Document:

exv10w4

 

Exhibit 10.4

Avery Dennison Corporation

Non-Employee
Director Compensation Summary(1)

	 	 	 	 	 
	Board members
	 	 	 	 
	Annual retainer for non-executive Chairman
	 	$	220,000	 
	Annual retainer for other Directors
	 	$	55,000	 
	Meeting fees
	 	$	1,500	 
	Annual stock
payment (shares of the Company’s stock)
	 	 	500	 
	Committee Chairman retainer
	 	 	 	 
	Audit Committee
	 	$	10,000	 
	Compensation and Executive Personnel Committee
	 	$	10,000	 
	Other Committees
	 	$	5,000	 
	Committee meeting fees
	 	 	 	 
	Chairman
	 	$	2,000	 
	Members
	 	$	1,500	 

 

			
	(1)	 	Effective December 1, 2005exv10w23

 

prepared January 11, 2006

COMPANY PURCHASE AGREEMENT:

KC MACHINE, LLC

By and Among

KELLY NISWENDER

and

CAROL NISWENDER

(COLLECTIVELY, THE “SELLERS”)

and

T-3 ROCKY MOUNTAIN HOLDINGS, INC.

(THE “PURCHASER”)

Dated January 12, 2006

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Table of Contents

	 	 	 
	Recitals
	 
	 	 
	Terms and Conditions
	 
	 	 
	Article I: DEFINITIONS AND RULES OF INTERPRETATION
	1.1
	 	Definitions
	1.2
	 	Rules of Interpretation
	 
	 	 
	ARTICLE II: SALE AND PURCHASE
	 
	 	 
	ARTICLE III: PURCHASE PRICE AND CLOSING PAYMENTS
	3.1
	 	Purchase Price
	3.2
	 	Post-Closing Purchase Price Adjustment
	3.3
	 	Adjustments to Purchase Price
	3.4
	 	Final Payment
	 
	 	 
	ARTICLE IV: CLOSING AND CLOSING DELIVERIES
	4.1
	 	Closing
	4.2
	 	Deliveries of Sellers
	4.3
	 	Deliveries by Purchaser
	 
	 	 
	ARTICLE V: REPRESENTATIONS AND WARRANTIES OF SELLERS
	5.1
	 	Corporate Existence and Power
	5.2
	 	Authorization; Enforceability
	5.3
	 	Governmental Authorization
	5.4
	 	Non-Contravention; Consents
	5.5
	 	Capitalization
	5.6
	 	Subsidiaries
	5.7
	 	Financial Statements
	5.8
	 	No Undisclosed Liabilities
	5.9
	 	Tax Matters
	5.10
	 	Absence of Certain Changes
	5.11
	 	Contracts
	5.12
	 	Insurance Coverage
	5.13
	 	Litigation
	5.14
	 	Compliance with Laws; Permits
	5.15
	 	Assets; Properties; Sufficiency of Assets
	5.16
	 	Intellectual Property
	5.17
	 	Environmental Matters
	5.18
	 	Plans and Material Documents
	5.19
	 	Affiliate Transactions
	5.20
	 	Customer and Supplier Relations
	5.21
	 	Employment Matters
	5.22
	 	Accounts Receivable

 

 

	 	 	 
	5.23
	 	Inventory
	5.24
	 	Product and Service Warranties; Defects; Liability Defects; Liability
	5.25
	 	Finders' Fees
	5.26
	 	Bank Accounts and Other Financial Relationships
	5.27
	 	Disclosure
	5.28
	 	Reliance
	 
	 	 
	ARTICLE VI: REPRESENTATIONS AND WARRANTIES OF PURCHASER
	6.1
	 	Corporate Existence and Power
	6.2
	 	Corporate Authorization; Enforceability
	6.3
	 	Non-Contravention
	6.4
	 	Finders' Fees
	 
	 	 
	ARTICLE VII: COVENANTS
	7.1
	 	Further Assurances
	7.2
	 	Personal Information
	 
	 	 
	ARTICLE VIII: TAX MATTERS
	8.1
	 	Allocation of Liability for Taxes, Tax Returns, and Tax Payments
	8.2
	 	Returns
	8.3
	 	Section 338 Elections
	8.4
	 	Tax Indemnification
	8.5
	 	Refunds
	8.6
	 	Contests
	8.7
	 	Miscellaneous Tax Matters
	 
	 	 
	ARTICLE IX: SURVIVAL; INDEMNIFICATION
	9.1
	 	Survival
	9.2
	 	Indemnification
	9.3
	 	Procedures
	9.3
	 	Indemnification Payments
	9.4
	 	Reassignment of Accounts Receivable
	9.5
	 	Taxes
	9.6
	 	Interest on Claims
	 
	 	 
	ARTICLE X: MISCELLANEOUS
	10.1
	 	Notices
	10.2
	 	Amendments and Waivers
	10.3
	 	Expenses
	10.4
	 	Successors and Assigns
	10.5
	 	No Third-Party Beneficiaries
	10.6
	 	Governing Law
	10.7
	 	Public Announcements
	10.8
	 	Counterparts and Execution
	10.9
	 	Entire Agreement
	10.10
	 	Severability; Injunctive Relief
	10.11
	 	Remedies

 

 

	 	 	 
	Exhibit A

	 	Lease
	Schedule 3.1(a)

	 	Closing Cash Consideration
	Schedule 3.2(a)

	 	Example of Calculation to Determine Net Working Capital
	Schedule 5.7

	 	Reference Financial Statements
	Schedule 5.8

	 	Secured Indebtedness to be Paid at Closing
	Schedule 5.10

	 	Significant Events; Distributions to Members
	Schedule 5.16(a)

	 	Intellectual Property Owned or Used by KC Machine
	Schedule 5.26

	 	Bank Accounts and Other Financial Relationships

 

 

COMPANY PURCHASE AGREEMENT:

KC MACHINE, LLC

This Company Purchase Agreement: KC Machine, LLC (as the same may be amended from time to time in
accordance with its terms, this “Agreement”), dated effective as of January 12, 2006, is by and
among Kelly Niswender (“Mr. Niswender”) and his wife, Carol Niswender (“Ms. Niswender”), in their
capacity as the “Sellers” hereunder, and T-3 Rocky Mountains Holdings, Inc., a Delaware corporation
(“Purchaser”).

RECITALS

	A.	 	Mr. Niswender owns all of the issued and outstanding interests of all Members in KC Machine,
LLC, a Wyoming limited liability company (“KC Machine”) and otherwise owns in its entirety all
of the rights of ownership and management associated with KC Machine (the “Interests”).

	B.	 	Ms. Niswender is a party to this Agreement to evidence her acknowledgement and consent to the
transactions described in this Agreement and to expressly convey to Purchaser any and all
rights which they may have with respect to the Interests or any other rights they may have
with respect to the ownership of any of KC Machine’s assets and the management of KC Machine.

	C.	 	Purchaser desires to acquire KC Machine and Sellers desire to convey to Purchaser any and all
rights of ownership, management, or possession with respect to KC Machine and its assets.

TERMS AND CONDITIONS

     In consideration of the premises and the mutual agreements and covenants hereinafter set forth,
Purchaser and Sellers hereby covenant and agree as follows:

ARTICLE I: DEFINITIONS AND RULES OF INTERPRETATION

1.1 Definitions.

In addition to the terms defined above when used with initial capitalization, the terms set forth below shall have the
following meanings ascribed to them when used with initial capitalization.

“Accountants” has the meaning set forth in §3.2(b).

“Accounts Receivable” means all accounts and notes receivable of KC Machine.

“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under
common control with the first Person and, if such first

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Person is an individual, any member of the immediate family (including parents, spouse and
children) of such individual and any trust whose principal beneficiary is such individual or
one or more members of such individual’s immediate family, and any Person who is controlled
by any such member or trust. For the purposes of this Agreement, “control,” when used with
respect to any Person, means the possession, directly or indirectly, of the power to

	 	(i)	 	vote 10% or more of the securities having ordinary voting power for the
election of directors (or comparable positions) of such Person or
	 
	 	(ii)	 	direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise, and the
terms “controlling” and “controlled” have meanings correlative to the foregoing.

“Allocation Statement” has the meaning given in §8.3.

“Ancillary Agreements” means the Employment Agreements, the Lease Agreement, and any and all
other instruments, certificates and other agreements entered into by one or more of the
Sellers or their Affiliates, Purchaser or its Affiliates, and KC Machine in connection with
the consummation of the transactions contemplated by this Agreement.

“Benefit Plan” means any employee benefit plan, program, agreement, arrangement, policy,
contract, commitment or scheme, written or oral, statutory or contractual, that provides for
compensation or benefits, including, without limitation, any deferred compensation, a 401(k)
savings plan, health insurance or comparable coverage, pension plan, supplemental pension
plan, retirement profit sharing, executive compensation, severance, separation, termination,
job security, bonus or incentive plan, any cafeteria plan or any holiday or vacation plan or
practice.

“Business” means the business of KC Machine as now or previously conducted.

“Business Day” means a day that is not a Saturday or a Sunday or a day on which commercial
banking institutions located in Houston, Texas or Rock Springs, Wyoming are authorized or
required to close.

“Capitalized Lease Obligations” means the obligations of a Person that are required to be
classified and accounted for as capital lease obligations under GAAP, together with all
obligations to make termination payments under such capitalized lease obligations.

“Closing” has the meaning set forth in §4.1.

“Closing Cash Consideration” has the meaning set forth in §3.1.

“Closing Date” has the meaning set forth in §4.1.

“Closing Date Balance Sheet” has the meaning set forth in §3.2.

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“Closing Statement” has the meaning set forth in §3.2.

“Closing Net Working Capital Balance” has the meaning set forth in §3.2.

“Code” means the United States Internal Revenue Code, as amended and all regulations
promulgated thereunder.

“Constituent of Concern” means any substance defined as a hazardous substance, hazardous
waste, hazardous material, pollutant or contaminant by any applicable Environmental Law, any
petroleum hydrocarbon and any degradation product of a petroleum hydrocarbon, asbestos, PCB
or similar substance, the generation, recycling, use, treatment, storage, transportation,
Release, disposal or exposure of or to which is subject to regulation under any applicable
Environmental Law.

“Contracts” has the meaning set forth in §5.11.

“Damages” has the meaning set forth in §9.2(a).

“Direct Claim” has the meaning set forth in §9.3(d).

“Employment Agreements” means the employment and non-competition agreement to be entered
into by Mr. Niswender with KC Machine on the Closing Date immediately after Purchaser has
acquired KC Machine.

“Environmental Claims” means administrative, regulatory or judicial actions, suits, demands,
demand letters, claims, liens, citations, summonses, orders, notices of non-compliance or
violation, requests for information, investigations or proceedings relating in any way to
the Release of Constituents of Concern by KC Machine in contravention of any applicable
Environmental Law, including:

	 	(i)	 	Environmental Claims by Governmental Authorities for enforcement, cleanup,
removal, response, investigation, assessment, remedial or other actions or damages
pursuant to any applicable Environmental Law, and
	 
	 	(ii)	 	Environmental Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief resulting from
Release of Constituents of Concern in contravention of any applicable Environmental Law
or arising from an alleged injury or threat of injury to human health and safety or the
environment from such a Release.

“Environmental Condition” means a condition with respect to the environment which has
resulted or could reasonably be expected to result in a loss, liability, cost, Environmental
Claim or expense to KC Machine.

“Environmental Law” means any Law, administrative interpretation, administrative order,
guideline, policy, directive, consent decree or judgment, or common law relating to the
environment, human health and safety and any provincial, state and local counterparts or
equivalents.

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“Environmental Permits” means all Permits, licenses, authorizations, certificates and
approvals of Governmental Authorities relating to or required by Environmental Laws.

“GAAP” means those generally accepted accounting principles established by the Financial
Accounting Standards Board from time to time, consistently applied.

“Governmental Authority” means any domestic or foreign governmental or regulatory agency,
authority, bureau, commission, department, official or similar body or instrumentality
thereof, or any governmental court, arbitral tribunal or other governmental body which can
exercise jurisdiction over any of the parties or which may be administering alternative
dispute resolution involving the parties or their affiliates.

“Indebtedness” means with respect to any Person, at any date, without duplication:

	 	(i)	 	all obligations of such Person for borrowed money, including
all principal, interest, premiums, fees, expenses, overdrafts and penalties
with respect thereto,
	 
	 	(ii)	 	all obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments,
	 
	 	(iii)	 	all obligations of such Person to pay the deferred purchase
price of the property or services, except trade payables incurred in the
Ordinary Course of Business,
	 
	 	(iv)	 	all obligations of such Person to reimburse any bank or other
Person in respect of amounts paid under a letter of credit or similar
instrument,
	 
	 	(v)	 	all Capitalized Lease Obligations,
	 
	 	(vi)	 	all other obligations of a Person which would be required to be
shown as indebtedness on a balance sheet of such Person prepared in accordance
with GAAP, and
	 
	 	(vii)	 	all indebtedness of any other Person of the type referred to
in clauses (a) to (f) above directly or indirectly guaranteed by such Person or
secured by any assets of such Person, whether or not such Indebtedness has been
assumed by such Person.

