EX-10.55






Exhibit 10.55




ASSET PURCHASE AGREEMENT




THIS ASSET PURCHASE AGREEMENT is made as of December 1, 2014, by and between Santa Rosa
Lead Products, LLC, a California limited liability company (“Purchaser”), and Santa Rosa
Lead Products, Inc., a California corporation (“Seller”). Certain capitalized terms used
herein are defined in Article I.



W I T N E S S E T H:




WHEREAS, Seller is engaged in the conduct of the Business (as defined below) at the Facilities
(as defined below);



WHEREAS, Purchaser desires to purchase from Seller, and Seller desires to sell to Purchaser,
substantially all of the assets of the Business, for the consideration and upon the terms and
conditions contained in this Agreement;



NOW, THEREFORE, in consideration of the mutual covenants, agreements, representations and
warranties contained herein, and for their mutual reliance, the parties hereto agree as follows:



ARTICLE I




DEFINITIONS




1.1 Definitions. The following terms shall have the following meanings for the
purposes of this Agreement:



“Acquired Contracts” shall have the meaning set forth in Section 2.1(c).



“Acquisition Agreements” shall mean the (i) the Mayco Purchase Agreement, (ii) the
Asset Purchase Agreement dated no later than the Closing Date by and between Mayco (Alabama), LLC,
and Metalico Alabama Realty, Inc., (iii) the Asset Purchase Agreement dated no later than the
Closing Date by and between Mayco (Nevada), LLC, and West Coast Shot, Inc. and (iv) the Asset
Purchase Agreement dated no later than the Closing Date by and between Mayco (Illinois), LLC, and
Metalico-Granite City, Inc.



“Acquired Intellectual Property Rights” shall have the meaning set forth in Section
2.1(n).



“Acquired Inventories” shall have the meaning set forth in Section 2.1(d).



“Acquired Personal Property Leases” shall have the meaning set forth in Section
2.1(g).



“Acquired Real Property Leases” shall have the meaning set forth in Section
2.1(f).



“Affiliate” shall mean, with respect to any specified Person, any other Person which,
directly or indirectly, controls, is under common control with, or is controlled by, such specified
Person.



“Aggregate Estimated Closing Net Working Capital” shall mean the sum of (i) the
Estimated Closing Net Working Capital and (ii) the “Estimated Closing Net Working Capital” under
and as that term is defined in the Mayco Purchase Agreement.



“Aggregate Final Closing Net Working Capital” shall have the meaning set forth in
Section 2.6(f).



“Aggregate Final Closing Net Working Capital Deficiency Amount” shall have the meaning
set forth in Section 2.6(f) (i).



“Aggregate Final Closing Net Working Capital Excess Amount” shall have the meaning set
forth in Section 2.6(f) (ii).



“Agreement” shall mean this Agreement, including the Disclosure Schedule and all other
exhibits and schedules hereto, as it and they may be amended from time to time.



“Alternative Arrangements” shall have the meaning set forth in Section 9.7(d).



“Applicable Laws” shall mean all laws, statutes, orders, rules, and regulations of
Governmental Authorities, and judgments, decisions or orders entered by any Governmental Authority
applicable to Seller or the Business.



“Assumed FSA Balance” shall have the meaning set forth in Section 5.5(d).



“Assumed Liabilities” shall have the meaning set forth in Section 2.3.



“Assumption Agreement” shall have the meaning set forth in Section
2.8(b)(iii).



“Balance Sheet Date” shall mean December 31, 2013.



“Benefit Plans” shall mean (i) any “employee welfare benefit plan” or “employee
pension benefit plan” (as those terms are respectively defined in Sections 3(1) and 3(2) of ERISA),
other than a Multiemployer Plan,; and (ii) any retirement or deferred compensation plan, incentive
compensation plan, stock plan, share appreciation right, unemployment compensation plan, vacation
pay, severance pay, bonus arrangement, health benefit plan, profit-sharing plan, death or
disability plan or any other welfare or fringe benefit arrangements in each case in which any
Employees participate.



“Bill of Sale” shall have the meaning set forth in Section 2.8(b)(i).



“Business” shall mean the business of manufacturing, distributing and selling
non-battery fabricated lead products as conducted by Seller at the Facilities as of the date of
this Agreement.



“Business Day” shall mean any day other than a Saturday, Sunday or other day on which
banking institutions in the State of New York are authorized or required by law or other action of
a Governmental Authority to close.



“Cash Consideration” ” shall mean the applicable amount determined pursuant to
Section 2.7 and set forth in Exhibit 2.7, subject to adjustment pursuant to
Section 2.6.



“Closing” shall mean the consummation of the transactions contemplated herein.



“Closing Date” shall have the meaning set forth in Section 2.8(a).



“Closing Net Working Capital” shall have the meaning set forth in Section
2.6(c).



“COBRA” shall have the meaning set forth in Section 3.8(c).



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



“Confidential Information” shall have the meaning set forth in Section 5.6(a).



“Contamination” or “Contaminated” shall mean the presence of Hazardous
Material in, on or under the soil, groundwater, surface water or other environmental media to an
extent that any Response Action is legally required by any Governmental Authority under any
Environmental Law with respect to such presence of Hazardous Material.



“Designated Contacts” shall have the meaning set forth in Section 5.1(a).



“Disclosing Party” shall have the meaning set forth in Section 5.6(a).



“Disclosure Schedule” shall mean the Disclosure Schedule delivered by Seller to
Purchaser on the date of this Agreement, as amended, modified or supplemented in accordance with
this Agreement.



“Dispute Notice” shall have the meaning set forth in Section 2.6(d).



“Employees” shall have the meaning set forth in Section 3.11.



“Enhanced” shall have the meaning set forth in Section 10.8.



“Environmental Claim” shall mean any written notice, claim, demand, action, suit,
complaint, proceeding or other communication by any Person alleging harm or potential harm to any
Person or to human health or to the environment or any violation of, or liability or potential
liability under or relating to any Environmental Law.



“Environmental Law” shall mean any federal, state or local statute, order, regulation
or ordinance pertaining to the protection of human health or the environment and any applicable
orders, judgments, decrees, permits, licenses or other authorizations or mandates under such laws,
each as in existence on the date hereof.



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



“ERISA Affiliate” shall mean any Person who together with Seller or any of its
subsidiaries is treated as a single employer within the meaning of Section 414 (b), (c), (m) or (o)
of the Code or Section 4001 (b) of ERISA.



“Escrow L/C” shall mean the irrevocable multiple-draw letter of credit to be issued to
Purchaser by the Escrow L/C Bank having a face amount of $750,000 in order to secure any adjustment
to the Purchase Price pursuant to Section 2.6 and any indemnification claims by Purchaser
that have been finalized pursuant to the procedures set forth in Section 9.2 or the
equivalent section in any of the other Acquisition Agreements for a period of nine months
commencing on the Closing Date, at which time the Escrow L/C will terminate, provided that if there
are any indemnification claims remaining outstanding on such termination date, the Escrow L/C shall
be reduced in amount to the amount of such outstanding indemnification claims and extended until
such time as any such indemnification claims have been resolved.



“Escrow L/C Bank” shall mean PNC Bank, National Association, the issuer of the Escrow
L/C.



“Estimated Closing Net Working Capital” shall have the meaning set forth in Section
2.6(b).



“Estimated Closing Net Working Capital Deficiency Amount” shall have the meaning set
forth in Section 2.6(b).



“Estimated Closing Net Working Capital Excess Amount” shall have the meaning set forth
in Section 2.6(b).



“Excluded Assets” shall have the meaning set forth in Section 2.2.



“Excluded Liabilities” shall have the meaning set forth in Section 2.4 (a).



“Expenses” shall have the meaning set forth in Section 8.2.



“Facilities” shall mean the Healdsburg Facility and the Ontario Facility where the
Business is conducted by Seller.



“Final Closing Net Working Capital” shall have the meaning set forth in Section
2.6(f).



“Financial Statements” shall have the meaning set forth in Section 3.17.



“FMLA” shall have the meaning set forth in Section 3.8(c).



“GAAP” shall mean U.S. generally accepted accounting principles, as in effect from
time to time.



“Governmental Authority” shall mean any U.S., state, local or foreign governmental,
regulatory or administrative body, agency or authority, any court or judicial authority or
arbitration tribunal, whether national, Federal, state or local or otherwise, or any Person
lawfully empowered by any of the foregoing to enforce or seek compliance with any applicable law,
statute, regulation, order or decree.



“Hazardous Material” shall mean any Hazardous Waste, Hazardous Substance or Toxic
Substance as such terms may be defined, listed or regulated in any Environmental Law, including
petroleum, any petroleum-based product, any radioactive substance and any hazardous air pollutant,
or any material posing a threat or potential threat to human health or the environment.



“Healdsburg Facility” shall mean the fabricating, office and storage facility located
at 33 So. University Street, Healdsburg, California 95448 and leased by Seller.



“Indemnification Period” shall have the meaning set forth in Section 9.1.



“Indemnitee” shall have the meaning set forth in Section 9.5.



“Indemnitor” shall have the meaning set forth in Section 9.5.



“Independent Auditor” shall have the meaning set forth in Section 2.6(e).



“Intellectual Property Rights” shall mean all of the following in any jurisdiction
throughout the world: (a) patents, patent applications, patent disclosures and statutory invention
registrations, including reissues, divisions, continuations, continuations in part, extensions and
reexaminations thereof, all rights therein provided by international treaties or conventions; (b)
trademarks, service marks, trade dress, trade names, logos (and all translations, adaptations,
derivations and combinations of the foregoing) and Internet domain names, together with all
goodwill associated with each of the foregoing, any and all common law rights, and registrations
and applications for registration thereof, all rights therein provided by international treaties or
conventions, and all reissues, extensions and renewals of any of the foregoing; (c) copyrightable
works (including computer software source code, executable code, databases and related
documentation and maskworks), copyrights, whether or not registered, and registrations and
applications for registration thereof, and all rights therein provided by international treaties or
conventions; and (d) confidential and proprietary information, including trade secrets, unpatented
inventions, data and know-how.



“Interim Financial Statements” shall have the meaning set forth in Section
3.17.



“IP Assignment” shall have the meaning set forth in Section 2.8(b)(i).



“IRCA” shall have the meaning set forth in Section 3.13(a).



“Item of Dispute” shall have the meaning set forth in Section 2.6(d).



“Leased Real Property” shall mean the parcels of real property leased by Seller or any
of its Affiliates and used in or necessary for the conduct of the Business at the Facilities as
currently conducted (together with all rights, title and interest of Seller or its Affiliates in
and to leasehold improvements relating thereto, including, but not limited to, security deposits,
reserves or prepaid rents paid in connection therewith).



“Lender” shall have the meaning set forth in Section 10.8.



“Liabilities” shall have the meaning set forth in Section 3.16.



“Lien” shall mean all liens, encumbrances, mortgages, charges, claims, restrictions,
pledges, security interests, title defects, easements, rights of way, covenants and encroachments.



“Loss” or “Losses” shall mean any and all actually incurred out-of-pocket
losses, liabilities, deficiencies, fines, costs, provable damages, penalties and reasonable and
documented expenses (including incurred out-of-pocket reasonable and documented attorneys’ fees and
expenses and litigation, settlement and judgment and interest costs), and any reasonable and
documented legal or other expenses reasonably incurred in connection with investigating or
defending any claims or actions but not including special, speculative, punitive, indirect,
incidental, or consequential damages or damages relating to business interruption or lost profits
(even if advised of the possibility thereof), and, in particular, no “multiple of profits” or
“multiple of cash flow” or similar valuation methodology shall be used in the calculating the
amount of any Losses, unless such items were asserted by unaffiliated third persons. All Losses
shall be net of any other recoveries realized or to be realized by an Indemnitee and its
Affiliates, including pursuant to Alternative Arrangements and any Tax Advantages.



“Material Adverse Effect” shall mean a change, event or occurrence that is reasonably
likely to have a material adverse effect on the financial condition or results of operations of the
Business and the Purchased Assets, taken as a whole; provided, however, that in
determining whether there has been a Material Adverse Effect or whether a Material Adverse Effect
could or would reasonably likely occur, any change, event or occurrence principally attributable
to, arising out of, or resulting from any of the following shall be disregarded: (i) general
economic, business, industry or credit, financial or capital market conditions (whether in the
United States or internationally), including conditions affecting generally the industries served
by the Business; (ii) the taking of any action required or permitted by this Agreement or the
Related Agreements; (iii) the negotiation, entry into and announcement of this Agreement or
pendency of the transactions contemplated hereby, including any suit, action or proceeding relating
to the transactions contemplated hereby, (iv) the breach of this Agreement or any Related Agreement
by Purchaser, (v) the taking of any action with the approval of Purchaser, (vi) pandemics,
earthquakes, tornados, hurricanes, floods and acts of God, (vii) acts of war (whether declared or
not declared), sabotage, terrorism, military actions or the escalation thereof; (viii) any changes
or prospective changes in applicable laws, regulations or accounting rules, including GAAP or
interpretations thereof, or any changes or prospective changes in the interpretation or enforcement
of any of the foregoing, or any changes in general legal, regulatory or political conditions; (ix)
any existing event, occurrence or circumstance with respect to which Purchaser has knowledge as of
the date hereof (including any matter set forth in the Disclosure Schedule) and (x) any adverse
change in or effect on the Business that is cured before the earlier of the Closing Date and
termination of this Agreement as set forth in Article VIII, provided that in the case of
any of the events set forth in clauses (vi), (vii) or (viii) consisting of actual (rather than
prospective) changes, such changes do not have a disproportionately adverse impact on the Business.



“Material Contract” shall mean (i) any agreement or contract providing for aggregate
future payment of at least $25,000, (ii) agreement or contract containing any covenant limiting the
freedom of the Business to engage in any line of business or compete with any Person; (iii) any
loan agreement, credit agreement, promissory note, guarantee, subordination agreement, letter of
credit or other similar type of contract; or (iv) any other agreement or contract material to the
business, operations or financial condition of the Business, taken as a whole.



“Mayco Purchase Agreement” shall mean the Asset Purchase Agreement dated no later than
the Closing Date by and between Mayco Industries, Inc. and Mayco Manufacturing, LLC.



“Metalico” shall mean Metalico, Inc. a Delaware corporation and the sole stockholder
of Seller.



“Multiemployer Plan” shall have the meaning set forth in Section 3(37) of the Code.



“Net Working Capital” shall mean the total current assets of the Business less the
Assumed Liabilities determined (i) in accordance with generally accepted accounting principles,
consistently applied, subject only to such exceptions thereto as agreed to by Purchaser and Seller,
and (ii) based upon a physical inventory to be conducted at Purchaser’s expense as of the Closing.



“Non-Competition Agreement” shall have the meaning set forth in Section 6.5.



“Non-Tax Prorations” shall mean closing adjustments, which should be included in the
calculation of Closing Net Working Capital, of utilities, rents, and other pro-ratable items
which shall be estimated at Closing and as per the Closing Date and reprorated upon the
determination of actual amounts as herein provided.



