**EXHIBIT 2.1**

 

**P& F INDUSTRIES, INC.**

 

 

 

GREEN MANUFACTURING, INC.,

 

AND

 

P&F INDUSTRIES, INC.

 

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ASSET PURCHASE AGREEMENT

 

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Dated as of September 16,1998

 

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TABLE OF CONTENTS

 
| SECTION 1.  DEFINITIONS                                        |   |
|--------------------------------------------------------------------------|--------|
|                                                                     |   |
| SECTION 2.  PURCHASE AND  SALE OF THE PURCHASED PROPERTY       |   |
| SECTION 2.1.  Transfer of Assets                               |   |
| SECTION 2.2.  Sale at Closing Date                             |   |
| SECTION 2.3.  Subsequent Documentation                         |   |
| SECTION 2.4.  Assumption of Liabilities                        |   |
|                                                                     |   |
| SECTION 3.  PURCHASE  PRICE                                    |   |
| SECTION 3.1.  Purchase Price                                   |   |
| SECTION 3.2.  Payment of Purchase Price                        |   |
|                                                                     |   |
| SECTION 4.  CLOSING                                            |   |
|                                                                     |   |
| SECTION 5.   REPRESENTATIONS AND WARRANTIES OF THE SELLER      |   |
| SECTION 5.1.  Corporate Organization                           |   |
| SECTION 5.2.  Qualification to Do Business                     |   |
| SECTION 5.3.  Authorization and Validity of Agreement          |   |
| SECTION 5.4.  No Conflict or Violation                         |   |
| SECTION 5.5.  Consents and Approvals                           |   |
| SECTION 5.6.  Financial Statements                             |   |
| SECTION 5.7.  Absence of Certain Changes or Events             |   |
| SECTION 5.8.  Tax Matters                                      |   |
| SECTION 5.9.  Absence of Undisclosed Liabilities               |   |
| SECTION 5.10. Purchased Real Property                               |   |
| SECTION 5.11. Leases                                                |   |
| SECTION 5.12. Equipment and Machinery                               |   |
| SECTION 5.13. Intellectual Property;  Intangible Assets             |   |
| SECTION 5.14. Licenses and Permits                                  |   |
| SECTION 5.15. Compliance with Law                                   |   |
| SECTION 5.16. Litigation                                            |   |
| SECTION 5.17. Contracts                                             |   |
| SECTION 5.18. Receivables                                           |   |
| SECTION 5.19. Inventories                                           |   |
| SECTION 5.20. Employee Plans                                        |   |
| SECTION 5.21. Customers, Suppliers and  Competitors                 |   |
| SECTION 5.22. Insurance                                             |   |
| SECTION 5.23. Transactions with  Directors, Officers and Affiliates |   |
| SECTION 5.24. Change in Ownership                                   |   |
| SECTION 5.25. Labor Matters                                         |   |
| SECTION 5.26. Products Liability                                    |   |
| SECTION 5.27. Environmental Matters                                 |   |
| SECTION 5.28. Solvency                                              |   |

 

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| SECTION 5.29. Accuracy of Information                                       |   |
|----------------------------------------------------------------------------------|--------|
|                                                                             |   |
| SECTION 6.  REPRESENTATIONS AND WARRANTIES OF THE BUYER                |   |
| SECTION 6.1.  Corporate Organization                                   |   |
| SECTION 6.2.  Qualification to Do Business                             |   |
| SECTION 6.3.  Authorization and Validity of Agreements                 |   |
| SECTION 6.4.  No Conflict or Violation                                 |   |
| SECTION 6.5.  Consents and Approvals                                   |   |
|                                                                             |   |
| SECTION 7.  COVENANTS OF  THE SELLER                                   |   |
| SECTION 7.1.  Conduct of Business Before the Closing Date              |   |
| SECTION 7.2.  Consents and Approvals                                   |   |
| SECTION 7.3.  Access to Properties and Records                         |   |
| SECTION 7.4.  Negotiations                                             |   |
| SECTION 7.5.  Further Assurances                                       |   |
| SECTION 7.6.  Best Efforts                                             |   |
| SECTION 7.7.  Covenant Not To Compete                                  |   |
| SECTION 7.8.  Non-Solicitation of Employees                            |   |
| SECTION 7.9.  Notice of Breach                                         |   |
| SECTION 7.10. Removal of Encumbrances                                       |   |
| SECTION 7.11. Assignment of Contracts  and Warranties                       |   |
| SECTION 7.12. Delivery of Deeds, Bills  of Sale, Certificate and Affidavits |   |
| SECTION 7.13. Removal of Excluded  Property                                 |   |
| SECTION 7.14. Closing Date Financial  Statements                            |   |
|                                                                             |   |
| SECTION 8.  COVENANTS OF  THE BUYER                                    |   |
| SECTION 8.1.  Actions Before Effective Date                            |   |
| SECTION 8.2.  Consents and Approvals; Best Efforts                     |   |
|                                                                             |   |
| SECTION 9.  EMPLOYEES AND EMPLOYEE PLANS                               |   |
| SECTION 9.1.  Offer of Employment                                      |   |
| SECTION 9.2.  No Assumption of Liabilities                             |   |
|                                                                             |   |
| SECTION 10.  TAXES                                                     |   |
| SECTION 10.1.  Taxes                                                   |   |
| SECTION 10.2.  Cooperation on Tax Matters                              |   |
| SECTION 10.3.  Allocation of Purchase Price                            |   |
| SECTION 10.4.  Transfer Taxes                                          |   |
|                                                                             |   |
| SECTION 11.  INDEMNIFICATION                                           |   |
| SECTION 11.1.  Indemnification by the Seller                           |   |
| SECTION 11.2.  Procedures for Indemnification by the  Seller           |   |
| SECTION 11.3.  Indemnification by the Buyer                            |   |
| SECTION 11.4.  Procedures for Indemnification by the  Buyer            |   |

 

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| SECTION 11.5.  Survival                                        |   |
|--------------------------------------------------------------------------|--------|
|                                                                     |   |
| SECTION 12.  CONDITIONS PRECEDENT TO PERFORMANCE BY THE SELLER |   |
| SECTION 12.1.  Representations and Warranties of the  Buyer    |   |
| SECTION 12.2.  Performance of the Obligations of the  Buyer    |   |
| SECTION 12.3.  Consents and Approvals                          |   |
| SECTION 12.4.  No Violation of Orders                          |   |
| SECTION 12.5.  Opinion of Counsel                              |   |
| SECTION 12.6.  Consulting Agreement                            |   |
| SECTION 12.7.  Automobile Storage Lease                        |   |
| SECTION 12.8.  Other Closing Documents                         |   |
| SECTION 12.9.  Legal Matters                                   |   |
|                                                                     |   |
| SECTION 13.  CONDITIONS PRECEDENT TO PERFORMANCE BY THE BUYER  |   |
| SECTION 13.1.  Representations and Warranties of the  Seller   |   |
| SECTION 13.2.  Performance of the Obligations of the  Seller   |   |
| SECTION 13.3.  Consents and Approvals; Licenses and  Permits   |   |
| SECTION 13.4.  No Violation of Orders                          |   |
| SECTION 13.5.  No Material Adverse Change                      |   |
| SECTION 13.6.  Opinion of Counsel                              |   |
| SECTION 13.7.  Consulting Agreement                            |   |
| SECTION 13.8.  Automobile Storage Lease                        |   |
| SECTION 13.9.  Assignment of Leases                            |   |
| SECTION 13.10. Change of Name                                       |   |
| SECTION 13.11. Deeds, Bills of Sale,  Certificate and Affidavit     |   |
| SECTION 13.12. Repayment of  Indebtedness                           |   |
| SECTION 13.13. Other Closing Documents                              |   |
| SECTION 13.14. Legal Matters                                        |   |
|                                                                     |   |
| SECTION 14. TERMINATION                                             |   |
| SECTION 14.1.  Conditions of Termination                       |   |
| SECTION 14.2.  Effect of Termination                           |   |
|                                                                     |   |
| SECTION 15.  MISCELLANEOUS                                     |   |
| SECTION 15.1.  Successors and Assigns                          |   |
| SECTION 15.2.  Governing Law                                   |   |
| SECTION 15.3.  Expenses                                        |   |
| SECTION 15.4.  Broker’s and Finder’s Fees            |   |
| SECTION 15.5.  Severability                                    |   |
| SECTION 15.6.  Notices                                         |   |
| SECTION 15.7.  Amendments; Waivers                             |   |
| SECTION 15.8.  Public Announcements                            |   |

 

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| SECTION 15.9.   Entire Agreement                     |   |
|---------------------------------------------------------------------|--------|
| SECTION 15.10. Parties in Interest                             |   |
| SECTION 15.11. Section and  Paragraph Headings            |   |
| SECTION 15.12. Counterparts                                    |   |
|                                                                |   |
| SECTION 16.  DESTRUCTION, DAMAGE OR TAKING BEFORE CLOSING |   |
| SECTION 16.1.  Destruction or Damage Before Closing       |   |
| SECTION 16.2.  Taking Before Closing                      |   |
| SECTION 16.3.  Knowledge                                  |   |

 

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INDEX TO SCHEDULES

 
| 1.        | Locations of  Personal Effects                        |   |
|-----------|-------------------------------------------------------|--------|
| 2.4(a)    | Certain  Assumed Liabilities                          |   |
| 2.4(b)    | Contracts  Constituting Excluded Liabilities          |   |
| 5.2       | Qualification  to do Business                         |   |
| 5.5       | Consents,  Waivers, Authorizations and Approvals      |   |
| 5.6       | Exceptions  to August 2, 1998 Balance Sheet      |   |
| 5.7(a)    | Certain  Changes or Events                            |   |
| 5.7(b)    | Operation of  Business                                |   |
| 5.10      | Purchased  Real Property                              |   |
| 5.11      | Leases                                                |   |
| 5.12      | Equipment  and Machinery                              |   |
| 5.13(a)   | Intellectual  Property                                |   |
| 5.13(b)   | Intellectual  Assets                                  |   |
| 5.14      | Licenses,  Permits and Governmental Approvals         |   |
| 5.15      | Compliance  with Law                                  |   |
| 5.16      | Litigation                                            |   |
| 5.17      | Contracts                                             |   |
| 5.20      | Employee  Plans                                       |   |
| 5.21      | Customers,  Suppliers and Competitors                 |   |
| 5.22      | Insurance                                             |   |
| 5.23      | Transactions  with Directors, Officers and Affiliates |   |
| 5.25      | Employment  and Labor Agreements                      |   |
| 5.26      | Products  Liability                                   |   |
| 5.27      | Environmental  Matters                                |   |
| 7.8       | Non-Solicitation                                      |   |
| 10.3      | Allocation  of Purchase Price                         |   |
| 12.3      | Certain  Consents and Approvals                       |   |
| 13.3      | Consents and  Approvals; Licenses and Permits         |   |
|      |                                                  |   |
|      |                                                  |   |
| EXHIBIT A | Form of  Consulting Agreement                         |   |
| EXHIBIT B | Form of  Escrow Agreement                             |   |
| EXHIBIT C | Form of  Automobile Storage Lease                     |   |
| EXHIBIT D | Form of  Opinion of Buyer’s Counsel              |   |
| EXHIBIT E | Form of  Opinion of Seller’s Counsel             |   |
| EXHIBIT F | Year End  Statement                                   |   |
| EXHIBIT G | August 2,  1998 Balance Sheet                    |   |
| EXHIBIT H | Form of Deed                                          |   |
|           |                                                       |        |  |

 

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ASSET PURCHASE AGREEMENT

 

THIS ASSET PURCHASE AGREEMENT, dated as ofSeptember 16, 1998, by and between Green Manufacturing, Inc., an Ohiocorporation (the “Seller”), and P&F Industries, Inc., a Delawarecorporation (the “Buyer”).

 

W I T N E S SE T H:

 

WHEREAS, the Seller is engaged in thebusiness of manufacturing custom engineered hydraulic cylinders, prefabricatedstairways and platforms and tractor-mounted post hole diggers;

 

WHEREAS, the Buyer desires to purchasecertain assets of the Seller, and the Seller desires to sell such assets to theBuyer, in each case upon the terms and subject to the conditions set forth inthis Agreement;

 

NOW, THEREFORE, in consideration of theforegoing and the respective covenants and agreements hereinafter contained,the parties hereby agree as follows:

 

# **SECTION 1**.  DEFINITIONS.

# ** **

As used in this Agreement, the followingterms shall have the following meanings:

 

“Accounts Receivable” shall mean allaccounts and notes receivable of the Seller relating to the Business, existingon the Closing Date.

 

“Affiliate” of any specified Personshall mean any other Person directly or indirectly controlling or controlled byor under direct or indirect common control with such specified Person.  For the purposes of this definition,“control” when used with respect to any specified Person means the power todirect the management and policies of such Person, directly or indirectly,whether through the ownership of voting securities, by contract or otherwise;and the terms “controlling” and “controlled” have meanings correlative to theforegoing.

 

“August 2, 1998 Balance Sheet”shall mean the balance sheet of the Seller at August 2, 1998, whichbalance sheet is annexed hereto as Exhibit G.

 

“Allocation” shall have the meaningset forth in Section 10.3.

 

“ALTA” shall mean American Land TitleAssociation.

 

“Assigned Contracts” shall mean therights of the Seller under the Contracts.

 

“Assumed Liabilities” shall have themeaning set forth in Section 2.4.

 

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“Authorized Withdrawals” shall havethe meaning set forth in Section 7.1(c).

 

“Automobile Storage Lease” shall meanthe Automobile Storage Lease substantially in the form of Exhibit Chereto.

 

“Business” shall mean all the businessactivities and operations of the Seller to be sold to the Buyer pursuant tothis Agreement.

 

“Business Day” shall mean days otherthan Saturdays, Sundays and holidays or days on which banks in the States ofNew York or Ohio are authorized or required by law to close.

 

“Buyer” shall have the meaning setforth in the Recitals hereto.

 

“Buyer Indemnitees” shall have themeaning set forth in Section 11.1.

 

“Buyer’s Event of Breach” shall havethe meaning set forth in Section 11.3.

 

“Closing” shall have the meaning setforth in Section 4.

 

“Closing Date” shall meanSeptember 16, 1998 or such other date as the parties shall mutually agreeupon but in no event later than December 31, 1998.

 

“Closing Date Statements” shall havethe meaning set forth in Section 7.14.

 

“Code” shall have the meaning setforth in Section 5.20(b).

 

“Consulting Agreement” shall mean theConsulting Agreement substantially in the form of Exhibit A hereto.

 

“Contracts” shall mean, collectively,the Leases, Purchase Orders, Sales Orders, Employment and Labor Agreements andOther Contracts, including, without limitation, those described inSection 5.17 hereto.

 

“Defects” shall have the meaning setforth in Section 7.10.

 

“Employment and Labor Agreements”shall have the meaning set forth in Section 5.25(a).

 

“Environmental Claims” shall have themeaning set forth in Section 5.27(g).

 

“Environmental Law(s)” shall mean anyfederal, state, or local statute, regulation, ordinance, order, decree, orother requirement of law relating to protection of human health or welfare orthe environment or to the identification, transportation, handling, discharge,emission, treatment, storage, or disposal of any pollutant, contaminant,hazardous or soiled waste, or any hazardous or toxic

 

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substance or material.  Withoutlimiting the generality of the foregoing, Environmental Laws shall include,without limitation, the Comprehensive Environmental Response, Compensation andLiability Act, 42 U.S.C. § 9601 etseq.; the ResourceConservation and Recovery Act, 42 U.S.C. § 6901 etseq.; theFederal Water Pollution Control Act, 33 U.S.C. § 1251 etseq.;the Clean Air Act, 42 U.S.C. § 7401 etseq.; the ToxicSubstances Control Act, 15 U.S.C. § 261 etseq.; the SafeDrinking Water Act, 42 U.S.C. 43000(f) etseq.; the OccupationalSafety and Health Act, 29 U.S.C. §  651 etseq.; and  the Hazardous Materials Transportation Act,49 U.S.C. § 1802 etseq., each as amended; together with theregulations promulgated thereunder, permits issued thereunder, and analogousstate and local statutes, regulations and ordinances.

