below) on the Real Property or on any other real
        property owned, leased, operated or used by Seller in connection with the
        Division.

       

      (d) Except
        as
        set forth on Schedule
        4.19,
        Seller
        has obtained (or have pending timely filed applications for) any and all
        environmental permits legally required to operate the Division and any assets
        used in connection therewith.

       

      (e) Seller
        has provided Purchaser with copies of any and all environmental reports
        conducted with respect to the Real Property and any other real property owned,
        leased, operated or used by Seller in connection with its operations and
        the
        conduct of the Division. 

       

      (f) For
        purposes of this Section
        4.19:

       


      
        
          
          

        

        
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      (i) “Environmental
        Law” means any federal, state or local statute, rule, regulation or ordinance
        having as its primary purpose the protection of the environment or the
        protection of human health from the effects of environmental pollutants and
        any
        permit, license or authorization required thereunder, as well as common
        law.

       

      (ii) “Health
        and Safety Law” means any federal, state or local statute, rule, regulation or
        ordinance having as its primary purpose the protection of worker safety or
        health in the workplace.

       

      (iii) “Hazardous
        Substance, Pollutant or Contaminant” means any “hazardous substance” as defined
        in 42 U.S.C. § 9601(14), any “pollutant or contaminant” as defined in 42
        U.S.C. § 9601(33), and petroleum, including crude oil or any fraction
        thereof.

       

      (iv) “Claim”
        means and includes any claim, action, suit, demand, administrative proceeding,
        notice of violation, notice of deficiency, or general notice of potential
        liability alleging any failure to comply with or any liability under any
        Environmental Law or Health and Safety Law, including, without limitation,
        any
        liability under common law for damages or injury to person or
        property.

       

      (v) “Environmental
        or Health and Safety Circumstance” means any fact, circumstance, activity,
        practice, incident, action, plan or condition which would constitute a failure
        to comply with any Environmental Law or Health and Safety Law, or would give
        rise to potential liability under any such Law.

       

      4.20 Real
        Property Matters.
        Seller
        owns the Real Property, free and clear of all tenancies, liens, mortgages
        and
        any other encumbrances, except for a lease to HK Castings, Inc. (“HK Castings”),
        a subsidiary of Seller and a Deed of Trust made in favor of GE Capital which
        will be released at and as a condition to Purchaser’s obligation to consummate
        the transactions contemplated in this Agreement. With respect to the Real
        Property:

       

      (a) To
        the
        best knowledge of Seller, all necessary water, sewer, gas, electric, telephone,
        drainage and other utility equipment, facilities and services, and all
        mechanical systems are installed and connected pursuant to valid permits,
        and
        are in good working order and adequate for the conduct of the business and
        operations of HK Castings;

       

      (b) To
        the
        best knowledge of Seller, the Real Property and the improvements thereon
        do not
        violate any governmental laws, ordinances, rules or regulations;

       

      (c) Seller
        has not received any notice from any insurance carrier of defects or
        inadequacies which, if not corrected, could reasonably be expected to result
        in
        termination of insurance coverage or a material increase in the cost thereof,
        and there are no such defects or inadequacies; 

       

      (d) To
        the
        best knowledge of Seller, the Real Property is zoned in a manner which permits
        its present use, and such use and occupation are not in contravention of
        

       


      
        
          
          

        

        
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      any
        statute, bylaw, regulation, ordinance, order, covenant, declaration, restriction
        or plan, including, without limitation, those relating to environmental
        protection;

       

      (e) There
        is
        no condemnation, expropriation or other proceeding in eminent domain pending
        or,
        to the best knowledge of Seller, threatened, affecting the Real Property,
        or any
        portion thereof or interest therein, and Seller has not engaged in any
        negotiation with any entity possessing the power of condemnation with regard
        to
        the acquisition of all or any portion of the Real Property;

       

      (f) To
        the
        best knowledge of Seller, the Real Property currently is not subject to any
        special assessments, no special assessments have been threatened against
        all or
        any part of the Real Property and Seller does not have knowledge of any intended
        assessments;

       

      (g) All
        real
        estate taxes on the Real Property for the year 2004 and all prior years have
        been paid or will be paid prior to Closing and, to the best knowledge of
        Seller,
        are not subject to any proposed reassessment, contest, protest, certificate
        of
        error or other proceedings, and all other taxes, charges, debts and other
        assessments due by Seller with respect to the Real Property through the Closing
        Date have been or will be paid by Seller prior to Closing;

       

      (h) No
        work
        has been performed or is in progress at, and no materials have been furnished
        to, the Real Property or any portion of the Real Property within sixty (60)
        days
        prior to the date of this Agreement which reasonably may give rise to a
        mechanic’s, materialmen’s or other liens against the Real Property, or operation
        thereof, which has not been or will not be paid in full by Seller by the
        Closing
        Date;

       

      (i) No
        written or oral contracts, management agreements, leasing agreements, repair
        or
        service agreements, employment agreements, easements, rights, privileges,
        licenses or options to purchase affecting the Real Property exist;

       

      (j) To
        the
        best knowledge of Seller, Seller
        has performed all of its obligations with respect to the Real Property that
        are
        required to be satisfied on or before the Closing Date; and

       

      (k) Seller
        has or will comply with all laws affecting the transfer of the Real Property
        and
        all disclosure requirements relating thereto.

       

      4.21 Tax
        Matters.

       

      (a) For
        purposes of this Agreement, (i) “Tax” means any federal, state, local, or
        foreign income, gross receipts, license, payroll, employment, excise, severance,
        stamp, occupation, premium, windfall profits, environmental (including taxes
        under Section 59A of the Code), customs duties, capital stock, franchise,
        profits, withholding, social security (or similar), unemployment, disability,
        real property, personal property, sales, use, transfer, registration, value
        added, alternative or add-on minimum, estimated, or other tax of any kind
        whatsoever, including any interest, penalty, or addition thereto, whether
        

       


      
        
          
          

        

        
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      disputed
        or not, and (ii) “Tax Return” means any return, report, information return, or
        other document (including any related or supporting information) filed or
        required to be filed with any taxing authority in connection with its
        determination, assessment, collection, administration, or imposition of any
        Tax.


