Document:

Asset Purchase Agreement - Delta Process Equipment

    ASSET
      PURCHASE AGREEMENT

     

    THIS
      ASSET PURCHASE AGREEMENT (this “Agreement”) is made and entered into this 2nd
      day of May, 2007, by and between DELTA PROCESS EQUIPMENT, INC., a Louisiana
      corporation (the “Seller”), DELTA COMPANIES CONSOLIDATED, INC., a Louisiana
      corporation (the “DCCI”), the Persons signing this Agreement under the heading
“Shareholders” (the “Shareholders”), and DXP ENTERPRISES, INC., a Texas
      corporation (the “Buyer”).

    

    W
      I T N E
      S S E T H:

    

    WHEREAS,
      the Seller desires to transfer to the Buyer the Business and certain of the
      properties, assets and liabilities related to the Business, and the Buyer
      desires to acquire such Business, properties and assets and assume such
      liabilities, all upon the terms and subject to the conditions set forth herein;
      and

    

    WHEREAS,
      the parties hereto desire to set forth certain representations, warranties
      and
      agreements, all as more fully set forth below.

    

    NOW,
      THEREFORE, in consideration of the premises and the respective covenants and
      agreements contained herein, the parties hereto agree as follows:

     

    PURCHASE
      AND SALE OF ASSETS

     

    Transferred
      Assets.

     

    Subject
      to the terms and conditions of this Agreement and in consideration of the
      obligations of the Buyer as provided herein, and except as otherwise provided
      in
      Section 1.2 hereof, at the Closing, the Seller shall sell, assign, transfer,
      grant, bargain, deliver and convey to the Buyer, free and clear of all Liens
      other than Permitted Liens, the Seller’s entire right, title and interest in, to
      and under any and all assets owned or used by the Seller in connection with
      or
      arising out of the Business of every type and description, tangible and
      intangible, wherever located and whether or not reflected on the books and
      records of the Seller (all of such assets, properties, rights and business
      being
      hereinafter sometimes collectively referred to as the “Transferred Assets”),
      including, but not limited to:

     

    the
      Equipment, including the Equipment set forth in Schedule
      1.1(a)(i)
      hereto,
      and all other tangible personal property (including supplies) held by Seller
      and
      used or useful in the Business;

     

    all
      Inventories, including the Inventories set forth in Schedule
      1.1(a)(ii)
      hereto;

     

    all
      accounts receivable of the Seller and the Business (the “Accounts Receivable”),
      including the accounts receivable set forth in Schedule 1.1(a)(iii)
      hereto;

     

    the
      Proprietary Information, including the name DELTA PROCESS EQUIPMENT or any
      derivative thereof, and any service marks, trademarks, trade names, d/b/a names,
      fictitious names, identifying symbols, logos, emblems or signs containing or
      comprising the foregoing;

     

    subject
      to Section 1.1(b) hereof, all customer contracts, distributor agreements,
      unfilled or outstanding purchase orders, sales contracts, other commitments,
      contracts and engagements to which the Seller is entitled at the Closing and
      which relate to the Business (the “Assumed Contracts”), including without
      limitation those contracts set forth in Schedule
      1.1(a)(v);

     

    subject
      to Section 1.1(b), the lease agreements listed in Schedule 1.1(a)(vi)
      (the
“Leases”);

     

    all
      prepaid expenses and deposits made by the Seller, including those shown on
      Seller’s financial statements relating to the Transferred Assets and the
      Business and set forth in Schedule
      1.1(a)(vii);

     

    any
      goodwill associated with the Transferred Assets and the Business;

     

    all
      Documents and Other Papers that are related to the Business or the other
      Transferred Assets, including Documents and Other Papers relating to products,
      services, marketing, advertising, promotional materials, Proprietary Rights,
      personnel files for Transferred Employees, customer lists and files and
      documents (including credit information to the extent legally transferable),
      and
      supplier lists, records and correspondence;

     

    subject
      to Section 1.1(b) hereof, all licenses, permits, concessions, warrants,
      franchises and other governmental authorizations and approvals of all
      Governmental Entities required or appropriate for the conduct of the Business
      and the operation of the Transferred Assets as presently conducted or operated
      by the Seller and all rights and incidents of interest therein;

     

    subject
      to Section 1.1(b) hereof, all rights of Seller under non-disclosure or
      confidentiality, non-compete or non-solicitation agreements with former
      employees, employees and agents of Seller or with third Persons to the extent
      relating to the Business or the Transferred Assets (or any portion
      thereof);

     

    subject
      to Section 1.1(b) hereof, all rights of Seller under or pursuant to all
      warranties, representations and guarantees made by suppliers, manufacturers
      and
      contractors to the extent relating to products sold or services provided to
      Seller in connection with the conduct or operation of the Business or to the
      extent affecting any other Transferred Assets;

     

    all
      third
      Person property and casualty insurance proceeds, and all rights to third Person
      property and casualty insurance proceeds, in each case to the extent received
      or
      receivable in respect of the Business; and

     

    Seller’s
      cash and cash equivalents on hand as of the Closing Date.

     

    The
      Seller shall use its reasonable best efforts to obtain such consents of third
      Persons as are necessary for the assignment of the Transferred Assets; provided,
      however, that Seller shall not be required to pay any amounts in respect of
      obtaining such consents. To the extent that any of the Transferred Assets are
      not assignable by the terms thereof or consents to the assignment thereof cannot
      be obtained as herein provided, the Transferred Assets shall be held by the
      Seller in trust for the Buyer and shall be performed by the Buyer in the name
      of
      the Seller and all benefits and obligations derived thereunder shall be for
      the
      account of the Buyer, provided, however, that where entitlement of the Buyer
      to
      such Transferred Assets hereunder is not recognized by any third Person, the
      Seller shall, at the request of the Buyer, enforce in a reasonable manner,
      at
      the cost of and for the account of the Buyer, any and all rights of the Seller
      against such third Person. Seller shall promptly pay over to the Buyer all
      money
      or other consideration received by it in respect of such entitlement of the
      Buyer.

     

    As
      of the
      Closing, except as may be identified by Seller in writing delivered to Buyer
      at
      the Closing, all of the Transferred Assets shall be located at a Facility.
      With
      respect to any Transferred Assets not located at a Facility as of the Closing,
      the Seller shall notify each Person which may have possession of such
      Transferred Assets of the ownership and other rights of the Buyer of such
      Transferred Assets and shall inform them of their obligation to deliver
      possession of such Transferred Assets to the Buyer.

     

    Excluded
      Assets

     

    .
      Notwithstanding anything contained in Section 1.1(a) to the contrary,
      Seller is not selling, and Buyer is not buying, any of the following
      (collectively, the “Excluded Assets”):

     

    those
      assets of the Seller, DCCI or the Shareholders listed or described on
Schedule
      1.2(a)
      hereto;

     

    the
      bank
      account described on Schedule 1.2(b)
      hereto,
      and all cash in such account;

     

    Seller’s
      minute books, Tax Returns and other corporate organizational documents and
      Seller’s financial statements and related documentation and bank records
      relating to the bank account described in Section 1.2(b); provided,
      however, that the Buyer shall be entitled to make and keep a copy of the
      foregoing at its expense;
      provided, further, that any documentation relating to Acquired Assets or Assumed
      Liabilities shall not be deemed Excluded Assets;

     

    all
      rights, claims, counterclaims, credits, causes of action, lawsuits, judgments,
      demands or rights of set-off in favor of Seller arising out of or relating
      to
      the conduct of the Business prior to the date hereof other than with respect
      to
      the Transferred Assets;

     

    Seller’s
      insurance policies; and

     

    the
      country club membership described on Schedule
      1.2(f)
      hereto.

     

    Purchase
      Price

     

    .
      In
      consideration of the transfer to the Buyer of the Transferred Assets, the Buyer
      shall at the Closing pay to the Seller $10,000,000 (the “Purchase Price”) and
      assume the Assumed Liabilities. At the Closing, the Buyer shall pay to the
      Seller by wire transfer of same day funds an amount equal to the Purchase
      Price.

     

    Liabilities
      Assumed by the Buyer

     

    .
      Subject
      to the terms and conditions contained in this Agreement, at the Closing Buyer
      will assume and agrees to pay or perform as and when due the following
      liabilities and obligations (the “Assumed Liabilities”):

     

    accounts
      payable as of the Closing arising in the ordinary course and conduct of the
      Business and of the same type as reflected on the balance sheet dated
      February 28, 2007 (the “Reference Balance Sheet”);

     

    all
      liabilities and obligations of Seller arising under the Assumed Contracts and
      Leases that are first required to be paid or performed from and after the
      Closing Date (but excluding any liabilities or obligations which are
      attributable to Seller’s violation, breach or default in respect of any Assumed
      Contract or Lease), including, without limitation, any amounts payable with
      respect to utility charges and other items of expense attributable to the
      conduct of the Business and first becoming due and owing on or after the Closing
      Date (whether or not such charges or expenses arise in respect of periods
      beginning prior to the Closing Date); 

     

    the
      obligations in respect of Transferred Employees as specifically set out in
      Article 6 of this Agreement and the liabilities, costs and expenses (including
      attorneys’ fees) for all employment claims that are filed by any Transferred
      Employee who accepts employment with the Buyer relating to arbitrations, unfair
      labor practice charges, employment discrimination charges, wrongful termination
      claims, workers’ compensation claims, any employment-related tort claim or other
      claims or charges of or by the Transferred Employees to the extent, but only
      to
      the extent, that the same result from the employment relationship between the
      Buyer and the Transferred Employee and conditions, actions or events or series
      of actions or events occurring on or subsequent to the Closing
      Date;

     

    all
      liabilities for payroll Taxes, sales Taxes and general property Taxes of the
      Business or assessed against or pertaining to the Transferred Assets to the
      extent such first become due and owing (and are not past due) on or after the
      Closing Date (whether or not such Taxes arise in respect of periods beginning
      prior to the Closing Date);

     

    all
      product warranty liabilities and obligations of Seller relating to products
      sold
      or services furnished by Seller prior to the Closing Date;

     

    those
      liabilities and obligations specifically described on Schedule 1.4(f);
      and

     

    all
      liabilities and obligations arising out of or related to the business,
      operations or activities conducted by the Buyer or any of its affiliates in
      connection with the Business or the Transferred Assets from and after the
      Closing Date.

     

    Liabilities
      Not Assumed by the Buyer

     

    .
      Except
      for the Assumed Liabilities, the Seller shall pay and discharge in due course
      all of its liabilities, debts and obligations, whether known or unknown, now
      existing or hereafter arising, contingent or liquidated (the “Retained
      Liabilities”), and the Buyer shall not assume, or in any way be liable or
      responsible for, any of such Retained Liabilities. Without limiting the
      generality of the foregoing, the Retained Liabilities shall include the
      following:

     

    any
      liability or obligation of the Seller arising out of or in connection with,
      or
      the negotiation and preparation of this Agreement and any other agreement,
      certificate, Schedule, Exhibit or writing delivered to the Buyer pursuant to
      this Agreement and the consummation and performance of the transactions
      contemplated hereby (including as provided in Article 12 hereof), whether
      or not such transactions are consummated, including but not limited to any
      income Tax liability of the Seller so arising and all liabilities and
      obligations for any fees, commissions or like payments for having acted or
      claiming to have acted, directly or indirectly, as a broker, finder or financial
      advisor for the Seller, DCCI or the Shareholders in connection the transactions
      contemplated hereby;

     

    all
      liabilities and obligations of Seller and the Business attributable to Seller’s
      violation, breach or default in respect of any Assumed Contract or
      Lease;

     

    any
      liability or obligation for any and all Taxes of, or pertaining or attributable
      to, the Seller or the Business for any period that ends prior to the Closing
      Date and for which such Taxes became due and owing prior to the Closing
      Date;

     

    all
      liabilities and obligations in respect of Employee Benefits and employees and
      former employees of the Seller and the Business except to the extent
      specifically assumed by the Buyer in respect of Transferred Employees as set
      out
      in Article 6 of this Agreement and all liabilities, costs and expenses
      (including attorneys’ fees) for all existing employment claims that have been
      filed by any employee or former employee of the Seller or the Business prior
      to
      the Closing Date relating to arbitrations, unfair labor practice charges,
      employment discrimination charges, wrongful termination claims, workers’
compensation claims, any employment-related tort claim or other claims or
      charges of or by employees of the Seller, or any thereof filed after the Closing
      Date, to the extent (and only to the extent) that the same result from the
      employment relationship between the Seller and the employee and conditions,
      actions or events or series of actions or events which occurred prior to the
      Closing Date;

     

    all
      liabilities and obligations of Seller and the Business under any and all
      Contracts and Other Agreements between the Seller or the Business (other than
      the Lease Agreements) and any one or more officers, directors, shareholders
      or
      members of Seller or any of its affiliates; and

     

    all
      product liabilities of Seller relating to products sold, distributed or
      manufactured by Seller prior to the Closing Date.

     

    Transfer
      Taxes; Recording Fees.

     

    The
      Buyer
      and the Seller acknowledge and agree that the Purchase Price includes and is
      inclusive of any and all sales, use, transfer or other similar Taxes imposed
      as
      a result of the consummation of the transactions contemplated by this Agreement.
      The Seller hereby agrees to indemnify the Buyer against, and agrees to protect,
      save and hold the Buyer harmless from, any loss, liability, obligation or claim
      (whether or not ultimately successful) for sales, use, transfer or other similar
      Taxes (and any interest, penalties, additions to tax and fines thereon or
      related thereto) imposed as a result of the consummation of the transactions
      contemplated by this Agreement.

     

    The
      Buyer
      shall pay any and all recording, filing or other fees relating to the conveyance
      or transfer of the Transferred Assets from the Seller to the Buyer.

     

    Allocation
      of Purchase Price.

     

    Seller
      and Buyer have prepared an initial written statement setting forth the
      allocation of the Purchase Price among the Transferred Assets based on the
      Reference Balance Sheet and a copy of such written statement is attached hereto
      as Exhibit
      A.
      Prior
      to the Closing, Seller and Buyer shall agree upon a final allocation of the
      Purchase Price (the “Allocation”).

     

    For
      federal income tax purposes (including, without limitation, the Buyer’s and the
      Seller’s compliance with the reporting requirements of Section 1060 of the
      Code), each of the Seller and the Buyer hereby agree to use the Allocation
      and
      to cooperate in good faith with each other in connection with the preparation
      and filing of any information required to be furnished to the Internal Revenue
      Service under Section 1060 of the Code (including, without limitation, Section
      1060(b) and (e) of the Code) and any applicable regulations thereunder. Without
      limiting the generality of the preceding sentence, the Buyer and the Seller
      agree to (i) report such allocations to the Internal Revenue Service on Form
      8594 and, if required, supplemental Forms 8594, in accordance with the
      instructions to Form 8594 and the provisions of Section 1060 of the Code and
      the
      applicable regulations thereunder, and (ii) coordinate their respective
      preparation and filing of each such Form 8594 and any other forms or information
      statements or schedules required to be filed under Section 1060 of the Code
      and
      the applicable regulations thereunder so that the Allocation and information
      reflected on such forms, statements and schedules shall be
      consistent.

     

    Notwithstanding
      the foregoing provisions to this Section 1.7, the Buyer shall prepare and
      deliver to Seller from time to time revised statements of any Allocation to
      the
      extent that any matters need updating (including, without limitation, in respect
      of any adjustments under Section 10.8 hereof), which such revised statements
      shall be substantially consistent with the manner of Allocation previously
      agreed by the Seller and the Buyer.

     

     

    CLOSING

     

    Subject
      to the conditions set forth in this Agreement, the Closing shall take place
      at
      the offices of Jones Walker, LLP, located at 8555 United Plaza Boulevard, Suite
      500 in Baton Rouge, Louisiana, at 10:00 a.m. on May 4, 2007 or at such
      other time, date and place as the parties hereto shall mutually agree upon
      in
      writing (the date the Closing actually occurs, the “Closing Date”). Failure to
      consummate the transactions contemplated hereby on such date shall not result
      in
      a termination of this Agreement or relieve any party hereto of any obligation
      hereunder. Title to, ownership of, control over and risk of loss of the
      Transferred Assets shall pass to the Buyer at 12:01 AM, in Baton Rouge,
      Louisiana as of the Closing Date.

     

    REPRESENTATIONS,
      WARRANTIES AND COVENANTS OF
      THE
      SELLER

     

    Except
      as
      otherwise set forth in the correspondingly numbered section of the Disclosure
      Schedule attached hereto as Exhibit B,
      the
      Seller hereby represents and warrants to the Buyer and covenants and agrees
      as
      follows:

    

    Corporate
      Matters

     

    .

     

    The
      Seller is a corporation organized, validly existing and in good standing under
      the laws of the State of Louisiana. The Seller is duly authorized, qualified
      and
      licensed and has all requisite power and authority under all applicable laws,
      ordinances and orders of public authorities to own, operate and lease its
      properties and assets and to carry on its business in the places and in the
      manner currently conducted. The Seller is qualified to transact business as
      a
      foreign corporation and is in good standing in each jurisdiction where the
      nature and extent of the Seller’s business or the character of its assets makes
      such qualification necessary, except where any such failures to qualify as
      could
      not reasonable be expected, individually or in the aggregate, to have a Material
      Adverse Effect. The Seller has all requisite corporate power and authority
      to
      enter into this Agreement and to perform its obligations under this
      Agreement.

     

    The
      Seller has no Subsidiaries.

     

    Attached
      as Schedule
      3.1(c)
      of the
      Disclosure Schedule is a true, correct and complete copy of the Articles of
      Incorporation certified by the Secretary of State of the State of Louisiana
      and
      the Bylaws certified by the corporate secretary of the Seller, in each case
      as
      amended and in full force and effect as of the date hereof and as of the Closing
      Date.

     

    The
      Seller does not do business in any state or commonwealth under any name other
      than the corporate name set forth in the first paragraph of this
      Agreement.

     

    DCCI
      holds of record and owns beneficially one hundred percent (100%) of all the
      issued and outstanding shares of the stock of Seller. The Seller is not a party
      to an option, warrant, purchase right, or other contract or commitment that
      could require the Seller to issue, sell, transfer or otherwise dispose of any
      stock of Seller.

     

    Validity
      of Agreement and Conflict with Other Instruments.

     

    This
      Agreement has been duly authorized by the Seller and DCCI. No further corporate
      action is necessary on the part of the Seller to execute and deliver this
      Agreement or to consummate the transactions contemplated hereby. This Agreement
      has been duly executed and delivered by the Seller, DCCI and the Shareholders
      and is a legal, valid and binding obligation of the Seller, DCCI and the
      Shareholders enforceable against each in accordance with its terms, except
      as
      enforceability may be limited by applicable bankruptcy, insolvency,
      reorganization, moratorium or similar laws from time to time in effect that
      affect creditors’ rights generally and by legal and equitable limitations on the
      availability of specific remedies.

     

    The
      execution, delivery and performance of this Agreement and the other agreements
      and documents to be delivered by the Seller, DCCI and the Shareholders to the
      Buyer, the consummation of the transactions contemplated hereby or thereby,
      and
      the compliance with the provisions hereof or thereof, by the Seller, DCCI and
      the Shareholders will not, with or without the passage of time or the giving
      of
      notice or both:

     

    conflict
      with, constitute a breach, violation or termination of any provision of, or
      give
      rise to any right of termination, cancellation or acceleration, or loss of
      any
      right or benefit or both, under, any Contract and Other Agreement to which
      the
      Seller is a party or by which any of its properties or assets is
      bound;

     

    result
      in
      an acceleration or increase of any amounts due with respect to the Trade
      Payables constituting part of the Assumed Liabilities;

     

    conflict
      with or violate the Articles of Incorporation or Bylaws of the
      Seller;

     

    result
      in
      the creation or imposition of any Lien on any of the Transferred Assets;
      or

     

    violate
      any law, statute, ordinance, regulation, judgment, writ, injunction, rule,
      decree, order or any other restriction of any kind or character applicable
      to
      the Seller or any of Seller's properties or assets;

     

    other
      than violations, defaults or conflicts that would not materially and adversely
      affect the ability of the Seller to consummate the transactions provided for
      in
      this Agreement.

    

    Attached
      as Schedule
      3.2(c)
      of the
      Disclosure Schedule are true, correct and complete copies of the resolutions
      adopted by the Seller's Board of Directors and DCCI approving this Agreement
      and
      the transactions contemplated hereby. Such resolutions were adopted by unanimous
      written consents. Such resolutions are in full force and effect without
      amendment or modification.

     

    Approvals,
      Licenses and Authorizations.

     

    Except
      as
      set forth on Schedule
      3.3(a)
      of the
      Disclosure Schedule (as disclosed, the “Required Consents”), no order, license,
      consent, waiver, authorization or approval of, or exemption by, or the giving
      of
      notice to, or the registration with, or the taking of any other action in
      respect of, any Person not a party to this Agreement, including any Governmental
      Entity, and no filing, recording, publication or registration in any public
      office or any other place is necessary on behalf of the Seller to authorize
      the
      execution, delivery and performance of this Agreement or any other agreement
      contemplated hereby to be executed and delivered by them and the consummation
      of
      the transactions contemplated hereby or thereby (including, but not limited
      to,
      assignment of the Transferred Assets and the use and occupation of the
      Facilities by the Buyer in the same manner as currently used and occupied by
      the
      Seller), or to effect the legality, validity, binding effect or enforceability
      thereof.

     

    Schedule
      3.3(b)
      of the
      Disclosure Schedule contains a list of all material licenses, permits,
      concessions, warrants, franchises and other governmental authorizations and
      approvals of all Governmental Entities required or appropriate for the conduct
      of the Business and the operation of the Transferred Assets as presently
      conducted or operated. Except as set forth on Schedule
      3.3(b)
      of the
      Disclosure Schedule, all of such licenses, permits, concessions, warrants,
      franchises and other governmental authorizations and approvals have been duly
      obtained and are in full force and effect and no violations are in existence
      or
      have been recorded, and no proceeding is pending or, to the best knowledge
      of
      the Seller, threatened with respect to the revocation or limitation thereof.
      The
      Seller has complied with all laws, rules, regulations and orders applicable
      to
      the operation, conduct and maintenance of the Business, except for violations
      that would not have a Material Adverse Effect.

     

    Title
      to and Condition of Transferred Assets.

     

    The
      Seller leases all of the Facilities. Each of the Facilities is in reasonable
      condition for the operation of the Business as the same is currently being
      conducted by the Seller. Seller is not in default under any of the leases for
      a
      Facility and, to the knowledge of the Seller, no event has occurred and no
      circumstances exists which, if not remedied, and whether with or without notice
      or the passage of time or both, would result in such a default. The Seller
      has
      not received or given any notice of any default or event that with notice or
      lapse of time, or both, would constitute a default by the Seller under any
      of
      the leases for a Facility and no party to any of such leases has exercised
      any
      termination rights with respect thereto.

     

    All
      Equipment (excluding Equipment that does not have a cost basis of $10,000 or
      more as of the date of this Agreement) is set forth in Schedule
      1.1(a)(i)
      hereto.
      Except as set forth in Schedule 3.4(b)
      of the
      Disclosure Schedule, the Seller has good and marketable title to all of the
      Equipment and all of the Equipment is in the Seller’s possession.