 

“Equipment and Machinery” shall mean(i) all the equipment, machinery, furniture, fixtures and improvements,tooling, spare parts, supplies and vehicles used by the Seller with respect tothe operations of the Business on the Closing Date (including, withoutlimitation, all such items as set forth on the August 2, 1998 BalanceSheet with additions thereto (net of dispositions) in the ordinary course ofbusiness), (ii) all the replacements for any of the foregoing owned or leasedby the Seller, (iii) any rights of the Seller to the warranties (to the extentassignable) and licenses received from manufacturers and sellers (to the extentassignable) of the aforesaid items and (iv) any related claims, credits, rightsof recovery and set-off with respect thereto.

 

“ERISA” shall mean the EmployeeRetirement Income Security Act of 1974, as amended.

 

“Escrow Agreement” shall mean theEscrow Agreement substantially in the form of Exhibit B hereto.

 

“Excluded Liabilities” shall have themeaning set forth in Section 2.4.

 

“Excluded Property” shall mean(i) the Mobile Office Trailer and (ii) the Seller’s Personal Effectsas defined in this Section 1; provided, however, that any orall of the Excluded Property may cease to be Excluded Property pursuant toSection 7.13 hereof.

 

“Files and Records” shall mean allfiles and records, whether in hard copy, computer or magnetic format, of theSeller specifically relating to the Business or the Purchased Property,including, without limitation, the following types of files and recordsspecifically relating to the Business: customer and supplier files, equipment maintenance records, equipmentwarranty information, plant plans, specifications and drawings, equipmentdrawings, trade secrets and customer specifications and all files relating toemployees of the Business employed by the Buyer following the Closing,correspondence with national, state and local governmental agencies relating tothe operation of the Business and related files and records of the Seller.

 

“401(k) Plan” shall have the meaningset forth in Section 2.4.

 

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“GAAP” shall have the meaning setforth in Section 5.6(a).

 

“Government” shall mean any agency,division, subdivision, audit group or procuring office of the Government of theUnited States or any foreign government, including the employees or agentsthereof.

 

“Hazardous Substance” shall have themeaning set forth in Section 5.27(d).

 

“Intangible Assets” shall mean allintangible personal property rights, including, without limitation, all rightson the part of the Seller to proceeds of any insurance policies and all claimson the part of the Seller for recoupment, reimbursement and coverage under anyinsurance policies, in each case in connection with the Business, and allgoodwill of the Seller relating to the Business, and including, withoutlimitation, those items listed in Schedule 5.13 hereto but excluding thoseinsurance policies specifically excluded from the definition of IntangibleAssets on Schedule 5.13.

 

“Intellectual Property” shall mean allletters patent, patent qualifications, trademarks, service marks, trade names(including the name “Green Manufacturing” and all derivatives thereof), brands,private labels, copyrights, know-how, trade secrets and licenses and rightswith respect to the foregoing that the Seller owns or possesses the rights touse relating to the Purchased Property or the operations of the Business,including, without limitation, those items listed in Schedule 5.13 hereto.

 

“Inventory” shall mean (i) all thefinished goods, raw materials, work in progress and inventoriable suppliesowned by the Seller on the Closing Date (including, without limitation, allsuch items as set forth on the August 2, 1998 Balance Sheet with additionsthereto (net of dispositions) in the ordinary course of business) specificallyfor use in the operations of the Business and (ii) any and all rights of theSeller to the warranties received from its suppliers with respect to suchinventory (to the extent assignable) and related claims, credits, rights of recoveryand set-off with respect thereto.

 

“Leased Real Property” shall have themeaning set forth in Section 5.11(a).

 

“Leases” shall have the meaning setforth in Section 5.11(a).

 

“Licenses and Permits” shall have themeaning set forth in Section 5.14.

 

“Lien” shall mean any mortgage,pledge, security interest, encumbrance, lien (statutory or other) orconditional sale agreement.

 

“Losses” shall have the meaning setforth in Section 11.1.

 

“Mobile Office Trailer” shall mean themobile office trailer

 

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that is located on the Premises on the Closing Date, along with thecontents thereof.

 

“Multiemployer Plans” shall have themeaning set forth in Section 5.20(e).

 

“NLRB” shall have the meaning setforth in Section 5.25(b).

 

“Obsolete Inventory” shall have themeaning set forth in Section 5.19.

 

“Occurrence” shall have the meaningset forth in Section 5.26(b).

 

“Other Contracts” shall mean anyEquipment and Machinery leases, and all indentures, loan agreements, securityagreements, partnership or joint venture agreements, license agreements,service contracts, guarantees and warranties in favor of the Seller,employment, commission and consulting agreements, suretyship contracts, lettersof credit, reimbursement agreements, distribution agreements, contracts orcommitments limiting or restraining the Seller from engaging or competing inany lines of business or with any Person, documents granting the power ofattorney with respect to the affairs of the Seller, agreements not made in theordinary course of business of the Seller, options to purchase any assets orproperty rights of the Seller, working capital maintenance or other form ofguaranty agreements, and all other agreements to which the Seller is a party andwhich are related to the operation of the Business, but excluding Employmentand Labor Agreements, Purchase Orders, Sales Orders and Plans and thoseContracts listed on Schedule 2.4.

 

“Person” shall mean any individual,corporation, partnership, joint venture, association, joint-stock company,trust, unincorporated organization or Government.

 

“Plans” shall have the meaning setforth in Section 5.20(a).

 

“Post-Retirement Benefits” shall havethe meaning set forth in Section 5.20(g).

 

“Premises” shall mean the PurchasedReal Property and any Leased Real Property.

 

“Product Liability Lawsuits” shallhave the meaning set forth in Section 5.26(a).

 

“Products” shall mean (i) the productsmanufactured or in the process of design or development for manufacturing bythe Seller as of the Closing Date (including, but not limited to, any productnecessary and useful for the performance of any Contract) and (ii) any productsmanufactured or which were in the process of design or development formanufacturing by the Seller (or its predecessors in interest) in the last fiveyears.

 

“Purchase Orders” shall mean all theSeller’s outstanding purchase orders, contracts or other commitments tosuppliers of goods

 

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and services for materials, supplies or other items used in theBusiness.

 

“Purchase Price” shall have themeaning set forth in Section 3.1.

 

“Purchased Property” shall mean theAccounts Receivable, Assigned Contracts, Equipment and Machinery, Files, andRecords, Intangible Assets, Intellectual Property, Inventory, Licenses andPermits (to the extent transferable by the Seller), Premises, any prepaidexpenses and other assets relating to the operations of the Business on theClosing Date (including, without limitation, all such items as are set forth onthe August 2, 1998 Balance Sheet with additions thereto (net ofdispositions) in the ordinary course of business) and all non-leased software,software systems, databases and all other information systems used in the Businessand includes all the tangible and intangible assets of the Seller and itsAffiliates used in the Business and related thereto.  Notwithstanding anything to the contrary contained herein,Purchased Property shall not include Excluded Property, except to the extentprovided in Section 7.13 hereto.

 

“Purchased Real Property” shall havethe meaning set forth in Section 5.10(a).

 

“Repair Cost” shall have the meaningset forth in Section 16.1.

 

“Retrofits” shall have the meaning setforth in Section 5.26(a).

 

“Sales Orders” shall mean all theSeller’s sales orders, contracts or other commitments to purchasers of goodsand services of the Business.

 

“Seller” shall have the meaning setforth in the Recitals hereto.

 

“Seller Indemnitees” shall have themeaning set forth in Section 11.3.

 

“Seller’s Personal Effects” shall meanany personal effects of the Seller’s stockholders or their beneficiaries or therelatives of such beneficiaries that are located in the Mobile Office Traileror the other locations on the Premises set forth on Schedule 1 on theClosing Date or are otherwise specified on Schedule 1.

 

“Sellers’ Event of Breach” shall havethe meaning set forth in Section 11.1.

 

“Surplus Inventory” shall have themeaning set forth in Section 5.19.

 

“Surveys” shall have the meaning setforth in Section 7.10.

 

“Taxes” shall mean for all purposes ofthis Agreement all

 

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taxes however denominated, including any interest, penalties oradditions to tax that may become payable in respect thereof, imposed by anygovernmental body, which taxes shall include, without limiting the generalityof the foregoing, all income taxes, payroll and employee withholding taxes,unemployment insurance, social security, sales and use taxes, excise taxes,franchise taxes, gross receipts taxes, occupation taxes, real and personalproperty taxes, stamp taxes, transfer taxes, gains taxes, workmen’scompensation taxes and other obligations of the same or a similar nature,whether arising before, on or after the Closing; and “Tax” shall mean any oneof them.

 

“Tax Returns” shall mean any return,report, information return or other document (including any related orsupporting information) filed or required to be filed with any governmentalbody in connection with the determination, assessment, collection oradministration of any Taxes.

 

“Title Insurance Company” shall havethe meaning set forth in Section 7.10.

 

“Title Policies” shall have themeaning set forth in Section 7.12.

 

“Title Reports” shall have the meaningset forth in Section 7.10.

 

“Transfer Taxes” shall have themeaning set forth in Section 10.4.

 

“Twelve-Month Anniversary” shall havethe meaning set forth in Section 7.13.

 

“UCC Searches” shall have the meaningset forth in Section 7.10.

 

“W.A.R.N.” shall mean the WorkerAdjustment and Retraining Notification Act, as codified at 29 U.S.C.,§§ 2101-2109, and the regulations promulgated thereunder.

 

“Welfare Plan” shall have the meaningset forth in Section 5.20(c).

 

“Year End Statement” shall mean theaudited balance sheet of the Seller as of December 31, 1997 and therelated audited statements of earnings and retained earnings and cash flows forthe year then ended, together with the report thereon of Bock, Korsnack &Hinds, Inc., which balance sheet and statements are annexed hereto as ExhibitF.

 

# **SECTION 2**.  PURCHASE AND SALE OF THE PURCHASEDPROPERTY.

 

## ***SECTION 2.1***.  Transfer of Assets.  Subject to the terms and conditions hereinset forth, the Seller shall sell, convey, transfer, assign and deliver to theBuyer, and the Buyer shall purchase and accept from the Seller, on the ClosingDate, all right, title and interest of the

 

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## ***Sellerand its Affiliates in and to the Purchased Property, wherever located.***

 

## ***SECTION 2.2***.  Sale at Closing Date.  The sale, transfer, assignment and deliveryby the Seller of the Purchased Property to the Buyer, as herein provided, shallbe effected on the Closing Date by deeds, bills of sale, endorsements, assignmentsand other instruments of transfer and conveyance satisfactory in form andsubstance to counsel for the Buyer.

 

## ***SECTION 2.3***.  Subsequent Documentation.  The Seller shall, at any time and from timeto time after the Closing Date, upon the request of the Buyer and at theexpense of the Buyer, execute, acknowledge and deliver, or cause to beexecuted, acknowledged and delivered, all such further deeds, assignments,transfers and conveyances, and take such other actions as may be required forthe better assigning, transferring, granting, conveying and confirming to theBuyer or its successors and assigns, or for aiding and assisting in collectingand reducing to possession, any or all of the Purchased Property.  The Seller hereby constitutes and appoints,effective as of the Closing Date, the Buyer, its successors and assigns, as thetrue and lawful attorney of the Seller with full power of substitution in thename of the Buyer or in the name of the Seller but for the benefit of the Buyer(a) to collect for the account of the Buyer all Accounts Receivable and anyother item of Purchased Property and (b) to institute and prosecute allproceedings which the Buyer may in its discretion deem proper in order tocollect the Accounts Receivable or to assert or enforce any right, title orinterest in, to or under the Purchased Property and to defend or compromise(subject to Section 11, if applicable) any and all actions, suits orproceedings in respect of any of the Purchased Property.  The Buyer shall be entitled to retain forits own account any amounts collected pursuant to the foregoing powers,including any amounts payable as interest in respect thereof.

 

## ***SECTION 2.4***.  Assumption of Liabilities.  From and after the Closing, the Buyer shallassume and the Buyer hereby agrees to pay, perform and discharge when due allliabilities of the Seller directly related to the Business (i) arisingpursuant to the terms of the Assigned Contracts (including the GreenManufacturing, Inc. 401(k) Retirement Plan (the “401(k) Plan”)),(ii) related to the Business and arising on or after the Closing Date, or(iii) related to the Business and arising in the ordinary course of businessafter December 31, 1997 and prior to the Closing Date, to the extent setforth on Schedule 2.4(a) (the “Assumed Liabilities”); provided,however, that the Buyer shall not assume (and the term “AssumedLiabilities” shall not be deemed to include) (i) income and franchisetaxes of the Seller; (ii) except as contemplated by Schedule 2.4(a),all other Taxes attributable to periods ending on or prior to the Closing Date;(iii) Taxes of any other Person for which the Seller may be liable bycontract or otherwise; (iv) any liability of any kind due to illegal ortortuous conduct prior to the Closing Date by the Seller, or the Seller’sofficers, directors or employees, whether to employees or third parties;(v) any liability for product liability lawsuits arising from the sale ofany Product before the Closing Date; (vi) any liability for the infringementof any item of Intellectual Property in

 

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## ***connectionwith the sale of any Product before the Closing Date; (vii) any and allliabilities under Environmental Laws arising from or in any way related toacts, omissions, occurrences or conditions first occurring or in existenceprior to the Closing Date; (viii) any liabilities with respect toContracts listed on Schedule 2.4(b); and (ix) any other liability notexpressly assumed by the Buyer pursuant to this Agreement.  All the liabilities and obligations of theSeller other than the Assumed Liabilities are hereinafter referred to as the “ExcludedLiabilities”.  On the Closing Date,the Buyer shall in addition execute and deliver to the Seller an instrument ofassumption of liabilities with respect to the Assumed Liabilities.***

 

# **SECTION 3**.  PURCHASE PRICE.

 

## ***SECTION 3.1***.  Purchase Price.  The purchase price for the sale and transferof the Purchased Property is $10,500,000 in cash (the “Purchase Price”),which price is payable and deliverable in accordance with Section 3.2.

 

## ***SECTION 3.2***.  Payment of Purchase Price.  In payment for the Purchased Property, theBuyer shall (i) on the Closing Date pay to the Seller $9,500,000 of thePurchase Price by (x) bank wire transfer of immediately available funds toan account designated by the Seller at least four (4) Business Days prior tothe Closing Date or (y) certified check or bank check payable, in eithercase, to the order of the Seller unless the Seller has designated another payeeat least four (4) Business Days prior to the Closing Date and (ii) on theClosing Date pay $1,000,000 of the Purchase Price into an escrow accountestablished pursuant to the terms of the Escrow Agreement.

 

# **SECTION 4.**  CLOSING.

 

The closing hereunder (the “Closing”)shall take place at the offices of the Buyer at 787 Seventh Avenue, New York,New York 10019-6099 at 11:00 a.m. on the Closing Date.