“Indemnified Party” has the meaning set forth in §10.3(a).

“Indemnifying Party” has the meaning set forth in §10.3(a).

“Intellectual Property” means any intellectual property owned by KC Machine or owned
by the Sellers and used in the conduct of the Business, including but not limited
to:

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	 	(i)	 	all inventions (whether patentable or unpatentable and whether
or not reduced to practice), all improvements thereto, and all patents, patent
applications, patent disclosures and industrial designs or industrial design
applications, together with all reissuances, continuations,
continuations-in-part, revisions, extensions and re-examinations thereof;
	 
	 	(ii)	 	all trade-marks, trade dress, logos, trade-names, business
names, corporate names and domain names together with all translations,
adaptations, derivations and combinations thereof and including all goodwill
associated therewith and all applications, registrations and renewals in
connection therewith; (iii) all copyrightable works, all copyrights and all
applications, registrations and renewals in connection therewith; (iv) all
proprietary or confidential information and trade secrets; (v) all computer
software (including data and related documentation); (vi) all copies, tangible
embodiments, and derivatives of the foregoing (in whatever form or medium); and
(vii) any intellectual property that may exist, arise or be embodied in those
items set out in Schedule 5.16(a), together with all Intellectual Property
Rights related thereto.

“Intellectual Property Rights” means any right or protection existing from time to time in a
specific jurisdiction, whether registered or not, under any patent law or other invention or
discovery law, copyright law, performance or moral rights law, trade-secret law,
confidential information law, plant breeders law, integrated circuit topography law,
semi-conductor chip protection law, trade-mark law, unfair competition law or other similar
laws and includes legislation by competent Governmental Authorities and judicial decisions
under common law or equity.

“Interests” has the meaning set forth in the recitals to this Agreement.

“Inventory” means raw materials, work in progress and finished goods inventory.

“IRS” means the U.S. Internal Revenue Service.

“knowledge” refers to the knowledge that a Person would have after a diligent and careful
inquiry into the relevant subject matter.

“KC Machine” has the meaning set forth in the recitals to this Agreement.

“Law” means any applicable international, foreign, federal, state or local statute or law,
including common law, code, rule, regulation, ordinance, code, permit or license.

“Lease” means the real property lease agreement to be entered into by KC Machine, as lessee,
and an Affiliate of Mr. Niswender effective as of the Closing Date. The proposed form of
the Lease is attached hereto as Exhibit A.

“Leased Premises” means the approximately four acres of fenced real property and main road
footage and the associated improvements and fixtures to be leased by KC Machine

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pursuant to the Lease. The Leased Premises are commonly described by their mailing address
of 61 Chimuza Street, Rock Springs, Wyoming.”

“Lien” means, with respect to any property or asset, any mortgage, lien, pledge, charge,
security interest, encumbrance or other adverse claim of any kind in respect of such
property or asset. For the purposes of this Agreement, a Person will be deemed to own,
subject to a Lien, any property or asset which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement relating to such property or asset.

“Material Adverse Effect” means, when taken together with other effects on the Business,
condition, assets, liabilities or operations of KC Machine, an effect on the Business,
condition, assets, liabilities or operations of KC Machine that results or could reasonably
be expected to result in a diminution in value of the Interests equal to or exceeding
$100,000 in the aggregate.

“Member” means any member of KC Machine or any other person holdings any rights or interests
with respect to the ownership or management of MC Machine.

“Net Working Capital” means

(i) the current assets of KC Machine, minus

(ii) the current liabilities of KC Machine,

all of which shall be determined in accordance with GAAP; provided, however, current
liabilities shall not include

	 	(a)	 	income Taxes payable for the fiscal year ending December 31, 2005 and the
period subsequent to such date up to and including the Closing Date, and
	 
	 	(b)	 	any line of credit balance, current portion of long-term debt, and short-term
debt for borrowed money.

For the purposes of determining “Net Working Capital”, loans between KC Machine and either
Seller shall not be included in current liabilities or current assets, as applicable.

“Order” means any judgment, injunction, judicial or administrative order or decree.

“Ordinary Course of Business” means, with respect to any Person, the ordinary course of
business of such Person, consistent with such Person’s past practice and custom, including,
without limitation, with respect to any category, quantity or dollar amount, term and
frequency of payment, delivery, accrual, expense or any other accounting entry.

“Permit” has the meaning set forth in §5.14(b).

“Permitted Lien” means

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	 	(a)	 	any mechanic’s, worker’s, carrier’s, repairmen’s or landlord’s Liens,
	 
	 	(b)	 	statutory Liens for Taxes, assessments and other similar governmental charges
that are not overdue, and
	 
	 	(c)	 	Liens incurred or deposits made to secure the performance of bids, contracts,
statutory obligations, surety and appeal bonds incurred in the Ordinary Course of
Business by KC Machine.

“Person” means an individual, corporation, partnership, limited liability company, joint
venture, association, trust or other entity or organization or Governmental Authority.

“Personal Information” means information about an identifiable individual but does not
include business contact information, provided that the collection, use or disclosure, as
the case may be, of such business contact information is for the purposes of contacting an
individual in that individual’s capacity as an employee or an official of an organization
and for no other purpose.

“Property” means any real property and improvements at any time owned, leased, used,
operated or occupied (whether for storage, disposal or otherwise) by KC Machine.

“Purchase Price” has the meaning set forth in Section §3.1.

“Purchaser” has the meaning set forth in the introductory paragraph of this Agreement.

“Reference Financial Statements” means the balance sheet of KC Machine as of October 31,
2005, together with the related statements of income for the periods then ended. The
Reference Financial Statements are attached hereto as Schedule 5.7.

“Reference Working Capital Balance” means $155,000.

“Release” means any release, spill, emission, discharge, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration into the environment
(including ambient air, surface water, groundwater and surface or subsurface strata) or into
or out of any Property, including the movement of Constituents of Concern through or in the
air, soil, surface water, groundwater or property.

“Representatives” means, with respect to any party, their Affiliates and their respective
directors, officers, employees, consultants, agents and other representatives and advisers.

“Returns” means returns, designations, declarations, reports, claims for refund, information
returns or other documents (including any related or supporting schedules, statements or
information) and including any amendment thereof filed or required to be filed in connection
with the determination, assessment or collection of Taxes of the parties or the
administration of any Laws relating to any Taxes.

“Selected Representations and Warranties” means the representations and warranties contained
in Sections 5.1 (Corporate Existence and Power), 5.2 (Authorization;

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Enforceability), 5.3 (Governmental Authorization), 5.4 (Non-Contravention; Consents), 5.5
(Capitalization), 5.15(a) (Assets; Properties; Sufficiency of Assets), and 5.17
(Environmental Matters) and 5.25 (Finders’ Fees).

“Seller Group Member” has the meaning given in §5.2

“Sellers” has the meaning given in the introductory paragraph of this Agreement.

“Tax” means

	 	(i)	 	any federal, state or foreign net income, alternative or add-on minimum tax,
net worth, gross income, capital, capital gains, gross receipts, sales, use, ad
valorem, value added, goods and services, transfer, franchise, profits, license,
withholding on amounts paid to or by any Person, payroll, employment, excise,
severance, stamp, occupation, premium, property, environmental or windfall profit tax,
custom, duty or other tax, charges, fees, levies, imposts, governmental fee or other
like assessment or charge of any kind whatsoever, together with any interest, penalty,
addition to tax or additional amount imposed by any Taxing Authority,
	 
	 	(ii)	 	any liability of any Seller or KC Machine for the payment of any amounts of any
of the foregoing types of taxes as a result of being a member of an affiliated,
consolidated, combined or unitary group, or being a party to any agreement or
arrangement whereby liability of any Seller or KC Machine for payment of such amounts
was determined or taken into account with reference to the liability of any other
Person, and
	 
	 	(iii)	 	any liability of any Seller or KC Machine for the payment of any amounts as a
result of being a party to any Tax-Sharing Agreement or with respect to the payment of
any amounts of any of the foregoing types of taxes as a result of any express or
implied obligation to indemnify any other Person.

“Tax-Sharing Agreements” means all existing Tax-sharing agreements or arrangements (whether
or not written) that are binding on any Seller or KC Machine.

“Taxing Authority” means the IRS or any other Governmental Authority having jurisdiction
over the assessment, determination, collection or other imposition of any Tax.

“Third-Party Claim” means any claim, demand, action, suit or proceeding made or brought by
any Person who or which is not a party to this Agreement or who or which is not an Affiliate
of any party to this Agreement.

“Transferred Information” means the Personal Information to be disclosed or conveyed to
Purchaser or any of its Representatives by or on behalf of the Sellers or KC Machine as a
result of or in conjunction with the transactions contemplated herein, and includes all such
Personal Information disclosed to the Purchaser during the period leading up to and
including the completion of the transactions contemplated herein.

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“Utilities” means all of the following: water distribution and service facilities; sanitary
sewers and associated installations; storm sewers; storm retention ponds and other drainage
facilities; electrical distribution and service facilities; telephone, and similar
communication facilities; heating, ventilating, cooling and air conditioning systems and
facilities; natural gas distribution and service facilities; fire protection facilities;
garbage compaction and collection facilities; and all other utility lines, conduit, pipes,
ducts, shafts, equipment, apparatus and facilities.

“Withholding Amount” means the sum of $250,000, which amount may be reduced from time to
time in accordance with the terms of this Agreement.

“Withholding Period” means the period commencing as of the Closing Date and ending one year
thereafter.

1.2 Rules of Interpretation.

	 	(a)	 	Whenever a reference is made in this Agreement to an Article, Section, Exhibit
or Schedule, such reference will be to an Article or Section of, or an Exhibit or
Schedule to, this Agreement unless otherwise indicated. Whenever the words, “include,”
“includes” or “including” are used in this Agreement, they will be deemed to be
followed by the words “without limitation.” The words “hereof”, “herein”, and
“hereunder”, and words of similar import when used in this Agreement refer to this
Agreement as a whole and not to any particular provision of this Agreement. All terms
defined in this Agreement have the defined meanings when used in any certificate or
other document made or delivered pursuant hereto unless otherwise defined therein. The
definitions contained in this Agreement are applicable to the singular as well as the
plural forms of such terms and to the masculine as well as to the feminine and neuter
genders of such terms. All references to “$” or dollar amounts will be to lawful
currency of the United States of America. Any agreement, instrument or statute defined
or referred to herein or in any agreement or instrument that is referred to herein
means such agreement, instrument or statute as from time to time amended, modified or
supplemented, including (in the case of agreements or instruments) by waiver or consent
and (in the case of statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated therein. References
to a Person are also to its permitted successors and assigns. Each of the Schedules
will apply only to its corresponding Section or subsection of this Agreement. Each
accounting term not otherwise defined in this Agreement has the meaning assigned to it
in accordance with GAAP. To the extent the term “day” or “days” is used, it will mean
calendar days unless referred to as a “Business Day.”
	 
	 	(b)	 	No provision of this Agreement will be interpreted in favor of, or against, any
of the parties hereto by reason of the extent to which any such party or its counsel
participated in the drafting thereof or by reason of the extent to which any such
provision is inconsistent with any prior draft hereof or thereof.

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ARTICLE II: SALE AND PURCHASE

	2.1	 	At the Closing, Mr. Niswender shall deliver to Purchaser the documentation described in §4.2
below whereby he will sell, convey, and assign to Purchaser all Interests and any other assets
which Mr. Niswender may hold with respect to KC Machine and the Business and Purchaser shall
purchase from Mr. Niswender all such items, free and clear of all Liens. The payment by
Purchaser to Mr. Niswender at the Closing shall confirm that such sale has taken place.

	2.2	 	At the Closing, Ms. Niswender shall deliver to Purchaser the documentation described in §4.2
below whereby she will sell, convey, and assign to Purchaser any and all rights which they may
have or hold with respect to the management and ownership of KC Machine and any and all
aspects of the Business which are not otherwise included within the scope of the grant made by
Mr. Niswender to Purchaser pursuant to §2.1. By their entry into this Agreement, Ms.
Niswender and KC Machine confirm that they are receiving adequate consideration for such
assignment even though neither Ms. Niswender nor KC Machine will be receiving any portion of
the Purchase Price directly from Purchaser.

