Document:

Exhibit 10.84.1

                                                                  Execution Copy

                          PLEDGE AND SECURITY AGREEMENT

         THIS PLEDGE AND SECURITY AGREEMENT (this "Security Agreement") is
entered into as of March 31, 2004 by and among HEADWATERS INCORPORATED, a
Delaware corporation (the "Borrower") and each of the subsidiaries of the
Borrower listed on the signature pages hereto (collectively, the "Initial
Grantors" and together with any additional Domestic Subsidiaries, whether now
existing or hereafter formed which become parties to this Security Agreement by
executing a Supplement hereto in substantially the form of Annex I, the
"Grantors"), and BANK ONE, NA (Main Office Chicago), in its capacity as
administrative agent (the "Administrative Agent") for the lenders party to the
Credit Agreement referred to below (collectively, the "Lenders").

                              PRELIMINARY STATEMENT

         The Borrower, the Administrative Agent and the Lenders are entering
into a Credit Agreement dated as of the date hereof (as amended, restated,
supplemented or otherwise modified from time to time, the "Credit Agreement").
The Grantors are entering into this Security Agreement in order to induce the
Lenders to enter into and extend credit to the Borrower under the Credit
Agreement.

         ACCORDINGLY, the Grantors and the Administrative Agent, on behalf of
the Holders of Secured Obligations, hereby agree as follows:

                                   ARTICLE I
                                   DEFINITIONS

         1.1. Terms Defined in Credit Agreement. All capitalized terms used
herein and not otherwise defined shall have the meanings assigned to such terms
in the Credit Agreement.

         1.2. Terms Defined in New York UCC. Terms defined in the New York UCC
which are not otherwise defined in this Security Agreement are used herein as
defined in the New York UCC.

         1.3. Definitions of Certain Terms Used Herein. As used in this Security
Agreement, in addition to the terms defined in the Preliminary Statement, the
following terms shall have the following meanings:

         "Accounts" shall have the meaning set forth in Article 9 of the New
York UCC.

         "Article" means a numbered article of this Security Agreement, unless
another document is specifically referenced.

         "Chattel Paper" shall have the meaning set forth in Article 9 of the
New York UCC.

         "Collateral" means all Accounts, Chattel Paper, Commercial Tort Claims,
Documents, Equipment, Fixtures, Goods, General Intangibles, Instruments,
Inventory, Investment Property, Pledged Deposits, Supporting Obligations and
Other Collateral, wherever located, in which any Grantor now has or hereafter
acquires any right or interest, and the proceeds (including Stock Rights),
insurance proceeds and products thereof, together with all books and records,
customer lists, credit files, computer files, programs, printouts and other
computer materials and records related thereto.

<PAGE>

         "Commercial Tort Claims" means those certain currently existing
commercial tort claims of any Grantor, including each commercial tort claim
specifically described in Exhibit E.

         "Control" shall have the meaning set forth in Article 8 or, if
applicable, in Section 9-104, 9-105, 9-106 or 9-107 of Article 9 of the New York
UCC.

         "Default" shall have the meaning set forth in the Credit Agreement.

         "Deposit Accounts" shall have the meaning set forth in Article 9 of the
New York UCC.

         "Documents" shall have the meaning set forth in Article 9 of the New
York UCC.

         "Equipment" shall have the meaning set forth in Article 9 of the New
York UCC.

         "Exhibit" refers to a specific exhibit to this Security Agreement,
unless another document is specifically referenced.

         "Fixtures" shall have the meaning set forth in Article 9 of the New
York UCC.

         "General Intangibles" shall have the meaning set forth in Article 9 of
the New York UCC.

         "Goods" shall have the meaning set forth in Article 9 of the New York
UCC.

         "Instruments" shall have the meaning set forth in Article 9 of the New
York UCC.

         "Inventory" shall have the meaning set forth in Article 9 of the New
York UCC.

         "Investment Property" shall have the meaning set forth in Article 9 of
the New York UCC.

         "New York UCC" means the New York Uniform Commercial Code as in effect
from time to time.

         "Other Collateral" means any property of the Grantors, not included
within the defined terms Accounts, Chattel Paper, Commercial Tort Claims,
Documents, Equipment, Fixtures, General Intangibles, Instruments, Inventory,
Investment Property and Pledged Deposits, including, without limitation, all
cash on hand, letter-of-credit rights, letters of credit, Stock Rights and
Deposit Accounts or other deposits (general or special, time or demand,
provisional or final) with any bank or other financial institution, it being
intended that the Collateral include all real and personal property of the
Grantors.

         "Pledged Deposits" means all time deposits of money (other than Deposit
Accounts and Instruments), whether or not evidenced by certificates, which a
Grantor may from time to time designate as pledged to the Administrative Agent
or to any Holder of Secured Obligations as security for any Obligation, and all
rights to receive interest on said deposits.

         "Receivables" means the Accounts, Chattel Paper, Documents, Investment
Property, Instruments or Pledged Deposits, and any other rights or claims to
receive money which are General Intangibles or which are otherwise included as
Collateral.

<PAGE>

         "Required Secured Parties" means (x) prior to an acceleration of the
Secured Obligations under the Credit Agreement, the Required Lenders, (y) after
an acceleration of the Secured Obligations under the Credit Agreement but prior
to the date upon which the Credit Agreement has terminated by its terms and all
of the Secured Obligations thereunder have been paid in full, Lenders and their
Affiliates holding in the aggregate more than 50% of the total of (i) the unpaid
principal amount of the outstanding Loans and LC Obligations and (ii) the
aggregate net early termination payments and all other amounts then due and
unpaid from the Borrower to the Lenders or their Affiliates under Rate
Management Transactions, as determined by the Administrative Agent in its
reasonable discretion, and (z) after the Credit Agreement has terminated by its
terms and all of the Secured Obligations thereunder have been paid in full
(whether or not the Secured Obligations under the Credit Agreement were ever
accelerated), Lenders and their Affiliates holding in the aggregate more than
50% of the aggregate net early termination payments and all other amounts then
due and unpaid from the Borrower to the Lenders or their Affiliates under Rate
Management Transactions, as determined by the Administrative Agent in its
reasonable discretion.

         "Section" means a numbered section of this Security Agreement, unless
another document is specifically referenced.

         "Security" has the meaning set forth in Article 8 of the New York UCC.

         "Stock Rights" means any securities, dividends or other distributions
and any other right or property which any Grantor shall receive or shall become
entitled to receive for any reason whatsoever with respect to, in substitution
for or in exchange for any securities or other ownership interests in a
corporation, partnership, joint venture or limited liability company
constituting Collateral and any securities, any right to receive securities and
any right to receive earnings, in which any Grantor now has or hereafter
acquires any right, issued by an issuer of such securities.

         "Supporting Obligation" shall have the meaning set forth in Article 9
of the New York UCC.

         The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms.

                                   ARTICLE II
                           GRANT OF SECURITY INTEREST

         Each of the Grantors hereby pledges, assigns and grants to the
Administrative Agent, on behalf of and for the ratable benefit of the Holders of
Secured Obligations and (to the extent specifically provided herein) their
Affiliates, a security interest in all of such Grantor's right, title and
interest, whether now owned or hereafter acquired, in and to the Collateral to
secure the prompt and complete payment and performance of the Secured
Obligations.

                                   ARTICLE III
                         REPRESENTATIONS AND WARRANTIES

         Each of the Initial Grantors represents and warrants to the
Administrative Agent and the Holders of Secured Obligations, and each Grantor
that becomes a party to this Security Agreement pursuant to the execution of a
Security Agreement Supplement in substantially the form of Annex I represents
and warrants (after giving effect to supplements to each of the Exhibits hereto
with respect to such subsequent Grantor as attached to such Security Agreement
Supplement), that:

<PAGE>

         3.1. Title, Authorization, Validity and Enforceability. Such Grantor
has good and valid rights in or the power to transfer the Collateral owned by it
and title to the Collateral with respect to which it has purported to grant a
security interest hereunder, free and clear of all Liens except for Liens
permitted under Section 6.12 of the Credit Agreement, and has full corporate,
limited liability company or partnership, as applicable, power and authority to
grant to the Administrative Agent the security interest in such Collateral
pursuant hereto. The execution and delivery by such Grantor of this Security
Agreement has been duly authorized by proper corporate, limited liability
company or partnership, as applicable, other proceedings, and this Security
Agreement constitutes a legal, valid and binding obligation of such Grantor and
creates a security interest which is enforceable against such Grantor in all
Collateral it now owns or hereafter acquires, except as enforceability may be
limited by (i) bankruptcy, insolvency, fraudulent conveyances, reorganization or
similar laws relating to or affecting the enforcement of creditors' rights
generally, (ii) general equitable principles (whether considered in a proceeding
in equity or at law), and (iii) requirements of reasonableness, good faith and
fair dealing. When financing statements have been filed in the appropriate
offices against such Grantor in the locations listed on Exhibit C, the
Administrative Agent will have a fully perfected first priority security
interest in the Collateral owned by such Grantor in which a security interest
may be perfected by filing, subject only to prior and junior Liens permitted
under Section 6.12 of the Credit Agreement.

         3.2. Principal Location. Such Grantor's mailing address and the
location of its place of business (if it has only one) or its chief executive
office (if it has more than one place of business), is disclosed in Exhibit A;
such Grantor has no other places of business except those set forth in Exhibit
A.

         3.3. Property Locations. The Inventory, Equipment and Fixtures of each
Grantor are located solely at the locations of such Grantor described in Exhibit
A. All of said locations are leased by such Grantor except for locations (i)
designated on Exhibit A as owned by such Grantor and (ii) at which Inventory is
held in a public warehouse or is otherwise held by a bailee or on consignment by
such Grantor, with respect to which Inventory such Grantor has delivered
bailment agreements, warehouse receipts, financing statements or other documents
reasonably satisfactory to the Administrative Agent to protect the
Administrative Agent's and the Holders of Secured Obligations' security interest
in such Inventory.

         3.4. No Other Names. Except as disclosed in Schedule 3.4, such Grantor
has not conducted business under any name except the name in which it has
executed this Security Agreement, which is the exact name as it appears in such
Grantor's organizational documents, as amended, as filed with such Grantor's
jurisdiction of organization as of the Closing Date.

         3.5. Accounts and Chattel Paper. The names of the obligors, amounts
owing, due dates and other information with respect to the Accounts and Chattel
Paper owned by such Grantor are and will be, taken as a whole, materially free
of error in all records of such Grantor relating thereto and in all invoices and
reports with respect thereto furnished to the Administrative Agent by such
Grantor from time to time. As of the time when each Account or each item of
Chattel Paper arises, such Grantor shall be deemed to have represented and
warranted that such Account or Chattel Paper, as the case may be, when taken
together with the other Accounts and Chattel Paper and all records relating
thereto, are materially free from error.

         3.6. No Financing Statements. No financing statement describing all or
any portion of the Collateral which has not lapsed or been terminated naming
such Grantor as debtor has been filed in any jurisdiction except financing
statements (i) naming the Administrative Agent on behalf of the Holders of
Secured Obligations as the secured party and (ii) in respect of Liens permitted
by Section 6.15 of the Credit Agreement; provided, that nothing herein shall be
deemed to constitute an agreement to subordinate any of the Liens of the
Administrative Agent under the Loan Documents to any Liens otherwise permitted
under Section 6.15 of the Credit Agreement, except to the extent permitted
therein.

<PAGE>

         3.7. Federal Employer Identification Number; State Organization Number;
Jurisdiction of Organization. Such Grantor's federal employer identification
number is, and if such Grantor is a registered organization, such Grantor's
State of organization, type of organization and State of organization
identification number and is, as set forth in Exhibit C.

         3.8. Pledged Securities and Other Investment Property. Exhibit D sets
forth a complete and accurate list of the Instruments, Securities and other
Investment Property delivered to the Administrative Agent. Each Grantor is the
direct and beneficial owner of each Instrument, Security and other type of
Investment Property listed on Exhibit D as being owned by it, free and clear of
any Liens, except for the security interest granted to the Administrative Agent
for the benefit of the Holders of Secured Obligations hereunder. Each Grantor
further represents and warrants that (i) all such Instruments, Securities or
other types of Investment Property which are shares of stock in a corporation or
ownership interests in a partnership or limited liability company have been (to
the extent such concepts are relevant with respect to such Instrument, Security
or other type of Investment Property) duly and validly issued, are fully paid
and non-assessable and constitute the percentage of the issued and outstanding
shares of stock (or other equity interests) of the respective issuers thereof
indicated on Exhibit D hereto and (ii) with respect to any certificates
delivered to the Administrative Agent representing an ownership interest in a
partnership or limited liability company, either such certificates are
Securities as defined in Article 8 of the New York UCC of the applicable
jurisdiction as a result of actions by the issuer or otherwise, or, if such
certificates are not Securities, such Grantor has so informed the Administrative
Agent so that the Administrative Agent may take steps to perfect its security
interest therein as a General Intangible.

                                   ARTICLE IV
                                    COVENANTS

         From the date of this Security Agreement and thereafter until this
Security Agreement is terminated, each of the Initial Grantors agrees, and from
and after the effective date of any Security Agreement Supplement applicable to
any Grantor (and after giving effect to supplements to each of the Exhibits
hereto with respect to such subsequent Grantor as attached to such Security
Agreement Supplement) and thereafter until this Security Agreement is terminated
each such subsequent Grantor agrees:

         4.1. General.

                  4.1.1 Financing Statements and Other Actions; Defense of
         Title. Each Grantor hereby authorizes the Administrative Agent to file,
         and if reasonably requested will execute and deliver to the
         Administrative Agent, all financing statements describing the
         Collateral owned by such Grantor and other documents and take such
         other actions as may from time to time reasonably be requested by the
         Administrative Agent in order to maintain a first perfected security
         interest in and, if applicable, Control of, the Collateral owned by
         such Grantor, subject to Liens permitted under Section 6.15 of the
         Credit Agreement (except to the extent permitted therein); provided,
         that nothing herein shall be deemed to constitute an agreement to
         subordinated any of the Liens of the Administrative Agent under the
         Loan Documents to any Liens otherwise permitted under Section 6.15 of
         the Credit Agreement. Such financing statements may describe the

<PAGE>

         Collateral in the same manner as described herein or may contain an
         indication or description of collateral that describes such property in
         any other manner as the Administrative Agent may determine, in its sole
         discretion, is necessary, advisable or prudent to ensure that the
         perfection of the security interest in the Collateral granted to the
         Administrative Agent herein, including, without limitation, describing
         such property as "all assets" or "all personal property, whether now
         owned or hereafter acquired." Each Grantor will take any and all
         actions necessary to defend title to the Collateral owned by such
         Grantor against all persons and to defend the security interest of the
         Administrative Agent in such Collateral and the priority thereof
         against any Lien not expressly permitted hereunder.

                  4.1.2 Change in Corporate Existence, Type or Jurisdiction of
         Organization, Location, Name. Each Grantor will:

         (i)      preserve its existence and corporate structure as in effect on
                  the Closing Date;

         (ii)     not change its jurisdiction of organization;

         (iii)    not maintain its place of business (if it has only one) or its
                  chief executive office (if it has more than one place of
                  business) at a location other than a location specified on
                  Exhibit A; and

         (iv)     not (i) have a Substantial Portion of the Inventory, Equipment
                  or Fixtures or proceeds or products thereof (other than
                  Inventory and proceeds thereof disposed of as permitted by the
                  Credit Agreement) at a location other than a location
                  specified in Exhibit A or (ii) change its name or taxpayer
                  identification number

         unless, in each such case, such Grantor shall have given the
         Administrative Agent prior written notice of such event or occurrence
         and such Grantor shall have taken such steps as are reasonably
         necessary or advisable to properly maintain the validity, perfection
         and priority of the Administrative Agent's security interest in the
         Collateral owned by such Grantor.

                  4.1.3 Other Financing Statements. No Grantor will suffer to
         exist or authorize the filing of any financing statement naming it as
         debtor covering all or any portion of the Collateral owned by such
         Grantor, except any Financing Statement authorized under Section 4.1.1
         hereof.

         4.2. Receivables.

                  4.2.1 Collection of Receivables. Except as otherwise provided
         in this Security Agreement, each Grantor will collect and enforce, at
         such Grantor's sole expense, all amounts due or hereafter due to such
         Grantor under the Receivables owned by such Grantor.

                  4.2.2 Delivery of Invoices. Each Grantor will deliver to the
         Administrative Agent immediately upon its request after the occurrence
         of a Default duplicate invoices with respect to each Account owned by
         such Grantor bearing such language of assignment as the Administrative
         Agent shall specify.

<PAGE>

         4.3. Instruments, Securities, Chattel Paper, Documents and Pledged
Deposits. Each Grantor will (i) deliver to the Administrative Agent immediately
upon execution of this Security Agreement the originals of all Chattel Paper,
Securities and Instruments constituting Collateral (if any then exist), (ii)
hold in trust for the Administrative Agent upon receipt and immediately
thereafter deliver to the Administrative Agent any Chattel Paper, Securities and
Instruments constituting Collateral, (iii) upon the designation of any Pledged
Deposits (as set forth in the definition thereof), deliver to the Administrative
Agent such Pledged Deposits which are evidenced by certificates included in the
Collateral endorsed in blank, marked with such legends and assigned as the
Administrative Agent shall specify, and (iv) upon the Administrative Agent's
request, after the occurrence and during the continuance of a Default, deliver
to the Administrative Agent (and thereafter hold in trust for the Administrative
Agent upon receipt and immediately deliver to the Administrative Agent) any
Document evidencing or constituting Collateral; provided, however, that this
Section 4.3 shall not have any application with respect to Instruments,
Securities, Chattel Paper, Documents and Pledged Deposits used by the Borrower
in connection with Margin Activities permitted under the Credit Agreement.

         4.4. Uncertificated Securities and Certain Other Investment Property.
Each Grantor will permit the Administrative Agent from time to time to cause the
appropriate issuers (and, if held with a securities intermediary, such
securities intermediary) of uncertificated securities or other types of
Investment Property not represented by certificates which are Collateral owned
by such Grantor to mark their books and records with the numbers and face
amounts of all such uncertificated securities or other types of Investment
Property not represented by certificates and all rollovers and replacements
therefor to reflect the Lien of the Administrative Agent granted pursuant to
this Security Agreement. Each Grantor will use all commercially reasonable
efforts, with respect to Investment Property constituting Collateral owned by
such Grantor held with a financial intermediary, to cause such financial
intermediary to enter into a control agreement with the Administrative Agent in
form and substance reasonably satisfactory to the Administrative Agent.
Notwithstanding anything in this Section 4.4 to the contrary, this Section 4.4
shall not have any application with respect to Investment Property used by the
Borrower in connection with Margin Activities permitted under the Credit
Agreement.

         4.5. Stock and Other Ownership Interests.

                  4.5.1 Changes in Capital Structure of Issuers. No Grantor will
         (i) permit or suffer any issuer of privately held corporate securities
         or other ownership interests in a corporation, partnership, joint
         venture or limited liability company constituting Collateral owned by
         such Grantor to dissolve, liquidate, retire any of its capital stock or
         other Instruments or Securities evidencing ownership, reduce its
         capital or merge or consolidate with any other entity, or (ii) vote any
         of the Instruments, Securities or other Investment Property in favor of
         any of the foregoing, except in each case to the extent permitted under
         Section 6.11 of the Credit Agreement.

                  4.5.2 Issuance of Additional Securities. No Grantor will
         permit or suffer the issuer of privately held corporate securities or
         other ownership interests in a corporation, partnership, joint venture
         or limited liability company constituting Collateral to issue any such
         securities or other ownership interests, any right to receive the same
         or any right to receive earnings, except to such Grantor; provided,
         however, that this Section 4.5.2 shall have no application with respect
         to any corporation, partnership, joint venture or limited liability
         company which is not a Subsidiary of such Grantor (including, without
         limitation, Persons in which a Permitted Alternative Fuel Acquisition
         has been made).

<PAGE>

                  4.5.3 Registration of Pledged Securities and other Investment
         Property. Each Grantor will permit any registerable Collateral owned by
         such Grantor to be registered in the name of the Administrative Agent
         or its nominee at any time at the option of the Required Secured
         Parties following the occurrence and during the continuance of a
         Default and without any further consent of such Grantor; provided,
         however, that this Section 4.5.3 shall not have any application with
         respect to any registerable Collateral used in connection with Margin
         Activities permitted under the Credit Agreement.

                  4.5.4 Exercise of Rights in Pledged Securities and other
         Investment Property. Each Grantor will permit the Administrative Agent
         or its nominee at any time after the continuance of a Default, without
         notice, to exercise or refrain from exercising any and all voting and
         other consensual rights pertaining to the Collateral owned by such
         Grantor or any part thereof, and to receive all dividends and interest
         in respect of such Collateral.

         4.6. Pledged Deposits. No Grantor will withdraw all or any portion of
any Pledged Deposit or fail to rollover said Pledged Deposit without the prior
written consent of the Administrative Agent.

         4.7. Deposit Accounts. Each Grantor will (i) upon the Administrative
Agent's request, cause each bank or other financial institution in which it
maintains (a) a Deposit Account to enter into a control agreement with the
Administrative Agent, in form and substance reasonably satisfactory to the
Administrative Agent in order to give the Administrative Agent Control of the
Deposit Account or (b) other deposits (general or special, time or demand,
provisional or final) to be notified of the security interest granted to the
Administrative Agent hereunder and cause each such bank or other financial
institution to acknowledge such notification in writing and (ii) upon the
Administrative Agent's request after the occurrence and during the continuance
of a Default, deliver to each such bank or other financial institution a letter,
in form and substance reasonably acceptable to the Administrative Agent,
transferring ownership of the Deposit Account to the Administrative Agent or
transferring dominion and control over each such other deposit to the
Administrative Agent until such time as no Default exists. In the case of
deposits maintained with Lenders, the terms of such letter shall be subject to
the provisions of the Credit Agreement regarding setoffs.

         4.8. Letter-of-Credit Rights. Each Grantor will, upon the
Administrative Agent's request, cause each issuer of a letter of credit, to
consent to the assignment of proceeds of the letter of credit in order to give
the Administrative Agent Control of the letter-of-credit rights to such letter
of credit.

         4.9. Federal, State or Municipal Claims. Each Grantor will notify the
Administrative Agent of any Collateral owned by such Grantor which constitutes a
claim against the United States government or any state or local government or
any instrumentality or agency thereof, the assignment of which claim is
restricted by federal, state or municipal law.

