Document:

Unassociated Document

     

    
      Exhibit
        10.1

      

      EXECUTION
        COPY

    

    

     

    

     

    STOCK
      PURCHASE AGREEMENT

     

    by
      and
      among

     

    PAV
      REPUBLIC, INC.,

     

    THE
      SHAREHOLDERS OF PAV REPUBLIC, INC.

     

    SIMREP
      CORPORATION

     

    and

     

    INDUSTRIAS
      CH, S.A. de
      C.V.

     

    

     

    JULY
      22, 2005

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    TABLE
      OF
      CONTENTS

    

      
        	 	 	Page
	 	 	 
	
                Section
                  1.

              	
                Definitions.

              	
                1

              
	 	 	 
	
                Section
                  2.

              	
                Purchase
                  and Sale of
                  Shares.

              	
                7

              
	
                (a)

              	
                Transactions
                  on the Closing
                  Date

              	
                7

              
	
                (b)

              	
                Purchase
                  Price

              	
                7

              
	
                (c)

              	
                Closing

              	
                8

              
	
                (d)

              	
                Deliveries
                  at Closing

              	
                8

              
	 	 	 
	
                Section
                  3.

              	
                Representations
                  and Warranties
                  Concerning Transaction.

              	
                8

              
	
                (a)

              	
                Sellers’
Representations
                  and
                  Warranties

              	
                8

              
	
                (b)

              	
                Purchaser’s
                  Representations and
                  Warranties

              	
                9

              
	 	 	 
	
                Section
                  4.

              	
                Representations
                  and Warranties Concerning Company and Its
                  Subsidiaries

              	
                10

              
	 	 	 
	
                Section
                  5.

              	
                Pre-Closing
                  Covenants

              	
                29

              
	
                (a)

              	
                General

              	
                29

              
	
                (b)

              	
                Notices
                  and Consents

              	
                29

              
	
                (c)

              	
                Operation
                  of Business

              	
                29

              
	
                (d)

              	
                Preservation
                  of
                  Business

              	
                30

              
	
                (e)

              	
                Full
                  Access

              	
                30

              
	
                (f)

              	
                Notice
                  of
                  Developments

              	
                30

              
	
                (g)

              	
                Exclusivity

              	
                30

              
	
                (h)

              	
                Maintenance
                  of Real
                  Property

              	
                30

              
	
                (i)

              	
                Leases

              	
                30

              
	
                (j)

              	
                Title
                  Insurance and
                  Surveys

              	
                30

              
	
                (k)

              	
                Tax
                  Matters

              	
                31

              
	
                (l)

              	
                Stockholders
                  Agreement

              	
                31

              
	 	 	 
	
                Section
                  6.

              	
                Post-Closing
                  Covenants

              	
                31

              
	
                (a)

              	
                General

              	
                31

              
	
                (b)

              	
                Litigation
                  Support

              	
                31

              
	
                (c)

              	
                Transition

              	
                32

              
	
                (d)

              	
                Confidentiality

              	
                32

              
	
                (e)

              	
                Covenant
                  Not to
                  Compete

              	
                32

              
	
                (f)

              	
                Non-solicitation

              	
                32

              
	
                (g)

              	
                Insurance
                  Proceeds

              	
                33

              
	
                (h)

              	
                Perry
                  Partners LP and Perry Partners International
                  Inc

              	
                33

              
	
                (i)

              	
                Without
                  the prior written consent
                  of the Sellers.

              	
                33

              
	
                (j)

              	
                Security
                  for Additional Purchase
                  Price

              	
                33

              
	 	 	 
	
                Section
                  7.

              	
                Conditions
                  to Obligation to
                  Close.

              	
                33

              
	
                (a)

              	
                Conditions
                  to Purchaser’s
                  Obligation

              	
                33

              
	
                (b)

              	
                Conditions
                  to Sellers’
                  Obligation

              	
                36

              
	 	 	 
	
                Section
                  8.

              	
                Remedies
                  for Breaches of This
                  Agreement.

              	
                37

              
	
                (a)

              	
                Survival
                  of Representations and
                  Warranties.

              	
                37

              
	
                (b)

              	
                Indemnification
                  Provisions for
                  Purchaser’s Benefit.

              	
                37

              
	
                (c)

              	
                Matters
                  Involving Third
                  Parties.

              	
                38

              
	
                (d)

              	
                Exclusive
                  Remedy

              	
                39

              
	
                (e)

              	
                Determination
                  of Adverse
                  Consequences

              	
                39

              
	
                (f)

              	
                Nature
                  of Sellers’
                  Obligations

              	
                39

              
	 	 	 
	
                Section
                  9.

              	
                Tax
                  Matters

              	
                39

              
	
                (a)

              	
                Responsibility
                  for Filing Tax
                  Returns

              	
                39

              
	
                (b)

              	
                Cooperation
                  on Tax
                  Matters.

              	
                40

              

      

       

      
        
          
          

        

        
          i

          
            

          

        

        
          
          

        

      

       

      
        	 	 	Page
	 	 	 
	
                (c)

              	
                Tax-Sharing
                  Agreements

              	
                40

              
	
                (d)

              	
                Certain
                  Taxes and
                  Fees

              	
                40

              
	 	 	 
	
                Section
                  10.

              	
                Authorization
                  of
                  Representative.

              	
                40

              
	 	 	 
	
                Section
                  11.

              	
                Termination.

              	
                42

              
	
                (a)

              	
                Termination
                  of
                  Agreement

              	
                42

              
	
                (b)

              	
                Effect
                  of Termination

              	
                42

              
	 	 	 
	
                Section
                  12.

              	
                Miscellaneous.

              	
                43

              
	
                (a)

              	
                Press
                  Releases and Public
                  Announcements

              	
                43

              
	
                (b)

              	
                Purchaser
                  Guarantor

              	
                43

              
	
                (c)

              	
                No
                  Third-Party
                  Beneficiaries

              	
                43

              
	
                (d)

              	
                Entire
                  Agreement

              	
                43

              
	
                (e)

              	
                Succession
                  and
                  Assignment

              	
                43

              
	
                (f)

              	
                Counterparts

              	
                43

              
	
                (g)

              	
                Headings

              	
                43

              
	
                (h)

              	
                Notices

              	
                43

              
	
                (i)

              	
                Governing
                  Law

              	
                45

              
	
                (j)

              	
                Amendments
                  and
                  Waivers

              	
                45

              
	
                (k)

              	
                Severability

              	
                45

              
	
                (l)

              	
                Expenses

              	
                45

              
	
                (m)

              	
                Incorporation
                  of Exhibits, Annexes,
                  and Schedules

              	
                45

              
	
                (n)

              	
                Specific
                  Performance

              	
                46

              
	
                (o)

              	
                Submission
                  to
                  Jurisdiction

              	
                46

              
	
                (p)

              	
                Tax
                  Disclosure
                  Authorization

              	
                46

              

      

       

    

    

      
        	
                Exhibit
                  A - 

              	
                Capitalization
                  of the Company

              
	
                Exhibit
                  B - 

              	
                Historical
                  Financial Statements

              
	
                Exhibit
                  C - 

              	
                Form
                  of Amendment between Republic Engineered Products, Inc. and Perry
                  Principals Investment, L.L.C. to the 11% Senior Secured Promissory
                  Note
                  due August 20, 2009

              
	
                Exhibit
                  D - 

              	
                Schedule
                  of Known Matters

              
	
                Disclosure
                  Schedule - 

              	
                Exceptions
                  to Representations and Warranties Concerning Company and Its
                  Subsidiaries

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    STOCK
      PURCHASE AGREEMENT

     

    This
      Stock Purchase Agreement (this “Agreement”) is entered into as of July 22, 2005,
      by and among PAV Republic, Inc., a Delaware corporation (the “Company”), the
      shareholders and option holders of the Company listed on the signature pages
      hereto (collectively, the “Sellers” and each individually, a “Seller”), SimRep
      Corporation, a Delaware corporation (the “Purchaser”) and Industrias CH, S.A. de
      C.V., a Mexican limited liability company with variable capital “sociedad
      anónima de capital variable” (the “Purchaser Guarantor”). Purchaser and Sellers
      are referred to collectively herein as the “Parties.”

     

    The
      Sellers are all the shareholders and optionholders of the Company and own
      beneficially and of record all of the issued and outstanding shares of capital
      stock or options to purchase shares of stock of the Company, as set forth on
      Exhibit A attached hereto. Each Seller desires to sell to Purchaser, and
      Purchaser desires to purchase from each Seller, all of such shares owned by
      such
      Seller (in the case of Sellers holding options, after exercise thereof) upon
      the
      terms and conditions hereinafter set forth.

     

    In
      consideration of the mutual covenants contained herein and for other good and
      valuable consideration, the receipt and adequacy of which is hereby
      acknowledged, and intending to be legally bound, the parties hereto agree as
      follows.

     

    Section
      1.  Definitions.

     

    “Additional
      Purchase Price”
has
      the
      meaning set forth in Section 2(b).

     

    “Adverse
      Consequences”
means
      all actions, suits, proceedings, hearings, investigations, charges, complaints,
      claims, demands, injunctions, judgments, orders, decrees, rulings, damages
      (excluding consequential and punitive damages), dues, penalties, fines, costs,
      reasonable amounts paid in settlement, Liabilities, obligations, Taxes, liens,
      losses, expenses, and fees, including court costs reasonable attorneys’ fees and
      expenses and reasonable consultant’s fees and expenses, adjusted for Tax
      benefits and Tax costs and insurance coverage that may be
      available.

     

    “Affiliate”
has
      the
      meaning set forth in Rule 12b-2 of the regulations promulgated under the
      Securities Exchange Act.

     

    “Affiliated
      Group”
means
      any affiliated group within the meaning of Code Section 1504(a) or any similar
      group defined under a similar provision of state, local or foreign
      law.

     

    “Applicable
      Rate”
means
      the corporate base rate of interest publicly announced from time to time by
      Citibank, N.A.’s prime rate, as published from time to time in the Wall Street
      Journal.

     

    “Asbestos
      Liabilities”
means
      any Liabilities arising from, relating to, or based on the presence or alleged
      presence of asbestos or asbestos-containing materials in any product or item
      designed, manufactured, sold, marketed, installed, stored, transported, handled,
      or distributed by the Company prior to the Closing Date or otherwise based
      on
      any personal or bodily injury or illness based on exposure to asbestos or
      asbestos-containing materials at any Real Property prior to the Closing
      Date.

     

    “Basis”
means
      any past or present fact, situation, circumstance, status, condition, activity,
      practice, plan, occurrence, event, incident, action, failure to act, or
      transaction that forms or could form the basis for any specified
      consequence.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Business
      Day”
means
      a
      day, other than a Saturday or Sunday, on which commercial banks in New York
      City
      and Mexico are open for the general transaction of business.

     

    “Closing”
has
      the
      meaning set forth in Section 2(c) below.

     

    “Closing
      Date”
has
      the
      meaning set forth in Section 2(c) below.

     

    “Closing
      Purchase Price”
has
      the
      meaning set forth in Section 2(b).

     

    “COBRA”
means
      the requirements of Part 6 of Subtitle B of Title I of ERISA and Code
      Section 4980B and of any similar state law.

     

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

     

    “Collective
      Bargaining Agreement”
means
      any written or oral agreement between the Company or any Subsidiary and a Labor
      Organization.

     

    “Company”
has
      the
      meaning set forth in the preface above.

     

    “Confidential
      Information”
means
      any information concerning the businesses and affairs of the Company and its
      Subsidiaries that is not already generally available to the public.

     

    “Disclosure
      Schedule”
has
      the
      meaning set forth in Section 4 below.

     

    “Employee
      Benefit Plan”
means
      any “employee benefit plan” (as such term is defined in ERISA Section 3(3)) and
      any other employee benefit plan, program or arrangement of any
      kind.

     

    “Employee
      Pension Benefit Plan”
has
      the
      meaning set forth in ERISA Section 3(2).

     

    “Employee
      Welfare Benefit Plan”
has
      the
      meaning set forth in ERISA Section 3(1).

     

    “Encumbrance
      Documents”
has
      the
      meaning set forth in Section 4(l) below.

     

    “Environmental,
      Health, and Safety Requirements”
shall
      mean, as in effect on the Closing Date, all federal, state, local, and foreign
      statutes, regulations, ordinances, and other provisions having the force or
      effect of law, all judicial and administrative orders and determinations,
      including but not limited to any requirements imposed by U.S. EPA or any similar
      state or local agency, all contractual obligations, and all common law
      concerning the protection of public health and safety from exposure to hazardous
      substances or environmental hazards, the protection of worker health and safety,
      pollution, or protection of the environment, including, without limitation,
      all
      those relating to the presence, use, production, generation, handling,
      transportation, treatment, storage, disposal, distribution, labeling, testing,
      processing, discharge, release, threatened release, control, or cleanup of
      any
      hazardous materials, substances, or wastes, chemical substances or mixtures,
      pesticides, pollutants, contaminants, toxic chemicals, petroleum products or
      byproducts, asbestos, toxic mold, polychlorinated biphenyls, noise, or
      radiation.

     

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

     

    “ERISA
      Affiliate”
means
      each entity that is treated as a single employer with Company for purposes
      of
      Code Section 414.

     

    “Fiduciary”
has
      the
      meaning set forth in ERISA Section 3(21).

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    “Financial
      Statements”
has
      the
      meaning set forth in Section 4(g) below.

     

    “FIRPTA
      Affidavit”
has
      the
      meaning set forth in Section 7(a) below.

     

    “GAAP”
means
      United States generally accepted accounting principles as in effect from time
      to
      time, consistently applied.

     

    “GE
      Credit Facility”
means
      the Credit Agreement dated as of May 20, 2004, among Republic Engineered
      Products, Inc., as borrower, the other credit parties signatory thereto, the
      lenders signatory thereto from time to time, General Electric Capital
      Corporation as agent and lender, GECC Capital Markets Group, Inc. and UBS
      Securities, LLC as lead arrangers, UBS Securities, LLC as syndication agent
      and
      Bank One, NA (Main Office Chicago) and Merrill Lynch Capital, a division of
      Merrill Lynch Business Financial Services Inc. as documentation agents, as
      amended.

     

    “Hart-Scott-Rodino
      Act”
means
      the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
      amended.

     

    “Indemnified
      Party”
has
      the
      meaning set forth in Section 8(c) below.

     

    “Indemnifying
      Party”
has
      the
      meaning set forth in Section 8(c) below.

     

    “Insurance
      Proceeds”
means
      all of the proceeds received by the Company and its Subsidiaries from any
      insurer in connection with the pending claims for business interruption,
      property damage or loss and any related loss under any policy of insurance
      relating to the multiple incidents involving the No. 3 blast furnace in the
      Company’s Lorain, Ohio facility.

     

    “Intellectual
      Property”
means
      all of the following in any jurisdiction throughout the world: (a) all
      inventions (whether patentable or unpatentable and whether or not reduced to
      practice), all improvements thereto, and all patents, patent applications,
      and
      patent disclosures, together with all reissuances, continuations,
      continuations-in-part, revisions, extensions, and reexaminations thereof, (b)
      all trademarks, service marks, trade dress, logos, slogans, trade names,
      corporate names, and Internet domain names, together with all translations,
      adaptations, derivations, and combinations thereof and including all goodwill
      associated therewith, and all applications, registrations, and renewals in
      connection therewith, (c) all copyrightable works, all copyrights, and all
      applications, registrations, and renewals in connection therewith, (d) all
      mask
      works and all applications, registrations, and renewals in connection therewith,
      (e) all trade secrets and confidential business information (including ideas,
      research and development, know-how, formulas, compositions, manufacturing and
      production processes and techniques, technical data, designs, drawings,
      specifications, customer and supplier lists, pricing and cost information,
      and
      business and marketing plans and proposals), (f) all computer software
      (including source code, executable code, data, databases, and related
      documentation) and (g) all other proprietary rights.

     

    “Knowledge”
an
      individual will be deemed to have “Knowledge” of a particular fact or other
      matter if:

     

    (a)  such
      individual is actually aware of such fact or other matter; or

     

    (b)  a
      prudent individual would reasonably be expected to discover or otherwise become
      aware of such fact or other matter in the course of conducting his or her duties
      in the ordinary course.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    A
      Person
      (other than an individual) will be deemed to have “Knowledge” of a particular
      fact or other matter if any individual who is serving as a director, officer,
      partner, executor, or trustee of such Person (or in any similar capacity) has,
      or at any time had, Knowledge of such fact or other matter.

     

    “Labor
      Organization”
means
      any labor organization (including as such term is defined in Section 2(2) of
      the
      NLRA) representing all or a portion of the Company’s employees.

     

    “Lease
      Consents”
has
      the
      meaning set forth in Section 7(a) below.

     

    “Leased
      Real Property”
means
      all leasehold or subleasehold estates and other rights to use or occupy any
      land, buildings, structures, improvements, fixtures, or other interest in real
      property held by Company or any of its Subsidiaries.

     

    “Leases”
means
      all leases, subleases, licenses, concessions and other agreements (written
      or
      oral), including all amendments, extensions, renewals, guaranties, and other
      agreements with respect thereto, pursuant to which Company or any of its
      Subsidiaries holds any Leased Real Property, including the right to all security
      deposits and other amounts and instruments deposited by or on behalf of Company
      or any of its Subsidiaries thereunder.

     

    “Liability”
means
      any liability or obligation of whatever kind or nature (whether known or
      unknown, whether asserted or unasserted, whether absolute or contingent, whether
      accrued or unaccrued, whether liquidated or unliquidated, and whether due or
      to
      become due), including any liability for Taxes.

     

    “Lien”
means
      any mortgage, pledge, lien, encumbrance, charge, or other security interest,
      other than (a) liens for Taxes not yet due and payable, (b) purchase money
      liens
      and liens securing rental payments under capital lease arrangements, and (c)
      other liens arising in the Ordinary Course of Business and not incurred in
      connection with the borrowing of money.

     

    “Material”
      means
      Adverse
      Consequences and/or Liabilities to
      the
      Company or its Subsidiaries of greater than $35,000 when applied to any single
      event, breach, failure to comply, inaccuracy or other occurrence or series
      of
      related events, breaches, failures to comply, inaccuracies or other
      occurrences.

     

    “Material
      Adverse Effect”
or
      “Material
      Adverse Change”
means
      any effect or change that would be (or could reasonably be expected to be)
      materially adverse to the business, assets, condition (financial or otherwise),
      results of operations, or operations of Company and its Subsidiaries, taken
      as a
      whole, or to the ability of Sellers to consummate timely the transactions
      contemplated hereby (regardless of whether Purchaser has knowledge of such
      effect or change on the date hereof), including any adverse change, event,
      development, or effect arising from or relating to (a) national or international
      political or social conditions, including the engagement by the United States
      or
      Canada in hostilities, whether or not pursuant to the declaration of a national
      emergency or war, or the occurrence of any military or terrorist attack upon
      the
      United States or Canada, or any of its territories, possessions, or diplomatic
      or consular offices or upon any military installation, equipment or personnel
      of
      the United States and (b) a discovery of a Liability for an environmental
      condition other than those listed on Section 4(aa) of the Disclosure Schedule,
      which is reasonably likely to exceed $20,000,000.

     

    “Most
      Recent Balance Sheet”
means
      the balance sheet contained within the Most Recent Financial
      Statements.

     

    “Most
      Recent Financial Statements”
has
      the
      meaning set forth in Section 4(g) below.

     

    “Most
      Recent Fiscal Month End”
has
      the
      meaning set forth in Section 4(g) below.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    “Most
      Recent Fiscal Year End”
has
      the
      meaning set forth in Section 4(g) below.

     

    “Multiemployer
      Plan”
has
      the
      meaning set forth in ERISA Section 3(37).

     

    “NLRA”
means
      the National Labor Relations Act of 1935, as amended.

     

    “Option”
means
      each exercisable stock option to purchase Shares.

     

    “Option
      Exercise”
has
      the
      meaning set forth in Section 2(a)(i).

     

    “Option
      Shares”
has
      the
      meaning set forth in Section 2(a)(i).

     

    “Option
      Withholding Tax”
has
      the
      meaning set forth in Section 2(a)(i).

     

    “Optionholder”
has
      the
      meaning set forth in Section 2(a)(i).

     

    “Ordinary
      Course of Business”
means
      the ordinary course of business consistent with past custom and practice
      (including with respect to quantity and frequency).

     

    “Owned
      Real Property”
means
      all land, together with all buildings, structures, improvements, and fixtures
      located thereon, including all electrical, mechanical, plumbing and other
      building systems, fire protection, security and surveillance systems,
      telecommunications, computer, wiring, and cable installations, utility
      installations, water distribution systems, and landscaping, together with all
      easements and other rights and interests appurtenant thereto (including air,
      oil, gas, mineral, and water rights), owned by Company or any of its
      Subsidiaries.

     

    “Party”
has
      the
      meaning set forth in the preface above.

     

    “PBGC”
means
      the Pension Benefit Guaranty Corporation.

     

    “Permitted
      Encumbrances”
means
      (a) taxes, assessments and other governmental levies, fees, or charges imposed
      with respect to each parcel of Real Property and all other assets owned by
      the
      Company and its Subsidiaries that are (i) not due and payable as of the Closing
      Date or (ii) being contested in good faith and for which appropriate reserves
      have been established in accordance with GAAP; (b) mechanics’ liens and similar
      liens for labor, materials, or supplies provided with respect to each parcel
      of
      Real Property and all other assets owned by the Company and its Subsidiaries
      incurred in the Ordinary Course of Business for amounts that are (i) not due
      and
      payable as of the Closing Date or (ii) being contested in good faith and for
      which appropriate reserves have been established in accordance with GAAP; (c)
      zoning, building codes and other land use laws regulating the use or occupancy
      of such Real Property or the activities conducted thereon which are imposed
      by
      any governmental authority having jurisdiction over such Real Property and
      are
      not violated by the current use or occupancy of such Real Property or the
      operation of Company’s or any of its Subsidiaries’ business as currently
      conducted thereon; (d) easements, covenants, conditions, restrictions, and
      other
      similar matters of record affecting title to such Real Property that do not
      or
      would not impair the use or occupancy of such Real Property in the operation
      of
      Company’s or its Subsidiaries’ business as currently conducted thereon and (e)
      all Liens set forth on Section 4(e) of the Disclosure Schedule.

     

    “Person”
means
      an individual, a partnership, a corporation, a limited liability company, an
      association, a joint stock company, a trust, a joint venture, an unincorporated
      organization, any other business entity, or a governmental entity (or any
      department, agency, or political subdivision thereof).

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    “Pre-Closing
      Tax Return”
has
      the
      meaning set forth in Section 9(a).

     

    “Pre-Sale
      Distribution”
has
      the
      meaning set forth in Section 2(a)(ii).

     

    “Predecessor”
means
      any predecessor to the business of the Company and each of its
      Subsidiaries.

     

    “Purchase
      Price”
has
      the
      meaning set forth in Section 2(b) below.

     

    “Purchaser”
has
      the
      meaning set forth in the preface above.

     

    “Prohibited
      Transaction”
has
      the
      meaning set forth in ERISA Section 406 and Code Section 4975.

     

    “Real
      Property”
has
      the
      meaning set forth in Section 4(l) below.

     

    “Reportable
      Event”
has
      the
      meaning set forth in ERISA Section 4043, other than any such event for which
      the
      notice requirement has been waived under applicable regulations.

     

    “Representative”
means
      Perry Partners LP, a Delaware limited partnership.

     

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

     

    “Securities
      Exchange Act”
means
      the Securities Exchange Act of 1934, as amended.

     

    “Seller”
has
      the
      meaning set forth in the preface above.

     

    “Subsidiary”
means,
      with respect to any Person, any corporation, limited liability company,
      partnership, association, or other business entity of which (i) if a
      corporation, a majority of the total voting power of shares of stock entitled
      (without regard to the occurrence of any contingency) to vote in the election
      of
      directors, managers, or trustees thereof is at the time owned or controlled,
      directly or indirectly, by that Person or one or more of the other Subsidiaries
      of that Person or a combination thereof or (ii) if a limited liability company,
      partnership, association, or other business entity (other than a corporation),
      a
      majority of the partnership or other similar ownership interests thereof is
      at
      the time owned or controlled, directly or indirectly, by that Person or one
      or
      more Subsidiaries of that Person or a combination thereof and for this purpose,
      a Person or Persons own a majority ownership interest in such a business entity
      (other than a corporation) if such Person or Persons shall be allocated a
      majority of such business entity’s gains or losses or shall be or control any
      managing director or general partner of such business entity (other than a
      corporation). The term “Subsidiary” shall include all Subsidiaries of such
      Subsidiary.

     

    “Share”
shall
      mean each share of capital stock of the Company, and Shares shall mean all
      such
      Shares.

     

    “Tax”
      or
“Taxes”
      shall
      mean all taxes, charges fees, levies, penalties or other assessments imposed
      by
      any United States federal, state, local or foreign taxing authority, including,
      but not limited to, income, gross receipts, excise, real property, personal
      property, ad valorem, value added, sales, use (or similar taxes), transfer,
      franchise, payroll, withholding, social security (or similar), business,
      license, fees, severance, stamp, premium, windfall profits, environmental
      (including taxes under Code Section 59A), customs duties, capital stock,
      profits, employment, unemployment, disability, registration, alternative or
      add-on minimum, estimated, or other tax of any kind whatsoever, including any
      interest, penalty, or addition thereto, whether disputed or not and including
      any obligations to indemnify or otherwise assume or succeed to the Tax liability
      of any other Person.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    “Tax
      Return”
      means
      any return, declaration, report, claim for refund, or information return or
      statement relating to Taxes, including any schedule or attachment thereto,
      and
      including any amendment thereof.

     

    “Third-Party
      Claim”
has
      the
      meaning set forth in Section 8(c) below.

     

    “WARN
      Act”
has
      the
      meaning set forth in Section 4(x) below.

     

    Section
      2.  Purchase
      and Sale of Shares.

     

    (a)  Transactions
      on the Closing
      Date.
      Upon the terms and subject to the
      conditions of this Agreement, the following transactions shall occur on the
      Closing Date in the order specified:

     

    (i)  Option
      Exercise.
      Each
      Seller who holds Options (an “Optionholder”)
      shall,
      and the Company shall cause each Optionholder to, fully exercise (on a cashless
      basis) his or her Options (the “Option
      Exercise”)
      so
      that all Optionholders become holders of Shares (the “Option
      Shares”).
      Each
      Optionholder’s exercise of his or her Options shall be subject to applicable
      U.S. federal, state and local withholding tax (“Option
      Withholding Tax”).
      The
      amount of the Option Withholding Tax shall be determined in good faith by the
      Company prior to the Closing. The Purchaser shall pay to the Company at the
      Closing cash in an amount equal to the aggregate Option Withholding Tax with
      respect to the Option Exercise by all Optionholders, and the Company shall
      (and
      after the Closing the Purchaser shall cause the Company to) timely pay such
      amount to the applicable taxing authorities. The portion of the Purchase Price
      otherwise payable to each Optionholder pursuant to clause (iii) below with
      respect to such Optionholder’s Option Shares shall be reduced by the amount of
      Option Withholding Tax paid by the Purchaser to the Company with respect to
      such
      Option holder pursuant to this clause (i). Each Optionholder and the Company
      agree, subject to the approval of the board of directors of the Company, that
      all Options shall become fully vested and exercisable as of the Closing Date
      in
      connection with the transactions contemplated by this Agreement.

     

    (ii)  Pre-Sale
      Distribution.
      Immediately after the Option Exercise, the Company shall make a cash
      distribution to the Representative, for the benefit of the Sellers (including
      the Optionholders in respect of their Option Shares) in the amount of
      $2,242,694.80 (the “Pre-Sale
      Distribution”).
      To
      the extent that any portion of the Pre-Sale Distribution is payable to an
      Optionholder in respect of his Option Shares (an “Option
      Share Distribution”),
      such
      portion shall be subject to Option Withholding Tax. The Company shall withhold
      from the Option Share Distribution all applicable Option Withholding Taxes
      and
      the Company shall (and after Closing the Purchaser shall cause the Company
      to)
      timely pay such amount to the applicable taxing authorities. The Option Share
      Distribution otherwise payable to each Optionholder pursuant to this clause
      (ii)
      shall be reduced by the amount of Option Withholding Tax paid by the Company
      pursuant to this clause (ii).

     

    (iii)  Purchase
      and Sale of the Shares.
      Immediately after the Pre-Sale Distribution, each Seller severally shall sell
      to
      Purchaser the Shares owned by such Seller as set forth opposite such Seller’s
      name on Exhibit
      A,
      and
      Purchaser shall purchase such Shares from each Seller.

     

    (b)  Purchase
      Price.
      The aggregate consideration payable by Purchaser at the
      Closing for the purchase of the Shares and Option Shares (including the Option
      Withholding Tax payable by Purchaser to the Company

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    pursuant
      to Section 2(a)(i)) shall be equal to US$229,000,000.00 (the “Closing
      Purchase Price”).
      In
      addition, the Purchaser shall pay to the Representative for the benefit of
      the
      Sellers, promptly upon receipt of any such amounts by the Company or any of
      its
      Subsidiaries or the Purchaser and as an additional purchase price (“Additional
      Purchase Price,”
      together with Closing Purchase Price the “Purchase
      Price”)
      for
      the Shares and Option Shares, 34.1% of all Insurance Proceeds received after
      the
      Closing Date. 

