Document:

exv10w5

Exhibit 10.5

 

SERVICING SUPPLEMENT

to the

AMENDED AND RESTATED SERVICING AGREEMENT

Dated as of December 1, 2006

among

FORD MOTOR CREDIT COMPANY LLC,

as Servicer with respect to the Collateral Specified Interests

and the 20_-__ Reference Pool and as Lender,

CAB EAST HOLDINGS, LLC and

CAB WEST HOLDINGS CORPORATION

as Holders of the Collateral Specified Interest Certificates

and

HTD LEASING LLC,

as Collateral Agent

Dated as of _______, 20__

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 

	ARTICLE I USAGE AND DEFINITIONS
	 	 	1	 
	Section 1.1. Usage and Definitions
	 	 	1	 
	 
	 	 	 	 
	ARTICLE II DESIGNATION
	 	 	2	 
	Section 2.1. Designation
	 	 	2	 
	 
	 	 	 	 
	ARTICLE III THE SERVICER
	 	 	2	 
	Section 3.1. Appointment of Servicer
	 	 	2	 
	Section 3.2. Representations of the Servicer
	 	 	2	 
	Section 3.3. Representations and Warranties About the Leases and the Leased Vehicles
	 	 	2	 
	Section 3.4. Liability of the Servicer; Indemnities
	 	 	5	 
	Section 3.5. Purchase Upon Breach
	 	 	5	 
	Section 3.6. Collection of Payments
	 	 	6	 
	Section 3.7. Servicer May Own Exchange Note and Notes
	 	 	6	 
	Section 3.8. Fees and Expenses
	 	 	7	 
	Section 3.9. Termination
	 	 	7	 
	 
	 	 	 	 
	ARTICLE IV ACCOUNTS, COLLECTIONS AND APPLICATION OF FUNDS
	 	 	8	 
	Section 4.1. Bank Accounts
	 	 	8	 
	Section 4.2. Remittance
	 	 	9	 
	Section 4.3. Advances
	 	 	10	 
	Section 4.4. Repayment of Advances
	 	 	11	 
	Section 4.5. Trust Distribution Account
	 	 	11	 
	 
	 	 	 	 
	ARTICLE V TERMINATION
	 	 	12	 
	Section 5.1. Clean-Up Call
	 	 	12	 
	 
	 	 	 	 
	ARTICLE VI REPORTS AND NOTICES
	 	 	12	 
	Section 6.1. Monthly Investor Reports
	 	 	12	 
	Section 6.2. Notices and Certificates Received by or Delivered by the Servicer Under the Servicing Agreement
	 	 	12	 
	Section 6.3. Annual Statement as to Compliance
	 	 	12	 
	Section 6.4. Compliance with Obligations under Sarbanes-Oxley Act
	 	 	13	 
	Section 6.5. Report on Assessment of Compliance with Servicing Criteria and Attestation
	 	 	13	 
	 
	 	 	 	 
	ARTICLE VII MISCELLANEOUS
	 	 	14	 
	Section 7.1. Amendments
	 	 	14	 
	Section 7.2. Third-Party Beneficiaries of the Servicing Agreement and this Servicing Supplement
	 	 	14	 
	Section 7.3.  No Petition
	 	 	14	 
	Section 7.4.  GOVERNING LAW
	 	 	14	 
	Section 7.5.  SUBMISSION TO JURISDICTION
	 	 	15	 
	Section 7.6.  WAIVER OF JURY TRIAL
	 	 	15	 

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	Section 7.7.   Severability
	 	 	15	 
	Section 7.8.   Counterparts
	 	 	15	 
	Section 7.9.   Headings
	 	 	15	 
	Section 7.10. Conflict with Servicing Agreement
	 	 	15	 
	Section 7.11. List of Responsible Persons
	 	 	15	 
	 
	 	 	 	 
	Exhibit A Schedule of Collateral Leases and Collateral Leased Vehicles in 20_-__ Reference Pool
	 	 	EA-1	 
	Exhibit B Form of Monthly Investor Report
	 	 	EC-1	 

ii

 

     SERVICING SUPPLEMENT, dated as of _______, 20__ (this “Servicing Supplement”), to the
Amended and Restated Servicing Agreement, dated as of December 1, 2006 (the “Servicing
Agreement”) among (i) FORD MOTOR CREDIT COMPANY LLC, a Delaware limited liability company
(“Ford Credit”), as servicer with respect to the Collateral Specified Interests and the
20_-__ Reference Pool (in such capacity, the “Servicer”) and as Lender under the Credit and
Security Agreement (in such capacity, the “Lender”), (ii) CAB EAST HOLDINGS, LLC, a
Delaware limited liability company and CAB WEST HOLDINGS CORPORATION, a Delaware corporation
(together the “Holding Companies” and each a “Holding Company”), as Holders of the
Collateral Specified Interest Certificates and (iii) HTD Leasing LLC, as collateral agent (in such
capacity, the “Collateral Agent”).

BACKGROUND

     Section 2.3 of the Servicing Agreement provides that in connection with the issuance of an
Exchange Note pursuant to the Credit and Security Agreement (as defined below) and the Exchange
Note Supplement (as defined below), the Servicer, the Lender, the Collateral Agent and each Holding
Company may enter into a supplement to the Servicing Agreement setting forth the specific rights
and duties of the Servicer and the other agreements and undertakings with respect to the
administration and servicing of the 20_-__ Reference Pool and the 20_-__ Exchange Note.

     The Series 20_-__ Exchange Note will be issued and the 20_-__ Reference Pool will be
designated, each pursuant to the Credit and Security Agreement and the Exchange Note Supplement.

     The parties wish to enter into this Servicing Supplement to set forth the additional duties
required of the Servicer with respect to the 20_-__ Reference Pool and the 20_-__ Exchange Note.

ARTICLE I

USAGE AND DEFINITIONS

     Section 1.1. Usage and Definitions. Capitalized terms used but not otherwise defined in this Servicing Supplement are defined
in Appendix 1 to the Exchange Note Supplement (the “Exchange Note Supplement”) to the
Credit and Security Agreement (as defined below), dated as of _______, 20__, among CAB East LLC
(“CAB East”), as a Borrower and CAB West LLC (“CAB West” and together with CAB
East, the “Titling Companies”), as a Borrower, U.S. Bank National Association (“U.S.
Bank”), as Administrative Agent, the Collateral Agent, and Ford Credit, as Lender and Servicer.
Capitalized terms used but not otherwise defined in this Servicing Supplement or in Appendix 1 to
the Exchange Note Supplement are defined in Appendix A to the Amended and Restated Credit and
Security Agreement (the “Credit and Security Agreement”), dated as of December 1, 2006,
among the Titling Companies and FCALM, LLC, as Borrowers, U.S. Bank, as Administrative Agent, HTD,
as Collateral Agent and Ford Credit, as Lender and Servicer, or, if not defined in Appendix A, are
defined in the related Titling Company Agreement. Appendix 1 and Appendix A also contain rules as
to usage applicable to this Servicing Supplement and are incorporated by reference into this
Servicing Supplement.

 

 

ARTICLE II

DESIGNATION

     Section 2.1. Designation. The parties designate the Collateral Leases and Collateral Leased Vehicles listed on
Exhibit A to be the “20_-__ Reference Pool” and each Collateral Lease and Collateral Leased
Vehicle included in the 20_-__ Reference Pool to be a “Lease” and a “Leased
Vehicle,” respectively.

ARTICLE III

THE SERVICER

     Section 3.1. Appointment of Servicer. Each party acknowledges and agrees that the Servicer under the Servicing Agreement will
also act as Servicer under this Servicing Supplement with respect to the 20_-__ Reference Pool and
the 20_-__ Exchange Note and will also act as agent of any Holding Company, as Holder of the
related Collateral Specified Interest Certificate in the management and control of the Leases and
Leased Vehicles and for all other purposes set forth in this Servicing Supplement and the Servicing
Agreement. Ford Credit accepts such appointments.

     Section 3.2. Representations of the Servicer. The Servicer has made the representations set forth in Section 3.2 of the Servicing
Agreement on which the Lender, the Holding Companies and the Collateral Agent have relied, and the
20_-__ Exchange Noteholder, in acquiring the 20_-__ Exchange Note, will rely. Such representations
are remade as of the Exchange Note Issuance Date and will survive the sale, transfer, assignment
and conveyance of the 20_-__ Exchange Note to the 20_-__ Exchange Noteholder, the Depositor and the
Issuer and the pledge of the 20_-__ Exchange Note to the Indenture Trustee pursuant to the
Indenture.

     Section 3.3. Representations and Warranties About the Leases and the Leased Vehicles. The Servicer represents and warrants to the Depositor and the Issuer as of the date of this
Servicing Supplement and the 20_-__ Closing Date (except as otherwise specified), which
representations and warranties (i) the 20_-__ Exchange Noteholder, the Depositor and the Issuer
have relied on in acquiring the 20_-__ Exchange Note and (ii) will survive the sale of the 20_-__
Exchange Note to the 20_-__ Exchange Noteholder, the Depositor and the Issuer and the pledge of the
20_-__ Exchange Note to the Indenture Trustee pursuant to the Indenture:

     (a) New Vehicle. Each Leased Vehicle was a new automobile or light truck at the
beginning of the related Lease; provided, that a Leased Vehicle that has never been titled
and has not been driven more than 6,000 miles will be deemed to be a new vehicle for purposes of
this representation and warranty.

     (b) Certificate of Title. Each Leased Vehicle was titled in accordance with the
related Titling Company Agreement and in a manner acceptable to the relevant Governmental
Authority.

     (c) Security Interest in Lease and Leased Vehicle. The Collateral Agent has a
security interest in each Lease and Leased Vehicle which was validly created and is a perfected,
first priority security interest, and is noted as lienholder on the certificate of title for each
Leased Vehicle.

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     (d) Interest in Lease and Leased Vehicle. Each Lease was entered into by a Dealer
located in the United States, as lessor, and a Lessee with a garaging location in an Eligible
State, as lessee, and all of the Dealer’s right, title and interest in such Lease and the related
Leased Vehicle was validly assigned by such Dealer to a Titling Company qualified to hold such
Leased Vehicle.

     (e) Origination of Leases. Each Lease was originated by a Dealer in the ordinary
course of its business and has been fully executed by the parties thereto and at the time of its
origination, substantially complied with the Servicer’s Credit and Collection Policy.

     (f) Total Payments. Each Lease (other than an Advance Payment Plan Lease) provides
for Total Payments that include Base Payments.

     (g) Compliance with Law. Each Lease complied in all material respects at the time it
was originated, and as of the date of this Servicing Supplement will comply in all material
respects, with all requirements of federal, State and local laws.

     (h) Consents, Licenses, Approvals and Authorizations. All material consents,
licenses, approvals or authorizations of, or registrations or declarations with, any Governmental
Authority required to be obtained, effected or given by the Dealer that originated a Lease or the
related Titling Company in connection with (i) the origination of such Lease, (ii) the execution,
delivery and performance by such Dealer of such Lease and (iii) the acquisition and ownership by
the related Titling Company of such Lease and the related Leased Vehicle, had been duly obtained,
effected or given and were in full force and effect as of such date of origination or acquisition
and remained in full force and effect.

     (i) Binding Obligation. Each Lease is on a form contract that includes rights and
remedies allowing the holder to enforce the obligation and realize on the Leased Vehicle and
represents the legal, valid and binding payment obligation of the related Lessee, enforceable in
all material respects by the holder of the Lease, except as may be limited by bankruptcy,
insolvency, reorganization or other laws relating to the enforcement of creditors’ rights or by
general equitable principles and consumer protection laws.

     (j) No Government Lessee. No Lease is an obligation of the United States of America
or any State or local government or from any agency, department, or instrumentality or political
subdivision of the United States of America or any State or local government.

     (k) No Commercial Lease. No Lease is a commercial lease contract, master lease
contract or fleet vehicle lease contract; provided that no Lease that is a retail lease
contract will breach this representation solely because the related Lessee is a commercial lessee.

     (l) Leases in Force. No Lease (i) is a Terminating Lease or a Closed Lease or (ii)
has been satisfied, subordinated, rescinded, cancelled or terminated, in whole or in part.

     (m) No Waiver or Amendments. No material provision of a Lease (other than the
assessment of a security deposit or a Payment Extension Fee or the payment of any other amount
that, upon collection, would constitute an Additional Amount, or a default relating to failure by
the related Lessee to pay any such amount) has been affirmatively waived or amended, except
amendments and modifications that are contained in the Lease Files.

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     (n) No Extensions. As of the Cutoff Date, no extensions other than Payment Extensions
not exceeding three months in the aggregate under any Lease have been granted.

     (o) No Defenses. To the Servicer’s knowledge, no right of rescission, setoff,
counterclaim or defense has been asserted or threatened with respect to any Lease.

     (p) No Delinquency or Default. Except for payments that are not more than 30 days
delinquent as of the Cutoff Date, no payment defaults (determined in accordance with the Credit and
Collection Policy) exist.

     (q) Insurance. Each Lease requires the lessee to obtain physical damage and liability
insurance covering the related Leased Vehicle.

     (r) Title. The applicable Titling Company has good title to each Lease and each
Leased Vehicle, free and clear of any Liens other than Permitted Liens.

     (s) Valid Assignment. No Lease was originated in, or is subject to the laws of, any
jurisdiction under which the sale and assignment of such Lease or the related Leased Vehicle to the
Titling Company would be unlawful, void, or voidable. Each Lease is fully assignable and no Dealer
has entered into any agreement with any Lessee that prohibits, restricts or conditions the
assignment of any portion of a Lease.

     (t) Chattel Paper. Each Lease constitutes either “tangible chattel paper” or
“electronic chattel paper” within the meaning of Section 9-102(a) of the UCC and there is only one
original authenticated copy of each.

     (u) Maturity of Leases. Each Lease has an original Scheduled Lease End Date of no
greater than 60 months from its Lease Date.

     (v) Peace of Mind. No Lease that is an Advance Payment Plan Lease has been identified
by the Servicer as qualifying for the benefits of its “Peace of Mind” program for Lessees who were
at least 62 years of age at Lease inception and who die during the term of the related Lease.

     (w) No Bankruptcy Proceeding. As of the Cutoff Date, the Servicer has not received
actual notice that the Lessee on any Lease is a debtor in a bankruptcy proceeding.

     (x) No Allocation to Other Specified Interest. No Lease or Leased Vehicle has been
allocated to any Specified Interest other than a Collateral Specified Interest.

     (y) Valid Security Interest. The Collateral Agent has a valid security interest in
the Collateral Leases and the Collateral Leased Vehicles and all proceeds thereof.

     (z) Information about Leases; Selection Procedures. The information on the schedule
of Collateral Leases and Collateral Leased Vehicles attached as Exhibit A is true and correct in
all material respects as of the Cutoff Date. No selection procedures believed to be adverse to the
20_-__ Exchange Noteholder have been utilized in selecting the Leases and Leased Vehicles

4

 

included
in the 20_-__ Reference Pool from other leases and leased vehicles that meet the criteria specified
in this Section 3.3.

     (aa) Other Data. The numerical data relating to the characteristics of the Leases and
Leased Vehicles contained in Annex A of the Prospectus Supplement is true and correct in all
material respects.

     Section 3.4. Liability of the Servicer; Indemnities.

     (a) The Servicer will indemnify, defend and hold harmless each Titling Company, the Holders of
the Collateral Specified Interest Certificates, the Administrative Agent, the Collateral Agent, the
Lender, the Indenture Trustee and the 20_-__ Exchange Noteholder (each, with respect to this
Section 3.4(a), an “Indemnified Person”) in accordance with Section 3.3 of the Servicing
Agreement as well as from and against any and all costs, expenses, losses, damages, claims and
liabilities, arising out of the Servicer’s willful misconduct, negligence or bad faith.

     (b) The Servicer will indemnify, defend and hold harmless the Issuer, the Collateral Agent,
the Administrative Agent, the Owner Trustee and the Indenture Trustee, as applicable, and their
respective officers, directors, employees and agents (each, with respect to this Section 3.4(b), an
“Indemnified Person”) from and against any and all costs, expenses, losses, damages, claims
and liabilities arising out of, or incurred in connection with, the acceptance of or performance by
the Servicer of the trusts and duties contained in this Servicing Supplement, except to the extent
that such cost, expense, loss, damage, claim or liability: (i) is due to the willful misconduct,
negligence or bad faith of the Indemnified Person, (ii) in the case of the Owner Trustee, arises
from the Owner Trustee’s breach of any of its representations or warranties set forth in the Trust
Agreement or (iii) in the case of the Indenture Trustee, arises from the Indenture Trustee’s breach
of any of its representations and warranties set forth in the Indenture.

     (c) In addition to the Indemnified Parties included in the Servicing Agreement, the Servicer
will indemnify the Issuer, the Owner Trustee and the Indenture Trustee as “Indemnified Parties”
pursuant to Sections 3.3(b), (c), and (d) of the Servicing Agreement.

     Section 3.5. Purchase Upon Breach.

     (a) Deposit of Administrative Reallocation Amount.

     (i) If a Responsible Person of the Servicer has actual knowledge, or receives notice
from the 20_-__ Exchange Noteholder or the Indenture Trustee, of a breach of (A) a
representation or warranty set forth in Section 3.3 of this Servicing Supplement, (B) the
covenant set forth in Section 3.8(b) of the Servicing Agreement, (C) the covenant set forth
in Section 3.6 of this Servicing Supplement or (D) the covenant set forth in Section 6.7 of
the Servicing Agreement, in each case, that materially and adversely affects any Lease and
Leased Vehicle, the Servicer will deposit into the Exchange Note Collection Account an
amount equal to the Administrative Reallocation Amount with respect to each such Lease
and Leased Vehicle as of the last day of the second Collection Period following the
Collection Period in which the Servicer obtained actual knowledge, or was notified, of such
breach (or, at the Servicer’s option, the end of the first Collection Period following the

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Collection Period in which the Servicer obtained actual knowledge, or was notified, of such
breach) unless, by such last day such breach has been cured in all material respects.

     (ii) The Servicer may deposit into the Exchange Note Collection Account an amount equal
to the Administrative Reallocation Amount with respect to any Lease and Leased Vehicle if
the Servicer determines, in its sole discretion, that, as a result of a computer systems
error or computer systems limitation or for any other reason, the Servicer is unable to
service such Lease and Leased Vehicle in accordance with the terms of the Servicing
Agreement or this Servicing Supplement. The Servicer will deposit into the Exchange Note
Collection Account an amount equal to the Administrative Reallocation Amount with respect to
any Lease (and with the related Leased Vehicle) that is an Advance Payment Plan Lease if the
Servicer determines that such Lease qualifies for the benefit of its “Peace of Mind”
program.

     (iii) So long as Ford Credit remains the Servicer, the Servicer will deposit into the
Exchange Note Collection Account an amount equal to the Administrative Reallocation Amount
with respect to any Lease and Leased Vehicle if the Servicer is notified that the Leased
Vehicle is no longer owned by a Titling Company.

     (iv) The Servicer will deposit the Administrative Reallocation Amount with respect to
any Lease and related Leased Vehicle that the Servicer is removing from the 20_-__ Reference
Pool in accordance with this Section 3.5(a) into the Exchange Note Collection Account on the
Business Day preceding the Payment Date (or, with Rating Agency Confirmation, on the Payment
Date) related to the Collection Period during which such purchase occurs.

     (b) Purchase Constitutes Sole Remedy for Breach. Except as provided in Section 3.3,
the sole remedy of the Collateral Agent, the 20_-__ Exchange Noteholder, the Indenture Trustee, the
holders of the Notes and any Purchaser Agent with respect to a breach of the representations and
warranties contained in Section 3.3 is as set forth in Section 3.5(a).

     (c) Reallocation of Purchased Leases and Leased Vehicles. Upon the deposit of the
Administrative Reallocation Amount for any Lease and Leased Vehicle pursuant to Section 3.5(a),
such Lease and Leased Vehicle will be reallocated to the Revolving Facility Pool at the direction
of the Servicer and will no longer be included in the 20_-__ Reference Pool.

     Section 3.6. Collection of Payments. The Servicer may grant extensions, waivers, rebates, modifications or adjustments with
respect to any Collateral Lease, except that if, after the Cutoff Date, the Servicer modifies the
amount of the Base Payment due [or the total number of original scheduled due dates (including in
connection with a Term Extension), in each case] with respect to any Lease, the Servicer will
reallocate such Lease and the related Leased Vehicle to the Revolving Facility Pool in accordance
with Section 3.5 except, in either case, to the extent that any such modification is required
by law or court order.

     Section 3.7. Servicer May Own Exchange Note and Notes. The Servicer, and any Affiliate of the Servicer, may, in its individual or any other
capacity, become the owner or pledgee of the 20_-__ Exchange Note and/or the Notes with the same
rights as it would have if it were not

6

 

the Servicer or an Affiliate thereof, except as otherwise
provided in the Servicing Agreement, this Servicing Supplement, the Credit and Security Agreement
and the Indenture. Except as set forth in the Servicing Agreement, this Servicing Supplement or in
the other 20_-__ Basic Documents, Notes so owned by or pledged to the Servicer or such Affiliate
will have an equal and proportionate benefit under the Servicing Agreement and this Servicing
Supplement.

     Section 3.8. Fees and Expenses.

     (a) Reference Pool Servicing Fee.

     (i) The “Reference Pool Servicing Fee” will, with respect to a Collection
Period, be an amount equal to the sum of (A) the product of: (1) one-twelfth of [1.00%;]
times (2) the Pool Balance as of the last day of the preceding Collection Period (or
the Cutoff Date for the first month) plus (B) the portion of the Reference Pool
Servicing Fee for the immediately preceding Collection Period, if any, that was not paid on
the related Payment Date.

     (ii) The Reference Pool Servicing Fee will be payable solely from, and the right of the
Servicer to receive the Reference Pool Servicing Fee will be limited in recourse to, the
Collections and other amounts applied to the payment of such fee pursuant to the Exchange
Note Supplement.

     (b) Investment Earnings. As provided in Section 4.2, the Servicer will be entitled to
receive investment earnings on funds on deposit in the Bank Accounts as additional compensation for
the performance of its duties under this Servicing Supplement, and losses, if any, and investment
expenses resulting from the investment of funds on deposit in the Bank Accounts will be charged to
the Servicer.

     (c) Additional Amounts. As additional compensation for the performance of its duties
under the Servicing Agreement and this Servicing Supplement and as reimbursement for expenses
incurred in connection with such performance, the Servicer will be entitled to retain for its own
account all Additional Amounts (or to withdraw and retain any Additional Amounts that nevertheless
have been deposited into the Exchange Note Collection Account). All Additional Amounts are the
property of the Servicer.

     Section 3.9. Termination. This Servicing Supplement will be terminated in the event that the Servicing Agreement is
terminated in accordance therewith and may also be terminated at the option of the Servicer or the
Holding Companies at any time following the payment in full of the 20_-__ Exchange Note;
provided, that the rights and obligations of the parties to this Servicing Supplement
under Section 3.4 will survive any such termination.

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ARTICLE IV

ACCOUNTS, COLLECTIONS AND APPLICATION OF FUNDS

     Section 4.1. Bank Accounts

     (a) Establishment of Bank Accounts. On or before the Exchange Note Issuance Date, the
Servicer will establish five segregated trust accounts, each in the name of the Indenture Trustee
at a Qualified Institution or a Qualified Trust Institution, to be designated as:

     (i) “The Bank of New York Mellon, as Indenture Trustee, as secured party for Ford
Credit Auto Lease Trust 20_-__ “ that will be designated as the “Exchange Note
Collection Account;”

     (ii) “The Bank of New York Mellon, as Indenture Trustee, as secured party for Ford
Credit Auto Lease Trust 20_-__ “ that will be designated as the “Collection
Account;”

     (iii) “The Bank of New York Mellon, as Indenture Trustee, as secured party for Ford
Credit Auto Lease Trust 20_-__ “ that will be designated as the “Principal Payment
Account;”

     (iv) “The Bank of New York Mellon, as Indenture Trustee, as secured party for Ford
Credit Auto Lease Trust 20_-__ “ that will be designated as the “Reserve Account;”
and

     (v) [“The Bank of New York Mellon, as Indenture Trustee, as secured party for Ford
Credit Auto Lease Trust 2011-WH1” that will be designated as the “Hedge Counterparty
Collateral Account.”]

     The Exchange Note Collection Account, Collection Account, the Principal Payment Account, the
Reserve Account, [and the Hedge Counterparty Collateral Account are referred to together as
the“Bank Accounts.”]

     Initially, the Exchange Note Collection Account will be account number [_____], the Collection
Account will be account number [____], the Principal Payment Account will be account number [____],
the Reserve Account will be account number [______] [and the Hedge Counterparty Collateral Account
will be account number [_____]] and each such account will include any successor or replacement
accounts thereto.

     (b) Control of the Bank Accounts. Each of the Bank Accounts with respect to the
20_-__ Reference Pool will be under the sole dominion and control of the Indenture Trustee, as
secured party for the benefit of the 20_-__ Secured Parties, so long as the Bank Accounts remain
subject to the Lien of the Indenture; provided, that, (i) following the payment in full of
the Notes and the release of the Bank Accounts from the Lien of the Indenture, the Exchange Note
Collection Account will be under the sole dominion and control of the Collateral Agent and (ii)
following the payment in full of the 20_-__ Exchange Note, the Exchange Note Collection Account will be
under the sole dominion and control of the Borrowers. However, the Servicer may make deposits to
or request the Indenture Trustee (or, after the Note Balance of the Notes has been reduced to

8

 

zero,
the Collateral Agent, and following the payment in full of the 20_-__ Exchange Note, the Borrowers)
to make deposits to or withdrawals from the Exchange Note Collection Account in accordance with the
Exchange Note Supplement, the Credit and Security Agreement, the Servicing Agreement and this
Servicing Supplement. All monies deposited in the Exchange Note Collection Account pursuant to the
Exchange Note Supplement, the Credit and Security Agreement, the Servicing Agreement or this
Servicing Supplement will be held (i) until the Note Balance of the Notes has been reduced to zero
and the Bank Accounts have been released from the Lien under the Indenture, by the Indenture
Trustee, (ii) until the payment in full of the 20_-__ Exchange Note, by the Collateral Agent and
(iii) following the payment in full of the 20_-__ Exchange Note, by or on behalf of the Borrowers,
and in each case will be applied only upon the terms and conditions of the 20_-__ Basic Documents,
as applicable. The authority of the Servicer to make deposits to the Bank Accounts is revocable at
any time (i) by the Indenture Trustee until the Note Balance of the Notes has been reduced to zero,
(ii) then, by the Collateral Agent until the payment in full of the 20_-__ Exchange Note, and (iii)
thereafter by the Borrowers.

     (c) Reserve Initial Deposit. On the 20_-__ Closing Date, the Depositor will deposit,
or cause to be deposited, the Reserve Initial Deposit into the Reserve Account from the net
proceeds of the sale of the Class A Notes.

     (d) Agreement with Depository Institution. The Bank Accounts will only be established
at a Qualified Institution or Qualified Trust Institution that complies with the requirements set
forth in Section 5.2(d) of the Servicing Agreement.

     (e) [Amounts on Deposits in the Hedge Counterparty Collateral Account. No deposit
will be made to the Hedge Counterparty Collateral Account on the 20_-_ Closing Date. Amounts will
be deposited into the Hedge Counterparty Collateral Account from time to time by the Hedge
Counterparty pursuant to the posting requirements set forth in the Interest Rate Hedge. The Hedge
Counterparty will be entitled to interest earned on amounts on deposit in the Hedge Counterparty
Collateral Account. Subject to the terms of the Interest Rate Hedge, the Hedge Counterparty
Collateral Account will be under the sole dominion and control of the Indenture Trustee, or its
agent appointed pursuant to the Interest Rate Hedge, as custodian.]

     Section 4.2. Remittance.

     (a) If Ford Credit’s short term unsecured debt is rated at least [“P-1” by Moody’s] and [“A-1”
by S&P] (this rating requirement, the “Monthly Remittance Required Ratings”), Ford Credit
may remit 20_-__ Collections on the Business Day preceding each Payment Date, or with satisfaction
of the Rating Agency Condition, on each Payment Date.

     (b) If Ford Credit’s short term unsecured debt is not rated at least equal to the Monthly
Remittance Required Ratings or a Servicer Event of Default occurs, the Servicer will remit to the
Exchange Note Collection Account:

     (i) on the Exchange Note Issuance Date, an amount equal to the sum of (A) the Cutoff
Date Payahead Amount and (B) all Active Lease Proceeds, Terminating Lease Proceeds and
Closed Lease Proceeds (in each case excluding Recoveries) that are Posted

9

 

during the period
from and including the Cutoff Date to and including the second Business Day preceding the
Closing Date;

     (ii) following the Exchange Note Issuance Date, an amount equal to all Active Lease
Proceeds, Terminating Lease Proceeds and Closed Lease Proceeds (in each case excluding
Recoveries) within 2 Business Days after the Posting Date for such amounts (including any
such amounts Posted on the Business Day preceding the Exchange Note Issuance Date and on the
Exchange Note Issuance Date); and

     (iii) Administrative Reallocation Amounts, Active Lease Advances, Payment Extension
Fees and Recoveries with respect to any Collection Period no later than the Business Day
preceding the following Payment Date or, with Rating Agency Confirmation, the following
Payment Date.

     (c) Pending deposit into the Exchange Note Collection Account, the Servicer is not required to
segregate 20_-__ Collections or Payaheads from its own funds.

     (d) So long as Ford Credit remains the Servicer, Ford Credit, as Servicer, may make the
remittances required by Section 4.2(a) net of:

     (i) Reference Pool Servicing Fees to be distributed pursuant to Section 3.8(a) to the
Servicer with respect to such Collection Period; and

     (ii) Advance Reimbursement Amounts that the Servicer is permitted to retain pursuant to
 Section 4.3(b).

     Section 4.3. Advances.

     (a) Advances by the Servicer. The Servicer will make an advance for each Active Lease
other than an Advance Payment Plan Lease and each Collection Period if, for such Lease and such
Collection Period, the scheduled Base Payment exceeds the sum of (A) Active Lease Proceeds (which
may be positive or negative) plus (B) the Payahead Draw, by depositing the amount of such
excess (equal to the Active Lease Advance) into the Exchange Note Collection Account on the
Business Day preceding the Payment Date immediately following such Collection Period or, with
Rating Agency Confirmation, on such Payment Date. However, the Servicer will be required to make
Active Lease Advances only to the extent that the Servicer, in its sole discretion, determines that
such advances will be recoverable from subsequent 20_-__ Collections (whether relating to such
Lease and Leased Vehicle or any other Lease or Leased Vehicle) in the
manner described in Section 4.3(b).

     (b) Reimbursement for Outstanding Advances. During each Collection Period, the
Servicer will be reimbursed for any outstanding Advance Balance with respect to a Lease for the
preceding Collection Period (or, with respect to the first Collection Period, as of the Cutoff
Date) by retaining the following amounts in the following order of priority (the amount so due with
respect to any Lease and any Collection Period, the “Advance Reimbursement Amount”):

     (i) first, if such Lease is an Active Lease during such Collection Period, an
amount equal to the lesser of (A) the sum of (1) Active Lease Proceeds, plus (2) the

10

 

Administrative Reallocation Amount (if any), minus (3) the scheduled Base Payment,
in each case with respect to such Lease and such Collection Period and (B) such Advance
Balance;

     (ii) second, if such Lease is a Terminating Lease or a Closed Lease during such
Collection Period, an amount equal to the lesser of (A) the sum of (1) the Terminating Lease
Proceeds, plus (2) the Closed Lease Proceeds, plus (3) the Administrative
Reallocation Amount (if any), in each case with respect to such Lease and such Collection
Period and (B) such Advance Balance; and

     (iii) third, on and after the Collection Period that includes the Closed Date
with respect to such Lease, an amount equal to the lesser of:

	 	(A)	 	the sum of all Active Lease Proceeds, Terminating Lease
Proceeds, Closed Lease Proceeds and Administrative Reallocation Amounts (in
each case not relating to such Lease) for such Collection Period; and
	 
	 	(B)	 	the excess, if any, of (1) such Advance Balance over
(2) the amount retained by the Servicer pursuant to Section 4.3(b)(ii) for
the current Collection Period.