ARTICLE III: PURCHASE PRICE AND CLOSING PAYMENTS

3.1 Purchase Price.

	 	(a)	 	In consideration of the sale, conveyance, and assignment to Purchaser to be
made by Sellers pursuant to §2.1, Purchaser will deliver to Mr. Niswender at the
Closing (subject to paragraph (b) below) the aggregate purchase price (as adjusted
pursuant to this Article III, the “Purchase Price”) in amount equal to $2,500,000,
reduced by

	 	(i)	 	the Withholding Amount, and
	 
	 	(ii)	 	the aggregate of all sums owed to any secured creditor of KC
Machine, which secured creditors shall be paid in full by Purchaser prior to
the payment of any sums owed to Mr. Niswender pursuant to this §3.1(a). The
secured creditors to be so paid and the amount to be paid to each secured
creditor is set forth in Schedule 5.8.

Such amount (the “Closing Cash Consideration”) shall be payable in cash by wire
transfer in immediately available funds to accounts designated in writing by
Sellers.

The calculations to show the amount of the Closing Cash Consideration it attached
hereto as Schedule 3.1(a).

	 	(b)	 	At the Closing, Purchaser shall first pay on KC Machine’s behalf the net amount
of Indebtedness due and owing to each creditor listed on Schedule 5.8 Purchaser

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	 	 	 	shall be entitled to characterize such payment as either a loan due from KC Machine
or a capital contribution to KC Machine.

3.2 Post-Closing Purchase Price Adjustment.

	 	(a)	 	Within 60 days after the Closing Date, Purchaser will prepare and deliver or
cause to be prepared and delivered to Mr. Niswender a balance sheet of KC Machine as of
the close of business on the Closing Date (the “Closing Date Balance Sheet”), as well
as a reasonably detailed calculation of the proposed statement of the Net Working
Capital prepared therefrom (the “Closing Statement”), in each case, without giving
effect to the transactions described in this Agreement to be consummated at the
Closing. The Closing Date Balance Sheet and the Closing Statement

	 	(i)	 	will reflect the financial position and the components and
calculation of the Net Working Capital, in each case as of the Closing Date,
	 
	 	(ii)	 	will be prepared and determined as of the Closing Date in
accordance with GAAP on the basis that KC Machine will continue to operate as a
going concern and unaffected by a change of control.

The Net Working Capital as of the Closing Date determined in accordance with this
§3.2 is referred to herein as the “Closing Net Working Capital Balance.” By way of
illustration, a sample calculation of Net Working Capital is attached hereto using
the accounting information available to KC Machine as of October 31, 2005. This
example is attached as Schedule 3.2(a).

	 	(b)	 	Mr. Niswender shall determine in good faith within 30 days after the date of
Purchaser’s delivery of the Closing Date Balance Sheet and the Closing Statement
whether such documents have been prepared or determined in accordance with this
Agreement. If Mr. Niswender determines in good faith that the Closing Date Balance
Sheet and the Closing Statement have not been prepared or determined in accordance with
this Agreement, Mr. Niswender will give written notice to Purchaser within such 30 day
period

	 	(i)	 	setting forth his proposed changes to the Closing Date Balance
Sheet and Closing Statement and his determination of the Closing Net Working
Capital Balance, and
	 
	 	(ii)	 	specifying in reasonable detail his basis for disagreement with
Purchaser’s preparation and determination of the Closing Date Balance Sheet and
the Closing Net Working Capital Balance.

The failure by Mr. Niswender to so express disagreement and provide such notice
within such 30-day period will constitute the acceptance of Purchaser’s preparation
of the Closing Date Balance Sheet and Closing Statement and the computation of the
Closing Net Working Capital Balance.

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	 	(c)	 	If Purchaser and Mr. Niswender are unable to resolve any disagreement between
them with respect to the preparation of the Closing Date Balance Sheet and Closing
Statement and the determination of the Closing Net Working Capital Balance within 15
days after the giving of notice by Mr. Niswender to Purchaser of such disagreement, the
items in dispute may be referred by Purchaser or Mr. Niswender for determination by the
certified public accounting firm of Grant Thrornton (or, if they are unable or
unwilling to serve, another nationally recognized accounting firm not affiliated with
any KC Machine, Sellers or Purchaser) (the “Accountants”).

	 	(i)	 	Purchaser and Sellers will use commercially reasonable efforts
to cause the Accountants to render their decision as soon as practicable
thereafter, including by promptly complying with all reasonable requests by the
Accountants for information, books, records and similar items. The parties
will instruct the Accountants to make a determination as to each of the items
in dispute or affected by items in dispute (but only those items in dispute or
affected by items in dispute)

	 	(A)	 	in writing,
	 
	 	(B)	 	as promptly as practicable after the items in
dispute have been referred to the Accountants (but in no event later
than 30 days thereafter), and
	 
	 	(C)	 	in accordance with this Agreement.

	 	(ii)	 	The Accountants’ determination will be conclusive and binding
upon each of the parties hereto. The fees and expenses of the Accountants will
be paid by the party against whom the majority of the matters (based on dollar
amounts) are determined. No party will disclose to the Accountants, and the
Accountants will not consider for any purpose, any settlement discussions or
settlement offer made by any party.

	 	(d)	 	During the period that Mr. Niswender’s advisors are conducting their review of
Purchaser’s preparation of the Closing Date Balance Sheet and Closing Statement and
determination of the Closing Net Working Capital Balance, Mr. Niswender and his
representatives will have access during normal business hours to the work papers
prepared by or on behalf of Purchaser and its representatives in connection with
Purchaser’s preparation of the Closing Date Balance Sheet and Closing Statement and
determination of the Closing Net Working Capital Balance; provided, however, that Mr.
Niswender will conduct such review in a manner that does not unreasonably interfere
with the conduct of the Business or any other businesses of Purchaser or its
Affiliates.

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3.3 Adjustments to Purchase Price.

	 	(a)	 	Upon the final determination of the Closing Net Working Capital Balance, if the
Closing Net Working Capital Balance is less than the Reference Working Capital Balance,
then the Purchase Price will be decreased by such amount and the Withholding Amount
shall be reduced accordingly. If the Withholding Amount is not sufficient to pay such
difference between the Closing Net Working Capital Balance and the Reference Working
Capital Balance, then Mr. Niswender shall pay any shortfall to Purchaser.
	 
	 	(b)	 	Any payment in respect of an adjustment required to be made under this § 3.3
will be made by Sellers in cash by wire transfer of immediately available funds to an
account specified by Purchaser, in writing, within five Business Days following the
final determination with respect to the Closing Net Working Capital Balance.

3.4 Final Payment.

Upon the conclusion of the Withholding Period, Purchaser shall pay to
Mr. Niswender an amount equal to the Withholding Amount, as the same
may have been reduced from time to time pursuant to this Agreement.

ARTICLE IV: CLOSING AND CLOSING DELIVERIES

4.1 Closing.

The closing of the sale and purchase of the Interests and any other
items or rights to be transferred pursuant to this Agreement is
hereinafter designated as the “Closing”. The date upon which the
Closing occurs is herein called the “Closing Date”. Notwithstanding
any other provision hereof, the Closing will be deemed effective for
accounting, tax and all other purposes as of the end of business on
the Closing Date.

4.2 Deliveries of Sellers.

At the Closing, Sellers will deliver to Purchaser:

	 	(a)	 	original certificates evidencing Mr. Niswender’s ownership of all issued and
outstanding Interests, or if no such certificates exist, an Assignment of Interest in
Lieu of Certificate, and documentation to assign, transfer, and convey all Interests to
Purchaser;
	 
	 	(b)	 	an assignment, transfer, and conveyance document signed by Mrs. Niswender and
which expressly conveys to Purchaser any and all rights which Ms. Niswender may have
with respect to the Interests or any other rights she may have with respect to the
ownership of any of KC Machine’s assets and the management of KC Machine.

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	 	(c)	 	certified copies of KC Machine’s most recent Articles of Organization, as most
recently amended, and any operating or other management agreements relating to KC
Machine, or if no such agreements exist, a certificate to such effect.
	 
	 	(d)	 	evidence or copies of the consents, approvals, orders, qualifications or
waivers required by any third party or Governmental Authority to consummate the
transactions contemplated by this Agreement that are listed in Schedule 5.4;
	 
	 	(e)	 	each Ancillary Agreement required to be executed and delivered by parties other
than Purchaser or its Affiliates.
	 
	 	(f)	 	as requested by Purchaser, resignations of and releases of any management
rights held by any Member;
	 
	 	(g)	 	a certified copy of the resolutions of all Members of KC Machine approving the
transactions contemplated in this Agreement;
	 
	 	(h)	 	all records of KC Machine, including, without limitation, the minute books,
membership interest register books and share certificate books (if any) of KC Machine;
and
	 
	 	(i)	 	such other documents and instruments as may be reasonably required to
consummate the transactions contemplated by this Agreement and the Ancillary Agreements
and to comply with the terms hereof and thereof.

4.3 Deliveries by Purchaser.

At the Closing, Purchaser will deliver or cause to be delivered to Mr. Niswender:

	 	(a)	 	the Closing Cash Consideration by wire transfer of immediately available funds
to the account specified pursuant to Section 3.1 (subject to the provisions of Section
3.1(b));
	 
	 	(b)	 	each Ancillary Agreement required to be duly authorized and delivered by
Purchaser or its Affiliates; and
	 
	 	(c)	 	such other documents and instruments as may be reasonably required to
consummate the transactions contemplated by this Agreement and the Ancillary Agreements
and to comply with the terms hereof and thereof.

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ARTICLE V: REPRESENTATIONS AND WARRANTIES OF SELLERS

The Sellers jointly and severally represent and warrant to Purchaser as of the date hereof and the
Closing Date as follows. Notwithstanding anything in this Article V to the contrary, all
representations and warranties made by Ms. Niswender are to the best of her knowledge.

5.1 Corporate Existence and Power.

	 	(a)	 	KC Machine is validly existing and in good standing under the laws of Wyoming.
	 
	 	(b)	 	KC Machine has all power required to carry on the Business as now conducted.
	 
	 	(c)	 	KC Machine has not qualified to do business in any jurisdiction other than
Wyoming.

5.2 Authorization; Enforceability.

	 	(a)	 	The execution, delivery and performance by Sellers or their respective
Affiliates of their obligations under this Agreement and each of the Ancillary
Agreements to which a Seller, any such Affiliate, or KC Machine will be a party at the
Closing are, and will be at the Closing, within each such party’s powers and have been
duly authorized by all necessary actions, and no other action on the part of any such
party is necessary to authorize this Agreement or any of the Ancillary Agreements to
which any such party will be a party at the Closing. Each such party is hereinafter
designated as a “Seller Group Member”.
	 
	 	(b)	 	This Agreement has been, and each of the Ancillary Agreements to which each
Seller Group Member will be a party at the Closing will have been, duly executed and
delivered by such party, as applicable. Assuming the due execution and delivery by
Purchaser of this Agreement and each of the Ancillary Agreements to which each Seller
Group Member will be a party at the Closing, this Agreement constitutes, and each
Ancillary Agreement to which each such party will be a party at the Closing will
constitute at the Closing, valid and binding agreements of such party, as applicable,
enforceable against each in accordance with their terms, except as such enforcement may
be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting enforcement of creditors’ rights generally and by general principles of
equity (whether applied in a proceeding at law or in equity).

5.3 Governmental Authorization.

The execution, delivery and performance by each Seller of this
Agreement and each Ancillary Agreement to which any Seller Group
Member will be a party at the Closing require no consent, approval,
order, authorization or action by or in respect of, or filing with,
any Governmental Authority.

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5.4 Non-Contravention; Consents.

The execution, delivery and performance by each Seller of this
Agreement and each Ancillary Agreement to which each Seller Group
Member will be a party at the Closing, and the consummation of the
transactions contemplated hereby and thereby do not and will not at
the Closing:

	 	(a)	 	violate the articles of organization, any operating agreement with respect to
the management and ownership of KC Machine, or any other similar documents pertaining
to KC Machine,
	 
	 	(b)	 	violate any applicable Law or Order,
	 
	 	(c)	 	require any filing with or Permit, consent or approval of, or the giving of any
notice to, any Person (including filings, consents or approvals required under any
Permits or licenses held by any of the Sellers or KC Machine,
	 
	 	(d)	 	result in a violation or breach of, conflict with, constitute (with or without
due notice or lapse of time or both) a default under, or give rise to any right of
termination, cancellation or acceleration of any right or obligation of any Seller or
KC Machine or to a loss of any benefit to which KC Machine is entitled under, any
Contract, agreement or other instrument binding upon KC Machine or any license,
franchise, Permit or other similar authorization held by KC Machine, or
	 
	 	(e)	 	result in the creation or imposition of any Lien (other than Permitted Liens)
on any asset of KC Machine.
	 
	 	(d)	 	result in a violation of or breach of, conflict with, constitute (with or
without due notice or lapse of time or both) a default under, or give rise to any right
of termination, cancellation or acceleration of any right or obligation of Purchaser or
to a loss of any benefit to which Purchaser is entitled under, any Contract, agreement
or other instrument binding upon Purchaser or any license, franchise, Permit or other
similar authorization held by Purchaser.