       

      (b) Except
        as
        set forth in Schedule
        4.21,
        Seller
        has duly and timely filed all Tax Returns and have duly and timely paid all
        Taxes and other charges (whether or not shown on any Tax Return) due or claimed
        to be due from it by federal, foreign, state, or local taxing authorities
        or has
        set up an adequate reserve on the Financial Statements for all Taxes payable.
        True and correct copies of all Tax Returns for the periods ending June 30,
        2001
        and 2002 have been heretofore delivered to Purchaser. There are no Tax liens
        (other than liens for current Taxes not yet due and payable) upon any properties
        or assets of Seller (whether real, personal, or mixed, tangible or intangible),
        and, except as reflected in the Financial Statements or as set forth in
Schedule
        4.21,
        there
        are no pending or, to Seller’s knowledge, threatened audits or examinations
        relating to, or claims asserted for, Taxes or assessments against Seller,
        and
        the Seller has no knowledge of any basis for any such claims. Seller has
        not
        been granted or been requested to grant any extension of the limitation period
        applicable to any claim for Taxes or assessments with respect to Taxes. Seller
        is not a party to any Tax allocation or sharing agreement. Seller is not
        liable
        for the Taxes of any “affiliated group” under Treasury Regulation 1.1502-6 (or
        any similar provision of state, local, or foreign law). Seller has withheld
        and
        paid all Taxes required to have been withheld and paid in connection with
        amounts paid or owing to any employee, independent contractor, creditor,
        or
        stockholder.

       

      (c) Schedule
        4.21
        attached
        hereto lists each jurisdiction in which Seller files Tax Returns for each
        period
        or portion thereof ending on or before the Closing Date.

       

      4.22 Employee
        Benefit Plans.
        Except
        as identified on Schedule
        4.22,
        Seller
        does not maintain or contribute to (or have the obligation to contribute
        to) any
        Employee Benefit Plans. For purposes of this Agreement, the term “Employee
        Benefit Plan” means (i) any employee benefit plan, as defined in Section 3(3) of
        the Employee Retirement Income Security Act of 1974 as amended (“ERISA”), and
        (ii) any other plan, trust agreement or arrangement for any bonus, severance,
        hospitalization, vacation, incentive or deferred compensation, pension or
        profit-sharing, retirement, payroll savings, stock option, equity compensation,
        group insurance, death benefit, fringe benefit, welfare or any other employee
        benefit plan or fringe benefit arrangement of any nature whatsoever, including
        those benefiting retirees or former employees. As to any previously terminated
        Employee Benefit Plan of Seller, Seller has not incurred, and will not incur,
        any withdrawal liability, nor does any Seller have any contingent withdrawal
        liability under ERISA to any Multiemployer Plan (as defined in ERISA or the
        Code). Except as identified on Schedule
        4.22
        and with
        respect to each Employee Benefit Plan, Seller is in material compliance,
        in form
        and operation, with the requirements provided by any and all statutes, orders
        or
        governmental rules or regulations currently in effect, including, but not
        limited to, ERISA and the Code, and applicable to such Employee Benefit Plan.
        Each Employee Benefit Plan and any related trust intended to qualify under
        Section 401(a) and Section 501(a) of the Code is so qualified and nothing
        has
        occurred to cause the loss of such qualification.

       


      
        
          
          

        

        
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      4.23 Compliance
        with Laws.
        Except
        as identified on Schedule
        4.23
        Seller
        is in material compliance with all laws applicable to it, and has not received
        any written notice of any civil, criminal or administrative investigation
        or
        audit by any governmental entity relating to Seller or the
        Division.

       

      4.24 Broker’s
        or Finder’s Fee.
        Except
        as identified on Schedule
        4.24,
        Seller
        has not employed, or is liable for the payment of any fee to, any finder,
        broker, consultant or similar person in connection with the transactions
        contemplated by this Agreement.

       

      4.25 No
        Omissions or Misstatements.
        None of
        the statements or information contained in any of the representations,
        warranties, covenants or agreements of Seller set forth in this Agreement
        or any
        information or documents delivered or to be delivered to Purchaser prior
        to the
        execution of this Agreement, contains any untrue statement of a material
        fact or
        omits a material fact necessary to make the statements contained in this
        Agreement or in any exhibit or schedule to this Agreement or in any of the
        other
        information provided or the documents delivered to Purchaser in connection
        with
        the transactions contemplated by this Agreement, in light of the circumstances
        in which those statements were made, not misleading.

       

      ARTICLE
        V. REPRESENTATIONS
        AND WARRANTIES OF PURCHASER

       

      As
        of the
        date hereof and as of the Closing Date, Purchaser hereby represents and warrants
        to Seller as follows:

       

      5.01 Organization.
        Purchaser
        is a limited liability company duly organized and validly existing under
        the
        laws of the State of Indiana. Purchaser has all necessary power and authority
        to
        own all of its property and assets and to make, execute, deliver, and perform
        this Agreement and the other documents and instruments contemplated
        hereby.

       

      5.02 Execution,
        Delivery and Validity.
        The
        execution, delivery and performance of this Agreement by Purchaser have been
        duly authorized by all requisite action. This Agreement and all other agreements
        contemplated hereby have been duly and validly executed and delivered by
        Purchaser, and each constitutes the legal, valid and binding obligation of
        Purchaser, enforceable against Purchaser in accordance with its
        terms.

       

      5.03 Non-contravention.
        The
        execution, delivery and performance of this Agreement and the other agreements
        contemplated hereby and the consummation of the transactions contemplated
        hereby
        or thereby or compliance with or fulfillment of the terms and provisions
        hereof
        or of any other agreement or instrument contemplated hereby or thereby, do
        not
        and will not: (i) conflict with or result in a breach of any of the provisions
        of the Articles of Organization of Purchaser; (ii) contravene any law, rule
        or
        regulation or any order, writ, award, judgment, decree or other determination
        which affects or binds Purchaser or any of its properties; (iii) conflict
        with,
        result in a breach of, constitute a default under, or give rise to a right
        of
        acceleration, termination or the imposition of penalties under any contract,
        deed of trust, mortgage, trust, lease, governmental or other license, permit
        or
        other authorization, contract, agreement, note or any other agreement,
        instrument or restriction to which Purchaser is a party or by which any of
        its
        properties may be affected or bound; or (iv) require the approval, consent
        or


       


      
        
          
          

        

        
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      authorization
        of, or the making of any declaration, filing or registration with, any third
        party or any foreign, federal, state or local court, governmental authority
        or
        regulatory body.

       

      5.04 Broker’s
        or Finder’s Fee.
        Purchaser has not employed, nor is Purchaser liable for the payment of any
        fee
        to any finder, broker, consultant or similar person in connection with the
        transactions contemplated by this Agreement.