 

# **SECTION 5**.  REPRESENTATIONS AND WARRANTIES OF THESELLER.

 

The Seller hereby represents and warrants tothe Buyer as follows:

 

## ***SECTION 5.1***.  Corporate Organization.  The Seller is a corporation duly organized,validly existing and in good standing under the laws of the State of Ohio andhas all requisite corporate power and authority to own its properties and assetsand to conduct its businesses as now conducted.  Copies of the Articles of Incorporation and Code of Regulationsof the Seller, with all amendments thereto to the date hereof, have beenfurnished to the Buyer or its representatives, and such copies are accurate andcomplete as of the date hereof.

## *** ***

## ***SECTION 5.2***.  Qualification to DoBusiness.  The Seller is dulyqualified to do business as a foreign corporation and is in good standing inevery jurisdiction in which the character of the

 

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## ***propertiesowned or leased by it or the nature of the business conducted by it makes suchqualification necessary and in which the failure to be so qualified and in goodstanding would have a material adverse effect on the Seller.  Schedule 5.2 sets forth alljurisdictions in which the Seller is qualified to do business as a foreigncorporation.***

 

## ***SECTION 5.3***.  Authorization and Validityof Agreement.  The Seller has allrequisite corporate power and authority to enter into this Agreement and theEscrow Agreement and to carry out its obligations hereunder andthereunder.  The execution and deliveryof this Agreement and the Escrow Agreement and the performance of the Seller’sobligations hereunder and thereunder have been duly authorized by all necessarycorporate action by the Board of Directors and stockholders of the Seller, andno other corporate proceedings on the part of the Seller or the stockholders ofthe Seller are necessary to authorize such execution, delivery andperformance.  This Agreement has beenduly executed by the Seller and constitutes its valid and binding obligation,enforceable against it in accordance with its terms.

## *** ***

## ***SECTION 5.4***.  No Conflict or Violation.  The execution, delivery and performance by theSeller of this Agreement and the Escrow Agreement do not and will not violateor conflict with any provision of the Articles of Incorporation or Code ofRegulations of the Seller and do not and will not violate any provision of law,or any order, judgment or decree of any court or other governmental orregulatory authority, nor violate nor will result in a breach of or constitute(with due notice or lapse of time or both) a default under any contract, lease,loan agreement, mortgage, security agreement, trust indenture or otheragreement or instrument to which the Seller is a party or by which it is boundor to which any of its properties or assets is subject, nor will result in thecreation or imposition of any Lien upon any of the Purchased Property, nor,except as set forth on Schedule 5.14, will result in the cancellation,modification, revocation or suspension with respect to the Business of any ofthe licenses, franchises, permits, authorizations or approvals referred to inSection 5.14.

## *** ***

## ***SECTION 5.5***.  Consents and Approvals.  Schedule 5.5 sets forth a true andcomplete list of each consent, waiver, authorization or approval of anygovernmental or regulatory authority, domestic or foreign, or of any otherPerson, and each declaration to or filing or registration with any suchgovernmental or regulatory authority, that is required in connection with theexecution and delivery of this Agreement by the Seller or the performance bythe Seller of its obligations hereunder.

## *** ***

## ***SECTION 5.6***.  Financial Statements.  (a) The Year End Statement (i) was preparedin accordance with generally accepted accounting principles (“GAAP”) applied ona consistent basis, (ii) presents fairly the financial condition of theBusiness as of such date, (iii) is in accordance with the books of account andrecords of the Seller, (iv) can be legitimately reconciled with the financialstatements and the financial records maintained and the accounting methodsapplied by the Seller for federal income tax purposes and (v) reflects accuratelyall accrued costs and expenses of the Seller related to the Business.  The Year End Statement contains all entriesrecommended by the

 

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## ***Seller’sindependent auditors.***

 

###### (a)                                  Except as set forthon Schedule 5.6, the August 2, 1998 Balance Sheet (i) presents fairlythe financial condition of the Business as of such date, (ii) is in accordancewith the books of account and records of the Seller and (iii) has been preparedin a manner consistent with the Year End Statement, except that theAugust 2, 1998 Balance Sheet is subject to normal year-end adjustments anddoes not include footnotes.

######  

## ***SECTION 5.7***.  Absence of Certain Changesor Events.

 

###### (a)                                  Except as set forthon Schedule 5.7(a), since December 31, 1997, there has not been:

 

(i)                                     anymaterial adverse change in the business, operations, properties, assets orcondition (financial or other) of the Seller, or any event that has had amaterial adverse effect on the foregoing, and no factor or condition exists andno event has occurred that would be likely to result in any such change;

 

(ii)                                  anymaterial loss, damage, destruction or other casualty to the Purchased Property;

 

(iii)                               anychange in any material method of accounting or accounting practice of the Businessor the Seller relating to the Business; or

 

(iv)                              anyloss of the employment, services or benefits of any key employee.

 

###### (b)                                 SinceDecember 31, 1997, the Seller has operated the Business in the ordinarycourse of its business consistent with past practice and, except as set forthon Schedule 5.7(b), has not:

######  

(i)                                     incurredany material obligation or liability (whether absolute, accrued, contingent orotherwise) relating to the operations of the Business except in the ordinarycourse of business consistent with past practice;

 

(ii)                                  failedto discharge or satisfy any Lien or pay or satisfy any obligation or liability(whether absolute, accrued, contingent or otherwise) arising from the operationof the Business, other than liabilities being contested in good faith and forwhich adequate reserves have been provided and Liens arising in the ordinarycourse of business that do not, individually or in the aggregate, interferewith the use, operation, enjoyment or marketability of any of the PurchasedProperty;

 

(iii)                               mortgaged,pledged or subjected to any Lien any of the Purchased Property, except forLiens for Taxes not yet due and payable and Liens or personal property arisingin the ordinary course of business that do not, individually or in theaggregate, interfere with the use, operation, enjoyment or marketability of anyof the Purchased Property;

 

(iv)                              soldor transferred any of the assets of the Business in excess of $10,000 orcanceled any debts or claims or waived any rights relating to the operations ofthe Business in excess of $10,000, except in the ordinary course of businessconsistent with past practice;

 

(v)                                 disposedof any patents, trademarks or copyrights or any patent, trademark or copyrightapplications used in the operations of the Business;

 

(vi)                              defaultedon any obligation relating to the operations of the Business;

 

(vii)                           enteredinto any transaction relating to the

 

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Business,except in the ordinary course of business consistent with past practice;

 

(viii)                        writtendown the value of any Inventory or written off as uncollectible any accountsreceivable specifically relating to the Business in excess of $5,000 or anyportion thereof not reflected in the August 2, 1998 Balance Sheet;

 

(ix)                                grantedany increase in the compensation or benefits of employees of the Business otherthan increases in accordance with past practice or entered into any employmentor severance agreement or arrangement with any of them;

 

(x)                                   madeany capital expenditure, or additions to property, plant and equipment used inthe operations of the Business other than in the ordinary course of business;

 

(xi)                                laidoff any Employees;

 

(xii)                             discontinuedthe manufacture or sale of any Products;

 

(xiii)                          incurredany obligation or liability for the payment of severance benefits; or

 

(xiv)                         enteredinto any agreement or made any commitment to do any of the foregoing.

 

## ***SECTION 5.8***.  Tax Matters.  All Tax Returns required to be filed beforethe Closing Date in respect of the Seller have been (or will have been by theClosing Date) filed, and the Seller has (or will have by the Closing Date)paid, accrued or otherwise adequately reserved for the payment of all Taxesrequired to be paid in respect of the periods covered by such returns and has(or will have by the Closing Date) adequately reserved for the payment of allTaxes with respect to periods ended on or before the Closing Date for which TaxReturns have not yet been filed.  AllTaxes of the Seller have been paid or adequately provided for and the Sellerknows of no proposed additional Tax assessment against it not adequatelyprovided for on the August 2, 1998 Balance Sheet.  In the ordinary course, the Seller makesadequate provision on its books for the payment of Taxes (including for thecurrent fiscal period) owed by the Seller. The Seller has withheld and paid all Taxes related to the Business andrequired to be withheld with respect to amounts paid or owing to any employee,creditor, independent contractor or other third party.

 

## ***SECTION 5.9***.  Absence of UndisclosedLiabilities.  To the best knowledgeof the Seller, the Seller does not have any indebtedness or liability, absoluteor contingent, known or unknown relating to the Business, which is not shown orprovided for on the August 2, 1998 Balance Sheet other than liabilities asshall have been incurred or accrued in the ordinary course of business sinceAugust 2, 1998.  Except as setforth on Schedule 5.9 or as shown on the August 2, 1998 BalanceSheet, the Seller is not directly or indirectly liable upon or with respect to(by discount, repurchase agreements or otherwise), or obliged in any other wayto provide funds in respect of, or to guarantee or assume, any debt, obligationor dividend of any Person in connection with the Business, except endorsementsin the ordinary course of business in connection with the deposit, in banks orother financial institutions, of items for collection.

 

## ***SECTION 5.10***. Purchased Real Property.

 

###### (a)                                  Schedule 5.10sets forth a complete and accurate description of

 

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###### all real property owned by the Seller (the “PurchasedReal Property”), including the recorded metes and bounds or other recordeddescription of each land parcel and a description of the improvementsconstructed or existing thereon.

######  

###### (b)                                 The Seller has goodand marketable title in fee simple to the Purchased Real Property, and thePurchased Real Property is not subject to any Liens (other than the Lien ofcurrent property Taxes and assessments not in default); and, except as setforth on Schedule 5.10, none of such real properties is subject to anyeasements, rights of way, licenses, grants, building or use restrictions,exceptions, reservations, limitations or other impediments or states of factthat adversely affect the value thereof or that interfere with or impair thepresent and continued use thereof in the usual and normal conduct of theBusiness.  Except as set forth onSchedule 5.10, none of the Purchased Real Property is subject to anylease, license or other agreement or understanding granting to any Person orentity any right to the use, occupancy or enjoyment of the Purchased Propertyor any portion thereof.

######  

###### (c)                                  Except as set forthon Schedule 5.10, Seller has not received any written notice that theimprovements on the Purchased Real Property and the operations thereinconducted fail to conform to any applicable health, fire, insurance,environmental, safety, zoning and building laws, ordinances and administrativeregulations, Permits or other regulations, except for possible nonconforminguses or violations that do not interfere with the present use, operation ormaintenance thereof by the Seller as now used, operated or maintained or accessthereto, and that do not affect the value thereof and Seller has not receivedany notice to the contrary.  Seller hasnot received any written notice that any of the buildings, structures,improvements and fixtures owned, leased or used by the Seller in connectionwith the Business fail to conform to any applicable codes and rules adopted bynational, state and local associations and boards of insuranceunderwriters.  There are no actions,suits, proceedings or governmental investigations pending or threatened againstthe Purchased Real Property.

######  

###### (d)                                 There are nooutstanding requirements or recommendations by any insurance company that hasissued a policy covering the Purchased Real Property, or by any board of fireunderwriters or other body exercising similar functions, requiring or recommendingany repairs or work to be done on any such property.

######  

###### (e)                                  All public utilitiesrequired for the operation of the Purchased Real Property either enter thePurchased Real Property through adjoining public streets or, if they passthrough adjoining private land, do so in accordance with valid, perpetual andnon-terminable public or private easements that will inure to the benefit ofthe Buyer.  All the public utilitiesmentioned above are installed and operating and are in good condition andrepair, and all installation and connection charges are paid in full.  The Seller has not received any notice fromany utility company or municipality of any fact or condition which could resultin the discontinuation of presently available or otherwise necessary sewer,water, electric, gas, telephone or other utilities or services for any of thePurchased Real Property.

######  

###### (f)                                    There are noactions, suits, proceedings or governmental investigations pending or, to thebest knowledge of the Seller, threatened against the Purchased RealProperty.  The Seller has no

 

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###### knowledge of and has not received any noticeof any pending or contemplated (i) rezoning or condemnation proceedingaffecting the Purchased Real Property; (ii) special assessment against thePurchased Real Property; or (iii) litigation against the Seller with respect tothe Purchased Real Property, the use thereof, or agreements affecting the same.

######  

###### (g)                                 The Seller is not a“foreign person” within the meaning of Section 1445 of the Code.

######  

###### (h)                                 Each parcel of realproperty comprising any part of the Purchased Real Property, including withoutlimitation all buildings and improvements thereon, and the present use,operation or condition thereof:  (i) isassessed as one or more separate tax lots and no part of such property is partof a tax lot which includes other property which is not a part of the PurchasedReal Property; (ii) is not located in an area designated as a flood zone; and(iii) is not subject to any purchase option, right of first refusal or firstoffer or other similar right.

######  

###### (i)                                     Except as setforth on Schedule 5.10, to the best knowledge of the Seller: (x) thebuildings, structures, improvements and fixtures upon the Purchased RealProperty are all in good operating condition and repair and are fully usablefor their intended purposes in connection with the Business; (y) the plumbing,electrical, heating, air conditioning, elevator, ventilating and all othermechanical or structural systems in the buildings or improvements located atthe Purchased Real Property are in good working order and condition, and theroof, basement and foundation walls of such buildings and improvements are ingood condition and free of leaks and other defects; and (z) are no physicaldefects or deferred maintenance items at the Purchased Real Property thatinterfere with or impede the Seller’s use of the Purchased Real Property in theordinary course of the Business.

######  

###### (j)                                     Each parcel ofPurchased Real Property is occupied and used by the Seller pursuant to and inconformity with a validly issued final certificate of occupancy which currentlyremains in effect.  There is currentlyno construction or development activity at or affecting the Purchased RealProperty and there has been no such activity for the past twelve months.

######  

###### (k)                                  Except as set forthon Schedule 5.10, each parcel of Purchased Real Property is used andoccupied by the Seller solely in the pursuit of the Business, and no portionthereof is leased or licensed to, or used or occupied by, any Person other thanthe Seller.

######  

###### (l)                                     A true andcomplete copy of existing policies of title insurance for all parcels of thePurchased Real Property has been delivered to the Buyer or itsrepresentatives.  All such titleinsurance policies are currently in effect.

######  

###### (m)                               No parcel of realproperty comprising any part of the Purchased Real Property, whether or notcurrently developed or used by the Seller in connection with the Business, issubject to zoning, environmental, contractual or other restrictions thatprevents or materially impedes the current use thereof for or in connectionwith the Business.

######  

###### (n)                                 The Purchased RealProperty is in compliance with the requirements of the Americans withDisabilities Act.

 

## ***SECTION 5.11***. Leases.

######  

###### (a)                                  Schedule 5.11(a)(i)  sets forth a list of all leases, subleases

 

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###### and occupancy agreements, together with allamendments and supplements thereto, with respect to all properties in which theSeller has a leasehold interest, whether as lessor or lessee and which are usedin connection with the Business (each, a “Lease” and collectively, the “Leases”;the real property covered by Leases under which the Seller is a lessee isreferred to herein as the “Leased Real Property”).  The Seller has furnished to Buyer true,correct and complete copies of all Leases. No option has been exercised under any of such Leases, except optionswhose exercise has been evidenced by a written document, a true, complete andaccurate copy of which has been delivered to the Buyer with the correspondingLease.  Except as set forth onSchedule 5.11(a)(ii) hereto, the transfer of the Leases to the Buyer doesnot require the consent or approval of the other party to the Lease, nor will suchtransfer violate any Lease or cause the Seller to be in default under anyLease.

######  

###### (b)                                 Each Lease is in fullforce and effect, and no Lease has been modified or amended except pursuant toan amendment referred to on Schedule 5.11(a)(i).  Neither the Seller nor any other party to a Lease has given tothe other party written notice of or has made a claim with respect to anybreach or default.  The Seller is not indefault under any Lease and, to the best knowledge of the Seller, no otherparty to a Lease is in default.