5.5 Capitalization.

	 	(a)	 	Mr. Niswender is the sole Member of, and owner of, KC Machine. Mr. Niswender
owns all Interests. The Interests constitute all of the equity interests in KC
Machine, except as may be implied or imposed under any applicable marital property law,
community property law, or other Law, and are owned of record and beneficially solely
by Mr. Niswender, free and clear of all Liens.
	 
	 	(b)	 	There are no options, warrants, purchase rights, subscription rights conversion
rights, exchange rights, or other rights, agreements, arrangements, or commitments of
any character relating to the Interests or obligating KC Machine to issue, sell, or
otherwise cause to become outstanding Interests.

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	 	(c)	 	There are no outstanding contractual obligations for KC Machine to repurchase,
redeem, or otherwise acquire any Interests or interests in KC Machine or to provide
fund to, or make any investment in the form of a loan, capital contribution, or
otherwise.
	 
	 	(d)	 	Upon consummation of the transactions contemplated by this Agreement, Purchaser
will acquire good, valid and indefeasible title to all of the Interests and any other
assets, rights, or privileges acquired under this Agreement free and clear of all
Liens.
	 
	 	(e)	 	There are no voting trusts, agreements, proxies or other understandings in
effect with respect to the voting or transfer of any of the Interests.
	 
	 	(f)	 	There are no outstanding or authorized rights for any Person other than Mr.
Niswender to become a Member or to otherwise acquire any Interests.

5.6 Subsidiaries.

KC Machine does not own any stock or other equity or ownership or
proprietary interest in any corporation, partnership, limited
liability company, association, trust, joint venture or other entity.

5.7 Financial Statements.

	 	(a)	 	A true and complete copy of the Reference Financial Statements is attached
hereto as Schedule 5.7. The Reference Financial Statements have been prepared in
accordance with GAAP and fairly present the financial position of KC Machine at the
respective dates thereof and the results of the operations of KC Machine for the
periods indicated.
	 
	 	(b)	 	The books of account, minute books, Interest accounts, and other records of KC
Machine, all of which have been made available to Purchaser, are complete and correct
in all material respects.

5.8 No Undisclosed Liabilities.

There are no liabilities or Indebtedness or any facts or circumstances
which could give rise to liabilities or Indebtedness, whether accrued,
contingent, absolute, determined, determinable or otherwise, of KC
Machine other than

	 	(a)	 	liabilities or Indebtedness fully provided for in the Reference Financial
Statements,
	 
	 	(b)	 	liabilities or the secured Indebtedness specifically disclosed in Schedule 5.8,
and
	 
	 	(c)	 	other liabilities or Indebtedness incurred since December 31, 2005 in the
Ordinary Course of Business

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5.9 Tax Matters.

	 	(a)	 	Sellers have not caused KC Machine in any Return filed on behalf of KC Machine
to elect to be taxed as a corporation for state or federal income tax purposes.
Sellers further covenant that they shall not make any such election in any future
Returns to be filed by Sellers on behalf of KC Machine.
	 
	 	(b)	 	(i) All Returns for Sellers and KC Machine for all periods which end prior to
the fourth quarter of 2005 have been filed on a timely basis in accordance with the
applicable laws of each Governmental Authority.

	 	(ii)	 	All Returns for Sellers and KC machine for all periods
commencing with 2005 through the Closing Date shall be filed on a timely basis
in accordance with the applicable laws of each Governmental Authority.
	 
	 	(iii)	 	All Taxes due and payable by KC Machine (whether or not
reflected on any Return) and its Members have been paid or remitted to the
proper Governmental Authority on a timely basis; and
	 
	 	(iv)	 	Sellers shall pay all federal, state, and local taxes owed with
respect to the Business which accrue prior to the Closing Date. Any Returns
associated with such taxes for 2006 shall be filed on an accrual basis.

	 	(c)	 	all Returns that have been so filed were, when filed, and continue to be, true,
correct and complete. All Returns that will be filed shall be true, correct and
complete when filed and properly reflect, and do not in any way understate, the taxable
income or liability for taxes associated with the Business;
	 
	 	(d)	 	KC Machine and each of its Members has paid, or made adequate provision in the
Reference Financial Statements, for the payment of all of Taxes that have or may become
due for all periods which end prior to or which end on the Closing Date, including all
Taxes reflected on the Returns referred to in this §5.9, or to the Sellers’ knowledge,
or that are included or reflected in any assessment, proposed assessment or notice,
either formal or informal, received by KC Machine or its Members from any Governmental
Authority;
	 
	 	(e)	 	no claim has ever been made by a Governmental Authority in a jurisdiction where
KC Machine does not file Returns that KC Machine is or may be subject to taxation by
that jurisdiction. No Seller has any reason to believe such to be required;
	 
	 	(f)	 	all Taxes that KC Machine was or is required by Law to withhold or collect have
been duly withheld or collected and, to the extent required, have been paid to the
appropriate Governmental Authorities;
	 
	 	(g)	 	there are no Liens with respect to Taxes on the assets of KC Machine, other
than Permitted Liens;

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	 	(h)	 	no adjustment relating to any Returns filed by any Seller has been proposed
formally or informally or threatened by any Tax Authority and, to the Sellers’
knowledge, no basis exists for any adjustment;
	 
	 	(i)	 	there are no pending or, to the Sellers’ knowledge, threatened actions or
proceedings for the assessment or collection of Taxes against any Seller;
	 
	 	(j)	 	KC Machine has not been included in any consolidated, combined or unitary
Return and has no liability for any Taxes of any Person as a transferee or successor,
by contract or otherwise.
	 
	 	(k)	 	KC Machine has not been at any time a member of any partnership or joint
venture or the holder of a beneficial interest in any trust for any period for which
the statute of limitations for any relevant Tax has not expired;
	 
	 	(l)	 	KC Machine is not doing business in or engaged in a trade or business in any
jurisdiction in which it has not filed any applicable Tax Returns;
	 
	 	(m)	 	KC Machine has maintained such records in respect of each transaction, event
and item (including as required to support otherwise allowable deductions and losses)
as are required under applicable Tax Law;
	 
	 	(n)	 	Neither any Seller nor KC Machine is a party to or bound by any Tax allocation
or Tax-Sharing Agreement and or has a current or potential contractual obligation to
indemnify any other person with respect to Taxes;
	 
	 	(o)	 	the unpaid Taxes of KC Machine did not as of December 31, 2005 exceed the
reserve for Tax liabilities (other than the reserve for deferred Taxes to reflect
timing differences between book and Tax income) on the books of KC Machine at that
time; and
	 
	 	(p)	 	KC Machine has historically used the cash method of accounting for Tax
accounting purposes.
	 
	 	(q)	 	there are no outstanding waivers or agreements extending the statute of
limitations for any period with respect to any Tax to which KC Machine may be subject
nor have any such waivers or agreements been requested;
	 
	 	(r)	 	KC Machine has not derived any material amount of income from sources, or
engaged in business, outside of Wyoming.
	 
	 	(s)	 	to the Sellers’ knowledge, there are no requests for information currently
outstanding that could affect the Taxes of KC Machine or its Members;
	 
	 	(t)	 	to the Sellers’ knowledge, there are no proposed reassessments of any property
owned by KC Machine or other proposals that are reasonably likely to increase the
amount of any Tax to which KC Machine would be subject; and

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	 	(u)	 	no power of attorney that is currently in force has been granted with respect
to any matter relating to Taxes that could affect KC Machine.
	 
	 	(v)	 	Schedule 5.9(v) lists all Returns filed with respect to KC Machine for all
taxable periods since the year ended December 31, 2003 and specifies the jurisdictions
in which each such Return has been filed, and indicates any Returns that currently are
the subject of audit.
	 
	 	(w)	 	Sellers have delivered to Purchaser correct and complete copies of all such
Returns described in clause (v) above and of any examination reports and any statements
of deficiencies proposed to be assessed against, or agreed to by KC Machine.

5.10 Absence of Certain Changes.

Except as disclosed in Schedule 5.10, since the date of the Reference
Financial Statements, KC Machine has conducted the Business in the
Ordinary Course of Business and there has not been any event,
occurrence, development or circumstance which has had or which could
reasonably be expected to have a Material Adverse Effect. Since the
date of the Reference Financial Statements:

	 	(a)	 	there has not occurred any damage, destruction or casualty loss (whether or not
covered by insurance) with respect to any asset owned or operated by KC Machine;
	 
	 	(b)	 	KC Machine has not made any distribution to its Members; and
	 
	 	(c)	 	KC Machine has not paid or agreed to pay any bonuses or similar compensation
except as otherwise previously disclosed to Purchaser.

5.11 Contracts

	 	(a)	 	KC Machine not a party to or bound by any lease, agreement, contract,
commitment or other legally binding contractual right or obligation (whether written or
oral) (collectively, “Contracts”) that is of a type described below:

	 	(i)	 	any lease (whether of real or personal property), including the
leases disclosed or required to be disclosed on Schedule 5.15(b);
	 
	 	(ii)	 	any agreement for the purchase of materials, supplies, goods,
services, equipment or other assets that provides for aggregate payments
$10,000 or more;
	 
	 	(iii)	 	any sales, distribution or other similar agreement providing
for the sale of materials, supplies, goods, services, equipment or other assets
that provides for aggregate payments of $10,000 or more;
	 
	 	(iv)	 	any partnership, joint venture or other similar agreement or arrangement;

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	 	(v)	 	any Contract pursuant to which any third party has rights to
own or use any material asset of KC Machine, including any Intellectual
Property Right of KC Machine;
	 
	 	(vi)	 	any agreement relating to the acquisition or disposition of any
business (whether by merger, sale of stock, sale of assets or otherwise) or
granting to any Person a right of first refusal, first offer or other right to
purchase any of the Interests in, or assets of, KC Machine.
	 
	 	(vii)	 	excluding those loan agreements already disclosed in Schedule
5.8, any agreement relating to Indebtedness (in any case, whether incurred,
assumed, guaranteed or secured by any asset of KC Machine) other than accruals
recorded in the Ordinary Course of Business;
	 
	 	(viii)	 	any license, franchise or similar agreement;
	 
	 	(ix)	 	any agency, dealer, sales representative, marketing or other
similar agreement;
	 
	 	(x)	 	any Contract that may not be terminated by KC Machine without
payment of penalty on less than 90 days’ prior notice;
	 
	 	(xi)	 	any agreement with any Member or any other Affiliate of KC
Machine;
	 
	 	(xii)	 	any agreement with any management services, legal, accounting,
or consulting services providers;
	 
	 	(xiii)	 	any warranty, guaranty or other similar undertaking with respect to any
contractual performance or agreement to indemnify any Person; or
	 
	 	(xiv)	 	any employment, deferred compensation, severance, bonus,
retirement or other similar agreement or plan in effect as of the date hereof
(including in respect of any advances or loans to any employees);
	 
	 	(xv)	 	any other agreement, commitment, arrangement or plan not made
in the Ordinary Course of Business that is material to KC Machine or the
Business.

5.12 Insurance Coverage.

Sellers have provided Purchaser with a list of all of the insurance
policies and fidelity bonds covering the assets, Business,
operations, employees, and Members of KC Machine. There is no
material claim by KC Machine pending under any of such policies or
bonds as to which coverage has been questioned, denied or disputed by
the underwriters of such policies or bonds. All premiums due and
payable under all such policies and bonds have been paid and KC
Machine has complied with the terms and conditions of all such
policies and bonds. Such policies of insurance and bonds (or other

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policies and bonds providing substantially similar insurance coverage) are in full force and
effect. Sellers have no knowledge of any threatened termination of any of such policies or
bonds. Since the last renewal date of any insurance policy, there has not been any adverse
change in the relationship of KC Machine with its insurers or the premiums payable pursuant
to such policies.

5.13 Litigation.

	(a)	 	There is no action, suit, investigation, arbitration or administrative or other proceeding
pending or, to the knowledge of Sellers, threatened, against or affecting KC Machine or the
Sellers before any court or arbitrator or any Governmental Authority, including, but not
limited to, any action which challenges or seeks to prevent, enjoin, alter or materially delay
the transactions contemplated by this Agreement and any Ancillary Agreements to which Sellers
will be a party at Closing. Sellers do not know of any valid basis for any such action, suit,
investigation, arbitration or proceeding against any of the Sellers, KC Machine, or the
Business. There are no outstanding judgments, Orders, injunctions, decrees, stipulations or
awards (whether rendered by a court, administrative agency, arbitral body or Governmental
Authority) against KC Machine or the Sellers.
	 
	(b)	 	There are no claims, whether in contract or tort, for defective or allegedly defective
products or workmanship pending, nor to the knowledge of the Sellers, threatened, against KC
Machine.

