Document:

EXHIBIT 4.19

                      NON-QUALIFIED STOCK OPTION AGREEMENT

STOCK OPTION AGREEMENT made in the City of Pittsburgh, Pennsylvania as of
November 1, 1991, between Westinghouse Electric Corporation, a Pennsylvania
corporation (the "Corporation"), and Mr. Leo W. Yochum ("Mr. Yochum").

In consideration of the mutual covenants hereinafter set forth and intending to
be legally bound, the parties have agreed, and do hereby agree, as follows:

         1. OPTION GRANT

The Corporation hereby grants Mr. Yochum the right and option (the "Option") to
purchase all or part of any aggregate of 200,000 shares of its common stock, par
value $1.00 per share ("Common Stock") from the Corporation for a purchase price
of $21.75 per share, on the terms and conditions herein set forth.

         2. OPTION TERM

The term of the Option shall be a period of ten years from the date of this
Agreement, unless the Option is earlier terminated under the terms of paragraph
5 hereof.

         3. EXERCISE OF OPTION

The Option will be exercisable in whole or in part after the date hereof,
subject to the terms and conditions of this Agreement, and at any time before it
terminates. During Mr. Yochum's lifetime, the Option may be exercised only by
him or a guardian or legal representative. Mr. Yochum shall have none of the
rights of a stockholder with respect to any shares of the Common Stock subject
to the Option until such shares shall be issued in his name or the name of a
designee following the exercise of the Option.

Shares of Common Stock issued upon exercise of the Option are not covered by any
registration statement filed under the Securities Act of 1933 (the "Act").
Accordingly, Mr. Yochum agrees that any such shares of Common Stock will not be
sold by him within two years after the date of any exercise unless (i) a
registration statement under the Act applicable to such shares of Common Stock
shall be in effect, or (ii) the Corporation shall have received an opinion of
its counsel that such shares of Common Stock may be sold without the
registration under the Act.

If Mr. Yochum dies prior to the exercise or expiration of the Option, the Option
shall terminate two years after Mr. Yochum's death, during which period the
Option may be exercised by the person or persons to whom Mr. Yochum's rights
shall pass by will or by the applicable law of descent and distribution.

         4. METHOD OF OPTION EXERCISE

Subject to the terms of this Agreement, the Option may be exercised by written
notice to the Corporation at Westinghouse Corporate Information Services, Post
Office Box 86070, Pittsburgh, Pennsylvania 15221, attention of Executive
Compensation Services. Such notice shall state the election to exercise the
Option, the number of shares in respect of which it is being

<PAGE>

exercised and shall be signed by the person or persons so exercising the Option.
Such notice shall be accompanied by payment of the full purchase price of said
shares in such manner as may be acceptable to the Corporation prior to delivery
of the certificate or certificates representing said shares. Notice of the
exercise of the Option to Executive Compensation Services may also be given by
FAX bearing the appropriate signature if followed promptly by a written
confirmation of such exercise. The Corporation shall deliver a certificate or
certificates representing said shares as soon as practicable after the notice
shall be received by the Corporation. The certificate or certificates for the
shares as to which the Option have been so exercised shall not be registered
earlier than five business days after receipt of notification of the exercise of
the Option and, unless the person or persons exercising the Option shall
otherwise direct the Corporation in writing, such certificate or certificates
for the shares shall be registered in the name of the person or persons so
exercising the Option and shall be delivered as aforesaid to or upon the written
order of the person or persons exercising the Option. In the event the Option
shall be exercised by any person or persons other than Mr. Yochum, such notice
shall be accompanied by appropriate proof of the derivative right of such person
or persons to exercise the Option. The date of exercise of the Option shall be
the date on which the aforesaid notice is received. All shares that shall be
purchased upon the exercise of the Option as provided herein shall be fully paid
and non-assessable.

         5. TERMINATION OF OPTION

The Option may not be exercised to any extent after termination of the Option in
one of the following ways, whichever first occurs;

(a)      Upon exercise, the Option shall terminate as to the number of shares of
         Common Stock with respect to which such Option was exercised.

(b)      The Option and all rights and obligations thereunder shall expire ten
         years after the date of this Agreement.

         6. ADJUSTMENT UPON CHANGES IN STOCK

If there shall be any change in the stock subject to the Option granted
hereunder, through merger, consolidation, reorganization, recapitalization,
stock dividend, stock split or other change in the corporate structure,
appropriate adjustments may be made by the Board of Directors of the Corporation
(or if the Corporation is not the surviving corporation in any such transaction,
the Board of Directors of the surviving corporation) in the number and kind of
shares and the price per share subject to the Option.

         7. LIMITED RIGHTS

The Corporation hereby grants to Mr. Yochum limited stock appreciation rights
("Limited Rights") with respect to the shares subject to the Option on the terms
and conditions herein set forth. Upon the occurrence of a Change in Control, as
defined below, the Option and Limited Rights granted herein shall become
immediately exercisable.

A Limited Right may be exercised only during the period beginning on the first
day following a Change in Control and ending on the thirtieth day following such
date. Each Limited Right shall

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be exercisable only to the same extent the Option is exercisable, and in no
event after the termination of the Option. In no event shall a Limited Right be
exercised during the first six months after the date of grant of the Limited
Right. Limited Rights shall be exercisable only when the fair market value
(determined as of the date of exercise of the Limited Rights) of each share of
Common Stock with respect to which the Limited Rights are to be exercised shall
exceed the option price per share of Common Stock subject to the Option.

Upon the exercise of Limited Rights, the Option shall be considered to have been
exercised to the extent of the number of shares of Common Stock with respect to
which such Limited Rights are exercised. Upon the exercise or termination of the
Option, the Limited Rights with respect to such Option shall be considered to
have been exercised or terminated to the extent of the number of shares of
Common Stock with respect to which the Option was so exercised or terminated.

Upon the exercise of Limited Rights, Mr. Yochum shall receive in cash an amount
equal to the product computed by multiplying (i) the excess of (a) the higher of
(x) the Minimum Price Per Share (as hereinafter defined), or (y) the highest
reported closing sales price of a share of Common Stock on the New York Stock
Exchange at any time during the period beginning on the sixtieth day prior to
the date on which such Limited Rights are exercised, over (b) the option price
per share of Common Stock subject to the Option, by (ii) the number of shares of
Common Stock with respect to which such Limited Rights are being exercised.

For purposes of this paragraph, the term "Minimum Price Per Share" shall mean
the highest gross price (before brokerage commissions and soliciting dealers'
fees) paid or to be paid for a share of Common Stock (whether by way of
exchange, conversion, distribution upon liquidation or otherwise) in any Change
in Control which is in effect at any time during the period beginning on the
sixtieth day prior to the date on which such Limited Rights are exercised and
ending on the date on which such Limited Rights are exercised. For purposes of
this definition, if the consideration paid or to be paid in any such Change in
Control shall consist, in whole or in part, of consideration other than cash,
the Corporation shall take such action, as in its judgment it deems appropriate,
to establish the cash value of such consideration.

The term "Change in Control" means the occurrence of one or more of the
following events:

(a)      there shall be consummated (i) any consolidation or merger of the
         Corporation in which the Corporation is not the continuing or
         surviving corporation or pursuant to which shares of the Corporation's
         Common Stock would be converted into cash, securities or other
         property, other than a merger of the Corporation in which the holders
         of the Corporation's Common Stock immediately prior to the merger have
         the same proportionate ownership of Common Stock of the surviving
         corporation immediately after the merger, or (ii) any sale, lease,
         exchange or other transfer (in one transaction or a series of related
         transactions) of all, or substantially all, of the assets of the
         Corporation, or (b) the stockholders of the Corporation shall approve
         any plan or proposal for the liquidation or dissolution of the
         Corporation, or (c) (i) any person (as such term is defined in Section
         13(d) of the Securities Exchange Act of 1934, as amended) (the
         "Exchange Act")), corporation or other entity shall purchase any
         Common Stock of the Corporation (or securities convertible into the
         Corporation's Common Stock) for cash, securities or any other
         consideration pursuant to a tender offer or exchange offer, unless,
         prior to the

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<PAGE>

         making of such purchase of Common Stock (or securities convertible
         into Common Stock), the Board shall determine that the making of such
         purchase shall not constitute a Change in Control, or (ii) any person
         (as such term is defined in Section 13(d) of the Exchange Act),
         corporation or other entity (other than the Corporation or any benefit
         plan sponsored by the Corporation or any of its subsidiaries) shall
         become the "beneficial owner" (as such term is defined in Rule 13d-3
         under the Exchange Act), directly or indirectly, of securities of the
         Corporation representing twenty percent or more of the combined voting
         power of the Corporation's then outstanding securities ordinarily (and
         apart from any rights accruing under special circumstances) having the
         right to vote in the election of directors (calculated as provided in
         Rule 13d-3(d) in the case of rights to acquire any such securities,
         unless, prior to such person so becoming such beneficial owner, the
         Board shall determine that such person so becoming such beneficial
         owner shall not constitute a Change in Control, or (d) at any time
         during any period of two consecutive years, individuals who at the
         beginning of such period constituted the entire Board shall cease for
         any reason to constitute at least a majority thereof, unless the
         election or nomination for election of each new director during such
         two-year period was approved by a vote of at least two-thirds of the
         directors then still in office who were directors at the beginning of
         such two-year period.

         8. NON-TRANSFERABILITY OF OPTION

The Option shall not be transferable otherwise than by will or by the applicable
laws of descent and distribution. More particularly (but without limiting the
generality of the foregoing), the Option may not be assigned, transferred
(except as aforesaid), pledged or hypothecated in any way (whether by operation
of law or otherwise) and shall not be subject to execution, attachment or
similar process. Any attempted assignment, transfer, pledge, hypothecation or
other disposition of the Option contrary to the provisions hereof, and the levy
of any execution, attachment or similar process upon the Option, shall be null
and void and without effect.

         9. This Agreement shall be governed in all respects by the laws of the
Commonwealth of Pennsylvania.

                                        WESTINGHOUSE ELECTRIC CORPORATION

                                        By:
                                            ------------------------------------

ATTEST

-----------------------------
Assistant Secretary

                                        By:
                                            ------------------------------------
                                                      Leo W. Yochum
                                                      (Legal Signature)

                                       4<PAGE>   1
                                                                    Exhibit 10.1

                            ASSET PURCHASE AGREEMENT

                                  BY AND AMONG

                       HEADS & THREADS INTERNATIONAL LLC,

                               ACKTION CORPORATION

                                       AND

                            REYNOLDS FASTENERS, INC.

