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EXHIBIT 4.2(i)  

 
 

AGREEMENT TO EXTEND MEZZANINE REVOLVING PROMISSORY NOTE
  and WORKING CAPITAL PROMISSORY NOTE
  
    JULY 15, 2003    
    

        This Agreement to extend the Mezzanine Revolving Promissory Note, dated March 31, 2002, in the principal amount not to exceed $3,500,000.00 from
2ndSwing, Inc., a Minnesota corporation ("Maker") to David R. Pomije ("Holder") and
Working Capital Promissory Note, dated March 31, 2002, in the amended principal amount of $4,500,000.00 from Maker to Holder ("Agreement to
Extend") is entered into effective July 15, 2003: 

        For
value received, the parties hereto agree as follows: 

	1.
	In
the event an initial public offering ("Offering") is closed on or before the current maturity date of the Mezzanine Revolving
Promissory Note of March 31, 2004, the maturity date of the Mezzanine Revolving Promissory Note shall be extended to March 31, 2006, but all other terms and conditions of the Mezzanine
Revolving Promissory Note shall remain in full force and effect.

	2.
	In
the event such Offering closes on or before the current maturity date of the Working Capital Promissory Note of March 31, 2004, the maturity date of the Working Capital
Promissory Note shall be extended to March 31, 2006 and the principal amount of such note on or after the current maturity date shall be reduced from $4,500,000.00 to $1,500,000.00, but all
other terms and conditions of the Working Capital Promissory Note shall remain in full force and effect.

	3.
	Whether
or not an Offering occurs, the maturity date on the notes referenced in Numbers 1 and 2 above is extended from March 31, 2004 to June 30, 2004.

	4.
	The
Mezzanine Financing Letter Agreement dated March 31, 2002 by and between Maker and Holder which sets forth, among other things, the consideration to create the Mezzanine
Revolving Promissory Note, is likewise amended so that reference to the Maturity Date (as therein defined) shall be amended if such Offering closes on or before the amended maturity date of
June 30, 2004, so that the Maturity Date becomes either June 30, 2004, or March 31, 2006, as applicable. All other terms and conditions of the March 31, 2002 Mezzanine
Financing Letter Agreement shall remain in full force and effect 

        IN
WITNESS WHEREOF, the undersigned have duly executed and delivered this Agreement to Extend. 

	 	 	MAKER:
	
 	
 	

2nd SWING, INC.,

a Minnesota corporation
	

 	
 	

By:	

 Stanley A. Bodine
 Its Chief Executive Officer
	

 	
 	
HOLDER:
	

 	
 	

	 	 	David R. Pomije

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AGREEMENT TO EXTEND MEZZANINE REVOLVING PROMISSORY NOTE and WORKING CAPITAL PROMISSORY NOTE JULY 15, 2003Exhibit 10.4

 

SUPPLY AGREEMENT

 

This Supply Agreement
(the “Agreement”)
is made as of March 31, 2003 (the “Effective Date”) by and between SEARS,
ROEBUCK AND CO., a New York corporation (“Sears”) with offices
at 3333 Beverly Road, Hoffman Estates, Illinois 60179, and Easco Hand Tools,
Inc., a Delaware corporation with offices at 125 Powder Forest Drive, Simsbury,
Connecticut 06070 (“Easco”) , Lea Way Handtool Co., Ltd., a
corporation formed under the laws of the Republic of China with offices at 288
Hou Tswang Road, Pei Twen District, Taichung, Taiwan (“Lea Way”), and Jessie
& J Co., Ltd., a Hong Kong corporation with offices at Rm 1010, Tower A,
Hung Hum Commercial Center, 39 Ma Tau Wai Road, Hung Hom, Kowloon, Hong Kong (“Jessie
& J”), collectively doing business as Danaher Tool Group.
Easco, Lea Way and Jessie & J are collectively referred to herein as “Seller.”

 

In consideration of the mutual covenants and promises
this Agreement contains and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

1.                                       VENDOR
AGREEMENT.

 

This Agreement is a “Vendor Agreement” pursuant to the
Universal Terms and Conditions between Seller and Sears of even date herewith
(the “UTC”).  The UTC, including the
Vendor Information Guide (as supplemented and modified by Sears, the “Vendor
Guide,” provided that no supplement or modification to the Vendor Guide that
results in additional obligations of or costs to Seller shall be effective
against Seller if Seller objects to it in writing to Sears within 60 days after
Sears e-mails notice of such supplement or modification to registered users of
the Sears Business Exchange) incorporated into the UTC by reference, is
incorporated into this Agreement. 
References herein to the Vendor Guide will mean the domestic Vendor
Information Guide with respect to Domestic Products and the International
Vender Information Guide with respect to Import Products.  This Agreement will control over the UTC in
case the terms of this Agreement are contradictory to or inconsistent with the
terms of the UTC.  All capitalized terms
used but not defined herein will have the meaning ascribed to them in the UTC.

 

2.                                       DEFINITIONS,
SUPPLY AND PURCHASE OBLIGATIONS; PURCHASE ORDERS; FORECASTS; ACCEPTANCE.

 

2.1.                              Definitions.

 

(a)                                  “Mechanics
Hand Tools” shall mean sockets (excluding impact sockets),
ratchets, wrenches, adapters, extension bars, nutdrivers, hex keys, torque
wrenches,

 

* Portions of this exhibit have been omitted pursuant to a request for
confidential treatment filed with the Securities and Exchange Commission. The
omitted portions, marked by “*”, have been separately filed with the
Commission.

 

1

 

ratcheting wrenches, speeders, hinge handles, sliding
Ts, and universal joints and other Products that Sears and Seller agree in
writing to add to Exhibit A.

 

(b)                                 “Product”
shall mean any Sears Branded MHT or other Mechanics Hand Tool that is listed on
Exhibit A, as that Exhibit is amended in writing by Sears and Seller
from time to time.  Except for purposes
of Sections 2.1(f), 2.2, 2.7, 8, 9.1, 9.2, 9.3, 9.4, 9.5, 9.6 and  9.8, “Products” also includes impact sockets.

 

(c)                                  “Domestic
Product” shall mean a Product that Sears purchases F.O.B. a
location inside the United States, as designated in Exhibit A, as that
Exhibit is amended in writing by Sears and Seller from time to time.

 

(d)                                 “Import
Product” shall mean a Product that Sears purchases F.O.B. a
location outside the United States, as designated in Exhibit A, as that
Exhibit is amended in writing by Sears and Seller from time to time.

 

(e)                                  “Sears
Branded MHTs” shall mean all Mechanics Hand Tools manufactured
on behalf of Sears or its Majority-Owned Domestic Subsidiaries and bearing a Sears-owned
brand, including Craftsman, Craftsman Professional and Companion, whether such
Mechanics Hand Tools are manufactured by Seller or any other manufacturer.

 

(f)                                    “Sears
Branded Products” shall mean all Sears Branded MHTs and all
Sears Branded impact sockets.

 

(g)                                 “New
Product” means any Product that offers significant improvement
in performance or functionality over existing Products and that, at the time it
is first added to Sears’ assortment, does not replace an existing Product (and
is not composed of a reassortment of existing Products) in Sears’ assortment
the sales history of which would have provided substantial insight into the
sales potential of the new Product.  For
example, at the time Sears first began selling them, the high visibility sockets
and the next generation ratchets were New Products.

 

(h)                                 “Eligible
MHTs” shall mean all Mechanics Hand Tools except *, or *, or *,
and *.

 

(i)                                     “Seller-Made
Eligible MHT Percentage” shall mean, for any period, a
percentage calculated by dividing (i) the aggregate dollar amount of purchases
of Eligible MHTs by Sears and its Majority-Owned Domestic Subsidiaries from
Seller and its majority-owned subsidiaries during that period (excluding any
such purchases that are made at less than the Initial First Cost Price or, if
the Initial First Cost Price has been increased pursuant to Section 3, then
excluding any such purchases at less than the adjusted price for so long as the
adjusted price is in effect) by (ii) the aggregate dollar amount of purchases
of Eligible MHTs by Sears and any of its Majority-Owned Domestic Subsidiaries
from all vendors during that period.

 

* Portions of this exhibit have been omitted pursuant to a request for
confidential treatment filed with the Securities and Exchange Commission. The
omitted portions, marked by “*”, have been separately filed with the
Commission.

 

2

 

(j)                                     “Purchase
Order” means a purchase order issued by Sears to Seller.

 

(k)                                  “Total
Purchases” means the aggregate First Cost Price of all Products
that Seller and its majority-owned subsidiaries ship to Sears and its
Majority-Owned Domestic Subsidiaries during a particular period, excluding
purchases by Sears and its Majority-Owned Domestic Subsidiaries pursuant to the
Industrial Contract.

 

(l)                                     “Majority-Owned
Domestic Subsidiaries” means any subsidiary incorporated and
doing business in the United States or Puerto Rico, the majority of the
outstanding voting securities of which are owned by Sears.

 

(m)                               “Initial
First Cost Price” for a Product means the price listed on Exhibit
A for that Product as of the Effective Date.

 

(n)           “First Cost Price” for a Product means
the Initial First Cost Price for that Product, subject to any adjustment
pursuant to Section 2.7 or Section 3.

 

(o)           “Industrial Contract” means the contract between Sears and Easco dated as of
December 10, 2002, as such agreement may be amended from time to time pursuant
to the terms thereof, relating to the
distribution by Seller of Sears Branded MHTs and other products to commercial
customers.

 

(p)           “VIR/Subsidy
Measurement Period” means, as the context requires, (i) the
second, third and fourth fiscal quarters of 2003, (ii) fiscal 2004, (iii)
fiscal 2005 or (iv) the first fiscal quarter of 2006, each as measured by
Sears’ fiscal year.

