Document:

Asset Purchase Agreement dated as of March 4, 2005 between HK Cast Products,
      LLC f/k/a HK Engineered Castings, LLC and HK Castings, Inc.

    

      Exhibit
        10.32

       

      

       

      Asset
        Purchase Agreement

       

      This
        Asset
        Purchase Agreement
        (the
“Agreement”) is made and entered into this 3rd
        day of
        March, 2005, by and between HK
        Cast
        Products, LLC, formerly
        known as HK
        Engineered Castings, LLC,
        an
        Indiana limited liability company (the “Purchaser”) and HK
        Castings, Inc.,
        a
        Washington corporation (“Seller”).

       

      Background:

       

      A. Seller
        is
        engaged in the business of manufacturing complex alloyed gray and ductile
        iron
        castings for use in large gas, diesel and other engines and other industrial
        applications (the “Business”). 

       

      B. Seller
        desires to sell to Purchaser, and Purchaser desires to purchase from Seller,
        substantially all of the assets, properties and rights of the Business, pursuant
        to the terms and conditions set forth in this Agreement.

       

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

       

       

      ARTICLE
        I. Purchase
        and Sale of Assets

       

      1.01 Purchased
        Assets.

       

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

       

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

       

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

       

      (c) Prepaid
        Expenses and Customer Deposits.
        All
        prepaid expenses, advance payments, deposits and claims for refunds (other
        than
        refunds pertaining to any liabilities 

       

      
        
          
          

        

        
          
            

          

        

        
          
          

        

      

      which
        are
        not assumed by Purchaser) existing as of Closing (the “Prepaid Expenses”), as
        well as any cash advances and/or deposits provided to Seller by any customers
        of
        the Business (“Customer Deposits”), a schedule of which shall be attached hereto
        as Schedule
        1.01(c)
        at
        Closing;

       

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

       

      (e) Licenses
        and Permits.
        All of
        Seller’s rights and benefits under licenses (including without limitation,
        licenses to use computer software), permits, distribution and/or franchise
        rights, registrations, all governmental and other licenses, certificates
        and
        permits relating to the operation of the Business (collectively, the “Licenses
        and Permits”);

       

      (f) Records.
        All of
        Seller’s books and records, customer files, customer lists and records, vendor
        files, vendor lists and records, cost files and records, credit information,
        distribution records, business records and plans, studies, surveys, reports,
        correspondence, sales and promotional literature and materials, advertising
        and
        advertising copy, and other similar materials, computer and other records,
        and
        all computer software (collectively, the “Books and Records”); 

       

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

       

      (h) Goodwill.
        All
        goodwill associated with Seller and the Business.

       

      1.02 Excluded
        Assets.

       

      The
        parties acknowledge and agree that the Purchased Assets shall not include
        Seller’s cash or cash equivalents, accounts receivable, minutes book and stock
        records, Seller’s deferred and prepaid income tax assets and any assets
        specifically listed on Schedule
        1.02
        (collectively, the “Excluded Assets”).

       

       

      ARTICLE
        II. Liabilities

       

      2.01 Assumption
        of Liabilities

       

      At
        the
        Closing, Purchaser shall assume and agree to discharge and perform when due
        only
        the
        liabilities and obligations of Seller accruing and arising after the Closing
        Date under the Contracts (collectively, the “Assumed Liabilities”).

       

      
        
          
          

        

        
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      2.02 Excluded
        Liabilities.

       

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

       

       

      ARTICLE
        III. Purchase
        Price and Closing 

       

      3.01 Purchase
        Price.

       

      The
        total
        purchase price (the “Purchase Price”) for the Purchased Assets shall be (i) Two
        Hundred Ten Thousand One Hundred and 00/100 Dollars ($210,100.00) (the “Cash
        Price”), and (ii) Thirty Thousand (30,000) shares
        of
        common stock of
        Magnetech Integrated Services Corp. (“MISCOR”), the in-direct parent company of
        Purchaser (the “Shares”). 