     

    (c)  Closing.
      The closing of the transactions contemplated hereby (the
“Closing”)
      shall
      take place at the offices of Thacher Proffitt & Wood, llp,
      Two
      World Financial Center, New York, NY 10281, at 10:00 A.M. on the Business Day
      on
      or before July 27, 2005 following the satisfaction or waiver of the conditions
      set forth in Section
      7
      (other
      than those conditions that by their terms cannot be satisfied until the
      Closing), or on such other date and time as Sellers and Purchaser shall mutually
      agree. The time and date of the Closing is herein called the “Closing
      Date.”

     

    (d)  Deliveries
      at Closing.
      At the Closing, (i) Sellers will deliver to
      Purchaser the various certificates, instruments, and documents referred to
      in
      Section 7(a) below, (ii) Purchaser will deliver to Sellers the various
      certificates, instruments, and documents referred to in Section 7(b) below,
      (iii) each Seller will deliver to Purchaser stock certificates representing
      all
      of his, her, or its Shares, endorsed in blank or accompanied by duly executed
      assignment documents and (iv) Purchaser will pay the aggregate Option
      Withholding Tax to the Company in accordance with Section 2(a)(i), and (v)
      Purchaser will pay an amount equal to the excess of the Closing Purchase Price
      over the aggregate Option Withholding Tax to Sellers and/or the Representative
      in accordance with Exhibit A, which Sellers and the Company will cause to be
      attached hereto prior to the Closing.

     

    Section
      3.  Representations
      and Warranties Concerning Transaction. 

     

    (a)  Sellers’
Representations
      and
      Warranties.
      Each
      Seller represents and warrants to Purchaser that the statements contained in
      this Section 3(a) are correct and complete as of the date of this Agreement
      and
      will be correct and complete as of the Closing Date (as though made then and
      as
      though the Closing Date were substituted for the date of this Agreement
      throughout this Section 3(a)) with respect to himself, herself, or
      itself.

     

    (i)  Organization
      of Certain Sellers. Seller, if a corporation or other entity, is duly organized,
      validly existing, and in good standing under the laws of the jurisdiction of
      its
      incorporation or other formation.

     

    (ii)  Authorization
      of Transaction. Seller has full power and authority (including, if a corporation
      or other entity, full corporate or other entity power and authority) to execute
      and deliver this Agreement and to perform his, her, or its obligations
      hereunder. This Agreement constitutes the valid and legally binding obligation
      of Seller, enforceable in accordance with its terms and conditions. Except
      for
      the filing of a pre-merger notification report and other filings required under
      the Hart-Scott-Rodino Act and the expiration or termination of the applicable
      waiting period in connection therewith, Seller need not give any notice to,
      make
      any filing with, or obtain any authorization, consent, or approval of any
      government or governmental agency in order to consummate the transactions
      contemplated by this Agreement. The execution, delivery, and performance of
      this
      Agreement and all other agreements contemplated hereby have been duly authorized
      by Seller.

     

    (iii)  Non-contravention.
      Neither the execution and delivery of this Agreement, nor the consummation
      of
      the transactions contemplated hereby, will (A) violate any constitution,
      statute, regulation, rule, injunction, judgment, order, decree, ruling, charge,
      or other restriction of any government, governmental agency, or court to which
      Seller is subject or, if Seller is an entity, any provision of its charter,
      bylaws, or other governing

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    documents,
      (B) conflict with, result in a breach of, constitute a default under, result
      in
      the acceleration of, create in any party the right to accelerate, terminate,
      modify, or cancel, or require any notice under any agreement, contract, lease,
      license, instrument, or other arrangement to which Seller is a party or by
      which
      he, she, or it is bound or to which any of his, her, or its assets are subject,
      or (C) result in the imposition or creation of a Lien upon or with respect
      to
      the Shares.

     

    (iv)  Brokers’
      Fees. Seller has no Liability to pay any fees or commissions to any broker,
      finder, or agent with respect to the transactions contemplated by this
      Agreement.

     

    (v)  Shares
      and Options. Each Seller holds of record and owns beneficially the number of
      Shares and/or Options set forth next to his or its name in Exhibit A, and in
      the
      case of any Optionholder, on the Closing Date immediately after the Option
      Exercise such Seller will hold of record and own beneficially the number of
      Shares set forth next to his or its name in Exhibit A, in all cases free and
      clear of any restrictions on transfer (other than any restrictions under the
      Securities Act and state securities laws), Taxes, Liens, options, warrants,
      purchase rights, contracts, commitments, equities, claims, and demands. Seller
      is not a party to any option, warrant, purchase right, or other contract or
      commitment (other than this Agreement) that could require Seller to sell,
      transfer, or otherwise dispose of any capital stock of Company. Except for
      the
      Stockholders Agreement dated January 20, 2004, Seller is not a party to any
      voting trust, proxy, or other agreement or understanding with respect to the
      voting of any capital stock of Company.

     

    (b)  Purchaser’s
      Representations and
      Warranties.
      Purchaser represents and warrants to Sellers that the statements contained
      in
      this Section 3(b) are correct and complete as of the date of this Agreement
      and
      will be correct and complete as of the Closing Date (as though made then and
      as
      though the Closing Date were substituted for the date of this Agreement
      throughout this Section 3(b)).

     

    (i)  Organization
      of Purchaser. Purchaser is a corporation (or other entity) duly organized,
      validly existing, and in good standing under the laws of the jurisdiction of
      its
      incorporation. Purchaser Guarantor is the owner, directly or indirectly, of
      at
      least 51% of the voting securities of the Purchaser. 

     

    (ii)  Authorization
      of Transaction. Purchaser has full power and authority (including full corporate
      or other entity power and authority) to execute and deliver this Agreement
      and
      to perform its obligations hereunder. This Agreement constitutes the valid
      and
      legally binding obligation of Purchaser, enforceable in accordance with its
      terms and conditions. Except for (A) the filing of a pre-merger notification
      report and other filings required under the Hart-Scott-Rodino Act and the
      expiration or termination of the applicable waiting period in connection
      therewith and (B) a post-Closing notification pursuant to the Investment Canada
      Act, Purchaser need not give ny
      notice
      to, make any filing with, or obtain any authorization, consent, or approval
      of
      any government or governmental agency in order to consummate the transactions
      contemplated by this Agreement. The execution, delivery, and performance of
      this
      Agreement and all other agreements contemplated hereby have been duly authorized
      by Purchaser.

     

    (iii)  Non-contravention.
      Neither the execution and delivery of this Agreement, nor the consummation
      of
      the transactions contemplated hereby, will (A) violate any constitution,
      statute, regulation, rule, injunction, judgment, order, decree, ruling, charge,
      or other restriction of any government, governmental agency, or court to which
      Purchaser is subject or any provision of its charter, bylaws, or other governing
      documents or (B) conflict with, result in a breach of, constitute a default
      under, result in the acceleration of, create in any party the right to
      accelerate, terminate, modify, or cancel, or require any notice under any
      agreement, contract, lease,

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    license,
      instrument, or other arrangement to which Purchaser is a party or by which
      it is
      bound or to which any of its assets are subject.

     

    (iv)  Brokers’
      Fees. Purchaser has no Liability to pay any fees or commissions to any broker,
      finder, or agent with respect to the transactions contemplated by this Agreement
      for which any Seller could become liable or obligated.

     

    (v)  Investment.
      Purchaser is not acquiring the Shares with a view to or for sale in connection
      with any distribution thereof within the meaning of the Securities
      Act.

     

    Section
      4.  Representations
      and Warranties Concerning Company
      and Its Subsidiaries.
      The
      Company and the Sellers,
      jointly and severally, represent and warrant to Purchaser that the statements
      contained in this Section 4 are correct and complete as of the date of this
      Agreement and will be correct and complete as of the Closing Date (as though
      made then and as though the Closing Date were substituted for the date of this
      Agreement throughout this Section 4), except as set forth in the disclosure
      schedule executed and delivered by Sellers to Purchaser on the date hereof
      (the
“Disclosure
      Schedule”).
      Nothing in the Disclosure Schedule shall be deemed adequate to disclose an
      exception to a representation or warranty made herein, however, unless the
      Disclosure Schedule identifies the exception with particularity and describes
      the relevant facts in detail. Without limiting the generality of the foregoing,
      the mere listing (or inclusion of a copy) of a document or other item shall
      not
      be deemed adequate to disclose an exception to a representation or warranty
      made
      herein (unless the representation or warranty pertains to the existence of
      the
      document or other item itself). The Disclosure Schedule will be arranged in
      paragraphs corresponding to the lettered and numbered paragraphs contained
      in
      this Section 4.

     

    (a)  Organization,
      Qualification, and Corporate Power.
      Each of
      Company and its Subsidiaries are corporations duly organized, validly existing,
      and in good standing under the laws of the jurisdiction of their incorporation,
      as identified in Section 4(a) of the Disclosure Schedule. Each of Company and
      its Subsidiaries are duly authorized to conduct business and are in good
      standing under the laws of each jurisdiction where such qualification is
      required except where the lack of such qualification would not be Material
      to
      the Company or its Subsidiaries. Neither the Company nor any of its Subsidiaries
      has any assets or operations in Mexico. Each of Company and its Subsidiaries
      have full corporate power and authority and all licenses, permits, and
      authorizations necessary to carry on the businesses in which they are engaged
      and to own and use the properties owned and used by them. Section 4(a) of the
      Disclosure Schedule lists the directors and officers of Company and each of
      its
      Subsidiaries. Sellers have delivered to Purchaser correct and complete copies
      of
      the charter and bylaws for each of Company and its Subsidiaries (as amended
      to
      date). The minute books (containing the records of meetings of the stockholders,
      the board of directors, and any committees of the board of directors), the
      stock
      certificate books, and the stock record books for each of Company and its
      Subsidiaries are correct and complete in all material respects. Neither Company
      nor any of its Subsidiaries is in default under or in violation of any provision
      of its charter or bylaws.

     

    (b)  Capitalization.
      The
      entire authorized capital stock of Company consists of (i) 57,000 shares of
      the
      Company’s Class A Common Stock, par value $0.01 per share (the “Common
      Stock”),
      of
      which 50,074.10 shares are issued and outstanding and no shares are held in
      treasury and (ii) 3,000 shares of the Company’s Class B Common Stock, par value
      $0.01 per share, of which no shares are issued and outstanding and no shares
      are
      held in treasury. The Common Stock constitutes 100% of the Shares. All of the
      issued and outstanding Shares have been or, in the case of the Option Shares,
      will be, duly authorized, validly issued, fully paid, and non-assessable, and
      are, or in the case of the Option Shares will be, held of record by the
      respective Sellers as set forth on Exhibit A. There are no outstanding or
      authorized options (other than the Options held by some of the Sellers to
      purchase 4,374.99 Shares), 

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    warrants,
      purchase rights, subscription rights, conversion rights, exchange rights, or
      other contracts or commitments that could require Company to issue, sell, or
      otherwise cause to become outstanding any of its capital stock. There are no
      outstanding or authorized stock appreciation, phantom stock, profit
      participation, or similar rights with respect to Company. There are no voting
      trusts, proxies, or other agreements or understandings with respect to the
      voting of the capital stock of Company.

     

    (c)  Non-contravention.
      Neither
      the execution and the delivery of this Agreement, nor the consummation of the
      transactions contemplated hereby, will (i) violate any constitution, statute,
      regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
      restriction of any government, governmental agency, or court to which any of
      Company and its Subsidiaries is subject or any provision of the charter or
      bylaws of any of Company and its Subsidiaries or (ii) conflict with, result
      in a
      breach of, constitute a default under, result in the acceleration of, create
      in
      any party the right to accelerate, terminate, modify, or cancel, or require
      any
      notice under any agreement, contract, lease, license, instrument, or other
      arrangement to which any of Company and its Subsidiaries is a party or by which
      it is bound or to which any of its assets is subject (or result in the
      imposition of any Lien upon any of its assets), except where the violation,
      conflict, breach, default, acceleration, termination, modification,
      cancellation, failure to give notice or Lien would not be
      Material to the Company or its Subsidiaries.
      Neither
      Company nor any of its Subsidiaries needs to give any notice to, make any filing
      with, or obtain any authorization, consent, or approval of any government or
      governmental agency or Labor Organization in order for the Parties to consummate
      the transactions contemplated by this Agreement, except where the failure to
      give notice, to file, or to obtain any authorization, consent or approval would
      not be Material to the Company or its Subsidiaries. 

     

    (d)  Brokers’
      Fees.
      Neither
      Company nor any of its Subsidiaries has any Liability to pay any fees or
      commissions to any broker, finder, or agent with respect to the transactions
      contemplated by this Agreement.

     

    (e)  Title
      to Assets.
      Company
      and its Subsidiaries have good and marketable title to, or a valid leasehold
      interest in, or valid license or right to use, the material properties and
      assets used by them, located on their premises, shown on the Most Recent Balance
      Sheet or acquired after the date thereof, free and clear of all Liens (other
      than Permitted Encumbrances), except for properties and assets disposed of
      in
      the Ordinary Course of Business since the date of the Most Recent Balance Sheet
      and, with respect to such properties or assets which constitute Real Property,
      subject to Permitted Encumbrances.

     

    (f)  Subsidiaries.
      Section
      4(f) of the Disclosure Schedule sets forth for each Subsidiary of Company (i)
      its name and jurisdiction of incorporation, (ii) the number of authorized shares
      for each class of its capital stock, (iii) the number of issued and outstanding
      shares of each class of its capital stock, the names of the holders thereof,
      and
      the number of shares held by each such holder, and (iv) the number of shares
      of
      its capital stock held in treasury. All of the issued and outstanding shares
      of
      capital stock of each Subsidiary of Company have been duly authorized and are
      validly issued, fully paid, and non-assessable. Company or one or more of its
      Subsidiaries holds of record and owns beneficially all of the outstanding shares
      of each Subsidiary of Company, free and clear of any restrictions on transfer
      (other than restrictions under the Securities Act and state securities laws),
      Taxes, Liens, options, warrants, purchase rights, contracts, commitments,
      equities, claims, and demands. There are no outstanding or authorized options,
      warrants, purchase rights, subscription rights, conversion rights, exchange
      rights, or other contracts or commitments that could require any of Company
      and
      its Subsidiaries to sell, transfer, or otherwise dispose of any capital stock
      of
      any of its Subsidiaries or that could require any Subsidiary of Company to
      issue, sell, or otherwise cause to become outstanding any of its own capital
      stock. There are no outstanding stock appreciation, phantom stock, profit
      participation, or similar rights with respect to any Subsidiary of Company.
      There are no voting trusts, proxies, or other agreements or understandings
      with
      respect to the voting of any capital stock of any Subsidiary of Company. Neither
      Company nor any of its Subsidiaries controls directly or indirectly or has
      any
      direct or indirect

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    equity
      participation in any corporation, partnership, trust, or other business
      association that is not a Subsidiary of Company. Except for the Subsidiaries
      set
      forth in Section 4(f) of the Disclosure Schedule, neither Company nor any of
      its
      Subsidiaries owns or has any right to acquire, directly or indirectly, any
      outstanding capital stock of, or other equity interests in, any
      Person.

     

    (g)  Financial
      Statements.
      Attached hereto as Exhibit B are the following financial statements
      (collectively the “Financial
      Statements”):
      (i)
      audited consolidated and Company’s internal consolidating balance sheets and
      statements of income, changes in stockholders’ equity, and cash flow as of and
      for the fiscal year ended December 31, 2004 (the “Most
      Recent Fiscal Year End”)
      for
      Company and its Subsidiaries; and (ii) Company’s internal consolidated and
      consolidating balance sheets and statements of income, changes in stockholders’
equity, and cash flow (the “Most
      Recent Financial Statements”)
      as of
      and for the months ended June 30, 2005 (the “Most
      Recent Fiscal Month End”)
      for
      Company and its Subsidiaries. The Financial Statements (including the notes
      thereto) have been prepared in accordance with GAAP throughout the periods
      covered thereby, present fairly the financial condition of Company and its
      Subsidiaries as of such dates and the results of operations of Company and
      its
      Subsidiaries for such periods, are correct and complete, and are consistent
      with
      the books and records of Company and its Subsidiaries (which books and records
      are correct and complete); provided,
      however,
      that the
      Most Recent Financial Statements are subject to normal year-end adjustments
      and
      lack footnotes and other presentation items.

     

    (h)  Events
      Subsequent to Most Recent Fiscal Year End.
      Since
      the Most Recent Fiscal Year End, there has not been any Material Adverse Change.
      Without limiting the generality of the foregoing, since that date except as
      set
      forth on the Most Recent Financial Statements:

     

    (i)  neither
      Company nor any of its Subsidiaries has sold, leased, transferred, or assigned
      any of its Material assets, tangible or intangible, other than for a fair
      consideration in the Ordinary Course of Business;

     

    (ii)  neither
      Company nor any of its Subsidiaries has entered into any agreement, contract,
      lease, or license (or series of related agreements, contracts, leases, and
      licenses) either involving more than $1,000,000 or outside the Ordinary Course
      of Business;

     

    (iii)  no
      party
      (including Company and any of its Subsidiaries) has accelerated, terminated,
      modified, or cancelled any agreement, contract, lease, or license (or series
      of
      related agreements, contracts, leases, and licenses) involving more than
      $1,000,000 to which Company or any of its Subsidiaries is a party or by which
      any of them is bound;

     

    (iv)  neither
      Company nor any of its Subsidiaries has imposed or permitted any Material Liens
      (other than Permitted Encumbrances) upon any of its assets, tangible or
      intangible;

     

    (v)  neither
      Company nor any of its Subsidiaries has made any capital expenditure (or series
      of related capital expenditures) either involving more than $10,000,000 or
      outside the Ordinary Course of Business;

     

    (vi)  neither
      Company nor any of its Subsidiaries has made any capital investment in, any
      loan
      to, or any acquisition of the securities or assets of, any other Person (or
      series of related capital investments, loans, and acquisitions) either involving
      more than $1,000,000 or outside the Ordinary Course of Business;

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (vii)  neither
      Company nor any of its Subsidiaries has issued any note, bond, or other debt
      security or created, incurred, assumed, or guaranteed any indebtedness for
      borrowed money or capitalized lease obligation causing the Company’s total
      consolidated long-term debt to be in an amount greater than $182,000,000, less
      scheduled payments thereon since March 31, 2005;

     

    (viii)  neither
      Company nor any of its Subsidiaries has delayed or postponed the payment of
      accounts payable and other Liabilities outside the Ordinary Course of
      Business;

     

    (ix)  neither
      Company nor any of its Subsidiaries has cancelled, compromised, waived, or
      released any right or claim (or series of related rights and claims) either
      involving more than $1,000,000 or outside the Ordinary Course of
      Business;

     

    (x)  neither
      Company nor any of its Subsidiaries has transferred, assigned, or granted any
      license or sublicense of any rights under or with respect to any material
      Intellectual Property outside the Ordinary Course of Business;

     

    (xi)  there
      has
      been no change made or authorized in the charter or bylaws of any of Company
      and
      its Subsidiaries;

     

    (xii)  neither
      Company nor any of its Subsidiaries has issued, sold, or otherwise disposed
      of
      any of its capital stock, or granted any options, warrants, or other rights
      to
      purchase or obtain (including upon conversion, exchange, or exercise) any of
      its
      capital stock;

     

    (xiii)  neither
      Company nor any of its Subsidiaries has declared, set aside, or paid any
      dividend or made any distribution with respect to its capital stock (whether
      in
      cash or in kind) or redeemed, purchased, or otherwise acquired any of its
      capital stock, other than the Pre-Closing Distribution;

     

    (xiv)  neither
      Company nor any of its Subsidiaries has experienced any Material damage,
      destruction, or loss (whether or not covered by insurance) to its
      property;

     

    (xv)  neither
      Company nor any of its Subsidiaries has made any loan to, or entered into any
      other transaction with, any of its directors, officers, and employees outside
      the Ordinary Course of Business;

     

    (xvi)  neither
      Company nor any of its Subsidiaries has entered into any collective bargaining
      agreement (or any Material employment agreement), written or oral, or materially
      modified the terms of any existing such contract or agreement, other than at
      Purchaser’s written request;

     

    (xvii)  neither
      Company nor any of its Subsidiaries has granted any increase in the base
      compensation of any of its directors, officers, and employees outside the
      Ordinary Course of Business;

     

    (xviii)  neither
      Company nor any of its Subsidiaries has adopted, amended, modified, or
      terminated any Material bonus, profit sharing, incentive, severance, or other
      plan, contract, or commitment for the benefit of any of its directors, officers,
      and employees (or taken any such action with respect to any other Employee
      Benefit Plan);

     

    
      
        
        

      

      
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    (xix)  neither
      Company nor any of its Subsidiaries has made any change in employment terms
      for
      any of its directors, officers, and employees outside the Ordinary Course of
      Business, other than at Purchaser’s written request;

     

    (xx)  neither
      Company nor any of its Subsidiaries has made or pledged to make any charitable
      or other capital contribution outside the Ordinary Course of
      Business;

     

    (xxi)  there
      has
      not been any other occurrence, event, incident, action, failure to act, or
      transaction outside the Ordinary Course of Business involving Company or any
      of
      its Subsidiaries that could reasonably be expected to have a Material Adverse
      Effect;

     

    (xxii)  neither
      Company nor any of its Subsidiaries has discharged a Material Liability or
      Lien
      outside the Ordinary Course of Business;

     

    (xxiii)  neither
      Company nor any of its Subsidiaries has made any Material loans or advances
      of
      money;

     

    (xxiv)  neither
      Company nor any of its Subsidiaries has created, added to or increased any
      reserve for environmental Liabilities or otherwise;

     

    (xxv)  neither
      Company nor any of its Subsidiaries has disclosed any Confidential Information
      other than in the Ordinary Course of Business consistent with past practice;
      and

     

    (xxvi)  neither
      Company nor any of its Subsidiaries has committed to any of the
      foregoing.

     

    (i)  Undisclosed
      Liabilities.
      To the
      Knowledge of the Sellers, Company and the Subsidiaries, neither Company nor
      any
      of its Subsidiaries has any Liability, except for (i) Liabilities set forth
      on
      the face of the Most Recent Balance Sheet (rather than in any notes thereto),
      (ii) Liabilities that have arisen after the Most Recent Fiscal Month End in
      the
      Ordinary Course of Business (none of which results from, arises out of, relates
      to, is in the nature of, or was caused by any breach of contract, breach of
      warranty, tort, infringement, or violation of law, except where a breach of
      contract or warranty, tort, infringement or violation of law would not be
      Material to the Company or its Subsidiaries) and (iii) Liabilities expressly
      and
      specifically disclosed on the Disclosure Schedules.

     

    (j)  Legal
      Compliance.
      Each of
      any Seller, Company and its Subsidiaries have, since December 19, 2003, complied
      in all Material respects with all applicable laws (including all applicable
      rules, regulations, codes, plans, injunctions, judgments, orders, decrees,
      and
      rulings, and charges thereunder of federal, state, local, and foreign
      governments (and all agencies thereof), and no action, suit, proceeding,
      hearing, investigation, charge, complaint, claim, demand, or notice has been
      filed or commenced against any of them alleging any failure so to
      comply.

     

    (k)  Tax
      Matters.

     

    (i)  Except
      as
      listed on Schedule 4(k)(i) of the Disclosure Schedule, each of Company and
      its
      Subsidiaries have filed with the appropriate federal, state, local and foreign
      taxing authorities all federal Tax Returns and all Material state, local and
      foreign Tax Returns that were required to be filed by or with respect to each
      of
      Company and its Subsidiaries under applicable laws and regulations. All such
      Tax
      Returns were true, correct and complete in all Material respects, and were
      prepared in substantial compliance with all applicable laws and regulations.
      Except as listed on Schedule 4(k)(i) of the Disclosure Schedule, each of Company
      and its ubsidiaries
      has

     

    
      
        
        

      

      
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    paid
      in
      full all Taxes (whether or not shown on any Tax Return) which are due and owing
      by them, except for Taxes that are being disputed in good faith for which
      adequate reserves have been established on the Most Recent Financial Statements.
      There are no Liens for Taxes upon the assets of Company or any of its
      Subsidiaries except for statutory liens for current Taxes not yet due and
      payable. 

     

    (ii)  Each
      of
      Company and its Subsidiaries have withheld and paid all Taxes required to have
      been withheld and paid in connection with any amounts paid or owing to any
      employee, independent contractor, creditor, Seller, current or former
      stockholder, or other third party.

     

    (iii)  Section
      4(k)(iii) of the Disclosure Schedule lists all federal, state, local and foreign
      income Tax Returns filed with respect to Company and each of its Subsidiaries
      for taxable periods ending on or after December 31, 2003, and indicates those
      Tax Returns that have been audited or that are currently the subject of any
      audit. Sellers have delivered or have caused Company and each of its
      Subsidiaries to deliver to Purchaser true, correct and complete copies of all
      federal income Tax Returns, examination reports and statements of deficiencies
      assessed against or agreed to by Company or any of its Subsidiaries since
      December 31, 2003. Each of Company and its Subsidiaries have disclosed on their
      federal income Tax Returns all positions taken therein that could give rise
      to a
      substantial understatement of federal income Tax within the meaning of Code
      Section 6662. Neither Company nor any of its Subsidiaries has received any
      request for information related to Tax matters or any notice of deficiency
      or
      assessment from any federal, state, local or foreign taxing authority (including
      jurisdictions where Company or any of its Subsidiaries have not filed Tax
      Returns) with respect to liabilities proposed, asserted or assessed for Taxes
      of
      Company or any of its Subsidiaries which has not been fully paid or finally
      settled and, to the Knowledge of any Seller, director or officer (or employee
      responsible for Tax matters) of Company or any of its Subsidiaries, there are
      no
      existing or prior facts, circumstances or conditions that would form the basis
      for such a notice of deficiency or assessment. Except as provided on Schedule
      4(k)(iii) of the Disclosure Schedule, no power of attorney has been executed
      by,
      or on behalf of, Company or any of its Subsidiaries with respect to any matter
      relating to Taxes which is currently in force. 

     

    (iv)  Except
      as
      listed on Schedule 4(k)(iv) of the Disclosure Schedule, neither Company nor
      any
      of its Subsidiaries has requested any extension of time within which to file
      any
      Tax Return, which Tax Return has not since been filed, and neither Company
      nor
      any of its Subsidiaries has waived any statute of limitations for, or agreed
      to
      any extension of time with respect to, the assessment of Taxes of Company or
      any
      of its Subsidiaries. No claim has ever been made by any authority in a
      jurisdiction where Company or any of its Subsidiaries does not file Tax Returns
      that Company or any of its Subsidiaries is or may be subject to taxation by
      that
      jurisdiction.

     

    (v)  Neither
      Company nor any of its Subsidiaries is a party to any agreement, contract,
      arrangement or plan that has resulted or could result, separately or in the
      aggregate, in the requirement to pay any “excess parachute payment” within the
      meaning of Code Section 280G (or any corresponding provision of state, local
      or
      foreign Tax law). Neither Company nor any of its Subsidiaries is a party to
      any
      Tax sharing, Tax allocation or Tax indemnity agreement or any other agreement
      of
      a similar nature that remains in effect. Neither Company nor any of its
      Subsidiaries has been a United States real property holding corporation within
      the meaning of Code Section 897(c)(2) during the applicable period specified
      in
      Code Section 897(c)(1)(A)(ii). Neither Company nor any of its Subsidiaries
      is or
      ever has been a member of an Affiliated Group filing a consolidated federal
      income Tax Return, other than a group the common parent of which is Company,
      or
      has any Liability for the Taxes of any Person (other than Company and each
      of
      its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or
      any

     

    
      
        
        

      

      
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    similar
      provision of state, local or foreign law), as a transferee, or successor, by
      contract or otherwise.

     

    (vi)  The
      unpaid Taxes of Company and its Subsidiaries (A) did not, as of the Most Recent
      Fiscal Month End, exceed the reserve for Tax Liability (rather than any reserve
      for deferred Taxes established to reflect timing differences between book and
      Tax income) set forth on the face of the Most Recent Balance Sheet (rather
      than
      in any notes thereto) and (B) will not exceed, as of the Closing Date, that
      reserve as adjusted for operations and transactions through the Closing Date
      in
      accordance with the past custom and practice of Company and its Subsidiaries
      in
      filing their Tax Returns. Since the date of the Most Recent Balance Sheet,
      neither Company nor any of its Subsidiaries has incurred any liability for
      Taxes
      arising from extraordinary gains or losses, as that term is used in GAAP,
      outside the Ordinary Course of Business consistent with past custom and practice
      (other than gains or losses arising from the receipt of Insurance Proceeds
      or
      the transaction contemplated by this Agreement).