                            DATED AS OF APRIL 3, 2000

<PAGE>   2

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                Page
                                                                                                ----
<S>                                                                                             <C>
ARTICLE I Purchase and Sale of Assets....................................................................1

   1.1      Purchase and Sale of Assets..................................................................1
   1.2      Purchase Price; Holdback.....................................................................3
   1.3      Allocation of Purchase Price.................................................................4
   1.4      Liabilities to be Assumed by Buyer...........................................................4
   1.5      Excluded Assets and Excluded Liabilities.....................................................5
   1.6      Closing; Closing Deliveries..................................................................6
   1.7      [Reserved]...................................................................................7
   1.8      Transfer Taxes...............................................................................7

ARTICLE II Representations and Warranties of Parent and Seller...........................................8

   2.1      Corporate Organization and Qualification.....................................................8
   2.2      Authority....................................................................................8
   2.3      Execution and Binding Effect.................................................................9
   2.4      Consents and Approvals; No Violations........................................................9
   2.5      Title........................................................................................9
   2.6      Financial Statements.........................................................................9
   2.7      Inventory...................................................................................10
   2.8      Accounts Receivable.........................................................................10
   2.9      Accounts Payable; Supplier Orders...........................................................10
   2.10     Condition and Operation of Fixed Assets.....................................................11
   2.11     Litigation..................................................................................11
   2.12     Tax Matters.................................................................................11
   2.13     Leases......................................................................................11
   2.14     Insurance...................................................................................12
   2.15     Environmental Matters.......................................................................12
   2.16     Products and Warranties.....................................................................13
   2.17     Employee Matters............................................................................14
   2.18     Customers and Suppliers.....................................................................15
   2.19     Certain Contracts and Commitments...........................................................15
   2.20     Ability to Conduct Business.................................................................16
   2.21     Brokers and Finders.........................................................................16

ARTICLE III Representations and Warranties of Purchaser.................................................16

   3.1      Corporate Organization and Qualification....................................................16
   3.2      Authority...................................................................................16
   3.3      Execution and Binding Effect................................................................17
   3.4      Consents and Approvals; No Violations.......................................................17
   3.5      Brokers and Finders.........................................................................17

ARTICLE IV Covenants of Parent and Seller...............................................................17

   4.1      [Reserved]..................................................................................17
   4.2      [Reserved]..................................................................................17
   4.3      [Reserved]..................................................................................18
</TABLE>

<PAGE>   3

<TABLE>
<S>                                                                                                 <C>
   4.4      No Competition, No Solicitation, No Inducement; Confidentiality.............................18
   4.5      Tax Clearance Certificates..................................................................19

ARTICLE V Other Covenants...............................................................................20

   5.1      Employee Matters............................................................................20
   5.2      [Reserved]..................................................................................20
   5.3      Further Assurances..........................................................................20
   5.4      Access to Books and Records after the Closing Date..........................................21
   5.5      Collection of Accounts Receivable...........................................................21
   5.6      Defective Goods, Returns and Retentions.....................................................22
   5.7      Payment of Creditors........................................................................22
   5.8      Transitional Assistance.....................................................................22

ARTICLE VI [Reserved]...................................................................................23

ARTICLE VII [Reserved]..................................................................................23

ARTICLE VIII Survival of Representations and Warranties; Indemnification................................23

   8.1      Survival of Representations, Warranties, etc................................................23
   8.2      Parent's and Seller's Agreement to Indemnify................................................23
   8.3      Purchaser's Agreement to Indemnify..........................................................25
   8.4      Matters Involving Third Parties.............................................................26
   8.5      Matters Not Involving Third-Party Claims....................................................27
   8.6      Exclusive Remedy............................................................................27

ARTICLE IX Miscellaneous Provisions.....................................................................28

   9.1      [Reserved]..................................................................................28
   9.2      Expenses....................................................................................28
   9.3      Notices.....................................................................................28
   9.4      Entire Agreement; Amendment.................................................................29
   9.5      Assignment..................................................................................29
   9.6      Governing Law...............................................................................29
   9.7      No Third-Party Beneficiaries................................................................30
   9.8      Consent to Jurisdiction.....................................................................30
   9.9      Waiver of Jury Trial........................................................................30
   9.10     Counterparts................................................................................30
   9.11     Headings....................................................................................30
   9.12     Severability................................................................................30
   9.13     FIRPTA Certificate..........................................................................31
</TABLE>

                                     -iii-
<PAGE>   4

                                    GLOSSARY

                                        1
1998 Financial Statements                       9
1999 Financial Statements                       9

                                        A
Accounts Payable                                4
Accounts Receivable                             2
Agreement                                       1
Alleghany                                      17
Annual Financial Statements                     9
Assumed Contracts                               5
Assumed Liabilities                             5

                                        C
Cash Consideration                              3
Closing                                         6
Closing Date                                    6
Code                                            4
Code Affiliate                                 14
Contract Assignment                             6
Customer Purchase Orders                        2

                                        D
Differential                                   20

                                        E
Employee Program                               13
Encumbrances                                    9
Environmental Condition                        12
Environmental Law                              12
Equipment Lease Assignment                      6
Equipment Lease Consents                       14
Equipment Leases                                4
ERISA                                          14
Excluded Assets                                 5
Excluded Liabilities                            5

                                        F
Final Allocation                                4
Fixed Assets                                    1

                                        G
GAAP                                            3

                                        H
Hazardous Substances                           12
Holdback Amount                                 3
HSR Act                                         8

                                        I
Indemnified Party                              24
Indemnifying Party                             24
Inventory                                       1

                                        L
Landlord Consents                              14
Lease Assignment                                6
Leased Premises                                10
Leases                                          4
Losses                                         21

                                        M
Material Adverse Effect                         8

                                        P
Parent                                          1
Potential customer                             17
Prepaid Amounts                                 2
Prepaid Customer Orders                         2
Proposed Allocation                             4
Purchase Price                                  3
Purchased Assets                                2
Purchaser                                   1, 23
Purchaser Indemnitees                          21

                                        R
Reynolds Business                               1

                                        S
Seller                                          1
Seller Approvals                                8

                                      -iv-
<PAGE>   5

Seller Indemnitees                             23
Supplier Orders                                 2
Survival Period                                21

                                        T
Third-Party Claim                              24
Threshold Amount                               22

                                        W
WARN Act                                       13

                                      -v-
<PAGE>   6

List of Schedules and Exhibits

<TABLE>
<CAPTION>
Number                            Description
------                            -----------
<S>                               <C>
Schedule 1.1(b)                   Fixed Assets to be Purchased
Schedule 1.1(i)                   Prepaid Amounts
Schedule 1.4(a)                   Real Property Leases to be Assumed
Schedule 1.4(b)                   Equipment Leases to be Assumed
Schedule 1.4(f)                   Contracts to be Assumed
Schedule 1.5(a)                   Excluded Assets
Schedule 2.2                      Restriction, Breaches, etc. Resulting from Sale of Assets
Schedule 2.4                      Consents and Approvals; No Violations
Schedule 2.5                      Title
Schedule 2.8                      Accounts Receivable
Schedule 2.11(a)                  Litigation
Schedule 2.11(b)                  Knowledge of Certain Persons
Schedule 2.14                     Insurance
Schedule 2.15                     Environmental Matters
Schedule 2.16                     Warranties
Schedule 2.17                     Employee Matters
Schedule 2.18                     Customers and Suppliers
Schedule 2.19                     Certain Contracts and Commitments
</TABLE>

                                      -vi-
<PAGE>   7

                            ASSET PURCHASE AGREEMENT

                  ASSET PURCHASE AGREEMENT (this "Agreement") dated as of April
3, 2000, by and among Heads & Threads International LLC, a Delaware limited
liability company ("Purchaser"), Acktion Corporation, a Canadian corporation
("Parent"), and Reynolds Fasteners, Inc., a Delaware corporation and
wholly-owned subsidiary of Parent ("Seller").

                              W I T N E S S E T H:

                  WHEREAS, Seller is engaged in the business of distributing
industrial fasteners and related products (the "Reynolds Business"); and

                  WHEREAS, Purchaser desires to purchase, and Parent and Seller
desire to sell, all of the inventory and certain of the fixed assets and
accounts receivable of Seller upon the terms and subject to the conditions set
forth herein;

                  WHEREAS, Purchaser desires to assume certain leasehold
obligations and other liabilities identified herein; and

                  WHEREAS, the parties hereto desire to make certain
representations, warranties, covenants and agreements in connection with the
purchase and sale of such assets and the assumption of such obligations and
liabilities;

                  NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements hereinafter set forth, the parties hereto hereby
agree as follows:

                                   ARTICLE I

                           Purchase and Sale of Assets

                  1.1      Purchase and Sale of Assets. Subject to the terms and
conditions set forth in this Agreement, at the Closing (as hereinafter defined),
Seller shall, and Parent shall cause Seller to, sell, convey, assign, transfer
and deliver to Purchaser, and Purchaser shall acquire:

                  (a)      all of the inventory arising in the ordinary course
         of the Reynolds Business which is owned by Seller as of the time of the
         Closing, wherever located (the "Inventory");

                  (b)      all of the fixed assets of Seller set forth on
         Schedule 1.1(b) hereto (the "Fixed Assets");

                  (c)      (i) all of the customer purchase orders arising in
         the ordinary course of the Reynolds Business for which neither delivery
         has been made nor payment has been received by Seller as of the time of
         the Closing (the "Customer

<PAGE>   8

         Purchase Orders"), and (ii) all of the customer purchase orders arising
         in the ordinary course of the Reynolds Business for which delivery has
         not been made and payment has been received by Seller as of the time of
         the Closing, to the extent that, at the time of the Closing, Seller
         pays over to Purchaser the amount of such payments (the "Prepaid
         Customer Orders");

                  (d)      all of the supplier orders made by Seller arising in
         the ordinary course of the Reynolds Business for which the ordered
         items have not been received by Seller as of the time of the Closing
         (the "Supplier Orders");

                  (e)      all accounts receivable arising in the ordinary
         course of the Reynolds Business which are outstanding as of the time of
         the Closing (the "Accounts Receivable");

                  (f)      all of Parent's and Seller's right, title and
         interest in and to all know-how, technical information, plans,
         specifications, engineering drawings, proprietary technology,
         correspondence, customer lists, vendor and supply lists, catalogues,
         manufacturing data, programs, methodologies, strategies, patents,
         trademarks, trade names, trade dress, copyrights, licenses (including
         computer software licenses and any tangible media upon which such
         software is recorded), trade secrets and similar property owned by, or
         used in, the Reynolds Business, including without limitation the name
         and the mark "Reynolds Fasteners";

                  (g)      the books and records of Parent and Seller relating
         to the Reynolds Business (including computerized data and any tangible
         media upon which such data is recorded);

                  (h)      all of Parent's and Seller's right, title and
         interest in and to the Leases, Equipment Leases and Assumed Contracts
         (each as hereinafter defined); and

                  (i)      prepaid contractual amounts and deposits set forth on
         Schedule 1.1(i) hereto (the "Prepaid Amounts").

The assets to be acquired by Purchaser pursuant to this Section 1.1 are referred
to herein as the "Purchased Assets." Notwithstanding any other provision of this
Agreement, any asset otherwise constituting a Purchased Asset, and any contract,
lease, instrument, document or agreement constituting a Lease (as hereinafter
defined), an Equipment Lease (as hereinafter defined), an Assumed Contract (as
hereinafter defined) or otherwise to be assigned or transferred to Purchaser
hereunder, the assignment or other transfer, or the attempted assignment or
other transfer of which would be invalid or ineffective or would constitute a
breach or default of such contract, agreement or commitment to which Seller is a
party or is bound, unless the consent or approval of another person or entity to
such assignment or other transfer shall have been obtained first, shall not be
assigned or otherwise transferred under this Agreement, and the provisions of
this Agreement shall not constitute an attempt to assign or transfer, unless and
until such consents or approvals shall have been obtained; provided that, until
such consents or approvals shall have been

                                      -2-
<PAGE>   9

obtained, such property, asset, contract or agreement, or the net proceeds
thereof, shall be held and/or received by Seller for the benefit and account of
Purchaser, Purchaser shall have the right to act as the agent for Seller, in the
name of Seller, or otherwise as Purchaser deems appropriate in order to obtain
for Purchaser the net benefits flowing from ownership of such property, asset,
contract or agreement and Purchaser shall perform or cause to be performed at
Purchaser's expense all the duties, obligations and liabilities of Seller
arising out of or relating to such property, asset, contract or agreement; and
such property, asset, contract or agreement shall be deemed to be a Purchased
Asset for purposes of this Section 1.1.