       

      ARTICLE
        VI. RELATED
        AGREEMENTS AND CONDITIONS TO CLOSING

       

      6.01 Related
        Agreements.
        In
        addition to any other agreements contemplated hereby or herein: 

       

      (a) Employees.
        Seller
        agrees to use its best efforts to retain the services of all employees of
        the
        Division until the Closing Date. Prior to the Closing Date, Seller shall
        cooperate with Purchaser to allow Purchaser a reasonable opportunity to
        interview the employees of the Division. At or immediately after Closing,
        Seller
        will (i) take such action as may be required to terminate its employment
        of each
        employee of the Division hired by Purchaser (without any liability to
        Purchaser), (ii) 100% vest the entire account balance of each such employee
        who
        is a participant under any of Seller’s pension, profit-sharing or 401(k) plans,
        if any, as of the Closing Date, (iii) make all employer contributions allocable
        to each such employee under any such plans for all periods through the Closing
        Date, and (iv) pay to each employee of the Division all wages and other benefits
        owed by Seller in connection with the employment and termination of employment
        of such employee; provided,
        however,
        Purchaser agrees to reimburse Seller for all earned or accrued but unpaid
        vacation pay paid by Seller at the Closing per Schedule
        6.01(a).
        Effective
        as of the Closing Date, Purchaser intends to offer at-will employment to
        each
        employee of the Division (other than Marshall Hatch and Galliano Mondin)
        at the
        same salary or hourly wage rate currently paid by Seller to such employee,
        subject to the employee’s completion of the Purchaser’s employment application
        process. All benefits and other terms and conditions of employment shall
        be
        determined by Purchaser in its discretion; provided,
        that
        such employees will be entitled to the same or comparable benefits (with
        a
        maximum of three weeks of vacation per year) as other similarly situated
        employees of Purchaser, subject to all applicable eligibility
        criteria.

       

      (b) Conduct
        of Business.
        Between
        the date hereof and the Closing Date, except as otherwise approved by Purchaser,
        Seller will conduct the business and operations of the Division only in the
        ordinary course of business consistent with past practice and in such a manner
        that the representations and warranties contained in Article IV shall be
        true
        and correct at and as of the Closing Date and so that the conditions to be
        satisfied by Seller on the Closing Date shall have been satisfied.

       

      (c) Full
        Access.
        Immediately following the execution of this Agreement by all parties, Seller
        shall give Purchaser and its authorized representatives full access to any
        and
        all premises, properties, contracts, commitments, books, records and affairs
        of
        Seller, including, without limitation, causing appropriate senior personnel
        of
        Seller to be made available for interviews by Purchaser and its authorized
        representatives. Purchaser shall 

       


      
        
          
          

        

        
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      use
        its
        best efforts to conduct any such inspections and interviews so as to cause
        minimal disruption to Seller’s business. If this Agreement is terminated, Seller
        and its representatives, and Purchaser and its representatives will, upon
        written request therefor, each return to the other all documents and records
        (including all copies made thereof) obtained from the other at any time in
        connection with the transactions contemplated hereby and will keep confidential
        any such information so obtained. Seller will also permit Purchaser at any
        time
        after the execution of this Agreement to make economic and operational
        feasibility, engineering and architectural studies, including soil tests
        and
        borings, and studies of estimated costs of clearance and grading on the Real
        Property and any other real estate used in connection with the business and
        operation of the Division. All such tests, inspections, assessments, audits
        and
        studies shall be at Purchaser’s cost. 

       

      (d) Public
        Announcements.
        Prior
        to Closing, the contents of any announcements to employees, customers or
        suppliers of Seller or any other public statements shall be mutually agreed
        to
        by the parties prior to the making of any such announcement; provided,
        that
        each party hereto may make disclosures that it in good faith believes, based
        on
        the advice of counsel, is reasonably necessary to comply with any requirement
        of
        law or regulation or to fulfill a party’s obligations under this
        Agreement.

       

      (e) Bulk
        Sales.
        

      Seller
        represents and warrants to Purchaser that Seller’s principal business is not the
        sale of merchandise from stock; that its gross income from the sale of
        merchandise from stock for the past 12 months constituted six percent (6%)
        of
        Seller’s gross income for that period; that the sale and transfer of the Assets
        being purchased by the Purchaser, described in Section 1 hereof and on
Schedules
        1.01(a)-(g),
        does
        not constitute a transfer of a major part of its material, supplies, merchandise
        or other inventory (as that term is defined in Section 9-102 of the Commercial
        Law Article of the Annotated Code of Maryland); nor does it constitute a
        bulk
        transfer as that term is defined in Section 6-102 of the Commercial Law Article
        of the Annotated Code of Maryland. In addition:

      


      (i) Seller
        agrees to provide the Purchaser with any information or documentation that
        Purchase may request, within 5 business days of any such request, to establish
        that the sale of the Assets described in Section 1 hereof, and in Schedule
        1.01(a)-(g), is not a transfer subject to Title 6 of the Commercial Law Article
        of the Annotated Code of Maryland. 

       

      (ii) If
        Purchaser should discover and determine to the contrary that the sale is
        subject
        to Title 6 of the Commercial Law Article of the Annotated Code of Maryland,
        then
        Seller agrees to provide Purchaser with a list of its existing creditors
        prepared in accordance with Section 6-104 of the Commercial Law Article of
        the
        Annotated Code of Maryland, within 5 days after Purchaser’s request for such
        list. In such event, the proceeds from the sale of the Assets shall be applied
        as provided in Section 6-106 of the said Commercial Law Article, and Purchaser
        reserves the right to apply said proceeds in accordance with Section 6-106(4)
        of
        the aforesaid Commercial Law Article.

       


      
        
          
          

        

        
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      (iii) Seller’s
        warranties and obligations under this Section shall survive closing.


       

      Nothing
        herein shall be deemed to release or discharge Seller from its obligation
        to pay
        its creditors except to the extent such obligations constitute Assumed
        Liabilities.

       

      (f) Purchase
        of Other Assets from Seller. 

       

      (i) The
        parties agree to enter into a mutually acceptable purchase agreement (the
        “Second Agreement”) for the purchase and sale of substantially all of Seller’s
        assets used in its operations conducted in Seattle, Washington and Houston,
        Texas, within sixty (60) days after the Closing, in accordance with the general
        terms and conditions outlined in Purchaser’s Letter of Intent to Seller dated
        January 5, 2005 and that certain letter from Purchaser to Seller dated February
        7, 2005 proposing certain modifications to the January 5, 2005 Letter of
        Intent;
        provided, however, entering into and closing on the purchase and sale of
        assets
        under such agreement shall be contingent on all of the following: (A) since
        January 5, 2005, Seller’s operations in Seattle, Washington and Houston, Texas,
        shall have been conducted in the ordinary course of business consistent with
        past practices and Seller shall not have sold, disposed of or otherwise
        distributed any of its assets used in such operations except for the sale
        of
        inventory in the ordinary course of business, (B) Seller’s assets to be acquired
        under the Second Agreement must be free and clear of all Liens, (C) there
        shall
        be no action, suit or proceeding before any court, governmental authority,
        agency or arbitrator pending or threatened which seeks to restrain or prohibit
        the sale or which affects the assets under the Second Agreement, (D) all
        consents, waivers, authorizations and approvals for the transaction, if
        required, shall have been obtained, (E) Seller shall have the full power
        and
        authority to enter into the Second Agreement and perform thereunder, (F)
        all
        representations and warranties made by Seller in the Second Agreement shall
        be
        true and correct, and (G) the assets to be acquired under the Second Agreement
        at Closing must be, in all material respects (including but not limited to
        the
        quantity and quality of such assets), the assets of Seller that existed as
        of
        the January 5, 2005 Letter of Intent.