 

2.2.                              Requirements;
Additional Business.

 

Subject to the provisions of Section 2.4 below
and provided that Seller is able to meet Sears’ requirements as set forth in
this Agreement, * Sears shall purchase from Seller quantities of Eligible MHTs
sufficient to maintain the Seller-Made Eligible MHT Percentage at no less than
* percent (*%).

 

2.3.                              Obligation
to Supply.

 

Subject to the terms of
this Agreement, Seller hereby agrees that it shall supply to Sears each of the
Products listed on Exhibit A hereto and all other Products that become
subject to the terms of this Agreement, upon issuance of a Purchase Order (as
defined below).  Each of the Products
shall bear the stock keeping unit (“SKU”) number assigned to it by Sears,
as listed on Exhibit A.  If,
after the Effective Date, additional Products are to be sold to Sears pursuant
to this Agreement, then the parties shall execute a supplement to Exhibit A
setting forth a description of such Products, the SKU, and other information
required by Exhibit A for such Products.

 

* Portions of this
exhibit have been omitted pursuant to a request for confidential treatment
filed with the Securities and Exchange Commission. The omitted portions, marked
by “*”, have been separately filed with the Commission.

 

3

 

2.4.                              Ordering
Processes.

 

The provisions of this Section 2.4 shall be effective
as of April 28, 2003 and shall continue throughout the balance of the Term.

(a)          Definitions:

 

•                  “Regular
Product” means any Product that is not a New Product.

•                  “New
Promotional Product” means any New Product that Sears first offers for sale by
including it in a weekly Sears pre-print, in an infomercial or in any other
print or broadcast media.

•                  “Average
Promotional Quantity” of any Product means the number calculated as follows:

A ÷ B, where

A = the number of units
of the Product and its Product Equivalent that Sears sold during promotions (as
defined by the Media Code based on the ad date) in the twelve full calendar
months preceding the date on which Sears first gives Seller a sales forecast
for a new promotion of the Product minus the number of units of the Product and
its Product Equivalent that Sears sold during promotions in October, November
and December of that twelve month period; and

B = nine.

•                  “Special
Promotion” means any promotion of a Product for which Sears’ sales forecast is
*% or greater than the Average Promotional Quantity for that Product.

•                  “Special
Promotional Product” means any Regular Product or New Product that Sears
features in a Special Promotion.

•                  “Product
Equivalent” means a Product (i) that is from the same product grouping as
another Product and (ii) the sales history of which would be reasonably
comparable to the sales history of the other Product.

•                  “Lock
Date” means, for a New Promotional Product, the day that is * before each Ship
Date for that Product, and for a Regular Product or a Special Promotional
Product, the day that is * before each Ship Date for that Product.

•                  “Netted
Needs” means the quantity of any Domestic Product that Sears estimates it may
purchase from Seller on a particular Ship Date.

•                  “Firm
Deployment Date” means (i) for a Rapid Deployment (“RD”) shipment location, the
date on which Seller receives “Firm Shipping Instructions” (Firm EDI 862) from
Sears and (ii) for a Distribution Resource Planning (“DRP”) shipment location,
the date on which Seller receives a Purchase Order (EDI 850) from Sears.

•                  “Shipping
Window” means, for “less than truckload” shipments, the period of time
beginning * before the Ship Date and ending on the * after the Ship Date, and
for all other shipments means the period of time beginning * before the Ship
Date and ending on the * after the Ship Date.

 

(b)                                 Each
week Sears will electronically deliver to Seller Sears’ Netted Needs for the
Domestic Products for each week over the following * (for DRP locations) or *
(for RD locations) (the “Needs Forecast”). Sears will update the Needs

 

* Portions of this exhibit have been omitted pursuant to a request for
confidential treatment filed with the Securities and Exchange Commission. The
omitted portions, marked by “*”, have been separately filed with the
Commission.

 

4

 

Forecasts weekly and will
periodically set regular Ship Dates for Domestic Products.  On the applicable Lock Date, Seller will
obtain from the most recent Needs Forecast the Netted Needs for the week in
which the Ship Date corresponding to that Lock Date occurs (the “Firm Order
Quantity”).  (For example, if the Ship
Date for a Regular Product is August 21, 2005, Seller will obtain the Netted
Needs for the week of August 20, 2005 from the Needs Forecast received by
Seller closest to, but no later than, *). For each Special Promotion and each
Special Promotional Product included therein, Sears and Seller will set a sales
target.  On a date that the parties
jointly select for that Special Promotion and Special Promotion Product (the
“Firm Sales Target Date”), the sales target will become firm: the Netted Needs
for that Special Promotion and Special Promotion Product will be calculated
based on the sales target, which Sears shall not alter without Seller’s written
consent. Sears agrees to buy from Seller, and Seller agrees to sell to Sears,
the applicable Firm Order Quantity of each Product, provided, however, that if
the Netted Needs on the Firm Deployment Date (the “Deployment Date Quantity”)
is higher or lower than the Firm Order Quantity, Seller will satisfy its
obligations under this Section 2.4(b) by shipping to Sears any quantity
between and including the Firm Order Quantity and the Deployment Date Quantity,
and Sears shall purchase whatever quantity within that range that Seller ships
during the applicable Shipping Window (the “Acceptable Quantity”).  Notwithstanding the foregoing, (i) once all
Purchase Orders for a Special Promotional Product relating to a particular
Special Promotion have been shipped, that Product will be considered a Regular
Product for purposes of this Section 2.4, and (ii) once all Purchase Orders for
the first promotion of a New Promotional Product have been shipped, that
Product will be considered a Regular Product for purposes of this Section 2.4.

 

(c)                                  Each
month Sears will issue a rolling * forecast indicating the Import Products and
quantities Sears estimates it may purchase from Seller (the “Import Forecast”)
and the estimated Ship Dates for such Products. Sears may increase or decrease
the quantities Sears estimates it may purchase by issuing new Import Forecasts.
* prior to any Ship Date set forth in an Import Forecast (the “Import Lock
Date”), the then-current Import Forecast will be deemed a Firm Order for the
quantity of Products forecasted for that Ship Date (the “Preliminary Import
Quantity”), provided that until * prior to the Ship Date Sears can increase or
decrease the Preliminary Import Quantity up to *%.

 

(d)                                 Notwithstanding
the foregoing, if the Netted Needs (in the case of a Domestic Product) or the
Import Forecast (in the case of an Import Product) for any Product (other than
a Promotional Product) and any Ship Date is more than *% of Sears’ average
weekly purchases of that Product in the * preceding the date of such Netted
Needs or Import Forecast, Seller may reject the amount in excess of *% by delivering
written notice to Sears within ten days after Seller first receives such Netted
Needs or Import Forecast.

 

(e)                                  Seller
will attend monthly Production, Sales and Inventory (“PSI”) meetings at Sears’
offices, during which Sears and Seller will discuss forecasted sales and

 

* Portions of this exhibit have been omitted pursuant to a request for
confidential treatment filed with the Securities and Exchange Commission. The
omitted portions, marked by “*”, have been separately filed with the
Commission.

 

5

 

promotional
activity.  If in a PSI meeting that
occurs after the Firm Sales Target Date, Sears and Seller agree to increase or
decrease the sales targets for any Promotional Product(s), then Sears will
promptly update the Needs Forecast based on the new sales targets.

 

(f)                                    Orders
calculated pursuant to Sections 2.4(b) and (c) shall be considered “Purchase
Orders” and shall be deemed to have been issued by Sears and accepted by Seller
on the applicable Lock Date (for Domestic Products) or the Import Lock Date
(for Import Products), in each case subject to any adjustments to quantity that
are permitted under Sections 2.4(b) and (c).

 

2.5.                              Forecasts.

 

Subject to the requirements purchase obligations set
forth in Section 2.2, Sears shall have no obligation to purchase any
specific quantity of Products from Seller unless and until Sears issues a
Purchase Order pursuant to this Agreement. 
Domestic Forecasts, Forecasted Quantities, Import Forecasts and any
other forecasts or estimates Sears may communicate to Seller will be estimates
only and will not be binding upon Sears or give rise to an obligation by Sears
to purchase any Products. Seller acknowledges and agrees that Sears has no
obligation and has made no commitment to purchase any minimum quantity of
Products, except as expressly ordered in any Purchase Order (subject to any
modification and cancellation rights that Sears may have under this Agreement
and to Sears’ obligation to purchase its requirements as set forth in Section
2.2).

 

2.6.                              Conflicting
Terms.

 

In the event of any conflict or inconsistency between
this Agreement and the terms and condition of any Forecast, Purchase Order, or
other order document, the terms and conditions of this Agreement will control
unless this Agreement is expressly referenced and superseded in such order
document and the order document is signed by an Authorized Sears Representative
and an Authorized Seller Representative. 
An “Authorized Sears Representative,” for purposes of this
Agreement, is any individual whose responsibilities include general management
of the Tools business; provided, however, that an individual with primary
buying responsibility for the Products will be deemed an Authorized Sears
Representative for purposes of agreeing to changes to any items on one or more
of the Exhibits so long as no such change alters the definition of any term
defined in this Agreement.  An “Authorized
Seller Representative” for purposes of this Agreement is the
President, Vice President – Finance or Vice President – Marketing or Director
of Marketing for Seller’s Special Markets Division.

 

2.7.                              Seller’s
Right to Bid.

 

If Sears receives or chooses to solicit offers from
third parties to supply any Sears Branded MHT listed on Exhibit A, or any New
Product that will be a Sears Branded MHT, Sears will deliver to Seller a
written notice describing the Sears Branded MHT and a forecast of Sears’
expected purchases of such Sears Branded MHT for the following twelve (12)
months.  Promptly

 

* Portions of this exhibit have been omitted pursuant to a request for
confidential treatment filed with the Securities and Exchange Commission. The
omitted portions, marked by “*”, have been separately filed with the
Commission.