                  1.2      Purchase Price; Holdback.

                  (a) Subject to the terms and conditions set forth in this
Agreement, in consideration of the sale of the Purchased Assets, Purchaser
agrees to pay to Seller an amount in cash (the "Purchase Price") equal to (A)
the sum of (i) $3,000,000, (ii) $2,104,608.05, in respect of the Fixed Assets,
(iii) $27,485,949.43, representing the book value of the Inventory as of the
opening of business on the Closing Date (as hereinafter defined), determined in
accordance with generally accepted accounting principles ("GAAP") applied on a
basis consistent with the Annual Financial Statements (as hereinafter defined)
(after reduction for the amount of the related reserve in the financial records
of Seller as of the Closing Date), (iv) $12,140,883.33, representing the book
value of the Accounts Receivable purchased pursuant to Section 1.1(e) above as
of the Closing Date, determined in accordance with GAAP applied on a basis
consistent with the Annual Financial Statements (with no reduction for the
amount of any related reserve in the financial records of Seller), and (v)
$274,908.10, representing the amount of the Prepaid Amounts purchased pursuant
to Section 1.1(i) above as of the Closing Date, determined in accordance with
GAAP applied on a basis consistent with the Annual Financial Statements, less
(B) the sum of (i) $3,224,334.30, representing the book value of the Accounts
Payable (as hereinafter defined) as of the Closing Date, determined in
accordance with GAAP applied on a basis consistent with the Annual Financial
Statements, and (ii) $50,999.35, representing an allocation of rental charges
and other charges in respect of the Leased Premises (as hereinafter defined) and
the Assumed Contracts.

                  (b)      Subject to the terms and conditions of this
Agreement, Purchaser agrees to pay the Purchase Price to Seller, as follows: (i)
an amount equal to (x) the Purchase Price less (y) $500,000 (such amount, the
"Cash Consideration"), shall be paid at the Closing, and (ii) $500,000 of the
Purchase Price (the "Holdback Amount"), shall be held back by Purchaser and paid
to Seller in accordance with Section 1.2(c) below.

                  (c)      The Holdback Amount shall not be delivered to Seller
at the Closing but shall be withheld by Purchaser. In the event that, within 120
days after the Closing Date, any of the Accounts Receivable have not been
collected at the full gross recorded amount thereof, the Purchaser shall provide
notice to Parent and Seller of the amount of such uncollected Accounts
Receivable. Within three business days of the date of delivery of such notice,
Purchaser shall deliver to Seller the Holdback Amount less the amount of
uncollected Accounts Receivable (if any). Any damages to which Purchaser

                                      -3-
<PAGE>   10

may be entitled for a breach of Section 2.8 of this Agreement or of any other
representation, warranty, covenant or agreement made by Parent or Seller herein
shall not be limited to the amount of the Holdback Amount.

                  1.3      Allocation of Purchase Price. Purchaser will submit
to Seller a proposed allocation of the Purchase Price and the Assumed
Liabilities among the Purchased Assets no later than 120 days after the Closing
Date, but in no event less than 30 days prior to the date on which Seller must
file any income tax returns with respect to the transaction (the "Proposed
Allocation"). The Proposed Allocation shall be made in a manner consistent with
Section 1060 of the Internal Revenue Code of 1986, as amended (including the
Treasury regulations thereunder, the "Code"). Within 30 days of receipt of the
Proposed Allocation, Seller shall either consent to the Proposed Allocation,
which consent shall not be unreasonably withheld, or Seller shall advise
Purchaser in reasonable detail of Seller's objections to the Proposed Allocation
and the basis therefor. A failure by Seller to propose any changes within such
30-day period shall be deemed a consent by Seller, and the Proposed Allocation
shall become Final (the "Final Allocation"). Seller and Purchaser shall endeavor
in good faith to resolve any dispute arising with respect to the Proposed
Allocation, but if Seller and Purchaser are unable to resolve any such dispute,
each shall file IRS Forms 8594 -- Asset Acquisition Statements under Section
1060 -- consistent with the Proposed Allocation, except with respect to any
items on which they continue to disagree (the Proposed Allocation, with such
exceptions, also referred to as the Final Allocation). Purchaser and Seller
agree that except as otherwise required by law (i) the Final Allocation shall be
binding on Purchaser and Seller for all federal, state and local tax purposes
and (ii) Purchaser and Seller shall file with their respective federal income
tax returns consistent IRS Forms 8594--Asset Acquisition Statements under
Section 1060, including any required amendment thereto which shall reflect the
allocations set forth in the Final Allocation.

                  1.4      Liabilities to be Assumed by Buyer. At the Closing,
Purchaser will assume and agree to perform and discharge the following:

                  (a)      all liabilities and obligations of Seller which
         accrue and are required to be paid or performed after the Closing Date
         under the real property leases of Seller set forth on Schedule 1.4(a)
         hereto (the "Leases");

                  (b)      all liabilities and obligations of Seller which
         accrue and are required to be paid or performed after the Closing Date
         under the equipment leases of Seller set forth on Schedule 1.4(b)
         hereto (the "Equipment Leases");

                  (c)      all of the Customer Purchase Orders and all of the
         Prepaid Customer Orders;

                  (d)      all of the Supplier Orders;

                  (e)      all accounts payable of Seller arising in the
         ordinary course of the Reynolds business which have not been paid or
         discharged as of the time of the Closing (the "Accounts Payable"); and

                                      -4-
<PAGE>   11

                  (f)      all liabilities and obligations of Seller which
         accrue and are required to be paid or performed after the Closing Date
         under the contracts set forth on Schedule 1.4(f) hereto (the "Assumed
         Contracts");

provided, however, that Purchaser shall not assume or be responsible for any
such liability or obligation which arises from defaults or breaches thereunder
by Seller. The liabilities and obligations of Seller to be assumed by Purchaser
pursuant to this Section 1.4 are referred to herein as the "Assumed
Liabilities."

                  1.5      Excluded Assets and Excluded Liabilities.

                  (a) Purchaser is acquiring from Parent and Seller hereunder
only the Purchased Assets. Purchaser is not acquiring any cash, cash equivalents
or any other asset not identified as a Purchased Asset in Section 1.1 above
(including without limitation the assets set forth on Schedule 1.5(a) hereto,
the "Excluded Assets").

                  (b) Except as expressly provided in Section 1.4 above,
Purchaser is not assuming any liabilities or obligations of any kind, character
or description, whether accrued, absolute, known, foreseeable, contingent or
otherwise, arising out of or resulting from Parent's, Seller's or any
predecessor's ownership, possession, operation or use of the Reynolds Business
or the Purchased Assets or otherwise, including, without limitation, any of the
following liabilities or obligations (together with such liabilities as are
otherwise specifically excluded pursuant to Section 1.4, the "Excluded
Liabilities"):

                  (i)      any liability or obligation arising out of or
         relating to a breach occurring on or prior to the Closing of any
         provision of the Leases or the Equipment Leases;

                  (ii)     any liability or obligation arising out of or
         relating to items sold by Seller on or prior to the Closing Date,
         including, without limitation, any product liability claims, or claims
         relating in any manner to recalled products, for injuries, property
         damage, economic loss, or other losses;

                  (iii)    any liability for any claim arising in any legal,
         administrative, arbitration or other action, inquiry, investigation or
         proceeding asserted, pending or threatened against Parent or Seller
         relating to periods on or before the Closing Date, whether or not
         asserted, pending or threatened on or before the Closing;

                  (iv)     any liability for any failure or alleged failure to
         comply with, or any violation or alleged violation of, any federal,
         state, local, municipal, foreign or other law, statute, ordinance,
         rule, regulation, directive or other legal requirement or any order,
         judgment, injunction, ruling, decision, writ or sentence rendered by
         any governmental authority, which failure or violation occurred or was
         alleged to have occurred on or prior to the Closing Date;

                  (v)      any liability or obligation related to an Excluded
         Asset;

                                      -5-
<PAGE>   12

                  (vi)     any accounts payable not assumed by Purchaser
         pursuant to Section 1.4(e) above;

                  (vii)    any liability or obligation for taxes (other than
         charges such as real estate taxes, personal property taxes and ad
         valorem taxes which may be apportioned to Purchaser pursuant to Section
         1.7 hereof);

                  (viii)   any liability or obligation arising out of or
         relating to any current or former employment, independent contractor,
         sales representative, agency or other similar relationship between
         Parent or Seller and any person;

                  (ix)     any liability or obligation arising from or relating
         to Environmental Conditions (as hereinafter defined) occurring or
         existing on or prior to the Closing Date in connection with the
         Purchased Assets; or

                  (x)      any liability or obligation arising out of or
         relating to the ownership or operation of the Purchased Assets, or the
         ownership or operation of the Reynolds Business, on or prior to the
         Closing Date, other than an Assumed Liability.

It is understood and agreed that Purchaser is only purchasing certain assets of
Seller, that Purchaser is not intended to be a successor to Seller for any
purpose, and that Purchaser has not assumed, and expressly denies assumption
hereby of, any other liability, obligation or commitment of Parent or Seller
other than as set forth in Section 1.4.

                  1.6      Closing; Closing Deliveries

                  (a)      Subject to the terms and conditions set forth in this

Agreement, the purchase and sale of the Assets (the "Closing") shall take place
on such date and at such time as shall be mutually agreed to by the parties, and
simultaneously with the execution and delivery of this Agreement and the
execution and delivery of the other agreements, documents and instruments
referred to herein. The date of the Closing is hereinafter referred to as the
"Closing Date."

                  (b)      At the Closing, (i) Parent and Seller shall execute
and deliver to Purchaser (v) a general assignment and bill of sale, (w)
instruments of assignment and assumption with respect to which Parent and Seller
will assign and transfer to Purchaser all of their respective right, title and
interest in and to, and Purchaser will assume any liability or obligation of
Seller which accrues and is required to be paid or performed after the Closing
Date (other than liabilities or obligations arising from defaults or breaches by
Seller) under, the Leases, the Equipment Leases and the Assumed Contracts (the
"Lease Assignment," the "Equipment Lease Assignment," and the "Contract
Assignment," respectively) and the other Assumed Liabilities, (x) a certificate
executed on behalf of Seller as described in Treas. Reg. Section 1.1445-2(b)(2)
to the effect that Seller is not a foreign person within the meaning of Sections
897(c) and 1445 of the Code, (y) such other good and sufficient instruments of
conveyance, transfer and assignment as shall be reasonably necessary to vest in
Purchaser all of the right, title and interest of each of Parent and Seller to
the Purchased Assets, and (z) such other documents, instruments and

                                      -6-
<PAGE>   13

writings as are required hereunder to be delivered to Purchaser at the Closing
and as Purchaser may reasonably request prior to the Closing to demonstrate
satisfaction of the conditions and compliance with the agreements and covenants
set forth in this Agreement; (ii) Parent and Seller shall deliver to Purchaser a
true and correct list, as of the Closing Date, of (u) the Customer Purchase
Orders and the Prepaid Customer Orders to be acquired by Purchaser pursuant to
Section 1.1(c) above, (v) the Supplier Orders to be acquired by Purchaser
pursuant to Section 1.1(d) above, (w) the Accounts Receivable to be acquired by
Purchaser pursuant to Section 1.1(e) above, (x) any additions to or deletions
from list of Prepaid Amounts set forth on Schedule 1.1(i) hereto; (y) the
Accounts Payable to be assumed by Purchaser pursuant to Section 1.4(e) above;
and (z) any additions to or deletions from the list of Assumed Contracts set
forth on Schedule 1.4(f); and (iii) Seller shall make payment to Purchaser of
any amount required to be paid to Purchaser in respect of Prepaid Customer
Orders pursuant to Section 1.1(c) above.