     

    (vii)  Except
      as
      listed on Section 4(k)(vii) of the Disclosure Schedule, neither Company nor
      any
      of its Subsidiaries will be required to include any item of income in, or
      exclude any item of deduction from, taxable income for any taxable period (or
      portion thereof) ending after the Closing Date as a result of any:

     

    (A)  change
      in
      method of accounting for a taxable period ending on or prior to the Closing
      Date;

     

    (B)  “closing
      agreement” as described in Code Section 7121 (or any corresponding or similar
      provision of state, local or foreign income Tax law) executed on or prior to
      the
      Closing Date;

     

    (C)  intercompany
      transaction (except for those properly accrued on the Company’s and its
      Subsidiaries books and records and set forth in the Most Recent Balance Sheet)
      or excess loss account described in Treasury Regulations under Code Section
      1502
      (or any corresponding or similar provision of state, local or foreign income
      Tax
      law); or 

     

    (D)  installment
      sale or open transaction disposition made on or prior to the Closing
      Date.

     

    (viii)  Neither
      Company nor any of its Subsidiaries has distributed stock of another Person,
      or
      has had its stock distributed by another Person, in a transaction that was
      purported or intended to be governed in whole or in part by Code Section 355
      or
      Code Section 361.

     

    (ix)  Neither
      Company nor any of its Subsidiaries is a party to or member of any joint
      venture, partnership, limited liability company or other arrangement or contract
      which could be treated as a partnership for income Tax purposes.

     

    (x)  Neither
      Company nor any of its Subsidiaries has any net operating loss or losses or
      other tax attributes presently subject to limitation under Code Sections 382,
      383, or 384, or the federal consolidated return regulations (other than
      limitations imposed as a result of the transactions contemplated by this
      Agreement). Neither Company nor any of its Subsidiaries has agreed to make
      any
      adjustment under Code Section 481(a) (or any corresponding provision of state,
      local or foreign Tax law) by reason of a change in accounting method or
      otherwise, and will not be required to make such an adjustment as a result
      of
      the transactions contemplated by this

     

    
      
        
        

      

      
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    Agreement.

     

    (l)  Real
      Property.

     

    (i)  Section
      4(l)(i) of the Disclosure Schedule sets forth the address and description of
      each parcel of Owned Real Property. With respect to each parcel of Owned Real
      Property:

     

    (A)  Company
      or one of its Subsidiaries has good and marketable fee simple title, free and
      clear of all Liens, except Permitted Encumbrances;

     

    (B)  neither
      Company nor any of its Subsidiaries has leased or otherwise granted to any
      Person the right to use or occupy such Owned Real Property or any portion
      thereof; and

     

    (C)  other
      than the right of Purchaser pursuant to this Agreement, there are no outstanding
      options, rights of first offer or rights of first refusal to purchase such
      Owned
      Real Property or any portion thereof or interest therein.

     

    (ii)  Section
      4(l)(ii) of the Disclosure Schedule sets forth the address of each parcel of
      Leased Real Property, and a true and complete list of all Leases for each such
      Leased Real Property (including the date and name of the parties to such Lease
      document). Each of Company and its Subsidiaries has delivered to Purchaser
      a
      true and complete copy of each such Lease document, and in the case of any
      oral
      Lease, a written summary of the material terms of such Lease. Except as set
      forth in Section 4(l)(ii) of the Disclosure Schedule, with respect to each
      of
      the Leases:

     

    (A)  such
      Lease is legal, valid, binding, enforceable and in full force and effect,
      subject to proper authorization and execution of such Lease by the other party
      thereto and the application of any bankruptcy or creditor’s rights
      laws;

     

    (B)  to
      the
      Knowledge of any Seller, Company or any of its Subsidiaries, neither Company’s
      nor any of its Subsidiaries’ possession and quiet enjoyment of the Leased Real
      Property under such Lease has been disturbed and there are no disputes with
      respect to such Lease;

     

    (C)  neither
      Company nor any of its Subsidiaries, and to the Knowledge of any Seller, Company
      or any of its Subsidiaries, no other party to the Lease, is in breach of or
      default under such Lease, and no event has occurred or circumstance exists
      that,
      with the delivery of notice, the passage of time or both, would constitute
      such
      a default, or permit the termination, modification or acceleration of rent
      under
      such Lease;

     

    (D)  no
      security deposit or portion thereof deposited with respect to such Lease has
      been applied in respect of a breach of or default under such Lease that has
      not
      been redeposited in full;

     

    (E)  neither
      Company nor any of its Subsidiaries owes, or will owe in the future, any
      brokerage commissions or finder’s fees with respect to such Lease;

     

    (F)  the
      other
      party to such Lease is not an Affiliate of, and otherwise does not have any
      economic interest in, Company or any of its Subsidiaries; and

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    (G)  neither
      Company nor any of its Subsidiaries has collaterally assigned or granted any
      other Lien in such Lease or any interest therein. 

     

    (iii)  The
      Owned
      Real Property identified in Section 4(l)(i) of the Disclosure Schedule and
      the
      Leased Real Property identified in Section 4(l)(ii) of the Disclosure Schedule
      (collectively, the “Real
      Property”),
      comprise all of the real property used or intended to be used in, or otherwise
      related to, Company’s and its Subsidiaries’ business; and neither Company nor
      any of its Subsidiaries is a party to any agreement or option to purchase any
      real property or interest therein.

     

    (iv)  Since
      the
      date of the surveys given to the Seller in connection with the acquisition
      of
      the Real Property, dated on our about August 2, 2003, other than as indicated
      thereon, if any, no parcel of Real Property has had any material change on
      it
      which would affect direct vehicular and pedestrian access to a public street
      adjoining the Real Property, or vehicular and pedestrian access to a public
      street via an insurable, permanent, irrevocable and appurtenant easement
      benefiting such parcel of Real Property.

     

    (v)  All
      water, oil, gas, electrical, steam, compressed air, telecommunications, sewer,
      storm and waste water systems and other utility services or systems which are
      material for the operation of the Company’s or its Subsidiaries’ business for
      the Real Property are operational and sufficient therefor.

     

    (vi)  Since
      the
      date of the title policy issued to the Company on or about December 19, 2003,
      the Company has not received any written notice of a material change with
      respect to any applicable zoning laws, ordinances and regulations (i) permitting
      the use and occupancy of such parcel and the operation of Company’s and its
      Subsidiaries’ business as currently conducted thereon, and the Improvements
      located thereon as currently constructed, used and occupied; or (ii) affecting
      parking spaces, loading docks and other facilities.

     

    (vii)  Since
      the
      date of the title policy issued to the Company on or about December 19, 2003,
      the Company has not received any written notice that the current use and
      occupancy of the Real Property and the operation of Company’s and its
      Subsidiaries’ business as currently conducted thereon materially violates any
      easement, covenant, condition, restriction or similar provision in any
      instrument of record or other unrecorded agreement affecting such Real Property
      (the “Encumbrance Documents).

     

    (viii)  Since
      the
      date of the surveys given to Seller in connection with its acquisition of the
      Real Property, dated on or about August 2, 2003, the Company has not (i)
      received any written notice that any of the Improvements encroaches on any
      land
      that is not included in the Real Property, or on any easement affecting such
      Real Property, or violates any building lines or set-back lines (other than
      as
      disclosed on such surveys), or (ii) given any written notice that there are
      encroachments onto the Real Property, or any portion thereof (other than as
      disclosed on such surveys), that, in each case, would interfere with the use
      or
      occupancy of such Real Property or the continued operation of Company’s or its
      Subsidiaries’ business as currently conducted thereon.

     

    (ix)  Since
      the
      date of the title policy issued to Company on or about December 19, 2003, the
      Company has not received any written notice regarding: (i) the status of the
      Real Property as a separate tax lot, or (ii) additional taxes, assessments,
      fees, charges or similar costs or expenses imposed by any governmental
      authority, association or other entity having jurisdiction over the Real
      Property that is not of the type set forth in such title policy.

     

    
      
        
        

      

      
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    (m)  Intellectual
      Property.

     

    (i)  Company
      and its Subsidiaries own and possess or have the right to use pursuant to a
      valid and enforceable license, sublicense, agreement, or other permission all
      Intellectual Property necessary for the operation of the business of Company
      and
      its Subsidiaries as presently conducted. Each item of Material Intellectual
      Property owned or used by Company or any of its Subsidiaries immediately prior
      to the Closing will be owned or available for use by Company or its Subsidiaries
      on substantially the same terms and conditions immediately subsequent to the
      Closing. Each of Company and its Subsidiaries have taken all reasonably
      necessary action to maintain and protect each item of Material Intellectual
      Property that they own.

     

    (ii)  Except
      as
      set forth in Section 4(m)(ii) of the Disclosure Schedule, during the two
      (2)-year period prior to the date hereof, neither Company nor any of its
      Subsidiaries (A) has, to the Knowledge of any of Sellers, Company, or any of
      its
      Subsidiaries, interfered with, infringed upon, misappropriated, or otherwise
      come into conflict with any Intellectual Property rights of third parties in
      any
      Material respect, and (B) has received any written charge, complaint, claim,
      demand, or notice alleging any such interference, infringement,
      misappropriation, or other conflict (including any claim that Company or any
      of
      its Subsidiaries must license or refrain from using any Intellectual Property
      rights of any third party). To the Knowledge of any of Sellers, Company, or
      any
      of its Subsidiaries, no third party has interfered with, infringed upon,
      misappropriated, or otherwise come into conflict with any Intellectual Property
      rights owned by Company or any of its Subsidiaries in any Material
      respect.

     

    (iii)  Section
      4(m)(iii) of the Disclosure Schedule identifies each Material patent or
      registration that has been issued to Company or any of its Subsidiaries with
      respect to any of its Intellectual Property, identifies each Material pending
      patent application or application for registration that Company or any of its
      Subsidiaries has made with respect to any of its Intellectual Property, and
      identifies each Material license, sublicense, agreement, or other permission
      that Company or any of its Subsidiaries has granted to any third party with
      respect to any of its Intellectual Property. Section 4(m)(iii) of the Disclosure
      Schedule also identifies each Material computer software item owned by the
      Company or any of its Subsidiaries. With respect to each item of Intellectual
      Property required to be identified in Section 4(m)(iii) of the Disclosure
      Schedule, except as set forth in Schedule 4(m)(iii) of the Disclosure
      Schedule:

     

    (A)  Company
      and its Subsidiaries own and possess all right, title, and interest in and
      to
      the item, free and clear of any Lien, license, or other restriction or
      limitation regarding use or disclosure;

     

    (B)  the
      item
      is not subject to any outstanding injunction, judgment, order, decree, ruling,
      or charge;

     

    (C)  no
      action, suit, proceeding, hearing, investigation, charge, complaint, claim,
      or
      demand is pending or, to the Knowledge of any of Sellers, Company, or any of
      its
      Subsidiaries, is threatened that challenges the legality, validity,
      enforceability, use, or ownership of the item;

     

    (D)  to
      the
      Knowledge of any Sellers, Company, or any of its Subsidiaries, no loss or
      expiration of the item is threatened, pending, or reasonably foreseeable, except
      for patents or copyrights expiring at the end of their statutory terms (and
      not
      as a result of any act or omission by Sellers, Company, or its Subsidiaries,
      including without limitation, a failure by Sellers, Company, or its Subsidiaries
      to pay any required 

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    maintenance
      fees).

     

    (iv)  Section
      4(m)(iv) of the Disclosure Schedule identifies each Material item of
      Intellectual Property that any third party owns and that Company or any of
      its
      Subsidiaries uses pursuant to license, sublicense, agreement, or other
      permission. Sellers have delivered to Purchaser correct and complete copies
      of
      all such licenses, sublicenses, agreements, and permissions (as amended to
      date). With respect to each item of Intellectual Property required to be
      identified in Section 4(m)(iv) of the Disclosure Schedule, to the Knowledge
      of
      any of Sellers, Company, or any of its Subsidiaries:

     

    (A)  the
      license, sublicense, agreement, or permission covering the item is legal, valid,
      binding, enforceable, and in full force and effect;

     

    (B)  the
      license, sublicense, agreement, or permission will continue to be legal, valid
      binding, enforceable, and in full force and effect on identical terms following
      consummation of the transactions contemplated hereby;

     

    (C)  no
      party
      to the license, sublicense, agreement, or permission is in breach or default,
      and no event has occurred that with notice or lapse of time would constitute
      a
      breach or default or permit termination, modification, or acceleration
      thereunder;

     

    (D)  no
      party
      to the license, sublicense, agreement, or permission has repudiated any
      provision thereof; and

     

    (E)  neither
      Company nor any of its Subsidiaries has granted any sublicense or similar right
      with respect to the license, sublicense, agreement, or permission.

     

    (n)  Tangible
      Assets.
      Company
      and its Subsidiaries own or lease all buildings, machinery, equipment and other
      tangible assets necessary for the conduct of their respective businesses as
      presently conducted. 

     

    (o)  Condition
      and Sufficiency of Assets.
      The
      building, plants, structures, machinery, equipment and other tangible assets
      necessary for the conduct of the business of the Company and its Subsidiaries
      as
      presently conducted are structurally sound, in reasonably good operating
      condition and repair (subject to ordinary wear and tear), and are adequate
      for
      the uses to which they are being put, are free from defects (patent and, to
      the
      Knowledge of the Sellers, Company and its Subsidiaries, latent) and none of
      such
      buildings, plants, structures, machinery, equipment or other tangible assets
      is
      in need of maintenance or repairs except for ordinary, routine maintenance
      or
      repairs that are not Material; all such building, plants, structures, machinery,
      equipment and other tangible assets are owned or leased by the Company or its
      Subsidiaries and to the Knowledge of any Seller, Company or any of its
      Subsidiaries are sufficient for the continued conduct of the Company’s and
      Subsidiaries’ businesses after the Closing in substantially the same manner as
      conducted prior to the Closing.

     

    (p)  Inventory.
      The
      inventory of Company and its Subsidiaries consists of raw materials and
      supplies, manufactured and purchased parts, goods in process, and finished
      goods, all of which is merchantable and fit for the purpose for which it was
      procured or manufactured, and none of which is slow-moving, obsolete, damaged,
      or defective, subject only to the reserve for inventory writedown set forth
      on
      the face of the Most Recent Balance Sheet (rather than in any notes
      thereto).

     

    
      
        
        

      

      
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    (q)  Contracts.
      Section
      4(q) of the Disclosure Schedule lists the following contracts and other
      agreements to which Company or any of its Subsidiaries is a party:

     

    (i)  any
      agreement (or group of related agreements) for the purchase or sale of raw
      materials, commodities, supplies, products, or other personal property, or
      for
      the furnishing or receipt of services, the performance of which will extend
      over
      a period of more than 1 year, result in a Material loss to Company or any of
      its
      Subsidiaries, or involve consideration in excess of $500,000;

     

    (ii)  any
      agreement concerning a partnership or joint venture;

     

    (iii)  any
      agreement (or group of related agreements) under which it has created, incurred,
      assumed, or guaranteed any indebtedness for borrowed money, or any capitalized
      lease obligation, in excess of $1,000,000 or under which it has imposed a Lien
      on any of its assets, tangible or intangible;

     

    (iv)  any
      Material agreement concerning confidentiality or non-competition;

     

    (v)  any
      agreement with any of Sellers and their Affiliates (other than Company and
      its
      Subsidiaries);

     

    (vi)  any
      profit sharing, stock option, stock purchase, stock appreciation, deferred
      compensation, severance, or other plan or arrangement for the benefit of its
      current or former directors, officers, and employees;

     

    (vii)  any
      Collective Bargaining Agreement;

     

    (viii)  any
      agreement for the employment of any individual on a full-time, part-time,
      consulting, or other basis providing annual compensation in excess of $100,000
      or providing severance benefits;

     

    (ix)  any
      agreement under which it has advanced or loaned any amount to any of its
      directors, officers, and employees outside the Ordinary Course of
      Business;

     

    (x)  any
      agreement under which it has granted any Person any registration rights
      (including, without limitation, demand and piggyback registration
      rights);

     

    (xi)  any
      settlement, conciliation or similar agreement, the performance of which will
      involve payment after the Closing Date of consideration in excess of
      $100,000;

     

    (xii)  any
      agreement under which Company or any of its Subsidiaries has advanced or loaned
      any other Person amounts in the aggregate exceeding $25,000;

     

    (xiii)  any
      other
      agreement (or group of related agreements) the performance of which involves
      consideration in excess of $100,000; or

     

    (xiv)  any
      other
      agreement with a remaining term longer than three months that, if terminated
      by
      the Company, would result in a Liability or Adverse Consequence to the Company
      greater than $50,000.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    The
      Company has made available to Purchaser a correct and complete copy of each
      written agreement (as amended to date) listed in Section 4(q) of the Disclosure
      Schedule and a written summary setting forth the terms and conditions of each
      oral agreement referred to in Section 4(q) of the Disclosure Schedule. With
      respect to each such agreement: (A) the agreement is legal, valid, binding,
      enforceable, and in full force and effect; (B) the agreement will continue
      to be
      legal, valid, binding, enforceable, and in full force and effect on identical
      terms following the consummation of the transactions contemplated hereby; (C)
      none of the Company or its Subsidiaries are, and to the Knowledge of any Seller,
      the Company or any of its Subsidiaries no other party is, in breach or default,
      and no event has occurred that with notice or lapse of time would constitute
      a
      breach or default, or permit termination, modification, or acceleration, under
      the agreement; and (D) no party has repudiated any provision of the
      agreement.

     

    (r)  Notes
      and Accounts Receivable.
      All
      notes and accounts receivable of Company and its Subsidiaries are reflected
      properly on their books and records, are valid receivables subject, to the
      Knowledge of any Seller, the Company or any of its Subsidiaries, to no current
      set offs or counterclaims, are current and collectible and, to the Knowledge
      of
      the Sellers, Company or any of the Subsidiaries, there is Basis to believe
      that
      all will be collected in accordance with their terms at their recorded amounts,
      subject only to any unused portion of the reserve for bad debts set forth on
      the
      face of the Most Recent Balance Sheet (rather than in any notes thereto)
      increased or decreased by an amount, if any, added to or subtracted from, as
      the
      case may be, such reserve since June 30, 2005, which amount shall not exceed
      the
      net increase or decrease, as the case may be, in the aggregate notes and
      accounts receivable (after write-offs or write-downs of aged or uncollectible
      notes and accounts receivable in the Ordinary Course of Business) multiplied
      by
      a fraction the numerator of which is the amount of the reserve for bad debts
      set
      forth on the face of the Most Recent Balance Sheet (rather than in any notes
      thereto) and the denominator of which is the amount of all notes and accounts
      receivable set forth on the Most Recent Balance Sheet (rather than in any notes
      thereto).

     

    (s)  Powers
      of Attorney.
      There
      are no outstanding powers of attorney executed on behalf of Company or any
      of
      its Subsidiaries.

     

    (t)  Insurance.
      Section
      4(t) of the Disclosure Schedule sets forth the following information with
      respect to each insurance policy (including policies providing property,
      casualty, Liability, and workers’ compensation coverage and bond and surety
      arrangements) to which Company or any of its Subsidiaries has been a party,
      a
      named insured, or otherwise the beneficiary of coverage at any time within
      the
      past 5 years:

     

    (i)  the
      name,
      address, and telephone number of the agent;

     

    (ii)  the
      name
      of the insurer, the name of the policyholder, and the name of each covered
      insured;

     

    (iii)  the
      policy number and the period of coverage;

     

    (iv)  the
      scope
      (including an indication of whether the coverage was on a claims made,
      occurrence, or other basis) and amount (including a description of how
      deductibles and ceilings are calculated and operate) of coverage;
      and

     

    (v)  a
      description of any retroactive premium adjustments or other loss-sharing
      arrangements.

     

    With
      respect to each such insurance policy: (A) the policy is legal, valid, binding,
      enforceable, and in full force and effect; (B) the policy will continue to
      be
      legal, valid, binding, enforceable, and in full force and effect on identical
      

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    terms
      following the consummation of the transactions contemplated hereby; (C) neither
      the Company nor any of its Subsidiaries are, and to the Knowledge of any Seller,
      the Company or any of its Subsidiaries, no other party to the policy is, in
      breach or default (including with respect to the payment of premiums or the
      giving of notices), and no event has occurred that, with notice or the lapse
      of
      time, would constitute such a breach or default, or permit termination,
      modification, or acceleration, under the policy; and (D) no party to the policy
      has repudiated any provision thereof. Each of Company and its Subsidiaries,
      have
      been covered since December 19, 2003 during the past 5 years by insurance in
      scope and amount customary and reasonable for the businesses in which they
      have
      engaged during the aforementioned period. Section 4(t) of the Disclosure
      Schedule describes any self-insurance arrangements affecting Company or any
      of
      its Subsidiaries.

     

    (u)  Litigation.
      Section
      4(u) of the Disclosure Schedule sets forth each instance in which Company or
      any
      of its Subsidiaries (i) is subject to any outstanding injunction, judgment,
      order, decree, ruling, or charge or (ii) is a party or, to the Knowledge of
      the
      Company, its Subsidiaries and any of Sellers, is threatened to be made a party,
      to any action, suit, proceeding, hearing, or investigation of, in, or before
      any
      court or quasi-judicial or administrative agency of any federal, state, local,
      or foreign jurisdiction or before any arbitrator. None of the Company, its
      Subsidiaries or any of the Sellers has any reason to reasonably believe that
      any
      such action, suit, proceeding, hearing, or investigation may be brought or
      threatened against Company or any of its Subsidiaries; except where any such
      action, suit, proceeding, hearing or investigation would not be Material to
      the
      Company or its Subsidiaries.

     

    (v)  Product
      Warranty.
      To the
      Knowledge of any Seller, Company or its Subsidiaries, each product manufactured,
      sold, leased, or delivered by Company or any of its Subsidiaries has been in
      conformity with all applicable contractual commitments and all express and
      implied warranties, and neither Company nor any of its Subsidiaries has any
      Liability for replacement or repair thereof or other damages in connection
      therewith, subject only to the reserve for product warranty claims set forth
      on
      the face of the Most Recent Balance Sheet (rather than in any notes thereto).
      Section 4(v) of the Disclosure Schedule includes copies of the standard terms
      and conditions of sale or lease for each of Company and its Subsidiaries
      (containing applicable guaranty, warranty, and indemnity provisions). No product
      manufactured, sold, leased, or delivered by Company or any of its Subsidiaries
      is subject to any guaranty, warranty, or other indemnity beyond the applicable
      standard terms and conditions of sale or lease set forth in Section 4(v) of
      the
      Disclosure Schedule.

     

    (w)  Product
      Liability. Neither
      Company nor any of its Subsidiaries has any Liability (and, to the Knowledge
      of
      any Seller, Company or its Subsidiaries, there is no Basis for any present
      or
      future action, suit, proceeding, hearing, investigation, charge, complaint,
      claim, or demand against any of them giving rise to any Liability) arising
      out
      of any injury to individuals or property as a result of the ownership,
      possession, or use of any product manufactured, sold, leased, or delivered
      by
      Company or any of its Subsidiaries.

     

    (x)  Employees. 

     

    (i)  With
      respect to the business of Company and its Subsidiaries:

     

    (A)  there
      is
      no Collective Bargaining Agreement or relationship with any Labor
      Organization;

     

    (B)  to
      the
      Knowledge of any of Sellers, no key executive of Company or any of its
      Subsidiaries (1) has any present intention to terminate his or her employment,
      or (2) is a party to any confidentiality, non-competition, proprietary rights
      or
      other such agreement between such employee and any Person besides such entity
      that would be Material to the performance of such employee’s employment duties,
      or the ability of

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    such
      entity or Purchaser to conduct the business of such entity;

     

    (C)  no
      Labor
      Organization or group of employees has made any written or oral demand for
      recognition, and neither the Company nor any of its Subsidiaries has received
      notice of the filing of any representation petition;

     

    (D)  to
      the
      Knowledge of any of Sellers, Company, or any of its Subsidiaries, no union
      organizing or decertification efforts are underway or threatened and no other
      question concerning representation exists;

     

    (E)  no
      labor
      strike, work stoppage, slowdown, or other Material labor dispute has occurred
      within the past two years, and none is underway or, to the Knowledge of Company
      or any of its Subsidiaries, threatened;

     

    (F)  except
      as
      accrued on the Most Recent Balance Sheet, there is no workmans compensation
      Liability, experience or matter that would be Material to the Company and its
      Subsidiaries;

     

    (G)  there
      is
      no material employment-related charge, complaint, grievance, investigation,
      arbitration, inquiry or obligation of any kind pending or, to the Knowledge
      of
      any of Sellers, Company or any of its Subsidiaries, threatened, in any forum,
      relating to an alleged violation or breach by Company or any of its Subsidiaries
      (or its or their officers or directors) of any law, regulation or contract;
      and,

     

    (H)  no
      employee or agent of Company or any of its Subsidiaries has committed any act
      or
      omission giving rise to Material Liability for any violation or breach
      identified in subsection (G) above.

     

    (ii)  Except
      as
      set forth in Section 4(x) of the Disclosure Schedule, (A) there are no
      employment contracts or severance agreements with any employees of Company
      or
      any of its Subsidiaries, requiring payments in excess of $100,000, and (B)
      there
      are no material written personnel policies, rules or procedures, and no employee
      handbooks or affirmative action plans, applicable to employees of Company or
      any
      of its Subsidiaries.

     

    (iii)  With
      respect to this Agreement and the transactions contemplated thereby, any notice
      required under any Collective Bargaining Agreement has been given and any rights
      resulting from any such notice or obligation have expired without exercise.
      Any
      notice or bargaining obligations with respect to any employee representative
      arising by operation of law have been, or prior to the Closing Date will be,
      satisfied. Notwithstanding any failure of the Company to issue preferred stock
      to any Labor Organization, any right of any Labor Organization to elect, remove
      or replace a Director of the Company or its Subsidiaries has been satisfied.
      Within the past two years, neither the Company nor any of its Subsidiaries
      has
      implemented any plant closing or layoff of employees that could implicate the
      Worker Adjustment and Retraining Notification Act of 1998, as amended, or any
      similar foreign, state, or local law, regulation, or ordinance (collectively
      the
“WARN Act”).

     

    (iv)  Each
      of
      any Seller, Company and its Subsidiaries have complied in all Material respects
      with all applicable laws relating to employees and former employees in
      connection with the business of the Company and

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    its
      Subsidiaries including respecting all applicable rules, regulations, statutes,
      codes, plans, injunctions, orders, decrees, awards, rulings, and charges of
      any
      federal, state, local and foreign governments and all agencies
      thereof.

     

    (y)  Employee
      Benefits.

     

    (i)  Section
      4(y) of the Disclosure Schedule lists each Employee Benefit Plan that Company
      or
      any of its Subsidiaries maintains, to which Company or any of its Subsidiaries
      contributes or has any obligation to contribute, or with respect to which
      Company or any of its Subsidiaries has any Material Liability.

     

    (A)  Each
      such
      Employee Benefit Plan (and each related trust, insurance contract, or fund)
      has
      been maintained, funded and administered in accordance in all Material respects
      with the terms of such Employee Benefit Plan and the terms of any applicable
      Collective Bargaining Agreement and complies in form and in operation in all
      Material respects with the applicable requirements of ERISA, the Code, and
      other
      applicable laws.

     

    (B)  All
      Material required reports and descriptions (including Form 5500 annual reports,
      summary annual reports, and summary plan descriptions) have been timely filed
      and/or distributed in accordance with the applicable requirements of ERISA
      and
      the Code with respect to each such Employee Benefit Plan. The requirements
      of
      COBRA have been met in all Material respects with respect to each such Employee
      Benefit Plan and each Employee Benefit Plan maintained by an ERISA Affiliate
      that is an Employee Welfare Benefit Plan subject to COBRA.

     

    (C)  All
      contributions (including all employer contributions and employee salary
      reduction contributions) that are due have been made within the time periods
      prescribed by ERISA and the Code to each such Employee Benefit Plan that is
      an
      Employee Pension Benefit Plan and all contributions for any period ending on
      or
      before the Closing Date that are not yet due have been made to each such
      Employee Pension Benefit Plan or accrued in accordance with the past custom
      and
      practice of Company and its Subsidiaries. All premiums or other payments for
      all
      periods ending on or before the Closing Date that are due have been paid with
      respect to each such Employee Benefit Plan that is an Employee Welfare Benefit
      Plan.

     

    (D)  Other
      than as set forth on Schedule 4(y)(i)(D), each such Employee Benefit Plan that
      is intended to meet the requirements of a “qualified plan” under Code Section
      401(a) has received a favorable determination letter from the Internal Revenue
      Service, and, to the Knowledge of any Seller, Company or any of its
      Subsidiaries, nothing has occurred since the date of such determination that
      could reasonably be expected to adversely affect the qualified status of any
      such Employee Benefit Plan. All such Employee Benefit Plans have been or will
      be
      timely amended for the requirements of the Tax legislation commonly known as
      “GUST” and “EGTRRA” and have been or will be submitted to the Internal Revenue
      Service for a favorable determination letter on the GUST requirements within
      the
      remedial amendment period prescribed by GUST.

     

    (E)  None
      of
      the Company, its Subsidiaries or any employees of the Company or its
      Subsidiaries have, and to the Knowledge of any Seller, the Company or any of
      its
      Subsidiaries no other Person has, engaged in a non-exempt Prohibited Transaction
      with respect to any such Employee Benefit Plan that could result in a Material
      Liability to Company. To the Knowledge of any Seller, Company or any of
      its

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    Subsidiaries,
      no Fiduciary has, or is reasonably expected to have, any Material Liability
      for
      breach of fiduciary duty or any other failure to act or comply in connection
      with the administration or investment of the assets of any such Employee Benefit
      Plan. No action, suit, proceeding, hearing, or investigation with respect to
      the
      administration or the investment of the assets of any such Employee Benefit
      Plan
      (other than routine claims for benefits) is pending or, to the Knowledge of
      any
      Seller, Company or any of its Subsidiaries, threatened.