       

      3.02 Payment
        of the Purchase Price.

       

      The
        Purchase Price shall be payable at the Closing as follows:

       

      (a) Purchaser
        shall pay One Hundred Fifty-one Thousand Eight Hundred and 57/100 Dollars
        ($151,800.57) of the Cash Price to General Electric Capital Corporation (“GE
        Capital”) on behalf of Hatch & Kirk, Inc., the majority shareholder of
        Seller (“Hatch & Kirk”), in
        partial payment of the debt and obligations owed to GE Capital by Hatch &
        Kirk (the “GE Indebtedness”);

       

      (b) Purchaser
        shall
        execute and deliver to Patricia Minehardt, on behalf of Seller, a promissory
        note (the “Minehardt Note”) in the principal amount of Thirty Thousand Dollars
        ($30,000), which shall be payable, without interest, in three (3) equal annual
        installments within thirty (30) days of the end of each twelve (12) month
        period
        following the Closing Date,

       

      (c) Purchaser
        shall reimburse certain vacation pay of Seller pursuant to Section 6.01(a)
        in
        the amount of Twenty-eight Thousand Two Hundred Ninety-nine and 43/100 Dollars
        ($28,299.43), and

       

      
        
          
          

        

        
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      (d) Purchaser
        shall issue the Shares to Seller. 

       

      3.03 Allocation.

       

      The
        Purchase Price shall be allocated among the Purchased Assets as set forth
        on
Schedule
        3.03
        attached
        hereto. Purchaser and Seller agree to furnish each other and the Internal
        Revenue Service with such applicable information as may be required under
        Section 1060 of the Internal Revenue Code, as amended (the “Code”), and to
        cooperate in the completion and timely filing of IRS Form 8594 (Asset
        Acquisition Statement). A party may change the agreed-upon allocations only
        in
        order to be consistent with any finally-adjudicated adjustments made to the
        federal tax returns of the other party. 

       

      3.04 The
        Closing.

       

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

       

      3.05 Actions
        at the Closing.

       

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

       

       

      ARTICLE
        IV. Representations
        and Warranties of Seller and Shareholders

       

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

       

      4.01 Organization;
        Power and Authority.

       

      Seller
        is
        a corporation duly organized, validly existing and in good standing under
        the
        laws of the State of Washington and is duly qualified to do business and
        is in
        good standing under the laws all other jurisdictions in which its ownership
        or
        use of property for the conduct of its Business requires it to qualify,
        including, but not limited to, the State of West Virginia. Seller has all
        necessary corporate power and authority to own all of its properties and
        assets,
        to conduct its business as now being conducted, and to make, execute, deliver,
        and perform this Agreement and the other documents and instruments contemplated
        hereby.

       

      4.02 Execution,
        Delivery and Validity.

       

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

       

      4.03 Non-contravention.

       

      Except
        as
        set forth on Schedule
        4.03,
        the
        execution, delivery and performance of this Agreement and the other agreements
        contemplated hereby and the consummation of the transactions contemplated
        hereby
        or thereby or compliance with or fulfillment of the terms and provisions
        hereof
        or of any other agreement or instrument contemplated hereby or thereby, do
        not
        and will not: (i) conflict with or result in a breach of any of the provisions
        of the Articles of Incorporation or By-Laws of Seller; (ii) contravene any
        law,
        rule or regulation or any order, writ, award, judgment, decree or other
        determination which 

       

      
        
          
          

        

        
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      affects
        or binds Seller or any of its properties; (iii) conflict with, result in
        a
        breach of, constitute a default under, or give rise to a right of acceleration,
        termination or the imposition of penalties under any contract, deed of trust,
        mortgage, trust, lease, governmental or other license, permit or other
        authorization, contract, agreement, note or any other agreement, instrument
        or
        restriction to which Seller is a party or by which any of their properties
        may
        be affected or bound; or (iv) require the approval, consent or authorization
        of,
        or the making of any declaration, filing or registration with, any foreign,
        federal, state or local court, governmental authority or regulatory body
        (“Governmental Authority”) or with any lender, customer or other third
        party.

       

      4.04 Capitalization.

       

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

       

      4.05 Financial
        Statements.

       

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

       

      4.06 Operations
        Since June 30, 2004.

       

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

       

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

       

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

       

      
        
          
          

        

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

       

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

       

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

       

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

       

      (g) moved,
        removed or caused to be moved or removed, any of the Equipment or Inventory
        (other than the sale of Inventory in the ordinary course of business consistent
        with past practice) located in or at Seller’s
        facility in Weston, West Virginia (the “Facility”);

       

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

       

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

       

      (j) modified
        or amended any relationships with suppliers or customers of the Business,
        which
        would adversely affect the Business; or

       

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

       

      4.07 Employment
        Compliance.

       

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

       

      4.08 Employees.

       

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

       

      
        
          
          

        

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

       

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

       

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

       

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

       

      4.09 Licenses
        and Permits.

       

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

       

      4.10 Assets.

       

      Except
        as
        set forth in Schedule
        4.10,
        Seller
        owns all of the assets reflected on the Financial Statements (including any
        patents, copyrights, trade names, service marks and other names and marks
        used
        in connection with the Business), and Seller owns all Purchased Assets with
        good
        and marketable title free and clear of all mortgages, security interests,
        liens,
        leases, covenants, assessments, easements, options, rights of refusal,
        restrictions, reservations, defects in title, encroachments, and other
        encumbrances.