     The Servicer may instruct the Indenture Trustee, for so long as the Notes are Outstanding, and
thereafter, the Collateral Agent, to withdraw from the Exchange Note Collection Account and pay to
the Servicer any amounts that the Servicer is entitled to retain pursuant to this Section 4.3(b) to
the extent such amounts have been deposited in the Exchange Note Collection Account. The Indenture
Trustee or the Collateral Agent, as applicable, may, but is not required to, request from the
Servicer reasonable documentation (which may be provided by reference to the Servicer’s books and
records) in connection with any such withdrawal instruction.

     Section 4.4. Repayment of Advances. If a successor Servicer is appointed pursuant to the Servicing Agreement, the predecessor
Servicer will be entitled to receive reimbursement for the Advance Balances outstanding on the date
of termination of such predecessor Servicer in the manner specified in Section 4.3(b). Any Advance
Reimbursement Amount for any Lease will be applied (a) first to the Advance Balances outstanding on
the date of termination of such predecessor Servicer and (b) second, to the remaining portion, if
any, of the Advance Balances.

     Section 4.5. Trust Distribution Account. The Depositor may cause the Owner Trustee to establish and maintain a segregated trust
account in the name “U.S. Bank Trust National Association as Owner Trustee,” that is designated as
the “Trust Distribution Account” and will promptly notify the Owner Trustee and the
Indenture Trustee after the establishment of the Trust Distribution Account. The Trust
Distribution Account will be under the sole dominion and control of the Owner Trustee, except that
the Indenture
Trustee may make deposits to the Trust Distribution Account in accordance with the 20_-__
Basic Documents. All deposits to and withdrawals from the Trust Distribution Account will be made
in accordance with the Indenture and the Trust Agreement.

11

 

ARTICLE V

TERMINATION

     Section 5.1. Clean-Up Call.

     (a) On the last day of any Collection Period as of which the Note Balance is equal to or less
than 5% of the initial aggregate Note Balance, the Servicer has the option to purchase the 20_-__
Exchange Note in whole but not in part. To exercise such option, the Servicer will (i) notify the
Collateral Agent, the Borrowers, the Owner Trustee, the Administrative Agent, the Indenture Trustee
and the Rating Agencies of such election not later than 10 days prior to the Exchange Note Purchase
Date and (ii) irrevocably deposit, by 10:00 a.m. (New York City time) on the Exchange Note Purchase
Date, in the Exchange Note Collection Account an amount equal to the Exchange Note Purchase Price,
which amount will be applied on such Payment Date in accordance with Section 8.2 of the Indenture
and will under all circumstances be sufficient to pay the Note Redemption Price on the Notes.

     (b) The Servicer will purchase the 20_-__ Exchange Note following notice of purchase as
required by Section 5.1(a) on the Exchange Note Purchase Date for the Exchange Note Purchase Price.

     (c) For so long as the Servicer and the Lender under the Credit and Security Agreement are the
same entity, upon purchase of the 20_-__ Exchange Note by the Servicer pursuant to Section 5.1(a),
the Servicer may, by notice to the Borrowers, the Lender, the Collateral Agent and the
Administrative Agent, request that the 20_-__ Exchange Note be cancelled and the Leases and related
Leased Vehicles be reallocated to the Revolving Facility Pool.

ARTICLE VI

REPORTS AND NOTICES

     Section 6.1. Monthly Investor Reports. At least two Business Days before each Payment Date, the Servicer will deliver to the Owner
Trustee, the Indenture Trustee, the Depositor and, if requested, the Rating Agencies, a servicing
report substantially in the form of Exhibit B covering 20_-__ Collections and the 20_-__ Reference
Pool for the Collection Period preceding such Payment Date and the payments due on such Payment
Date with respect to the 20_-__ Exchange Note and the Notes, (the “Monthly Investor
Report”). A Responsible Person of the Servicer will certify as to the accuracy of the
information in the Monthly Investor Report.

     Section 6.2. Notices and Certificates Received by or Delivered by the Servicer Under the
Servicing Agreement. Any notice or certificate received by the Servicer or delivered by the Servicer under the
Servicing Agreement will be forwarded by the Servicer to the Owner Trustee and the Indenture
Trustee within 5 Business Days of delivery or receipt thereof by the Servicer.

     Section 6.3. Annual Statement as to Compliance. To the extent required by Regulation AB, the Servicer will deliver to the Depositor, the
Owner Trustee, the Indenture Trustee and each Rating Agency within 90 days after the end of each
calendar year beginning with the year after the Closing Date, an Officer’s Certificate, dated as of
December 31 of the preceding calendar year, signed by a Responsible Person of the Servicer to the
effect that (i) a review of the Servicer’s activities during the preceding calendar year (or, in
the case of the first certificate, the portion of

12

 

the preceding calendar year since the Closing
Date) and of its performance under this Agreement has been made under such Responsible Person’s
supervision and (ii) to such Responsible Person’s knowledge, based on such review, the Servicer has
fulfilled in all material respects all of its obligations under this Agreement throughout such
calendar year (or applicable portion of such calendar year), or, if there has been a failure to
fulfill any such obligation in any material respect, specifically identifying each such failure
known to such Responsible Person and the nature and status of such failure. If the Issuer is not
required to file periodic reports under the Exchange Act or otherwise required by law to file an
Officer’s Certificate of the Servicer as to compliance, the Servicer may deliver such Officer’s
Certificate on or before April 30 of each calendar year. A copy of the Officer’s Certificate
referred to in this Section 3.4(b) may be obtained by any Noteholder or Person certifying it is a
Note Owner by a request in writing to the Indenture Trustee at its Corporate Trust Office.

     Section 6.4. Compliance with Obligations under Sarbanes-Oxley Act. If directed by the Indenture Administrator, the Servicer will prepare, execute and deliver
all certificates or other documents required to be delivered by the Issuer pursuant to the
Sarbanes-Oxley Act of 2002.

     Section 6.5. Report on Assessment of Compliance with Servicing Criteria and
Attestation. The Servicer will:

     (i) deliver to the Depositor, the Owner Trustee, the Indenture Trustee and each Rating
Agency, a report, dated as of December 31 of the preceding calendar year, on its assessment
of compliance with the minimum servicing criteria during the preceding calendar year,
including disclosure of any identified material instance of non-compliance identified by the
Servicer, as specified by Rule 13a-18 and 15d-18 of the Exchange Act and Item 1122 of
Regulation AB under the Securities Act; and

     (ii) cause a firm of registered public accountants that is qualified and independent
within the meaning of Rule 2-01 of Regulation S-X under the Securities Act to deliver an
attestation report that satisfies the requirements of Rule 13a-18 or Rule 15d-18 under the
Exchange Act and Item 1122 of Regulation AB, as applicable, on the assessment of compliance
with servicing criteria with respect to the prior calendar year. Such attestation report
will be addressed to the board of directors of the Servicer and the Servicer
will deliver copies to the Issuer, the Owner Trustee, the Depositor and the Indenture
Trustee. Such attestation will be in accordance with Rules 1-02(a)(3) and 2-02(g) of
Regulation S-X under the Securities Act and the Exchange Act. The firm may render other
services to the Servicer, the Depositor or Ford Credit, but the firm must indicate in each
attestation report that it is qualified and independent within the meaning of Rule 2-01 of
Regulation S-X under the Securities Act.

     The reports referred to in this Section 6.5 will be delivered within 90 days after the end of
each calendar year unless the Issuer is not required to file periodic reports under the Exchange
Act or any other law, in which case the reports may be delivered on or before April 30 of each
calendar year, beginning in the year after the Closing Date. A copy of the reports referred to in
this Section 6.5 may be obtained by any Noteholder or Person certifying it is a Note Owner by a
request in writing to the Indenture Trustee at its Corporate Trust Office.

13

 

ARTICLE VII

MISCELLANEOUS

     Section 7.1. Amendments.

     (a) This Servicing Supplement may be amended in accordance with Section 10.1 of the Servicing
Agreement; provided, however, that the Indenture Trustee will provide or withhold
consent with respect to any proposed amendment to this Servicing Supplement or the Servicing
Agreement that materially affects the rights or obligations of the Servicer with respect to the
Collateral Specified Interests and the 20_-__ Reference Pool, only as directed by the Noteholders
of Notes evidencing not less than a majority of the Note Balance of the Controlling Class.

     (b) Promptly upon the execution of any such amendment, (i) the Servicer will send a copy of
such amendment to the Indenture Trustee, each Hedge Counterparty and each of the Rating Agencies
and (ii) the Indenture Trustee will notify each holder of a Note of the substance of such
amendment.

     Section 7.2. Third-Party Beneficiaries of the Servicing Agreement and this Servicing
Supplement. The Servicing Agreement and this Servicing Supplement will inure to the benefit of and be
binding upon the parties to this Servicing Supplement and their assigns (including the Holders of
the Collateral Specified Interest Certificates as assignees of the Holding Companies) as well as
any 20_-__ Exchange Noteholder, the Owner Trustee and the Indenture Trustee.

     Section 7.3. No Petition. Each party to this Servicing Supplement covenants that for a period of one year and one day
(or, if longer, any applicable preference period) after payment in full of the Notes, all Exchange
Notes, and all distributions to all Holders of Certificates and all holders of any other Securities
(as defined in the related Titling Company Agreement) the payments on which are derived in any
material part from amounts received with respect to any Titling Company Assets (as
defined in the applicable Titling Company Agreements), it will not institute against, or join
any Person in instituting against, the Issuer, the Depositor, any Holding Company, any Titling
Company, or the Holders of the Collateral Specified Interest Certificates any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings under any
United States federal or state bankruptcy or similar law in connection with any obligations
relating to the 20_-__ Exchange Note, the Notes, this Servicing Supplement or any of the other
20_-__ Basic Documents and agrees it will not cooperate with or encourage others to file a
bankruptcy petition against the Issuer, the Depositor, any Holding Company, any Titling Company or
the Holders of the Collateral Specified Interest Certificates during the same period.

     Section 7.4. GOVERNING LAW. THIS SERVICING SUPPLEMENT WILL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATION LAWS OF THE STATE OF NEW YORK,
BUT OTHERWISE WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

14

 

     Section 7.5. SUBMISSION TO JURISDICTION. Each party to this Servicing Supplement submits to the nonexclusive jurisdiction of the
United States District Court for the Southern District of New York and of any New York State Court
sitting in New York, New York for purposes of all legal proceedings arising out of or relating to
this Servicing Supplement or the transactions contemplated by this Servicing Supplement or by the
other 20_-__ Basic Documents. Each party to this Servicing Supplement irrevocably waives, to the
fullest extent it may do so, any objection that it may now or hereafter have to the laying of the
venue of any such proceeding brought in such a court and any claim that any such proceeding brought
in such a court has been brought in an inconvenient forum.

     Section 7.6. WAIVER OF JURY TRIAL. EACH PARTY TO THIS SERVICING SUPPLEMENT IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS SERVICING SUPPLEMENT, THE INDENTURE OR ANY OTHER 20_-__ BASIC DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED BY THIS SERVICING SUPPLEMENT, THE INDENTURE OR ANY SUCH OTHER 20_-__
BASIC DOCUMENT.

     Section 7.7. Severability. If any one or more of the covenants, agreements, provisions or terms of this Servicing
Supplement is held invalid, illegal or unenforceable, then such covenants, agreements, provisions
or terms will be deemed severable from the remaining covenants, agreements, provisions or terms of
this Servicing Supplement and will in no way affect the validity, legality or enforceability of the
other provisions of this Servicing Supplement.

     Section 7.8. Counterparts. This Servicing Supplement may be executed in any number of counterparts, each of which will
be an original, and all of which will together constitute one and the same instrument.

     Section 7.9. Headings. The various headings in this Servicing Supplement are included for convenience only and
will not affect the meaning or interpretation of any provision of this Servicing Supplement.

     Section 7.10. Conflict with Servicing Agreement. In the event of any conflict between this Servicing Supplement (or any portion thereof) and
the Servicing Agreement, the terms of this Servicing Supplement will prevail.

     Section 7.11. List of Responsible Persons. The Servicer may from time to time designate the individuals who are authorized to act as a
“Responsible Person” with respect to the Servicer pursuant to an Officer’s Certificate distributed
to the Owner Trustee, the Indenture Trustee, the Titling Companies, the Titling Company
Administrator, the Holding Companies and the Depositor.

[Remainder of Page Intentionally Left Blank]

15

 

EXECUTED BY:

	 	 	 	 	 
	 	FORD MOTOR CREDIT COMPANY LLC,	 
	 	 	as Servicer with respect to the Collateral Specified Interests and the 20_-__ Reference Pool and as Lender
 	 
	 	By:  	 	 
	 	 	Name:  	Scott D. Krohn 	 
	 	 	Title:  	Assistant Treasurer 	 
	 
	 	CAB EAST HOLDINGS, LLC,	 
	 	 	acting with respect to its Series of limited
liability company interests designated as the
“Collateral Series,” as Holder of a Collateral
Specified Interest Certificate
 	 
	 	By:  	 	 
	 	 	Name:  	Scott D. Krohn 	 
	 	 	Title:  	President and Assistant Treasurer 	 
	 
	 	CAB WEST HOLDINGS CORPORATION,	 
	 	 	acting with respect to its Series of limited
liability company interests designated as the
“Collateral Series,” as Holder of a Collateral
Specified Interest Certificate
 	 
	 	By:  	 	 
	 	 	Name:  	James M. Swartz 	 
	 	 	Title:  	Assistant Secretary 	 
	 

[Signature Page to the Servicing Supplement]

 

 

	 	 	 	 	 
	 	HTD LEASING LLC,

     as Collateral Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

AGREED AND ACCEPTED BY:

	 	 	 	 	 

	U.S. BANK NATIONAL ASSOCIATION, 	 	 
	 	 	as Titling Company Registrar with
Respect to each of the Titling Companies,
on behalf of the Titling Companies	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 

[Signature Page to the Servicing Supplement]

 

 

	 	 	 	 	 

	AGREED AND ACCEPTED FOR	 	 
	 

	 	PURPOSES OF SECTION 7.1(a) BY:	 	 
	 
	 	 	 	 
	FORD CREDIT AUTO LEASE TRUST 20_-__	 	 
	 
	 	 	 	 
	By:

	 	U.S. Bank Trust National Association,
not in its individual capacity but solely as
Owner Trustee of Ford Credit Auto Lease
Trust 20_-__	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	THE BANK OF NEW YORK MELLON,	 	 
	 

	 	not in its individual capacity but solely as Indenture Trustee	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 

[Signature Page to the Servicing Supplement]

 

 

Exhibit A

Schedule of Collateral Leases and Collateral Leased Vehicles in 20_-__ Reference Pool

(On File with Collateral Agent)

EA-1

 

 

Exhibit B

Form Of Monthly Investor Report

EB-1exv10w1

Exhibit 10.1

EXECUTION VERSION

STOCK PURCHASE AGREEMENT

Dated
as of June 3, 2011

By and Between

SOUTHEASTERN METALS MANUFACTURING COMPANY, INC.

as Purchaser

and

THE STOCKHOLDERS

OF

PACIFIC AWARD METALS, INC.

 

 

TABLE OF CONTENTS

	 	 	 

	ARTICLE 1. DEFINITIONS
	 	1
	 
	 	 
	1.01 Definitions.
	 	1
	1.02 Rules of Construction.
	 	10
	 
	 	 
	ARTICLE 2. PURCHASE AND SALE
	 	11
	 
	 	 
	2.01 Purchase and Sale of the Shares.
	 	11
	2.02 Payment of the Estimated Closing
Purchase Price.
	 	11
	2.03 Calculation of Estimated Closing
Purchase Price.
	 	12
	2.04 Closing Cash.
	 	12
	2.05 Closing.
	 	12
	2.06 Closing Deliveries by the Sellers.
	 	12
	2.07 Closing Deliveries by the Purchaser.
	 	13
	2.08 Post Closing Adjustment to
Estimated Closing Purchase Price.
	 	13
	 
	 	 
	ARTICLE 3. REPRESENTATIONS
AND WARRANTIES OF SELLERS
	 	16
	 
	 	 
	3.01 Sellers.
	 	16
	3.02 Management Sellers.
	 	17
	 
	 	 
	ARTICLE 4. REPRESENTATIONS
AND WARRANTIES OF THE
PURCHASER
	 	27
	 
	 	 
	4.01 Organization and Authority and the
Purchaser.
	 	28
	4.02 No Conflict.
	 	28
	4.03 Governmental Consents and Approvals.
	 	28
	4.04 No Brokers.
	 	28
	4.05 Litigation.
	 	28
	4.06 Investment Intention.
	 	28
	 
	 	 
	ARTICLE 5. COVENANTS AND
ADDITIONAL AGREEMENTS
	 	29
	 
	 	 
	5.01 Ancillary Agreements.
	 	29
	5.02 Conduct of Business Prior to the
Closing.
	 	29
	5.03 Access to Information.
	 	29
	5.04 Confidentiality.
	 	29
	5.05 Regulatory and Other
Authorizations; Consents.
	 	30
	5.06 Further Action.
	 	30
	5.07 Release of Indebtedness.
	 	30
	5.08 Legal Privileges.
	 	30
	5.09 Preservation of Records.
	 	30
	 
	 	 
	ARTICLE 6. CONDITIONS TO
CLOSING
	 	31
	 
	 	 
	6.01 Conditions to Obligations of the
Sellers.
	 	31
	6.02 Conditions to Obligations of the
Purchaser.
	 	32
	 
	 	 
	ARTICLE 7. INDEMNIFICATION
	 	34
	 
	 	 
	7.01 Survival; Remedies for Breach.
	 	34
	7.03 Indemnification of the Sellers.
	 	35
	7.04 Procedures for Indemnification.
	 	36

i 

 

	 	 	 

	7.05 Additional Limits on Rights to
Indemnification.
	 	36
	7.06 Procedures for Third Party Claims.
	 	38
	 
	 	 
	ARTICLE 8. TAXES
	 	39
	 
	 	 
	8.01 Straddle Period
	 	39
	8.02 Preparation of Tax Returns; Payment
of Taxes.
	 	40
	8.03 Cooperation with Respect to Tax
Returns.
	 	40
	8.04 Tax Audits.
	 	40
	8.05 Disputes.
	 	41
	 
	 	 
	ARTICLE 9. GENERAL PROVISIONS
	 	41
	 
	 	 
	9.01 Sellers’ Representative.
	 	41
	9.02 Expenses.
	 	42
	9.03 Notices.
	 	42
	9.04 Headings.
	 	43
	9.05 Severability.
	 	43
	9.06 Entire Agreement.
	 	43
	9.07 Assignment.
	 	43
	9.08 No Third Party Beneficiaries.
	 	43
	9.09 Amendment.
	 	43
	9.10 Governing Law.
	 	44
	9.11 Waiver of Jury Trial.
	 	44
	9.12 Public Announcements.
	 	44
	9.13 Counterparts; Effectiveness.
	 	44

ii 

 

STOCK PURCHASE AGREEMENT

     THIS
STOCK PURCHASE AGREEMENT (this “Agreement”), dated as of June 3, 2011, is made by and
between each of the stockholders of Pacific Award Metals, Inc., a California corporation (the
“Company”) and Southeastern Metals Manufacturing Company, Inc., a Florida corporation
(“Purchaser”).

R E C I T A L S:

     The Company manufacturers sheet metal products for the construction industry, including
ventilation metals, roof drainage products, roofing metals, drywall trims, pipes and fittings,
gutter profiles, steel stakes, snapties, bare metal and paperfaced trims, copper products, and
vents.

     Sellers (as hereinafter defined) are the owners of all the issued and outstanding capital
stock of the Company.

     Sellers desire to sell all of the issued and outstanding capital stock of the Company to the
Purchaser, and the Purchaser desires to purchase all of the issued and outstanding capital stock of
the Company for the Purchase Price (as hereinafter defined) and upon the other terms and conditions
set forth herein.

CONSIDERATION:

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

ARTICLE 1.

DEFINITIONS

1.01 Definitions. In this Agreement, unless the context otherwise requires, the following
terms shall have the following meanings:

     “Acceptance Notice” shall have the meaning ascribed to such term in Section 2.08(c)
hereof.

     “Action” means any judicial, administrative or arbitral action, suit, mediation,
hearing, proceeding (public or private), investigation or claim before or by any Governmental
Authority.

     “Adjusted Holdback Amount” shall mean the Holdback Amount less the amount of the
reduction, provided for in Section 2.08(e), in the amount of the Holdback to be paid to the Sellers
pursuant to the provisions of Section 2.02(b).

1

 

     “Affiliate” means, with respect to any Person, any Person directly or indirectly
controlling, controlled by, or under common control with such other Person. For purposes of
determining whether a Person is an Affiliate, the term “control” and its correlative forms
“controlled by” and “under common control with” shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of a Person, whether
through ownership of securities, contract or otherwise.

     “Agreement” shall have the meaning ascribed to such term in the first paragraph
hereof.

     “Ancillary Agreements” shall have the meaning ascribed to such term in Section 3.01(a)
hereof.

     “Base Purchase Price” means the sum of Fifteen Million Three Hundred Ninety-Nine
Thousand U.S. Dollars (US$15,399,000.00).

     “Basket Amount” shall have the meaning ascribed to such term in Section 7.05(a)(i)
hereof.

     “Business” means the development, design, manufacture, distribution, marketing and
sale of sheet metal products for the construction industry, including ventilation metals, roof
drainage products, roofing metals, drywall trims, pipes and fittings, gutter profiles, steel
stakes, snapties, bare metal and paperfaced trims, copper products and vents as conducted by the
Company on the date hereof.

     “Business Day” means a day other than a Saturday, Sunday or other day on which
commercial banks in Los Angeles, California are authorized or required by law to close.

     “Closing” shall have the meaning ascribed to such term in Section 2.04 hereof.

     “Closing Date” shall have the meaning ascribed to such term in Section 2.04 hereof.

     “Closing Balance Sheet” means the Proposed Closing Balance Sheet as finally determined
pursuant to Section 2.07 hereof.

     “Closing Cash” has the meaning ascribed to such term in Section 2.03 hereof.

     “Closing Net Working Capital” means the Proposed Net Working Capital as finally
determined pursuant to Section 2.08 hereof.

     “Closing Payment” has the meaning ascribed to such term in Section 2.02 hereof.

     “Closing Sellers’ Payment” has the meaning ascribed to such term in Section 2.02
hereof.

     “Code” means the Internal Revenue Code of 1986, as amended.

     “Company” shall have the meaning ascribed to such term in the first paragraph hereof.

2

 

     “Company Transaction Expenses” means the fees and expenses incurred by the Company or
the Sellers on or before the Closing Date in connection with the transactions contemplated herein
(including fees of attorneys and other professionals), in each case that are unpaid as of and
through the Closing Date.

     “Contract” means any written or oral contract, agreement, mortgage, deed of trust,
bond, indenture, lease, license, note, franchise, certificate, option, warrant, right, instrument
or other commitment or obligation and any amendment, supplement or modification thereto.

     “Current Assets” means trade accounts receivable, net of applicable reserves, plus
inventory, net of applicable reserves other than the LIFO inventory reserve, which reserves, in all
cases shall be calculated in accordance with GAAP and, for the avoidance of doubt, the term
“Current Assets” shall exclude inter-company receivables.

     “Current Liabilities” means trade accounts payable coming due within one year of such
date and determined in accordance with GAAP, but excluding (a) the Company Transaction Expenses
paid at Closing; and (b) inter-company accounts payable.

     “Disputed Claims” shall have the meaning ascribed to such term in Section 2.02 hereof.

     “Disputed Claims Amount” shall have the meaning ascribed to such term in Section 2.02
hereof.

     “Dispute Notice” shall have the meaning ascribed to such term in Section 2.08(c)
hereof.

     “Effective Time” means 11:59 p.m. Pacific Time on the Closing Date.

     “Employee Plans” shall have the meaning ascribed to such term in Section 3.02(t)
hereof.

     “Encumbrance” means any security interest, pledge, mortgage, lien, charge,
encumbrance, beneficial ownership interest, adverse claim, impairment, conditional sale agreement,
retention agreement, option, right of first option, right of first refusal (or similar
restriction), easement, right of way, encroachment, servitude, restriction or limitation of any
kind or nature, including any restriction on use, voting, transfer, receipt of income, or exercise
of any other attribute of ownership, excluding, in the case of any securities, any limitations on
the right to transfer securities arising under Law.

     “Environmental Laws” means all Federal, State, local and foreign Laws, orders,
judgments and consent decrees as in effect on or prior to the Effective Time relating to or
governing the protection of health, safety, environment or natural resources, and any such laws
that prohibit or that otherwise impose liability or standards of conduct concerning: (a) protection
of the indoor or outdoor environment; (b) pollution or pollution control; and (c) the management,
containment, manufacture, possession, presence, use, processing, generation, transportation,
treatment, storage, disposal, Release, abatement, removal, remediation or handling of or exposure
to any contaminant or hazardous, toxic, deleterious, carcinogenic, mutagenic,

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radioactive, corrosive, reactive, injurious or otherwise harmful chemical, constituent,
substance, material, product or waste, and including, without limitation, the Federal Insecticide,
Fungicide and Rodenticide Act (7 U.S.C. 136 et seq.), the Federal Water Pollution Control Act (33
U.S.C. 1251 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. 6901 et seq.), the
Comprehensive Environmental Response Compensation and Liability Act (“CERCLA”) (42 U.S.C. 9601 et
seq.), the Clean Air Act (42 U.S.C. 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. 2601
et seq.), the Occupational Safety and Health Act (29 U.S.C. 651 et seq.), the Hazardous Material
Transportation Act (49 U.S.C. 1801 et seq.) and any similar Federal, State, local and foreign Laws
and all rules and regulations promulgated according thereto, all as amended from time to time.

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

     “ERISA Affiliate” has the meaning ascribed to such term in Section 3.02(t) hereof.

     “Estimated Closing Balance Sheet” has the meaning ascribed to such term in Section
2.03(a) hereof.

     “Estimated Closing Purchase Price” means the amount determined pursuant to Section
2.03(b) hereof.

     “Estimated Net Working Capital” has the meaning ascribed to such term in Section
2.03(a) hereof.

     “Final Purchase Price” means the amount determined pursuant to Section 2.08(d) hereof.

     “Financial Statements” shall have the meaning ascribed to such term in Section 3.02(f)
hereof.

     “GAAP” means generally accepted United States accounting principles as of the date
hereof applied on a basis consistent with the basis on which the Financial Statements were
prepared.

     “Governmental Authority” means any government or governmental, administrative or
regulatory body thereof, whether Federal, State, local, national, municipal or foreign, any agency
or instrumentality thereof and any court, tribunal or judicial or arbitral body thereof.

     “Governmental Order” means any order, writ, judgment, stipulation, determination or
award made, issued or entered into by or with any Governmental Authority.

     “Hazardous Material” means any: (a) “hazardous waste” as defined in the Resource
Conservation and Recovery Act of 1976 (42 U.S.C. § 6901 et seq.), as amended
through the Effective Time, and regulations promulgated thereunder; (b) any substance defined as a
contaminant, pollutant, dangerous, toxic or hazardous substance pursuant to any Environmental Law,
including, without limitation, any “hazardous substance” as defined in CERCLA; (c) petroleum; (d)
asbestos: and (e) any hazardous, toxic, deleterious, carcinogenic, mutagenic,

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radioactive, corrosive, reactive, injurious or otherwise harmful chemical, constituent, substance,
material, product or waste, the use, handling, presence, importing, reporting, recycling, disposal
or Release of which is regulated, assessed or prohibited by or pursuant to any applicable
Environmental Law.

     “Holdback Amount” shall have the meaning ascribed to such term in Section 2.02(b)
hereof.

     “Indemnified Party” shall have the meaning ascribed to such term in Section 7.04(a)
hereof.

     “Indemnifying Party” shall have the meaning ascribed to such term in Section 7.04(a)
hereof.

     “Indebtedness” means with respect to any Person at any date: (a) any indebtedness
(including interest, fees and prepayment premiums or penalties) of such Person for borrowed money
or in respect of loans or advances and other third-party financing; (b) any indebtedness evidenced
by any note, bond, debenture, capital lease, credit agreement or other debt security; (c) any
indebtedness for the deferred purchase price of property or services with respect to which such
Person is liable, contingently or otherwise, as obligor or otherwise (other than trade payables and
other current Liabilities incurred in the Ordinary Course of Business); (d) any commitment by which
such Person assures a creditor, customer or another Person against loss (including contingent
reimbursement obligations with respect to letters of credit (drawn or undrawn), guarantees or
similar arrangements backed by cash collateral, performance bonds or payment bonds); (e)
indebtedness of another Person which is guaranteed in any manner by such Person (including
guarantees in the form of an agreement to repurchase or reimburse); and (f) any indebtedness
secured by any lien on such Person’s assets other than Permitted Liens.

     “Independent Accounting Firm” shall have the meaning ascribed to such term in Section
2.08(c) hereof.

     “Intellectual Property” means all Software (as hereinafter defined), patents,
industrial designs, copyrights, works of authorship, benefits of moral rights waivers, technology,
trade secrets, including methods, techniques, processes and know-how, inventions, proprietary data,
formulae and research and development data; all trademarks, trade names, trade dress, logos, domain
names, service marks and service names; all registrations, applications, rights of priority,
recordings, licenses and common-law rights relating thereto; all rights to sue at law or in equity
for any past or future infringement or other impairment thereof, including the right to receive all
proceeds and damages therefrom, all rights to obtain renewals, reissues, continuations,
reexaminations, divisions or other extensions of legal protections pertaining thereto and all
goodwill relating to the foregoing.

     “Law” means, with respect to any Person, property, transaction, event or other matter,
any foreign or domestic constitution, treaty, law, statute, regulation, code, ordinance,
Governmental Order or other requirement having the force of law.

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     “Leased Real Property” shall have the meaning ascribed to such term by Section 3.02(o)
hereof.

     “Liability” means any debt, loss, damage, adverse claim, fine, penalty, liability or
obligation of any kind, whether direct or indirect, known or unknown, asserted or unasserted,
accrued or unaccrued, absolute, contingent, matured or unmatured, liquidated or unliquidated,
disputed or undisputed, due or to become due and whether in contract, tort, strict liability or
otherwise.

     “Losses” shall mean any and all damages (including but not limited to, exemplary or
multiple damages or diminution in value, loss of profits or loss of business opportunity damages or
other special, incidental, or consequential damages), Liabilities, deficiencies, claims, actions,
demands, amounts paid in settlement, judgments, awards, interest, punitive losses, assessments,
obligations, fines, penalties, Taxes or costs or expenses of whatever kind including costs of
investigation and defense, court costs and reasonable attorneys’ fees and expenses.

     “Management Sellers” shall mean each of W. Brent Taylor, Frank J. Fulford, David M.
Hughes, Duane Simmons, William Korth and Larry D. Inhelder.

     “March 31 Balance Sheet” means the consolidated balance sheet of the Business, dated
as of March 31, 2011, a copy of which has been delivered to the Purchaser.