     

    (F)  Sellers
      have delivered to Purchaser correct and complete copies of the plan documents,
      Material employee communications and most recent summary plan descriptions,
      the
      most recent determination letter received from the Internal Revenue Service,
      the
      most recent annual report (Form 5500, with all applicable attachments) for
      the
      past three years, and the most recent related trust agreements, insurance
      contracts, and other funding arrangements that implement each such Employee
      Benefit Plan.

     

    (ii)  Company
      and its Subsidiaries do not have any Liability under Title IV of ERISA on
      account of any Employee Benefit Plan of an ERISA Affiliate other than Company
      and its Subsidiaries. Except as could not result in a Material Liability to
      the
      Company or any of its Subsidiaries, none of the Company nor any of its
      Subsidiaries nor any ERISA Affiliate has ever maintained, or had any obligation
      with respect to, an Employee Pension Benefit Plan subject to Title IV of
      ERISA.

     

    (iii)  With
      respect to each Employee Benefit Plan that any of Company or its Subsidiaries
      maintains, to which any of them contributes or has any obligation to contribute,
      or with respect to which any of them has any Material Liability:

     

    (A)  No
      such
      Employee Benefit Plan that is an Employee Pension Benefit Plan (other than
      any
      Multiemployer Plan) has been completely or partially terminated or been the
      subject of a Reportable Event. No proceeding by the PBGC to terminate any such
      Employee Pension Benefit Plan (other than any Multiemployer Plan) has been
      instituted or threatened.

     

    (B)  Neither
      Company nor any ERISA Affiliate nor any of its Subsidiaries has incurred, and
      none of Sellers and the directors and officers (and employees with
      responsibility for employee benefits matters) of Company and its Subsidiaries
      has any reason to expect that any of Company and its Subsidiaries will incur,
      any Liability to the PBGC (other than with respect to PBGC premium payments
      not
      yet due) or otherwise under Title IV of ERISA with respect to any such Employee
      Benefit Plan that is an Employee Pension Benefit Plan that could have a Material
      Liability to the Company or any of its Subsidiaries.

     

    (C)  No
      such
      Employee Benefit Plan has an accumulated funding deficiency within the meaning
      of the Code or ERISA, or has applied for or received a waiver of an accumulated
      funding deficiency or an extension of any amortization period, within the
      meaning of Section 412 of the Code or Section 303 or 304 of ERISA; neither
      the
      Company, nor any of its Subsidiaries nor any ERISA Affiliate has incurred any
      Material liability to or on account of such an Employee Benefit Plan pursuant
      to
      Section 409, 502(i), 502(l) or 515 of ERISA or Section 401(a)(29), or 4971
      of
      the Code or reasonably expects to incur any such liability under any of the
      foregoing sections with respect to any such Employee Benefit Plan; no lien
      or
      security interest has been imposed under the Code or ERISA on the assets of
      the
      Company, or any of its Subsidiaries or is likely to

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    arise
      on
      account of any such Employee Benefit Plan. 

     

    (iv)  Neither
      Company, nor any of its Subsidiaries, nor any ERISA Affiliate has incurred
      any
      Material Liability on account of a “partial withdrawal” or a “complete
      withdrawal” (within the meaning of ERISA Sections 4205 and 4203, respectively)
      from any Multiemployer Plan, no such Liability has been asserted, and there
      are
      no events or circumstances that could reasonably be expected to result in any
      such partial or complete withdrawal; and neither Company nor any of its
      Subsidiaries is bound by any contract or agreement or has any Liability
      described in ERISA Section 4204. To the Knowledge of the Company, its
      Subsidiaries, and each of the Sellers, each Multiemployer Plan complies in
      form
      and has been administered in accordance with the requirements of ERISA and,
      where applicable, the Code, and each Multiemployer Plan is qualified under
      Code
      Section 401(a). To the Knowledge of any Seller, the Company or any of its
      Subsidiaries, the Company and its Subsidiaries and their ERISA Affiliates will
      have no Liability in the event of a complete withdrawal from any Multiemployer
      Plan as of the close of the fiscal year of each such Multiemployer Plan ending
      on December 31, 2004. No Multiemployer Plan is insolvent or in reorganization.
      

     

    (v)  The
      present value of any obligation (as calculated in accordance with FASB 135)
      of
      the Company and its Subsidiaries to contribute to, or any Liability with respect
      to, any Employee Welfare Benefit Plan providing health or life insurance or
      other welfare-type benefits for current or future retired or terminated
      directors, officers or employees (or any spouse or other dependent thereof)
      of
      Company or any of its Subsidiaries or of any other Person did not exceed
      $700,000 as of December 31, 2004.

     

    (z)  Guaranties.
      Neither
      Company nor any of its Subsidiaries is a guarantor or otherwise is liable for
      any Liability (including indebtedness) of any other Person who is not Company
      or
      a Subsidiary of Company.

     

    (aa)  Environmental,
      Health, and Safety Matters.

     

    (i)  Each
      of
      Company, its Subsidiaries, have since December 19, 2003 complied in all Material
      respects with and are in Material compliance with all applicable Environmental,
      Health, and Safety Requirements.

     

    (ii)  Without
      limiting the generality of the foregoing, each of Company, its Subsidiaries,
      and
      their respective Affiliates have obtained and since December 19, 2003 have
      complied in all Material respects with, and are in Material compliance with,
      all
      permits, licenses and other authorizations that are required pursuant to
      Environmental, Health, and Safety Requirements for the occupation of the Real
      Property and the operation of their business.

     

    (iii)  Neither
      Company, nor any of its Subsidiaries, nor their respective Predecessors or
      Affiliates has received any written or oral notice, report, complaint,
      directive, demand, information request, investigation, or other information
      regarding any actual or alleged violation by Company or of Environmental,
      Health, and Safety Requirements, or any investigatory, remedial or corrective
      obligations of Company arising under Environmental, Health, and Safety
      Requirements.

     

    (iv)  Neither
      Company, nor any of its Subsidiaries has treated, stored, disposed of, arranged
      for or permitted the disposal of, transported, handled, manufactured,
      distributed, or released any hazardous substance, at any off-site disposal
      facility or at any property or facility owned or operated by the Company or
      its
      Subsidiaries and none of the Real Property is contaminated by any such
      substance, in each case as would give rise to any

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    Material
      investigatory, remedial or corrective obligations of the Company or the
      Subsidiaries under Environmental Law.

     

    (v)  Neither
      this Agreement nor the consummation of the transactions that are the subject
      of
      this Agreement will result in any Liabilities for investigation or cleanup
      of
      the Real Property, or notification to or consent of government agencies or
      third
      parties, pursuant to any of the so-called “transaction-triggered” or
“responsible property transfer” or “environmental transfer” Environmental,
      Health, and Safety Requirements.

     

    (vi)  Neither
      Company, nor any of its Subsidiaries, has designed, manufactured, sold,
      marketed, installed, or distributed products or other items containing asbestos
      and none of such entities is subject to any Asbestos Liabilities.

     

    (vii)  Neither
      Company, nor any of its Subsidiaries has assumed, or has otherwise become
      subject to any Liability of any other Person relating to Environmental, Health,
      and Safety Requirements, including without limitation any obligation for
      corrective or remedial action.

     

    (viii)  No
      facts,
      events or conditions occurring or existing on or prior to the Closing Date
      relating to the past or present facilities, properties or operations of Company,
      its Subsidiaries, or their respective Predecessors or Affiliates will prevent,
      hinder or limit continued compliance with Environmental, Health, and Safety
      Requirements or give rise to any Liabilities for compliance, investigatory,
      remedial or corrective obligations pursuant to Environmental, Health, and Safety
      Requirements.

     

    (ix)  Sellers,
      Company, and its Subsidiaries have made available to Purchaser all environmental
      audits, site assessments and other material environmental documents relating
      to
      Company’s or its Subsidiaries’, past or current properties, facilities, or
      operations that are in their possession or under their reasonable
      control.

     

     

    This
      Section 4(aa) contains the sole and exclusive representations and warranties
      of
      the Sellers and the Company with respect to any environmental, health or safety
      matters, including without limitation, any arising under Environmental, Health
      and Safety Requirements.

     

    (bb)  Reserved.

     

    (cc)  Reserved.

     

    (dd)  Certain
      Business Relationships with Company and Its Subsidiaries.
      Except
      as set forth on Section 4(dd) of the Disclosure Schedule, none of Sellers,
      their
      Affiliates, Sellers’ directors, officers, employees and shareholders and
      Company’s and its Subsidiaries’ respective directors, officers, employees, and
      shareholders has been involved in any business arrangement or relationship
      with
      Company or any of its Subsidiaries within the past 12 months, and none of
      Sellers, their Affiliates, Seller’s directors, officers, employees and
      shareholders and Company’s and its Subsidiaries’ respective directors, officers,
      employees, and shareholders owns any asset, tangible or intangible, that is
      used
      in the business of Company or any of its Subsidiaries.

     

    (ee)  Customers
      and Suppliers. 

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

    (i)  Section
      4(ee) of the Disclosure Schedule lists the 10 largest customers of Company
      (on a
      consolidated basis) for each of the three most recent fiscal years and sets
      forth opposite the name of each such customer the percentage of consolidated
      net
      sales attributable to such customer.

     

    (ii)  Since
      the
      date of the Most Recent Balance Sheet, no Material supplier of Company or any
      of
      its Subsidiaries has indicated that it may stop, or decrease the rate of,
      supplying materials, products or services to Company or any of its Subsidiaries,
      and no customer listed on Section 4(ee) of the Disclosure Schedule has indicated
      that it may stop, or Materially decrease the rate of, buying materials, products
      or services from Company or any of its Subsidiaries.

     

    (ff)  Filings
      with the SEC.
      The
      Company’s Form S-1, as amended by Amendment No. 1, as filed with the SEC and
      delivered by the Company to the Purchaser, and Amendment No. 2 as delivered
      by
      the Company to the Purchaser, as of their respective dates, did not contain
      any
      untrue statement of a material fact or omit to state a material fact necessary
      in order to make the statements made therein, in light of the circumstances
      under which they were made, not misleading.

     

    (gg)  Pre-Closing
      Insurance Proceeds.
      Since
      May 20, 2005 through the Closing Date, the entire amount of Insurance Proceeds
      received by the Company and its Subsidiaries is $4,352,674.01.

     

    (hh)  Disclaimer
      of Other Representations and Warranties.
      Except
      as expressly set forth in this Agreement and except as contained in certificates
      delivered to the Purchaser or its agents prior to or at the Closing pursuant
      to
      any provision of this Agreement, Sellers, the Company or its Subsidiaries make
      no representation or warranty, express or implied, at law or in equity, in
      respect of Company, its Subsidiaries, or any of their respective assets,
      liabilities or operations, and any such other representations or warranties
      are
      hereby expressly disclaimed.

     

    Section
      5.  Pre-Closing
      Covenants. 
      The
      Parties agree as follows with respect to the period between the execution of
      this Agreement and the Closing:

     

    (a)  General.
      Each of the Parties will use his, her, or its best efforts to
      take all actions and to do all things necessary in order to consummate and
      make
      effective the transactions contemplated by this Agreement (including
      satisfaction, but not waiver, of the Closing conditions set forth in Section
      7
      below).

     

    (b)  Notices
      and Consents.
The
      Company and the Subsidiaries will, and Sellers
      will cause each of Company and its Subsidiaries to, give any notices to third
      parties, and the Company and the Subsidiaries will, and Sellers will cause
      each
      of Company and its Subsidiaries to, use their best efforts to obtain any
      third-party consents referred to in Sections 3(a)(ii) and 4(c) above, the Lease
      Consents, and the items set forth on Section 5(b) of the Disclosure Schedule.
      Each of the Parties will (and Sellers will cause each of Company and its
      Subsidiaries to) give any notices to, make any filings with, and use its best
      efforts to obtain any authorizations, consents, and approvals of governments
      and
      governmental agencies in connection with the matters referred to in Section
      3(a)(ii), Section 3(b)(ii), and Section 4(c) above.

     

    (c)  Operation
      of Business.
      Except
      as consented to in writing by the Purchaser, neither the Company nor any of
      its
      Subsidiaries will, and Sellers will not cause or permit Company or any of its
      Subsidiaries to, engage in any practice, take any action, or enter into any
      transaction outside the Ordinary Course of Business. Without limiting the
      generality of the foregoing, the Company and its Subsidiaries will not, and
      Sellers will not cause or permit Company or any of its Subsidiaries to, (i)
      except for the Pre-Sale Distribution, declare, set aside, or pay any dividend
      or
      make any distribution with respect to its capital stock or redeem, purchase,
      or
      otherwise acquire any of its capital stock or

     

    
      
        
        

      

      
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    (ii)
      otherwise engage in any practice, take any action, or enter into any transaction
      of the sort described in Section 4(h) above.

     

    (d)  Preservation
      of Business.
      The
      Company and its Subsidiaries will, and Sellers will cause each of Company and
      its Subsidiaries to, keep their business and properties substantially intact,
      including its present operations, physical facilities, working conditions,
      insurance policies, and relationships with lessors, licensors, suppliers,
      customers, and employees.

     

    (e)  Full
      Access.
      The Company and its Subsidiaries will permit, and Sellers
      will cause each of Company and its Subsidiaries to permit, representatives
      of
      Purchaser (including legal counsel and accountants) to have full access at
      all
      reasonable times, and in a manner so as not to interfere with the normal
      business operations of Company and its Subsidiaries, to all premises,
      properties, personnel, books, records (including Tax records), contracts, and
      documents of or pertaining to each of Company and its Subsidiaries.

     

    (f)  Notice
      of Developments.
      The Company and Sellers will give prompt written
      notice to Purchaser of any material adverse development causing a breach of
      any
      of the representations and warranties in Section 4 above. Each Party will give
      prompt written notice to the others of any material adverse development causing
      a breach of any of his, her, or its own representations and warranties in
      Section 3 above. No disclosure by any Party pursuant to this Section 5(f),
      however, shall be deemed to amend or supplement the Disclosure Schedule or
      to
      prevent or cure any misrepresentation, breach of warranty, or breach of
      covenant.

     

    (g)  Exclusivity.
      None of Sellers will (and the Company and its
      Subsidiaries will not, nor will Sellers cause or permit Company or any of its
      Subsidiaries to) (i) solicit, initiate, or encourage the submission of any
      proposal or offer from any Person relating to the acquisition of any capital
      stock or other voting securities, or any substantial portion of the assets,
      of
      Company or any of its Subsidiaries (including any acquisition structured as
      a
      merger, consolidation, or share exchange) or (ii) participate in any discussions
      or negotiations regarding, furnish any information with respect to, assist
      or
      participate in, or facilitate in any other manner any effort or attempt by
      any
      Person to do or seek any of the foregoing. None of Sellers will vote their
      Shares in favor of any such acquisition. The Company and Sellers will notify
      Purchaser immediately if any Person makes any proposal, offer, inquiry, or
      contact with respect to any of the foregoing.

     

    (h)  Maintenance
      of Real Property.
      The Company and its Subsidiaries will, and
      Sellers will cause each of Company and its Subsidiaries to, maintain the Real
      Property, in substantially the same condition as existed on the date of this
      Agreement, ordinary wear and tear excepted, and shall not demolish or remove
      any
      of the existing Improvements, or erect new improvements on the Real Property
      or
      any portion thereof (provided
      that
      Company and its Subsidiaries shall not be prohibited from (i) continuing
      the erection of new improvements that are in process as of the date hereof
      and
      (ii) erecting new improvements pursuant to Company’s capital improvements
      program), without the prior written consent of Purchaser.

     

    (i)  Leases.
      The Company and its Subsidiaries will not, and Sellers will
      not cause or permit, any of Company’s or its Subsidiaries’ Leases to be amended,
      modified, extended, renewed or terminated, nor shall Company or its Subsidiaries
      enter into any new lease, sublease, license or other agreement for the use
      or
      occupancy of any Real Property, without the prior written consent of
      Purchaser.

     

    (j)  Title
      Insurance and Surveys.
      The Company and its Subsidiaries will, and
      Sellers will cause each of Company and its Subsidiaries to, use their reasonable
      best efforts to assist Purchaser in obtaining the title commitments, title
      policies, updated title policies and surveys in form and substance reasonably
      satisfactory to the Purchaser, including removing from title any Liens or
      encumbrances that are not Permitted Encumbrances. Sellers

     

    
      
        
        

      

      
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    shall
      provide the title company with any affidavits, indemnities, memoranda or other
      assurances reasonably requested by the title company to issue the title
      policies, provided that any Seller shall not be required to undertake or incur
      any Liability under any such affidavits, indemnities, memoranda or other
      assurances in excess of any Liability that it would otherwise have pursuant
      to
      Section 8 of this Agreement. 

     

    (k)  Tax
      Matters.
      Without the prior written consent of Purchaser, which
      consent shall not be unreasonably withheld or delayed, neither Company nor
      any
      of its Subsidiaries shall make or change any election, change an annual
      accounting period, adopt or change any accounting method, file any amended
      Tax
      Return, enter into any closing agreement, settle any Tax claim or assessment
      relating to Company or any of its Subsidiaries, surrender any right to claim
      a
      refund of Taxes, consent to any extension or waiver of the limitation period
      applicable to any Tax claim or assessment relating to Company or any of its
      Subsidiaries, or take any other similar action relating to the filing of any
      Tax
      Return or the payment of any Tax, if such election, adoption, change, amendment,
      agreement, settlement, surrender, consent or other action would have the effect
      of increasing the Tax liability of Company or any of its Subsidiaries for any
      period ending after the Closing Date or decreasing any Tax attribute of Company
      or any of its Subsidiaries existing on the Closing Date.

     

    (l)  Stockholders
      Agreement.
The
      Sellers and the Company, being all the
      parties to that certain Stockholders Agreement dated January 20, 2004 do hereby
      waive their rights thereunder unless and until and only if this Agreement is
      duly terminated by the Sellers in accordance with Section 11 hereof, in which
      case all such waivers shall terminate as of such termination.

     

    Section
      6.  Post-Closing
      Covenants. 
      The
      Parties agree as follows with respect to the period following the
      Closing:

     

    (a)  General.
      In case at any time after the Closing any further actions
      are necessary to carry out the purposes of this Agreement, each of the Parties
      will take such further actions (including the execution and delivery of such
      further instruments and documents) as any other Party may reasonably request,
      all at the sole cost and expense of the requesting Party (unless the requesting
      Party is entitled to indemnification therefor under Section 8
      below). 
      Sellers
      acknowledge and agree that from and after the Closing Purchaser will be entitled
      to possession of all documents, books, records (including Tax records),
      agreements, and financial data of any sort relating to Company and its
      Subsidiaries (the “Company Information”), provided, however, that Purchaser
      shall, and shall cause the Company to, until the seventh anniversary of the
      Closing Date, retain the Company Information and make it available for
      inspection and copying by the Sellers or any representative of the Sellers
      at
      the expense of Sellers during normal business hours of Purchaser or the Company,
      as applicable, upon reasonable request and upon reasonable notice.

     

    (b)  Litigation
      Support.
      In the event and for so long as any Party actively
      is contesting or defending against any action, suit, proceeding, hearing,
      investigation, charge, complaint, claim, or demand in connection with (i) any
      transaction contemplated under this Agreement or (ii) any fact, situation,
      circumstance, status, condition, activity, practice, plan, occurrence, event,
      incident, action, failure to act, or transaction on or prior to the Closing
      Date
      involving Company or any of its Subsidiaries, each of the other Parties will
      cooperate with him, her, or it and his, her, or its counsel in the contest
      or
      defense, make available his, her, or its personnel, and provide such testimony
      and access to his, her, or its books and records as shall be necessary in
      connection with the contest or defense, all at the sole cost and expense of
      the
      contesting or defending Party (unless the contesting or defending Party is
      entitled to indemnification therefor under Section 8 below).

     

    
      
        
        

      

      
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    (c)  Transition.
      None of Sellers will take any action that is designed or
      intended to have the effect of discouraging any lessor, licensor, customer,
      supplier, or other business associate of Company or any of its Subsidiaries
      from
      maintaining the same business relationships with Company and its Subsidiaries
      after the Closing as it maintained with Company and its Subsidiaries prior
      to
      the Closing. Each of Sellers will refer all customer inquiries relating to
      the
      business of Company and its Subsidiaries to Purchaser from and after the
      Closing.

     

    (d)  Confidentiality.
      Each Seller will treat and hold as such all of the
      Confidential Information, refrain from using any of the Confidential Information
      except in connection with this Agreement, and, following expiration of the
      indemnity periods contained in Section 8 hereof, and assuming no outstanding
      claims, deliver promptly to Purchaser or destroy, at the request and option
      of
      Purchaser, all tangible embodiments (and all copies) of the Confidential
      Information that are in his, her, or its possession. In the event that any
      Seller is requested or required pursuant to written or oral question or request
      for information or documents in any legal proceeding, interrogatory, subpoena,
      civil investigative demand, or similar process to disclose any Confidential
      Information, such Seller will notify Purchaser promptly of the request or
      requirement so that Purchaser may seek an appropriate protective order or waive
      compliance with the provisions of this Section 6(d). If, in the absence of
      a
      protective order or the receipt of a waiver hereunder, any of Sellers is
      requested, required or compelled to disclose any Confidential Information to
      any
      tribunal, such Seller may disclose the Confidential Information to the tribunal;
      provided,
      however,
      that
      the disclosing Seller shall use his, her, or its reasonable efforts to obtain,
      at the request of Purchaser, an order or other assurance that confidential
      treatment will be accorded to such portion of the Confidential Information
      required to be disclosed as Purchaser shall designate. The foregoing provisions
      shall not apply to any Confidential Information that is generally available
      to
      the public immediately prior to the time of disclosure unless such Confidential
      Information is so available due to the actions of a Seller.

     

    (e)  Covenant
      Not to Compete.
      For a period of 18 months from and after the
      Closing Date, none of Sellers (other than Contrarian Funds LLC (“Contrarian”) or
      any of Joseph Kaczka, John George, James Thielens, Noel Huettich and John
      Willoughly (the “Managers”) in the event such Manager is terminated without
      severance of at least 18 months) will engage directly or indirectly in the
      production and sale of special bar quality steel (the “Business”), other than as
      an officer or director of the Company, in any geographic area in which Company
      or any of its Subsidiaries conducts the Business as of the Closing Date.
      Purchaser acknowledges that the foregoing restriction shall not restrict any
      Seller from (i) owning less than 10% of the outstanding stock of any publicly
      traded corporation that is engaged in the Business, (ii) providing debt
      financing to any Person engaged in the Business or (iii) having an ownership
      interest in any Person that derives less than twenty percent (20%) of sales
      revenue from the Business. If the final judgment of a court of competent
      jurisdiction declares that any term or provision of this Section 6(e) 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.

     

    (f)  Non-solicitation.
      For a period of 18 months from and after the Closing
      Date, none of the Sellers (other than Contrarian) will solicit, attempt to
      solicit, encourage or otherwise induce, directly or indirectly, any of the
      Company’s customers (or any contemplated future customers), vendors, suppliers,
      distributors, contractors or other third parties to terminate or adversely
      modify any existing business relationship with the Company, or to establish
      a
      business relationship with another person or entity engaged in the Business.
      This restriction applies to any person or entity that any of the Sellers know,
      or reasonably should know, is one of the Company’s customers as well as
      any

     

    
      
        
        

      

      
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    person
      or
      entity that any of the Sellers know, or reasonably should know, is in
      discussions with the Company about a potential or actual business
      relationship.

     

    (g)  Insurance
      Proceeds.
      The Company and each Seller agree that the
      Representative will have sole control and decision-making authority with respect
      to the negotiation and resolution of the claims to which the Insurance Proceeds
      relate (including selection of legal counsel and other outside consultants)
      and
      will receive the full cooperation of the Company’s management, in each case
      consistent with past custom and practice; provided,
      however,
      that in
      the negotiation and resolution of the claims, the Representative may only
      contact Joseph Lapinsky (“Lapinsky”), who will manage the Company’s time and
      resources spent on matters related to the Insurance Proceeds; provided,
      further,
      however, that in the event that Lapinsky becomes unavailable, the Company shall
      provide another person reasonably acceptable to Representative that the
      Representative may contact. If the Representative fails to respond in a timely
      manner or otherwise fails to act to timely resolve the claims relating to the
      Insurance Proceeds, the Purchaser, following 30 days notice to the
      Representative (with an opportunity within that period by Representative to
      cure, provided,
      however,
      that if
      any relevant statute of limitations or contract right will terminate within
      30
      days of such notice with the consequence that the claims relating to the
      Insurance Proceeds may be adversely effected, Representative will have no right
      to cure and Purchaser or the Company will assume control), will assume sole
      control and decision-making authority (including selection of legal counsel
      and
      other outside consultants) with respect to the negotiation and resolution of
      such claims. The Parties may not settle any claims relating to the Insurance
      Proceeds without the consent of either the Company or the Representative, as
      the
      case may be, which consent shall not be unreasonably withheld, conditioned
      or
      delayed. The Representative will give prompt notice to the Company of all
      material developments relating to the Insurance Proceeds. The actual third
      party
      costs incurred by the Company or its Subsidiaries that are directly associated
      with the negotiation and resolution of the claims to which the Insurance
      Proceeds relate shall be borne 55% by the Representative and 45% by the Company.
      Representative shall promptly reimburse the Company for all such expenses upon
      receipt of an invoice from the Company.

     

    (h)  Maintenance
      of Net Worth.
      Perry Partners LP and Perry Partners International
      Inc. covenant that until December 31, 2008, each will remain in good standing
      and retain a net worth based on GAAP sufficient to satisfy the maximum of its
      possible indemnification obligations under this Agreement.

     

    (i)  Tax
      Returns.
      Without
      the prior written consent of the Sellers, which consent will not be unreasonably
      withheld, delayed or conditioned, Purchaser shall not make or change any Tax
      election of Company or its Subsidiaries, or file any amended Tax Return for
      Company and its Subsidiaries, in each case if such election or amended Tax
      Return would have the effect of increasing the Sellers’ indemnification
      liability under Section 8, except as otherwise required by law.

     

    (j)  Security
      for Additional Purchase
      Price.
      As soon
      as permitted under the Company’s or any of its Subsidiaries’ debt documentation,
      the Purchaser will, at the Representative’s election, either (a) cause Republic
      Engineered Products, Inc. to grant a security interest, in the portion of the
      Insurance Proceeds payable to the Sellers,to the Representative to secure
      payment of the Additional Purchase Price to the Sellers or (b) covenant not
      to
      encumber such portion of the Insurance Proceeds.

     

    Section
      7.  Conditions
      to Obligation to Close. 