       

      4.11 Insurance.

       

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

       

      (a) is
        valid,
        outstanding and enforceable; 

       

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

       

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

       

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

       

      4.12 Intellectual
        Property.

       

       Schedule
        4.12
        lists or
        describes all patents, trademarks, trade names, service marks, copyrights
        and
        applications for such items used in the conduct of the Business. Seller owns
        or
        has a valid right to use the Intellectual Property, and may transfer the
        

       

      
        
          
          

        

        
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      Intellectual
        Property to Purchaser without the need for third party agreements or consents.
        There
        is
        no claim or proceeding pending or threatened by any third party against or
        relating to Seller, nor does Seller know or have reasonable grounds to know
        of
        any basis for any such action, with respect to the Intellectual
        Property.

       

      4.13 Contracts
        and Commitments.

       

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

       

      4.14 Condition
        of Inventory and Equipment. 

       

      (a) The
        Equipment is adequate for the uses for which it is being put. The Equipment
        is
        sufficient for the continued conduct of the Business after the Closing in
        substantially the same manner as conducted prior to the Closing. 

       

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

       

      4.15 Personal
        Property.

       

      Except
        as
        listed on Schedule
        4.15:

       

      (a) All
        of
        the tangible property used in the Business is located at Seller’s facility in
        Weston, West Virginia;

       

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

       

      4.16 Customers.

       

      Except
        as
        listed on Schedule
        4.16,
        Seller
        has not received any notice nor has knowledge that any of its customers intends
        to terminate or materially reduce its commercial relationship with Seller,
        and
        no customer has terminated or materially reduced its commercial relationship
        with Seller in the last twelve (12) months.

       

      
        
          
          

        

        
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      4.17 Product
        Warranty.

       

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

       

      4.18 Litigation.

       

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

       

      4.19 Environment,
        Health and Safety. 

       

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

       

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

       

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

       

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

       

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

       

      (f) For
        purposes of this Section
        4.19:

       

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

       

      
        
          
          

        

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

       

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

       

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

       

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

       

      4.20 Tax
        Matters. 

       

      (a) For
        purposes of this Agreement, (i) “Tax” means any federal, state, local, or
        foreign income, gross receipts, license, payroll, employment, excise, severance,
        stamp, occupation, premium, windfall profits, environmental (including taxes
        under Section 59A of the Code), customs duties, capital stock, franchise,
        profits, withholding, social security (or similar), unemployment, disability,
        real property, personal property, sales, use, transfer, registration, value
        added, alternative or add-on minimum, estimated, or other tax of any kind
        whatsoever, including any interest, penalty, or addition thereto, whether
        disputed or not, and (ii) “Tax Return” means any return, report, information
        return, or other document (including any related or supporting information)
        filed or required to be filed with any taxing authority in connection with
        its
        determination, assessment, collection, administration, or imposition of any
        Tax.

       

      (b) Except
        as
        set forth in Schedule
        4.20,
        Seller
        has duly and timely filed all Tax Returns and have duly and timely paid all
        Taxes and other charges (whether or not shown on any Tax Return) due or claimed
        to be due from it by federal, foreign, state, or local taxing authorities
        or has
        set up an adequate reserve on the Financial Statements for all Taxes payable.
        True and correct copies of all Tax Returns for the periods ending June 30,
        2001
        and 2002 have been heretofore delivered to Purchaser. There are no Tax liens
        (other than liens for current Taxes not yet due and payable) upon any properties
        or assets of Seller (whether real, personal, or mixed, tangible or intangible),
        and, except as reflected in the Financial Statements or as set forth in
Schedule
        4.20,
        there
        are no pending or, to Seller’s knowledge, threatened audits or examinations
        relating to, or claims asserted for, Taxes or assessments against Seller,
        and
        the Seller has no knowledge of any basis for 

       

      
        
          
          

        

        
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      any
        such
        claims. Seller has not been granted or been requested to grant any extension
        of
        the limitation period applicable to any claim for Taxes or assessments with
        respect to Taxes. Seller is not a party to any Tax allocation or sharing
        agreement. Seller is not liable for the Taxes of any “affiliated group” under
        Treasury Regulation 1.1502-6 (or any similar provision of state, local, or
        foreign law). Seller has withheld and paid all Taxes required to have been
        withheld and paid in connection with amounts paid or owing to any employee,
        independent contractor, creditor, or stockholder.