 

6

 

after determining the country or countries of manufacture the other
bidder(s) are proposing for such Sears Branded MHT, Sears will deliver to
Seller a written notice identifying such country or countries.  Seller may submit a supply proposal for such
Sears Branded MHT and, if it does so, *. 
*. Notwithstanding the foregoing, Sears is not required to *.

 

3.                                       PRICES.

 

Beginning on April 28, 2003, and continuing *, and
exclusive of any rebates, subsidies, discounts and other payments Seller makes
to Sears under this Agreement, Seller and its majority-owned subsidiaries shall
sell the Products to Sears at the First Cost Price.

 

The First Cost Price
shall include: (a) all costs of shipping and insuring the Products to the
F.O.B. Point, and (b) Seller’s cost of complying with Sears’ packaging and
labeling requirements and assembly.  The
parties shall negotiate in good faith to determine the First Cost Price of any
Products supplied by Seller or any of its majority-owned subsidiaries which are
not included on Exhibit A as of the Effective Date.

 

Notwithstanding the
foregoing, if increases in any component of Seller’s * or * cause Seller’s cost
of manufacturing the Products to increase for more than * (the “Trigger
Period”) by more than *% over the cost of manufacturing in the
prior * (a “Material Cost Increase”), then Seller may request a
temporary increase in the First Cost Prices of the Products, such increase to
equal no more than * percent (*%) of the increase in Seller’s manufacturing
cost that is attributable to the increase in Seller’s * or * in excess of the
*% increase.  For example, if increases
in Seller’s * or * cause Seller’s cost of manufacturing the Products to
increase from an average of $*/unit for * to $* for more than * in *, then
Seller may request a temporary price increase of $*/unit (*% of the increase in
excess of *% over the * cost of production). 
If Seller requests a temporary price increase, Seller will permit Sears’
independent auditors to audit Seller’s books and records relating to the
Material Price Increase, including all applicable supply contracts and hedging
transactions, to verify the amount and cause of the Material Cost Increase and
the proposed price increase. Sears’ independent auditors will execute the confidentiality
agreement in the form attached as Exhibit I prior to conducting any
audit and shall not disclose to Sears any information other than to verify or
dispute Seller’s contentions regarding the Material Cost Increase and the
proposed price increase. If Sears accepts the temporary price increase, Seller
will (i) notify Sears as soon as the * and/or * cease to account for the
Material Cost Increase, and the First Cost Prices will return to their previous
levels retroactive to the date of such cessation, and (ii) continue to permit
Sears’ independent auditors to audit Seller’s books and records to monitor the
Material Cost Increase.  If Sears
declines the temporary price increase, Seller may terminate this Agreement upon
one hundred eighty (180) days’ written notice, provided that during such notice
period Seller shall continue to fulfill its obligations hereunder.  Any price increase pursuant to this
paragraph shall be retroactive to the first day of the Trigger Period.

 

4.                                       PRODUCT
CHANGES

 

Seller shall provide Sears no less than six
months’ written notice or such shorter period as

 

* Portions of this exhibit have been omitted pursuant to a request for
confidential treatment filed with the Securities and Exchange Commission. The
omitted portions, marked by “*”, have been separately filed with the
Commission.

 

7

 

may be mutually agreed in writing by Sears Authorized Representative
and Seller Authorized Representative, and obtain Sears’ written approval from
an Authorized Sears Representative before implementing any Product Change.  “Product Change” is any change to a
Product that impacts its performance, design, packaging, tags, labels, hangers,
containers used in connection therewith, and/or all literature pertaining to
the Product.  Sears and Seller shall
negotiate in good faith to develop an action plan with respect to any Product
which Sears and Seller agree should be subject to a Product Change.

 

5.                                       MANUFACTURING
AND DELIVERY TERMS, AND RECOURSE PAYMENTS.

 

5.1.                              Manufacturing
Products.

 

Seller and its majority-owned subsidiaries shall
supply Products that meet or exceed the following (collectively the “Product
Specifications”).

 

•                  any
feature specifications described in Exhibit B;

 

•                  the
final written technical and performance specifications agreed to by Sears and
Seller for the Sears Branded Products;

 

•                  all
industry or government standards applicable to the Products, as modified from
time to time (such as UL, CPSC, ANSI and other standards for safety and
efficiency), unless Sears and Seller agree to deviate from such standard(s) and
their agreement is documented in a signed writing that identifies the
standard(s) from which the applicable Products shall deviate;

 

•                  any
final performance claim that Seller makes or has made in writing to Sears in
connection with a Sears Branded Product; and

 

•                  any
final performance claim that Seller makes or has made in writing in connection
with a Product that is not a Sears Branded Product.

 

•                  in
the case of Craftsman and Craftsman Professional Products, manufactured in a
manner to permit “Made in U.S.A.” claim.

 

Sears has approved the Product Specifications for all
Sears Branded Products listed on Exhibit A as it exists on the Effective
Date.  Any changes to Product Specifications
must be approved in advance in writing by an Authorized Sears Representative
and an Authorized Seller Representative.

 

Seller shall regularly test the Products to ensure
that the Products meet the Product Specifications. The timing and protocol for
such testing must be approved in advance in writing by the Sears Lab.

 

The term “Specifications” in the UTC shall be deemed
to include the Product Specifications.  If,
after Specifications testing, Sears determines that any Product fails to meet

 

* Portions of this exhibit have been omitted pursuant to a request for
confidential treatment filed with the Securities and Exchange Commission. The
omitted portions, marked by “*”, have been separately filed with the
Commission.

 

8

 

the Product Specifications, Seller shall, with Sears’ reasonable
assistance, redesign the Product to meet or exceed the Product Specifications
within sixty (60) days after Sears’ delivering written notice to Seller.

 

5.2.                              Delivery.

 

(a)                                  Purchase
Order Lines; Order Completion; On Time Delivery.  This Section 5.2(a) shall be effective as of May 25, 2003
and shall continue throughout the balance of the Term

 

“Purchase Order Line” means a line in a Purchase Order
that specifies the Product(s) and quantity of Product(s) being ordered.  The number of Purchase Order Lines included
in a Purchase Order is equal to the number of different items being ordered
(e.g., if Sears issues a Purchase Order for 300 units of item 12345 and 220
units of item 56789, then the Purchase Order contains two Purchase Order
Lines).

 

Seller
shall use its best efforts to fill each Purchase Order Line:

 

•                                          on
time (i.e., delivery within the applicable Shipping Window) and

 

•                                          complete
(i.e., delivery of the Acceptable Quantity of the applicable Product).

 

For
Domestic Products, Seller is responsible for loading the Domestic Products on a
trailer at the Delivery Point.  For
Import Products, Seller is responsible for loading the Import Products on a
container and clearing them through customs.

 

If in
any calendar year of the Term the number of Non-Complying Lines exceeds that
year’s Maximum Allowable Non-Complying Lines, then for each Non-Complying Line
in excess of the Maximum Allowable Non-Complying Lines Seller will pay Sears
the applicable Compliance Fee for that year. 
A “Non-Complying Line” is a Purchase Order Line that Seller does not
fill on time or does not fill complete. 
The Maximum Allowable Non-Complying Lines for a year is the total number
of Purchase Order Lines issued by Sears during that year multiplied by the
applicable Allowable Non-Compliance Percentage listed on Exhibit C.  The Compliance Fee for each year equals A ́B,
where

 

A = the *, calculated by
dividing the * by the *; and

B = *%.

 

Seller
will immediately notify Sears if there is a reasonable likelihood that Seller
may not meet a required Ship Date. 
Seller will accurately complete such paper work and/or electronic
communications for each shipment (e.g., bills of lading, packing lists and UCC
128 labels) as Sears periodically requires. The quantity stated by Seller for
each Product on the advance shipping notice (“ASN”), invoice, bill of lading,
packlist/manifest and any other documentation will equal the actual quantity
shipped by Seller.

 

* Portions of this exhibit have been omitted pursuant to a request for
confidential treatment filed with the Securities and Exchange Commission. The
omitted portions, marked by “*”, have been separately filed with the
Commission.

 

9

 

Commencing
with the fiscal month May 25, 2003 through June 28, 2003 and continuing
throughout the balance of the Term, Seller shall deliver to Sears on a monthly
basis the total Non-Complying Lines for the prior month and for the year-to-date.  Sears shall then have 30 days after
receiving such report to either accept or reject the number of Non-Complying
Lines listed therein, after which time if Sears does not respond the
Non-Complying Lines listed in the report shall be deemed to have been accepted
by Sears.

 

(b)                                 Delivery
Point.  All Products shall be
shipped F.O.B. (as that term is used in the Illinois Uniform Commercial Code)
Sears’ delivery point (the “F.O.B. Point”). The F.O.B. Point for
Domestic Products shall be *; the F.O.B. Point for Import Products shall be
*.  Seller shall be responsible for all
freight costs attributable to transporting Import Products to the F.O.B.
Point.  All risk of loss shall remain
with Seller until the Products are delivered to the F.O.B. Point.  In addition, Seller is solely responsible
for any damage to the Products attributable to improper loading and improper
packaging from the time the Product is delivered to the F.O.B. Point until it
reaches a Sears distribution facility (e.g., Sears DDC or RRC).  Absent a specific amendment to this
provision, any language in a Purchase Order selecting a Seller or a carrier
F.O.B. Point shall not apply.