######  

###### (c)                                  The Seller has noLeased Real Property.

 

## ***SECTION 5.12***. Equipment and Machinery. Schedule 5.12 sets forth a complete and correct list and briefdescription of each item of Equipment and Machinery having an original purchasecost exceeding $5,000.  The Seller hasgood title, free and clear of all title defects and objections, Liens (otherthan the Lien of current property Taxes and assessments not in default, if any)to the Equipment and Machinery and other than Liens set forth on Schedule 5.12.  The Equipment and Machinery is sufficientand adequate to carry on the Business as presently conducted, and except as setforth on Schedule 5.12, all items thereof are in good operating condition andrepair.  All Equipment and Machineryowned by an Affiliate of the Seller required or used in connection with theBusiness will, on the Closing Date, be included in the Purchased Property.

 

## ***SECTION 5.13***. Intellectual Property; Intangible Assets.

## *** ***

###### (a)                                  Except as set forthon Schedule 5.13(a), the Seller has no Intellectual Property.  The Seller is not under any obligation topay any royalties or similar payments in connection with any license to any ofits Affiliates.  All IntellectualProperty owned by any Affiliate of the Seller required or used in connectionwith the Business will, on the Closing Date, be included in the PurchasedProperty.  The Seller owns or has theright to use all computer software, software systems and databases and allother information systems included in the Purchased Property.

######  

###### (b)                                 Schedule 5.13(b)sets forth a true and complete list of all of the Intangible Assets and asummary description of each such item. There is no restriction affecting the use of any of the IntangibleAssets, and no license has been granted with respect thereto.  Each of the Intangible Assets is valid andin good standing, is not currently being challenged, is not involved in anypending, to the best knowledge of the Seller, or threatened administrative orjudicial proceeding, and, to the best knowledge of the Seller, does not

 

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###### conflict with any rights of any otherPerson.  The Seller’s rights in and tothe Intangible Assets are sufficient and adequate in all respects to permit theconduct of the Business as now conducted, and, to the best knowledge of theSeller, none of the products or operations of the Business involves anyinfringement of any proprietary right of any other Person.  All Intangible Assets owned by any Affiliateof the Seller required or used in connection with the Business will, on theClosing Date, be included in the Purchased Property.

 

## ***SECTION 5.14***. Licenses and Permits. Schedule 5.14 sets forth a true and complete list of all licenses,permits, certificates of occupancy, franchises, authorizations and approvalsissued or granted to the Seller with respect to the Business or the Premises bythe Government of the United States, any state or local government, any foreignnational or local government, or any department, agency, board, commission,bureau or instrumentality of any of the foregoing (the “Licenses and Permits”),and all pending applications therefor. Such list contains a summary description of each such item and, whereapplicable, specifies the date issued, granted or applied for, the expirationdate and the current status thereof. Each License and Permit has been duly obtained, is valid and in fullforce and effect, and is not subject to any pending or, to the best knowledgeof the Seller, threatened administrative or judicial proceeding to revoke,cancel, suspend or declare such License and Permit invalid in any respect.  The Licenses and Permits are sufficient andadequate in all respects to permit the continued lawful conduct of the Businessin the manner now conducted, and none of the operations of the Business arebeing conducted in a manner that violates any of the terms or conditions underwhich any License and Permit was granted. The Seller has obtained and, where applicable, filed timely applicationsto renew, all Licenses and Permits required by any Environmental Law withrespect to the Business and the Premises, and the Seller is in compliance witheach such License and Permit.  Except asset forth on Schedule 5.14, no License and Permit will in any way beaffected or modified by, or terminate or lapse by reason of, the transactionscontemplated by this Agreement.

 

## ***SECTION 5.15***. Compliance with Law. Except as set forth on Schedule 5.15, the Purchased Property is incompliance with, and the operations of the Business and the Premises have beenconducted in accordance with all applicable laws, regulations, orders and otherrequirements of all courts and other governmental or regulatory authoritieshaving jurisdiction over the Seller and its assets, properties and operations,including, without limitation, all such laws, regulations, orders andrequirements promulgated by or relating to consumer protection, currencyexchange, equal opportunity, health, environmental protection, HazardousSubstances, conservation, wetlands, architectural barriers to the handicapped,fire, zoning and building, occupation safety, pension, securities andtrading-with-the-enemy matters, except where the failure to be in suchcompliance or to have so conducted the operations of the Business and thePremises would not result in liability to any Person in excess of $10,000.  The Seller has not received notice of anyviolation of any such law, regulation, order or other legal requirement, and isnot in default with respect to any order, writ, judgment, award, injunction ordecree

 

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## ***ofany national, state or local court or governmental or regulatory authority orarbitrator, domestic or foreign, applicable to the Business or any of theassets, properties or operations with respect thereto.  The Seller does not have knowledge of anyproposed change in any such laws, rules or regulations (other than laws ofgeneral applicability) that would materially and adversely affect thetransactions contemplated by this Agreement or all or a material part of theBusiness or the Purchased Property.***

 

## ***SECTION 5.16***. Litigation.  Except asset forth on Schedule 5.16, there are no claims, actions, suits,proceedings, labor disputes or investigations pending or, to the best knowledgeof the Seller, threatened (including, without limitation, any claim, action,suit, proceeding or investigation under any Environmental Law), before anynational, state or local court or governmental or regulatory authority,domestic or foreign, or before any arbitrator of any nature, brought by oragainst the Seller or any of its officers, directors, employees, agents orAffiliates involving, affecting or relating to the Business, the PurchasedProperty or the transactions contemplated by this Agreement, nor is any basisknown to the Seller or any of its directors or officers for any such action,suit, proceeding or investigation. Neither the Business nor the Purchased Property is subject to any order,writ, judgment, award, injunction or decree of any national, state or localcourt or governmental or regulatory authority or arbitrator, domestic orforeign, that affects or might affect the Business or the Purchased Property,or that would or might interfere with the transactions contemplated by thisAgreement.

 

## ***SECTION 5.17***. Contracts.

## *** ***

###### (a)                                  Schedule 5.17sets forth a complete and correct list and, if such contract is not in writing,a summary description of all Contracts (as in effect on the date hereof).

######  

###### (b)                                 To the best knowledgeof the Seller, each Contract is valid, binding and enforceable against theparties thereto in accordance with its terms, and in full force and effect onthe date hereof.  The Seller hasperformed all obligations required to be performed by it to date under, and isnot in default or delinquent in performance, status or any other respect(claimed or actual) in connection with, any Contract, and no event has occurredwhich, with due notice or lapse of time or both, would constitute such adefault.  To the best knowledge of theSeller, no other party to any Contract is in default in respect thereof, and noevent has occurred which, with due notice or lapse of time or both, wouldconstitute such a default.  The Sellerhas delivered to the Buyer or its representatives true and complete originalsor copies of all the Contracts.

######  

###### (c)                                  With respect to eachContract, the Seller has complied with and expects to comply with all materialterms thereof, all certifications and representations of the Seller withrespect thereto and all statutes and regulations applicable thereto.

 

## ***SECTION 5.18***. Receivables.  All notesand accounts receivable payable to or for the benefit of the Business reflectedon the August 2, 1998 Balance Sheet, or acquired by the Seller after thedate thereof and before the Closing Date have been collected or are (or willbe)

 

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## ***collectiblein amounts not less than the aggregate amount thereof (net of reservesestablished in accordance with prior practice and reflected on theAugust 2, 1998 Balance Sheet) carried (or to be carried) on the books ofthe Seller, and are not subject to any counterclaims or set-offs in excess of$10,000.***

 

## ***SECTION 5.19***. Inventories.  TheInventory is carried at not more than the lower of cost or net realizablevalue, and does not include any Obsolete Inventory or Surplus Inventory.  As used herein, “Obsolete Inventory”is Inventory which, at August 2, 1998, was not usable or saleable in thelawful and ordinary course of business of the Business as now conducted and hasbeen proposed by the Seller to be conducted because of legal restrictions,failure to meet specifications, loss of market, damage, physical deteriorationor for any other cause in each case net of reserves provided therefor on theAugust 2, 1998 Balance Sheet and net of Inventory adjustments madesubsequent to August 2, 1998 that are mutually acceptable to the Buyer andthe Seller; and “Surplus Inventory” is Inventory that, at August 2,1998, exceeded twelve (12) months’ supply based on sales during the twelve (12)months ended August 2, 1998.

 

## ***SECTION 5.20***. Employee Plans.

## *** ***

###### (a)                                  There is no (nor hasthere ever been) any trade or business (whether or not incorporated), undercommon control with the Seller within the meaning of Sections 414(b), (c), (m)or (o) of the Code.  Schedule 5.20sets forth all pension, savings, retirement, health, insurance, severance andother employee benefit or fringe benefit plans maintained or sponsored by theSeller, or with respect to which the Seller has any responsibility or liability(including any contingent liability) (collectively referred to herein as the “Plans”).  With respect to the Plans, the Seller hasdelivered to the Buyer copies of:  (i)the plan documents, and, where applicable, related trust agreements, and anyrelated agreements which are in writing; (ii) summary plan descriptions; (iii)the most recent Internal Revenue Service determination letter relating to eachPlan for which a letter of determination was obtained; (iv) to the extentrequired to be filed, the most recent Annual Report (Form 5500 Series andaccompanying schedules of each Plan and applicable financial statements) asfiled with the Internal Revenue Service; and (v) audited financial statements,if any.

######  

###### (b)                                 Except as set forth onSchedule 5.20, (i) Each Plan conforms to, and its administration is incompliance with, all applicable requirements of law, including, withoutlimitation, ERISA and the Internal Revenue Code of 1986, as amended (the “Code”)and (ii) all of the Plans are in full force and effect as written, and allpremiums, contributions and other payments required to be made by the Sellerunder the terms of any Welfare Plan (as hereinafter defined) have been made oraccrued.

######  

###### (c)                                  Each Plan maintainedby the Seller that is required to be qualified under Section 401(a) of theCode, and each trust maintained pursuant thereto has been determined to beexempt from federal taxation by the Internal Revenue Service and has afavorable determination letter that has been issued by the Internal RevenueService with respect to each such Plan. No Plan that is an employee welfare benefit plan as defined inSection 3(1) of ERISA (a “Welfare

 

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###### Plan”) is fundedthrough a voluntary employee beneficiary association as defined inSection 501(c)(9) of the Code.

######  

###### (d)                                 Except as set forth onSchedule 5.20, the Seller has never maintained, contributed to or incurredany liability with respect to any Plan subject to Title IV of ERISA or Section 412of the Code.  The Seller has no materialliability under Section 4062 of ERISA to the Pension Benefit GuarantyCorporation or to a trustee appointed under Section 4042 of ERISA.  The Seller has not engaged in anytransaction described in Section 4069 of ERISA.

######  

###### (e)                                  There are nomultiemployer plans (as defined in Subsection 3(37) of ERISA) (“MultiemployerPlans”) to which the Seller is or has been required to make a contributionor other payment.  The Seller has notwithdrawn in a complete or partial withdrawal from any Multiemployer Plan, norhas the Seller incurred any material liability due to the termination orreorganization of a Multiemployer Plan.

######  

###### (f)                                    There has been nonon-exempt prohibited transaction (within the meaning of Section 4975 of theCode or Part 4 of Subtitle B of Title I of ERISA) with respectto any Pension Plan or penalty under Section 502(i) of ERISA.

######  

###### (g)                                 The Seller does notmaintain any Plan providing post-retirement benefits qualified underSection 401(a) of the Code (“Post-Retirement Benefits”).  The Seller is not liable for Post-RetirementBenefits under any plan not maintained by the Seller.  The Seller has complied in all material respects with therequirements of Section 4980B of the Code and Sections 601 to 608 ofERISA relating to continuation coverage for group health plans.

######  

###### (h)                                 There has been nomaterial violation of ERISA or the Code with respect to the filing ofapplicable reports, documents and notices regarding the Plans with theSecretary of Labor or the Secretary of the Treasury or the furnishing ofrequired reports, documents or notices to the participants or beneficiaries ofthe Plans.

######  

###### (i)                                     There are nopending actions, claims or lawsuits which have been asserted, instituted or, tothe best of the Seller’s knowledge, threatened, against the Plans, the assetsof any of the trusts under such Plans or the Plan sponsor or the Planadministrator, or, to the best of the Seller’s knowledge, against any fiduciaryof the Plans with respect to the operation of such Plans (other than routinebenefit claims).

######  

###### (j)                                     Except as setforth on Schedule 5.20, the Plans have been maintained, in all materialrespects, in accordance with their terms and with all provisions of ERISA andthe Code (including rules and regulations thereunder) and other applicablefederal and state laws and regulations.

######  

###### (k)                                  There has been nomass layoff or plant closing as defined by W.A.R.N. or any similar state orlocal “plant closing” law with respect to the employees of the Seller.

######  

###### (l)                                     Except as set forthon Schedule 5.20, the execution of, and performance of the transactionscontemplated in, this Agreement will not, either alone or upon the occurrenceof subsequent events, result in any payment (whether of severance pay orotherwise), acceleration, forgiveness of indebtedness, vesting, distribution,increase in benefits or obligation to fund benefits with respect to anyemployee of the Seller.

 

## ***SECTION 5.21***. Customers, Suppliers and Competitors.  Schedule 5.21 sets forth a complete andcorrect list of (a) current all customers

 

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## ***whosepurchases exceeded $10,000 in net sales of the Business during the Seller’slast full fiscal year; (b) the suppliers by dollar volume of the Business andthe aggregate dollar volume of purchases by the Business from such suppliersfor such fiscal year; (c) the most significant (by volume of sales) competitorsof the Business by product; (d) all distributors of any Products; and (e) allrepresentatives of the Business or of the Seller with respect to theBusiness.  None of such customers,suppliers, distributors or representatives has or, to the best knowledge of theSeller, intends to terminate or change significantly its relationship with theBusiness.***

 

## ***SECTION 5.22***. Insurance. Schedule 5.22 lists the fidelity bonds and the aggregate coverageamount and type and generally applicable deductibles of all policies of title,liability, fire, casualty, business interruption, workers’ compensation andother forms of insurance insuring the Business and the Purchased Property.  The Seller has furnished a true, completeand accurate copy of all such policies and bonds to the Buyer.  All such policies and bonds are in fullforce and effect.  The Seller shallmaintain the coverage under all policies and bonds listed in Schedule 5.22in full force and effect through the Closing Date.

 

## ***Tothe best knowledge of the Seller, the Seller is not in default under anyprovisions of any such policy of insurance, nor has received notice of cancellationof any such insurance.  To the bestknowledge of the Seller, there is no claim by the Seller pending under any ofsuch policies or bonds as to which coverage has been questioned, denied ordisputed by the underwriters of such policies or bonds.  Except as set forth on Schedule 5.22,since December 31, 1997, the Seller has not received any written noticefrom or on behalf of any insurance carrier issuing such policies that insurancerates will be substantially increased (except to the extent that insurancerates may be increased for all similarly situated risks), that there will be acancellation, or an increase in a deductible (or an increase in premiums inorder to maintain an existing deductible) or non-renewal of existing policies,or that alteration of any Equipment and Machinery or any improvements toPurchased Real Property or Leased Real Property, the purchase of additionalEquipment and Machinery, or modification of any of the methods of doingbusiness of the Business, will be required or suggested.***

## *** ***

To the best knowledge of the Seller, theinsurance maintained by the Seller in connection with the Business is adequatein accordance with industry standards, the requirements of any applicableleases and is in at least the minimum amount required by currently applicableenvironmental regulations.  After theClosing the Seller will provide the Buyer with all reasonable assistance andinformation necessary to enable the Buyer to obtain and maintain insurance coveragefor the Business and the Purchased Property.