     

    All
      Inventories as of the date of this Agreement are set forth in Schedule
      1.1(a)(ii)
      hereto.
      The Seller has good and marketable title to all Inventories free and clear
      of
      all Liens other than Permitted Liens and those Liens set forth in Schedule
      3.4(c)
      of the
      Disclosure Schedule, which Liens set forth on such schedule shall be released
      on
      or prior to the Closing, and such Inventories are in a good and marketable
      condition and are saleable in the ordinary course of the Business. The
      Inventories constitute sufficient quantities for the normal operation of the
      Business in the ordinary course in accordance with past practice.

     

    The
      Accounts Receivable are owned by the Seller free and clear of all Liens other
      than Permitted Liens and those Liens set forth in Schedule
      3.4(d)
      of the
      Disclosure Schedule, which Liens set forth on such schedule shall be released
      on
      or prior to the Closing. All Accounts Receivable were generated in the ordinary
      course of business. Except as set forth on Schedule
      3.4(d) of
      the
      Disclosure Schedule, the Seller is unaware of any existing facts or
      circumstances that could reasonably be expected to result in the Accounts
      Receivable not being fully collected in accordance with their
      terms.

     

    The
      Seller owns or possesses licenses or other rights to use, and will at the
      Closing transfer to the Buyer, all rights to all Proprietary Rights necessary
      for the conduct of the Business as currently conducted. Set forth in
Schedule 1.1(a)(iv)
      is a
      complete and accurate list of all patents, trademarks and licenses the Seller
      owns or possesses or otherwise has rights to use pertaining to the Business.
      No
      licenses, sublicenses, covenants or agreements have been granted or entered
      into
      by the Seller in respect of the items listed in Schedule 1.1(a)(iv)
      except
      as noted in Schedule 3.4(e)
      of the
      Disclosure Schedule. The Seller has not received any notice of infringement,
      misappropriation or conflict from any other Person with respect to such
      Proprietary Rights, and the conduct of the Business has not infringed,
      misappropriated or otherwise conflicted with any Proprietary Rights of any
      such
      Person. The Seller has not given indemnification for patent, trademark, service
      mark or copyright infringements except to licensees or customers in the ordinary
      course of business. All of the Proprietary Rights that are owned by the Seller
      are owned free and clear of all Liens except for Permitted Liens or as set
      forth
      in Schedule
      3.4(e)
      of the
      Disclosure Schedule and all such Proprietary Rights will be transferred to
      the
      Buyer free and clear of all Liens other than Permitted Liens. All Proprietary
      Rights that are licensed to the Seller by third parties are licensed pursuant
      to
      valid and existing license agreements and such interests are not subject to
      any
      Liens other than those under the applicable license agreements. The consummation
      of the transactions contemplated by this Agreement will not result in the loss
      of any Proprietary Rights, unless, with respect to such Proprietary Rights
      licensed to the Seller by third parties a Required Consent is necessary and
      is
      not obtained.

     

    The
      Seller owns or has rights to use, and is transferring to the Buyer hereunder,
      the Transferred Assets that, together with the Seller’s agreements hereunder and
      the Lease Agreements, are necessary for the conduct of the Business in the
      ordinary course consistent with past practices. The conduct of the Business
      in
      the ordinary course is not dependent upon the right to use the property of
      others, except such property as is leased or licensed to the Seller pursuant
      to
      any of the Transferred Assets.

     

    Contracts
      and Commitments.

     

    Except
      as
      set forth in Schedule
      3.5(a)
      of the
      Disclosure Schedule and except for the Retained Liabilities, the Seller is
      not a
      party to or bound by:

     

    any
      agreement, contract or commitment requiring the expenditure, or series of
      related expenditures, of funds in excess of $10,000 (other than purchase orders
      arising in the ordinary course of business);

     

    to
      the
      best knowledge of Seller, any agreement, contract or commitment requiring the
      provision of goods or services as a price less than the Seller’s cost of
      producing such goods or providing such services;

     

    any
      agreement, contract or commitment requiring the payment for goods or services
      whether or not such goods or services are actually provided;

     

    any
      loan
      or advance to, or investment in, any Person in an amount greater than $5,000
      (other than trade payables arising in the ordinary course of business) or any
      agreement, contract, commitment or understanding relating to the making of
      any
      such loan, advance or investment;

     

    any
      contract, agreement, indenture, note or other instrument relating to the
      borrowing of money or any guarantee or other contingent liability in respect
      of
      any obligation of any other Person (other than the endorsement of negotiable
      instruments for deposit or collection in the ordinary course of
      business);

     

    any
      management service, employment, consulting or other similar type contract or
      agreement;

     

    any
      agreement, contract or commitment that prohibits the Seller or the Business
      from
      engaging in any line of business or competing with any Person or engaging in
      any
      business or activity in any geographic area;

     

    any
      agreement or contract obligating the Seller or any owner of the Business or
      the
      Transferred Assets to provide for indemnification or contribution with respect
      to any matter;

     

    any
      agreement, contract or commitment, or series of related agreements, contracts
      or
      commitments, not entered into in the ordinary course of business for the
      Business;

     

    any
      sales, distributorship or similar agreement relating to the products sold or
      services provided by the Seller;

     

    any
      license, royalty or similar agreement; or

     

    any
      agreement, contract or commitment between, with or among the Seller and any
      current or former officer, director, shareholder, partner, member or any member
      of his or her immediate family or an of their respective
      affiliates.

     

    Seller
      is
      not in breach of any provision of, or is in default (or knows of any event
      or
      circumstance that with notice, or lapse of time or both, would constitute an
      event of default) under the terms of, any of the Contracts and Other Agreements
      that constitute a part of the Transferred Assets. All of the Contracts and
      Other
      Agreements that constitute a part of the Transferred Assets are in full force
      and effect. The Seller is not aware of any pending or threatened disputes with
      respect to any of the Contracts and Other Agreements.

     

    Except
      for the Required Consents, each Contract and Other Agreement that constitute
      a
      part of the Transferred Assets may be validly assigned by Seller to Buyer
      without the consent, approval or waiver of any other party and without resulting
      in any breach, violation or right of termination, or increase or acceleration
      of
      any amounts due thereunder, of and from the Seller, the Business and the Buyer
      in respect of such assignment and transfer.

     

    Financial
      Statements.

     

    Attached
      as Schedule
      3.6(a)
      of the
      Disclosure Schedule are true, correct and complete copies of (i) the audited
      balance sheet of the Seller as of December 31, 2004 and the unaudited balance
      sheet of the Seller as of December 31, 2005 and December 31, 2006, and (ii)
      the audited statement of income of the Seller for the 12 month period ended
      December 31, 2004 and the unaudited statement of income of the Seller for the
      12
      month period ended December 31, 2005 and December 31, 2006; and (iii) the
      unaudited balance sheet of the Seller and the unaudited statement of income
      for
      the Seller as of and for the three month period ended March 31, 2007
      (collectively, the “Financial Statements”). The Financial
      Statements:

     

    fairly
      present the financial position of the Seller as of their respective dates and
      the results of operations of the Seller for the periods indicated
      therein;

     

    have
      been
      prepared on a consistent basis throughout the periods covered thereby;
      and

     

    fairly
      present in all material respects the financial position of the Seller as of
      the
      respective dates of the balance sheets and the results of its operations for
      the
      respective periods indicated.

     

    The
      values at which the Inventories are carried on the Financial Statements reflect
      normal and consistent inventory valuation policies of the Seller.

     

    Taxes.

     

    All
      material Tax Returns that are required to be filed (taking into account all
      extensions) on or before the Closing Date for, by or on behalf of the Seller,
      the Business and the Transferred Assets have been or will be filed by the Seller
      with the appropriate foreign, federal, state and local authorities at or prior
      to the time they are due, and all Taxes shown to be due and payable on, or
      otherwise related to, such Tax Returns, the failure to make payment of which
      could be material to the Business or the Transferred Assets, have been or will
      be timely paid in full by Seller.

     

    All
      such
      Tax Returns and the information and data contained therein have been or will
      be
      completed in all material respects, fairly present or will fairly present in
      all
      material respects the information purported to be shown therein, and reflect
      or
      will reflect all liabilities for Taxes for the periods covered by such Tax
      Returns.

     

    None
      of
      such Tax Returns are now under audit or examination by any foreign, federal,
      state or local authority and there are no agreements, waivers or other
      arrangements providing for an extension of time with respect to the assessment
      or collection of any Tax or deficiency of any nature against the Seller, the
      Business or the Transferred Assets or any suits or other actions, proceedings,
      investigations or claims now pending or threatened against the Seller, the
      Business or the Transferred Assets with respect to any Tax, or any material
      matters under discussion with any foreign, federal, state or local authority
      relating to any Tax or any claims for any additional Tax asserted by any such
      authority.

     

    All
      Taxes
      due and owing from the Seller or assessed and due and owing against the Business
      or the Transferred Assets on or before the Closing Date have been or will be
      timely paid by Seller.

     

    All
      withholding Tax and Tax deposit requirements imposed on the Seller and
      applicable to the Business for any and all periods prior to the Closing Date
      have been or will be timely satisfied by Seller.

     

    The
      Seller has made or will make adequate provision in Seller’s financial statements
      for the payment in full of any and all unpaid Taxes which in any way may affect
      the Transferred Assets or the Business for any and all periods or portions
      thereof ending before the Closing Date.

     

    No
      Violations or Litigation.

     

    Seller
      has not materially violated, and is not currently in material violation of,
      any
      order of any Governmental Entity or any law, ordinance, regulation, order,
      requirement, statute, rule, permit, concession, grant, franchise, license or
      other governmental authorization relating or applicable to the Seller, the
      Business or to any of the Seller’s properties, assets or operations, including
      without limitation, the Transferred Assets and the Facilities.

     

    There
      is
      no action, suit, claim or legal, administrative, arbitration or other
      proceeding, or any change in any zoning or building ordinance, pending or,
      to
      the Seller’s knowledge, threatened against or affecting the Seller, the
      Business, the Facilities or any of the Transferred Assets, at law or in equity,
      before or by any Governmental Entity and, to the Seller’s knowledge, there is no
      investigation and no basis otherwise exists for any such action, suit, claim,
      investigation or proceeding.

     

    No
      Adverse Changes or Events

     

    .
      Since
      January 1, 2007, except as set forth on Schedule 3.9
      of the
      Disclosure Schedule, the Business has been consistently operated only in the
      ordinary course and there has not been:

     

    any
      adverse occurrence, event, circumstance, change or combination thereof in the
      financial condition, assets, liabilities (contingent or otherwise), results
      of
      operations or business of the Seller, except for such changes that, individually
      or in the aggregate, have not had and could not reasonably be expected to have
      a
      Material Adverse Effect;

     

    any
      damage, destruction or loss, whether or not covered by insurance, adversely
      affecting any Transferred Asset or the Business having a replacement cost of
      more than $25,000 for any single loss or $50,000 for all such
      losses;

     

    any
      award
      or payment of any bonuses to directors, officers, employees or former employees,
      agents or representatives of the Seller or the Business, except to the extent
      accrued on the balance sheet as of December 31, 2006, or any increase (or
      payment in respect of any increase) in the compensation or rate of compensation
      or commissions or bonuses payable, or to become payable, by the Seller or in
      respect of the Business to any employee of Seller, any payment or accrual of,
      or
      commitment with respect to, any bonus plan, severance arrangement or other
      Employee Benefits that is not consistent with past practice, or any change
      or
      modification to any severance arrangement or other Employee
      Benefits;

     

    any
      debt,
      obligation or liability issued, incurred or created by the Seller, other than
      the incurrence of trade payables of the Business arising in a manner consistent
      with the past practice of the Business and in the ordinary course, or any
      assumption, guarantee, endorsement or other responsibility of or by the Seller
      for the liability or obligation of any other Person (whether absolute, accrued,
      contingent or otherwise) not arising in a manner consistent with the past
      practice of the Business and in the ordinary course;

     

    any
      mortgage, pledge or creation of any Lien with respect to any of the Transferred
      Assets, and any discharge or satisfaction of any Lien or payment of any
      obligation or liability of Seller except in a manner consistent with past
      practice of the Business and in the ordinary course;

     

    any
      sale,
      assignment, transfer, conveyance, license or sublicense or other disposition
      or
      lapse of any Proprietary Rights or disclosure to any Person (other than to
      the
      Buyer, employees of the Seller in the scope of their employment or otherwise
      in
      the ordinary course of business consistent with past practice) of any
      Proprietary Rights material to the Business;

     

    any
      write
      up or write down in the value of any Equipment or Inventories;

     

    any
      cancellation or compromise of any material claims, institution or settlement
      of
      any material legal proceeding, or any waiver of any other material rights
      relating to the Business, or any sale, transfer or other disposition of any
      properties or assets, real, personal or mixed, tangible or intangible, material
      to the Business (other than sales of Inventory in the ordinary course of
      business consistent with past practice);

     

    any
      change in the Seller’s method, principles or polices of accounting for
      financial, Tax or other purposes;

     

    any
      declaration, setting aside or payment of any dividend or other distribution
      in
      respect of any shares of capital stock of Seller or any repurchase, redemption
      or other acquisition by Seller of any outstanding shares of capital stock or
      other securities of, or other ownership interest in, Seller;

     

    any
      election or rescission of any election relating to Taxes, or settlement or
      compromise of any claim, action, suit, litigation, proceeding, arbitration,
      investigation, audit or controversy relating to Taxes, or except as may be
      required by applicable law, any change made to any of Seller’s methods of
      reporting income or deductions for federal income tax purposes from those
      employed in the preparation of its most recently filed federal Tax Returns,
      in
      each case, to the extent related to the Business or the Transferred
      Assets;

     

    any
      failure to pay and discharge current liabilities in a manner consistent with
      past practice of the Business and in the ordinary course;

     

    any
      capital investment in, any loan to, or any acquisition of the securities or
      assets of any other Person;

     

    any
      capital expenditures or commitment to make any capital expenditures by the
      Seller or in respect of the Business other than such expenditures arising in
      the
      ordinary course consistent with past practice; 

     

    any
      loan
      to or other transaction with any of its shareholders (including, without
      limitation, DCCI or the Shareholders), affiliates, officers, directors or
      partners, except for advances and reimbursements to employees for business
      expenses in the ordinary course of business;

     

    any
      material change in the customary methods used in operating the Business
      (including the pricing practices) or any material change in the sales
      operations; or

     

    any
      agreement, commitment, arrangement or entry into any understanding to do
      anything set forth in subsections (a)-(p) above.

     

    Environmental
      Matters.

     

    Neither
      the Seller nor, to the knowledge of the Seller, any prior owner or operator
      of
      the Business, any of the Facilities or the Transferred Assets has caused or
      allowed the generation, use, treatment, storage, or disposal of Hazardous
      Materials at any site (including any Facility) owned, leased or operated by
      the
      Seller or used in the Business, except in accordance with all applicable
      Environmental Laws or except to the extent the same would not result in any
      material liability, contingent or otherwise, to the Buyer or its
      affiliates.

     

    The
      Seller does not own or lease any real property, improvements or related assets
      that form a part of the Facilities, the Transferred Assets or the Business
      and
      that have been subject to the release of any Hazardous Materials except to
      the
      extent that the same would not result in any material liability, contingent
      or
      otherwise, to the Buyer or its affiliates.

     

    Except
      as
      set forth on Schedule 3.10
      of the
      Disclosure Schedule, the Seller has secured all Environmental Permits necessary
      to conduct and operate the Business as currently conducted by the Seller and
      the
      Facilities and the Seller is in material compliance with such
      permits.

     

    Except
      as
      set forth on Schedule 3.10
      of the
      Disclosure Schedule, the Seller has not received any notice, nor is it aware,
      of
      any proposal to amend, revoke or replace any Environmental Permit, or requiring
      the issuance of any additional Environmental Permit.

     

    The
      Seller has not received inquiry or notice nor does it have any reason to believe
      that it is likely to receive inquiry or notice of any actual or potential
      proceedings, claims, lawsuits or losses related to or arising under any
      Environmental Law.

     

    The
      Seller is not currently operating or required to be operating under any
      compliance order, schedule, decree or agreement, any consent decree, order
      or
      agreement, and/or corrective action decree, order or agreement issued or entered
      into under any federal, state or local statute, regulation or ordinance
      regarding the environment and/or health or safety in the work
      place.

     

    Neither
      the Seller nor, to the knowledge of the Seller, any prior owner or operator
      of
      the Business, any of the Facilities or the Transferred Assets has transported,
      arranged for the transportation of or disposed of any substance in a manner
      that
      may lead to claims against the Buyer for clean-up costs, remedial work, damages
      to natural resources or for personal injury claims.

     

    The
      Facilities, the Transferred Assets and the Business are in compliance in all
      material respects with all applicable limitations, restrictions, conditions,
      standards, prohibitions, requirements and obligations established under
      Environmental Laws.

     

    Condition
      of Inventories and Equipment

     

    .
      Except
      as expressly provided herein (including Section 3.13 hereof), the Inventories
      and Equipment included in the Transferred Assets are being sold, transferred
      and
      conveyed “AS IS, WHERE IS,” and the Seller makes NO REPRESENTATION OR WARRANTY,
      EXPRESS OR IMPLIED, AS TO THEIR MERCHANTABILITY OR FITNESS FOR A PARTICULAR
      PURPOSE. Without limiting the generality of the foregoing, Seller makes no
      representations or warranties to Buyer with respect to any projections,
      estimates or budgets heretofore delivered to or made available to Buyer of
      future revenues, future results of operations (or any component thereof), future
      cash flows or future financial condition (or any component thereof) of
      Seller.

     

    Undisclosed
      Liabilities

     

    .
      The
      Seller does not have any material liabilities or obligations of any nature,
      whether accrued, absolute, contingent, unliquidated, civil, criminal or
      otherwise, and whether due or to become due, other than liabilities that
      (a) are reflected or reserved against in the Reference Balance Sheet,
      (b) are disclosed in any Schedule (or in any plan, instrument, lease or
      agreement referred to therein) or Exhibit hereto, (c) are liabilities
      incurred since December 31, 2006, in the ordinary course of business that would
      not have a Material Adverse Effect, and (d) liabilities under Contracts and
      Other Agreements that are not due and have not arisen in respect of any breach
      or violation of, or default under, any provision thereof.

     

    Warranties
      and Product Liability

     

    .
      Except
      for warranties implied by law or set forth in written agreements between the
      Seller and its customers, the Seller has not given or made any warranties in
      connection with the sale or rental of goods or services, including, without
      limitation, warranties covering the customer’s consequential damages. To the
      Seller’s knowledge, there are no facts or the occurrence of any events forming
      the basis of any present claim against the Seller and the Seller does not have
      any reason to believe the Business will likely be subject to any such claim
      with
      respect to warranties relating to products manufactured, sold or distributed
      by
      the Seller or services performed by the Seller, except any claim that would
      not
      individually or in the aggregate with all such claims exceed
      $100,000.

     

    Employee
      Matters.

     

    There
      are
      no collective bargaining or other labor union agreements to which the Seller
      is
      a party or by which it or the Business is bound. To the best knowledge of the
      Seller, it has not encountered any labor union organizing activity or had any
      actual or threatened employee strikes, work stoppages, slowdowns or
      walkouts.

     

    Schedule 3.14
      of the
      Disclosure Schedule sets forth all Employee Benefits. The Seller does not
      contribute to or have an obligation to contribute to, and has not at any time
      within six years prior to the Closing Date contributed to or had an obligation
      to contribute to, a multi-employer plan within the meaning of Section 3(37)
      of
      ERISA.

     

    The
      Seller does not have any defined benefit plan or employee benefit plan. Seller
      does have plan(s) established pursuant to Section 401(k) of the
      Code.

     

    No
      lawsuit, complaint or investigation or governmental audit has been noticed,
      initiated or filed with respect to any employee benefit plan. The Seller has
      not
      incurred any liability to the PBGC or otherwise under Title IV of
      ERISA.

     

    Attached
      as Schedule
      3.14(e)
      to the
      Disclosure Schedule is a list of the current employees and their respective
      total compensation paid by the Seller during 2006 and their respective rates
      of
      compensation for 2007.

     

    Seller
      is
      in material compliance with all laws relating to the employment of labor,
      including all such laws relating to wages, hours, the Worker and Retraining
      Notification Act of 1988, as amended (“WARN”) and any similar state or local
“mass layoff” or “plant closing” law, collective bargaining, discrimination,
      safety and health and the collection and payment of withholding and/or social
      security Taxes and any similar Tax. There has been no “mass layoff” or “plant
      closing” (as defined by WARN) with respect to the Seller or the Business within
      the six months prior to Closing.

     

    Finder’s
      Fees

     

    .
      Neither
      the Seller nor any affiliate of the Seller has employed or retained any
      investment banker, broker, agent, finder or other party, or incurred any
      obligation for brokerage fees, finder’s fees or commissions, with respect to the
      sale by the Seller of any of the Transferred Assets or with respect to the
      transactions contemplated by this Agreement, or otherwise dealt with anyone
      purporting to act in the capacity of a finder or broker with respect thereto
      whereby any party hereto may be obligated to pay such a fee or
      commission.

     

    Bank
      Accounts

     

    .
      Schedule
      3.16
      of the
      Disclosure Schedule contains a complete and correct list of (a) the names and
      locations of all banks at which the Seller maintains accounts or safe deposit
      boxes of the Business, (b) the account numbers of all such accounts and (c)
      the
      names of all persons authorized to draw thereon or to have access thereto.
      Except as set forth on Schedule
      3.16
      of the
      Disclosure Schedule, no person holds a power of attorney to act on behalf of
      Seller.

     

    Insurance

     

    .
      Seller
      has insurance policies in full force and effect (a) for such amounts as are
      sufficient for all requirements of law and all Contracts and Other Agreements
      to
      which Seller or the Business is a party or by which any of the Transferred
      Assets is bound and (b) which are in such amounts, with such deductibles and
      against such risks and losses, as are reasonable for the maintenance of the
      Facilities, the Business and the Transferred Assets. Set forth in Schedule
      3.17
      of the
      Disclosure Schedule is a list of all insurance policies and all fidelity bonds
      held by or applicable to the Facilities, the Business or the Transferred Assets
      setting forth, in respect of each such policy, the policy name, policy number,
      carrier, term, type and amount of coverage and annual premium.

     

     

    REPRESENTATIONS
      AND WARRANTIES OF THE BUYER

     

    The
      Buyer
      represents and warrants to the Seller as follows:

    

    Corporate
      Matters

     

    .
      The
      Buyer is a corporation duly organized, validly existing and in good standing
      under the laws of the State of Texas. The Buyer has full corporate power and
      authority to enter into this Agreement and to perform its obligations under
      this
      Agreement. This Agreement has been duly authorized, executed and delivered
      by
      the Buyer and is a legal, valid and binding obligation of the Buyer, enforceable
      in accordance with its terms, except as enforceability may be limited by
      applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
      from time to time in effect that affect creditors’ rights generally and by legal
      and equitable limitations on the availability of specific remedies. The
      execution and delivery of this Agreement and the consummation of the
      transactions contemplated hereby by the Buyer will not violate any provision
      of,
      or constitute a default under, any contract or other agreement to which the
      Buyer is a party or by which it is bound, or conflict with its Articles of
      Incorporation or Bylaws, other than violations, defaults or conflicts that
      would
      not materially and adversely affect the ability of the Buyer to consummate
      the
      transactions provided for in this Agreement.