         4.10. Intellectual Property. If, after the date hereof, any Grantor
files an application to register any new patentable invention, trademark or
copyright in addition to the patents, trademarks and copyrights described in
Exhibit B, which are all of such Grantor's patents, trademarks and copyrights as
of the Closing Date, then such Grantor shall give the Administrative Agent
notice thereof as part of the compliance certificate provided to the Agent
pursuant to Section 6.1.3 of the Credit Agreement, and the security interest
granted to the Administrative Agent hereunder shall automatically apply thereto.
Each Grantor agrees promptly upon request by the Administrative Agent to execute
and deliver to the Administrative Agent any supplement to this Security
Agreement or any other document reasonably requested by the Administrative Agent
to evidence such security interest in a form appropriate for recording in the

<PAGE>

applicable federal office. Each Grantor also hereby authorizes the
Administrative Agent to modify this Security Agreement unilaterally (i) by
amending Exhibit B to include any future patents, trademarks and/or copyrights
of which the Administrative Agent receives notification from such Grantor
pursuant hereto and (ii) by recording, in addition to and not in substitution
for this Security Agreement, a duplicate original of this Security Agreement
containing in Exhibit B a description of such future patents, trademarks and/or
copyrights.

         4.11. Commercial Tort Claims. If, after the date hereof, any Grantor
identifies the existence of a commercial tort claim belonging to such Grantor
that has arisen in the course of such Grantor's business in addition to the
commercial tort claims described in Exhibit E, which are all of such Grantor's
commercial tort claims as of the Closing Date, then such Grantor shall give the
Administrative Agent notice thereof as part of the compliance certificate
provided to the Agent pursuant to Section 6.1.3 of the Credit Agreement. Each
Grantor agrees promptly upon request by the Administrative Agent to execute and
deliver to the Administrative Agent any supplement to this Security Agreement or
any other document reasonably requested by the Administrative Agent to evidence
the grant of a security interest therein in favor of the Administrative Agent.

                                   ARTICLE V
                                     DEFAULT

         5.1. Acceleration and Remedies. Upon the acceleration of the Secured
Obligations under the Credit Agreement pursuant to Section 8.1 thereof, the
Obligations and, to the extent provided for under the Rate Management
Transactions evidencing the same, the Rate Management Obligations, shall
immediately become due and payable without presentment, demand, protest or
notice of any kind, all of which are hereby expressly waived, and the
Administrative Agent may, with the concurrence or at the direction of the
Required Secured Parties, exercise any or all of the following rights and
remedies:

                  5.1.1 Those rights and remedies provided in this Security
         Agreement, the Credit Agreement, or any other Loan Document, provided
         that this Section 5.1.1 shall not be understood to limit any rights or
         remedies available to the Administrative Agent and the Holders of
         Secured Obligations prior to a Default.

                  5.1.2 Those rights and remedies available to a secured party
         under the New York UCC (whether or not the New York UCC applies to the
         affected Collateral) or under any other applicable law (including,
         without limitation, any law governing the exercise of a bank's right of
         setoff or bankers' lien) when a debtor is in default under a security
         agreement.

                  5.1.3 Without notice except as specifically provided in
         Section 8.1 hereof or elsewhere herein, sell, lease, assign, grant an
         option or options to purchase or otherwise dispose of the Collateral or
         any part thereof in one or more parcels at public or private sale, for
         cash, on credit or for future delivery, and upon such other terms as
         the Administrative Agent may deem commercially reasonable.

The Administrative Agent, on behalf of the secured parties, may comply with any
applicable state or federal law requirements in connection with a disposition of
the Collateral, and such compliance will not be considered to adversely affect
the commercial reasonableness of any sale of the Collateral.

If, after the Credit Agreement has terminated by its terms and all of the
Obligations have been paid in full, there remain Rate Management Obligations
outstanding, the Required Secured Parties may exercise the remedies provided in
this Section 5.1 upon the occurrence of any event which would allow or require
the termination or acceleration of any Rate Management Obligations pursuant to
the terms of the agreement governing any Rate Management Transaction.

<PAGE>

         5.2. Grantors' Obligations Upon Default. Upon the request of the
Administrative Agent after the occurrence and during the Continuation of a
Default, each Grantor will:

                  5.2.1 Assembly of Collateral. Assemble and make available to
         the Administrative Agent the Collateral and all records relating
         thereto at any place or places specified by the Administrative Agent.

                  5.2.2 Secured Party Access. Permit the Administrative Agent,
         by the Administrative Agent's representatives and agents, to enter any
         premises where all or any part of the Collateral, or the books and
         records relating thereto, or both, are located, to take possession of
         all or any part of the Collateral and to remove all or any part of the
         Collateral.

         5.3. License. The Administrative Agent is hereby granted a license or
other right to use, following the occurrence and during the continuance of a
Default, without charge, each Grantor's labels, patents, copyrights, rights of
use of any name, trade secrets, trade names, trademarks, service marks, customer
lists and advertising matter, or any property of a similar nature, as it
pertains to the Collateral, in completing production of, advertising for sale,
and selling any Collateral, and, following the occurrence and during the
continuance of a Default, such Grantor's rights under all licenses and all
franchise agreements shall inure to the Administrative Agent's benefit. In
addition, each Grantor hereby irrevocably agrees that the Administrative Agent
may, following the occurrence and during the continuance of a Default, sell any
of such Grantor's Inventory directly to any person, including without limitation
persons who have previously purchased such Grantor's Inventory from such Grantor
and in connection with any such sale or other enforcement of the Administrative
Agent's rights under this Security Agreement, may sell Inventory which bears any
trademark owned by or licensed to such Grantor and any Inventory that is covered
by any copyright owned by or licensed to such Grantor and the Administrative
Agent may finish any work in process and affix any trademark owned by or
licensed to such Grantor and sell such Inventory as provided herein.

                                   ARTICLE VI
                        WAIVERS, AMENDMENTS AND REMEDIES

         No delay or omission of the Administrative Agent or any Holder of
Secured Obligations to exercise any right or remedy granted under this Security
Agreement shall impair such right or remedy or be construed to be a waiver of
any Default or an acquiescence therein, and any single or partial exercise of
any such right or remedy shall not preclude any other or further exercise
thereof or the exercise of any other right or remedy. No waiver, amendment or
other variation of the terms, conditions or provisions of this Security
Agreement whatsoever shall be valid unless in writing signed by the
Administrative Agent with the concurrence or at the direction of the Lenders
required under Section 8.2 of the Credit Agreement and each Grantor, and then
only to the extent in such writing specifically set forth, provided that the
addition of any Domestic Subsidiary as a Grantor hereunder by execution of a
Security Agreement Supplement in the form of Annex I (with such modifications as
shall be acceptable to the Administrative Agent) shall not require receipt of
any consent from or execution of any documentation by any other Grantor party
hereto. All rights and remedies contained in this Security Agreement or by law
afforded shall be cumulative and all shall be available to the Administrative
Agent and the Holders of Secured Obligations until the Secured Obligations have
been paid in full.

                                  ARTICLE VII
                       PROCEEDS; COLLECTION OF RECEIVABLES

         7.1. Lockboxes. Upon request of the Administrative Agent after the
occurrence and during the continuation of a Default, each Grantor shall execute
and deliver to the Administrative Agent lockbox agreements in the form provided
by or otherwise acceptable to the Administrative Agent, which agreements shall
be accompanied by an acknowledgment by the bank where the lockbox is located of
the Lien of the Administrative Agent granted hereunder and of irrevocable
instructions to wire all amounts collected therein to a special collateral
account at the Administrative Agent.

<PAGE>

         7.2. Collection of Receivables. The Administrative Agent may at any
time after the occurrence and during the continuation of a Default, by giving
each Grantor written notice, elect to require that the Receivables be paid
directly to the Administrative Agent for the benefit of the Holders of Secured
Obligations. In such event, each Grantor shall, and shall permit the
Administrative Agent to, promptly notify the account debtors or obligors under
the Receivables owned by such Grantor of the Administrative Agent's interest
therein and direct such account debtors or obligors to make payment of all
amounts then or thereafter due under such Receivables directly to the
Administrative Agent. Upon receipt of any such notice from the Administrative
Agent, each Grantor shall thereafter hold in trust for the Administrative Agent,
on behalf of the Holders of Secured Obligations, all amounts and proceeds
received by it with respect to the Receivables and Other Collateral and
immediately and at all times thereafter deliver to the Administrative Agent all
such amounts and proceeds in the same form as so received, whether by cash,
check, draft or otherwise, with any necessary endorsements. The Administrative
Agent shall hold and apply funds so received as provided by the terms of
Sections 7.3 and 7.4 hereof.

         7.3. Special Collateral Account. Upon the occurrence and during the
continuation of a Default, the Administrative Agent may require all cash
proceeds of the Collateral to be deposited in a special non-interest bearing
cash collateral account with the Administrative Agent and held there as security
for the Secured Obligations. No Grantor shall have any control whatsoever over
said cash collateral account. If any Default has occurred and is continuing, the
Administrative Agent may (and shall, at the direction of the Required Secured
Parties), from time to time, apply the collected balances in said cash
collateral account to the payment of the Secured Obligations whether or not the
Secured Obligations shall then be due.

         7.4. Application of Proceeds. The proceeds of the Collateral shall be
applied by the Administrative Agent to payment of the Secured Obligations in the
following order unless a court of competent jurisdiction shall otherwise direct:

                  (a) FIRST, to payment of all reasonable costs and expenses of
         the Administrative Agent incurred in connection with the collection and
         enforcement of the Secured Obligations or of the security interest
         granted to the Administrative Agent pursuant to this Security
         Agreement;

                  (b) SECOND, to payment of that portion of the Secured
         Obligations constituting accrued and unpaid interest and fees, pro rata
         among the Lenders and their Affiliates in accordance with the amount of
         such accrued and unpaid interest and fees owing to each of them;

                  (c) THIRD, to payment of the principal of the Secured
         Obligations and the net early termination payments and any other Rate
         Management Obligations then due and unpaid from the Borrower to any of
         the Lenders or their Affiliates, pro rata among the Lenders and their
         Affiliates in accordance with the amount of such principal and such net
         early termination payments and other Rate Management Obligations then
         due and unpaid owing to each of them;

                  (d) FOURTH, to payment of any Secured Obligations (other than
         those listed above) pro rata among those parties to whom such Secured
         Obligations are due in accordance with the amounts owing to each of
         them; and

<PAGE>

                  (e) FIFTH, the balance, if any, after all of the Secured
         Obligations have been satisfied, shall be distributed by the
         Administrative Agent to the applicable Grantor or at its direction.

                                  ARTICLE VIII
                               GENERAL PROVISIONS

         8.1. Notice of Disposition of Collateral; Condition of Collateral. Each
Grantor hereby waives notice of the time and place of any public sale or the
time after which any private sale or other disposition of all or any part of the
Collateral may be made. To the extent such notice may not be waived under
applicable law, any notice made shall be deemed reasonable if sent to the
Borrower, addressed as set forth in Article IX, at least thirty days prior to
(i) the date of any such public sale or (ii) the time after which any such
private sale or other disposition may be made. Administrative Agent shall have
no obligation to clean-up or otherwise prepare the Collateral for sale.

         8.2. Compromises and Collection of Collateral. Each Grantor and the
Administrative Agent recognize that setoffs, counterclaims, defenses and other
claims may be asserted by obligors with respect to certain of the Receivables,
that certain of the Receivables may be or become uncollectible in whole or in
part and that the expense and probability of success in litigating a disputed
Receivable may exceed the amount that reasonably may be expected to be recovered
with respect to a Receivable. In view of the foregoing, each Grantor agrees that
the Administrative Agent may at any time and from time to time, if a Default has
occurred and is continuing, compromise with the obligor on any Receivable,
accept in full payment of any Receivable such amount as the Administrative Agent
in its sole discretion shall determine or abandon any Receivable, and any such
action by the Administrative Agent shall be commercially reasonable so long as
the Administrative Agent acts in good faith based on information known to it at
the time it takes any such action.

         8.3. Secured Party Performance of Grantor's Obligations. Without having
any obligation to do so, the Administrative Agent may perform or pay any
obligation which any Grantor has agreed to perform or pay in this Security
Agreement and such Grantor shall reimburse the Administrative Agent for any
reasonable amounts paid by the Administrative Agent pursuant to this Section
8.3. Each Grantor's obligation to reimburse the Administrative Agent pursuant to
the preceding sentence shall be a Secured Obligation payable on demand.

         8.4. Authorization for Secured Party to Take Certain Action. Each
Grantor irrevocably authorizes the Administrative Agent at any time and from
time to time in the sole discretion of the Administrative Agent and appoints the
Administrative Agent as its attorney in fact (i) to execute on behalf of such
Grantor as debtor and to file financing statements necessary or desirable in the
Administrative Agent's sole discretion to perfect and to maintain the perfection
and priority of the Administrative Agent's security interest in the Collateral,
(ii) upon the occurrence and during the continuation of a Default, to indorse
and collect any cash proceeds of the Collateral, (iii) to file a carbon,
photographic or other reproduction of this Security Agreement or any financing
statement with respect to the Collateral as a financing statement and to file
any other financing statement or amendment of a financing statement (which does
not add new collateral or add a debtor) in such offices as the Administrative
Agent in its sole discretion deems necessary or desirable to perfect and to
maintain the perfection and priority of the Administrative Agent's security
interest in the Collateral, (iv) to contact and enter into one or more
agreements with the issuers of uncertificated securities which are Collateral
owned by such Grantor and which are Securities or with financial intermediaries
holding other Investment Property as may be necessary or advisable to give the
Administrative Agent Control over such Securities or other Investment Property,

<PAGE>

(v) upon the occurrence and during the continuation of a Default, subject to the
terms of the Credit Agreement, to enforce payment of the Instruments, Accounts
and Receivables in the name of the Administrative Agent or such Grantor, (vi)
upon the occurrence and during the continuation of a Default, to apply the
proceeds of any Collateral received by the Administrative Agent to the Secured
Obligations as provided in Article VII and (vii) upon the occurrence and during
the continuation of a Default, to discharge past due taxes, assessments,
charges, fees or Liens on the Collateral (except for such Liens as are
specifically permitted hereunder or under any other Loan Document), and each
Grantor agrees to reimburse the Administrative Agent on demand for any
reasonable payment made or any reasonable expense incurred by the Administrative
Agent in connection therewith, provided that this authorization shall not
relieve any Grantor of any of its obligations under this Security Agreement or
under the Credit Agreement.

         8.5. Specific Performance of Certain Covenants. Each Grantor
acknowledges and agrees that a breach of any of the covenants contained in
Sections 4.4 or 5.2 or in Article VII hereof will cause irreparable injury to
the Administrative Agent and the Holders of Secured Obligations, that the
Administrative Agent and Holders of Secured Obligations have no adequate remedy
at law in respect of such breaches and therefore agrees, without limiting the
right of the Administrative Agent or the Holders of Secured Obligations to seek
and obtain specific performance of other obligations of the Grantors contained
in this Security Agreement, that the covenants of the Grantors contained in the
Sections referred to in this Section 8.5 shall be specifically enforceable
against the Grantors.

         8.6. Use and Possession of Certain Premises. Upon the occurrence and
during the continuation of a Default, the Administrative Agent shall be entitled
to occupy and use any premises owned or leased by the Grantors where any of the
Collateral or any records relating to the Collateral are located until the
Secured Obligations are paid or the Collateral is removed therefrom, whichever
first occurs, without any obligation to pay any Grantor for such use and
occupancy.

         8.7. Benefit of Agreement. The terms and provisions of this Security
Agreement shall be binding upon and inure to the benefit of the Grantors, the
Administrative Agent and the Holders of Secured Obligations and their respective
successors and assigns (including all persons who become bound as a debtor to
this Security Agreement), except that the Grantors shall not have the right to
assign their rights or delegate their obligations under this Security Agreement
or any interest herein, without the prior written consent of the Administrative
Agent.

         8.8. Survival of Representations. All representations and warranties of
the Grantors contained in this Security Agreement shall survive the execution
and delivery of this Security Agreement.

         8.9. Headings. The title of and section headings in this Security
Agreement are for convenience of reference only, and shall not govern the
interpretation of any of the terms and provisions of this Security Agreement.

         8.10. Termination. This Security Agreement shall continue in effect
(notwithstanding the fact that from time to time there may be no Secured
Obligations outstanding) until (i) the Credit Agreement has terminated pursuant
to its express terms and (ii) all of the Secured Obligations have been
indefeasibly paid and performed in full and no commitments of the Administrative
Agent or the Holders of Secured Obligations which would give rise to any Secured
Obligations are outstanding.

         8.11. Entire Agreement. This Security Agreement embodies the entire
agreement and understanding between the Grantors and the Administrative Agent
relating to the Collateral and supersedes all prior agreements and
understandings between the Grantors and the Administrative Agent relating to the
Collateral.

         8.12. CHOICE OF LAW. THIS SECURITY AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(WITHOUT REGARD TO THE CONFLICTS OF LAWS PROVISIONS) BUT GIVING EFFECT TO
FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.

         8.13. Subordination of Intercompany Indebtedness. Each Grantor agrees
that any and all claims of such Grantor against any other Grantor with respect
to any payment or distribution of any kind or character, either in cash,
securities or other property is and shall be expressly subordinated to the
Secured Obligations pursuant to those terms and conditions set forth in the
Credit Agreement.

                                   ARTICLE IX
                                     NOTICES

         9.1. Sending Notices. Any notice required or permitted to be given
under this Security Agreement shall be sent (and deemed received) in the manner
and to the addresses set forth in Article XIII of the Credit Agreement; and any
such notice delivered to the Borrower shall be deemed to have been delivered to
all of the Grantors.

         9.2. Change in Address for Notices. Each of the Grantors, the
Administrative Agent and the Lenders may change the address for service of
notice upon it by a notice in writing to the other parties.

<PAGE>

                                    ARTICLE X
                            THE ADMINISTRATIVE AGENT

         Bank One, NA (Main Office Chicago) has been appointed Administrative
Agent for the Holders of Secured Obligations hereunder pursuant to Article X of
the Credit Agreement. It is expressly understood and agreed by the parties to
this Security Agreement that any authority conferred upon the Administrative
Agent hereunder is subject to the terms of the delegation of authority made by
the Holders of Secured Obligations to the Administrative Agent pursuant to the
Credit Agreement, and that the Administrative Agent has agreed to act (and any
successor Administrative Agent shall act) as such hereunder only on the express
conditions contained in such Article X. Any successor Administrative Agent
appointed pursuant to Article X of the Credit Agreement shall be entitled to all
the rights, interests and benefits of the Administrative Agent hereunder.

                            [SIGNATURE PAGES FOLLOW]

<PAGE>

                 SIGNATURE PAGE TO PLEDGE AND SECURITY AGREEMENT
         IN WITNESS WHEREOF, each of the Grantors and the Administrative Agent
have executed this Security Agreement as of the date first above written.

                                 HEADWATERS INCORPORATED, as a Grantor

                                 By   /s/ Steven G. Stewart
                                    --------------------------------------------
                                 Name:  Steven G. Stewart
                                 Title: Chief Financial Officer

                                 COVOL SERVICES CORPORATION,
                                 HEADWATERS CLEAN COAL CORP.,
                                 HEADWATERS HEAVY OIL, INC.,
                                 HEADWATERS NANOKINETIX, INC.,
                                 HEADWATERS OLYSUB CORPORATION,
                                 HEADWATERS TECHNOLOGY INNOVATION
                                      GROUP, INC.,
                                 HTI CHEMICAL SUBSIDIARY, INC.
                                 HYDROCARBON TECHNOLOGIES, INC.,
                                      each as a Guarantor

                                 By   /s/ Harlan M. Hatfield
                                    --------------------------------------------
                                 Name:  Harlan M. Hatfield
                                 Title: Vice President, General Counsel and
                                        Secretary

<PAGE>

                                 ACM GEORGIA, INC.,
                                 AMERICAN CONSTRUCTION MATERIALS, INC.,
                                 GLOBAL CLIMATE RESERVE CORPORATION,
                                 ISG LIBERTY, INC.,
                                 ISG RESOURCES, INC.,
                                 BEST MASONRY & TOOL SUPPLY, INC.,
                                 LEWIS W. OSBORNE, INC.,
                                 UNITED TERRAZZO SUPPLY CO., INC.,
                                 MAGNA WALL, INC.,
                                 ISG MANUFACTURED PRODUCTS, INC.,
                                 ISG PARTNER, INC.,
                                 ISG SERVICES CORPORATION,
                                 ISG SWIFT CRETE, INC.,
                                 DON'S BUILDING SUPPLY, L.P.,
                                 PALESTINE CONCRETE TILE COMPANY, L.P.,
                                      each as a Guarantor

                                 By       /s/ Brett A. Hickman
                                    --------------------------------------------
                                 Name:  Brett A. Hickman
                                 Title: Senior Vice President, General Counsel
                                        and Secretary

<PAGE>

                                 BANK ONE, NA, as Administrative Agent

                                 By:   /s/ Tony C. Nielsen
                                    --------------------------------------------
                                 Name:  Tony C. Nielsen
                                 Title:  First Vice PresidentExhibit 10.85

                          AGREEMENT and PLAN OF MERGER

         This Agreement and Plan of Merger (this "Agreement") is dated February
10, 2004, between Headwaters Incorporated, a Delaware corporation ("Parent"),
ISG Liberty, Inc. a Utah corporation ("Purchaser"), VFL Technology Corporation,
a Pennsylvania corporation ("Company"), Richard W. Patton, an individual
residing in Florida ("Patton") and Louis M. Ruggiano, an individual residing in
Florida ("Ruggiano"). Patton and Ruggiano shall be collectively referred to
herein as the "Equityholders". The Purchaser, the Parent and the Equityholders
may be individually referred to as a "Party" or collectively as the "Parties".

                                    RECITALS

         WHEREAS, the respective boards of directors of each of Parent, the
Purchaser and the Company have approved this Agreement, pursuant to which the
Purchaser will merge with and into the Company (the "Merger").

         WHEREAS, the Equityholders have, as sole shareholders of the Company,
each approved this Agreement.

         WHEREAS, the issued and outstanding shares of capital stock of the
Company shall be referred to collectively herein as the "Common Shares" and
individually as a "Common Share".

         WHEREAS, the Parent, the Purchaser, the Company and the Equityholders
desire to make certain representations, warranties, covenants and agreements in
connection with this Agreement.

         WHEREAS, unless otherwise defined in this Agreement, the capitalized
terms used in this Agreement have the meanings given in Article 9 below.
References to any section in this Agreement shall be in reference to the Article
and then the Section (or subsection) within the Article (for example reference
to Section 1.2.1 shall mean Article 1, Section 2, subsection 1).

         NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as set forth
herein, intending to be legally bound.