     

    (a)  Conditions
      to Purchaser’s
      Obligation.
      Purchaser’s obligation to consummate the transactions to be performed by it in
      connection with the Closing is subject to satisfaction of the following
      conditions:

     

    
      
        
        

      

      
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    (i)  The
      representations and warranties set forth in Section 3(a) and Section 4 above
      shall be true and correct in all material respects at and as of the Closing
      Date, and no breach of the representations and warranties, individually or
      in
      the aggregate, will cause a Material Adverse Effect except to the extent that
      such representations and warranties are qualified by the terms “material” or
“Material,” or contain terms such as “Material Adverse Effect” or “Material
      Adverse Change,” in which case such representations and warranties (as so
      written, including the term “material” or “Material”) shall be true and correct
      in all respects at and as of the Closing Date;

     

    (ii)  Sellers
      and Company shall have performed and complied with all of their covenants
      hereunder in all material respects through the Closing, except to the extent
      that such covenants are qualified by the terms “material” or “Material” or
      contain terms such as “Material Adverse Effect” or “Material Adverse Change,” in
      which case Sellers shall have performed and complied with all of such covenants
      (as so written, including the term “material” or “Material”) in all respects
      through the Closing;

     

    (iii)  Company
      and its Subsidiaries shall have procured all of the third-party consents
      specified in Section 5(b) above;

     

    (iv)  no
      action, suit, or proceeding shall be pending or, to the Knowledge of the Company
      and its Subsidiaries or any of the Sellers, threatened before any court or
      quasi-judicial or administrative agency of any federal, state, local, or foreign
      jurisdiction or before any arbitrator wherein an unfavorable injunction,
      judgment, order, decree, ruling, or charge would (A) prevent consummation of
      any
      of the transactions contemplated by this Agreement, (B) cause any of the
      transactions contemplated by this Agreement to be rescinded following
      consummation, (C) adversely affect the right of Purchaser to own the Shares
      and
      to control Company and its Subsidiaries, or (D) adversely affect the right
      of
      Company or any of its Subsidiaries to own its assets and to operate its business
      (and no such injunction, judgment, order, decree, ruling, or charge shall be
      in
      effect);

     

    (v)  Sellers
      and Company shall have delivered to Purchaser a certificate to the effect that
      each of the conditions specified above in Section 7(a)(i)-(iv) is satisfied
      in
      all respects;

     

    (vi)  
      all
      applicable waiting periods (and any extensions thereof) under the
      Hart-Scott-Rodino Act shall have expired or otherwise been terminated and the
      Parties, Company, and its Subsidiaries shall have received all other
      authorizations, consents, and approvals of governments and governmental agencies
      referred to in Section 3(a)(ii), Section 3(b)(ii), and Section 4(c)
      above;

     

    (vii)  the
      relevant parties shall have executed the amendment relating to the waiver of
      prepayment penalties in form and substance as set forth in Exhibits C attached
      hereto and the same shall be in full force and effect;

     

    (viii)  Purchaser
      shall have received from counsel to Company and Sellers an opinion in form
      and
      substance reasonably satisfactory to Purchaser dated as of the Closing
      Date;

     

    (ix)  Purchaser
      shall have received the resignations, effective as of the Closing, of each
      director of Company and its Subsidiaries other than those whom Purchaser shall
      have specified in writing prior to the Closing;

     

    
      
        
        

      

      
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    (x)  all
      actions to be taken by Sellers in connection with consummation of the
      transactions contemplated hereby and all certificates, opinions, instruments,
      and other documents required to effect the transactions contemplated hereby
      shall be reasonably satisfactory in form and substance to
      Purchaser;

     

    (xi)  Purchaser
      shall have obtained, or received evidence of already existing, title policies
      and surveys for all Owned Real Property of the Company and its Subsidiaries,
      in
      all cases in form and substance reasonably satisfactory to the
      Purchaser;

     

    (xii)  Company
      and its Subsidiaries shall have obtained and delivered to Purchaser a written
      consent with respect to the transactions contemplated by this Agreement for
      each
      of the Leases set forth on Schedule 4(e)(ii) which may require a consent from
      the other party to the Lease pursuant to the terms thereof, and, if requested
      by
      Purchaser’s lender, a waiver of landlord liens, collateral assignment of lease
      or leasehold mortgage from the landlord or other party whose consent thereto
      is
      required under such Lease (the “Lease
      Consents”),
      in
      form and substance reasonably satisfactory to Purchaser and Purchaser’s
      lender;

     

    (xiii)  Company
      and its Subsidiaries shall have executed mutual releases with each Seller and
      each director and officer of the Company and Subsidiaries;

     

    (xiv)  Sellers
      and the Company shall have delivered to Purchaser a properly executed statement
      from the Company satisfying the requirements of Treasury Regulation Sections
      1.897-2(h) and 1.1445-2(c)(3) in a form reasonably acceptable to Purchaser
      (the
“FIRPTA Affidavit”);

     

    (xv)  no
      damage
      or destruction or other change has occurred with respect to any of the Real
      Property or any portion thereof that, individually or in the aggregate, would
      materially impair the use or occupancy of the Real Property or the operation
      of
      Company’s or its Subsidiaries’ business as currently conducted
      thereon;

     

    (xvi)  Company
      and Subsidiaries shall have delivered to Purchaser copies of the certificate
      of
      incorporation or
      formation, as
      applicable, certified on or soon before the Closing Date by the Secretary of
      State (or comparable officer) of the jurisdiction of each such Person’s
      incorporation (or formation);

     

    (xvii)  Company
      and Sellers shall have delivered to Purchaser copies of the certificate of
      good
      standing of each entity Seller, Company, and Company Subsidiary issued on or
      soon before the Closing Date by the Secretary of State (or comparable officer)
      of the jurisdiction of each such Person’s organization;

     

    (xviii)  Company
      and Sellers shall have delivered to Purchaser a certificate of the secretary
      or
      an assistant secretary of each of entity Sellers, dated the Closing Date, in
      form and substance reasonably satisfactory to Purchaser, as to: (i) the
      resolutions of the board of directors or other authorizing body (or a duly
      authorized committee thereof) of such Seller authorizing the execution,
      delivery, and performance of this Agreement and the transactions contemplated
      hereby; and (ii) incumbency and signatures of the officers of such Seller
      executing this Agreement or any other agreement contemplated by this Agreement;
      and

     

    (xix)  The
      executive officers of the Company or any Subsidiary shall have waived their
      rights to any payments of compensation or vesting of stock awards or options
      to
      the extent that such payment or vesting would result in an excess parachute
      payment within the meaning of Section 280G of the Code.

     

    
      
        
        

      

      
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    Purchaser
      may waive any condition specified in this Section 7(a) if it executes a writing
      so stating at or prior to the Closing.

     

    (b)  Conditions
      to Sellers’
Obligation.
The
      obligation of Sellers to consummate
      the transactions to be performed by them in connection with the Closing is
      subject to satisfaction of the following conditions:

     

    (i)  the
      representations and warranties set forth in Section 3(b) above shall be true
      and
      correct in all material respects at and as of the Closing Date, the except
      to
      the extent that such representations and warranties are qualified by the terms
      “material” or “Material” or contain terms such as “Material Adverse Effect” or
“Material Adverse Change,” in which case such representations and warranties (as
      so written, including the term “material” or “Material”) shall be true and
      correct in all respects at and as of the Closing Date;

     

    (ii)  Purchaser
      shall have performed and complied with all of its covenants hereunder in all
      material respects through the Closing, except to the extent that such covenants
      are qualified by the term “material,” or contain terms such as “Material Adverse
      Effect” or “Material Adverse Change,” in which case Purchaser shall have
      performed and complied with all of such covenants (as so written, including
      the
      term “material” or “Material”) in all respects through the Closing;

     

    (iii)  no
      action, suit, or proceeding shall be pending, or to the Knowledge of the
      Purchaser, threatened, before any court or quasi-judicial or administrative
      agency of any federal, state, local, or foreign jurisdiction or before any
      arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling,
      or charge would (A) prevent consummation of any of the transactions contemplated
      by this Agreement or (B) cause any of the transactions contemplated by this
      Agreement to be rescinded following consummation (and no such injunction,
      judgment, order, decree, ruling, or charge shall be in effect);

     

    (iv)  Purchaser
      shall have delivered to Sellers a certificate to the effect that each of the
      conditions specified above in Section 7(b)(i)-(iii) is satisfied in all
      respects;

     

    (v)  all
      applicable waiting periods (and any extensions thereof) under the
      Hart-Scott-Rodino Act shall have expired or otherwise been terminated and the
      Parties, Company, and its Subsidiaries shall have received all other
      authorizations, consents, and approvals of governments and governmental agencies
      referred to in Section 3(a)(ii), Section 3(b)(ii), and Section 4(c)
      above;

     

    (vi)  the
      relevant parties shall have executed the amendment relating to the waiver of
      prepayment penalties in form and substance as set forth in Exhibit C and the
      same shall be in full force and effect;

     

    (vii)  Sellers
      shall have received from counsel to Purchaser an opinion in form and substance
      as set forth in Exhibit E attached hereto, addressed to Sellers, and dated
      as of
      the Closing Date; and

     

    (viii)  all
      actions to be taken by Purchaser in connection with consummation of the
      transactions contemplated hereby and all certificates, opinions, instruments,
      and other documents required to effect the transactions contemplated hereby
      will
      be satisfactory in form and substance to Sellers.

     

    
      
        
        

      

      
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    Sellers
      may waive any condition specified in this Section 7(b) if they execute a writing
      so stating at or prior to the Closing.

     

    Section
      8.  Remedies
      for Breaches of This Agreement.

     

    (a)  Survival
      of Representations and Warranties.

     

    All
      of
      the representations and warranties and covenants of Sellers contained in this
      Agreement shall survive the Closing hereunder (even if Purchaser knew or had
      reason to know of any misrepresentation or breach of warranty at the time of
      Closing) and continue in full force and effect for a period of one year
      thereafter, except, however, that the survival period for breach of
      representations and warranties contained in Section 3 shall be indefinite and
      the survival period for the indemnities provided in Sections 8(b)(i)(B) and
      (C)
      below shall be until and including December 31, 2008. The representations,
      warranties and covenants of the Company shall not survive the closing of the
      transaction.

     

    (b)  Indemnification
      Provisions for Purchaser’s
      Benefit.

     

    (i)  If
      Purchaser makes a written claim for indemnification against any Seller pursuant
      to Section 12(h) below within the applicable survival period, if any,
with
      respect to an Adverse Consequence resulting from, arising out of, relating
      to,
      in the nature of, or caused by:

     

    (A)  the
      breach by any Seller (or in the event any third party alleges facts that, if
      true, would mean any Seller has breached) of any of his, her, or its
      representations, warranties, and covenants contained herein, other than those
      representations and warranties contained in Section 4(aa) (Environmental, Health
      and Safety Matters);

     

    (B)  any
      pre-Closing condition or other non-compliance with the Environmental, Health
      and
      Safety Requirements not
      set
      forth on Exhibit D attached hereto; or

     

    (C)  any
      condition or other non-compliance with Environmental, Health and Safety
      Requirements with respect to the matters set forth on Exhibit D attached hereto;
      

     

    then
      each
      Seller shall be obligated, in the case of Perry Partners LP and Perry Partners
      International Inc., jointly and severally for each other’s proportionate share
      of the Purchase Price, and in the case of each other Seller, severally, to
      indemnify Purchaser from and against the entirety of any Adverse Consequences
      Purchaser may suffer (including any Adverse Consequences Purchaser may suffer
      after the end of any applicable survival period with respect to claims for
      indemnification against any Seller within the applicable survival
      period);

     

    except,
      however,
      that

     

    (D)  in
      the
      case of Section 8(b)(i)(A) (non-environmental, health and safety matters) above,
      Sellers shall not have any obligation to indemnify Purchaser from and against
      any Adverse Consequences resulting from, arising out of, relating to, in the
      nature of, or caused by the breach (or alleged breach) of any representation
      or
      warranty of Sellers contained in this Agreement until and then only to the
      extent that Purchaser has suffered Adverse Consequences by reason of all such
      breaches (or alleged breaches) in excess of a $1,000,000 in the aggregate;
      provided,
      further,
      that,
      the maximum amount of indemifiable Adverse Consequences 

     

    
      
        
        

      

      
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    which
      may
      be recovered pursuant to Section 8(b)(i)(A) shall be $10,000,000;

     

    (E)  in
      the
      case of Section 8(b)(i)(B) and (C) above, Sellers shall not have any obligation
      to indemnify Purchaser from and against any Adverse Consequences in excess
      of
      $20,000,000, and only after giving effect to the insurance policy deductibles
      already in place at the Closing Date, the application of net insurance proceeds,
      the current unused reserve for environmental remediation Liabilities as set
      forth on the Most Recent Balance Sheet and, in the case of Section 8(b)(i)(C),
      the Sellers shall not have any obligation to indemnify Purchaser from and
      against any Adverse Consequences in excess of 50% of such Adverse Consequences
      and after a deductible of $1,000,000; and

     

    (F)  neither
      Contrarian nor any Seller who is an individual shall have any obligation to
      indemnify Purchaser in excess of such Seller’s proportionate share of the
      indemnification obligation of all Sellers based on such Seller’s proportionate
      share of the Purchase Price.

     

    (ii)  The
      indemnification obligations of Seller set forth in Section 8(b)(i)(B) and(C)
      hereof, as they relate to any environmental investigative, remedial, corrective,
      cleanup, or compliance action and any Adverse Consequences arising therefrom,
      shall be limited to those actions that are (a) affirmatively required by
      Environmental, Health and Safety Requirements, (b) necessary to reduce levels
      of
      contamination at the relevant Real Property to comply with applicable cleanup
      standards established under Environmental, Health and Safety Requirements,
      or
      (c) necessary for the Company and its Subsidiaries to attain compliance with
      Environmental Laws; in each case assuming continued industrial use of the
      relevant Real Property and employing risk based standards and institutional
      controls where available. The indemnification obligation of Seller shall not
      include Adverse Consequences arising from any action, not otherwise required
      by
      law, of Purchaser or Company to initiate or prompt a claim against Company
      or
      any action where the primary purpose is to trigger Seller’s indemnification
      obligation provided in this Agreement.

     

    (c)  Matters
      Involving Third
      Parties.

     

    (i)  If
      any
      third party notifies any Party (the “Indemnified
      Party”)
      with
      respect to any matter (a “Third-Party
      Claim”)
      that
      may give rise to a claim for indemnification against any other Party (the
“Indemnifying
      Party”)
      under
      this Section 8, then the Indemnified Party shall promptly notify each
      Indemnifying Party thereof in writing; provided,
      however,
      that no
      delay on the part of the Indemnified Party in notifying any Indemnifying Party
      shall relieve the Indemnifying Party from any obligation hereunder unless (and
      then solely to the extent) the Indemnifying Party is thereby
      prejudiced.

     

    (ii)  Any
      Indemnifying Party will have the right to defend the Indemnified Party against
      the Third-Party Claim with counsel of his, her, or its choice reasonably
      satisfactory to the Indemnified Party so long as (A) the Indemnifying Party
      notifies the Indemnified Party in writing within 15 days after the Indemnified
      Party has given notice of the Third-Party Claim that the Indemnifying Party
      will
      indemnify the Indemnified Party from and against the entirety of any Adverse
      Consequences the Indemnified Party may suffer resulting from, arising out of,
      relating to, in the nature of, or caused by the Third-Party Claim, (B) the
      Third-Party Claim involves only money damages and does not seek an injunction
      or
      other equitable relief, (D) settlement of, or an adverse judgment with respect
      to, the Third-Party Claim is not, in the good faith judgment of the Indemnified
      Party, likely to

     

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    

     

    establish
      a precedential custom or practice materially adverse to the continuing business
      interests or the reputation of the Indemnified Party, and (E) the Indemnifying
      Party conducts the defense of the Third-Party Claim actively and
      diligently.

     

    (iii)  So
      long
      as the Indemnifying Party is conducting the defense of the Third-Party Claim
      in
      accordance with Section 8(c)(ii) above, the Indemnified Party may retain
      separate co-counsel at his, her, or its sole cost and expense and participate
      in
      the defense of the Third-Party Claim. In any event, the Indemnified Party will
      not consent to the entry of any judgment on or enter into any settlement with
      respect to the Third-Party Claim without the prior written consent of the
      Indemnifying Party (not to be unreasonably withheld), and (C) the Indemnifying
      Party will not consent to the entry of any judgment on or enter into any
      settlement with respect to the Third-Party Claim without the prior written
      consent of the Indemnified Party (not to be unreasonably withheld).

     

    (iv)  In
      the
      event any of the conditions in Section 8(c)(ii) above is or becomes unsatisfied,
      however, (A) the Indemnified Party may defend against, and consent to the entry
      of any judgment on or enter into any settlement with respect to, the Third-Party
      Claim in any manner his, her, or it may reasonably deem appropriate (and the
      Indemnified Party need not consult with, or obtain any consent from, any
      Indemnifying Party in connection therewith), (B) the Indemnifying Parties will
      reimburse the Indemnified Party promptly and periodically for the costs of
      defending against the Third-Party Claim (including reasonable attorneys’ fees
      and expenses), and (C) the Indemnifying Parties will remain responsible for
      any
      Adverse Consequences the Indemnified Party may suffer resulting from, arising
      out of, relating to, in the nature of, or caused by the Third-Party Claim,
      subject to the limitations set forth in Section 8(b).

     

    (d)  Exclusive
      Remedy.
      Purchaser and Sellers acknowledge and agree that, except in the (i) event of
      fraud, willful breach, or violation of securities laws, and (ii) the application
      of any equitable remedies, the foregoing indemnification provisions in this
      Section 8 are the exclusive remedy of Purchaser and Sellers under or in
      connection with this Agreement and the transactions contemplated
      hereby. 

     

    (e)  Determination
      of Adverse
      Consequences.
      The
      Parties shall take into account the time cost of money (using the Applicable
      Rate as the discount rate) in determining Adverse Consequences for purposes
      of
      this Section 8, which Applicable Rate shall begin to accrue on the date the
      claim is made through the final resolution and payment of such claim. All
      indemnification payments under this Section 8 shall be deemed adjustments to
      the
      Purchase Price.

     

    (f)  Nature
      of Sellers’
Obligations.
      The
      covenants of each Seller in Section 2(a) above concerning the sale of his,
      her,
      or its Shares to Purchaser and the representations and warranties of each Seller
      in Section 3(a) above concerning the transaction are individual, and not joint
      and several, obligations. This means that the particular Seller making the
      representation, warranty, or covenant shall be solely responsible to the extent
      provided in Section 8(b)(ii) above for any Adverse Consequences Purchaser may
      suffer as a result of any breach thereof, except, however, that the obligation
      of each Seller shall not be limited as provided by Section 8(b)(ii) but shall
      be
      limited to the extent of the proportionate share of the Purchase Price paid
      or
      owed to such Seller.

     

    Section
      9.  Tax
      Matters.
      The following provisions shall govern the allocation of
      responsibility as between Purchaser and Sellers for certain tax matters
      following the Closing Date:

     

    (a)  Responsibility
      for Filing Tax
      Returns.
Purchaser
      shall prepare or cause to be
      prepared and file or cause to be filed all Tax Returns for Company and its
      Subsidiaries that are filed after the Closing Date. Any such Tax Return relating
      in whole or in part to a period prior to or including the Closing Date (each,
      “Pre-Closing
      Tax Return”)
      shall
      be prepared in accordance with past custom and practice of the Company and
      its
      Subsidiaries except as

     

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

     

    otherwise
      required by law. Each Pre-Closing Tax Return shall be subject to review and
      approval by the Representative prior to filing, which approval shall not be
      unreasonably withheld, delayed or conditioned.

     

    (b)  Cooperation
      on Tax Matters.

     

    (i)  Purchaser,
      Company and its Subsidiaries, and Sellers shall cooperate fully, as and to
      the
      extent reasonably requested by the other Party, in connection with the filing
      of
      Tax Returns pursuant to this Section 9(c) and any audit, litigation or other
      proceeding with respect to Taxes. Such cooperation shall include the retention
      and (upon the other Party’s request) the provision of records and information
      that are reasonably relevant to any such audit, litigation or other proceeding
      and making employees available on a mutually convenient basis to provide
      additional information and explanation of any material provided hereunder.
      Company and its Subsidiaries and Sellers agree (A) to retain all books and
      records with respect to Tax matters pertinent to Company and its Subsidiaries
      relating to any taxable period beginning before the Closing Date until the
      expiration of the statute of limitations (and, to the extent notified by
      Purchaser or Sellers, any extensions thereof) of the respective taxable periods,
      and to abide by all record retention agreements entered into with any taxing
      authority, and (B) to give the other Party reasonable written notice prior
      to
      transferring, destroying or discarding any such books and records and, if the
      other Party so requests, Company and its Subsidiaries or Sellers, as the case
      may be, shall allow the other Party to take possession of such books and
      records.

     

    (ii)  Purchaser
      and Sellers further agree, upon request, to use their best efforts to obtain
      any
      certificate or other document from any governmental authority or any other
      Person as may be necessary to mitigate, reduce or eliminate any Tax that could
      be imposed (including, but not limited to, with respect to the transactions
      contemplated hereby).

     

    (iii)  Purchaser
      and Sellers further agree, upon request, to provide the other Party with all
      information that either Party may be required to report pursuant to Code Section
      6043 and all Treasury Regulations promulgated thereunder.

     

    (c)  Tax-Sharing
      Agreements.
      All
      tax-sharing agreements or similar agreements with respect to or involving
      Company and its Subsidiaries shall be terminated as of the Closing Date and,
      after the Closing Date, Company and its Subsidiaries shall not be bound thereby
      or have any liability thereunder.

     

    (d)  Certain
      Taxes and Fees.
      All transfer, documentary, sales, use, stamp,
      registration and other such Taxes, and all conveyance fees, recording charges
      and other fees and charges (including any penalties and interest) incurred
      in
      connection with consummation of the transactions contemplated by this Agreement
      shall be paid equally by Sellers and Purchaser when due, and Sellers and
      Purchaser, as the case may be, will file all necessary Tax Returns and other
      documentation with respect to all such Taxes, fees and charges, and, if required
      by applicable law. All expenses in connection with filing such Tax Returns
      shall
      be shared equally by the Sellers and the Purchaser.

     

    Section
      10.  Authorization
      of Representative.

     

    (a)  Representative
      is hereby appointed, authorized and empowered to act as a representative, for
      the benefit of the Sellers, as the exclusive agent and attorney-in-fact to
      act
      on behalf of the Sellers, in connection with and to facilitate the consummation
      of the transactions contemplated hereby, which shall include the power and
      authority:

     

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    

     

    (i)  to
      execute and deliver such waivers and consents in connection with this Agreement
      and the consummation of the transactions contemplated hereby as Representative,
      in its sole discretion, may deem necessary or desirable;

     

    (ii)  as
      Representative, to enforce and protect the rights and interests of the Sellers
      and to enforce and protect the rights and interests of Representative arising
      out of or under or in any manner relating to this Agreement and each other
      agreement, document, instrument or certificate referred to herein or the
      transactions provided for herein, and to take any and all actions which
      Representative believes are necessary or appropriate under this Agreement for
      and on behalf of the Sellers, including asserting or pursuing any claim, action,
      proceeding or investigation (a “Claim”)
      against Purchaser and/or the Company (after the Closing), conducting
      negotiations with Purchaser or the Company (after the Closing) and their
      respective representatives regarding such Claims, and, in connection therewith,
      to (A) assert any claim or institute any action, proceeding or
      investigation; (B) investigate, defend, contest or litigate any claim, action,
      proceeding or investigation initiated by Purchaser, the Company or any other
      person, or by any federal, state or local governmental authority against
      Representative and/or any of the Sellers, and receive process on behalf of
      any
      or all Sellers in any such claim, action, proceeding or investigation and
      compromise or settle on such terms as Representative shall determine to be
      appropriate, and give receipts, releases and discharges with respect to, any
      such claim, action, proceeding or investigation; (C) file any proofs of debt,
      claims and petitions as Representative may deem advisable or necessary; and
      (D)
      file and prosecute appeals from any decision, judgment or award rendered in
      any
      such action, proceeding or investigation, it being understood that
      Representative shall not have any obligation to take any such actions, and
      shall
      not have any Liability for any failure to take any such actions;

     

    (iii)  to
      refrain from enforcing any right of the Sellers or any of them and/or
      Representative arising out of or under or in any manner relating to this
      Agreement or any other agreement, instrument or document in connection with
      the
      foregoing; provided,
      however,
      that no
      such failure to act on the part of Representative, except as otherwise provided
      in this Agreement, shall be deemed a waiver of any such right or interest by
      Representative or by the Sellers unless such waiver is in writing signed by
      the
      waiving party or by Representative; and

     

    (iv)  to
      make,
      execute, acknowledge and deliver all such other agreements, guarantees, orders,
      receipts, endorsements, notices, requests, instructions, certificates, stock
      powers, letters and other writings, and, in general, to do any and all things
      and to take any and all action that Representative, in its sole and absolute
      discretion, may consider necessary or proper or convenient in connection with
      or
      to carry out the transactions contemplated by this Agreement, and all other
      agreements, documents or instruments referred to herein or executed in
      connection herewith.

     

    (b)  Sellers
      authorize Representative to withhold the amount specified to be withheld on
      Exhibit A from the Purchase Price for the payment by Representative on behalf
      of
      Sellers of certain transactional expenses, including Taxes, fees, financial
      advisor fees and legal expenses owed by Sellers pursuant to or in connection
      with this Agreement and as a reserve with respect to post-Closing
      expenses.

     

    (c)  Representative
      shall not be entitled to any fee, commission or other compensation for the
      performance of its services hereunder. In connection with this Agreement, and
      any instrument, agreement or document relating hereto, and in exercising or
      failing to exercise all or any of the powers conferred upon Representative
      hereunder (i) Representative shall incur no responsibility whatsoever to any
      of
      the Sellers by reason of any error in judgment or other act or omission
      performed or omitted hereunder or any such other agreement, instrument or
      document, excepting only responsibility for any act or failure to act which
      represents willful misconduct, and (ii) Representative shall

     

    
      
        
        

      

      
        41

        
          

        

      

      
        
        

      

    

     

    be
      entitled to rely on the advice of counsel, public accountants or other
      independent experts experienced in the matter at issue, and any error in
      judgment or other act or omission of Representative pursuant to such advice
      shall in no event subject Representative to Liability to any of the Sellers.
      Each Seller shall indemnify, pro rata based upon such Seller’s share of the
      number of Shares outstanding as of immediately prior to the Closing (on a
      fully-diluted basis), Representative against all losses, damages, liabilities,
      claims, obligations, costs and expenses, including reasonable attorneys’,
      accountants’ and other experts’ fees and the amount of any judgment against
      them, of any nature whatsoever (including any and all expense whatsoever
      reasonably incurred in investigating, preparing or defending against any
      litigation, commenced or threatened or any claims whatsoever), arising out
      of or
      in connection with any claim, investigation, challenge, action or proceeding
      or
      in connection with any appeal thereof, relating to the acts or omissions of
      Representative hereunder or otherwise. 

     

    (d)  All
      of
      the indemnities, immunities and powers granted to Representative under this
      Agreement shall survive the Closing Date and/or any termination of this
      Agreement.

     

    (e)  Purchaser
      shall have the right to rely upon all actions taken or omitted to be taken
      by
      Representative pursuant to this Agreement, all of which actions or omissions
      shall be legally binding upon the Sellers.

     

    (f)  The
      grant
      of authority provided for herein (i) is coupled with an interest and shall
      be
      irrevocable and survive the death, incompetency, bankruptcy or liquidation
      of
      any of the Sellers; and (ii) shall survive the Closing.

     

    Section
      11.  Termination. 

     

    (a)  Termination
      of Agreement.
      Certain
      of the Parties may terminate this Agreement as provided below:

     

    (i)  Purchaser
      and Sellers, for itself and on behalf of the Company, may terminate this
      Agreement by mutual written consent by Purchaser and Sellers at any time prior
      to the Closing; and

     

    (ii)  Either
      Party may terminate this Agreement by giving written notice to the other at
      any
      time prior to the Closing (A) in the event the other party has breached any
      material representation, warranty, or covenant contained in this Agreement
      in
      any material respect ignoring for this purpose the extent to which such
      representation, warranty or covenant is qualified by the term “Material” or
“material” or contains terms such as “Material Adverse Effect” or “Material
      Adverse Change,” or (B) if the Closing shall not have occurred on or before
      August 10, 2005, by reason of the failure of any condition precedent under
      Section 7 hereof (unless the failure results primarily from the notifying party
      itself breaching any representation, warranty, or covenant contained in this
      Agreement). 

     

    (b)  Effect
      of Termination.
      If any
      Party terminates this Agreement pursuant to Section 11(a) above, all rights
      and
      obligations of the Parties hereunder shall terminate without any Liability
      of
      any Party to any other Party (except for any Liability of any Party then in
      breach); except that, the Confidentiality Agreement between the Company and
      Purchaser Guarantor, dated April 12, 2005, shall survive
      termination.

     

    
      
        
        

      

      
        42

        
          

        

      

      
        
        

      

    

     

    Section
      12.  Miscellaneous. 

     

    (a)  Press
      Releases and Public
      Announcements.
      No Party shall issue any press release or make
      any public announcement relating to the subject matter of this Agreement prior
      to the Closing without the prior written approval of Purchaser and
      Representative; provided,
      however,
      that
      any Party may make any public disclosure it believes in good faith is required
      by applicable law or any listing or trading agreement concerning its publicly
      traded securities (in which case the disclosing Party will provide a copy of
      any
      such disclosure to the other Parties and give the other Parties an opportunity
      (which may require a very timely response depending on the circumstances) to
      comment timely prior to making the disclosure). 

     

    (b)  Purchaser
      Guarantor.
      The Purchaser Guarantor hereby guarantees to the
      Sellers payment and performance by the Purchaser of its obligations under this
      Agreement.

     

    (c)  No
      Third-Party
      Beneficiaries.
      This Agreement shall not confer any rights
      or remedies upon any Person other than the Parties and their respective
      successors and permitted assigns.

     

    (d)  Entire
      Agreement.
      Except
      for that certain Confidentiality Agreement between Company and Purchaser
      Guarantor, dated April 12, 2005, this Agreement (including the documents
      referred to herein) constitutes the entire agreement among the Parties and
      supersedes any prior understandings, agreements, or representations by or among
      the Parties, written or oral, to the extent they relate in any way to the
      subject matter hereof. To the extent that any provision in the Confidentiality
      Agreement conflicts with any provision of this Agreement, the provision
      contained in this Agreement shall govern.

     

    (e)  Succession
      and Assignment.
      This Agreement shall be binding upon and
      inure to the benefit of the Parties named herein and their respective successors
      and permitted assigns. No Party may assign either this Agreement or any of
      his,
      her, or its rights, interests, or obligations hereunder without the prior
      written approval of Purchaser and Representative; provided,
      however,
      that
      Purchaser may (i) assign any or all of its rights and interests hereunder to
      one
      or more of its Affiliates and (ii) designate one or more of its Affiliates
      to
      perform its obligations hereunder (in any or all of which cases Purchaser
      nonetheless shall remain responsible for the performance of all of its
      obligations hereunder).

     

    (f)  Counterparts.
      This
      Agreement may be executed in one or more counterparts (including by means of
      facsimile), each of which shall be deemed an original but all of which together
      shall constitute one and the same instrument.

     

    (g)  Headings.
      The section headings contained in this Agreement are
      inserted for convenience only and shall not affect in any way the meaning or
      interpretation of this Agreement.