     “Material Adverse Effect” means a change, event, occurrence, violation, inaccuracy or
circumstance, the effect of which is both material and adverse to: (a) the business, assets,
properties, prospects, results of operations or condition (financial or otherwise) of the Company;
or (b) the ability of the Sellers or Purchaser to consummate the transactions contemplated by this
Agreement; provided, however, that Material Adverse Effect shall not include: (i)
changes in business or economic conditions affecting the U.S. or global economy generally; (ii)
changes in the industry in which the Company operates generally; (iii) any act, omission or event
to which the Purchaser has explicitly consented in writing; provided that, the exceptions noted in
(b)(i) through (ii) set forth above shall not apply if and to the extent such change,
implementation, adoption, or event has a disproportionately material effect on the Company, as
compared to similarly situated companies in substantially the same industry.

     “Material Contracts” shall have the meaning ascribed to such term in Section 3.02(l)
hereof.

     “Material Customers” shall have the meaning ascribed to such term in Section 3.02(p)
hereof.

     “Material Suppliers” shall have the meaning ascribed to such term in Section 3.02(p)
hereof.

     “Net Working Capital” means the Current Assets of the Company minus the Current
Liabilities of the Company, determined as of the Effective Time by the Purchaser as contemplated by
Section 2.08 hereof.

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     “Objection Period” shall have the meaning ascribed to such term by Section 2.08(b)
hereof.

     “Ordinary Course of Business” means an action taken by a Person that: (a) is
consistent in all material respects in nature, scope, and magnitude with the past practices of such
Person and is taken in the ordinary course of the normal, day-to-day operations of such Person; and
(b) does not require authorization by the board of directors of such Person (or by any Person or
group of Persons exercising similar authority) and does not require any other separate or special
authorization of any nature.

     “Payoff Statement” shall have the meaning ascribed to such term by Section 6.02(e)
hereof.

     “Permit” means all approvals, licenses, permits, authorizations, certificates and
registrations issued by any Person and applications therefor.

     “Permitted Liens” means each of the following: (a) liens for Taxes that are not yet
due and payable; (b) requirements and restrictions of zoning, building and other Laws, rules and
regulations that apply to the Leased Real Property; provided that the Company is in compliance with
any such requirements, restrictions, Laws, rules and/or regulations; (c) statutory liens created in
the Ordinary Course of Business which are not, individually or in the aggregate, material to the
Business; and (d) liens arising under conditional sales contracts and equipment leases with third
parties entered into in the Ordinary Course of Business.

     “Person” is to be broadly interpreted and includes any individual, corporation,
general partnership, limited partnership, limited liability company, limited liability partnership,
unincorporated organization, Governmental Authority, association, trust or any other entity or
organization and the executors, administrators or other legal representatives of an individual in
such capacity.

     “Personal Property Leases” shall have the meaning ascribed to such term in Section
3.02(v)hereof.

     “Phoenix Lease” means that certain real property lease dated July 1, 2001 by and
between 43rd Avenue/Jefferson Partnership and the Company relating to the property
located at 50 South 43rd Avenue, Phoenix, Arizona.

     “Pre-Adjustment Remaining Holdback Amount” has the meaning ascribed to such term in
Section 2.08(e) hereof.

     “Proposed Closing Balance Sheet” means a balance sheet of the Company, prepared by the
Purchaser in accordance with GAAP and containing a statement of the Net Working Capital, determined
as of the Effective Time.

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     “Proposed Net Working Capital” has the meaning ascribed to such term in section
2.08(a) hereof.

     “Pro Rata Portion” means, with respect to each Seller, a percentage equal to (a) the
number of Shares held by such Seller divided by (b) the aggregate number of Shares.

     “Purchaser” shall have the meaning ascribed to such term in the first paragraph of
this Agreement.

     “Purchaser Indemnified Parties” shall have the meaning ascribed to such term in
Section 7.02(a) hereof.

     “Release” means any release, spill, emission, leaking, pumping, injection, deposit,
disposal, discharge, dispersal, or dumping of Hazardous Materials into the environment.

     “Related Party Leases” shall mean, collectively, the Phoenix Lease, the Vineland
Lease, the Virginia Lease, and the Union City Lease.

     “Securities Act” means the Securities Act of 1933, as amended.

     “Seller(s)” shall mean each of the stockholders of the Company listed on Schedule
1 attached hereto, including but not limited to, the Management Sellers.

     “Seller Indemnified Parties” shall have the meaning ascribed to such term in Section
7.03(a) hereof.

     “Sellers’ Representative” shall have the meaning ascribed to such term in Section 9.01
hereof.

     “Shares” means the One Hundred and Ninety-Two Thousand (192,000) shares of common
stock, no par value per share, of the Company.

     “Software” means any and all: (a) computer programs including any and all software
implementations of algorithms, models and methodologies, whether in source code or object code,
including all software developed by, for, or in connection with the Business and all software that
the Company licenses, leases or otherwise obtains, directly or indirectly, from third parties; (b)
databases and compilations, including any and all data and collections of data, whether machine
readable or otherwise; (c) descriptions, flow charts and other work product used to design, plan,
organize and develop any of the foregoing, screens, menus, buttons and icons; and (d) all
documentation, including user manuals and other training documentation related to any of the
foregoing.

     “Specified Representations” means the representations and warranties of the Sellers
contained in Sections 3.01(a), (b), (c), the representations and warranties of the Management
Sellers contained in Sections 3.02(a), (b), (c), (d) and (x), and the representations and
warranties of the Purchaser contained in Sections 4.01, 4.02(a) and 4.04.

8

 

     “Specified Indemnity Claims” shall have the meaning ascribed to such term in Section
7.02(a) hereof.

     “Straddle Period” shall have the meaning ascribed to such term in Section 8.01.

     “Survival Period” shall have the meaning ascribed to such term by Section 7.01(a)
hereof.

     “Target Net Working Capital” means the sum of Seven Million One Hundred Twenty-Two
Thousand U.S. Dollars (US$7,122,000.00).

     “Tax Authority” means a Federal, State, local, national or foreign Governmental
Authority having jurisdiction over the assessment, determination, collection or imposition of any
Tax, as the context requires.

     “Tax Returns” means all returns, information returns, reports, statements, schedules,
notices, forms, elections, agreements or declarations filed or required to be filed with any
applicable Governmental Authority in respect of Taxes, and the term “Tax Return” shall include any
one of the foregoing Tax Returns as well as any foreign bank account filing requirements.

     “Tax or Taxes” means all Federal, State, local or foreign taxes, charges, fees, levies
or other assessments, including without limitation, all net income, gross income, gross receipts,
goods and services, harmonized sales, value added, activity, capital, capital stock, inventory,
sales, use, ad valorem, transfer, franchise, profits, license, withholding, payroll, employment,
excise, estimated, severance, stamp, occupation, property or other taxes, customs, duties, fees, or
similar charges, in the nature of a tax and any interest, fines and penalties, in all cases imposed
by any Governmental Authority in respect thereof and whether disputed or not, and any tax resulting
from indemnification for taxes or otherwise.

     “Third Party Claim” shall have the meaning ascribed to such term in Section 7.04(a)
hereof.

     “To the knowledge of,” “known by” or “known” (and any similar phrase)
means: (a) with respect to the Company, matters known by the Management Sellers and Donald Laughlin
after a reasonably detailed investigation and matters, which such individuals would reasonably be
expected to have in the ordinary course performance of their duties, including, but not limited to,
their responsibilities in connection with the transactions contemplated by this Agreement; (b) with
respect to the Management Sellers, matters known by the Management Sellers after a reasonably
detailed investigation and matters, which such individuals would reasonably be expected to have in
the ordinary course performance of their duties, including, but not limited to, their
responsibilities in connection with the transactions contemplated by this Agreement; and (c) for
the purposes of Section 3.01 only, with respect to the Sellers, matters actually known by the
Sellers.

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     “Union Agreement” means that certain agreement by and between the Company and the
Sheet Metal Workers’ International Association Local Union No 170, Affiliated with The AFL-CIO that
runs from May 2010 through April 2011.

     “Union City Lease” means that certain real property lease dated July 1, 1999 by and
between Ari-Cal, L.L.C. and the Company (as successor in interest to Kaibib Metals, Inc.) relating
to the property located at 1000 Whipple Road, Union City, California.

     “Vineland Lease” means that certain real property lease dated July 1, 2001 by and
between Ari-Pac Investments and the Company relating to the real property located at 1315 Vineland
Avenue, Baldwin Park, California.

     “Virginia Lease” means that certain real property lease dated July 1, 2001 by and
between Ari-Pac Investments and the Company relating to the property located at 1450 Virginia
Avenue, Baldwin Park, California.

     “WARN Act” means the United States Worker Adjustment and Retraining Notification Act
and the rules and regulations promulgated thereunder.

     1.02 Rules of Construction. (a) Unless the context of this Agreement otherwise
clearly requires: (i) references to the plural include the singular, and references to the singular
include the plural; (ii) references to any gender include the other genders; (iii) the words
“include,” “includes” and “including” do not limit the preceding terms or words and shall be deemed
to be followed by the words “without limitation”; (iv) the term “or” has the inclusive meaning
represented by the phrase “and/or”; (v) the terms “hereof”, “herein”, “hereunder”, “hereto” and
similar terms in this Agreement refer to this Agreement as a whole and not to any particular
provision of this Agreement; (vi) the terms “day” and “days” mean and refer to calendar day(s);
(vii) the terms “year” and “years” mean and refer to calendar year(s); and (viii) the term
“dollars” shall mean United States dollars.

               (b) Unless otherwise set forth herein, references in this Agreement to: (i) any document,
instrument or agreement (including this Agreement): (A) includes and incorporates all exhibits,
schedules and other attachments thereto; and (B) means such documents, instruments or agreements,
as amended, modified or supplemented from time to time; and (ii) a particular Law means such Law as
in effect (including any amendments, modifications or supplements thereto) on the date hereof and
as of the Effective Time. All Article, Section, Exhibit and Schedule references herein are to
Articles, Sections, Exhibits and Schedules of this Agreement, unless otherwise specified. This
Agreement shall not be construed as if prepared by one of the parties, but rather according to its
fair meaning as a whole, as if all parties had prepared it.

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ARTICLE 2.

PURCHASE AND SALE

     2.01 Purchase and Sale of the Shares. Subject to the terms and conditions of this
Agreement, on the Closing Date, each Seller shall sell, assign, transfer, convey and deliver to the
Purchaser, and the Purchaser shall purchase from each Seller, the Shares owned by such Seller set
forth opposite such Seller’s name on Schedule 1 hereto free and clear of all Encumbrances.

     2.02 Payment of the Estimated Closing Purchase Price. (a) On the Closing Date, the
Purchaser shall pay, by wire transfer of immediately available funds in amounts and to the
respective accounts designated by Sellers’ Representative to Purchaser in writing at least three
(3) Business Days prior to the Closing Date, an amount equal to the Estimated Closing Purchase
Price minus $2,000,000.00 (the amount of the Estimated Closing Purchase Price minus $2,000,000.00
being hereinafter the “Closing Payment”) as follows:

               (i) pursuant to the instructions of the Sellers’ Representative, such amounts as are necessary
to pay all Company Transaction Expenses and such amounts as are necessary to pay the full amount of
the Indebtedness of the Company as of the Closing Date as reflected in the Payoff Statements; and

               (ii) pursuant to the instructions of the Sellers’ Representative, the balance of the Closing
Payment to the Sellers (the “Closing Sellers’ Payment”).

          (b) On the first Business Day following the end of the five hundred and forty (540) day
period beginning on the first day following the Closing, the Purchaser shall pay the Sellers’
Representative in immediately available funds via wire transfer to an account designated by the
Sellers’ Representative in writing for further distribution to the Sellers, the amount, if any, by
which: (i) $2,000,000.00 (the “Holdback Amount”); exceeds: (ii) the sum of (A) any amounts
determined to be due and owing to the Purchaser pursuant to the provisions of Section 2.08 hereof;
(B) the amount of any undisputed Losses, which it has been determined, either by agreement between
the Purchaser and Sellers’ Representative or by a final non-appealable order of a court or other
applicable Governmental Authority, that the Purchaser Indemnified Parties are entitled to be
indemnified against pursuant to the provisions of Article 7 hereof; and (C) the amount of any
indemnification claims made by the Purchaser Indemnified Parties pursuant to Article 7 hereof which
have not yet been resolved (each a “Disputed Claim”) (the aggregate amount retained by the
Purchaser relating to all Disputed Claims is hereinafter referred to as the “Disputed Claims
Amount”). The Purchaser will retain the Disputed Claims Amount until each Disputed Claim is
resolved by the mutual agreement of the Sellers’ Representative and the Purchaser or until each
such claim is resolved pursuant to a final, non-appealable determination of a court or other
applicable Governmental Authority. Within five (5) Business Days following the resolution of any
Disputed Claim, the Purchaser shall pay Sellers’ Representative, via wire transfer to an account
designated by the Sellers’ Representative in writing for further distribution to the Sellers, the
amount, if any, by which the portion of the Disputed Claims Amount relating to such Disputed Claim
exceeds the sum of: (y) the portion of the Disputed Claim which is determined to be due and owing
to a Purchaser Indemnified Party pursuant to the resolution of such Disputed Claim; and (z) the
aggregate amount, if any, of the Disputed Claims Amount

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relating to all unresolved Disputed Claims.

     2.03 Calculation of Estimated Closing Purchase Price. (a) Sellers shall deliver
to Purchaser, at least five (5) business Days prior to the Closing Date: (i) an estimated balance
sheet of the Company, prepared by Sellers in good faith and in accordance with GAAP and dated as of
the Closing Date (such balance sheet being hereinafter the “Estimated Closing Balance Sheet”); (ii)
a written statement, prepared by Sellers in good faith and setting forth in reasonable detail, an
estimate of the Net Working Capital of the Company as of the Closing Date (the amount of the Net
Working Capital of the Company as set forth in such statement being hereinafter the “Estimated Net
Working Capital”); and (iii) a written statement containing a calculation of the amount of the
Estimated Closing Purchase Price.

          (b) If the Estimated Net Working Capital as set forth in the written statement to be
delivered by Sellers to Purchaser is equal to the Target Net Working Capital, the Estimated Closing
Purchase Price shall be an amount equal to the Base Purchase Price. If the Estimated Net Working
Capital as set forth in the written statement to be delivered by Sellers to Purchaser exceeds the
amount of the Target Net Working Capital, the Estimated Closing Purchase Price shall be an amount
equal to the Base Purchase Price plus the amount by which the Estimated Net Working Capital exceeds
the Target Net Working Capital. If the Estimated Net Working Capital as set forth in the written
statement to be delivered by Sellers to Purchaser is less than the amount of the Target Net Working
Capital, the Estimated Closing Purchase Price shall be an amount equal to the Base Purchase Price
minus the amount by which the Target Net Working Capital exceeds the Estimated Net Working Capital.

     2.04 Closing Cash. Not more than five (5) Business Days following the Closing Date,
Purchaser will: (a) determine all cash and cash equivalents of the Company, which were on hand as
of the Closing Date (“Closing Cash”); and (b) pay via wire transfer to Sellers’ Representative for
further payment to the Sellers, the aggregate amount of all Closing Cash, less the aggregate
amount, if any, of any outstanding checks issued by the Company out of the bank accounts where
Closing Cash is located.

     2.05 Closing. Subject to the terms and conditions of this Agreement, the sale and
purchase of the Shares shall take place and become effective at a closing (the “Closing”) to be
held at the offices of Lippes Mathias Wexler Friedman LLP on June 3, 2011 or on such other date
as may be mutually agreed to by the parties (the date on which the Closing occurs being hereinafter
the “Closing Date”). The parties may also agree to close the transactions contemplated hereby
through the mutual exchange of documents and funds in a manner acceptable to the parties and their
respective counsel without the need for a meeting of the parties to conduct the Closing.
Notwithstanding the actual occurrence of the Closing at any particular time on the Closing Date,
the Closing shall be deemed to occur and be effective at the Effective Time.

     2.06 Closing Deliveries by the Sellers. At the Closing, subject to satisfaction or
waiver of each of the conditions to the obligations of the Sellers set forth in Section 6.01 of
this Agreement, Sellers shall deliver or cause to be delivered to the Purchaser the following:

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          (a) stock certificates representing the Shares duly endorsed in blank or accompanied by stock
transfer powers and with all requisite stock transfer tax stamps attached;

          (b) the certificates and agreements referred to in Section 6.02(a), Section 6.02(d) and
Section 6.02(e);

          (c) copies of all consents and waivers referred to in Section 6.02(c);

          (d) a written resignation from each director and officer of the Company;

          (e) minute books of the Company; and

          (f) such other documents as the Purchaser shall reasonably request.

     2.07 Closing Deliveries by the Purchaser. At the Closing, subject to satisfaction or
waiver of each of the conditions to the obligations of the Purchaser set forth in Section 6.02 of
this Agreement, the Purchaser shall deliver or cause to be delivered:

          (a) the Closing Sellers’ Payment, via wire transfer to the account(s) specified by the
Company;

          (b) a payment, by wire transfer of immediately available funds to such accounts as may be
specified by written instructions of the Sellers’ Representative, of such amounts as are necessary
to pay all Indebtedness of the Company and Company Transaction Expenses;

          (c) the payments specified in the Non-Competition Agreements referred to in Section 6.02(j)
hereof;

          (d) the certificate referred to in Section 6.01(a); and

          (e) such other documents as Sellers shall reasonably request.

2.08 Post Closing Adjustment to Estimated Closing Purchase Price. The Estimated Closing
Purchase Price shall be subject to adjustment after the Closing as follows:

          (a) The Purchaser shall prepare and deliver to Sellers’ Representative no later than the end
of the one hundred eighty (180) day period beginning on the first day following the Closing Date:
(i) a Proposed Closing Balance Sheet; and (ii) a written statement prepared by Purchaser based on
the Proposed Closing Balance Sheet and setting forth in reasonable detail, the Net Working Capital
of the Company as of the Effective Time (the amount of the Net Working Capital of the Company as
set forth in such statement being hereinafter the “Proposed Net Working Capital”).

          (b) The Proposed Closing Balance Sheet and the Proposed Net Working Capital as contained in
the statement delivered to Sellers’ Representative shall be deemed to be final, binding and
conclusive on the parties (at which time the Proposed Closing Balance Sheet shall

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be deemed to constitute the Closing Balance Sheet and the Proposed Net Working Capital shall be
deemed to be the Closing Net Working Capital) upon the earliest of: (i) the date on which Sellers’
Representative delivers an Acceptance Notice to the Purchaser; (ii) in the event that Sellers’
Representative does not deliver an Acceptance Notice or a Dispute Notice to the Purchaser before
the end of the sixty (60) day period beginning on the first day following the date on which the
Proposed Closing Balance Sheet is delivered by the Purchaser to Sellers’ Representative (such
period being hereinafter the “Objection Period”), the first day following the expiration of such
Objection Period; and (iii) in the event that Sellers’ Representative delivers a Dispute Notice to
the Purchaser within the Objection Period, the date on which all disputes between Sellers’
Representative and the Purchaser concerning the amount of the Net Working Capital as of the
Effective Time have been resolved in writing, whether by agreement of the Purchaser and Sellers’
Representative or by the Independent Accounting Firm as provided for by Section 2.08(c) hereof.

          (c) During the Objection Period, the Purchaser shall provide Sellers’ Representative with
access to all of the documents, books and records used by the Purchaser in preparing the Proposed
Closing Balance Sheet and the Proposed Net Working Capital. Sellers’ Representative shall have the
right to either accept or dispute the amounts reflected on the Proposed Closing Balance Sheet,
including the amount of the Proposed Net Working Capital as reflected therein by delivering written
notice (as applicable, an “Acceptance Notice” or a “Dispute Notice”) to the Purchaser before the
expiration of the Objection Period. The Dispute Notice shall identify with reasonable
particularity each disputed item on the Proposed Closing Balance Sheet, shall specify the amount of
such dispute and shall set forth the general basis for each item in dispute. In the event of any
such dispute, Sellers’ Representative and the Purchaser shall attempt in good faith to reconcile
their dispute, and any resolution by them as to any disputed items shall be final, binding and
conclusive on Sellers and the Purchaser. If Sellers’ Representative and the Purchaser are unable
to reach a resolution of their differences within thirty (30) days following the date on which
Sellers’ Representative delivers the Dispute Notice to the Purchaser (or such longer period as they
may agree in writing), then Sellers’ Representative and the Purchaser shall promptly submit any
remaining disputed items to a mutually agreeable third-party independent accounting firm (the
“Independent Accounting Firm”). If any remaining disputed items are submitted to the Independent
Accounting Firm for resolution: (i) each party will furnish to the Independent Accounting Firm such
workpapers and other documents and information relating to the remaining disputed items as the
Independent Accounting Firm may reasonably request and are available to such party, and each party
will be afforded the opportunity to present to the Independent Accounting Firm any material
relating to the disputed items and to discuss (in the presence of the other party) the resolution
of the disputed items with the Independent Accounting Firm; (ii) each party will use its good faith
efforts to work with the other party and the Independent Accounting Firm to resolve the disputed
items within thirty (30) days of submission of the disputed items to the Independent Accounting
Firm; and (iii) the determination by the Independent Accounting Firm, as set forth in a written
notice to Sellers’ Representative and the Purchaser setting forth the reasons underlying such
determination, shall be final, binding and conclusive on Sellers and the Purchaser. The fees and
disbursements of the Independent Accounting Firm shall be allocated between the Sellers on the one
hand and the Purchaser on the other hand in the same proportion that the aggregate dollar amount of
the disputed items submitted to the Independent Accounting Firm that is

14

 

unsuccessfully disputed by the Sellers or the Purchaser, as the case may be, bears to the total
dollar amount of the disputed items submitted to the Independent Accounting Firm. If Sellers’
Representative delivers a Dispute Notice to the Purchaser before the expiration of the Objection
Period, the Net Working Capital as of the Effective Time as determined by written agreement of
Sellers’ Representative and the Purchaser, or as determined by the Independent Accounting Firm,
shall be deemed to be the Closing Net Working Capital and shall be conclusive and binding on
Sellers and the Purchaser. In addition, if Sellers’ Representative delivers a Dispute Notice to
the Purchaser before the expiration of the Objection Period, the Proposed Closing Balance Sheet, as
adjusted, if applicable, to reflect the resolution of the dispute between Sellers’ Representative
and the Purchaser (whether such resolution arises as a result of an agreement between Sellers’
Representative and the Purchaser or a determination of the Independent Accounting Firm) shall be
deemed to be the Closing Balance Sheet and such Closing Balance Sheet shall be conclusive and
binding on the Sellers and the Purchaser.

          (d) In the event that the Closing Net Working Capital as finally determined pursuant to
Section 2.08(b) or (c) above is equal to the Target Net Working Capital, the Final Purchase Price
shall be an amount equal to the Base Purchase Price. In the event that the Closing Net Working
Capital as finally determined pursuant to Section 2.08(b) or (c) above is greater than the Target
Net Working Capital, the Final Purchase Price shall be an amount equal to the Base Purchase Price
plus the amount by which the Closing Net Working Capital exceeds the Target Net Working Capital.
In the event that the Closing Net Working Capital as finally determined pursuant to Section 2.08(b)
or (c) above is less than the Target Net Working Capital, the Final Purchase Price shall be an
amount equal to the Base Purchase Price minus the amount by which the Target Net Working Capital
exceeds the Closing Net Working Capital.

          (e) Within ten (10) Business Days after the Proposed Closing Balance Sheet is deemed to be
final, binding and conclusive on the parties, a cash adjustment to the amount of the Estimated
Closing Purchase Price shall be made, on a dollar-for-dollar basis, as follows: (i) in the event
that the Final Purchase Price exceeds the Estimated Closing Purchase Price, the Purchaser shall
pay, by wire transfer of immediately available funds to an account or accounts specified in writing
by the Sellers’ Representative, an aggregate amount equal to the amount by which the Final Purchase
Price exceeds the Estimated Closing Purchase Price; (ii) in the event that the Final Purchase Price
is less than the Estimated Closing Purchase Price but greater than an amount equal to the Estimated
Closing Purchase Price minus the Holdback Amount, reduced by the amount of any Losses for which
Purchaser is entitled to be indemnified by Sellers pursuant to Section 7.02 hereof (including the
amount of any Losses which Purchaser has claimed it is entitled to be indemnified against but which
obligation to indemnify is being disputed by Sellers) (the Holdback Amount reduced by such amount
being hereinafter the “Pre-Adjustment Remaining Holdback Amount”) the amount which the Purchaser is
required to pay to the Sellers at the end of the five hundred forty (540) day period described in
Section 2.02(b) hereof shall be reduced by an amount equal to the amount by which the Estimated
Closing Purchase Price exceeds the Final Purchase Price; and (iii) in the event that the Final
Purchase Price is less than an amount equal to the Estimated Closing Purchase Price minus the
Pre-Adjustment Remaining Holdback Amount, each Seller shall pay to the Purchaser, by wire transfer
to an account specified in writing by Purchaser, their Pro Rata Portion of the amount by

15

 

which: (A)(I) the Estimated Closing Purchase Price; minus (II) the Pre-Adjustment Remaining
Holdback Amount; exceeds (B) the Final Purchase Price.

ARTICLE 3.

REPRESENTATIONS AND WARRANTIES OF SELLERS

     3.01 Sellers. Each Seller, hereby, severally, makes the following representations and
warranties, as of the date hereof and as of the Effective Time, which representations and
warranties shall be qualified by the Disclosure Schedules.

          (a) Authorization of Agreement. The Seller has all requisite power, authority and
legal capacity to execute and deliver this Agreement and any other documents, instruments,
certificates or agreements required to be executed and/or delivered pursuant to the terms of this
Agreement (the “Ancillary Agreements”) to which he, she or it is a party and to consummate the
transactions contemplated hereby and thereby. This Agreement has been, and when executed and
delivered by the Seller, each Ancillary Agreement to which such Seller is a party will be, duly and
validly executed and delivered by such Seller and (assuming the due authorization, execution and
delivery by the other parties hereto and thereto) this Agreement constitutes, and each of such
Ancillary Agreements, when executed and delivered, will constitute, a legal, valid and binding
obligation of such Seller, enforceable against such Seller in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium and similar laws affecting creditors’ rights and
remedies generally, and subject, as to enforceability, to rules of law governing specific
performance, to injunctive relief and to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought
in a proceeding at law or in equity).

          (b) Share
Ownership and Transfer.

               (i) The Seller is the record and beneficial owner of the Shares which are indicated as being
owned by such Seller on Schedule 1. All of the Shares which are identified as being owned
by such Seller on Schedule 1 are owned by the Seller free and clear of any and all
Encumbrances and, at the Closing, the Purchaser will acquire good, valid and marketable title to
the Shares, free and clear of all Encumbrances (other than as contemplated by Section 4.06).

               (ii) There is no existing option, warrant, call, right, commitment or other agreement of any
character to which the Seller is a party or which are binding on the Seller and, to the knowledge
of the Seller, there are no securities of the Company outstanding which upon conversion or exchange
would require, the issuance, sale or transfer of any additional shares of capital stock, ownership
interests or other equity securities of the Company or other securities convertible into,
exchangeable for or evidencing the right to subscribe for or purchase shares of capital stock,
ownership interests or other equity securities of the Company. Other than this Agreement, none of
the Shares owned by the Seller are subject to any voting trust agreement or other Contract,
commitment, agreement, pooling arrangement or arrangement restricting or relating to the voting or
dividend rights or disposition of such Shares.

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          (c) No Conflict. Except as listed and described in Schedule 3.01(c),
assuming that all consents, approvals, authorizations and other actions listed and described in
Schedule 3.01(c) have been obtained and all filings and notifications listed and described
in such Schedule have been made, the execution, delivery and performance of this Agreement and each
of the Ancillary Agreements by the Seller, does not and will not: (a) violate, conflict with or
result in the breach of any provision of its organizational documents; or (b) conflict with or
violate any Law or Governmental Order applicable to such Seller or any of his, her or its
respective assets, properties or businesses.

          (d) Governmental Consents. The execution, delivery and performance of this Agreement
and the Ancillary Agreements by the Seller does not require any consent, approval, authorization or
other order of, action by, filing with or notification to any Governmental Authority.

          (e) Litigation. Except as set forth on Schedule 3.01(e), there is no Action
pending or to the knowledge of the Seller, threatened against the Seller that is reasonably likely
to prevent or materially delay consummation of the transactions contemplated by this Agreement.

     3.02 Management Sellers.

Each of the Management Sellers, hereby, makes the following representations and warranties, as of
the date hereof and as of the Effective Time, which representations and warranties shall be
qualified by the Disclosure Schedules.

          (a) Organization, Authority and Qualification of the Company. The Company is duly
organized and validly existing under the laws of its jurisdiction of organization and has all
necessary power and authority to own, operate or lease all the properties and assets now owned,
operated or leased by it, to perform all its obligations under its Contracts and to conduct the
Business as it has been and is now being conducted. The Company is duly qualified to do business
and is in good standing in: (i) each jurisdiction in which the properties owned or leased by it are
located; and (ii) where the operation of its Business makes such qualification necessary or
desirable. Schedule 3.02(a) attached hereto contains a list of the jurisdictions of
organization of the Company and a list of all jurisdictions in which the Company is duly qualified
or registered to do business.

          (b) Subsidiaries. The Company does not own, directly or indirectly, any capital stock or
other equity interest in any Person.

          (c) Capitalization; Officers and Directors. (i) The authorized capital stock of the
Company consists of an aggregate of one million shares of common stock, no par value per share.
The Shares constitute all of the issued and outstanding capital stock of the Company. The Shares
were duly authorized for issuance and are validly issued in compliance with applicable Law and are
fully paid and non-assessable.

          (ii) There is no existing option, warrant, call, right, commitment or
other agreement of any character to which the Company is a party or which are binding on the
Company and there
are no securities of the Company outstanding which upon conversion or exchange would require,
the issuance, sale or transfer of any additional shares of

17

 

capital stock, ownership interests or other equity securities of the Company or other securities
convertible into, exchangeable for or evidencing the right to subscribe for or purchase shares of
capital stock, ownership interests or other equity securities of the Company. Other than this
Agreement, none of the Shares are subject to any voting trust agreement or other Contract,
commitment, agreement, pooling arrangement or arrangement restricting or relating to the voting or
dividend rights or disposition of the Shares.

               (iii) Schedule 3.02(c) identifies all of the officers and directors of the Company.

          (d) No Conflict. Except as listed and described in Schedule 3.02(d),
assuming that all consents, approvals, authorizations and other actions listed and described in
Schedule 3.02(d) have been obtained and all filings and notifications listed and described
in Schedule 3.02(d) have been made, the execution, delivery and performance of this
Agreement and each of the Ancillary Agreements by each of the Sellers, does not and will not: (a)
violate, conflict with or result in the breach of any provision of the Company’s Certificate of
Incorporation or By-laws; (b) conflict with or violate any Law or Governmental Order applicable to
the Company or any of its assets, properties or businesses; or (c) conflict in any way with, result
in any breach of, constitute a default (or event which with the giving of notice or lapse of time,
or both, would become such a default) under, require any consent under, or give to others any
rights of termination, amendment, acceleration, suspension, revocation or cancellation of, or
result in the creation of any Encumbrance on any of the assets of the Company under the terms of
any Material Contract.

          (e) Governmental Consents and Approvals. Except as otherwise described in
Schedule 3.02(e), the execution, delivery and performance of this Agreement and the
Ancillary Agreements by each of the Sellers does not require the Company to obtain any consent,
approval, authorization or other order of or require any action by, filing with or notification to
any Governmental Authority.