       

      (c) Schedule
        4.20
        attached
        hereto lists each jurisdiction in which Seller files Tax Returns for each
        period
        or portion thereof ending on or before the Closing Date. 

       

      4.21 Employee
        Benefit Plans.

       

      Except
        as
        identified on Schedule
        4.21,
        Seller
        does not maintain or contribute to (or have the obligation to contribute
        to) any
        Employee Benefit Plans. For purposes of this Agreement, the term “Employee
        Benefit Plan” means (i) any employee benefit plan, as defined in Section 3(3) of
        the Employee Retirement Income Security Act of 1974 as amended (“ERISA”), and
        (ii) any other plan, trust agreement or arrangement for any bonus, severance,
        hospitalization, vacation, incentive or deferred compensation, pension or
        profit-sharing, retirement, payroll savings, stock option, equity compensation,
        group insurance, death benefit, fringe benefit, welfare or any other employee
        benefit plan or fringe benefit arrangement of any nature whatsoever, including
        those benefiting retirees or former employees. As to any previously terminated
        Employee Benefit Plan of Seller, Seller has not incurred, and will not incur,
        any withdrawal liability, nor does any Seller have any contingent withdrawal
        liability under ERISA to any Multiemployer Plan (as defined in ERISA or the
        Code). Except as identified on Schedule
        4.21
        and with
        respect to each Employee Benefit Plan, Seller is in material compliance,
        in form
        and operation, with the requirements provided by any and all statutes, orders
        or
        governmental rules or regulations currently in effect, including, but not
        limited to, ERISA and the Code, and applicable to such Employee Benefit Plan.
        Each Employee Benefit Plan and any related trust intended to qualify under
        Section 401(a) and Section 501(a) of the Code is so qualified and nothing
        has
        occurred to cause the loss of such qualification.

       

      4.22 Compliance
        with Laws.

       

      Except
        as
        identified on Schedule
        4.22
        Seller
        is in material compliance with all laws applicable to it relating to the
        Business, and has not received any written notice of any civil, criminal
        or
        administrative investigation or audit by any governmental entity relating
        to
        Seller or the Business.

       

      4.23 Broker’s
        or Finder’s Fee.

       

      Except
        as
        identified on Schedule
        4.23,
        Seller
        has not employed, or is liable for the payment of any fee to, any finder,
        broker, consultant or similar person in connection with the transactions
        contemplated by this Agreement.

       

      4.24 Investment
        Matters.

       

      Seller
        is
        acquiring the Shares for Seller’s own investment and not with a view toward the
        distribution or resale thereof; provided,
        that
        Seller
        intends to distribute all of the Shares to Patricia Minehardt, as Personal
        Representative of the Estate of Lou Minehardt (the “Estate”), a shareholder of
        Seller, upon the subsequent liquidation or dissolution of Seller. Seller
        acknowledges and understands that (i) the transferability of the Shares is
        severely limited and Seller must continue to bear the economic risks of Seller’s
        ownership of the Shares for an indefinite period of time as the Shares have
        not
        been registered under the Federal 

       

      
        
          
          

        

        
          -11-

          
            

          

        

        
          
          

        

      

      Securities
        Act of 1933, as amended, or any state securities laws, (ii) the Shares cannot
        be
        offered or sold unless they are subsequently registered under such laws or
        an
        exemption from each such registration requirement is available; and (iii)
        investment in the Shares involves a high degree of risk and is suitable only
        for
        sophisticated investors. Seller has had access to or has received all material
        facts and information with respect to MISCOR (including an opportunity to
        ask
        questions and receive answers from MISCOR regarding MISCOR’s business and
        operations) which Seller has deemed necessary or desirable in order to make
        an
        informed decision with respect to its acquisition of the Shares. Seller
        has not been solicited to acquire the Shares by means of general advertising
        or
        general solicitation. Prior to and as a condition of Seller’s distribution of
        the Shares to any of its shareholders, Seller will cause such shareholder
        to
        execute an investment intent letter in favor of MISCOR substantially in the
        form
        of the letter attached hereto as Exhibit
        4.24.

       

      4.25 
        No Omissions or Misstatements.

       

      None
        of
        the statements or information contained in any of the representations,
        warranties, covenants or agreements of Seller set forth in this Agreement
        or any
        information or documents delivered or to be delivered to Purchaser prior
        to the
        execution of this Agreement, contains any untrue statement of a material
        fact or
        omits a material fact necessary to make the statements contained in this
        Agreement or in any exhibit or schedule to this Agreement or in any of the
        other
        information provided or the documents delivered to Purchaser in connection
        with
        the transactions contemplated by this Agreement, in light of the circumstances
        in which those statements were made, not misleading.