     

    Finder’s
      Fees

     

    .
      Neither
      the Buyer nor any affiliate of the Buyer has employed or retained any investment
      banker, broker, agent, finder or other party, or incurred any obligation for
      brokerage fees, finder’s fees or commissions, with respect to the transactions
      contemplated by this Agreement, or otherwise dealt with anyone purporting to
      act
      in the capacity of a finder or broker with respect thereto whereby any party
      hereto other than Buyer may be obligated to pay such a fee or a
      commission.

     

     

    ACCESS
      TO
      INFORMATION BY THE BUYER

     

    Prior
      to Closing

     

    .
      Prior
      to the Closing, Seller will furnish the Buyer and its employees, officers,
      accountants, attorneys, agents, investment bankers and other authorized
      representatives with all financial, operating and other data and information
      concerning the Business, commitments and properties of the Seller as the Buyer
      shall from time to time reasonably request and will afford the Buyer and its
      employees, officers, accountants, attorneys, agents, investment bankers and
      other authorized representatives reasonable access to the Seller’s offices,
      properties, books, records, contracts and documents (including Tax Returns
      filed
      and those in preparation) and will be given the opportunity to ask questions
      of,
      and receive answers from, representatives of the Seller with respect to the
      Business, the Contracts and Other Agreements, the Transferred Assets and the
      other properties of the Seller. Notwithstanding the foregoing, Seller shall
      not
      be required to disclose any information if such disclosure would contravene
      any
      applicable law. No investigations by the Buyer or its employees, representatives
      or agents shall reduce or otherwise affect the obligation or liability of the
      Seller with respect to any representations, warranties, covenants or agreements
      made herein or in any Exhibit, Schedule or other certificate, instrument,
      agreement or document, including the Disclosure Schedule, executed and delivered
      in connection with this Agreement.

     

    Public
      Information

     

    .
      Until
      the Closing or termination hereof, the Buyer and the Seller will consult in
      advance on the necessity for, and the timing and content of, any communications
      to be made to the public and to the form and content of any application or
      report to be made to any Governmental Entity that relates to the transactions
      contemplated by this Agreement and, except with respect to public announcements
      or disclosures in response to legal requirements (including, without limitation,
      requirements under the Federal securities laws in connection with any
      registration, sale or purchase of securities), all such public announcements
      and
      disclosures shall require the consent of the Buyer and the Seller, which consent
      shall not be unreasonably withheld, delayed, denied or conditioned. Each of
      the
      Buyer, the Seller, DCCI and the Shareholders agrees that the terms of this
      Agreement shall not be disclosed or otherwise made available to the public
      and
      that copies of this Agreement shall not be publicly filed or otherwise made
      available to the public, except where such disclosure, availability or filing
      is
      required by applicable law and only to the extent required by such law. The
      Seller will reasonably cooperate with the Buyer and its employees, officers,
      accountants, attorneys, agents and other authorized representatives in the
      preparation of any documents or other materials that may be required by any
      Governmental Entity.

     

     

    EMPLOYEE
      MATTERS

     

    Hiring
      of Transferred Employees

     

    .
      The
      Buyer
      shall offer employment (on an “at will basis”) to all of the Seller’s active
      hourly employees and other active salaried employees as of the Closing
      (collectively, those accepting such employment, the “Transferred Employees”).
      The Buyer will give credit, under the Buyer’s employee plans and policies, for
      all unused vacation and sick days of the Transferred Employees accrued as of
      and
      at the Closing Date under the employee plans and policies of the Seller for
      calendar year 2007, and will, in accordance with and subject to applicable
      laws,
      permit the Transferred Employees to “rollover” their benefits in the Seller’s
      Section 401(k) plan (including any outstanding loans thereunder) into the
      Section 401(k) plan maintained by the Buyer generally for the benefit of the
      Buyer’s employees. Except for the foregoing, the Buyer shall not assume any
      liabilities or obligations of the Seller with respect to its employees and
      will
      have complete discretion as to the terms of employment (including wages and
      position) that are offered to the Transferred Employees. Schedule 6.1 of the
      Disclosure Schedule sets forth a list of all of the employees of the Seller
      as
      of the date hereof and their respective accrued unused vacation and sick days
      and outstanding balances of accounts under the Seller’s 401(k) plan and, if
      applicable, any loan amounts outstanding from such respective employees under
      the 401(k) plan. No later than two (2) Business Days prior to the Closing Date,
      the Seller shall deliver an updated Schedule
      6.1
      and the
      Buyer will be entitled to rely definitively on the information presented in
      the
      updated Schedule
      6.1
      for
      purposes of fulfillment of its obligations hereunder. Nothing contained in
      this
      Section 6.1 is intended to confer upon any of the Seller’s employees any right
      to continued employment after evaluation by the Buyer of its employment needs
      after the Closing Date. Notwithstanding any other provision of this Agreement,
      the parties hereto do not intend to create any third-party beneficiary rights
      respecting any of the Seller’s employees or former employees as a result of the
      provisions herein and specifically hereby negate any such
      intention.

     

     Employee
      Benefits.

     

    Except
      as
      expressly provided under Section 6.1, the Buyer shall not be liable or obligated
      under any Employee Benefits of the Seller or its employees, and the Seller
      expressly acknowledges that it has sole liability for all employee benefit
      costs
      accrued as of the Closing whether or not any or all of such employees are
      subsequently hired by the Buyer. Without limiting the generality of the
      foregoing, the Seller acknowledges and agrees that the Buyer does not assume
      the
      sponsorship of, the responsibility of contributions to, or any liabilities
      in
      connection with any employee benefit plan maintained by the Seller for active
      employees, retirees, former employees, their beneficiaries or any other Person,
      including any employee pension benefit plan within the meaning of Section 3(2)
      of ERISA, employee welfare plan within the meaning of Section 3(1) of ERISA
      and
      any personnel policy, stock option plan, bonus plan or arrangement, incentive
      award plan or arrangement, vacation policy, severance pay plan, policy or
      agreement, deferred compensation agreement arrangement, executive compensation
      or supplemental income arrangement, consulting agreement, employment agreement
      and each other employee benefit plan, agreement, arrangement, program, practice
      or understanding.

     

    With
      respect to Transferred Employees, the Seller will remain responsible for medical
      expenses covered under its plans (i) actually incurred prior to the Closing
      Date
      or (ii) actually incurred with respect to any hospitalization that began prior
      to the Closing Date until such hospitalization ends (as required under such
      plans), and the Buyer will be responsible for all other medical expenses
      incurred on or after the Closing Date to the extent covered under its plans
      without the application of any waiting period for coverage generally applicable
      to newly hired employees. The Seller shall provide medical coverage to the
      Transferred Employees with respect to any pre-existing medical conditions to
      the
      extent required by applicable law. To the fullest extent permitted under its
      applicable policies of insurance, the Seller shall maintain health,
      hospitalization, life, travel and accident insurance coverage for the
      Transferred Employees in effect for so long as Buyer shall request; provided,
      that Buyer shall be responsible for all costs (if any) of maintaining such
      policies for all periods beginning on the first day of the month following
      the
      month in which the Closing Date falls. The cost of such insurance coverage
      from
      and after the Closing Date shall be borne by the Buyer. The Seller shall
      cooperate with the Buyer to provide continuity of such insurance coverage to
      such employees. The Seller shall be exclusively responsible for complying with
      the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”)
      with respect to its employees (including the Transferred Employees) and their
      qualified beneficiaries by reason of any such employees’ termination of
      employment with the Seller until the Closing Date, at which point the Buyer
      shall be exclusively responsible for complying with COBRA with respect to the
      Transferred Employees and any “M+A Qualified Beneficiaries” (as defined in
      Treasury Regulation Section 54.4980B-9 Q/A-4), in accordance with the
      Treasury Regulations governing asset sales in which the Seller ceases to provide
      any group health plan, at Treasury Regulation Section 54.4980B-9
      Q/A-8(c).

     

    With
      respect to the Transferred Employees, the Buyer shall take all actions necessary
      to cause Buyer’s 401(k) plan to recognize the service that the Transferred
      Employees had in the Seller’s 401(k) plan, for purposes of determining such
      Transferred Employees’ eligibility to participate in, and vesting under, the
      Buyer’s 401(k) plan.

     

    Reporting
      of Data

     

    .
      The
      Buyer and the Seller shall complete and furnish to each other such other
      employee data as shall be reasonably required from time to time for each party
      to perform and fulfill its obligations under this Article 6.
      In
      addition to, and not in limitation of, the obligations under the immediately
      preceding sentence, pursuant to the “Standard Procedure” provided in Section 4
      of Revenue Procedure 2004-53. 2004-34 IRB 320, (i) the Buyer and the Seller
      shall report on a predecessor/successor basis as set forth therein, (ii)
      the Seller will not be relieved from filing a Form W-2 with respect to any
      Transferred Employees, and (iii) the Buyer will undertake to file (or cause
      to be filed) a Form W-2 for each such Transferred Employee only with respect
      to
      the portion of the year during which such Transferred Employees are employed
      by
      the Buyer that includes the Closing Date, excluding the portion of such year
      that such Transferred Employee was employed by the Seller.

     

     

    ADDITIONAL
      AGREEMENTS

     

    Conduct
      of the Business

     

    .
      The
      Seller, DCCI and the Shareholders (as applicable) covenant and agree with the
      Buyer that from and after the date hereof until the Closing, except as expressly
      authorized by this Agreement or expressly consented to in writing by the Buyer
      (such consent not to be unreasonably withheld in respect of any request for
      the
      actions described in subsection (i) hereof to the extent that such action would
      be in the ordinary course for the Business or otherwise would not result in
      any
      adverse effect to the Business), the Seller shall:

     

    operate
      the Business and the Transferred Assets only in the usual, regular and ordinary
      manner with a view to maintaining the goodwill that the Seller now enjoys and,
      to the extent consistent with such operation, will use all reasonable efforts
      to
      preserve intact its present business organization, keep available the services
      of its employees and preserve its relationship with its customers, suppliers,
      jobbers, distributors and other Persons having business relations with
      it;

     

    use
      all
      reasonable efforts to maintain the Transferred Assets in a state of repair,
      order and condition consistent with its usual practice in connection with the
      Business;

     

    maintain
      its books of account and records relating to the Business in the usual, regular
      and ordinary manner, in accordance with the Seller’s usual accounting practices
      applied on a consistent basis;

     

    comply
      in
      all material respects with all statutes, laws, orders and regulations applicable
      to it and to the conduct of the Business;

     

    not
      sell,
      assign, transfer, lease or otherwise dispose of any Proprietary Rights,
      Equipment or any of the other Transferred Assets, except for dispositions of
      Inventories for value in the usual and ordinary course of business;

     

    preserve
      and maintain all rights that it now enjoys in and to the Proprietary
      Rights;

     

    not
      mortgage, pledge or otherwise create a security interest in any of the
      Transferred Assets or permit there to be created or exist any Liens thereon
      that
      would not be released upon the transfer of the Transferred Assets to the Buyer
      pursuant to this Agreement; 

     

    not
      enter
      into any contract, commitment or lease in relation to the Business that is
      not
      in the ordinary course of the Business;

     

    not
      amend, modify or consent to the termination of any Assumed Contract or Lease
      or
      waive any of the Seller’s rights with respect thereto;

     

    not
      grant
      any increase in the compensation or rate of compensation or commissions or
      bonuses payable to or severance obligations for any of the Transferred Employees
      or in any bonus plan and not transfer or otherwise change any of the terms
      or
      conditions of employment of any of the Transferred Employees;

     

    not
      permit any insurance policy naming it as a beneficiary or a loss payee relating
      to the Business or the Transferred Assets to be canceled or terminated or any
      of
      the coverage thereunder to lapse unless simultaneously with such termination
      or
      cancellation replacement policies providing substantially the same or better
      coverage are in full force and effect;

     

    pay
      when
      due all trade payables and all payments required by any of the Contracts and
      Other Agreements, and all Taxes of the Seller or with respect to the Business
      or
      the Transferred Assets that are or become due and owing, other than Taxes that
      are being contested in good faith and which would not result in a Lien being
      imposed on any of the Transferred Assets;

     

    not
      change or modify its credit or collection policies, procedures or practices,
      including acceleration of collections or receivables (whether or not past
      due);

     

    promptly
      notify the Buyer in writing if the Seller becomes aware of any change that
      shall
      have occurred or that shall have been threatened (or any development that shall
      have occurred or that shall have been threatened involving a prospective change)
      in the Transferred Assets or the Business that would reasonably be expected
      to
      have a Material Adverse Effect, whether or not occurring in the ordinary course
      of business; and

     

    not
      agree
      to anything prohibited by this Section 7.1 or which would make any of the
      representations and warranties of Seller in this Agreement untrue or
      incorrect.

     

    Information

     

    .
      During
      the period from the date of this Agreement to the Closing Date, the Buyer and
      the Seller will promptly inform the other in writing of any claim, action or
      any
      proceeding commenced against such party with respect to the transactions
      contemplated by this Agreement or any assets or property of the Seller or the
      Business.

     

    Required
      Consents

     

    .
      The
      Seller, DCCI and the Shareholders shall use their reasonable best efforts to
      obtain those Required Consents described on Schedule 7.3
      (the
“Closing Consents”).
      Notwithstanding anything in this Agreement to the contrary, in no event shall
      the Seller, DCCI or the Shareholders have any liability to the Buyer in the
      event Buyer is unable to obtain any Required Consent.

     

    Delivery
      of and Access to Corporate Documents and Assistance.

     

    At
      the
      Closing, the Seller shall deliver to the Buyer at the Facilities all Documents
      and Other Papers constituting Transferred Assets or relating to the Assumed
      Liabilities, including, without limitation, all files relating to the Trade
      Payables, computer disks reflecting any books or records, documents or other
      papers, or other information or data relating to the operation of the Business
      or the Transferred Assets or customer records and sales history stored on any
      electronic media, including computers. The Seller, however, shall be entitled
      to
      retain all Documents and Other Papers constituting Excluded Assets. For a period
      of four years after the Closing Date, each of Buyer and Seller will retain
      such
      Documents and Other Papers retained or obtained by it pursuant to this
      Section 7.4(a). During such period, each of Buyer and Seller will afford
      duly authorized representatives of the other reasonable access during normal
      business hours to all of such records and will permit such representatives,
      at
      the requesting party’s expense, to make copies of any of such records as may be
      reasonably required by the other; provided, however, that (i) any such
      access shall be had or done in such a manner so as to not unreasonably interfere
      with the normal conduct of the Business or the business of Buyer and its
      affiliates or the Seller and its affiliates (as the case may be), (ii) neither
      the Buyer nor the Seller shall be required to provide access to any confidential
      record or records, the disclosure of which would violate any governmental
      statute or regulation, and (iii) neither the Buyer nor the Seller shall be
      required to provide access to any confidential record or records, the disclosure
      of which would cause it or any of its respective affiliates to waive its
      attorney-client privilege or attorney work product privilege.

     

    In
      addition to, and not in limitation of subsection (a) above, the Seller, DCCI
      and
      the Shareholders, if requested by the Buyer and at Buyer’s expense, shall make
      available to Buyer and its representatives financial and accounting records
      of
      the Business in the Seller’s, DCCI’s or the Shareholders’ custody or control,
      including, without limitation, by causing its accountant to provide the Buyer
      with access to such firm’s work papers in support of the Business, in order that
      Buyer may prepare financial statements of the Business in connection with the
      filing by the Buyer of a Current Report on Form 8-K (if necessary) with the
      Securities and Exchange Commission in accordance with the Securities Exchange
      Act of 1934, as amended, and the rules and regulations thereunder in connection
      with the transactions contemplated hereby, and to comply with any other
      financial disclosure requirements with respect to the Business applicable to
      Buyer under the Securities Exchange Act of 1934, as amended, the Securities
      Act
      of 1933, as amended, and the rules and regulations thereunder. Notwithstanding
      anything in this Section 7.4(b) to the contrary, in no event shall the
      Seller, DCCI or the Shareholders have any liability to Buyer or any third party
      with respect to any records made available to the Buyer or its representatives
      pursuant to this Section 7.4(b), except for any claim or action based on
      fraud or as otherwise expressly provided under the representations and
      warranties contained in Article 3 hereof.

     

    Further
      Assurances

     

    .
      Each
      party hereto shall execute, acknowledge and deliver or cause to be executed,
      acknowledged and delivered to the any other party such bills of sale,
      assignments, assumptions and other instruments of transfer, assignment and
      conveyance, in form and substance reasonably satisfactory to counsel for the
      requesting party, as shall be necessary to vest in the Buyer all the right,
      title and interest in and to the Transferred Assets free and clear of all Liens
      (including the release of all Liens of record) and all obligations for the
      Assumed Liabilities, and shall use its reasonable best efforts to cause to
      be
      taken such other action as a party reasonably may require to more effectively
      implement and carry into effect the transactions contemplated by this
      Agreement.

     

    Nondisclosure
      of Proprietary Information

     

    .
      The
      Seller, DCCI and the Shareholders agree that, from and after the Closing Date,
      they and their Subsidiaries and affiliates shall hold in confidence and will
      not
      directly or indirectly at any time reveal, report, publish, disclose or transfer
      to any Person other than the Buyer and its representatives any of the
      Proprietary Information that is not generally known to the public or utilize
      any
      of the Proprietary Information for pecuniary gain. Notwithstanding the
      foregoing, the Seller and its affiliates may disclose information that is (i)
      required to be disclosed by applicable laws to the extent, and only to the
      extent, such laws require such disclosure and the Seller provides the Buyer
      prior written notice of its intent to provide such disclosure and the general
      text of such disclosure and such disclosure is consented to by the Buyer, which
      consent shall not be unreasonably withheld, and (ii) required to be disclosed
      by
      final order of a court of competent jurisdiction, provided that, in the event
      Seller or such affiliate is served or threatened with litigation that would
      require the Seller or such affiliate to disclose such information, the Seller
      or
      such affiliate shall tender to the Buyer the opportunity to defend, at Buyer’s
      cost, against such disclosure. Because of the unique nature of the Proprietary
      Information, the Seller, DCCI and the Shareholders understand and agree that
      the
      Buyer and its affiliates and their successors and assigns shall be entitled
      to
      seek specific performance and injunctive relief in accordance with Section
      15.7
      (as well as any other legal and equitable remedies to which they may be
      entitled) in respect of any breach or anticipated breach of their respective
      obligations (as well as those of their respective affiliates) under this Section
      7.6.

     

    Covenant
      Not to Compete With the Business

     

    .
      Each of
      the Seller, DCCI and the Shareholders agrees that, effective as of the Closing
      Date and for a period of two (2) years thereafter, the Seller, DCCI, the
      Shareholders and their respective affiliates shall not, directly or indirectly,
      for itself or others, (i) own, manage, operate, control, be employed by,
      engage or participate in, allow its or their skill, knowledge, experience or
      reputation to be used by, or otherwise be connected in any manner with the
      ownership, management, operation or control of, any company or other business
      enterprise (other than Buyer or its affiliates) engaged in any aspect of the
      Business within all of the Parishes and Counties set forth on Schedule 7.7(1),
      (ii)
      make any contact with, for the purpose of transacting any business competitive
      to the Business, with any Person which was a customer of Seller at any time
      in
      the six (6) years prior to the Closing Date (“Company’s Customers”), (iii)
      attempt to direct or take away the business or patronage from the Buyer or
      the
      Business of any of the Business’ customers, (iv) solicit, hire away or attempt
      to solicit or hire away to any firm or entity engaged in the Business, any
      person employed by the Buyer or any of its affiliates, or (v) interfere with
      the
      business, trade, goodwill or customers of the Buyer or the Business.
      Notwithstanding the foregoing, the Seller, DCCI and the Shareholders shall
      be
      able to: (a) own in the aggregate not more than five percent (5%) of a
      public company that engages in the Business; provided, that the Seller, DCCI
      or
      the Shareholders, as applicable, does not exert or possess the power to exert,
      directly or indirectly, the direction of the management, policies or other
      control (whether through ownership of voting securities, by contract or
      otherwise) over such public company; and (b) participate in the activities
      specifically described on Schedule 7.7(2).
      The
      Seller, DCCI and the Shareholders understand and agree that, due to the unique
      nature of the obligations hereunder and inadequacy of a remedy of law for a
      breach or attempted breach of this Section 7.7, the Buyer and its affiliates
      and
      their successors and assigns shall be entitled to seek specific performance
      and
      injunctive relief in accordance with Section 15.7 (as well as any other legal
      and equitable remedies to which they may be entitled) in respect of any such
      breach or attempted breach of their respective obligations (as well as those
      of
      their respective affiliates) under this Section 7.7. The Seller, DCCI and the
      Shareholders acknowledge that this covenant not to compete is being provided
      as
      an inducement to the Buyer to acquire the Business and the Transferred Assets
      and that this Section 7.7 contains reasonable limitations as to time,
      geographical area and scope of activity to be restrained that do not impose
      a
      greater restraint than is necessary to protect the goodwill or other business
      interest of the Buyer. Whenever possible, each provision of this Section 7.7
      shall be interpreted in such a manner as to be effective and valid under
      applicable law but if any provision of this Section 7.7 shall be prohibited
      by
      or invalid under applicable law, such provision shall be ineffective to the
      extent of such prohibition or invalidity, without invalidating the remaining
      provisions of this Section 7.7. If any provision of this Section 7.7 shall,
      for
      any reason, be judged by any court of competent jurisdiction to be invalid
      or
      unenforceable, such judgment shall not affect, impair or invalidate the
      remainder of this Section 7.7 but shall be confined in its operation to the
      provision of this Section 7.7 directly
      involved in the controversy in which such judgment shall have been rendered.
      In
      the event that the provisions of this Section 7.7 should ever be deemed to
      exceed the time or geographic limitations permitted by applicable laws, then
      such provision shall be reformed to the maximum time or geographic limitations
      permitted by applicable law.

     

    Continuation
      of Business by the Buyer

     

    .
      Nothing
      in this Section 7.8, in any other provision of this Agreement, in any Exhibit
      or
      Section hereto, or in any agreement, instrument, or other document executed
      or
      delivered in connection with this Agreement shall require the Buyer to continue
      its business or operations or to manage and operate the Business with any duty
      or standard of care to the Seller. The Seller acknowledges and agrees that
      the
      Buyer in its sole discretion may continue, manage, modify or discontinue its
      operations, liquidate or otherwise change or cease its operations.

     

    Collection
      of Accounts Receivable

     

    .
      If the
      Seller shall receive payment in respect of Accounts Receivable that is included
      in the Transferred Assets, then the Seller shall promptly, but in any event
      within ten (10) days of Seller’s receipt thereof, forward such payment to the
      Buyer.