 

## ***SECTION 5.23***. Transactions with Directors, Officers and Affiliates.  Except as set forth on Schedule 5.23,since December 31, 1997, there have been no transactions between theSeller and any director, officer, employee, stockholder or other Affiliate ofthe Seller.  To

 

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## ***thebest knowledge of the Seller, during the past three years none of the officers,stockholders, directors or employees of the Seller, or any spouse or relativeof any of such Persons, has been a director or officer of, or has had anydirect or indirect interest in, any Person which during such period has been asupplier, customer or sales agent of the Seller or has competed with or beenengaged in any business of the kind being conducted by the Business.  Except as set forth on Schedule 5.23,no Affiliate of the Seller owns or has any rights in or to any of the assets,properties or rights used by the Business in the ordinary course of itsbusiness.***

 

## ***SECTION 5.24***. Change in Ownership. To the best knowledge of the Seller, neither the purchase of thePurchased Property by the Buyer nor the consummation of the transactionscontemplated by this Agreement will result in any material adverse change inthe Business or in the loss of the benefits of any material relationship withany customer or supplier.

 

## ***SECTION 5.25***. Labor Matters.

## *** ***

###### (a)                                  Except as set forthin Schedule 5.25(a):  (i) theSeller is not a party to any outstanding employment agreements or contractswith officers or employees of the Business that are not terminable at will, orthat provide for the payment of any bonus or commission; (ii) the Seller is nota party to any agreement, policy or practice that requires it to paytermination or severance pay to salaried, non-exempt or hourly employees of theBusiness (other than as required by law); and (iii) the Seller is not a partyto any collective bargaining agreement or other labor union contract applicableto employees of the Business nor does the Seller know of any activities orproceedings of any labor union to organize any such employees.  The Seller has furnished to the Buyercomplete and correct copies of all such agreements (the “Employment andLabor Agreements”).  The Seller hasnot breached or otherwise failed to comply with any provisions of anyEmployment or Labor Agreement, and there are no grievances outstandingthereunder.

######  

###### (b)                                 (i) To the bestknowledge of the Seller, the Seller is in compliance with all applicable lawsrelating to employment and employment practices, wages, hours, and terms andconditions of employment, in each case relating to the Business; (ii) there isno unfair labor practice charge or complaint pending before the National LaborRelations Board (the “NLRB”) relating to the Business; (iii) there is nolabor strike, material slowdown or material work stoppage or lockout pendingor, to the best knowledge of the Seller, threatened against or affecting theBusiness, and the Seller has not experienced any strike, material slowdown ormaterial work stoppage, lockout or other collective labor action by or withrespect to employees of the Business; (iv) there is no representation claim orpetition pending before the NLRB or any similar foreign agency and no questionconcerning representation exists relating to the employees of the Business; (v)there are no charges with respect to or relating to the Business pending beforethe Equal Employment Opportunity Commission or any state, local or foreignagency responsible for the prevention of unlawful employment practices; and(vi) the Seller has received no notice from any national, state, local orforeign agency responsible for the enforcement of labor or employment laws ofan intention to

 

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###### conduct an investigation of the Sellerrelating to the Business, and no such investigation is in progress.

 

## ***SECTION 5.26***. Products Liability.

## *** ***

###### (a)                                  (i) Except as setforth on Schedule 5.26(a), there is no notice, demand, claim, action,suit, inquiry, hearing, proceeding, notice of violation or investigation of acivil, criminal or administrative nature before any court or governmental orother regulatory or administrative agency, commission or authority, domestic orforeign, against or involving any Product or any product distributed by or onbehalf of the Business, or class of claims or lawsuits involving the same orsimilar Product or any product distributed by or on behalf of the Businesswhich is pending or threatened, resulting from an alleged defect in design,manufacture, materials or workmanship of any Product or any product distributedor sold by or on behalf of the Business, or any alleged failure to warn, orfrom any breach of implied warranties or representations (collectively, “ProductLiability Lawsuits”); (ii) except as set forth on Schedule 5.26(a),there has not been any Occurrence (as hereinafter defined); and (iii) there hasnot been, nor is there under consideration or investigation by the Seller, anyProduct rework or retrofit (collectively, “Retrofits”) conducted by oron behalf of the Seller concerning any products manufactured, produced,distributed or sold by or on behalf of the Business.

######  

###### (b)                                 For purposes of thisSection 5.26, the term “Occurrence” shall mean any accident,happening or event which takes place at any time which is caused or allegedlycaused by any alleged hazard or alleged defect in manufacture, design,materials or workmanship including, without limitation, any alleged failure towarn or any breach of express or implied warranties or representations withrespect to, or any such accident, happening or event otherwise involving anyProduct or any product distributed by or on behalf of the Business (includingany parts or components), that is likely to result in a claim or loss.

 

## ***SECTION 5.27***. Environmental Matters. Except as set forth in Schedule 5.27:

## *** ***

###### (a)                                  The operations of theBusiness are, and for the past five years have been, in material compliancewith all applicable Environmental Laws.

######  

###### (b)                                 The Seller does notreasonably expect that material expenditures are or will be necessary for theBusiness to maintain full compliance with Environmental Laws currently ineffect.

######  

###### (c)                                  The Seller hasobtained, or has made timely and complete application for, or for renewal of,all permits required under Environmental Laws for the operation of theBusiness.

######  

###### (d)                                 No substanceidentified or regulated pursuant to any Environmental Law, including, withoutlimitation, any hazardous substance, hazardous waste, toxic substance,pollutant, contaminant, or petroleum or any fraction thereof (“HazardousSubstance”), except for Hazardous Substances used in the ordinary course ofthe Business in compliance with Environmental Laws, has come to be located on,at, beneath, or near any real property currently or, to the best knowledge ofthe Seller, formerly owned, operated, leased, or used by the Seller.

######  

###### (e)                                  No real propertycurrently or, to the best knowledge of the Seller, formerly owned, operated,leased, or used by the Seller contains or formerly contained any underground oraboveground storage

 

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###### tank, surface impoundment, landfill, landdisposal area, polychlorinated biphenyls, asbestos or urea formaldehydeinsulation.

######  

###### (f)                                    To the bestknowledge of the Seller, the Seller has not disposed of, transported orarranged for the disposal or transportation of any Hazardous Substance at or toany facility at which there has been a release or threatened release of aHazardous Substance.

######  

###### (g)                                 The Seller has notreceived notice of, nor is there pending or, to the best knowledge of theSeller, threatened against the Seller, any claim, investigation, order, decreeor lawsuit pursuant to any Environmental Law arising out of the operation ofthe Business (“Environmental Claim”).

######  

###### (h)                                 To the best knowledgeof the Seller, no other party with whom the Seller has contracted forenvironmental matters is or has been the subject of any claim, action orproceeding arising out of the substance of the transaction to which suchcontract relates and involving the violation or alleged violation of anyEnvironmental Law or the disposal, arrangement for the disposal, release orthreatened release of any Hazardous Substance.

######  

###### (i)                                     The Seller hasnot, by agreement or otherwise, assumed any liability of or duty to indemnifyany other party for any claim, damage or loss arising out of the use,treatment, storage or disposal of any Hazardous Substance.

######  

###### (j)                                     To the bestknowledge of the Seller, no Hazardous Substance has migrated from any realproperty currently or formerly owned, operated, leased or used by the Seller toany other real property, nor has any Hazardous Substance migrated from anyother real property onto any real property owned, operated, leased or used bythe Seller.

######  

###### (k)                                  To the best knowledgeof the Seller, in connection with the operation of the Business, the Seller hasnot committed any act or omission which could give rise to liability under anyEnvironmental Law.

######  

###### (l)                                     To the bestknowledge of the Seller, there is no condition in existence on, at, beneath ornear any real property owned, leased or used by the Seller which could giverise to any claim against, liability of, or loss by, the Buyer pursuant toEnvironmental Laws.

######  

###### (m)                               The Seller has providedthe Buyer with copies of all: (i) permits held by the Seller pursuant toEnvironmental Law; (ii) notices, demands, claims or actions against the Sellerpursuant to Environmental Law; and (iii) reports, data or other documentationrelated to all investigations, audits or assessments of environmentalconditions at property owned, leased or used by the Seller and the Seller’scompliance with Environmental Law.

 

## ***SECTION 5.28***. Solvency.  On the dateof this Agreement and at all times during the six months immediately precedingthe date of this Agreement, the Seller is and has been paying all of its debts,liabilities and obligations accruing with respect to or resulting from theconduct of its business as the same shall become due and owing, and none ofsuch payment obligations are past due or otherwise delinquent in any materialrespect.  Immediately after the Closing,the Seller (i) will be solvent (i.e., the sum of its debts will be lessthan all of its property, at a fair valuation), (ii) will have sufficientcapital to conduct the business, if any, it conducts after the Closing, and(iii) will be able to pay its current and anticipated debts as such debtsmature.  The Seller is executing thisAgreement in good faith, for fair value and without intent to hinder, delay orto

 

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## ***defraudits present and future creditors.***

 

## ***SECTION 5.29***. Accuracy of Information. None of the Seller’s representations, warranties or statements containedin this Agreement, or in the exhibits hereto, contains any untrue statement ofa material fact or omits to state any material fact necessary in order to makeany of such representations, warranties or statements in light of thecircumstances under which they were made not misleading.

 

# **SECTION 6.**  REPRESENTATIONS AND WARRANTIESOF THE BUYER.

 

The Buyer hereby represents and warrants tothe Seller as follows:

 

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## ***SECTION 6.1***.  Corporate Organization.  The Buyer is a corporation duly organized,validly existing and in good standing under the laws of the State of Delaware,and has all requisite corporate power and authority to own its properties andassets and to conduct its businesses as now conducted.

 

## ***SECTION 6.2***.  Qualification to DoBusiness.  The Buyer is dulyqualified to do business as a foreign corporation and is in good standing inevery jurisdiction in which the character of the properties owned or leased byit or the nature of the business conducted by it makes such qualificationnecessary.

 

## ***SECTION 6.3***.  Authorization and Validityof Agreements.  The Buyer has allrequisite corporate power and authority to enter into this Agreement and theEscrow Agreement and to carry out its obligations hereunder and thereunder andthe Affiliate of the Buyer that will be a party to the Automobile Storage Leasehas all requisite corporate power and authority to enter into the AutomobileStorage Lease and to carry out its obligations thereunder.  The execution and delivery of this Agreementand the Escrow Agreement and the performance of the Buyer’s obligationshereunder have been duly authorized by all necessary corporate action by theBoard of Directors of the Buyer, and no other corporate proceedings on the partof the Buyer are necessary to authorize such execution, delivery and performance.  The execution and delivery of the AutomobileStorage Lease by the Affiliate of the Buyer that will be a party thereto andthe performance of such Affiliate’s obligations thereunder have been duly authorizedby all necessary corporate action by the Board of Directors of such Affiliate,and no other corporate proceedings on the part of such Affiliate are necessaryto authorize such execution, delivery and performance.  This Agreement has been duly executed by theBuyer and constitutes its valid and binding obligation, enforceable against itin accordance with its terms.

 

## ***SECTION 6.4***.  No Conflict or Violation.  The execution, delivery and performance bythe Buyer of this Agreement do not and will not violate or conflict with anyprovision of the Certificate of Incorporation or By-laws (or equivalentdocuments) of the Buyer and do not and will not violate any provision of law,or any order, judgment or decree of any court or other governmental orregulatory authority.

 

## ***SECTION 6.5***.  Consents and Approvals.  The execution, delivery and performance ofthis Agreement on behalf of the Buyer does not require the consent or approvalof, or filing with, any government, governmental body or agency or other entityor person except:  (i) as may berequired to transfer any Licenses and Permits; and (ii) such consents,approvals and filings, of which the failure to obtain or make would not,individually or in the aggregate, have a material adverse effect on the abilityof the Buyer to consummate the transactions contemplated hereby.

# ** **

# **SECTION 7**.  COVENANTS OF THE SELLER.

# ** **

The Seller covenants as follows:

 

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## ***SECTION 7.1***.  Conduct of Business Beforethe Closing Date.

## *** ***

###### (a)                                  Withoutthe prior written consent of the Buyer, between the date hereof and the ClosingDate, the Seller shall not, except as required or expressly permitted pursuantto the terms hereof:

######  

(i)                                     makeany change in the conduct of the Business or enter into any transaction otherthan in the ordinary course of business consistent with past practices;

 

(ii)                                  makeany sale, assignment, transfer, abandonment or other conveyance of thePurchased Property or any part thereof or interest therein, except transactionspursuant to the Contracts set forth in the Schedules hereto and dispositions ofInventory or of worn-out or obsolete equipment for fair or reasonable value inthe ordinary course of business consistent with past practice;

 

(iii)                               subjectany of the Purchased Property, or any part thereof or interest therein, to anyLien or suffer such to exist other than such Liens as may arise in the ordinarycourse of business consistent with past practice by operation of law and thatwill not, individually or in the aggregate, have an adverse effect on theBusiness;

 

(iv)                              acquireany assets, raw materials or properties, or enter into any other transaction,other than in the ordinary course of business consistent with past practice;

 

(v)                                 enterinto any new (or amend any existing) employee benefit plan, program or arrangementor any new (or amend any existing) employment, severance or consultingagreement, grant any general increase in the compensation of officers oremployees (including any such increase pursuant to any bonus, pension,profit-sharing or other plan or commitment) or grant any increase in thecompensation payable or to become payable to any employee, except in accordancewith pre-existing contractual provisions or consistent with past practice or asrequired by law;

 

(vi)                              makeor commit to make any capital expenditure in excess of $10,000;

 

(vii)                           pay,lend or advance any amount to, or sell, transfer or lease any properties orassets to, or enter into any agreement or arrangement with, any of itsAffiliates;

 

(viii)                        failto keep in full force and effect insurance comparable in amount and scope tocoverage maintained in respect of the Business;

 

(ix)                                takeany other action that would cause any of the representations and warrantiesmade by the Seller in this Agreement not to remain true and correct;

 

(x)                                   makeany change in any method of accounting or accounting principle, method,estimate or practice except for any such change required by reason of aconcurrent change in GAAP, or write down the value of any Inventory or writeoff as uncollectible any Accounts Receivable except in the ordinary course ofbusiness consistent with past practice;

 

(xi)                                settle,release or forgive any claim or litigation or waive any right thereto in excessof $10,000 in the aggregate;

 

(xii)                             make,enter into, modify, amend in any material respect or terminate any Contract,bid or expenditure with respect to the Business;

 

(xiii)                          causeany “plant closing” or “mass layoff” at the Business, as such actions aredefined in W.A.R.N., unless all notices as required by such Act have been givenprior to such plant closing or

 

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mass layoffand unless the Seller shall have notified the Buyer in advance of all layoffswith respect to the Business between the date hereof and the Closing Date; or

 

(xiv)                         committo do any of the foregoing.

 

###### (b)                                 Fromand after the date hereof and until the Closing Date, the Seller shall:

######  

(i)                                     continueto maintain the Purchased Property in accordance with present practice in acondition suitable for its current use;

 

(ii)                                  file,when due or required, all Tax Returns and other tax returns and other reportsrequired to be filed and pay when due all Taxes, assessments, fees and othercharges lawfully levied or assessed against them, unless the validity thereofis contested in good faith and by appropriate proceedings diligently conducted;

 

(iii)                               continueto conduct the Business in the ordinary course consistent with past practice;

 

(iv)                              keepits books of account, Files and Records in the ordinary course and inaccordance with existing practice; and

 

(v)                                 usecommercially reasonable efforts to continue to maintain existing businessrelationships with suppliers and customers other than relationships noteconomically beneficial to the Business.