                  (c)      At the Closing, Purchaser shall (w) make payment of
the Cash Consideration by wire transfer to a bank account designated by Seller,
(x) execute and deliver to Seller the Lease Assignment, the Equipment Lease
Assignment and the Contract Assignment, (y) execute and deliver to Parent and
Seller all certificates and other documents relating to exemption from sales,
use, transfer or similar Taxes that may be available in each jurisdiction in
which any of the Purchased Assets are located, and (z) execute and deliver such
other documents, instruments and writings as are required hereunder to be
delivered to Parent and Seller at the Closing and as Parent and Seller may
reasonably request prior to the Closing to demonstrate satisfaction of the
conditions and compliance with the agreements and covenants set forth in this
Agreement.

                  1.7      [Reserved]

                  1.8      Transfer Taxes. Seller shall pay all transfer, gains,
stamp, recording or other similar taxes incurred in connection with the
transactions contemplated by this Agreement. Seller will, at its own expense,
file all necessary tax returns and other documentation with respect to all such
transfer, gains, stamp, recording or other similar taxes, and, if required by
applicable law, Purchaser, as appropriate, will join in the execution of any
such tax return or other documentation.

                                   ARTICLE II

                         Representations and Warranties
                              of Parent and Seller

                  Each of Parent and Seller jointly and severally represents and
warrants to Purchaser as follows:

                  2.1      Corporate Organization and Qualification. Parent is a
corporation duly organized, validly existing and in good standing under the laws
of Canada, and is in good standing as a foreign corporation in each jurisdiction
where the properties owned, leased or operated, or the business conducted, by it
require such qualification and where the absence of such qualification would
have a material adverse effect on: (i) the

                                      -7-
<PAGE>   14

operations, properties, assets or liabilities of the Reynolds Business, (ii) the
ability of Parent or Seller to consummate the transactions contemplated by this
Agreement, or (iii) the ability of Purchaser, subsequent to the Closing, to
conduct the Reynolds Business as presently conducted (a "Material Adverse
Effect"). Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, and is in good standing as a
foreign corporation in each jurisdiction where the properties owned, leased or
operated, or the business conducted, by it require such qualification and where
the absence of such qualification would have a Material Adverse Effect.

                  2.2      Authority. Except as set forth on Schedule 2.2
hereto, no consents, approvals, qualifications, filings or waiting periods of
any third party or governmental authority other than compliance with any
applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act of
1976 (the "HSR Act") and the Landlord Consents and Equipment Lease Consents
(each, as hereinafter defined), are required on the part of Parent or Seller for
the consummation of the transactions contemplated by this Agreement (the "Seller
Approvals"). Each of Parent and Seller has full corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement by Parent and
Seller have been duly and validly authorized by all necessary corporate action
on the part of each of Parent and Seller. No other corporate proceedings on the
part of either Parent or Seller are necessary to authorize this Agreement and
the transactions contemplated hereby.

                  2.3      Execution and Binding Effect. This Agreement has been
duly and validly executed and delivered by each of Parent and Seller and
constitutes, and the other documents and instruments to be executed and
delivered by Parent and/or Seller on or prior to the Closing Date will
constitute (assuming in each case the due and valid authorization, execution and
delivery thereof by the other parties thereto), legal, valid and binding
agreements of each of Parent and Seller, enforceable against each of them in
accordance with their respective terms.

                  2.4      Consents and Approvals; No Violations. Except as set
forth in Schedule 2.4 hereto, neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(a) conflict with or result in a breach or violation of any of the provisions of
the Certificate of Incorporation or By-Laws of Parent or Seller; (b) result in
the creation of any Encumbrance (as hereinafter defined) on any of the Purchased
Assets; (c) result in a breach or violation of, result in a default or loss of a
material benefit under, or permit the acceleration of any obligation under any
provision of any agreement, indenture, mortgage, lien, lease or other instrument
or restriction of any kind to which Seller is a party or by which any of its
assets or properties is otherwise bound; (d) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Seller or any of
its assets or properties; (e) result in a breach or violation of, result in a
default or loss of a material benefit under, or permit the acceleration of any
obligation under any provision of any agreement, indenture, mortgage, lien,
lease or other instrument or restriction of any kind to which Parent is a party
or by which any of its assets or properties is otherwise bound; or (f) violate
any order, writ, injunction, decree, statute, rule or regulation applicable to
Parent or any of its

                                      -8-
<PAGE>   15

assets or properties; except, with respect to each of clauses (e) and (f) of
this Section 2.4 where the effect of such breach, violation, default, loss or
acceleration, individually or in the aggregate, would not have a Material
Adverse Effect.

                  2.5      Title. Except as set forth in Schedule 2.5 hereto, as
of the date hereof, Seller has good and marketable title to the Purchased
Assets, free and clear of any mortgages, deeds of trust, liens, security
interests, encumbrances, leases, subleases, charges or other claims of third
parties of any kind ("Encumbrances"), other than Encumbrances for current taxes
and assessments not yet past due. As of the Closing Date, Seller will have good
and marketable title to the Purchased Assets, free and clear of any Encumbrances
other than Encumbrances for current taxes and assessments not yet due. Upon
delivery of the bill of sale and assignments to be delivered by Parent and
Seller to Purchaser at the Closing, good and marketable title to the Purchased
Assets, free and clear of any Encumbrances, will pass to Purchaser.

                  2.6      Financial Statements. The balance sheet of Seller as
of December 31, 1998 and the related statements of income, retained earnings and
cash flows for the fiscal year then ended (the "1998 Financial Statements"), and
the balance sheet of Seller as of December 31, 1999 and the related statements
of income, retained earnings and cash flows for the fiscal year then ended (the
"1999 Financial Statements", and together with the 1998 Financial Statements,
the "Annual Financial Statements"), which heretofore have been delivered to
Purchaser, present fairly in all material respects the financial position and
results of operations of Seller as of the dates and for the periods indicated
therein in accordance with GAAP applied on a consistent basis throughout the
periods indicated, except as may otherwise be specifically indicated in such
financial statements. The 1998 Financial Statements have been reviewed by Ernst
& Young LLP.

                  2.7      Inventory. The Inventory consists of items of a
quality and quantity salable in the ordinary course of business of Seller. The
values at which inventories are carried on the Annual Financial Statements, and
at which the Inventory is carried on the books and records of Seller, reflect
the normal inventory valuation of Seller (including the writing down of the
value of slow-moving or obsolete inventory or inventory of below standard
quality to realizable market value in accordance with GAAP), applied on a basis
consistent with the Annual Financial Statements, stating inventories on a
"moving average cost" basis. Any change in the inventory of Seller subsequent to
December 31, 1999 was reasonable and warranted in the ordinary course of
business. The products included in the Inventory were purchased by Seller on
specifications which conform in design in all material respects with, and meet
or exceed the standards required by, all applicable governmental laws,
ordinances and regulations now in effect.

                  2.8      Accounts Receivable. All Accounts Receivable of
Seller outstanding as of the time of the Closing (i) will represent valid
obligations arising from sales actually made to, or services actually performed
in the ordinary course of business for, persons other than affiliates of Seller
or Parent, and (ii) will be collectible within 120 days after the Closing Date
at the aggregate gross recorded amounts thereof (with no reduction for the
amount of any related reserve on the financial records of Seller).

                                      -9-
<PAGE>   16

Schedule 2.8 sets forth a complete and accurate list of all Accounts Receivable
as of March 31, 2000, and the aging of such Accounts Receivable on such date. In
the event that, as a result of the breach of this Section 2.8, there is either a
deduction from the Holdback Amount or an indemnification payment made by Parent
or Seller in respect of one or more Accounts Receivable, then, upon the written
request of Parent and Seller following such deduction or payment and the
agreement of Parent and Seller that such Account Receivable was not collectible
as represented and warranted, Purchaser shall assign such uncollectible Account
Receivable to Seller.

                  2.9      Accounts Payable; Supplier Orders. All Accounts
Payable of Seller outstanding as of the time of the Closing will represent valid
obligations to persons other than affiliates of Seller or Parent arising in the
ordinary course of business. All Supplier Orders made by Seller that are
outstanding as of the time of the Closing shall have been made in the ordinary
course of business. No Supplier Order made by Seller that is outstanding at the
time of the Closing shall be with an affiliate of Seller or Parent.

                  2.10     Condition and Operation of Fixed Assets. All of the
equipment and other property constituting the Fixed Assets is in good operating
condition except for reasonable wear and tear. No equipment or other property
which constitutes the Fixed Assets has been sold, removed, transferred or
otherwise disposed of.

                  2.11     Litigation. (a) Except as set forth on Schedule
2.11(a) hereto, there are no actions, suits, proceedings, claims, investigations
or examinations pending or, to the knowledge of Parent and Seller, threatened
against Parent or Seller with respect to the business, operations, properties,
assets or liabilities of Seller, except for such matters that will not adversely
affect the business or operations of Seller (and, after the Closing, the ability
of Purchaser to conduct the Reynolds Business as currently conducted), the
Purchased Assets, the Leases and the Equipment Leases or the ability of Parent
or Seller to consummate the transactions contemplated by this Agreement.

                  (b)      For purposes of this Agreement, the "knowledge" of
Parent and Seller (and all correlative terms) means to the knowledge of the
persons identified on Schedule 2.11 (b) hereto.

                  2.12     Tax Matters. There are no Encumbrances with respect
to taxes on any of the Purchased Assets.

                  2.13     Leases.

                  (a) Purchaser has been provided with true and complete copies
of all Leases set forth on Schedule 1.4(a) hereto and all amendments and
supplements thereto. The Leases set forth on Schedule 1.4(a) represent the only
real property leases associated with the business of Seller (collectively, the
"Leased Premises"). Each of the Leases is in full force and effect and there are
no existing defaults thereunder, nor does there exist any event or condition
which, with notice or lapse of time or both, would constitute grounds for
termination or re-entry thereunder.

                                      -10-
<PAGE>   17

                  (b) Purchaser has been provided with true and complete copies
of all Equipment Leases set forth on Schedule 1.4(b) hereto and all amendments
and supplements thereto. The Equipment Leases set forth on Schedule 1.4(b)
represent the only equipment leases associated with the business of Seller. Each
of the Equipment Leases is in full force and effect and there are no existing
defaults thereunder, nor does there exist any event or condition which, with
notice or lapse of time or both, would constitute a default thereunder.

                  2.14     Insurance. Schedule 2.14 hereto sets forth a true and
complete list of all policies of insurance maintained by each of Parent and
Seller relating to the Purchased Assets (including the Leased Premises), showing
the beneficiary and the amount of coverage for each policy, all of which
policies are in full force and effect. As of the date hereof, neither Parent nor
Seller has received any written or, to the knowledge of Parent or Seller, oral
notice or any other communication reasonably to be interpreted as notice from
any insurer or agent of any intention to cancel any such insurance policy.