     

    Use
      of
      Name

     

    .
      All
      uses of the names “Delta Process Equipment, Inc.” and any derivations thereof
      (collectively, the “Names”) are being transferred to Buyer on the Closing Date
      as part of the Transferred Assets. From and after the Closing Date, Seller
      and
      its affiliates will not, directly or indirectly, use in any manner the Names
      or
      any other trade name, trademark, service mark or logo used by Seller, or any
      word or logo, that is similar in sound or appearance, in the Business. Within
      fifteen (15) days after the Closing Date, Seller shall provide Buyer with a
      certified copy of its organizational documents indicating that it has changed
      its name in accordance with the foregoing sentence.

     

    Tax
      Arrangements

     

    .
      The
      Buyer, on the one hand, and the Seller, DCCI and the Shareholders, on the other
      hand, shall furnish or cause to be furnished to each other, as promptly as
      practicable, such information and assistance relating to the Transferred Assets
      and the Assumed Liabilities as is reasonably necessary for the preparation
      and
      filing of any Tax Return, claim or refund or other filings relating to Tax
      matters, for the preparation of any Tax audit, for the preparation of any Tax
      protest, or for the prosecution or defense of any suit or other proceeding
      relating to Tax matters.

     

     

    CONDITIONS
      TO THE BUYER’S OBLIGATION
      TO
      CONSUMMATE THE TRANSACTIONS

     

    The
      obligation of the Buyer to purchase the Transferred Assets and to assume the
      Assumed Liabilities as contemplated hereby is subject to the satisfaction on
      or
      before the Closing Date of the conditions set forth below, any of which may
      be
      waived by the Buyer in writing; provided, however, the Buyer’s election to
      proceed with the Closing of the transactions contemplated hereby shall not
      be
      deemed a waiver of any breach of any representation, warranty or covenant herein
      not known to the Buyer as of the Closing Date or existing on the Closing Date,
      and such action shall not prejudice the Buyer’s right to recover damages for any
      breach.

    

    Representations,
      Warranties and Covenants

     

    .
      The
      representations and warranties of the Seller, DCCI and the Shareholders
      contained in this Agreement qualified as to materiality (including as to any
      Material Adverse Effect) shall be true, correct and complete in all respects,
      and those not so qualified shall be true, correct and complete in all material
      respects, on and as of the Closing Date with the same force and effect as though
      such representations and warranties had been made or given on and as of such
      date; each and all of the agreements and covenants of the Seller, DCCI and
      the
      Shareholders to be performed or complied with by it on or before the Closing
      Date pursuant to this Agreement shall have been performed or complied with
      in
      all material respects; and the Seller shall have delivered to the Buyer a
      certificate signed by one of its duly authorized officers, dated the Closing
      Date, to all such effects.

     

    Good
      Standing

     

    .
      The
      Seller shall have delivered to the Buyer certificates issued by appropriate
      Governmental Entities evidencing the good standing of the Seller, as of a date
      not more than ten calendar days prior to the Closing Date, in Louisiana and
      the
      states or commonwealths in which it is qualified to do business as a foreign
      corporation. To the extent provided for under applicable law, the Seller shall
      also have delivered to the Buyer certificates or other writings issued by
      appropriate Governmental Entities evidencing that all applicable state franchise
      Taxes have been paid.

     

    Instruments
      of Transfer

     

    .
      (i) The Seller shall have executed and delivered to the Buyer (a) the
      General Conveyance, Transfer, Assignment and Assumption, in substantially the
      form attached hereto as Exhibit
      C
      hereto
      (the “General Conveyance, Transfer, Assignment and Assumption”), as shall be
      necessary to vest in the Buyer all the right, title and interest in and to
      the
      Transferred Assets and assumption of all Assumed Liabilities, and (b) a power
      of
      attorney in the form of Exhibit
      D
      hereto,
      and (ii) Stone Flower, L.L.C., an affiliate of Seller (“Stone Flower”), shall
      have executed Lease Agreements, in substantially the forms attached hereto
      as
Exhibits E-1
      and
E-2
      hereto
      (the “Lease Agreements”), for the Facilities described on Schedule 8.3.

     

    No
      Litigation.

     

    No
      preliminary or permanent injunction or other order of any court or other
      Governmental Entity shall be in effect nor shall there be in effect any statute,
      rule, regulation or executive order promulgated or enacted by any Governmental
      Entity that, in any such case, prevents the consummation of the transactions
      contemplated by this Agreement.

     

    No
      suit,
      action, claim, proceeding or investigation before any Governmental Entity shall
      have been commenced or threatened seeking to prevent the sale of the Transferred
      Assets or the Business or asserting that the sale of all or a portion of the
      Transferred Assets or the Business would be unlawful.

     

    Receipt
      of Closing Consents

     

    .
      The
      Buyer shall have obtained the Closing Consents.

     

    Receipt
      of Approvals and Authorizations

     

    .
      The
      Buyer shall have received each of the licenses, consents, approvals and other
      authorizations from Governmental Entities necessary or appropriate for the
      Buyer
      to consummate the transactions contemplated by this Agreement and to conduct
      the
      Business and operate the Transferred Assets on and after the Closing
      Date.

     

    No
      Liens

     

    .
      The
      Seller shall have delivered to the Buyer releases of all Liens (other than
      Permitted Liens) and/or other evidence reasonably satisfactory to the Buyer
      to
      show that the Transferred Assets are being transferred, sold, assigned,
      delivered and conveyed to the Buyer hereunder free and clear of all Liens (other
      than Permitted Liens).

     

     

    CONDITIONS
      TO THE SELLER’S OBLIGATION TO
      CONSUMMATE THE TRANSACTIONS

     

    The
      obligation of the Seller to transfer the Transferred Assets as contemplated
      hereby is subject to the satisfaction on or before the Closing Date of the
      conditions set forth below, any of which may be waived by the Seller in writing;
      provided, however, the Seller’s election to proceed with the Closing of the
      transactions contemplated hereby shall not be deemed a waiver of any breach
      of
      any representation, warranty or covenant herein, not known to the Seller as
      of
      the Closing Date or existing on the Closing Date, and such action shall not
      prejudice the Seller’s right to recover damages for any breach.

    

    Representations
      and Warranties and Covenants

     

    .
      The
      representations and warranties of the Buyer contained in this Agreement
      qualified as to materiality (including as to any Material Adverse Effect) shall
      be true, correct and complete in all respects, and those not so qualified shall
      be true, correct and complete in all material respects, on and as of the Closing
      Date with the same force and effect as though such representations and
      warranties had been made or given on and as of such date; each and all of the
      agreements and covenants of the Buyer to be performed or complied with by it
      on
      or before the Closing Date pursuant to this Agreement shall have been performed
      or complied with in all material respects; and the Buyer shall have delivered
      to
      the Seller a certificate signed by one of its duly authorized officers, dated
      the Closing Date, to such effects.

     

    Receipt
      of the Purchase Price; Instruments of Transfer

     

    .
      The
      Seller shall have received the Purchase Price. The Buyer shall have executed
      and
      delivered to (i) the Seller, the General Conveyance, Transfer, Assignment
      and Assumption and (ii) Stone Flower, the Lease Agreements.

     

    No
      Litigation.

     

    No
      preliminary or permanent injunction or other order of any Governmental Entity
      shall be in effect nor shall there be any statute, rule, regulation or executive
      order promulgated or enacted by any Governmental Entity that, in any such case,
      prevents the consummation of the transactions contemplated by this
      Agreement.

     

    No
      suit,
      action, claim, proceeding or investigation before any court or other
      Governmental Entity shall have been commenced or threatened seeking to prevent
      the sale of the Transferred Assets or the Business or asserting that the sale
      of
      all or a portion of the Transferred Assets or the Business would be
      unlawful.

     

     

    INDEMNIFICATION

     

    Indemnification
      by the Seller

     

    .
      Except
      as otherwise limited by this Article 10 and Article 11 hereof, the Seller agrees
      to indemnify, defend and hold the Buyer and each of its officers, directors,
      employees, agents, stockholders and controlling Persons and their respective
      successors and assigns harmless from and against and in respect of Damages
      actually suffered, incurred or realized by such party (collectively, “General
      Buyer Losses”), arising out of or resulting from or relating to:

     

    the
      failure of any representation or warranty made by the Seller, DCCI or the
      Shareholders in this Agreement or in any other agreement, certificate, Schedule,
      Exhibit or writing delivered to the Buyer pursuant to this Agreement to be
      true
      and correct;

     

    the
      breach of any covenant or other agreement made or undertaken by the Seller,
      DCCI
      or the Shareholders in this Agreement or in any other agreement, certificate,
      Schedule, Exhibit or writing delivered to the Buyer pursuant to this Agreement;
      and

     

    any
      Retained Liability.

     

    Indemnification
      by the Buyer

     

    .
      Except
      as otherwise limited by this Article 10 and Article 11 hereof, the Buyer agrees
      to indemnify, defend and hold the Seller and each of its officers, directors,
      employees, agents, stockholders and controlling Persons and successors and
      assigns (including DCCI and the Shareholders) harmless from and against and
      in
      respect of Damages actually suffered, incurred or realized by such party
      (collectively, “Seller Losses”), arising out of or resulting from:

     

    the
      failure of any representation or warranty made by the Buyer in this Agreement
      or
      in any other agreement, certificate, Schedule, Exhibit or writing delivered
      to
      the Seller pursuant to this Agreement to be true and correct;

     

    the
      breach of any covenant or other agreement made or undertaken by the Buyer in
      this Agreement or in any other agreement, certificate, Schedule, Exhibit or
      writing delivered to the Seller pursuant to this Agreement; and

     

    any
      Assumed Liability.

     

    Limitations
      on Indemnifications

     

    .
      An
      indemnified party shall not have any liability under Sections 10.1 and 10.2
      hereof unless the aggregate amount of Damages incurred by the indemnified
      parties exceeds $50,000, and then only to the extent such Damages exceed
      $50,000. For purposes of calculating the Damages hereunder arising out of or
      resulting from or relating to any failure of representations to be true and
      correct or the breach of any covenants or agreements, any materiality or
      Material Adverse Effect qualifications in the representations, warranties,
      covenants and agreements shall be disregarded. The aggregate amount of all
      Damages for which the Seller shall be required to indemnify an indemnified
      party
      under Section 10.1(a) shall not exceed $5,000,000; provided, however, that
      such
      limitation shall not apply in respect of indemnification for the failure of
      any
      representations or warranties made by the Seller in Sections 3.1(a), 3.2(a),
      3.4(b), 3.4(c), 3.4(d), 3.4(e), 3.7, 3.10 and 3.15, for which the Seller’s
      obligation to indemnify shall not exceed the Purchase Price.

     

    Procedure

     

    .
      All
      claims for indemnification under this Article 10 shall be asserted and resolved
      as follows:

     

    An
      Indemnitee shall promptly give the Indemnitor notice of any matter which an
      Indemnitee has determined has given or could give rise to a right of
      indemnification under this Agreement, stating the amount of the Loss, if known,
      and method of computation thereof, all with reasonable particularity, and
      stating with particularity the nature of such matter. Failure to provide such
      notice shall not affect the right of the Indemnitee to indemnification except
      to
      the extent such failure shall have resulted in liability to the Indemnitor
      that
      could have been actually avoided had such notice been provided within such
      required time period.

     

    The
      obligations and liabilities of an Indemnitor under this Article 10 with respect
      to Losses arising from claims of any third party that are subject to the
      indemnification provided for in this Article 10 (“Third Party Claims”) shall be
      governed by and contingent upon the following additional terms and conditions:
      if an Indemnitee shall receive notice of any Third Party Claim, the Indemnitee
      shall give the Indemnitor prompt notice of such Third Party Claim and the
      Indemnitor may, at its option provided that it shall acknowledge in writing
      to
      Indemnitee its unqualified obligation to indemnify the Indemnitee as provided
      hereunder with respect to such Third Party Claim, assume and control the defense
      of such Third Party Claim at the Indemnitor’s expense and through counsel of the
      Indemnitor’s choice reasonably acceptable to Indemnitee. In the event the
      Indemnitor assumes the defense against any such Third Party Claim as provided
      above, the Indemnitee shall have the right to participate at its own expense
      in
      the defense of such asserted liability (provided that such Indemnitee shall
      be
      entitled to participate in any such defense with separate counsel at the expense
      of the Indemnitor if, in the reasonable opinion of counsel to the Indemnitee
      a
      conflict or potential conflict exists between the Indemnitor and the Indemnitee
      that would make such separate representation advisable), shall reasonably
      cooperate with the Indemnitor in such defense and will attempt to make available
      on a reasonable basis to the Indemnitor all witnesses, pertinent records,
      materials and information in its possession or under its control relating
      thereto as is reasonably required by the Indemnitor. In the event the Indemnitor
      does not elect to conduct the defense against any such Third Party Claim, but
      it
      is ultimately determined that such Indemnitor is liable for any Losses under
      this Article 10, the Indemnitor shall pay all costs and expenses of such
      defense and shall cooperate with the Indemnitee (and be entitled to participate)
      in such defense and attempt to make available to it on a reasonable basis all
      such witnesses, records, materials and information in its possession or under
      its control relating thereto as is reasonably required by the Indemnitee. Except
      for the settlement of a Third Party Claim that involves the payment of money
      only and for which the Indemnitee is totally indemnified by the Indemnitor
      and
      provided with an unqualified release from all liability in respect of such
      Third
      Party Claim, no Third Party Claim may be settled without the written consent
      of
      the Indemnitee.

     

    Payment

     

    .
      Payment
      of any amounts due pursuant to this Article 10 shall be made within ten Business
      Days after notice of a final determination of Losses, including, without
      limitation, in respect of any Third Party Claims, is sent by the
      Indemnitee.

     

    Failure
      to Pay Indemnification

     

    .
      If and
      to the extent the Indemnitee shall make written demand upon the Indemnitor
      for
      indemnification and the Indemnitor shall refuse or fail to pay in full within
      ten (10) Business Days of such written demand the amounts demanded pursuant
      hereto and in accordance herewith, then the Indemnitee may utilize any legal
      or
      equitable remedy to collect from the Indemnitor the amount of its Losses.
      Nothing contained herein is intended to limit or constrain the Indemnitee’s
      rights against the Indemnitor for indemnity, the remedies herein being
      cumulative. In the event the Seller is obligated to provide indemnification
      pursuant to this Agreement and the Seller shall refuse or fail to pay any such
      claim therefor in full within ten (10) Business Days after written demand upon
      Seller, then each of DCCI and the Shareholders, jointly and severally, agree
      (subject to the terms and conditions of this Article 10 and Article 11 hereof,
      including the limitations contained in Section 10.3) to pay to the Indemnitee
      any amount equal to such General Buyer Losses (which shall include any
      additional losses, costs and expenses incurred by the Indemnitee in seeking
      and
      obtaining such recovery from DCCI and the Shareholders pursuant hereto) less
      any
      amount(s) paid by the Seller in respect of such claim.

     

    Adjustment
      of Liability

     

    .
      The
      amount which an Indemnitee shall be entitled to receive from an Indemnitor
      with
      respect to any indemnifiable Loss under this Article 10 shall
      be
      net of any actual insurance recovery received by the Indemnitee at the time
      of
      such indemnification on account of such Loss under any Third Party Claim;
      provided, however, that any costs of obtaining such recovery shall further
      constitute Losses that are indemnifiable under this Article 10.

     

    Tax
      Treatment of Indemnity Payments

     

    .
      Each
      of
      the Seller, DCCI, the Shareholders and the Buyer agrees to treat any indemnity
      payment
      made
      pursuant to this Article 10 as an adjustment to the Purchase Price for all
      income Tax purposes.

     

     

    SURVIVAL
      OF COVENANTS, REPRESENTATIONS, WARRANTIES
      AND AGREEMENTS

     

    The
      representations and warranties of the parties to this Agreement shall survive
      the Closing Date and shall remain in full force and effect for a period of
      twelve (12) months following the Closing Date (except that (i) the
      representations and warranties set forth in the second sentence in each of
      Sections 3.4(b) and 3.4(c) and the first sentence of Section 3.4(d) shall
      survive the Closing Date without limitation and (ii) the representations and
      warranties contained in Sections 3.7, 3.10 and 3.14 hereof shall survive the
      Closing Date and shall not terminate until twenty (20) days after the expiration
      of all applicable statutes of limitations) (the period during which the
      representations and warranties shall survive being referred to herein with
      respect to such representations and warranties respectively as the “Survival
      Period”), and shall be effective with respect to any inaccuracy therein or
      breach thereof (and a claim for indemnification under Article 10 hereof may
      be
      made thereon) if a written notice asserting the claim shall have been duly
      given
      in accordance with Article 10 hereof within the Survival Period with respect
      to
      such matter. Any claim for indemnification made in writing during the Survival
      Period shall be valid and the representations and warranties relating thereto
      shall remain in effect for purposes of such indemnification notwithstanding
      that
      such claim may not be resolved within the Survival Period. All representations,
      warranties and covenants and agreements made by the parties shall not be
      affected by any investigation heretofore or hereafter made by and on behalf
      of
      any of them and shall not be deemed merged into any instruments or agreements
      delivered in connection with the Closing or otherwise in connection with the
      transactions contemplated hereby.

     

    EXPENSES

     

    Except
      as
      otherwise expressly set forth herein, and whether or not the transactions
      contemplated by this Agreement shall be consummated, each party agrees to pay,
      without assumption of liability or right of reimbursement from any other party,
      the costs and expenses incurred by such party incident to or in connection
      with
      the preparation, negotiation and execution of this Agreement, the transactions
      contemplated hereby and performance of its obligations hereunder, including
      without limitation the fees and disbursements of legal counsel, accountants
      and
      consultants employed by such party in connection with such preparation,
      negotiation, execution and performance.

    

     

    TERMINATION

     

    Reasonable
      Best
      Efforts to Satisfy Conditions

     

    .
      Subject
      to the provisions of this Agreement, the Buyer, on the one hand, and the Seller,
      DCCI and the Shareholders, on the other hand, agree to use their reasonable
      best
      efforts to bring about the satisfaction of the conditions specified in Articles
      9 and 8 hereof, respectively.

     

    Termination

     

    .
      The
      obligation to close the transactions contemplated by this Agreement may be
      terminated by:

     

    mutual
      written agreement of the Buyer and the Seller;

     

    the
      Buyer, if a material default shall be made in the observance or in the due
      and
      timely performance by the Seller, DCCI or the Shareholders of any agreements
      and
      covenants of the Seller, DCCI or the Shareholder herein contained, or if there
      shall have been a material breach by the Seller, DCCI or the Shareholders of
      any
      of their respective warranties and representations herein contained, and such
      default or breach is incapable of being cured or, if capable of being cured,
      shall not have been cured within ten (10) days following receipt by the Seller,
      DCCI or the Shareholders (as the case may be) of notice of such default or
      breach;

     

    the
      Seller, if a material default shall be made in the observance or in the due
      and
      timely performance by the Buyer of any agreements and covenants of the Buyer
      herein contained, or if there shall have been a material breach by the Buyer
      of
      any of the warranties and representations of the Buyer herein contained, and
      such default or breach is incapable of being cured or, if capable of being
      cured, shall not have been cured within ten (10) days following receipt by
      the
      Buyer of notice of such default or breach; or

     

    the
      Buyer
      or the Seller (provided the terminating party has not materially breached any
      of
      its agreements, covenants, representations or warranties) if the Closing shall
      not have occurred on or before April 30, 2007. 

     

    Liability
      Upon Termination

     

    .
      If the
      obligation to close the transactions contemplated by this Agreement is
      terminated pursuant to Section 13.2(a) or 13.2(d), then this Agreement shall,
      forthwith become void and there shall not be any liability or obligation with
      respect to the terminated provisions of this Agreement on the part of the
      Seller, DCCI, the Shareholders or the Buyer. If this Agreement is terminated
      pursuant to Section 13.2(b) or 13.2(c), then the breaching party, as applicable,
      shall remain liable for any breach of this Agreement prior to the effective
      date
      of such termination. The exercise of any rights or remedy shall not be an
      election of remedies.

     

    Notice
      of Termination

     

    .
      The
      parties hereto may exercise their respective rights of termination under this
      Article 13 only by delivering written notice to that effect to the other party
      or parties, and such notice is received on or before the Closing
      Date.

     

     

    DEFINITIONS
      OF CERTAIN TERMS

     

    In
      addition to terms defined elsewhere in this Agreement, the following terms
      shall
      have the meanings assigned to them herein, unless the context otherwise
      indicates, both for purposes of this Agreement and all Exhibits and Schedules
      hereto:

    

    “AAA”
      shall have the meaning given such term in Section 15.6(c) hereof. 

    

    “Accounts
      Receivable” shall have the meaning given such term in Section
      1.1(a)(iii).

    

    “Agreement”
      shall have the meaning given such term in the preamble hereof, as the same
      may
      be amended from time to time by the parties hereto, and including the Exhibits
      and Schedules hereto.

    

    “Allocation”
      shall have the meaning given such term in Section 1.7(a).

    

    “Assumed
      Contracts” shall have the meaning given such term in Section 1.1(a)(v)
      hereof.

    

    “Assumed
      Liabilities” shall have the meaning given such term in Section 1.4
      hereof. 

    

    “Business”
      shall mean the businesses and operations of the Seller including, without
      limitation, the distribution and installation of equipment used in the
      industrial and municipal markets and the representation of industrial and
      municipal equipment manufacturers, the distribution and installation of water
      and wastewater treatment plants and the representation of water and wastewater
      treatment plant manufacturers, the repair and remanufacturing of industrial
      equipment, and the fabrication of equipment packaging.

    

    “Business
      Day” shall mean any day other than a Saturday, Sunday or other day on which
      commercial banks in Baton Rouge, Louisiana or Houston, Texas are authorized
      by
      law to close.

    

    “Buyer”
      shall have the meaning given such term in the preamble hereof, or one or more
      of
      such Person’s designees.

    

    “Closing”
      shall mean the transfer by the Seller to the Buyer of the Transferred Assets,
      the assumption by the Buyer of the Assumed Liabilities and the transfer by
      the
      Buyer to the Seller of the Purchase Price.

    

    “Closing
      Consents” shall have the meaning given such term in Section 7.3
      hereof.

    

    “Closing
      Date” shall mean the time and date of the Closing as specified in Article 2
      hereof.

    

    “COBRA”
      shall have the meaning given such term in Section 6.2(b) hereof.

    

    “Code”
      shall mean the Internal Revenue Code of 1986, as amended from time to time,
      or
      similar provisions of legislation replacing such law from time to
      time.

    

    “Contracts
      and Other Agreements” shall mean all contracts, agreements, understandings,
      indentures, notes, bonds, loans, instruments, leases, mortgages, franchises,
      licenses, commitments or binding arrangements, whether express or implied,
      oral
      or written, to which the Seller is a party or bound or to which its properties
      or assets are subject.

    

    “Damages”
      shall mean any and all liabilities, losses, damages, demands, assessments,
      claims, costs and expenses (including interest, awards, judgments, penalties,
      settlements, fines, costs of remediation, costs and expenses incurred in
      connection with investigating and defending any claims or causes of action,
      including, without limitation, reasonable attorneys’ fees and expenses and all
      fees and expenses of consultants and other professionals).