       

       

      ARTICLE
        V. Representations
        and Warranties of Purchaser

       

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

       

      5.01 Organization.

       

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

       

      5.02 Execution,
        Delivery and Validity.

       

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

       

      5.03 Non-contravention.

       

       The
        execution, delivery and performance of this Agreement and the other agreements
        contemplated hereby and the consummation of the transactions contemplated
        hereby
        or thereby or compliance with or fulfillment of the terms and provisions
        hereof
        or of any other agreement or instrument contemplated hereby or thereby, do
        not
        and will not: (i) conflict with or result in a breach of any of the provisions
        of the Articles of Organization of Purchaser; (ii) contravene any law, rule
        or
        regulation or any order, writ, award, judgment, decree or other determination
        which affects or binds Purchaser or any of its properties; (iii) conflict
        with,
        result in a breach of, constitute a default under, or give rise to a right
        of

       

      
        
          
          

        

        
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      acceleration,
        termination or the imposition of penalties under any contract, deed of trust,
        mortgage, trust, lease, governmental or other license, permit or other
        authorization, contract, agreement, note or any other agreement, instrument
        or
        restriction to which Purchaser is a party or by which any of its properties
        may
        be affected or bound; or (iv) require the approval, consent or authorization
        of,
        or the making of any declaration, filing or registration with, any third
        party
        or any foreign, federal, state or local court, governmental authority or
        regulatory body.

       

      5.04 Broker’s
        or Finder’s Fee.

       

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

       

       

      ARTICLE
        VI. Related
        Agreements and Conditions to Closing

       

      6.01 Related
        Agreements.

       

      In
        addition to any other agreements contemplated hereby or herein: 

       

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

       

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

       

      
        
          
          

        

        
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      (c) Full
        Access.
        Immediately following the execution of this Agreement by all parties, Seller
        shall give Purchaser and its authorized representatives full access to any
        and
        all premises, properties, contracts, commitments, books, records and affairs
        of
        Seller, including, without limitation, causing appropriate senior personnel
        of
        Seller to be made available for interviews by Purchaser and its authorized
        representatives. Purchaser shall use its best efforts to conduct any such
        inspections and interviews so as to cause minimal disruption to the Business.
        If
        this Agreement is terminated, Seller and its representatives, and Purchaser
        and
        its representatives will, upon written request therefor, each return to the
        other all documents and records (including all copies made thereof) obtained
        from the other at any time in connection with the transactions contemplated
        hereby and will keep confidential any such information so obtained. Seller
        will
        also permit Purchaser at any time after the execution of this Agreement to
        make
        economic and operational feasibility, engineering and architectural studies,
        including soil tests and borings, and studies of estimated costs of clearance
        and grading on any real estate used in connection with the Business. All
        such
        tests, inspections, assessments, audits and studies shall be at Purchaser’s
        cost. 

       

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

       

      (e) Bulk
        Sales.
        Purchaser and Seller hereby agree that the parties intend to comply with
        any
        applicable bulk sales laws and all other statutes, regulations or ordinances
        requiring notice to creditors of the Business or others in connection with
        the
        consummation of the transactions contemplated by this Agreement; provided,
        that
        nothing herein shall be deemed to release or discharge Seller from its
        obligation to pay its creditors except to the extent such obligations constitute
        Assumed Liabilities.

       

      6.02 Conditions
        to Obligations of Seller.

       

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

       

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

       

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

       

      
        
          
          

        

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

       

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

       

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

       

      6.03 Conditions
        to Obligations of Purchaser.

       

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

       

      (a) Hatch
        & Kirk Asset Purchase Agreement.
        At or
        prior to Closing, Purchaser, or a related entity, shall enter into a written
        asset purchase agreement with Hatch & Kirk for the purchase of certain
        assets of Hatch & Kirk located in Hagerstown, Maryland, substantially in the
        form of asset purchase agreement attached hereto as Exhibit
        6.03(a).

       

      (b) Minehardt
        Employment Agreement.
        At or
        prior to Closing, Purchaser shall enter into a written employment agreement
        with
        Patricia Minehardt, substantially in the form of employment agreement attached
        hereto as Exhibit
        6.03(b).

       

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

       

      (d) Due
        Diligence.
        Purchaser shall have completed such inspections of the Purchased Assets and
        such
        due diligence investigations of Seller and the Business as Purchaser may
        deem
        reasonably necessary or advisable, and Purchaser shall be satisfied in its
        sole
        and absolute discretion with the results of such due diligence
        review.