 

6.                                       PAYMENT
TERMS.

 

(a)                                  Domestic
Products.  Seller will invoice Sears
via EDI on the date Seller issues its Advance Shipping Notice (“ASN”)
to Sears.  Seller will issue an ASN via
EDI on the date the Domestic Product departs the F.O.B. Point. Sears will pay
the undisputed portion of each invoice so that Seller receives payment on the *
(*th) day after the date of the ASN; provided that if that
day is a Saturday, Sunday or bank holiday, Sears will pay on the next banking
day.

 

(b)                                 Import
Products.  Seller will invoice Sears
upon delivery of Import Products to the F.O.B. Point.  Sears will pay the undisputed portion of each invoice *.

 

7.                                       PRODUCT
LINE TRACKING, REPORTING AND SALES SUPPORT.

 

7.1.                              Single Point
of Contact.

 

Seller shall provide Sears with sufficient assistance
and resources to manage Sears’ account with Seller and to manage Seller’s
administrative and other obligations under this Agreement.  Seller shall designate at least one  full time contact
person, who is acceptable to Sears, per Sears’ format (minimum $20 million in
sales per calendar year) to oversee this relationship.

 

7.2.                              Periodic
Reporting.

 

(a)                                  Intentionally
Omitted.

 

* Portions of this exhibit have been omitted pursuant to a request for
confidential treatment filed with the Securities and Exchange Commission. The
omitted portions, marked by “*”, have been separately filed with the
Commission.

 

10

 

(b)                                 Seller-Made
Eligible MHT Percentage.  Sears will
share with Seller on an annual  basis the Seller-Made Eligible MHT
Percentage. No more than once during each year of the Term, Sears will permit
Seller’s independent auditor to audit Sears’ books and records relating to the
calculation of the Seller-Made Eligible MHT Percentage to verify that Sears has
satisfied its obligations under Section 2.2. The independent auditors shall
execute the confidentiality agreement in the form attached as Exhibit I
prior to conducting any audit and shall not disclose to Seller any information
other than whether Sears has satisfied its obligations under Section 2.2 and if
not the nature and scope of the failure to so comply.

 

(c)                                  Seller
Performance Evaluation.  Seller
shall survey, on an annual basis, Sears’ personnel concerning Seller’s
performance during the prior year. Within 45  days of the end of each calendar year,
Seller shall deliver to Sears a written evaluation of Seller’s performance
under this Agreement during the previous year, incorporating Sears’ survey
responses and other comments relating to Seller’s performance.  Sears shall deliver to Seller twice annually
a mid-year vendor score card.

 

(d)                                 General
Marketing Reports.  Sears and Seller
will use commercially reasonable efforts to provide additional marketing
reports to each other on a regular basis as shall be mutually agreed by the
parties.

 

(e)                                  Market
Research.  Sears and Seller will
share the results of all relevant, non-confidential market research studies
that either party conducts or commissions relating directly to Sears Branded
Products.

 

All such reports and surveys are for informational
purposes only and will not be the basis for any subsidy or other calculations
under this Agreement.  All such reports
and surveys shall, unless otherwise agreed to by Sears and Seller, be prepared
on a consistent basis and, to the extent available and meaningful, shall
include a comparison to the prior year’s performance for the period in
question.  Furthermore, all such reports
and surveys, shall be “Confidential Information” of the
disclosing party as defined in Section 15.1.  This provision shall not require Sears or Seller to provide, and
Sears and Seller shall not provide, any information which would violate any
applicable federal, state or local statutes, common law, rules, regulations,
ordinances or order of a court of competent jurisdiction (collectively, “Applicable
Law”), or any agreement legally binding upon Sears or Seller.

 

7.3.                              Training
Support.

 

Seller shall provide sales support representatives to
provide training sessions for Sears’ personnel at such location(s) and in such
manner as shall be mutually agreed by the parties.  Seller’s support representatives shall have adequate sales and
technical expertise on all Product, application and usage issues to train
Sears’ personnel reasonably during these support calls.  Training shall focus on Product knowledge
and features, Product uses, competitive Product offerings, pricing issues,
promotions, marketing initiatives and customer complaints.  As reasonably requested by Sears, and
consistent with the parties’ past practice, Seller will provide

 

* Portions of this exhibit have been omitted pursuant to a request for
confidential treatment filed with the Securities and Exchange Commission. The
omitted portions, marked by “*”, have been separately filed with the
Commission.

 

11

 

training content regarding Product features in the form of articles for
Sears’ Homeworks
magazine and e-learning materials.

 

7.4.                              After-Sale
Support.

 

Seller shall maintain at least one dedicated toll-free
telephone number exclusively for Sears’ customers and Sears’ associate support
and assistance relating to the Sears Branded Products. The call center(s) (each
a “Call
Center”), answering such calls shall be open from 8:00 a.m. to
5:00 p.m. Monday through Friday Eastern Standard or Daylight Time,  as applicable,
except for national holidays.  The Call
Center must have, or have the capability to connect Sears’ customers and Sears’
associates directly with, English-speaking and Spanish-speaking personnel
knowledgeable in all technical and functional aspects of the Sears Branded
Product Line.  After the first year of
the Term, Sears and Seller will evaluate criteria to be mutually agreed upon to
determine the continuing need for Spanish-speaking personnel.  Following a request by the Sears buyer, and
after Seller consumes its then-existing inventory of packaging materials in the
manufacturing process, on all packaging materials subsequently acquired or
manufactured by Seller, Seller shall print the applicable telephone number,
along with the model number, current industry marking standard, and Sears  web site address
(www.craftsman.com) on all Sears Branded Product packaging and literature. All
data and information related to the Sears Branded Products that Seller collects
in connection with these telephone and Internet support centers, including,
without limitation, any customer names, customer addresses and warranty card
information, shall be deemed “Sears Information” as defined in Section 14.4(b).

 

7.5.                              Telephone
Numbers; Internet Addresses.

 

Effective upon this Agreement’s expiration (without
renewal or extension) or termination and subject to approval by the applicable
telephone company (which approval the parties will use their best efforts to
obtain), Seller hereby assigns to Sears all of Seller’s right, title and
interest in and to all telephone numbers (the “Sears Numbers”) used
in connection with Sears Branded Products under Section 7.4 above.  Upon the expiration or termination of this
Agreement, Seller shall have no further right, obligation, title or interest in
or to those Sears Numbers, but shall remain liable for all fees and costs
relating to those Sears numbers incurred prior to the effective date of the
assignment.  Such assignment shall not
be effective unless accepted by Sears, in its sole discretion.  Prior to its acceptance of the assignment,
Sears shall have no liability or obligation whatsoever in connection with the
Sears Numbers.  Seller acknowledges and
agrees that as between Seller and Sears, upon this Agreement’s expiration or
termination, Sears shall, if it so elects, have the sole right to and interest
in those Sears Numbers, which right may be exercised by Sears providing written
notice to Seller of its intention to exercise the right within thirty (30) days
after the expiration or termination of this Agreement.  If Sears exercises its rights pursuant to
this Section 7.5, and solely for the purposes thereof, Seller shall
direct the telephone company with which Seller has placed listings of the Sears
Numbers to assign the Sears Numbers and listings to Sears (or Sears’ designee),
and to sign and deliver any documents and take any actions as may be reasonably
necessary to effectuate this assignment.

 

* Portions of this exhibit have been omitted pursuant to a request for
confidential treatment filed with the Securities and Exchange Commission. The
omitted portions, marked by “*”, have been separately filed with the
Commission.

 

12

 

8.                                       VOLUME
INCENTIVE REBATES.

 

In addition to all other Seller support provided under
this Agreement, Seller shall provide volume incentive rebates (“Volume
Incentive Rebates” or “VIR”) to Sears.  Volume Incentive Rebates shall be calculated
based on Sears’ Total Purchases of Products during the applicable VIR/Subsidy
Measurement Period compared to Sears’ Total Purchases of Products during the
same period from the previous year (e.g., the second, third and fourth quarters
of fiscal 2003 would be compared against the second, third and fourth quarters
of fiscal 2002). The applicable incremental increase of the Total Purchases
over the previous year shall then be multiplied by the applicable “VIR
Percentage” listed below.

 

	
  Percent of  Total
  Purchases

  	
   

  	
  VIR
  Percentage

  	
   

  
	
  Above *% - *%

  	
   

  	
  *%

  	
   

  
	
  Above *%

  	
   

  	
  * % of the first

  *% - *%, and *%

  of the excess over

  *%

  	
   

  

 

For purposes of calculating the VIR, any purchases of
Products prior to the Effective Date shall be restated using the First Cost
Prices of the applicable Products

 

Examples (with all Total Purchases restated to reflect
the First Cost under this Agreement):

 

1.               If Sears’ Total
Purchases were $* for fiscal 2003 and $* for fiscal year 2004, then the VIR for
2004 would be $* ($*, the excess of the increase in Total Purchases over *%,
multiplied by *%, the applicable VIR percentage because the year over year
increase in Total Purchases was *%).

2.               If Sears’ Total
Purchases were $* for fiscal 2003 and $* for fiscal 2004, then the VIR for 2004
would be $* ($* (the portion of the year over year increase in Total Purchases
that was greater than *% but less than or equal to *%) multiplied by *%, plus
$* (the portion of the year over year increase in Total Purchases that was
greater than *%) multiplied by *%).

 

Sears shall be entitled to collect from Seller any VIR
on or after the fifth business day after the end of the VIR/Subsidy Measurement
Period in which the VIR is earned.

 

9.                                       SUBSIDIES
AND MARKETING SUPPORT.

 

9.1.                              Promotional
Plans.

 

Before the beginning of each year of the Term, Sears
and Seller shall conduct a joint planning session (an “Annual Planning
Session”) to set growth targets and discuss new or existing Products or
strategies designed to increase the volume under the program for the coming
year, discuss strategies and assign responsibilities for marketing support, and
discuss capacity estimates for the relevant calendar year.   During each year of the Term, Sears and
Seller shall meet at least two additional times for seasonal updates to the
plan prepared in the previous Annual Planning Session.