    

    “DCCI”
      shall have the meaning given such term in the preamble hereof.

    

    “Disclosure
      Schedule” shall mean the disclosure schedule delivered to the Buyer attached
      hereto as Exhibit
      B.

    

    “Documents
      and Other Papers” shall mean and include any document, agreement, instrument,
      certificate, writing, notice, consent, affidavit, letter, telegram, telex,
      financial record, statement, file, computer disk, microfiche or other document
      in electronic format, schedule, exhibit or any other paper or record
      whatsoever.

    

    “Employee
      Benefits” shall mean any and all pension or welfare benefit programs, payroll
      practices, fringe benefits, or other plans, arrangements, agreements and
      understandings for employees or other service providers, groups of employees
      or
      other service providers or specific individual employees or other service
      providers to which the Seller contributes or is a party, by which it may be
      bound or under which it may have liability, other than benefits required by
      applicable law (e.g., social security benefits and payroll taxes related
      thereto), including without limitation pension or retirement plans, deferred
      compensation plans, bonus or incentive plans, early retirement programs,
      severance pay policies, support funds, medical or dental insurance, short-term
      and long-term disability, educational reimbursement plans, sick leave, vacation
      policy, and any other payment or reimbursement plans.

    

    “Environmental
      Laws” shall mean all federal, state, or municipal laws, rules, regulations,
      statutes, ordinances, or orders of any Governmental Entity relating to (a)
      the
      control of any potential pollutant or protection of the air, water, or land,
      (b)
      solid, gaseous or liquid waste generation, handling, treatment, storage,
      disposal or transportation and (c) exposure to hazardous, toxic or other
      substances alleged to be harmful. “Environmental Laws” shall include, but not be
      limited to, the Clean Air Act, 42 U.S.C. § 7401 et seq., the Clean Water Act, 33
      U.S.C. § 1251 et seq., the Resource Conservation Recovery Act (“RCRA”), 42
      U.S.C. § 6901 et seq., the Superfund Amendments and Reauthorization Act, 42
      U.S.C. § 11001, et seq., the Toxic Substances Control Act, 15 U.S.C. § 2601 et
      seq., the Water Pollution Control Act, 33 U.S.C. § 1251 et seq., the Safe
      Drinking Water Act, 42 U.S.C. § 300f et seq. and the Comprehensive Environmental
      Response, Compensation and Liability Act (“CERCLA”), 42 U.S.C. § 9601 et seq.
      The term “Environmental Laws” shall also include all state, local and municipal
      laws, rules, regulations, statutes, ordinances and orders dealing with the
      same
      subject matter or promulgated by any governmental or quasi-governmental agency
      thereunder or to carry out the purposes of any federal, state, local and
      municipal law.

    

    “Environmental
      Permit” shall mean any permit, license, approval, registration, identification
      number or other authorization with respect to the Transferred Assets or the
      operation of the Business under any applicable law, regulation or other
      requirement of the United States or any other country or of any state,
      municipality or other subdivision thereof relating to the control of any
      pollutant or protection of health or the environment, including laws,
      regulations or other requirements relating to emissions, discharges, releases
      or
      threatened releases of pollutants, contaminants or hazardous or toxic materials
      or wastes into ambient air, surface water, groundwater or land, or otherwise
      relating to the manufacture, processing, distribution, use, treatment, storage,
      disposal, transport, or handling of chemical substances, pollutants,
      contaminants or hazardous or toxic materials or wastes.

    

    “Equipment”
      shall mean all machinery, transportation equipment, tools, equipment,
      furnishings and fixtures owned, leased or subject to a contract of purchase
      and
      sale, or lease commitment that is used in the Business as operated by the
      Seller.

    

    “ERISA”
      shall mean the Employee Retirement Income Security Act of 1974, and the related
      regulations, as amended from time to time.

    

    “Excluded
      Assets” shall have the meaning given such term in Section 1.2
      hereof.

    

    “Facilities”
      shall collectively mean the real property that is leased by Seller and is
      described in Exhibit
      F
      (including, without limitation, that real property to be leased in connection
      with the consummation of the transactions under this Agreement to the Buyer
      by
      Stone Flower under the Lease Agreements). Facilities shall include all fixtures
      and improvements erected or located on or affixed to the
      Facilities.

    

    “Financial
      Statements” shall have the meaning given such term in Section 3.6
      hereof.

    

    “General
      Buyer Losses” shall have the meaning given such term in Section 10.1
      hereof.

    

    “General
      Conveyance, Transfer, Assignment and Assumption” shall have the meaning given
      such term in Section 8.3 hereof.

    “Governmental
      Entity” shall mean any arbitrator, court, administrative or regulatory agency,
      commission, department, board or bureau or body or other government or
      authority, instrumentality or subdivision or any entity or Person exercising
      executive, legislative, judicial, regulatory or administrative functions of
      or
      pertaining to government.

    

    “Hazardous
      Materials” shall mean any (a) petroleum or petroleum products, (b) hazardous
      substances as defined by § 101(14) of CERCLA and (c) any other chemical,
      substance or waste that is regulated by any Governmental Entity under any
      Environmental Law.

    

    “Indemnitee”
      shall mean the Person or Persons indemnified, or entitled, or claiming to be
      entitled to be indemnified, pursuant to the provisions of Sections 10.1 or
      10.2
      hereof, as the case may be.

    

    “Indemnitor”
      shall mean the Person or Persons having the obligation to indemnify, or alleged
      to have the obligation to indemnify, pursuant to the provisions of Sections
      10.1
      or 10.2 hereof, as the case may be.

    

    “Inventories”
      shall mean all inventories of finished goods, tooling inventory, work in
      progress, raw materials and other inventories relating to the Business, wherever
      situated.

    

    “Lease
      Agreements” shall have the meaning given such term in Section 8.3
      hereof.

    

    “Leases”
      shall have the meaning given such term in Section 1.1(a)(vi)
      hereof.

    

    “Lien”
      shall mean any lien, pledge, claim, charge, security interest, right of first
      refusal or other encumbrance, option or other rights of any third Person of
      any
      nature whatsoever.

    

    “Losses”
      shall mean Seller Losses or General Buyer Losses, as the case may
      be.

    

    “Material
      Adverse Effect” shall mean any change, circumstance or effect that, individually
      or in the aggregate with all other changes, circumstances and effects, is or
      could reasonably be expected to be materially adverse to the assets, business,
      operations or financial condition of Seller or the Business, other than adverse
      effects arising from events or conditions relating to the economy or the water
      or wastewater treatment plants industry in general and not disproportionately
      impacting the Transferred Assets or the results of operations and financial
      condition of the Business.

    

    “Names”
      shall have the meaning given such term in Section 7.11 hereof.

    

    “Permitted
      Liens” shall mean (a) liens or encumbrances created by this Agreement,
      (b) mechanics’, carriers’, workmen’s, warehousemen’s, repairmen’s or other
      like statutory liens arising in the ordinary course of business and securing
      obligations not yet due and not resulting from a breach, default or violation
      by
      Seller, (c) liens or encumbrances for Taxes or other governmental
      obligations not yet due and payable (without taking into account any extensions
      therefore), provided an appropriate reserve has been established therefore
      in
      the Financial Statements and (d) those Liens listed on Schedule 14.40.

    

    “Person”
      shall mean a corporation, an association, a partnership, a limited liability
      company, a trust, an organization, a business, an individual or a Governmental
      Entity.

    

    “Proprietary
      Information” shall mean collectively (a) the Seller’s Proprietary Rights and (b)
      any and all other information and material proprietary to the Seller, owned,
      possessed or used by the Seller, whether or not such information is embodied
      in
      writing or other physical form, and which is not generally known to the public,
      that (i) relates to financial information regarding the Business, including,
      without limitation, (y) business plans and (z) sales, financing, pricing and
      marketing procedures or methods of the Business or (ii) relates to specific
      matters concerning the Seller or the Business, including, without limitation,
      the identity of or other information regarding sales personnel or customers
      of
      the Seller.

    

    “Proprietary
      Rights” means all patents, inventions, shop rights, trade secrets, designs,
      plans, user manuals, including training documentation, computer software and
      programs, whether in source code or object code, including licenses related
      thereto, databases and compilations, whether machine readable or otherwise,
      specifications, flow charts and other work products used to design, plan or
      organize and develop any of the foregoing, confidentiality agreements,
      confidential information and other proprietary technology and similar
      information; all registered and unregistered trademarks, service marks, logos,
      corporate names, trade names and all other trademark rights; all registered
      and
      unregistered copyrights; and all registrations for, and applications for
      registration of, any of the foregoing, that are used in the conduct of the
      Business.

    

    “Purchase
      Price” shall have the meaning given such term in Section 1.3
      hereof.

    

    “Reference
      Balance Sheet” shall have the meaning given such term in Section 1.4(a)
      hereof.

    

    “Required
      Consents” shall have the meaning given such term in Section 3.3(a)
      hereof.

    

    “Retained
      Liabilities” shall have the meaning given such term in Section 1.5
      hereof.

    

    “Seller”
      shall have the meaning given such term in the preamble hereof.

    

    “Seller
      Losses” shall have the meaning given such term in Section 10.2
      hereof. 

    

    “Shareholders”
      shall have the meaning given such term in the preamble hereof.

    

    “Stone
      Flower” shall have the meaning given such term in Section 8.3
      hereof.

    

    “Subsidiary”
      shall mean, as to a Person, any corporation, partnership, limited liability
      company, joint venture, association or other entity or organization in which
      such Person owns (directly or indirectly) any equity or other similar capital
      interest (other than obligations under trade payables arising in the ordinary
      course of business of such Person).

    

    “Survival
      Period” shall have the meaning given such term in Article 11
      hereof.

    

    “Tax
      Returns” shall mean all returns, declarations, reports, statements and other
      documents of, relating to, or required to be filed in respect of, any and all
      Taxes, and the term “Tax Return” means any one of the foregoing Tax
      Returns.

    

    “Taxes”
      shall mean all federal, state, local, foreign and other taxes, charges, fees,
      duties, levies, imposts, customs or other assessments, including, without
      limitation, all net income, gross income, gross receipts, sales, use, ad
      valorem, transfer, franchise, profits, profit share, license, lease, service,
      service use, value added, withholding, payroll, employment, excise, estimated,
      severance, stamp, occupation, premium, property, windfall profits, or other
      taxes, fees, assessments, customs, duties, levies, imposts, or charges of any
      kind whatsoever, together with any interests, penalties, additions to tax,
      fines
      or other additional amounts imposed thereon or related thereto, and the term
      “Tax” means any one of the foregoing Taxes. 

    

    “Third
      Party Claims” shall have the meaning given such term in Section 10.4(b)
      hereof.

    

    “Trade
      Payables” shall mean those obligations of the Seller relating to the provision
      of goods and services to the Seller for the conduct of the Business in the
      ordinary course of business of the Seller that relate to the Transferred Assets
      and that are classified as Trade Payables and are shown on Seller’s financial
      statements delivered to Buyer.

    

    “Transferred
      Assets” shall have the meaning given such term in Section 1.1
      hereof.

    

    “Transferred
      Employees” shall have the meaning given such term in Section 6.1
      hereof.

    “WARN”
      shall have the meaning given such term in Section 3.14(f) hereof.

     

    MISCELLANEOUS

     

    Notices

     

    .
      All
      notices, requests, consents, directions and other instruments and communications
      required or permitted to be given under this Agreement shall be in writing
      and
      shall be deemed to have been duly given if delivered in person, by courier,
      by
      overnight delivery service with proof of delivery or by prepaid registered
      or
      certified United States first-class mail, return receipt requested, addressed
      to
      the respective party at the address set forth below, or if sent by facsimile
      or
      other similar form of communication (with receipt confirmed) to the respective
      party at the facsimile number set forth below:

     

    If
      to the
      Seller, DCCI

    
      	 	
              or
                the Shareholders, to:    

            	
                 
                M. Wayne Guy

            

    

                                17732
      Highland Rd.,
      Suite G-113

                                Baton
      Rouge, La.
      70810

                                (V)
      (225)
      753-7279

                                (F)
      (225)
      751-3867

    

    
      	 	
              Copies
                to:

            	
                 
                B. Michael Mauldin

            

    

                                Jones,
      Walker,
      Waechter, Poitevent,

                                  Carrere
&
Denegre
      L.L.P.

                                8555
      United Plaza
      Blvd., 5th Floor

                                Baton
      Rouge, LA
      70809

                                (V)
      (225)
      248-2034

                                (F)
      (225)
      248-3034

    

    
      	 	
              If
                to the Buyer, to:

            	
                DXP
                Enterprises,
                Inc.

            

    

                                7272
      Pinemont

                                Houston,
      Texas
      77040

                                Attn:
      David R.
      Little, CEO

                                (V)
      (713)
      996-4755

                                (F)
      (713)
      996-6570

    

    
      	 	
              Copies
                to:

            	
                 
                Gary A. Messersmith

            

    

                                Looper,
      Reed &
McGraw, P.C.

                                1300
      Post Oak Blvd.,
      Suite 2000

                                Houston,
      Texas
      77056

                                (V)
      (713)
      986-7216

                                (F)
      (713)
      986-7100

    

    or
      to
      such other address or facsimile number and to the attention of such other
      Person(s) as either party may designate by written notice. Any notice mailed
      shall be deemed to have been given and received on the third Business Day
      following the day of mailing.

    

    Assignment

     

    .
      Prior
      to the Closing Date, no party to this Agreement may sell, transfer, assign,
      pledge or hypothecate its rights, interests or obligations under this Agreement,
      except that the Buyer may assign its rights to any affiliate of the Buyer.
      Subsequent to the Closing Date, the parties may, from time to time, without
      the
      consent of the other parties hereto assign any or all of their respective rights
      (but not their obligations) under this Agreement. Notwithstanding the foregoing,
      no assignment of this Agreement or any of the rights, interests or obligations
      hereof by the Buyer shall relieve the Buyer of its obligations under this
      Agreement and, upon any such assignment occurring prior to the Closing, the
      representations, warranties, covenants and agreements contained in this
      Agreement shall be deemed to have been made by the Buyer’s assignee as well as
      by the Buyer. The Buyer and the Seller agree that in connection with any sale
      or
      other disposition or series of sales or dispositions of all or substantially
      all
      of such party’s assets to an affiliate of such party or any merger or
      liquidation of such party, the acquiring Person or other recipient of
      substantially all of such party’s assets, as the case may be, shall assume the
      obligations of such party under this Agreement. Such obligation shall apply
      to
      successive sales, dispositions, mergers and liquidations. 

     

    Successors

     

    .
      This
      Agreement shall inure to the benefit of, be binding upon and be enforceable
      by
      the parties hereto and their respective successors and permitted assigns. Each
      of DCCI and the Shareholders represents and warrants to the Buyer that (i)
      DCCI
      holds of record and owns beneficially one hundred percent (100%) of all of
      the
      issued and outstanding shares of stock of Seller, (ii) the Shareholders hold
      of
      record and own beneficially ninety eight and two tenths percent (98.2%) of
      the
      issued and outstanding shares of stock of DCCI, (iii) DCCI is not a party to
      an
      option, warrant, purchase right or other contract or commitment that could
      require DCCI to issue, sell, transfer or otherwise dispose of any stock of
      DCCI,
      (iv) this Agreement has been duly authorized by DCCI and is a legal, valid
      and
      binding obligation of DCCI and the Shareholders, enforceable against each of
      them in accordance with its terms, except as enforceability may be limited
      by
      applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
      from time to time in effect that affect creditors’ rights generally and by legal
      and equitable limitations on the availability of specific remedies.

     

    Entire
      Agreement

     

    .
      This
      Agreement and the Exhibits and Schedules hereto and the Disclosure Schedule
      constitute the entire agreement and understanding between the parties relating
      to the subject matter hereof and thereof and supersede all prior
      representations, endorsements, premises, agreements, memoranda communications,
      negotiations, discussions, understandings and arrangements, whether oral,
      written or inferred, between the parties relating to the subject matter hereof.
      This Agreement may not be modified, amended, rescinded, canceled, altered or
      supplemented, in whole or in part, except upon the execution and delivery of
      a
      written instrument executed by a duly authorized representative of each of
      the
      parties hereto.

     

    Governing
      Law

     

    .
      This
      Agreement shall be governed by and construed and enforced in accordance with the
      laws of the State of Texas without giving effect to choice of law
      principles.

     

    Dispute
      Resolution; Mediation; Arbitration.

     

    Except
      with respect to any dispute, breach or attempted breach arising out of or
      relating to this Agreement or the transactions contemplated hereby in respect
      of
      which a party or parties shall seek or be entitled to obtain specific
      performance or injunctive relief hereunder, any dispute arising out of or
      relating to this Agreement or the transactions contemplated hereby (including
      without limitation any questions regarding the existence, validity,
      interpretation or termination hereof) shall be resolved in accordance with
      the
      procedures specified in this Section 15.6, which shall be the sole and
      exclusive procedures for the resolution of any such disputes.

     

    Any
      dispute arising out of or relating to this Agreement or the transactions
      contemplated hereby shall first be submitted to mediation by a mutually
      acceptable mediator in a non-binding mediation after written notice by a party
      of such dispute. The fee of such mediator shall be paid one-half by the Seller
      and one-half by the Buyer.

     

    Any
      part
      of a dispute which is not resolved by mediation within sixty (60) days from
      the
      notice of such dispute provided under Section 15.6(b) shall be referred to
      and finally resolved by binding arbitration under the auspices and the then
      applicable Commercial Arbitration Rules of the American Arbitration Association
      (the “AAA”) as herein modified or supplemented or otherwise agreed to by the
      parties hereto. At any time, by express written agreement the parties may
      modify, limit the application of, add to or avoid the operation of one or more
      rules of the AAA.

     

    The
      arbitrator shall be selected in accordance with the rules of the AAA. The
      location of the arbitration proceedings shall be in Houston, Texas. The AAA
      shall arrange for a prehearing conference as soon as practicable after the
      appointment of the arbitrator. At the prehearing conference, the arbitrator
      shall set a hearing date, which shall commence not later than sixty (60) days
      after the prehearing conference.

     

    The
      parties agree that the arbitrator may call and question any witness, including
      any expert witness, and may require a party to produce any relevant documents
      or
      evidence prior to or at any hearing. The parties and the arbitrator shall
      proceed expeditiously so that the arbitral award is issued as soon as
      practicable. The arbitrator will be empowered to grant injunctive relief in
      the
      form of interim orders pending the outcome of the arbitration and in the final
      arbitral award. The costs, expenses and fees of a party incurred in connection
      with any arbitration proceeding shall be borne by that party. Costs, expenses
      and fees of the arbitrator shall be borne equally by the Seller and the Buyer,
      unless the arbitral award otherwise provides.

     

    Any
      award
      may, in the discretion of the arbitrators, include interest from the date of
      the
      breach or other violation of the Agreement until the award is fully paid.
      Judgment upon the award rendered by the arbitrator may be entered by any court
      having jurisdiction thereof. Judgment may be entered on the award of the
      arbitrators and may be enforced in any court having competent jurisdiction.
      Any
      additional costs, fees or expenses incurred in enforcing the arbitral award
      will
      be charged against the party that resists enforcement.

     

    Waiver

     

    .
      The
      waiver of any breach of any term or condition of this Agreement shall not be
      deemed to constitute the waiver of any other breach of the same or any other
      term or condition. No failure on the part of any party to exercise, and no
      delay
      in exercising, any right, power or remedy hereunder shall operate as a waiver
      thereof, nor shall any single or partial exercise of such right, power or remedy
      by such party preclude any other or further exercise thereof or the exercise
      of
      any other right, power or remedy. Each of Seller, DCCI and the Shareholders
      acknowledges and agrees that the breach of this Agreement would cause
      irreparable damage to Buyer and that Buyer will not have an adequate remedy
      at
      law. Therefore, the obligations of Seller, DCCI and the Shareholders under
      this
      Agreement, including Seller’s obligation to sell the Transferred Assets to
      Buyer, shall be enforceable by a decree of specific performance issued by any
      court of competent jurisdiction, and appropriate injunctive relief may be
      applied for and granted in connection therewith.

     

    Severability

     

    .
      Without
      limitation to the terms and provisions contained in Section
      7.8
      hereof
      and except as provided therein, any provision of this Agreement that is
      prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
      be ineffective to the extent of such prohibition or unenforceability without
      invalidating the remaining provisions hereof, and any such prohibition or
      unenforceability in any jurisdiction shall not invalidate or render
      unenforceable such provision in any other jurisdiction.

     

    No
      Third Party Beneficiaries

     

    .
      Any
      agreement contained, expressed or implied in this Agreement shall be only for
      the benefit of the parties hereto and their respective legal representatives,
      successors and permitted assigns, and such agreements shall not inure to the
      benefit of the obligees of any indebtedness of any party hereto, it being the
      intention of the parties hereto that no Person shall be deemed a third party
      beneficiary of this Agreement, except to the extent a third party is expressly
      given rights herein.

     

    Counterparts

     

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

     

    Headings

     

    .
      Each
      statement set forth in the Disclosure Schedule with respect to a particular
      section herein shall be deemed made with respect to such section and with
      respect to any other section hereof where such statement would be appropriate
      and the relevance of such statement to such other section is readily apparent.
      The Table of Contents and the headings of the Articles and Sections of this
      Agreement have been inserted for convenience of reference only and shall in
      no
      way restrict or otherwise modify any of the terms or provisions hereof or affect
      in any way the meaning or interpretation of this Agreement.

     

    Negotiated
      Transaction

     

    .
      The
      provisions of this Agreement were negotiated by the parties hereto, and this
      Agreement shall be deemed to have been drafted by all of the parties
      hereto.

     

    Negotiation
      with Others

     

    .
      The
      Seller agrees that from the date hereof until the Closing Date or the
      termination of this Agreement pursuant to Article 13, it will not, directly
      or
      indirectly, negotiate with any Person not a party hereto or not affiliated
      with
      a party hereto with respect to a merger, consolidation, asset purchase or any
      similar transaction with any such Person.

     

    

    [Signature
      page follows.]

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

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

    

    SELLER:

    

    DELTA
      PROCESS EQUIPMENT, INC.

    

    

    By:
      /s/
      M.
      Wayne Guy    

    M.
      Wayne
      Guy, President

    

    DCCI:

    

    DELTA
      COMPANIES CONSOLIDATED, INC.

    

    By:
      /s/
      M.
      Wayne Guy    

    M.
      Wayne
      Guy, President

    

    SHAREHOLDERS:

    

    

    /s/
      M.
      Wayne Guy    

    M.
      Wayne
      Guy

    

    

    /s/
      Brenda Guy     

    Brenda
      Guy

    

    

    BUYER:

    

    DXP
      ENTERPRISES, INC.

    

    

    By:
      /s/
      David R. Little    

    David
      R.
      Little, CEOTIMET Exhibit 10.1 Form 10-Q

    Exhibit
      10.1

    
 

    Portions
      of this Exhibit 10.1 have been omitted based upon a request for confidential
      treatment. This Exhibit 10.1, including the non-public information, has been
      filed separately with the U.S. Securities and Exchange Commission. “[*]”
designates portions of this document that have been redacted pursuant to the
      request for confidential treatment filed with the U.S. Securities and Exchange
      Commission.