 

###### (c)                                  Notwithstandinganything to the contrary contained herein, the Seller’s stockholders (or theirbeneficiaries) may withdraw from the Seller, to the extent not previouslywithdrawn, an aggregate amount (the “Authorized Withdrawals”) equal tothe sum of (x) the difference between (a) forty-five percent (45%) of the netprofits of the Seller for the period from October 1, 1997 to the ClosingDate and (b) $40,000 and (y) an amount not to exceed $120,000 in respect ofbonus compensation to be paid to current and former stockholders of the Seller.  If the Seller’s stockholders have withdrawnan amount less than the Authorized Withdrawals as of the Closing Date, then theBuyer shall pay an amount equal to the difference between the AuthorizedWithdrawals and the amounts so withdrawn to the Seller within five (5) BusinessDays after the date that the net profits of the Seller through the Closing Datehave been mutually agreed to by the Buyer and the Seller and based upon theaudit of the Closing Date Statements. If the Seller’s stockholders have withdrawn an amount that exceeds theAuthorized Withdrawals as of the Closing Date, then the Seller shall pay to theBuyer an amount equal to such excess within five (5) Business Days after thedate that the net profits of the Seller through the Closing Date have beenfinally determined.

######  

## ***SECTION 7.2***.  Consents and Approvals.  The Seller (a) shall, at the Buyer’s costand expense, use its best efforts to obtain all necessary consents, waivers,authorizations and approvals of all governmental and regulatory authorities,domestic and foreign, and of all other Persons required in connection with theexecution, delivery and performance by it of this Agreement, and (b) shalldiligently assist and cooperate with the Buyer in preparing and filing alldocuments required to be submitted by the Buyer to any governmental orregulatory authority, domestic or foreign, in connection with such transactionsand in obtaining any governmental consents, waivers, authorizations orapprovals which may be required to be obtained by the Buyer in connection withsuch transactions (which assistance and cooperation shall include, withoutlimitation, timely furnishing to the Buyer all information concerning theSeller that counsel to the

 

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## ***Buyerreasonably determines is required to be included in such documents or would behelpful in obtaining any such required consent, waiver, authorization orapproval).***

 

## ***SECTION 7.3***.  Access to Properties andRecords.  The Seller shall afford tothe Buyer, and to the accountants, counsel and representatives of the Buyer,full access during normal business hours throughout the period prior to theClosing Date (or the earlier termination of this Agreement pursuant toSection 14) to all properties, books, Contracts, commitments and Files andRecords (including, but not limited to, Tax Returns and correspondence withaccountants) of the Seller relating to the Business and, during such period,shall furnish promptly, or cause to be furnished to the Buyer all otherinformation (including, but not limited to, the work papers of the Seller’saccountants) concerning the Business, properties and personnel as the Buyer mayreasonably request, provided that no investigation or receipt of informationpursuant to this Section 7.3 shall qualify any representation or warrantyof the Seller or the conditions to the obligations of the Buyer.  The Seller shall also afford the Buyer fullaccess to the Business, all operations of the Business and to all PurchasedProperty throughout the period prior to the Closing Date.

 

## ***SECTION 7.4***.  Negotiations.  From and after the date hereof, neither theSeller, nor its officers or directors nor anyone acting on behalf of the Selleror such persons shall, directly or indirectly, encourage, solicit, engage indiscussions or negotiations with, or provide any information to, any Person(other than the Buyer or its representatives) concerning any merger, sale ofsubstantial assets, purchase or sale of shares of capital stock or similartransaction involving the Seller and the Business or any other transactioninconsistent with the transactions contemplated hereby.  The Seller shall promptly communicate to theBuyer any inquiries or communications concerning any such transaction which itmay receive or of which it may become aware.

 

## ***SECTION 7.5***.  Further Assurances.  Upon the reasonable request of the Buyer atany time after the Closing Date, the Seller shall forthwith execute and deliversuch further instruments of assignment, transfer, conveyance, endorsement,direction or authorization and other documents as the Buyer or its counsel mayreasonably request to perfect title of the Buyer and its successors and assignsto the Purchased Property or otherwise to effectuate the purposes of thisAgreement.

 

## ***SECTION 7.6***.  Best Efforts.  Upon the terms and subject to the conditionsof this Agreement, the Seller will use its best efforts to take, or cause to betaken, all actions, and to do, or cause to be done, all things necessary,proper or advisable consistent with applicable law, to consummate and makeeffective in the most expeditious manner practicable the transactionscontemplated hereby.

 

## ***SECTION 7.7***.  Covenant Not To Compete.

 

###### (a)                                  The Seller and itsAffiliates agree that, for a period of five years after the Closing Date, theyshall not compete with the Business

 

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###### and shall not engage or participate, directlyor indirectly, in the business or businesses which are engaged in by theBusiness as of the Closing Date in any geographical area where such business orbusinesses are engaged in by the Business as of the Closing Date.

######  

###### (b)                                 The Seller agrees thata monetary remedy for a breach of the agreement set forth inSection 7.7(a) hereof will be inadequate and impracticable and furtheragrees that such a breach would cause the Buyer irreparable harm, and that theBuyer shall be entitled to temporary and permanent injunctive relief withoutthe necessity of proving actual damages. In the event of such a breach, the Seller agrees that the Buyer shall beentitled to such injunctive relief, including temporary restraining orders,preliminary injunctions and permanent injunctions as a court of competentjurisdiction shall determine.

######  

###### (c)                                  If any provision ofthis Section 7.7 is invalid in part, it shall be curtailed, both as totime and location, to the minimum extent required for its validity underapplicable law and shall be binding and enforceable with respect to the Selleras so curtailed.

######  

## ***SECTION 7.8***.  Non-Solicitation ofEmployees.  The Seller and itsAffiliates agree, for the five-year period commencing on the Closing Date, notto make, offer, solicit or induce to enter into, any written or oralarrangement, agreement or understanding regarding employment or retention as aconsultant with any Person listed on Schedule 7.8, and in each case tocause its Affiliates not to engage in any such action, without the writtenconsent of the Buyer.

 

## ***SECTION 7.9***.  Notice of Breach.  Through the Closing Date, the Seller shallpromptly give the Buyer written notice with particularity upon having knowledgeof any matter that may constitute a breach of any representation, warranty,agreement or covenant contained in this Agreement.

## *** ***

## ***SECTION 7.10***. Removal of Encumbrances. Promptly upon execution of this Agreement, upon request therefor by theBuyer, the Seller shall cooperate with the Buyer in the Buyer’s efforts toprocure ALTA surveys of all Premises dated as of a date subsequent to the dateof this Agreement which shall be certified by a land surveyor licensed in thestate in which the Premises in question are located (the “Surveys”).  Promptly upon execution of this Agreement,the Buyer may, at its election, order from an insurer acceptable to the Buyer(the “Title Insurance Company”) ALTA Owner’s Preliminary Title Reports(or the local equivalent) including zoning endorsements covering the PurchasedReal Property, together  with copies ofall documents relating to exceptions to title or leasehold interests referredto therein (collectively, the “Title Reports”) and may, at its election,order UCC search reports from all applicable jurisdictions (the “UCCSearches”).  The Buyer shall givenotice to the Seller of the Buyer’s disapproval of any exception or matterreferred to in the Title Reports, UCC Searches or Surveys, or discovered by theBuyer as a result of a physical inspection or other examination of thePremises, and which matters or exceptions: (i) constitute any Taxes and assessments, other than ad valorem realproperty Taxes and assessments for the current year which are not yet due andpayable; (ii) represent mortgages, deeds of trust, financing statements,mechanics’ lien claims or similar instruments of encumbrance; or (iii)interfere with

 

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## ***theBuyer’s right to possession of or the present use of any of the Premises oradversely affect continuation by the Buyer of such present use or the value ofany of such Premises when utilized in substantial conformity with such presentuse (such matters or exceptions are hereinafter referred to collectively as “Defects”).  Any such notice of disapproval shall includea reasonably detailed description of the Defects.  The Seller shall cure and eliminate all Defects as promptly aspracticable.  If the Seller is unable tocure and eliminate all such Defects before the Closing Date (which cure orelimination shall, if the Buyer so consents, include the commitment of aninsurer acceptable to the Buyer at the Seller’s sole cost and expense (anythingto the contrary contained in Section 2.4 notwithstanding), to endorse overany such Defects pertaining to title), the Buyer may terminate this Agreementin accordance with the provisions of Section 14.1(d), or consummate the Closingand deduct from the Purchase Price an amount equal to the amount that the Buyerand the Seller agree represents the amount the Buyer reasonably expects toincur in order to cure or remove the Defect. The Seller shall not take any action that would result in the creationof any Defect on any of the Premises.***

## *** ***

## ***SECTION 7.11***. Assignment of Contracts and Warranties.  At the Closing and effective as of theClosing Date, the Seller shall assign to the Buyer all its rights under theContracts.  Notwithstanding the foregoing,no Contract shall be assigned contrary to law or the terms of such Contractand, with respect to Contracts that cannot be assigned to the Buyer at theClosing Date, the performance obligations of the Seller thereunder shall,unless not permitted by such Contract, be deemed to be subleased orsubcontracted to the Buyer until such Contract has been assigned.  The Buyer shall assist the Seller inobtaining any necessary approvals to such subleases and subcontracts.  The Seller shall use its best efforts toassist the Buyer in obtaining all necessary consents and the Buyer shall takeall necessary actions to perform and complete all Contracts in accordance withtheir terms if neither assignment, subleasing nor subcontracting is permittedby the other party, and the Seller shall pay over to the Buyer any amountsreceived by the Seller after the Closing Date as a result of performance by theBuyer of such Contracts.

 

## ***SECTION 7.12***. Delivery of Deeds, Bills of Sale, Certificate and Affidavits.  At the Closing and effective as of theClosing Date, the Seller shall deliver to the Buyer (i) a special warranty deed(or the local equivalent thereof), in the form attached hereto as ExhibitH hereto, transferring to the Buyer good and marketable title to the Purchased RealProperty; (ii) an Assignment of each Lease; (iii) all such further dulyexecuted bills of sale and other assignments or certificates of title, in formsatisfactory to the Buyer’s counsel, as are reasonably necessary to transfer tothe Buyer all of the Seller’s right, title and interest in, to and under thePurchased Property; (iv) a certificate that the Seller is not a foreign personwithin the meaning of Section 1445 of the Code, which certificate shallset forth all information required by, and otherwise be executed in accordancewith, Treasury Regulation Section 1.1445-2(b); (v) any and all titleaffidavits and indemnities customarily required by the Title Insurance Companyto be delivered by a seller in order for the Title Insurance Company to issue atitle insurance policy or title insurance policies

 

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## ***forthe Premises, in form reasonably acceptable to the Buyer and consistent withthe Title Reports, together with all title insurance endorsements reasonablyrequested by the Buyer, including zoning endorsements where available (the “TitlePolicies”) including, without limitation, the following affidavit:  a ‘Corporate Owner’s Affidavit’ in form andsubstance satisfactory to the Title Insurance Company; and (vi) physicalpossession and control of the Premises. All such documents, instruments and certificates shall be in a formreasonably satisfactory to the Buyer.***

 

## ***SECTION 7.13***. Removal of Excluded Property. Not later than the first anniversary of the Closing Date (the “Twelve-MonthAnniversary”), the Seller shall remove, or shall cause to be removed fromthe Premises, the Excluded Property. Any of the Excluded Property that is not removed by the Twelve-MonthAnniversary shall cease to be Excluded Property on the first Business Day afterthe Twelve-Month Anniversary and shall, without any notice to the Seller (whichnotice is hereby expressly waived) or any action on the part of the Buyer, bedeemed to be Purchased Property.

 

## ***SECTION 7.14***. Closing Date Financial Statements.  Not later than five Business Days subsequent to the Closing Date,the Seller shall deliver to the Buyer an unaudited balance sheet of the Selleras of the Closing Date and the related unaudited statements of earnings andretained earnings for the period commencing on January 1, 1998 andterminating on the day immediately preceding the Closing Date (the “ClosingDate Statements”).  The Closing DateStatements shall (i) present fairly the financial condition of the Business asof such date, (ii) be in accordance with the books of account and records ofthe Seller and (iii) be prepared in a manner consistent with the Year EndStatement, except that the Closing Date Statements shall be subject to normalyear-end adjustments and shall not include footnotes.

 

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# **SECTION 8**.  COVENANTS OF THE BUYER.

# ** **

## ***SECTION 8.1***.  Actions Before EffectiveDate.  The Buyer shall not take anyaction which shall cause it to be in breach of any of its representations,warranties, covenants or agreements contained in this Agreement.  The Buyer shall use its best efforts toperform and satisfy all conditions to Closing to be performed or satisfied bythe Buyer under this Agreement as soon as possible, but in no event later thanthe Closing Date.

## *** ***

## ***SECTION 8.2***.  Consents and Approvals;Best Efforts.  The Buyer shall useits best efforts to obtain all consents and approvals of third parties requiredto be obtained by the Buyer to effect the transactions contemplated by thisAgreement.  Upon the terms and subjectto the conditions of this Agreement, the Buyer will use its best efforts totake, or cause to be taken, all actions, and to do, or cause to be done, allthings necessary, proper or advisable, consistent with applicable law toconsummate and make effective in the most expeditious manner practicable thetransactions contemplated herein.

## *** ***

# **SECTION 9.**  EMPLOYEES AND EMPLOYEEPLANS.

# ** **

## ***SECTION 9.1***.  Offer of Employment.  The Seller will use its commerciallyreasonable efforts to assist the Buyer in assuring that, as of the ClosingDate, all employees and independent contractors of the Seller who primarilyserve the Business shall continue employment with the Buyer, and the Sellershall cooperate fully with the Buyer in connection herewith; provided, however,that nothing herein shall require the Buyer to employ any such employees orindependent contractors for any period after the Closing Date.

## *** ***

## ***SECTION 9.2***.  No Assumption ofLiabilities.  Except as set forth inSection 2.4 of this Agreement, the Buyer shall have no direct or indirectobligation or liability of any nature, whether matured or unmatured, accrued orcontingent, due or to become due or otherwise, to any employee, former employeeor independent contractor of the Seller, or to any dependent, survivor orbeneficiary thereof, arising out of or in relation to such Person’s employmentor engagement with the Seller or the termination of such employment prior tothe Closing Date. As of the Closing Date, the Buyer (or an Affiliate of theBuyer) shall assume responsibility for the sponsorship of the 401(k) Plan andthe Seller shall take all actions necessary to provide for the Buyer’s (or suchAffiliate’s) assumption of the 401(k) Plan as of the Closing Date.

## *** ***

# **SECTION 10**.  TAXES.

# ** **

The parties hereto hereby covenant and agreeas follows:

 

## ***SECTION 10.1***.  Taxes.  The Seller shall be responsible for thepreparation and filing of all federal, state and local income and franchise taxreturns for the Seller and shall be liable for the payment of any and allincome and franchise taxes relating to the

 

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## ***Seller.  The Buyer shall be responsible for thepreparation and the Seller shall be responsible for the final inspection andfiling of all Taxes and Tax Returns as part of the Assumed Liabilities by theBuyer and listed on Schedule 2.4, including but not limited to, payrolltax returns, workers’ compensation returns, employee W-2 statements, personalproperty tax returns, and 5500 filings for the Seller’s qualified retirementplan which will be required to be filed with federal, state or localgovernmental authorities subsequent to the Closing Date for periods prior tothe Closing Date but subsequent to December 31, 1997.  The Buyer shall further pay all Taxes thatconstitute Assumed Liabilities when due and payable.***

## *** ***

## ***SECTION 10.2.***  Cooperation on Tax Matters.  The Buyer and the Seller agree to furnish orcause to be furnished to each other, as promptly as practicable, suchinformation and assistance relating to the Business as is reasonably necessaryfor the preparation and filing of any Tax Return, claim for refund or otherrequired or optional filings relating to tax matters, for the preparation forand proof of facts during any tax audit, for the preparation for any taxprotest, for the prosecution or defense of any suit or other proceedingrelating to tax matters and for the answer to any governmental or regulatoryinquiry relating to tax matters.