       

      (e) Performance
        of Agreement.
        Seller
        shall have delivered all documents and agreements described in Article VII
        and
        otherwise performed in all respects all 

       

      
        
          
          

        

        
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      obligations
        required under this Agreement and any other agreements referenced herein
        to be
        performed by it on or prior to the Closing Date.

       

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

       

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

       

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

       

      (i) Lien
        Searches.
        Seller
        shall have delivered to Purchaser (i) final state and local tax lien and
        Uniform
        Commercial Code financing statement searches disclosing all liens and
        encumbrances on the Purchased Assets; and (ii) written releases from the
        holders
        of any such security interests, liens or other encumbrances with respect
        thereto.

       

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

       

       

      ARTICLE
        VII. Deliveries
        at Closing

       

      7.01 Deliveries
        by Seller.

       

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

       

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

       

      (b) Seller
        shall execute an assignment and assumption agreement (“Assignment and Assumption
        Agreement”) in the form attached hereto as Exhibit
        

       

      
        
          
          

        

        
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      7.01(b)
        together
        with such other instruments and specific forms of assignment as may be necessary
        to effect the transfer and registration of transfer of the Purchased Assets
        and
        Assumed Liabilities hereunder.

       

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

       

      (d) Seller
        shall deliver originals (to the extent available, and if not, copies) of
        the
        Contracts, Licenses and Permits, Business Records and other documents in
        Seller’s possession constituting part of the Purchased Assets, as well as
Schedule
        1.01(a)
        and
1.01(d)
        updated
        as of the Closing Date.

       

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

       

      7.02 Deliveries
        by Purchaser.

       

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

       

      (a) Purchaser
        shall pay the Cash Price to GE Capital and issue the Shares in accordance
        with
        Section 3.02.

       

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

       

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

       

      7.03 Additionally
        Requested Documents; Post-Closing Assistance.

       

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

       

       

      ARTICLE
        VIII. Survival
        of Provisions and Indemnification

       

      8.01 Survival.

       

      The
        respective representations, warranties and covenants of each of the parties
        to
        this Agreement, including all statements contained in any schedule, exhibit
        or
        other agreement delivered pursuant hereto or contemplated hereby, shall be
        deemed to be material and to have been relied upon by the parties hereto
        and
        shall survive the Closing, and the consummation of the transactions contemplated
        hereby, as follows: (a)
        the
        representations and warranties contained in Sections 4.01, 4.02, 4.04, 4.10,
        5.01 and 5.02 shall
        survive indefinitely 

       

      
        
          
          

        

        
          -17-

          
            

          

        

        
          
          

        

      

      and
        shall
        not terminate; (ii) the representations and warranties contained in Sections
        4.07, 4.19, 4.20 and 4.21 shall
        survive for the applicable statutes of limitation; and (c) all other
        representations and warranties shall survive for a period of twenty-four
        (24)
        months after the Closing Date; provided,
        that
        any representation or warranty in respect of which indemnity may be sought
        under
        this Article VIII, and the indemnity with respect thereto, shall survive
        the
        time at which it would otherwise terminate pursuant to this Section 8.01
        if
        notice of the breach thereof giving rise to such right or potential right
        of
        indemnity shall have been given to the party against whom such indemnity
        may be
        sought prior to such time. No investigation by the parties made heretofore
        or
        hereafter shall affect the representations and warranties of the parties
        contained in or made pursuant hereto.

       

      8.02 Indemnification
        by Seller.

       

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

       

      8.03 Indemnification
        by Purchaser.

       

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

       

      8.04 Cooperation.

       

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

       

      8.05 Indemnification
        Procedure for Third Party Claims Against Indemnified Parties.

       

      (a) In
        the
        event that subsequent to the Closing Date any Indemnified Party asserts a
        claim
        for indemnification under this Article VIII, on account of or in connection
        with
        any claim or the commencement of any action or proceeding against such
        Indemnified Party by any person or entity who is not a party to this Agreement
        (including 

       

      
        
          
          

        

        
          -18-

          
            

          

        

        
          
          

        

      

      any
        Governmental Authority) (a “Third Party Claim”), the Indemnified Party shall
        give written notice thereof together with a summary of any available information
        regarding such claim (the “Notice of Claim”) to the Indemnifying Party promptly
        after learning of such Third Party Claim. The Indemnifying Party shall have
        the
        right, upon written notice to the Indemnified Party (the “Defense Notice”)
        within 15 days of its receipt from the Indemnified Party of the Notice of
        Claim,
        to conduct at its expense the defense against such Third Party Claim in its
        own
        name, or, if necessary, in the name of the Indemnified Party.