                  2.15     Environmental Matters. Except as specifically
disclosed on Schedule 2.15 hereto: (i) there is not and has not been any
Environmental Condition (as hereinafter defined) at, under, in, originating from
or affecting the Purchased Assets or the Leased Premises or any premises or
property owned, leased, operated, or used in connection with the business of
Seller or at any other location relating in any way to the business of Seller
(including, without limitation, any location at which any Hazardous Substances
(as hereinafter defined) have been used, generated, treated, stored or disposed
by or on behalf of Parent or Seller in connection with the business of Seller),
(ii) except as set forth in the Leases, neither Parent nor Seller is subject to
any indemnity or other agreement with any person or entity relating to
liabilities or obligations (contingent or otherwise) arising under Environmental
Laws (as hereinafter defined) in connection with the Purchased Assets, the
Leased Premises or the business of Seller, (iii) neither Parent nor Seller has
received any notice alleging that any Environmental Condition exists at, under,
in, originating from, or affecting any of the Leased Premises or any premises or
property owned, leased, operated, or used in connection with the business of
Seller or that Parent or Seller is or may be liable for any Environmental
Condition at any location arising out of or relating to the business of Seller,
(iv) no aboveground or underground storage tanks are or have been located at,
under or in any of the Leased Premises or at any premises or property owned,
leased, operated, or used in connection with the business of Seller; to the
knowledge of Seller, no aboveground or underground storage tanks located
adjacent to any of the Leased Premises or any premises or property owned,
leased, operated, or used in connection with the business of Seller are used or
usable in connection with the operation of the business of Seller; and the
Leased Premises do not contain and the Purchased Assets do not include any
underground or aboveground storage tanks, (v) no asbestos-containing material,
polychlorinated biphenyl's or, except in appliances containing less than five
pounds of refrigerant, fluorocarbons or hydrochlorofluorocarbons are present in
any form at or in the Leased Premises or any premises or property owned, leased,
operated, or used in connection with the business of Seller.

                                      -11-
<PAGE>   18

                  For purposes of this Agreement, the following terms have the
following meanings:

                  "Environmental Condition" means any action, omission, event,
condition or circumstance, including, without limitation, the release or
presence of any Hazardous Substances, which does or could reasonably be expected
to (i) require assessment, investigation, abatement, correction, removal or
remediation pursuant to any Environmental Law, (ii) cause personal injury or
property damage as a result of the presence of Hazardous Substances, (iii) give
rise to any obligation or liability of any nature (whether civil or criminal,
arising under a theory of negligence or strict liability, or otherwise) pursuant
to any Environmental Law, (iv) create or constitute a public or private nuisance
or trespass, or (v) constitute a violation of or non-compliance with any
Environmental Law, including, without limitation, Environmental Laws requiring
any filing with any governmental authority or the acquisition of and compliance
with the terms of permits, licenses, approvals, consents and authorizations
issued by any governmental authority.

                  "Environmental Law" means any international, national, state,
provincial, regional, federal, municipal and local law (including, without
limitation, principles of common law and decisional law), statute, code,
ordinance, rule, regulation, decree, judgment, directive, binding policy, term
or condition of any permit, or order, as now or hereafter in effect, which
regulates, establishes standards, or concerns liability with respect to the
environment, natural resources, safety, or health of humans or other organisms,
including the manufacture, distribution in commerce, and use of Hazardous
Substances, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act, as amended.

                  "Hazardous Substances" means any pollutant, contaminant,
hazardous substance, hazardous waste, toxic substance, petroleum or
petroleum-derived substance, waste, or additive, asbestos, polychlorinated
biphenyls, radioactive material, or other compound, element, material or
substance in any form whatsoever (including, without limitation, products)
regulated, restricted or addressed by or under any Environmental Law.

                  2.16     Products and Warranties. Except as set forth in
Schedule 2.16 hereto, there are no claims of customers or others based upon an
alleged or admitted defect of material, workmanship or design or otherwise in
respect of any of Seller's product included in the Inventory that are presently
pending or, to the knowledge of Parent or Seller, threatened against Parent or
Seller. Seller does not provide its customers with any product warranty for the
products included in the Inventory.

                  2.17     Employee Matters.

                  (a)      Employees. Schedule 2.17 hereto sets forth a true and
complete list, as of the pay date immediately preceding the date hereof, of the
names, positions, years of employment and current salaries or wage rates of all
persons employed by Seller, together with a description of all incentive awards,
bonuses and other compensation

                                      -12-
<PAGE>   19

which each such employee is eligible to receive in respect of Seller's fiscal
year ended December 31, 1999. Except as set forth on Schedule 2.17, (i) none of
the persons employed by Seller is on short-term or long-term disability leave as
of the date hereof, (ii) none of the persons employed by Seller is employed
pursuant to an employment agreement, and (iii) Seller has not increased the
compensation of any employee of Seller since October 1, 1999.

                  (b)      Labor Matters; Compliance with Laws. Except as set
forth in Schedule 2.17, (i) there is no labor strike, dispute, slowdown,
stoppage or lockout pending or, to the knowledge of Parent or Seller, threatened
against Seller, and during the past three years there has not been any such
action; (ii) there are no union claims to represent the employees of Seller;
(iii) Seller is not a party to or bound by any collective bargaining or similar
agreement with any labor organization, or work rules or practices agreed to with
any labor organization or employee association applicable to such employees;
(iv) Seller is, and has of all times been, in material compliance with all
applicable laws respecting employment and employment practices, terms and
conditions of employment, wages, hours of work, occupational safety and health,
equal opportunity, collective bargaining and payment of social security and
other taxes, and is not engaged in any discriminatory employment practices or
unfair labor practices as defined in the National Labor Relations Act or other
applicable law, ordinance or regulation; (v) no charges with respect to or
relating to Seller are pending before the Equal Employment Opportunity
Commission or any other agency responsible for the prevention of unlawful
employment practices; (vi) there are no complaints, lawsuits or other
proceedings pending or, to the knowledge of Parent or Seller, threatened in any
forum by or on behalf of any employee of Seller alleging breach of any express
or implied contract of employment, any law or regulation governing employment or
the termination thereof or other discriminatory, wrongful or tortious conduct in
connection with the employment relationship; and (vii) there has been no "mass
layoff" or "plant closing" as defined by the Worker Adjustment and Retraining
Notification Act (the "WARN Act") or any similar state or local "plant closing"
law with respect to the employees of Seller.

                  (c)      Neither Parent, Seller nor any Code Affiliate of
either has or will have after the Closing any unpaid liability, contribution,
fine, penalty or tax, with respect to any Employee Program, for which Purchaser
could become liable as the result of the transactions contemplated by this
Agreement.

                  For purposes of this Agreement, the following terms have the
following meanings.

                  "Employee Program" means (A) any "employee benefit plan,"
within the meaning of Section 3(3) of ERISA, whether or not it is subject to
ERISA, or (B) any other employee benefit arrangement which is (1) the portion of
any employment or consulting agreement which provides employee benefits, (2) an
arrangement providing for insurance coverage or workers' compensation benefits,
(3) an incentive bonus or deferred bonus arrangement, (4) a stock purchase or
stock option arrangement, (5) a cafeteria plan, (6) a death benefit arrangement,
(7) an arrangement providing termination allowance, salary continuation,
severance or similar benefits, (8) an equity compensation

                                      -13-
<PAGE>   20

plan, (9) a deferred compensation plan, (10) a tuition reimbursement, dependent
care assistance, or legal assistance plan or arrangement, (11) a fringe benefit
arrangement (cash or noncash), (12) a holiday or vacation plan or policy, or
(13) any other compensation policy or practice.

                  "Code Affiliate" means any entity which has ever been
considered a single employer with Seller under Section 414(b), (c), (m) or (o)
of the Code or any comparable provision of Canadian law.

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

                  2.18     Customers and Suppliers. Schedule 2.18 hereto lists
the ten largest customers of, and the ten largest suppliers to, Seller during
its fiscal year ended December 31, 1999. Seller has not received any written, or
to the knowledge of Parent and Seller, oral notice or any other communication
reasonably to be interpreted as notice that any such customer or supplier
intends to terminate or materially reduce its business with Seller.

                  2.19     Certain Contracts and Commitments.

                  (a)      Schedule 2.19 hereto sets forth a true and complete
list of agreements, contracts or commitments relating to the Reynolds Business
which are material to the business, operations or financial condition of the
Reynolds Business or which require payment of more than $50,000 in any year or
$150,000 in the aggregate other than (i) the Leases, (ii) the Equipment Leases,
(iii) the Assumed Contracts, (iv) the Customer Purchase Orders and the Prepaid
Customer Orders to be acquired by Purchaser pursuant to Section 1.1(c) above and
(v) the Supplier Orders to be acquired by Purchaser pursuant to Section 1.1(d)
above. Schedule 2.19 includes a statement as to the disposition of each such
agreement, contract or commitment. Except as set forth in Schedule 2.19, to the
knowledge of Parent and Seller, neither Parent nor Seller is in default in any
material respect, and there is no basis for a claim of such default, under any
of the Assumed Contracts set forth on Schedule 1.4(f).

                  (b)      Except as set forth on Schedule 2.19 hereto, all
consents required for the assignment to Purchaser of Seller's right, title and
interest pursuant to the Assumed Contracts and to the Leases (the "Landlord
Consents") and the Equipment Leases (the "Equipment Lease Consents") have been
obtained and are in full force and effect.

                  2.20     Ability to Conduct Business.

                  (a)      Neither Parent nor Seller is subject to or bound by
any judgment, order, writ, injunction or decree of any court or of any other
governmental authority or of any arbitration which, after the Closing Date,
would prevent the use by Purchaser of assets or rights of any nature material to
the Reynolds Business, or impair the conduct by Purchaser of the Reynolds
Business, in each case in accordance with present practices.

                                      -14-
<PAGE>   21

                  (b)      The Purchased Assets comprise all assets and rights
of any nature material to the Reynolds Business or necessary to enable Purchaser
to conduct the Reynolds Business, in each case in accordance with present
practices.

                  2.21     Brokers and Finders. None of Parent, Seller, or any
of their officers, directors, employees, agents or affiliates has employed any
broker or finder or incurred any liability for any brokerage fees or finder's
fees in connection with the transactions contemplated by this Agreement.

                                  ARTICLE III

                   Representations and Warranties of Purchaser

                  Purchaser hereby represents and warrants to Parent and Seller
as follows:

                  3.1      Corporate Organization and Qualification. Purchaser
is a limited liability company duly organized, validly existing and in good
standing under the laws of the State of Delaware, and is in good standing as a
foreign limited liability company in each jurisdiction where the properties
owned, leased or operated, or the business conducted, by it require such
qualification and where the absence of such qualification would have a material
adverse effect on the ability of Purchaser to consummate the transactions
contemplated by this Agreement. Purchaser has the requisite power and authority
to carry on its business as it is now being conducted.

                  3.2      Authority. No consents, approvals, qualifications,
filings or waiting periods of any third party or governmental authority other
than compliance with any applicable requirements of the HSR Act is required on
the part of Purchaser for the consummation of the transactions contemplated by
this Agreement. Purchaser has full power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby. The execution,
delivery and performance of this Agreement by Purchaser has been duly and
validly authorized by all necessary action on the part of Purchaser. No other
proceedings on the part of Purchaser are necessary to authorize this Agreement
and the transactions contemplated hereby.

                  3.3      Execution and Binding Effect. This Agreement has been
duly and validly executed and delivered by Purchaser and constitutes, and the
other documents and instruments to be executed and delivered by Purchaser on or
prior to the Closing Date will constitute (assuming in each case the due and
valid authorization, execution and delivery thereof by the other parties
thereto), legal, valid and binding agreements of Purchaser, enforceable against
it in accordance with their respective terms.