## *** ***

## ***Fromand after the Closing Date, the Buyer agrees that it will not unreasonablywithhold access by the Seller and its attorneys, accountants and otherrepresentatives (after reasonable notice and during normal business hours), tosuch personnel, books, records, documents and any or all other informationrelating to the Business then in Buyer’s possession as the Seller mayreasonably deem necessary to properly prepare for, file, prove, answer,prosecute and/or defend any such Tax Return, filing, audit, protest, claim,suit, inquiry or other proceeding.  Suchaccess shall include, without limitation, access to any computerizedinformation retrieval systems relating to the Business.***

## *** ***

## ***SECTION 10.3***.  Allocation of PurchasePrice.  The Buyer and the Selleragree to allocate the Purchase Price and the Assumed Liabilities among thePurchased Property and the covenants contained in Section 7.7 of thisAgreement in accordance with Schedule 10.4 (any agreed allocationhereinafter referred to as the “Allocation”).  The Seller and the Buyer will cooperate in filing with theInternal Revenue Service their respective Forms 8594 as provided for inSection 1060 of the Code, on a basis consistent with such Allocation, andsuch Allocation shall be reflected on any Tax Returns required to be filed as aresult of the transactions contemplated hereby.

## *** ***

## ***SECTION 10.4***.  Transfer Taxes.  Notwithstanding anything to the contrary setforth in Section 10.1, all transfer, documentary, sales, use, excise,registration, value-added and other similar Taxes (including all applicablereal estate transfer Taxes) and related fees (including any penalties, interestand additions to Tax (“Transfer Taxes”) incurred in connection with thisAgreement and the transactions contemplated hereby shall be paid by theBuyer.  The Seller and the Buyer shallcooperate in making in a timely manner all filings, returns, reports and formsas may be required to comply with

 

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## ***theprovisions of such Transfer Tax laws. To the extent legally able to do so, the Seller shall deliver to theBuyer exemption certificates satisfactory in form and substance to the Buyerwith respect to Transfer Taxes if such delivery would reduce the amount ofTransfer Taxes that would otherwise be imposed.  The Buyer shall provide the Seller with written evidence of allTransfer Tax payments after payment has been made.***

 

# **SECTION 11**.  INDEMNIFICATION.

 

## ***SECTION 11.1***.  Indemnification by theSeller.  Notwithstanding the Closingor the delivery of the Purchased Property and regardless of any investigationat any time made by or on behalf of the Buyer or of any knowledge orinformation that the Buyer may have, the Seller shall indemnify and fullydefend, save and hold the Buyer, any Affiliate of the Buyer and theirrespective directors, officers and employees (the “Buyer Indemnitees”),harmless if any Buyer Indemnitee shall at any time or from time to time sufferany damage, liability, loss, cost, expense (including all reasonableattorneys’, consultants’ or experts’ fees), deficiency, interest, penalty,impositions, assessments or fines (collectively, “Losses”) arising outof or resulting from, or shall pay or become obliged to pay any sum on accountof, any Sellers’ Event of Breach, including without limitation, any Seller’sEvent of Breach resulting from a third party claim.  As used herein, “Seller’s Event of Breach” shall be andmean any one or more of the following:

## *** ***

###### (a)                                  any untruth orinaccuracy in any representation of the Seller or the breach of any warranty ofthe Seller (including, without limitation, any misrepresentation in, oromission from, any statement, certificate, schedule, exhibit, annex or otherdocument furnished pursuant to this Agreement by the Seller (or any of itsrepresentatives) to the Buyer (or any representative of the Buyer) and anymisrepresentation in or omission from any document furnished to the Buyer inconnection with the Closing;

######  

###### (b)                                 any failure of theSeller duly to perform or observe any term, provision, covenant or condition onthe part of the Seller to be performed or observed;

######  

###### (c)                                  any act performed,law violated, transaction entered into, or state of facts suffered to exist bythe Seller before the Closing Date, except to the extent that any liabilityresulting from such act, violation, transaction or state of facts constitutesan Assumed Liability;

######  

###### (d)                                 the laws of anyjurisdiction relating to sales of property in bulk, whether asserted prior toor subsequent to the Closing Date;

######  

###### (e)                                  any and allliabilities under Environmental Laws arising from or in any way related toacts, omissions, occurrences or conditions first occurring or in existenceprior to the Closing Date; provided, however, that if the Buyer develops thePremises for any non-industrial use, and such development requires remediationof Hazardous Substances, Seller shall not be obligated to indemnify the Buyerfor any remedial costs in excess of what would otherwise be required were thePremises maintained as an industrial establishment; and

######  

###### (f)                                    any claim or causeof action by any party against any Buyer Indemnitee with respect to theExcluded Liabilities;

 

provided, however,that the Seller shall have no obligation to make

 

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any payments under Section 11.1(a) with respect to any representationor warranty made in good faith without actual knowledge or notice of falsityunless the aggregate amount to which all Buyer Indemnitees are entitled byreason of all such claims under Section 11.1(a) exceed $100,000; provided,further, however, that the aggregate liability of the Sellerunder Section 11.1(a) shall not exceed $1,000,000; and the Seller shallhave no obligation to make any payments under Section 11.1(f) with respectto Excluded Liabilities of which the Seller has no knowledge on the date ofthis Agreement unless the aggregate amount of such Excluded Liabilities exceeds$25,000.

 

## ***SECTION 11.2***.  Procedures forIndemnification by the Seller.  If aSeller’s’ Event of Breach occurs or is alleged and a Buyer Indemnitee assertsthat the Seller has become obligated to such Buyer Indemnitee pursuant toSection 11.1, or if any suit, action, investigation, claim or proceedingis begun, made or instituted as a result of which the Seller may becomeobligated to a Buyer Indemnitee hereunder, such Buyer Indemnitee shall givewritten notice to the Seller which shall specify the basis for such obligationwith reasonable particularity.  TheSeller agrees to defend, contest or otherwise protect the Buyer Indemniteeagainst any such suit, action, investigation, claim or proceeding at its solecost and expense; provided, however, that the Seller shall notcompromise any suit, action, investigation, claim or proceeding involving anyEnvironmental Law without the Buyer’s prior written consent.  The Buyer Indemnitee shall have the right,but not the obligation, to participate at its own expense in the defensethereof by counsel of the Buyer Indemnitee’s choice and shall in any eventcooperate with and assist the Seller to the extent reasonably possible.  If the Seller fails timely to defend,contest or otherwise protect against such suit, action, investigation, claim orproceeding, the Buyer Indemnitee shall have the right to do so, including,without limitation, the right to make any compromise or settlement thereof, andthe Buyer Indemnitee shall be entitled to recover the entire cost thereof fromthe Seller including, without limitation, reasonable attorneys’, consultants’and experts’ fees, disbursements and amounts paid as the result of such suit,action, investigation, claim or proceeding.

## *** ***

## ***SECTION 11.3***.  Indemnification by theBuyer.  Notwithstanding the Closingor the delivery of the Purchased Property, the Buyer shall indemnify and agreeto fully defend, save and hold the Seller, any Affiliate of the Seller andtheir respective directors, officers and employees (the “Seller Indemnitees”),harmless if any Seller Indemnitee shall at any time or from time to time sufferany Losses arising out of or resulting from, or shall pay or become obligatedto pay any sum on account of, any Buyer’s Event of Breach, including withoutlimitation, any Buyer’s Event of Breach resulting from a third partyclaim.  As used herein, “Buyer’sEvent of Breach” shall be and mean any one or more of the following:

## *** ***

###### (a)                                  any untruth or inaccuracyin any representation of the Buyer or the breach of any warranty of the Buyercontained in this Agreement;

######  

###### (b)                                 any failure of theBuyer duly to perform or observe any term, provision, covenant, agreement orcondition contained in this Agreement on the part of the Buyer to be performedor observed; and

######  

###### (c)                                  any claim or cause ofaction by any party against any Seller

 

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###### Indemnitees with respect to AssumedLiabilities;

######  

provided, however,that the Buyer shall have no obligation to make any payment underSection 11.3(a) with respect to any representation and/or warranty made ingood faith without actual knowledge or notice of falsity unless the aggregateamount to which all Seller Indemnities are entitled by reason of all suchclaims under Section 11.3(a) exceeds $100,000; provided, further, however,that the aggregate liability of the Buyer under Section 11.3(a) shall notexceed $1,000,000.

 

## ***SECTION 11.4.***  Procedures forIndemnification by the Buyer.  If aBuyer’s Event of Breach occurs or is alleged and a Seller Indemnitee assertsthat the Buyer has become obligated to it pursuant to Section 11.3, or ifany suit, action, investigation, claim or proceeding is begun, made orinstituted as a result of which the Buyer may become obligated to a SellerIndemnitee hereunder, such Seller Indemnitee shall give written notice to theBuyer which shall specify the basis for such obligation with reasonableparticularity.  The Buyer agrees todefend, contest or otherwise protect such Seller Indemnitee against any suchsuit, action, investigation, claim or proceeding at its sole cost andexpense.  Such Seller Indemnitee shallhave the right, but not the obligation, to participate at its own expense inthe defense thereof by counsel of its choice and shall in any event cooperatewith and assist the Buyer to the extent reasonably possible.  If the Buyer fails timely to defend, contestor otherwise protect against such suit, action, investigation, claim orproceeding, the Seller Indemnitee shall have the right to do so, including,without limitation, the right to make any compromise or settlement thereof, andthe Seller Indemnitee shall be entitled to recover the entire cost thereof fromthe Buyer including, without limitation, reasonable attorneys’ fees,disbursements and amounts paid as the result of such action, investigation,claim or proceeding.

 

## ***SECTION 11.5***.  Survival.  Each of the representations and warrantiesset forth in this Agreement shall survive the Closing, notwithstanding anyinvestigation on the part of the Buyer or the Seller, for a period terminatingon the second anniversary of the Closing Dates, provided, however,that the representations and warranties contained in Sections 5.3 and 6.3(Authorization and Validity of Agreement) shall survive indefinitely, therepresentations and warranties contained in Sections 5.8 (Tax Matters) and5.20  (Employee Plans) shall survive fora period terminating on the fifth anniversary of the Closing Date and therepresentations and warranties contained in Section 5.27 (EnvironmentalMatters) shall survive for a period equal to the applicable statute oflimitations, provided, further, however, that the representations andwarranties contained in Section 5.27 shall terminate on the fifthanniversary of the Closing Date if there exists no applicable statute oflimitations.  The covenants contained inthis Agreement shall survive the Closing and the consummation of thetransactions contemplated by this Agreement. No claim for indemnification under Section 11.1(a) or 11.3(a) shallbe asserted or maintained by any party hereto after the expiration of theperiod referred to in this paragraph with respect to the reason for whichindemnification is sought, except for claims made in writing prior to suchexpiration or actions (whether instituted before or after such

 

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## ***expiration)based on any claims made in writing prior to such expiration.***

## *** ***

# **SECTION 12.**  CONDITIONS PRECEDENT TO PERFORMANCEBY THE SELLER.

# ** **

The obligations of the Seller to consummatethe transactions contemplated by this Agreement are subject to the fulfillment,at or before the Closing Date, of the following conditions, any one or more ofwhich may be waived by the Seller in its sole discretion:

 

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## ***SECTION 12.1***.  Representations andWarranties of the Buyer.  Allrepresentations and warranties made by the Buyer in this Agreement shall betrue and correct on and as of the Closing Date as if again made by the Buyer onand as of such date, and the Seller shall have received a certificate dated theClosing Date and signed by the Chairman of the Board or the President or anyVice President of the Buyer to that effect.

## *** ***

## ***SECTION 12.2***.  Performance of theObligations of the Buyer.  The Buyershall have performed all obligations required under this Agreement to beperformed by the Buyer on or before the Closing Date, and the Seller shall havereceived a certificate dated the Closing Date and signed by the Chairman of theBoard or the President of the Buyer to that effect.

## *** ***

## ***SECTION 12.3***.  Consents and Approvals.  All consents, waivers, authorizations andapprovals set forth on Schedule 12.3 shall have been duly obtained andshall be in full force and effect on the Closing Date.

## *** ***

## ***SECTION 12.4***.  No Violation of Orders.  No preliminary or permanent injunction orother order issued by any court or other governmental or regulatory authority,domestic or foreign, nor any statute, rule, regulation, decree or executiveorder promulgated or enacted by any government or governmental or regulatoryauthority, domestic or foreign, that declares this Agreement invalid orunenforceable in any respect or which prevents the consummation of the transactionscontemplated hereby shall be in effect; and no action or proceeding before anycourt or regulatory authority, domestic or foreign, shall have been institutedor threatened by any government or governmental or regulatory authority,domestic or foreign, or by any other Person, which seeks to prevent or delaythe consummation of the transactions contemplated by this Agreement or whichchallenges the validity or enforceability of this Agreement, and which in anysuch case has a reasonable likelihood of success in the opinion of counsel tothe Seller.

## *** ***

## ***SECTION 12.5***.  Opinion of Counsel.  The Seller shall have received a favorableopinion, dated as of the Closing Date, from counsel to the Buyer, substantiallyin the form of Exhibit D hereto.

## *** ***

## ***SECTION 12.6***.  Consulting Agreement.  The Buyer or an Affiliate of the Buyer shallhave offered to enter into the Consulting Agreement.

## *** ***

## ***SECTION 12.7***.  Automobile Storage Lease.  The Buyer or an Affiliate of the Buyer shallhave offered to enter into the Automobile Storage Lease.

## *** ***

## ***SECTION 12.8***.  Other Closing Documents.  The Seller shall have received such othercertificates, instruments and documents in confirmation of the representationsand warranties of the Buyer or in furtherance of the transactions contemplatedby this Agreement as the Seller may reasonably request.

 

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## ***SECTION 12.9***.  Legal Matters.  All certificates, instruments, opinions andother documents required to be executed or delivered by or on behalf of theBuyer under the provisions of this Agreement, and all other actions andproceedings required to be taken by or on behalf of the Buyer in furtherance ofthe transactions contemplated hereby shall be reasonably satisfactory in formand substance to counsel for the Seller.

## *** ***

# **SECTION 13**.  CONDITIONS PRECEDENT TOPERFORMANCE BY THE BUYER.

# ** **

The obligations of the Buyer to consummatethe transactions contemplated by this Agreement are subject to the fulfillment,at or before the Closing Date, of the following conditions, any one or more ofwhich may be waived by the Buyer in its sole discretion:

 

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## ***SECTION 13.1***.  Representations andWarranties of the Seller.  Allrepresentations and warranties made by the Seller in this Agreement shall betrue and correct on and as of the Closing Date as if again made by the Selleron and as of such date, and the Buyer shall have received a certificate datedthe Closing Date and signed by the Chairman of the Board or President of theSeller to that effect.