“Ontario Facility” shall mean the fabricating, office and storage facility located at
3949 Guasti Rd., Unit B, Ontario, California 91761 and leased by Seller.



“Open Customer Orders” shall have the meaning set forth in Section 2.1(j).



“Open Supplier Orders” shall have the meaning set forth in Section 2.1(k).



“Owned Real Property” shall mean all parcels of real property owned by Seller or any
of its Affiliates and used in or necessary for the conduct of the Business at the Facilities as
currently conducted (together with all buildings, fixtures, structures and improvements situated
thereon and all easements, rights-of-way and other rights and privileges each appurtenant thereto).



“Permits and Licenses” shall have the meaning set forth in Section 2.1(h).



“Permitted Liens” shall mean, as of the Closing Date, all (a) Liens for Taxes,
assessments and governmental charges or levies not yet delinquent or for which adequate reserves
are maintained on the financial statements of Seller and set forth as a current liability on the
Target Closing Net Working Capital Calculation Statement; (b) Liens imposed by law, such as
materialmen’s, mechanics’, carriers’, workmen’s and repairmen’s liens and other similar liens
arising in the ordinary course of business securing obligations that are not overdue for a period
of more than 60 days or which are being contested in good faith by appropriate proceedings and set
forth as a current liability on the Target Closing Net Working Capital Calculation Statement; (c)
pledges or deposits to secure obligations under workers’ compensation laws or similar legislation
or to secure public or statutory obligations and set forth as a current liability on the Target Net
Closing Working Capital Calculation Statement; (d) deposits to secure the performance of bids,
trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature incurred in the ordinary course of business consistent with past
practice and set forth as a current liability on the Target Closing Net Working Capital Calculation
Statement; (e) all matters of record, including survey exceptions, reciprocal easement agreements
and other encumbrances on title to real property disclosed to Purchaser and which will not
individually or in the aggregate materially adversely impact the Business or its assets or
financial condition; (f) all applicable zoning, entitlement, conservation restrictions and other
land use and environmental regulations disclosed to Purchaser and which will not individually or in
the aggregate materially adversely impact the Business or its assets or financial condition; (g)
all exceptions, restrictions, easements, charges, rights-of-way and other Liens set forth in any
permits, any deed restrictions, groundwater or land use limitations or other institutional controls
utilized in connection with any required environmental remedial actions, or other state, local or
municipal franchise applicable to Seller or any of its properties disclosed to Purchaser and which
will not individually or in the aggregate materially adversely impact the Business or its assets or
financial condition; and (h) Liens referred to in the Disclosure Schedule.



“Person” shall mean an individual, corporation, partnership, joint venture, trust,
association, estate, joint stock company, limited liability company, Governmental Authority or any
other organization of any kind.



“PNC” shall have the meaning set forth in Section 10.8.



“Purchase Price” shall mean an amount equal to the Cash Consideration (i) either, as
appropriate, (A) plus the amount, if any, by which the Final Closing Net Working Capital as
of the Closing Date exceeds the Target Closing Net Working Capital or (B) minus the amount,
if any, by which the Final Closing Net Working Capital as of the Closing Date is less than the
Target Closing Net Working Capital, in case as provided in Section 2.6(f), (ii) plus
or minus, as appropriate, (A) the Tax Prorations and (b) the Non-Tax Prorations.



“Purchased Assets” shall have the meaning set forth in Section 2.1.



“Purchased Equipment” shall have the meaning set forth in Section 2.1(a).



“Purchaser” shall have the meaning set forth in the preamble.



“Purchaser Benefit Plans” shall have the meaning set forth in Section 5.5(b).



“Purchaser FSA” shall have the meaning set forth in Section 5.5(d).



“Purchaser’s 401(k) Plan” shall have the meaning set forth in Section 5.5(c).



“Real Property” shall mean the Owned Real Property and the Leased Real Property.



“Receiving Party” shall have the meaning set forth in Section 5.6(a).



“Related Agreements” shall mean the Bill of Sale, the Assumption Agreement, the IP
Assignment, the Escrow L/C, and the Non-Competition Agreement.



“Release” means any release, spill, emission, discharge, leaking, pumping, injection,
deposit, disposal, dispersal, leaching or migration into the environment (including, without
limitation, ambient air, surface water, groundwater and surface or subsurface strata) or into or
out of any property, including the movement of any Hazardous Material through or in the air, soil,
surface water, groundwater or property.



“Response Action” shall mean any action taken to investigate, abate, treat, remediate,
clean up, remove or mitigate any violation of Environmental Law, any Contamination of any property
owned, leased or used by the Business or any release or threatened release of Hazardous Materials.
Without limitation, Response Action shall include any action that would be a response as defined by
the Comprehensive Environmental Response, Compensation and Liability Act, as amended at the date of
Closing, 42 U.S.C. §9601 (25).



“Selected Employees” shall have the meaning set forth in Section 5.5(a).



“Seller” shall have the meaning set forth in the preamble.



“Seller FSA” shall have the meaning set forth in Section 5.5(d).



“Seller’s 401(k) Plan” shall have the meaning set forth in Section 5.5(c).



“Subject Employees” shall have the meaning set forth in Section 5.5(a).



“Target Closing Net Working Capital” shall mean $16,500,000 minus “Target Closing Net
Working Capital” allocated to the acquisition under the Mayco Purchase Agreement.



“Target Closing Net Working Capital Calculation Statement” shall have the meaning set
forth in Section 2.6(b).



“Tax” (and, with correlative meaning, “Taxes,” “Taxable” and
“Taxing”) shall mean any net income, capital gains, gross income, gross receipts, sales,
use, transfer, ad valorem, franchise, profits, license, capital, withholding, payroll, estimated,
employment, excise, goods and services, severance, stamp, occupation, premium, property, social
security, environmental (including Code section 59A), alternative or add-on, value added,
registration, windfall profits or other taxes, duties, charges, fees, levies or other assessments
imposed by any Governmental Authority, or any interest, penalties, or additions to tax incurred
under Applicable Laws with respect to taxes.



“Tax Prorations” shall mean prorations between Seller and Purchaser for real property
and personal property taxes pursuant to the procedures set forth in Section 5.9.



“Tax Returns” shall mean any report, return (including any information return),
declaration or other filing required or permitted to be supplied to any Taxing authority or
jurisdiction with respect to Taxes, including any amendments or attachments to such reports,
returns, declarations or other filings.



“Termination Date” shall have the meaning set forth in Section 8.1(b).



“Transferred Employees” shall have the meaning set forth in Section 5.5(a).



“WARN Act” shall mean the Worker Adjustment and Retraining Notification Act of 1988,
as amended.



“Year-End Financial Statements” shall have the meaning set forth in Section
3.17.



ARTICLE II




PURCHASE AND SALE; CLOSING




2.1 Purchase and Sale. Upon the terms and subject to the conditions set forth in this
Agreement, including Section 2.6 hereof, at the Closing, Seller shall sell, convey,
transfer, assign and deliver to Purchaser, and Purchaser shall purchase and accept from Seller, all
of Seller’s and any of its Affiliate’s right, title and interest in and to all of the assets,
wherever located, whether at the Facilities or in transit thereto which were or are used primarily
in the Business, including, without limitation, the following assets, except to the extent that the
same are Excluded Assets (the “Purchased Assets”) free and clear of all Liens other than
Permitted Liens:




(a) all machinery, production equipment, furniture, fixtures, office furnishings, tools
and dies, molds and parts, capital spares, vehicles, computer hardware and software, and
other tangible personal property owned by Seller or any of its Affiliates for use in
connection with the Business at the Facilities, including, without limitation, the tangible
personal property identified on Section 2.1(a) of the Disclosure Schedule (the
“Purchased Equipment”);




(b) to the extent assignable, all rights in all warranties of any manufacturer or
vendor in connection with the Purchased Equipment;




(c) all contracts and agreements, licenses, purchase orders, customer orders, utility
supply arrangements, and other contracts and agreements, whether written or oral, related to
the Business at the Facilities and identified on Schedule 2.1(c) of the Disclosure
Schedule (collectively, the “Acquired Contracts”);




(d) all inventories of raw materials, work in process, finished goods, parts, office
supplies, packing materials, janitorial supplies and other supplies owned by Seller or its
Affiliates for use in connection with the Business at the Facilities (collectively,
“Acquired Inventories”);




(e) all Owned Real Property;




(f) Seller’s or any of its Affiliates’ leasehold interest in the Leased Real Property
arising under the leases identified in Schedule 2.1(f) of the Disclosure Schedule
(the “Acquired Real Property Leases”);




(g) all leasehold rights in personal property leased by Seller or any of its Affiliates
and used primarily in connection with the Business at the Facilities, for the periods set
forth in the leases identified in Schedule 2.1(g) of the Disclosure Schedule (the
“Acquired Personal Property Leases”);




(h) to the extent assignable or transferable, all the permits, including environmental
permits, licenses, approvals, franchises and registrations and other governmental licenses,
permits or approvals issued to Seller or its Affiliates with respect to the operation of the
Facilities or the conduct of the Business at the Facilities (the “Permits and
Licenses”);




(i) other than the books and records contemplated by Section 2.1(n) below, all
books and records maintained at the Facilities which are related to the Business, including
without limitation, engineering drawings of machinery and equipment currently used or held
for use in connection with the Business; blueprints and other technical papers; user
manuals; inventory, maintenance, and asset history records; construction plans and
specifications; administrative libraries; environmental records required by law or
regulation; and systems documentation and other data processing information and records,
except, in each instance, to the extent they relate to the Excluded Assets;




(j) to the extent not fulfilled prior to Closing, all open orders for goods and
services with customers of the Business at the Facilities outstanding as of the Closing Date
(the “Open Customer Orders”), which are set forth on Schedule 2.1(j) of the
Disclosure Schedule;




(k) the right to receive all goods or services to be provided to Seller or its
Affiliates in connection with the Business at the Facilities pursuant to open orders for
goods and services with suppliers that remain unfulfilled as of the Closing date (the
“Open Supplier Orders”), which are set forth on Schedule 2.1(k) of the
Disclosure Schedule;




(l) all proceeds under Seller’s or any of its Affiliate’s casualty insurance policies
to the extent arising in connection with unrepaired property damage to the Purchased Assets
occurring prior to the Closing Date;




(m) all receivables, wherever located, of Seller or its Affiliates specifically related
to products produced at the Facilities on or before the Closing Date;




(n) all Intellectual Property Rights, wherever located, owned by Seller and used
primarily in the Business at the Facilities, including those Intellectual Property Rights
set forth on Schedule 2.1(n) of the Disclosure Schedule (the “Acquired
Intellectual Property Rights”); and




(o) all employee-related files and records, including occupational health and safety
records, assessments and audits; industrial hygiene files; workers compensation records;
workers compensation claims files; and personnel employment and medical records (in each
case, to the extent the transfer thereof is not prohibited by law) for Employees at the
Facilities (provided that Seller may retain copies to the extent necessary or appropriate to
protect its interests after Closing).



2.2 Excluded Assets. Notwithstanding anything to the contrary contained in this
Agreement, the following assets are not being sold, assigned, transferred or conveyed to Purchaser
by Seller hereunder (the “Excluded Assets”):




(a) Seller’s assets which are not located at the Facilities, unless wrongly moved from
the Facilities or unless used primarily in the Business or in transit to the Facilities;




(b) all commercial claims of Seller against third parties, including but not limited to
any such claims arising out of Seller’s conduct of the Business at the Facilities on or
before the Closing Date, including any rights of Seller in any legal proceedings relating to
any Excluded Asset or Excluded Liability (including but not limited to the insurance
policies and rights related thereto described below);




(c) the corporate seals, organizational documents, minute books, stock books, Tax
Returns, books of account and other records having to do with the corporate organization of
Seller;




(d) the basic books and records of account and all supporting vouchers, invoices and
other records and materials relating to any or all Taxes of Seller or the Business;




(e) all claims for refunds due to Seller for Taxes of any nature paid by Seller with
respect to any period ending on or prior to the Closing Date;




(f) except only as provided in Section 2.1(l), all insurance policies and
performance bonds of Seller covering the Purchased Assets and any rights, proceeds and
claims of and from such bonds or policies;




(g) Benefit Plan assets for Benefit Plans;




(h) data files, archive files, systems documentation and other data processing
information and records relating to any of the foregoing Excluded Assets;




(i) the assets, properties and rights specifically set forth on Section 2.2(i)
of the Disclosure Schedule;




(j) the rights which accrue or will accrue to Seller or any of its Affiliates under
this Agreement and the Related Agreements;




(k) any rights, claims or causes of action related to (i) Excluded Assets or (ii)
intercompany obligations between Seller and any of its Affiliates other than Mayco
Industries, Inc.;




(l) all claims of Seller that are not directly related to the ongoing operation of the
Business at the Facilities, including without limitation all potential claims against
directors and officers;




(m) all cash, liquid securities and other cash equivalents of Seller; and




(n) any assets of Seller which are not Purchased Assets.



2.3 Assumed Liabilities. Upon the terms and conditions contained in this Agreement,
Purchaser shall, without any further responsibility or liability of, or recourse to, Seller, or
Seller’s directors, shareholders, officers, employees, agents, consultants, representatives,
Affiliates, successors or assigns, absolutely and irrevocably assume and be solely liable and
responsible for paying and satisfying, solely and only the following liabilities and obligations
upon, from and after the Closing Date, all items not specifically set forth below being excluded
(the “Assumed Liabilities”):




(a) liabilities arising in connection with or from the use of the Purchased Assets or
operation of the Business at the Facilities by Purchaser, its Affiliates, sublicensees or
their respective successors or assigns, including claims by employees of any of the
foregoing, or other persons, arising from or relating to the use of the Purchased Assets or
the operation of the Business at the Facilities on or after Closing Date, including claims
resulting from injuries alleged to occur as a result of the condition of any of the
Purchased Assets solely with respect to periods from and after the Closing Date;




(b) obligations arising from any actions taken by Purchaser after the Closing Date with
respect to Transferred Employees or operation of the Business conducted at the Facilities;




(c) all obligations of Seller to deliver products or services pursuant to Open Customer
Orders outstanding upon the effectiveness of the Closing;




(d) all accounts payable of Seller outstanding upon the effectiveness of the Closing
(including all books and records supporting such accounts payable) to the extent incurred by
Seller in the ordinary course of Business and not more than ninety (90) days old as of the
Closing Date, including, without limitation, all accounts payable of Seller related to any
Purchased Assets or any assets that will be delivered after Closing pursuant to Open
Supplier Orders, provided they are included in the Final Closing Net Working Capital;




(e) all liabilities in respect of the Acquired Contracts, the Acquired Real Property
Leases or the Acquired Personal Property Leases, but only to the extent that such
liabilities thereunder are required to be performed or relate to the period after the
effectiveness of the Closing and do not relate to any failure to perform, breach of any
representation or warranty hereunder without regard to cushion, cap, or survival, improper
performance, warranty or other breach, default or violation by Seller on or prior to the
Closing and provided that such contracts were disclosed in writing to and expressly assumed
by Purchaser;




(f) any and all obligations of Purchaser under the WARN Act or similar state statutes
as a result of the consummation of the transactions contemplated by this Agreement;




(g) all accrued and unpaid vacation, holidays, sick pay and other paid time off to
which the Transferred Employees are entitled with respect to all periods of service up to
and including the Closing Date under the policies and practices of Seller or its Affiliates;
and




(h) all other obligations expressly assumed by Purchaser under the terms of this
Agreement or any of the documents and agreements executed in connection with the Closing.