 

* Portions of this exhibit have been omitted pursuant to a request for
confidential treatment filed with the Securities and Exchange Commission. The
omitted portions, marked by “*”, have been separately filed with the
Commission.

 

13

 

9.2.                              Sales
Promotion Subsidies.

 

In addition to all other Seller support provided under
this Agreement, Seller shall pay to Sears or its designee marketing subsidies
(“Sales
Promotion Subsidies”) of a total of $* in the last three
quarters of fiscal 2003, $* in 2004, $* in 2005 and $* in the first fiscal
quarter of 2006 (each a “Sales Promotion Subsidy”). Sears and
Seller shall meet periodically to plan how to use the Sales Promotion
Subsidies.  For each portion of the
Sales Promotion Subsidy to be spent as mutually agreed by the parties, Seller
will pay Sales Promotion Subsidies (i) at Sears’ direction, to third parties
providing goods or services to Sears or (ii) to Sears directly, pursuant to the
terms of a promotional agreement issued by Sears.  If in any calendar year (or fiscal quarter, in the case of the
first quarter 2006 Sales Promotion Subsidy) Seller does not pay the full Sales
Promotion Subsidy for that year or quarter, Seller shall pay the shortfall to
Sears by wire transfer no later than the fifth business day after the end of
the fiscal period to which the Sales Promotion Subsidy relates.

 

9.3.                              Packaging
and Product Development Information and Material.

 

Seller shall consult with Sears and obtain Sears’
prior written approval before developing or implementing any changes to the
packaging, advertising and marketing materials, or owners or other manuals used
in connection with the any or all of the Sears Branded Products.
Notwithstanding the foregoing, Seller shall be solely responsible for the
adequacy of such materials and Sears shall have no liability for any suggested
changes proposed by Sears which Seller adopts.

 

9.4.                              Other
Marketing Support.

 

Periodically during the Term, Sears and Seller shall
negotiate in good faith to determine other subsidies and marketing support
that, upon agreement of the parties, Seller shall provide to Sears to support
the Products.  This support, may
include, without limitation, the following:

 

(a)                                  Marketing
and Promotional Materials.  Seller
shall provide Sears with a reasonable supply of Seller’s standard marketing and
promotional items for the Product Lines, including, without limitation,
point-of-sale brochures, laminated hang cards, signage (including, without
limitation, c-channel, point-of-sale, special event, endcap, promotional and
overhead signage), sufficient samples to support public relations and
promotional activity, and other similar materials.

 

(b)                                 Plan-O-Gram.  Seller shall, at Sears’ sole discretion,
either provide Plan-O-Gram development support (including, without limitation,
Product samples and imaging) at reasonable intervals during the Term outlining
suggested placement, layout and presentation of Products, or reimburse Sears
for all reasonable costs and expenses incurred in developing the Plan-O-Gram
support.

 

* Portions of this exhibit have been omitted pursuant to a request for
confidential treatment filed with the Securities and Exchange Commission. The
omitted portions, marked by “*”, have been separately filed with the
Commission.

 

14

 

(c)                                  Internet
Efforts.  Seller shall support
Sears’ internet marketing, distribution, logistic, accounting and sales
efforts.  If requested by Sears, Seller
shall include a hyper link from Seller’s web site(s) to the web site(s)
designated by Sears.  The parties shall
agree on the appearance and location of such hyperlink within the website.  Seller’s support of Sears internet marketing
and sales efforts shall include, without limitation: (i) providing reasonable
graphics and content support for any Sears’ designated web site relating to the
Products, and (ii) reimbursing Sears for the cost Sears pays to add Products to
Sears’ websites, which cost currently approximately ranges from $150 to $485
per product.

 

9.5.                              Coop
Advertising Subsidy.

 

Seller will pay Sears a
Coop Advertising Subsidy (the “Coop Advertising Subsidy”) equal to *
percent (*%) of Sears’ Total Import Purchases during each VIR/Subsidy
Measurement Period. “Total Import Purchases” means the
aggregate First Cost Price of all Products that are manufactured outside the
United States that Sears purchases from Seller during the applicable
VIR/Subsidy Measurement Period. On or after the fifth business day after the
end of each VIR/Subsidy Measurement Period, Sears will collect the Coop
Advertising Subsidy for the prior period by debit memo.  If the Coop Advertising Subsidy exceeds the
amounts then payable from Sears to Seller, Seller will immediately pay such
excess to Sears by wire transfer.

 

9.6                                 Promotional
Support Subsidy.

 

Beginning April 28, 2003
and continuing throughout the balance of the Term, Seller will pay Sears
monthly Promotional Support Subsidies (“Promotional Support Subsidies”) equal
to * percent (*%) of the prior month’s Total Purchases of Domestic Products. On
or after the fourth business day of each month, Sears will issue a debit memo
for the prior month’s Promotional Support Subsidy. If the Promotional Support
Subsidy for any month exceeds the amounts then payable from Sears to Seller,
Seller will immediately pay such excess to Sears by wire transfer.

 

9.7         Impact Socket Subsidies.

 

Seller will pay Sears a
Marketing Subsidy equal to * percent (*%) of Sears’ Total Purchases of impact
sockets during each VIR/Subsidy Measurement Period and a Store Support Subsidy
equal to * percent (*%) of Sears’ Total Purchases of impact sockets during each
VIR/Subsidy Measurement Period (collectively, the “Impact Socket
Subsidies”).  On or after the fifth
business day after the end of each VIR/Subsidy Measurement Period, Sears will
collect the Impact Socket Subsidies for the prior period by debit memo.  If the Impact Socket Subsidies exceed the
amounts then payable from Sears to Seller, Seller will immediately pay such
excess to Sears by wire transfer.

 

9.8                                 Warranty
Credit Subsidy.

 

To offset Sears’ costs associated
with providing Product exchanges to customers who return ratchets, on or before
December 31, 2003, 2004 and 2005, Seller will pay Sears by wire

 

* Portions of this exhibit have been omitted pursuant to a request for
confidential treatment filed with the Securities and Exchange Commission. The
omitted portions, marked by “*”, have been separately filed with the
Commission.

 

15

 

transfer a “Warranty
Credit Subsidy” of $*, and on or before *, Seller will pay Sears
by wire transfer a Warranty Credit Subsidy of $*.  The Warranty Credit Subsidy will be decreased by * percent for
each full * percent reduction in the annual Ratchet Allowance Rate below the
2002 Ratchet Allowance Rate.  The “Ratchet
Allowance Rate” is the quotient obtained by dividing Sears’
Craftsman and Craftsman Professional ratchet allowances during the applicable
period by Sears’ total sales of Craftsman and Craftsman Professional ratchets
during the applicable period as calculated in SPRS.  As of the Effective Date, SPRS reports the Ratchet Allowance Rate
as “Sales Adjustments by Reason—Craftsman Lifetime Warranty.

 

10.                                 EPIDEMIC
RETURNS.  

 

10.1.                        “Epidemic
Return” means (i) a Product or Product Line that is subject to a
recall or (ii) a * percent or greater increase (e.g., an increase from *% to
*%) in the rolling * returns rate for a Product or Product Line over the prior
* rolling * returns rate. The returns rate is calculated by dividing (a) the
total number of units of a Product (or of Products in a Product Line) that are
returned to Sears by customers during the previous * by (b) the total number of
units of a Product (or of Products in a Product Line) that are sold by Sears to
customers during the previous *.

 

10.2.                        Epidemic Return Payments.

 

Sears may, at any time during or after the Term,
return to Seller all Epidemic Returns. 
Seller shall reimburse Sears for the full “Return Cost” of each Epidemic
Return Sears tenders to Seller (collectively, the “Epidemic Return Payments”).  “Return Cost” means *% of  the First Cost of the Epidemic Return, plus
Sears’ actual freight costs.

 

11.                                 TRANSITION
MANAGEMENT.  

 

Seller shall provide Sears no less than six
(6)
months’ written notice or such shorter period as agreed to in writing by a
Sears Authorized Representative and obtain Sears’ written approval before
discontinuing any Product production. 
Sears and Seller shall negotiate in good faith to develop an equitable
program, consistent with past practice, for liquidating any inventory of discontinued
Products or any Products that are the subject of a demand made by Sears
pursuant to Section 14.4(c).

 

12.                                 SEARS
INVENTORY PURCHASE OBLIGATIONS

 

Upon the termination or expiration of this Agreement,
Sears will purchase from Seller the following:

 

(a)
all Products listed on any Purchase Orders issued by Sears prior to such
termination or expiration;

 

(b) *;

 

* Portions of this exhibit have been omitted pursuant to a request for
confidential treatment filed with the Securities and Exchange Commission. The
omitted portions, marked by “*”, have been separately filed with the
Commission.

 

16

 

(c) *;
provided, however, that Sears shall not be required to purchase pursuant to
this Section 12(c) *.

 

Seller shall not be
liable to Sears for Administrative Fees and Compliance Fees related to late
delivery or non-delivery of Products pursuant to this Section 12.  In the event that Seller *.  Seller is hereby authorized by Sears to use
the Sears Marks and Sears Trade Dress solely for the sale or other disposition
of remaining inventory * in accordance with this paragraph.

 

Sears’ purchases of
Products pursuant to this Section 12 will be counted for purposes of Sections
9.5, 9.6 and 9.7, but not for purposes of Section 8.

 

13.                                 TERM.

 

The term of this Agreement (the “Term”) shall begin on
the Effective Date and shall end, unless sooner terminated under the terms of
this Agreement, on the * anniversary of the Effective Date (the “Expiration
Date”).  Orders placed by
Sears with Seller during the Term pursuant to Section 2.4 are subject to this
Agreement.