5.14 Compliance with Laws; Permits.

	(a)	 	KC Machine has complied with all Laws. Sellers know of no fact, circumstance, condition or
situation existing which, after notice or lapse of time or both, would constitute
noncompliance by KC Machine or give rise to any future liability of KC Machine with respect to
any Law heretofore or currently in effect. Neither the use, condition nor other aspect of any
of the assets of the Business or other right, property or asset used in or associated with the
Business is or has been in violation of any applicable Law. KC Machine has not received
notice of any violation of any Law, or any potential liability under any Law, relating to the
operation of the Business or to any of its assets, operations, processes, results or products,
nor is any Seller aware of any such violation or potential liability. Sellers are not aware
of any future requirement of any applicable Law which is due to be imposed on KC Machine that
is reasonably likely to increase the cost of complying with such Law.

	(b)	 	Sellers represent that KC Machine is not required to hold any government or regulatory
license, authorization, permit, franchise, consent and approval which requires more than a
nominal fee and routine application to obtain. No government or regulatory license,
authorization, permit, franchise, consent or approval (collectively, “Permits”) are required
to be held by KC Machine or Sellers with respect to the Business which, if required and not
obtained, would have more than a de minimus impact on KC Machine or the Business. KC Machine
is not in default under, and no condition exists that with notice or lapse of time or both
could constitute a default or could give rise to a right of termination, cancellation or
acceleration under, any Permit held by KC Machine.

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     5.15 Assets; Properties; Sufficiency of Assets.

	 	(a)	 	Except for Inventory disposed of in the Ordinary Course of Business, KC Machine
has good title to, or in the case of leased property has valid leasehold interests in,
the property and assets (whether real or personal, tangible or intangible) reflected in
the Reference Financial Statements or acquired after the date thereof, free and clear
of all Liens (excluding the Liens described in Schedule 5.8 which are to be released at
Closing).
	 
	 	(b)	 	KC Machine owns no real property.
	 
	 	(c)	 	KC Machine has no leasehold or other rights with respect to any real property
other than those rights which it will obtain pursuant to the Lease.
	 
	 	(d)	 	Neither of the Sellers nor KC Machine has received any notice of any
appropriation, condemnation or like proceeding, or of any violation of any applicable
zoning Law or Order relating to or affecting the Leased Premises or any other Property
every utilized or owned by KC Machine or its Affiliates, and to Sellers’ knowledge, no
such proceeding has been threatened or commenced.
	 
	 	(e)	 	To Sellers’ knowledge, the Leased Premises has adequate Utilities of a capacity
and condition to serve adequately the Leased Premises, after giving due regard for the
use to which the Leased Premises is presently being put.
	 
	 	(f)	 	The tangible personal property of KC Machine is in all material respects in
good repair and operating condition (subject to normal maintenance requirements and
normal wear and tear excepted).

5.16 Intellectual Property.

Schedule 5.16(a) contains a complete list of all Intellectual
Property owned or used by KC Machine together with the details of any
registrations and applications for registration in respect thereto.
All such registrations and applications for registration are valid
and subsisting and are in good standing and are enforceable against
third parties and are recorded, maintained and renewed in the name of
KC Machine in the appropriate offices to preserve the rights thereof
and thereto. Except for matters which would not result in a Material
Adverse Effect:

	 	(a)	 	KC Machine owns or has the right to use pursuant to license, sublicense,
agreement or permission all Intellectual Property necessary for the operation of the
Business as such Business is currently and has historically operated, free of any
claims or encumbrances of any nature. Each item of Intellectual Property currently
owned or used by KC Machine will be owned or available for use by KC Machine on
identical terms and conditions immediately after, and after giving effect to, the
Closing;

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	 	(b)	 	except as disclosed in Schedule 5.16(a), KC Machine has the exclusive right to
use the Intellectual Property in all jurisdictions in which it currently or previously
has been used;
	 
	 	(c)	 	neither of the Sellers nor KC Machine have permitted or licensed any Person to
use any of the Intellectual Property and the Sellers do not have any knowledge that the
Intellectual Property is being infringed by any other Person. Schedule 5.16(a) sets
forth a description of all actions KC Machine has taken to maintain and protect each
item of Intellectual Property;
	 
	 	(d)	 	the licenses or other agreements relating to the Intellectual Property listed
in Schedule 5.16(a) do not require consent to the change of control of KC Machine
resulting from the transactions contemplated herein, and there are no other such
licenses or other agreements;
	 
	 	(e)	 	Sellers have no knowledge or information of any facts which would affect the
validity, enforceability, scope or registrability of any of the Intellectual Property;
	 
	 	(f)	 	no claim has been asserted (or is likely to be asserted) by KC Machine with
respect to the Intellectual Property nor has KC Machine issued, filed, or made (or is
likely to issue, file, or make) any notice, complaint, threat or claim against a third
party alleging infringement of the Intellectual Property or any Intellectual Property
Right or other right of KC Machine by such third party;
	 
	 	(g)	 	no claims have been asserted by any third party with respect to, or challenging
or questioning, the ownership, validity, enforceability or use of, the Intellectual
Property and there is no valid basis for any such claim;
	 
	 	(h)	 	neither of the Sellers nor KC Machine has received any notice, complaint,
threat or claim alleging infringement of, and the use by KC Machine of the Intellectual
Property as currently and historically conducted and used does not infringe, any
Intellectual Property Right or other right of any third party;
	 
	 	(i)	 	No Seller has received any notice, information, threat or claim suggesting that
KC Machine does not own the Intellectual Property or, in the case of Intellectual
Property which is licensed to KC Machine as further described in Schedule 5.16(a), that
KC Machine does not have an exclusive right (unless otherwise stated in Schedule
5.16(a)) to exploit the Intellectual Property in any way or manner whatsoever;
	 
	 	(j)	 	complete and correct copies of all agreements relating to or affecting the
Intellectual Property have been provided to Purchaser and are fully assignable to
Purchaser without cost or consent;
	 
	 	(k)	 	KC Machine owns all Intellectual Property in its own name and, except as
provided in the agreements listed in Schedule 5.16(a), none of the Intellectual
Property has been licensed from a third party;

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	 	(l)	 	there are no royalty payments or license fees payable to or by KC Machine in
respect of the Intellectual Property except as listed in Schedule 5.16(a);
	 
	 	(m)	 	neither of the Sellers nor KC Machine have received any notice that KC Machine
is in default (or, with the giving of notice or lapse of time or both, would be in
default) under any license to use the Intellectual Property;
	 
	 	(n)	 	to the extent that the Intellectual Property includes computer software, the
Intellectual Property:

	 	(i)	 	has, at all times, operated in accordance with the operational
documentation and specifications therefor without any operating defects, delays
or nonconformance and without the requirement for work around or non-automated
process steps which could affect the operation of the Business as currently
operated; and
	 
	 	(ii)	 	does not contain any unauthorized code, disabling mechanism or
protection feature designed to prevent its use, including any clock, timer,
counter, computer virus, worm, software lock, drop dead device, Trojan-horse
routine, trap door or time bomb that may be used to distort, delete, modify,
damage or disable such Intellectual Property or otherwise modify, disable or
harm the Intellectual Property or the Business;

	 	(o)	 	KC Machine owns all right, title and interest, including, without limitation,
any Intellectual Property Rights, in any databases, data and corresponding information
contained therein and which are related to or used by the Business. Neither of the
Sellers nor KC Machine have not received notice that either the past, current or future
use of any databases related to the Business or use or disclosure of the information or
any data contained therein:

	 	(i)	 	has violated or infringed upon, or is violating or infringing
upon, the rights, title or interest of any Person;
	 
	 	(ii)	 	breaches any duty or obligation owed to any Person; or
	 
	 	(iii)	 	violates the privacy or any Law relating to the privacy of any
Person;

	 	(p)	 	no proceeding, opposition, office action or claim has been asserted (or is
likely to be asserted) by KC Energy challenging or questioning the ownership, validity,
enforceability or right to use any intellectual property of a third party, or in
respect of any registration or application for registration in respect thereof;
	 
	 	(q)	 	all of the persons who either alone or in concert with others, developed,
invented, improved, adapted, created, discovered, derived, programmed, designed,
modified, updated, corrected or maintained any element or combination of elements in
the Intellectual Property are:

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	 	(i)	 	employees or former employees of KC Machine, all of whose work
or access with respect to any of the Intellectual Property occurred within the
scope and in the regular course of their employment, on the premises of KC
Machine and using only KC Machine equipment; or
	 
	 	(ii)	 	independent contractors or former independent contractors of KC
Machine or any Seller, all of whom have, or as of Closing will have, executed
valid and binding written assignments of any and all rights they may have in
any element or combination of elements in the Intellectual Property in a form
and substance reasonably satisfactory to Purchaser and its counsel; and

	 	(r)	 	waivers of moral rights and all other similar rights with respect to
association with or integrity in a work, whether arising under copyright legislation or
otherwise, in favor of KC Machine have been obtained from each independent contractor,
employee, or other entity who participated in or contributed to the development,
invention, improvement, adaptation, creation, discovery, derivation, programming,
designing, modification, updating correcting or maintenance of any element or
combination of elements of the Intellectual Property.

5.17 Environmental Matters.

	 	(a)	 	(i) Neither KC Machine has nor, to Sellers’
knowledge, has any other Person
generated, recycled, used, treated or
stored on, transported to or from, or
Released or disposed in, on or under, the
Property any Constituents of Concern or,
to the knowledge of Sellers, in, on or
under any property adjoining or adjacent
to any Property, except in compliance
with Environmental Laws;

	 	(ii)	 	KC Machine has not disposed of Constituents of Concern from
Property at any off-site facility except in compliance with Environmental Laws;
	 
	 	(iii)	 	KC Machine has been and is in compliance with

	 	(A)	 	applicable Environmental Laws and
	 
	 	(B)	 	the requirements of Permits with respect to the Property;

	 	(iv)	 	There are no pending nor, to the knowledge of Sellers,
threatened Environmental Claims against any KC Machine or the current or former
owners of any Property or against the Property itself;
	 
	 	(v)	 	Sellers have no knowledge of any facts, circumstances,
conditions or occurrences regarding the Business or with respect to any
Property or any property adjoining any Property that could reasonably be
expected to

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	 	(A)	 	form the basis of an Environmental Claim
against KC Machine or any of the Property or assets, including
leasehold interests and licenses, of KC Machine, or
	 
	 	(B)	 	cause any Property or assets of KC Machine to
be subject to any restrictions on its ownership, occupancy, use or
transferability under any Environmental Law;

	 	(vi)	 	There are no underground storage tanks or sumps located on any Property;
	 
	 	(vii)	 	Neither KC Machine nor any Property is listed or, to the
knowledge of Sellers, proposed for listing by any Governmental Authority as
requiring investigation or clean-up;
	 
	 	(viii)	 	KC Machine has obtained all required Environmental Permits and is and has
been in compliance with the terms of each Environmental Permit. There are no
Environmental Permits held by KC Machine that are nontransferable or require
consent, notification or other action to remain in full force and effect
following the consummation of the transactions contemplated hereby; and
	 
	 	(ix)	 	KC Machine has no liability under any Environmental Law
(including an obligation to remediate any Environmental Condition whether
caused by KC machine or any other Person).

	 	(b)	 	KC Machine has delivered or made available to Purchaser true and complete
copies of all environmental reports, investigations, assessments, studies, audits,
tests, reviews or other analyses commenced or conducted by or on behalf of KC Machine
(or by a third party of which Sellers have knowledge) in relation to the Business.
	 
	 	(c)	 	For purposes of this §5.17, the term “KC Machine” will include any entity,
which is, in whole or in part, a predecessor to KC Machine.

5.18 Plans and Material Documents.

	 	(a)	 	the Sellers do not and have not agreed to sponsor, administer, maintain or
contribute nor have they ever sponsored, administered, maintained or contributed nor
have they ever been required to sponsor, administer, maintain or contribute to any
Benefit Plans; and
	 
	 	(b)	 	The Sellers have no statutory, regulatory or contractual obligations (written
or oral), liabilities or responsibilities respecting Benefit Plans.

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5.19 Affiliate Transactions.

	 	(a)	 	There are no outstanding payables, receivables, loans, advances and other
similar accounts between KC Machine, on the one hand, and any of its Affiliates, on the
other hand, relating to the Business.
	 
	 	(b)	 	To the knowledge of Sellers, no Seller or any employee of KC Machine possesses,
directly or indirectly, any ownership interest in, or is a director or officer of, any
Person which is a supplier, customer, lessor, lessee, licensor, or competitor of
Seller, excluding the Affiliate of Sellers which will be entering into the Lease with
KC Machine. Ownership of 1% or less of any class of securities of a Person whose
securities are publicly traded will not be deemed to be an ownership interest for
purposes of this §5.19(b).