       

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

       

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

       

      
        
          
          

        

        
          -19-

          
            

          

        

        
          
          

        

      

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

       

      8.06 Nature
        of Other Liabilities.

       

      In
        the
        event any Indemnified Party should have a claim against any Indemnifying
        Party
        hereunder which does not involve a Third Party Claim, the Indemnified Party
        shall transmit to the Indemnifying Party a written notice (the “Indemnity
        Notice”) describing in detail the nature of the claim and the basis of the
        Indemnified Party’s request for indemnification under this Agreement. The
        Indemnifying Party shall make all payments pursuant to the indemnification
        provisions contained in this Article VIII within ten (10) days after its
        receipt
        of the Indemnity Notice or, if the Indemnifying Party delivers written notice
        to
        the Indemnified Party within such 10-day period that it is disputing the
        Indemnified Party’s right to indemnification hereunder with respect to such
        payments, immediately upon the final determination of the amount of such
        indemnification obligation. 

       

      8.07 Right
        to Set-Off.

       

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

       

       

      ARTICLE
        IX. Restrictive
        Covenants

       

      9.01 Confidentiality.

       

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

       

      
        
          
          

        

        
          -20-

          
            

          

        

        
          
          

        

      

      voting
        shares or of the value of such person or entity or has the ability to control
        the management or affairs of such person or entity.

       

      9.02 Covenant
        Against Competition and Solicitation.

       

      To
        preserve the value of the goodwill purchased by Purchaser, and to reduce
        the
        cost to Purchaser of monitoring and enforcing the compliance of Seller with
        the
        confidentiality obligations contained in Section 9.01, Seller covenants and
        agrees that, during the five (5) year period from and after Closing, it will
        not, and it will cause its shareholders, directors, officers, employees,
        agents
        and Affiliates to not, without the express written consent of Purchaser and
        only
        to the extent authorized by Purchaser:

       

      (a) Directly
        or indirectly, alone or in concert with others, whether as principal, agent,
        representative, partner, lender, consultant, shareholder or otherwise, under
        or
        through any form of business entity, own, operate, manage, control or actively
        participate in any business which competes with or is substantially similar
        to
        the Business as presently conducted by Seller anywhere in the world (the
        “Prohibited Territory”); 

       

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

       

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

       

      The
        covenants contained in Sections 9.02(a), (b) and (c) are separate and distinct
        covenants of Seller. 

      

      9.03 Reasonableness.

       

      Seller
        acknowledges and agrees that the customers of the Business are located
        throughout the Prohibited Territory and that the territorial, time and other
        limitations set forth above are reasonable and properly required for the
        adequate protection of the goodwill and other Purchased Assets acquired by
        Purchaser pursuant to this Agreement and shall be enforceable to the fullest
        extent permitted by law. 

       

      9.04 Modification.

       

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

       

      9.05 Remedies.

       

      Seller
        acknowledges and agrees that any violation of Section 9.01 or Section 9.02
        would
        cause Purchaser irreparable damage and that if Seller violates or threatens
        to
        violate such restrictions, Purchaser shall be entitled to injunctive relief
        against Seller, without the 

       

      
        
          
          

        

        
          -21-

          
            

          

        

        
          
          

        

      

      necessity
        of proof of actual damage or the posting of bond, in addition to any other
        remedies available under this Agreement at law or in equity.

       

       

      ARTICLE
        X. Miscellaneous

       

      10.01 Termination.

       

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

       

      10.02 Risk
        of Loss.

       

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

       

      10.03 Definition
        of Knowledge.

       

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

       

      10.04 Assignment.

       

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

       

      10.05 Other
        Expenses.

       

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

       

      10.06 Notices.

       

      All
        notices, requests, demands, waivers and other communications required or
        permitted to be given under this Agreement shall be in writing and shall
        be
        deemed to 

       

      
        
          
          

        

        
          -22-

          
            

          

        

        
          
          

        

      

      have
        been
        duly given: (a) if delivered personally or sent by facsimile, on the date
        received, (b) if delivered by overnight courier, on the day after mailing,
        and
        (c) if mailed, four days after mailing by first class certified mail, return
        receipt requested and with postage prepaid. Any such notice shall be sent
        as
        follows:

       

      
        	 	
                To
                  Seller:

              	 	
                To
                  Purchaser:

              
	 	 	 	 
	 	
                HK
                  Castings, Inc.