2.4 Excluded Liabilities.




(a) Except for the Assumed Liabilities expressly set forth above, Purchaser shall not
assume or become responsible for any of Seller’s or any Affiliate’s duties, obligations or
liabilities other than those expressly set forth in Section 2.3 (the “Excluded
Liabilities”) and Seller shall remain fully and solely responsible for all of its
liabilities including, without limitation, all Excluded Liabilities, and, except as
expressly provided elsewhere in this Agreement, any and all obligations of Seller under the
WARN Act or similar state statutes as a result of the consummation of the transactions
contemplated by this Agreement.




(b) Notwithstanding anything contained in this Agreement to the contrary, Excluded
Liabilities includes all claims, requests, and liabilities arising from or related to: (i)
any federal, state, local or foreign taxes in connection with the operations of the Business
prior to the effectiveness of the Closing; (ii) any product warranty or product liability
claims for any products, materials or services manufactured, sold, performed or shipped by
Seller or the Business prior to the Closing Date; (iii) any judgments, orders, decrees,
claims, actions, suits or proceedings relating to the business of Seller or the Business
arising out of events, including without limitation any environmental matters occurring, or
with respect to the manner in which the Business was conducted by Seller, prior to the
Closing Date; (iv) any failure to comply with or violations of IRCA, including failure to
maintain Forms I-9 for the periods of time required by IRCA, at any time prior to the
effectiveness of the Closing or (v) any liability under or with respect to Benefit Plans.



2.5 Non-Transferable Contracts and Permits. Anything in this Agreement to the
contrary notwithstanding, this Agreement shall not constitute an agreement to assign or transfer
any Assigned Contract, Acquired Personal Property Lease, Acquired Real Property Lease or any of the
Permits and Licenses, or any claim or right or any benefit or obligation thereunder or resulting
therefrom if an assignment or transfer thereof is prohibited or, without the consent of a third
party thereto, would constitute a breach or violation thereof or is otherwise prohibited and such
consent has not been obtained. If such consent is required and has not been obtained or if an
attempted assignment or transfer is ineffective or prohibited, Seller shall use commercially
reasonable efforts to cooperate with Purchaser in any reasonable arrangement requested and approved
by Purchaser to provide for Purchaser the benefits under any such Assigned Contract, Acquired
Personal Property Lease, Acquired Real Property Lease or any such Permit or License. In connection
with any such arrangement, (i) Purchaser shall bear the expense of structuring and implementing the
arrangement and (ii) Purchaser shall honor Seller’s commitments under any such Assigned Contract,
Acquired Personal Property Lease, Acquired Real Property Lease, Permit or License to the extent
arising following the close of business on the Closing Date in connection with Purchaser’s use of
any such assigned Contract, Acquired Personal Property Lease, Acquired Real Property Lease, License
or Permit that is the subject of such arrangement (or assets or rights relating thereto).



2.6 Calculation and Payment of Purchase Price.




(a) Payment at Closing. At the Closing, as consideration for the Purchased
Assets, Purchaser shall pay to Seller the Cash Consideration by wire transfer of immediately
available U.S. funds in accordance with wire instructions provided by Seller to Purchaser
not later than two (2) Business Days prior to Closing.




(b) Estimated Closing Net Working Capital. Not less than two (2) Business Days
prior to the Closing Date, Seller shall in good faith and in consultation with Purchaser
prepare and deliver to Purchaser a good faith estimated calculation of the Net Working
Capital of Seller as of the Closing Date (the “Estimated Closing Net Working
Capital”). Seller’s calculation of the Estimated Closing Net Working Capital shall be
made in accordance with the methodology set forth in Exhibit 2.6(b) (the “Target
Closing Net Working Capital Calculation Statement”). If (i) the Estimated Closing Net
Working Capital exceeds the Target Closing Net Working Capital, the Cash Consideration to be
paid by Purchaser at the Closing shall be increased by such excess (the “Estimated
Closing Net Working Capital Excess Amount”) or (ii) the Estimated Net Closing Working
Capital is less than the Target Closing Net Working Capital, the Cash Consideration to be
paid by Purchaser at the Closing shall be decreased by such deficiency (the “Estimated
Closing Net Working Capital Deficiency Amount”).




(c) Closing Net Working Capital. As promptly as possible and in any event
within thirty (30) days after the Closing Date, Purchaser shall in good faith and in
consultation with Seller prepare and deliver to Seller a good faith calculation of the Net
Working Capital of Seller as of the Closing Date (the “Closing Net Working
Capital”). Seller will have reasonable access to all work papers and books and records
of the Business used by Purchaser in its calculation of the Closing Net Working Capital.




(d) Dispute Notice. Purchaser’s determination of the Closing Net Working
Capital will be final, conclusive and binding on Purchaser and Seller unless Seller provides
a written notice (a “Dispute Notice”) to Purchaser no later than the thirtieth
(30th) day after delivery of Purchaser’s calculation of the Closing Net Working Capital
setting forth in reasonable detail (i) any item of Purchaser’s calculation of the Closing
Net Working Capital which Seller believes has not been prepared in accordance with this
Agreement or the Target Closing Net Working Capital Calculation Statement (an “Item of
Dispute”) and (ii) the correct amount of such Item of Dispute in accordance with this
Agreement. Any item or amount to which no dispute is raised in a timely fashion under the
Dispute Notice will be final, conclusive and binding on Purchaser and Seller.




(e) Resolution of Disputes. If any dispute remains unresolved for a period of
fifteen (15) Business Days after Purchaser’s receipt of the Dispute Notice, Purchaser and
Seller shall submit the remaining dispute to McGladrey LLP or other mutually agreeable
accounting firm (the “Independent Auditor”). Purchaser and Seller shall request
that the Independent Auditor render a determination (which determination shall be solely
based on whether the Item of Dispute was prepared in accordance with the terms of this
Section 2.6 or whether a mathematical error was made) as to each unresolved Item of
Dispute within thirty (30) Business Days after its retention, and Purchaser and Seller shall
cooperate fully with the Independent Auditor so as to enable it to make such determination
as quickly and as accurately as practicable. The Independent Auditor’s determination as to
each Item of Dispute shall be (i) based solely on presentations by Purchaser and Seller
which are in accordance with the guidelines and procedures set forth in this Agreement
(i.e., not on the basis of an independent review), (ii) in writing and (iii) conclusive and
binding upon Purchaser and Seller, and the Closing Net Working Capital shall be modified to
the extent necessary to reflect such determination. The Independent Auditor shall consider
only the remaining Items of Dispute and the Independent Auditor may not assign a value to
any Item of Dispute greater than the greatest value assigned by Purchaser, on the one hand,
or Seller, on the other hand, or less than the smallest value for such item assigned by
Purchaser, on the one hand, or Seller, on the other hand. The costs and expenses of the
Independent Auditor shall be borne by the prevailing party as determined by the Independent
Auditor.




(f) Final Closing Working Capital. The final Closing Net Working Capital as
finally determined pursuant to Section 2.6(c), if there is no dispute, or
Section 2.6(d) and (e), if there is a dispute, is referred to as the
“Final Closing Net Working Capital.” For purposes of the adjustments contemplated
under this Section 2.6(f), Final Closing Net Working Capital under this Agreement and “Final
Closing Net Working Capital” under and as defined in the Mayco Purchase Agreement shall be
combined or netted, as appropriate, and such combined or netted amount is referred to as the
“Aggregate Final Closing Net Working Capital.”




(i) If the Aggregate Final Closing Net Working Capital is less than the
Aggregate Estimated Closing Net Working Capital (such an amount, the “Aggregate
Final Closing Net Working Capital Deficiency Amount”), then Seller shall within
five (5) days of the determination of the Final Closing Net Working Capital pay to
Purchaser the Aggregate Final Closing Net Working Capital Deficiency Amount less the
Aggregate Estimated Closing Net Working Capital Deficiency Amount previously
deducted from the combined Cash Consideration paid by Purchaser at the Closing and
“Cash Consideration” paid by Purchaser’s Affiliate as the “Closing” under and as
such terms are defined in the Mayco Purchase Agreement.




(ii) If the Aggregate Final Closing Net Working Capital is greater than the
Aggregate Estimated Closing Net Working Capital (such an amount, the “Aggregate
Final Closing Net Working Capital Excess Amount”), then Purchaser shall within
five (5) days of the determination of the Aggregate Final Closing Net Working
Capital pay to Seller the Aggregate Final Closing Net Working Capital Excess Amount
less the Aggregate Estimated Closing Net Working Capital Excess Amount previously
deducted from the Cash Consideration paid by Purchaser at the Closing and “Cash
Consideration” paid by Purchaser’s Affiliate as the “Closing” under and as such
terms are defined in the Mayco Purchase Agreement.




(iii) Notwithstanding the methodology for determining adjustments set forth in
this Section 2.6(f), for accounting and tax purposes the Final Closing Net
Working Capital under this Agreement shall be allocated to the Purchase Price under
this Agreement and the “Final Closing Net Working Capital” under and as defined in
the Mayco Purchase Agreement shall be allocated to the “Purchase Price” under and as
those terms are defined in the Mayco Purchase Agreement.




(g) Additional Adjustments. The Cash Consideration to be paid at Closing shall
further be adjusted (i) upward by an amount equal to the verified capital expenditures made
by Seller between October 16 and the Closing for the rail spur, paint shed and tractor, up
to a maximum of $350,000 and (ii) downward by an amount equal to any fines, including any
penalties and interest, outstanding at Closing for environmental violations by Seller.



2.7 Cash Consideration and Purchase Price Allocation. Attached hereto as Exhibit
2.7 is the allocation of the Cash Consideration agreed to by Seller and Purchaser to be paid at
Closing under this Agreement and the other Acquisition Agreements. Not later than thirty (30)
calendar days following the Closing Date and after determination of the Aggregate Final Closing Net
Working Capital, Purchaser shall prepare and deliver to Seller Purchaser’s proposed draft of ITS
Form 8594 to be filed with the IRS, setting forth an allocation of the Purchase Price amongst all
of the assets being acquired by Purchaser and its Affiliates under this Agreement and under the
other Acquisition Agreements. Seller and Purchaser shall cooperate in good faith to finalize a
mutually agreeable Form 8594 before December 31, 2014. Seller and Purchaser acknowledge that the
allocation of the Purchase Price set forth in such form shall be binding upon the parties for all
applicable federal, state, local and foreign tax purposes. Seller and Purchaser covenant (i) to
report gain or loss or cost basis, as the case may be, in a manner consistent with such allocation;
(ii) not to voluntarily take any position inconsistent therewith in any proceeding relating to such
returns; and (iii) to use commercially reasonable efforts to sustain such allocation in any
subsequent Tax audit or Tax dispute.



2.8 Closing.




(a) The Closing shall take place on the date that is one (1) Business Day after the
satisfaction or waiver of the conditions precedent set forth in Articles VI and
VII or on such other date, and at such time and place, as may be agreed by Purchaser
and Seller; provided, however, that the date of the Closing shall be
automatically extended from time to time for so long as any of the conditions set forth in
Articles VI and VII shall not be satisfied or waived, subject, however, to
the provisions of Section 8.1. The date on which the Closing occurs in accordance
with the preceding sentence is referred to in this Agreement as the “Closing Date.”
The Closing shall be effective as of the close of business on the day before the Closing
Date.




(b) At the Closing, Seller shall deliver to Purchaser the following documents, duly
executed by Seller where appropriate:




(i) a bill of sale in the form attached hereto as Exhibit 2.8(b)(i)
(the “Bill of Sale”);




(ii) an assignment of the Acquired Intellectual Property Rights in the form
attached hereto as Exhibit 2.8(b)(ii) (the “IP Assignment”);




(iii) an assumption of liabilities agreement in the form attached hereto as
Exhibit 2.8(b)(iii) (the “Assumption Agreement”);




(iv) assignments for all Leased Real Property, together with consents to such
assignments from the respective lessors;




(v) the Escrow L/C;




(vi) the Non-Competition Agreement;




(vii) the Acquisition Agreements, duly executed by the Affiliates of Seller
party thereto;




(viii) copies of all consents, waivers and approvals obtained under this
Agreement as of the Closing Date;




(ix) a certificate of good standing of Seller from the Secretary of State of
the State of California;




(x) a certificate of the Secretary of Seller certifying as to: (i) the
certificate of incorporation of Seller, as certified by the Secretary of State of
the State of California not earlier than thirty (30) days prior to the Closing Date;
(ii) the by-laws, as in effect on the Closing Date, of Seller; (iii) the incumbency
and signatures of the executing officers of Seller; and (iv) resolutions duly
adopted by the Board of Directors of Seller approving the transactions contemplated
by this Agreement;




(xi) a certificate of Seller, dated as of the Closing Date, as to the
satisfaction of the conditions set forth in Sections 6.1 and 6.2;
and




(xii) such other instruments and documents as reasonably requested by Purchaser
in order to consummate the transactions contemplated under this Agreement.




(c) At the Closing, Purchaser shall deliver to Seller the following documents, duly
executed by Purchaser where appropriate:




(i) the Cash Consideration payable to Seller pursuant to Section 2.6;




(ii) the Acquisition Agreements, duly executed by the Affiliates of Purchaser
party thereto;




(iii) counterparts of each of the other agreements referred to in Section
2.8(b);




(iv) a certificate of good standing of Purchaser from the Secretary of State of
the State of California;




(v) certificate of the Secretary or an Assistant Secretary of Purchaser
certifying as to: (i) the certificate of formation of Purchaser, as certified by
the Secretary of State of the State of California not earlier than thirty (30) days
prior to the Closing Date; (ii) the Operating Agreement, as amended, of Purchaser;
(iii) the incumbency and signatures of the executing officers of Purchaser; and
(iv) resolutions duly adopted by the sole member of Purchaser approving the
transactions contemplated by this Agreement;




(vi) a certificate of Purchaser, dated as of the Closing Date, as to the
satisfaction of the conditions set forth in Sections 7.1 and 7.2;
and




(vii) such other instruments and documents as reasonably requested by Seller in
order to consummate the transactions contemplated under this Agreement.



ARTICLE III




REPRESENTATIONS AND WARRANTIES OF SELLER




Seller hereby represents and warrants to Purchaser that, except as set forth in the Disclosure
Schedule:



3.1 Due Organization. Seller is duly organized, validly existing and in good standing
under the laws of the State of California with all requisite power and authority to own and operate
its assets and properties as they are now being owned and operated.