 

On or before *, Sears and Seller shall meet to
evaluate the MHT market and their relationship and to discuss in good faith the
terms under which they might choose to continue to do business *.

 

14.                                 INTELLECTUAL
PROPERTY.

 

14.1.                        Patents.

 

Seller represents and
warrants that the manufacture, usage and sale of the Products are not in
violation and are not alleged to be in violation of any patent, patent
application, trademark, copyright, trade secret or other intellectual property
right of any third party.

 

14.2.                        Exclusive Features/Products.

 

For the period(s) stated on Exhibit D, Seller will not
directly or indirectly, under any brand name, sell any Product listed on
Exhibit D or any Mechanics Hand Tool including any feature listed on Exhibit D
to the Retail Market. “Retail Market” means (i) on-line and catalog
retailers, (ii) businesses that generally meet the retail market
characteristics listed on Exhibit H and (iii) businesses that directly
or indirectly sell products to businesses described in clause (i) or (ii),
provided that solely for purposes of this Agreement the Retail Market shall not
include NAPA.  Breach of this Section 14.2
is a material breach of this Agreement.

 

14.3.                        Work Product.

 

Any marketing materials, advertising materials,
promotional materials, point of sale displays, packaging, customer information
and material, warranty card information, copyrights, tradenames, trademarks,
trade dress, servicenames, servicemarks and other materials relating to

 

* Portions of this exhibit have been omitted pursuant to a request for
confidential treatment filed with the Securities and Exchange Commission. The
omitted portions, marked by “*”, have been separately filed with the
Commission.

 

17

 

any Sears Branded Products, which materials are prepared, developed or
created by or on behalf of Sears or Seller or any of their personnel, agents or
contractors in connection with this Agreement or otherwise in connection with
the Sears Branded Products (collectively, “Work Product”), shall be exclusively
owned by Sears.  Sears may, in its sole
discretion, use, reproduce, or distribute any Work Product in any manner
whatsoever, without further obligation or liability to Seller.  Seller acknowledges and agrees that all Work
Product shall be considered “work made for hire” as that term may be defined
from time to time in Section 101 of the Copyright Act, 17 U.S.C. Section 101
(or any successor provision), that Sears shall be deemed the author of the Work
Product, and that Sears shall be the exclusive owner of all right, title and
interest, including all copyrights, in and to the Work Product.  If, for any reason, the Work Product is found
not to have been created as work made for hire, Seller hereby assigns without
limitation all right, title and interest in and to the Work Product to Sears,
including all copyrights and other intellectual property rights associated with
any Work Product and the right to bring suit on all causes of action relating
to any Work Product, including for copyright infringement of, the Work
Product.  Seller further agrees to
execute and deliver to Sears any and all further documents deemed by Sears to
be helpful in documenting, effectuating or recording the foregoing
assignment.  Seller shall not, and shall
not permit any third party to, disclose or provide any of the Work Product to
any Person other than Sears, including but not limited to disclosure of Work
Product as a part of any master mailing list or other compilation of customer
or demographic information.

 

Seller hereby grants Sear a perpetual, irrevocable,
worldwide license to use in any manner, including to reproduce, sell and
sublicense, any owner’s manuals, web site graphics, web site content support
videos and web site content related to any Sears Branded Product, which
materials are prepared, developed or created by or on behalf of Seller or any
of its personnel, agents or contractors in connection with this Agreement or
otherwise in connection with the Products.

 

14.4.                        Sears Marks and Sears Trade Dress.

 

(a)                                  Seller
hereby acknowledges that (i) the trademarks, service marks and trade names
listed on Exhibit E (collectively, the “Sears Marks”), and (ii) any distinctive
trade dress of any Sears Branded Products purchased from Seller by Sears (the “Sears
Trade Dress”) constitute
valuable intellectual property solely and exclusively owned by Sears.  During the Term of this Agreement only,
Sears hereby grants to Seller a non-exclusive, limited license to use the Sears
Marks and Sears Trade Dress for the sole purpose of affixing the Sears Marks or
incorporating the Sears Trade Dress into (1) any Products supplied to Sears by
Seller, in accordance with Sears’ instructions and (2) any Work Product
developed, prepared or supplied by or on behalf of Seller relating to any Sears
Branded Products, including but not limited to advertising materials,
promotional materials, point of sale displays or packaging. Seller shall not
distribute to any Person other than Sears any Products or any Work Product
relating to any Products bearing the Sears Marks or incorporating Sears Trade
Dress or Sears’ other Intellectual Property Rights without Sears’ specific
written authorization prior to such distribution.  Such limitation of distribution rights shall not affect the
distribution rights granted to Seller in the Industrial Contract.

 

* Portions of this exhibit have been omitted pursuant to a request for
confidential treatment filed with the Securities and Exchange Commission. The
omitted portions, marked by “*”, have been separately filed with the
Commission.

 

18

 

(b)                                 Seller
shall not claim any right, title or interest in, or challenge Sears ownership
of, (i) the Sears Marks, (ii) the Sears Trade Dress, (iii) the Work Product, or
(iv) any lists, files or other information or material provided or made
available by Sears (or by Sears customers in connection with purchases of
Products) for use by Seller (“Sears Information”).  Seller recognizes and acknowledges that the
use of any Sears Information shall not confer upon Seller any right or interest
therein.

 

(c)                                  Seller
shall use the Sears Information only in the performance of its obligations
under this Agreement and in accordance with this Section 14.  Upon the expiration or termination of this
Agreement, or at any time during the Term upon demand by Sears, Seller shall
immediately stop using all Sears Marks, Sears Trade Dress, Sears Work Product
and Sears Information and shall transfer to Sears all Work Product produced and
all other materials containing or based on Sears Information. Should Sears
demand that Seller stop using Sears Marks, Sears Trade Dress, Work Product,
Sears’ Intellectual Property and Sears Information in accordance with this
subsection, Seller shall have no obligation to pay damages for any failure to
supply Sears Branded Products that is prevented by such demand.

 

(d)                                 Nothing
in this Agreement shall be construed to bar Sears from protecting its rights to
the exclusive ownership of Sears Information against infringement or
appropriation by any party or parties, including any use by Seller not
expressly authorized by this Agreement. 
Seller acknowledges that Sears Information possess a special, unique and
extraordinary character which makes it difficult to assess the monetary damage
Sears would sustain in the event of unauthorized use thereof.  Seller agrees and acknowledges (i) that
irreparable injury would be caused to Sears by unauthorized use of Sears Marks,
Sears Trade Dress, Work Sears Branded Product or Sears Information, (ii) that
if this Section 14 is breached by Seller there would be no adequate
remedy at law and (iii) that in the event of such breach, a temporary
restraining order or preliminary or permanent injunctive relief, in each case
without bond, would be appropriate. 
Seller waives any right it may have to require Sears to post a bond in
connection with any such order.

 

14.5.                        Seller Marks and Seller Trade Dress.

 

Sears hereby acknowledges that the trademarks,
service marks and trade names listed on Exhibit F (the “Seller Marks”) constitute valuable intellectual property and, as
between Sears and Seller, are solely and exclusively owned by
Seller.  Sears shall not claim any right, title or interest in, or
challenge Seller’s ownership of, the Seller Marks.

 

14.6.                        Innovations to Mechanics Hand Tools.

 

Seller agrees to consult with Sears periodically
during the Term in the processes of developing new Mechanics Hand Tools,
enhancements, innovations, technological

 

* Portions of this exhibit have been omitted pursuant to a request for
confidential treatment filed with the Securities and Exchange Commission. The
omitted portions, marked by “*”, have been separately filed with the
Commission.

 

19

 

improvements and modifications to Mechanics Hand Tools and redesigns of
Mechanics Hand Tools (collectively “Innovations”) to the extent such
Innovations are owned or licensed by Seller or its majority-owned subsidiaries.
As between Sears and Seller, Seller shall own all right, title and interest in
and to those Innovations that Seller solely initiates, solely develops or
solely commissions, or that are proposed to Seller by a third party, without
any direction, input or assistance from Sears, during the Term.  Any and all Product evaluations performed by
Sears or its authorized representatives shall not qualify as direction, input
and/or assistance in or to the Innovations and Sears shall not claim any right,
title and interest in, or challenge Seller’s ownership of such Innovations.

 

*

 

(c)                                  *.  Sears and Seller acknowledge that the * and
* applicable to any * or * will be subject to *.  Sears and Seller further acknowledge their expectation that the *
of any such * will be *.

 

(d)                                 *.

 

15.                                 CONFIDENTIALITY.

 

15.1.                        “Confidential
Information” means any information, whether disclosed in oral,
written, visual, electronic or other form,
that one party (the “Disclosing Party”) discloses to the other
party (the “Receiving Party”), that relates to or is disclosed in
connection with the parties’ performance under this Agreement and that is or
reasonably should be understood by the Receiving Party to be confidential or
proprietary to the Disclosing Party, including information concerning the
Disclosing Party’s sales, pricing, costs, inventory, operations, employees,
current or potential customers, financial performance or forecasts and business
plans, strategies, forecasts or analyses, warranty card information,
manufacturing technologies or processes, software (including all documentation
and code), hardware or system designs, architectures or protocols, Sears
Branded Product specifications, any New Product information, any Innovations or
the terms of this Agreement.