                                    ARTICLE 1

1. THE MERGER, EFFECT OF THE MERGER

         1.1. The Merger. Upon the terms and subject to the conditions hereof,
and in accordance with the Utah Revised Business Corporation Act (the "URBC")
and the Pennsylvania Business Corporation Law of 1988, as amended (the "PBCL"),
the Purchaser shall be merged with and into the Company at the Effective Time.
Following the Merger, the separate corporate existence of the Purchaser shall
cease and the Company shall continue as the surviving corporation (the
"Surviving Corporation") and shall succeed to and assume all the rights and
obligations of the Purchaser and the Company in accordance with the URBC and the
PBCL.

<PAGE>

         1.2. Closing. The closing (the "Closing") of the Merger shall take
place at 10:00 a.m. on a date to be specified by the Parties, which date shall
be no earlier than the second business day and no later than the fifth business
day after satisfaction or waiver of the conditions set forth in Article 5 (other
than those conditions that by their nature are to be satisfied at the Closing,
but subject to the fulfillment or waiver of those conditions at Closing) at the
offices of the Company in West Chester, Pennsylvania, unless another date, time
or place is agreed to in writing by the Parties (the "Closing Date").

         1.3. Effective Time. The Merger shall become effective (the "Effective
Time") when a Certificate of Merger and the Articles of Merger (collectively,
the "Merger Filings"), executed in accordance with the relevant provisions of
the URBC and the PBCL, are duly filed with the Division of Corporations and
Commercial Code of the State of Utah and the Secretary of State of the
Commonwealth of Pennsylvania, or at such other time as the Purchaser and the
Company shall agree should be specified in the Merger Filings. The Merger
Filings shall be made contemporaneously with or as promptly as practicable after
the Closing.

         1.4. Effects of the Merger. The Merger shall have the effects set forth
in the URBC and the PBCL.

         1.5. Articles of Incorporation and Bylaws; Officers and Directors.

                  1.5.1. The Articles of Incorporation of the Company, as in
         effect immediately prior to the Effective Time, shall be the Articles
         of Incorporation of the Surviving Corporation until thereafter changed
         or amended as provided therein or by applicable law.

                  1.5.2. The Bylaws of the Company, as in effect immediately
         prior to the Effective Time, shall be the Bylaws of the Surviving
         Corporation until thereafter changed or amended as provided therein, by
         the Articles of Incorporation of the Surviving Corporation or by
         applicable law.

                  1.5.3. The directors of the Company shall resign at and as of
         the Effective Time and the directors of the Purchaser immediately prior
         to the Effective Time shall become the directors of the Surviving
         Corporation, until the next annual meeting of stockholders (or the
         earlier of their resignation or removal) and until their respective
         successors are duly elected and qualified, as the case may be.

                  1.5.4. The officers of the Company shall resign at and as of
         the Effective Time and the officers of the Purchaser immediately prior
         to the Effective Time shall become the officers of the Surviving
         Corporation until the earlier of their resignation or removal and until
         their respective successors are duly elected and qualified, as the case
         may be.

         1.6. Effect of the Merger on the Stock of the Company; Exchange of
Certificates.

                  1.6.1 Effect on Capital Stock. As of the Effective Time, by
         virtue of the Merger and without any action on the part of the Parent,
         the Purchaser, the Company or the Equityholders, each of the following
         shall occur:

                  1.6.2 Common Stock. Each share of the Common Stock of the
         Company (each a "Common Share") issued and outstanding immediately
         prior to the Effective Time shall be converted into the right to
         receive the following (collectively, the "Merger Consideration"): (i)
         an amount equal to $5,000 in cash per share or $2,000,000 in the
         aggregate all of which is allocated to the purchase of the fixed assets
         of the Company as partial payment therefore (the "Cash Payment"), plus

<PAGE>

         (ii) $32,500 per share or $13,000,000 in the aggregate payable in
         accordance with the terms of the promissory note (the "Initial Note")
         attached hereto as Exhibit A, secured by a pledge to the Equityholders
         of all New Shares (as defined hereinbelow) of the Company under a stock
         pledge agreement in the form attached hereto as Exhibit B (the "Stock
         Pledge Agreement"), plus (iii) $7,500 per share or $3,000,000 in the
         aggregate payable in accordance with the terms of the promissory note
         (the "Secured Note") attached hereto as Exhibit C, secured by an
         irrevocable letter of credit in the form attached hereto as Exhibit D
         (the "Letter of Credit"), plus (iv) $7,500 per share or $3,000,000 in
         the aggregate payable in accordance with the terms of the promissory
         note (the "Unsecured Note") attached hereto as Exhibit E, plus (v) the
         Estimated Tax Payment payable in accordance with Section 8.5. At the
         Effective Time, (a) all Common Shares shall cease to be outstanding,
         shall be canceled and retired and shall cease to exist, and (b) each
         certificate formerly representing a Common Share shall thereafter cease
         to have any rights with respect to the Common Shares, except as
         provided herein or by law.

                  1.6.3 Capital Stock of the Purchaser. Each issued and
         outstanding share of capital stock of the Purchaser, immediately prior
         to the Effective Time, shall be converted into one share of Common
         Stock of the Surviving Corporation (collectively, the "New Shares").

                  1.6.4 Exchange Procedure1.6.1. . Promptly after the Effective
         Time each Equityholder shall surrender his Common Shares to the Parent
         and shall receive in exchange therefor the Merger Consideration.

         1.7. Post Closing Adjustment.

                  1.7.1. The Merger Consideration will increase or decrease, on
         a dollar-for-dollar basis, by the amount by which the working capital
         of the Company calculated solely for purposes of this Section 1.7 in
         accordance with the formula attached hereto as Exhibit F (the "Adjusted
         Working Capital"), exceeds or is less than, respectively, three million
         four hundred thousand dollars ($3,400,000) calculated as of the Closing
         Date.

                  1.7.2. Within sixty days of the Closing Date, the
         Equityholders will provide the Company with a calculation of the
         Adjusted Working Capital indicating whether an adjustment is due
         pursuant to Section 1.7.1 (the "Calculation"). If the Company, within
         thirty days of receiving the Calculation, disagrees with the
         Calculation, then the Equityholders and the Company will promptly
         engage an independent accounting firm to review the Calculation as of
         the Closing in accordance with GAAP, consistently applied. Within
         forty-five (45) days after the matter is referred to the accounting
         firm, the accounting firm will prepare and deliver a report to the
         Parties which will detail whether a Merger Consideration adjustment is
         necessary. The report will be final and binding on the Parties, absent
         fraud or clear error.

                  1.7.3. If the Company agrees with the Calculation, then within
         twenty (20) days after delivery of the Calculation: (i) if the
         Calculation indicates that an upward adjustment is appropriate, the
         Company will deliver to the Equityholders, on a pro-rata basis, cash in
         the amount of the indicated adjustment; or (ii) if the Calculation
         indicates that a downward adjustment is appropriate, the Unsecured Note
         shall be reduced in the amount of the indicated adjustment by applying

<PAGE>

         the reduction to the principal payment(s) in inverse order of maturity.
         If the Company disagrees with the Calculation then, within twenty (20)
         days after delivery of the report by the independent accounting firm,
         referred to in Section 1.7.2: (i) if the report indicates that an
         upward adjustment is appropriate, the Company will deliver to the
         Equityholders, on a pro-rata basis, cash in the amount of the
         adjustment specified in the report, absent fraud or clear error; or
         (ii) if the report indicates that an downward adjustment is
         appropriate, the Promissory Note shall be reduced as aforesaid in the
         amount of the adjustment specified in the report, absent fraud or clear
         error.

                                    ARTICLE 2

2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE EQUITYHOLDERS

         The Equityholders and the Company hereby represent and warrant to the
Purchaser as follows:

         2.1. Organization and Qualification. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Pennsylvania and has full corporate power and authority to conduct its business
as and to the extent now conducted and to own, use and lease its Assets. The
Company is duly qualified, licensed or admitted to do business and is in good
standing in each jurisdiction in which the ownership, use or leasing of its
Assets, or the conduct or nature of its business, makes such qualification,
licensing or admission necessary, except for such failures to be so qualified,
licensed or admitted and in good standing which, individually or in the
aggregate, (i) are not having and could not be reasonably expected to have a
Material Adverse Effect on the business or condition of the Company and (ii)
could not be reasonably expected to have a Material Adverse Effect on the
validity or enforceability of this Agreement or any other agreement to which it
is a party or on the ability of the Equityholders or the Company to perform
their obligations hereunder or thereunder. The Company has delivered to
Purchaser true and complete copies of the certificate or articles of
incorporation and by-laws (or other comparable charter or enabling documents) of
the Company, including all amendments thereto effected through the Closing Date.
Section 2.1 of the Disclosure Schedule sets forth a complete and accurate list
of each jurisdiction in which the Company is qualified to do business.

         2.2. Capital Stock. The Common Shares consists of the following number
of shares of capital stock: 240 shares of common stock, par value $1.00 per
share owned by Patton; and 160 shares of common stock, par value $1.00 per share
owned by Ruggiano. The Common Shares constitute all of the issued and
outstanding shares of capital stock of the Company. The shares of Common Shares
are validly issued, fully paid and non-assessable, issued in compliance with all
applicable Laws and no additional shares of capital stock have been reserved for
issuance. There are no outstanding Options with respect to the stock of the
Company or agreements, arrangements or understandings to issue any Options with
respect to the stock of the Company, nor are there any preemptive rights or
agreements, arrangements or understandings to issue preemptive rights with
respect to the issuance or sale of the capital stock of the Company. The
Equityholders are the record and beneficial owners of all of the Common Shares,
free and clear of all Liens. From and after the Closing, neither the
Equityholders nor any other Person (other than the Purchaser) will have any
rights whatsoever with respect to the Common Shares or to any other securities,
or incidents of ownership, of or in the Company.

         2.3. Authority Relative to this Agreement. The Company and the
Equityholders have full authority to enter into this Agreement, to perform their
obligations hereunder and to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by the Company
and the Equityholders and constitutes the legal, valid and binding obligations
of the Company and the Equityholders, enforceable against them in accordance
with its terms.

<PAGE>

         2.4. Subsidiaries; Company; Business. Section 2.4 of the Disclosure
Schedule lists all lines of business in which the Company is participating or
engaged or has participated or engaged in the preceding three years. The name of
each director and officer of the Company, and the position with the Company held
by each, are listed in Section 2.4 of the Disclosure Schedule. Except as set
forth in Section 2.4 of the Disclosure Schedule, the Company holds no equity,
partnership, joint venture or other interest in any Person.

         2.5. No Conflicts. The execution and delivery by the Company and by the
Equityholders of this Agreement does not, and the consummation of the
transactions contemplated hereby will not:

                  2.5.1. conflict with or result in a violation or breach of any
         of the terms, conditions or provisions of the certificate or articles
         of incorporation or by-laws (or other comparable charter or enabling
         documents) of the Company;

                  2.5.2. subject to obtaining the consents, approvals and
         actions, making the filings and giving the notices referred to in
         Section 2.6 below or disclosed in Section 2.6 of the Disclosure
         Schedule, if any, conflict with or result in a violation or breach of
         any term or provision of any Laws or Order applicable to any of the
         Equityholders or to the Company, or any of their Assets; or

                  2.5.3. except as disclosed in Section 2.5 of the Disclosure
         Schedule, (i) conflict with or result in a violation or breach of, (ii)
         constitute (with or without notice or lapse of time or both) a default
         under, (iii) require any of the Equityholders or the Company to obtain
         any consent, approval or action of, make any filing with or give any
         notice to any Person as a result or under the terms of, (iv) result in
         or give to any Person any right of termination, cancellation,
         acceleration or modification in or with respect to, (v) result in or
         give to any Person any additional rights or entitlement to increased,
         additional, accelerated or guaranteed payments under, or (vi) result in
         the creation or imposition of any Lien upon the Company or any of its
         Assets under, any Contract or License to which the Equityholders or the
         Company is a party or by which any of their respective Assets is bound.

         2.6. Governmental Approvals and Filings. Except as disclosed in Section
2.6 of the Disclosure Schedule, no consent, approval or action of, filing with
or notice to any Governmental or Regulatory Authority on the part of the
Equityholders or the Company is required in connection with the execution,
delivery and performance of this Agreement or the consummation of transactions
contemplated herein.

         2.7. Books and Records. The minute books and other similar records of
the Company to be provided to Purchaser upon execution of this Agreement contain
a true and complete record, in all material respects, of all action taken by the
stockholders, the board of directors and committees of the boards of directors
(or other similar governing entities) of the Company.

         2.8. Financial Statements; Internal Controls; Execution of
Certifications.

                  2.8.1. The Equityholders have caused the Company to furnish to
         Purchaser true and complete copies of (i) the audited balance sheets of
         the Company for the periods ending as at December 31, 2000, 2001 and
         2002 and the audited income statements and statements of cash flow for
         the annual periods then ended, together with the audit reports thereon
         of Joseph M. Cahill, Ltd., independent public accountants (ii)
         unaudited balance sheet as at November 30, 2003 and unaudited income
         statement and statements of cash flow for the 11-month period then
         ended certified as true and correct by the chief financial officer of

<PAGE>

         the Company and the Equityholders. All of these statements, opinions,
         etc. (collectively referred to herein as the "Financial Statements")
         are in accordance with the Books and Records of the Company and fairly
         present the financial position of the Company as of the dates thereof,
         for the periods covered thereby and the results of operations and cash
         flows of the Company for the periods set forth therein, all in
         conformity with GAAP, consistently applied. The Company has no
         liabilities or obligations, secured or unsecured (whether accrued,
         absolute, contingent or otherwise and whether or not required to be
         reflected in the Financial Statements under GAAP) (collectively,
         "Liabilities") not reflected on or adequately reserved against in the
         Financial Statements or the accompanying notes thereto, except for (i)
         Liabilities incurred in the ordinary course of business since the date
         of the Financial Statements which are usual and normal in amount, and
         (ii) Liabilities which would not be required under GAAP to be set forth
         on or reserved against in the Financial Statement or a consolidated
         balance sheet of the Company as of the date hereof, which would not,
         individually or in the aggregate, reasonably be expected to have a
         Material Adverse Effect on the Company.

                  2.8.2. The Company maintains a system of internal accounting
         controls sufficient to provide reasonable assurance that (i)
         transactions are executed in accordance with management's general or
         specific authorizations; (ii) transactions are recorded as necessary to
         permit preparation of financial statements in conformity with GAAP,
         consistently applied, and to maintain asset accountability; (iii)
         access to assets is permitted only in accordance with management's
         general or specific authorization; and (iv) the recorded accountability
         for assets is compared with the existing assets at reasonable intervals
         and appropriate action is taken with respect to any differences.

                  2.8.3. No officer, director, or employee of the Company or any
         Subsidiary has ever refused to execute any certification, of any nature
         whatsoever, required by law, or requested by any accounting, banking,
         financial or legal firm or entity.

         2.9. Absence of Changes. Since December 31, 2002, there has not been
any Material Adverse Change or any event or development, which, individually or
together with other such events, could reasonably be expected to result in a
Material Adverse Change, in the business or condition of the Company and/or the
Assets. In addition, except as expressly contemplated hereby and except as
disclosed in the Financial Statements or in Section 2.9 of the Disclosure
Schedule, there has not occurred since December 31, 2002:

                  2.9.1. any declaration, setting aside or payment of any
         dividend or other distribution in respect of the capital stock (or
         other equity interests) of the Company or any direct or indirect
         redemption, purchase or other acquisition by the Company of any such
         capital stock (or other equity interests) of the Company;

                  2.9.2. any authorization, issuance, sale or other disposition
         by the Company of any shares of its capital stock (or other equity
         interests), or any modification or amendment of any right of any holder
         of any outstanding shares of capital stock (or other equity interests)
         of the Company;

                  2.9.3. any increase in salary, rate of commissions or rate of
         consulting fees of any employee or consultant of the Company; (ii) any
         payment of consideration of any nature whatsoever (other than salary,
         commissions or consulting fees paid to any employee or consultant of
         the Company) to any officer, director, stockholder, employee or

<PAGE>

         consultant of the Company; (iii) any establishment or modification of
         (A) targets, goals, pools or similar provisions under any Benefit Plan,
         employment contract or other employee compensation arrangement or (B)
         salary ranges, increase guidelines or similar provisions in respect of
         any Benefit Plan, employment contract or other employee compensation
         arrangement; or (iv) any adoption, entering into, amendment,
         modification or termination (partial or complete) of any Benefit Plan;

                  2.9.4. incurrences by the Company of (i) Indebtedness or (ii)
         any voluntary purchase, cancellation, prepayment or complete or partial
         discharge in advance of a scheduled payment date with respect to, or
         waiver of any right of the Company under, any Indebtedness of or owing
         to the Company;

                  2.9.5. any physical damage, destruction or other casualty loss
         (whether or not covered by insurance) affecting any of the Assets of
         the Company in an aggregate amount exceeding $25,000;

                  2.9.6. any write-off or write-down of or any determination to
         write off or write down any of the Assets of the Company;

                  2.9.7. any purchase of any Assets of any Person or disposition
         of, or incurrence of a Lien on, any Company Assets, other than
         acquisitions or dispositions of inventory in the ordinary course of
         business by the Company consistent with past practice;

                  2.9.8. other than in the ordinary course of business (and in
         each such case disclosed to the Purchaser), any entering into,
         amendment, modification, termination (partial or complete) or granting
         of a waiver under or giving any consent with respect to (i) any
         Contract which is required (or had it been in effect on the date hereof
         would have been required) to be disclosed in the Disclosure Schedule
         pursuant to Section 2.18.1, (ii) any License held by the Company, or
         (iii) any intellectual property rights owned by the Company;

                  2.9.9. any capital expenditures or commitments for additions
         to property, plant or equipment of the Company constituting capital
         assets in an aggregate amount exceeding $25,000;

                  2.9.10. any commencement, termination or change by the Company
         of any line of business;

                  2.9.11. any transaction by the Company with any of its
         officers, directors, stockholders or Affiliates, other than pursuant to
         a Contract or arrangement in effect on December 31, 2002 and disclosed
         to Purchaser pursuant to Section 2.18.A or other than pursuant to any
         Contract of employment and listed pursuant to Section 2.18.A of the
         Disclosure Schedule;

                  2.9.12. any entering into of an agreement to do or engage in
         any of the foregoing, including without limitation with respect to any
         merger, sale of substantially all assets or other business combination
         not otherwise restricted by the foregoing paragraphs; or

                  2.9.13. any change in the accounting methods or procedures of
         the Company.

         2.10. No Undisclosed Liabilities. Except as disclosed in Section 2.10
of the Disclosure Schedule, neither the Company nor any of its Subsidiaries has
any liability, indebtedness, obligation, expense, claim, deficiency, guaranty or
endorsement of any type, whether accrued, absolute, contingent, matured,
unmatured or other (whether or not required to be reflected in Financial

<PAGE>

Statements in accordance with GAAP), except for those which individually or in
the aggregate (i) have been reflected in the Current Balance Sheet, or (ii) have
arisen in the ordinary course of business consistent with past practices since
the Balance Sheet Date and prior to the date hereof, and there are no
Liabilities relating to or affecting the Company or any of its Assets.

         2.11. Taxes. Except as set forth on Section 2.11 of the Disclosure
Schedule:

                  2.11.1. The Company has duly filed (or has had filed on its
         behalf) all Tax Returns required to be filed under applicable laws and
         regulations by or with respect to the Company. All such Tax Returns (i)
         were prepared in the manner required by applicable law; (ii) are in
         compliance with applicable laws and regulations and are, to the best
         knowledge of the Company and the Equityholders, true, correct, and
         complete in all material respects, and (iii) accurately reflect the
         liability for Taxes of the Company. No claim (including a notice of
         inquiry or commencement of an audit) has ever been made by any
         authority in a jurisdiction where the Company does not file Tax Returns
         that the Company is or may be subject to taxation by that jurisdiction.
         No extension of time with respect to any date on which a Tax Return was
         or is to be filed by, or related to, the Company is in force, and no
         waiver or agreement by the Company is in force for the extension of
         time for the assessment or payment of any Taxes. The Company has not
         granted a power of attorney to any person with respect to any Taxable
         Period.

                  2.11.2. The Company has complied in all respects with the
         provisions of the Code relating to the withholding and payment of
         Taxes, and has, within the time and in the manner prescribed by law,
         withheld and paid over to the proper governmental authorities all
         amounts required to be withheld from employees, independent
         contractors, creditors, stockholders, or other third parties except
         where noncompliance would not result, individually or in the aggregate,
         in any material liability.

                  2.11.3. The Company has paid, or caused to be paid, all Taxes
         due by, or related to, the Company, whether or not shown (or required
         to be shown) on a Tax Return. All assessments of Tax made against the
         Company have been paid when due.

                  2.11.4. The Financial Statements reflect an adequate reserve
         for the payment of all Taxes due and payable by the Company for all
         Taxable Periods through the date of such Financial Statements. There
         are no Taxes that would be due if asserted by a taxing authority,
         except with respect to which the Company is maintaining adequate
         reserves.

                  2.11.5. Since the date of the Financial Statements the Company
         has not: (i) incurred any liability for Taxes other than Taxes arising
         in the ordinary course of business; or (ii) incurred any liability for
         Taxes that would result in a material decrease in the net worth of the
         Company.

                  2.11.6. None of the Tax Returns of, or related to, the Company
         have been or are currently being examined by the IRS or relevant state,
         local or foreign taxing authorities. There are no examinations or other
         administrative or court proceedings relating to Taxes in progress or,
         to the Company's and the Equityholders' knowledge, pending nor has the
         Company received a revenue agent's or similar report asserting a tax
         deficiency. There are no threatened actions, suits, proceedings,
         investigations, audits or claims (including notices of inquiry or
         commencement of an audit) relating to or asserted for Taxes of, or
         related to, the Company, whether in writing or otherwise and there is
         no basis for such claim for which the Company is or reasonably should
         be aware.

<PAGE>

                  2.11.7. There are no proposed reassessments of any real
         property owned by the Company or other proposals that could increase
         the amount of any Tax to which the Company could be subject.

                  2.11.8. There are no security interests on any of the Assets
         of the Company that arose in connection with any failure (or alleged
         failure) to pay any Taxes and, except for liens for real and personal
         property Taxes that are not yet due and payable, there are no liens for
         any Tax upon any asset of the Company. The Company has not entered into
         a closing agreement pursuant to ss.7121 of the Code.

                  2.11.9. The Company has not been a member of an (i) affiliated
         group (within the meaning of ss.1504 of the Code), or (ii) affiliated,
         combined, consolidated, unitary, or similar group for state, local or
         foreign Tax purposes, other than the group of which the Company is the
         common parent. Except as disclosed in Section 2.4 of the Disclosure
         Schedule, the Company is not a party to any joint venture, partnership,
         or other arrangement that is treated as a partnership for Tax purposes.