                  3.4      Consents and Approvals; No Violations. Neither the
execution and delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will (a) conflict with or result in a breach
or violation of any of the provisions of Purchaser's Certificate of Formation or
Limited Liability Company Agreement; (b) conflict with, result in a breach or
violation of, result in a default or loss of a material benefit under, or permit
the acceleration of any obligation under any provision of any

                                      -15-
<PAGE>   22

agreement, indenture, mortgage, lien, lease or other instrument or restriction
of any kind to which Purchaser is a party or by which any of its assets or
properties is otherwise bound; (c) result in the creation of any Encumbrance on
any of the assets or properties of Purchaser; or (d) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Purchaser or any
of its assets or properties, except, with respect to each of clauses (b), (c)
and (d) of this Section 3.4 where the effect of such Encumbrance, conflict,
breach, violation, default, loss or acceleration, individually or in the
aggregate, would not have a material adverse effect on the ability of Purchaser
to consummate the transactions contemplated by this Agreement.

                  3.5      Brokers and Finders. Neither Purchaser, nor any of
its officers, directors, employees, agents or affiliates has employed any broker
or finder or incurred any liability for any brokerage fees or finder's fees in
connection with the transactions contemplated by this Agreement.

                                   ARTICLE IV

                         Covenants of Parent and Seller

                  4.1      [Reserved]

                  4.2      [Reserved]

                  4.3      [Reserved]

                  4.4      No Competition, No Solicitation, No Inducement;
Confidentiality.

                  (a) Each of Parent and Seller agrees that for a period of five
(5) years from the Closing Date, neither it nor any of its affiliates or
subsidiaries shall, without the express prior written consent of Purchaser:

                  (i)      own, manage, operate or control any business that is
         engaged in a business which is the same or substantially similar to the
         Reynolds Business, either directly or indirectly, or as a consultant or
         advisor, or as a shareholder (other than as the holder of less than 5
         percent of the shares of any corporation whose shares are traded on a
         national securities exchange or over the counter) or partner, anywhere
         in the United States of America or Canada;

                  (ii)     for itself, on behalf of any other person, firm or
         entity or in conjunction with any other person, firm or entity, do
         business with, solicit, call upon, accept business from or engage in
         business with any person, firm or entity which is a customer of Seller
         or Purchaser or any subsidiary or affiliate thereof as of the date
         hereof, which becomes a customer of Purchaser or any subsidiary or
         affiliate thereof during the five-year period from the Closing Date, or
         which is a potential customer of Seller, for the purpose of providing
         the same or similar products or services as those provided by Seller or
         Purchaser or any subsidiary or affiliate thereof as of the Closing Date
         or entered into by Purchaser or any

                                      -16-
<PAGE>   23

         subsidiary or affiliate thereof during the five-year period from the
         Closing Date; or

                  (iii)    for itself, on behalf of any other person, firm or
         entity or in conjunction with any other person, firm or entity,
         approach, counsel or attempt to induce any person who is then in the
         employ of Purchaser or any subsidiary or affiliate thereof to leave
         such employment, or employ or attempt to employ any such person or any
         professional who at any time during the preceding twelve months was in
         the employ of Purchaser or any subsidiary or affiliate thereof.

                  (b) Each of Parent and Seller agrees that it will not at any
time from and after the date hereof divulge, furnish or make accessible to any
person, or itself make use of, any confidential information obtained by it in
respect of Seller, including, without limitation, information with respect to
any products, programs, methodologies, business strategies, finances, financial
condition, organization, personnel, business activities, customers, suppliers,
budgets, plans or objectives of Seller; provided, however, that (i) confidential
information shall not include publicly available information or information
known generally to the public or in the industry, and (ii) each of Parent and
Seller may disclose such information as may be required in the reasonable
opinion of counsel in connection with any judicial or administrative proceeding
or inquiry.

                  (c) "Potential customer" shall mean at any particular time any
person, firm or entity to whom Seller, through any of its respective employees,
had within one year prior to such time offered (by means of a personal meeting
or written proposal directed to such person, firm or entity) to provide the
products or services provided by Seller or Purchaser or any subsidiary or
affiliate thereof, but who at such time is not a customer of Seller or Purchaser
or any subsidiary or affiliate thereof.

                  (d) For purposes of the restrictive covenants set forth in
this Section 4.4, it is understood and agreed by the parties that references to
"Purchaser or any subsidiary or affiliate thereof" shall be deemed to include
(i) Purchaser, (ii) Heads and Threads (PA) LLC, a Delaware limited liability
company, (iii) Heads and Threads (NJ) LLC, a Delaware limited liability company,
and (iv) Alleghany Corporation, a Delaware corporation ("Alleghany") and any
subsidiary, division or affiliate of Alleghany which engages in a business
similar to the business presently conducted by Purchaser, but shall not be
deemed to include Alleghany (except in respect of Purchaser) or any subsidiary
or affiliate of Alleghany which engages in a business which is not similar to
the business presently conducted by Purchaser.

                  (e) The provisions of this Section 4.4 shall continue in full
force and effect in the event of any sale of the business of Purchaser,
including, but not limited to, any merger or consolidation of Purchaser with or
into any other entity.

                  (f) The provisions of this Section 4.4 shall be construed as
independent covenants; the existence of any claim, demand, action or cause of
action of Parent against Purchaser, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement of any of the
covenants in this Section 4.4.

                                      -17-
<PAGE>   24

                  (g) Since Purchaser will be irreparably damaged and its remedy
at law will be inadequate in the event of a breach of this Section 4.4,
Purchaser shall be entitled to an injunction restraining violation of this
Section 4.4 or any appropriate decree of specific performance, without showing
any actual damage or that monetary damages would not provide an adequate remedy.
In the event that any particular provision or portion of this Section 4.4 shall
be adjudicated to be invalid or unenforceable because of the scope, duration or
area of its applicability, the parties agree that a court of competent
jurisdiction shall have jurisdiction to, and the parties desire and intend that
such court shall, modify such scope, duration or area, or all of them, and such
provision shall then be applicable in such modified form.

                  4.5      Tax Clearance Certificates. To the extent required by
law to relieve Purchaser of any liability for unpaid sales, income, franchise or
similar taxes of Parent or Seller attributable to periods prior to the Closing
Date, each of Parent and Seller shall take all necessary action in order to
obtain clearance certificates or similar documents from any applicable state tax
authority as soon as practicable after the Closing.

                                   ARTICLE V
                                 Other Covenants

                  5.1      Employee Matters. Purchaser agrees to offer
employment beginning on the day following the Closing (i) to each of the
employees identified on Schedule 2.17 hereto, at the same base compensation as
currently paid to them by Seller and at the same level of seniority held by each
of them at the time of the Closing, and (ii) to each other person who becomes an
employee of Seller with the prior written consent of Purchaser between the pay
date immediately preceding the date hereof and the Closing Date, at the same
base compensation paid to such person at the time of hire and at the same level
of seniority held by such person at the time of the Closing. Each individual who
accepts such offer shall become an employee of Purchaser on the day following
the Closing Date, and each such individual shall receive credit, for eligibility
and vesting purposes, under each employee benefit plan of Purchaser in which
such individual may thereafter participate in respect of such individual's
service with Seller. Purchaser agrees that no employee of Seller who becomes an
employee of Purchaser on the day following the Closing Date will be transferred
to a workplace located more than 50 miles from such employee's current workplace
location during the 30-day period following the Closing Date. Any coverage
provided to an individual who becomes an employee of Purchaser beginning on the
day following the Closing under any health or medical plan of Purchaser shall be
limited to coverage for health or medical services rendered to such individual
(including his or her dependents) after the Closing Date. Seller shall be
responsible for maintaining coverage for any such individual (and such
individual's dependents) under its health and medical care plans existing
immediately prior to the Closing for any health or medical services rendered on
or prior to the Closing Date and for complying with Section 4180B of the Code
and Section 601 through 608 of ERISA after the Closing Date to the extent that
such individuals (or their dependents) have rights under the provisions set
forth therein. Except as expressly set forth in this Section 5.1,

                                      -18-
<PAGE>   25

Purchaser will not assume any obligations or liabilities of any kind or
character whatsoever, accruing under, arising out of or related to the
employment of employees by Seller prior to the Closing, including without
limitation, liabilities attributable to, or arising as a result of, the
establishment, operation or termination of any Employee Program, any law
regulating employment or employee benefits, vacation or dismissal pay, wages,
salaries, bonuses, overtime or other pay accruals, retiree medical care,
workmen's compensation or other occupational claims.

                  5.2      [Reserved]

                  5.3      Further Assurances. Each of Parent and Seller agrees
that it will, from time to time at and subsequent to the Closing Date, at the
request of Purchaser and without further consideration, execute and deliver such
other instruments of conveyance, assignment and transfer and take such other
actions as Purchaser may reasonably request in order more effectively to perfect
the vesting of title to the Purchased Assets in Purchaser and otherwise to
consummate the transactions contemplated by this Agreement. Purchaser agrees
that it will, from time to time at and subsequent to the Closing Date, at the
request of Parent or Seller and without further consideration, execute and
deliver such other instruments of conveyance, assignment and transfer and take
such other actions as Parent and Seller may reasonably request in order more
effectively to perfect the vesting of title to the Purchased Assets in Purchaser
and otherwise to consummate the transactions contemplated hereby.

                  5.4      Access to Books and Records after the Closing Date.
Parent and Seller agree that on and after the Closing Date, Parent and Seller
shall permit Purchaser, its counsel, financial advisors, auditors and other
authorized representatives to have reasonable access to, and to examine and make
copies of, the books and records of Seller (including, but not limited to,
correspondence, memoranda, books of account, payroll records and the like)
pertaining to the ownership and operation of the Purchased Assets or the Leased
Premises prior to the Closing Date which are retained by Parent or Seller.
Purchaser agrees that on and after the Closing Date, Purchaser shall permit
Parent and Seller, its counsel, financial advisors, auditors and other
authorized representatives to have reasonable access to, and to examine and make
copies of, the books and records of Seller (including, but not limited to,
correspondence, memoranda, books of account, payroll records and the like) that
relate primarily to the Purchased Assets or the Leased Premises. Purchaser, on
the one hand, and Parent and Seller, on the other hand, shall cause their
respective managerial employees and counsel to be available upon reasonable
notice to answer questions of representatives of a party concerning the
Purchased Assets or the Leased Premises. Each party hereto shall take all
necessary action to keep, or cause to be kept, in its original form, for a
period of at least six years following the Closing Date, all books and records
relating to the Purchased Assets or the Leased Premises in existence on the
Closing Date; provided, however, that Parent and Seller may offer in writing to
Purchaser, or Purchaser may offer in writing to Parent and Seller, to deliver
all or a portion of such information in its possession and, if such offer is
accepted in writing within 90 days after receipt thereof, the offering party or
parties shall promptly arrange for the delivery of such information (or copies
thereof) to the accepting party or parties (at the expense of such accepting
party). If such offer is not so accepted, the

                                      -19-
<PAGE>   26

offered information may be destroyed or otherwise disposed of by the offering
party or parties at any time thereafter. Any such offer shall identify in
reasonable detail the documents proposed to be destroyed or disposed of.

                  5.5      Collection of Accounts Receivable. Except to the
extent that Purchaser shall assign to Seller one or more uncollectible Accounts
Receivable as provided in Section 2.8 hereof, from and after the Closing, (i)
Purchaser shall have the right and authority to collect for its own account all
Accounts Receivable and other items that are included in the Purchased Assets
and to endorse with the name of Seller any checks or drafts received with
respect to any such Accounts Receivable or other items, and (ii) Seller shall,
and Parent agrees to cause Seller to, deliver to Purchaser any cash or other
property received directly or indirectly by Seller with respect to such Accounts
Receivable and other items.