## *** ***

## ***SECTION 13.2***.  Performance of theObligations of the Seller.  TheSeller shall have performed all obligations required under this Agreement to beperformed by the Seller on or before the Closing Date, and the Buyer shall havereceived a certificate dated the Closing Date and signed by the Chairman of theBoard or President of the Seller to that effect.

## *** ***

## ***SECTION 13.3***.  Consents and Approvals;Licenses and Permits.  All consents,waivers, authorizations and approvals of any governmental or regulatoryauthority, domestic or foreign, and of any other Person, required in connectionwith the execution, delivery and performance of this Agreement shall have beenduly obtained, and such consents, waivers, authorizations and approvals, and theLicenses and Permits, shall be in full force and effect on the Closing Date.

## *** ***

## ***SECTION 13.4***.  No Violation of Orders.  No preliminary or permanent injunction orother order issued by any court or governmental or regulatory authority,domestic or foreign, nor any statute, rule, regulation, decree or executiveorder promulgated or enacted by any government or governmental or regulatoryauthority, which declares this Agreement invalid in any respect or prevents theconsummation of the transactions contemplated hereby, or which materially andadversely affects the assets, properties, operations, prospects, net income orfinancial condition of the Business shall be in effect; and no action orproceeding before any court or governmental or regulatory authority, domesticor foreign, shall have been instituted or threatened by any government orgovernmental or regulatory authority, domestic or foreign, or by any otherPerson or entity which seeks to prevent or delay the consummation of thetransactions contemplated by this Agreement or which challenges the validity orenforceability of this Agreement, and which in either such case has areasonable likelihood of success in the opinion of counsel to the Buyer.

## *** ***

## ***SECTION 13.5***.  No Material Adverse Change.  During the period from December 31,1997 to the Closing Date, there shall not have been any material adverse changein the assets, properties, business, operations, prospects, net income orfinancial condition of the Business.

## *** ***

## ***SECTION 13.6***.  Opinion of Counsel.  The Buyer shall have received a favorableopinion, dated as of the Closing Date, from counsel to the Seller,substantially in the form of Exhibit E hereto.

## *** ***

## ***SECTION 13.7***.  Consulting Agreement.  Jeffrey F. Snook shall have executed anddelivered the Consulting Agreement, and the Consulting Agreement shall be infull force and effect and Jeffrey F. Snook shall not be in breach thereof.

 

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## ***SECTION 13.8***.  Automobile Storage Lease.  Jeffrey F. Snook shall have executed anddelivered the Automobile Storage Lease, and the Automobile Storage Lease shallbe in full force and effect and Jeffrey F. Snook shall not be in breachthereof.

## *** ***

## ***SECTION 13.9***.  Assignment of Leases.  The Buyer shall have received consents tothe assignment of all Leases from the lessors thereof on terms reasonablysatisfactory to the Buyer.

## *** ***

## ***SECTION 13.10***. Change of Name.  TheSeller shall have amended its Certificate or Articles of Incorporation tochange the Seller’s corporate name to a name that does not include GreenManufacturing or any derivative thereof.

## *** ***

## ***SECTION 13.11***. Deeds, Bills of Sale, Certificate and Affidavit.  The Seller shall deliver to the Buyer (i) aspecial warranty deed transferring to the Buyer good and marketable title tothe Purchased Real Property; (ii) an Assignment of each Lease; (iii) all suchfurther duly executed bills of sale and other assignments or certificates oftitle, in form reasonably satisfactory to the Buyer’s counsel, as arereasonably necessary to transfer to the Buyer all of the Seller’s right, titleand interest in, to and under the Purchased Property; (iv) any and all titleaffidavits and indemnities customarily required by the Title Insurance Companyto be delivered by a seller in order for the Title Insurance Company to issue atitle insurance policy or title insurance policies for the Premises, in formreasonably acceptable to the Buyer and the Seller and consistent with the TitleReports, together with all title insurance endorsements reasonably requested bythe Buyer, including zoning endorsements where available (the “TitlePolicies”) including, without limitation, the following affidavit:  a ‘Corporate Owner’s Affidavit’ in form andsubstance satisfactory to the Title Insurance Company; (v) physical possessionand control of the Purchased Real Property; and (vi) assignment of all right,title and interest in and to the Leased Real Property, together with deliveryof the Leased Real Property.  All suchdocuments, instruments and certificates shall be in a form reasonablysatisfactory to the Buyer.

## *** ***

## ***SECTION 13.12.***Repayment of Indebtedness. The Seller shall have repaid all indebtedness owed by the Seller to theToledo-Lucas County Port Authority and all Liens granted by the Seller inconnection with such indebtedness shall have been terminated in a mannerreasonably satisfactory to the Buyer.

## *** ***

## ***SECTION 13.13***. Other Closing Documents. The Buyer shall have received such other certificates, instruments anddocuments in confirmation of the representations and warranties of the Selleror in furtherance of the transactions contemplated by this Agreement as theBuyer or its counsel may reasonably request.

## *** ***

## ***SECTION 13.14***. Legal Matters.  Allcertificates, instruments, opinions and other documents required to be executedor delivered by or on behalf of the Seller under the provisions of thisAgreement, and all other actions and proceedings required to be taken by or onbehalf of the Seller in furtherance of the transactions contemplated hereby,

 

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## ***shallbe reasonably satisfactory in form and substance to counsel for the Buyer.***

 

# **SECTION 14**.  TERMINATION.

# ** **

## ***SECTION 14.1***.  Conditions of Termination.  Notwithstanding anything to the contrarycontained herein, this Agreement may be terminated at any time before theClosing:

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###### (a)                                  By mutual consent ofthe Seller and the Buyer;

######  

###### (b)                                 By the Seller if, asof the Closing Date, any of the conditions set forth in Section 12 shallnot have been met;

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###### (c)                                  By the Buyer if, asof December 31, 1998, any of the conditions set forth in Section 13shall not have been met;

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###### (d)                                 By the Buyer if theSeller does not on or prior to the Closing Date cure and eliminate all Defects;or

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###### (e)                                  By the Buyer ifentitled to do so pursuant to Section 16 hereof.

######  

## ***SECTION 14.2***.  Effect of Termination.  In the event of termination pursuant toSection 14.1, this Agreement shall become null and void and have noeffect, with no liability on the part of the Seller or the Buyer, or theirdirectors, officers, agents or stockholders, with respect to this Agreement,except for the liability of a party for expenses pursuant to Section 15.3and except that the Confidentiality Agreement between the Buyer and the Sellerdated April 15, 1998 shall remain in effect.

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# **SECTION 15**.  MISCELLANEOUS.

# ** **

## ***SECTION 15.1***.  Successors and Assigns.  Except as otherwise provided in thisAgreement, no party hereto shall assign this Agreement or any rights orobligations hereunder without the prior written consent of the other partyhereto and any such attempted assignment without such prior written consentshall be void and of no force and effect; provided, that the Buyer mayassign its rights hereunder to an Affiliate; provided, further, that nosuch assignment shall reduce or otherwise vitiate any of the obligations of theBuyer hereunder.  This Agreement shallinure to the benefit of and shall be binding upon the successors and permittedassigns of the parties hereto.

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## ***SECTION 15.2***.  Governing Law.  This Agreement shall be construed, performedand enforced in accordance with, and governed by, the laws of the State ofOhio, without giving effect to the principles of conflicts of laws thereof.

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## ***SECTION 15.3***.  Expenses.  Except as otherwise provided herein, each ofthe parties hereto shall pay its own expenses in connection with this Agreementand the transactions contemplated hereby, including, without limitation, anylegal and accounting fees, whether or not the transactions contemplated herebyare consummated. Without limiting the foregoing, the Seller shall pay the costof all surveys, title insurance policies and title reports ordered pursuant toSection 7.10.

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## ***SECTION 15.4***.  Broker’s and Finder’s Fees.  The Buyer represents and warrants that ithas dealt with no broker or finder in connection with

 

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## ***anyof the transactions contemplated by this Agreement.  The Seller represents and warrants that it has dealt with nobroker or finder in connection with any of the transactions contemplated by thisAgreement, other than Nieder Hoffer-Henkel & Co., L.L.C., whose feesand expenses shall be the responsibility of the Seller, and, insofar as theSeller knows, no other broker or other person is entitled to any commission orfinder’s fee in connection with any of these transactions.  The provisions of this Section 15.4shall survive the Closing.***

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## ***SECTION 15.5***.  Severability.  In the event that any part of this Agreementis declared by any court or other judicial or administrative body to be null,void or unenforceable, said provision shall survive to the extent it is not sodeclared, and all of the other provisions of this Agreement shall remain infull force and effect.

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## ***SECTION 15.6***.  Notices.  All notices, requests, demands and othercommunications under this Agreement shall be in writing and shall be deemed tohave been duly given (i) on the date of service if served personally on theparty to whom notice is to be given; (ii) on the day of transmission if sentvia facsimile transmission to the facsimile number given below, and telephonicconfirmation of receipt is obtained promptly after completion of transmission;(iii) on the day after delivery to Federal Express or similar overnight courieror the Express Mail service maintained by the United States Postal Service; or(iv) on the fifth day after mailing, if mailed to the party to whom notice isto be given, by registered or certified mail, postage prepaid and properlyaddressed, to the party as follows:

 

 

If to the Seller:

 

Green Manufacturing, Inc.

Post Office Box 408

Bowling Green, Ohio 43402

Telecopy: (419) 354-2087

 

 

Copy to:

 

Marshall & Melhorn

Four Seagate, Eighth Floor

Toledo, Ohio 43604

Attn: A. Thomas Christensen

Telecopy: (419) 249-7151

 

 

If to the Buyer:

 

P&F Industries, Inc.

300 Smith Street

Farmingdale, New York 11735

Attn: Chief Financial Officer

Telecopy: (516) 694-1836

 

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Copy to:

 

Willkie Farr & Gallagher

787 Seventh Avenue

New York, New York 10019

Attn: Neil Novikoff, Esq.

Telecopy: (212) 728-8111

 

Any party may change its address for thepurpose of this Section by giving the other party written notice of itsnew address in the manner set forth above.

 

## ***SECTION 15.7***.  Amendments; Waivers.  This Agreement may be amended or modified,and any of the terms, covenants, representations, warranties or conditionshereof may be waived, only by a written instrument executed by the partieshereto, or in the case of a waiver, by the party waiving compliance.  Any waiver by any party of any condition, orof the breach of any provision, term, covenant, representation or warrantycontained in this Agreement, in any one or more instances, shall not be deemedto be nor construed as a further or continuing waiver of any such condition, orof the breach of any other provision, term, covenant, representation orwarranty of this Agreement.

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## ***SECTION 15.8***.  Public Announcements.  The parties agree that after the signing ofthis Agreement, neither party shall make any press release or publicannouncement concerning this transaction without the prior written approval ofthe other party unless a press release or public amendment is required by lawor by the rules of any securities exchange or association on which thesecurities of such party are listed or included for trading.  If any such announcement or other disclosureis required by law or by such rules, the disclosing party agrees to give thenondisclosing party prior notice and an opportunity to comment on the proposeddisclosure.

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## ***SECTION 15.9***.  Entire Agreement.  Except for the Confidentiality Agreementreferred to in Section 14.2, this Agreement contains the entireunderstanding between the parties hereto with respect to the transactionscontemplated hereby and supersedes and replaces all prior and contemporaneousagreements and understandings, oral or written, with regard to suchtransactions.  All schedules hereto andany documents and instruments delivered pursuant to any provision hereof areexpressly made a part of this Agreement as fully as though completely set forthherein.

 

## ***SECTION 15.10***. Parties in Interest. Nothing in this Agreement is intended to confer any rights or remediesunder or by reason of this Agreement on any persons other than the Seller andthe Buyer and their respective successors and permitted assigns.  Nothing in this Agreement is intended torelieve or discharge the obligations or liability of any third persons to theSeller or the Buyer.  No provision of thisAgreement shall give any third persons any right of subrogation or action overor against the Seller or the Buyer.

 

## ***SECTION 15.11***. Section and Paragraph Headings.  The section and

 

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## ***paragraphheadings in this Agreement are for reference purposes only and shall not affectthe meaning or interpretation of this Agreement.***

 

## ***SECTION 15.12***. Counterparts.  ThisAgreement may be executed in counterparts, each of which shall be deemed anoriginal, but both of which shall constitute the same instrument.

 

# **SECTION 16**.  DESTRUCTION, DAMAGE OR TAKINGBEFORE CLOSING.

# ** **

## ***SECTION 16.1***.  Destruction or DamageBefore Closing.  Until the Closing,the Seller shall have the entire risk of loss in connection with thePremises.  In the event of damage to ordestruction of all or any portion of the Premises by fire or other casualtyprior to the Closing, the Seller shall promptly notify the Buyer.  If the Buyer reasonably estimates that$200,000.00 or less is required to be expended to repair or restore the damagedor destroyed Premises or portion thereof (“Repair Cost”), this Agreementshall remain in full force and effect, and the Seller shall repair such damageor destruction, but if such damage or destruction has not been repaired to thesatisfaction of the Buyer prior to the Closing, the Buyer shall take title tothe Premises subject to such damage or destruction with a reduction of thePurchase Price equal to the amount of the Repair Cost.  If the Buyer reasonably estimates that theRepair Cost exceeds $200,000.00, Buyer shall have (i) the option to terminatethis Agreement within thirty (30) business days after its receipt of noticefrom the Seller as set forth above, by notice in writing to the Seller, or (ii)if the Buyer does not elect to terminate, this Agreement shall remain in fullforce and effect and the Seller shall repair such damage or destruction, but ifsuch damage or destruction has not been repaired to the satisfaction of theBuyer prior to the Closing, Buyer shall take title to the Premises subject tosuch damage or destruction with a reduction of the Purchase Price equal to theamount of the Repair Cost as the Buyer and the Seller mutually estimate suchrepair cost on the Closing Date.

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## ***SECTION 16.2***.  Taking Before Closing.  In the event of an eminent domain taking orthe issuance of a notice of a proposed eminent domain taking prior to theClosing with respect to all or any portion of the Premises, the Seller shallpromptly notify the Buyer.  The Buyershall have, as its sole and exclusive remedies in any such case, (i) the optionto terminate this Agreement within thirty (30) days after its receipt of noticefrom the Seller as set forth above, by notice in writing to the Seller, or (ii)if the Buyer does not elect to terminate, this Agreement shall remain in fullforce and effect, the Buyer shall be obligated to consummate the transactioncontemplated by this Agreement for the full Purchase Price, the Buyer shall beentitled to receive all eminent domain awards and shall control allcondemnation award proceedings and, to the extent the same may be necessary andappropriate, the Seller shall assign to the Buyer at Closing the Seller’srights to such awards.

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## ***SECTION 16.3***.  Knowledge.  References in this Agreement to the bestknowledge of the Seller shall refer to the knowledge, after due inquiry, ofJeffrey F. Snook, and shall include the knowledge of any officer or employee ofthe Seller which may be imputed to Jeffrey F. Snook.

 

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IN WITNESS WHEREOF, the parties hereto havecaused this Agreement to be executed by their respective officers thereuntoduly authorized as of the date first above written.

 
|   | P&F INDUSTRIES, INC.           |
|--------|------------------------------------|
|   |                               |
|   |                               |
|   | By:                                |     /s/ Joseph A.  Molino, Jr. |   |
|   | Name:   Joseph A. Molino, Jr. |
|   | Title: Vice President              |
|   |                               |
|   |                               |
|   | GREEN MANUFACTURING, INC.          |
|   |                               |
|   |                               |
|   | By:                                |     /s/ Jeffrey F.  Snook |   |
|   | Name:   Jeffrey F. Snook      |
|   | Title: President                   |

 

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