                  2.11.10. The Company has not been a party to nor is bound by
         any obligations under any tax sharing, tax indemnity, or similar
         agreement or arrangement for any Taxable Period. The Company does not
         have any liability for the Taxes of any person (other than the Company)
         under Treas. Reg. ss. 1.1502-6 (or any similar provision of state,
         local, or foreign law), as a transferee or successor, by contract, or
         otherwise.

                  2.11.11. The Company does not have any material deferred
         income reportable for a period ending after the Closing Date but that
         is attributable to a transaction (e.g., an installment sale) occurring
         in, or resulting from a change of accounting method for, a period
         ending on or prior to the Closing Date.

                  2.11.12. The Company is not a party to any "safe harbor lease"
         that is subject to the provisions of ss.168(f)(8) of the Code as in
         effect prior to the Tax Reform Act of 1986 or to any "long-term
         contract" within the meaning of ss.460 of the Code.

                  2.11.13. The Company is not a party to any contract,
         agreement, plan or arrangement that, individually or in the aggregate,
         or when taken together with any payment that may be made under this
         Agreement or any agreements contemplated hereby, that could reasonably
         give rise to the payment of any "excess parachute payment" within the
         meaning of ss.280G of the Code.

                  2.11.14. No consent under ss.341(f) of the Code has been filed
         with respect to the Company.

                  2.11.15. The Company has no losses (including, without
         limitation, built-in losses, net operating losses, or capital losses)
         that are subject to (for Tax purposes) any federal income tax
         limitation with respect to the use thereof (other than limitations that
         arise as a result of transactions contemplated by this Agreement).

<PAGE>

                  2.11.16. The Company has not distributed the stock of any
         corporation in a transaction satisfying the requirements of ss.355 of
         the Code since April 16, 1997. The stock of the Company has not been
         distributed in a transaction satisfying the requirements of ss.355 of
         the Code since April 16, 1997.

                  2.11.17. The Company has not agreed nor is required to include
         in income any adjustment under either ss.481(a) or ss.482 of the Code
         (or an analogous provision of state, local, or foreign law) by reason
         of a change in accounting method or otherwise.

                  2.11.18. No holder of an interest (other than an interest
         solely as a creditor) in the Company is a foreign corporation, foreign
         partnership, foreign trust or foreign estate (as those terms are
         defined in the Code and Income Tax Regulations) nor a nonresident alien
         for U.S. income tax purposes.

                  2.11.19. The Company, and any Subsidiary of the Company, has
         been a validly electing S corporation within the meaning of Code
         ss.ss.1361 and 1362 at all times since December 1, 1986, and the
         Company will be an S corporation up to and including the Closing Date.

                  2.11.20. The Company does not have and has never had any
         Subsidiary that is a "qualified subchapter S subsidiary" within the
         meaning of Code ss.1361(b)(3)(B).

                  2.11.21. The Company shall not be liable for any Tax under
         Code ss.1374 in connection with the deemed sale of the Company's assets
         (including the assets of any qualified subchapter Subsidiary) caused by
         the Section 338(h)(10) Election. Neither the Company nor any qualified
         subchapter S subsidiary of the Company has, in the past 10 years, (A)
         acquired assets from another corporation in a transaction in which the
         Company's Tax basis for the acquired assets was determined, in whole or
         in part, by reference to the Tax basis of the acquired assets (or any
         other property) in the hands of the transferor or (B) acquired the
         stock of any corporation which is a qualified subchapter S subsidiary.

         2.12. Legal Proceedings.

                  2.12.1. Except as disclosed in Section 2.12 of the Disclosure
         Schedule (with paragraph references corresponding to those set forth
         below):

                           2.12.1.1. there are no actions or proceedings pending
                  or, to the knowledge of the Equityholders or the Company,
                  threatened against, relating to or affecting the Company, or
                  any of its Assets which (A) could reasonably be expected to
                  result in the issuance of an Order restraining, enjoining or
                  otherwise prohibiting or making illegal any of the
                  transactions contemplated by this Agreement or otherwise
                  result in a material diminution of the benefits contemplated
                  by this Agreement to Purchaser, or (B) if determined adversely
                  to the Company or the Equityholders, could reasonably be
                  expected to result in (x) any injunction or other equitable
                  relief against the Company or the Equityholders, or (y) Losses
                  by the Company, individually or in the aggregate with Losses
                  in respect of other such actions or proceedings, exceeding
                  $25,000;

                           2.12.1.2. there are no facts or circumstances known
                  to the Equityholders or to the Company that could reasonably
                  be expected to give rise to any action or proceeding that
                  would be required to be disclosed pursuant to clause 2.12.1.1.
                  above;

<PAGE>

                           2.12.1.3. neither the Equityholders nor the Company
                  have received notice, or are aware of any Orders or lawsuits
                  outstanding against the Company; and

                           2.12.1.4. neither the Equityholders nor the Company
                  have received notice or are aware of any defects, dangerous or
                  substandard conditions in the products or materials
                  manufactured, sold, distributed, or to be manufactured, sold
                  or distributed by the Company that could cause bodily injury,
                  sickness, disease, death, or damage to property, or result in
                  loss of use of property, or any claim, suit, demand for
                  arbitration or notice seeking damages for bodily injury,
                  sickness, disease, death, or damage to property, or loss of
                  use or property.

                           2.12.2. Prior to the execution of this Agreement, the
                  Equityholders and the Company have delivered all responses of
                  counsel for the Company to auditors' requests for information
                  regarding actions or proceedings pending or threatened
                  against, relating to or affecting the Company during the
                  period commencing January 1, 2000. Section 2.12.2 of the
                  Disclosure Schedule sets forth all actions or proceedings
                  relating to or affecting the Company or its Assets filed,
                  presented, brought, or in any manner active or outstanding,
                  during the period commencing January 1, 2001 through the date
                  hereof.

         2.13. Compliance with Laws and Orders. Except as disclosed in Section
2.13 of the Disclosure Schedule, neither the Equityholders nor the Company have
received at any time since January 1, 2000 any notice that the Company is or has
been at any time since such date, in violation of or in default under, any Law
or Order applicable to the Company or any of its Assets. In furtherance and not
limitation of the foregoing, neither the Equityholders nor the Company have
violated any federal or state securities law in connection with the offer, sale
or purchase of any securities.

         2.14. Benefit Plans; ERISA.

                  2.14.1. Section 2.14.1 of the Disclosure Schedule sets forth
         each "employee benefit plan," whether written or unwritten, as defined
         in Section 3(3) of the Employee Retirement Income Security Act of 1974,
         as amended ("ERISA") (excluding equity-based plans and workers'
         compensation, unemployment compensation and similar government-mandated
         programs) currently or at any time within the past five (5) years
         maintained, contributed to or entered into by the Company for the
         benefit of any current or former employee, consultant or director of
         the Company under which the Company has any present or future
         obligation or liability (collectively, the "Employee Plans"). Current,
         accurate and complete copies of all Employee Plans (and, if applicable,
         related trust agreements or other funding instruments), and all
         amendments thereto and related summary plan descriptions and for the
         three (3) most recent years (i) Forms 5500 and attached schedules and
         (ii) audited financial statements have been made available to the
         Purchaser. Section 2.14.1 of the Disclosure Schedule sets forth all
         discrimination testing results for either a qualified plan under
         Section 401(a) and a flexible benefits plan under Code ss.125 or
         self-insured plan under Section 105(h), and all such results have been
         made available to the Purchaser.

                  2.14.2. Except as set forth in Section 2.14.2 of the
         Disclosure Schedule, neither the Company nor any ERISA Affiliate
         sponsors or has sponsored, within the last five (5) years, any employee
         benefit plan which, individually or collectively, constitute(s) (i) an
         "employee pension benefit plan," as defined in Section 3(2) of ERISA,
         that is subject to ss.412 of the Code or ss.302 or Title IV of ERISA,
         or (ii) a "multiemployer plan," as defined in ss.3(37) of ERISA.

<PAGE>

                  2.14.3. Each Employee Plan that is intended to be qualified
         under ss.401(a) of the Code has received a favorable determination,
         advisory and/or opinion letter, as applicable, from the Internal
         Revenue Service and is so qualified.

                  2.14.4. The Company has furnished or made available to the
         Purchaser copies or descriptions of each severance or other similar
         contract, arrangement or policy and each plan, agreement, policy or
         arrangement (written or oral) providing for insurance coverage
         (including any self-insured arrangements), vacation benefits,
         disability benefits, early retirement benefits, death benefits,
         hospitalization benefits, retirement benefits, deferred compensation,
         profit-sharing, bonuses, stock options, stock purchase, phantom stock,
         stock appreciation or other forms of compensation or post-retirement
         benefits that (i) is not an Employee Plan, (ii) is entered into,
         maintained or contributed to, as the case may be, by the Company or any
         of its Subsidiaries and (iii) covers any employee, former employee,
         director, consultant or independent contractor of the Company. Such
         contracts, plans and arrangements as are described in this Section are
         herein referred to collectively as the "Benefit Arrangements."

                  2.14.5. Except as set forth in Section 2.14.5 of the
         Disclosure Schedule and except for continued "COBRA" health coverage
         required pursuant to Code ss.4980B, the Company is not a party to any
         Employee Plan or other agreement, contract, arrangement or policy, that
         requires the Company to provide, at any cost to the Company, any health
         or life insurance coverage to any former employee of the Company.

                  2.14.6. Each Employee Plan and Benefit Arrangement has been
         maintained in substantial and material compliance with its terms and
         complies in all material respects with all applicable requirements of
         (i) the Age Discrimination in Employment Act of 1967, as amended, and
         the regulations thereunder, (ii) any applicable provisions of the Code,
         including ss.4980B thereof, and (iii) ERISA.

                  2.14.7. There is no pending or threatened litigation or action
         relating to any Employee Plan or Benefit Arrangement and there are no
         facts or circumstances that could reasonably be expected to give rise
         to any such litigation or action. No investigation, audit or other
         administrative proceeding by the Department of Labor, the Pension
         Benefit Guaranty Corporation, the Internal Revenue Service or other
         governmental agencies are pending, in progress or, to the Knowledge of
         the Company, threatened. All contributions due under each Employee Plan
         or Benefit Arrangement have been paid or accrued on the books of the
         Company in accordance with Department of Labor Regulation
         2510.3-102(b), to the extent applicable.

                  2.14.8. To the Knowledge of the Company, no "prohibited
         transaction" (as such term is defined in ERISA ss.406 or Code ss.4975)
         has occurred with respect to any Employee Plan and neither the Company
         nor any ERISA Affiliate has engaged in a transaction described in
         Section 4069 or 4212(c) of ERISA. No circumstances exist pursuant to
         which the Company or any ERISA Affiliate could reasonably be expected
         to incur any material liability for any Tax imposed under ss.ss.4971
         through 4980B of the Code or any liability under ss.ss.502(i) or (l) of
         ERISA.

                  2.14.9. Except as set forth on Section 2.14.9 of the
         Disclosure Schedule, neither the Company nor any ERISA Affiliate has
         any accumulated funding deficiency under ss.412 of the Code or any
         termination or withdrawal liability under Title IV of ERISA.

<PAGE>

                  2.14.10. All contributions, premiums or other payments due
         from the Company to (or under) any Plan have been fully paid or
         adequately provided for on the books and financial statements of the
         Company. All accruals (including, where appropriate, proportional
         accruals for partial periods) have been made in accordance with prior
         practices.

                  2.14.11. The Company has not, since January 1, 1997,
         terminated, suspended, discontinued contributions to or withdrawn from
         any Employee Plan subject to Title IV of ERISA, including (without
         limitation) any multiemployer plan, as defined in ss.3(37) of ERISA.

         2.15. Real Property.

                  2.15.1. Section 2.15.1 of the Disclosure Schedule contains a
         true and correct list of (i) each parcel of real property owned (the
         "Owned Real Property") by the Company, (ii) each parcel of real
         property leased or subleased or otherwise occupied by the Company as
         tenant or subtenant (the "Leased Real Property"; together with the
         Owned Real Property, the "Real Property") together with a true and
         correct list of all such leases, subleases or other similar agreements
         and any amendments, modifications or extensions thereto (the "Real
         Property Leases"), and (iii) all Liens relating to or affecting any
         parcel of Real Property, in each case identifying the owner, lessor and
         lessee thereof.

                  2.15.2. The Company has good and marketable title to its Owned
         Real Property, free and clear of all Liens, other than as specifically
         listed in Section 2.15.2 of the Disclosure Schedule.

                  2.15.3. Subject to the terms of its leases, the Company has a
         valid and subsisting leasehold estate in and the right to quiet
         enjoyment to the Leased Real Property for the full term of the lease
         thereof. Each Real Property Lease is a legal, valid and binding
         agreement, enforceable in accordance with its terms, of the Company and
         of each other Person that is a party thereto, and except as set forth
         in Section 2.15.3 of the Disclosure Schedule, there is no, and neither
         the Equityholders nor the Company, have knowledge of any, or has
         received any, notice of any uncured default (or any condition or event
         which, after notice or lapse of time or both, would constitute a
         default) thereunder. The Company has not assigned, sublet, transferred,
         hypothecated or otherwise disposed of its interest in any Real Property
         Lease. No penalties are accrued and unpaid under any Real Property
         Lease.

                  2.15.4. The Equityholders shall deliver to Purchaser upon the
         execution of this Agreement true and complete copies of all (i) title
         policies, mortgages, deeds of trust, deeds, leases, easements,
         restrictive covenants, certificates of occupancy, and similar
         documents, and all amendments thereto concerning the Owned Real
         Property, and (ii) Real Property Leases and, to the extent reasonably
         available, all other documents referred to in clause (i) of this
         paragraph with respect to the Leased Real Property.

                  2.15.5. Except as disclosed in Section 2.15.5 of the
         Disclosure Schedule, the improvements on the Real Property are in good
         operating condition and in a state of good maintenance and repair,
         ordinary wear and tear excepted, are adequate and suitable for the
         purposes for which they are presently being used and, to the knowledge
         of each of the Equityholders and of the Company, there are no
         condemnation or appropriation proceedings pending or threatened against
         Real Property or the improvements thereon.

<PAGE>

                  2.15.6. Neither the Equityholders nor the Company has any
         knowledge of any claim, action or proceeding, actual or threatened,
         against the Company, the Real Property by any Person which would
         materially affect the future use, occupancy or value of the Real
         Property or any part thereof.

         2.16. Tangible Personal Property. The Company is in possession of and
has good and marketable title to, or has valid leasehold interests in or valid
rights under contract to use, all tangible personal property used in the conduct
of its business, including all tangible personal property reflected on the
Financial Statements and tangible personal property acquired since December 31,
2001 other than property disposed of since such date in the ordinary course of
business consistent with past practice and the terms of this Agreement. All such
tangible personal property is free and clear of all Liens, other than Liens
disclosed in Section 2.16 of the Disclosure Schedule, and, as of the Closing
Date, is adequate and suitable for the current use by the Company of the
business presently conducted by it, and is in working order and condition,
ordinary wear and tear excepted, and its use complies in all material respects
with all applicable Laws.

         2.17. Intellectual Property Rights.

                  2.17.1. Section 2.17.1 of the Disclosure Schedule contains a
         true and complete list of all patents, trademark registrations, service
         mark registrations, and copyright registrations, and, with respect to
         each of the foregoing, applications (including provisional
         applications) owned by the Company (the "Company IP"), and lists any
         proceedings or actions pending as of the date hereof before any court
         or tribunal (including the United States Patent and Trademark Office or
         equivalent authority anywhere in the world) related to the foregoing
         such intellectual property.

                  2.17.2. Except as set forth in Schedule 2.17.2 of the
         Disclosure Schedule, the Company has the right to use, sell, or license
         the Company IP.

                  2.17.3. Section 2.17.3 of the Disclosure Schedule lists all
         written contracts and licenses (including all inbound licenses) to
         which the Company is a party with respect to (i) any Company IP, or
         (ii) any intellectual property owned by any other Person and used by
         the Company (except licenses to standard, off-the-shelf software or
         mass-marketed software with a license fee of less than $10,000).

                  2.17.4. The operation of the business of the Company as
         currently conducted does not, to the Equityholders' and/or the
         Company's knowledge, (i) infringe or misappropriate the intellectual
         property of any other Person (ii) violate any term or provision of any
         license or contract concerning such intellectual property, or (iii)
         violate the privacy or publicity rights of any Person, and the Company
         has not received written notice from any Person alleging any of the
         foregoing (including notice of third party patent or other intellectual
         property rights from a potential licensor of such rights).

                  2.17.5. With respect to each item of Company IP that the
         Company uses or would expect to use in the operation of its business,
         all necessary registration, maintenance, renewal fees, annuity fees,
         and taxes in connection with such Company IP have been paid and all
         necessary documents and certificates in connection with such Company IP
         have been filed with the relevant patent, copyright, trademark, or
         other authorities in the United States or foreign jurisdictions, as the
         case may be, for the purposes of maintaining such Company IP.

<PAGE>

                  2.17.6. There are no contracts or licenses between the Company
         and any other Person with respect to Company IP under which there is
         any dispute regarding the scope of such contract or license, or
         performance under such contract or license, including with respect to
         any payments to be made or received by the Company thereunder.

                  2.17.7. To the knowledge of the Company and/or the
         Equityholders, no Person is infringing or misappropriating any Company
         IP.

                  2.17.8. The Company has taken commercially reasonable steps to
         protect and preserve ownership of its rights in Company IP and
         confidential information and trade secrets of the Company.

                  2.17.9. No Company IP is subject to any order, action, or
         proceeding, that restricts in any manner the use, transfer, or
         licensing of any Company IP or that affects the validity, use, or
         enforceability of such Company IP.

                  2.17.10. The Company's products comply in all material
         respects with all applicable standards and with the feature
         specifications and performance standards set forth in product data
         sheets of the Company. There are no outstanding claims for breach of
         warranties by the Company in connection with the foregoing.

         2.18. Contracts and Default.

                  2.18.1. Section 2.18.1 of the Disclosure Schedule contains a
         true and complete list of every Contract (true and complete copies, or,
         if none, reasonably complete and accurate written descriptions of
         which, together with all amendments and supplements thereto and all
         waivers of any terms thereof, of which have been delivered to Purchaser
         prior to the execution of this Agreement), to which the Company is a
         party, a guarantor or by which any of its Assets is bound which
         involves any commitment by, or benefit to, the Company valued, in the
         aggregate, in excess of $10,000.00 per year.

                  2.18.2. Each Contract disclosed in Section 2.18.1 of the
         Disclosure Schedule is in full force and effect and constitutes a
         legal, valid and binding agreement, enforceable in accordance with its
         terms, of each party thereto; and except as disclosed in Section 2.18.2
         of the Disclosure Schedule, neither the Company nor, to the knowledge
         of any the Equityholders, any other party to such Contract is, or has
         received notice that it is, in violation or breach of or default under
         any such Contract (or with notice or lapse of time or both, would be
         violation or breach of or default under any such Contract).

                  2.18.3. Except as disclosed in Section 2.18.3 of the
         Disclosure Schedule, the Company is not a party to or bound by any
         Contract that has been or could reasonably be expected to be,
         individually or in the aggregate with any other such Contracts,
         materially adverse to the business or condition of the Company.

                  2.18.4. To the extent any of the guaranties for the benefit of
         the Company or any of its Assets are not integrated with Contracts
         disclosed in Section 2.18.1 to the Disclosure Schedule, each such
         guaranty is in full force and effect and constitutes a legal, valid and
         binding agreement, enforceable in accordance with its terms, or each
         party thereto; and neither the guarantor thereunder nor, to the
         knowledge of the Equityholders or the Company or any other party to
         such guaranty is, or has received notice that it is, in violation or
         breach of or default under any such guaranty (or with notice or lapse
         of time or both, would be in violation or breach of default under any
         such guaranty).

<PAGE>

                  2.18.5. The Company has performed in all respects, or is now
         performing in all respects, the obligations of, and none are in default
         (or would by the lapse of time and/or the giving of notice be in
         default in any respect) the Company in respect of every Contract,
         except for any failure to perform or default which would not,
         individually or in the aggregate, reasonably be expected to have an
         adverse effect on the Company. No third party has notified the Company
         of any material claim, dispute or controversy with respect to any of
         the Contracts of the Company, nor has the Company received notice or
         warning of alleged nonperformance, delay in delivery or other
         noncompliance by the Company with respect to its obligations under any
         of those contracts, nor are there any facts which exist indicating that
         any of those contracts may be totally or partially terminated or
         suspended by the other parties thereto.

                  2.18.6. Except as set forth in Section 2.18.1 of the
         Disclosure Schedule, the execution and delivery by the Company of this
         Agreement does not, and the consummation by the Company of the
         transactions and compliance by it with the provisions hereof, will not,
         directly or indirectly (with or without notice or lapse of time)
         trigger any change of control, prohibition upon assignment or similar
         provision of, or breach any provision of, or give any Person the right
         to declare a default or exercise any remedy under, or to accelerate the
         maturity or performance of, or payment under, or to cancel, terminate
         or modify any Contract.

         2.19. Licenses. Section 2.19 of the Disclosure Schedule contains a true
and complete list of all Licenses used in and material to the business or
operations of the Company, setting forth the owner, the function and the
expiration and renewal date of each. Prior to the execution of this Agreement,
the Equityholders or the Company have delivered to Purchaser true and complete
copies of all such Licenses. Except as disclosed in Section 2.19 of the
Disclosure Schedule:

                  2.19.1. the Company owns or validly holds all Licenses that
         are material to its respective business or operations;

                  2.19.2. each license listed in Section 2.19 of the Disclosure
         Schedule is valid, binding and in full force and effect;

                  2.19.3. neither the Equityholders nor the Company is, or has
         received any notice that it is in default (or with the giving of notice
         of lapse of time or both, would be in default) under any such License;
         and

                  2.19.4. the transactions contemplated in this Agreement will
         not violate any such License or give any other party thereto rights to
         terminate the License or change the terms thereof.

         2.20. Insurance. Section 2.20 of the Disclosure Schedule contains a
true and complete list (including the names of the insurers, the expiration
dates thereof, the period of time covered thereby and a brief description of the
interests insured thereby) of all liability, property, workers' compensation,
directors' and officers' liability and other insurance policies currently in
effect, and in effect since January 1, 2000, that insure the business,
operations or employees of the Company or affect or relate to the ownership, use
or operation of any of the Assets of the Company and that (i) have been issued
to the Company, or (ii) have been issued to any Person (other than the Company)
for the benefit of the Company. Each policy listed in Section 2.20 of the

<PAGE>

Disclosure Schedule is valid and binding and in full force and effect, all
premiums due thereunder have been paid when due and neither the Equityholders
nor the Company or the Person to whom such policy has been issued has received
any notice of cancellation or termination in respect of any such policy or is in
default thereunder, and the Company does not know of any reason or state of
facts that could lead to the cancellation of such policies. The insurance
policies listed in Section 2.20 of the Disclosure Schedule (i) in light of the
business, operations and Assets of the Company are in amounts and have coverages
that are reasonable and customary for Persons engaged in such businesses and
operations and having such Assets and (ii) are in amounts and have coverages as
required by any Contract to which the Company is a party. Section 2.20 of the
Disclosure Schedule contains a list of all claims made under any insurance
policies covering the Company since January 1, 2000. Neither the Equityholders
nor the Company have received notice that any insurer under any policy referred
to in this Section is denying liability with respect to a claim thereunder or
defending under a reservation of rights clause.