3.2 Due Authorization. Seller has full power and authority to enter into this
Agreement and its Related Agreements and to consummate the transactions contemplated hereby and
thereby. The execution, delivery and performance by Seller of this Agreement and its Related
Agreements have been duly and validly approved by the board of directors of Seller and no other
corporate actions or proceedings on the part of Seller are necessary to authorize this Agreement,
its Related Agreements and the transactions contemplated hereby and thereby. Seller has duly and
validly executed and delivered this Agreement and has duly and validly executed and delivered (or
prior to or at the Closing will duly and validly execute and deliver) its Related Agreements. This
Agreement constitutes the legal, valid and binding obligation of Seller and Seller’s Related
Agreements, upon execution and delivery by Seller, will constitute legal, valid and binding
obligations of Seller, in each case, enforceable in accordance with their respective terms, except
as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium,
reorganization or similar laws in effect which affect the enforcement of creditors’ rights
generally and by equitable principles.



3.3 Consents and Approvals; Governmental Authority Relative to This Agreement. Except
as set forth in Schedule 3.3 of the Disclosure Schedule, the execution, delivery and
performance by Seller of this Agreement and its Related Agreements will not (i) conflict with or
result in a breach of any provision of the certificate of incorporation or bylaws of Seller (ii)
violate any order, writ, injunction, decree, statute, treaty, rule or regulation applicable to
Seller or any of its assets, other than, in the case of clause (ii) above, as would not reasonably
be expected to result in a Material Adverse Effect.



3.4 Compliance with Laws. Seller is and has been operating its Business in compliance
in all material respects with all Applicable Laws. Seller has not been charged with or given
notice of, and to the best of Seller’s knowledge, Seller is not under investigation with respect
to, in violation of, or under any obligation to take remedial action under, any Applicable Law.
Notwithstanding the foregoing, no provision of this Section 3.4 shall be deemed a
representation or warranty by Seller as to compliance with any Environmental Laws.



3.5 Title; Sufficiency. Seller has (or prior to the Closing will have) good and
marketable title to, or valid a leasehold interests in, as the case may be, all of the Purchased
Assets free and clear of all Liens, other than Permitted Liens. The Purchased Assets constitute all
of the assets, rights and properties that are used in the operation of the Business as it is now
conducted or that are used or held by Seller for use in the operation of the Business. Except as
set forth on Section 3.5 of the Disclosure Schedule, immediately following the Closing, all
of the Purchased Assets will be owned, leased or available for use by Purchaser on terms and
conditions substantially identical to those under which, immediately prior to the Closing, Seller
owns, leases, uses or holds available for use such Purchased Assets. All of the Purchased Assets
are structurally sound and in good working condition, ordinary wear and tear excepted.



3.6 Taxes. Except as set forth in Schedule 3.6 of the Disclosure Schedule,
all Taxes with respect to the Business and the Purchased Assets which are due and payable prior to
the Closing Date have been or will be duly and properly computed, reported, fully paid and
discharged, other than those Taxes which are the subject of a bona fide dispute with the taxing
authority and disclosed on Schedule 3.6 of the Disclosure Schedule and/or set forth as a
current liability on the Final Closing Net Working Capital statement. There are no unpaid Taxes
with respect to any period ending on or before the Closing Date which are or would become a lien on
the Purchased Assets, except for current Taxes not yet due and payable, or Taxes which are the
subject of a bona fide dispute with the taxing authority.



3.7 Permits and Licenses. Schedule 3.7 of the Disclosure Schedule lists all
Permits, and Licenses which are issued to, held or used by Seller, or for which Seller has applied
in connection with the operation of the Business at the Facilities as of the date of this
Agreement. To the best of Seller’s knowledge, Seller has all Permits and Licenses necessary to own
and operate the Purchased Assets and to operate its Business in material compliance with all
Applicable Laws as of the date of this Agreement.



3.8 Employee Benefits.




(a) Except as indicated in Schedule 3.8(a) of the Disclosure Schedule, Seller
does not maintain, participates in or contribute to any Benefit Plans. Seller has delivered
to Purchaser correct and complete copies of (i) the plan documents and summary plan
descriptions, if applicable, for all Benefit Plans to which it is a party; (ii) the most
recent determination or opinion letter received from the Internal Revenue Service for each
Benefit Plan to which it is a party, if applicable; and (iii) the Form 5500 Annual Report
and schedules thereto, if applicable, for the most recent plan year for which such report
has been filed. In addition, Seller has provided Purchaser with a true and accurate copy of
each employee handbook and employee manual currently in effect as they relate to the
Employees of Seller. All Benefit Plans have received favorable determination letters from
the Internal Revenue Service as to their tax qualified status and the tax exempt status of
any related trust under Sections 401(a) and 501 of the Code, respectively, which
determinations are currently in effect, as applicable. To the best of Seller’s knowledge,
Seller (i) is in material compliance with laws applicable to Benefit Plans and the Benefit
Plans documents, (ii) has followed all employee laws, (iii) has made all material required
filings in a timely manner and (iv) has timely made all required contributions to the
Benefit Plans.




(b) Listed within Schedule 3.8(b) of the Disclosure Schedule are all
employment, managerial, advisory and consulting agreements, contracts and arrangements,
employee confidentiality agreements, and employee severance agreements maintained or
provided by Seller in which any Employee participates in his or her capacity as such which
individually requires the expenditure of an amount in excess of $50,000.




(c) Seller, each Benefit Plan and each Benefit Plan “sponsor” or “administrator”
(within the meaning of Section 3(16) of ERISA) has complied in all respects with the
applicable requirements of Part 6 of Subtitle B of Title I of ERISA and Section 4980B of the
Code (such statutory provisions and predecessors thereof are referred to herein collectively
as “COBRA”). Schedule 3.8(c) of the Disclosure Schedule lists the name of
each former Employee who has experienced a “Qualifying Event” (as defined in COBRA) with
respect to a Benefit Plan and who is thereby eligible for “Continuation Coverage” (as
defined in COBRA) and whose maximum period for Continuation Coverage has not expired.
Included in such list are the current address for each such individual, the date and type of
each Qualifying Event, whether the individual has already elected Continuation Coverage and,
for any individual who has not yet elected Continuation Coverage, the date on which such
individual was notified of his or her rights to elect Continuation Coverage. Except as set
forth in Schedule 3.8(c) of the Disclosure Schedule, there is no Employee who is on
a leave of absence (whether or not pursuant to the Family and Medical Leave Act of 1993, as
amended (“FMLA”)) and is receiving or entitled to receive health coverage under an
Benefit Plan, whether pursuant to FMLA, COBRA or otherwise.




(d) Except as set forth in Schedule 3.8(d) of the Disclosure Schedule, the
consummation of the transactions contemplated by this Agreement will not give rise to any
liability of Purchaser for any employee benefits, including, without limitation, liability
for severance pay, unemployment compensation, termination pay or withdrawal liability, or
accelerate the time of payment or vesting or increase the amount of compensation or benefits
due from Purchaser to any Employee.




(e) From the date of organization of Seller and through the date hereof, except as set
forth on Schedule 3.8(e) of the Disclosure Schedule, other than compensation
increases in the ordinary course of business, neither Seller nor any ERISA Affiliate has,
nor from the date hereof to the Closing will it have, (i) instituted or agreed to institute
any new employee benefit plan or practice, (ii) made or agreed to make any change in any
Benefit Plan, (iii) made or agreed to make any increase in the compensation payable or to
become payable by Seller or any ERISA Affiliate to any Employee, or (iv) except pursuant to
this Agreement and except for contributions required to provide benefits pursuant to the
provisions of the Benefit Plans, paid or accrued or agreed to pay or accrue any bonus,
percentage of compensation, or other like benefit to, or for the credit of, any Employee.




(f) Seller has no liability in respect of post-retirement health, medical or life
insurance benefits for retired, former or current Employees, except as required to avoid the
excise tax under Section 4980B of the Code. Seller has not, within the past six years,
maintained, contributed to, or been required to contribute to a “defined benefit plan” (as
defined in ERISA §3(35)) subject to Title IV of ERISA. Except as set forth in Schedule
3.8 (d), neither Seller nor any ERISA Affiliate has within the past six years,
maintained, contributed to, or been required to contribute to (i) a Multiemployer Plan, (ii)
a multiple employer plan subject to Section 413 of the Code, (iii) a “multiple employer
welfare arrangement” (as defined in Section 3(40) of ERISA) or (iv) any plan which is funded
by or associated with a “voluntary employee’s beneficiary association” within the meaning of
Section 501(c)(9) of the Code. Neither Seller nor any ERISA Affiliate has any liability to a
Multiemployer Plan.



3.9 Litigation. Schedule 3.9 of the Disclosure Schedule sets forth each
instance in which either the Business at the Facilities or any of the Purchased Assets (a) is
subject to any judgment, order, decree, stipulation, injunction, or charge or (b) is or in the past
three years has been a party to any charge, complaint, action, suit, proceeding, hearing, or
investigation of or in any court or quasi-judicial or administrative agency of any federal, state,
local, or foreign jurisdiction, or to the best of Seller’s knowledge, is threatened to be a party
to any such action.



3.10 Intellectual Property. Schedule 3.10 of the Disclosure Schedule contains
a true and complete list as of the date of this Agreement of all of the patents and patent
applications, trademark registrations and applications and registered copyrights that are included
in the Acquired Intellectual Property Rights. All such registrations are in full force and effect
and no challenges have been asserted by the applicable filing office or any third person. Except
as disclosed in Schedule 3.10 of the Disclosure Schedule: (a) Seller has not granted any
license to a third party or agreed to pay to or receive from a third party any royalty in respect
of any of such Acquired Intellectual Property Rights; and (b) to the best of Seller’s knowledge,
there are no pending claims, proceedings or litigation alleging infringement or misappropriation by
Seller of any third party patent or trademark rights, except where such claims, proceedings or
litigation would not have a Material Adverse Effect and (c) none of the Intellectual Property
infringes on the rights of any third persons and there is no known infringement on the Intellectual
Property by any third person.



3.11 Employees. Schedule 3.11 of the Disclosure Schedule sets forth a
complete list (as of the date set forth therein) of names, positions and current annual salaries or
wage rates and period of service of all full-time or part-time employees of Seller employed at the
Facilities, indicating whether such employee or other individual providing service is part-time or
full-time (collectively, “Employees”). Except as set forth in Schedule 3.8(d) to
the Disclosure Schedule, all employment agreements are in full force and effect with no charges,
grievances or complaints filed or alleged and there are no “golden parachute,” severance, change of
control or other payments due or which will become due at Closing.



3.12 Employee Relations. Except as set forth on Schedule 3.12 of the
Disclosure Schedule, Seller is not a party to any collective bargaining agreement with respect to
or binding on Seller. Seller has complied in all material respects with all laws, rules and
regulations which relate to prices, wages, hours, employee documentation, immigration,
discrimination in employment and collective bargaining applicable to the Business. Seller is not
liable for any arrears of wages or any taxes or penalties for failure to comply with any of the
foregoing. There have been no union organizing efforts within the last five (5) years, except as
set forth on Schedule 3.12 of the Disclosure Schedule. There is no pending or, to the best
of Seller’s knowledge, threatened labor dispute involving the Business other than employee
grievances in the ordinary course of business that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect, nor has Seller experienced any labor
interruptions or threatened labor interruptions including, without limitation, any material strike,
slowdown, work stoppage, concerted refusal to work overtime by, or lockout of, or other similar
labor activity with respect to any employee of the Business. There have been no strikes, lockouts,
slowdowns or similar work stoppages affecting the employees of the Business. Schedule 3.12
of the Disclosure Schedule lists all employment agreements, policy manuals and other written
understandings with employees of the Business (including covenants not to compete). Except as set
forth on Schedule 3.12 of the Disclosure Schedule, Seller is not involved in (i) any use of
any funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to
political activity, (ii) the making of any direct or indirect unlawful payments to government
officials or others from funds or the establishment or maintenance of any unlawful or unrecorded
funds, (iii) the violation of any of the provisions of The U.S. Foreign Corrupt Practices Act of
1977, or any rules or regulations promulgated thereunder, (iv) the receipt of any illegal discounts
or rebates, or (v) any investigation by any other federal, foreign, state or local government
agency or authority. Purchaser is not under any obligation to recognize or to bargain with any
union.



3.13 Immigration Matters.




(a) With respect to all Employees (as defined in Section 274a.1 (g) of Title 8, Code of
Federal Regulations), true and complete copies of all Forms I-9 (Employment Eligibility
Verification Forms) completed pursuant to the Immigration Reform and Control Act of 1986, as
amended, and all regulations promulgated thereunder (“IRCA”), and any and all copies
of documentation, records or other papers retained with Forms I-9 have been delivered to
Purchaser. Seller has complied with IRCA with respect to the completion of Forms I-9 for
all employees and the reverification of the employment status of any and all employees whose
employment authorization documents indicated a limited period of employment authorization.




(b) Schedule 3.13(b) of the Disclosure Schedule contains a true and complete
list of all Employees working under INS authorization in E, F, H, J, L, M, O, P, or TN Visa
Status together with a listing of each such employee’s visa status and visa expiration date.
Seller maintains current files containing all Labor Condition Application (LCA) related
public and non-public access documentation which it must present upon request by the U.S.
Department of Labor or the general public, including but not limited to all documentation
noted in 20 CFR § 655.760.




(c) Seller has not had any immigration violations and, to the best of its knowledge,
has only employed individuals authorized to work in the United States. Seller has not been
the subject of any inspection or investigation relating to its compliance with or violation
of IRCA resulting in a notice of violation or proceeding, nor has it been warned, fined or
otherwise penalized by reason of any failure to comply with IRCA, nor is such proceeding
pending or, to the best of its knowledge, threatened.




(d) To the best of Seller’s knowledge, the consummation of the transactions
contemplated by this Agreement will not give rise to any liability for the failure to
properly complete, maintain and update Forms I-9, or give rise to any liability for the
employment of individuals not authorized to work in the United States, or cause any
Employees to become unauthorized to work in the United States.



3.14 Real Property.




(a) Seller has no Owned Real Property.




(b) Schedule 3.14 (b) of the Disclosure Schedule sets forth each parcel of
Leased Real Property, and a true and complete list of all leases, subleases, licenses,
concessions and other agreements (whether written or oral), including all amendments,
extensions renewals, guaranties and other agreements with respect thereto, pursuant to which
Seller or any of its Affiliates holds any Leased Real Property (collectively, the “Real
Property Leases”). Seller has delivered to Purchaser a true and complete copy of each
Real Property Lease. With respect to each Real Property Lease leased by Seller or its
Affiliates:




(i) such Real Property Lease is valid, binding, enforceable and in full force
and effect, and Seller or the applicable Affiliate enjoys peaceful and undisturbed
possession of the Leased Real Property;




(ii) Seller or the applicable Affiliate is not in material breach or default
under such Lease, and no event has occurred or circumstance exists which, with the
delivery of notice, passage of time or both, would constitute such a material breach
or default, and Seller has paid all rent due and payable under such Lease through
the date hereof;




(iii) Neither Seller nor the applicable Affiliate has received nor given any
notice of any default or event that with notice or lapse of time, or both, would
constitute a default by Seller or such Affiliate under any of the Real Property
Leases and, to the best of Seller’s knowledge, no other party is in default thereof,
and no party to any Real Property Lease has exercised any termination rights with
respect thereto;




(iv) Neither Seller nor the applicable Affiliate has subleased, assigned or
otherwise granted to any Person the right to use or occupy such Leased Real Property
or any portion thereof; and




(v) Neither Seller nor the applicable Affiliate has pledged, mortgaged or
otherwise granted a Lien on its leasehold interest in any Leased Real Property.