          (f) Financial Information. Prior to the date hereof, the Company has delivered to
the Purchaser true and complete copies of (a) the March 31 Balance Sheet and the related statements
of income and cash flows for the 9 month period then ended, and (b) true and complete copies of a
balance sheet for the Business as of June 30, 2010 and June 30, 2009 and the related statements of
income and cash flows for each twelve (12) month period then ended (together with the financial
statements referred to in subdivision (a) of this Section, collectively referred to herein as the
“Financial Statements”). The Financial Statements (x) were prepared in good faith from the books
and records of the Business in accordance with GAAP, (y) present fairly the financial condition and
results of operations of the Company as of the dates thereof or for the periods covered thereby and
(z) include all adjustments that are necessary for a fair presentation of the financial condition
of the Business and the results of the operations of the Business as of the dates thereof or for
the periods covered. The inventories of the Company are and at all times prior to the date hereof
have been valued using a last in first out (LIFO) valuation methodology.

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          (g) No Undisclosed Liabilities. Except as set forth in the Financial Statements or
in Schedule 3.02(g), there are no Liabilities of the Business, other than Liabilities which
have been incurred since March 31, 2011 in the Ordinary Course of Business.

          (h) Permits. Schedule 3.02(h) sets forth a correct and complete list and
description of all Permits required to conduct the Business, as conducted on the date hereof. All
of the Permits listed on Schedule 3.02(h) are in the possession of the Company, are in full
force and effect and the Company is operating in compliance therewith. The failure to obtain (or
maintain) a Permit from any such Person with respect to any products sold by the Company will not
have a material adverse effect on the sales of any of the products of the Company.

          (i) Conduct in the Ordinary Course; Absence of Certain Changes, Events and
Conditions. Since June 30 2010, except as disclosed in Schedule 3.02(i), the Company
has conducted its Business in the Ordinary Course of Business. As amplification and not in
limitation of the foregoing, except as disclosed in Schedule 3.02(i), since June 30, 2010,
the Company has not: (i) made any change in Tax or accounting methods, principles or practices or
any method of calculating any bad debt, contingency or other reserve for accounting, financial
reporting or Tax purposes or made or changed any Tax election, or settled any Tax controversy
matter or matters; (ii) made any changes in the customary methods of operating its Business
including, without limitation, practices and policies relating to marketing, selling and pricing;
(iii) amended, terminated, cancelled or compromised any material claims; (iv) entered into any
agreement, arrangement or transaction with any of its directors, officers, employees or
stockholders other than those for compensation in the Ordinary Course of Business consistent with
past practices; (v) acquired, sold, transferred or disposed of, or agreed to acquire, sell,
transfer or dispose of, any material assets of the Business; (vi) incurred or created any
Encumbrances on any of the assets of the Business; (vii) incurred any Liability outside the
Ordinary Course of Business; (viii) made any distribution on its Shares, or redeemed or repurchased
any of its Shares; (ix) agreed, whether in writing or otherwise, to take any action described in
this Section 3.02(i); or (x) suffered any Material Adverse Effect.

          (j) Litigation. Except as set forth on Schedule 3.02(j), there is no Action
pending or to the knowledge of the Company or the Management Sellers, threatened against the
Sellers, the Company or the Business or its properties or assets before any court, or before any
Governmental Authority. There is no Action pending or, to the knowledge of the Company or the
Management Sellers, threatened against the Sellers or the Company that is reasonably likely to
prevent or materially delay consummation of the transactions contemplated by this Agreement.

          (k) Compliance with Laws. The Company has conducted and continues to conduct, in all
material respects, its Business in accordance with all Laws and Governmental Orders applicable to
it and the Company is not in violation of any such Law or Governmental Order, or any judicial or
administrative interpretation thereof. The Company has not, and no agent of the Business has,
agreed to give, or has given, offered, authorized, promised, made or agreed to make, any gifts of
money or thing of value (other than incidental gifts of articles of
nominal value) to any actual or potential customer, supplier, governmental employee or any
Person in a position to assist or hinder such Person in connection with any actual or proposed

19

 

transaction other than payments required or permitted by Law and in compliance with the U.S.
Foreign Corrupt Practices Act.

          (l) Material Contracts. On or prior to the date hereof, the Company has delivered to
the Purchaser a true, complete and correct list of all of the following Contracts to which the
Company is a party or by which any of its property or assets are bound (collectively, the “Material
Contracts”): (i) Contracts with the Sellers, any Affiliate or any current or former officer or
director of the Sellers or the Company which the Sellers or the Company, as the case may be, have
any continuing liabilities or obligations; (ii) Contracts pursuant to which any party is required
to purchase or sell a stated portion of its requirements or output from or to another party; (iii)
Contracts for the sale of any assets of the Company other than in the Ordinary Course of Business;
(iv) Contracts containing covenants of the Company not to compete in any line of business or with
any other Person in any geographical area; (v) Contracts relating to the borrowing of money,
including indebtedness under capital leases; (vi) any other Contracts that: (A) involve,
individually, the expenditure by the Company of more than $50,000 annually, (B) are not cancelable
upon 30 or fewer days’ notice without any Liability or (C) require performance by any party more
than one year from the date hereof; (vii) Contracts that provide for the receipt of payment by the
Company of $50,000 or more annually; (viii) Contracts requiring the Company to pay, perform,
discharge or otherwise guarantee any debt or obligation of any Person; (ix) Contracts relating to
ownership of equity interests in any Person; (x) Contracts containing any provisions that are
contingent upon the occurrence of or prohibit any change in ownership of the Company; and (xi)
Contracts (other than those disclosed in clauses (i) through (x) above) that: (A) are material to
the Business and either (B) were entered into other than in the Ordinary Course of Business; or (C)
are to be performed other than in the Ordinary Course of Business.

     All of the Material Contracts to which the Company is a party: (i) are the legal, valid and
binding obligation of the Company enforceable against the Company in accordance with their
respective terms, subject to applicable Law, bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors’ rights and remedies generally and subject, as to enforceability,
to rules of law governing specific performance, to injunctive relief, and to general principles of
equity (regardless of whether enforcement is sought in a proceeding at law or in equity) and (ii)
are in full force and effect. The Company is not in default in any respect under any Material
Contract and, to the knowledge of the Company and the Management Sellers, no other party is in
default under the terms of any Material Contract. Prior to the date hereof, true, correct and
complete copies of all Material Contracts have been provided to the Purchaser.

          (m) Intellectual Property. (i) The Company owns or has the right to use all of the
Intellectual Property which is used by it in the conduct of the Business, free and clear of any
Encumbrance or any payment (other than payments made under those licenses or other agreements
described in 3.02(m)(ii), below, under which the Company obtains its rights from third parties).

               (ii) Schedule 3.02(m)(ii) sets forth a true and complete list of each: (A) patent,
trademark or copyright used in connection with the Business or any application for any
patent, trademark or copyright used in connection with the Business, which in any case is
registered, filed or pending with the United States Patent and Trademark Office, the United

20

 

States Copyright Office or the corresponding office of any other jurisdictions; (B) any license or
other agreement under which the Company obtains rights from third parties to use any Intellectual
Property except for “off-the-shelf” Software; (C) any trade names used in connection with the
Business; or (D) any domain name used in connection with the Business. Neither the Intellectual
Property nor the conduct of Business conflicts with or infringes upon any Intellectual Property
owned by any third party. No Person has asserted to the Company or to the Sellers in writing (or
otherwise) that the Intellectual Property of the Company or the conduct of the Business conflicts
with or infringes upon, any Intellectual Property owned by any third party. Except as disclosed in
Schedule 3.02(m)(ii), the Company has not granted any outstanding licenses or other rights,
or obligated itself to grant licenses or other rights in or to any of the Intellectual Property.

               (iii) Except as set forth on Schedule 3.02(m)(iii), at the Effective Time, the Company
will own or hold a valid license to use the Intellectual Property set forth in Schedule
(m)(ii), free and clear of all Encumbrances other than Permitted Liens.

               (iv) The Company has taken reasonable steps to maintain the confidentiality of any trade
secrets that are material to its business.

          (n) Owned Real Property. The Company does not own any real property.

          (o) Leased Real Property. Schedule 3.02(o) attached hereto sets forth, as of
the date hereof, the street address of each parcel of real property which is leased by the Company
as lessee together with the identity of the lessor of such real property (all such real property
being hereinafter collectively the “Leased Real Property”). The Company has a valid and
enforceable leasehold interest under each such lease for the Leased Real Property which it is a
party to and none of the Sellers or the Company are in default under any such real property lease,
nor have any of them received any notice of any default or event that, with notice or lapse of
time, or both, would constitute a default by the Company of the terms of any such real property
lease. There are no parties other than the Company in possession of the portion of any parcel of
Leased Real Property which is leased by the Company, and there are no subleases, licenses,
concessions or other agreements, written or oral, granting to any party or parties the right of use
or occupancy of any such portion of the Leased Real Property. Prior to the date hereof, true,
correct and complete copies of each lease of any Leased Real Property have been delivered to the
Purchaser. Except as set forth on Schedule 3.02(o), the Company does not occupy any real
property or improvements other than the Leased Real Property.

          (p) Top Fifteen Customers and Suppliers. On or prior to the date hereof, the Company
has delivered to the Purchaser a true and complete list of: (i) the names of the top fifteen (15)
customers of the Business (the “Material Customers”), by revenue during the preceding two (2) years
and the percentage of revenue represented by each such customer during the preceding two (2) years;
and (ii) the top fifteen (15) suppliers of the Business (the “Material Suppliers”) by payments
during the preceding two (2) years and the percentage of total payments to suppliers represented by
each such supplier during the preceding two (2) years. Except as set forth in Schedule
3.02(p): (i) there has been no adverse change in the business relationship of the Company with
any of the Material Customers or Material Suppliers; (ii) there are no outstanding

21

 

disputes with any customer or supplier of the Business; and (iii) no Material Customer or Material
Supplier has notified Sellers or the Company in writing or otherwise that it intends to cease doing
business with the Company, that it will materially reduce its business with the Company, or that it
will require any modification of the terms of its agreements with the Business.

          (q) Taxes. All Tax Returns required to be filed with respect to the Business have
been timely filed and all such Tax Returns are true, correct and complete in all material respects
and were prepared in compliance with applicable Law. The Company has paid (or caused to be paid)
or has withheld and remitted to the appropriate Taxing Authority all Taxes due and payable, or,
where payment is not yet due, has established in accordance with GAAP, an adequate accrual for all
Taxes. All Taxes shown on such Tax Returns or otherwise due or payable have been timely paid
except as expressly reserved for current taxes payable. Neither the Internal Revenue Service nor
any other Tax Authority is currently claiming or asserting against the Company, any adjustment,
deficiency or claim for payment of additional Taxes, nor, to the knowledge of the Company and the
Management Sellers, is there any basis for any such claim or assertion. No Tax examinations or
audits of the Company are in progress or have taken place during the past two (2) years nor have
any assessments or reassessments been issued or outstanding and all deficiencies asserted or
assessments or reassessments made against the Company (which are not being contested) as a result
of any examination by any Tax Authority have been paid. There are no pending or, to the knowledge
of the Company and the Management Sellers, threatened Actions, audits, assessments or proceedings
for the assessment, reassessment or collection of Taxes against the Company and there are no Tax
liens on any assets of the Company. The Company is not a party to any agreement or arrangement
that would result, separately or in the aggregate, in the payment of any “excess parachute payment”
within the meaning of Section 280G of the Code by reason of the transactions contemplated hereby
and the Company has not, at any time, been 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 Tax potentially applicable as a result of such membership or holding has not expired. The
Company is not bound by any Tax sharing agreement, Tax indemnity obligation or similar Contract or
practice. The Company does not have any private letter rulings outstanding. The Company is a
United States Person as defined in Section 7701(a)(30) of the Code. The Company has delivered to
the Purchaser true and complete copies of all Federal and State income Tax Returns of the Company
for all open taxable years and no claim has been made since January 1, 2006 by a Tax Authority in a
jurisdiction in which Tax Returns are not filed by the Company, that the Company is subject to
taxation by that jurisdiction.

          (r) Environmental Matters. The Company has complied in all respects with all
Environmental Laws applicable to the Company, the Business and the Leased Real Property, and no
material expenditures are required in order to comply with existing Environmental Laws and
regulations. Except as set forth on Schedule 3.02(r), neither the Company nor any
Management Seller is aware of any facts or circumstances that exist with respect to the past or
present operations or facilities of the Company, including but not limited to the Leased Real
Property, which would give rise to a Liability or corrective or remedial obligation under any such
Environmental Law.

22

 

          (s) Employee Plans. (i) Schedule 3.02(s)(i) sets forth a true and complete
list of all employee benefit plans (within the meaning of Section 3(3) of ERISA) and all bonus,
stock option, stock purchase, restricted stock, incentive, deferred compensation, executive
compensation, retiree medical or life insurance, retirement, supplemental retirement, severance or
other benefit plans, programs or arrangements in which current or former employees of the Company
participate, with respect to which the Company has any obligation or which are maintained,
contributed to or sponsored by the Company or any of its Affiliates for the benefit of any current
or former employee, officer or director of the Company regardless of whether such plans, programs
or arrangements are being assumed by the Purchaser (hereinafter the “Employee Plans”). Except as
provided in Schedule 3.02(s)(i), each Employee Plan is in writing and prior to the date
hereof, the Company has delivered to the Purchaser true and correct copies of each such Employee
Plan as amended through the date hereof, together with all related documentation including, without
limitation, funding and investment management agreements and the most recently issued summary plan
descriptions, the most recent actuarial reports, trust statements, insurance contracts, financial
and assets statements, administrative services agreements and all correspondence with all
regulatory authorities or other relevant Persons with respect to any issues related to such
Employee Plans which, as of the date hereof, is not resolved without further obligation or
liability of the Company. No changes have occurred or are expected to occur which would affect the
information contained in the actuarial reports, financial or asset statements required to be
provided to Purchaser pursuant to the terms of this Section. No Employee Plan is subject to the
Laws of any jurisdiction other than the United States or any State thereof. The Company has not
made an express or implied commitment to modify, change or terminate any Employee Plan other than a
modification, change or termination required by Law.

               (ii) Except as provided in Schedule 3.02(s)(ii), neither the Company nor any trade or
business that is required to be aggregated with the Company under Code Section 414(o) or Section
4001 of ERISA (an “ERISA Affiliate”) contributes to or has ever contributed to or has any liability
or contingent liability with respect to any “multiemployer plan” within the meaning of Section
3(37) of ERISA, a “multiple employer plan” within the meaning of Section 210 of ERISA or Code
Section 413, a pension plan subject to Title IV of ERISA or Code Section 412, or a “welfare benefit
fund” within the meaning of Code Section 419.

               (iii) Each Employee Plan which is intended to be qualified under Section 401(a) of the Code,
and the trust (if any) forming a part thereof, has received a favorable determination letter from
the IRS that it is so qualified, and each related trust which is intended to be exempt from federal
income Tax pursuant to Section 501(a) of the Code, has received a determination letter from the IRS
that it is so exempt, and no fact or event has occurred since the date of such determination letter
that would adversely affect such qualification, tax-preferred or tax exempt status, as the case may
be.

               (iv) No Liability under Title IV or Section 302 of ERISA has been incurred by the Company or
any ERISA Affiliate that has not been satisfied in full and no condition exists that presents a
risk to the Company or any ERISA Affiliate of incurring any such Liability, other than Liabilities
due to the Pension Benefit Guaranty Corporation (which
premiums have been paid when due). No Employee Plan that is subject to Title IV of ERISA or
Section 412 of the Code or any trust established thereunder has failed to satisfy the applicable

23

 

“minimum funding standard” as defined in Section 302 of ERISA and Section 412 of the Code, whether
or not waived, as of the last date of the most recent fiscal year of each such plan that ended
prior to Closing.

               (v) With respect to each Employee Plan in which employees of the Company participate, the
Company is not currently liable for any Tax arising under Section 4971, 4972, 4975, 4976, 4978,
4979, 4980 or 4980B of the Code, and no fact or event exists which would give rise to any such
Liability. The Company has not incurred any Liability under or arising out of ERISA, the Health
Insurance Portability and Accountability Act of 1996 and the Family Medical Leave Act of 1993 and
no fact or event exists that would result in such a Liability. None of the assets of the Company
are the subject of any lien arising under ERISA or the Code and no fact or event exists which would
give rise to any such lien.

               (vi) The Company has performed all of its obligations under the Employee Plans to the extent
required by applicable Law. Each Employee Plan is now and has at all times prior to the date
hereof been operated in all material respects in accordance with the requirements of all applicable
Laws, including, without limitation, ERISA and the Code. Except as set forth on Schedule
3.02(s)(vi), the Financial Statements reflect accruals of all amounts of employer contributions
and premiums accrued by the Company in respect of employees employed or Persons formerly employed
by the Company but unpaid with respect to the Employee Plans as of the date of such statements.

               (vii) Except for claims for benefits arising in the ordinary course with respect to any
Employee Plan, there are no claims, actions, suits, proceedings, investigations or hearings pending
or, to the Company’s or the Management Sellers’ knowledge, threatened with respect to any Employee
Plan or any fiduciary thereof, and there exists no condition or set of circumstances which could
reasonably be expected to subject the Company to any Liability under the terms of or with respect
to any Employee Plan or under ERISA, the Code, or applicable Law.

               (viii) Neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated by this Agreement (whether alone or together with another event such as
termination of employment) will (i) entitle any individual to severance pay, (ii) accelerate the
time of payment or vesting under any Employee Plan or other agreement, (iii) trigger any funding
(though a grantor trust or otherwise) of any compensation, severance or other benefit under any
Employee Plan or other agreement to which the Company is a party, or (iv) increase the amount of
compensation or benefits due to any individual.

               (ix) Each Employee Plan that is a “nonqualified deferred compensation plan” (within the
meaning of Code Section 409A(d)(1)) and is subject to the requirements of Code Section 409A is in
compliance with Code Section 409A and all guidance issued by the IRS or United States Department of
Treasury.

          (t) Labor Matters.
 (i) On or prior to the date hereof, the Company has provided a true, correct and complete
list, of the names, positions, locations, dates of hire and compensation of all employees
(including those on leave of absence and layoff status) and the names and

24

 

current compensation levels of all consultants or independent contractors who provide services
to the Business. To the extent required by Law, all employees of the Company have completed, and
the Company has retained for each such employee, a Form I-9 (Employment Eligibility Verification)
and all appropriate supporting documentation for each employee. The Company does not have any
employees for whom it currently has petitions or applications for immigration benefits pending with
the U.S. Citizenship and Immigration Services or the United States Department of Labor. The
Company has not made any representations to any Person concerning any sponsorship for temporary or
permanent immigration status.

               (ii) Except for the Union Agreement, the Company is not a party to any collective
bargaining agreement or union contract recognizing any labor organization as the bargaining agent
of any employees. There is no other union organization activity or any application for
certification of a collective bargaining agent involving any of the employees pending or, to the
knowledge of the Company or the Management Sellers, threatened. The Company and the conduct of the
Business are in compliance with all Laws relating to the employment of labor, including all such
Laws relating to employment practices, wages, hours, occupational safety and health, the WARN Act
and any similar state or local “mass layoff” or “plant closing” Law. During the three year period
ending on the date hereof, there has been no “mass layoff” or “plant closing” (as defined by the
WARN Act) with respect to the Company. The Business has not, during the last three (3) years,
experienced any and there are no currently threatened, strikes, slowdowns, picketing or work
stoppages. There is no material charge, grievance proceeding or other claim pending, or to the
knowledge of the Company or the Management Sellers threatened, against or affecting the Company
relating to the alleged violation of any Law pertaining to labor relations or employment matters
including any charge or complaint filed by an employee or union with the National Labor Relations
Board, the Equal Employment Opportunity Commission or any comparable Governmental Authority.

               (iii) The Company has delivered or made available to the Purchaser true and complete
copies of all current employee manuals and handbooks relating to the employment of employees.

               (iv) The Company has fulfilled all consultation and notification requirements to any
union, work council or other similar labor organization as may be required as a result of the
consummation of this Agreement and has obtained all approvals from such unions, work councils or
other labor organizations as may be required for the consummation of the transactions contemplated
by this Agreement.

          (u) Insurance. The Company has policies of insurance in amounts sufficient to operate and
protect its assets and to conduct its Business as intended and consistent with past practices.
Schedule 3.02(u) contains a list of all policies of insurance, including property,
casualty, fire, liability, workers’ compensation and all other types of insurance, under which the
Company is insured and lists the amount of coverage and the annual premium under each such policy.
As of the date hereof, all such policies are in full force and effect and all premiums due thereon
have been paid.

25

 

          (v) Tangible Personal Property.  (i) Schedule 3.02(v) contains a
list of each lease of tangible personal property used in the Business requiring annual payments
from the Company of $10,000 or more (collectively the “Personal Property Leases”).

               (ii) Prior to the date hereof, a copy of each of the Personal Property Leases has been
delivered to the Purchaser. The Company has a valid leasehold interest under each of the Personal
Property Leases under which it is a lessee, subject to bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors’ rights and remedies generally and subject, as to
enforceability, to general principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity), there is no default under any Personal Property Leases by the
Company or, to the knowledge of the Company and the Management Sellers, by any other parties
thereto.

               (iii) The Company has good and marketable title to all of the items of tangible personal
property reflected in the March 31 Balance Sheet (except as sold or disposed of subsequent to the
date thereof in the Ordinary Course of Business), free and clear of any and all Encumbrances other
than Permitted Liens. All such items are in good operating condition and repair and are suitable
for their intended uses, ordinary wear and tear excepted.

          (w) Product Warranties. Prior to the date hereof, the Company has delivered to the
Purchaser a true, complete and correct list of the standard product and service warranties,
indemnifications and guarantees which the Business extends to customers in the Ordinary Course of
Business together with copies of such standard product and/or service warranties. No warranties,
indemnifications or guarantees are now in effect or outstanding with respect to the products or
services manufactured, produced or performed by the Company, except for the warranties,
indemnifications and guarantees identified and described in the list of product and service
warranties delivered to Purchaser prior to the date hereof. Prior to the date hereof, the
Company has also delivered to the Purchaser a true, complete and correct list of the Contracts
which contain separate warranties, which differ from the standard product and service warranties of
the Company. The products sold by the Company prior to the date hereof do not have defect or
failure rates that have given rise to material warranty, product liability or related claims.

          (x) No Brokers. No broker, finder or investment banker is entitled to any brokerage,
finder’s or other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Sellers or the Company.

          (y) Corporate Books and Records. The books of account of the Company, the minute
book and stock or ownership transfer records of the Company and the other records of the Company
are complete and correct in all material respects and have been maintained in accordance with sound
business practices.

          (z) Related-Party Transactions. Except as set forth on Schedule 3.02(z), no
officer, director, employee, Affiliate or stockholder of the Company or any member of his or her
immediate family is currently indebted to the Company, nor is the Company indebted (or committed to
make loans, advances or extend or guarantee credit) to any of such individuals.

26

 

Except as set
forth on Schedule 3.02(z) hereto, none of such Persons has any direct or indirect ownership
interest in any firm or corporation with which the Company is affiliated or with which the Company
has a business relationship, or any firm or corporation that competes with the Company except that
such Persons and members of their immediate families may own stock in an amount not to exceed 5% of
the outstanding capital stock of publicly traded companies that may compete with the Purchaser
following the consummation of the transactions contemplated hereby. Except as set forth on
Schedule 3.02(z) hereto, no director, officer or Affiliate of the Company and no member
of the immediate family of any such Person is directly or indirectly interested in any Material
Contract to which the Company is a party.

          (aa) Bank Accounts; Lockboxes. On or prior to the date hereof, the Company has provided
the Purchaser with a true, correct and complete list of each bank account of the Company together
with a true, correct and complete list of each bank or other financial institution at which any
lockbox for the collection of accounts receivable of the Company is maintained, together with the
identity of all Persons authorized to withdraw any funds contained in such accounts or lockboxes.
Except as set forth in the list of bank accounts delivered to the Purchaser as described in the
preceding sentence, the Company does not maintain any bank account or lockbox for the collection of
accounts receivable of the Company.

          (bb) Accounts Receivable. All accounts receivable of the Company have arisen from
sales actually made or services actually performed in the Ordinary Course of Business and
constitute valid obligations and are collectible in accordance with their terms, net of applicable
reserves reflected in the Financial Statements.

          (cc) Inventory. All inventories of the Company consist of a quality and quantity
usable and, with respect to finished goods, saleable in the Ordinary Course of Business, except for
obsolete items and excess inventory reserved for in the Financial Statements.

          (dd) Indebtedness. All of the Indebtedness of the Company or the Business is set
forth on Schedule 3.02(dd), with the holder of each item of such Indebtedness set forth
thereon and the amount of Indebtedness so held. All Indebtedness of the Company or the Business,
will be repaid in full at Closing as provided in Section 5.07.

          (ee) Disclosures. No representation or warranty or other statement made by Sellers
or the Company in this Agreement, the Disclosure Schedules or the certificate delivered pursuant to
Section 6.01(a) hereof contains any untrue statement of material fact or omits to state a material
fact necessary to make the statements in this Agreement or therein, in light of the circumstances
in which they were made, not misleading.

ARTICLE 4.

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

     Purchaser hereby makes the following representations and warranties, as of the date hereof and
as of the Effective Time, which representations and warranties shall be qualified by the Schedules.

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     4.01 Organization and Authority and the Purchaser. Purchaser is duly organized,
validly existing and in good standing under the laws of the State of Florida and has all necessary
power and authority to enter into this Agreement and the applicable Ancillary Agreements. The
execution and delivery of this Agreement and any applicable Ancillary Agreement by Purchaser, the
performance by Purchaser of its obligations hereunder and thereunder, and the consummation by
Purchaser of the transactions contemplated hereby and, as applicable, thereby have been duly
authorized by all requisite corporate action on the part of the Purchaser. This Agreement and each
Ancillary Agreement have been duly executed and delivered by Purchaser and (assuming due
authorization, execution and delivery by the Sellers and any other parties thereto other than the
Purchaser), this Agreement and each such Ancillary Agreement constitutes a legal, valid and binding
obligation of the Purchaser, enforceable against the Purchaser in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors
rights and remedies generally and subject, as to enforceability, to rules of law governing specific
performance, injunctive relief and to general principles of equity.

     4.02 No Conflict. The execution, delivery and performance of this Agreement and each applicable Ancillary Agreement
by the Purchaser does not and will not: (a) violate, conflict with or result in the breach of any
provision of the Certificate of Incorporation or By-laws of the Purchaser; (b) conflict with or
violate in any material respect any Law or Governmental Order applicable to the Purchaser or any of
its properties or assets; or (c) conflict with, result in any breach of, constitute a material
default (or event which with the giving of notice of lapse or time, or both, would become such a
default) under, require any consent under, or give to others any rights of termination, amendment,
acceleration, suspension, revocation, or cancellation of, or result in the creation of any material
Encumbrance on any of the assets or properties of the Purchaser pursuant to, any note, bond,
mortgage or indenture, contract, agreement, lease, sublease, license, permit, franchise or other
instrument or arrangement to which the Purchaser is a party or by which any of its assets or
properties are bound or affected.

     4.03 Governmental Consents and Approvals. To the knowledge of Purchaser, the
execution, delivery and performance of this Agreement by the Purchaser does not and will not
require any consent, approval, authorization or other order of, action by, filing with, or
notification to, any Governmental Authority.

     4.04 No Brokers. No broker, finder or investment banker is entitled to any brokerage,
finder’s or other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Purchaser.

     4.05 Litigation. There is no Action pending or, to the knowledge of the Purchaser,
threatened against either Purchaser or its Affiliates, which, if adversely determined, is
reasonably likely to prohibit, restrain or materially delay the ability of Purchaser to enter into
this Agreement or consummate the transactions contemplated hereby.

     4.06 Investment Intention. The Purchaser is acquiring the Shares for its own account,
for investment purposes only and not with a view to the distribution (as such term is used in
Section 2(11) of the Securities Act). The Purchaser understands that the Shares have not been

28

 

registered under the Securities Act and cannot be sold unless subsequently registered under the
Securities Act or an exemption from such registration is available.

ARTICLE 5.

COVENANTS AND ADDITIONAL AGREEMENTS

     5.01 Ancillary Agreements. Prior to or contemporaneous with the Closing, the Sellers
will cause to be duly executed (by each party other than the Purchaser) and delivered each of the
Ancillary Agreements. The Purchaser shall execute each Ancillary Agreement to which it is a party
and deliver executed copies of such agreements to the Sellers.

     5.02 Conduct of Business Prior to the Closing.  (a) Sellers covenant and
agree, except as set forth at all times from and after the date hereof through and to the Effective
Time to take all action necessary to cause the Company to: (i) operate its Business only in the
Ordinary Course Business; and (ii) use commercially reasonable efforts to: (A) preserve its present
Business operations, organization and goodwill; and (B) preserve the present relationships which it
has with its suppliers, customers and other Persons having business relationships with it.

          (b) Sellers covenant and agree that, at all times from and after the date hereof through and
to the Effective Time, they shall take all action necessary to cause the Company to refrain from
taking any action or failing to take any action which would cause any representation or warranty
contained in Article 3 hereof to be untrue in any respect or result in any breach of any covenant.

     5.03 Access to Information. Prior to the Effective Time, the Purchaser shall be
entitled, through its officers, employees and representatives (including, without limitation, its
legal advisors and accountants), to make such investigation of the properties, businesses and
operations of the Business and such examination of the books, records and financial condition of
the Business as it reasonably requests and to make extracts and copies of such books and records.
Any such investigation and examination shall be conducted during regular business hours and under
reasonable circumstances, and the Sellers shall cooperate, and shall direct the Company to
cooperate, fully therein.

     5.04 Confidentiality. No party hereto shall, without the prior written consent of the
disclosing party, disclose or acquiesce in the disclosure by any Person, or use or enable the use
of any non-public information regarding the disclosing party or the financial condition of such
party, except for disclosure to or use by the legal counsel, accountants, financial advisors,
investment bankers and the other authorized agents and representatives of the parties hereto, and
to such Persons only to the extent required for activities directly related to the obligations of
the receiving parties under this Agreement, except to the extent such information has been publicly
disclosed or is otherwise in the public domain or is required to be disclosed by Law or by a
Governmental Authority. The provisions of this Section 5.04 shall apply to Sellers, Purchaser and
each Affiliate of Sellers and Purchaser.

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     5.05 Regulatory and Other Authorizations; Consents.  (a) Each of the parties
hereto shall give such notices and obtain (and Management Sellers shall cause the Company to give
such notices and/or obtain) all authorizations, consents, orders, and approvals of all Governmental
Authorities and officials that may be or become necessary for such party’s execution and delivery
of, and the performance of their respective obligations pursuant to, this Agreement and each
Ancillary Agreement, and will cooperate fully with each other in promptly seeking to give such
notices and obtain all such authorizations, consents, orders and approvals.

          (b) Each of the parties hereto shall also give such notices and obtain (and the Management
Sellers shall cause the Company to give such notices and obtain) all authorizations, consents and
approvals of all other third parties (other than any Governmental Authorities) that
may be or become necessary for such party’s execution and delivery of, and the performance of
their respective obligations pursuant to, this Agreement and each Ancillary Agreement, and will
cooperate fully with each other in promptly seeking to give such notices and obtain all such
authorizations, consents and approvals.