     

    (h)  Notices.
      All notices, requests, demands, claims, and other
      communications hereunder shall be in writing. Any notice, request, demand,
      claim, or other communication hereunder shall be deemed duly given (i) when
      delivered personally to the recipient, (ii) one business day after being sent
      to
      the recipient by reputable overnight courier service (charges prepaid), (iii)
      one business day after being sent to the recipient by facsimile transmission
      or
      electronic mail, or (iv) four business days after being mailed to the recipient
      by certified or registered mail, return receipt requested and postage prepaid,
      and addressed to the intended recipient as set forth below:

     

    If
      to
      Purchaser:

     

    SimRep
      Corporation

    c/o
      Industrias CH, S.A. de C.V.

     

    
      
        
        

      

      
        43

        
          

        

      

      
        
        

      

    

     

    Agustin
      Melgar #23

    Fracc:
      Industrial Ninos Heroes, Tlalnepantla

    Edo
      de
      Mexico 54030

    Facsimile:               
      011
      52 55
      53 1027 15

    Attention:              
      Sergio
      Vigil Gonzalez

     

    with
      a
      mandatory copy to:

     

    Thacher
      Proffitt & Wood LLP

    Two
      World
      Financial Center

    New
      York,
      NY 10281

    Facsimile:              
      (212)
      912-7751

    Attention:             
      Marc
      M.
      Rossell, Esq.

    Thomas
      N.
      Talley, Esq.

     

    If
      to
      Purchaser Guarantor to:

     

    Industrias,
      CH, S.A. de C.V. 

    Agustin
      Melgar #23

    Fracc: Indistrial
      Ninos Heroes, Tlalnepantla

    Edo
      de
      Mexico 54030

    Facsimile:
      011 52 55 53 102715

    Attention:
      Sergio Vigil Gonzalez

     

     

    with
      a
      mandatory copy to:

     

    Mijares,
      Angoitia, Cortés y Fuentes, S.C.

    Montes
      Urales 505, Piso 3

    Lomas
      de
      Chapultepec

    11000
      México, D.F.

    Facsimile:
      52 (55) 5520 1065 / 1075

    Attention:
      Ricardo Maldonado Yáňcz

     

     

    If
      to the
      Company:

     

    PAV
      Republic, Inc.

    3770
      Embassy Parkway

    Fairlawn,
      OH 44333-8367

    Facsimile:             
      (330)
      670-7034

    Attention:            
      Joseph
      Lapinsky

    

     

    with
      a
      mandatory copy to (if prior to the Closing):

     

    Kirkland &
      Ellis LLP

    153
      East
      53rd Street

    New
      York,
      NY 10022-4675

    Facsimile:             
      (212)
      446-6460

    Attention:            
      Adrian
      van Schie

     

    
      
        
        

      

      
        44

        
          

        

      

      
        
        

      

    

     

    If
      to
      Representative (notice to Representative will be deemed notice to
      Sellers):

     

    Perry
      Capital LLC

    767
      Fifth
      Avenue

    New
      York,
      NY 10153

    Facsimile:              (212)
      583-4122

    Attention:            
      Michael
      Neus

     

    with
      a
      mandatory copy to:

     

    Kirkland &
      Ellis LLP

    153
      East
      53rd Street

    New
      York,
      NY 10022-4675

    Facsimile:             (212)
      446-6460

    Attention:           
      Adrian
      van Schie

     

    Any
      Party
      may change the address to which notices, requests, demands, claims, and other
      communications hereunder are to be delivered by giving the other Parties notice
      in the manner herein set forth.

     

    (i)  Governing
      Law.This
      Agreement shall be governed by and construed in accordance with the domestic
      laws of the State of New
      York without
      giving effect to any choice or conflict of law provision or rule (whether of
      the
      State of New
      York
      or any
      other jurisdiction) that would cause the application of the laws of any
      jurisdiction other than the State of New
      York.

     

    (j)  Amendments
      and Waivers.
No
      amendment of any provision of this Agreement
      shall be valid unless the same shall be in writing and signed by Purchaser
      and
      Representative. No waiver by any Party of any provision of this Agreement or
      any
      default, misrepresentation, or breach of warranty or covenant hereunder, whether
      intentional or not, shall be valid unless the same shall be in writing and
      signed by the Party making such waiver nor shall such waiver be deemed to extend
      to any prior or subsequent default, misrepresentation, or breach of warranty
      or
      covenant hereunder or affect in any way any rights arising by virtue of any
      prior or subsequent such default, misrepresentation, or breach of warranty
      or
      covenant.

     

    (k)  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 jurisdiction.

     

    (l)  Expenses.
      Each
      Purchaser, Seller, Company, and any Subsidiary shall bear his, her, or its
      own
      costs and expenses (including legal fees and expenses) incurred in connection
      with this Agreement and the transactions contemplated hereby; provided,
      however,
      that
      Sellers shall also bear the costs and expenses of Company and its Subsidiaries
      (including all of their legal fees and expenses and excluding any of their
      costs
      and expenses associated with the amendment of the GE Credit Facility) in
      connection with this Agreement and the transactions contemplated hereby in
      the
      event that the transactions contemplated by this Agreement are consummated.
      Sellers shall hold Company and Purchaser harmless for all fees and expenses
      owed
      UBS Investment Bank with respect to the transactions contemplated by this
      Agreement.

     

    (m)  Incorporation
      of Exhibits, Annexes, and
      Schedules.
      The
      Exhibits, Annexes, and Schedules identified in this Agreement are incorporated
      herein by reference and made a part hereof.

     

    
      
        
        

      

      
        45

        
          

        

      

      
        
        

      

    

     

    (n)  Specific
      Performance.
      Each
      Party acknowledges and agrees that the other Parties would be damaged
      irreparably in the event any provision of this Agreement is not performed in
      accordance with its specific terms or otherwise is breached, so that a Party
      shall be entitled to injunctive relief to prevent breaches of this Agreement
      and
      to enforce specifically this Agreement and the terms and provisions hereof
      in
      addition to any other remedy to which such Party may be entitled, at law or
      in
      equity. In particular, the Parties acknowledge that the business of Company
      and
      its Subsidiaries is unique and recognize and affirm that in the event Sellers
      breach this Agreement, money damages would be inadequate and Purchaser would
      have no adequate remedy at law, so that Purchaser shall have the right, in
      addition to any other rights and remedies existing in its favor, to enforce
      its
      rights and the other Parties’ obligations hereunder not only by action for
      damages but also by action for specific performance, injunctive, and/or other
      equitable relief.

     

    (o)  Submission
      to Jurisdiction.
      Each of
      the Parties submits to the jurisdiction of any state or federal court sitting
      in
      New York, New York, in any action or proceeding arising out of or relating
      to
      this Agreement and agrees that all claims in respect of the action or proceeding
      may be heard and determined in any such court. Each Party also agrees not to
      bring any action or proceeding arising out of or relating to this Agreement
      in
      any other court. Each of the Parties waives any defense of inconvenient forum
      to
      the maintenance of any action or proceeding so brought and waives any bond,
      surety, or other security that might be required of any other Party with respect
      thereto. Any Party may make service on any other Party by sending or delivering
      a copy of the process to the Party to be served at the address and in the manner
      provided for the giving of notices in Section 11(h) above. Nothing in this
      Section 11(p), however, shall affect the right of any Party to bring any action
      or proceeding arising out of or relating to this Agreement in any other court
      or
      to serve legal process in any other manner permitted by law or at equity. The
      Sellers hereby constitute and appoint Representative as the agent of the Sellers
      to accept all service of legal process. Each Party agrees that a final judgment
      in any action or proceeding so brought shall be conclusive and may be enforced
      by suit on the judgment or in any other manner provided by law or at
      equity.

     

    (p)  Tax
      Disclosure
      Authorization.
      Notwithstanding anything herein to the contrary, the Parties (and each Affiliate
      and Person acting on behalf of any Party) agree that each Party (and each
      employee, representative, and other agent of such Party) may disclose to any
      and
      all Persons, without limitation of any kind, the transaction’s tax treatment and
      tax structure (as such terms are used in Code Sections 6011 and 6112 and
      regulations thereunder) contemplated by this Agreement and all materials of
      any
      kind (including opinions or other tax analyses) provided to such Party or such
      Person relating to such tax treatment and tax structure, except to the extent
      necessary to comply with any applicable federal or state securities laws;
provided,
      however,
      that
      such disclosure may not be made until the execution of this Agreement. This
      authorization is not intended to permit disclosure of any other information
      including (without limitation) (A) any portion of any materials to the extent
      not related to the transaction’s tax treatment or tax structure, (B) the
      identities of participants or potential participants, (C) the existence or
      status of any negotiations, (D) any pricing or financial information (except
      to
      the extent such pricing or financial information is related to the transaction’s
      tax treatment or tax structure), or (E) any other term or detail not relevant
      to
      the transaction’s tax treatment or the tax structure.

     

    *
      * * *
      *

     

    
      
        
        

      

      
        46

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this Stock Purchase Agreement
      to
      be duly executed as of the day and year first above written.

     

    
      	 	 	 
	 	
              SIMREP
                CORPORATION

            
	 
 	 
 	 
 
	 	By:  	 
	 	
              Name:  
                

            	
              

            
	 	Title:	
            

       

      
        	 	 	 
	 	
                
                  INDUSTRIAS
                    CH, S.A. de C.V.,

                  solely
                    for the purpose 

                  set
                    forth in Section 12(b)

                

              
	 
 	 
 	 
 
	 	By:  	 
	 	
                Name:  
                  

              	
                

              
	 	Title:	
              

         

        
          	 	 	 
	 	
                  
                    PAV
                      REPUBLIC, INC.

                  

                
	 
 	 
 	 
 
	 	By:  	 
	 	          
                  	
                  
Its:
	 	
                	
                

           

          
            	 	 	 
	 	
                    
                      PERRY
                        PARTNERS LP, in its individual capacity

                      and
                        as Representative

                    

                  
	 
 	 
 	 
 
	 	By:  	 
	 	          
                    	
                    
Its:
	 	
                  	
                  

             

            
              	 	 	 
	 	
                      
                        PERRY
                          PARTNERS INTERNATIONAL INC.

                      

                    
	 
 	 
 	 
 
	 	By:  	 
	 	          
                      	
                      
Its:
	 	
                    	
                    

            

             

            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

             

            
              	 	 	 
	 	
                      
                        CONTRARIAN
                          FUNDS LLC

                      

                    
	 
 	 
 	 
 
	 	By:  	 
	 	
                                    
                        

                    	
                      
Its:
	 	
                    	
                    

      

          

        

      

    

     

     

    
      	 	 	 
	 	
            
	 
 	 
 	 
 
	 	
            	
            
	 	
              
JOSEPH
              F. LAPINSKY
	 	
            

    

     

    
      
        	 	 	 
	 	
              
	 	
                
GEORGE
                E. STRICKLER
	 	
              

      

       

    

    
      
        	 	 	 
	 	
              
	 	
                
JOHN
                GEORGE
	 	
              

      

       

    

    
      
        	 	 	 
	 	
              
	 	
                
JOSEPH
                KACZKA
	 	
              

      

       

    

    
      
        	 	 	 
	 	
              
	 	
                
JOHN
                WILLOUGHBY 
	 	
              

      

       

    

    
      
        	 	 	 
	 	
              
	 	
                
JAMES
                T. THIELENS
	 	
              

      

       

    

    
      
        	 	 	 
	 	
              
	 	
                
NOEL
                HUETTICH
	 	
              

      

       

    

    
      
        	 	 	 
	 	
              
	 	
                
LYNN
                WILLIAMS
	 	
              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

    

    
      
        	 	 	 
	 	
              
	 	
                
STEPHEN
                KASNET
	 	
              

      

       

    

    
      
        	 	 	 
	 	
              
	 	
                
ROBERT
                NORTONNature Vision, Inc. Exhibit 10.1 to Form 8-K Dated October 20, 2006

Exhibit 10.1

 

ASSET PURCHASE AGREEMENT

by and among

PROMARK INTERNATIONAL, INC.

d/b/a PHOTOGENIC PROFESSIONAL LIGHTING

and

NATURE VISION, INC.

October 20, 2006

TABLE OF CONTENTS

Page

 

	
            ARTICLE 1.
 	
            PURCHASE AND SALE OF ASSETS
 	
            1
 

	
             
 	
            1.1
 	
            Purchased Assets
 	
            1
 

	
             
 	
            1.2
 	
            Excluded Assets
 	
            3
 

	
             
 	
            1.3
 	
            Assumption of Liabilities
 	
            3
 

	
             
 	
            1.4
 	
            Excluded Liabilities
 	
            3
 

	
            ARTICLE 2.
 	
            CONSIDERATION FOR THE PURCHASED ASSETS
 	
            4
 

	
             
 	
            2.1
 	
            Purchase Price
 	
            4
 

	
             
 	
            2.2
 	
            Purchase Price Adjustment
 	
            4
 

	
             
 	
            2.3
 	
            Procedures for Final Determination of Inventory
 	
            5
 

	
            ARTICLE 3.
 	
            REPRESENTATIONS AND WARRANTIES OF SELLER
 	
            6
 

	
             
 	
            3.1
 	
            Organization and Power
 	
            6
 

	
             
 	
            3.2
 	
            Subsidiaries
 	
            6
 

	
             
 	
            3.3
 	
            Authorization; No Breach
 	
            6
 

	
             
 	
            3.4
 	
            Financial Statements
 	
            7
 

	
             
 	
            3.5
 	
            Absence of Undisclosed Liabilities
 	
            7
 

	
             
 	
            3.6
 	
            No Material Adverse Changes
 	
            7
 

	
             
 	
            3.7
 	
            Absence of Certain Developments
 	
            7
 

	
             
 	
            3.8
 	
            Title and Condition of Properties
 	
            8
 

	
             
 	
            3.9
 	
            Tax Matters
 	
            9
 

	
             
 	
            3.10
 	
            Contracts and Commitments
 	
            9
 

	
             
 	
            3.11
 	
            Proprietary Rights
 	
            11
 

	
             
 	
            3.12
 	
            Litigation; Proceedings
 	
            11
 

	
             
 	
            3.13
 	
            Brokerage
 	
            12
 

	
             
 	
            3.14
 	
            Governmental Consent, Etc.
 	
            12
 

	
             
 	
            3.15
 	
            Employees
 	
            12
 

	
             
 	
            3.16
 	
            Employee Benefit Plans
 	
            12
 

	
             
 	
            3.17
 	
            Affiliated Transactions
 	
            14
 

	
             
 	
            3.18
 	
            Compliance with Laws; Permits; Certain Operations
 	
            14
 

	
             
 	
            3.19
 	
            Product and Warranty Claims; Warranties
 	
            15
 

	
             
 	
            3.20
 	
            Inventory
 	
            15
 

	
             
 	
            3.21
 	
            Customers
 	
            15
 

	
             
 	
            3.22
 	
            Disclosure
 	
            15
 

	
            ARTICLE 4.
 	
            REPRESENTATIONS AND WARRANTIES OF PURCHASER
 	
            15
 

	
             
 	
            4.1
 	
            Corporate Organization and Power
 	
            15
 

	
             
 	
            4.2
 	
            Authorization; No Breach
 	
            16
 

	
             
 	
            4.3
 	
            No Violation
 	
            16
 

	
             
 	
            4.4
 	
            Litigation
 	
            16
 

	
             
 	
            4.5
 	
            Brokerage
 	
            17
 

	
            ARTICLE 5.
 	
            CLOSING TRANSACTIONS
 	
            17
 

i

TABLE OF CONTENTS

(continued)

Page

 

	
             
 	
            5.1
 	
            The Closing
 	
            17
 

	
             
 	
            5.2
 	
            Action to Be Taken at the Closing
 	
            17
 

	
             
 	
            5.3
 	
            Closing Documents
 	
            17
 

	
             
 	
            5.4
 	
            Possession
 	
            18
 

	
             
 	
            5.5
 	
            Nonassignable Contracts
 	
            18
 

	
            ARTICLE 6.
 	
            CONDITIONS TO PURCHASER’S OBLIGATION TO CLOSE
 	
            19
 

	
             
 	
            6.1
 	
            Conditions to Purchaser’s Obligation
 	
            19
 

	
            ARTICLE 7.
 	
            CONDITIONS TO SELLER’S OBLIGATION TO CLOSE
 	
            20
 

	
             
 	
            7.1
 	
            Conditions to Seller’s Obligation
 	
            20
 

	
            ARTICLE 8.
 	
            INDEMNIFICATION
 	
            20
 

	
             
 	
            8.1
 	
            Indemnification by Seller
 	
            20
 

	
             
 	
            8.2
 	
            Indemnification by Purchaser
 	
            21
 

	
             
 	
            8.3
 	
            Method of Asserting Claims
 	
            21
 

	
             
 	
            8.4
 	
            Set-off
 	
            22
 

	
             
 	
            8.5
 	
            Maximum Liability
 	
            22
 

	
             
 	
            8.6
 	
            Exclusive Remedies
 	
            23
 

	
            ARTICLE 9.
 	
            ADDITIONAL AGREEMENTS
 	
            23
 

	
             
 	
            9.1
 	
            Survival
 	
            23
 

	
             
 	
            9.2
 	
            Mutual Assistance
 	
            23
 

	
             
 	
            9.3
 	
            Press Release and Announcements
 	
            23
 

	
             
 	
            9.4
 	
            Expenses
 	
            23
 

	
             
 	
            9.5
 	
            Further Transfers
 	
            23
 

	
             
 	
            9.6
 	
            Transition Assistance
 	
            23
 

	
             
 	
            9.7
 	
            Confidentiality
 	
            23
 

	
             
 	
            9.8
 	
            Non-Compete; Non-Solicitation
 	
            24
 

	
             
 	
            9.9
 	
            Specific Performance
 	
            24
 

	
             
 	
            9.10
 	
            Remittances
 	
            25
 

	
             
 	
            9.11
 	
            Employees and Agents of Seller
 	
            25
 

	
            ARTICLE 10.
 	
            MISCELLANEOUS
 	
            25
 

	
             
 	
            10.1
 	
            Amendment and Waiver
 	
            25
 

	
             
 	
            10.2
 	
            Notices
 	
            25
 

	
             
 	
            10.3
 	
            Assignment
 	
            26
 

	
             
 	
            10.4
 	
            Severability
 	
            27
 

	
             
 	
            10.5
 	
            No Third-Party Beneficiaries
 	
            27
 

	
             
 	
            10.6
 	
            No Strict Construction
 	
            27
 

	
             
 	
            10.7
 	
            Captions
 	
            27
 

	
             
 	
            10.8
 	
            Complete Agreement
 	
            27
 

	
             
 	
            10.9
 	
            Counterparts
 	
            27
 

	
             
 	
            10.10
 	
            Governing Law
 	
            27
 

ii

EXHIBITS 

	
            Exhibit A
 	
            —
 	
            Form of Transition Services Agreement
 

	
            Exhibit B
 	
            —
 	
            Form of Promissory Note
 

i

DISCLOSURE SCHEDULES

	
            Schedule 1.1(a)
 	
            —
 	
            Prepaid Assets Schedule
 
	
            Schedule 1.1(b)
 	
            —
 	
            Inventory Schedule
 
	
            Schedule 1.1(c)
 	
            —
 	
            Tangible Property Schedule
 
	
            Schedule 1.1(e)
 	
            —
 	
            Intellectual Property Schedule
 
	
            Schedule 1.1(k)
 	
            —
 	
            Computer Hardware and Software Schedule
 
	
            Schedule 1.2
 	
            —
 	
            Excluded Assets Schedule
 
	
            Schedule 1.3(b)
 	
            —
 	
            Assumed Liability Schedule
 
	
            Schedule 2.1(a)
 	
            —
 	
            Purchase Price Allocation Schedule
 
	
            Schedule 2.2(a)
 	
            —
 	
            Estimated Inventory Schedule
 
	
            Schedule 3.1
 	
            —
 	
            Qualifications Schedule
 
	
            Schedule 3.3
 	
            —
 	
            No Conflicts Schedule
 
	
            Schedule 3.5
 	
            —
 	
            Undisclosed Liabilities Schedule
 
	
            Schedule 3.7
 	
            —
 	
            Developments Schedule
 
	
            Schedule 3.8(c)
 	
            —
 	
            Permitted Encumbrances Schedule
 
	
            Schedule 3.10(a)
 	
            —
 	
            Contracts Schedule
 
	
            Schedule 3.10(d)
 	
            —
 	
            Customer Contracts Schedule
 
	
            Schedule 3.11
 	
            —
 	
            Proprietary Rights Schedule
 
	
            Schedule 3.12
 	
            —
 	
            Litigation Schedule
 
	
            Schedule 3.14
 	
            —
 	
            Consents Schedule
 
	
            Schedule 3.15
 	
            —
 	
            Employees Schedule
 
	
            Schedule 3.16
 	
            —
 	
            Employee Benefits Schedule
 
	
            Schedule 3.17
 	
            —
 	
            Affiliated Transactions Schedule
 
	
            Schedule 3.18(a)
 	
            —
 	
            Compliance Schedule
 
	
            Schedule 3.18(b)
 	
            —
 	
            Permits Schedule
 
	
            Schedule 3.19
 	
            —
 	
            Claims Schedule
 
	
            Schedule 3.21
 	
            —
 	
            Customer List Schedule
 

ii

ASSET PURCHASE AGREEMENT

ASSET PURCHASE AGREEMENT made as of October 20, 2006 (this “Agreement”) by and between PROMARK INTERNATIONAL, INC. d/b/a PHOTOGENIC PROFESSIONAL LIGHTING, an Illinois corporation (“Purchaser”), and NATURE VISION, INC., a Minnesota corporation (“Seller”).

W I T N E S S E T H:

WHEREAS, the Seller is engaged in the business of designing, manufacturing, marketing, distributing and selling cameras, electronic-flash equipment, and related accessories used in the photography business and marketed under the Norman, Lindahl and Camerz product lines (the “Business”); and

WHEREAS, on the terms and subject to the conditions of this Agreement, Purchaser desires to acquire from Seller and Seller desires to sell to Purchaser, substantially all of the assets and properties of the Seller, both tangible and intangible, as described herein on terms and conditions hereinafter set forth.

NOW, THEREFORE, the parties agree as follows:

ARTICLE 1.

 

PURCHASE AND SALE OF ASSETS

1.1          Purchased Assets. On the terms and subject to the conditions of this Agreement, on the Closing Date (as defined in Section 5.1), Purchaser shall purchase from Seller, and Seller shall sell, convey, assign, transfer and deliver to Purchaser all of the following assets related to the Business:

(a)          all prepayments, prepaid expenses, deferred charges, advance payments and security deposits as of the Closing Date listed on Schedule 1.1(a) (the “Prepaid Assets”);

(b)          all inventories (including raw materials, work-in-process and finished goods) and related supplies, including component parts, cartons and packaging materials, located at the Seller’s facilities or stored off-site, in transit to or from the Seller’s facilities or which otherwise relate to the Business which are listed on Schedule 1.1(b) (the “Inventory”);

(c)          Seller’s interests in only that machinery, equipment, fixtures, fittings, tools, dies, jigs, molds, printing films, office furnishings, shelving, spare parts and supplies and other tangible personal property, whether owned or leased which are listed on Schedule 1.1(c) (including, without limitation, items which have been fully depreciated or expensed);

3

(d)          all rights in and to products sold or leased (including, but not limited to, products hereafter returned or repossessed and unpaid and the Seller’s rights of rescission, replevin, reclamation and rights to inventory in transit) to the extent of any credit that is given by the Purchaser related to such products and to the extent Purchaser is not indemnified hereunder with respect to any such credit;

(e)          all intangible assets and intellectual property (including, without limitation, registered and unregistered trademarks, service marks and product line trade names, trade dress and other names, marks and slogans, including the names “Norman”, “Camerz”, “Photo Control” and “Lindahl” and any deviations thereof); all publishing and distribution rights, and all associated goodwill; all statutory, common law and registered copyrights; all patents, inventions, shop rights, know-how, trade secrets and confidential information; all registration applications for any of the foregoing; all interests in and to the telephone numbers of 800-787-8078, 763-537-3601 and 763-537-2852 and all listings pertaining to these telephone numbers along with all listings
pertaining to the Business in other directories; all interest in web-sites and web addresses; together with all rights owned by Seller to use all of the foregoing and all other rights of Seller in, to, and under the foregoing in all countries, including, without limitation, such items as set forth on Schedule 1.1(e);

(f)           all discoveries, improvements, processes, formulae (secret or otherwise), data, confidential information, engineering, technical and shop drawings, specifications and ideas, whether patentable or not, all licenses and other similar agreements, and all drawings, records, books or other indicia, however evidenced, of the foregoing; all rights in and to any products or other intellectual property rights under research or development prior to or on the Closing Date;

(g)          all rights existing under purchase orders, sales and purchase agreements and orders, warranties, consents, orders, registrations, privileges, franchises, memberships, certificates, approvals or other similar rights, including, without limitation, all rights existing under the contracts listed on the Contracts Schedule and Customer Contracts Schedule (as defined in Section 3.10 hereof);

(h)          the right to receive all mail and other communications addressed to the Seller related directly to the Business (including, without limitation, mail and communications from customers, suppliers, distributors, agents and others and accounts receivable payments which are assets of the Purchaser);

(i)           all lists, records and files, or copies thereof, pertaining to customers, suppliers, distributors, personnel and agents and other books, ledgers, files, documents, correspondence, drawings and specifications and business records of every kind and nature;

(j)           all business and marketing plans and proposals and pricing and cost information;

4

(k)
          all computer hardware, software and systems and licenses related thereto, proprietary or otherwise, related source codes, data and documentation which are listed on Schedule 1.1(k);

(l)
           all creative materials (including, without limitation, photographs, films, art work, color separations and the like, catalogues, electronic data for catalogues, price lists, sell sheets, labels, cartons, advertising and promotional materials and all other printed or written materials); and

(m)
         all goodwill as a going concern and all other intangible property related directly to the Business.

For purposes of the Agreement, the term “Purchased Assets” means all properties, assets and rights which Seller shall convey to Purchaser or shall be obligated to convey to Purchaser under this Agreement. The Purchaser will be deemed the owner of the Purchased Assets as of 12:01 a.m. on the Closing Date (the “Effective Time”).

1.2          Excluded Assets. Notwithstanding the foregoing, the following assets (the “Excluded Assets”) are expressly excluded from the purchase and sale contemplated hereby and, as such, are not included in the Purchased Assets:

(a)
          cash, cash equivalents and marketable securities;

(b)
          the minute books, member or unit records, articles of organization, operating agreement of Seller and other documents and correspondence that relate to Seller’s corporate organization and maintenance thereof;

	
             
 	
            (c)
 	
            all accounts receivable;
 

(d)
          all rights in real estate except for rights under that certain Sublease between Seller and Purchaser dated the Closing Date; 

	
             
 	
            (e)
 	
            those certain assets listed on Schedule 1.2; and
 

	
             
 	
            (f)
 	
            all of the Seller’s assets not included as part of the Purchased Assets.
 

1.3          Assumption of Liabilities. Subject to the conditions specified in this Agreement, on the Closing Date, Purchaser shall assume and agree to pay, defend, discharge and perform as and when due only the following liabilities and obligations of the Seller (the “Assumed Liabilities”):

(a)
          the Seller’s obligations and liabilities under the contracts listed on the Contracts Schedule (Schedule 3.10(a)) and on the Customer Contract Schedule (Schedule 3.10(d)) for any activity following the Closing Date; 

5

(b)          the Seller’s outstanding commitments as listed on Schedule 1.3(b) for goods and services which have not been delivered to Seller as of the Closing Date; and

(c)          the Seller’s obligations for warranty claims for products sold prior to the Closing up to $35,000 per year for a period of two years in liability as calculated pursuant to that certain Transition Services Agreement between Purchaser and Seller (the “Transition Services Agreement”), attached hereto as Exhibit A; provided, however, the parties hereto agree that certain repair work for Portrait Corporation of America (“PCA”) will be covered by a Vendor Agreement with PCA dated September 29, 2006.

1.4          Excluded Liabilities. Notwithstanding anything to the contrary contained in this Agreement, Purchaser shall not assume or be liable for any liabilities or obligations of Seller other than the Assumed Liabilities and all such other liabilities or obligations shall be the responsibility of the Seller, including, but not limited to the following liabilities and obligations (the “Excluded Liabilities”):

(a)          any liabilities or obligations arising out of or in connection with charge backs, returns, allowances or customer adjustments relating to products sold by the Seller; and

(b)          any accounts payable or accrued liabilities or obligations relating to the operations of the Seller prior to the Closing Date, including, but not limited to, accrued liabilities or obligations related to vacation, accrued bonuses and incentives, other employee-related charges, accrued commissions, accrued rebates, accrued returns and any co-op advertising responsibilities.

ARTICLE 2.