         2.21. Affiliate Transactions. Except as disclosed in the Financial
Statements or in Section 2.21 of the Disclosure Schedule, there are no
Liabilities between the Company and any current or former officer, director,
stockholder, Affiliate of the Company or any Affiliate of any such officer,
director, stockholder or Affiliate, and the Company does not provide or cause to
be provided any assets, services or facilities to any such current or former
officer, director, stockholder or Affiliate.

         2.22. Employees; Labor Relations. Except as disclosed in Section 2.22
of the Disclosure Schedule, the Company is not a party to or otherwise bound by
any collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor organization. To the knowledge of the
Equityholders and/or the Company, there are no activities or proceedings of any
labor union to organize any employees of the Company, and there are no strikes,
material slowdowns, work stoppages or lockouts, or, to the Knowledge of the
Company, threats thereof, by or with respect to any employees of the Company.
The Company is and has been in compliance in all material respects with all
applicable laws regarding employment practices, terms and conditions of
employment, and wages and hours (including, without limitation, ERISA, WARN or
any similar state or local law). The Company has not received any notice from
any of its employees that any such employee is terminating, or will terminate,
as a result of the transactions contemplated by this Agreement, his or her
employment with the Company. Section 2.22 of the Disclosure Schedule sets forth
the Company's workers' compensation claims history since January 1, 2000.

         2.23. Environmental Matters.

                  2.23.1. The Company has obtained and holds all Environmental
         Permits necessary to operate and conduct its business.

                  2.23.2. Except as disclosed in Section 2.23.2 of the
         Disclosure Schedule:

                           2.23.2.1. The Company is, and at all times has been,
                  in full compliance with, and has not been and is not in
                  violation of or liable under, any Environmental Law. Neither
                  the Equityholders nor the Company has any basis to expect, nor
                  has any of them or any other Person for whose conduct they may
                  be held to be responsible received, any actual or threatened
                  Order, notice, or other communication from (A) any
                  Governmental Body or private citizen acting in the public
                  interest, or (B) the current or prior owner or operator of any
                  Facilities, of any actual or potential violation or failure to

<PAGE>

                  comply with any Environmental Law, or of any actual or
                  threatened obligation to undertake or bear the cost of any
                  Environmental, Health, and Safety Liabilities with respect to
                  any of the Facilities or any other properties or assets
                  (whether real, personal, or mixed) in which the Company has
                  had an interest, or to the knowledge of the Equityholders
                  and/or the Company, with respect to any property or Facility
                  at or to which Hazardous Materials were generated,
                  manufactured, refined, transferred, imported, used, or
                  processed by the Company or any other Person for whose conduct
                  they are or may be held responsible, or from which Hazardous
                  Materials have been transported, treated, stored, handled,
                  transferred, disposed, recycled, or received;

                           2.23.2.2. There are no pending or, to the knowledge
                  of the Equityholders or the Company, threatened claims,
                  encumbrances, or other restrictions of any nature, resulting
                  from any Environmental, Health, and Safety Liabilities or
                  arising under or pursuant to any Environmental Law, with
                  respect to or affecting any of the Facilities or any other
                  properties and assets (whether real, personal, or mixed) in
                  which the Equityholders or the Company has or had an interest;

                           2.23.2.3. Neither the Equityholders nor the Company
                  has knowledge of, nor has any of them or any other Person for
                  whose conduct they are or may be held responsible received any
                  citation, directive, inquiry, notice, Order, summons, warning,
                  or other communications that relates to Hazardous Activity,
                  Hazardous Materials, or any alleged, actual, or potential
                  violation or failure to comply with any Environmental Law, or
                  of any Environmental, Health, and Safety Liabilities with
                  respect to any of the Facilities or any other Assets in which
                  the Company had an interest, or, to the knowledge of the
                  Equityholders and/or the Company, with respect to any Facility
                  to which Hazardous Materials generated, manufactured, refined,
                  transferred, imported, used, or processed by the
                  Equityholders, the Company, or any other Person for whose
                  conduct it or they are or may be held responsible, have been
                  transported, treated, stored, handled, transferred, disposed,
                  recycled, or received; and

                           2.23.2.4. Neither the Company, the Equityholders nor
                  any other Person for whose conduct it or they may be held
                  responsible, has any Environmental, Health, and Safety
                  Liabilities with respect to the Facilities, any other Assets
                  (whether real, personal, or mixed) in which the Company or the
                  Equityholders (or any predecessor thereof), has or had an
                  interest, or , to the knowledge of the Equityholders and/or
                  the Company, at any property geologically or hydrologically
                  adjoining the Facilities or any such Assets;

                  2.23.3. There are no Hazardous Materials present on or in the
         Environment at the Facilities or, to the knowledge of the Equityholders
         and/or the Company, at any geologically or hydrologically adjoining
         property, including any Hazardous Materials contained in barrels, above
         or underground storage tanks, landfills, land deposits, dumps,
         equipment (whether moveable or fixed) or other containers, either
         temporary or permanent, and deposited or located in land, water, sumps,
         or any other part of the Facilities or such adjoining property, or
         incorporated into any structure therein or thereon. Neither the Company
         nor any other Person for whose conduct it may be held responsible, or
         any other Person, has permitted or conducted, or is aware of, any
         Hazardous Activity conducted with respect to the Facilities or any
         other properties or assets (whether real, personal, or mixed) in which
         the Equityholders or the Company has or had an interest except in full
         compliance with all applicable Environmental Laws.

<PAGE>

                  2.23.4. To the knowledge of the Equityholders and/or of the
         Company, there has been no Release or any threat of Release of any
         Hazardous Materials (i) at or from the Facilities, or (ii) at any other
         locations where any Hazardous Materials were generated, manufactured,
         refined, transferred, produced, imported, used, or processed from or by
         the Facilities, or (iii) from or by any other properties and assets
         (whether real, personal, or mixed) in which the Company has or had an
         interest, or (iv) at any geologically or hydrologically adjoining
         property.

                  2.23.5. The Equityholders have caused the Company to deliver
         to Purchaser true and complete copies and results of any reports,
         studies, analyses, tests, and monitoring possessed or initiated by the
         Equityholders or the Company pertaining to Hazardous Materials or
         Hazardous Activities in, on, or under the Facilities, or concerning
         compliance by the Equityholders, the Company or any other Person for
         whose conduct it or they are or may be held responsible, with
         Environmental Laws.

                  2.23.6. There are no Liens arising under or pursuant to any
         Environmental Law on any Owned Real Property, Leased Real Property and
         there are no facts, circumstances, or conditions that could reasonably
         be expected to restrict, encumber, or result in the imposition of
         special conditions that could reasonably be expected to restrict,
         encumber, or result in the imposition of special conditions under any
         Environmental Law with respect to the ownership, occupancy,
         development, use, or transferability of any Real Property.

                  2.23.7. There are no (i) underground storage tanks, active or
         abandoned, (ii) polychlorinated biphenyl containing equipment, or (iii)
         asbestos containing material, at any Owned Real Property, or, to the
         knowledge of the Equityholders and/or the Company, at any Leased Real
         Property.

                  2.23.8. There have been no environmental investigations,
         studies, audits, tests, reviews or other analyses conducted by, on
         behalf of, or which are in the possession of the Equityholders or the
         Company with respect to any Asset of, or property that is adjacent to
         an Asset of the Company which have not been delivered to Purchaser
         prior to execution of this Agreement.

         2.24. Substantial Customers and Suppliers. Section 2.24.1 of the
Disclosure Schedule lists the ten (10) largest customers of the Company on the
basis of revenues for goods sold or services provided for the twelve month
period ending December 31, 2003. Section 2.24.2 of the Disclosure Schedule lists
the ten (10) largest suppliers of the Company on the basis of cost of goods or
services purchased during the twelve month period ending December 31, 2003.
Except as disclosed in Section 2.24.3 of the Disclosure Schedule, to the
knowledge of the Equityholders and the Company, no such customer or supplier is
insolvent or threatened with bankruptcy or insolvency.

         2.25. Accounts Receivable. Except as set forth in Section 2.25 of the
Disclosure Schedule, the accounts and notes receivable of the Company reflected
on the balance sheets included in the Financial Statements, and all accounts and
notes receivable arising subsequent to such date, (i) arose from bona fide sales
transactions in the ordinary course of business consistent with past practice
and are payable on ordinary trade terms, (ii) are legal, valid and binding
obligations of the respective debtors enforceable in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, moratorium or
similar laws for the relief of debtors, (iii) to the knowledge of the
Equityholders and/or the Company are not subject to any valid set-off or
counterclaim, (iv) do not represent obligations for goods sold on consignment,

<PAGE>

on approval or on a sale-or-return basis or subject to any other repurchase or
return arrangements, and (v) are not subject of any Actions or Proceedings
brought by or on behalf of the Company. Section 2.25 of the Disclosure Schedule
sets forth (x) a description of any security arrangements and collateral
securing the repayment or other satisfaction of receivables of the Company and
(y) all jurisdictions in which the records relating to accounts and notes
receivable are located.

         2.26. Other Negotiations; Brokers. Neither the Equityholders, nor the
Company, nor any of their respective Affiliates (nor any investment banker,
financial advisor, attorney, accountant or other Person retained by or acting
for or on behalf of the Equityholders or the Company or any such Affiliate) have
entered into any agreement or had any discussions with any third party regarding
any transaction involving the Company which could result in the Company,
Purchaser or its stockholders, or any officer, director, employee, agent or
Affiliate of any of them, being subject to any claim for liability to said third
party as a result of entering into this Agreement or consummating the
transactions contemplated hereby or thereby. No agent, broker, finder,
investment banker, financial advisor or other Person will be entitled to any
fee, commission or other compensation in connection with the transactions
contemplated by this Agreement on the basis of any act or statement made by the
Equityholders, the Company or any of their respective Affiliates, or any
investment banker, financial advisor, attorney, accountant or other Person
retained by or acting for or on behalf of the Equityholders, the Company, or any
such Affiliate.

         2.27. Holding Company Act and Investment Company Act Status. The
Company is not a "holding company" or a "public utility company" as such terms
are defined in the Public Utility Company Act of 1935, as amended. The Company
is not an "investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.

         2.28. Bank and Brokerage Accounts. Section 2.28 of the Disclosure
Schedule sets forth (a) a list of the names and locations of all banks,
securities brokers and other financial institutions at which the Company has an
account or safe deposit box or maintains a banking, custodial, trading or other
similar relationship; and (b) a true and complete list and description of each
such account, box and relationship, indicating in each case the account number
and the names of all persons having signatory power and respect thereto.

         2.29. Exemption from Registration. The offer and sale of the Common
Shares made pursuant to this Agreement are exempt from the registration
requirements of the Securities Act. Neither any the Equityholders, nor the
Company nor any Person authorized to act on behalf of any of the foregoing has,
in connection with the offering of the Common Shares, engaged in (i) any form of
general solicitation or general advertising (as those terms are used within the
meaning of Rule 501(c) under the Securities Act), (ii) any action involving a
public offering within the meaning of section 4(2) of the Securities Act, or
(iii) any action that would require the registration under the Securities Act of
the offering and sale of the Common Shares pursuant to this Agreement or that
would violate applicable state securities or "blue sky" laws.

         2.30. Disclosure. The representations and warranties contained in this
Agreement, and the statements contained in the Disclosure Schedule or in the
certificates, lists and other writings furnished to Purchaser pursuant to any
provision of this Agreement (including the Financial Statements), when taken
together, do not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements herein and
therein, in the light of the circumstances under which they were made, not
misleading.

         2.31. Survival of Representations, Warranties, Covenants and
Agreements. Even though the Purchaser may investigate the affairs of the Company
and attempt to confirm the accuracy of the representations and warranties of the
Equityholders, the Purchaser, nonetheless, shall have the right to rely fully
upon the representations, warranties, covenants and agreements of the
Equityholders contained in this Agreement. All such representations, warranties,
covenants and agreements will survive the Closing for the period specified in
Section 7.1 hereof.

<PAGE>

         2.32. Board Approval. The Board of Directors of the Company has
approved by unanimous written consent this Agreement.

         2.33. Stockholder Approval. The Equityholders, as sole stockholders of
the Company, have approved this Agreement in writing, and no other stockholder
vote, approval or consent of any holder of capital stock of the Company is
required or necessary to consummate the transactions contemplated by this
Agreement.

                                    ARTICLE 3

3. REPRESENTATIONS AND WARRANTIES OF PURCHASER AND PARENT

         Purchaser and Parent jointly and severally represent and warrant to the
Equityholders as follows:

         3.1. Organization and Qualification. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Utah. Parent is a corporation duly organized, validly existing and in good
standing under the laws of the state of Delaware. Purchaser and Parent are duly
qualified, licensed or admitted to do business and is in good standing in each
jurisdiction in which the ownership, use or leasing of their Assets, or the
conduct or nature of their business, makes such qualification, licensing or
admission necessary, except for such failures to be so qualified, licensed or
admitted and in good standing which, individually or in the aggregate, could not
be reasonably expected to have a Material Adverse Effect on the validity or
enforceability of this Agreement or on the ability of Purchaser and Parent to
perform their obligations hereunder or thereunder.

         3.2. Authority Relative to this Agreement. Purchaser and Parent have
full corporate power and authority to enter into this Agreement and to perform
their obligations hereunder and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement by Purchaser
and by Parent and the consummation by Purchaser and by Parent of the
transactions contemplated hereby have been duly and validly approved by their
board of directors and no other corporate proceedings on the part of Purchaser,
Parent or their stockholders are necessary to authorize the execution, delivery
and performance of this Agreement by Purchaser and Parent and the consummation
by Purchaser and Parent of the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by Purchaser and constitutes a
legal, valid and binding obligation of Purchaser enforceable against Purchaser
in accordance with its terms.

         3.3. No Conflicts. The execution and delivery by Purchaser of this
Agreement does not, and the performance by Purchaser of its obligations under
this Agreement and the consummation of the transactions contemplated hereby, do
not and will not conflict or result in a violation or breach of any of the
terms, conditions or provisions of the certificate of incorporation or by-laws
of Purchaser.

         3.4. Governmental Approvals and Filings. To Purchaser's knowledge, no
consent, approval or action of, filing with or notice to any Governmental or
Regulatory Authority on the part of Purchaser is required in connection with the
execution, delivery and performance of this Agreement to which it is a party or
the consummation of the transactions contemplated herein.

         3.5. Legal Proceedings. There are no Actions or Proceedings pending or,
to the knowledge of Purchaser, threatened against, relating to or affecting
Purchaser or any of its Assets which (i) could reasonably be expected to result
in the issuance of an Order restraining, enjoining or otherwise prohibiting or
making illegal the consummation of any of the transactions contemplated by this
Agreement, or (ii) could reasonably be expected, individually or in the
aggregate with other such Actions or Proceedings, to have a Material Adverse
Effect on the business or condition of Purchaser.

<PAGE>

         3.6. Brokers. No agent, broker, finder, investment banker, financial
advisor or other similar Person will be entitled to any fee, commission or other
compensation in connection with any of the transactions contemplated by this
Agreement on the basis of any act or statement made by Purchaser.

         3.7. Survival of Representations, Warranties, Covenants and Agreements.
Even though the Equityholders may investigate the affairs of the Purchaser and
confirm the accuracy of the representations and warranties of the Purchaser
contained in this Agreement, the Equityholders, nonetheless, shall have the
right to rely fully upon the representations, warranties, covenants and
agreements of the Purchaser contained in this Agreement. All such
representations, warranties, covenants and agreements will survive the Closing
for the period specified in Section 7.1 hereof.

         3.8. Parent. Parent is the ultimate parent company of the Purchaser.

         3.9. Board Approval. The Board of Directors of the Purchaser and of the
Parent have approved this Agreement.

                                    ARTICLE 4

4. PRE-CLOSING and POST CLOSING COVENANTS BY THE EQUITYHOLDERS

         4.1. Non competition; Non solicitation.

                  4.1.1. For a period of five (5) years from the Closing Date,
         the Equityholders, alone or in conjunction with any other Person, or
         directly or indirectly through their present or future Affiliates, will
         not directly or indirectly, without the prior written consent of the
         Purchaser, own, manage, operate, join, be employed by, have a financial
         interest in, control or participate in the ownership, management,
         operation or control of, or use or permit his name to be used in
         connection with, or be otherwise connected in any manner with any
         business or enterprise engaged in the design, development, manufacture,
         distribution or sale of any products, or the provision of any services
         related to those which the Company was designing, developing,
         manufacturing, distributing, selling or providing, at any time prior to
         and up to and including the Closing Date anywhere in the United States
         of America, provided that the foregoing restriction shall not be
         construed to prohibit (a) the ownership, in the aggregate, of not more
         than two percent (2%) of any class of securities of any corporation
         which is engaged in any of the businesses or enterprises described
         above, having a class of securities registered pursuant to the
         Securities Exchange Act of 1934, as amended, which securities are
         publicly owned and regularly traded on any national exchange or in the
         over-the-counter market, or (b) the use by the Equityholders of the
         name "VFL Development Corp." for the existing company of the same name
         as long as its activities and those of the Equityholders in connection
         therewith do not otherwise violate the restrictions in this Section
         4.1.

<PAGE>

                  4.1.2. Except as expressly provided in this Agreement, for a
         period of five (5) years from the Closing Date, the Equityholders shall
         not directly or indirectly, or through an Affiliate, (i) cause or seek
         to cause any individual who was an employee or consultant of the
         Company at any time, to terminate his or her employment or consulting
         relationship with the Company, (ii) interfere in any other way with the
         employment, or other relationship, of any employee or consultant of the
         Company or (iii) cause or attempt to cause (or participate in any way
         in any discussion or negotiation concerning) (x) any client, customer
         or supplier of the Company or (y) any prospective client, customer or
         supplier of the Company from engaging in business with the Company.

                  4.1.3. The Equityholders agree that Purchaser's remedies at
         law for any breach or threat of breach by it of any of the provisions
         of this Section 4.1 will be inadequate, and that, in addition to any
         other remedy to which Purchaser may be entitled at law or in equity,
         Purchaser shall be entitled to a temporary or permanent injunction or
         injunctions or temporary restraining orders or orders to prevent
         breaches of the provisions of this Section 4.1 and to enforce
         specifically the terms and provisions hereof, in each case without the
         need to post any security or bond. Nothing herein contained shall be
         construed as prohibiting Purchaser from pursuing, in addition, any
         other remedies available to it for such breach or threatened breach. A
         waiver by the Purchaser of any breach of any provision hereof shall not
         operate or be construed as a waiver of a breach of any other provisions
         of this Agreement or of any subsequent breach thereof. The Purchaser
         may for itself and the Company assign all of the rights under this
         Section 4.1 to any successor to the business of the Company, including
         all remedies for breach of this Section 4.1.

                  4.1.4. The Parties consider the restrictions contained in this
         Section 4.1 hereof to be reasonable for the purpose of preserving the
         goodwill, proprietary rights and going concern value of the Company,
         but if a final judicial determination is made by a court having
         jurisdiction that the time or territory or any other restriction
         contained in this Section 4.1 is an unenforceable restriction on the
         Equityholders' activities, the provisions of this Section 4.1 shall not
         be rendered void but shall be deemed amended to apply as to such
         maximum time and territory and to such other extent as such court may
         judicially determine or indicate to be reasonable. Alternatively, if
         the court referred to above finds that any restriction contained in
         this Section 4.1 or any remedy provided herein is unenforceable, and
         such restriction or remedy cannot be amended so as to make it
         enforceable, such finding shall not affect the enforceability of any of
         the other restrictions contained therein or the availability of any
         other remedy. The provisions of this Section 4.1 shall in no respect
         limit or otherwise affect the Equityholders' obligations under other
         agreements with the Company.

         4.2. Regulatory and Other Approvals. The Equityholders shall, and shall
cause the Company to, (a) take all necessary or desirable steps and proceed
diligently and in good faith and use diligent efforts, as promptly as
practicable, to obtain all consents, approvals or actions of, to make all
filings with and to give all notices to, Governmental or Regulatory Authorities
or any other Person required to consummate the transactions contemplated hereby
and those described in Sections 2.5 and 2.6 of the Disclosure Schedule, (b)
provide such other information and communications to such Governmental or
Regulatory Authorities or other Persons as Purchaser or such Governmental or
Regulatory Authorities or other Persons may reasonably request and (c) cooperate
with Purchaser as promptly as practicable in obtaining all consents, approvals
or actions of, making all filings with and giving all notices to, Governmental
or Regulatory Authorities or other Persons required of Purchaser to consummate
the transactions contemplated hereby. The Equityholders will provide prompt
notification to Purchaser when any such consent, approval, action, filing or
notice referred to in clause (a) above is obtained, taken, made or given, as
applicable, and will advise Purchaser of any communications (and, unless
precluded by Law, provide copies of any such communications that are in writing)
with any Governmental or Regulatory Authority or other Person regarding any of
the transactions contemplated by this Agreement.

<PAGE>

         4.3. Investigation by Purchaser. From the date of this Agreement until
the date on which this Agreement is terminated, or until the Closing, whichever
is earlier, the Equityholders will afford Purchaser its employees, agents,
accountants and other representatives with access to the Books and Records of
the Company, as well as employee files and records and access to the physical
locations at which the Company conducts its business.

         4.4. Severance, stock options, claims of ownership and other payments.
The Equityholders shall be responsible for and shall discharge any claims made
by any Person asserting that such Person: (i) is the holder or the beneficial
owner of, or has the right to acquire or to obtain beneficial ownership of any
stock of, or any other voting, equity, or ownership interest in the Company;
(ii) is the holder or the beneficial owner of, or has the right to acquire or to
obtain beneficial ownership of any phantom stock interest, or any other phantom
voting, equity, or ownership interest in the Company; and/or (iii) is entitled
to any portion of the Merger Consideration. At or prior to the Closing, the
Equityholders shall obtain from those persons listed in Section 4.4. of the
Disclosure Schedule releases in favor of the Company and the Purchaser, in a
form reasonably acceptable to the Purchaser, from any claim for the payment of
any money, fee and/or the giving of any other form of consideration (including,
but not limited to, severance pay) as a result of Merger, or the termination of
the Person's employment by the Company, or in order to induce the Person to
remain an employee of the Company through the Closing Date or thereafter.