          (c) Notwithstanding the foregoing provisions of this Section 5.05, the obligation of each
party to fully cooperate with the other party pursuant to the provisions of this Section 5.05 shall
not include and no party hereto shall have any obligation to give any guarantee or other
consideration of any nature in connection with any such notice or consent or to consent to any
change in the terms of any agreement or arrangement which such party in its sole and absolute
discretion may deem adverse to the interests of the Purchaser, the Sellers or the Company.

     5.06 Further Action. Each of the parties hereto shall use all reasonable efforts to
take, or cause to be taken, all appropriate action, to do or cause to be done all things necessary,
proper or advisable under applicable Law, and to execute and deliver such documents and other
papers, each as may be required to carry out the provisions of this Agreement and the Ancillary
Agreements and to consummate and make effective the transactions contemplated by this Agreement and
the Ancillary Agreements.

     5.07 Release of Indebtedness. Prior to or on the Closing Date, the Sellers shall have
(or shall have caused the Company to have) fully discharged and paid any and all Indebtedness of
the Company or the Business, and at Closing the Sellers shall deliver evidence of the foregoing
reasonably satisfactory to the Purchaser.

     5.08 Legal Privileges. The Sellers and the Purchaser acknowledge and agree that all
attorney-client, work product and other legal privileges that may exist with respect to the Company
shall, from and after the Closing Date, be deemed joint privileges of the Sellers and the
Purchaser. Both the Sellers and the Purchaser shall use all commercially reasonable efforts after
the Closing Date to preserve all privileges and neither the Sellers nor the Purchaser shall
knowingly waive any such privilege without the prior written consent of the other party (which
consent shall not be unreasonably withheld or delayed).

     5.09 Preservation of Records. Subject to Section 8.03 hereof (relating to the
preservation of Tax records), the Sellers and the Purchaser shall preserve and keep the records
held by them relating to the business of the Company for a period of seven (7) years from the

30

 

Closing Date and shall make such records and personnel available to the other as may be reasonably
required by such party in connection with, among other things, any insurance claims by, legal
proceedings against or governmental investigations of the Sellers, the Company or the Purchaser or
any of their Affiliates or in order to enable the Sellers or the Purchaser to comply with their
respective obligations under this Agreement; provided, however, that a Person may
dispose of any such records at any time during such period if such Person first provides sixty (60)
days prior written notice to the other parties
hereto of the intent to so dispose of such records and affords such other parties an opportunity,
at their expense, to take possession and control of such records.

ARTICLE 6.

CONDITIONS TO CLOSING

     6.01 Conditions to Obligations of the Sellers. The obligations of the Sellers to
consummate the transactions contemplated by this Agreement shall be subject to the fulfillment, or
written waiver by the Sellers (in their sole discretion), at or prior to the Closing, of each of
the following conditions:

          (a) Representations, Warranties and Covenants. The representations and warranties of
the Purchaser contained in this Agreement which are qualified by materiality or Material Adverse
Effect shall be true and correct in all respects as of the date hereof and as of the Effective
Time, all other representations and warranties of the Purchaser shall be true and correct in all
material respects as of the date hereof and as of the Closing Date, the covenants and agreements
contained in this Agreement to be complied with by the Purchaser on or before the Closing shall
have been complied with and the Sellers shall have received a certificate from the Purchaser to
such effect signed by a duly authorized officer thereof;

          (b) No Proceeding or Litigation. No Action shall have been commenced by or before
any Governmental Authority against the Sellers, the Company or the Purchaser, seeking to restrain
or materially alter the transactions contemplated by this Agreement which, in the reasonable, good
faith determination of the Sellers, are likely to render it impossible or unlawful to consummate
such transactions or which would reasonably be expected to have a Material Adverse Effect;

          (c) Ancillary Agreements. At or prior to the Closing, the Purchaser shall have
delivered each of the Ancillary Agreements, duly executed by each party thereto (other than the
Sellers or the Company) in a form satisfactory to the Sellers;

          (d) Consents and Approvals. The Sellers shall have received from the Purchaser, each
in form and substance reasonably satisfactory to the Sellers, all authorizations, consents, orders
and approvals of all Governmental Authorities and officials and all third party consents which the
Sellers reasonably deem necessary for the consummation of the transactions contemplated by this
Agreement; and

31

 

          (e) Non-Competition Agreements. The Purchaser shall have paid or caused to be paid
such amounts as specified in the Non-Competition Agreements referred to in Section 6.02(j) below to
each of the individuals identified in Schedule 6.02(j).

     6.02 Conditions to Obligations of the Purchaser. The obligations of the Purchaser to
consummate the transactions contemplated by this Agreement shall be subject to the fulfillment, or
written waiver by the Purchaser (in its sole discretion), at or prior to the Closing, of each of
the following conditions:

          (a) Representations, Warranties and Covenants. The representations and warranties of
the Sellers contained in this Agreement which are qualified by materiality or Material Adverse
Effect shall be true and correct in all respects as of the date hereof and as of the Effective
Time, all other representations and warranties of the Sellers shall be true and correct in all
material respects as of the date hereof and as of the Effective Time, the covenants and agreements
contained in this Agreement to be complied with by the Sellers or the Company on or before the
Closing shall have been complied with and the Purchaser shall have received a certificate from
Sellers and the Company to such effect;

          (b) No Proceeding or Litigation. No Action shall have been commenced or threatened
by or against the Sellers, the Company or the Purchaser which seeks to restrain or materially alter
the transactions contemplated hereby which the Purchaser believes, in its reasonable good faith
determination, is likely to render it impossible or unlawful to consummate the transactions
contemplated by this Agreement or the Ancillary Agreements, or which would reasonably be expected
to have a Material Adverse Effect;

          (c) Consents and Approvals. (i) the Purchaser shall have received the consent or
approval of its institutional lender; and (ii) the Sellers shall have obtained, each in form and
substance reasonably satisfactory to the Purchaser, all authorizations, consents, orders and
approvals of all Governmental Authorities and officials and all third party consents which the
Purchaser reasonably deems necessary for the consummation of the transactions contemplated by this
Agreement or by the Ancillary Agreements;

          (d) Organizational Documents. The Purchaser shall have received a copy of: (i) the
organizational documents of the Company, certified by the Secretary of the Company and accompanied
by a certificate of the Secretary of the Company, dated as of the Closing Date, stating that no
amendments have been made to such organizational documents since such date; (ii) the By-laws of the
Company, certified by the Secretary of the Company; and (iii) Good Standing Certificates for the
Company from the Secretary of State of the State of its incorporation;

          (e) Payoff Statements. Not less than three (3) Business Days prior to the Closing
Date, the Sellers shall cause to be delivered to the Purchaser, a written statement from each
Person to whom the Company owes any Indebtedness (each such written statement being hereinafter a
“Payoff Statement”), which Payoff Statements shall be in form and substance reasonably acceptable
to Purchaser and as to each Person to whom the Company owes any Indebtedness: (i) shall set forth
the full amount (or a methodology for calculating the full

32

 

amount) which is to be paid, on the
Closing Date, to the Person to whom the Company owes the Indebtedness; and (ii) shall provide that
upon payment on the Closing Date to the Person which has issued the Payoff Statement of the amount
stated or described in the Payoff Statement, the Company shall be fully released and discharged
from any and all Indebtedness owed to such Person;

          (f) Ancillary Agreements. At or prior to the Closing, the Sellers shall have
delivered each of the Ancillary Agreements, duly executed by each party thereto (other than the
Purchaser or its Affiliates), in substantially the forms attached hereto;

          (g) Leases. Purchaser shall have successfully renegotiated the Phoenix Lease, the
Vineland Lease and the Virginia Lease to contain such terms and conditions as are acceptable to
Purchaser, in its sole discretion;

          (h) Union City Lease. The Union City Lease shall have been amended to provide that
such lease will continue on a month to month basis for a period of six (6) months beginning on June
1, 2011;

          (i) Union Agreement. The term of the Union Agreement shall have been extended for a
period of one (1) month from its expiration date of April 30, 2011;

          (j) Non-Competition Agreements. Each of the individuals identified in Schedule
6.02(j) shall have executed and delivered a Non-Competition Agreement containing such terms and
conditions as are mutually agreeable to such Person and the Purchaser;

          (k) Buy and Sell Agreement. The Buy and Sell Agreement dated as of June 18, 2001 by
and among the Company and the Sellers named therein shall have been terminated;

          (l) Trust Documents. Such documentation as reasonably requested by the Purchaser,
including but not limited to, one or more Affidavits, to confirm that, with respect to each Seller
that is a Trust or a Trustee: (i) each such Seller is authorized to enter into this Agreement and
transfer the Shares held by such Seller in accordance with the provisions hereof; (ii) the Person
executing this Agreement on behalf of such Seller is authorized to execute this Agreement by all
necessary action; and (iii) upon the execution and delivery of this Agreement and any Ancillary
Agreements by such Seller to which it is a party, this Agreement and any such Ancillary Agreements
will be a legal, valid and binding obligation of such Seller, enforceable against such Seller in
accordance with their respective terms; and

          (m) No Material Adverse Effect. No Material Adverse Effect shall have occurred with
respect to the Business.

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ARTICLE 7.

INDEMNIFICATION

     7.01 Survival; Remedies for Breach.  (a) Each and every representation and
warranty made by the Sellers and the Purchaser in this Agreement or in any Exhibit, Schedule,
instrument of transfer or other document delivered pursuant hereto or in connection herewith shall
survive the Closing for a period of one thousand ninety five (1,095) days beginning on the first
day following the Closing, except that; (i) the representations and warranties of the Sellers
contained in Section 3.02(q) shall survive until sixty (60) days after the end of the applicable
statute of limitations; (ii) the
Specified Representations shall survive the Closing without limitation as to time; and (iii)
the representations and warranties of the Sellers in Section 3.02(r) shall survive the Closing for
a period of ten (10) years. Each and every covenant and agreement of a party set forth herein
shall survive the Closing without limitation as to time. Except as otherwise provided in Section
7.01(b) , following the expiration of the period during which the representations and warranties
survive the Closing as set forth in the preceding sentence (such period being hereinafter the
“Survival Period”), the representations and warranties shall be of no further force or effect.

          (b) Any representation or warranty that would otherwise terminate at the expiration of the
Survival Period with respect thereto shall survive if the written notice referred to in Section
7.02(b) or Section 7.03(b), as the case may be, of the breach or inaccuracy thereof shall have been
given to the party against whom indemnification may be sought on or prior to the expiration of the
applicable Survival Period; provided that such survival shall only apply to the portion of any such
representation or warranty with respect to which such breach or inaccuracy has occurred.

     7.02 Indemnification of the Purchaser.  (a) Subject to the provisions of
this Section 7.02 and the other Sections of this Article 7, the Purchaser and each of its
Affiliates, officers, directors, employees, agents, successors and assigns and, after the Effective
Time, Purchaser, the Company and each of their respective Affiliates, officers, directors,
employees, agents, successors and assigns (each hereinafter a “Purchaser Indemnified Party”) shall
be indemnified by each of the Sellers, jointly and severally, from and against the amount of any
and all Losses incurred or sustained by or imposed upon any of them with respect to or by reason
of:

               (i) any failure, breach or inaccuracy of any representations or warranties made by the
Sellers under this Agreement or contained in any certificate, document or instrument delivered by
the Sellers or the Company hereunder;

               (ii) any breach, default or lack of performance on the part of the Sellers or the Company
of any of its covenants or agreements under this Agreement or the Ancillary Agreements;

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               (iii) any Liabilities of the Company arising under or in connection with any Environmental
Laws with respect to any of the facilities leased by the Company pursuant to the Related Party
Leases;

               (iv) any Liabilities of the Company for any Indebtedness which have not been paid in full
or otherwise discharged for any reason as of the Effective Time, including but not limited to, any
Liabilities for Indebtedness owed to Wells Fargo Bank, NA, KIT International, Inc., Moss-Hansen, W.
Brent Taylor, International Steel City Company, Inc. and Frank Fulford;

               (v) any Liabilities of the Company or the Sellers for any Company Transaction Expenses
which have not been paid in full or otherwise discharged for any reason as of the Effective Time;
and

               (vi) any Liabilities of the Company arising under or in connection with any Taxes relating
to periods ending on or prior to Closing (Sections 7.02(a)(ii), (iii), (iv), (v) and (vi) are
hereinafter referred to as the “Specified Indemnity Claims”)

          (b) Notwithstanding anything to the contrary in this Agreement, the Purchaser Indemnified
Parties shall not be entitled to indemnification: (i) under Section 7.02(a) (i) hereof if the
Purchaser Indemnified Party fails to provide the Sellers’ Representative with written notice of
such claim prior to the expiration of the applicable Survival Period provided in Section 7.01
above; or (ii) solely with respect to Third Party Claims, the Purchaser Indemnified Party fails to
provide the Sellers’ Representative with written notice of such Third Party Claim setting forth in
reasonable detail the facts and circumstances pertaining thereto as soon as practicable following
discovery of such claim and as a result of such failure, the Sellers’ ability to defend against
such Third Party Claim has been materially adversely affected.

          (c) The obligation of the Purchaser set forth in Section 7.07 hereof to reduce the Adjusted
Holdback Amount shall not, except as expressly provided for in Section 7.07 hereof, be deemed or
construed to limit or otherwise impair or affect the obligations of the Sellers to indemnify the
Purchaser Indemnified Parties from and against any and all Losses as provided in this Section 7.02.

     7.03 Indemnification of the Sellers.  (a) Subject to the provisions of this
Section 7.03 and the other Sections of this Article 7, the Purchaser agrees to indemnify, defend
and hold the Sellers, and their Affiliates, officers, directors, employees, agents, successors and
assigns, (each a “Seller Indemnified Party”), harmless from and against any and all Losses incurred
or sustained by or imposed upon any of the Seller Indemnified Parties with respect to or by reason
of:

               (i) any failure, breach or inaccuracy by the Purchaser of any representations or
warranties made by the Purchaser under this Agreement or the Ancillary Agreements or contained in
any certificate, document or instrument delivered by the Purchaser hereunder; and

35

 

               (ii) any breach, default or lack of performance on the part of the Purchaser of any of its
covenants or agreements under this Agreement or the Ancillary Agreements.

          (b) Notwithstanding anything to the contrary in this Agreement, the Seller Indemnified
Parties shall not be entitled to indemnification: (i) under Section 7.03(a)(i) hereof if the Seller
Indemnified Party fails to provide the Purchaser with written notice of such claim prior to the
expiration of the applicable Survival Period provided in Section 7.01 above; or (ii) solely with
respect to Third Party Claims, the Seller Indemnified Party fails to provide the Purchaser with
written notice of such Third Party Claim setting forth in reasonable detail the facts and
circumstances pertaining thereto as soon as practicable following discovery of such claim and as a
result of such failure, the Purchaser’s ability to defend against such Third Party Claim has been
materially adversely affected.

     7.04 Procedures for Indemnification.  (a) If any Purchaser Indemnified Party
or any Seller Indemnified Party (hereinafter an “Indemnified Party”) shall claim to have suffered a
Loss (other than with respect to any claim asserted, demand or other Action by any Person who is
not a party to this Agreement (hereinafter a “Third-Party Claim”)) for which indemnification is
available under Section 7.02 or 7.03, as the case may be, the Indemnified Party shall notify the
party required to provide indemnification (hereinafter an “Indemnifying Party”) in writing of such
claim: (i) with respect to claims arising under Section 7.02(a)(i) or Section 7.03(a)(i), within
the time periods provided in Section 7.01; and (ii) with respect to a Specified Indemnity Claim or
a claim made pursuant to Section 7.03(a) (ii) hereof at any time after the Closing Date. The
written notice to be delivered shall describe the nature of such claim, the facts and circumstances
that give rise to such claim and the amount of such claim if reasonably ascertainable at the time
such claim is made (or if not then reasonably ascertainable, the maximum amount of such claim
reasonably estimated by the Indemnified Party). In the event that within thirty (30) days after
the receipt by the Indemnifying Party of such a written notice from the Indemnified Party, the
Indemnified Party shall not have received from the Indemnifying Party a written objection to such
claim, such claim shall be conclusively presumed and considered to have been assented to and
approved by the Indemnifying Party.

          (b) If within the thirty (30) day period described in Section 7.04(a) above, the Indemnified
Party shall have received from the Indemnifying Party a written notice setting forth the
Indemnifying Party’s objections to such claim and the Indemnifying Party’s reasons for such
objection, then the parties shall negotiate in good faith for a period of ten (10) Business Days
from the date the Indemnified Party receives such objection. After such ten (10) Business Day
period (or such longer period as they may agree in writing), if the parties still cannot agree on
the claim, the Indemnified Party may, at any time thereafter, until the expiration of the
applicable statute of limitations with respect to its claim for indemnification, commence legal
proceedings against the Indemnifying Party to enforce its rights to indemnification from and
against any Losses described in the written notice described in Section 7.04(a) above.

     7.05 Additional Limits on Rights to Indemnification.  (a) Notwithstanding
anything to the contrary in this Agreement, except as provided in Sections 7.05(b) and (c) below,
an Indemnified Party shall not be entitled to indemnification:

36

 

               (i) for any Losses under Section 7.02(a)(i) or Section 7.03(a)(i), as the case may be, as
to which the Indemnified Parties otherwise may be entitled to indemnification hereunder (without
giving effect to this clause (i)), until such Losses exceed $10,000 (the “Basket Amount”),
provided that, after the aggregate amount of all Losses exceeds the Basket Amount
the Indemnifying Party shall be obligated to indemnify the Indemnified Party from the first dollar
of all such Losses; and

               (ii) for any Losses under Section 7.02(a)(i) or Section 7.03(a)(i), as the case may be, as
to which the Indemnified Parties otherwise may be entitled to indemnification
hereunder to the extent that the aggregate amount of such Losses exceeds an amount equal to
Four Million Dollars ($4,000,000).

          (b) Notwithstanding the foregoing provisions of Section 7.02(a) hereof, the Sellers shall
only be jointly and severally liable for any and all Losses of the Purchaser Indemnified Parties to
the extent that such Losses are less than or equal to the Adjusted Holdback Amount. (i) If Losses
of the Purchaser Indemnified Parties exceed the Adjusted Holdback Amount and are attributable to
(A) the breach or inaccuracy of any representation and warranty other than the Specified
Representations or the representations and warranties provided in Sections 3.02(q)(Taxes) or
3.02(r) (Environmental); then (B) each Seller shall be liable to the Purchaser Indemnified Parties
for such Seller’s Pro Rata Portion of the amount by which the Losses of the Purchaser Indemnified
Parties exceed the lesser of: (I) the amount by which $4,000,000 exceeds the Adjusted Holdback
Amount; and (II) the amount by which the Losses exceed the Adjusted Holdback Amount. (ii) If Losses
of the Purchaser Indemnified Parties exceed the Adjusted Holdback Amount and such Losses are
attributable to: (A) the breach or inaccuracy of the Specified Representations or the
representations and warranties provided in Sections 3.02(q) (Taxes) or 3.02(r) (Environmental); or
(B) any Liabilities incurred by Purchaser pursuant to the Specified Indemnity Claims; then (C) each
Seller shall be liable to the Purchaser Indemnified Parties for such Seller’s Pro Rata Portion of
the amount by which the Losses of the Purchaser Indemnified Parties exceed the Adjusted Holdback
Amount; provided, that, in no event will any Seller be liable to the Purchaser
Indemnified Parties for an amount in excess of such Seller’s Pro Rata Portion of the sum of: (I)
the Closing Sellers’ Payment; and (II) any Closing Cash distributed to the Sellers’ Representative
in accordance with the provisions of Section 2.04 above.

          (c) Notwithstanding the provisions of Section 7.05(a) and subject to the provisions of
Section 7.05(b) above, the Purchaser Indemnified Parties shall be entitled to be indemnified by the
Sellers for Losses without reference to or the application of the limitations in Section 7.05(a)
if and to the extent that such Losses are attributable to: (i) a breach or inaccuracy of the
Specified Representations; (ii) a breach or inaccuracy of any of the representations and warranties
of the Sellers or the Company contained in Section 3.02(q) (Taxes) or 3.02(r)(Environmental)
hereof; or (iii) any Liabilities incurred by the Purchaser pursuant to the Specified Indemnity
Claims.

          (d) An Indemnified Party shall not be entitled to double recovery for any Losses. Without
limitation of the foregoing, an Indemnified Party shall not be entitled to indemnification

37

 

for
Losses (and the amount of any such Losses shall not be includable in determining whether the
aggregate amount of the Losses exceeds the Basket Amount) if and to the extent that the amount of
any Losses from any matter have been taken into account in the determination of the Closing Net
Working Capital.

     7.06 Procedures for Third-Party Claims.  (a) Any Indemnified Party seeking
indemnification pursuant to this Article 7 in respect of any Third-Party Claim shall give the
Indemnifying Party from whom indemnification with respect to such claim is sought: (i) prompt
written notice of such Third Party Claim (but in no event more than ten (10) days after the
Indemnified Party receives written
demand of any Third Party Claim); and (ii) copies of all documents and information relating to
any such Third-Party Claim within ten (10) days of their being obtained by the Indemnified Party;
provided, that the failure by the Indemnified Party to so notify or provide copies to the
Indemnifying Party shall not relieve the Indemnifying Party from any liability to the Indemnified
Party for any liability hereunder except to the extent that such failure shall have prejudiced the
defense of such Third-Party Claim.

          (b) The Indemnifying Party shall have thirty (30) days (or such lesser time as may be
necessary to comply with statutory response requirements for litigation claims that are included in
any Third-Party Claim) from receipt of the notice contemplated in Section 7.06(a) to notify the
Indemnified Party whether or not the Indemnifying Party will, at its sole cost and expense, defend
the Indemnified Party against such claim. If the Indemnifying Party timely gives notice that it
intends to defend the Third-Party Claim, it shall have the right, except as hereafter provided, to
defend against, negotiate, settle or otherwise deal with the Third-Party Claim and to be
represented by counsel of its own choice, and the Indemnified Party will not admit any liability
with respect thereto or settle, compromise, pay or discharge the same without the consent of the
Indemnifying Party, which consent shall not be unreasonably withheld or delayed, so long as the
Indemnifying Party is contesting or defending the same with reasonable diligence and in good faith;
provided, that the Indemnified Party may participate in any proceeding with counsel of its
choice and at its expense; provided further, that the Indemnifying Party may not
enter into a settlement of any such Third-Party Claim without the consent of the Indemnified Party,
which consent shall be not unreasonably withheld, unless such settlement requires no more than a
monetary payment for which the Indemnified Party is fully indemnified by the Indemnifying Party or
involves other matters not binding upon the Indemnified Party; and provided further
that, in the event the Indemnifying Party does not agree in writing to accept the defense of, and
assume all responsibility for, such Third-Party Claim as provided above in this Section 7.06(b) ,
then the Indemnified Party shall have the right to defend against, negotiate, settle or otherwise
deal with the Third-Party Claim in such manner as the Indemnified Party deems appropriate, in its
sole discretion, and the Indemnified Party shall be entitled to indemnification therefor from the
Indemnifying Party to the extent provided under this Article 7. Notwithstanding the foregoing, if
in the reasonable opinion of the Indemnified Party such Third-Party Claim, or the litigation or
resolution of such Third-Party Claim, involves an issue or matter that could have a Material
Adverse Effect on the Indemnified Party, including the administration of Tax Returns of the
Indemnified Party or a dispute with a significant supplier or customer of the Indemnified Party, or
there is a conflict of interest in the defense of such action between the Indemnified Party and the
Indemnifying Party, the Indemnified Party shall have the right to control the defense or settlement
of any such claim or demand and its reasonable costs and

38

 

expenses shall be included as part of the
indemnification obligations of the Indemnifying Party. If the Indemnified Party elects to exercise
such right, the Indemnifying Party shall have the right to participate in, but not control, the
defense or settlement of such claim at its sole cost and expense.

     7.07 Reduction of Amounts Payable to Sellers. In the event that, prior to the
expiration of five hundred and forty (540) day period beginning on the first day following the
Closing, any of the Purchaser Indemnified Parties shall incur or suffer any Losses with respect to
which Sellers, as determined either by mutual agreement of the Purchaser and Sellers’
Representative
or by final non-appealable order of a court or other Governmental Authority, are required to
indemnify the Purchaser Indemnified Parties from and against pursuant to the provisions of this
Article 7, Purchaser shall reduce the amount of Losses which the Purchaser Indemnified Parties are
entitled to be indemnified from and against under this Article 7 by an amount equal to the lesser
of (a) the amount of such Losses, and (b) the Adjusted Holdback Amount. Upon a reduction in the
Adjusted Holdback Amount by the Purchaser in accordance with the provisions of this Section 7.07,
the remaining amount of the Adjusted Holdback Amount to be paid by Purchaser to Sellers’
Representative as provided in Section 2.02(b) hereof, if any, shall be reduced by the amount of the
Losses with respect to which the Sellers’ obligation to indemnify Purchaser Indemnified Parties has
been reduced by the operation of this Section.

ARTICLE 8.

TAXES

     8.01 Straddle Period In the case of any Tax Return with respect to a taxable period that
includes (but does not end on) the Closing Date (a “Straddle Period”), Purchaser will, to the
extent permitted by Law, elect to treat the Closing as the last day of the taxable year or period
and will apportion any Taxes arising out of or relating to a Straddle Period to the taxable period
(or portion thereof) ending on or prior to the Closing Date, including the portion of any Straddle
Period up to and including the Closing Date and to the taxable period (or portion thereof)
commencing after the Closing Date, including the portion of any Straddle Period commencing after
the Closing Date under the “closing-the-books” method as described in Treasury Regulation Section
1.1502-76(b)(2)(i) (or any similar provision of state or local law); provided, however that any Tax
benefits arising from the payment on the Closing Date of any Indebtedness of the Company will be
apportioned to the taxable period ending on the Closing Date. In any case where applicable Law
does not permit the Company to treat the Closing Date as the last day of the taxable year or
period, any Taxes arising out of or relating to the Straddle Period will be apportioned to the
taxable period ending on the Closing Date and the taxable period beginning on the first day
following the Closing Date based on a closing of the books of the Company; provided, however, that:
(a) exemptions, allowances or deductions that are calculated on an annualized basis (including
depreciation, amortization and depletion deductions) will be apportioned on a daily pro-rata basis,
and (b) real and personal property Taxes and any other Tax that is not based on or measured by
income, gross receipts, sales, use or payroll shall be allocated on a per diem basis.

39

 

     8.02 Preparation of Tax Returns; Payment of Taxes.  (a) The Sellers will
prepare and file all Tax Returns of the Company for the taxable periods of the Company ending (or
the portion of any taxable period ending) on the Closing Date, including, all Straddle Period Tax
Returns. The Sellers shall pay any and all Taxes due with respect to the Tax Returns referred to
in this Section 8.01(a). The Sellers also shall cause the Company to file all other Tax Returns of
the Company required to be filed (taking into account any extensions) prior to or on the Effective
Time and shall cause the Company to pay any and all Taxes due with respect to such Tax Returns.
All Tax Returns described in this Section 8.01 shall be prepared in a manner consistent with prior
practice. The Sellers shall, prior
to the filing of any Tax Returns required to be filed after the Effective Time, permit the
Purchaser a thirty day period to review and comment upon all such Tax Returns. The Sellers and the
Purchaser shall attempt in good faith mutually to resolve any disagreements regarding such Tax
Returns prior to the due date for filing thereof.

          (b) Following the Closing, the Purchaser shall be responsible for preparing or causing to be
prepared all Tax Returns required to be filed by the Company for all taxable periods ending after
the Effective Time. The Purchaser shall file or cause to be filed all such Tax Returns and shall
pay the Taxes shown due thereon.

          (c) For U.S. Federal income tax purposes, the taxable year of the Company shall end at 11:59
p.m., Pacific Time, on the Closing Date. Neither the Sellers nor the Purchaser shall take any
position inconsistent with the preceding sentence on any Tax Return.

     8.03 Cooperation with Respect to Tax Returns. The Purchaser and the Sellers shall
furnish or cause to be furnished to each other, and each at their own expense, as promptly as
practicable, such information (including access to books and records) and assistance, including
making employees available on a mutually convenient basis to provide additional information and
explanations of any material provided, relating to the Company as is reasonably necessary for the
filing of any Tax Return, for the preparation for any audit, and for the prosecution or defense of
any claim, suit or proceeding relating to any adjustment or proposed adjustment with respect to
Taxes. The Purchaser and the Company shall retain possession of, and shall provide the Sellers
reasonable access to (including the right to make copies of), such supporting books and records and
any other materials that the Sellers may specify with respect to Tax matters relating to any
taxable period ending on the Effective Time, until the relevant statute of limitations has expired.
After such time, the Purchaser may dispose of such material, provided that, prior to such
disposition, the Purchaser shall give the Sellers a reasonable opportunity to take possession of
such materials.

     8.04 Tax Audits.  (a) In the event that the Purchaser or the Company
receives notice from any Tax Authority of any audit of any Tax Return or Taxes of the Company for
any taxable period ending on or prior to the Effective Time, the Purchaser shall promptly provide
written notice to the Sellers’ Representative of the date on which such audit is to begin, but in
no event later than ten (10) days prior to the date such audit is to begin or, if earlier, thirty
(30) days following the receipt by the Purchaser or the Company of any such notice. In the event
that any Seller receives notice from any Tax Authority of any audit of any Tax Return or Taxes of
the Company, such Seller shall promptly provide written notice to the Purchaser of the date on

40

 

which such audit is to begin, but in no event later than ten (10) days prior to the date such audit
is to begin or, if earlier, thirty (30) days following the receipt by any Seller of any such
notice.

          (b) After the Closing Date, the Purchaser and the Sellers shall have the right to participate
in any Tax audit or administrative or court proceeding relating to any tax period that may have the
effect of increasing the Purchaser’s or any Seller’s Tax liability for any tax period and neither
the Purchaser nor Sellers shall settle or compromise any such proceeding without the prior written
consent of the other party, which consent shall not be unreasonably withheld,
conditioned or delayed. In connection with any such proceeding, the Sellers shall bear their
own costs and expenses and the Purchaser and the Company shall bear their own costs and expenses.

          (c) If any Tax Authority notifies the Purchaser or the Company that it is asserting any
claim, making any assessment or otherwise disputing or affecting any Tax for which the Sellers are
responsible hereunder, the Purchaser shall, promptly upon receipt by the Purchaser or the Company
of notice thereof, inform the Sellers’ Representative thereof. If any Tax Authority notifies any
Seller that it is asserting any claim, making any assessment or otherwise disputing or affecting
any Tax for which the Purchaser or the Company is responsible hereunder, Sellers shall, promptly
following receipt of such notice, inform the Purchaser thereof.

     8.05 Disputes. Any dispute as to any matter covered by this Article 8 shall be
resolved by the Independent Accounting Firm and the fees and expenses of such accounting firm shall
be borne equally by the Sellers, on the one hand, and the Purchaser, on the other hand.

ARTICLE 9.

GENERAL PROVISIONS

     9.01 Sellers’ Representative.  (a) The Sellers hereby irrevocably make,
constitute and appoint W. Brent Taylor (the “Sellers’ Representative”) and the Sellers’
Representative accepts such appointment as their true and lawful attorney-in-fact with full power
of substitution to do any and all things and execute any and all documents which may be necessary,
convenient or appropriate to facilitate the consummation of the transactions contemplated by this
Agreement, including but not limited to: (i) receipt of payments under this Agreement and the
disbursement thereof to the Sellers and others; (ii) receipt and forwarding of notices and
communications pursuant to this Agreement; and (iii) administration of this Agreement, including
the resolution of any dispute or claim. The Sellers’ Representative shall promptly forward all
notices and communications received pursuant to this Agreement and shall provide to any Seller such
information relating to this Agreement as has been reasonably requested by such Seller.