    

    

    

    

    AGREEMENT
      DPC6709 For the Purchase and Supply of MATERIALS

    

    

    

    Between

    

    Rolls-Royce
      plc,

    

    Rolls-Royce
      Deutschland Ltd & Co KG,

    

    Rolls-Royce
      Canada Limited,

    

    Rolls-Royce
      Corporation

    

    and

    

    Titanium
      Metals Corporation,

    

    TIMET
      UK Limited

    

    and

    

    TIMET
      Savoie, S.A.

    

    

    

    

    

    
      
        
          

          DALLAS:
            589241.00000: 1585207v3

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    This
      Agreement referenced DPC6709 is made between ROLLS-ROYCE plc whose registered
      office is at 65 Buckingham Gate, London, SW1E 6AT, England (hereafter referred
      to as “R-Rplc”), ROLLS-ROYCE DEUTSCHLAND LTD & Co KG whose registered office
      is at Eschenweg 11, D-15827 Blankenfelde-Mahlow, Germany (hereafter referred
      to
      as “R-RD”), ROLLS-ROYCE CANADA LIMITED whose registered office is at 9500
      Cote-de-Liesse, Lachine, Quebec, H8T1A2, Canada (hereafter referred to as
      "R-RCAN") , ROLLS-ROYCE CORPORATION whose registered office is at PO Box 420,
      2355 South Tibbs Avenue, Indianapolis, Indiana 46206-0420, USA (hereafter
      referred to as “R-RC”) (“R-R” collectively or singularly as the case may be) and
      TITANIUM METALS CORPORATION whose registered office is at Three Lincoln Centre,
      5430 LBJ Freeway, Suite 1700, Dallas, Texas 75240, USA, on behalf of itself
      and
      its named subsidiaries herein, TIMET UK Limited whose registered office is
      at PO
      Box 704, Holford Way, Witton, Birmingham, B6 7UR, England and TIMET Savoie,
      S.A.
      whose registered office is at 62 avenue Paul Girod, 73400 Ugine, France , that
      sell materials to R-R or [*] (as defined below) pursuant to the terms of this
      Agreement, (hereafter referred to as the “Vendor” collectively or singularly as
      the case may be). The effective date of this Agreement is 1 January
      2007.

    

    R-R
      and
      the Vendor are referred to in this Agreement individually as a “Party” and
      together as the “Parties”.

    

    WHEREAS:

    

    
      	
              A)

            	
              R-R
                is in the business of manufacturing aerospace engines (including
                aero
                derivative gas turbines) that utilize a substantial quantity of titanium
                parts in various forms. The Vendor is a producer of titanium metal
                products.

            

    

    

    
      	
              B)

            	
              R-R
                and the Vendor are parties to a Purchase and Sale Agreement for the
                purchase and sale of titanium dated as of December 22, 1998 as amended
                by
                the First Amendment to Purchase and Sale Agreement dated as of November
                11, 1999 and the Second Amendment to Purchase and Sale Agreement
                dated as
                of December 31, 2003 (the “Prior LTA”). The Prior LTA terminates on
                December 31, 2008, and the Parties desire to terminate the Prior
                LTA as of
                the effective date of this LTA (as hereinafter defined), which shall
                replace and supersede the Prior
                LTA.

            

    

    

    
      	
              C)

            	
              R-R
                and the Vendor wish to co-operate in a strategic alliance addressing
                all
                areas relating to the purchase and supply of titanium metal products
                (hereinafter defined as “Materials”) to R-R, including without limitation,
                defining and measuring methods of schedule adherence and lead times
                consistent with meeting R-R’s customer needs, [*], and identifying and
                implementing opportunities for [*] which may [*] of Materials to
                R-R.

            

    

    

    
      	
              D)

            	
              In
                order to achieve long-term efficiencies in the purchase and supply
                of
                Materials by the Vendor to R-R directly, R-R and the Vendor have
                negotiated the terms to be applicable to direct purchases by R-R
                from the
                Vendor of Materials for end use by R-R in R-R aerospace applications,
                all
                as set forth in this LTA, including the GCP (as hereinafter defined
                and as
                modified herein), pursuant to which the Vendor has agreed to supply
                Materials at the pricing set forth in this LTA in return for the
                agreement
                of R-R to purchase from the Vendor [*] of Materials, all as set forth
                in
                this LTA.

            

    

    

    
      	
              E)

            	
              In
                addition, R-R and the Vendor desire to improve on these long term
                efficiencies by including within the scope of this LTA to the maximum
                extent possible, [*] to R-R (hereinafter defined as the [*]) that
                purchase
                titanium metal products for ultimate application in R-R end products.
                To
                this end, R-R and the Vendor desire to provide in this LTA a directed-buy
                mechanism for providing the pricing contained herein to those [*]
                that
                agree to purchase Materials from the Vendor pursuant to the terms
                and
                conditions of purchase to be agreed between Vendor and
                [*].

            

    

    

    
      	
              F)

            	
              The
                Parties therefore desire to enter into this LTA for the purchase
                and sale
                of Materials.

            

    

    

    IT
      IS
      THEREFORE AGREED AS FOLLOWS: 

    

    1. DEFINITIONS

    

    The
      terms
      set out below shall have the following meanings: -

     

    
      
        	
                “Associated
                  Company”

              	
                Means
                  an associated company (within the meaning of section 416 (1) of
                  the Income
                  and Corporation Taxes Act 1988) of R-R.

              
	
                “Base
                  Price”

              	
                Means
                  the base price for each Material as set out in Attachment
                  3.

              
	
                [*]

              	
                Means
                  the [*] that Vendor is required to supply to R-R and [*], taken
                  together,
                  on an annual basis under this LTA.

              
	
                “Buffer
                  Stock”

              	
                Means
                  an agreed level of Materials held and maintained pursuant to the
                  terms and
                  conditions of Clause 4.1.

              
	
                “Estimate
                  Year”

              	
                Means
                  the term defined in Clause 2.2.6.

              
	
                “GCP”

              	
                Means
                  R-R’s General Conditions of Purchase - Nov 2006 and attached hereto
                  as
                  Exhibit
                  1,
                  as modified by this LTA.

              
	
                [*]

              	
                Means
                  the term defined in Clause 2.2.6.1.

              
	
                “Lead
                  Time”

              	
                Means
                  the agreed period of time from the ordering to supply of specific
                  Materials as set out in Attachment 1.

              
	
                “LTA”

              	
                Means
                  this long term agreement.

              
	
                “Materials”

              	
                Means
                  the titanium metal products to the specifications identified in
                  Attachment
                  1. References to “Material” hereunder shall refer to individual Materials.
                  

                 

              
	
                [*]

              	
                Means
                  the [*] that Vendor is required to supply to R-R and [*], taken
                  together,
                  on an annual basis under this LTA.

              
	
                [*]

              	
                Means
                  [*] that R-R and [*], taken together, are required to purchase
                  on an
                  annual basis under this LTA. 

              
	
                “Orders”

              	
                Means
                  the term as defined in the GCP. 

              
	
                “Price
                  Payable”

              	
                Means
                  the Base Price as amended by Clause 3 below.

              
	
                “Prior
                  LTA”

              	
                Means
                  the term defined in Recital B.

              
	
                “Quarterly
                  Reviews”

              	
                Means
                  the mechanism for R-R and the Vendor to review the Parties’ performance
                  approximately once each calendar quarter or on such interval as
                  the
                  Parties may otherwise agree. 

              
	
                “Revert”

              	
                Means
                  certified and auditable by-product of titanium metal products.
                  

              

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      
        	
                “R-R
                  Requirements”

              	
                Means,
                  for any given [*] of all Materials purchased (in [*], either by
                  R-R
                  directly from a titanium producer, or indirectly by R-R or [*]
                  through a
                  chain of [*], in either case to be used to manufacture parts or
                  assemblies
                  for use in R-R aerospace products, but excluding (i) Materials
                  excluded
                  pursuant to Clauses 2.3.1 and 2.3.2 and (ii) [*]. Such volume requirements
                  shall be calculated based upon the actual weight and form of titanium
                  metal first sold by a titanium manufacturer (but without duplicating
                  volumes purchased in different forms in multiple transactions prior
                  to use
                  by R-R), unless such shipped product is [*], in which case the
                  measurement
                  shall be the weight of the [*]. 

              
	
                “[*]”

              	
                Means
                  [*] hereunder as set out in Attachment 2A.

              

      

    

    

    All
      other
      capitalised terms used herein and without definition shall bear the same meaning
      as defined with GCP. The GCP (as modified by this LTA) applies only to direct
      purchases by R-R and shall have no application to purchases by, and sales to,
      the [*]. References to “this Agreement” in the GCP shall be interpreted to mean
      the GCP and this LTA. In the event of a conflict between the terms and
      conditions of this LTA and the terms of the GCP, the terms and conditions of
      this LTA shall control. For the avoidance of doubt, Materials as defined herein
      shall have the same meaning ascribed for Deliverables as defined in the GCP.
      

     

    2. APPLICATION

     

    2.1         
      This
      LTA
      applies to all Orders placed by R-R and/or purchase orders from [*], as
      applicable, with the Vendor and accepted by the Vendor (subject to the terms
      of
      Clause 2.1.2) for the purchase and supply of Materials scheduled for delivery
      during the 10 (ten) year period commencing on 1st
      January
      2007 and ceasing on 31st
      December
      2016 (hereafter referred to as the “LTA Term”) provided that the Vendor meets
      its supply obligations for Materials over the LTA Term. 

     

    
      	 	 	 	
              2.1.1

            	
              R-R
                shall inform [*] of the existence of this LTA, and, subject to compliance
                with the terms and conditions established between the Vendor and
                [*] in
                accordance with Clause 2.4, [*] may also place purchase orders with
                the
                Vendor for the purchase and supply of Materials at the Base Prices
                as
                adjusted in accordance with Clause 3. Materials purchased by [*]
                hereunder
                must be incorporated into R-R end products.

            

    

    

    2.1.2           
      The
      Vendor must send acceptance or a notice of objection (only upon grounds
      permitted by Clause 2.3 below) within thirty (30) days of receiving each Order
      (or purchase order if from [*]); provided such Order or purchase order is placed
      within the forecasted volumes provided to the Vendor by R-R in accordance with
      Clause 2.2.6 and otherwise conforms to the requirements of this
      LTA.

    

    2.1.3          
       
      The
      Vendor further agrees to adhere to the applicable vendor performance
      requirements of the latest version of the R-R Supplier Advanced Business
      Relationship (SABRe) document; provided that, if any amendment to SABRe [*],
      if
      any, of such amendment [*].

     

    2.2     
       For
      the
      duration of the LTA Term:

    

    2.2.1       
      [*].
      If
      the [*] in any calendar year is not purchased, [*]. The Vendor shall review
      its
      order book each calendar quarter and if the Vendor believes there will be a
      [*],
      the Vendor will notify R-R of [*] and confer with R-R on potential methods
      [*]
      in the remainder of the calendar year. The amount of [*] shall be determined
      as
      of [*], and the Vendor [*] of the following year for [*] pursuant to this Clause
      2.2.1. R-R shall [*] in accordance with the standard terms of payment under
      this
      LTA. If [*], R-R may elect to [*], with the exception of [*], in which case,
      [*]
      by the Vendor.

    

    2.2.2       
      The
      [*]
      during
      the initial [*]
      of
      the LTA Term commencing [*]. The [*] for the remainder of the LTA Term,
      [*].

    

    2.2.2.1 During
      any calendar year of the LTA Term, the [*]. The [*] will be increased by [*]
      upon R-R approval and qualification of each initiative set forth in Attachment
      9A. The [*] is also subject to the limitation that the Vendor is not required
      to
      supply more than [*] following the approval and qualification of the Attachment
      9A initiatives) from the Vendor’s European facilities and [*] from the Vendor’s
      U.S. facilities. The [*] upon R-R approval and qualification of each initiative
      set forth in Attachment 9B in the incremental amounts that correspond to each
      such initiative. The [*] from the geographic location at which such initiatives
      are approved and qualified.

     

    2.2.3       
      During
      the LTA Term, R-R shall be required to purchase the following volume
      requirements expressed as a percentage of the total of all R-R Requirements
      for
      such Materials:

    

    
      	 	
              2.2.3.1

            	
              [*]
                of the annual R-R Requirements for the following titanium Materials.
                

            

    

    

    (i) [*]
      for
      all existing R-R engine programmes as detailed in Attachment 3 as well as all
      [*] developed during the LTA that are not produced using [*]; and

     

    (ii) [*]
      for
      all existing R-R engine programmes as detailed in Attachment 3 as well as all
      [*] developed during the LTA Term; and 

                  
      

                    (iii) The
      Vendor’s alloys identified commonly as [*]. The Parties will use reasonable
      efforts to [*]; and 

              
      

                   
      (iv) [*]
      required for [*] engine programme over a
      three
      year period commencing on [*].

    

    2.2.3.2 At
      least
      [*] of the annual R-R Requirements for [*] Material as well as at least [*]
      of
      all [*] developed during the LTA that are not produced using [*]; and

    

    2.2.3.3
      At least [*] of the total of the annual R-R Requirements for [*]
      Materials.

    

    2.2.4           Commencing
      [*] and on [*] of each subsequent calendar year for the LTA Term, R-R [*] for
      the preceding calendar year. In the event that the Vendor reasonably believes
      that such [*], the Vendor may [*] in support of such [*] and the Parties will
      confer to discuss R-R’s [*]. If the Vendor is not reasonably satisfied with [*],
      the Vendor may require that the R-R Requirements for such year [*].

    

    2.2.4.1
      For the purpose of determining when Material is purchased under this LTA,
      Material shall be deemed to have been purchased in [*] as agreed between R-R
      or
      [*] and the Vendor (regardless of whether [*] during such year). 

    

    2.2.4.2
      If the amount set forth by R-R in [*] of R-R Requirements sent to Vendor
      pursuant to Clause 2.2.4 is incorrect by [*] of this LTA Term, and R-R has
      not
      purchased the volume of Materials that it is otherwise required to purchase
      under this LTA in such year, then R-R will be required to [*]. The Parties
      will
      work together in connection with the R-R requirement to [*] by [*] or exploring
      other alternatives.

    

    
      	 	
              2.2.5

            	
              Attachment
                7 sets forth the [*] Lead Times for the Material by product. From
                time to
                time, the Vendor will supply R-R and [*] with the Vendor’s current Lead
                Time for such Material, [*] as set forth on Attachment 7. Orders
                from R-R
                and purchase orders from [*] of the [*] may be placed subject to
                the then
                current Lead Time.

            

    

    

    2.2.6       No
      later
      than [*] of each year (the “Estimate Year”) R-R shall provide the Vendor with a
      forecast of its Materials requirements for the following [*], expressed in
      type
      of [*] of R-R Requirements [*], and [*]. [*], R-R can [*] of the [*] volume
      (based upon the order book at that time) provided that the [*] by [*] of the
      Estimate Year (i.e. by [*] to increase [*] over [*]) (such [*] is referred
      to
      herein as the [*]). In connection with the [*], R-R can [*] by a [*]
      (based on the order book at such time)
      (the
      [*]).

    

    2.2.6.1      
      Commencing
      in [*] and [*], in addition to the [*], R-R can [*] of the [*] with [*]
      (provided such notice is accompanied by the applicable Orders) (such [*]
      referred to herein as the [*]). In connection with the [*] will be a [*] the
      [*]
      (based upon the order book at such time). The [*] shall be pro-rated for any
      of
      the year unavailable due to such advance written notice to ensure [*] can be
      incorporated into the Vendor’s production schedule in an orderly manner;
      provided that, subject to available capacity and planned maintenance, [*].
      

    

    
      	 	
              2.2.6.1.1

            	
              For
                the avoidance of doubt, the [*] the prior year’s volume (based upon the
                order book at such time), consisting of a [*] in the
                [*].

            

    

    

    2.2.6.2      The
      delivery dates requested for Orders or [*] submitted as part of the [*] provided
      under this Clause 2.2.6 shall be scheduled on a [*] throughout the calendar
      year
      to incorporate deliveries into the Vendor’s production schedule in an orderly
      manner. 

    

    2.2.6.3        
      If
      the
      volume forecast for any given year is [*] an amount permitted by the [*], the
      Vendor agrees to [*], in its discretion, for the Material subject
      to [*]. 

    

    2.2.6.4       
      Commencing
      in [*] shall not [*] of the total R-R Requirements in any [*]. The Parties
      shall
      use the forecasts described in Clause 2.2.5 to monitor the Vendor’s supply of
      [*], and to adjust the supply of such Material in the event the [*] is reached.
      If R-R is purchasing [*] equal to the [*] and the Vendor has not increased
      its
      [*] capacity, [*] until such time as the Vendor has the ability to supply the
      additional required [*]. On notice from the Vendor of such ability, R-R will
      be
      subject to the [*] on [*] from the Vendor following a period of no longer than
      [*]. At each quarterly review the status of the Vendor’s production capacity for
      [*] will be reviewed to permit as much time as possible for R-R to notify
      [*].

    

    2.2.6.5     
      Materials
      for use in [*] applications (such as [*]) will not be subject to compliance
      with
      the [*] during the first [*]. Such Materials, however, must be included in
      the
      R-R annual forecast and [*] for such Materials shall [*] that is consistent
      with
      the past historical practices between the Parties.

    

    2.2.6.6      The
      parties agree that it is not their intention to allow R-R to change its annual
      purchase volume of [*] for the primary purpose of reducing [*] by taking
      advantage of [*].

    

    2.3          
      In
      consideration of R-R’s agreement to purchase the [*] requirements set forth in
      Clause 2.2.3, the Vendor agrees to accept all Orders placed by R-R and [*]
      for
      Materials in accordance with this LTA, except as follows:

    

    
      	 	
              2.3.1

            	
              Any
                amount of [*] (subject to the Vendor agreeing to [*] pursuant to
                Clause
                2.2.6.3).

            

    

    

    
      	 	
              2.3.2

            	
              Any
                amount of [*] Clauses 2.2.6, 2.2.6.1, 2.2.6.2, 2.2.6.4, or 2.2.6.5.
                

            

    

    

    
      	 	
              2.3.3

            	
              Any
                Order or purchase order placed for [*] for such
                Material.

            

    

    

    In
      the
      event that the Vendor rejects an Order and/or [*], as applicable, pursuant
      to
      Clause 2.3.1 or Clause 2.3.2, the Materials in such Order and/or purchase order,
      as applicable, shall be [*] with Clause 2.2.3 for the purchase of R-R
      Requirements, and R-R (or a [*], as applicable) [*]. 

    

    
      	 	
              2.4

            	
              The
                [*] agreed by the Vendor and R-R as qualified to be [*] under this
                LTA are
                listed hereto on Attachment 2A and Attachment 2B. Upon execution
                of this
                LTA, all such Parties shall be deemed [*] under the terms of this
                LTA as
                follows:

            

    

    

    
      	 	
              2.4.1

            	
              For
                the purpose of qualifying [*] (as defined in the Prior LTA) under
                the
                Prior LTA, until such time as each [*] has executed documentation
                reasonably satisfactory to the Vendor, the provisions on [*] will
                be the
                only governing terms for [*], and the other terms and conditions
                of
                purchase for Materials hereunder will be those set forth in Exhibit
                A, the
                Common Terms, and Schedule 3, the Terms and Conditions, of the Prior
                LTA.
                In addition, the Vendor commits to R-R that in the event the Vendor
                is
                unable to reach agreement with [*] on the terms of a [*] between
                the
                Vendor and [*], the Vendor will agree to sell to [*] on terms not
                materially different from those contained in the Common Terms and
                the
                Terms & Conditions of the Prior
                LTA.

            

    

    

    
      	 	 	 	
              2.4.2

            	
              For
                the purpose of qualifying [*] listed on Attachment 2A or Attachment
                2B who
                were not Purchasers under the Prior LTA into the [*] under this LTA,
                until
                such time as each [*] has executed documentation reasonably satisfactory
                to the Vendor, the provisions on [*] will be the only governing terms
                for
                [*], and the other terms and conditions of purchase for Materials
                hereunder will be those set forth in Exhibit A, the Common Terms,
                and
                Schedule 3, the Terms and Conditions, of the Prior LTA. In addition,
                the
                Vendor commits that in the case where [*] is already an [*] of the
                Vendor
                with respect to any Material, the Vendor will continue to sell to
                such
                supplier on terms not materially different from those upon which
                it is
                currently selling to [*]. 

            

    

    

    
      	 	
              2.4.3

            	
              The
                Vendor further agrees that [*] designated by R-R to be a [*] shall
                be
                acceptable by the Vendor provided
                that:

            

    

    

    (i) [*]
      provides a written agreement to the Vendor, in form and substance reasonably
      satisfactory to the Vendor, that it will comply with the terms of
      confidentiality of this LTA and will only use Material purchased hereunder
      for
      R-R use.

    

    (ii) The
      Vendor shall have established credit arrangements for [*] in accordance with
      the
      Vendor’s standard credit practices, or[*].

    

    (iii) [*]
      agrees to terms and conditions of purchase reasonably satisfactory to the Vendor
      for the purchase of Materials hereunder, or in the alternative, terms not
      materially different from those contained in the Common Terms and the Terms
      and
      Conditions of the Prior LTA.

    

    
      	 	
              2.4.4

            	
              In
                the event of a conflict between the terms and conditions of this
                LTA and
                the terms and conditions applicable to [*] the terms of this LTA
                shall
                control; provided, however, that all of Clauses 4-7 hereof and the
                GCP
                shall have no application to and shall not be enforceable by
                [*].

            

    

    

    2.5          
      In
      the
      event that the nomenclature of Material specifications changes during the LTA
      Term, the Parties will work together to amend Attachment 1 to reflect such
      changes as appropriate. 

    

    

    3. PRICE
      AND COST REDUCTION

    

    3.1          
      R-R
      and
      the Vendor have agreed a Base Price for each Material. 

    

    3.2          
      The
      Price
      Payable for any Material shall be equal to the Base Price and the adjustments
      made in accordance with this Clause 3. The Price Payable for Materials on each
      anniversary of this LTA will be the Base Price for the subsequent year.

    

      
      3.3             
Base
      Prices each year are adjustable to the Price Payable as described in this Clause
      3 using the methodologies set forth for the respective calendar year
      on    

                         
      Attachment 4. For the avoidance of doubt, the [*]. 

    

    3.4         
      The
      Base
      Prices at the commencement of this LTA and for [*] are as set forth in
      Attachment 3 and are [*]. From [*] and until the expiry of this LTA, the Base
      Prices will be subject to [*] adjustment where a [*] price adjustment [*]
      mechanism shall be applied on [*] of this LTA to the then Price Payable in
      accordance with the following:

    

    3.4.            
      For
      prices [*], the Base Prices for all [*] Material shall be [*] and, if the
      Formula as set out in Attachment 4 is in [*] will be [*] and the Price Payable
      for the [*] Materials will be adjusted accordingly. [*] Material shall have
      the
      Base Price set forth for each item of [*] Material on Attachment 5, subject
      to
      Clause 3.8.