 

                                                15.2.                        Treatment of
Confidential Information.

 

Sears and Seller shall each use the other party’s
Confidential Information and reproduce materials containing Confidential
Information only as necessary to perform its obligations under this
Agreement.  Sears and Seller shall
restrict disclosure of Confidential Information to its personnel who have a
need to know such information to perform the parties’ obligations under this
Agreement and who have been advised of the obligation not to disclose
Confidential Information. The Receiving Party is liable for any unauthorized
disclosure or use of Confidential Information by the Disclosing Party’s
personnel.  Within ten  (10) days after receiving the
Disclosing Party’s written request, the Receiving Party shall: (a) destroy or
return (as instructed by the Disclosing Party) any materials containing
Confidential Information, and (b) certify to the requesting party that it has
satisfied its obligations under this Section 15.

 

* Portions of this exhibit have been omitted pursuant to a request for
confidential treatment filed with the Securities and Exchange Commission. The
omitted portions, marked by “*”, have been separately filed with the
Commission.

 

20

 

15.3.                        Exceptions to Confidential Treatment.

 

General.  The obligations under this Section 15
do not apply to any Confidential Information that the Receiving Party can
demonstrate:

is or
becomes publicly available without the Receiving Party’s breach of this
Agreement;

is independently
developed by the Receiving Party without using any Confidential Information; or

is received by the
Receiving Party from a third party that does not have an obligation of
confidentiality to Sears.

 

Legal Requirements.  The Receiving Party may disclose
Confidential Information to the extent that it is required by Applicable Law to
be disclosed. The Receiving Party shall notify the Disclosing Party a
reasonable time prior to disclosure and allow the Disclosing Party a reasonable
opportunity to seek appropriate protective measures.

 

Burden of Proof.  The Receiving Party shall have the burden of
proving the applicability of the foregoing exceptions to this Section 15.

 

16.                                 MISCELLANEOUS.

 

16.1.                        Representations and Warranties.

 

Each party represents and warrants that it has the
right, power and authority to grant the rights provided under this Agreement
and to perform its obligations under this Agreement, and that the warranty’s
party execution, delivery and performance of this Agreement have been duly
authorized and will not violate any other agreement, restriction, or Applicable
Law or by which the party is bound.

 

                                                16.2.                        No
Assignment or Sublicense; Binding Effect.

 

This Agreement and all its rights and duties hereunder
are personal to Seller and shall not, without the written consent of Sears, be
transferred, assigned, sublicensed or otherwise encumbered by Seller or by
operation of law.  Notwithstanding the
foregoing, Seller may upon forty-five (45) days’ advance written notice to
Sears assign this Agreement to a direct or indirect wholly-owned subsidiary of
Danaher Corporation (a “Permitted Assignee”), provided that any such assignment
shall only be valid so long as the Permitted Assignee remains a direct or
indirect wholly-owned subsidiary of Danaher Corporation.

 

A Change of Control shall constitute an assignment of
this Agreement.  Notwithstanding
anything to the contrary in the preceding paragraph, Seller or, if Seller has
assigned this Agreement to a Permitted Assignee as permitted by this Section,
its Permitted Assignee (as applicable, the “Assignor”) may assign this
Agreement without Sears’ consent in connection with a Change of Control, except
that if any party listed on Exhibit G is a party to the Change of Control, then
the Assignor must obtain Sears’ prior written consent to the Change of Control,
which Sears may withhold in its sole discretion.

 

* Portions of this exhibit have been omitted pursuant to a request for
confidential treatment filed with the Securities and Exchange Commission. The
omitted portions, marked by “*”, have been separately filed with the
Commission.

 

21

 

For purposes of this
Section, “Change of Control” means (i) a sale of all or substantially
all of the assets of Seller, whether in a single transaction or a series of
transactions; (ii) the merger or consolidation of Seller with or into any
corporation or the merger of another corporation into Seller if the effect is
that fifty percent (50%) or more of the total voting power entitled to vote in
the election of the board of directors of the surviving or new corporation is
held by a person or persons other than the shareholders of Seller immediately
prior to such transaction; or (iii) the occurrence of any other event which
results in fifty percent (50%) or more of the total voting power entitled to
vote in the election of the board of directors of Seller being held by a person
or persons other than the shareholders of Seller who, individually or as a
group, held 50% or more of such voting power immediately prior to such event.
If any direct or indirect parent company of Seller (other than Danaher
Corporation) or, in the event that Seller has assigned this Agreement to a
Permitted Assignee as permitted by this Section, such Permitted Assignee, or
any direct or indirect parent company thereof (other than Danaher Corporation),
undergoes a transaction described in this definition, that transaction would
also be deemed to be a Change of Control.

 

16.3.                        Notices.

 

Notices under this Agreement are sufficient if given
by nationally recognized overnight courier service, certified mail (return
receipt requested), facsimile with electronic confirmation or personal delivery
to the other party at the address below:

 

	
  If to Sears:

  	
   

  	
  Sears, Roebuck and Co.

  
	
   

  	
   

  	
  3333 Beverly Road, Mail
  Station: D3-168B

  
	
   

  	
   

  	
  Hoffman Estates,
  Illinois 60179

  
	
   

  	
   

  	
  Attn.: VP, GMM - Tools

  
	
   

  	
   

  	
  Facsimile:  (847) 286-4404

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Sears, Roebuck and Co.

  
	
   

  	
   

  	
  3333 Beverly Road, Mail
  Station: B6-247A

  
	
   

  	
   

  	
  Hoffman Estates,
  Illinois 60179

  
	
   

  	
   

  	
  Attn.: VP Law, Retail

  
	
   

  	
   

  	
  Facsimile:  (847) 286-0266

  
	
   

  	
   

  	
   

  
	
  If to Seller:

  	
   

  	
  Easco Hand Tools

  
	
   

  	
   

  	
  125 Powder Forest Drive

  
	
   

  	
   

  	
  Simsbury, Connecticut
  06070

  
	
   

  	
   

  	
  Attn.: President,
  Special Markets Division

  
	
   

  	
   

  	
  Facsimile: (860)
  843-7398

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Wilmer, Cutler &
  Pickering

  
	
   

  	
   

  	
  2445 M Street, NW

  
	
   

  	
   

  	
  Washington, D.C. 20037

  
	
   

  	
   

  	
  Attn.: Mark A. Dewire

  
	
   

  	
   

  	
  Facsimile: (202)
  663-6363

  

 

* Portions of this exhibit have been omitted pursuant to a request for
confidential treatment filed with the Securities and Exchange Commission. The
omitted portions, marked by “*”, have been separately filed with the
Commission.

 

22

 

Notice is effective: 
(i) when delivered personally, (ii) three business days after sent by
certified mail, (iii) on the business day after sent by a nationally recognized
courier service, or (iv) on the business day after sent by facsimile with
electronic confirmation to the sender. 
A party may change its notice address by giving notice in accordance
with this Section 16.3.

 

16.4.                        Recoupment and Setoff; Joint and Several
Liability.

 

“Seller’s Monetary Obligations” under Section 14
of the UTC shall include, without limitation, the VIR, all subsidies and any
Epidemic Return Payments.  Sears may, at
any time after they accrue, collect Seller’s Monetary Obligations by debit
memo.  To the extent a debit memo
exceeds the amounts owed by Sears at the time it is issued, Seller shall pay
the difference by company check within 30 days after receiving Sears’ debit memo.
Easco, Lea Way and Jessie & J shall be jointly and severally liable for any
Seller’s Monetary Obligations and for any damages suffered by Sears as a result
of Seller’s breach of this Agreement.

 

16.5.                        Liquidated Damages.

 

Seller and Sears hereby agree that the Epidemic Return
Payments, Return Costs and other liquidated payments which are due hereunder
are not intended by the parties as penalty payments, but are instead, intended
as liquidated damages to partially compensate Sears for its losses should
Seller fail to meet its required performance levels.  Furthermore, the parties agree that these amounts are reasonable
and appropriate because of the difficulty, time and cost of determining Sears
actual damages resulting from such performance shortfalls.

 

16.6.                        Relationship
of the Parties.

 

The relationship of Seller and its personnel to Sears
shall be that of independent contractors, and Seller shall not purport to
represent Sears as Sears’ agent, employee or partner in any manner.  All persons that Seller furnishes to fulfill
its obligations hereunder shall be the employees, agents and/or subcontractors
of Seller and shall not be the employees or agents of Sears.  Seller shall have exclusive control over its
employees and agents and over their labor and employee relations and policies
relating to wages, hours and working conditions.  Seller is solely responsible for all salaries and other
compensation of all of its employees and agents, and for making all deductions
and withholdings and paying all contributions, taxes and assessments for their
salaries and other compensation.  Seller
has the exclusive right to hire, transfer, suspend, lay off, recall, promote,
discipline, discharge and adjust grievances with its employees and agents.  Seller shall have no authority to enter into
any contract or incur any expense or obligation of any kind in Sears’ name.

 

16.7                           Public
Disclosure.

 

Seller acknowledges that
Sears requires manufacturers of Sears Branded merchandise to reinforce the
Sears brand names as opposed to emphasizing the manufacturers who make Sears

 

* Portions of this exhibit have been omitted pursuant to a request for
confidential treatment filed with the Securities and Exchange Commission. The
omitted portions, marked by “*”, have been separately filed with the
Commission.

 

23

 

Branded merchandise.  Except as permitted under the terms and
conditions of this Agreement or with Sears’ prior written consent, Seller will
not disclose the existence or terms of this Agreement or any other information
regarding Seller’s supply of the Sears Branded Products to Sears in any
advertising, promotional or sales activity or publicity or press release.  Seller will refrain from making any
reference to this Agreement or to Sears in the solicitation of business, unless
Sears gives its prior written consent to such action and approves any press
release or other publicity materials prior to their dissemination. Provided
that Seller does not disclose any Confidential Information of Sears, Seller may
disclose that it manufactures Sears Branded Products and information about its
business with Sears (i) to the extent Seller reasonably believes that
disclosure is required under Applicable Law or applicable stock exchange
requirements and (ii) in communications with securities professionals.