          (b) Purchaser shall be fully protected in dealing with the Sellers’ Representative under this
Agreement and may rely upon the authority of the Sellers’ Representative to act as the agent of the
Sellers. Any payment by Purchaser to the Sellers’ Representative under this Agreement shall be
considered a payment by Purchaser to the Sellers. The appointment of the Sellers’ Representative
is coupled with an interest and shall be irrevocable by any Seller in any manner or for any reason.
This power of attorney shall not be affected by the disability or incapacity of the principal
pursuant to any applicable Law.

41

 

     9.02 Expenses. Each of the Sellers and the Purchaser shall bear their own expenses
incurred in connection with the negotiation and execution of this Agreement, and each other
agreement, document and instrument contemplated by this Agreement and the consummation of the
transactions contemplated hereby and thereby; provided, however, that the Sellers
shall be responsible for
payment of all sales, use, transfer, intangible, recordation, documentary stamp or similar Taxes or
charges, of any nature whatsoever, applicable to, or resulting from, the transactions contemplated
by this Agreement.

     9.03 Notices. All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be given or made (and shall be deemed to have been duly
delivered, given, made and received): (a) if delivered in person, when delivered; (b) if delivered
by facsimile, upon written confirmation of transmission; (c) if by overnight courier, one (1)
Business Day following the day on which such notice is sent; (d) if by U.S. mail, five (5) days
after being mailed, certified or registered mail, with postage prepaid to the respective parties at
the following addresses or facsimile numbers (or at such other address or facsimile number for a
party as shall be specified in a notice given in accordance with this Section 9.03):

(a) If to the Purchaser to:

Southeastern Metals Manufacturing Company, Inc.

3556 Lake Shore Road

Buffalo, New York 14219

Attn: Kenneth W. Smith

Facsimile Number: (716) 826-1589

with a copy to:

Lippes Mathias Wexler Friedman LLP

665 Main Street

Suite 300

Buffalo, New York 14203

Attn: Paul J. Schulz, Esq.

Facsimile No: (716) 853-5199

b) If to the Sellers, a single notice to:

W. Brent Taylor

217 17th Street 

Manhattan Beach, California 90266

____________________

____________________

Facsimile No.: ________

with a copy to:

42

 

Law Offices of Harold S. Nelson

100 Pacifica

Suite 130

Irvine, California 92618

Attn: Harold S. Nelson, Esq.

Facsimile No.: (949) 442-7610

     9.04 Headings. The descriptive headings contained in this Agreement are for
convenience of reference only and shall not affect in any way the meaning or interpretation of this
Agreement.

     9.05 Severability. If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any Law or public policy, all other terms and provisions
of this Agreement shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision is invalid, illegal
or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as possible in an
acceptable manner in order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.

     9.06 Entire Agreement. This Agreement, together with all Exhibits to this Agreement
and the Schedules and any certificates delivered by the parties in connection with the closing of
the transactions contemplated hereby, constitutes the entire agreement of the parties hereto with
respect to the subject matter hereof and supersedes all prior agreements and undertakings, both
written and oral, between the Sellers or their Affiliates and the Purchaser or its Affiliates with
respect to the subject matter hereof.

     9.07 Assignment. This Agreement may not be assigned by operation of law or otherwise
without the express written consent of the Sellers or the Purchaser; provided,
however, that upon prior written notice to the Sellers, the Purchaser may (a) assign this
Agreement and its rights and obligations hereunder (provided that the Purchaser shall not be
relieved of its obligations hereunder in connection with any such assignment), in whole or in part,
to one or more of its Affiliates; or (b) assign any portion of its rights hereunder as collateral
to any financing source. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors (by merger, consolidation, sale or otherwise) and
permitted assigns.

     9.08 No Third Party Beneficiaries. This Agreement shall be binding upon and inure
solely to the benefit of the parties hereto and their permitted assigns and nothing herein, express
or implied, is intended to or shall confer upon any other Person any legal or equitable right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement.

     9.09 Amendment. This Agreement may not be amended or modified except by an instrument
in writing signed the Sellers, the Company and the Purchaser.

43

 

     9.10 Governing Law. This Agreement shall be interpreted in accordance with and
governed by the laws of the State of Delaware (without giving effect to any choice or conflict of
laws provisions thereof).

     9.11 Waiver of Jury Trial. Each party hereto hereby waives, to the fullest extent
permitted by applicable Law, any right it may have to a trial by jury in respect of any litigation
directly or indirectly arising out of, under or in connection with this Agreement. Each party
hereto acknowledges that it and the other parties hereto have been induced to enter into this
Agreement, by, among other things, the mutual waivers and certifications in this Section 9.11.

     9.12 Public Announcements. Prior to the Closing Date, none of the Sellers, the Company
or the Purchaser shall issue any press release or public announcement concerning this Agreement or
the transactions contemplated hereby without obtaining the prior written approval of the other
party hereto, which approval will not be unreasonably withheld or delayed, unless, in the sole
judgment of the Purchaser or the Sellers, as applicable, disclosure is otherwise required by Law or
by the applicable rules of any stock exchange, provided that, to the extent required by Law, the
party intending to make such release shall use its best efforts consistent with such Law to consult
with the other party with respect to the text thereof.

     9.13 Counterparts; Effectiveness. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Agreement shall become effective when each party
hereto shall have received a counterpart hereof signed by the other parties hereto. For the
convenience of the parties, any number of counterparts hereof may be executed, each such executed
counterpart shall be deemed an original and all such counterparts together shall constitute one and
the same instrument. Facsimile transmission (including the e-mail delivery of documents in Adobe
PDF format) of any signed original counterpart and/or retransmission of any signed facsimile
transmission shall be deemed the same as the delivery of an original.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

44

 

[Signature Page to Stock Purchase Agreement]

          IN WITNESS WHEREOF, each of the parties hereto has executed, or has caused to be executed by
its duly authorized representative, this Agreement as of the date first written above.

	 	 	 

	SELLERS:

	 	PURCHASER:
	 
	 	 
	 

	 	SOUTHEASTERN METALS
	 

	 	MANUFACTURING COMPANY, INC.
	 
	 	 
	By:

	 	By: /s/ Timothy Heasley

	Print Name:

	 	Print Name: Timothy Heasley

	Title:

	 	Title: Secretary

	 
	 	 
	By:

	 	 
	Print Name:

	 	 
	Title:

	 	 
	 
	 	 
	By:

	 	 
	Print Name:

	 	 
	Title:

	 	 
	 
	 	 
	By:

	 	 
	Print Name:

	 	 
	Title:

	 	 

45

 

[Signature Page to Stock Purchase Agreement]

          IN WITNESS WHEREOF, each of the parties hereto has executed, or has caused to be executed by
its duly authorized representative, this Agreement as of the date first written above.

	 	 	 

	SELLERS:

	 	PURCHASER:
	 
	 	 
	 

	 	SOUTHEASTERN METALS
	 

	 	MANUFACTURING COMPANY, INC.
	 
	 	 
	By: /s/ Loring W. Rutt

	 	By:

	Print Name: Loring W. Rutt

	 	Print Name: 

	Title: Trustee

	 	Title: 

	 
	 	 
	By:

	 	 
	Print Name:

	 	 
	Title:

	 	 
	 
	 	 
	By:

	 	 
	Print Name:

	 	 
	Title:

	 	 
	 
	 	 
	By:

	 	 
	Print Name:

	 	 
	Title:

	 	 

45

 

[Signature Page to Stock Purchase Agreement]

          IN WITNESS WHEREOF, each of the parties hereto has executed, or has caused to be executed by
its duly authorized representative, this Agreement as of the date first written above.

	 	 	 

	SELLERS:

	 	PURCHASER:
	 
	 	 
	 

	 	SOUTHEASTERN METALS
	 

	 	MANUFACTURING COMPANY, INC.
	 
	 	 
	By: /s/ Earl L. Banks

	 	By: 

	Print Name: Earl L. Banks

	 	Print Name: 

	Title: Trustee

	 	Title: 

	 
	 	 
	By:

	 	 
	Print Name:

	 	 
	Title:

	 	 
	 
	 	 
	By:

	 	 
	Print Name:

	 	 
	Title:

	 	 
	 
	 	 
	By:

	 	 
	Print Name:

	 	 
	Title:

	 	 

45

 

[Signature Page to Stock Purchase Agreement]

          IN WITNESS WHEREOF, each of the parties hereto has executed, or has caused to be executed by
its duly authorized representative, this Agreement as of the date first written above.

	 	 	 

	SELLERS:

	 	PURCHASER:
	 
	 	 
	 

	 	SOUTHEASTERN METALS
	 

	 	MANUFACTURING COMPANY, INC.
	 
	 	 
	By: /s/ Duane M. Simmons

	 	By:  

	Print Name: Duane M. Simmons

	 	Print Name: 

	Title:

	 	Title: 

	 
	 	 
	By: /s/ Mary Ellen C. Simmons

	 	 
	Print
Name: Mary Ellen C. Simmons

	 	 
	Title:

	 	 
	 
	 	 
	By:
/s/ Daniel C. Davis III

	 	 
	Print
Name: Daniel C. Davis III

	 	 
	Title:

	 	 
	 
	 	 
	By: /s/ David M. Hughes

	 	 
	Print Name: David M. Hughes

	 	 
	Title: Vice - President

	 	 

45

 

[Signature Page to Stock Purchase Agreement]

          IN WITNESS WHEREOF, each of the parties hereto has executed, or has caused to be executed by
its duly authorized representative, this Agreement as of the date first written above.

	 	 	 

	SELLERS:

	 	PURCHASER:
	 
	 	 
	 

	 	SOUTHEASTERN METALS
	 

	 	MANUFACTURING COMPANY, INC.
	 
	 	 
	By:

	 	By:  

	Print Name:

	 	Print Name: 

	Title:

	 	Title: 

	 
	 	 
	By:

	 	 
	Print Name:

	 	 
	Title:

	 	 
	 
	 	 
	By:

	 	 
	Print Name:

	 	 
	Title:

	 	 
	 
	 	 
	By: /s/ Larry D. Inhelder

	 	 
	Print Name: Larry D. Inhelder

	 	 
	Title:

	 	 

45

 

[Signature Page to Stock Purchase Agreement]

          IN WITNESS WHEREOF, each of the parties hereto has executed, or has caused to be executed by
its duly authorized representative, this Agreement as of the date first written above.

	 	 	 

	SELLERS:

	 	PURCHASER:
	 
	 	 
	 

	 	SOUTHEASTERN METALS
	 

	 	MANUFACTURING COMPANY, INC.
	 
	 	 
	By: /s/ William L. Korth

	 	By:  

	Print Name: William L. Korth

	 	Print Name: 

	Title: Shareholder

	 	Title: 

	 
	 	 
	By:

	 	 
	Print Name:

	 	 
	Title:

	 	 
	 
	 	 
	By:

	 	 
	Print Name:

	 	 
	Title:

	 	 
	 
	 	 
	By:

	 	 
	Print Name:

	 	 
	Title:

	 	 

45

 

[Signature Page to Stock Purchase Agreement]

          IN WITNESS WHEREOF, each of the parties hereto has executed, or has caused to be executed by
its duly authorized representative, this Agreement as of the date first written above.

	 	 	 

	SELLERS:

	 	PURCHASER:
	 
	 	 
	 

	 	SOUTHEASTERN METALS
	 

	 	MANUFACTURING COMPANY, INC.
	 
	 	 
	By:
/s/ Lura M. Hansen

	 	By:  

	Print
Name: Lura M. Hansen

	 	Print Name: 

	Title:

	 	Title: 

	 
	 	 
	By:

	 	 
	Print Name:

	 	 
	Title:

	 	 
	 
	 	 
	By:

	 	 
	Print Name:

	 	 
	Title:

	 	 
	 
	 	 
	By:

	 	 
	Print Name:

	 	 
	Title:

	 	 

45

 

[Signature Page to Stock Purchase Agreement]

          IN WITNESS WHEREOF, each of the parties hereto has executed, or has caused to be executed by
its duly authorized representative, this Agreement as of the date first written above.

	 	 	 

	SELLERS:

	 	PURCHASER:
	 
	 	 
	 

	 	SOUTHEASTERN METALS
	 

	 	MANUFACTURING COMPANY, INC.
	 
	 	 
	By: /s/ Carter Dunlap

	 	By:  

	Print Name: Carter Dunlap

	 	Print Name: 

	Title: Trustee Kevin Barry Hayes Trust,
          FBO Timothy Barry Hayes

	 	Title: 

	 
	 	 
	By: /s/ Carter Dunlap

	 	 
	Print Name: Carter Dunlap

	 	 
	Title:
Trustee Kevin Barry Hayes Trust 
          FBO Kelly Megan Hayes

	 	 
	 
	 	 
	By: /s/ Carter Dunlap

	 	 
	Print Name: Carter Dunlap

	 	 
	Title:
Trustee Kevin Barry Hayes 
          FBO Casey John Hayes

	 	 
	 
	 	 
	By:

	 	 
	Print Name:

	 	 
	Title:

	 	 

45

 

[Signature Page to Stock Purchase Agreement]

          IN WITNESS WHEREOF, each of the parties hereto has executed, or has caused to be executed by
its duly authorized representative, this Agreement as of the date first written above.

	 	 	 

	SELLERS:

	 	PURCHASER:
	 
	 	 
	 

	 	SOUTHEASTERN METALS
	 

	 	MANUFACTURING COMPANY, INC.
	 
	 	 
	By: /s/ W. Brent Taylor

	 	By:  

	Print Name: W. Brent Taylor

	 	Print Name: 

	Title: President

	 	Title: 

	 
	 	 
	By:

	 	 
	Print Name:

	 	 
	Title:

	 	 
	 
	 	 
	By:

	 	 
	Print Name:

	 	 
	Title:

	 	 
	 
	 	 
	By:

	 	 
	Print Name:

	 	 
	Title:

	 	 

45

 

[Signature Page to Stock Purchase Agreement]

          IN WITNESS WHEREOF, each of the parties hereto has executed, or has caused to be executed by
its duly authorized representative, this Agreement as of the date first written above.

	 	 	 

	SELLERS:

	 	PURCHASER:
	 
	 	 
	 

	 	SOUTHEASTERN METALS
	 

	 	MANUFACTURING COMPANY, INC.
	 
	 	 
	By: /s/ Robin A. Edgar

	 	By:

	Print Name: Robin A. Edgar

	 	Print Name:

	Title:
Trustee

	 	Title: 

	 
	 	 
	By:

	 	 
	Print Name:

	 	 
	Title:

	 	 
	 
	 	 
	By:

	 	 
	Print Name:

	 	 
	Title:

	 	 
	 
	 	 
	By:

	 	 
	Print Name:

	 	 
	Title:

	 	 

45

 

[Signature Page to Stock Purchase Agreement]

          IN WITNESS WHEREOF, each of the parties hereto has executed, or has caused to be executed by
its duly authorized representative, this Agreement as of the date first written above.

	 	 	 

	SELLERS:

	 	PURCHASER:
	 
	 	 
	 

	 	SOUTHEASTERN METALS
	 

	 	MANUFACTURING COMPANY, INC.
	 
	 	 
	By: /s/ Frank J. Fulford 

	 	By:  

	Print Name: Frank J. Fulford

	 	Print Name: 

	Title: Vice President

	 	Title: 

	 
	 	 
	By: /s/ Carole A. Fulford

	 	 
	Print Name: Carole A. Fulford

	 	 
	Title:

	 	 
	 
	 	 
	By:

	 	 
	Print Name:

	 	 
	Title:

	 	 
	 
	 	 
	By:

	 	 
	Print Name:

	 	 
	Title:

	 	 

45

 

[Signature Page to Stock Purchase Agreement]

          IN WITNESS WHEREOF, each of the parties hereto has executed, or has caused to be executed by
its duly authorized representative, this Agreement as of the date first written above.

	 	 	 

	SELLERS:

	 	PURCHASER:
	 
	 	 
	 

	 	SOUTHEASTERN METALS
	 

	 	MANUFACTURING COMPANY, INC.
	 
	 	 
	By: /s/ Janice C. Jones

	 	By:  

	Print Name: Janice C. Jones

	 	Print Name: 

	Title:

	 	Title: 

	 
	 	 
	By:

	 	 
	Print Name:

	 	 
	Title:

	 	 
	 
	 	 
	By:

	 	 
	Print Name:

	 	 
	Title:

	 	 
	 
	 	 
	By:

	 	 
	Print Name:

	 	 
	Title:

	 	 

45

 

[Signature Page to Stock Purchase Agreement]

          IN WITNESS WHEREOF, each of the parties hereto has executed, or has caused to be executed by
its duly authorized representative, this Agreement as of the date first written above.

	 	 	 

	SELLERS:

	 	PURCHASER:
	 
	 	 
	 

	 	SOUTHEASTERN METALS
	 

	 	MANUFACTURING COMPANY, INC.
	 
	 	 
	By: /s/ Ben Dinapoli

	 	By:  

	Print Name: Ben Dinapoli

	 	Print Name: 

	Title: Production Mgr.

	 	Title: 

	 
	 	 
	By:

	 	 
	Print Name:

	 	 
	Title:

	 	 
	 
	 	 
	By:

	 	 
	Print Name:

	 	 
	Title:

	 	 
	 
	 	 
	By:

	 	 
	Print Name:

	 	 
	Title:

	 	 

45

 

SCHEDULE 1

SHAREHOLDERS

	 	 	 	 	 	 	 	 	 
	 	 	Certificate	 	 	Number of	 
	Name	 	Number	 	 	Shares	 
	Taylor Family Revocable Trust
	 	 	1	 	 	 	51,000	 
	W. Brent Taylor, Trustee
	 	 	30	 	 	 	2,000	 
	 
	 	 	 	 	 	 	 	 
	David Michael Hughes
	 	 	2	 	 	 	7,500	 
	David Michael Hughes
	 	 	3	 	 	 	10,000	 
	 
	 	 	 	 	 	 	 	 
	Robin A. Edgar & Ellen

K. Edgar, Trustees
	 	 	11	 	 	 	5,000	 
	 
	 	 	 	 	 	 	 	 
	Loring W. Rutt, Trustee
	 	12-A (duplicate)	 	 	2,500	 
	 
	 	 	 	 	 	 	 	 
	Frank J. & Carole A. Fulford
	 	 	14	 	 	 	6,000	 
	Frank J. Fulford
	 	 	31	 	 	 	500	 
	 
	 	 	 	 	 	 	 	 
	William L. Korth & Sandra

K. Korth, Trustee
	 	 	15	 	 	 	7,000	 
	“
	 	 	19	 	 	 	23,333	 
	“
	 	 	32	 	 	 	1,500	 
	 
	 	 	 	 	 	 	 	 
	Barbara F. Banks & Earl L. 

Banks, Trustee
	 	 	20	 	 	 	23,334	 
	 
	 	 	 	 	 	 	 	 
	Lura M. Hansen
	 	 	21	 	 	 	23,333	 
	 
	 	 	 	 	 	 	 	 
	Larry D. Inhelder
	 	 	23	 	 	 	13,000	 
	 
	 	 	 	 	 	 	 	 
	Daniel C. Davis III
	 	 	24	 	 	 	2,500	 
	 
	 	 	 	 	 	 	 	 
	Janice C. Jones
	 	 	25	 	 	 	3,000	 
	 
	 	 	 	 	 	 	 	 
	Carter Dunlap, Trustee

FBO Timothy Hayes
	 	 	26	 	 	 	1,000	 
	Carter Dunlap, Trustee

FBO Casey Hayes
	 	 	27	 	 	 	1,000	 
	Carter Dunlap, Trustee 

FBO Keely Hayes
	 	 	28	 	 	 	1,000	 
	 
	 	 	 	 	 	 	 	 
	Duane M. Simmons and Mary
Ellen C. Simons
	 	 	29	 	 	 	5,000	 
	 
	 	 	 	 	 	 	 	 
	Ben Dinapoli
	 	 	33	 	 	 	2,500	 

 

 

SCHEDULE 3.01(c)

CONFLICTS

     All shareholders are governed by the Pacific Award Metals, Inc. Buy and Sell Agreement dated
June 18, 2001, restricting the transfer, encumbrance, alienation or assignment of the shareholder’s
stock in the company without the providing of certain notices to the Company and to the other
shareholders. Said agreement also provides options and rights of first refusal to the Company and
the shareholders in the event a shareholder desires to transfer shares in the Company. By signing
this agreement, the Company and all shareholders waive the rights and duties and obligations of the
shareholders and the Company under said Buy and Sell Agreement. The Buy and Sell Agreement will be
terminated on or before closing.

     The Wells Fargo Bank Credit and Security Agreement dated as of December 22, 2008, entered into
by the Company, which will be paid off at closing.

     The K.I.T. International Note and Security Agreement dated March 24, 2011, entered into by the
Company, which will be paid off at closing.

 

 

SCHEDULE 3.01(e)

LITIGATION

See Schedule 3.02(j).

 

 

SCHEDULE 3.02(a)

JURISDICTION OF ORGANIZATION

AND

JURISDICTIONS IN WHICH THE COMPANY IS QUALIFIED TO DO BUSINESS

	1.	 	The Company was organized in the State of California.

	2.	 	Company is qualified or registered to do business in the States of Arizona, California and
Washington.

	 	 	Company has operated in Colorado and has filed tax returns in Colorado. Company is in the
process of registering with the Colorado Secretary of State as a foreign corporation doing
business in Colorado.

 

 

SCHEDULE 3.02(c)

OFFICERS AND DIRECTORS OF PACIFIC AWARD METALS, INC.

OFFICERS:

	 	 	 

	President

	 	W. Brent Taylor
	Vice-President of Sales

	 	Frank J. Fulford
	Vice President

	 	David M. Hughes
	Secretary

	 	Donald Laughlin
	Chief Financial Officer

	 	Donald Laughlin

DIRECTORS:

W. Brent Taylor

David M. Hughes

Duane M. Simmons

William L. Korth

Larry D. Inhelder

 

 

SCHEDULE 3.02(d)

CONFLICTS

     All shareholders are governed by the Pacific Award Metals, Inc. Buy and Sell Agreement dated
June 18, 2001, restricting the transfer, encumbrance, alienation or assignment of the shareholder’s
stock in the company without the providing of certain notices to the Company and to the other
shareholders. Said agreement also provides options and rights of first refusal to the Company and
the shareholders in the event a shareholder desires to transfer shares in the Company. By signing
this agreement, the Company and all shareholders waive the rights and duties and obligations of the
shareholders and the Company under said Buy and Sell Agreement. The Buy and Sell Agreement will be
terminated on or before closing.

     The Wells Fargo Bank Credit and Security Agreement dated as of December 22, 2008, entered into
by the Company, which will be paid off at closing.

     The K.I.T. International Note and Security Agreement dated March 24, 2011, entered into by the
Company, which will be paid off at closing.

 

 

SCHEDULE 3.02(e)

GOVERNMENT CONSENTS AND APPROVALS

None.

 

 

SCHEDULE 3.02(g)

LIABILITIES

None.

 

 

SCHEDULE 3.02(h)

PERMITS

	 	 	 	 	 
	BUSINESS LICENSES	 	License Number	 	Expiration Date
	CITY OF BALDWIN PARK CA

	 	 991574
	 	06/30/11
	CITY OF UNION CITY CA

	 	 BL-023926
	 	06/30/11
	CITY OF VANCOUVER WA

	 	 14482
	 	03/31/12
	CITY OF KENT WA

	 	 BLC-2040033
	 	01/31/12
	CITY OF PHOENIX AZ

	 	 1011289
	 	12/31/11

	 	 	 
	SALES, USE, EXCISE TAX:	 	Account Number
	CA SALES TAX

	 	 SRAP 97-882997
	CO SALES TAX

	 	 04134717-0000
	CO CITY AND COUNTY OF DENVER SALES TAX

	 	 282157-010063
	NV SALES TAX

	 	 1000631583
	WA EXCISE TAX

	 	 602130459
	AZ TRANSACTION PRIVILEGE, USE & SEVERANCE TAX

	 	 07636478-V
	AZ CITY OF PHOENIX PRIVILEGE (SALES) TAX

	 	 282157-010063

	 	 	 	Baldwin Park Permits

EPA ID #

CAL000302257
	 
	 	 	 	CALIFORNIA REGIONAL WATER QUALITY CONTROL BOARD

WDID — 4B195S009949

GENERAL PERMIT — CAS000001

WATER QUALITY — 97-03-DWQ
	 
	 	 	 	UNIFIED PROGRAM FACILITY PERMIT (LA COUNTY FIRE DEPT)

LA CO CUPA — AR0031352
	 
	 	 	 	COMPRESSOR PERMITS

BUILDING 1

ST SERIAL # — A007081-08

NB #SER — 95644

ST SERIAL # — A008011-08

NB #SER — 189086
	 
	 	 	 	BUILDING 2

ST SERIAL # — A007083-91

NB #SER — 229086

ST SERIAL # — A007082-91
	 	 	 	NB #SER — 222743

 

 

	 	 	 	DEPARTMENT OF INDUSTRIAL RELATIONS

PERMIT TO OPERATE LIQUIFIED PETROLEUM GAS

ST # — L008309-98

SERIAL # — 10462
	 
	 	 	 	Union City Permits to Operate:

Business License

City of Union City

License # BL-023926

Account # 015593
	 
	 	 	 	Liquefied Petroleum Gas Tank

SER # 132580

State # L002160-75

	 
	 	 	 	Air Pressure Tank

SER # 30444

State # A002289-86

SER # 3147770

State # A002192-75
	 
	 	 	 	Union City Fire Department (CUPA division)

no permit numbers

	 
	 	 	 	Bay Area Air Quality Management District

Plant # 12505
	 
	 	 	 	Department of Resources Recycling & Recovery

# 1608981-01
	 
	 	 	 	EPA

# CAL000229799

 

 

SCHEDULE 3.02(i)

ABSENCE OF CERTAIN CHANGES

Secured Note and related agreements relating to the loan made by K.I.T. International, Inc. on
March 24, 2011, which will be paid off on or before Closing.

The Company continues to be in default under certain covenants made by the Company in that certain
Credit and Security Agreement dated as of December 22, 2008 with Wells Fargo Bank, NA, which will
be paid off at Closing.

 

 

SCHEDULE 3.02(j)

LITIGATION

     Company is a party to the following litigation. Pacific Award Metals, Inc. is being sued in a
negligence, personal injury case in the State of Oregon by Dustin Fullgraf. This is case No.
CN22652, captioned “Dustin Fullgraf v. Firebolt Trucking, LLC, a foreign corporation; May Trucking,
Inc., an Oregon Corporation; and Pacific Award Metals, Inc., a foreign corporation.” The accident
arose from injuries sustained by Plaintiff when a semi truck he was riding in collided with another
semi truck parked on the shoulder of Interstate 84 in Eastern Oregon. The plaintiff alleges a
driver for Pacific Award Metals, Inc. contributed to this accident by abruptly pulling in front of
oncoming traffic. This claim is being defended by counsel provided by insurance of Pacific Award
Metals, Inc.

     Company is also pursuing a claim against Kibel Green Inc. for a refund of the remainder of an
unearned deposit for loan consultation. No litigation has been commenced at this time.

 

 

SCHEDULE 3.02(m)

INTELLECTUAL PROPERTY

	(ii)	 	Trademarks — U.S.

	 	 	 	 	 	 	 
	Title	 	Trademark Number	 	Issue Date
	Stealth

	 	 	2,282,019	 	 	9/28/1999
	Snapie Ties

	 	 	1,383,007	 	 	2/18/1986
	Award Stonecoat

	 	 	2,283,817	 	 	10/5/1999
	RAP-I-FORM

	 	 	1,210,253	 	 	9/28/1982
	Power Bead

	 	 	3,393,273	 	 	3/4/2008
	Sun Line

	 	 	3,058,800	 	 	2/14/2006
	Nifty-fifty

	 	 	2,568,162	 	 	5/7/2002
	Mini Bead

	 	 	3,077,946	 	 	4/4/2006
	Minibull

	 	 	3,175,110	 	 	11/21/2006
	Ready-Vent

	 	 	2,336,522	 	 	3/28/2000

	 	 	Trademarks — Canada & Mexico

	 	 	 	 	 	 	 	 	 
	Title	 	Trademark Number	 	Issue Date	 	Country
	Power Bead

	 	TMA737,886
	 	4/9/2009
	 	Canada
	Sun Line

	 	TMA707,983
	 	2/21/2008
	 	Canada
	Taper’s Bead

	 	TMA701,150
	 	11/20/2007
	 	Canada
	Tapers Choice

	 	TMA701,149
	 	11/20/2007
	 	Canada
	Minibull

	 	TMA693,198
	 	8/1/2007
	 	Canada
	Minibead

	 	TMA668,221
	 	7/19/2006
	 	Canada
	Sun Line

	 	 	900097	 	 	9/22/2005
	 	Mexico
	Minibull

	 	 	896556	 	 	8/24/2005
	 	Mexico
	Minibead

	 	 	896555	 	 	8/24/2005
	 	Mexico

	 	 	Patents — U.S.

	 	 	 	 	 	 	 
	 	 	Patent	 	 
	Title	 	Number	 	Issue Date
	Multi-Part Foundation Ventilator

	 	 	6,165,066	 	 	12/26/2000
	Ridge Vent for Tile Roofs

	 	US6,662,509B2
	 	12/16/2003
	Continuation Patent for Ridge Vent

	 	US7,024,829B2
	 	4/11/2006
	Foundation Ventilator Plug

	 	USD438,300S
	 	2/27/2001

	 	 	Company domain name: www.awardmetals.com
	 
	 	 	Trade Names: Award Metals, which is registered in Los Angeles County, California
	 
	 	 	Business and Commercial System Purchase/License Agreement by and between Business
Automation, Inc. and Award Metals, Inc. dated December 8, 1994

 

 

SCHEDULE 3.02(o)

LEASED REAL PROPERTY

	 	 	 
	Pacific Award Metals Locations	 	Ownership Entity
	1450 Virginia Ave.
Baldwin Park, CA 91706

	 	ARI-PAC Investments
	 
	 	 
	1315 Vineland Avenue
Baldwin Park, CA 91706

	 	ARI-PAC Investments
	 
	 	 
	50 South 43rd Ave.
Phoenix, AZ 85009

	 	43rd Avenue/Jefferson Partnership
	 
	 	 
	1000 Whipple Road
Union City, CA 94587

	 	ARI-CAL, LLC
	 
	 	 
	2400 N.E. 65th Ave.
Vancouver, WA 98661

	 	Christensen Group, Inc.
	 
	 	 
	18770 80th Place South
Kent, WA 98032

	 	Hill Investment Company, LLP
	 
	 	 
	12001 East 37th Ave.
Denver, CO 80239

	 	LPJC Development Center Limited LLLP

 

 

SCHEDULE 3.02(p)

TOP FIFTEEN CUSTOMERS AND SUPPLIERS

There has been no direct adverse change to customers or suppliers. There has been an indirect
adverse change with all of these entities as a result of the elongated and profound nature of the
economic downturn that continues to stifle the construction segment of the economy.

None of our top customers have gone out of business, though they shift around some regarding who is
actually in or near the top 15. These customers all continue to purchase materials from us but at
reduced quantities consistent with the depressed economy.

 

 

SCHEDULE 3.02(r)

ENVIRONMENTAL MATTERS

Matters related to an underground storage tank that was removed from the facility located at 1450
North Virginia Avenue, Baldwin Park, California.