(c) Except as listed on Schedule 3.14 (c) of the Disclosure Schedule, neither
Seller nor any of its Affiliates has received any notice of (i) material violations of
building codes and/or zoning ordinances or other Applicable Laws affecting the Leased Real
Property, (ii) existing, pending or threatened condemnation proceedings affecting the Leased
Real Property, or (iii) existing, pending or threatened zoning, building code or other
moratorium proceedings, or similar matters affecting the operation of the Leased Real
Property as currently operated.



3.15 Environmental Matters. Except as set forth on Schedule 3.15 of the
Disclosure Schedule:




(a) The operations of Seller or its Affiliates with respect to the Business and the
Purchased Assets are in material compliance with all Environmental Laws. Seller has not
received from any Person within the past three years, with respect to the Business or the
Purchased Assets, any: (i) Environmental Claim; or (ii) written request for information
pursuant to Environmental Law, which, in each case, either remains pending or unresolved, or
is the source of ongoing obligations or requirements as of the Closing Date. There are no
underground or above ground storage tanks, and there is no use, and to the best of Seller’s
knowledge there has been no use, of any asbestos containing materials, Polychlorinated
Biphenyls (PCB’s), or other Hazardous Material, on or at the Facilities.




(b) Seller and each Affiliate has obtained and is in material compliance with all
Environmental Permits necessary for the conduct of the Business as currently conducted or
the ownership, lease, operation or use of the Purchased Assets and all such Environmental
Permits are in full force and effect and shall be maintained in full force and effect by
Seller through the Closing Date in accordance with Environmental Law.




(c) None of the Business or the Purchased Assets is listed on, or, to the best of
Seller’s knowledge, has been proposed for listing on, the National Priorities List (or
CERCLIS) under CERCLA, or any similar state list.




(d) There has been no Response Action and no Release of any Hazardous Material in
contravention of Environmental Law with respect to the Business or the Purchased Assets, and
neither of Seller nor any of its Affiliates has received an Environmental Notice that any of
the Business or the Purchased Assets (including soils, groundwater, surface water, buildings
and other structure located thereon) has been contaminated with any Hazardous Material which
could reasonably be expected to result in an Environmental Claim against, or a material
violation of Environmental Law or term of any Environmental Permit by, Seller.



3.16 No Undisclosed Liabilities. Except as listed on Schedule 3.16 of the
Disclosure Schedule, Seller has no claims, liabilities, indebtedness or obligations of any nature
(whether absolute, accrued, contingent or otherwise, whether matured or unmatured and whether due
or to become due), including without limitation Tax liabilities due or to become due (each, a
“Liability” and collectively, the “Liabilities”), including but not limited to all
Liabilities for breach of any contract or any liabilities in connection with Seller’s obligations
under any guaranty, warranty, right of return and indemnity provisions in any contract related to
the Business. Schedule 3.16 of the Disclosure Schedule lists all parties to which Seller
owes any payment or other amount including the name and address of such party and the amount owed.



3.17 Financial Statements. Schedule 3.17 of the Disclosure Schedule sets
forth true, correct and complete copies of Seller’s unaudited financial statements, income
statement, statement of cash flows and statements for changes in capital, all for the years ending
December 31, 2012 and 2013 (the “Year-End Financial Statements”) and the unaudited
financial statements, income statements, statements of cash flows and statements for changes in
capital as of and for the ten-month period ending October 31, 2014 (the “Interim Financial
Statements” and, together with the Year-End Financial Statements, the “Financial
Statements”). The Financial Statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods indicated, except that
the unaudited Financial Statements may not contain all footnotes required by generally accepted
accounting principles. The Financial Statements fairly present in all material respects the
financial condition and operating results of Seller as of the dates, and for the periods, indicated
therein, subject in the case of the unaudited Financial Statements to normal year-end audit
adjustments. Except as set forth in the Financial Statements, Seller has no material liabilities
or obligations, contingent or otherwise, other than (i) liabilities incurred in the ordinary course
of business subsequent to October 31, 2014 (ii) obligations under contracts and commitments
incurred in the ordinary course of business and (iii) liabilities and obligations of a type or
nature not required under generally accepted accounting principles to be reflected in the Financial
Statements, which, in all such cases, individually and in the aggregate would not have a material
adverse effect on the Business. Seller maintains and will continue to maintain a standard system of
accounting established and administered in accordance with generally accepted accounting
principles.



3.18 Customers. Schedule 3.18 of the Disclosure Schedule contains a true,
correct and complete list of names and addresses of the twenty (20) largest customers (measured by
dollar volume of business) of the Business and the percentage of which each such customer
represents or represented during the past twelve (12) months and the period from the end of fiscal
year 2013 through the Closing Date. There exists no actual or threatened termination, cancellation
or litigation of, or any modification or change in, the business relationship of the Business with
any customer, or group of customers listed in Section 3.18 of the Disclosure Schedule or
whose purchases individually or in the aggregate are material to the operations of Seller and there
exists no present condition or state of facts or circumstances, involving customers which would
have a Material Adverse Effect or prevent Purchaser from conducting the Business after the
consummation of the transactions contemplated by this Agreement in essentially the same manner in
which it has heretofore been conducted by Seller, except as affected by the transactions
contemplated hereby or by Purchaser’s express actions.



3.19 Suppliers. Schedule 3.19 of the Disclosure Schedule is a true, correct
and complete list by dollar volume of purchases made during the past twelve (12) months and the
period from the end of fiscal year 2013 through the Closing Date from the twenty (20) largest
suppliers to the Business of goods or services. In the last twelve (12) months, no such supplier
has canceled or otherwise terminated, or threatened in writing to cancel or otherwise terminate,
its relationship with Seller. Seller has not received any written notice and is not and should not
be aware that any such supplier intends to cancel or otherwise modify its relationship with Seller.
All accounts payable of the Business represent amounts owed to suppliers or employees of Seller for
bona fide goods or services performed in good faith by such supplier or employee. All such goods
have been delivered or services performed by the respective creditor in a timely manner and Seller
has no claim against such creditor for offset, faulty workmanship, defective quality of goods, or
other breach of contract claim. No such accounts payable are owed to any owner of Seller or
Affiliate thereof.



3.20 Accounts Receivable. To the best of Seller’s knowledge, all accounts receivable
of the Business are reflected properly in all material respects on its books and records, are valid
receivables and subject only to the reserve for bad debts set forth on the Interim Financial
Statements as adjusted for the passage of time through the Closing Date in accordance with the past
custom and practice of the Business.



3.21 Contracts. Schedule 3.21 of the Disclosure Schedule contains a true and
complete list of all Material Contracts to which Seller is a party that relate to the Purchased
Assets or operation of the Business. Except for any contracts excluded as Excluded Assets, each
Material Contract is in full force and effect in all material respects and is valid and binding on
the parties thereto in accordance with its respective terms.



3.22 Brokers and Finders. Other than as set forth on Schedule 3.22 of the
Disclosure Schedule, no agent, broker, investment banker, financial advisor or other firm or person
is entitled to any brokerage, finder’s, financial advisor’s or other similar fee or commission for
which Purchaser or any of its Affiliates could become liable in connection with the transactions
contemplated by this Agreement as a result of any action taken by or on behalf of Seller or any of
its Affiliates.



3.23 Full Disclosure. To the best of Seller’s knowledge, no representation or
warranty of Seller contained in this Agreement or in the Disclosure Schedule contains any untrue
statement of a material fact or omits to state a material fact required to be stated therein or
necessary to make the statements made, in the context in which made, not materially false or
misleading.



ARTICLE IV




REPRESENTATIONS AND WARRANTIES OF PURCHASER




Purchaser hereby represents and warrants to Seller that:



4.1 Due Organization. Purchaser is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of California with all requisite
power and authority to own and operate its assets and properties as they are now being owned and
operated.



4.2 Due Authorization. Purchaser has full power and authority to enter into this
Agreement and its Related Agreements and to consummate the transactions contemplated hereby and
thereby. The execution, delivery and performance by Purchaser of this Agreement and its Related
Agreements have been duly authorized by all necessary limited liability company action of
Purchaser. Purchaser has duly and validly executed and delivered this Agreement and has duly and
validly executed and delivered (or prior to or at the Closing will duly and validly execute and
deliver) its Related Agreements. This Agreement constitutes the legal, valid and binding
obligation of Purchaser and its Related Agreements, upon execution and delivery by Purchaser will
constitute legal, valid and binding obligations of Purchaser enforceable in accordance with their
respective terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium, reorganization or similar laws in effect which affect the enforcement of
creditors’ rights generally and by equitable principles.



4.3 Consents and Approvals; No Violations. The execution, delivery and performance by
Purchaser of this Agreement and its Related Agreements will not (i) violate any law, regulation or
order of any Governmental Authority applicable to Purchaser; (ii) require any filing or
registration by Purchaser with, or consent or approval with respect to Purchaser of, any
Governmental Authority; (iii) violate or conflict with or result in a breach or default under any
contract to which Purchaser is a party or by which Purchaser or any of its assets or properties are
bound; or (iv) violate or conflict with the certificate of formation or operating agreement of
Purchaser, except where any such filing, registration, consent or approval, if not made or
obtained, or any such violation, conflict, breach or default, would not have a material adverse
effect on Purchaser or its ability to perform its obligations under this Agreement and the Related
Agreements.



4.4 Purchaser’s Examination. Purchaser and its representatives have been afforded the
opportunity to meet with, ask questions of and receive answers from the management of Seller in
connection with the determination by Purchaser to enter into this Agreement and the Related
Agreements and consummate the transactions contemplated hereby and thereby, and all such questions
have been answered to the full satisfaction of Purchaser.



4.5 Limitation on Warranties. Purchaser acknowledges and agrees that neither Seller
nor any other Person acting on behalf of Seller or any of its Affiliates or representatives has
made any representation or warranty, express or implied, as to the accuracy or completeness of any
information regarding Seller, the Business or the Purchased Assets, except as expressly set forth
in this Agreement or as and to the extent required by this Agreement to be set forth in the
Disclosure Schedule.



4.6 Brokers and Finders. No agent, broker, investment banker, financial advisor or
other firm or person is entitled to any brokerage, finder’s, financial advisor’s or other similar
fee or commission for which Seller or any of its Affiliates could become liable in connection with
the transactions contemplated by this Agreement as a result of any action taken by or on behalf of
Purchaser or any of its Affiliates.



ARTICLE V




COVENANTS




5.1 Access to Information and Facilities.




(a) From the date of this Agreement to the earlier of the Closing Date or the date this
Agreement is terminated, subject to Section 5.6 hereinbelow, Seller shall give
Purchaser and Purchaser’s representatives, upon reasonable notice, reasonable access during
normal business hours to the offices, facilities, employees, customers, suppliers, books and
records of the Business, and shall make the officers and employees and customers and
suppliers of the Business available to Purchaser and its representatives as Purchaser and
its representatives shall from time to time reasonably request, in each case to the extent
that such access and disclosure would not obligate Seller to take any actions that would
unreasonably disrupt the normal course of its business or violate the terms of any contract
to which Seller is bound or any Applicable Law; provided, that all requests for
access shall be directed to either Michael J. Drury or Arnold S. Graber in writing (the
“Designated Contacts”); provided, further, that nothing herein shall require
Seller to provide access or to disclose any information to Purchaser if such access or
disclosure (i) would cause significant competitive harm to Seller if the transactions
contemplated by this Agreement are not consummated or (ii) would be in violation of
Applicable Laws or the provisions of any agreement to which they are a party.
Notwithstanding the forgoing, other than the Designated Contacts, Purchaser is not
authorized to and shall not (and shall cause its employees, agents, representatives and
Affiliates to not) contact any officer, director, employee, franchisee, customer, supplier,
distributor, lender or other material business relation of Seller prior to the Closing
without the prior written consent of a Designated Contact (it being agreed that if the
Designated Contact elects to give any such consent, the consent may be conditioned upon,
among other things, Seller being able to participate in any such contacts and any
discussions or dialogue resulting therefrom).




(b) Purchaser and its representatives shall treat and hold strictly confidential any
Confidential Information of Seller in accordance with Section 5.6.



5.2 Preservation of Business. From the date of this Agreement until the Closing Date,
other than as specifically contemplated by this Agreement or with the prior consent of Purchaser
(such consent not to be unreasonably withheld or delayed), Seller shall operate the Business in the
ordinary and usual course of business and consistent with past practice. Without limiting the
generality of the foregoing, from the date hereof to and including the Closing Date, Seller shall
not, nor shall it authorize or permit any owner, directors, officers, employees, representatives or
agents to, directly or indirectly, encourage, solicit, initiate, facilitate or continue inquiries,
discussions or negotiations with, or provide any information to, any corporation, partnership,
person or other entity or group (other than Purchaser or its Affiliates) concerning any merger,
sale of substantial assets, sale of shares of capital stock or other similar transactions involving
the Business and any person other than Purchaser, other than the disposition of inventory in the
ordinary course of business consistent with past practice. Notwithstanding the forgoing, the
parties acknowledge and agree that Seller may reduce purchases of raw materials and/or delay
receipts of raw materials until Closing to limit the adjustment for Net Working Capital required
under Section 2.6.



5.3 Efforts. Subject to the terms and conditions hereof, each party hereto shall use
its commercially reasonable efforts to consummate the transactions contemplated hereby as promptly
as practicable. The “commercially reasonable efforts” of Seller shall not require Seller or its
Affiliates or representatives to expend any money to remedy any breach of any representation or
warranty hereunder, to obtain any consent required for consummation of the transactions
contemplated hereby or to provide financing to Purchaser for consummation of the transactions
contemplated hereby; provided that if Seller or its Affiliates or representatives elect to
remedy such breach, Seller shall not be deemed to be in breach of such representation or warranty,
or in violation of any covenant pursuant to Section 5.2, for purposes of determining
Purchaser’s obligations to consummate the transactions contemplated hereby pursuant to Section
6.1.



5.4 Preservation of Records; Post-Closing Access and Cooperation.




(a) For a period of three (3) years after the Closing Date or such other period (if
longer) required by applicable law, Seller shall preserve and retain all corporate,
accounting, legal, auditing, human resources and other books and records in its possession
(including any documents relating to any governmental or non-governmental claims, actions,
suits, proceedings or investigations) relating to the Business and the Purchased Assets
prior to the Closing Date. Notwithstanding the foregoing, Seller shall have the right to
discard or destroy any of the foregoing books and records at any time, provided that Seller
have given Purchaser not less than thirty (30) days written notice of its intent to discard
or destroy the same and an opportunity to remove and take possession of such books and
records at Purchaser’s sole cost and expense during such thirty (30) day period.