       

      (ii) The
        parties agree that the Second Agreement will contain usual and customary
        representations, warranties, covenants and other agreements between the parties.
        In addition, as part of the Second Agreement and in order to preserve the
        value
        of the goodwill purchased by Purchaser, and to reduce the cost to Purchaser
        of
        monitoring and enforcing the compliance of Seller with the confidentiality
        obligations contained in this Agreement and the Second Agreement, Seller
        shall
        covenant and agree that, during the five (5) year period from and after closing
        of the Second Agreement, it will not, and it will cause its shareholders,
        directors, officers, employees, agents and Affiliates to not, without the
        express written consent of Purchaser and only to the extent authorized by
        Purchaser:

       

      (A) Directly
        or indirectly, alone or in concert with others, whether as principal, agent,
        representative, partner, lender, consultant, shareholder 

       


      
        
          
          

        

        
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      or
        otherwise, under or through any form of business entity, own, operate, manage,
        control or actively participate in any business which competes with or is
        substantially similar to the business and operations of the Seller as presently
        conducted anywhere in the world (the “Prohibited Territory”);

       

      (B) Either
        for themselves or for any other person, firm, corporation or entity solicit,
        divert or accept, or attempt to solicit, divert or accept any persons or
        entities which were customers or suppliers of the Seller at any time within
        two
        (2) years prior to the Closing; and

       

      (C) Induce
        or
        solicit or seek to induce or solicit any person who was engaged by the Seller
        as
        an employee, agent or otherwise within the one (1) year period prior to the
        closing to terminate his or her engagement with Purchaser or otherwise
        participate in any business activity directly or indirectly competitive with
        the
        Division.

       

      (iii) Closing
        of the Second Agreement will be subject to the parties obtaining all necessary
        consents or approvals for the transaction and the transfer of the assets
        under
        the Second Agreement that may be required.

       

      (iv) Purchaser
        understands that certain capital expenditures and the infusion of working
        capital may be necessary in the successful operation of the Division acquired
        hereunder and other businesses of Seller and HK Castings, Inc. acquired under
        the Second Agreement and the HK Castings, Inc. asset purchase
        agreement.

       

      (g) Insurance
        Premiums.
        Prior
        to Closing, Seller shall pay all of its overdue and premiums (and any penalties,
        late charges or other fees) for general and product liability insurance in
        order
        to ensure that there is no gap in insurance coverage up to and through
        Closing.

       

      6.02 Conditions
        to Obligations of Seller.
        The
        obligations of Seller under this Agreement are subject to the fulfillment,
        at or
        prior to the Closing, of the following conditions, any one or more of which
        may
        be waived by Seller:

       

      (a) Representations
        and Warranties.
        All
        representations and warranties of Purchaser contained in or made pursuant
        to
        this Agreement shall be true and correct on and as of the Closing Date with
        the
        same force and effect as though made on and as of the Closing Date, and
        Purchaser shall have delivered to Seller a certificate, signed and dated
        as of
        the Closing Date by an officer of Purchaser, to the foregoing
        effect.

       

      (b) Performance
        of Agreement.
        Purchaser shall have delivered all documents and agreements described in
        Article
        VII and otherwise performed in all respects all obligations required under
        this
        Agreement and any other agreements referenced herein to be performed by it
        on or
        prior to the Closing Date.

       


      
        
          
          

        

        
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      (c) Litigation;
        Injunctions.
        No
        order of any court or administrative agency shall be in effect which restrains
        or prohibits the transactions contemplated hereby, and there shall not have
        been
        threatened, nor shall there be pending, any action or proceeding by or before
        any court or governmental agency or other regulatory or administrative agency
        or
        commission, challenging any of the transactions contemplated by this
        Agreement.

       

      (d) Consents
        and Approvals.
        All
        consents, approvals, licenses and permits, the granting of which are reasonably
        necessary for the consummation of the transactions contemplated hereby, shall
        have been obtained.

       

      (e) Corporate
        Certificates.
        Purchaser shall have delivered to Seller: (i) a copy of Purchaser’s Certificate
        and Articles of Organization; (ii) a certificate of existence of Purchaser
        issued as of a current date by the Indiana Secretary of State; and (iii)
        copies
        of resolutions of the Board of Managers of Purchaser authorizing (A) the
        execution and delivery of this Agreement and any other agreements contemplated
        hereby and (B) the taking of all steps necessary to consummate the transactions
        and fulfill Purchaser’s obligations under this Agreement.

       

      6.03 Conditions
        to Obligations of Purchaser.
        All
        obligations of Purchaser under this Agreement are subject to the fulfillment,
        at
        or prior to the Closing, of the following conditions, any one or more of
        which
        may be waived by Purchaser:

       

      (a) Lease
        Agreement.
        Seller
        and HKM Properties Company, a Washington general partnership, shall have
        mutually terminated their existing lease for Seller’s facility located in
        Hagerstown, Maryland. In addition, Purchaser and HKM Properties Company shall
        have entered into a written lease agreement for Seller’s facility in Hagerstown,
        Maryland on terms acceptable to Purchaser, pursuant to which Purchaser shall
        lease the facility for $12,539.26 per month and pursuant to which HKM Properties
        Company agrees to release any claims it may have under any previous
        lease.

       

      (b) HK
        Castings, Inc. Asset Purchase Agreement.
        At or
        prior to Closing, Purchaser or a related entity shall enter into a written
        asset
        purchase agreement with HK Castings, Inc., substantially in the form of asset
        purchase agreement attached hereto as Exhibit
        6.03(b).

       

      (c) Representations
        and Warranties.
        All
        representations and warranties of Seller contained in or made pursuant to
        this
        Agreement shall be true and correct on and as of the Closing Date with the
        same
        force and effect as though made on and as of the Closing Date, and Seller
        shall
        have delivered to Purchaser a certificate, signed and dated as of the Closing
        Date by an officer of Seller to the foregoing effect. 

       

      (d) Due
        Diligence.
        Purchaser shall have:

       

      (i) Received
        a title insurance policy for the Real Property issued, as of the moment of
        Closing, by a reputable title company, and in a form, acceptable to


       


      
        
          
          

        

        
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      Purchaser,
        insuring the Real Property for its current fair market value as agreed to
        by the
        parties. The policy shall be subject only to covenants, easements, liens
        and
        other restrictions reasonably acceptable to Purchaser. Seller shall pay all
        costs and expenses related to the issuance of the title insurance policy
        

       

      (ii) Received
        environmental test results as desired by Purchaser confirming that the Real
        Property is of an environmental quality acceptable to Purchaser, in its sole
        discretion. 