              	 	
                HK
                  Cast Products, LLC

              
	 	
                5111
                  Leary Ave. N.W.

              	 	
                1125
                  S. Walnut

              
	 	
                Seattle,
                  Washington 98107

              	 	
                South
                  Bend, Indiana 46619

              
	 	
                Attn:
                  Galliano Mondin

              	 	
                Attn:
                  John A. Martell

              
	 	
                Fax:
                  (425) 952-7212

              	 	
                Fax:
                  (574) 232-7648

              
	 	 	 	 
	 	
                with
                  a copy to:

              	 	
                with
                  a copy to:

              
	 	 	 	 
	 	
                Williams,
                  Kastner & Gibbs PLLC

              	 	
                Barnes
                  & Thornburg LLP

              
	 	
                601
                  Union Street, No. 4100

              	 	
                600
                  1st
                  Source Bank Center

              
	 	
                Seattle,
                  Washington 98107

              	 	
                100
                  North Michigan St. 

              
	 	
                Attn:
                  Dwayne E. Copple

              	 	
                South
                  Bend, Indiana 46601

              
	 	
                Fax:
                  (206) 628-6611

              	 	
                Attn:
                  Richard L. Mintz

              
	 	 	 	
                Fax:
                  (574) 237-1125

              

      

      

      10.07 Controlling
        Law; Jurisdiction.

       

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

       

      10.08 Headings.

       

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

       

      10.09 Benefit.

       

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

       

      10.10 Partial
        Invalidity.

       

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

       

      10.11 Waiver.

       

      Neither
        the failure nor any delay on the part of any party hereto in exercising any
        rights, power or remedy hereunder shall operate as a waiver thereof, or of
        any
        other right, power or remedy; nor shall any single or partial exercise of
        any
        right, power or remedy preclude any further or other exercise thereof, or
        the
        exercise of any other right, power or remedy. No waiver of any of the provisions
        of this Agreement shall be void unless it is in writing and signed by the
        party
        against which it is sought to be enforced.

       

      
        
          
          

        

        
          -23-

          
            

          

        

        
          
          

        

      

      10.12 Counterparts
        and Facsimiles.

       

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

       

      10.13 Legal
        Fees and Costs.

       

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

       

      10.14 Entire
        Agreement.

       

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

       

      [Remainder
        of Page Intentionally Blank]

      

      
        
          
          

        

        
          -24-

          
            

          

        

        
          
          

        

      

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

       

      
        	
                “SELLER”

              	 	
                “PURCHASER”

              
	 	 	 	 	 
	
                Hatch
                  & Kirk, Inc. 

              	 	
                HK
                  Cast Products, LLC, formerly
                  known as HK
                  Engineered Castings, LLC

              
	 	 	 	 	 
	 	 	 	 	 
	
                By:

              	/s/
                Galliano Mordin	 	
                By:

              	/s/
                John A. Martell
	
                Its:
                  

              	Vice
                President	 	
                Its:

              	Manager
	 	 	 	 	 
	
                Dated:

              	March
                4, 2005	 	
                Dated:

              	 March
                4, 2005

      

      
 

       

      -25-incplan

	EXHIBIT 10.12

Associated Estates Realty Corporation

Long Term Incentive Compensation Plan

	On August 4, 2005, the Executive Compensation Committee of the Board of Directors
approved and implemented the following long-term incentive ("LTI") compensation structure for key
executives:

PLAN NAME:   

	Associated Estates Realty Corporation Long-Term Incentive Compensation Plan.

OBJECTIVE:

	To motivate and reward executives for the achievement of certain milestones linked to
the strategic plan.

TIMING:

	Grants will be delivered annually and each annual grant is tied to a three-year strategic
benchmark that will be determined by the Executive Compensation Committee at the first
meeting of each calendar year.

	Performance against benchmark will be measured at the conclusion of each calendar
year and approved at the first Executive Compensation Committee meeting of the year.

PLAN PARAMETERS AND PARTICIPANTS:

	Target LTI awards will be established for each participant based on the mix of total
compensation.

	Threshold award levels are set at 25% of the total LTI target opportunity.

	Awards are delivered through a mix of non-qualified stock options ("NQSOs") and/or
stock settled appreciation rights ("SARs") and Performance-Contingent Restricted
Shares.

	NQSOs/SARs vest in equal, annual installments over the three-year period.

	The restricted share grant may be accelerated up to the threshold level at the end
of each measurement period based on the achievement of strategic objectives.

	If the overall three-year objective is met, the participants are eligible for the
remaining 50% of the restricted share grant.
			If the overall objective is not met, the unvested portion of the restricted share grant
will be forfeited.
			Participants have the right to receive dividends and vote the shares during the
restricted period.

  		If the overall three-year benchmark is exceeded, the Executive Compensation
Committee may, in its sole discretion, issue awards in excess of target at the end of the
three-year performance period.

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