 

 

SCHEDULE 3.02(s)(i)

EMPLOYEE PLANS

	1.	 	Award Metals 401(k) Plan
	 
	2.	 	Award Metals Union Employees 401(k) Plan
	 
	3.	 	Pacific Award Metals, Inc. Employee Handbook
	 
	4.	 	Pacific Award Metals, Inc. Health and Welfare Benefits Plan
	 
	5.	 	Agreement between Pacific Award Metals, Inc. and Sheet Metal Workers’
International Association Local Union No 170
	 
	6.	 	See attached
	 
	7.	 	Sheet Metal Workers National Pension Fund Plan

 

 

AWARD METALS

AUGUST 1, 2010 EMPLOYEE BENEFIT SUMMARY

INTRODUCTION

Award Metals. is proud to offer a generous employee benefit program that gives you flexibility and
choice. This summary briefly highlights the benefits offered to all eligible employees and their
dependents.

If you would like more information about any of the benefits described here, please contact Human
Resources:

Lorraine Rivas

626-814-4410 or

lorrainev@awardmetals.com

WHO CAN BE COVERED?

All full-time regular employees working at least 30 hours per week may participate in benefits
programs offered by Award Metals.

Your Eligible dependents include

	 	•	 	Spouse
	 
	 	•	 	Domestic Partner
	 
	 	•	 	Unmarried children under age 19
	 
	 	•	 	Unmarried children up to age 25 if they are full-time students

Note: Dependent children covered under the medical and/or dental plans as of June 1, 2010 will
continue to be eligible for coverage under both plans up to age 26, regardless of their student
status.

CHANGES TO ENROLLMENT

The benefit elections you make will be in effect through July 31, 2011. There will be an annual
open enrollment period in July, during which you can make new benefit elections for the following
August 1st effective date.

Once you make your benefit elections, you cannot change them during the year unless you have a
change in family status.

IRS regulations define a change in family status as:

	•	 	Marriage, divorce or legal separation
	 
	•	 	Birth or adoption of a child
	 
	•	 	A child becoming ineligible for dependent coverage
	 
	•	 	Death of a spouse or child
	 
	•	 	A change from full time to part time (or the opposite)
	 
	•	 	An unpaid leave of absence
	 
	•	 	A change in your spouse’s employment
	 
	•	 	A move out of the HMO service area
	 
	•	 	A Qualified Medical Child Support Order

NOTE: If you have a family status change, you have 31 days to update your coverage per
insurer guidelines.

Please contact Human Resources immediately upon a change in status to complete the appropriate
forms. If you do not update your coverage within 31 days from the family status change, you must
wait until the next open enrollment period to update your coverage.

CA Salaried — Open Enrollment 2010     Page 1 of 5

 

 

			
	

	 	 

Award Metals offers a choice of medical plans so you can select the coverage that is right for
you.

ANTHEM BLUE CROSS HMO PLAN

Anthem Blue Cross offers a Health Maintenance Organization (HMO). Under this plan, you must choose
a Primary Care Physician (PCP) and medical group. All of your care must be directed through your
PCP and/or your medical group. You will receive benefits only if you use the doctors, clinics and
hospitals that belong to the medical group in which you are enrolled.

ANTHEM BLUE CROSS PPO PLANS

With an Anthem Blue Cross Preferred Provider Organization (PPO) plan, you have the freedom to go in
and out of network for care. You may use a PPO provider whose negotiated rates provide richer
levels of benefits, with claim forms filed by the provider. You may also obtain services outside
the PPO network; however, you will incur higher out of pocket expenses and you are responsible for
filing claims.

Enrollment in the Anthem Blue Cross Health Savings Account (HSA) allows you to use a Savings
Account for qualified medical expenses. Unused HSA dollars can be saved from year to year to
reduce the amount you may have to pay for health care in the future.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	MEDICAL BENEFITS SUMMARY
	 	 	 	 	 	 	Anthem Blue Cross	 	Anthem Blue Cross
	 	 	 	 	 	 	PPO PLAN	 	HEALTH SAVINGS ACCOUNT
	 	 	Anthem Blue Cross	 	 	 	 	 	OUT OF	 	 	 	 	 	OUT OF
	FEATURE	 	HMO PLAN	 	IN NETWORK	 	NETWORK	 	IN NETWORK	 	NETWORK
	Lifetime Maximum

	 	Unlimited
	 	$5,000,000	 	$5,000,000
	Deductible

	 	 	 	 	 	 	 	 	 	 	 	 	 	Applies to medical care

	(Calendar Year)

	 	 	 	 	 	 	 	 	 	 	 	 	 	AND prescription drugs

	Individual

	 	$0	 	$250	 	$750	 	$1,500
	Family

	 	$0	 	$750	 	$2,250	 	$3,000 aggregate

	Coinsurance (Plan Pays)

	 	100% for most services
	 	80%	 	60%	 	90%	 	70%
	Physician Office Visit

	 	$20 Copay
	 	$20 Copay
	 	60%	 	90%	 	70%
	Out of Pocket Maximum
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	(Calendar Year)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Individual

	 	$1,500	 	$3,000	 	$6,000	 	$3,000	 	$6,000
	Family

	 	$3,000	 	N/A	 	N/A	 	$6,000	 	$12,000
	Hospitalization
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Inpatient

	 	$250 copay per
	 	$250 Deductible,
	 	$750 Deductible,
	 	 	 	 	 	 	 	 
	 

	 	admission
	 	then 80%
	 	then 60%
	 	90%	 	70%
	Outpatient

	 	80%	 	80%	 	60%	 	90%	 	70%
	Emergency Services

	 	$100 Copay
	 	$100 Deductible, then 80%
	 	90%
	Wellness Exams

	 	 	 	 	 	 	 	 	 	 	 	 	 	Deductible waived for these services

	Adult

	 	$20 Copay
	 	$25 Copay
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	for most services
	 	for most services
	 	60%	 	100%	 	70%
	Children

	 	$20 Copay
	 	$25 Copay
	 	60%	 	100%	 	70%
	Prescription Drugs

	 	Mandatory Generic*
	 	Mandatory Generic*
	 	Mandatory Generic *

	Generic Formulary

	 	$10	 	$10	 	90%	 	10%
	Brand Name Formulary

	 	$25	 	$25	 	90%	 	25%
	Non-Formulary

	 	$40	 	$40	 	90%	 	10%
	Mail Order
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	(up to 90 day supply)

	 	$20/$50/$80	 	$20/$50/$80	 	Not
available	 	
$20/$50/$80
	Mental Health
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	(non-severe)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Inpatient

	 	$250 copay per
	 	$250 Deductible,	 	$750 Deductible,
	 	$250 copay per
	 	$250 Deductible,
	 

	 	admission
	 	 then 80%
	 	then 60%
	 	admission
	 	 then 80%

	Outpatient

	 	$20 Copay
	 	$20 Copay
	 	 	60	%	 	$20 Copay
	 	$20 Copay

Most out of network services are based on the customary & reasonable charge.

 

			
	*	 	Mandatory Generic Substitution: Failure to get generic when available will result in the
member paying the difference in cost between the generic drug and the brand name drug plus the
brand name drug copay. The mail order drug program has been enhanced to allow the member to
receive a 3 month supply of generic medication for just one generic drug copay.

CA
Salaried — Open Enrollment 2010     Page 2 of 5

 

			
	DENTAL

	 	 

PPO DENTAL

The PPO Dental plan benefits cover a wide range of dental services. You have the freedom to go in
and out of network for care.

You may visit a PPO dentist and benefit from the reduced contracted fee resulting in less out of
pocket expense.

You may also visit an out of network dentist, where services will be based on a reasonable and
customary amount and you will be responsible for any amount owed after insurance has paid.

	 	 	 	 	 	 	 	 	 
	FEATURE	 	IN NETWORK	 	 	OUT OF NETWORK	 
	Calendar Year Maximum
	 	$	1,500	 	 	$	1,500	 
	Deductible (Ind. / Family)
	 	$	50 / $150	 	 	$	50/$150	 
	 
	 	Plan Pays:	 
	Preventive
	 	 	100	%	 	 	 	 
	Deductible
Waived for Preventive Services?
	 	Yes	 
	Basic Services
	 	 	90	%	 	 	80	%
	Major Services
	 	 	60	%	 	 	50	%
	Orthodontia (child only)
	 	 	50	%	 	 	50	%
	Orthodontia Lifetime Max
	 	 	$ 1,500	 
	 

			
	 
	 	 

The Vision Service Plan (VSP) provides professional vision care and high quality lenses and
frames through a broad network of optical specialists.

	 	 	 	 	 	 	 	 	 
	FEATURE	 	IN NETWORK	 	 	OUT OF NETWORK	 
	Deductible
	 	 	 	 	 	 	 	 
	Examination
	 	$ 20
	Prescription Glasses
	 	$ 20
	Contact Lenses
	 	 	No Copay	 
	Lenses
	 	 	 	 	 	 	 	 
	Single Vision
	 	 	100	%	 	$45 Benefit
	Bifocal
	 	 	100	%	 	$65 Benefit
	Trifocal
	 	 	100	%	 	$85 Benefit
	Frame
	 	$120 Benefit	 	$47 Benefit
	Contact Lenses
	 	$120 Benefit	 	$105 Benefit
	 
	 	(in lieu of glasses)
	Frequency
	 	 	 	 	 	 	 	 
	Exam
	 	12 months
	Lenses
	 	12 months
	Frames
	 	24 months

BASIC LIFE AND AD&D

Award Metals provides full-time salaried employees with Basic Term Life and Accidental Death &
Dismemberment (AD&D) insurance through Prudential Financial. The Basic Term Life benefit is 2x
base salary, up to $500,000.

The AD&D benefit matches the Basic Term Life benefit. The AD&D benefit includes benefits for loss
of life or limbs due to an accident.

DEPENDENT LIFE

Award Metals also provides full-time salaried employees with Basic Term Life insurance for
their dependents through Prudential Financial. The Basic Term Life benefit is $5,000 for a spouse
and $1,000 for each dependent child.

VOLUNTARY LIFE AND AD&D

You may elect to purchase additional Term Life insurance at group rates provided by Prudential
Financial. You pay for this coverage with after-tax dollars through payroll deduction. Benefits
are available to employees in increments of $10,000 up to $500,000. Coverage for your spouse and
child(ren) is also available. For more information, contact your Human Resources Dept.

CA Salaried — Open Enrollment 2010     Page 3 of 5

 

 

LONG TERM DISABILITY

Award Metals also provides full-time salaried employees with Long-Term Disability coverage
which may replace up to 60% of your income, in the event that you are disabled due to injury or
illness, through Prudential Financial. Benefits begin the day after the waiting period is
completed.

	 	 	 	 	 
	FEATURE	 	 	 	 
	Benefit
	 	60% of pre-disability earnings
	Benefit Maximum
	 	$6,000/month
	Waiting Period
	 	90 Days
	Maximum Benefit Duration
	 	Social Security Normal Retirement Age

SHORT TERM DISABILITY

Award Metals also provides Short-Term Disability coverage which may replace up to 60% of your
income for up to twelve weeks, in the event that you are disabled due to injury or illness, through
Prudential Financial. Benefits begin the day after the waiting period is completed.

This weekly benefit is intended to provide income to you for brief periods of disability, such as
pregnancy or post-surgery, or until you become eligible to receive Long-Term Disability benefits.

	 	 	 	 	 
	FEATURE	 	 	 	 
	Benefit
	 	60% of pre-disability earnings
	Benefit Maximum
	 	$1,000/week
	Waiting Period
	 	7 Days
	Maximum Benefit Duration
	 	12 Weeks

CA Salaried — Open Enrollment 2010     Page 4 of 5

 

 

INSURANCE BENEFITS CONTACTS

	 	 	 
	Medical HMO

	 	Anthem Blue Cross
	800-227-3560

	 	www.anthem.com/ca
	 
	 	 
	Medical PPO

	 	Anthem Blue Cross
	800-888-8288

	 	www.anthem.com/ca
	 
	 	 
	Prescription Drugs

	 	Anthem Blue Cross
	800-700-2541
	 	 
	 
	 	 
	Dental

	 	Assurant
	800-442-7742

	 	www.assurant.com
	 
	 	 
	Vision

	 	VSP
	800-877-7195

	 	www.vsp.com
	 
	 	 
	Basic Life, AD&D, and Dependent Life

	 	Prudential Financial
	800-524-0542

	 	www.prudential.com
	 
	 	 
	Disability

	 	Prudential Financial
	800-842-1718

	 	www.prudential.com
	 
	 	 
	Flexible Spending Accounts

	 	Conexis
	877-266-3947

	 	www.conexis.org

Provider Directories are available online for Medical, Dental and Vision providers.

Remember: Medical, Dental and Vision contributions are deducted before taxes through
payroll! Any contributions for Domestic Partner coverage are after-tax deductions per IRS
regulations.

This summary provides an overview of some of your benefit plan choices. It is for
informational purposes only. It is not intended to be an agreement for continued employment.
Neither is it a legal plan document. If there is a disagreement between this summary and the plan
documents, the documents will govern. In addition, the plans described in this summary are subject
to change without notice. Continuation of any benefit plan or coverage is at the company’s
discretion and in accordance with federal and state laws. If you need additional information or
have any questions about the benefit program, please contact Human Resources.

HOW MUCH WILL YOU PAY FOR BENEFITS?

Vision, Basic Life and AD&D, Long-Term Disability and Short-Term Disability insurance coverages are
provided for you by Award Metals at no cost to you.

You and the company share in the cost of the Medical and Dental benefits you elect.

Your contributions for Medical and Dental benefits are deducted before taxes are withheld,
which saves you tax dollars.

EMPLOYEE CONTRIBUTIONS
PER MONTH

	 	 	 	 	 

	Medical — Anthem Blue Cross HMO Plan
	 	 	 	 
	Employee
	 	$	118.00	 
	Employee + Spouse/DP
	 	$	271.00	 
	Employee + Child(ren)
	 	$	222.00	 
	Employee + Family
	 	$	399.00	 
	Medical — Anthem Blue Cross PPO Plan
	 	 	 	 
	Employee
	 	$	127.00	 
	Employee + Spouse/DP
	 	$	292.00	 
	Employee + Child(ren)
	 	$	239.00	 
	Employee + Family
	 	$	430.00	 
	Medical— Anthem Blue Cross Health Savings Account
	 	 	 	 
	Employee
	 	$	110.25	 
	Employee + Spouse/DP
	 	$	228.90	 
	Employee + Child(ren)
	 	$	203.70	 
	Employee + Family
	 	$	245.70	 
	Dental — Assurant
	 	 	 	 
	Employee
	 	$	9.00	 
	Employee + Spouse/DP
	 	$	19.00	 
	Employee + Child(ren)
	 	$	21.00	 
	Employee + Family
	 	$	32.00	 

FLEXIBLE SPENDING ACCOUNTS (FSA’s)

The flexible benefit plan allows you to put away money on a PRE-TAX basis (in other words,
before taxes are withheld) for qualified Health Care and Dependent Care.

FSA enrollment is on a calendar year basis. There will be an open enrollment period in December,
during which you can make benefit elections for the following January 1 effective date.

CA Salaried — Open Enrollment 2010     Page 5 of 5

 

 

AWARD METALS

AUGUST 1, 2010 EMPLOYEE BENEFIT SUMMARY

INTRODUCTION

Award Metals is proud to offer a generous employee benefit program. This summary briefly
highlights the benefits offered to all eligible employees and their dependents.

If you would like more information about any of the benefits described here, please contact Human
Resources:

Lorraine Rivas

626-814-4410 or

lorrainev@awardmetals.com

WHO CAN BE COVERED?

All full-time regular employees working at least 30 hours per week may participate in benefits
programs offered by Award Metals.

Your Eligible dependents include

	 	•	 	Spouse
	 
	 	•	 	Domestic Partner
	 
	 	•	 	Unmarried children under age 19
	 
	 	•	 	Unmarried children up to age 25 if they are full-time students

Note: Dependent children covered under the medical and/or dental plans as of June 1, 2010 will
continue to be eligible for coverage under both plans up to age 26, regardless of their student
status.

CHANGES TO ENROLLMENT

The benefit elections you make will be in effect through July 31, 2011. There will be an annual
open enrollment period in July, during which you can make new benefit elections for the following
August 1st effective date.

Once you make your benefit elections, you cannot change them during the year unless you have a
change in family status.

IRS regulations define a change in family status as:

	•	 	Marriage, divorce or legal separation
	 
	•	 	Birth or adoption of a child
	 
	•	 	A child becoming ineligible for dependent coverage
	 
	•	 	Death of a spouse or child
	 
	•	 	A change from full time to part time (or the opposite)
	 
	•	 	An unpaid leave of absence
	 
	•	 	A change in your spouse’s employment
	 
	•	 	A move out of the HMO service area
	 
	•	 	A Qualified Medical Child Support Order

NOTE: If you have a family status change, you have 31 days to update your coverage per
insurer guidelines.

Please contact Human Resources immediately upon a change in status to complete the appropriate
forms. If you do not update your coverage within 31 days from the family status change, you must
wait until the next open enrollment period to update your coverage.

Non-CA — Open Enrollment 2010    Page 1 of 4

 

 

ANTHEM BLUE CROSS PPO PLAN

With an Anthem Blue Cross Preferred Provider Organization (PPO) plan, you have the freedom to go in
and out of network for care. You may use a PPO provider whose negotiated rates provide richer
levels of benefits, with claim forms filed by the provider. You may also obtain services outside
the PPO network; however, you will incur higher out of pocket expenses and you are responsible for
filing claims.

	 	 	 	 	 	 	 	 	 
	MEDICAL BENEFITS SUMMARY	 
	 	 	Anthem Blue Cross	 
	FEATURE	 	PPO PLAN	 
	 	 	IN NETWORK	 	 	OUT OF NETWORK	 
	Lifetime Maximum
	 		$5,000,000	 
	Deductible
(Calendar Year)
	 	 	 	 	 	 	 	 
	Individual
	 	$	250	 	 	$	750	 
	Family
	 	$	750	 	 	$	2,250	 
	Coinsurance (Plan Pays)
	 	 	80	%	 	 	60	%
	Physician Office Visit
	 	$20 Copay	 	 	60	%
	Out of Pocket Maximum (Calendar Year)
	 	 	 	 	 	 	 	 
	Individual
	 	$	3,000	 	 	$	6,000	 
	Family
	 	 	N/A	 	 	 	N/A	 
	Hospitalization
	 	 	 	 	 	 	 	 
	Inpatient
	 	$250 Deductible, then 80%	 	$750 Deductible, then 60%
	Outpatient
	 	 	80	%	 	 	60	%
	Emergency Services
	 	$100 Deductible, then 80%	 
	Wellness Exams
	 	 	 	 	 	 	 	 
	Adult
	 	$25 Copay for most services	 	 	60	%
	Children
	 	$25 Copay	 	 	60	%
	Prescription Drugs
	 	Mandatory Generic*	 
	Generic Formulary
	 		$10	 
	Brand Name Formulary
	 	 	$25	 
	Non-Formulary
	 	 	$40	 
	Mail Order
(up to 90 day supply)
	 	 	$20/$50/$80	 
	Mental Health
(non-severe)
	 	 	 	 	 	 	 	 
	Inpatient
	 	$250 Deductible, then 80%	 	$750 Deductible, then 60%
	Outpatient
	 	$20 Copay	 	 	60	%

Most out of network services are based on the customary & reasonable charge.

 

			
	*	 	Mandatory Generic Substitution: Failure to get generic when available will
result in the member paying the difference in cost between the generic drug and the
brand name drug plus the brand name drug copay. The mail order drug program has been
enhanced to allow the member to receive a 3 month supply of generic medication for
just one generic drug copay.

Non-CA — Open Enrollment 2010     Page 2 of 4

 

 

DENTAL

PPO DENTAL

The PPO Dental plan benefits cover a wide range of dental services. You have the freedom to go in
and out of network for care.

You may visit a PPO dentist and benefit from the reduced contracted fee resulting in less out of
pocket expense.

You may also visit an out of network dentist, where services will be based on a reasonable and
customary amount and you will be responsible for any amount owed after insurance has paid.

	 	 	 	 	 	 	 	 	 
	FEATURE	 	IN NETWORK	 	 	OUT OF NETWORK	 
	Calendar Year Maximum
	 	$	1,500	 	 	$	1,500	 
	Deductible (Ind. / Family)
	 	$	50 / $150	 	 	$	50 / $150	 
	 
	 	Plan Pays:	 
	Preventive
	 	 	100%	 
	Deductible
Waived for Preventive Services?
	 	Yes	 
	Basic Services
	 	 	90	%	 	 	80	%
	Major Services
	 	 	60	%	 	 	50	%
	Orthodontia (child only)
	 	 	50	%	 	 	50	%
	Orthodontia Lifetime Max
	 		$1,500	 

The Vision Service Plan (VSP) provides professional vision care and high quality lenses and
frames through a broad network of optical specialists.

	 	 	 	 	 	 	 	 	 
	FEATURE	 	IN NETWORK	 	 	OUT OF NETWORK	 
	Deductible
	 	 	 	 	 	 	 	 
	Examination
	 		$20	 
	Prescription Glasses
	 		 $20	 
	Contact Lenses
	 	No Copay	 
	Lenses
	 	 	 	 	 	 	 	 
	Single Vision
	 	 	100	%	 	$45 Benefit
	Bifocal
	 	 	100	%	 	$65 Benefit
	Trifocal
	 	 	100	%	 	$85 Benefit
	Frame
	 	$120 Benefit	 	$47 Benefit
	Contact Lenses
	 	$120 Benefit	 	$105 Benefit
	 
	 	(in lieu of glasses)
	Frequency
	 	 	 	 	 	 	 	 
	Exam
	 	12 months	 
	Lenses
	 	12 months	 
	Frames
	 	24 months	 

BASIC LIFE AND AD&D

Award Metals provides full-time hourly employees with Basic Term Life and Accidental Death &
Dismemberment (AD&D) insurance through Prudential Financial. The Basic Term Life benefit is
$10,000.

The AD&D benefit matches the Basic Term Life benefit. The AD&D benefit includes benefits for loss
of life or limbs due to an accident.

DEPENDENT LIFE

Award Metals also provides full-time salaried employees with Basic Term Life insurance for
their dependents through Prudential Financial. The Basic Term Life benefit is $5,000 for a spouse
and $1,000 for each dependent child.

VOLUNTARY LIFE AND AD&D

You may elect to purchase additional Term Life insurance at group rates provided by Prudential
Financial. You pay for this coverage with after-tax dollars through payroll deduction. Benefits
are available to employees in increments of $10,000 up to $500,000. Coverage for your spouse and
child(ren) is also available. For more information, contact your Human Resources Dept.

SHORT TERM DISABILITY

Award Metals also provides Short-Term Disability coverage which may replace up to 60% of your
income for up to twelve weeks, in the event that you are disabled due to injury or illness, through
Prudential Financial. Benefits begin the day after the waiting period is completed.

This weekly benefit is intended to provide income to you for brief periods of disability, such as
pregnancy or post-surgery.

	 	 	 	 	 
	FEATURE	 	 	 	 
	Benefit
	 	60% of pre-disability earnings
	Benefit Maximum
	 	$1,000/week
	Waiting Period
	 	7 Days
	Maximum Benefit Duration
	 	12 Weeks

Non-CA — Open Enrollment 2010     Page 3 of 4

 

 

INSURANCE BENEFITS CONTACTS

	 	 	 

	Medical PPO

	 	Anthem Blue Cross
	800-888-8288

	 	www.anthem.com/ca
	 
	 	 
	Prescription Drugs

	 	Anthem Blue Cross
	800-700-2541
	 	 
	 
	 	 
	Dental

	 	Assurant
	800-442-7742

	 	www.assurant.com
	 
	 	 
	Vision

	 	VSP
	800-877-7195

	 	www.vsp.com
	 
	 	 
	Basic Life, AD&D, and Dependent Life

	 	Prudential Financial
	800-524-0542

	 	www.prudential.com
	 
	 	 
	Disability

	 	Prudential Financial
	800-842-1718

	 	www.prudential.com
	 
	 	 
	Flexible Spending Accounts

	 	Conexis
	877-266-3947

	 	www.conexis.org

Provider Directories are available online for Medical, Dental and Vision providers.

Remember: Medical, Dental and Vision contributions are deducted before taxes through
payroll! Any contributions for Domestic Partner coverage are after-tax deductions per IRS
regulations.

This summary provides an overview of some of your benefit plan choices. It is for
informational purposes only. It is not intended to be an agreement for continued employment.
Neither is it a legal plan document. If there is a disagreement between this summary and the plan
documents, the documents will govern. In addition, the plans described in this summary are subject
to change without notice. Continuation of any benefit plan or coverage is at the company’s
discretion and in accordance with federal and state laws. If you need additional information or
have any questions about the benefit program, please contact Human Resources.

HOW MUCH WILL YOU PAY FOR BENEFITS?

Vision, Basic Life and AD&D, and Short-Term Disability insurance coverages are provided for you by
Award Metals at no cost to you.

You and the company share in the cost of the Medical and Dental benefits you elect.

Your contributions for Medical and Dental benefits are deducted before taxes are withheld,
which saves you tax dollars.

EMPLOYEE CONTRIBUTIONS

PER MONTH

	 	 	 	 	 
	Medical Blue Cross PPO Plan
	 	 	 	 
	Employee
	 	$	92.00	 
	Employee + Spouse/DP
	 	$	212.00	 
	Employee + Child(ren)
	 	$	174.00	 
	Employee + Family
	 	$	312.00	 
	Dental — Assurant
	 	 	 	 
	Employee
	 	$	9.00	 
	Employee + Spouse/DP
	 	$	19.00	 
	Employee + Child(ren)
	 	$	21.00	 
	Employee + Family
	 	$	32.00	 

FLEXIBLE SPENDING ACCOUNTS (FSA’s)

The flexible benefit plan allows you to put away money on a PRE-TAX basis (in other words,
before taxes are withheld) for qualified Health Care and Dependent Care.

FSA enrollment is on a calendar year basis. There will be an open enrollment period in December,
during which you can make benefit elections for the following January 1 effective date.

Non-CA — Open Enrollment 2010     Page 4 of 4

 

 

AWARD METALS

AUGUST 1, 2010 EMPLOYEE BENEFIT SUMMARY

INTRODUCTION

Award Metals is proud to offer a generous employee benefit program. This summary briefly
highlights the benefits offered to all eligible employees and their dependents.

If you would like more information about any of the benefits described here, please contact Human
Resources:

Lorraine Rivas

626-814-4410 or

lorrainev@awardmetals.com

WHO CAN BE COVERED?

All full-time regular employees working at least 30 hours per week may participate in benefits
programs offered by Award Metals.

Your Eligible dependents include

	 	•	 	Spouse
	 
	 	•	 	Domestic Partner
	 
	 	•	 	Unmarried children under age 19
	 
	 	•	 	Unmarried children up to age 25 if they are full-time students

Note: Dependent children covered under the medical and/or dental plans as of June 1, 2010 will
continue to be eligible for coverage under both plans up to age 26, regardless of their student
status.

CHANGES TO ENROLLMENT

The benefit elections you make will be in effect through July 31, 2011. There will be an annual
open enrollment period in July, during which you can make new benefit elections for the following
August 1st effective date.

Once you make your benefit elections, you cannot change them during the year unless you have a
change in family status.

IRS regulations define a change in family status as:

	•	 	Marriage, divorce or legal separation
	 
	•	 	Birth or adoption of a child
	 
	•	 	A child becoming ineligible for dependent coverage
	 
	•	 	Death of a spouse or child
	 
	•	 	A change from full time to part time (or the opposite)
	 
	•	 	An unpaid leave of absence
	 
	•	 	A change in your spouse’s employment
	 
	•	 	A move out of the HMO service area
	 
	•	 	A Qualified Medical Child Support Order

NOTE: If you have a family status change, you have 31 days to update your coverage per
insurer guidelines.

Please contact Human Resources immediately upon a change in status to complete the appropriate
forms. If you do not update your coverage within 31 days from the family status change, you must
wait until the next open enrollment period to update your coverage.

Non-CA Salaried — Open Enrollment 2010     Page 1 of 5

 

 

ANTHEM BLUE CROSS PPO PLAN

With an Anthem Blue Cross Preferred Provider Organization (PPO) plan, you have the freedom to go in
and out of network for care. You may use a PPO provider whose negotiated rates provide richer
levels of benefits, with claim forms filed by the provider. You may also obtain services outside
the PPO network; however, you will incur higher out of pocket expenses and you are responsible for
filing claims.

	 	 	 	 	 	 	 	 	 
	MEDICAL BENEFITS SUMMARY	 
	 	 	Anthem Blue Cross	 
	FEATURE	 	PPO PLAN	 
	 	 	IN NETWORK	 	 	OUT OF NETWORK	 
	Lifetime Maximum
	 		$5,000,000	 
	Deductible
(Calendar Year)
	 	 	 	 	 	 	 	 
	Individual
	 	$	250	 	 	$	750	 
	Family
	 	$	750	 	 	$	2,250	 
	Coinsurance (Plan Pays)
	 	 	80	%	 	 	60	%
	Physician Office Visit
	 	$20 Copay	 	 	60	%
	Out of Pocket Maximum (Calendar Year)
	 	 	 	 	 	 	 	 
	Individual
	 	$	3,000	 	 	$	6,000	 
	Family
	 	 	N/A	 	 	 	N/A	 
	Hospitalization
	 	 	 	 	 	 	 	 
	Inpatient
	 	$250 Deductible,  then 80%	 	$750 Deductible, then 60%
	Outpatient
	 	 	80	%	 	 	60	%
	Emergency Services
	 	$100 Deductible, then 80%	 
	Wellness Exams
	 	 	 	 	 	 	 	 
	Adult
	 	$25 Copay for most services	 	 	60	%
	Children
	 	$25 Copay	 	 	60	%
	Prescription Drugs
	 	Mandatory Generic*	 
	Generic Formulary
	 		$10	 
	Brand Name Formulary
	 		$25	 
	Non-Formulary
	 		$40	 
	Mail Order
(up to 90 day supply)
	 		$20/$50/$80	 
	Mental Health
(non-severe)
	 	 	 	 	 	 	 	 
	Inpatient
	 	$250 Deductible, then 80%	 	$750 Deductible, then 60%
	Outpatient
	 	$20 Copay	 	 	60	%

Most out of network services are based on the customary & reasonable charge.

 

			
	*	 	Mandatory Generic Substitution: Failure to get generic when available will
result in the member paying the difference in cost between the generic drug and the
brand name drug plus the brand name drug copay. The mail order drug program has been
enhanced to allow the member to receive a 3 month supply of generic medication for
just one generic drug copay.

Non-CA Salaried — Open Enrollment 2010      Page 2 of 5

 

 

DENTAL 

PPO DENTAL

The PPO Dental plan benefits cover a wide range of dental services. You have the freedom to go in
and out of network for care.

You may visit a PPO dentist and benefit from the reduced contracted fee resulting in less out of
pocket expense.

You may also visit an out of network dentist, where services will be based on a reasonable and
customary amount and you will be responsible for any amount owed after insurance has paid.

	 	 	 	 	 	 	 	 	 
	FEATURE	 	IN NETWORK	 	 	OUT OF NETWORK	 
	Calendar Year Maximum
	 	$	1,500	 	 	$	1,500	 
	Deductible (Ind. / Family)
	 	$	50 / $150	 	 	$	50 / $150	 
	 
	 	Plan Pays:	 
	Preventive
	 	 	100%	 
	Deductible
Waived for Preventive Services?
	 	Yes	 
	Basic Services
	 	 	90	%	 	 	80	%
	Major Services
	 	 	60	%	 	 	50	%
	Orthodontia (child only)
	 	 	50	%	 	 	50	%
	Orthodontia Lifetime Max
	 		$1,500	 

The Vision Service Plan (VSP) provides professional vision care and high quality lenses and
frames through a broad network of optical specialists.