 

CONSIDERATION FOR THE PURCHASED ASSETS

2.1          Purchase Price. The aggregate purchase price for the Purchased Assets shall be an amount equal to Two Million Four Hundred Twenty Three Thousand Two Hundred Fifty Two Dollars ($2,423,252) as adjusted pursuant to Section 2.2 hereof (the “Purchase Price”), which shall be payable to Seller as follows:

(a)          on the Closing Date by wire transfer of immediately available funds to such account or accounts as shall have been designated in writing by Seller in an amount equal to One Million Nine Hundred Ninety Eight Thousand Two Hundred Fifty Two Dollars ($1,998,252), subject to adjustment as provided for in Section 2.2(b) hereof;

(b)          on a date forty-five (45) days following the date of determination of the Final Inventory pursuant to Section 2.3 hereof, an amount equal to One Hundred Twenty Five Thousand Dollars ($125,000), subject to adjustment as provided in Section 2.2(b) hereof; and

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(c)          by a promissory note
in an amount equal to Three Hundred Thousand Dollars ($300,000) as adjusted pursuant to Section 2.2(b), substantially in the form
attached hereto as Exhibit B (the “Promissory Note”) to be issued by
Purchaser to Seller which shall be paid by Purchaser in accordance with the terms thereof.

     The Purchase Price shall be allocated among the Purchased Assets as mutually agreed to by the parties and as set forth on
     Schedule 2.1 (the “Purchase Price Allocation”). The parties
     agree that the Purchase Price Allocation shall be used by them and respected for all purposes, including income tax purposes
     if in conformance with the rules and regulations of the Internal Revenue Code of 1986, as amended (the “Code”), and
     that the parties shall follow such allocation for all reporting purposes, including, without limitation, Internal Revenue
     Service (“IRS”) Form 8594.

	
             
 	
            2.2
 	
            Purchase Price Adjustment.
 

(a)          An estimate of the Inventory Value (as defined below) will be made as of the Effective Time based on a physical inventory taken by the Seller and Purchaser which shall be used to determine the Purchase Price (the “Estimated Inventory Value “) as provided for on Schedule 2.2(a) hereof. For purposes hereof, “Inventory Value” means 90% of the Seller’s cost of raw materials and finished goods Inventory related to the Business and 100% of the Seller’s cost of work in process Inventory related to the Business (such cost to exclude any warehouse costs, handling costs, insurance costs and any other related overhead costs).

Any Inventory which is defective which cannot be reworked in the reasonable discretion of Purchaser will not be included in the net realizable value calculation for the Inventory and will be given zero value for purposes of calculating the Purchase Price. Inventory which can be reworked will be included in the Inventory Value for purposes hereof; provided, however, such rework will be conducted by Purchaser at a cost equal to labor plus materials and be paid for by Seller. Inventory which is obsolete will not be excluded from the Estimated Inventory Value due to its unmerchantability.

(b)          If the Final Inventory Value (as defined below) is greater than $2,100,000, no adjustment shall be made to the Purchase Price. The Purchase Price shall be reduced by any amount by which the Estimated Inventory Value exceeds the Final Inventory Value (the “Payback Amount”) and a dollar for dollar reduction of the payment provided for in Section 2.1(b) hereof shall be made upon the final determination of such Payback Amount. If the Payback Amount exceeds the amount of Purchase Price payable pursuant to Section 2.1(b) hereof, Purchaser shall reduce the Promissory Note referred to in Section 2.1(c) hereof by an amount equal to such excess within ten (10) days of final determination of the Payback Amount; provided such reduction of the Promissory Note shall not exceed $200,000. If the Payback
Amount exceeds the amount of Purchase Price provided for in Section 2.1(b) and $200,000 of the Promissory Note pursuant to Section 2.1(c), the Seller shall pay Purchaser an amount equal to such excess within ten (10) days of final determination of the Payback Amount.

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            2.3
 	
            Procedures for Final Determination of Inventory.
 

(a)          An estimate of the Inventory Value shall be taken by Purchaser and Seller as of the Effective Time as provided in Section 2.2 hereof.

(b)          Within ninety (90) days of the Closing Date, Purchaser shall prepare and deliver to Seller at Purchaser’s sole cost and expense a statement (the “Inventory Report”) setting forth Purchaser’s determination of the Inventory for the Seller as of the Effective Time.

(c)          Within thirty (30) days after receipt of the Inventory Report, Seller shall deliver to Purchaser a detailed written statement describing its objections, if any, to such determination of the Inventory Value. If Seller does not raise any objections within the 30-day period, the Purchaser’s determination of the Inventory Value shall become final and binding upon all parties. If Seller does raise any objections, Purchaser and Seller shall use reasonable efforts to resolve any such disputes. If a final resolution is not obtained within thirty (30) days after Seller shall have submitted its objections to Purchaser, any remaining disputes shall be resolved by an accounting firm mutually agreeable to Purchaser and Seller. If Purchaser and Seller are unable to mutually agree on such
an accounting firm within five (5) days after the expiration of said 30-day period, an accounting firm shall be selected by lot from six (6) accounting firms, none of which have ever performed services for Purchaser or Seller, with each of Purchaser and Seller submitting three names of accounting firms (the “Neutral Auditor”). The determination of the Neutral Auditor shall be set forth in writing and shall be conclusive and binding upon the parties, and the fees and expenses of such firm shall be paid one-half by Purchaser and one-half by Seller. For purposes hereof, “Final Inventory Value” is the Inventory Value determined by this Section 2.3(c). 

ARTICLE 3.

 

REPRESENTATIONS AND WARRANTIES

OF SELLER

As an inducement to Purchaser to enter into this Agreement, Seller represents and warrants to Purchaser as of the date hereof and as of the Closing Date that:

3.1          Organization and Power. Seller is a corporation duly organized, validly existing and in good standing under the laws of Minnesota. Seller is qualified to do business as a foreign entity and is in good standing in the jurisdictions specified on the “Qualifications Schedule” attached hereto as Schedule 3.1, which are all jurisdictions in which ownership of the Purchased Assets or the conduct of the Business requires it to be so qualified. The Seller has all corporate power and authority and all material licenses, permits and other authorizations necessary to own and operate its properties and to carry on its business as now conducted as they relate to the Business. The articles of incorporation and
by-laws of Seller which have been previously furnished to Purchaser reflect all amendments made thereto at any time prior to the date of this Agreement and are correct and complete.

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3.2          Subsidiaries. Seller owns no stock, membership interest, partnership interest, joint venture interest or other security or interest in any other corporation, limited liability company, organization or entity related to the Business.

3.3          Authorization; No Breach. The execution, delivery and performance of this Agreement and the other agreements contemplated hereby and the transactions contemplated hereby and thereby have been duly and validly authorized by Seller. No other act or proceeding on the part of Seller, its shareholders, directors or officers is necessary to authorize the execution, delivery or performance of this Agreement, any other agreement contemplated hereby or the consummation of the transactions contemplated hereby or thereby. This Agreement has been duly executed and delivered by Seller and this Agreement constitutes, and the other agreements contemplated hereby upon execution and delivery by Seller shall each constitute, a valid and binding obligation of Seller, enforceable
against it in accordance with their terms. Except as set forth on Schedule 3.3, the execution, delivery and performance of this Agreement and the other agreements contemplated hereby by Seller and the consummation of the transactions contemplated hereby and thereby do not and shall not (a) conflict with or result in any breach of any of the provisions of, (b) constitute a default under, result in a violation of, or cause the acceleration of any obligation under, (c) result in the creation of any lien, security interest, charge or encumbrance upon any of the Purchased Assets under, or (d) require any authorization, consent, approval, exemption or other action by or notice to any court or other governmental body under the provisions of Seller’s articles of incorporation, by-laws, any indenture, mortgage, lease, loan agreement or other agreement or instrument to which Seller is bound or affected or any law, statute,
rule, regulation, judgment, order or decree to which Seller is subject or by which any of the Purchased Assets are bound.

3.4          Financial Statements. Seller has furnished Purchaser with copies of (a) its audited balance sheet as of December 31, 2005 and the related audited financial statements for the twelve-month period then ended (the “Latest Balance Sheet”), (b) its audited balance sheets as of December 31, 2004 and December 31, 2003 and the related audited financial statements for the fiscal years then ended, and (c) internally prepared unaudited financial statements for the Seller as at and for the six-month period ended June 30, 2006. Each of the foregoing financial statements has been based upon the information contained in Seller’s books and records (which are accurate and complete in all material respects) and fairly presents
the financial condition and results of operations of Seller as of the times and for the periods referred to therein, and such financial statements contain proper accruals and adequate reserves and have been prepared in accordance with generally accepted accounting principles, consistently applied throughout the periods indicated, except as otherwise noted therein.

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3.5          Absence of Undisclosed Liabilities. As of the Closing (as defined in Section 5.1), except as set forth on Schedule 3.5, Seller shall have no liabilities or obligations whether accrued, absolute, contingent, unliquidated or otherwise, whether or not known to Seller, whether due or to become due, arising out of or related to transactions entered into at or prior to the Closing, or out of any action or inaction by Seller or any employee, agent, licensee or contractor of any of them at or prior to the Closing related to the Purchased Assets or the Business, or out of any state of facts existing at or prior to the Closing, regardless of when any such liability or obligation is asserted, including, without
limitation, taxes with respect to or based upon transactions or events occurring on or before the Closing or any errors in billing by Seller with respect to transactions or events occurring on or before the Closing related to the Purchased Assets or the Business, except (a) liabilities and obligations reflected on Seller’s Latest Balance Sheet, and (b) liabilities and obligations which have arisen after the date of Seller’s Latest Balance Sheet in the ordinary course of business (none of which is a liability for breach of contract, breach of warranty, tort, infringement, claim or lawsuit).

3.6          No Material Adverse Changes. Since the date of the Latest Balance Sheet, there has been no material adverse change in the financial condition, operating results, assets, operations, employee relations, customer relations or business prospects of the Seller as they relate to the Business.

3.7          Absence of Certain Developments. Except as set forth in the “Developments Schedule” attached hereto as Schedule 3.7, since the date of the Latest Balance Sheet, Seller has not, as it relates to the Business or the Purchased Assets:

(a)          mortgaged, pledged or subjected to any lien, charge or any other encumbrance, any portion of the Purchased Assets, except liens for current property taxes not yet due and payable;

(b)          sold, assigned or transferred, or agreed to do so, any of the Purchased Assets, except in the ordinary course of business or canceled without fair consideration any material debts or claims owing to or held by it;

(c)          sold, assigned, transferred, abandoned or permitted to lapse any patents, trademarks, trade names, copyrights, trade secrets or other intangible assets, or disclosed any material proprietary confidential information to any person;

(d)          made, or agreed to make, any capital expenditures or commitments therefore that aggregate in excess of $50,000;

(e)          suffered any extraordinary losses or waived any rights of material value, whether or not in the ordinary course of business or consistent with past practice;

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(f)           entered into, or agreed to enter into, any other material transaction other than in the ordinary course of business;

(g)          failed to replenish the Seller’s supplies in a normal and customary manner consistent with its prior practice and prudent business practices prevailing in the industry, or made any purchase commitment of services or goods in excess of the normal, ordinary and usual requirements of its business or at any price in excess of the then current market price or upon terms and conditions more onerous than those usual and customary in the industry, or made any change in its selling, pricing, advertising or personnel practice inconsistent with its prior practice and prudent business practices prevailing in the industry; or

(h)          suffered any material damage, destruction or casualty loss to the Purchased Assets, whether or not covered by insurance.

	
             
 	
            3.8
 	
            Title and Condition of Properties.
 

(a)          The Seller owns no real estate related to the Business other than the property located at 4800 Quebec Avenue North, Minneapolis, Minnesota 55428.

(b)          The Seller holds no leasehold interest in real estate related to the Business. 

(c)          Except as set forth on Schedule 3.8(c), Seller owns good and marketable title, free and clear of all liens, charges, security interests, encumbrances, encroachments and claims of others, to all of the Purchased Assets, except for leased equipment, for liens of current taxes not yet due and payable (“Permitted Encumbrances”), and all of such personal property is necessary or useful in the conduct of the Business. At the Closing, Seller shall sell, assign, transfer and convey to Purchaser all of the personal property included within the Purchased Assets, free and clear of all liens, security interests, charges, encumbrances and claims of others, other than Permitted Encumbrances.

(d)          Seller’s leased premises, machinery, equipment and other tangible assets are in good condition and repair in all material respects, have been maintained in accordance with normal industry standards and are usable in the ordinary course of business. Seller owns or leases under valid leases all buildings, machinery, equipment and other tangible assets necessary for the conduct of the Business.

(e)          The Purchased Assets and the Excluded Assets, together with the services and arrangements described on the Contracts Schedule, comprise all assets and services required for the continued conduct of the Business by the Purchaser as now being conducted. The Purchased Assets and the Excluded Assets, taken as a whole, constitute all the properties and assets relating to or used or held for use in connection with the Business during the past twelve months (except supplies utilized, cash disposed of, accounts receivable collected, prepaid expenses realized, Contracts fully performed, properties or 

11

assets replaced by equivalent or superior properties or assets, in each case in the ordinary course of business). There are no assets or properties used in the operation of the Business and owned by any Person other than the Seller that will not be leased or licensed to the Purchaser under valid, current leases or license arrangements, except as set forth in this Agreement. The Purchased Assets are in all material respects adequate for the purposes for which such assets are currently used or are held for use, and are in reasonably good repair and operating condition (subject to normal wear and tear) and there are no facts or conditions affecting the Purchased Assets which could, individually or in the aggregate, interfere in any material respect with the use, occupancy or operation thereof as currently used, occupied or operated, or their adequacy for such use.

	
             
 	
            3.9
 	
            Tax Matters.
 

(a)          Seller has duly filed all federal, foreign, state and local tax information and tax returns of any and every nature and description (the “Returns”) required to be filed by it (all such returns being accurate and complete in all material respects) and has duly paid or made provision for the payment of all taxes and other governmental charges (including without limitation any interest, penalty or additions to tax thereto) which have been incurred or are shown to be due on said Returns or are claimed in writing by the appropriate taxing authority to be due from Seller or imposed on Seller or its properties, assets, income, franchises, leases, licenses, sales or use, by any federal, state, local or foreign taxing authorities (collectively, the “Taxes”) on or prior to the
date hereof, other than Taxes which are being contested in good faith and by appropriate proceedings and as to which Seller has set aside on its books adequate reserves or which may be attributable to the transactions contemplated hereby. Neither the IRS nor any foreign, state, local or other taxing authority is in the process of examining any federal, foreign, state, local or other tax return of Seller. There are no disputes pending, or claims asserted, for Taxes upon Seller.

(b)          All monies required to be withheld from employees, independent contractors, shareholders, or creditors of Seller for Taxes, including, but not limited to, income taxes, back-up withholding taxes, social security and unemployment insurance taxes or collected from customers or others as Taxes, including, but not limited to, sales, use or other taxes, have been withheld or collected and paid, when due, to the appropriate governmental authority, or if such payment is not yet due, an adequate reserve has been established for such Taxes.

	
             
 	
            3.10
 	
            Contracts and Commitments.
 

(a)          Except as set forth in Section 3.16 or in the “Contracts Schedule” attached hereto as Schedule 3.10(a) or in the “Customer Contracts Schedule” attached hereto as Schedule 3.10(d), Seller is not a party to any:

12

(i)           contract with any labor union or contract for the employment of any officer, individual employee or other person on a full-time, part-time or consulting basis;

(ii)          mortgaging, pledging or otherwise placing a lien on any of the Purchased Assets;

	
             
 	
            (iii)
 	
            license or royalty agreement related to the Business;
 

(iv)         lease or agreement related to the Business under which it is lessee of or holds or operates any personal property owned by any other party;

(v)          lease or agreement related to the Business under which it is lessor of or permits any third party to hold or operate any property, real or personal, owned or controlled by it;

(vi)         contract or group of related contracts related to the Business with the same party for the purchase or sale of products or services other than the Customer Contracts (as defined in Section 3.10(d) hereof);

(vii)       other contract related to the Business with any party continuing over a period of more than six months from the date or dates thereof, not terminable by it on thirty (30) days’ or less notice without penalties;

(viii)      contract which prohibits it from freely engaging in the Business anywhere in the world;

(ix)         contract relating to the distribution of its products as it relates to the Business; or

(x)          other agreements related to the Business whether or not entered into in the ordinary course of business but not including insurance agreements.

(b)          Except as specifically disclosed in the Contracts Schedule or the Customer Contracts Schedule, (i) to the Seller’s knowledge, no contract or commitment related to the Business has been breached in any respect or canceled by the other party; (ii) since December 31, 2005, no supplier of the Business has notified the Seller that it shall stop or decrease in any material respect the rate of business done with the Seller; (iii) the Seller has in all respects performed all the obligations required to be performed by it to the date of this Agreement and is not in receipt of any claim of default under any material lease, contract, commitment or other agreement related to the Business to which it is a party; (iv) to Seller’s knowledge, no event has occurred which with the
passage of time or the giving of notice or both would result in a breach or default under any lease, contract, instrument or other agreement  related to the Business to which the Seller is a party and which is related to the Business; and (v) the Seller is not a party to any contract which is adverse to the Business’s operations, financial condition, operating results or business prospects.

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(c)          Purchaser has been supplied with a true and correct copy of all written contracts which are referred to on the Contract Schedule and Customer Contracts Schedule, together with all amendments, waivers or other changes thereto.

(d)          Seller has no knowledge of any (i) pending or threatened termination, cancellation, limitation, modification or change in any of the Seller’s business relationships with any customer or group of customers, any vendor or supplier related to the Business or (ii) changes or pending changes in any law, rule, regulation, technology, or business relationship or other circumstance that could result in the loss of any customers related to the Business after the date hereof. Each contract, agreement or lease with customers of Seller relating to the Business (“Customer Contracts”) are listed on Schedule 3.10(d) (the “Customer Contracts Schedule”). Except as indicated on the Customer Contract Schedule,
(A) each of the Customer Contracts is valid, enforceable and in full force and effect in accordance with the terms thereof, (B) there is no existing default or event or condition which, with notice or lapse of time or both, would constitute an event of default under any Customer Contract, (C) no Customer Contract has been amended, modified, supplemented or otherwise altered orally, in writing or by course of conduct, (D) no Customer Contract requires the consent of the Customer or any other party to affect a valid assignment thereof to Purchaser without causing a default or giving rise to a right of termination thereunder and (E) each Customer Contract complies with all applicable laws, rules and regulations.

3.11       Proprietary Rights. Set forth on the “Proprietary Rights Schedule” attached hereto as Schedule 3.11 is a list and summary description of all patents,  patent applications, trademarks, service marks, trade names, corporate names and copyrights owned by Seller which are related to the Business or used by the Seller in the conduct of the Business and owned by any third party other than the Seller. Except as set forth on Schedule 3.11, Seller owns and possesses all right, title and interest in and to the proprietary rights necessary to conduct the Business. Seller has taken all necessary or desirable action to protect the proprietary rights necessary or desirable to conduct
the Business. Seller has not received any notices of infringement, misappropriation, invalidity or conflict from any third party with respect to such proprietary rights. To Seller’s knowledge, Seller has not infringed, misappropriated or otherwise conflicted with any proprietary rights of any third parties and, to the best of Seller’s knowledge, Seller’s proprietary rights have not been infringed by any third parties.

3.12       Litigation; Proceedings. Except as disclosed
on the “Litigation Schedule” attached hereto as Schedule 3.12, there
are no actions, suits, proceedings, orders or investigations pending or, to the best of Seller’s knowledge, threatened
against or affecting Seller at law or in equity, or before or by any federal, state, municipal or other 

14

governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign. No officer, director, employee
or agent of Seller has been or is authorized to make or receive, and Seller knows of no such person making or receiving, any
bribe, kickback or other illegal payment at any time. Within the three years preceding the date hereof, Seller has not received
any opinion or legal advice in writing to the effect that Seller is exposed from a legal standpoint to any liability or
disadvantage which may be material to the Business as previously or presently conducted. Notwithstanding anything else herein to
the contrary, Seller has not received any opinion or legal advice from any legal counsel that any of its activities or conduct
constitutes a basis for, or will expose the Seller to, liability, including liability for misrepresentations or false statements,
concerning the cost, performance, tax treatment or results to be expected with respect to any of the plans or policies placed by
Seller.

3.13       Brokerage. Except for the amounts owed to Quazar Capital Corporation which are the Seller’s obligations, there are no claims for brokerage commissions, finders’ fees or similar compensation in connection with the transactions contemplated by this Agreement based on any arrangement or agreement made by or on behalf of Seller.

 

	
             
 	
            3.14
 	
            Governmental Consent, Etc.
 

(a)          No permit, consent, approval or authorization of, or declaration to or filing with, any governmental or regulatory authority is required in connection with the execution, delivery or performance of this Agreement by Seller, or the consummation by Seller of any of the transactions contemplated hereby and thereby, except as disclosed on the “Consents Schedule” attached hereto as Schedule 3.14.

(b)          The Consents Schedule attached hereto as Schedule 3.14 sets forth all governmental approvals or thirty-party consents necessary for, or otherwise material to, the conduct of the Business, including but not limited to, all consents and assignments required to transfer all fees, bonuses and commissions paid by insurance carriers, customers and brokers/dealers. All such governmental approvals and consents have been duly obtained and are in full force and effect, and Seller is in compliance with each of such governmental approvals and consents held by it with respect to the Purchased Assets and the Business.

3.15       Employees. Seller has complied in all material respects with all applicable laws relating to the employment of labor and independent contractors related to the Business, including provisions thereof relating to wages, hours, equal opportunity, immigration, collective bargaining, disabilities, family leave and the payment of social security and other taxes. Except as disclosed on the “Employees Schedule” attached hereto as Schedule 3.15, Seller has no existing relationships with any union or employee representative or any labor relations problems, and there has been no union organization efforts with respect to the Business within the last five years. 

15

	
             
 	
            3.16
 	
            Employee Benefit Plans.
 

(a)          Definitions. When used in this Section 3.16, the following terms have the following meanings:

(i)           “Benefit Arrangement” means any agreement or arrangement providing for severance benefits, supplemental unemployment benefits, vacation benefits, retirement benefits, life insurance benefits, health benefits, disability or accident benefits, or for deferred compensation, profit-sharing, bonuses, stock options, stock appreciation rights, stock purchases or other forms of incentive compensation or post-retirement insurance, compensation or benefits (A) which is not a Welfare Plan, Pension Plan or Multiemployer Plan, (B) which Seller or any ERISA Affiliate maintains, administers, contributes to or is required to contribute to, and (C) which covers any employee or former employee of Seller or an ERISA Affiliate.

(ii)          “Benefit Plans” means all Benefit Arrangements, Multiemployer Plans, Pension Plans and Welfare Plans.

(iii)         “ERISA” means the Employment Retirement Income Security Act of 1974, as amended, and any lawful rules and regulations promulgated thereunder.

(iv)         “ERISA Affiliate” means any entity which is (or at any relevant time was) a member of a “controlled group of corporations” with, or under “common control” with, Seller, as defined in Section 414(b) or (c) of the Code, or any entity which is otherwise required to be aggregated and treated as one employer with the Seller under Section 414(m) or (o) of the Code.

(v)          “Multiemployer Plan” means any “multiemployer plan,” as defined in Section 4001(a)(3) of ERISA, (A) which Seller or any ERISA Affiliate contributes to or is required to contribute to and (B) which covers any employee or former employee of Seller or any ERISA Affiliate.

(vi)         “Pension Plan” means any “employee pension benefit plan” as defined in Section 3(2) of ERISA (other than a Multiemployer Plan) (A) which Seller or any ERISA Affiliate maintains, administers, contributes to or is required to contribute to and (B) which covers any employee or former employee of Seller or an ERISA Affiliate.

(vii)       “Welfare Plan” means any “employee welfare benefit plan” as defined in Section 3(1) of ERISA, (A) which Seller or any ERISA Affiliate maintains, administers, contributes to or is required to contribute to and (B) which covers any employee or former employee of Seller or any ERISA Affiliate.

16

(b)          Disclosure and Delivery of Documents. Schedule 3.16 contains a complete and accurate list of all Benefit Plans that cover any employees or former employees of Seller which relate to the Business. Seller has provided to Purchaser true and correct copies of all Benefit Plans that cover any employees of Seller who work in the Business.

	
             
 	
            (c)
 	
            Representations. Seller represents and warrants as follows:
 

	
             
 	
            (i)
 	
            Pension Plans.
 

(1)          No “accumulated funding deficiency” (for which an excise tax is due or would be due in the absence of a waiver) as defined in Section 412 of the Code or as defined in Section 302(a)(2) of ERISA, whichever may apply, exists with respect to any Pension Plan (whether or not waived).

(2)          No security is required to be provided with respect to a Pension Plan under Section 401(a)(29) of the Code.

(3)          No termination has occurred within the 6 years prior to the Closing Date with respect to any Pension Plan that has resulted in any termination liability under Section 4061 or 4062 of ERISA to the Seller or any ERISA Affiliate that has not been satisfied prior to the Closing Date.

(4)          All premiums (and interest charges and penalties for late payment, if applicable) due the Pension Benefit Guaranty Corporation have been paid with respect to each Pension Plan for each plan year thereof for which such premiums are required. Within the past six (6) years, no proceeding has been commenced by the Pension Benefit Guaranty Corporation to terminate any Pension Plan.

(ii)          Multiemployer Plans. Neither the Seller nor any ERISA Affiliate has contributed to or had an obligation to contribute to any Multiemployer Plan within the 6 years prior to the Closing Date.

(iii)         Benefit Plans. Seller has not incurred, and as of the Closing Date will not incur, any liability with respect to any Benefit Plan which creates a lien upon, or can be collected from, the Purchased Assets, nor which may impose, directly or indirectly, any obligation or liability on Purchaser, as a successor employer or otherwise. It is expressly understood and agreed that Purchaser is not assuming any of the Benefit Plans and that Seller shall retain all assets and liabilities with respect to the Benefit Plans.

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3.17       Affiliated Transactions. Except as set forth on the “Affiliated Transaction Schedule” attached hereto as Schedule 3.17, no officer, director or affiliate of the Seller or any person related by blood or marriage to any such person or any entity in which any such person owns any beneficial interest is a party to any agreement, contract, commitment or transaction related to the Business or has any interest in any property used by the Seller in the Business.

	
             
 	
            3.18
 	
            Compliance with Laws; Permits; Certain Operations.
 

(a)          The Seller and its officers, directors, agents and employees have complied in all material respects with all applicable laws and regulations of foreign, federal, state and local governments and all agencies thereof which affect the Business or the Purchased Assets and no claims have been filed against Seller alleging a violation of any such law or regulation related to the Business, except as set forth on the “Compliance Schedule” attached hereto as Schedule 3.18(a). In particular, but without limiting the generality of the foregoing, Seller has not received a notice or charge asserting any violation and the Seller has no knowledge, nor has any reason to know, of any violation, of the Immigration Reform and Control Act of 1986,
the Occupational Safety and Health Act of 1970, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, the Resource Conservation and Recovery Act of 1976, the Toxic Substances Control Act of 1976, the Americans With Disabilities Act, or any other state or federal act (including rules and regulations thereunder) regulating or otherwise affecting the employment of aliens, employee health and safety, the environment, zoning, building, fire or other ordinances or any other aspect of the Business.

(b)          The Seller holds all of the permits, licenses, certificates and other authorizations of foreign, federal, state and local governmental agencies required for the conduct of the Business all of which are set forth in the “Permits Schedule” attached hereto as Schedule 3.18(b). The Seller has not received any notice (and the Seller has no reason to believe) that revocation is being considered with respect to any of such licenses, permits, certificates or authorizations, or that the Seller is in violation of any such license, permit, certificate or authorization.

3.19       Product and Warranty Claims; Warranties. Except as disclosed in the “Claims Schedule” attached hereto as Schedule 3.19, the Seller has no knowledge of and has not received during the period from January 1, 2005 through October 17, 2006 any claim or notice with respect to any occurrences arising out of the use of, or related to, the products designed, sold, implemented, monitored or serviced by or on behalf of the Seller related to the Business, which has resulted in any claim or notice that any such products do not conform to any agreement, representation or warranty made by the Seller (or implied by law) with respect to such products. The Seller is covered against all damages, liability and expenses for any
claims based upon products designed, sold, implemented, monitored or serviced by or on behalf of the Seller (including, but not limited to, costs of investigation and attorneys’ fees and expenses) under policies of insurance, except as to warranty claims included in the Assumed Liabilities and as to claims for breach of any agreement, representation or warranty made with respect to such products against which the Seller has established good and sufficient reserves therefor on their books and records.

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3.20       Inventory. The Inventory of the Seller reflected on the Inventory Schedule is stated at cost and in a manner consistent with past practice. Except as otherwise described, such Inventory consists only of items in good condition and saleable or useable in the ordinary course of business. Any Inventory supplies, including but not limited to, labels and bar codes, are useable for existing products.

3.21       Customers. The Seller has delivered to Purchaser an accurate list (which is set forth on Schedule 3.21) of all customers of the Seller as it relates to the Business from January 1, 2002 through the Closing Date, including any customers with respect to which any transactions are pending as of the date hereof.

3.22       Disclosure. Neither this Agreement nor any of the schedules, attachments or exhibits hereto contain any untrue statement of a material fact or omit a material fact necessary to make the statements contained herein or therein, in light of the circumstances in which they were made, not misleading. There is no material fact which has not been disclosed to Purchaser of which the Seller or any manager, officer, director or key employee of the Seller is aware and which materially adversely affects the Business or the Purchased Assets.

ARTICLE 4.