       

      (iii) Unless
        waived by Purchaser, received a current survey of the Real Property prepared
        by
        a licensed professional surveyor and in a form reasonably acceptable to
        Purchaser. 

       

      (iv) Completed
        such other inspections of the Purchased Assets and such due diligence
        investigations of Seller and the Division as Purchaser may deem reasonably
        necessary or advisable, and Purchaser shall be satisfied in its sole and
        absolute discretion with the results of such due diligence review. 

       

      (e) Performance
        of Agreement.
        Seller
        shall have delivered all documents and agreements described in Article VII
        and
        otherwise performed in all respects all obligations required under this
        Agreement and any other agreements referenced herein to be performed by it
        on or
        prior to the Closing Date.

       

      (f) Litigation;
        Injunctions.
        No
        order of any court or administrative agency shall be in effect which restrains
        or prohibits the transactions contemplated hereby or which would limit or
        affect
        Purchaser’s ownership or control of the Purchased Assets or the Division, and
        there shall not have been threatened, nor shall there be pending, any action
        or
        proceeding by or before any court or governmental agency or other regulatory
        or
        administrative agency or commission challenging any of the transactions
        contemplated by this Agreement.

       

      (g) Consents
        and Approvals.
        All
        consents, approvals, licenses and permits, the granting of which are reasonably
        necessary for the consummation of the transactions contemplated hereby, shall
        have been obtained.

       

      (h) Absence
        of Changes.
        On or
        prior to the Closing Date, there shall have been no loss, damage or destruction
        to the Purchased Assets which materially impairs the use or the value of
        the
        Purchased Assets or the Division. Seller shall not have suffered any material
        adverse change in its financial condition, results of operations, assets,
        liabilities, or business relating to the Division, nor shall Seller have
        suffered any significant employee attrition between the date of execution
        of
        this Agreement and the Closing Date. 

       

      (i) Lien
        Searches.
        Seller
        shall have delivered to Purchaser (i) final state and local tax lien and
        Uniform
        Commercial Code financing statement searches disclosing all 

       


      
        
          
          

        

        
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      liens
        and
        encumbrances on the Purchased Assets; and (ii) written releases from the
        holders
        of any such security interests, liens or other encumbrances with respect
        thereto.

       

      (j) Corporate
        Certificates.
        Seller
        shall have delivered to Purchaser: (i) a copy of Seller’s Articles of
        Incorporation, certified by the Washington Secretary of State as of a current
        date; (ii) a certificate of good standing of Seller issued as of a current
        date
        by the Washington Secretary of State; and (iii) copies of resolutions of
        the
        Boards of Directors Seller and a certificate of the secretary regarding the
        vote
        of the shareholders of Seller, authorizing (A) the execution and delivery
        of
        this Agreement and the other agreements contemplated hereby and (B) the taking
        of all steps necessary to consummate the transactions and fulfill Seller’s
        obligations under this Agreement and all agreements contemplated 

       

      (k) Interim
        Services Agreement.
        At or
        prior to Closing, Purchaser and Seller shall enter into a written interim
        services agreement providing, among other things, that Seller shall provide
        certain administrative and other support to Purchaser between the Closing
        hereunder and the closing under the Second Agreement and that Seller shall
        provide certain information on a regular basis with respect to the Seller’s
        operations in Seattle, Washington and Houston, Texas between the Closing
        hereunder and the closing under the Second Agreement, which agreement shall
        be
        substantially in the form of the interim services agreement attached hereto
        as
Exhibit
        6.03(k).
        

       

      ARTICLE
        VII. DELIVERIES
        AT CLOSING

       

      7.01 Deliveries
        by Seller.
        Seller
        shall execute, acknowledge, deliver and cause to be executed, acknowledged
        and
        delivered to Purchaser documents conveying title to the Purchased Assets
        as
        follows:

       

      (a) Seller
        shall each execute and deliver to HK Weston a general warranty deed conveying
        to
        Purchaser good and indefeasible title in fee simple to the Real Property
        in the
        form attached hereto as Exhibit
        7.01(a).

       

      (b) Seller
        shall execute and deliver to HK Parts a bill of sale in the form attached
        hereto
        as Exhibit
        7.01(b).

       

      (c) Seller
        shall execute an assignment and assumption agreement (“Assignment and Assumption
        Agreement”) in the form attached hereto as Exhibit
        7.01(c)
        together
        with such other instruments and specific forms of assignment as may be necessary
        to effect the transfer and registration of transfer of the Purchased Assets
        and
        Assumed Liabilities hereunder.

       

      (d) Seller
        shall execute and endorse to Purchaser certificates of title covering all
        vehicles, if any, that are part of the Purchased Assets.

       

      (e) Seller
        shall deliver originals (to the extent available, and if not, copies) of
        the
        Contracts, Licenses and Permits, Business Records and other documents in
        Seller’s 

       


      
        
          
          

        

        
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      possession
        constituting part of the Purchased Assets, as well as Schedule
        1.01(a)
        and
1.01(d)
        updated
        as of the Closing Date.

       

      (f) Seller
        shall have delivered to Purchaser fully executed documents to Purchaser’s
        satisfaction, evidencing Seller’s authority to sign this Agreement and to
        consummate the transactions contemplated hereby, as well as corporate
        certificates set forth in Section 6.03(j).

       

      7.02 Deliveries
        by Purchaser.
        Purchaser shall execute, acknowledge, deliver and cause to be executed,
        acknowledged and delivered to Seller the following items:

       

      (a) Purchaser
        shall pay the Purchase Price to GE Capital in accordance with Section 3.02.
        

       

      (b) HK
        Parts
        shall execute and deliver the Assignment and Assumption Agreement.

       

      (c) Purchaser
        shall have delivered to Seller fully executed documents to Seller’s
        satisfaction, evidencing each such Purchaser’s authority to sign this Agreement
        and to consummate the transactions contemplated hereby, as well as corporate
        certificates set forth in Section 6.02(e).

       

      7.03 Additionally
        Requested Documents; Post-Closing Assistance.
        At the
        reasonable request of Purchaser at Closing and at any time or from time to
        time
        thereafter, Seller shall cooperate with Purchaser to put Purchaser in actual
        possession and operating control of the Division and the Purchased Assets,
        execute and deliver such further instruments of sale, conveyance, transfer
        and
        assignment as Purchaser may reasonably request in order to effectively convey,
        transfer and assign the same to Purchaser, free and clear of all Liens, except
        the Assumed Liabilities.