(b) Purchaser shall, after the Closing Date, afford promptly to Seller and its
representatives reasonable access during normal business hours to the offices, facilities,
books, records, officers and employees of the Business to the extent and for a purpose
reasonably requested by Seller.



5.5 Employees and Benefits.




(a) As of the Closing, Seller shall terminate the employment of all of its Employees
identified on Schedule 5.5(a) of the Disclosure Schedule (the “Subject
Employees”). Schedule 5.5(a) of the Disclosure Schedule hereto may be amended
from time to time prior to the Closing to (i) delete any individuals who are no longer
employed by Seller or (ii) upon the mutual written agreement of Purchaser and Seller, add or
remove any other individuals. Purchaser, in cooperation with Seller, shall, at least two
Business Days prior to the Closing Date and effective as of the Closing Date, extend a
written offer of employment to those employees selected by Purchaser, in its sole and
absolute discretion (the “Selected Employees”), at a level and with responsibilities
that are substantially commensurate with their employment with Seller and at a wage or
salary and other compensation not less than the respective wages or salaries and other
compensation specified for such Selected Employees on Schedule 3.11 of the
Disclosure Schedule. Those Selected Employees who accept offers of employment with Purchaser
and who become employees of Purchaser as of the Closing Date are referred to as
“Transferred Employees.” Purchaser agrees that in the event that it determines that
it may not offer employment to sufficient numbers of employees to avoid the notice and other
requirements of the WARN Act, Purchaser will give Seller immediate notice thereof which
will be sufficiently in advance of the Closing of the purchase of the Business that Seller
will be able to comply with the notice requirements of the WARN Act and Purchaser will
indemnify, defend and hold Seller harmless from any liability or obligations under the WARN
Act if Purchaser should fail to do so or if Seller otherwise incurs liability under the
WARN Act as a result of Purchaser’s actions in connection with this transaction.




(b) For one year following Closing, Purchaser shall provide (i) to each Transferred
Employee salary or wages, as applicable, at least equal to those provided to such
Transferred Employee immediately prior to the Closing and (ii) to Transferred Employees
generally, such employee benefits as Purchaser shall determine and, in all events, in
compliance with all requirements of applicable Law and any collective bargaining agreement.
Upon Closing, Purchaser agrees that the Transferred Employees shall be eligible to
participate in the employee benefit plans of Purchaser, including any group health plan of
Purchaser (the “Purchaser Benefit Plans”). Without limiting the foregoing,
Purchaser shall take the following actions: (i) upon the Closing provide all Transferred
Employees health care coverage; and (ii) for all purposes (other than for purposes of
benefit accruals under any defined benefit pension plan) under all compensation and benefit
plans and policies applicable to the Transferred Employees, including the Purchaser Benefit
Plans, treat all service by the Transferred Employees with Seller before the Closing as
service with Purchaser and its subsidiaries. Nothing herein shall prohibit Purchaser from
terminating the employment of any Transferred Employee at any time.




(c) Purchaser shall take all action necessary to permit Purchaser’s tax-qualified
employee savings plan(s) maintained in the United States (“Purchaser’s 401(k) Plan”)
to accept rollover contributions of “eligible rollover distributions” (within the meaning of
Section 402(c)(4) of the Code) to Transferred Employees under Seller’s tax qualified
employee savings plan (“Seller’s 401(k) Plan”). Following the Closing Date and
prior to a distribution (including an eligible rollover distribution) from Seller’s 401(k)
Plan, Seller’s 401(k) Plan will permit each Transferred Employee with outstanding loans
under such Seller’s 401(k) Plan to continue to make scheduled repayments under such loans to
avoid a default under such loans.




(d) During the period beginning on the Closing Date and ending on the last day of the
plan year in which the applicable Closing Date occurs, Purchaser shall or shall cause its
affiliates, as the case may be, to (i) maintain a limited purpose healthcare spending and
dependent care flexible spending accounts established under Section 125 of the Code (the
“Purchaser FSA”), (ii) permit the Transferred Employees to participate in the
Purchaser FSA to the extent coverage under such Purchaser FSA replaces coverage under a
corresponding Benefit Plan in which such Transferred Employee participated immediately
before the replacement (the “Seller FSA”), (iii) credit Transferred Employees under
the Purchaser FSA immediately following the applicable Transfer Date with amounts available
for reimbursement equal to such amounts as were credited under the Seller FSA with respect
to such person immediately prior to the applicable Transfer Date and (iv) give effect under
the Purchaser FSA to any elections made by such Transferred Employees with respect to the
Seller FSA for the year in which the applicable Transfer Date occurs. As soon as reasonably
practicable following the applicable Closing Date, if the net difference between (x) the
aggregate employee contributions under the Seller FSA as of the applicable Closing Date made
during the year in which the applicable Closing Date occurs and (y) the aggregate employee
reimbursements under the Seller FSA as of the applicable Closing Date made during the year
in which the applicable Closing Date occurs, in each case with respect to Transferred
Employees for the applicable plan year, (the “Assumed FSA Balance”) is (1) a
positive number, then the applicable Seller shall transfer to Purchaser an amount, in cash,
equal to the Assumed FSA Balance or (2) a negative number, then Purchaser shall transfer to
the applicable Seller an amount, in cash, equal to the positive value of the Assumed FSA
Balance. The parties hereto agree to make reasonable, good faith efforts to implement the
provisions of this Section 5.5(d) to take into account the complexity of
transferring flexible spending accounts.




(e) It is understood and agreed between the parties that all provisions contained in
this Agreement with respect to employee benefit plans or employee compensation are included
for the sole benefit of the respective parties hereto and do not and shall not create any
right in any other person, including, but not limited to, any Employee, any participant in
any benefit or compensation plan or any beneficiary thereof.




(f) In any termination or layoff of any Employee by Purchaser on or after the Closing,
Purchaser will comply fully, if applicable, with the WARN Act and all other applicable
foreign, Federal, state and local laws, including those prohibiting discrimination and
requiring notice to employees. Purchaser shall not at any time prior to sixty (60) days
after the Closing Date, effectuate a “plant closing” or “mass layoff” as those terms are
defined in the WARN Act affecting in whole or in part any Facilities, site of employment,
operating unit or employee of the Business without complying fully with the requirements of
the WARN Act. Purchaser will bear the cost of compliance with (or failure to comply with)
any such laws.




(g) Seller, from the date hereof to the Closing, will not (i) institute or agree to
institute any new employee benefit plan or practice, (ii) make or agree to make any change
in any Benefit Plan, (iii) make or agree to make any increase in the compensation payable or
to become payable by Seller to any Employee, or (iv) except pursuant to this Agreement and
except for contributions required to provide benefits pursuant to the provisions of the
Benefit Plans, pay or accrue or agree to pay or accrue any bonus, percentage of
compensation, or other like benefit to, or for the credit of, any Employee.




(h) Except for Transferred Employees, Seller shall provide COBRA continuation coverage
for M&A Beneficiaries (as defined in COBRA) of Seller. Purchaser shall provide any required
COBRA continuation coverage for Transferred Employees and their dependents.



5.6 Confidentiality.




(a) General. Pursuant to the terms of this Agreement, Purchaser, on the one
hand, and Seller, on the other hand, (in such capacity, the “Disclosing Party”) have
disclosed and will be disclosing to the other party, and to its Affiliates and to their
respective officers, directors, employees, agents and/or representatives (in such capacity,
the “Receiving Party”) certain secret, confidential or proprietary data, trade
secrets, know-how, intellectual property and related information, including, without
limitation, operating methods and procedures, marketing, manufacturing, distribution and
sales methods and systems, sales figures, pricing policies and price lists and other
business information (“Confidential Information”). The Receiving Party shall make
no use of any Confidential Information of the Disclosing Party except in the exercise of its
rights and the performance of its obligations set forth in this Agreement or the Related
Agreements. The Receiving Party (i) shall keep and hold as confidential, and shall cause
its officers, directors, employees, agents and representatives to keep and hold as
confidential, all Confidential Information of the Disclosing Party, and (ii) shall not
disclose, and shall cause its officers, directors, employees, agents and representatives not
to disclose, any Confidential Information of the Disclosing Party. Confidential Information
disclosed by the Disclosing Party shall remain the sole and absolute property of the
Disclosing Party, subject to the rights granted in this Agreement or the Related Agreements.




(b) Exceptions. The restrictions set forth in Section 5.6(a) above on
the use and disclosure of Confidential Information shall not apply to any information which
(i) is already known to the Receiving Party at the time of disclosure by the Disclosing
Party (other than Confidential Information which forms a part of the Purchased Assets), as
demonstrated by competent proof (other than as a result of prior disclosure under any
agreement between the parties with respect to confidentiality), (ii) is or becomes generally
available to the public other than through any act or omission of the Receiving Party in
breach of this Agreement or the Related Agreements or (iii) is acquired by the Receiving
Party from a third party who is not, directly or indirectly, under an obligation of
confidentiality to the Disclosing Party with respect to same. In addition, nothing in this
Section 5.6 shall be interpreted to limit the ability of either party to use or
disclose its own Confidential Information in any manner to or any other Person.




(c) Permitted Disclosures. It shall not be a breach of Section 5.6(a)
if a Receiving Party discloses Confidential Information of a Disclosing Party (i) pursuant
to a binding requirement of Applicable Law or a Governmental Authority, or (ii) in a
judicial, or administrative or arbitration proceeding to enforce such party’s rights under
this Agreement, (iii) to its employees, officers, directors, members, shareholders, OEMs,
professionals and consultants who have a need to know in furtherance of the transaction
contemplated herein. In such event, the Receiving Party shall (A) provide the Disclosing
Party with as much advance written notice as possible of the required disclosure, (B)
reasonably cooperate with the Disclosing Party in any attempt to prevent or limit the
disclosure, and (C) limit disclosure, if any, to the specific purpose at issue.




(d) Confidential Terms. Each party acknowledges and agrees that the terms and
conditions of this Agreement shall be considered Confidential Information of each party and
shall be treated accordingly. Notwithstanding the foregoing, each party acknowledges and
agrees that the other party may be required to disclose some or all of the information
included in this Agreement in order to comply with its obligations under securities laws or
the rules or regulations of any securities exchange or market on which the Disclosing
Party’s or its Affiliate’s stock is traded.




(e) Equitable Remedies. Each party specifically recognizes that any breach by
it of this Section 5.6 may cause irreparable injury to the other party and that
actual damages may be difficult to ascertain, and in any event, may be inadequate.
Accordingly (and without limiting the availability of legal or equitable, including
injunctive, remedies under any other provisions of this Agreement), each party agrees that
in the event of any such breach, notwithstanding the provisions of Section 9.4, the
other party shall be entitled to seek, by way of private litigation in the first instance,
injunctive relief and such other legal and equitable remedies as may be available.



5.7 Public Announcements. Purchaser and Seller will consult with each other before
issuing any press release or otherwise making any public statements or disclosures with respect to
the transactions contemplated by this Agreement, including the terms hereof, and no party shall,
without the prior written consent of the other party, issue any such press release or make any such
public statement, except as may be required by applicable law.



5.8 Transfer Taxes. All federal, state, county, non-U.S. transfer, excise, sales,
use, value added, registration, stamp, recording, property and similar Taxes or fees applicable to,
imposed upon, or arising out of any transaction contemplated by this Agreement shall be split
equally and paid by Seller and Purchaser.



5.9 Tax Proration. All real and personal property taxes or similar ad valorem
obligations levied with respect to the Purchased Assets for any taxable period falling entirely
within the period before the Closing Date shall be the responsibility of Seller. All real and
personal property taxes or similar ad valorem obligations levied with respect to the Purchased
Assets for any taxable period that includes the Closing Date and ends after the Closing Date,
whether imposed or assessed before or after the Closing Date, shall be the responsibility of
Purchaser. If the exact amount of any real or personal property taxes is not known on the Closing
Date, such taxes shall be estimated based upon the best available information at the time of
Closing (i.e. the taxable value currently assigned to the property and the most recent millage
rate). There shall be no re-proration of real or personal property taxes after Closing. The net
amount of such prorations payable by Seller, if any, shall be paid by Purchaser, but shall result
in a reduction of the Purchase Price in like amount.



5.10 Change of Name. Within five (5) Business Days after the Closing Date, Seller
shall file an amendment to Seller’s organizational documents with the Secretary of State of the
State of California changing its name to a name without the words “Santa Rosa Lead Products.”



ARTICLE VI




CONDITIONS PRECEDENT TO OBLIGATIONS

OF PURCHASER




The obligations of Purchaser at Closing under this Agreement are subject to the satisfaction
(or waiver by Purchaser) of the following conditions precedent on or before the Closing Date:



6.1 Warranties True as of Present Date. Each of the representations and warranties of
Seller contained in Article III (a) that are qualified as to Material Adverse Effect shall
be true and correct as of the Closing Date as if made anew as of such date (except to the extent
such representations and warranties expressly relate to an earlier date (in which case, as of such
earlier date)), except to the extent of changes or developments contemplated by the terms of this
Agreement or caused by the transactions contemplated hereby, and (b) that are not so qualified
shall be true and correct as of the Closing Date as if made anew as of such date (except to the
extent such representations and warranties expressly relate to an earlier date (in which case, as
of such earlier date)), except to the extent of changes or developments contemplated by the terms
of this Agreement or caused by the transactions contemplated hereby and except for failures of the
representations and warranties referred to in this clause (b) to be true and correct as do
not and would not reasonably be expected to have, in the aggregate, a Material Adverse Effect.



6.2 Compliance with Agreements and Covenants. Seller shall have performed and
complied with all of the covenants, obligations and agreements contained in this Agreement to be
performed and complied with by it on or prior to the Closing Date, including delivery of the
documents referred to in Section 2.8(b).



6.3 No Prohibition. No law or injunction shall have been adopted, promulgated or
entered by any Governmental Authority which prohibits, and no lawsuit, proceeding or investigation
shall be pending, which would be reasonably expected to prohibit the consummation of the
transactions contemplated hereby.



6.4 Non-Competition Agreement. Metalico and Seller shall have entered into the
Non-Competition Agreement with Purchaser upon the terms and conditions set forth on Exhibit
6.4 attached hereto (the “Non-Competition Agreement”).



6.5 Financing Documents. Purchaser shall have consummated agreements with banks and
lending institutions for all funds borrowed or to be borrowed by Purchaser in connection with the
acquisition of the Purchased Assets and for working capital to be used in the operations of the
Business subsequent to the Closing Date.



6.6 Material Adverse Change. Between the Balance Sheet Date and the Closing Date
there shall have been no material adverse change in the condition (financial or otherwise), results
of operations, operations, assets, liabilities of Seller, including, without limitation, a material
adverse change in the business relationship or arrangement between Seller and any of its material
suppliers, creditors, customers or vendors.



6.7 Additional Closings. The closing of the transactions contemplated by the
Acquisition Agreements shall have occurred simultaneously with the closing of the transactions
contemplated by this Agreement.