 

REPRESENTATIONS AND WARRANTIES OF PURCHASER

As an inducement to Seller to enter into this Agreement, Purchaser hereby represents and warrants to Seller as of the date hereof and as of the Closing Date that:

4.1          Corporate Organization and Power. Purchaser is a corporation duly organized and validly existing under the laws of the State of Illinois with full power and authority to enter into this Agreement and the other agreements contemplated hereby and perform its obligations hereunder and thereunder. The Purchaser has all requisite power and authority and all material licenses, permits and other authorizations necessary to own and operate the Business.

4.2          Authorization; No Breach. The execution,
delivery and performance of this Agreement and the other agreements contemplated hereby and the transactions contemplated hereby
and thereby have been duly and validly authorized by Purchaser. No other act or proceeding on the part of Purchaser, its
shareholders or directors is necessary to authorize the execution, delivery or performance of this Agreement, any other agreement
contemplated hereby or the consummation of the transactions contemplated hereby or thereby. This Agreement has been duly executed
and delivered by Purchaser and  this

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Agreement constitutes, and the other agreements contemplated hereby upon execution and delivery by Purchaser shall each
constitute, a valid and binding obligation of Purchaser enforceable against it in accordance with their terms. The execution,
delivery and performance of this Agreement and the other agreements contemplated hereby by Purchaser and the consummation of the
transactions contemplated hereby and thereby do not and shall not (a) conflict with or result in any breach of any of the
provisions of, (b) constitute a default under, result in a violation of, or cause the acceleration of any obligation under,
or (c) require an authorization, consent, approval, exemption or other action by or notice to any court or other governmental
body under the provisions of Purchaser’s articles of incorporation, by-laws, any indenture, mortgage, lease, loan agreement
or other agreement or instrument to which Purchaser is bound or affected or any law, statute, rule, regulation, judgment, order or
decree to which Purchaser is subject or by which any of the Purchased Assets will be bound.

4.3          No Violation. Purchaser is not subject to or obligated under its articles of incorporation, its by-laws, any applicable law, rule or regulation of any governmental authority, or any agreement or instrument, or any license, franchise or permit, or subject to any order, writ, injunction or decree which would materially, adversely affect its ability to perform this Agreement or the other agreements contemplated hereby. Neither the execution and delivery of this Agreement or the other documents and instruments to be executed and delivered by Purchaser pursuant hereto, nor the consummation by Purchaser of the transactions contemplated hereby and thereby (a) will violate any applicable law or order, (b) will require any authorization, consent, approval,
exemption or other action by or notice to any court or governmental body, or (c) will violate or conflict with, or constitute a default under, or will result in the termination of, or accelerate the performance required by any term or provision of the Purchaser’s By-laws or of any agreement or restriction of any kind or character to which Purchaser is a party or by which Purchaser or any of its assets or properties may be bound or affected.

4.4          Litigation. There are no actions, suits, proceedings, orders or investigations pending or, to the best of Purchaser’s knowledge, threatened against or affecting Purchaser, at law or in equity, or before or by any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, which would materially adversely affect Purchaser’s performance under this Agreement or the consummation of the transactions contemplated hereby.

4.5          Brokerage. There are no claims for brokerage commissions, finders fees or similar compensation in connection with the transactions contemplated by this Agreement based on any arrangement or agreement made by or on behalf of Purchaser.

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ARTICLE 5.

 

CLOSING TRANSACTIONS

5.1          The Closing. Subject to the conditions contained in this Agreement, the closing of the transactions contemplated by this Agreement (the “Closing”) shall take place at the offices of Vedder, Price, Kaufman & Kammholz, P.C. at 10:00 a.m. local time on October 20, 2006, or on such other date as may be mutually agreeable to the parties. The date and time of the Closing are referred to herein as the “Closing Date.”

5.2          Action to Be Taken at the Closing. The sale, conveyance, assignment and delivery of the Purchased Assets and the payment of the Purchase Price pursuant to the terms of this Agreement shall take place at the Closing, and, simultaneously, the other transactions contemplated by this Agreement shall take place by the delivery of all of the closing documents set forth in Section 5.3.

	
             
 	
            5.3
 	
            Closing Documents.
 

(a)          Seller shall deliver to Purchaser at the Closing the following documents, duly executed by Seller where necessary to make them effective:

(i)           an opinion addressed to Purchaser and dated the Closing Date, in form and substance satisfactory to Purchaser and Seller;

(ii)          copies of all necessary third party and governmental consents, approvals, releases and filings required in order to effect the transactions contemplated by this Agreement;

(iii)
        such stamped recordable warranty deeds, instruments of sale, transfer, assignment, conveyance and delivery, as are required in order to transfer to Purchaser good and marketable title to the Purchased Assets, free and clear of all liens, charges, security interests and other encumbrances, except for Permitted Encumbrances, including but not limited to a Bill of Sale;

(iv)         certified copies of the resolutions duly adopted by the directors of Seller authorizing the execution, delivery and performance of this Agreement and each of the other agreements contemplated hereby, and the consummation of all other transactions contemplated by this Agreement, certified by the Secretary of the Seller;

(v)          all of the Seller’s contracts and commitments, files, books, records and other data directly relating to the Business and the Purchased Assets (except in the event the originals are required by law to be kept by the Seller or the originals also relate to the Seller’s operation not being sold, copies of such documents shall be delivered to the Purchaser);

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(vi)         copies of good standing certificates in all jurisdictions where the Seller is qualified to do business in which ownership of the Purchased Assets or the conduct of the Business requires Seller to be so qualified;

(vii)
       a certificate of the Seller, certifying as to the correctness and completeness of the Articles of Incorporation and By-laws of Seller, as appropriate, and all amendments thereto;

(viii)
      the Estimated Inventory Report along with the detail for each component of the Inventory; 

	
             
 	
            (ix)
 	
            the Transition Services Agreement; and
 

(x)          such other documents or instruments as Purchaser may reasonably request to effect the transactions contemplated hereby.

All of the foregoing documents in this Section 5.3(a) shall be reasonably satisfactory in form and substance to Purchaser and shall be dated the Closing Date.

(b)          Purchaser shall deliver to Seller at the Closing the following items, duly executed by Purchaser where necessary to make them effective:

(i)           the amount of the Purchase Price payable at Closing as provided in Section 2.1;

(ii)          an opinion addressed to Seller and dated the Closing Date, in form and substance satisfactory to Seller and Purchaser;

(iii)         copies of all necessary third party and governmental consents, approvals, releases and filings required in order for Purchaser to effect the transactions contemplated by this Agreement; 

	
             
 	
            (iv)
 	
            the fully executed Promissory Note;
 

	
             
 	
            (v)
 	
            the Transition Services Agreement; and
 

(vi)         such other documents or instruments as Seller reasonably may request to effect the transactions contemplated hereby.

All of the foregoing documents in this Section 5.3(b) shall be reasonably satisfactory in form and substance to Seller and shall be dated as of the Closing Date.

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5.4          Possession. Simultaneously with the Closing, Seller shall take such steps as may be requisite or desirable to put Purchaser in actual possession and operating control of the Business and the Purchased Assets.

5.5          Nonassignable Contracts. To the extent that the assignment hereunder by Seller to Purchaser of the Contracts is not permitted or any other rights or is not permitted without the consent of any other party to the Contract, this Agreement shall not be deemed to constitute an assignment of any such Contract if such consent is not given or if such assignment otherwise would constitute a breach of, or cause a loss of contractual benefits under, any such Contract, and Purchaser shall assume no obligations or liabilities thereunder. Seller shall advise Purchaser promptly in writing with respect to any Contract which it knows, should know or has reason to know that it will not receive any required consent. Without in any way limiting Seller’s obligation to obtain
all consents necessary for the sale, transfer, assignment and delivery of the Contracts and the Purchased Assets to Purchaser hereunder, if any such consent is not  obtained or if such assignment is not permitted irrespective of consent and the Closing hereunder is consummated, Seller shall cooperate with Purchaser in any reasonable arrangement designed by Purchaser to provide Purchaser with the rights and benefits, subject to the obligations, under the Contract, including enforcement for the benefit of Purchaser of any and all rights of Seller against any other person arising out of breach or cancellation by such other person.

ARTICLE 6.

 

CONDITIONS TO PURCHASER’S OBLIGATION TO CLOSE

6.1          Conditions to Purchaser’s Obligation. The obligation of Purchaser to consummate the transactions contemplated by this Agreement is subject to the satisfaction of the following conditions on or before the Closing Date:

(a)          the representations and warranties set forth in Article 3 hereof shall be true and correct in all material respects at and as of the Closing as though then made and as though the Closing Date was substituted for the date of this Agreement throughout such representations and warranties, subject to such matters as are consented to in writing by Purchaser;

(b)          Seller shall have performed in all material respects all of the covenants and agreements required to be performed by it under this Agreement prior to the Closing;

(c)          there shall have been no material adverse change in the operations, financial condition, operating results, assets or business of the Business;

(d)          all consents by third parties that are required for the transfer of the Purchased Assets and the Business to Purchaser as contemplated hereby, that are required for the consummation of the transactions contemplated hereby or that are required to prevent a breach of, or a material default under or a termination or modification of any instrument, contract, license, lease or other agreement to which Seller is a party or to which any of the Purchased Assets is subject, and, other than Permitted Encumbrances, releases of all liens, charges, security interests, encumbrances and claims of others on or with respect to the Purchased Assets shall have been obtained on terms and conditions reasonably satisfactory to Purchaser; and

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(e)          Purchaser shall have obtained financing for the transaction in amounts and on terms reasonably satisfactory to Purchaser and obtained the consent of the senior lender to the transaction.

Any conditions specified in this Section 6.1 may be waived by Purchaser; provided that no such waiver shall be effective unless it is set forth in a writing executed by Purchaser. If the transaction contemplated hereunder is completed, all conditions under this Section 6.1 shall be considered met or waived.

ARTICLE 7.

 

CONDITIONS TO SELLER’S OBLIGATION TO CLOSE

7.1          Conditions to Seller’s Obligation. The obligation of Seller to consummate the transactions contemplated by this Agreement are subject to the satisfaction of the following conditions on or before the Closing Date:

(a)          the representations and warranties set forth in Article 4 hereof shall be true and correct in all material respects at and as of the Closing as though then made and as though the Closing Date was substituted for the date of this Agreement throughout such representations and warranties; and

(b)          Purchaser shall have performed in all material respects all the covenants and agreements required to be performed by it under this Agreement prior to the Closing.

Any condition specified in this Section 7.1 may be waived by Seller; provided that no such waiver shall be effective against Seller unless it is set forth in a writing executed by Seller. If the transaction contemplated hereunder is completed, all conditions under this Section 7.1 shall be considered met or waived.

ARTICLE 8.

 

INDEMNIFICATION

8.1          Indemnification by Seller. Seller agrees to and shall indemnify in full Purchaser and its shareholders, officers, directors and employees (collectively, the “Purchaser Indemnified Parties”) and defend and hold them harmless against any loss, liability, deficiency, damage, expense or cost (including reasonable legal expenses) that Purchaser Indemnified Parties may suffer, sustain or become subject to as a result of (a) any misrepresentation in any of the representations or breach of any of the warranties of Seller contained in this Agreement or in any exhibits, schedules, certificates delivered or to be delivered pursuant to the terms of this Agreement, the Transition Services Agreement or in any other agreements executed in connection with this
Agreement or otherwise incorporated in this Agreement (collectively, the “Related Documents”), (b) any breach of, 

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or failure to perform, any agreement or covenant of Seller contained in this Agreement or any of the Related Documents, (c) except for the Assumed Liabilities, any claims, losses, costs or expenses related to any products of Seller sold on or prior to the Closing Date or related to the finished goods Inventory purchased hereunder (as identified as finished goods on Schedule 2.2(a), and referenced by date code and serial number as being manufactured before Closing), (d) any Excluded Liabilities, (e) any claims, losses, costs or related expenses (including the reasonable attorneys’ fees) resulting from or arising from the rights of any creditors of Seller pursuant to any bulk sales laws which may apply as a result of the sale of the Purchased Assets to Purchaser, (f) Seller’s use of the Facility (as defined in the Transition Services
Agreement), or (g) except for the Assumed Liabilities, any claim, liability or contingent liability arising out of the operations of the Seller prior to the Closing Date disclosed on any schedule hereto, including, but not limited to, any amounts owed with respect to litigation, employment disputes or severance obligations (collectively, “Purchaser Losses”). In the event any Purchaser Indemnified Party incurs any Purchaser Losses, Purchaser, in addition to all other rights and remedies available to it under this Agreement, shall have the right to set off the amount of such Purchaser Losses against any amounts owed Seller.

8.2          Indemnification by Purchaser. Purchaser agrees to indemnify in full Seller and its managers, officers, directors and employees (the “Seller Indemnified Parties”) and hold them harmless against any loss, liability, deficiency, damage, expense or cost (including reasonable legal expenses) that the Seller Indemnified Parties may suffer, sustain or become subject to as a result of (a) any misrepresentation in any of the representations or breaches of any of the warranties of Purchaser contained in this Agreement or in any of the Related Documents, (b) any breach of, or failure to perform, any agreement of Purchaser contained in this Agreement or any of the Related Documents, (c) Assumed Liabilities, (d) Purchaser’s use of the Facility
(as defined in the Transition Services Agreement), or (e) except for the Excluded Liabilities, any claims, losses or expenses related to any products of Purchaser sold on or after the Closing Date (other than the finished goods Inventory (as identified as finished goods on Schedule 2.2(a), and referenced by date code and serial number as being manufactured before Closing)) (collectively, “Seller Losses”) (Purchaser Losses and Seller Losses shall collectively be referred to as the “Losses”).

8.3          Method of Asserting Claims. As used herein, an “Indemnified Party” shall refer to a “Purchaser Indemnified Party” or “Seller Indemnified Party,” as applicable, the “Notifying Party” shall refer to the party hereto whose Indemnified Parties are entitled to indemnification hereunder, and the “Indemnifying Party” shall refer to the party hereto obligated to indemnify such Notifying Party’s Indemnified Parties. 

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(a)          In the event that any of the Indemnified Parties is made a defendant in or party to any action or proceeding, judicial or administrative, instituted by any third party for the liability or the costs or expenses of which are Seller Losses or Purchaser Losses, as the case may be (any such third party action or proceeding being referred to as a “Claim”), the Notifying Party shall give the Indemnifying Party prompt notice thereof. The failure to give such notice shall not affect any Indemnified Party’s ability to seek reimbursement except to the extent such failure has materially and adversely affected the Indemnifying Party’s ability to defend successfully a Claim. The Indemnifying Party shall be entitled to contest and defend such Claim; provided, that the Indemnifying
Party (i) has a reasonable basis for concluding that such defense may be successful and (ii) diligently contests and defends such Claim. Notice of the intention so to contest and defend shall be given by the Indemnifying Party to the Notifying Party within twenty (20) business days after the Notifying Party’s notice of such Claim (but, in all events, at least five (5) business days prior to the date that an answer to such Claim is due to be filed). Such contest and defense shall be conducted by reputable attorneys employed by the Indemnifying Party. The Notifying Party shall be entitled at any time, at its own cost and expense (which expense shall not constitute a Loss unless the Notifying Party reasonably determines that the Indemnifying Party is not adequately representing or, because of a conflict of interest, may not adequately represent, any interests of the Indemnified Parties), to participate in such contest and defense and to be represented by attorneys of its
or their own choosing. If the Notifying Party elects to participate in such defense, the Notifying Party shall cooperate with the Indemnifying Party in the conduct of such defense. Neither the Notifying Party nor the Indemnifying Party may concede, settle or compromise any Claim without the consent of the other party, which consent shall not be unreasonably withheld or delayed. Notwithstanding the foregoing, in the event the Indemnifying Party fails or is not entitled to contest and defend a claim, the Notifying Party shall be entitled to contest, defend and settle such Claim.

(b)          In the event any Indemnified Party should have a claim against any Indemnifying Party that does not involve a Claim, the Notifying Party shall deliver a notice of such claim with reasonable promptness to the Indemnifying Party. If the Indemnifying Party notifies the Notifying Party that it does not dispute the claim described in such notice or fails to notify the Notifying Party within thirty (30) days after delivery of such notice by the Notifying Party whether the Indemnifying Party disputes the claim described in such notice, the Loss in the amount specified in the Notifying Party’s notice shall be conclusively deemed a liability of the Indemnifying Party and the Indemnifying Party shall pay the amount of such Loss to the Indemnified Party on demand. If the Indemnifying Party has
timely disputed its liability with respect to such claim, a representative of each of the Indemnifying Party and the Notifying
Party (or their respective designees) shall proceed in good faith to negotiate a resolution of such dispute, and if not resolved
through the negotiations of such representatives or designees within sixty (60) days after the delivery of  

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the Notifying Party’s notice of such claim, such dispute (except for any such dispute which gives rise or could give rise to
equitable relief under this Agreement) shall be resolved fully and finally by arbitration by an arbitrator selected by the
parties, at a location agreed to by the parties, and pursuant to rules of procedure agreed to by the parties. If the parties
cannot agree, the arbitration shall be in Chicago, Illinois by an arbitrator selected pursuant to, and an arbitration governed by,
the Commercial Arbitration Rules of the American Arbitration Association. The arbitrator shall resolve the dispute within thirty
(30) days after selection and judgment upon the award rendered by such arbitrator may be entered in any court of competent
jurisdiction.

8.4          Set-off. Purchaser is hereby granted an express right to set off amounts due under this Article 8 and otherwise hereunder against any amounts owed to Seller by Purchaser; provided, however, the Purchaser and Seller agree that the Purchaser may not set-off against more than $200,000 of the Promissory Note. This right of set-off shall be cumulative and not exclusive of any rights or remedies provided for herein or by law.

8.5          Maximum Liability. Notwithstanding the terms herein, the maximum amount required to be paid by the Seller in the aggregate for Purchaser Losses shall not exceed the Purchase Price, and the maximum amount required to be paid by the Purchaser for Seller Losses shall not exceed the Purchase Price. Seller shall not be required to pay any Purchaser Losses until such Losses in the aggregate exceed $20,000 and then Seller shall be liable for all Purchaser Losses; provided, however, this limitation shall not apply to Excluded Liabilities. Purchaser shall not be required to pay any Seller Losses until such Losses in the aggregate exceed $20,000 and then Purchaser shall be liable for all Seller Losses; provided, however, this limitation shall not apply to Assumed Liabilities.

8.6          Exclusive Remedies. Remedies provided in this Article 8 are the sole and exclusive remedies for the recoveries against another party for matters related to this Agreement, other than the equitable remedies set forth in Section 9.8.

ARTICLE 9.

 

ADDITIONAL AGREEMENTS

9.1          Survival. The representations, warranties, covenants and agreements set forth in this Agreement or in any writing delivered to Purchaser or Seller in connection with this Agreement shall survive the Closing Date for a period of two (2) years.

9.2          Mutual Assistance. Subsequent to the Closing, Seller on the one hand and Purchaser on the other, at their own cost, shall assist each other (including making records available) in the preparation of their respective tax returns and the filing and execution of tax elections, if required, as well as any audits or litigation that may ensue as a result of the filing thereof, to the extent that such assistance is reasonably requested.

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9.3          Press Release and Announcements. No press release related to this Agreement or the transactions contemplated hereby, or other announcements to the employees, customers or suppliers of Seller, shall be issued without the joint approval of Purchaser and Seller. No other public announcement related to this Agreement or the transactions contemplated hereby shall be made by either party, except as required by law.

9.4          Expenses. Each party shall pay all of its expenses in connection with the negotiation of this Agreement, the performance of its obligations hereunder and the consummation of the transactions contemplated by this Agreement. Seller shall pay the cost of recording all documents necessary to place record title to the Purchased Assets in the condition warranted by or required of Seller by this Agreement.

9.5          Further Transfers. After the Closing, Seller shall, and shall cause its affiliates to, execute and deliver such further instruments of conveyance and transfer and take such additional action as Purchaser may reasonably request to effect, consummate, confirm or evidence the transfer to Purchaser of the Purchased  Assets. Seller shall execute such documents as may be necessary to assist Purchaser (or its designees) in preserving or perfecting its rights in the Purchased Assets.

9.6          Transition Assistance. From the date hereof and until three (3) years after the Closing, Seller shall not in any manner take any action which is designed, intended or might be reasonably anticipated to have the effect of discouraging customers, suppliers, lessors, employees, sales agents and other business associates from maintaining the same business relationships with Purchaser after the date of this Agreement as were maintained with Seller prior to the date of this Agreement.

9.7          Confidentiality. If the transactions contemplated by this Agreement are not consummated, Purchaser shall maintain the confidentiality of all information and materials received by it reasonably designated by Seller as confidential, and Purchaser shall return to Seller or destroy any materials (and copies thereof) obtained from Seller in connection with the transactions contemplated hereby. Whether or not the transactions contemplated hereby are consummated, Seller shall maintain the confidentiality of all information and materials regarding Purchaser and its affiliates, reasonably designated as confidential by Purchaser. If the transactions contemplated by this Agreement are consummated, Seller shall maintain the confidentiality of all proprietary and other
non-public information regarding the Business and the Purchased Assets and shall turn over to Purchaser all such materials in their possession.

	
             
 	
            9.8
 	
            Non-Compete; Non-Solicitation.
 

(a)          Although it is understood among the parties that Seller desires to stop engaging in business operations similar to that of the Business, as an additional inducement to Purchaser to enter into and to perform its obligations under this Agreement, Seller agrees that, for a period of five (5) years after the Closing Date (the “Non-Competition Period”), Seller shall not, in the United States or in any foreign country in which Seller currently does business, directly or indirectly, either for itself or any other person or entity, own, manage, control, participate in, permit its name to be used by, consult with, render services for or otherwise assist in any manner any entity that owns, invests in, manages, controls or engages in the business of designing, distributing and selling products which are
similar to those of the Business.

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(b)          Seller agrees that, for a period of five (5) years after the Closing, it shall not directly or indirectly offer employment to or hire any current employee or sales agent of the Seller who becomes the employee or sales agent of the Purchaser and it shall not interfere with sources of supply of Purchaser in its operation of the Business.

(c)
          If, at the time of enforcement of this Section 9.8, a court shall hold that the duration, scope or area restrictions  stated herein are unreasonable under circumstances then existing, the parties agree that the maximum duration, scope or area reasonable under such circumstances shall be substituted for the stated duration, scope or area.

(d)          Seller recognizes and affirms that in the event of breach by it of any of the provisions of this Section 9.8 money damages would be inadequate and Purchaser would have any adequate remedy at law. Accordingly, Seller agrees that the Purchaser shall have the right, in addition to any other rights and remedies existing in its favor, to enforce its rights and the obligations under this Section 9.8 by an action or actions for specific performance, injunction and/or other equitable relief without posting any bond or security to enforce or prevent any violations, whether anticipatory, continuing or future, of the provisions of this Section 9.8, including, without limitation, the extension of the Non-Competition Period by a period equal to (i) the length of the violation of
this Section 9.8 plus (ii) the length of any court proceedings necessary to stop such violation. In the event of a breach or violation by Seller of any of the provisions of this Section 9.8, the running of the Non-Competition Period, but not of Seller’s obligations under this Section 9.8, shall be tolled during the period during which the occurrence of any such breach or violation is investigated and during the continuance of any such breach or violation.

9.9          Specific Performance. Purchaser and Seller acknowledge that the Business and the Purchased Assets are unique and recognize and affirm that in the event of a breach of this Agreement money damages would be inadequate and the non-breaching party would have no adequate remedy at law. Accordingly, Purchaser and Seller agree that the non-breaching party shall have the right, in addition to any other rights and remedies existing in its favor, to enforce its rights and the breaching Party’s obligations hereunder by an action or actions for specific performance, injunction and/or other equitable relief, without posting any bond or security.

9.10       Remittances. All remittances, mail and other communications relating to the Purchased Assets or the Business received by Seller or the managers, officers and directors of Seller, at any time after the Closing Date shall be immediately turned over to Purchaser by such parties. Seller shall cooperate with Purchaser, and take such actions as Purchaser reasonably requests, to assure that customers of the Business send their remittances directly to Purchaser, and to assure that remittances from customers of the Business which are improperly sent to Seller are not commingled with Seller’s assets and are turned over to Purchaser.

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9.11       Employees and Agents of Seller. Purchaser is under no legal obligation to employ any personnel presently employed by the Seller. Prior to the Closing Date, Purchaser may, but shall not be required to, offer employment to such persons currently employed by Seller as part of the Business as Purchaser in its sole discretion shall determine. Purchaser shall have the absolute right to establish all terms and conditions of employment, including wages, benefits and benefit plans, for any employees of the Seller to whom it chooses to make an offer of employment to be employed by Purchaser. Further, it is expressly agreed that Purchaser is not bound to assume, implement or continue any wages, terms and conditions of employment, benefits or benefit plans which may currently exist for
any of the Seller’s employees. All such offers of employment shall be on the terms and conditions established by Purchaser and shall be contingent upon employment commencing with Purchaser only following the Closing Date. The Seller agrees not to discourage any individuals who are offered employment or an agency relationship with Purchaser from accepting such employment or agency relationship with Purchaser.

ARTICLE 10.

 

MISCELLANEOUS

10.1       Amendment and Waiver. This Agreement may be amended, and any provision of this Agreement may be waived; provided that any such amendment or waiver shall be binding on Seller only if such amendment or waiver is set forth in a writing executed by Seller and that any such amendment or waiver shall be binding upon Purchaser only if such amendment or waiver is set forth in a writing executed by Purchaser. No course of dealing between or among any persons having any interest in this Agreement shall be deemed effective to modify, amend or discharge any part of this Agreement or any rights or obligations of any person under or by reason of this Agreement.

10.2       Notices. All notices, demands and other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given when personally delivered, mailed by first class mail, return receipt requested or delivered by a nationally recognized courier service. Notices, demands and communications to Seller or Purchaser shall, unless another address is specified in writing in accordance herewith, be sent to the address indicated below:

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Notices to Seller:

Nature Vision, Inc.

213 NW 4th Street

Brainerd, Minnesota  56401

Attention:  Jeff Zernov

Phone:  (218) 825-0733

Fax:  (218) 825-0721

with a copy to:

Gray, Plant, Mooty, 

Mooty & Bennett, P.A.

500 IDS Center 

80 South Eighth Street 

Minneapolis, MN 55402 

Phone:  (612) 632-3002 

Fax:  (612) 632-4002 

Notices to Purchaser

Photogenic Professional Lighting

1268 Humbracht Circle

Bartlett, Illinois  60103

Attention:  Ken Orlando

Phone:  (630) 830-2500

Fax:  (630) 830-2525

with a copy to:

Vedder, Price, Kaufman & Kammholz, P.C.

222 North LaSalle Street

Chicago, Illinois  60601

Attention:  Lane R. Moyer, Esq.

Phone:  (312) 609-7500

Fax:  (312) 609-5005

10.3       Assignment. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, legatees, personal representatives, successors and permitted assigns (including all successors and assignees in the event of Seller’s liquidation or the sale of substantially all of the assets of Seller) as the case may be, but neither this Agreement nor any of the rights, interests or obligations hereunder of Seller shall be assignable by Seller without the prior written consent of Purchaser. Purchaser may assign this Agreement without restriction to any of its affiliates, existing as of the date hereof or in the future, or to its senior lender; provided Purchaser unconditionally guarantees to Seller at the time of
such assignment the prompt and complete performance of all of such affiliates’ obligations hereunder.

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10.4       Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Agreement.

10.5       No Third-Party Beneficiaries. Nothing in this Agreement, whether express or implied, is intended to confer any rights or remedies under or by reason of this Agreement on any other persons other than the parties hereto and their respective successors, permitted assigns, heirs, legatees and personal representatives, as the case may be, nor is anything in this Agreement intended to relieve or discharge the obligation or liability of any third persons to any party, nor shall any provision give any third parties any right of subrogation or action over or against any party. This Agreement is not intended to and does not create any third-party beneficiary rights whatsoever.

10.6       No Strict Construction. The language used in this Agreement shall be deemed to be the language chosen by the  parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any person.

10.7       Captions. The captions used in this Agreement are for convenience of reference only and do not constitute a part of this Agreement and shall not be deemed to limit, characterize or in any way affect any provision of this Agreement, and all provisions of this Agreement shall be enforced and construed as if no caption had been used in this Agreement.

10.8       Complete Agreement. This document and the documents referred to herein contain the complete agreement between the parties and supersede any prior understandings, agreements or representations by or between the parties, written or oral, which may have related to the subject matter hereof in any way.

10.9       Counterparts. This Agreement may be executed in one or more counterparts, all of which taken together shall constitute one and the same instrument.

10.10     Governing Law. The internal law, not the law of conflicts, of the State of Illinois shall govern all questions concerning the construction, validity and interpretation of this Agreement and the performance of the obligations imposed by this Agreement.

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

 

	
             
 	
             
 	
            PROMARK INTERNATIONAL, INC. d/b/a PHOTOGENIC PROFESSIONAL LIGHTING  
 
	
              
 	
             
 	
            By: 
 	
            
 /S/ Kenneth Orlando
 
	
             
 	
             
 	
            Its:
 	
            President
 

 

 

	
             
 	
             
 	
            NATURE VISION, INC.  
 
	
              
 	
             
 	
            By: 
 	
            
 /S/ Michael Day
 
	
             
 	
             
 	
            Its:
 	
            Chief Financial Officer
 

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