       

      ARTICLE
        VIII. SURVIVAL
        OF PROVISIONS AND INDEMNIFICATION

       

      8.01 Survival.
        The
        respective representations, warranties and covenants of each of the parties
        to
        this Agreement, including all statements contained in any schedule or exhibit
        delivered pursuant hereto, shall be deemed to be material and to have been
        relied upon by the parties hereto and shall survive the Closing, and the
        consummation of the transactions contemplated hereby as
        follows: (i) the representations and warranties contained in Sections 4.01,
        4.02, 4.04, 4.10, 5.01 and 5.02 shall survive indefinitely and shall not
        terminate; (ii) the representations and warranties contained in Sections
        4.07,
        4.19, 4.21 and 4.22 shall survive for the applicable statutes of limitation;
        and
        (c) all other representations and warranties shall survive for a period of
        two
        (2) years after the Closing Date; provided,
        that
        any representation or warranty in respect of which indemnity may be sought
        under
        this Article 8, and the indemnity with respect thereto, shall survive the
        time
        at which it would otherwise terminate pursuant to this Section 8.01 if
        notice
        of the breach thereof giving rise to such right or potential right of indemnity
        shall have been given to the party against whom such indemnity may be sought
        prior to such time. No investigation by 

       


      
        
          
          

        

        
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      the
        parties made heretofore or hereafter shall affect the representations and
        warranties of the parties contained in or made pursuant hereto.

       

      8.02 Indemnification
        by Seller.
        Subject
        to the other provisions of this Article, Seller shall promptly indemnify,
        defend
        and hold harmless Purchaser and its shareholders, directors, officers,
        employees, agents, successors and assigns (“Purchaser Indemnified Parties”)
        against any and all losses, costs, claims, demands and expenses (including
        reasonable costs of investigation, court costs and legal fees actually incurred)
        and other damages (collectively, the “Losses”) arising our of, relating to or
        resulting from: (a) any breach by Seller of, or failure by Seller to perform,
        any of the covenants, obligations, representations or warranties contained
        in
        this Agreement; (b) any and all Excluded Liabilities; (c) any claim relating
        to
        bulk transfers or other principles of transferee liability by any creditor
        or
        former creditor of Seller, whether such claim is liquidated or unliquidated,
        contingent or disputed; (d) the operation of the Division on and prior to
        the
        Closing Date; and (e) any claim, action, suit or proceeding relating to any
        of
        the foregoing.

       

      8.03 Indemnification
        by Purchaser.
        Subject
        to the other provisions of this Article, Purchaser shall promptly indemnify,
        defend and hold harmless Seller against any and all Losses arising out of,
        relating to or resulting from: (a) any breach by Purchaser of, or failure
        by
        Purchaser to perform, any of the covenants, obligations, representations
        or
        warranties contained in this Agreement; (b) any Assumed Liabilities; (c)
        the
        conduct of the business and operations of the Division by the Purchaser after
        the Closing Date; and (d) any claim, action, suit or proceeding relating
        to any
        of the foregoing. 

       

      8.04 Cooperation.
        Subject
        to the provisions of Section 8.05, a party or parties against whom
        a claim
        for indemnification has been asserted (individually and collectively
“Indemnifying Party”) shall have the right, at its own expense, to defend any
        action or proceeding brought by a third party which resulted in said claim
        for
        indemnification, and if said right is exercised, the party or parties entitled
        to indemnification (individually and collectively “Indemnified Party”) and the
        Indemnifying Party shall cooperate in the defense of said action or
        proceeding.

       

      8.05 Indemnification
        Procedure for Third Party Claims Against Indemnified
        Parties.
        

       

      (a) In
        the
        event that subsequent to the Closing Date any Indemnified Party asserts a
        claim
        for indemnification under this Article VIII, on account of or in connection
        with
        any claim or the commencement of any action or proceeding against such
        Indemnified Party by any person or entity who is not a party to this Agreement
        (including any Governmental Authority) (a “Third Party Claim”), the Indemnified
        Party shall give written notice thereof together with a summary of any available
        information regarding such claim (the “Notice of Claim”) to the Indemnifying
        Party promptly after learning of such Third Party Claim. The Indemnifying
        Party
        shall have the right, upon written notice to the Indemnified Party (the “Defense
        Notice”) within 15 days of its receipt from the Indemnified Party of the Notice
        of Claim, to conduct at its expense the defense against such Third Party
        Claim
        in its own name, or, if necessary, in the name of the Indemnified
        Party.

       


      
        
          
          

        

        
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      (b) In
        the
        event that the Indemnifying Party shall fail to give the Defense Notice within
        the time and as prescribed by Section 8.05(a), the Indemnified Party shall
        have
        the right to conduct such defense in good faith with counsel reasonably
        acceptable to the Indemnifying Party at the Indemnifying Party’s expense, but
        the Indemnified Party (or any insurance carrier defending such Third Party
        Claim
        on the Indemnified Party’s behalf) shall be prohibited from compromising or
        settling such claim without the prior written consent of the Indemnifying
        Party,
        which consent shall not be unreasonably withheld or delayed.

       

      (c) In
        the
        event that the Indemnifying Party does deliver a Defense Notice and thereby
        elects to conduct the defense of such Third Party Claim in accordance with
        Section 8.05(a), the Indemnified Party will cooperate with and make available
        to
        the Indemnifying Party such assistance and materials as it may reasonably
        request, all at the expense of the Indemnifying Party. Regardless of which
        party
        defends such Third Party Claim, the other party shall have the right at its
        expense to participate in the defense assisted by counsel of its own choosing.
        Without the prior written consent of the Indemnified Party, the Indemnifying
        Party (and any insurance carrier defending such Third Party Claim on the
        Indemnified Party’s behalf) will not enter into any settlement of any Third
        Party Claim if pursuant to or as a result of such settlement, such settlement
        would lead to liability or create any financial or other obligation on the
        part
        of the Indemnified Party. If a firm offer is made to settle a Third Party
        Claim,
        which offer the Indemnifying Party is permitted to settle under this Section
        8.05, and the Indemnifying Party desires to accept and agree to such offer,
        the
        Indemnifying Party will give written notice to the Indemnified Party to that
        effect. If the Indemnified Party objects to such firm offer within 10 days
        after
        its receipt of such notice, the Indemnified Party may continue to contest
        or
        defend such Third Party Claim and, in such event, the maximum liability of
        the
        Indemnifying Party as to such Third Party Claim will not exceed the amount
        of
        such settlement offer, plus costs and expenses paid or incurred by the
        Indemnified Party up to the point such notice had been delivered. Failure
        at any
        time of the Indemnifying Party to diligently defend a Third Party Claim as
        required herein shall entitle the Indemnified Party to assume the defense
        and
        settlement of said Third Party Claim as if the Indemnifying Party had never
        elected to do so as provided in this Section 8.05. Failure by an Indemnified
        Party to provide notice on a timely basis of a Third Party Claim shall not
        relieve the Indemnifying Party of its obligations hereunder, except that
        the
        foregoing shall not constitute a waiver by the Indemnifying Party of any
        claim
        for direct damages caused by such delay. 