         4.5. West Chester, Pennsylvania Office Lease. The Company, as a tenant,
is a party to a lease dated February 1, 1995, as amended August 18, 1995, with
D&L Development Company, a Pennsylvania limited partnership, as landlord, in
which the Equityholders are the general and limited partners (the "Lease")
pursuant to which the Company leases an administrative office and warehouse
space at 16 Hagerty Blvd., West Chester, Pennsylvania. At Closing, the Parties
agree to amend and restate the Lease in the form attached as Exhibit "G" (the
"Amended Lease").

         4.6. Third Party Consents. For each matter disclosed in Section 2.5
and/or Section 2.18.6 of the Disclosure Schedule, the Equityholders shall obtain
the consent, action, waiver, approval assignment and/or release, as the case may
be (in a form that is satisfactory to the Purchaser in its sole discretion) of
or from each Person necessary, in Purchaser's opinion, to result in the
elimination of the conflict, or potential conflict, disclosed in Section 2.5
and/or Section 2.18.6 of the Disclosure Schedule or otherwise described in
Section 2.5.3 of this Agreement.

         4.7. Operations of the Company. During the period from the date of this
Agreement until the Closing, the Equityholders shall, in all material respects,
except as contemplated by this Agreement, carry on the Business in the usual and
ordinary course in substantially the same manner as heretofore conducted and, to
the extent consistent therewith, use reasonable efforts to preserve intact its
current business organizations, keep available the services of its current
officers and key employees and preserve its present relationships with
customers, suppliers and others having significant business dealings with the
Business. Without limiting the generality of the foregoing, and except as
otherwise contemplated by this Agreement (including the immediately preceding
sentence), during such period, the Company shall not, and the Company shall
cause its Affiliates not to, without the prior written consent of the Purchaser
(which consent shall not be unreasonably withheld):

                  4.7.1. pay or obligate itself to pay any compensation
         commission or bonus to any director, officer, employee or independent
         contractor, relating to or affecting the Business and/or the Assets,
         except for the regular compensation and commissions payable to such
         Persons at the rate in effect on the date of this Agreement;

                  4.7.2. acquire or agree to acquire by merging or consolidating
         with, or by purchasing a substantial portion of the assets of or equity
         in, or by any other manner, any business or any corporation,
         partnership, limited liability company, association or other business
         organization or division thereof relating to or affecting the Business
         and/or the Assets;

<PAGE>

                  4.7.3. sell, lease, license, encumber or otherwise dispose of,
         or agree to sell, lease, encumber or otherwise dispose of, any of the
         Assets, other than transactions that are in the ordinary course of
         business consistent with past practice or pursuant to licenses entered
         into in the ordinary course of business consistent with past practice,
         and, in any event, except as expressly permitted in this Agreement, and
         which involve assets which in the aggregate are not in excess of
         $50,000;

                  4.7.4. incur any Indebtedness or guarantee any such
         indebtedness secured in any manner by the Assets and/or the Business;

                  4.7.5. increase the compensation payable or to become payable
         to any director, officer or employee of the Company related to the
         Business, except for increases required under employment agreements
         existing on the date hereof, or grant any severance or termination pay
         to, or enter into any employment or severance agreement, or establish,
         adopt, enter into, or amend or take action to enhance or accelerate any
         rights or benefits under, any collective bargaining, bonus, profit
         sharing, thrift, compensation, stock option, restricted stock, pension,
         retirement, deferred compensation, employment, termination, severance
         or other plan, agreement, trust, fund, policy or arrangement for the
         benefit of any director, officer or employee, except, in each case, as
         may be required by the terms of any such plan, agreement, trust, fund,
         policy or arrangement or to comply with applicable law or regulation;

                  4.7.6. knowingly violate or fail to perform any material
         obligation or duty imposed upon it by any applicable federal, state or
         local law, rule, regulation, guideline or ordinance related to the
         Business;

                  4.7.7. make or change any material tax election, change any
         annual tax accounting period, adopt or change any method of tax
         accounting, file any amended Tax Return, enter into any material
         closing agreement, settle any material Tax claim, assessment, or
         proposed assessment, surrender any right to claim a material Tax
         refund, consent to any extension or waiver of the limitation period
         applicable to any material Tax claim or assessment or take or omit to
         take any other action, if any such action or omission would have the
         effect of increasing any post-closing Tax liability of the Purchaser or
         any Person related to the Purchaser;

                  4.7.8. make any change in its method of accounting or
         accounting practice;

                  4.7.9. as related to the Business, make or agree to make any
         new capital expenditure not previously committed, or new capital
         expenditures not in excess of $50,000 in the aggregate;

<PAGE>

                  4.7.10. pay, discharge, settle or satisfy any material claims,
         liabilities or obligations (absolute, accrued, asserted or unasserted,
         contingent or otherwise) related to the Business, other than the
         payment, discharge, settlement or satisfaction, (A) in the ordinary
         course of business consistent with past practice or in accordance with
         their terms, of liabilities recognized or disclosed in the most recent
         consolidated financial statements (or the notes thereto) of the Company
         included in the Financial Statements or incurred since the date of such
         financial statements in the ordinary course of business consistent with
         past practice, (B) of liabilities required to be paid, discharged or
         satisfied pursuant to the terms of any contract in existence on the
         date hereof or (C) amounts not exceeding $50,000 per liability and in
         no event exceeding $100,000 in the aggregate;

                  4.7.11. other than in the ordinary course of business
         consistent with past practice, enter into, modify, amend or terminate
         any material contract or agreement, including any Contract, to which
         the Business is a party or will be bound, or waive, release or assign
         any material rights or claims;

                  4.7.12. enter into any license or other agreement with respect
         to Company IP, or (b) enter into any consulting arrangement; provided
         that clauses (a) and (b) shall not include, nor prevent the Company
         from entering into, any license, agreement or consulting arrangement
         that is granted in the ordinary course of business consistent with past
         practice;

                  4.7.13. directly or indirectly, engage in any transaction
         (except pursuant to an existing Contract or with respect to
         reimbursement of reasonable expenses incurred by employees in
         connection with performing services to or for the Company related to
         the Business) with, or enter into any agreement with, any director,
         officer or affiliate of the Company or any individual known to the
         Company to be a family member of any such person related, in any
         manner, to the Business;

                  4.7.14. fail to maintain existing insurance coverage relating
         to the Business and/or the Assets;

                  4.7.15. authorize or announce an intention to do any of the
         foregoing, or enter into any contract, agreement, commitment or
         arrangement to do any of the foregoing; or

                  4.7.16. take, or commit or agree to take any action that would
         cause the Equityholders not to perform their covenants hereunder or
         that would reasonably be expected to result in any of the
         Equityholders' representations and warranties becoming untrue in any
         material respect or in any of the conditions set forth in Section 4
         hereof not being satisfied.

                                    ARTICLE 5

5. CLOSING CONDITIONS

         5.1. Condition to the Obligations of the Purchaser. The obligations of
Purchaser hereunder to effect the Merger are subject to the fulfillment, at or
prior to the Closing, of the following conditions precedent (any or all of which
may be waived, in writing, in whole or in part by Purchaser in its sole
discretion):

                  5.1.1. Representations and Warranties. Each of the
         representations and warranties made by the Equityholders in this
         Agreement shall, unless waived, be true and correct in all material
         respects as of the date of this Agreement and on and as of the Closing
         Date as though each such representation and warranty was made on and as
         of the Closing Date.

<PAGE>

                  5.1.2. Performance. The Equityholders and the Company shall
         have performed and complied with, unless waived, each agreement,
         covenant and obligation required by this Agreement to be so performed
         or complied with by them at or before the Closing.

                  5.1.3. Orders and Laws. There shall not be pending, threatened
         or in effect on the Closing Date any Order or Law restraining,
         enjoining or otherwise prohibiting or making illegal the consummation
         of any of the transactions contemplated by this Agreement or which
         could reasonably be expected to otherwise result in a material
         diminution of the benefits of the transactions contemplated by this
         Agreement to Purchaser.

                  5.1.4. Regulatory Consents and Approvals. All consents,
         approvals and actions of, filings with and notices to any Governmental
         or Regulatory Authority necessary to permit Purchaser and the
         Equityholders to perform their obligations under this Agreement and to
         consummate the transactions contemplated hereby (i) shall have been
         duly obtained, made or given, (ii) shall be in form and substance
         reasonably satisfactory to Purchaser, (iii) shall not impose any
         limitations or restrictions on Purchaser, (iv) shall not be subject to
         the satisfaction of any condition that has not been satisfied or
         waived, and (v) shall be in full force and effect, and all terminations
         or expirations of waiting periods imposed by any Governmental or
         Regulatory Authority necessary for the consummation for the
         transactions contemplated by this Agreement shall have occurred.

                  5.1.5. Financial Statements. The Equityholders shall have
         caused the Company to provide the Purchaser with (i) the audited
         balance sheets of the Company for the period ending as at December 31,
         2003 and the audited income statements and statements of cash flow for
         the annual period then ended, together with the audit reports thereon
         of Joseph M. Cahill, Ltd., independent public accountants and (ii) the
         unaudited balance sheet as at the end of the month immediately
         preceding the Closing Date by more than ten days and unaudited income
         statement and statements of cash flow for the period then ended
         certified as true and correct by the chief financial officer of the
         Company and the Equityholders.

                  5.1.6. Third Party Consents. Any consents, actions, waivers,
         approvals, releases and/or assignments (collectively for this Section
         referred to as "Consents") identified in Section 2.5 and/or 2.18.6 of
         the Disclosure Schedule, and all other Consents to the performance by
         the Equityholders of its obligations under this Agreement, or to the
         consummation of the transactions contemplated hereby as are required
         under any Contract or License to which the Equityholders or the Company
         is a party or by which any of their Assets are bound and where the
         failure to obtain any such Consent could reasonably be expected,
         individually or in the aggregate with other such failures, to
         materially adversely affect the Purchaser or the business or condition
         of the Company or otherwise result in a material diminution of the
         benefits of the transactions contemplated by this Agreement to the
         Purchaser in its sole discretion, (i) shall have been obtained, (ii)
         shall be in form and substance satisfactory to the Purchaser in its
         sole discretion, (iii) shall not be subject to the satisfaction of any
         condition that has not been satisfied or waived and (iv) shall be in
         full force and effect.

                  5.1.7. Purchaser's Investigation. Purchaser shall not have
         discovered, as a result of its investigation and review pursuant to
         Section 4.3 hereof, any condition (financial, legal or otherwise)
         relating in any way to the Company, its Assets or business, that is
         material and adverse or otherwise would render any representation or
         warranty of the Equityholders and/or the Company contained in this
         Agreement misleading or untrue.

<PAGE>

                  5.1.8. Equityholders' Certificates. The Equityholders shall
         have delivered to Purchaser (i) certificates, dated the Closing Date
         and executed by an executive officer of the Company, substantially in
         the form and to the effect of Exhibit H hereto and (ii) certificates,
         dated the Closing Date and executed by the chief financial officer of
         the Company, substantially in the form of Exhibit I hereto.

                  5.1.9. Resignations of Officers and Directors. The
         Equityholders shall have delivered to Purchaser the resignations of all
         current officers and directors of the Company, effective as of the
         Closing Date.

                  5.1.10. Opinion of Counsel. Purchaser shall have received the
         opinion of O'Neill, Bragg & Staffin, P.C., counsel to the Company in
         connection with this Agreement, dated the Closing Date, substantially
         in the form and to the effect of Exhibit J hereto.

                  5.1.11. Disclosure Schedule. The Equityholders shall have
         delivered to Purchaser a copy of the Disclosure Schedule, updated and
         current through the Closing Date.

                  5.1.12. Releases. The Equityholders shall have delivered to
         Purchaser the releases described in Section 4.4 of this Agreement.

                  5.1.13. Good Standing Certificates. The Equityholders shall
         have delivered to Purchaser (i) copies of the certificate or articles
         of incorporation (or other comparable corporate charter documents),
         including all amendments thereto of the Company certified by the
         applicable Secretary of State or other appropriate governmental
         official, (ii) certificates from the applicable Secretary of State or
         other appropriate governmental official to the effect that the Company
         is in good standing in such jurisdiction, listing all charter documents
         of the Company on file and attesting to its payment of all franchise or
         similar Taxes, and (iii) certificates from the Secretary of State or
         other appropriate official in each jurisdiction in which the Company is
         qualified or admitted to do business to the effect that the Company is
         duly qualified or admitted in good standing in such jurisdiction.

                  5.1.14. Exchange of Common Shares. Certificates representing
         the Common Shares shall have been tendered to Purchaser in accordance
         with the terms of this Agreement.

                  5.1.15. No Adverse Change. Since the date of this Agreement,
         there shall have been no change, event or condition of any character
         (whether or not covered by insurance) which has had or would reasonably
         be expected to have a Material Adverse Effect in or on the business or
         financial condition of the Company.

                  5.1.16. Consulting Agreements. Purchaser shall have received
         Consulting Agreements between the Purchaser and each of the
         Equityholders in the form attached as Exhibit "K".

                  5.1.17. Equityholders' Release. The Equityholders shall have
         delivered to the Purchaser a release by each of the Equityholders, in a
         form acceptable to the Purchaser, releasing the Company and the
         Purchaser from any and all liability to the Equityholders, except as
         may have arisen or may arise under this Agreement or Promissory Note
         and the Surety.

                  5.1.18. Amended Lease. The Equityholders shall have caused the
         Amended Lease to be executed and delivered by the Company.

<PAGE>

                  5.1.19. Consent of Parent's Secured Lender. Parent shall have
         obtained prior to the Closing, from its secured lender, any approvals
         necessary to permit the completion of the transaction (including the
         approval of the form of the Notes, the Stock Pledge Agreement and the
         Letter of Credit) described in this Agreement and the Exhibits hereto;
         provided, that if such approvals are not obtained, Parent and Purchaser
         shall have the right, but not the obligation, to deliver cash at
         Closing in the face amount of and in lieu of the Notes.

                  5.1.20. Asset Allocation Statement. Purchaser and the
         Equityholders shall have agreed upon the information to be set forth in
         Department of the Treasury, Internal Revenue Service Form 8883 and the
         valuations to be set forth therein, consistent with the Allocation
         Schedule attached as Exhibit N and reflecting the appraised value of
         the Company's property and equipment.

         5.2. Conditions to the Obligations of the Equityholders. The
obligations of the Equityholders hereunder to effect the Merger are subject to
the fulfillment, at or prior to the Closing, of the following conditions
precedent (any or all of which may be waived in writing in whole or in part by
the Equityholders in their sole discretion):

                  5.2.1. Representations and Warranties. Each of the
         representations and warranties made by Purchaser in this Agreement
         shall be true and correct in all material respects as of the date of
         this Agreement and on and as of the Closing Date as though each such
         representation and warranty was made on and as of the Closing Date.

                  5.2.2. Performance. Purchaser shall have performed and
         complied with, in all material respects, each agreement, covenant and
         obligation required by this Agreement to be so performed or complied
         with by Purchaser at or before the Closing, including without
         limitation, delivery of the Merger Consideration.

                  5.2.3. Orders and Laws. There shall not be pending, threatened
         or in effect on the Closing Date any Orders or Laws restraining,
         enjoining or otherwise prohibiting or making illegal the consummation
         of any of the transactions contemplated by this Agreement.

                  5.2.4. Regulatory Consents and Approvals. All consents,
         approvals and actions of, filings with and notices to any Governmental
         or Regulatory Authority necessary to permit Purchaser and the
         Equityholders to perform their obligations under this Agreement and to
         consummate the transactions contemplated hereby (i) shall have been
         duly obtained, made or given, (ii) shall not be subject to the
         satisfaction or any condition that has not been satisfied or waived,
         and (iii) shall be in full force and effect, and all terminations or
         expirations of waiting periods imposed by any Governmental or
         Regulatory Authority necessary for the consummation of the transactions
         contemplated by this Agreement shall have occurred.

                  5.2.5. Officers' Certificates. Purchaser shall have delivered
         to the Equityholders a certificate, dated the Closing Date and executed
         by the president or vice-president or other officer of Purchaser,
         substantially in the form and to the effect of Exhibit L hereto.

                  5.2.6. Opinion of Counsel. The Equityholders shall have
         received the opinion of Curtis J. Brown, counsel to the Purchaser in
         connection with this Agreement, dated the Closing Date, substantially
         in the form and to the effect of Exhibit M hereto.

<PAGE>

                  5.2.7. Consulting Agreements. The Equityholders shall have
         received Consulting Agreements between the Purchaser and each of the
         Equityholders in the form attached as Exhibit "K".

                  5.2.8. Amended Lease. The Purchaser shall have caused the
         Amended Lease to be executed and delivered to the Equityholders.

                  5.2.9. Equityholders' Investigation. The Equityholders shall
         not have discovered, as a result of its investigation and review
         pursuant to this Agreement, any condition (financial, legal or
         otherwise) relating in any way to the Parent, the Purchaser, their
         Assets or business, that is material and adverse or otherwise would
         render any representation or warranty of the Parent and/or the
         Purchaser contained in this Agreement misleading or untrue.

                                    ARTICLE 6

6. TERMINATION

         6.1. Termination Events. This Agreement may, by notice given prior to
or at the Closing, be terminated:

                  6.1.1. by Purchaser or by the Equityholders if a material
         breach of any provision of this Agreement has been committed by the
         other Party and such breach has not been waived or cured within five
         days after receipt from the non-breaching Party of written notice
         specifying the breach;

                  6.1.2. (i) by Purchaser if any of the conditions in Section
         5.1 has not been satisfied as of the Closing Date or if satisfaction of
         such a condition is or becomes impossible (other than through the
         failure of Purchaser to comply with its obligations under this
         Agreement) and Purchaser has not waived such condition on or before the
         Closing Date, or (ii) by the Equityholders, if any of the conditions in
         Section 5.2 has not been satisfied as of the Closing Date or if
         satisfaction of such a condition is or becomes impossible (other than
         through the failure of the Equityholders to comply with his obligations
         under this Agreement) and the Equityholders have not waived such
         condition on or before the Closing Date;

                  6.1.3. by Purchaser if the representations and warranties of
         the Company and/or the Equityholders contained in this Agreement shall
         not be true in any respect (without giving effect to any limitation as
         to "materiality," "Material Adverse Effect", "Material Adverse Change,"
         or similar qualifying language set forth therein), except to the extent
         that any breach (either individually or in the aggregate with all other
         such breaches) would not reasonably be expected to have a Material
         Adverse Effect on the Company and such untruth or incorrectness cannot
         be or has not been cured within five days after the giving of written
         notice to the Company;

                  6.1.4. by the Company and the Equityholders if the
         representations and warranties of the Purchaser and/or the Parent
         contained in this Agreement shall not be true in any respect (without
         giving effect to any limitation as to "materiality," "Material Adverse
         Effect", "Material Adverse Change," or similar qualifying language set
         forth therein), except to the extent that any breach (either
         individually or in the aggregate with all other such breaches) would
         not reasonably be expected to have a Material Adverse Effect on the
         business of the Purchaser and/or the Parent and such untruth or
         incorrectness cannot be or has not been cured within five days after
         the giving of written notice to the Purchaser;

                  6.1.5. by Purchaser if there has been a change, event or
         condition of any character (whether or not covered by insurance) which,
         in the aggregate, has had or would reasonably be expected to have a
         Material Adverse Effect on the Company;

<PAGE>

                  6.1.6. by the Company and the Equityholders if there has been
         a change, event or condition of any character (whether or not covered
         by insurance) which, in the aggregate, has had or would reasonably be
         expected to have a Material Adverse Effect on the Parent and the
         Purchaser;

                  6.1.7. by any Party if the Merger has not been consummated by
         April 15, 2004; provided that the terminating party shall not have
         breached in any material respect its obligations under this Agreement
         in any manner that shall have proximately contributed to the failure to
         consummate the Merger by such date;

                  6.1.8. by Purchaser if as a result of its continued
         investigation, pursuant to Sections 4.3 and 5.1.8, hereof, it discovers
         any condition (financial, legal or otherwise) relating in any way to
         the Company, its Assets or business, that is material and adverse or
         otherwise would render any representation or warranty of the
         Equityholders and/or the Company contained in this Agreement misleading
         or untrue;

                  6.1.9. by Company and the Equityholders if as a result of
         their continued investigation they discover any condition (financial,
         legal or otherwise) relating in any way to the Parent, the Purchaser or
         any of their assets or business, that is material and adverse or
         otherwise would render any representation or warranty of the Parent or
         the Purchaser contained in this Agreement misleading or untrue;

                  6.1.10. by the Equityholders in accordance with the Stock
         Pledge Agreement; or

                  6.1.11. by mutual consent of Purchaser and the Equityholders.

         6.2. Effect of Termination. Each Party's right of termination under
Section 6.1 is in addition to any other rights it may have under this Agreement
or otherwise, and the exercise of a right of termination will not be an election
of remedies. If this Agreement is terminated pursuant to Section 6.1, all
further obligations of the Parties under this Agreement will terminate, except
that the obligations in this Article 6 and in Sections 9.3, 9.4 and 9.12 will
survive; provided, however, that if this Agreement is terminated by a Party
because of a breach of the Agreement by another Party or because one or more of
the conditions to the terminating Party's obligations under this Agreement is
not satisfied as a result of the other Party's failure to comply with its
obligations under this Agreement, the terminating Party's right to pursue all
legal remedies (including specific performance) will survive such termination
unimpaired.

                                    ARTICLE 7

7. INDEMNIFICATION

         7.1. Indemnification.

                  7.1.1. The Equityholders, jointly and severally, will
         indemnify the Company, the Purchaser, the Parent and their respective
         stockholders and the officers, directors, employees, agents and
         Affiliates of each of them in respect of, and hold each of them
         harmless from and against, any and all Losses suffered, incurred or

<PAGE>

         sustained by any of them or to which any of them becomes subject,
         resulting from, arising out of, or relating to any misrepresentation or
         breach of warranty or non-fulfillment of or failure to perform any
         covenant or agreement on the part of the Equityholders contained in
         this Agreement (including, without limitation, any certificate
         delivered in connection herewith or therewith and/or the matters set
         forth, in the Disclosure Schedule).

                  7.1.2. Purchaser and Parent, jointly and severally, will
         indemnify the Equityholders in respect of, and hold each of them
         harmless from and against, any and all Losses suffered, incurred or
         sustained by either of them or to which either of them becomes subject,
         resulting from, arising out of, or relating to any misrepresentation or
         breach of warranty or non-fulfillment of or failure to perform any
         covenant or agreement on the part of Purchaser contained in this
         Agreement (including, without limitation, any certificate delivered in
         connection herewith or therewith).