ARTICLE VII




CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER




The obligations of Seller at Closing under Article II of this Agreement are subject to
the satisfaction (or waiver by Seller) of the following conditions precedent on or before the
Closing Date:



7.1 Warranties True as of Present Date. Each of the representations and warranties of
Purchaser contained in Article IV (a) that are qualified as to “material adverse effect”
shall be true and correct as of the Closing Date as if made anew as of such date (except to the
extent such representations and warranties expressly relate to an earlier date (in which case, as
of such earlier date)), except to the extent of changes or developments contemplated by the terms
of this Agreement or caused by the transactions contemplated hereby, and (b) that are not so
qualified shall be true and correct as of the Closing Date as if made anew as of such date (except
to the extent such representations and warranties expressly relate to an earlier date (in which
case, as of such earlier date)), except to the extent of changes or developments contemplated by
the terms of this Agreement or caused by the transactions contemplated hereby and except for
failures of the representations and warranties referred to in this clause (b) to be true
and correct as do not and would not reasonably be expected to have, in the aggregate, a material
adverse effect on Purchaser’s ability to consummate the transactions contemplated hereby.



7.2 Compliance with Agreements and Covenants. Purchaser shall have performed and
complied with all of its covenants, obligations and agreements contained in this Agreement to be
performed and complied with by it on or prior to the Closing Date, in all material respects,
including delivery of the documents referred to in Section 2.8(c).



7.3 No Prohibition. No law or injunction shall have been adopted, promulgated or
entered by any Governmental Authority which prohibits and no lawsuit, proceeding or investigation
shall be pending, which would be reasonably expected to prohibit the consummation of the
transactions contemplated hereby.



7.4 Additional Closings. The closing of the transactions contemplated by the
Acquisition Agreements shall have occurred simultaneously with the closing of the transactions
contemplated by this Agreement.



ARTICLE VIII




TERMINATION




8.1 Termination. This Agreement may be terminated at any time on or prior to the
Closing Date:




(a) With the mutual written consent of Purchaser and Seller;




(b) By Seller if the Closing shall not have occurred on or before December 1, 2014 (the
“Termination Date”); “); provided, that the right to terminate this Agreement under
this Section 8.1(b) shall not be available to Seller if its failure to fulfill any
obligation under this Agreement has been the cause of, or resulted in, the failure of the
Closing to occur on or before the Termination Date;




(c) By Seller, if Purchaser shall have breached or failed to perform any of its
representations, warranties, covenants or other agreements contained in this Agreement,
which breach or failure to perform (A) would give rise to the failure of a condition set
forth in Article VII and (B) has not been or is incapable of being cured by
Purchaser within thirty (30) calendar days after its receipt of written notice thereof from
Seller;




(d) By Purchaser, if Seller shall have breached or failed to perform any of its
representations, warranties, covenants or other agreements contained in this Agreement,
which breach or failure to perform (A) would give rise to the failure of a condition set
forth in Article VI and (B) has not been or is incapable of being cured by Seller
within thirty (30) calendar days after its receipt of written notice thereof from Purchaser;




(e) By Seller if (i) all of the conditions set forth in Article VI have been
satisfied (other than those conditions that by their terms are to be satisfied at the
Closing) and (ii) (A) Purchaser shall not have sufficient funds available to consummate the
Closing or (B) Purchaser otherwise breaches its obligations under Article II hereof;
or




(f) By either of Purchaser or Seller if any Governmental Authority shall have issued an
order, decree or ruling or taken any other action permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement, and such order,
decree, ruling or other action shall have become final and nonappealable.



Notwithstanding anything else contained in this Agreement, the right to terminate this Agreement
under this Section 8.1 shall not be available to either party (a) that is in material
breach of its obligations hereunder or (b) whose failure to fulfill its obligations or to comply
with its covenants under this Agreement has been the cause of, or resulted in, the failure to
satisfy any condition to the obligations of either party hereunder. If this Agreement is terminated
pursuant to Section 8.1(c) or (e), Seller and its Affiliates shall be released from
any obligations for payments or reimbursements of costs and expenses under this Agreement, any
Related Agreement, or any other agreement, instrument or document executed and delivered by or
between Seller and/or any of its Affiliates, on the one hand, and Purchaser and/or any of its
Affiliates, on the other hand.



8.2 Expenses. Whether or not the Closing occurs, all Expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by the party incurring
such Expenses. As used in this Agreement, “Expenses” means the out-of-pocket fees and
expenses of the party’s independent advisor, counsel and accountants, incurred or paid by the party
or on its behalf in connection with this Agreement and the transactions contemplated hereby.



8.3 Effect of Termination. In the event of termination of this Agreement by either
Purchaser or Seller as provided in Section 8.1, this Agreement will forthwith become void
and have no further force or effect, without any Liability (other than as set forth in Section
8.2 or this Section 8.3) on the part of Purchaser or Seller; provided,
however, that the provisions of Section 8.2, this Section 8.3, Sections
5.1(b), 5.6, 10.6, 10.7, 10.12 and 10.13 will survive
any termination hereof; provided, further, however, that subject to the
terms of this Section 8.3, nothing in this Section 8.3 shall relieve either party
of any liability for any breach by such party of this Agreement prior to the date of any such
termination.



ARTICLE IX




SURVIVAL AND REMEDY; INDEMNIFICATION




9.1 Survival. All of the terms and conditions of this Agreement, together with the
warranties, representations, agreements and covenants contained herein or in any instrument or
document delivered or to be delivered pursuant to this Agreement, shall survive the execution of
this Agreement and the Closing Date for a period of one year from the Closing Date, except for the
representations and warranties set forth in Sections 3.1 (Seller’s Due Organization),
3.2 (Seller’s Due Authorization), 3.5 (Title), 3.6 (Taxes), 3.8 (Employee
Benefits), 3.15 (Environmental Matters), 3.22 (Seller’s Brokers), 4.1
(Purchaser’s Due Organization), 4.2 (Purchaser’s Due Authorization) and 4.7
(Purchaser’s Brokers) which will survive until the expiration of the applicable statute of
limitations; provided, however, that in the case of representations, warranties, covenants and
related indemnities for which an indemnification claim shall be pending as of the end of the
applicable period referred to above, such indemnities shall survive with respect to such
indemnification claim until the final disposition thereof (as applicable, the “Indemnification
Period”). Thereafter, neither Seller nor Purchaser shall be under any obligation or liability
whatsoever with respect to any such representation, warranty, covenant or agreement or any
certificate in respect thereto, except for those covenants and agreements which, by their terms,
expressly extend for a longer period than the Indemnification Period. No party shall have any
right to assert any claims against the other party with respect to any Loss, cause of action or
other claim to the extent it is (i) primarily a possible or potential Loss, cause of action or
claim that such party believes may be asserted rather than a Loss, cause of action or claim that
has, in fact, been filed of record against such party or one of its Affiliates or paid or incurred
by such party or one of its Affiliates or (ii) a Loss, cause of action or claim with respect to
which a party or any of its Affiliates has taken action (or caused action to be taken) to
accelerate the time period in which such matter is asserted or payable.



9.2 Indemnification by Seller. Subject to the other provisions of this Article
IX, Seller shall indemnify Purchaser and its Affiliates, and each of their respective officers,
directors, partners, trustees, employees, stockholders, representatives and agents, against, and
agrees to hold them harmless from, any and all Losses incurred or suffered by Purchaser or any of
the foregoing Persons (or any combination thereof) arising out of (i) any breach of or any
inaccuracy in any representation or warranty made by Seller pursuant to Article III of this
Agreement or any Related Agreement; (ii) any breach of or failure by Seller to perform any
agreement, covenant or obligation of Seller set out in this Agreement or any Related Agreement, any
agreement, or instrument contemplated hereby, any document relating hereto or thereto or contained
in any Exhibit to this Agreement; (iii) any defect in title to the Purchased Assets which
materially adversely affects or impairs Purchaser’s use or ownership of the Purchased Assets; and
(iv) any Excluded Liability.



9.3 Indemnification by Purchaser. Subject to the other provisions of this Article
IX, Purchaser shall indemnify Seller and its Affiliates, and each of their respective officers,
directors, partners, trustees, employees, stockholders, representatives and agents, against, and
agrees to hold them harmless from, any and all Losses incurred or suffered by Seller or any of the
foregoing Persons (or any combination thereof) arising out of (i) any breach of or any inaccuracy
in any representation or warranty made by Purchaser pursuant to Article IV of this
Agreement or any Related Agreement; (ii) any breach of or failure by Purchaser to perform any
agreement, covenant or obligation of Purchaser set out in this Agreement or any Related Agreement,
any agreement, or instrument contemplated hereby, any document relating hereto or thereto or
contained in any Exhibit to this Agreement; (iii) any Assumed Liability; and (iv) any acts or
omissions by Purchaser and any obligations and liabilities in respect of Purchaser from and after
the Closing Date.



9.4 Indemnification Exclusive Remedy. Notwithstanding anything to the contrary in
this Agreement, except in the case of (i) actual fraud by Seller, (ii) title to the Purchased
Assets and (iii) any claims related to Excluded Liabilities, the sole recourse and exclusive remedy
of Purchaser for the breach of any representations, warranties, covenants and agreements contained
in this Agreement, the Related Agreements, any agreement, or instrument contemplated hereby, any
document relating hereto or thereto contained in any Schedules or Exhibits to this Agreement, or
otherwise arising from the transactions contemplated hereby or the operation of the Business and/or
use of the Purchased Assets prior to the Closing, shall be to assert a claim for indemnification
under the indemnification provisions of Sections 9.2.



9.5 Third-Party Claims. Except as otherwise provided in this Agreement, the following
procedures shall be applicable with respect to indemnification pursuant to this Article IX
relating to or arising out of claims, actions by Governmental Authorities or other third parties.
Promptly after receipt by the party seeking indemnification hereunder (hereinafter the
“Indemnitee”) of notice of the commencement of any (a) Tax audit or proceeding for the
assessment of any Tax by any Taxing Authority or any other proceeding likely to result in the
imposition of a liability or obligation for Taxes or (b) any action or the assertion of any claim,
liability or obligation by a Governmental Authority or a third party (whether by legal process or
otherwise), against which claim, liability or obligation a party under this Article IX
(hereinafter the “Indemnitor”) that is, or may be, required under this Agreement to
indemnify such Indemnitee, the Indemnitee will, if a claim thereon is to be, or may be, made
against the Indemnitor pursuant to this Article IX, promptly notify the Indemnitor in
writing of the commencement or assertion thereof, including the amount and specific factual and
legal basis for such claim, and give the Indemnitor a copy of such claim, process and all legal
pleadings and other written evidence thereof. The Indemnitor shall have, in all instances, the
right to participate in the defense of such action with counsel of reputable standing. The
Indemnitor shall have the right to assume the defense of such action unless such action (a) may
result in orders or mandatory injunctions materially impacting the Indemnitee’s on-going operation
of the business or (b) may result in liabilities which, taken with other then-existing claims under
this Article IX, would not be fully indemnified hereunder. The Indemnitor shall have
twenty (20) days, after receipt of notice of such claim, process, legal proceeding and other
written notice, to assume the defense thereof. If the Indemnitor does assume such defense, it
will, within such twenty (20) days, so notify the Indemnitee. If the Indemnitor does not assume
such defense and so notifies the Indemnitee, or if the Indemnitor is barred from assuming such
defense pursuant to this Section 9.5, then the Indemnitee shall have the right to assume
such defense, subject to the participation of the Indemnitor, as provided in this Section
9.5, and the Indemnitee’s fees and expenses (including reasonable fees and expenses of counsel)
in connection with such defense will be borne by the Indemnitor. In any case, the Indemnitor and
Indemnitee shall cooperate and assist each other in such defense, and shall make available to the
other all records, documents, employees and information (written or otherwise) relevant to such
defense. Prior to paying any claim against which an Indemnitor is, or may be, obligated under this
Agreement to indemnify an Indemnitee, the Indemnitee must first supply the Indemnitor with a copy
of a final court judgment or decree, or evidence of assessment of Taxes or a similar final action
by a Taxing authority, holding the Indemnitee liable on such claim or failing such judgment or
decree, must first receive the written approval of the terms and conditions of such settlement from
the Indemnitor which consent shall not be unreasonably withheld. The Indemnitor’s consent shall
not be required for settlements (a) which consist principally of equitable remedies in respect of
the Indemnitee or its business, or (b) that result in payments by the Indemnitee which, taken with
other then existing claims under this Article IX, would not be subject to indemnification
hereunder. An Indemnitor or Indemnitee shall have the authority to settle or compromise any claim
for which it has assumed or conducted the defense pursuant to this Section 9.5;
provided, that an Indemnitor shall not settle or compromise any such claim if such
settlement or compromise would result in an order, injunction or other equitable remedy in respect
of the Indemnitee, or would otherwise have a direct effect upon Indemnitee’s continuing operations,
or would result in liabilities which, taken together with other existing claims under this
Article IX, would not be fully indemnified hereunder; in each case, without the prior
written consent of the Indemnitee, which consent will not be unreasonably withheld.
Notwithstanding the foregoing or anything else to the contrary in this Article IX or
elsewhere in this Agreement, Seller shall have the right, in its sole and absolute discretion, to
settle and compromise (on whatever terms it may elect) any claim or action to which this
Article IX applies to the extent such claim or action relates to any Excluded Liability, so
long as such settlement or compromise includes a release in favor of Purchaser with respect to such
Excluded Liability from the third party asserting the claim and/or action. An Indemnitee shall have
the right to employ its own counsel in any case, but the fees and expenses of such counsel shall be
at the expense of the Indemnitee, unless (x) the employment of such counsel shall have been
authorized in writing by the Indemnitor in connection with the defense of such action or claim,
(y) the Indemnitor shall not have assumed the defense, or shall be barred from assuming the
defense, of such action or claim pursuant to this Section 9.5, or (z) such Indemnitee shall
have reasonably concluded that there may be defenses available to it which are contrary to, or
inconsistent with, those available to the Indemnitor, in any of which events such reasonable fees
and expenses of counsel for the Indemnitee shall be borne by the Indemnitor, in accordance with the
following paragraph.



9.6 Procedure for Other Claims. In the event that any Indemnitee believes that it is
entitled to claim indemnification from an Indemnitor under this Article IX and such claim
is not subject to Section 9.5, the Indemnitee shall notify the Indemnitor of such claim,
the amount or estimated amount thereof and the specific factual and legal basis for such claim
(which will be described in reasonable detail). The Indemnitor and Indemnitee will proceed, in
good faith, to agree on the amount of such indemnification claim. If they are unable to agree on
the amount of such indemnification claim within thirty (30) days after such notice, then the
indemnification claim will be submitted to arbitration conducted pursuant to the rules and
procedures of the American Arbitration Association. The place of such arbitration shall be New
York, New York. The determination of the amount of any indemnification claim pursuant to this
Section 9.6 will be final, binding and conclusive, and the Indemnitee, upon final
determination of the amount of the indemnification claim, will be paid by the Indemnitor (or will
draw under the Escrow L/C, if applicable and available) within ten (10) days of such final
determination, the full amount, in cash, of such indemnification claim, as finally determined, and
will be entitled to apply to any court or authority of competent jurisdiction described in
Section 10.12 to enforce such payment. The court costs and reasonable and documented fees
and expenses, including reasonable and documented attorney’s fees, incurred by the Indemnitor and
Indemnitee in connection with any such enforcement proceeding shall be borne by the Indemnitor and
Indemnitee in inverse proportion to their relative success in such proceeding.