    

    3.4.2           For
      the
      Base Price over a [*] ending 31st
      December
      2016 (being the due date for expiry of this LTA) if the Formula as set out
      in
      Attachment 4 hereto determines an adjustment to the then Base Price, then the
      Price Payable for the Materials shall be adjusted [*].
      The
      Price Payable will not be adjusted for the subsequent [*]
      as
      determined by the Formula. Thereafter, any resultant changes in [*]
      will be
[*]
      and the
      Price Payable for the Materials will be adjusted accordingly.

    

    Notwithstanding
      any provisions to the contrary, if [*] of Materials are [*], then the Price
      Payable for such Materials shall [*]. In the event that [*] of Materials are
      [*], the Price Payable for Materials shall be [*].

    

    3.5      
      The
      Parties have agreed to the following terms related to exchange
      rates:

    

    3.5.1      
      From
      time
      to time, R-R may request that Material denominated on the price lists of
      Attachment 3 in Great British Pounds (GBP) or United States Dollars (USD) be
      converted to another currency. Except as provided in Clause 3.5.2, the Parties
      shall convert from GBP or USD to another currency using an exchange rate equal
      to the [*] (or such substitute [*] that the Parties may reasonably agree).
      

    

    
      	 	
              3.5.2

            	
              For
                [*] Material, TIMET and R-R have agreed to [*] for the term of the
                LTA to
                convert the currency for prices for such Material. The Parties agree
                to
                review the [*] to determine whether to apply [*] Material. Neither
                party
                shall be under any obligation under this LTA, however, to agree whether
                to
                apply [*] for currency conversion for the prices of such
                Materials.

            

    

     

    3.6         
      The
      Parties agree to use [*] to pursue the joint formulation, development, and
      implementation of initiatives intended [*] and thereby result in [*] for
      Materials and [*] to all R-R and [*], including, without limitation, initiatives
      related to [*] (collectively, “Value Improvement Initiatives”). The Parties
      agree to work in good faith toward the successful implementation of such Value
      Improvement Initiatives and the [*] of the resultant benefits ([*]). In this
      regard, the Vendor agrees that it will not [*] any such Value Improvement
      Initiative proposed that is established to be [*] and likely to produce a [*]
      to
      the Vendor. 

    

            
      3.6.1   The
      Parties agree that except as provided below, the initiatives referenced on
      Attachment 9A and Attachment 9B hereof are intended to enable the Vendor

                            
      to satisfy
      its supply obligations hereunder and that such initiatives are not intended
      to
      be Value Improvement Initiatives. The Parties further agree, 

                            
      however, that the
      initiative described on Attachment 9B [*] is intended to be a Value Improvement
      Initiative. 

    

    3.7         
      The
      Vendor shall provide to R-R sufficient information to allow R-R to evaluate
      [*]
      for Material processes and equipment (including but not limited to, [*]) used
      by
      the Vendor in evaluating Value Improvement Initiatives under this LTA. Such
      [*]
      information will be provided by a [*] as may be reasonably agreed by R-R and
      the
      Vendor. 

    

    3.8          
      Commencing
      on [*] and each corresponding [*] period thereafter, the Base Prices for ingot
      Materials are subject to R-R providing [*] of its [*] back to the Vendor in
      the
      form of [*]. In the event R-R provides [*], the Vendor will have to acquire
      [*]
      in the market. The Base Prices for [*] will therefore be adjusted for the [*]
      of
      any [*]. The adjusted price will remain in effect until R-R provides the [*]
      required under this Clause 3.8.  The
      methodology to adjust the price [*] is set forth on Attachment 5. For the
      avoidance of doubt, there is no [*] In addition, the Base Price for [*] Material
      will not be subject to the index adjustment mechanism of Clause 3.4.1 for [*],
      but in [*], Base Prices for [*] Material will be subject to the adjustments
      of
      Clause 3.4.2 and Clause 3.4.3 as well as this Clause 3.8. 

     

    3.9          R-R
      will
      supply the [*] Revert (“[*]”) required to produce [*] identified by
      specification [*] ordered during the term of this LTA (“[*]”). The ratio
      required for the supply of [*]
      for
      each pound of [*] purchased by R-R and [*], is different for facilities in
      the
      U.S. and the U.K. and is set forth for each of the U.S. and U.K. facilities
      in
      Attachment 8. From [*], the Vendor will pay R-R [*] Revert (shipping terms
      are
      [*] INCOTERMS 2000). For [*] thereafter, the price for [*] Revert shall be
      adjusted effective [*] of each year by applying the formula of Clause 3.4.3
      applicable for such Material in such year. 

    

    
      	 	
              3.9.1

            	
              The
                price for [*] will be the Price Payable produced by operation of
                Clause
                3.4 as long as a required ratio of [*] is sold by R-R to the Vendor.
                In
                the event R-R fails to sell to the Vendor the required ratio of [*]
                Revert
                set forth above, R-R shall bear the expense adjustment to account
                for the
                [*] suitable to make the [*] in accordance with Clause
                3.9.2.

            

    

    

    
      	 	
              3.9.2

            	
              In
                the event that the Vendor is required to acquire suitable replacement
                [*]
                in the open market to make up any shortfall, the [*] shall be made
                based
                upon [*] of such [*] acquired by the Vendor and shall be payable
                as
                follows: 

            

    

    

    
      	 	
              3.9.2.1

            	
              R-R
                will pay the Vendor an amount calculated by multiplying (a) the
                difference between the price payable hereunder by the Vendor to R-R
                for
                the [*] and the [*] by (b) the volume of [*] purchased by Vendor
                under
                this Clause to make up for any R-R shortfall. If the amount of the
                adjustment required by this Clause is [*]. If the amount of this
                adjustment is [*], the Parties will [*] Material for the [*] as follows:
                

            

    

    

    (i) Based
      upon the forecast information available on [*], TIMET will prepare a provisional
      calculation estimating the price (and the applicable price adjustments of Clause
      3.4) for [*] for the [*], which estimate shall include the [*] (i.e. by [*]
      for
      the provisional price for [*]).

    

    (ii) By
      [*],
      based upon actual information available at that time for [*] supplied and [*]
      Material actually purchased and scheduled to be purchased during the current
      year, TIMET will provide the adjusted [*] price to apply for the
      [*].

    

    (iii)By
      [*] of
      each year (commencing in [*]), the Parties will reconcile the information from
      the preceding year used to prepare the estimated [*] with the actual [*]
      supplied and [*] Material purchased in the [*] in order to
      determine the actual amount owed. Any amount outstanding shall be [*] by the
      Vendor to R-R.

    

    
      	 	
              3.9.3

            	
              Any
                currency conversion from USD to GBP required by Clause 3.9.2 shall
                use [*]
                set forth in Clause 3.5.2 hereof. 

            

    

    

    
      	 	
              3.10

            	
              Commencing
                in [*] thereafter until expiry or earlier termination of this LTA,
                the
                price for [*] Material (excluding [*] Material as identified in Attachment
                3) shall be based upon an estimated [*] price which [*] purchased
                at the
                Price Payable determined in accordance with Clause 3.4 in the [*]
                and (ii)
                [*] at the price for such Material determined in accordance with
                the
                formula on Attachment 6. The Parties will confer by [*] to reconcile
                actual shipments of [*] in the [*] to the forecasted [*] to balance
                the
                amount actually owed compared to the amount paid pursuant the estimated
                [*] price in the [*]. The amount resulting from the reconciliation
                shall
                be [*] by the Vendor to R-R. 

            

    

    

    3.11           
      The
      delivery terms for Materials manufactured in the UK and delivered to the UK
      or
      manufactured in the US and delivered to the US will be [*] (Incoterms 2000)
      except for [*] which will be [*] (Incoterms 2000). The delivery terms for
      Materials to be delivered outside the country of manufacture will be [*]
      (Incoterms 2000). The delivery terms for [*] Chain shall be in accordance with
      terms agreed to separately by the Vendor and [*].

    

    3.12           
      The
      Vendor will prepare a provisional price list for R-R for planning purposes
      only
      by the [*] for the [*]. Such price list shall be an estimate only that is based
      on provisional data from the [*] for the price formulas and estimates of [*]
      supply based upon the Vendor’s order book. On or prior to [*], upon finalisation
      of the [*] data for the Formulas, the Vendor will prepare the final price list
      for the [*]. In the event any Party finds a mistake in the calculations provided
      by the final price list, such Party shall notify the other Party as soon as
      possible with an explanation of the error, and the Vendor will correct the
      effected price. The Parties will work in good faith to make the appropriate
      equitable adjustment to any mistaken calculation.

    

    3.13            R-R
      acknowledges that the pricing contained in this LTA is based on the [*] process
      for [*] Materials by [*]. Accordingly, the Parties agree that if such
      qualification is not achieved by such date, the Parties will meet by [*] to
      renegotiate an increase in the Base Price for such [*] Materials. 

    

    R-R
      further agrees to approve and qualify the Vendor’s [*] through [*] as
      follows:

    

    
      	 	 	 	
              (i)
                for [*] Materials on the [*], and 

            

    

    

    
      	 	 	 	
              (ii)
                for [*] Materials by [*].

            

    

    

    If
      R-R
      uses [*] to seek such qualification and the Vendor and R-R decide such
      qualification is [*], there shall be no consequence under this LTA to achieve
      such qualification. If such qualification is not achieved in the above
      timescales, for [*], the replenishment rate for [*] Materials held in any of
      the
      Buffer Stocks under Clause 4.1 shall change to [*] for all purposes until such
      qualification is achieved or an alternate production route is achieved for
      [*]
      Materials. If the [*] Materials for the [*] is substantially delayed past [*]
      the Parties agree to explore approval of the [*] or an alternate for existing
      [*] Material.

     

    

    4. PROGRAMME

       

    4.1 The
      Parties hereby agree to the following terms with respect to the Buffer
      Stock:

    

    
      	 	
              4.1.1

            	
              The
                Vendor shall create and maintain a Buffer Stock (the “Vendor Buffer
                Stock”) comprised of a [*] Materials in amount equal to a [*] based upon
                the forecast provided by R-R on [*] (i.e. the [*] forecast will be
                used to
                establish the quantity and composition of the Vendor Buffer Stock
                to be
                maintained throughout 2008). The initial Vendor Buffer Stock shall
                be
                filled by [*].

            

    

    

    
      	 	
              4.1.2

            	
              [*].

            

    

    

    
      	 	
              4.1.3

            	
              The
                Parties agree that the purpose of the respective Buffer Stocks is
                to
                provide additional Materials in the event of [*]. Withdrawals from
                the
                Vendor Buffer Stock shall be limited to [*]. Withdrawals from the
                [*] will
                be permitted when R-R requires Materials in [*]. If Vendor experiences
                late deliveries and Materials are not available from the [*] because
                the
                Materials have been withdrawn for reasons other than [*], Vendor
                shall
                have [*] so long as Vendor complies with the replenishment requirements
                set forth in Clause 4.2 below.

            

    

    

    
      	 	
              4.1.4

            	
              The
                specific locations, quantities and product mix of the Vendor Buffer
                Stock
                and [*] shall be agreed in writing and reviewed by the Parties at
                least
                [*].

            

    

    

    
      	 	
              4.1.5

            	
              Title
                to the [*] Materials held at the Vendor’s facilities within the UK shall
                vest in [*] for such Material. Title to all [*] Materials and all
                Vendor
                Buffer Stock Materials shall remain with Vendor until title passes
                to R-R
                in accordance with Clause 3 of the GCP. Vendor shall bear risk of
                loss in
                all Buffer Stock Materials until risk of loss passes to R-R in accordance
                with Clause 3 of the GCP.

            

    

    

      
      4.2          Replenishment
      of all Buffer Stock Materials shall be based upon a rate of [*]. If Buffer
      Stock
      Materials are withdrawn from the [*] for a reason other than a [*],

                     
      replenishment will be based upon a rate of [*].

     

    4.3              
      R-R
      and
      the Vendor will create a working team who will meet at each Quarterly Review
      to
      review the Parties’ performance. Such Quarterly Reviews will cover QCDR (as
      defined in SABRe) metrics, contract management and performance of obligations
      and such other information as is relevant and appropriate for the purchase
      and
      supply of the Materials.

    

    5. TERMINATION

    

    5.1          
      Each
      Party shall have the right, without prejudice to its other rights and remedies,
      to terminate this LTA in whole or in part without incurring any liability,
      if
      the other Party commits any material breach of any of its obligations under
      the
      LTA which it fails to rectify within [*] of written notice of that breach from
      the non-breaching Party. 

     

    5.2         
      Each
      Party shall have the right, without prejudice to its other rights and remedies
      at law or in equity, to terminate this LTA forthwith by written notice without
      incurring liability if the other Party makes a general arrangement with its
      creditors or ceases or threatens to cease to carry on its business or a
      substantial part of it or is unable to pay its debts within the meaning of
      Section 123 of the Insolvency Act 1986 or any statutory modification or
      re-enactment thereof or enters into liquidation whether compulsory or voluntary,
      except as a solvent company for the purposes of amalgamation or reconstruction
      or has an administrator or administrative receiver of the whole or part of
      its
      assets appointed or (not being a company registered in England) carries out
      or
      becomes subject to actions or proceedings, which, within the jurisdiction to
      which it is subject, are similar in nature or effect to those specified in
      this
      Clause 5.2.

     

    5.3       The
      termination of this LTA shall not affect the rights and obligations of the
      Parties with respect to any Order (or [*])
      outstanding as of the effective date of such termination (and, if applicable,
      the expiration of the period set forth in Clause 6.1) to the extent that the
      production or delivery of Material covered by such Order (or [*])
      is
      still in process. The provisions of Clauses 6.1, 6.2 of this LTA and Clause
      27
      of the GCP shall survive termination of this LTA.

    

    6. CONTINUATION
      OF SUPPLY

    

    6.1              
      Without
      prejudice to R-R’s other rights and remedies, if R-R has cause to terminate this
      LTA in whole or in part, then the Vendor shall continue to be obligated to
      accept further Orders in accordance with Clause 2 above at the then current
      Price Payable until the earlier to occur of (i)
      [*]
      from the
      date of termination pursuant to Clause 5.1 or (ii) [*].
      

    

    6.2             
      In
      the
      event of a termination as per Clause 5, the Vendor shall cooperate with R-R
      in
      the development by R-R, or any Associated Company, of an alternative source
      for
      Materials as reasonably requested by R-R. 

    

    6.3              
      The
      Vendor shall, so far as it is reasonably able, include provisions in its
      contracts with its sub-contractors which are equivalent to those of this Clause
      6.

    

    7. MISCELLANEOUS
      PROVISIONS 

    

    
      	 	
              7.1

            	
              This
                LTA, together with the attachments, schedules and exhibits hereto
                (including, without limitation, the GCP, and any subsequent amended
                or
                restated attachments, schedules or exhibits), each of which are hereby
                incorporated into this LTA by reference, and together with all purchase
                orders (to the extent accepted by the Vendor pursuant to this LTA),
                set
                forth the entire agreement between R-R and the Vendor with respect
                to the
                subject matter hereof, and supersede any and all other prior agreements
                and understandings between R-R and the Vendor with respect to such
                matters, including but not limited to the Prior LTA (except for those
                terms of the Prior LTA that will continue to apply to [*]). To the
                extent
                any Orders, purchase orders, order acknowledgements, invoices or
                other
                document exchanged between the Parties (or with the [*]) contains
                terms
                additional to or inconsistent with this LTA or the GCP, the other
                party
                shall be deemed to have objected to such additional or inconsistent
                terms
                and they shall not become part of any contract or obligation, whether
                or
                not material, unless the other party shall expressly agree to such
                terms
                in writing.

            

    

    

    
      	 	
              7.2

            	
              The
                Parties acknowledge that they have equal bargaining power in relation
                to
                the terms of this LTA and agree that each of its clauses and sub-clauses
                are reasonable.

            

    

    

    
      	 	
              7.3

            	
              The
                Parties shall each be responsible for complying with all laws, including
                without limitation, any statute, rule, regulation, judgment, decree,
                order, or permit, applicable to its respective performance under
                the
                LTA.

            

    

    

    
      	 	
              7.4

            	
              Either
                Party is permitted to disclose information about this LTA or any
                provisions thereof that are required under applicable laws and
                regulations. In connection with such disclosure, the Parties shall
                ensure
                reasonable protection is given to either Party’s proprietary or
                confidential information. In addition, the disclosing Party shall
                advise
                and consult with the other Party prior to any such disclosure so
                that it
                may seek a protective order or other appropriate remedy. If such
                protective order or other remedy is not obtained a Party will disclose
                only that portion of the information which is legally required. Any
                disclosure made in accordance with the provisions of this Clause
                7.4 shall
                not be regarded as a breach of the obligations of this LTA. In addition
                to
                the exceptions in Clause 12.2 of the GCP, confidential or proprietary
                information will not include information that (i) was in the lawful
                possession of the receiving Party without confidentiality restrictions
                prior to this LTA, (ii) is or becomes available to the receiving
                Party on
                an unrestricted basis from a source having a right to make such disclosure
                and (iii) is developed by the receiving Party independent of the
                Information received under this
                LTA.

            

    

    

       
      7.5    This LTA may be executed in counterparts each of which
      shall be deemed an original, but all of which together shall constitute one
      and
      the same instrument.

    

    
      	 	
                7.6

            	
                  
                In addition to the Clauses that survive termination in accordance
                with
                Clause 27 of the GCP, Clauses 2.2.4, 3.9.2 and 3.10 shall survive
                termination of this LTA for

                 
                 the duration
                necessary to carry out the intent of such clause following the final
                year
                of this LTA.

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    IN
      WITNESS
      whereof
      the Parties hereto have caused this LTA to be executed by their duly authorised
      officers for and on behalf of

    

    

    Rolls-Royce
      plc  Rolls-Royce
      plc 

    

    /s/
      Tony
      Shine      /s/
      Mike
      Orris   

    ŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸ ŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸ

    (Signature)                                                  
      (Signature)   

    

    T
      SHINE                                                                               
M
      ORRIS

    ŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸ ŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸ

    (Print
      Name)                                                
(Print
      Name)    

    

    Global
      Supply Chain Director - Materials 

    -
      Global
      Purchasing &
Strategy                
Chief
      Procurement Officer     

    ŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸ ŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸ

    (Position)                                                      
      (Position)

    

    

    Rolls-Royce
      Deutschland Ltd & Co KG  Rolls-Royce
      Deutschland Ltd & Co KG

    

    /s/
      Mike
      Kern                                                                
/s/
      Andy
      Page

    ŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸ  ŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸ 

    (Signature)                                                     
      (Signature)    

    

    Michael
      Kern                                                
Andy
      Page

    ŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸ  ŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸ 

    (Print
      Name)                                                   (Print
      Name)    

    

    Managing
      Director Operations   Regional
      Purchasing Manager     

    ŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸ  ŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸ 

    (Position)                                                        (Position) 

    

    

    Rolls-Royce
      Corporation Rolls-Royce
      Corporation

    

    /s/
      Cheryl McClain     /s/
      Geneva Taylor

    ŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸ ŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸ 

    (Signature)                                                        
      (Signature)   

    

    Cheryl
      McClain                                                            Geneva
      Taylor

    ŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸ ŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸ 

    (Print
      Name)                                                     
(Print
      Name)   

    Acting
      VP
      Purchasing    Purchasing
      Director   

    ŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸ ŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸ 

    (Position)                                                           
      (Position)

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Rolls-Royce
      Canada Ltd Rolls-Royce
      Canada Ltd

    

     /s/
      CG
      Cudiffs      /s/
      Sophie Douville

    ŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸ ŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸ 

    (Signature)                                                          
      (Signature)   

    

    CG
      Cudiffs      Sophie
      Douville

    ŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸ ŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸ 

    (Print
      Name)                                                       
(Print
      Name)   

    

    Director
      Procurement    Legal
      Counsel    

    ŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸ ŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸ 

    (Position)                                                         
      (Position)

    

    

    

    

    

    Titanium
      Metals Corporation   Timet
      UK Limited

    

    /s/
      Charles H. Entrekin    /s/
      Ian
      Hodges

    ŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸ  ŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸ 

    (Signature)                                                      
      (Signature)

    

    Charles
      H. Entrekin    
      Ian
      Hodges

    ŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸ   ŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸ 

    (Print
      Name)                                                       
(Print
      Name)

    

    President
      & COO     VP
&
      Managing Director

    ŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸ  ŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸ

    (Position)                                                            
      (Position)  

    

    TIMET
      Savoie, S.A.

    

    /s/
      Ian
      Hodges

    ŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸ 

    (Signature)

    

    Ian
      Hodges

    ŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸ

    (Print
      Name)

    

    VP
&
      Managing Director      

    ŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸŸ

    (Position) 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ATTACHMENT
      1 TO AGREEMENT Ref DPC6709 

    

    [*] 

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Attachment
      2A To Agreement Ref: DPC6709

    

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    Attachment
      2B To Agreement Ref: DPC6709

    

    [*]

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Attachment
      3 To Agreement Ref: DPC6709

    

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    Attachment
      4
      to Agreement Ref: DPC6709

    

    [*]

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Attachment
      5
      to Agreement Ref: DPC6709:

    

    [*]

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Attachment
      6 to
      Agreement Ref: DPC6709: 

    

    [*]

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Attachment
      7 To Agreement Ref: DPC6709

    

    [*]

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Attachment
      8 To Agreement Ref: DPC6709

    

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    Attachment
      9 To Agreement Ref: DPC6709

    

    [*]

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ROLLS
      ROYCE - GENERAL CONDITIONS OF PURCHASE

    
      	
              1.

            	
              These
                general conditions together with the terms and special conditions
                appearing on a purchase order, schedule agreement, and/or framework
                order
                (“Order”) ("Procurement Conditions") are the only express conditions on
                which Rolls-Royce plc (“R-Rplc”) and/or Rolls-Royce Deutschland Ltd &
                Co KG (“R-RD”) and/or Rolls-Royce Canada Limited (“RRCAN”) and/or
                Rolls-Royce Corporation (“R-RC”) (“R-R” collectively or singularly as the
                case may be) procures goods and/or work and/or services (“Deliverables”)
                specified on an Order from the person to whom the Order is addressed
                ("Vendor"). The Vendor will accept an Order by acknowledging receipt
                or
                beginning performance, and a contract (“Contract”) will be created.
                Subject to Clauses 17, 18 and 20 below, for the avoidance of doubt
                electronic communications shall be deemed to be made in writing.
                Subject
                to any long term agreement for the purchase and sale of Deliverables
                between the parties (a “Long Term Agreement”), any other terms that either
                Party specifies will be of no
                effect.

            

    

    

    
      	
              2.

            	
              Orders
                known as “Schedule Agreements” will consist of two parts. Part one will
                contain but not be limited to the following; the Order number, the
                part
                number, description and price and the terms of business agreement
                reference. Part two of the Order will contain the schedule requirements
                for the part. Part two will be issued periodically by R-R. Each re-issue
                of a part one and/or part two Order shall be considered an amendment
                to
                the Order. All communications in respect of Orders shall be in English.
                On
                request, the Vendor will provide information showing the current
                status of
                Deliverables in comparison to the planned
                status.