                  7.1.3. The representations, warranties and covenants contained
         in or made pursuant to this Agreement or any certificate, schedule,
         document or instrument delivered pursuant to or in connection with this
         Agreement in the transactions contemplated hereby shall survive the
         execution and delivery of this Agreement and the Closing hereunder in
         full force and effect for a period of fifteen (15) months after the
         Closing Date. The Parties agree that if the non-breaching Party has not
         given written notice to the breaching Party by the applicable date on
         which the representation or warranty expires, any claim based thereon
         shall be forever barred.

                  7.1.4. Except for losses resulting from the fraud or
         fraudulent misrepresentation of the other Party, and except for a
         breach of any provision set forth in Article 8 hereof by either of the
         Equityholders, the Parent or the Purchaser, in no event shall an
         Indemnifying Party be liable to an Indemnified Party for any
         consequential, special, indirect or punitive damages, except to the
         extent recovered as part of a Third Party Claim for which the
         Indemnified Party is entitled to indemnification under Section 7.2.

                  7.1.5. Notwithstanding any provision in this Agreement to the
         contrary, an Indemnifying Party shall have no liability for
         indemnification under this Article 7 until the aggregate sum of the
         Losses suffered, incurred or sustained by the Indemnified Party exceeds
         Two Hundred Ten Thousand Dollars ($210,000) (the "Basket"), and then
         the Indemnifying Party shall be liable only for such Losses in excess
         of the Basket.

                  7.1.6. The Equityholders shall have no liability to Purchaser,
         and Purchaser shall have no liability to the Equityholders, pursuant to
         their respective indemnification obligations under this Article 7 to
         the extent that the total of all Losses paid by the Indemnifying Party
         pursuant to such Party's indemnification obligations exceed the amount
         of the Merger Consideration. In determining the amount of Losses for
         any indemnification claim, the Indemnified Party's Losses shall account
         for and reduce its claim by any insurance proceeds received by the
         Indemnified Party with regard thereto or which the Indemnified Party
         should have received had the Indemnified Party taken reasonable and
         timely steps to file and prosecute a claim with the applicable insurer;
         provided, that the Indemnifying Party shall have the burden of proof
         that the Indemnified Party did not take such reasonable and timely
         steps.

         7.2. Method of Asserting Claims. All claims for indemnification by any
Indemnified Party under Section 7.1 will be asserted and resolved as follows:

<PAGE>

                  7.2.1. In order for an Indemnified Party to be entitled to any
         indemnification provided for under Section 7.1 in respect of, arising
         out of or involving a claim or demand made by any Person not a party to
         this Agreement against the Indemnified Party (a "Third Party Claim"),
         the Indemnified Party shall deliver a Claim Notice to the Indemnifying
         Party promptly after receipt by such Indemnified Party of written
         notice of the Third Party Claim; provided, that failure to give such
         Claim Notice shall not affect the indemnification provided hereunder
         except to the extent the Indemnifying Party shall have been actually
         prejudiced as a result of such failure.

                  7.2.2. If a Third Party Claim is made against an Indemnified
         Party, the Indemnifying Party shall be entitled to participate in the
         defense thereof and, if it so chooses, to assume the defense thereof
         with counsel selected by the Indemnifying Party, which counsel must be
         reasonably satisfactory to the Indemnified Party. Should the
         Indemnifying Party so elect to assume the defense of a Third Party
         Claim, the Indemnifying Party shall not be liable to the Indemnified
         Party for legal expenses subsequently incurred by the Indemnified Party
         in connection with the defense thereof, but shall continue to pay for
         any expenses of investigation or any Loss suffered. If the Indemnifying
         Party assumes such defense, the Indemnified Party shall have the right
         to participate in the defense thereof and to employ counsel, at its own
         expense, separate from the counsel employed by the Indemnifying Party.
         If (i) the Indemnifying Party shall not assume the defense of a Third
         Party claim with counsel satisfactory to the Indemnified Party within
         five Business Days of any Claim Notice, or (ii) legal counsel for the
         Indemnified Party notifies the Indemnifying Party that there are or may
         be legal defenses available to the Indemnifying Party or to other
         Indemnified Parties which are different from or additional to those
         available to the Indemnified Party, which, if the Indemnified Party and
         the Indemnifying Party were to be represented by the same counsel,
         would constitute a conflict of interest for such counsel or prejudice
         prosecution of the defenses available to such Indemnified Party, or
         (iii) if the Indemnifying Party shall assume the defense of a Third
         Party Claim and fail to diligently prosecute such defense, then in each
         such case the Indemnified Party, by notice to the Indemnifying Party,
         may employ its own counsel and control the defense of the Third Party
         Claim and the Indemnifying Party shall be liable for the reasonable
         fees, charges and disbursements of counsel employed by the Indemnified
         Party, and the Indemnified Party shall be promptly reimbursed for any
         such fees, charges and disbursements, as and when incurred. Whether the
         Indemnifying Party or the Indemnified Party control the defense of any
         Third Party Claim, the parties hereto shall cooperate in the defense
         thereof. Such cooperation shall include the retention and provision to
         the counsel of the controlling Party of records and information which
         are reasonably relevant to such Third Party Claim, and making employees
         available on a mutually convenient basis to provide additional
         information and explanation or any material provided hereunder. The
         Indemnifying Party shall have the right to settle, compromise or
         discharge a Third Party Claim (other than any such Third Party Claim in
         which criminal conduct is alleged) without the Indemnified Party's
         consent if such settlement, compromise or discharge (i) constitutes a
         complete and unconditional discharge and release of the Indemnified
         Party, and (ii) provides for no relief other than the payment of
         monetary damage and such monetary damages are paid in full by the
         Indemnifying Party.

<PAGE>

         7.3. In the event any Indemnified Party should have a claim under
Section 7.1 against any Indemnifying Party that does not involve a Third Party
Claim, the Indemnified Party shall promptly deliver an Indemnity Notice to the
Indemnifying Party. The failure by any Indemnified Party to give the Indemnity
Notice shall not impair such party's rights hereunder except to the extent that
an Indemnifying Party demonstrates that it has been prejudiced thereby. If the
Indemnifying Party notifies the Indemnified Party that it does not dispute the
claim described in such Indemnity Notice or fails to notify the Indemnified
Party within the Dispute Period whether the Indemnifying Party disputes the
claim described in such Indemnity Notice, the Loss in the amount specified in
the Indemnity Notice will be conclusively deemed a liability of the Indemnifying
Party under Section 7.1 and the Indemnifying Party shall pay the amount of such
Loss to the Indemnified Party on demand. If the Indemnifying Party has timely
disputed its liability with respect to such claim, the Indemnifying Party and
the Indemnified Party will proceed in good faith to negotiate a resolution of
such dispute, and if not resolved through negotiations within thirty (30) days,
either Party may take such further legal action it deems necessary.

                                    ARTICLE 8

8. TAX MATTERS

         The following provisions shall govern the allocation of responsibility
as between the Parent, the Purchaser and the Equityholders for certain tax
matters following the Closing date:

         8.1. Tax Indemnification. Except for H-10 Tax Claims, each Equityholder
shall jointly and severally indemnify the Company, its Subsidiaries, the Parent
and the Purchaser, and hold them harmless from and against any Loss attributable
to (i) all Taxes (or the non-payment thereof) of the Company and its
Subsidiaries for all Taxable periods ending on or before the Closing Date and
the portion through the end of the Closing Date ("Pre-Closing Tax Period"), (ii)
all Taxes of any member of an affiliated, consolidated, combined or unitary
group of which the Company or any of its Subsidiaries (or any predecessor of any
of the foregoing) is or was a member on or prior to the Closing Date, including
pursuant to Treasury Regulation ss.1.1502-6 or any analogous or similar state,
local, or foreign law or regulation, and (iii) any and all Taxes of any Person
(other than the Company and its Subsidiaries) imposed on the Company or any of
its Subsidiaries as a transferee or successor, by contract or pursuant to any
law, rule, or regulation, which Taxes relate to an event or transaction
occurring before the Closing.

         8.2. Straddle Period. In the case of any Tax period that includes (but
does not end on) the Closing Date (a "Straddle Period"), the amount of any Taxes
based on or measured by income or receipts of the Company and its Subsidiaries
for the Pre-Closing Tax Period shall be determined based on an interim closing
of the books as of the close of business on the Closing Date (and for such
purpose, the Taxable period of any partnership or other pass-through entity in
which the Company or any of its Subsidiaries holds a beneficial interest shall
be deemed to terminate at such time) and the amount of other Taxes of the
Company and its Subsidiaries for a Straddle Period which relate to the
Pre-Closing Tax Period shall be deemed to be the amount of such Tax for the
entire Tax period multiplied by a fraction the numerator of which is the number
of days in the Taxable period ending on the Closing Date and the denominator of
which is the number of days in such Straddle Period.

<PAGE>

         8.3. Section 338(h)(10) Election. The Company and each Equityholder
shall join with the Purchaser in making an election under Code ss.338(h)(10)
(and any corresponding election under state, local, and foreign tax law) with
respect to the transactions pursuant to this Agreement (collectively, a
"ss.338(h)(10) Election"). The ss.338(h)(10) Election shall be made
contemporaneously with the Pledge Closing as defined in the Stock Pledge
Agreement. The Equityholders shall include any income, gain, loss, deduction, or
other tax item resulting from the ss.338(h)(10) Election on their Tax Returns to
the extent required by applicable law. The Equityholders shall also pay any Tax
imposed on the Company or its Subsidiaries attributable to the making of the
ss.338(h)(10) Election, including (i) any Tax imposed under Code ss.1374, (ii)
any tax imposed under Regs.ss.1.338(h)(10)-1(d)(3) and, ss.1.338(h)(10)-1(e)(5),
or (iii) any state, local or foreign Tax imposed on the Company or its
Subsidiaries' with respect to the foregoing, and the Equityholders shall
indemnify the Purchaser, the Company and its Subsidiaries against any Loss
arising out of any failure of the Equityholders to pay any such Taxes.

         8.4. Purchase Price Allocation. Purchaser, the Company and the
Equityholders agree that the Purchase Price and the liabilities of the Company
and its qualified subchapter S subsidiaries (plus other relevant items) shall be
allocated to the assets of the Company and its qualified subchapter S
subsidiaries for all purposes (including Taxes and financial accounting) as
shown as shown on the Allocation Schedule attached hereto as Exhibit N. This
Allocation Schedule shall, at a minimum, reflect the mutual intentions of the
Purchaser, the Company and the Equityholders, after arm's length negotiations,
that the $2,000,000.00 cash consideration is being paid, in its entirety, as
partial consideration for such property and equipment of the Company as are
enumerated in Exhibit O. Purchaser, the Company and its Subsidiaries, and
Equityholders shall file all Tax Returns (including amended returns and claims
for refund) and information reports in a manner consistent with the Allocation
Schedule.

         8.5. H-10 Tax Indemnification. The Parent and the Purchaser shall
jointly and severally indemnify the Equityholders and the Company, and the
respective heirs, successors and assigns of each of them, and hold them harmless
from and against any Loss attributable to any H-10 Tax Claims. The Basket
described in Section 7.1.5 shall not apply to the indemnification in this
Section 8.5. The Parent and/or the Purchaser shall pay the Equityholders the sum
of $635,442.00 (the "Estimated Tax Payment") by wire transfer to a bank account
or account(s) designated in writing by the Equityholders and applied on account
of the indemnity obligations in this paragraph 8.5, no later than the earlier of
(a) 30 days after the Closing and (b) three business days prior to the deadline
for the Equityholders' federal and state estimated tax payments (the "Tax
Deadline") that they elect to make as a result of the transactions under this
Agreement, provided they give written notice thereof to the Parent and the
Purchaser at least five days prior to such Tax Deadline. The Estimated Tax
Payment has been calculated using the methodology set forth in Exhibit P
attached hereto, and the amount shall be adjusted by mutual agreement of the
parties at or before Closing based on the final allocation of the Purchase Price
described in paragraphs 5.1.20 and 8.4 and the resulting amount of the H-10 Tax
Claims. The amount of the Estimated Tax Payment so paid shall reduce
dollar-for-dollar the indemnity obligations of the Purchaser and the Parent
under this paragraph 8.5.

         8.6. S Corporation Status. Neither the Company nor the Equityholders
shall revoke the Company's election to be taxed as an S corporation within the
meaning of Code ss.ss.1361 and 1362. Neither the Company nor the Equityholders
shall take or allow any action (other than the sale of the Company's stock
pursuant to this Agreement) that would result in the termination of the
Company's status as a validly electing S corporation within the meaning of Code
ss.ss.1361 and 1362.

         8.7. Installment Method Reporting. Neither the Company nor the
Equityholders shall take any action under Code ss.453(d) to elect out of
installment method reporting under ss.453(1) with respect to any disposition
deemed to occur as a result of the ss.338(h)(10) Election.

<PAGE>

         8.8. Tax Periods Ending on or before Closing Date. The Equityholders
shall prepare or cause to be prepared and file or cause to be filed all Tax
Returns for the Company and its Subsidiaries for all periods ending on or prior
to the Closing Date which are filed after the Closing Date. The Equityholders
shall permit the Company to review and shall incorporate any comments provided
by the Company on each such Tax Return described in the preceding sentence prior
to filing. Failure of the Equityholders to incorporate any comments of Company
shall be deemed to be a Tax Claim within the meaning of Sections 8.12 or 8.13,
as appropriate, and shall be resolved in accordance with the provisions therein.
To the extent permitted by applicable law, the Equityholders shall include any
income, gain, loss, deduction or other tax items for such periods on their Tax
Returns.

         8.9. Cooperation on Tax Matters.

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

                  8.9.2. The Purchaser and the Equityholders further agree, upon
         request, to use commercially reasonable efforts to obtain any
         certificate or other document from any governmental authority or any
         other Person as may be necessary to mitigate, reduce or eliminate any
         Tax that could be imposed (including with respect to the transactions
         contemplated hereby).

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

         8.11. Certain Taxes. All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement shall be paid by the
Equityholders when due, and the Equityholders shall, at their own expense, file
all necessary Tax Returns and other documentation with respect to all such
transfer, documentary, sales, use, stamp, registration and other Taxes and fees,
and, if required by applicable law, the Equityholders shall, and shall cause
their affiliates to, join in the execution of any such Tax Returns and other
documentation.

<PAGE>

         8.12. Tax Contests (Other than H-10 Tax Claims).

                  8.12.1. If any Taxing Authority or other Person asserts a Tax
         Claim, then the Party first receiving notice of such Tax Claim shall
         promptly provide written notice thereof to the other Parties hereto.
         Such notice shall specify in reasonable detail the basis for such Tax
         Claim and shall include a copy of all correspondence or other materials
         received from the Taxing Authority or other Person.

                  8.12.2. If, within 30 calendar days after either of the
         Equityholders receives or delivers, as the case may be, notice of a Tax
         Claim, the Equityholders provide to the Purchaser an Election Notice,
         then subject to the provisions of this Section 8.11, the Equityholders
         shall defend or prosecute, at their sole cost, expense and risk, such
         Tax Claim by all appropriate proceedings, which proceedings shall be
         defended or prosecuted diligently by the Equityholders to a Final
         Determination; provided, that the Equityholders shall not, without the
         prior written consent of the Company, enter into any compromise or
         settlement of such Tax Claim that would result in any Tax detriment to
         the Company. So long as the Equityholders are defending or prosecuting
         a Tax Claim, with respect to the Company, the Company shall provide or
         cause to be provided to the Equityholders any information reasonably
         requested by the Equityholders or their authorized representatives
         relating to such Tax Claim, and shall otherwise cooperate with the
         Equityholders and their representatives in good faith in order to
         contest effectively such Tax Claim. The Equityholders shall inform the
         Company of all developments and events relating to such Tax Claim
         (including, without limitation, providing to the Company copies of all
         written materials relating to such Tax Claim) and the Company or its
         authorized representatives shall be entitled, at the expense of the
         Company, to attend, but not to participate in or control, all
         conferences, meetings and proceedings relating to such Tax Claim.

                  8.12.3. If, with respect to any Tax Claim, the Equityholders
         fail to deliver an Election Notice to the Company within the period
         provided in Section 8.11.2 or, after delivery of such Election Notice
         to the Company, the Equityholders fail diligently to defend or
         prosecute such Tax Claim to a Final Determination, then the Company
         shall at any time thereafter have the right (but not the obligation) to
         defend or prosecute, at the sole cost, expense and risk of the
         Equityholders, such Tax Claim. The Company shall have full control of
         such defense or prosecution and such proceedings, including any
         settlement or compromise thereof. If requested by the Company, the
         Equityholders shall cooperate in good faith with the Company and its
         authorized representatives in order to contest effectively such Tax
         Claim. The Equityholders may attend, but not participate in or control,
         any defense, prosecution, settlement or compromise of any Tax Claim
         controlled by the Company pursuant to this Section 8.11.3, and shall
         bear their own costs and expenses with respect thereto. In the case of
         any Tax Claim that is defended or prosecuted by the Company pursuant to
         this Section 8.11.3, the Company shall, from time to time, be entitled
         to receive current payments from the Equityholders with respect to
         costs and expenses incurred by the Company in connection with such
         defense or prosecution (including, without limitation, reasonable
         attorneys', accountants' and experts' fees and disbursements,
         settlement costs, court costs and any other costs or expenses for
         investigating, defending or prosecuting such Tax Claim, and any Taxes
         imposed on the Company as a result of receiving a payment from the
         Equityholders pursuant to this Section 8.11) (collectively "Associated
         Costs").

<PAGE>

                  8.12.4. In the case of any Tax Claim that is defended or
         prosecuted to a Final Determination by the Equityholders pursuant to
         this Section 8.11, the Equityholders shall pay to the appropriate Tax
         Indemnitees, in immediately available funds, the full amount of any Tax
         arising or resulting from such Tax Claim within five Business Days
         after such Final Determination. In the case of any Tax Claim that is
         defended or prosecuted to a Final Determination by the Company pursuant
         to the terms of this Section 8.11, the Equityholders shall pay to the
         appropriate Tax Indemnitee, in immediately available funds, the full
         amount of any Tax arising or resulting from such Tax Claim, together
         with any Associated Costs that have not theretofore been paid by the
         Equityholders to the Company, within five Business Days after such
         Final Determination. In the case of any Tax Claim not covered by the
         two preceding sentences, the Equityholders shall pay to the Company, in
         immediately available funds, the full amount of any Tax arising or
         resulting from such Tax Claim (calculated after taking into account any
         actual reduction in the current liability for Taxes of such Tax
         Indemnitee for Tax arising out of or resulting from such payment or
         such Tax Claim), together with any Associated Costs that have not
         theretofore been paid by the Equityholders to the Company, at least
         five Business Days before the date payment of such Tax is due from any
         Tax Indemnitee.

         8.13. Tax Contests Relating to H-10 Tax Claims.

                  8.13.1. If any Taxing Authority or other Person asserts an
         H-10 Tax Claim, then the Party first receiving notice of such H-10 Tax
         Claim shall promptly provide written notice thereof to the other
         Parties hereto. Such notice shall specify in reasonable detail the
         basis for such H-10 Tax Claim and shall include a copy of all relevant
         correspondence or other material received from the Taxing Authority or
         other Person.

                  8.13.2. If, within 30 calendar days after either of the
         Equityholders receives or delivers, as the case may be, notice of an
         H-10 Tax Claim, the Company provides to the Equityholders an H-10
         Election Notice, then subject to the provisions of this Section 8.12,
         the Company shall defend or prosecute, at its sole cost, expense and
         risk, such H-10 Tax Claim by all appropriate proceedings, which
         proceedings shall be defended or prosecuted diligently by the Company
         to a Final Determination; provided, that the Company shall not, without
         the prior written consent of the Equityholders, enter into any
         compromise or settlement of such H-10 Tax Claim that would result in
         any Tax detriment to the Equityholders in excess of such H-10 Tax
         Claim. The Equityholders shall provide or cause to be provided to the
         Company any information reasonably requested by the Company relating to
         such H-10 Tax Claim, and shall otherwise cooperate with the Company and
         its representatives in good faith in order to contest effectively such
         H-10 Tax Claim. The Company shall inform the Equityholders of all
         developments and events relating to such H-10 Tax Claim (including,
         without limitation, providing to the Equityholders copies of all
         written materials relating to such H-10 Tax Claim) and the
         Equityholders and their authorized representatives shall be entitled,
         at the expense of the Company, to attend, but not to participate in or
         control, all conferences, meetings and proceedings relating to such
         H-10 Tax Claim.

                  8.13.3. If, with respect to any H-10 Tax Claim, the Company
         fails to deliver an H-10 Election Notice to the Equityholders within
         the period provided in Section 8.12.2 or, after delivery of such H-10
         Election Notice to the Equityholders, the Company fails diligently to
         defend or prosecute such H-10 Tax Claim to a Final Determination, then
         the Equityholders shall at any time thereafter have the right (but not

<PAGE>

         the obligation) to defend or prosecute, at the sole cost, expense and
         risk of the Company, such H-10 Tax Claim. The Equityholders shall have
         full control of such defense or prosecution and such proceedings,
         including any settlement or compromise thereof. If requested by the
         Equityholders, the Company shall cooperate in good faith with the
         Equityholders and its authorized representatives in order to contest
         effectively such H-10 Tax Claim. The Company may attend, but not
         participate in or control, any defense, prosecution, settlement or
         compromise of any H-10 Tax Claim controlled by the Equityholders
         pursuant to this Section 8.12.3, and shall bear its own costs and
         expenses with respect thereto. In the case of any H-10 Tax Claim that
         is defended or prosecuted by the Equityholders pursuant to this Section
         8.12.3, the Equityholders shall, from time to time, be entitled to
         receive current payments from the Company with respect to costs and
         expenses incurred by the Equityholders in connection with such defense
         or prosecution, including, without limitation, reasonable attorneys',
         accountants' and experts' fees and disbursements, settlement costs,
         court costs and any other costs or expenses for investigating,
         defending or prosecuting such Tax Claim, and any Taxes imposed on the
         Equityholders as a result of receiving a payment from the Company
         pursuant to this Section 8.12 using a gross-up rate of 126.582%
         (collectively, "H-10 Costs"). The Basket described in Section 7.1.5
         shall not apply to the payments under in this Section 8.12.

                  8.13.4. In the case of any H-10 Tax Claim that is defended or
         prosecuted to a Final Determination pursuant to this Section 8.12, the
         Company shall pay to the Equityholders, in immediately available funds,
         the full amount of any H-10 Costs and any Tax arising or resulting from
         such H-10 Tax Claim within five Business Days after such Final
         Determination. In the case of any H-10 Tax Claim not covered by the
         preceding sentence, the Company shall pay to the Equityholders, in
         immediately available funds, the full amount of any Tax arising or
         resulting from such H-10 Tax Claim (plus a gross up at a rate of
         126.582% for Tax arising out of or resulting from such payment),
         together with any H-10 Costs that have not theretofore been paid by the
         Company to the Equityholders, at least five Business Days before the
         date payment of such Tax is due from the Equityholders, provided that
         notice of the date of payment has been provided to the Company at least
         five Business Days prior to such date.