9.7 Indemnification Limits and Payment.




(a) Notwithstanding anything to the contrary in this Article IX or any other
provision of this Agreement, (i) no party shall be entitled to indemnification pursuant to
this Article IX with respect to any breach of any representation or warranty or
other indemnification obligation until such time as its respective aggregate right to such
indemnification, together with all other rights to indemnification of the purchasers under
the Acquisition Agreements in the aggregate exceeds One Hundred Thousand Dollars
($100,000.00) (it being agreed that in the event such threshold is reached and exceeded, the
Indemnitor will only be liable for the amount of any Losses that is in excess of such
threshold amount), and (ii) except in the case of fraud by Purchaser or Seller (in which
event, this limitation will not apply to the party who committed such fraud) and in the case
of Seller, the Excluded Liabilities, the maximum aggregate amount that Seller, Purchaser and
their respective Affiliates may be required to pay for indemnification pursuant to this
Article IX and comparable provisions of the Acquisition Agreements, the Related
Agreements, and the “Related Agreements” under and as defined in the Acquisition Agreements
in respect of all claims by all Indemnitees and “Indemnitees” under and as defined in the
Acquisition Agreements for Losses and “Losses” under and as defined in the Acquisition
Agreements is an amount equal to $3,000,000.




(b) Purchaser will not be entitled to indemnification pursuant to this Article
IX with respect to any claim or liability (i) relating to a breach by Seller of a
representation or warranty before the Closing Date if Seller has supplemented the Disclosure
Schedule to provide new information or correct such misrepresentation; or (ii) relating to
any Employee (a) as the result of the termination of such Employee’s employment with
Purchaser or its Affiliates after the Closing Date, (b) any injuries to, or deaths or
illnesses of, such Employees occurring after the Closing Date, (c) as a result of the
employment of any person on and after the Closing Date or (d) any action by Purchaser
subsequent to the Closing Date.




(c) From and after the Closing, Purchaser shall maintain or cause to be maintained
customary property, casualty, business interruption and other insurance in respect of the
Business and the Purchased Assets in accordance with Purchaser’s general practices and
industry standards.




(d) Any amounts payable under Section 9.2 or Section 9.3 shall be
treated by Purchaser and Seller as an adjustment to the Purchase Price, and shall be
calculated after giving effect to (i) any proceeds received or receivable from insurance
policies covering the damage, loss, liability or expense that is the subject to the claim
for indemnity, (ii) any self-insured, retention, deduction or similar liability retention by
Purchaser will, for this purpose, be viewed as actual insurance for this purpose, except to
the extent any such insurance proceeds must be specifically repaid by Indemnitee through
adjustments to past, present or future premiums or other similar mechanism and net of any
costs of obtaining any such proceeds, and (iii) any proceeds received or receivable from
third parties, through indemnification, counterclaim, reimbursement arrangement, contract or
otherwise in compensation for the subject matter of an indemnification claim by such
Indemnitee (such arrangements referenced in clauses (i) through (iii) in
this Section 9.7(d), collectively, “Alternative Arrangements”). Subject to
Section 9.7(e), the taking of a Tax deduction in connection with any such damage,
loss, liability or expense that is subject to a claim for indemnification shall be at the
discretion of the Indemnitee. Purchaser shall have no right to assert any claims with
respect to any Losses that would have been covered by an Alternative Arrangement had
Purchaser maintained for its benefit and the benefit of the Business and the Purchased
Assets the same rights or coverage under an Alternative Arrangement following the Closing
that was in effect for the Business and the Purchased Assets immediately prior to the
Closing.




(e) Purchaser shall utilize its commercially reasonable efforts, consistent with normal
practices and policies and good commercial practice, to mitigate any amounts payable under
Section 9.2, including pursuing any and all other rights and remedies to  collect
any proceeds pursuant to Alternative Arrangements covering the Loss that is the subject to
the claim for indemnity. If any such proceeds, benefits or recoveries are received by
Purchaser with respect to any Losses after Purchaser has received any indemnification
payments from Seller, Purchaser shall promptly, but in any event no later than ten (10)
Business Days after the receipt, realization or recovery of such proceeds, benefits or
recoveries, pay such proceeds, benefits or recoveries to Seller. Upon making a payment to
Purchaser in respect of any Losses, Seller will, to the extent of such payment, be
subrogated to all rights of Purchaser pursuant to Alternative Arrangements or against any
third party in respect of the Losses to which such payment relates. Purchaser shall execute
upon request all instruments reasonably necessary to evidence or further perfect such
subrogation rights. Each party hereby waives any subrogation rights that its insurer may
have with respect to any indemnifiable Losses.




(f) Once an indemnification claim has been finalized pursuant to the procedures set
forth in Section 9.2 or 9.3, the Indemnitor shall promptly remit to the
Indemnitee the amount of any such claim. If Purchaser is the Indemnitee, to the extent that
the Escrow L/C is still in place, Purchaser shall be entitled to draw upon the Escrow L/C
for the amount of such indemnification claim pursuant to the terms of the Escrow L/C,
provided that the amount available under the Escrow L/C shall not limit in any way
Purchaser’s right to recover in full its indemnification claim, subject to the other
limitations set forth in this Section 9.7.



ARTICLE X




MISCELLANEOUS




10.1 Amendment. This Agreement may be amended, modified or supplemented only in a
writing signed by Purchaser and Seller.



10.2 Notices. Any notice, request, instruction or other document to be given
hereunder by a party hereto shall be in writing and shall be deemed to have been given, (i) when
received if given in person or by courier or a courier service or by electronic mail (“email”) with
receipt confirmed, (ii) on the date of transmission if sent by confirmed facsimile, (iii) on the
next Business Day if sent by an overnight delivery service, or (iv) five Business Days after being
deposited in the U.S. mail, certified or registered mail, postage prepaid:




(a) If to Seller, addressed as follows:




Santa Rosa Lead Products, Inc.


c/o Metalico, Inc.


186 North Ave. East


Cranford, NJ 07016


Attention: Michael J. Drury




with a copy (for informational purposes only) to:




Metalico, Inc.


186 North Ave. East


Cranford, NJ 07016


Attention: General Counsel




If to Purchaser, addressed as follows:




Santa Rosa Lead Products, LLC


1031 East 103rd Street


Chicago, Illinois 60628


Attention: President




with a copy (for informational purposes only) to:




Imperial Acquisitions, LLC


1031 East 103rd Street


Chicago, Illinois 60628


Attention: Stuart Schwartz



or to such other individual or address as a party hereto may designate for itself by notice given
as herein provided.



10.3 Waivers. The failure of a party hereto at any time or times to require
performance of any provision hereof shall in no manner affect its right at a later time to enforce
the same. No waiver by a party of any condition or of any breach of any term, covenant,
representation or warranty contained in this Agreement shall be effective unless in writing, and no
waiver in any one or more instances shall be deemed to be a further or continuing waiver of any
such condition or breach in other instances or a waiver of any other condition or breach of any
other term, covenant, representation or warranty.



10.4 Counterparts. This Agreement may be executed in counterparts and such
counterparts may be delivered in electronic format (including by fax and email). Such delivery of
counterparts shall be conclusive evidence of the intent to be bound hereby and each such
counterpart and copies produced therefrom shall have the same effect as an original. To the extent
applicable, the foregoing constitutes the election of the parties to invoke any law authorizing
electronic signatures.



10.5 Interpretation. The headings preceding the text of Articles and Sections
included in this Agreement and the headings to Sections of the Disclosure Schedule are for
convenience only and shall not be deemed part of this Agreement or the Disclosure Schedule or be
given any effect in interpreting this Agreement or the Disclosure Schedule. The use of the
masculine, feminine or neuter gender herein shall not limit any provision of this Agreement. The
use of the terms “including” or “include” shall in all cases herein mean “including, without
limitation” or “include, without limitation,” respectively. Underscored references to Articles,
Sections, Exhibits or Schedules shall refer to those portions of this Agreement. Time is of the
essence of each and every covenant, agreement and obligation in this Agreement. Neither Purchaser
nor Seller shall be deemed to be in breach of any covenant contained in this Agreement if such
party’s deemed breach is the result of any action or inaction on the part of the other.



10.6 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE
PRINCIPLES OF CONFLICTS OF LAW THEREOF.



10.7 Binding Agreement. This Agreement and the Related Agreements shall be binding
upon and inure to the benefit of the parties hereto and their respective successors and permitted
assigns.



10.8 Assignment. This Agreement and all of the provisions hereof shall be binding
upon and shall inure to the benefit of the parties hereto and their respective heirs, successors
and permitted assigns; provided that neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned (including by operation of law) by either party without the
prior written consent of the other party, provided further that,  Purchaser may, without the prior
written consent of Seller, assign all or any portion of its rights under this Agreement to PNC
Bank, National Association (“PNC”) and Enhanced Small Business Investment Company LP
(“Enhanced” and together with PNC, each a “Lender”) as collateral security for any
loans made by any Lender to Purchaser. For all purposes hereof, a transfer, sale or disposition
of a majority of the capital stock or other voting interest of Purchaser or Seller (whether by
contract or otherwise) shall be deemed an assignment hereunder. Any purported assignment in
contravention of this Section 10.8 shall be null and void.



10.9 Third Party Beneficiaries. This Agreement is solely for the benefit of the
parties hereto and no provision of this Agreement shall be deemed to confer upon third parties,
either express or implied, any remedy, claim, liability, reimbursement, cause of action or other
right. Notwithstanding the foregoing, the Persons referred to in Sections 5.5, 5.6
and Article IX are hereby made third party beneficiaries of this Agreement, with all of the
rights, remedies, claims, liabilities, reimbursements, causes of action and other rights accorded
such Persons under this Agreement and the Related Agreements.



10.10 Further Assurances. Upon the reasonable request of Purchaser or Seller, each
party will on and after the Closing Date execute and deliver to the other party such other
documents, assignments and other instruments as may be reasonably required to effectuate completely
the transactions contemplated hereby, and to effect and evidence the provisions of this Agreement
and the Related Agreements and the transactions contemplated hereby.



10.11 Entire Understanding. The Exhibits, Schedules and Disclosure Schedule
identified in this Agreement are incorporated herein by reference and made a part hereof. This
Agreement and the Related Agreements, together with the Acquisition Agreements, and documents
reference herein and therein, set forth the entire agreement and understanding of the parties
hereto and supersedes any and all prior agreements, arrangements and understandings among the
parties.



10.12 JURISDICTION OF DISPUTES. SUBJECT TO SECTION 9.6, IN THE EVENT EITHER
PARTY TO THIS AGREEMENT COMMENCES ANY LITIGATION, PROCEEDING OR OTHER LEGAL ACTION IN CONNECTION
WITH OR RELATING TO THIS AGREEMENT, ANY RELATED AGREEMENT OR ANY MATTERS DESCRIBED OR CONTEMPLATED
HEREIN OR THEREIN, WITH RESPECT TO ANY OF THE MATTERS DESCRIBED OR CONTEMPLATED HEREIN OR THEREIN,
THE PARTIES TO THIS AGREEMENT HEREBY (A) AGREE THAT SUBJECT TO SECTION 9.6, ANY LITIGATION,
PROCEEDING OR OTHER LEGAL ACTION SHALL BE INSTITUTED IN A COURT OF COMPETENT JURISDICTION LOCATED
WITHIN THE CITY OF NEW YORK, NEW YORK, WHETHER A STATE OR FEDERAL COURT; (B) AGREE THAT IN THE
EVENT OF ANY SUCH LITIGATION, PROCEEDING OR ACTION, SUCH PARTIES WILL CONSENT AND SUBMIT TO
PERSONAL JURISDICTION IN ANY SUCH COURT DESCRIBED IN CLAUSE (A) OF THIS SECTION
10.12 AND TO SERVICE OF PROCESS UPON THEM IN ACCORDANCE WITH THE RULES AND STATUTES GOVERNING
SERVICE OF PROCESS (IT BEING UNDERSTOOD THAT NOTHING IN THIS SECTION 10.12 SHALL BE DEEMED
TO PREVENT EITHER PARTY FROM SEEKING TO REMOVE ANY ACTION TO A FEDERAL COURT IN NEW YORK, NEW
YORK); (C) AGREE TO WAIVE TO THE FULL EXTENT PERMITTED BY LAW ANY OBJECTION THAT THEY MAY NOW OR
HEREAFTER HAVE TO THE VENUE OF ANY SUCH LITIGATION, PROCEEDING OR ACTION IN ANY SUCH COURT OR THAT
ANY SUCH LITIGATION, PROCEEDING OR ACTION WAS BROUGHT IN AN INCONVENIENT FORUM; AND (D) AGREE THAT
NOTHING HEREIN SHALL AFFECT THE RIGHTS OF EITHER PARTY TO EFFECT SERVICE OF PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW.



10.13 WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY
WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND
THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY
HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 10.13.



10.14 Severability. Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability
of the remaining terms and provisions hereof or the validity or enforceability of the offending
term or provision in any other situation or in any other situation or in any other jurisdiction.
If the final judgment of a court of competent jurisdiction declares that any term or provision
hereof is invalid or unenforceable, the parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope, duration, or area of the
term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable
term or provision with a term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within which the judgment may
be appealed.



10.15 Construction. The parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or interpretation
arises, the language shall be construed as mutually chosen by the parties to express their mutual
intent, and no rule of strict construction shall be applied against either party. Any reference to
any federal, state, local, or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise.



10.16 Counterparts. This Agreement may be executed by facsimile and in counterparts,
all of which shall be considered an original and one and the same agreement and shall become
effective when counterparts have been signed by each of the parties and delivered to the other
party, it being understood that all parties need not sign the same counterpart.



IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered
as of the date first above written.



	 	 	 	 	 
	SANTA ROSA LEAD PRODUCTS, LLC
	By:

	 	/s/
	 	Stuart Schwartz
	 

	 	 
	 	 






	 	 	 	 	 
	 	 



              Name: Stuart Schwartz }
              Title: Vice President }
              SANTA ROSA LEAD PRODUCTS, INC.                    }
              By:      }   /s/      }   Michael J. Drury


                                              Name: Michael J. Drury

                                              Title: President
Name: Stuart Schwartz
    	 	 	 	 	 	 
	 	 	Title: Vice President	 	 	 	 	 	 
	 	 	SANTA ROSA LEAD PRODUCTS, INC.	 	 	 	 
	 	 	By:	 	 	 	/s/	 	 	 	Michael J. Drury
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Name: Michael J. Drury

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Title: President