            

    

    

    
      	
              2.1
                

            	
              For
                R-RCAN only, the Parties confirm that they have requested the present
                Agreement and any correspondence related thereto to be drawn up in
                the
                English language. Any dispute in relation to this Agreement will
                be
                conducted in English. French Translation of above: Les Parties aux
                présentes confirment qu’il est de leur volonté expresse que la présente
                convention ainsi que toute correspondance s’y rattachant, soit rédigée
                dans la langue anglaise. Tout litige relatif à cette convention sera
                conduit en anglais.

            

    

    

    
      	
              3

            	
              Risk
                of loss in the Deliverables will pass to R-R in accordance with the
                delivery instructions set out on the Order. Unless otherwise set
                out on
                the Order title in the Deliverables will pass to R-R upon receipt
                at the
                destination set out on the Order unless delivery occurs more than
                5 days
                prior to the scheduled delivery date then title shall pass to R-R
                on the
                earlier of; (i) R-R using the Deliverables; or (ii) five days prior
                to the
                scheduled delivery date.

            

    

    

    4         
      If
      delivery of the Deliverables is delayed in respect of the delivery date
      specified in a Contract, other than for reasons set out in Clause 5 below [*],
      the Vendor shall pay R-Rplc, RRCAN or R-RC liquidated damages or pay R-RD a
      penalty as applicable at the rate of 2.5% (two and a half percent) of the cost
      of the delayed Deliverables for each complete week of delay following written
      notice to Vendor of the unexcused delay of such deliverables up to a maximum
      of
      10% (ten percent) of such cost to compensate R-R for its internal administration
      costs only.  

    

    5.        
      The
      Parties agree that timely performance under an Order shall be a primary
      obligation of the Vendor, hence the Vendor will only be excused delay in
      delivery or performance if it can show to R-R's reasonable satisfaction that
      such delay has been caused by circumstances outside its reasonable control
      and
      it has notified R-R in writing within five (5) calendar days of becoming aware
      of such circumstances. No Order will terminate as a result of such delay except
      that R-R may, at its discretion, terminate an Order in whole or in part where
      the Vendor is so excused without incurring liability if such delay becomes
      substantial. The Vendor will make all reasonable endeavours to mitigate the
      effects of such delay. For the avoidance of doubt, [*]

    

    
      	
              6.1

            	
              The
                price stated on an Order shall be a fixed price inclusive of all
                duties,
                levies and taxes in the country of origin of the Deliverables excluding
                value added tax or equivalent tax. 

            

    

    

    

    
      	
              6.2

            	
              Where
                the Contract requires the Vendor to submit an invoice, the Vendor
                will
                post invoices to R-R's Purchase Accounts Department at the address
                on the
                Order on the day on which Deliverables are despatched or completed.
                

            

    

    

    
      	
              6.3

            	
              R-R
                will electronically transfer payment to the Vendor on the first working
                day after the last day of the [*] in which the relevant Deliverables
                have
                been delivered or completed, provided that the Vendor has supplied
                such
                Deliverables in accordance with the Contract and where the Vendor
                is
                required to submit an invoice, such invoice is accurate and was received
                by R-R's Purchase Accounts Department within 7 days of despatch or
                completion of Deliverables. Without prejudice to R-R's other rights
                and
                remedies, R-R may deduct from any payments due to the Vendor under
                any
                Contract the amount of any bona fide contra accounts or other claims
                which
                R-R may have against the Vendor in connection with that Contract
                or any
                other contract.

            

    

    

    6.4  
      For
      R-Rplc only, if R-Rplc does not post payment in accordance with Clause 6.3
      above, the Vendor will be entitled to recover a sum from R-Rplc equal to the
      interest which it pays or loses as the case may be in consequence of such late
      payment upon provision of evidence of such payment/loss. The amount so
      recoverable shall not in any event exceed a sum equivalent to interest at 0.6%
      above the Bank of England’s Base Rate on the overdue payment for the period
      between the dates on which the payment was due and made. For these purposes,
      the
      Bank of England’s base rate shall be that applicable at the date on which the
      overdue payment was due. The Parties acknowledge and agree that such payments
      are sufficient to compensate the Vendor for any such late payment. 

    

    
      	
              6.5

            	
              For
                RRCAN only, If RRCAN does not post payment in accordance with Clause
                6.3
                above, the Vendor will be entitled to recover a sum from RRCAN equal
                to
                the interest which it pays or loses as the case may be in consequence
                of
                such late payment upon provision of evidence of such payment/loss.
                The
                amount so recoverable shall not in any event exceed a sum equivalent
                to
                interest at 0.6% above the TD Bank’s Base Rate on the overdue payment for
                the period between the dates on which the payment was due and made.
                For
                these purposes, the TD Bank’s base rate shall be that applicable at the
                date on which the overdue payment was due. The Parties acknowledge
                and
                agree that such payments are sufficient to compensate the Supplier
                for any
                such late payment.

            

    

    

    
      	
              7.

            	
              Any
                items held by the Vendor which R-R has paid for in full or which
                R-R may
                have loaned, bailed, consigned or supplied to the Vendor for the
                execution
                of an Order will be at the Vendor's risk of loss until delivered
                to R-R.
                The Vendor shall be fully liable for any damage caused to such items
                whilst in its possession. The Vendor will retain such items in good
                condition, subject to the ordinary wear and tear caused by the ordinary
                use, storage or possession of such items, during performance and
                after
                completion of an Order and shall not dispose of such items except
                in
                accordance with R-R's written instructions nor shall such items be
                used
                other than for the purpose of such Order without R-R's prior written
                consent. The Vendor will ensure that such items are at all times
                identified as the property of R-R and do not become the subject of
                any
                encumbrance.

            

    

    

    
      	
              8.1

            	
              The
                Vendor will inspect and release Deliverables as directed on an Order.
                The
                Vendor warrants and assures to R-R that all Deliverables delivered
                hereunder will (a) [*] and (b) such Deliverable will conform to the
                specifications set forth in the Order, subject to customary mill
                tolerances and immaterial variations consistent with good mill practices
                and inspection methods with respect to dimension, weight, straightness,
                section, composition, mechanical properties, surface and internal
                conditions and quality. The determination of whether material meets
                the
                requirements of this Clauses 8.1(a) and 8.1(b) of these General Conditions
                of Purchase will be based upon the [*] Each party will ensure that
                any of
                its personnel will, whilst on the other party’s premises, comply with the
                other party’s standard vendor security and health and safety requirements
                as applicable for such premises, copies of which are available on
                request.

            

    

    

    
      	
              8.2

            	
              If
                Deliverables do not conform to the requirements set out in Clause
                8.1
                above (“Non-Conformance” ) without prejudice to R-R's other rights and
                remedies which R-R may have at law, the Vendor will promptly replace
                or,
                where appropriate repair or rectify any such Non-Conformance at its
                own
                expense. If the Vendor fails to promptly repair, rectify or replace
                any
                Non Conformance R-R may, without prejudice to its other rights and
                remedies, (i) choose to accept the
                Non-

            

    

    
      	 	
              Conformance
                and R-R will be entitled to an equitable adjustment to the Order
                price to
                reflect the loss of value due to such Non-Conformance or (ii) rectify
                or
                arrange to have rectified such Non-Conformance.

            

    

    

    
      	
              8.3

            	
              Any
                claim against the Vendor for breach of the warranties set forth in
                Clause
                8.1 shall be made in writing no later than [*] after delivery of
                the
                Deliverables to R-R (or to another at R-R’s direction or pursuant to the
                terms of the Long Term Agreement), after which time any such claim
                shall
                be deemed waived and barred; provided, however, that if (a) a claim
                of
                breach of warranty is made by R-R’s customer against R-R with respect to
                the goods sold by R-R that incorporate any Deliverables, and (b)
                such
                claim could reasonably involve a breach of warranty under Clause
                8.1 by
                the Vendor with respect to such Deliverables, then such
                [*].

            

    

    

    
      	
              8.4

            	
              EXCEPT
                FOR THOSE EXPRESS WARRANTIES SET FORTH IN CLAUSE 8.1 (AND WITHOUT
                PREJUDICE TO SECTION 12 OF THE SALE OF GOODS ACT 1979), THE VENDOR
                MAKES
                [*]
                WITH RESPECT TO ANY GOODS DELIVERED UNDER ANY ORDER AND
                [*]
                INCLUDING
                WITHOUT LIMITATION, [*].
                

            

    

    

    
      	
              8.5

            	
              EXCEPT
                IN THE CASE OF CLAIMS [*],
                IN NO EVENT SHALL VENDOR OR R-R BE LIABLE TO THE OTHER PURSUANT TO
                ANY
                ORDER OR CONTRACT OR THESE GENERAL CONDITIONS OF PURCHASE UNDER ANY
                THEORY
                OF LIABILITY FOR ANY FORM OF CONSEQUENTIAL, SPECIAL, INDIRECT, OR
                PUNITIVE
                DAMAGES, INCLUDING WITHOUT LIMITATION, ANY DAMAGES FOR LOSS OF PROFITS
                OR
                LOSS OF USE.

            

    

    

    9.1     
      Without
      prejudice to any of R-R's rights and remedies, R-R may terminate an Order in
      whole or in part by giving the Vendor notice in writing, identified as a notice
      of termination, whereupon all work on that Order shall cease. R-R shall pay
      the
      Vendor, in full and final satisfaction of all claims arising out of such
      termination: the price of all Deliverables which the Vendor has justifiably
      produced and completed in accordance with such terminated Order or part thereof
      and which R-R has not paid for; the cost of settling any claims for necessary
      termination of sub-contracts justifiably committed in respect of such terminated
      Order or part thereof and the cost to the Vendor of any justified
      work-in-progress in respect of such Order or part thereof.

    

    
      	
              9.2

            	
              The
                amount payable to the Vendor under Clause 9.1 will not exceed the
                total
                amount that would have been payable to the Vendor for the Deliverables
                and
                the Vendor will submit notice of its claim within 2 months of termination.
                Any finished Deliverables and any work in progress paid for by R-R
                under
                Clause 9.1 will be delivered to R-R or held by the Vendor as R-R
                property
                in accordance with Clause 7 above. 

            

    

    

    9.3     
      If
      R-R
      has reasonable grounds for believing the Vendor will be unable to substantially
      fulfil its obligations, R-R may require the Vendor to provide reasonable written
      evidence that the Vendor will fulfil its obligations. If the Vendor fails to
      provide such evidence within 30 days of R-R's request R-R may treat that failure
      as a material breach and terminate the relevant Order.

    

    
      	 	
              9.4

            	
              Each
                Party will have the right, without prejudice to its other rights
                and
                remedies, to terminate any Order without incurring any liability,
                if the
                other Party commits any material breach of any of its obligations
                under
                this Agreement or the Order which it fails to rectify within 30 days
                of
                written notice of that breach (no notice period shall apply for a
                breach
                of delivery terms) or makes a general arrangement with its creditors;
                or
                ceases or threatens to cease to carry on its business or a substantial
                part of it or is unable to pay its debts within the meaning of Section
                123
                of the Insolvency Act 1986 or any statutory modification or re-enactment
                thereof; enters into liquidation whether compulsory or voluntary,
                except
                as a solvent company for the purposes of amalgamation or reconstruction;
                or has an administrator or administrative receiver of the whole or
                part of
                its assets appointed; or (not being a company registered in England)
                carries out or becomes subject to actions or proceedings, which,
                within
                the jurisdiction to which it is subject, are similar in nature or
                effect
                to those specified in this Clause 9.4.

            

    

    

    
      	 	
              9.5

            	
              Each
                Party will effect termination under this Clause 8 by issuing notice
                of
                termination in writing to the other Party. Such notice will be effective
                24 hours after it is issued or on receipt whichever is the earlier.
                

            

    

    

    
      	
              10.
                

            	
              If
                any Deliverables involve research or development that is specifically
                funded by R-R then all intellectual property rights in the results
                thereof
                will vest in R-R. All designs, drawings, processes and developments
                by R-R
                and all intellectual property rights, copyrights and other proprietary
                rights (including know-how) supplied by R-R under this Agreement
                and/or
                any Order shall remain the sole and undivided property of R-R. The
                Vendor
                shall use such intellectual property only for the purposes of performing
                its obligations under this Agreement and/or any Order. The Vendor
                shall
                and shall require
                its employees to sign all papers and do such acts as are reasonably
                necessary for R-R to pursue formal protection of any anticipated
                intellectual property rights.

            

    

    

     

    
      	
              11.

            	
              If
                any allegation is made or any claim asserted against R-R, or any
                person
                claiming title from or through R-R, that any act done or proposed
                to be
                done in relation to Deliverables constitutes a violation or infringement
                of any patent, copyright, registered design or other proprietary
                right
                held by a third party, the Vendor will indemnify R-R against and
                hold R-R
                harmless from any loss or damage (including without limitation all
                reasonable costs and expenses) arising directly or indirectly out
                of such
                allegation or claim unless the allegation or claim is the direct
                result of
                the Vendor following a design or process originated and furnished
                by R-R,
                in which case, R-R will indemnify and hold the Vendor harmless against
                any
                loss or damage (including without limitation all reasonable costs
                and
                expenses) arising directly or indirectly out of such allegation or
                claim.

            

    

    

    
      	
              12.1

            	
              The
                Parties agree to exchange drawings, operating or maintenance instructions
                together with any other technical and/or commercial information necessary
                to execute an Order. Title to any such information will not be affected
                by
                any such exchange. Subject to Clause 12.2 if manufacturing data and/or
                drawings relating to the subject of an Order are required for any
                purpose
                of R-R, the Vendor will on request supply the
                same.

            

    

     

    
      	
              12.2

            	
              Any
                information, including but not limited to that covered by Clause
                12.1
                above, disclosed by one Party to the other in connection with an
                Order or
                a proposed Order shall be treated in confidence and shall not be
                copied or
                disclosed to any third party without the prior written consent of
                the
                disclosing Party. These provisions do not apply to information that
                has
                lawfully entered the public domain.

            

    

    
      	
               

              12.3

            	
               

              The
                Party that has received such information in the form of drawings
                and/or
                computer readable written material or other recorded form including
                all
                copies thereof, shall return to the disclosing Party all information
                which
                has been supplied or it has acquired under this Agreement and/or
                any Order
                and shall delete or have deleted all information stored in computer
                readable form when so requested by the disclosing Party and in any
                event
                on completion of its obligations under such
                Order.

            

    

    

    

    12.4           
      Subject
      to Clause 12.2, each Party shall protect all intellectual property rights,
      copyrights and other proprietary rights (including know-how) supplied by the
      other Party under this Agreement and/or any Order which are in the possession
      of
      its sub-tier suppliers, sub-contractors and/or agents including without
      limitation, taking all necessary steps and actions to ensure that any such
      sub-tier supplier complies with all confidentiality provisions herein. Each
      Party shall indemnify and hold the other harmless in the event of any breach
      of
      such provisions by such sub-tier supplier. Furthermore, either Party shall
      notify the other Party immediately on becoming aware of a breach or a potential
      breach and shall inform the other Party of what actions it is taking to prevent
      or remedy such breach or potential breach to ensure risks to the other party
      are
      mitigated. The indemnified Party reserves the right to take its own action
      against any such sub-tier supplier and to direct the indemnifying Party to
      take
      certain actions. 

    

    
      	
              13.

            	
              The
                Vendor agrees that R-R shall have the right to enter the Vendor’s
                facilities at reasonable times to inspect the facility, Deliverables,
                materials and property of R-R. Such inspection shall not constitute
                or
                imply acceptance of any
                Deliverables.

            

    

    

    14.      
      Neither
      Party will do anything that might result in other parties believing that it
      has
      authority either to contract on behalf of the other Party or is a licensee
      of
      the other Party. This Agreement shall not include any express or implied licence
      whatsoever. In particular and without prejudice to the generality of this Clause
      14, the Vendor shall not without the prior written permission of R-R manufacture
      or supply to third parties Deliverables of a similar nature pursuant to
      technical information supplied or derived from R-R. 

    

    15.      
      Neither
      Party shall refer to the other Party’s name, trademarks or products in
      connection with any publicity without such other Party’s prior written
      permission.

    

    
      	
              16.

            	
              Failure
                by either Party at any time to enforce any term of this Agreement
                or any
                Procurement Condition shall not be construed as waiver by such Party
                of
                such Condition. 

            

    

    

    17.      
      If
      there
      is a conflict of terms the order of precedence shall be: -

    1.    
      any
      Government terms applicable to a Contract; 

    
      	 	
              2.

            	
              any
                Long Term Agreement; 

            

    

    3. 
this
      General Conditions of Purchase   

    
      	 	
              4.

            	
              terms
                appearing on the front of an Order other than Government
                terms.

            

    

     

    
      	
              18.

            	
              This
                Agreement binds and inures to the benefit of the Parties and their
                successors and assigns, except that neither Party will assign this
                Agreement without the prior written consent of the other Party.
                Notwithstanding the above and subject to Clause 24 hereof, each Party
                may
                assign this Agreement and its rights and obligations hereunder in
                connection with a merger or consolidation involving such Party (so
                long as
                the assignment is to the newly merged, consolidated or surviving
                entity)
                or the sale of all or substantially all of such Party’s assets (so long as
                the assignment is to the acquirer of such assets) providing such
                assignee
                expressly assumes all obligations of the assignor hereunder. Nothing
                in
                this Agreement shall be construed as creating any rights in respect
                of any
                third parties (including without limitation any employee, officer,
                agent,
                representative or sub-contractor of any Party) under, as a result
                of, or
                in connection with this Agreement. Where Orders are received from
                R-Rplc
                this Agreement excludes the provisions of the Contracts (Rights of
                Third
                Parties) Act 1999. Nothing in this provision shall restrict the Vendor’s
                ability to grant to its lender a security interest in, or assign
                to its
                lender rights to, monies due or to become due under this Agreement
                in
                connection with the Vendor’s secured lending facility, provided that the
                account by the Vendor to receive such payments is the Vendor’s named
                account.

            

    

    

    19.      
      Any
      notices or other documents to be served under any Order or this Agreement shall
      be in writing and addressed to the party to be served at its registered address
      or any other address as may be notified. Such notices may be delivered by hand
      or sent by fax or recorded delivery post.

    

    
      	
              20.
                

            	
              Where
                Orders are received from R-Rplc this Agreement and Orders shall be
                subject
                to and interpreted in accordance with the Laws of England. Where
                Orders
                are received from R-RD this Agreement and Orders shall be subject
                to and
                interpreted in accordance with the Law of Germany with the place
                of
                jurisdiction being Berlin, Germany. The Vendor and R-RD hereby expressly
                agree to exclude the application of the United Nations Conventions
                for the
                international sale of goods dated April 11 1980, as implemented in
                Germany. Where Orders are received from R-RCAN this Agreement and
                Orders
                shall be subject to and interpreted according to the laws of Quebec,
                Canada. Jurisdiction and venue for any suit shall be in the jurisdiction
                of the Superior Court, District of Montreal, Quebec, Canada.
                The
                Vendor and R-RCAN exclude the application of the United Nations Convention
                for the International Sale of Goods (Vienna Convention). Where Orders
                are
                received from R-RC this Agreement and Orders shall be subject to
                and
                interpreted in accordance with the Laws of the State of Indiana,
                United
                State of America, excluding its choice of law statutes. Jurisdiction
                and
                venue for any suit shall be in the State of Indiana. The Vendor and
                R-RC
                hereby specifically exclude the UN Convention on Contracts for the
                International Sale of Goods. Any disputes in connection with the
                provisions of this Agreement not connected to an Order shall be subject
                to
                and interpreted in accordance with the Laws of
                England.

            

    

    

    

    21.     
      This
      Agreement shall not be amended other than by an agreement in writing signed
      by
      an authorised signatory of the Parties, which is expressly stated to amend
      this
      Agreement. 

    

    
      	
              22.

            	
              If
                any provision of this Agreement is declared by any judicial or other
                competent authority to be void, voidable, illegal or otherwise
                unenforceable, or indications to that effect are received by either
                of the
                Parties from any competent authority, the remainder of the Agreement
                shall
                remain in full force and effect, and the Parties shall amend that
                provision in such reasonable manner as achieves the intention of
                the
                Parties without illegality. 

            

    

    

    
      	
              23.

            	
              The
                Parties agree that they have not placed any reliance whatsoever on
                any
                representations, statements or understandings made prior to this
                Agreement
                whether orally or in writing relating to the subject of this Agreement
                other than those expressly incorporated in a Long Term Agreement
                and/or
                this Agreement and/or the Order, which have been agreed on the basis
                that
                its provisions represent their entire agreement and shall supersede
                all
                such prior representations, agreements, statements and
                understandings.

            

    

    

    

    24.1    
      If
      during
      the lifetime of this Agreement, [*] then the Vendor shall promptly notify R-R
      of
      such transaction. 

    

    
      	
              24.2

            	
              If
                the [*] then R-R, without prejudice to any other rights and remedies
                it
                may have, shall be entitled [*] by written notice to the Vendor.
                

            

    

    

    
      	
              24.3

            	
              In
                this Clause 24 [*].

            

    

    

    25.     
      The
      Vendor undertakes that, in relation to this Agreement or any Contract, it shall,
      in respect of all Personal Data provided to it by R-Rplc, comply strictly with
      all requirements of the Data Protection Act 1998 as if it were the Data
      Controller of such personal data. The phrases "Personal Data" and "Data
      Controller" shall bear the meanings attributed to them in the Data Protection
      Act 1998. The Vendor shall indemnify RRplc against all losses, costs, expenses,
      damages, liabilities, demands, claim, actions or proceedings with R-Rplc may
      incur arising out of any breach of this Clause 25. The Vendor undertakes that,
      in relation to this Agreement or any Contract, it shall, in respect of all
      Personal Data provided to it by R-RD, comply with the Federal Data Protection
      Act of the Federal Republic of Germany 2001. The Vendor undertakes that, in
      relation to this Agreement or any Contract, it shall, in respect of all Personal
      Data provided to it by R-RCAN, comply strictly with all requirements of the
      Quebec Act Respecting the Protection of Personal Information in the Private
      Sector and Canada’s Privacy Act and any regulations related to them or any
      modification or re-enactment of them being in force (collectively the “Data
      Protection Legislation”).

    

    
      	
              26.

            	
              Each
                of the Parties comprising R-R shall be severally but not jointly
                liable in
                respect of Orders placed in accordance with this Agreement.
                

            

    

    

    27.      
      The
      provisions of Clauses 7, 8.3, 8.4, 8.5, 11, 12.2, 12.3, 12.4 and this Clause
      27
      shall survive any expiry or earlier termination of an Order or a Long Term
      Agreement applicable to the Contract. 

    

    28.     
      The
      Parties acknowledge that any information provided or received under this
      Agreement may be subject to government export control legislation including,
      but
      not limited to, the relevant legislation in the countries where the Parties
      are
      established, the International Traffic in Arms Regulations (22 CFR 120-130)
      and
      the Export Administration Regulations (15
      CFR
      730-774).
      As
      such, the Parties warrant and undertake that they will not export or transfer
      by
      any means, electronic or otherwise, any information without complying in all
      respects with the applicable export control legislation, codes of conduct,
      the
      relevant export licence(s), guidelines, notices and/or instructions in relation
      to any such export or transfer of information.

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