 

16.8.                        Intentionally
omitted.

 

16.9.                        SPRS.

 

For purpose of this Agreement, unless otherwise
indicated herein, all calculations and measurements with respect to Sears’
purchases, sale of Sears Branded Products, average retail selling prices, and
similar information will be measured in units or dollars, as the context
requires, and determined by reference to Sears’ Strategic Performance Reporting
System or any successor system implemented by Sears (“SPRS”).

 

16.10.                  Intentionally omitted.

 

16.11.                  Miscellaneous Support.

 

As reasonably requested by Sears, Seller will provide
support and assistance to, and will cooperate with, Sears’ Sears Branded
Product services division, Sears’ logistics/delivery organization (including
Sears Logistics Services, Inc.), Sears Branded Product Quality Assurance
Laboratory, Sears International Marketing, Inc., Sears’ field support
organization, and any other individual or group included in or affiliated with
Sears.

 

16.12.                  Federal
Contracting Requirements.

 

As a federal contractor,
Sears is subject to affirmative action and other federal contracting
requirements, and is required to include those requirements in its subcontracts
for commercial items and commercial components.  Therefore, this Agreement incorporates by reference, and Seller
will comply with, the following provisions of Title 48 of the Code of Federal
Regulations:  52.219-8, Utilization of
Small Business Concerns; 52.222-26, Equal Opportunity; 52.222-35, Affirmative
Action for Special Disabled and Vietnam Era Veterans; 52.222-36, Affirmative
Action for Handicapped Workers; and 52.244-6, Subcontracts for Commercial Items
and Commercial Components.  
Furthermore, Seller acknowledges that Sears is committed to helping
bring small business, small disadvantaged businesses, and women-owned
businesses into the American economic system. 
In furtherance of this goal, if Seller uses the services of
subcontractors, Seller will use reasonable efforts to involve qualified small,
small disadvantaged,

 

* Portions of this exhibit have been omitted pursuant to a request for
confidential treatment filed with the Securities and Exchange Commission. The
omitted portions, marked by “*”, have been separately filed with the
Commission.

 

24

 

and women-owned sources in its selection process.

 

16.13.                  Arbitration.

 

Either party may elect to submit to non-binding
arbitration any dispute, claim or controversy arising out of, in connection
with or relating to this Agreement, including any question regarding its
formation, existence, validity, enforceability, performance, interpretation,
breach or termination (a “Dispute”). Either party may elect to initiate
arbitration by providing written notice to the other party of its intention to
submit a Dispute to arbitration. 
However, if either party (“Plaintiff”) has initiated a lawsuit against
the other party (“Defendant”) prior to delivery of such notice, then the
Defendant must deliver written notice to the Plaintiff of its intention to
submit the subject matter of the lawsuit to arbitration within thirty days of
the date on which the Defendant receives service of process.  If the Defendant does not deliver written
notice within such thirty day period, then neither the subject matter of the
legal proceedings nor any related claims or counterclaims will be subject to
arbitration.

 

At the time of providing notice of its intention to
initiate arbitration, the initiating party shall provide the name of five
potential arbitrators, all of whom must be attorneys or retired judges with no
less than 15 years’ experience in the practice of law.  Any proposed arbitrator must be neutral and
independent.  Within fourteen days
thereafter, the responding party must choose one of the five potential
arbitrators to arbitrate the Dispute and inform the initiating party of its
decision.  The arbitration will be
administered by the American Arbitration Association (“AAA”) in accordance
with its Commercial Arbitration Rules.  The place of the arbitration shall
be Chicago, Illinois.  Arbitration shall
be completed within 120 days of the time the responding party selects the
arbitrator. The arbitrator shall allocate the costs and expenses of the
arbitrator and administrative fees of the arbitration among the parties as the
arbitrator determines to be appropriate under the circumstances.  Except as provided in the preceding
sentence, each party to the arbitration shall bear its own costs and expenses.

 

This provision does not restrict the right of either
party to initiate a lawsuit in a court of competent jurisdiction after the
conclusion of the arbitration. If arbitration has been demanded in accordance
with the above paragraph, any pending lawsuit shall be stayed until the
completion of the arbitration or expiration of the 120-day period set forth
above. All issues that may relate to any applicable statute of limitations
relevant to any arbitrated Dispute will be resolved as if any action filed by
either party was filed on the date of first notification of a request to
arbitrate and as if any action resumed by either party was filed on the date
the original action was filed.

 

16.14                     Governing Law and Forum.

 

This Agreement will be governed by, and all disputes,
claims or controversies relating to, arising out of, or in connection with this
Agreement, including any question regarding its formation, existence, validity,
enforceability, performance, interpretation, breach, or termination (collectively,
“Disputes”)
, shall be resolved in accordance with the laws of Illinois without regard to
its conflict of laws rules.  Seller and
Sears submit to venue and exclusive personal jurisdiction in the federal and
state courts in Cook County, Illinois for any Disputes and waive all

 

* Portions of this exhibit have been omitted pursuant to a request for
confidential treatment filed with the Securities and Exchange Commission. The
omitted portions, marked by “*”, have been separately filed with the Commission.

 

25

 

objections to jurisdiction and venue of such courts.

 

16.15.                  Costs
and Legal Fees.

 

In the event of any legal proceeding between the
parties arising from this Agreement, the substantially prevailing party may
recover from the other party all of its reasonable costs and expenses,
including but not limited to attorneys’ fees and court costs.

 

16.16.                  Entire Agreement.

 

The agreement between Sears and Seller dated as of
March 7, 1988, as amended, is hereby terminated.  This Agreement, which includes the UTC, the Vendor Guide, and
each of the Exhibits attached hereto, sets forth the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof.  All prior and contemporaneous
discussions and negotiations relating to the Sears Branded Products and the
Sears Branded Product Lines are merged herein. This Agreement shall not be
supplemented, modified or amended except by a written instrument signed by a
duly authorized officer of each of Sears and Seller.  Furthermore, this Agreement shall supersede and neither Sears nor
Seller shall be bound by any “disclaimers” or “click to approve” terms or
conditions now or hereafter contained in any website used by Sears in connection
with the Sears Branded Products or this Agreement.  Any terms and conditions in any Purchase Order, order
acknowledgement, order acceptance, shipping schedule or similar documentation
relating to any Sears Branded Products that contradict this Agreement’s terms
and conditions are null and void unless a Sears Authorized Representative and a
Seller Authorized Representative sign such documentation.  This Agreement shall be binding upon and
inure to the benefit of the successors, representatives and permitted assigns
of the parties hereto.  Sears and Seller
represent and warrant that they are entering into this Agreement based solely
on the provisions set forth herein and not in reliance, in whole or in part, on
any claim or representation contained in any RFP Document

 

16.17.                  Survival.

 

All obligations of Sears and Seller which expressly or
by their nature survive the expiration or termination of this Agreement,
including the obligation of either party to pay any amounts accrued hereunder
will continue in full force and effect subsequent to and notwithstanding the
expiration or termination of this Agreement and until they are satisfied in
full or by their nature expire.

 

16.18.                  No Waiver.

 

This Agreement’s terms, covenants and conditions may
be waived only by a written instrument signed by the party waiving
compliance.  Any party’s failure at any
time to require performance of any provision shall, in no manner, affect that
party’s right to enforce that or any other provision at a later date.  No waiver of any condition or breach of any
provision, term or covenant contained in this Agreement, whether by conduct or
otherwise, in any one or more instances shall be deemed to be or construed as a
further or continuing waiver of that or any

 

* Portions of this exhibit have been omitted pursuant to a request for
confidential treatment filed with the Securities and Exchange Commission. The
omitted portions, marked by “*”, have been separately filed with the
Commission.

 

26

 

other condition or of the breach of that or that provision, term or
covenant of this Agreement.

 

16.19.                  Construction.

 

The Section headings of this Agreement are for
convenience only and have no interpretive value. All references in this
Agreement to “including” shall be interpreted to mean “including, but not
limited to,” and unless otherwise indicated all references to a number of days
shall mean calendar (and not business) days. E-mail communications will be
considered “in writing” for purposes of this Agreement.

 

16.20.                  Intentionally omitted.

 

16.21.                  Counterparts; Facsimile.

 

This Agreement may be executed in any number of
separate counterparts, all of which, when taken together, shall constitute one
and the same instrument, notwithstanding the fact that all parties did not sign
the same counterpart.  Each of the
parties agrees that a signature transmitted to the other parties or their
respective counsel by facsimile transmission shall be effective to bind the
party whose signature was transmitted, as a duly executed and delivered
original.  Each party further agrees to
promptly deliver its original signature pages to this Agreement to counsel for
the other parties promptly following execution, but any failure to do so shall
not affect the binding effect of such signature.

 

Signature Page Follows

 

* Portions of this exhibit have been omitted pursuant to a request for
confidential treatment filed with the Securities and Exchange Commission. The
omitted portions, marked by “*”, have been separately filed with the
Commission.

 

27

 

IN WITNESS WHEREOF, the parties have
executed and delivered this Agreement as of the date first set forth above.

 

 

	
  SEARS:

  	
  SELLER:

  
	
   

  	
   

  
	
  Sears, Roebuck and Co.

  	
  Easco Hand Tools, Inc.

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Lyle G. Heidemann

  	
   

  	
  By:

  	
  /s/
  George C. Moore

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Lyle
  G. Heidemann

  	
  Name:

  	
  George
  C. Moore

  
	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  EVP/GM

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Lea Way Hand Tool Co., Ltd.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  George C. Moore

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  George
  C. Moore

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Jessie & J Co., Ltd.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  George C. Moore

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  George
  C. Moore

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  V.P.

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