5.20 Customer and Supplier Relations.

Sellers have already supplied to Purchaser all material and relevant
information pertaining to the significant customers of and suppliers
to KC Machine. The relationships of KC Machine with such customers
and suppliers are good commercial working relationships and none of
such customers or suppliers has canceled, terminated or otherwise
materially altered or notified KC Machine of any intention to cancel,
terminate or materially alter its relationship with KC Machine during
the past twelve months and, to the knowledge of Sellers, there will
not be any such change as a result of the transactions contemplated
by this Agreement.

5.21 Employment Matters.

	 	(a)	 	KC Machine is not a party to any labor or collective bargaining agreement.
	 
	 	(b)	 	No labor organization or group of KC Machine employees has made a pending
demand for recognition, there are no representation proceedings or petitions seeking a
representation proceeding presently pending or, to the knowledge of Sellers, threatened
to be brought or filed with any labor relations tribunal, and there is no organizing
activity involving KC Machine pending or, to the knowledge of Sellers, threatened by
any labor organization or group of employees.
	 
	 	(c)	 	There are no

	 	(i)	 	strikes, work stoppages, slow-downs, lockouts or arbitrations
or
	 
	 	(ii)	 	grievances or other labor disputes pending or

to the knowledge of Sellers, threatened against or involving KC
Machine.

     (d) There are no complaints, charges or claims against KC Machine pending or, to
the knowledge of Sellers, threatened to be brought or filed with any Governmental
Authority based on, arising out of, in connection with, or otherwise relating to the

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     employment by KC Machine or any Seller of any Person, including any claim for
workers’ compensation.

     (e) KC Machine and Sellers are in compliance with all Laws and Orders in respect of
employment and employment practices and the terms and conditions of employment and
wages and hours, and has not, and is not, engaged in any unfair labor practice.

     (f) Sellers have delivered to Purchaser a complete and accurate list of each
employee of KC Machine, job title, and hourly compensation.

     (g) To the knowledge of Sellers, no employee of KC Machine or Mr. Niswender is a
party to, or is otherwise bound by, any confidentiality, non-competition, proprietary
rights agreement or similar agreement that would affect

	 	(i)	 	the performance of his or her duties as an employee of KC
Machine or
	 
	 	(ii)	 	the ability of Purchaser to conduct the Business after the
Closing Date.

	 	(h)	 	Except for oral employment agreements provided for by implication of general
employment Law, and except as otherwise disclosed in any Schedule hereto, KC Machine is
not a party to or bound by any agreement, contract, commitment or other legal binding
contractual right or obligation relating to any employment, deferred compensation,
severance, bonus, retirement or other similar agreement or plan in effect as of the
date hereof (including in respect of any advances or loans to any employees).
	 
	 	(i)	 	Each KC Machine employee currently receives two weeks of paid vacation.

5.22 Accounts Receivable.

As of the Closing Date, all Accounts Receivable of KC Machine are
valid and enforceable claims, and the goods and services sold and
delivered which gave rise to such Accounts Receivable were sold and
delivered in the Ordinary Course of Business. Such Accounts
Receivable are subject to no defenses, offsets or recovery in whole
or in part by the Persons whose purchase gave rise to such Accounts
Receivable or by third parties and such Accounts Receivable are fully
collectible within 135 days after the Closing Date without resort to
legal proceedings.

5.23 Inventory.

All Inventories reflected on the Reference Financial Statements (net
of any applicable reserves set forth thereon) and all Inventories
which have been acquired or produced since the date of the Financial
Statements (net of any additional applicable reserves established
since such date in the Ordinary Course of Business) are in good
condition, conform in all material respects with the applicable
specifications and warranties, are not obsolete or excess, and are
usable and salable in the Ordinary Course of Business. The

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values at which such inventories are carried are consistent with the past business practices
of KC Machine.

5.24  Product and Service Warranties; Defects; Liability Defects; Liability.

Each product manufactured, sold, leased, delivered or installed or services performed by KC Machine prior to the Closing
has complied with and conformed to all applicable federal, state, local or foreign laws and regulations, contractual
commitments, and all applicable warranties. KC Machine has not ever had standard terms and conditions of sale, lease,
delivery or installation for its products and services (including, without limitation, whether by way of applicable
guaranty, warranty, or indemnity provisions). Except as disclosed in Schedule 5.24 or otherwise implied by Law, none of
such products or services are subject to any express or implied guaranty, warranty, or other indemnity.

5.25 Finders’ Fees.

There is no investment banker, broker, finder or other intermediary which has been retained by or is authorized to act on
behalf of KC Machine or Sellers who might be entitled to any fee or other commission in connection with the transactions
contemplated by this Agreement or any of the Ancillary Agreements.

5.26 Bank Accounts and Other Financial Relationships.

Schedule 5.26 sets out the name of each bank or other depository in which KC Machine maintains any bank account, trust
account or safety deposit box and the names of all Persons authorized to draw thereon or who have access thereto. There
is no Person holding a general or special power of attorney on behalf of KC Machine.

5.27 Disclosure.

None of

	 	(a)	 	the information contained in the Schedules,
	 
	 	(b)	 	any other written information furnished to Purchaser by KC Machine or Sellers,
or
	 
	 	(c)	 	the representations and warranties of Sellers contained in this Agreement

contain any untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements contained therein, in light
of the circumstances under which they were or are made, not false or misleading.

5.28 Reliance.

Sellers hereby expressly acknowledge that Purchaser is relying upon
the representations and warranties of Sellers contained in this
Agreement or in any agreement, certificate or

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other document delivered pursuant hereto in connection with the purchase of the Interests
and the other transactions contemplated hereunder.

ARTICLE VI: REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser represents and warrants to Sellers as of the date hereof and the Closing Date as follows:

6.1 Corporate Existence and Power.

Purchaser is a corporation duly incorporated, validly existing and in
good standing under the laws of Delaware. Purchaser has all corporate
power required to carry on its business as now conducted.

6.2 Corporate Authorization; Enforceability.

The execution, delivery and performance by Purchaser of this Agreement
and each of the Ancillary Agreements to which it will be a party at
the Closing are, and will be at the Closing, within Purchaser’s
corporate power and have been duly authorized by the board of
directors of Purchaser and no other corporate action on the part of
Purchaser is necessary to authorize this Agreement or any of the
Ancillary Agreements to which Purchaser will be a party at the
Closing. This Agreement has been, and each of the Ancillary
Agreements to which Purchaser will be a party at the Closing will have
been, duly executed and delivered by Purchaser. Assuming the due
execution and delivery by the Sellers of this Agreement and the
parties to each of the Ancillary Agreements to which Purchaser will be
a party at the Closing, this Agreement constitutes, and each Ancillary
Agreement to which Purchaser will be a party at the Closing will
constitute at the Closing, valid and binding agreements of Purchaser,
enforceable against Purchaser in accordance with their terms, except
as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting enforcement
of creditors’ rights generally and by general principles of equity
(whether applied in a proceeding at law or in equity).

6.3 Non-Contravention.

The execution, delivery and performance by Purchaser of this Agreement
and each Ancillary Agreement to which Purchaser will be a party at the
Closing do not and will not at the Closing

	 	(a)	 	violate the certificate of incorporation or bylaws of Purchaser,
	 
	 	(b)	 	violate any applicable Law or Order,
	 
	 	(c)	 	require any filing with or Permit, consent or approval of, or the giving of any
notice to, any Person (including filings, consents or approvals required under any
Permits or licenses held by Purchaser.

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	 	(d)	 	result in a violation of or breach of, conflict with, constitute (with or
without due notice or lapse of time or both) a default under, or give rise to any right
of termination, cancellation or acceleration of any right or obligation of Purchaser or
to a loss of any benefit to which Purchaser is entitled under, any Contract, agreement
or other instrument binding upon Purchaser or any license, franchise, Permit or other
similar authorization held by Purchaser.

6.4 Finders’ Fees.

There is no investment banker, broker, finder or other intermediary
that has been retained by or is authorized to act on behalf of
Purchaser who might be entitled to any fee or other commission in
connection with the transactions contemplated by this Agreement or any
of the Ancillary Agreements.

ARTICLE VII: COVENANTS

7.1 Further Assurances.

From time to time, as and when requested by a party hereto, the other
party or parties will execute and deliver, or cause to be executed and
delivered, all such documents and instruments and will take, or cause
to be taken, all such further actions, as the requesting party may
reasonably deem necessary or desirable to consummate the transactions
contemplated by this Agreement.

7.2 Personal Information.

The Sellers hereby covenant and agree to, and to cause KC Machine to:

	 	(a)	 	advise the Purchaser of all purposes for which Transferred Information was
initially collected from or in respect of the individual to which such Transferred
Information relates and all additional purposes where the Sellers or the KC Machine, as
the case may be, have notified the individual of such additional purpose, and where
required by law, obtained the consent of such individual to such use or disclosure,
unless such use or disclosure is permitted or authorized by law, without notice to, or
consent from, such individual;
	 
	 	(b)	 	where the purposes described by §8.2(a)(i) do not include a purpose for which
the Transferred Information is currently collected, used or disclosed by KC Machine or
the Sellers, as the case may be and where required by law, notify the individual to
whom such information relates of such additional purpose, and where required by law,
obtain the consent of such individual to such additional purpose, unless the use or
disclosure contemplated by such additional purpose is permitted or authorized by law,
without notice to, or consent from, such individual; and where required by law, in a
manner and form approved by Purchaser:

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	 	(i)	 	notify the individual to whom the Transferred Information
relates of the disclosure of the Transferred Information to Purchaser as
contemplated herein; and
	 
	 	(ii)	 	obtain the consent of such individual to such disclosure,
unless such disclosure is permitted or authorized by law, without notice to, or
consent from, such individual.

Purchaser hereby covenants and agrees to use and disclose the Transferred Information only
for those purposes for which the Transferred Information was initially collected from or in
respect of the individual to which such Transferred Information relates, unless

	 	(x)	 	KC Machine, Sellers, or Purchaser have first notified such
individual of such additional purpose, and where required by law, obtained the
consent of such individual to such additional purpose, or
	 
	 	(y)	 	such use or disclosure is permitted or authorized by law,
without notice to, or consent from, such individual.

In the event Closing does not occur, each party who received Transferred Information shall,
if such information is still in the custody of or under the control of such party, either,
at such party’s option, destroy such information or return it to the party that disclosed
it.

ARTICLE VIII: TAX MATTERS

8.1 Allocation of Liability for Taxes, Tax Returns, and Tax Payments.

Sellers and Purchaser shall, to the extent permitted by applicable law
and except as otherwise provided herein, elect with the relevant
Governmental Authority to close the taxable period of KC Machine at
the close of business on the Closing Date.

8.2 Returns.

	 	(a)	 	Sellers shall prepare or cause to be prepared and file or cause to be filed any
required Tax Returns for Sellers and for KC Machine for all taxable periods or portions
thereof ending on or before the Closing Date. The Returns for KC Machine shall be
prepared in a manner consistent with the Returns filed on or prior to the Closing Date
for prior fiscal periods, so long such preparation is in compliance with applicable Law
and GAAP, except that any returns filed with respect to 2006 shall be prepared on an
accrual (and not a cash) basis. Sellers shall pay, or cause to be paid, all Taxes
shown as due (or required to be shown as due) on such Returns to the extent that such
Taxes exceed the accrual or reserve for tax liability (as opposed to any reserve for
deferred Taxes which reflects timing differences between book and Tax income) shown on
the Reference Financial Statements.

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	 	(b)	 	Purchaser shall prepare or cause to be prepared and file or cause to be filed
(at its expense) any Returns of KC Machine for Tax periods which begin with the Closing
Date.
	 
	 	(c)	 	To the extent that the operations of KC Machine are required to be included in
the consolidated, unitary or combined Return of Purchaser and its Affiliates, Purchaser
will cause the operations of KC Machine to be so included) provided that Sellers shall
provide such reasonable assistance to, and cooperate with, the Purchaser in order to
have such Returns prepared in draft form at least 60 days prior to the statutory filing
deadline. To the extent Mr. Niswender shall have failed to file any Returns and to
have paid any amounts owed with respect to the Business during 2005 or 2006, Mr.
Niswender shall pay to the Purchaser within fifteen days after the date on which Taxes
are paid with respect to such periods an amount equal to the portion of such Taxes
which relates to the portion of such Taxable period ending on the Closing Date (as
determined in accordance with clause (b) above to the extent that such Taxes (together
with the Taxes with respect to Returns described in the preceding paragraph) exceed the
accrual or reserve for tax liability (as opposed to any reserve for deferred Taxes
which reflects timing differences between book and Tax income) shown on the Reference
Financial Statements.

     8.3 Section 338 Elections.

	 	(a)	 	At Purchaser’s option, Purchaser and Sellers shall join, and shall cause their
respective Affiliates to join with each other as applicable, in making an election
under §338 of the Code with respect the purchases by Purchaser described in this
Agreement. Any such elections shall be made in accordance with applicable Laws.
	 