                  5.6      Defective Goods, Returns and Retentions. As an
accommodation to Seller, from and after the Closing, Purchaser, on behalf of
Seller, shall administer warranty claims and customer complaints or disputes
concerning allegedly defective, incomplete or non-conforming goods or products
shipped by Seller on or prior to the Closing Date to the extent such claims,
complaints or disputes may be resolved by the provision of replacement goods, or
the grant of a credit, allowance or other price reduction against amounts
otherwise due to Purchaser. Parent and Seller agree to reimburse Purchaser in an
amount equal to (x) the regular sales price of all such replacement goods and
the amount of all such credits, allowances or price reductions extended to
customers by Purchaser less (y) the amount (if any) of credits received by the
Purchaser from the manufacturers of such defective, incomplete or non-conforming
goods or products (the "Differential"). Notwithstanding the foregoing, (i)
Parent and Seller shall have no obligation to reimburse Purchaser pursuant to
the preceding sentence until the Differential exceeds an amount equal to
$125,000 less the amount of any Losses (as hereinafter defined) incurred by any
Purchaser Indemnitee (as hereinafter defined) as to which Parent and Seller are
excused from indemnifying pursuant to the first proviso set forth in Section
8.2, and then Parent and Seller shall be required to reimburse Purchaser only to
the extent of the difference between the Differential and such amount; and (ii)
Purchaser shall not assume any liability or obligation with respect to any such
warranty claims and customer complaints or disputes concerning allegedly
defective, incomplete or non-conforming goods or products.

                  5.7      Payment of Creditors. Each of Parent and Seller
shall, and Parent agrees to cause Seller to, pay on a timely basis all amounts
owed to creditors of Parent and/or Seller to the extent that failure to make any
such payment could reasonably be expected to result in a determination that the
sale of the Purchased Assets hereunder is ineffective against any creditor of
Parent and/or Seller.

                  5.8      Transitional Assistance. For a period not to extend
past the first anniversary of the Closing Date, Purchaser agrees to make
available to Seller and Parent at reasonable times and for reasonable periods
the services of those employees of Seller who become employees of Purchaser who
prior to the date hereof have been responsible for financial accounting,
employee benefits, litigation, banking and contract

                                      -20-
<PAGE>   27

administration matters relating to the Reynolds Business. Parent and Seller will
reimburse Purchaser for all out-of-pocket costs incurred by Purchaser in
providing such assistance. Parent and Seller acknowledge that Purchaser shall
have no responsibility for, and shall have no liability to, Parent or Seller
arising out of any act or failure to act by any such employee with respect to
such assistance.

                                   ARTICLE VI
                                   [Reserved]

                                  ARTICLE VII
                                   [Reserved]

                                  ARTICLE VIII

                  Survival of Representations and Warranties; Indemnification

                  8.1      Survival of Representations, Warranties, etc. All
representations and warranties of the parties made in this Agreement, including,
without limitation, the Schedules or any instrument, list, certificate or
writing delivered pursuant hereto, shall survive the Closing Date and for a
period of one year thereafter notwithstanding any investigation at any time made
by or on behalf of the other party; provided, however, that, all representations
and warranties made by each of Parent and Seller in Section 2.12 (Tax Matters)
and 2.15 (Environmental Matters) shall survive the Closing Date until the
applicable statute of limitation (or any extension thereof) has expired, and the
representation and warranty made by each of Parent and Seller in Section 2.5
(Title) shall survive the Closing Date for a period of two years thereafter (as
the case may be, the applicable "Survival Period"). All claims for damages for
breach of a representation or warranty which are asserted by Purchaser under
Section 8.2(a)(i) or which are asserted by Parent or Seller under Section 8.3(i)
must be asserted prior to the expiration of the Applicable Survival Period. All
representations, warranties and statements related to any claim asserted prior
to the expiration of the applicable Survival Period shall survive until such
claim shall be resolved and payment in respect thereof, if any is owing, shall
be made.

                  8.2      Parent's and Seller's Agreement to Indemnify.

                  (a) Each of Parent and Seller shall fully indemnify and hold
harmless Purchaser, its officers, directors, employees, agents, representatives
and affiliates and their successors and assigns (collectively, the "Purchaser
Indemnitees") against and in respect of any and all liabilities, losses,
damages, claims, penalties, actions, fines, deficiencies, costs, taxes, loss of
deductions or expenses (including, without limitation, the reasonable fees and
expenses of counsel) (collectively, "Losses"), regardless of whether an action
has been filed or asserted against Purchaser after the Closing Date, (i)
resulting from any breach of representation or warranty by Parent and/or Seller
made in this Agreement (including, without limitation, the Schedules and any
instrument, list, certificate or writing delivered pursuant hereto), (ii)
resulting from the breach or non-

                                      -21-
<PAGE>   28

performance of any covenant or agreement by Parent and/or Seller made in this
Agreement (including, without limitation, the Schedules and any instrument,
list, certificate or writing delivered pursuant hereto), (iii) relating in any
way to any Excluded Liability, (iv) arising under any bulk sales law or from a
determination that the sale of the Purchased Assets hereunder is ineffective
against any creditor of Parent and/or Seller or any taxing authority or other
entity asserting any similar claim against Parent and/or Seller, (v) incurred or
suffered by Purchaser under the WARN Act, and any similar state and local
statutes, as a result of the transactions contemplated by this Agreement (except
for such Losses that are incurred or suffered by Purchaser as a result of
termination by Purchaser after the Closing Date of current employees of Seller
who become employees of Purchaser), (vi) arising in respect of periods of
employment of current or former employees of Seller prior to the Closing Date,
and periods of employment on or after the Closing Date, for current or former
employees of Seller who do not become employees of Purchaser, (vii) that
Purchaser may incur with respect to or arising in connection with the
termination of employment of such employees in respect of such periods and any
employment agreement, Employee Program or any arrangement or commitment with or
maintained for the benefit of such employees existing at or prior to the Closing
Date, and (viii) without limiting the foregoing, resulting or relating in any
way to the conduct of the business of Seller or the ownership or operation of
the Purchased Assets on or prior to the Closing Date; provided, however, that
(A) for purposes of the indemnification provided under Section 8.2(a)(i) (other
than in respect of the breach or inaccuracy of Sections 2.5, 2.8 and 2.12, to
which the deductible shall not apply), Parent and Seller shall have no
obligation to indemnify the Purchaser Indemnitees until such time, if any, as,
and only to the extent that, the aggregate amount of the Losses arising out of
all such breaches exceeds the Threshold Amount (as hereinafter defined), and (B)
for purposes of the indemnification provided under Section 8.2(a)(i), Parent and
Seller shall have no obligation to indemnify the Purchaser Indemnitees in
respect of a breach of a representation or warranty to the extent the event
giving rise to the breach occurred or first became known to Parent and Seller
after the date of this Agreement and was disclosed in writing to the Purchaser
prior to the Closing; and provided, further, that for purposes of the
indemnification provided in Section 8.2(a)(i), the obligations of Parent and
Seller to indemnify the Purchaser Indemnitees in respect of the representations
and warranties set forth in Sections 2.12 and 2.15 shall be without limitation,
the obligations of Parent and Seller to indemnify the Purchaser Indemnitees in
respect of the representations and warranties set forth in Sections 2.6, 2.16
and 2.18 shall be limited to aggregate payments equal to $3,000,000, and the
obligations of Parent and Seller to indemnify the Purchaser Indemnitees in
respect of the representations and warranties set forth in Sections 2.1, 2.2,
2.3, 2.4, 2.5, 2.7, 2.8, 2.9, 2.10, 2.11, 2.13, 2.14, 2.17, 2.19, 2.20 and 2.21
shall be limited to aggregate payments equal to the Purchase Price. For purposes
of the indemnification provided in Section 8.2(a)(i), in determining whether the
representations and warranties of Parent and Seller have been breached, no
effect will be given to any materiality qualifier or dollar threshold set forth
in such representations and warranties or related definitions. For purposes
hereof, the "Threshold Amount" shall mean an amount equal to $125,000 less the
amount of any Differential for which Seller is not required to reimburse
Purchaser pursuant to the provisions of Section 5.6 hereof.

                                      -22-
<PAGE>   29

                  (b) In addition to the foregoing provisions of Section 8.2(a)
and without limiting the generality of such provisions, each of Parent and
Seller agrees to fully indemnify and hold harmless Purchaser and its parent
corporation and all other members, if any, of any group of which such Purchaser
is a member for tax purposes (any subsequent reference to "Purchaser" in this
paragraph (b) shall mean either Purchaser individually or one or more of its
affiliates as described herein, as appropriate) against and in respect of and,
on demand, will reimburse Purchaser for, any and all liability whatsoever, and
however imposed (including any claim asserted or deficiency assessed against or
collected from or paid by Purchaser), in respect of (x) any taxes (including any
interest thereon and any penalties with respect thereto) relating to the
Purchased Assets for any and all periods through and including the Closing Date,
(y) any taxes (including any interest thereon and any penalties with respect
thereto) payable by Parent and Seller pursuant to Sections 9.2 below and 1.8
above and (z) any taxes of any kind whatsoever, whether sales, use, excise,
employment or withholding taxes (including any interest thereon and any
penalties with respect thereto), arising out of, or related to, the business or
operations of Seller conducted prior to and through the Closing Date.

                  (c) In addition to the foregoing provisions of Section 8.2(a)
and without limiting the generality of such provisions, each of Parent and
Seller shall fully indemnify and hold harmless the Purchaser Indemnitees against
and in respect of any and all Losses relating to or arising from any
Environmental Condition occurring or existing on or prior to the Closing arising
from or relating to the Purchased Assets, the Leased Premises or any other
premises or property currently or formerly owned, leased, operated, or used in
connection with the business of Seller, including, without limitation, and
notwithstanding Section 1.4(a), any Losses arising under or in connection with
the Leases and relating to any Environmental Condition occurring or existing at
or prior to the Closing.

                  8.3      Purchaser's Agreement to Indemnify. Purchaser shall
fully indemnify and hold harmless each of Parent and Seller and its respective
officers, directors, employees, agents, representatives, affiliates and their
successors and assigns (collectively, the "Seller Indemnitees"), against and in
respect of any and all Losses, regardless of whether an action has been filed or
asserted against Parent or Seller after the Closing Date, (i) resulting from any
breach of representation or warranty by Purchaser made in this Agreement
(including, without limitation, any instrument, list, certificate or writing
delivered pursuant hereto), (ii) resulting from the breach or non-performance of
any covenant or agreement by Purchaser made in this Agreement (including,
without limitation, any instrument, list, certificate or writing delivered
pursuant hereto), (iii) arising in respect of periods of employment after the
Closing Date for current employees of the Seller who become employees of
Purchaser, (iv) that Parent or Seller may incur (pursuant to the WARN Act or
otherwise) with respect to or arising in connection with the termination by
Purchaser after the Closing Date of current employees of Seller who become
employees of Purchaser, (v) arising out of the failure by Purchaser to perform
and discharge any Assumed Liability, or (vi) without limiting the foregoing,
resulting or relating in any way to the ownership or operation of the Purchased
Assets by Purchaser from and after the Closing Date; provided, however, that (A)
for purposes of the indemnification provided under Section 8.3(i), the Purchaser
shall have no obligation to indemnify the Seller Indemnitees until such time, if
any, as, and only to the extent that,

                                      -23-
<PAGE>   30

the aggregate amount of the Losses arising out of all such breaches exceeds
$125,000; and provided, further, that the obligation of the Purchaser to
indemnify the Seller Indemnitees pursuant to Section 8.3(i) shall be limited to
aggregate payments equal to the Purchase Price. For purposes of the
indemnification provided in Section 8.3(i), in determining whether the
representations and warranties of the Purchaser have been breached, no effect
will be given to any materiality qualifier or dollar threshold set forth in such
representations and warranties or related definitions. Purchaser will have no
obligation to indemnify or hold harmless Parent or Seller in respect of any Loss
relating in any way to an Excluded Asset or an Excluded Liability.