	 	 	 	 	 	 	 	 	 
	FEATURE	 	IN NETWORK	 	 	OUT OF NETWORK	 
	Deductible
	 	 	 	 	 	 	 	 
	Examination
	 	 	$20	 
	Prescription Glasses
	 		$20	 
	Contact Lenses
	 	No Copay	 
	Lenses
	 	 	 	 	 	 	 	 
	Single Vision
	 	 	100	%	 	$45 Benefit
	Bifocal
	 	 	100	%	 	$65 Benefit
	Trifocal
	 	 	100	%	 	$85 Benefit
	Frame
	 	$120 Benefit	 	$47 Benefit
	Contact Lenses
	 	$120 Benefit	 	$105 Benefit
	 
	 	(in lieu of glasses)
	Frequency
	 	 	 	 	 	 	 	 
	Exam
	 	12 months	 
	Lenses
	 	12 months	 
	Frames
	 	24 months	 

BASIC LIFE AND AD&D

Award Metals provides full-time salaried employees with Basic Term Life and Accidental Death &
Dismemberment (AD&D) insurance through Prudential Financial. The Basic Term Life benefit is 2x
base salary, up to $500,000.

The AD&D benefit matches the Basic Term Life benefit. The AD&D benefit includes benefits for loss
of life or limbs due to an accident.

DEPENDENT LIFE

Award Metals also provides full-time salaried employees with Basic Term Life insurance for
their dependents through Prudential Financial. The Basic Term Life benefit is $5,000 for a spouse
and $1,000 for each dependent child.

VOLUNTARY LIFE AND AD&D

You may elect to purchase additional Term Life insurance at group rates provided by Prudential
Financial. You pay for this coverage with after-tax dollars through payroll deduction. Benefits
are available to employees in increments of $10,000 up to $500,000. Coverage for your spouse and
child(ren) is also available. For more information, contact your Human Resources Dept.

Non-CA Salaried — Open Enrollment 2010     Page 3 of 5

 

 

LONG TERM DISABILITY

Award Metals also provides full-time salaried employees with Long-Term Disability coverage
which may replace up to 60% of your income, in the event that you are disabled due to injury or
illness, through Prudential Financial. Benefits begin the day after the waiting period is
completed.

	 	 	 	 	 
	FEATURE	 	 	 	 
	Benefit
	 	60% of pre-disability earnings
	Benefit Maximum
	 	$6,000/month
	Waiting Period
	 	90 Days
	Maximum Benefit Duration
	 	Social Security Normal Retirement Age

SHORT TERM DISABILITY

Award Metals also provides Short-Term Disability coverage which may replace up to 60% of your
income for up to twelve weeks, in the event that you are disabled due to injury or illness, through
Prudential Financial. Benefits begin the day after the waiting period is completed.

This weekly benefit is intended to provide income to you for brief periods of disability, such as
pregnancy or post-surgery, or until you become eligible to receive Long-Term Disability benefits.

	 	 	 	 	 
	FEATURE	 	 	 	 
	Benefit
	 	60% of pre-disability earnings
	Benefit Maximum
	 	$1,000/week
	Waiting Period
	 	7 Days
	Maximum Benefit Duration
	 	12 Weeks

Non-CA Salaried — Open Enrollment 2010 Page 4 of 5

 

 

INSURANCE BENEFITS CONTACTS

	 	 	 

	Medical PPO

	 	Anthem Blue Cross
	800-888-8288

	 	www.anthem.com/ca
	 
	 	 
	Prescription Drugs

	 	Anthem Blue Cross
	800-700-2541
	 	 
	 
	 	 
	Dental

	 	Assurant
	800-442-7742

	 	www.assurant.com
	 
	 	 
	Vision

	 	VSP
	800-877-7195

	 	www.vsp.com
	 
	 	 
	Basic Life, AD&D, and Dependent Life

	 	Prudential Financial
	800-524-0542

	 	www.prudential.com
	 
	 	 
	Disability

	 	Prudential Financial
	800-842-1718

	 	www.prudential.com
	 
	 	 
	Flexible Spending Accounts

	 	Conexis
	877-266-3947

	 	www.conexis.org

Provider Directories are available online for Medical, Dental and Vision providers.

Remember: Medical, Dental and Vision contributions are deducted before taxes through
payroll! Any contributions for Domestic Partner coverage are after-tax deductions per IRS
regulations.

This summary provides an overview of some of your benefit plan choices. It is for
informational purposes only. It is not intended to be an agreement for continued employment.
Neither is it a legal plan document. If there is a disagreement between this summary and the plan
documents, the documents will govern. In addition, the plans described in this summary are subject
to change without notice. Continuation of any benefit plan or coverage is at the company’s
discretion and in accordance with federal and state laws. If you need additional information or
have any questions about the benefit program, please contact Human Resources.

HOW MUCH WILL YOU PAY FOR BENEFITS?

Vision, Basic Life and AD&D, Long-Term Disability and Short-Term Disability insurance coverages are
provided for you by Award Metals at no cost to you.

You and the company share in the cost of the Medical and Dental benefits you elect.

Your contributions for Medical and Dental benefits are deducted before taxes are withheld,
which saves you tax dollars.

EMPLOYEE CONTRIBUTIONS

PER MONTH

	 	 	 	 	 	 	 	 	 
		 	 	 	 	 	 	 	 
	Medical – Anthem Blue Cross PPO Plan
	 			 	 	 	 	 
	Employee
	 	 	 	 	 	$	92.00	 
	Employee + Spouse/DP
	 	 	 	 	 	$	212.00	 
	Employee + Child(ren)
	 	 	 	 	 	$	174.00	 
	Employee + Family
	 	 	 	 	 	$	312.00	 
	Dental – Assurant
	 	 	 	 	 	 	 	 
	Employee
	 	 	 	 	 	$	9.00	 
	Employee + Spouse/DP
	 	 	 	 	 	$	19.00	 
	Employee + Child(ren)
	 	 	 	 	 	$	21.00	 
	Employee + Family
	 	 	 	 	 	$	32.00	 

FLEXIBLE SPENDING ACCOUNTS (FSA’s)

The flexible benefit plan allows you to put away money on a PRE-TAX basis (in other words,
before taxes are withheld) for qualified Health Care and Dependent Care.

FSA enrollment is on a calendar year basis. There will be an open enrollment period in December,
during which you can make benefit elections for the following January 1 effective date.

Non-CA Salaried — Open Enrollment 2010      Page 5 of 5

 

 

AWARD METALS

AUGUST 1, 2010 EMPLOYEE BENEFIT SUMMARY

INTRODUCTION

Award Metals. is proud to offer a generous employee benefit program that gives you flexibility and
choice. This summary briefly highlights the benefits offered to all eligible employees and their
dependents.

If you would like more information about any of the benefits described here, please contact Human
Resources:

Lorraine Rivas

626-814-4410 or

lorrainev@awardmetals.com

WHO CAN BE COVERED?

All full-time regular employees working at least 30 hours per week may participate in benefits
programs offered by Award Metals.

Your Eligible dependents include

	 	•	 	Spouse
	 
	 	•	 	Domestic Partner
	 
	 	•	 	Unmarried children under age 19
	 
	 	•	 	Unmarried children up to age 25 if they are full-time students

Note: Dependent children covered under the medical and/or dental plans as of June 1, 2010 will
continue to be eligible for coverage under both plans up to age 26, regardless of their student
status.

CHANGES TO ENROLLMENT

The benefit elections you make will be in effect through July 31, 2011. There will be an annual
open enrollment period in July, during which you can make new benefit elections for the following
August 1st effective date.

Once you make your benefit elections, you cannot change them during the year unless you have a
change in family status.

IRS regulations define a change in family status as:

	•	 	Marriage, divorce or legal separation

	•	 	Birth or adoption of a child

	•	 	A child becoming ineligible for dependent coverage

	•	 	Death of a spouse or child

	•	 	A change from full time to part time (or the opposite)

	•	 	An unpaid leave of absence

	•	 	A change in your spouse’s employment

	•	 	A move out of the HMO service area

	•	 	A Qualified Medical Child Support Order

NOTE: If you have a family status change, you have 31 days to update your coverage per
insurer guidelines.

Please contact Human Resources immediately upon a change in status to complete the appropriate
forms. If you do not update your coverage within 31 days from the family status change, you must
wait until the next open enrollment period to update your coverage.

CA — Open Enrollment 2010      Page 1 of 4

 

 

	 	 	 

	

	 	

Award Metals offers a choice of medical plans so you can select the coverage that is right for
you.

ANTHEM BLUE CROSS HMO PLAN

Anthem Blue Cross offers a Health Maintenance Organization (HMO). Under this plan, you must choose
a Primary Care Physician (PCP) and medical group. All of your care must be directed through your
PCP and/or your medical group. You will receive benefits only if you use the doctors, clinics and
hospitals that belong to the medical group in which you are enrolled.

ANTHEM BLUE CROSS PPO PLANS

With an Anthem Blue Cross Preferred Provider Organization (PPO) plan, you have the freedom to go in
and out of network for care. You may use a PPO provider whose negotiated rates provide richer
levels of benefits, with claim forms filed by the provider. You may also obtain services outside
the PPO network; however, you will incur higher out of pocket expenses and you are responsible for
filing claims.

Enrollment in the Anthem Blue Cross Health Savings Account allows you to use a Savings Account for
qualified medical expenses. Unused HSA dollars can be saved from year to year to reduce the amount
you may have to pay for health care in the future.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	MEDICAL BENEFITS SUMMARY
	FEATURE	 	Anthem Blue Cross	 	 	 	 	Anthem Blue Cross	Anthem Blue Cross
	 	 	HMO PLAN	 	 	 	 	PPO PLAN	 	HEALTH SAVINGS ACCOUNT
	 	 	 	 	 	 	 	 	 	 	 	OUT OF	 	 	 	 	 	 	OUT OF
	 	 	 	 	IN NETWORK	 	NETWORK	 	IN NETWORK	 	NETWORK
	Lifetime Maximum

	 	Unlimited
	 	$5,000,000	 	$5,000,000
	Deductible (Calendar Year)

	 	 	 	 	 	 	 	 	 	 	 	 	 	Applies to medical care

	

	 	 	 	 	 	 	 	 	 	 	 	 	 	AND prescription drugs

	Individual

	 	$	0	 	 	$	250	 	 	$	750	 	 	$1,500
	Family

	 	$	0	 	 	$	750	 	 	$	2,250	 	 	$3,000 aggregate

	Coinsurance (PlanPays)

	 	100% for most services
	 	 	80	%	 	 	60	%	 	 	90	%	 	 	70	%
	Physician Office Visit

	 	$20 Copay
	 	$20 Copay
	 	 	60	%	 	 	90	%	 	 	70	%
	Out of Pocket Maximum (Calendar Year)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Individual

	 	$	1,500	 	 	$	3,000	 	 	$	6,000	 	 	$	3,000	 	 	$	6,000	 
	Family

	 	$	3,000	 	 	 	N/A	 	 	 	N/A	 	 	$	6,000	 	 	$	12,000	 
	Hospitalization
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Inpatient

	 	$250 copay per
	 	$250 Deductible,
	 	$750 Deductible,
	 	 	 	 	 	 	 	 
	 

	 	admission
	 	then 80%
	 	then 60%
	 	 	90	%	 	 	70	%
	Outpatient

	 	 	80	%	 	 	80	%	 	 	60	%	 	 	90	%	 	 	70	%
	Emergency Services

	 	$100 Copay
	 	$100 Deductible, then 80%
	 	 	 	 	 	 	 	 
	Wellness Exams

	 	 	 	 	 	 	 	 	 	 	 	 	 	Deductible waived for these services

	Adult

	 	$20 Copay
	 	$25 Copay
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	for most services
	 	for most services
	 	 	60	%	 	 	100	%	 	 	70	%
	Children

	 	$20 Copay
	 	$25 Copay
	 	 	60	%	 	 	100	%	 	 	70	%
	Prescription Drugs

	 	Mandatory Generic*
	 	Mandatory Generic*
	 	Mandatory Generic *

	Generic Formulary

	 	$	10	 	 	$10	 	 	90	%	 	 	70	%
	Brand Name Formulary

	 	$	25	 	 	$25	 	 	90	%	 	 	70	%
	Non-Formulary

	 	$	40	 	 	$40	 	 	90	%	 	 	70	%
	Mail Order (up to 90 day supply)

	 	$20/$50/$80	 	$20/$50/$80	 	Not available

	Mental Health
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	(non-severe)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Inpatient

	 	$250 copay per
	 	 $250 Deductible,	$750 Deductible,
	 	 	 	 	 	 	 	 
	 

	 	admission
	 	 then 80%
	 	then 60%
	 	 	90	%	 	 	70	%
	Outpatient

	 	$20 Copay
	 	$20 Copay
	 	 	60	%	 	 	90	%	 	 	70	%

Most out of network services are based on the customary & reasonable charge.

 

			
	* 	 	Mandatory Generic Substitution: Failure to get generic when available will result in the
member paying the difference in cost between the generic drug and the brand name drug plus the
brand name drug copay. The mail order drug program has been enhanced to allow the member to
receive a 3 month supply of generic medication for just one generic drug copay.

CA — Open Enrollment 2010      Page 2 of 4

 

 

	 	 	 

	DENTAL

	 	

PPO DENTAL

The PPO Dental plan benefits cover a wide range of dental services. You have the freedom to go in
and out of network for care.

You may visit a PPO dentist and benefit from the reduced contracted fee resulting in less out of
pocket expense.

You may also visit an out of network dentist, where services will be based on a reasonable and
customary amount and you will be responsible for any amount owed after insurance has paid.

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	OUT OF	 
	FEATURE	 	IN NETWORK	 	 	NETWORK	 
	Calendar Year Maximum
	 	$	1,500	 	 	$	1,500	 
	Deductible (Ind. / Family)
	 	$	50 / $150	 	 	$	50 / $150	 
	 
	 	Plan Pays:
	Preventive
	 	 	100%
	Deductible
Waived for Preventive Services?
	 	Yes
	Basic Services
	 	 	90	%	 	 	80	%
	Major Services
	 	 	60	%	 	 	50	%
	Orthodontia (child only)
	 	 	50	%	 	 	50	%
	Orthodontia Lifetime Max
	 	$1,500

	 	 	 

	

	 	

The Vision Service Plan (VSP) provides professional vision care and high quality lenses and
frames through a broad network of optical specialists.

	 	 	 	 	 	 	 	 	 
	FEATURE	 	IN NETWORK	 	 	OUT OF NETWORK	 
	Deductible
	 	 	 	 	 	 	 	 
	Examination
	 	$20
	Prescription Glasses
	 	$20
	Contact Lenses
	 	No Copay
	Lenses
	 	 	 	 	 	 	 	 
	Single Vision
	 	 	100	%	 	$45 Benefit
	Bifocal
	 	 	100	%	 	$65 Benefit
	Trifocal
	 	 	100	%	 	$85 Benefit
	Frame
	 	$120 Benefit	 	$47 Benefit
	Contact Lenses
	 	$120 Benefit	 	$105 Benefit
	 
	 	(in lieu of glasses)
	Frequency
	 	 	 	 	 	 	 	 
	Exam
	 	12 months
	Lenses
	 	12 months
	Frames
	 	24 months

BASIC LIFE AND AD&D

Award Metals provides full-time hourly employees with Basic Term Life and Accidental Death &
Dismemberment (AD&D) insurance through Prudential Financial. The Basic Term Life benefit is
$10,000.

The AD&D benefit matches the Basic Term Life benefit. The AD&D benefit includes benefits for loss
of life or limbs due to an accident.

DEPENDENT LIFE

Award Metals also provides full-time salaried employees with Basic Term Life insurance for
their dependents through Prudential Financial. The Basic Term Life benefit is $5,000 for a spouse
and $1,000 for each dependent child.

VOLUNTARY LIFE AND AD&D

You may elect to purchase additional Term Life insurance at group rates provided by Prudential
Financial. You pay for this coverage with after-tax dollars through payroll deduction. Benefits
are available to employees in increments of $10,000 up to $500,000. Coverage for your spouse and
child(ren) is also available. For more information, contact your Human Resources Dept.

SHORT TERM DISABILITY

Award Metals also provides Short-Term Disability coverage which may replace up to 60% of your
income for up to twelve weeks, in the event that you are disabled due to injury or illness, through
Prudential Financial. Benefits begin the day after the waiting period is completed.

This weekly benefit is intended to provide income to you for brief periods of disability, such as
pregnancy or post-surgery.

	 	 	 	 	 
	FEATURE	 	 	 	 
	Benefit
	 	 60% of pre-disability earnings
	Benefit Maximum
	 	 $1,000/week
	Waiting Period
	 	 7 Days
	Maximum Benefit Duration
	 	 12 Weeks

CA — Open Enrollment 2010      Page 3 of 4

 

 

INSURANCE BENEFITS CONTACTS

	 	 	 

	Medical HMO

	 	Anthem Blue Cross
	800-227-3560

	 	www.anthem.com/ca
	 
	 	 
	Medical PPO

	 	Anthem Blue Cross
	800-888-8288

	 	www.anthem.com/ca
	 
	 	 
	Prescription Drugs

	 	Anthem Blue Cross
	800-700-2541
	 	 
	 
	 	 
	Dental

	 	Assurant
	800-442-7742

	 	www.assurant.com
	 
	 	 
	Vision

	 	VSP
	800-877-7195

	 	www.vsp.com
	 
	 	 
	Basic Life, AD&D, and Dependent Life

	 	Prudential Financial
	800-524-0542

	 	www.prudential.com
	 
	 	 
	Disability

	 	Prudential Financial
	800-842-1718

	 	www.prudential.com
	 
	 	 
	Flexible Spending Accounts

	 	Conexis
	877-266-3947

	 	www.conexis.org

Provider Directories are available online for Medical, Dental and Vision providers.

Remember: Medical, Dental and Vision contributions are deducted before taxes through
payroll! Any contributions for Domestic Partner coverage are after-tax deductions per IRS
regulations.

This summary provides an overview of some of your benefit plan choices. It is for
informational purposes only. It is not intended to be an agreement for continued employment.
Neither is it a legal plan document. If there is a disagreement between this summary and the plan
documents, the documents will govern. In addition, the plans described in this summary are subject
to change without notice. Continuation of any benefit plan or coverage is at the company’s
discretion and in accordance with federal and state laws. If you need additional information or
have any questions about the benefit program, please contact Human Resources.

HOW MUCH WILL YOU PAY FOR BENEFITS?

Vision, Basic Life and AD&D, and Short-Term Disability insurance coverages are provided for you by
Award Metals at no cost to you.

You and the company share in the cost of the Medical and Dental benefits you elect.

Your contributions for Medical and Dental benefits are deducted before taxes are withheld,
which saves you tax dollars.

EMPLOYEE CONTRIBUTIONS
PER MONTH

	 	 	 	 	 

	Medical — Anthem Blue Cross HMO Plan
	 	 	 	 
	Employee
	 	$	118.00	 
	Employee + Spouse/DP
	 	$	271.00	 
	Employee + Child(ren)
	 	$	222.00	 
	Employee + Family
	 	$	399.00	 
	Medical — Anthem Blue Cross PPO Plan
	 	 	 	 
	Employee
	 	$	127.00	 
	Employee + Spouse/DP
	 	$	292.00	 
	Employee + Child(ren)
	 	$	239.00	 
	Employee + Family
	 	$	430.00	 
	Medical— Anthem Blue Cross Health Savings Account
	 	 	 	 
	Employee
	 	$	110.25	 
	Employee + Spouse/DP
	 	$	228.90	 
	Employee + Child(ren)
	 	$	203.70	 
	Employee + Family
	 	$	245.70	 
	Dental — Assurant
	 	 	 	 
	Employee
	 	$	9.00	 
	Employee + Spouse/DP
	 	$	19.00	 
	Employee + Child(ren)
	 	$	21.00	 
	Employee + Family
	 	$	32.00	 

FLEXIBLE SPENDING ACCOUNTS (FSA’s)

The flexible benefit plan allows you to put away money on a PRE-TAX basis (in other words,
before taxes are withheld) for qualified Health Care and Dependent Care.

FSA enrollment is on a calendar year basis. There will be an open enrollment period in December,
during which you can make benefit elections for the following January 1 effective date.

CA — Open Enrollment 2010      Page 4 of 4

 

 

SCHEDULE 3.02(s)(ii)

Sheet Metal Workers National Pension Fund has provided estimated unfunded vested benefit liability
related to union employees of company. Attached hereto is the December 31, 2010, statement
regarding these liabilities.

 

 

Exhibit I

Sheet Metal Workers’ National Pension Fund Determination of Employer

Withdrawal Liability Payments For Withdrawals During the Plan Year Ending

December 31, 2010

     

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Contributions	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	All Employers	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Unamortized	 	 	Unamortized	 	 	Unamortized	 	 	Unamortized	 	 	 	 	 	 	 	 	 	 	Contributions	 	 	Prior Plan	 	 	5-Year Total,	 	 	 	 	 	 	 	 	 	 	Employer’s	 
	 	 	UVB	 	 	Reallocated	 	 	Affected Benefits	 	 	Total	 	 	 	 	 	 	 	 	 	 	of Withdrawn	 	 	Contributions for 5	 	 	Adjusted for	 	 	 	 	 	 	 	 	 	 	Share of	 
	 	 	Pools	 	 	Pools	 	 	Pools	 	 	Pools	 	 	Total	 	 	5-Year	 	 	Significant	 	 	Full Preceeding	 	 	Withdrawn	 	 	 	 	 	 	5-Year	 	 	Unamortized	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Award Metals,	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Inc. dba Pacific	 	 	 	 	 	 	 
	 	 	As of 12/31	 	 	As of 12/31	 	 	As of 12/31	 	 	As of 12/31	 	 	Contributions	 	 	Total	 	 	Employers	 	 	Plan Years	 	 	Employers	 	 	Award Metals	 	 	Total	 	 	Pools	 
	1995
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	161,977,117	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	85,094.48	 	 	 		 	 	 		 
	1996
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	175,335,950	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	87,244.62	 	 	 		 	 	 		 
	1997
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 	 	 	202,341,866	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	91,362.11	 	 	 		 	 	 		 
	1998
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	215,924,309	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	101,610.22	 	 	 		 	 	 		 
	1999
	 	 	368,130,679	 	 	 	—	 	 	 	—	 	 	 	368,130,679	 	 	 	226,290,914	 	 	 	981,870,156	 	 	 	3,962,308	 	 	 	850,533	 	 	 	978,758,381	 	 	 	98,586.89	 	 	 	463,898	 	 	 	174,481.47	 
	2000
	 	 	146,428,400	 	 	 	1,556,055	 	 	 	—	 	 	 	147,984,455	 	 	 	239,717,741	 	 	 	1,059,610,780	 	 	 	11,129,474	 	 	 	717,342	 	 	 	1,049,198,648	 	 	 	87,923,74	 	 	 	466,728	 	 	 	65,829.69	 
	2001
	 	 	453,869,381	 	 	 	879,691	 	 	 	—	 	 	 	454,749,072	 	 	 	238,418,955	 	 	 	1,122,693,785	 	 	 	15,147,300	 	 	 	489,000	 	 	 	1,108,035,485	 	 	 	90,194.55	 	 	 	469,678	 	 	 	192,760.44	 
	2002
	 	 	452,190,922	 	 	 	490,594	 	 	 	—	 	 	 	452,681,516	 	 	 	247,660,789	 	 	 	1,168,012,708	 	 	 	12,173,600	 	 	 	247,533	 	 	 	1,156,086,641	 	 	 	86,299.34	 	 	 	464,615	 	 	 	181,926.25	 
	2003
	 	 	97,133,915	 	 	 	1,166,242	 	 	 	—	 	 	 	98,320,157	 	 	 	240,674,499	 	 	 	1,192,762,898	 	 	 	12,561,082	 	 	 	62,375	 	 	 	1,180,264,191	 	 	 	96,179.07	 	 	 	459,184	 	 	 	38,251.61	 
	2004
	 	 	292,442,198	 	 	 	3,353,109	 	 	 	—	 	 	 	295,795,307	 	 	 	247,443,434	 	 	 	1,213,915,418	 	 	 	20,166,069	 	 	 	—	 	 	 	1,193,749,349	 	 	 	103,302.53	 	 	 	463,899	 	 	 	114,948.10	 
	2005
	 	 	175,603,802	 	 	 	467,970	 	 	 	—	 	 	 	176,071,772	 	 	 	262,377,565	 	 	 	1,236,575,242	 	 	 	26,385,454	 	 	 	—	 	 	 	1,210,189,788	 	 	 	107,804.70	 	 	 	483,780	 	 	 	70,385.68	 
	2006
	 	 	560,808,146	 	 	 	1,502,878	 	 	 	—	 	 	 	562,311,024	 	 	 	299,954,497	 	 	 	1,298,110,784	 	 	 	22,811,032	 	 	 	—	 	 	 	1,275,299,752	 	 	 	104,700.81	 	 	 	498,286	 	 	 	219,706.75	 
	2007
	 	 	315,339,322	 	 	 	2,466,401	 	 	 	—	 	 	 	317,805,723	 	 	 	332,387,580	 	 	 	1,382,837,575	 	 	 	14,859,085	 	 	 	—	 	 	 	1,367,978,490	 	 	 	75,921.34	 	 	 	487,908	 	 	 	113,349.81	 
	2008
	 	 	(158,316,465	)	 	 	800,557	 	 	 	688,287,903	 	 	 	530,771,995	 	 	 	368,026,400	 	 	 	1,510,189,476	 	 	 	11,450,641	 	 	 	—	 	 	 	1,498,738,835	 	 	 	50,346.49	 	 	 	442,076	 	 	 	156,559.29	 
	2009
	 	 	509,376,896	 	 	 	5,087,176	 	 	 	97,042	 	 	 	514,561,114	 	 	 	322,938,570	 	 	 	1,585,684,612	 	 	 	5,686,918	 	 	 	—	 	 	 	1,579,997,694	 	 	 	39,335.09	 	 	 	378,108	 	 	 	123,139.35	 
	 
	 	 	3,213,007,196	 	 	 	17,790,673	 	 	 	688,384,945	 	 	 	3,919,182,814	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Gross withdrawal liability assessment 
	 	1,451,338.44	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	De minimis reduction

	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	A. Excess assessment (over $100,000) 
	 	1,351,338.44	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	B Lesser of 50,000 and 0.75% of UVB 
	 	30,000.00	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	C. [B]-[A] not less than zero 
	 	—	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Net withdrawal liability assessment 
	 	1,451,338.44	 

This estimate is based on Unfunded Vested Benefits as of 12/31/09, and assuming the withdrawal took place in 2010.

We will not have our Withdrawal Liability Report and calculation worksheet for 2011 withdrawals until late October

                               or early November after the Fund’s actuarials for year ending 12/31/10 are completed. You may request another estimate at that time.

 

 

SCHEDULE 3.02(s)(vi)

EMPLOYEE PLANS

Sheet Metal Workers National Pension Fund has provided estimated unfunded vested benefit liability
related to union employees of company. See Schedule 3.02(s)(ii).

 

 

SCHEDULE 3.02(u)

INSURANCE

Property and Casualty Insurance Policies currently in place include:

	 	 	 	 	 	 	 
	 	 	Coverage Amount	 	 
	Policy	 	Aggregate/Occurrence	 	Annual Premium
	General Liability

	 	2,000,000/1,000,000
	 	30,111	 	 
	 
	 	 	 	 	 	 
	Property

	 	14,000,000 blanket building

9,400,000 blanket personal

property

9,000,000 blanket stock

6,420,000 blanket business

income-Value

1,940,000 blanket business

income-Area
	 	27,485	 	 
	 
	 	 	 	 	 	 
	Automobile

	 	Liability 1,000.000
Uninsured Motorists 1,000,000
	 	59,991	 	 
	 
	 	 	 	 	 	 
	Workers Comp — CA

	 	Each accident: 1,000,000
	 	est 258,402
direct bill

	 
	 	 	 	 	 	 
	Workers Comp — AZ & CO

	 	Each accident: 1,000,000
	 	est 35,370
direct bill

	 
	 	 	 	 	 	 
	Umbrella

	 	20,000,000/20,000,000
	 	17,741	 	 
	 
	 	 	 	 	 	 
	Excess Liability

	 	10,000,000/10,000,000
	 	10,100	 	 
	 
	 	 	 	 	 	 
	D & O and EPLI

	 	5,000,000/5,000,000
	 	23,147	 	 

 

 

SCHEDULE 3.02(v)

TANGIBLE PERSONAL PROPERTY LEASES

(IN EXCESS OF $10,000 PER YEAR)

None.

 

 

SCHEDULE 3.02(z)

RELATED PARTY TRANSACTIONS

     Each of the entities listed below are the landlords under certain leases of real property to
the Company:

	 	 	 	 	 
	43rd Ave/Jefferson Partnership	 	Percent	 
	A. Milton Whiting & Lorana Whiting Trust
	 	 	42.50	%
	W. Brent Taylor
	 	 	42.50	%
	David Hughes
	 	 	7.50	%
	Frank Fulford
	 	 	7.50	%
	Totals
	 	 	100.00	%

	 	 	 	 	 
	ARI-PAC Investments	 	Percent	 
	W. Brent Taylor
	 	 	52.31	%
	A. Milton Whiting & Lorana Whiting Trust
	 	 	25.58	%
	Bruce Whiting
	 	 	5.19	%
	Frank Fulford
	 	 	7.69	%
	Gerald Anctil
	 	 	7.69	%
	Blas Lozano
	 	 	1.54	%
	Totals
	 	 	100.00	%

	 	 	 	 	 
	ARI-CAL, LLC	 	Percent	 
	A. Milton Whiting & Lorana Whiting Trust
	 	 	51.13	%
	W. Brent Taylor
	 	 	28.41	%
	Duane Simmons
	 	 	6.82	%
	David Hughes
	 	 	6.82	%
	Barry Whiting
	 	 	6.82	%
	Totals
	 	 	100.00	%

Each of the following have made loans to the Company: W. Brent Taylor, Frank
Fulford and International Steel Center Co., Inc.

The only other related party transaction applicable to this definition is a $1,000,000
personal guarantee made by W. Brent Taylor to Wells Fargo to support it’s financing of
the company credit facility.

 

 

SCHEDULE 3.02(dd)

INDEBTEDNESS

	 	 	 	 	 	 	 	 	 
	Entity	 	Definition	 	 	Balance	 
	Wells Fargo
	 	Loans	 	$	3,827,832.02	 
	Shareholders
	 	Brent Taylor loan	 	$	350,167.71	 
	 
	 	Frank J. Fulford loan	 	$	50,023.96	 
	 
	 	Interstate Steel loan	 	$	150,071.88	 
	KIT International, Inc
	 	Loan	 	$	831,229.22	 

 

 

SCHEDULE 6.02(j)

Non-Competition Agreements

	 	 	 
	Name:	 	Length:
	W. Brent Taylor

	 	5 years —reduced to 6 months if employment with the Company is terminated for
“cause” or “good reason”
	 
	 	 
	David Hughes

	 	5 years —reduced to 6 months if employment with the
Company is terminated for “cause” or “good reason”
	 
	 	 
	Frank Fulford

	 	5 years —reduced to 6 months if employment with the
Company is terminated for “cause” or “good reason”
	 
	 	 
	Ben Dinapoli

	 	1 year —reduced to 6 months if employment with the
Company is terminated for “cause” or “good reason”
	 
	 	 
	Daniel Davis III

	 	1 year —reduced to 6 months if employment with the
Company is terminated for “cause” or “good reason”

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00190-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00190-of-00352.parquet"}]]