	 	(b)	 	The Purchase Price, liabilities of KC Machine, and other relevant items shall
be allocated in accordance with §338(b)(5) and §1060 of the Code (as applicable) as set
forth on a schedule (the “Allocation Statement”). The Allocation Statement will be
prepared by Purchaser and provided to Sellers within 120 days after the Closing Date.
Sellers shall have 30 days after receipt of the Allocation Statement to object to any
allocation set forth therein. Any such objection shall be provided to Purchaser in a
written notice setting forth each disputed item and describing in reasonable detail the
basis for such dispute. If the parties cannot agree on the final form of the
Allocation Statement, the disputed items shall be resolved in accordance with the
procedures set fort in §3.2(c).
	 
	 	(c)	 	Purchaser shall prepare all §338 Forms in accordance with the Allocation
Statement and shall deliver such §338 Forms to Sellers as soon as practicable after the
finalization of the Allocation Statement, and in any event at least 30 days prior to
the due date for filing such forms. The parties shall take all reasonable actions or
refrain from taking any actions, as the case may be, necessary to give effect to the
§338 election. The Parties shall report the transactions contemplated by this
Agreement on any §338 Forms, any statement required under §1060 of the Code, and any
other Returns consistent with the Allocation Statement, and shall

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	 	 	 	take no position contrary thereto unless required to do so by applicable tax Law
pursuant to a “determination”, as defined in §1313(a) of the Code.

8.4 Tax Indemnification.

Sellers, jointly and severally, hereby, agree to indemnify and hold harmless KC Machine and
its future Members and the Purchaser, and their respective directors, officers, employees,
agents and representatives from and against, and shall reimburse them for, any loss, damage,
liability, or expense, including reasonable fees for attorneys and other outside
consultants, incurred in contesting or otherwise in connection with Taxes imposed on
Purchaser or KC Machine as a result of any breach of warranty or misrepresentation under
§5.9 or any failure by Sellers to fulfill their obligations under this Article VIII.

8.5 Refunds.

Any Tax refund (or comparable benefit resulting from a reduction in
Tax liability) for a period ending as of or prior to the Closing Date
arising out of the carryback of a loss or credit incurred by KC
Machine in a taxable year beginning and ending on or after the Closing
Date shall be the property of KC Machine. All Tax refunds to KC
Machine relating to activities on or prior to the Closing Date shall
belong to and be distributed to Mr. Niswender or offset against
amounts owed by Mr. Niswender to Purchaser to the extent any refund is
in excess of Tax receivables relating thereto.

8.6 Contests.

	 	(a)	 	In the case of an audit or administrative or judicial proceeding that relates
to periods ending on or before the Closing Date or for which Purchaser may seek
indemnity from Sellers, the Sellers shall have the right to participate in and control
the conduct of such audit or proceeding but only to the extent that such audit or
proceeding relates solely to a potential adjustment for which any Seller has
acknowledged liability and the issue underlying the potential adjustment does not recur
for any period ending subsequent to the Closing Date. Sellers shall keep Purchaser
fully informed of the progress of any such audit or proceeding and, if it appears in
the sole discretion of the Purchaser, that such audit or proceeding may reasonably be
expected to adversely affect the Purchaser or KC Machine, the Purchaser also may
participate in any such audit or proceeding. If the Sellers do not assume the defense
of any such audit or proceeding promptly, the Purchaser may defend and settle the same
(for the Sellers’ account and at Sellers’ expense) in such manner as it may deem
appropriate. In the event that a potential adjustment as to which the Sellers would be
liable is present in the same proceeding as a potential adjustment for which the
Purchaser would be liable, the Purchaser shall have the right, at its expense, to
control the audit or proceeding with respect to the latter potential adjustment.
	 
	 	(b)	 	With respect to a potential adjustment for which any Seller and the Purchaser
or KC Machine could be liable, or which involves an issue that recurs for any period
ending after the Closing Date (whether or not the subject of audit at such time),

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	 	(i)	 	both the Purchaser and the Sellers may participate in the audit
or proceeding, each at its own expense, and
	 
	 	(ii)	 	the audit or proceeding shall be controlled by that party which
would bear the burden of the greater portion of the dollar amount of the
adjustment and any corresponding adjustments that may reasonably be anticipated
for future Tax periods. The principle set forth in the preceding sentence
shall govern also for purposes of deciding any issue that must be decided
jointly (in particular, choice of judicial forum) in circumstances in which
separate issues are otherwise controlled hereunder by the Purchaser and the
Sellers.

	 	(c)	 	Except as provided in clause (a) above, neither the Purchaser nor the Sellers
shall enter into any compromise or agree to settle any claim pursuant to any Tax audit
or proceeding which would adversely affect the other party, or result in a material
benefit to that party, for such year or a subsequent year without the written consent
of the other party, which consent may not be unreasonably withheld or delayed.

8.7 Miscellaneous Tax Matters.

	 	(a)	 	Sellers and Purchaser agree to treat all payments made by either to or for the
benefit of the other (including any payments to KC Machine) under this Article VIII,
under other indemnification provisions of this Agreement, and for any
misrepresentations or breach of representations, warranties or covenants as adjustments
to the Purchase Price for Tax purposes and that such treatment shall govern for
purposes hereof except to the extent that the laws of a particular jurisdiction provide
otherwise.
	 
	 	(b)	 	Notwithstanding any provision herein to the contrary, the obligations of the
Sellers to indemnify and hold harmless the Purchaser and KC Machine pursuant to this
Article VIII, and the representations and warranties contained in this Article VIII and
in §5.9, shall terminate (as to any unasserted claims) as of the close of business on
the 180th day following expiration of the applicable statutory period with
respect to the Tax liabilities in question (giving effect to any waiver, mitigation or
extension thereof) during which an assessment, reassessment, or other form of
recognized document assessing liability for Taxes could be issued.

ARTICLE IX: SURVIVAL; INDEMNIFICATION

9.1 Survival.

Subject to §8.5(b), the representations and warranties of the parties
contained in this Agreement or in any certificate or other writing
delivered pursuant hereto or in connection herewith will remain in
force for the Withholding Period; provided, however, that the Selected
Representations and Warranties will survive the Closing until the
dates on which such matters are barred by the applicable statute of
limitations.

-36-

 

Notwithstanding the immediately preceding sentence, any representation or warranty in
respect of which indemnity may be sought under this Agreement will survive the time at which
it would otherwise terminate pursuant to the immediately preceding sentence if written
notice of the inaccuracy or breach thereof giving rise to such right of indemnity shall have
been given to the party against whom such indemnity may be sought prior to such time;
provided, however, that the applicable representation or warranty will survive only with
respect to the particular inaccuracy or breach specified in such written notice. All
covenants and agreements of the parties contained in this Agreement will survive the Closing
indefinitely. The representations and warranties will not be affected or reduced as a
result of any investigation or knowledge of Purchaser.

9.2 Indemnification.

	 	(a)	 	Subject to Article VIII, Sellers will jointly and severally indemnify, defend
and hold harmless Purchaser and, after the Closing Date, KC Machine, and their
respective Members, officers, directors, employees, Affiliates, stockholders and
agents, and the successors to the foregoing (and their respective officers, directors,
employees, Affiliates, stockholders and agents) against (i) any and all liabilities,
damages and losses, including diminution in value of the Business to Purchaser, and,
but only to the extent asserted in a Third-Party Claim, (ii) punitive damages, and
(iii) all costs or expenses, including reasonable attorneys’ and consultants’ fees and
expenses reasonably incurred in respect of Third-Party Claims or claims between the
parties hereto (“Damages”), incurred or suffered as a result of or arising out of

	 	(i)	 	the failure of any representation or warranty made by Sellers
in Article V to be true and correct as of the date of this Agreement and as of
the Closing Date as if made anew at and as of the Closing Date;
	 
	 	(ii)	 	the breach of any covenant or agreement made or to be performed
by Sellers pursuant to this Agreement,
	 
	 	(iii)	 	any Environmental Claims or Environmental Conditions which
relate to KC Machine or its Business prior to the Closing Date, and
	 
	 	(iv)	 	personal injury, death or property damage arising out of any
product manufactured or sold by KC Machine prior to the Closing Date,

provided, however, that Sellers will not be liable under clause (i) of this
§9.2(a)(i) (other than with respect to a breach of any of the Selected
Representations and Warranties) for any amounts after the Withholding Period unless
the aggregate amount of Damages suffered by Purchaser since the Closing Date exceeds
$50,000 and then for the full amount of such Damages up to and exceeding $50,000;
provided, further, that Sellers’ liability under clause (i) will not exceed, in the
aggregate, an amount equal to the Purchase Price.

	 	(b)	 	Purchaser will indemnify, defend and hold harmless Sellers against Damages
incurred or suffered as a result of or arising out of

-37-

 

	 	(i)	 	the failure of any representation or warranty made by Purchaser
in Article VI to be true and correct as of the Closing Date, and
	 
	 	(ii)	 	the breach of any covenant or agreement made or to be performed
by Purchaser pursuant to this Agreement.

9.3 Procedures.

	 	(a)	 	If any Person who or which is entitled to seek indemnification under §9.2 (an
“Indemnified Party”) receives notice of the assertion or commencement of any
Third-Party Claim against such Indemnified Party with respect to which the Person
against whom or which such indemnification is being sought (an “Indemnifying Party”) is
obligated to provide indemnification under this Agreement, the Indemnified Party will
give such Indemnifying Party reasonably prompt written notice thereof. Such notice by
the Indemnified Party will describe the Third-Party Claim in reasonable detail, will
include copies of all available material written evidence thereof and will indicate the
estimated amount, if reasonably estimable, of the Damages that have been or may be
sustained by the Indemnified Party. The Indemnifying Party will have the right to
participate in, or, by giving written notice to the Indemnified Party, to assume, the
defense of any Third-Party Claim at such Indemnifying Party’s own expense and by such
Indemnifying Party’s own counsel (which will be reasonably satisfactory to the
Indemnified Party), and the Indemnified Party will cooperate in good faith in such
defense.
	 
	 	(b)	 	If, within 10 days after giving notice of a Third-Party Claim to an
Indemnifying Party pursuant to Section 9.3(a), an Indemnified Party receives written
notice from the Indemnifying Party that the Indemnifying Party has elected to assume
the defense of such Third-Party Claim as provided in the last sentence of Section
9.3(a), the Indemnifying Party will not be liable for any legal expenses subsequently
incurred by the Indemnified Party in connection with the defense thereof; provided,
however, that if the Indemnifying Party fails to take reasonable steps necessary to
defend diligently such Third-Party Claim within ten days after receiving written notice
from the Indemnified Party or if the Indemnified Party reasonably believes the
Indemnifying Party has failed to take such steps or if the Indemnifying Party has not
undertaken fully to indemnify the Indemnified Party in respect of all Damages relating
to the matter, the Indemnified Party may assume its own defense, and the Indemnifying
Party will be liable for all reasonable costs and expenses (including, without
limitation, attorney’s fees on a solicitor and his own client basis) paid or incurred
in connection therewith; provided, however, that the Indemnifying Party shall not be
liable for the costs and expenses of more than one counsel for all Indemnified Parties
in any one jurisdiction. Without the prior written consent of the Indemnified Party
(such consent not to be unreasonably withheld or delayed), the Indemnifying Party will
not enter into any settlement of any Third-Party Claim which would lead to liability or
create any financial or other obligation on the part of the Indemnified Party for which
the Indemnified Party is not entitled to indemnification hereunder,

-38-

 

or which provides for injunctive or other non-monetary relief applicable to the
Indemnified Party, or does not include an unconditional release of all Indemnified
Parties.

	 	(c)	 	If a firm offer is made to settle a Third-Party Claim without leading to
liability or the creation of a financial or other obligation on the part of the
Indemnified Party for which the Indemnified Party is not entitled to indemnification
hereunder and the Indemnifying Party desires to accept and agree to such offer, the
Indemnifying Party will give written notice to the Indemnified Party to that effect.
If the Indemnified Party fails to consent to such firm offer within ten days after its
receipt of such notice, the Indemnified Party may continue to contest or defend such
Third-Party Claim and, in such event, the maximum liability of the Indemnifying Party
as to such Third-Party Claim will not exceed the amount of such settlement offer. The
Indemnified Party will provide the Indemnifying Party with reasonable access during
normal business hours to books, records and employees of the Indemnified Party
necessary in connection with the Indemnifying Party’s defense of any Third-Party Claim
which is the subject of a claim for indemnification by an Indemnified Party hereunder.
	 
	 	(d)	 	Any claim by an Indemnified Party on account of Damages which does not result
from a Third-Party Claim (a “Direct Claim”) will be asserted by giving the Indemnifying
Party reasonably prompt written notice thereof. Such notice by the Indemnified Party
will describe the Direct Claim in reasonable detail, will include copies of all
available material written evidence thereof and will indicate the estimated amount, if
reasonably practicable, of Damages that has been or may be sustained by the Indemnified
Party. The Indemnifying Party will have a period of 20 days within which to respond in
writing to such Direct Claim. If the Indemnifying Party does not so respond within
such 20 day period, the Indemnifying Party will be deemed to have rejected such claim,
in which event the Indemnified Party will be free to pursue such remedies as may be
available to the Indemnified Party on the terms and subject to the provisions of this
Agreement.
	 