                  8.4      Matters Involving Third Parties. (a) If any third
party shall notify any party (the "Indemnified Party") with respect to any
matter (a "Third-Party Claim") which may give rise to a claim for
indemnification against any other party (the "Indemnifying Party") under this
Article VIII, then the Indemnified Party shall promptly (and in any event within
five (5) business days after receiving written notice of the Third-Party Claim)
notify the Indemnifying Party thereof in writing; provided, however, that
failure to provide such written notice on a timely basis shall not release the
Indemnifying Party from any of its obligations under this Article VIII except to
the extent the Indemnifying Party is materially prejudiced by such failure.

                  (b)      The Indemnifying Party shall, upon receipt of such
notice and upon its irrevocably and unconditionally notifying the Indemnified
Party in writing that it shall indemnify all Indemnified Parties in respect of
such matter, be entitled to participate in or, at the Indemnifying Party's
option, assume at its own expense the defense, appeal or settlement of such
Third-Party Claim with respect to which such indemnity has been invoked with
counsel of the Indemnifying Party's choice (provided that such counsel is
reasonably satisfactory to the Indemnified Party), and the Indemnified Party
shall fully cooperate with the Indemnifying Party in connection therewith
including contesting such Third-Party Claim or making any counterclaim against
the person asserting such Third-Party Claim; provided, however, that if the
Indemnifying Party assumes the defense, appeal or settlement of such Third-Party
Claim, (i) the Indemnifying Party shall reimburse the Indemnified Party for out
of pocket expenses incurred by the Indemnified Party (such as travel costs, but
not internal time charges) and (ii) the Indemnified Party shall be entitled to
employ one counsel to represent itself if, in the opinion of counsel to the
Indemnified Party, an actual conflict of interest exists between the
Indemnifying Party and the Indemnified Party in respect of such Third-Party
Claim and in that event the reasonable fees and expenses of such counsel shall
be paid by the Indemnifying Party (it being understood that all Indemnified
Parties may employ not more than one counsel to represent them at the expense of
the Indemnified Party). Any Indemnified Party is hereby authorized prior to the
date on which it receives written notice from the Indemnifying Party that it
intends to assume the defense, appeal or settlement of such Third-Party Claim,
to file any motion, answer or other pleading and take such other action which it
shall reasonably deem necessary to protect its interest or that of the
Indemnifying Party until the date on which the Indemnified Party receives such
notice from the Indemnifying Party, provided that, prior to filing such motion,
answer or other pleading or taking such other action, the Indemnified Party
shall have made reasonable efforts to consult with the Indemnifying Party.
Failure by the Indemnifying Party to

                                      -24-
<PAGE>   31

assume the defense, appeal or settlement of such Third-Party Claim within a
reasonable period of time, but in no event more than ten (10) business days
after written notice thereof shall have been given to the Indemnifying Party,
shall be deemed a waiver by the Indemnifying Party of its right to defend such
Third-Party Claim.

                  (c)      If the Indemnifying Party shall not assume the
defense of the Third-Party Claim, the Indemnified Party may defend against such
Third-Party Claim in such manner as it deems appropriate, provided that the
Indemnified Party shall not settle such Third-Party Claim without providing
notice and a description of the proposed settlement to the Indemnifying Party.
If the Indemnified Party shall not receive from the Indemnifying Party within
ten (10) business days of the date of notice of such proposed settlement a
notice that the Indemnifying Party reasonably objects to such proposed
settlement accompanied by an acknowledgement by the Indemnifying Party that the
Third-Party Claim which is subject of the proposed settlement is subject to
indemnification pursuant to the provisions of this Article VIII, the Indemnified
Party shall be free to settle such Third-Party Claim. If no settlement of such
Third-Party Claim is made, the Indemnifying Party shall promptly reimburse the
Indemnified Party for the amount of any final judgment rendered with respect to
such Third-Party Claim and for the amount of all expenses, legal or otherwise,
incurred by the Indemnified Party in the defense against such Third-Party Claim,
provided that the Indemnified Party has contested such Third-Party Claim in good
faith. If the Indemnifying Party assumes the defense of any Third-Party Claim,
the Indemnifying Party shall not consent to entry of any judgment or enter into
any settlement, other than a judgment or settlement involving only the payment
of money damages by the Indemnifying Party, without the consent of the
Indemnified Party, which consent shall not be unreasonably withheld or
unreasonably delayed.

                  8.5      Matters Not Involving Third-Party Claims. Any
indemnifiable claim that is not a Third-Party Claim shall be asserted by written
notice to the Indemnifying Party.

                  8.6      Exclusive Remedy. If the Closing occurs, except as
specifically provided in Section 4.4 hereof, absent fraud, the indemnification
provided for in this Article VIII shall be the exclusive remedy in any action
seeking damages or any other form of monetary relief brought by any party to
this Agreement.

                                   ARTICLE IX

                            Miscellaneous Provisions

                  9.1      [Reserved]

                  9.2      Expenses. Parent and Seller shall pay all taxes
(including, without limitation, sales, use and transfer taxes) which may be
payable by reason of the consummation and sale of the Purchased Assets and the
assignment of the Leases and Equipment Leases to Purchaser. Subject to the
foregoing, each party hereto shall pay all of the costs and expenses incurred by
it in connection with this Agreement or in

                                      -25-
<PAGE>   32

consummating the transactions contemplated hereby (including, without
limitation, disbursements and expenses of its attorneys, accountants and
advisers).

                  9.3      Notices. All notices and other communications
required or permitted to be given pursuant to this Agreement shall be in writing
and shall be effective upon delivery by hand or upon receipt if sent certified
or registered mail (postage prepaid and return receipt requested) or by a
nationally recognized overnight courier service (appropriately marked for
overnight delivery) or upon transmission if sent by telex or facsimile (with
request for immediate confirmation of receipt in a manner customary for
communications of such respective type and with physical delivery of the
communication being made by one of the other means specified in this Section 9.3
as promptly as practicable thereafter). Notices are to be addressed as follows:

                  If to Purchaser, to:

                           Heads & Threads International LLC
                           200 Kennedy Drive
                           Sayreville, New Jersey 08872
                           Attention:  Mr. Steven R. Schonholtz
                                       President

                  with copies to:

                           Alleghany Corporation
                           375 Park Avenue
                           New York, New York 10152
                           Attention:  Robert M. Hart, Esq.
                                       Senior Vice President and General Counsel

                  and

                           Dewey Ballantine LLP
                           1301 Avenue of the Americas
                           New York, New York 10019
                           Attention:  Aileen C. Meehan, Esq.

                  If to Parent and Seller, to:

                           Acktion Corporation
                           65 Overlea Boulevard, Suite 400
                           Toronto, Ontario
                           CANADA M4H 1P1
                           Attention:  Mr. Eugene Hretzay
                                       Secretary

                                      -26-
<PAGE>   33

                  with a copy to:

                           Rosenman & Colin LLP
                           575 Madison Avenue
                           New York, NY 10022
                           Attention:  Robinson Markel, Esq.

                  Any party may change the person and address to which notices
or other communications are to be sent to it by giving written notice of any
such change in the manner provided herein.

                  9.4      Entire Agreement; Amendment. This Agreement, together
with the Schedules, exhibits and other documents delivered pursuant hereto, sets
forth the entire agreement and understanding of the parties hereto in respect of
the transactions contemplated hereby, and supersedes all prior agreements,
arrangements and understandings relating to the subject matter hereof. This
Agreement may be amended, modified, superseded or supplemented only by an
instrument in writing executed and delivered by Purchaser, Parent and Seller.

                  9.5      Assignment. This Agreement shall inure to the benefit
of, and be binding upon, the respective successors, administrators, legal
representatives and permitted assigns of the parties hereto; provided, however,
that no assignment of any rights or delegation of any obligations provided for
herein shall be made by any party hereto without the express prior written
consent of each other party.

                  9.6      Governing Law. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of New York,
without giving effect to the principles of conflicts of law thereof.

                  9.7      No Third-Party Beneficiaries. This Agreement is for
the benefit of the parties hereto and is not intended to confer upon any other
person any rights or remedies hereunder.

                  9.8      Consent to Jurisdiction. Except as otherwise
expressly provided in this Agreement, the parties hereto agree that any suit,
action or proceeding seeking to enforce any provision of, or based on any matter
arising out of or in connection with, this Agreement or the transactions
contemplated hereby shall be brought in the United States District Court for the
Southern District of New York or any New York State court sitting in Manhattan,
and each of the parties hereby consents to the exclusive jurisdiction of such
courts (and of the appropriate appellate courts therefrom) in any such suit,
action or proceeding and irrevocably waives, to the fullest extent permitted by
law, any objection which it may now or hereafter have to the laying of the venue
of any such suit, action or proceeding in any such court or that any such suit,
action or proceeding which is brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be served
on any party anywhere in the world, whether within or without the jurisdiction
of any such court. Without limiting the foregoing, each party

                                      -27-
<PAGE>   34

agrees that service of process on such party as provided in this Section 9.8
shall be deemed effective service of process on such party.

                  9.9      Waiver of Jury Trial. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.

                  9.10     Counterparts. This Agreement may be executed in any
number of separate counterparts, each of which shall be deemed to be an
original, but which together shall constitute one and the same instrument.

                  9.11     Headings. The section headings contained in this
Agreement are inserted for convenience of reference only and shall not affect
the meaning or interpretation of this Agreement.

                  9.12     Severability. In the event that any provision hereof
is prohibited or unenforceable in any jurisdiction, such provision shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.

                  9.13     FIRPTA Certificate. On the Closing Date, Seller shall
execute and deliver to Purchaser the certificate described in Treas. Reg.
Section 1.1445-2(b)(2) to the effect that Seller is not a foreign person within
the meaning of Sections 897(c) and 1445 of the Code.

                                      -28-
<PAGE>   35

IN WITNESS WHEREOF, each party hereto has duly executed, or has caused this
Agreement to be duly executed, as of the date first above written.

<TABLE>
<S>                                                   <C>
                                                       HEADS & THREADS INTERNATIONAL LLC
Attest:

                                                       By: /s/ Steven R. Schonholtz
                                                          --------------------------------------
                                                          Steven R. Schonholtz
/s/ Michael Wrenn                                         President
-----------------------------------

Attest:                                                ACKTION CORPORATION

/s/ Eugene Hretzay                                     By: /s/ K. (Rai) Sahi
-----------------------------------                       --------------------------------------
                                                          K. (Rai) Sahi
                                                          Chairman and Chief Executive Officer

Attest:

/s/ Eugene Hretzay                                     BY: /s/ Fraser R. Berrill
-----------------------------------                       --------------------------------------
                                                          Fraser R. Berrill
                                                          Senior Vice President

Attest:                                                REYNOLDS FASTENERS, INC.

/s/ Eugene Hretzay                                     By: /s/ Don Haggerty
-----------------------------------                       --------------------------------------
                                                          Don Haggerty
                                                          President
</TABLE>

                                      -29-

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