       

      (d) Any
        judgment entered or settlement agreed upon in the manner provided herein
        shall
        be binding upon the Indemnifying Party, and shall be conclusively deemed
        to be
        an obligation with respect to which the Indemnified Party is entitled to
        prompt
        indemnification hereunder, subject to the Indemnifying Party’s right to appeal
        an appealable judgment or order. 

       

      8.06 Nature
        of Other Liabilities.
        In the
        event any Indemnified Party should have a claim against any Indemnifying
        Party
        hereunder which does not involve a Third Party Claim, the Indemnified Party
        shall transmit to the Indemnifying Party a written notice (the “Indemnity


       


      
        
          
          

        

        
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      Notice”)
        describing in detail the nature of the claim and the basis of the Indemnified
        Party’s request for indemnification under this Agreement. The
        Indemnifying Party shall make all payments pursuant to the indemnification
        provisions contained in this Article VIII within ten (10) days after its
        receipt
        of the Indemnity Notice or, if the Indemnifying Party delivers written notice
        to
        the Indemnified Party within such 10-day period that it is disputing the
        Indemnified Party’s right to indemnification hereunder with respect to such
        payments, immediately upon the final determination of the amount of such
        indemnification obligation. 

       

      8.07 Right
        to Set-Off.
        Purchaser shall have the right to directly recoup and set-off any Losses
        incurred or suffered by any of the Purchaser Indemnified Parties resulting
        from
        any failure of a Seller to reimburse Purchaser for (i) any amounts due under
        this Agreement, and (ii) any claims of the Purchaser Indemnified Parties
        under this Article VIII, against any and all amounts which Purchaser may
        owe
        Seller from time to time.
        The
        parties acknowledge and agree that the rights of recoupment and set off set
        forth in this Section 8.07 are a condition to Purchaser agreeing to enter
        into
        and perform this Agreement and any other agreements contemplated hereby.
        

       

      ARTICLE
        IX. RESTRICTIVE
        COVENANTS

       

      9.01 Confidentiality.
        Seller
        acknowledges that the trade secrets and other confidential information acquired
        by Purchaser pursuant to this Agreement, including, without limitation, pricing
        practices, marketing strategies, technology and know-how are valuable, special
        and unique assets of Purchaser. Seller agrees that it will not, and it will
        cause its shareholders, directors, officers, employees, agents and Affiliates
        to
        not, directly or indirectly, except with the prior written consent of Purchaser,
        use, divulge or disclose or communicate, or cause or permit any other person
        or
        entity to use, divulge, disclose or communicate, to any person, firm,
        corporation or entity, in any manner whatsoever, any trade secrets or other
        confidential information conveyed to Purchaser pursuant to this Agreement.
        The
        foregoing covenants shall remain in effect for so long as any such information
        remains confidential information of Purchaser, and, in any event, for a minimum
        period of five (5) years after Closing. Notwithstanding anything to the contrary
        in this Agreement, Seller will not, and it will cause its shareholders,
        directors, officers, employees, agents and Affiliates to not, ever disclose
        or
        use confidential information which remains a trade secret of Purchaser.
For
        purposes of this Agreement, “Affiliate” means a person or entity that directly
        or indirectly, through one or more intermediaries, controls, is controlled
        by,
        or is under common control with, another person or entity or which any person
        or
        entity owns or controls directly or indirectly 20% or more of the voting
        shares
        or of the value of such person or entity or has the ability to control the
        management or affairs of such person or entity.

       

      9.02 Modification.
        In the
        event that any term, provision or covenant contained in Section 9.01 above
        is
        found to be unreasonable, and therefore unenforceable, by a court of competent
        jurisdiction, but would be valid and enforceable if any part thereof were
        deleted or otherwise modified, then the parties expressly agree that a court
        may
        limit the application of, or modify any such term, provision or covenant
        and
        proceed to enforce this Section as so limited or modified.

       


      
        
          
          

        

        
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      9.03 Remedies.
        Seller
        acknowledges and agrees that any violation of Section 9.01 would cause Purchaser
        irreparable damage and that if Seller violates or threatens to violate such
        restrictions, Purchaser shall be entitled to injunctive relief against Seller,
        without the necessity of proof of actual damage or the posting of bond, in
        addition to any other remedies available under this Agreement at law or in
        equity.

       

      ARTICLE
        X. MISCELLANEOUS

       

      10.01 Termination.
        This
        Agreement may be terminated at any time prior to Closing: (a) by the mutual
        written consent of the parties hereto; (b) by Purchaser in the event that
        the
        conditions to its obligations set forth in Section 6.03
        hereof have not been satisfied or waived at or prior to the Closing Date;
        (c) by
        Seller in the event that the conditions to its obligations set forth in
        Section 6.02
        hereof have not been satisfied or waived at or prior to the Closing Date;
        or (d)
        by either Purchaser or Seller if Closing has not occurred by 11:59 p.m. on
        March
        15, 2005, without intentional delay. In the event this Agreement is terminated
        pursuant to this Section,
        all rights and obligations of the parties hereunder shall terminate and no
        party
        shall have any liability to any other party; provided,
        that
        nothing herein will relieve any party from liability for any breach of any
        representation, warranty, agreement or covenant contained herein prior to
        such
        termination.

       

      10.02 Risk
        of Loss.
        Seller
        assumes all risks of destruction, loss or damage to any of the Purchased
        Assets
        due to fire or other casualty up to and including the Closing Date. If any
        material portion of the Purchased Assets is so destroyed, lost or damaged
        prior
        to Closing as to impair Purchaser’s ability to operate the Division, as
        determined in Purchaser’s discretion, Purchaser shall have the option to: (i)
        terminate this Agreement or (ii) or proceed with the Closing, with the Purchase
        Price reduced by the amount of such destruction, loss or damage as mutually
        agreed by Seller and Purchaser. 

       

      10.03 Definition
        of Knowledge. For
        purposes of this Agreement, Seller will be deemed to have “knowledge” of a
        particular fact or other matter if any individual who is serving, or who
        has at
        any time served, as a shareholder, director, officer or trustee of such person
        (or in any similar capacity) is, or at any time was, actually aware of such
        fact
        or other matter or
        if a
        reasonable inquiry by such person could reasonably be expected to disclose
        the
        existence of such fact or matter.