	 	(e)	 	A failure to give timely notice or to include any specified information in any
notice provided under this Article IX will not affect the rights or obligations of any
party hereunder, except and only to the extent that, as a result of such failure, any
party which was entitled to receive such notice was deprived of its right to recover
any payment under its applicable insurance coverage or was otherwise materially
prejudiced as a result of such failure.

9.3 Indemnification Payments.

Prior to the expiration of the Withholding Period, Purchaser may
reduce the Withholding Amount by the amount of any sums owed or which
reasonably can be anticipated to be owed to Purchaser pursuant to this
Article IX. Otherwise, all indemnifiable Damages under this Agreement
will be paid in cash in immediately available funds.

-39-

 

9.4 Reassignment of Accounts Receivable.

In the event of a claim for indemnification by Purchaser as result of
a breach of the representations or warranties regarding the collection
of Accounts Receivable, Purchaser shall, upon receipt from or on
behalf of Mr. Niswender a payment equal to the amount of such Accounts
Receivable, assign or reassign to Mr. Niswender such Account(s)
Receivable (including any retention or holdback) that is subject to
the claim for indemnification, and thereafter, Mr. Niswender shall
have the right to collect such Account(s) Receivables in such manner
as he deems appropriate.

9.5 [intentionally left blank]

9.6 Interest on Claims.

	 	(a)	 	The amount of any Direct Claim or Third-Party Claim submitted under this
Article IX or Article VIII as damages or by way of indemnification shall bear interest,
from and including the date that the notice of claim is received by the Indemnifying
Party at the prime rate published by the Wall Street Journal from time to time
calculated from and including such date to but excluding the date reimbursement of such
claim by the Indemnifying Party is made, , and the amount of such interest shall be
deemed to be part of such claim.
	 
	 	(b)	 	Notwithstanding the preceding clause (a), no interest shall accrue on any
Direct Claim or Third-Party Claim payable by Sellers prior to the extinguishment of any
sums remaining in the Withholding Amount or upon the conclusion of the Withholding
Period, whichever first occurs.

ARTICLE X: MISCELLANEOUS

10.1 Notices.

All notices and other communications required or permitted hereunder
will be in writing and, unless otherwise provided in this Agreement,
will be deemed to have been duly given when delivered in person or
when dispatched by electronic facsimile transfer (receipt confirmed)
or one Business Day after having been dispatched by a nationally
recognized overnight courier service to the appropriate party at the
address specified below:

If to Purchaser, to:

T-3 Rocky Mountain Holdings, Inc.

13111 Northwest Freeway, Suite 500

Houston, Texas 77040

Facsimile No.: 713-996-4123

Attention: President

-40-

 

with a copy to:

General Counsel

T-3 Rocky Mountain Holdings, Inc.

13111 Northwest Freeway, Suite 500

Houston, Texas 77040

Facsimile No.: 713-996-4123

If to Sellers, to:

Kelly Niswender

3317 Sierra Circle

Rock Springs, Wyoming 82901

Facsimile No:307-                                        

with a copy to:

Stephen K. Palmer

Palmer & LaBuda, P.C.

510 South Main

Rock Springs, Wyoming 82901

Facsimile No. 307-362-3440

or to such other address or addresses as any such party may from time to time designate as
to itself by like notice.

10.2 Amendments and Waivers.

	 	(a)	 	Any provision of this Agreement may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed, in the case of an amendment, by each
party to this Agreement, or in the case of a waiver, by the party against whom the
waiver is to be effective.
	 
	 	(b)	 	No failure or delay by any party in exercising any right, power or privilege
hereunder will operate as a waiver thereof nor will any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided will be cumulative
and not exclusive of any rights or remedies provided by Law.

10.3 Expenses.

Whether or not the transactions contemplated by this Agreement are
consummated, except as otherwise expressly provided for herein, the
parties will pay or cause to be paid all of their own fees and
expenses incident to this Agreement and in preparing to consummate
and in consummating the transactions contemplated hereby, including
the

-41-

 

fees and expenses of any broker, finder, financial advisor, investment banker, legal advisor
or similar person engaged by such party.

10.4 Successors and Assigns.

The provisions of this Agreement will be binding upon and inure to
the benefit of the parties hereto and their respective successors
and assigns. No party may assign, delegate or otherwise transfer
any of its rights or obligations under this Agreement (including any
transfer by way of merger or operation of law) without the consent
of each other party hereto; provided, however, that Purchaser may
assign its rights and obligations under this Agreement to an
Affiliate of Purchaser, it being understood that such assignment
will not relieve Purchaser from its obligations hereunder. Any
assignment in violation of the preceding sentence will be void ab
initio.

10.5 No Third-Party Beneficiaries.

Except as expressly provided in this Agreement, including the
indemnity obligations hereunder, this Agreement is for the sole
benefit of the parties hereto and their permitted successors and
assigns, and nothing herein expressed or implied will give or be
construed to give to any Person, other than the parties hereto and
such permitted successors and assigns, any legal or equitable rights
hereunder.

10.6 Governing Law.

This Agreement will be governed by, and construed in accordance
with, the laws of the State of Wyoming without regard to any
principles of Wyoming law which would require the application of the
law of another jurisdiction.

10.7 Public Announcements.

From the of this Agreement until the Closing Date, Sellers and
Purchaser will obtain the approval of each other before issuing, or
permitting any agent or Affiliate to issue, any press releases or
otherwise making or permitting any agent or Affiliate to make any
public statements with respect to this Agreement and the
transactions contemplated hereby; provided, this provision will not
restrict either party from issuing any press release or public
statement required by applicable securities laws or the rules of a
stock exchange.

10.8 Counterparts and Execution.

     This Agreement may be executed by the parties hereto in separate
counterparts of the signature page, each of which when so executed
and delivered shall be deemed an original, but all such counterparts
shall, when attached together, constitute one and the same
agreement. Each counterpart signature page so executed may be
attached to another counterpart of this Agreement and such
counterparts, when so attached, shall constitute a single agreement.
Delivery of an executed counterpart of a signature page of this
Agreement by computer email or telephonic facsimile transmission
shall be as effective as delivery of a manually executed original
counterpart of this Agreement.

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10.9 Entire Agreement.

This Agreement (including the Schedules and Exhibits hereto) and the
Ancillary Agreements constitute the entire agreement among the
parties with respect to the subject matter of this Agreement. This
Agreement (including the Schedules and Exhibits hereto) and the
Ancillary Agreements supersede all prior agreements and
understandings, both oral and written, between the parties or their
respective Affiliates with respect to the subject matter hereof of
this Agreement.

10.10 Severability; Injunctive Relief.

If any provision of this Agreement or the application of any such
provision to any Person or circumstance is held invalid, illegal or
unenforceable in any respect by a court of competent jurisdiction,
the remainder of the provisions of this Agreement (or the
application of such provision in other jurisdictions or to Persons
or circumstances other than those to which it was held invalid,
illegal or unenforceable) will in no way be affected, impaired or
invalidated, and to the extent permitted by applicable Law, any such
provision will be restricted in applicability or reformed to the
minimum extent required for such provision to be enforceable. This
provision will be interpreted and enforced to give effect to the
original written intent of the parties prior to the determination of
such invalidity or unenforceability.

10.11 Remedies.

The remedies available to the parties under this Agreement are in
addition to and without limitation to any other remedy at law or in
equity.

     The parties hereto have caused this Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.

PURCHASER:

     T-3 ROCKY MOUNTAIN HOLDINGS, INC.

	 	 	 	 	 
	By:

	 	/s/ Michael T. Mino
 

	 	  
	Name:

	 	Michael T. Mino	 	 
	Title:

	 	Vice President	 	 
	 
	 	 	 	 

	 	 	 
	SELLERS:

	 	 
	 
	 	 
	/s/ Kelly Niswender
 

	 	  
	Kelly Niswender
	 	 
	 
	 	 
	/s/ Carol Niswender
 

	 	 
	Carol Niswender
	 	 

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Schedule 3.1(a)

Closing Cash Consideration

	 	 	 	 	 
	Purchase Price
	 	$	2,500,000.00	 
	less: Withholding Amount
	 	 	250,000.00	 
	less: Amounts to be Paid to Secured Creditors (per Schedule 5.8)
	 	 	382,261.25	 
	 
	 	 	 
	 
	Closing Cash Consideration
	 	$	1,867,738.75	 

-44-

 

Exhibit 3.2(a)

Example of Calculation to Determine Net Working Capital

Based upon October 31, 2005 Financial Statements of KC Machine, LLC

	 	 	 	 	 
	Current Assets
	 	$	379,872	 
	 
	 	 	 	 
	minus
	 	 	 	 
	 
	 	 	 	 
	Current Liabilities
	 	$	332,603	 
	 
	 	 	 	 
	Subtotal
	 	$	47,269	 
	 
	 	 	 	 
	Adjustments
	 	 	 	 
	 
	 	 	 	 
	Addbacks
	 	 	 	 
	 
	 	 	 	 
	Income Taxes Payable
	 	$	-0-	 
	 
	 	 	 	 
	Lines of credit, current portion of long term
debt & short term debt for borrowed money
	 	$	237,934	 
	 
	 	 	 	 
	Total Addbacks
	 	$	237,934	 
	 
	 	 	 	 
	Net Working Capital
	 	$	285,203	 

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Schedule 5.8

Secured Indebtedness to be Paid at Closing

	 	 	 	 	 	 	 
	 	 	 	 	Collateral	 	 
	Secured Creditor	 	Amount	 	to be Released	 	Owner After Payment
	Sweetwater Federal Credit Union
	 	$34,818.95	 	2005 GMC Yukon	 	K. & C. Niswender
	 
	 	 	 	Denali	 	 
	 
	 	 	 	VIN:  1GKFK66U35J113254	 	 
	 
	 	 	 	 	 	 
	Bank of the West
	 	$23,323.12	 	2004 Dodge Ram	 	KC Machinie, LLC
	 
	 	 	 	3500	 	 
	 
	 	 	 	VIN:  3D7MU46CX4G278670	 	 
	 
	 	 	 	 	 	 
	Chase Auto Finance/
JP Morgan Chase
	 	$39,149.35	 	2006 Dodge Ram	 	KC Machine, LLC
	 
	 	 	 	2500	 	 
	 
	 	 	 	VIN:  3D7KS29CX6G142099	 	 
	 
	 	 	 	 	 	 
	US Bank
	 	$14,256.73	 	2002 Dodge Ram	 	KC Machine, LLC
	 
	 	 	 	3500	 	 
	 
	 	 	 	VIN:  3B6MF36672M309871	 	 
	 
	 	 	 	 	 	 
	State Bank of Green River
	 	$220,622.86	 	Equipment of LLC	 	KC Machine, LLC
	 
	 	 	 	 	 	 
	State Bank of Green River
	 	$50,090.24	 	revolving line of	 	N/A
	 
	 	 	 	credit	 	 
	 
	 	 	 	 	 	 
	Total Secured Indebtedness to be Paid at Closing	 	$382,261.25	 	 

-46-

 

Schedule 5.10

Significant Events; Distributions to Members

Significant Events: None

Distributions to Members: Distribution of $53,000 to the sole Member on November 20, 2005

-47-

 

Schedule 5.16(a)

Intellectual Property Owned or Used by KC Machine

Registered patents, trademarks, service marks, copyrights: none

Common law rights to the name “KC Machine”. Sellers have received no notices alleging infringement
by third parties.

Common law rights to the logos used by KC Machine. Sellers have received no notices alleging
infringement by third parties.

Trade secrets, including:

all proprietary or confidential information regarding the Business and affairs of KC
Machine and whether of a technical, operational, economic, or other nature, and
including customer lists, identities, contacts, pricing information, information
regarding employees of KC Machine, know-how, formulas, patterns, inventions,
engineering records or data, interpretive or analytical information or data,
drilling logs, operating agreements and related records, records of research,
proposals, manuals, compilations, programs, devices, methods, techniques, processes,
budgets or other financial information, and any other records or information that
derive independent economic value, actual or potential, from not being generally
known to, and not being readily ascertained by proper means by persons other than
the holders, licensees, or other authorized holders thereof who can obtain economic
value from its disclosure or use.

-48-

 

Schedule 5.26

KC Machine Banking Relationships

Bank Accounts:

1. State Bank of Green River, Rock Springs, Wyoming

2. Bank of the West, Rock Springs, Wyoming

     Authorized signatories on both accounts:

Shelly Brenden

Carol Niswender

Kelly Niswender

Other Deposit Account Locations: None

Safety Deposit Box Locations: None

-49-

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