         8.14. Conflict. In the event of a conflict between the provisions of
this Article 8 and any other provision of this Agreement, the provisions of this
Article 8 shall control.

                                    ARTICLE 9

9. DEFINITIONS

         9.1. Definitions. As used in this Agreement, the following defined
terms shall have the meanings indicated below:

         "Actions or Proceedings" means any action, suit, proceeding,
arbitration or Governmental or Regulatory Authority investigation or audit.

         "Affiliate" means, as applied to any Person, (a) any other Person
directly or indirectly owning, owned by, controlling, controlled by or under
common control with, that Person, (b) any director, partner, officer, agent,
employee or relative of such Person. For the purposes of this definition,
"control" (including with correlative meanings, the terms "controlling",
"controlled by", and "under common control with") as applied to any Person,
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of that Person.

<PAGE>

         "Agreement" means this Purchase Agreement, the Exhibits and the
Disclosure Schedule and the certificates delivered in connection herewith, as
the same may be amended from time to time in accordance with the terms hereof.

         "Allocation Schedule" has the meaning ascribed to it in Section 8.4.

         "Assets" of any Person means all assets and properties of every kind,
nature, character and description, including goodwill and other tangibles,
operated, owned or leased by such Person, including cash and cash equivalents,
investments, accounts and notes receivable, chattel paper, documents,
instruments, real estate, equipment, inventory, goods and intellectual property.

         "Associated Costs" has the meaning ascribed to it in Section 8.12.3.

         "Benefit Plan" means any Plan, existing at the Closing Date or prior
thereto, established or to which contributions have at any time been made by the
Company or under which any employee, former employee or director of the Company
or any beneficiary thereof is covered, is eligible for coverage or has benefit
rights.

         "Books and Records" means all files, documents, instruments, papers,
books and records relating to the Company, including financial statements, Tax
Returns and related work papers and letters from accountants, attorneys,
budgets, pricing guidelines, ledgers, journals, deeds, title policies, minute
books, stock certificates and books, stock transfer ledgers, Contracts,
Licenses, customer lists, computer files and programs, legal files, retrieval
programs, operating data and plans and environmental studies and plans.

         "Claim Notice" means written notification pursuant to Section 7.2.1 of
a Third Party Claim as to which indemnity under Section 7.1 is sought by an
Indemnified Party.

         "Closing" and "Closing Date" have the meaning ascribed to them in
Section 1.2.

         "Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.

         "Common Shares" has the meaning ascribed to it on the first page of
this Agreement.

         "Company" has the meaning ascribed to it in the first recital of this
Agreement (and shall include all predecessors and subsidiaries of the Company).

         "Contract" means any written or oral agreement, lease, guaranty,
evidence of indebtedness, mortgage, indenture, security agreement or other
contract of any nature whatsoever.

         "Disclosure Schedule" means the schedules delivered to Purchaser by or
on behalf of the Company and the Equityholders, and the schedules delivered by
or on behalf of Purchaser, containing all lists, descriptions, exceptions and
other information and materials as are required to be included therein pursuant
to this Agreement.

         "Dispute Period" means the period ending thirty (30) calendar days
following receipt by an Indemnifying Party of either a Claim Notice or an
Indemnity Notice.

         "Election Notice" means a written notice provided by the Equityholders
in respect of a Tax Claim to the effect that (i) the Equityholders acknowledge
their indemnity obligation under this Agreement with respect to such Tax Claim
and (ii) the Equityholders elect to contest, and to control the defense or
prosecution of, such Tax Claim at their sole risk and sole cost and expense.

<PAGE>

         "Environment" means all air, surface water, groundwater, drinking water
supply, stream sediments, or land, including soil, land surface or subsurface
strata, all fish, wildlife, biota and all other environmental medium or natural
resources.

         "Environmental, Health and Safety Liabilities" means any cost, damages,
expense, liability, obligation, or other responsibility arising from or under
any Environmental Law or Occupational Safety and Health Law and consisting of or
relating to (i) any environmental, health or safety matters or conditions
(including on-site or off-site contamination, occupational safety and health,
and regulation of chemical substances or products); (ii) fines, penalties,
judgments, awards, settlements, legal or administrative proceedings, damages,
losses, claims, demands and response, investigative, remedial, or inspection
costs and expenses arising under Environmental Law or Occupational Safety and
Health Law; (iii) financial responsibility under Environmental Law or
Occupational Safety and Health Law for clean-up costs or corrective action,
including any investigation, clean-up, removal, containment, or other
remediation or response actions required by Environmental Law or Occupational
Safety and Health Law (whether or not such clean-up has been required or
requested by any governmental body or any other Person) and for any natural
resource damages; or (iv) any other compliance, corrective, investigative, or
remedial measures required under Environmental Law or Occupational Safety and
Health Law. The terms "removal," "remedial," and "response action" include the
types of activities covered by the United States Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., as
amended (CERCLA).

         "Environmental Law" means all federal, state, local and foreign
environmental, health and safety laws, common law orders, decrees, judgments,
codes and ordinances and all rules and regulations promulgated thereunder, civil
or criminal, including, without limitation, Laws relating to emissions,
discharges, releases or threatened releases of Hazardous Materials, pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes
into the Environment or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials, pollutants, contaminants, chemicals, or industrial, solid,
toxic or hazardous substances or wastes.

         "Environmental Permit" means any federal, state, local, provincial, or
foreign permits, licenses, approvals, consent or authorizations required by any
Governmental or Regulatory Authority under or in connection with any
Environmental Law and includes any and all orders, consent orders or binding
agreements issued or entered into by a Governmental or Regulatory Authority
under any applicable Environmental Law.

         "Equityholders" has the meaning ascribed to it in the first paragraph
of this Agreement.

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.

         "Facilities" means any real property, leaseholds, or other interests
currently or formerly owned, managed, leased or operated by the Company and any
buildings, plants, structures or equipment (including motor vehicles, tank cars
and rolling stock) currently or formerly owned, managed, leased or operated by
the Company.

         "Final Determination" means (i) a decision, judgment, decree or other
Order by any court of competent jurisdiction, which decision, judgment, decree
or other Order has become final after all allowable appeals by either Party to
the action have been exhausted or the time for filing such appeals has expired,

<PAGE>

(ii) a closing agreement entered into under ss.7121 of the Code or any other
settlement agreement entered into in connection with an administrative or
judicial proceeding, (iii) the expiration of the time for instituting suit with
respect to a claimed deficiency or (iv) the expiration of the time for
instituting a claim for refund, or if such a claim was filed, the expiration of
the time for instituting suit with respect thereto.

         "Financial Statements" has the meaning ascribed to it in Section 2.8.

         "GAAP" means generally accepted accounting principles of the United
States, consistently applied.

         "Governmental or Regulatory Authority" means any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality of
the United States, any foreign country or any domestic or foreign state, county,
city or other political subdivision.

         "Hazardous Activity" means the distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
Release, storage, transfer, transportation, treatment, or use (including any
withdrawal or other use of groundwater) of Hazardous Materials in, on, under,
about, or from the Facilities or any part thereof into the Environment, and any
other act, business, operation, or thing that increases the danger, or risk of
danger, or poses an unreasonable risk of harm to persons or property on or off
the Facilities, or that may affect the value of the Facilities or the Company.

         "Hazardous Material" means (i) any petroleum or petroleum products,
radioactive materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation and transformers or other equipment that
contain dielectric fluid containing levels of polychlorinated biphenyls (PCBs);
(ii) any chemicals, materials, substances or wastes which are now or hereafter
become defined as or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," "extremely hazardous wastes,"
"restricted hazardous wastes," "toxic substances," "toxic pollutants" or words
of similar import, under any Environmental Law; and (iii) any other chemical,
material, substance or waste, exposure to which is now or hereafter prohibited,
limited or regulated by any Governmental or Regulatory Authority.

         "H-10 Election Notice" means a written notice provided by the Company
in respect of an H-10 Tax Claim to the effect that (i) the Company acknowledge
its indemnity obligation under this Agreement with respect to such H-10 Tax
Claim and (ii) the Company elects to contest, and to control the defense or
prosecution of, such Tax Claim at its sole risk and sole cost and expense.

         "H-10 Tax Claim" means any increase in Taxes payable by the
Equityholders or the Company or both as a result of the 338(h)(10) Election
described in Section 8.3 over the Taxes that otherwise would be payable by the
Equityholders and the Company absent the 338(h)(10) Election.

         "Indebtedness" of any Person means all obligations of such Person (i)
for borrowed money, (ii) evidenced by notes, bonds, debentures or similar
instruments, (iii) for the deferred purchase price of goods or services (other
than trade payables or accruals incurred in the ordinary course of business),
(iv) under capital leases, (v) long term debt and (vi) in the nature of
guarantees of the obligations described in clauses (i) through (v) above of any
other Person.

         "Indemnified Party" means any Person claiming indemnification under any
provision of Article 7.

         "Indemnifying Party" means any Person against whom a claim for
indemnification is being asserted under any provision of Article 7.

<PAGE>

         "Indemnity Notice" means written notification pursuant to Section 7.2.3
of a claim for indemnity under Article 7 by an Indemnified Party, specifying the
nature of and basis for such claim, together with the amount or, if not then
reasonably ascertainable, the estimated amount, determined in good faith, of
such claim.

         "Laws" means all laws, statutes, rules, regulations, ordinances and
other pronouncements having the effect of law of the United States, any foreign
country or any domestic or foreign state, county, city or other political
subdivision or of any Governmental or Regulatory Authority.

         "Leased Real Property" has the meaning ascribed to it in Section 2.15.

         "Liabilities" means all Indebtedness, obligations and other liabilities
(or contingencies that have not yet become liabilities) of a Person (whether
absolute, accrued, contingent (or based upon any contingency), known or unknown,
fixed or otherwise, or whether due or to become due).

         "Licenses" means all licenses, permits, certificates of authority,
authorizations, approvals, registrations, franchises and similar consents
granted or issued by any Governmental or Regulatory Authority.

         "Liens" means any mortgage, pledge, assessment, security interest,
lease, lien, adverse claim, levy, charge or other encumbrance of any kind, or
any conditional sale Contract, title retention Contract or other Contract to
give any of the foregoing.

         "Loss" means any and all damages, fines, fees, penalties, deficiencies,
diminution in value of investment, losses and expenses, including without
limitation, interest, reasonable expenses of investigation, court costs,
reasonable fees and expenses of attorneys, accountants and other experts or
other expenses of litigation or other proceedings or of any claim, default or
assessment (such fees and expenses to include all fees and expenses, such as
reasonable fees and expenses of attorneys, incurred in connection with (i) the
investigation or defense of any Third Party Claims, Tax Claims or H-10 Claims,
or (ii) asserting or disputing any rights under this Agreement against any Party
hereto or otherwise).

         "Material Adverse Change" or "Material Adverse Effect" means any change
or effect materially adverse to the business, financial condition or results of
operations of the Company taken as a whole.

         "Merger Consideration" has the meaning ascribed to it in Section 1.6.2.

         "New Shares" shall have the meaning ascribed in Section 1.6.3.

         "Notes" shall mean collectively the Initial Note, the Secured Note and
the Unsecured Note.

         "Occupational Safety and Health Law" means any Law designed to provide
safe and healthful working conditions and to reduce occupational safety and
health hazards, and any program, whether governmental or private (including
those promulgated or sponsored by industry associations and insurance
companies), designed to provide safe and healthful working conditions.

         "Option" with respect to any Person means any security, right,
subscription, warrant, option, "phantom" stock right or other Contract that
gives the right to (i) purchase or otherwise receive or be issued any shares of
capital stock or other equity interests of such Person or any security of any
kind convertible into or exchangeable or exercisable for any shares of capital
stock or other equity interests of such Person, or (ii) receive any benefits or
rights similar to those enjoyed by or accruing to the holder of shares of
capital stock or other equity interests of such Person, including without
limitation, any rights to participate in the equity, income or election of
directors or officers of such Person.

<PAGE>

         "Order" means any writ, judgment, decree, injunction or similar order
of any Governmental or Regulatory Authority (in each such case whether
preliminary or final).

         "Owned Real Property" has the meaning ascribed to it in Section 2.15.

         "Parent" has the meaning ascribed to it in the first paragraph of this
Agreement.

         "Person" means any natural person, corporation, general partnership,
limited partnership, limited liability company or partnership, proprietorship,
other business organization, trust, union, association or Governmental or
Regulatory Authority.

         "Plan" means any bonus, compensation, pension, profit sharing,
retirement, stock purchase or cafeteria, life, health, accident, disability,
workmen's compensation or other insurance, severance, separation or other
employee benefit plan, practice, policy or arrangement of any kind, whether
written or oral, or whether for the benefit of a single individual or more than
one individual including, but not limited to, any "employee benefit plan" within
the meaning of Section 3(3) of ERISA.

         "Post-Closing Period" means any taxable period or portion thereof
beginning after the Closing Date. If a taxable period begins on or before the
Closing Date and ends after the Closing Date, then the portion of the taxable
period that begins on the day following the Closing Date shall constitute a
Post-Closing Period.

         "Pre-Closing Period" means any taxable period or portion thereof that
is not a Post-Closing Period.

         "Purchaser" has the meaning ascribed to it in the first paragraph of
this Agreement.

         "Real Property" has the meaning ascribed to it in Section 2.15.

         "Real Property Leases" has the meaning ascribed to it in Section 2.15.

         "Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, or disposing of a
Hazardous Material into the Environment.

         "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.

         "Subsidiary" means any Person in which another Person, directly or
indirectly through Subsidiaries or otherwise, beneficially owns at least fifty
percent (50%) of either the equity interest in, or the voting control of, such
Person, whether or not existing on the date hereof. Unless the context otherwise
requires a different interpretation, references to a "Subsidiary" mean a
Subsidiary of the Company.

         "Surviving Corporation" has the meaning ascribed to it in Section 1.1.

         "Tax" or "Taxes" means all federal, state, local or foreign net or
gross income, gross receipts, net proceeds, sales, use, ad valorem, value added,
franchise, withholding, payroll, employment, excise, property, alternative or
add-on minimum, environmental or other taxes, assessments, duties, fees, levies
or other governmental charges of any nature whatever, whether disputed or not,
together with any interest, penalties, additions to tax or additional amounts
with respect thereto.

<PAGE>

         "Tax Claim" means any written claim (other than an H-10 Tax Claim) with
respect to Taxes attributable to a Pre-Closing Period made by any Taxing
Authority or any Person that, if pursued successfully, could serve as the basis
for a claim for indemnification, under this Agreement, of Purchaser, the Parent,
the Company and other Indemnified Parties specified in Section 7.1 of this
Agreement or in Article 8 of this Agreement.

         "Tax Indemnitee" means the Company, the Purchaser, the Parent, and
their respective stockholders, officers, directors, employees, agents and
Affiliates of each of them (other than the Equityholders, except in the case of
an H-10 Tax Claim).

         "Tax Returns" means any returns, reports or statements (including any
information returns) required to be filed for purposes of a particular Tax.

         "Taxing Authority" means any governmental agency, board, bureau, body,
department or authority of any United States federal, state or local
jurisdiction or any foreign jurisdiction, having or purporting to exercise
jurisdiction with respect to any Tax.

         "Third Party Claim" has the meaning ascribed to it in Section 7.2.

         9.2. Interpretation of Agreement.

                  9.2.1. Unless the context of this Agreement otherwise
         requires, (i) words of any gender include each other gender; (ii) words
         using the singular or plural number also include the plural or singular
         number, respectively; (iii) the terms "hereof," "herein," "hereby" and
         derivative or similar words refer to this entire Agreement; (iv) the
         terms "Article" or "Section" refer to the specified Article or Section
         of this Agreement; (v) the word "including" does not imply any
         limitation to the item or matter mentioned; and (vi) the phrases
         "ordinary course of business" and "ordinary course of business
         consistent with past practice" refer to the business and practice of
         the Company. All accounting terms used herein and not expressly defined
         herein shall have the meanings given to them under GAAP.

When used herein, the phrase "to the knowledge of" any Person, "to the best
knowledge of" any Person or any similar phrase, means (i) with respect to the
Equityholders, the actual knowledge of Patton and/or Ruggiano, and (ii) with
respect to the Company, the actual knowledge of Patton and/or Ruggiano and/or
James T. Delizzio, the Vice President-Finance of the Company.

                                   ARTICLE 10

10. MISCELLANEOUS

         10.1. Notices. All notices, requests and other communications hereunder
must be in writing and will be deemed to have been duly given only if delivered
personally or mailed by prepaid first class certified mail, return receipt
requested, or sent by prepaid courier, to the Parties at the following
addresses:

<PAGE>

If to Purchaser, to:                 If to the Equityholders or the Company, to:

ISG Resources, Inc.                  Richard W. Patton and Louis M. Ruggiano
10653 S. Riverfront Parkway,         c/o VFL Technology Corporation
Suite 300                            16 Hagerty Blvd.
South Jordan, UT 84095               West Chester, Pennsylvania 19382
Attn.:Sr. Vice President and
      General Counsel

All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by mail in the manner described above to the address
as provided in this Section, be deemed given upon receipt and (iii) if delivered
by courier or other recognized national overnight delivery service to the
address as provided for in this Section, be deemed given on the earlier of the
second Business Day following the date sent by such courier or upon receipt. Any
Party may, from time to time, change its address or other information for the
purpose of notices to that Party by giving notice specifying such change to the
other Parties hereto.

         10.2. Entire Agreement. This Agreement supersedes all prior discussions
and agreements between the Parties with respect to the subject matter hereof and
thereof and contains the sole and entire agreement between the Parties hereto
with respect to the subject matter hereof and thereof.

         10.3. Expenses. Except as otherwise expressly provided in this
Agreement (including without limitation as provided in Articles 7 and 8), each
Party will pay its own costs and expenses incurred in connection with this
Agreement, and the transactions contemplated hereby and thereby; provided, the
Equityholders will pay all expenses relating hereto of the Company in excess of
$100,000 incurred in respect of the period prior to the Closing.

         10.4. Confidentiality. Purchaser and the Equityholders will hold in
strict confidence from any Person (other than its Affiliates or representatives)
all documents and information concerning the other Parties hereto or any of its
Affiliates furnished to it by or on behalf of another Party in connection with
this Agreement or the transactions contemplated hereby, except to the extent the
disclosing Party can demonstrate that such documents or information was (a)
previously known by the Party receiving such documents or information, (b) in
the public domain (either prior to or after the furnishing of such documents or
information hereunder) through no fault of such receiving Party or (c) later
acquired by the receiving party from another source if the receiving party is
not aware that such source is under an obligation to another party hereto to
keep such documents and information confidential. Such covenant of
confidentiality will remain in effect unless a Party is compelled to disclose by
judicial or administrative process (including in connection with obtaining the
necessary approvals of this Agreement and the transactions contemplated hereby
of Governmental or Regulatory Authorities) or by other requirements of Law. Need
to discuss.

         10.5. Further Assurances; Post-Closing Cooperation. At any time or from
time to time after the Closing, the Purchaser or the Equityholders shall execute
and deliver to the other Party such other documents and instruments, provide
such materials and information and take such other actions as the other Party
may reasonably request to consummate the transactions contemplated by this
Agreement and otherwise to cause the Purchaser or the Equityholders to fulfill
their obligations under this Agreement.

         10.6. Waiver. Any term or condition of this Agreement may be waived at
any time by the Party that is entitled to the benefit thereof, but no such
waiver shall be effective unless set forth in a written instrument duly executed
by or on behalf of the Party waiving such term or condition. No waiver by any
Party of any term or condition of this Agreement, in any one or more instances,
shall be deemed to be or construed as a waiver of the same or any other term or
condition of this Agreement on any future occasion. All remedies, either under
this Agreement or by Law or otherwise afforded, will be cumulative and not
alternative.

<PAGE>

         10.7. Amendment. This Agreement may be amended, supplemented or
modified only by a written instrument duly executed by or on behalf of the
Parties.

         10.8. No Third Party Beneficiary. The terms and provisions of this
Agreement are intended solely for the benefit of the Parties and their
respective successors or permitted assigns, and it is not the intention of the
Parties to confer third-party beneficiary rights, and this Agreement does not
confer any such rights, upon any other Person other than any Person entitled to
indemnity under Article 7.

         10.9. No Assignment; Binding Effect. Neither this Agreement nor any
right, interest or obligation hereunder may be assigned (by operation of law or
otherwise) by any Party without the prior written consent of the other Parties
and any attempt to do so will be void, except that Purchaser shall have the
right to assign this Agreement to any Affiliate, without the consent of the
Equityholders. Subject to the preceding sentence, this Agreement is binding
upon, inures to the benefit of and is enforceable by the Parties hereto and
their respective successors and assigns.

         10.10. Headings. The headings used in this Agreement have been inserted
for convenience of reference only and do not define or limit the provisions
hereof.

         10.11. Invalid Provisions. If any provision of this Agreement is held
to be illegal, invalid or unenforceable under any present or future Law, and if
the rights or obligations of any Party hereto under this Agreement will not be
materially and adversely affected thereby, (a) such provision will be fully
severable, (b) this Agreement will be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part hereof, (c) the
remaining provisions of this Agreement will remain in full force and effect and
will not be affected by the illegal, invalid or unenforceable provision or by
its severance herefrom and (d) in lieu of such illegal, invalid or unenforceable
provision, there will be added automatically as a part of this Agreement a
legal, valid and enforceable provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible.

         10.12. Governing Law. This Agreement shall be governed by and construed
in accordance with the domestic laws of the State of Pennsylvania, without
giving effect to any choice of law or conflict of law provision or rule that
would cause the application of the laws of any jurisdiction other than the State
of Pennsylvania. The Parties agree that the state and federal courts in
Pennsylvania shall have exclusive personal jurisdiction over the Parties and the
subject matter of any dispute arising under or in connection with this Agreement
that the Parties are unable to resolve, and each Party further waives the right
to assert any claim of forum non conveniens.

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

         IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date set forth on the first page hereof.

ISG Liberty, Inc.                             VFL Technology Corporation

By:   /s/ Steven G. Stewart                   By:  /s/ Richard W. Patton
   ------------------------------------          -------------------------------
    Steven G. Stewart, Chief Financial           Richard W. Patton, President
    Officer

Headwaters Incorporated

By:   /s/ Steven G. Stewart                       /s/ Richard W. Patton
   ------------------------------------          -------------------------------
   Steven G. Stewart, Chief Financial            Richard W. Patton
   Officer

                                                   /s/ Louis M. Ruggian
                                                 -------------------------------
                                                  Louis M. Ruggian

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