       

      10.04 Assignment.
        Seller
        may not assign any rights or delegate any obligations under this Agreement
        without the prior written consent of Purchaser, and any prohibited assignment
        or
        delegation will be null and void. The parties hereby acknowledge and agree
        that
        Purchaser may assign this Agreement at any time prior to Closing to any
        affiliated third party assignee, provided that such assignee agrees to assume
        Purchaser’s obligations hereunder. 

       

      10.05 Other
        Expenses.
        Except
        as otherwise provided in this Agreement, Seller shall pay all of its expenses
        incurred in connection with the negotiation, execution, and implementation
        of
        the transactions contemplated under this Agreement, and Purchaser shall pay
        all
        of its expenses incurred in connection with the negotiation, execution, and
        implementation of the transactions contemplated under this
        Agreement.

       


      
        
          
          

        

        
          -26-

          
            

          

        

        
          
          

        

      


      10.06 Notices.
        All
        notices, requests, demands, waivers and other communications required or
        permitted to be given under this Agreement shall be in writing and shall
        be
        deemed to have been duly given: (a) if delivered personally or sent by
        facsimile, on the date received, (b) if delivered by overnight courier, on
        the
        day after mailing, and (c) if mailed, four days after mailing by first class
        certified mail, return receipt requested and with postage prepaid. Any such
        notice shall be sent as follows:

       

      
        	 	
                To
                  Seller:

              	 	
                To
                  Purchaser:

              
	 	 	 	 
	 	
                Hatch
                  & Kirk, Inc.

              	 	
                HK
                  Machined Parts, LLC

              
	 	
                5111
                  Leary Ave. N.W.

              	 	
                HK
                  Weston Properties, LLC

              
	 	
                Seattle,
                  Washington 98107

              	 	
                1125
                  S. Walnut

              
	 	
                Attn:
                  Galliano Mondin

              	 	
                South
                  Bend, Indiana 46619

              
	 	
                Fax:
                  (425) 952-7212

              	 	
                Attn:
                  John A. Martell

              
	 	
                 

              	 	
                Fax:
                  (574) 232-7648

              
	 	 	 	 
	 	
                with
                  a copy to:

              	 	
                with
                  a copy to:

              
	 	 	 	 
	 	
                Williams,
                  Kastner & Gibbs PLLC

              	 	
                Barnes
                  & Thornburg LLP

              
	 	
                601
                  Union Street, No. 4100

              	 	
                600
                  1st
                  Source Bank Center

              
	 	
                Seattle,
                  Washington 98107

              	 	
                100
                  North Michigan St. 

              
	 	
                Attn:
                  Dwayne E. Copple

              	 	
                South
                  Bend, Indiana 46601

              
	 	
                Fax:
                  (206) 628-6611

              	 	
                Attn:
                  Richard L. Mintz

              
	 	 	 	
                Fax:
                  (574) 237-1125

              


      

      


      10.07 Controlling
        Law; Jurisdiction.
        This
        Agreement shall be construed, interpreted and enforced in accordance with
        the
        laws of the State of Indiana, without giving effect to principles of conflicts
        of laws. The parties expressly consent to exclusive personal jurisdiction
        and
        venue in the federal and state courts of the State of Indiana.

       

      10.08 Headings.
        Any
        table of contents and paragraph headings in this Agreement are for convenience
        of reference only and shall not be considered or referred to in resolving
        questions of interpretation.

       

      10.09 Benefit.
        This
        Agreement shall be binding upon and shall inure to the exclusive benefit
        of the
        parties hereto and their respective heirs, legal representatives, permitted
        successors and permitted assigns. This Agreement is not intended to, nor
        shall
        it, create any rights in any other party.

       

      10.10 Partial
        Invalidity.
        The
        invalidity or unenforceability of any particular provision of this Agreement
        shall not affect the other provisions hereof, and this Agreement shall be
        construed in all respects as if such invalid or unenforceable provisions
        were
        omitted. 

       

      10.11 Waiver.
        Neither
        the failure nor any delay on the part of any party hereto in exercising any
        rights, power or remedy hereunder shall operate as a waiver thereof, or of
        any
        other right, power or remedy; nor shall any single or partial exercise of
        any
        right, power or 

       


      
        
          
          

        

        
          -27-

          
            

          

        

        
          
          

        

      


      remedy
        preclude any further or other exercise thereof, or the exercise of any other
        right, power or remedy. No waiver of any of the provisions of this Agreement
        shall be void unless it is in writing and signed by the party against which
        it
        is sought to be enforced.

       

      10.12 Counterparts
        and Facsimiles.
        This
        Agreement may be executed simultaneously in two or more counterparts each
        of
        which shall be deemed an original and all of which together shall constitute
        but
        one and the same instrument. The signature page to this Agreement and all
        other
        documents required to be executed at Closing may be delivered by facsimile
        and
        the signatures thereon shall be deemed effective upon receipt by the intended
        receiving party.

       

      10.13 Legal
        Fees and Costs.
        Subject
        to the provisions of Article VIII, in the event any party hereto incurs legal
        expenses to enforce any provision of this Agreement, the prevailing party
        will
        be entitled to recover such legal expenses, including, without limitation,
        attorneys’ fees, costs and disbursements, in addition to any other relief to
        which such party shall be entitled.

       

      10.14 Entire
        Agreement.
        This
        Agreement, including the schedules and exhibits hereto, constitutes the entire
        agreement between the parties hereto with regard to the matters contained
        herein
        and it is understood and agreed that all previous undertakings, negotiations,
        letter of intent, term sheets, and agreements between the parties are merged
        herein. This Agreement may not be modified orally, but only by an agreement
        in
        writing signed by Purchaser and Seller.

       

      [Remainder
        of Page Intentionally Blank]


      
        
          
          

        

        
          -28-

          
            

          

        

        
          
          

        

      


      IN
        WITNESS WHEREOF,
        the
        parties hereto have executed this Agreement on the date or dates indicated
        below, effective as of the date first above written.

       

      
        	
                “SELLER”

              	 	
                “PURCHASER”

              
	 	 	 	 	 
	 	 	 	 	 
	
                HATCH
                  & KIRK, INC.

              	 	
                HK
                  MACHINED PARTS, LLC

              
	 	 	 	 	 
	 	 	 	 	 
	
                By:

              	/s/
                Galliano Mordin	 	
                By:

              	/s/
                John A. Martell
	 	 	 	 	 
	
                Its:

              	President	 	
                Its:

              	Manager
	 	 	 	 	 
	
                Dated:

              	March
                4, 2005	 	
                Dated:

              	March
                4, 2005
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	
                HK
                  WESTON PROPERTIES, LLC

              
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	
                By:

              	/s/
                John A. Martell
	 	 	 	 	 
	 	 	 	
                Its:

              	Manager
	 	 	 	 	 
	 	 	 	
                Dated:

              	March
                4, 2005


      

       

       

       

      -29-