Document:

EX-10.2

 

Exhibit 10.2

	***	 	Denotes certain parts that have not been
disclosed and have been filed separately with
the Securities and
Exchange Commission and are subject to a request for confidential
treatment
pursuant to Rule 24b-2 of the Securities Exchange Act of
1934.

 

STOCK PURCHASE AGREEMENT

BY AND AMONG

AIR PRODUCTS AND CHEMICALS, INC.

(a Delaware corporation),

TOMAH HOLDINGS, INC.

(a Delaware corporation),

AND

THE STOCKHOLDERS OF TOMAH HOLDINGS, INC.

Dated March 20, 2006

 

 

 

STOCK PURCHASE AGREEMENT

          This STOCK PURCHASE AGREEMENT is made as of 20 March, 2006, by and among Air Products and
Chemicals, Inc., a Delaware corporation (“Buyer”), Tomah Holdings, Inc., a Delaware corporation
(“Company”), and the common stockholders and option holders of the Company set forth on the
signature page of this Agreement (individually, a “Stockholder” and collectively, the
“Stockholders”). Certain other terms are used herein as defined below in Section 1 or elsewhere in
this Agreement.

Background

     As of the Closing, the Stockholders shall own all of the outstanding equity securities of the
Company, which owns all of the outstanding equity securities of each other Company Group Member.
This Agreement sets forth the terms and conditions under which Buyer will purchase from the
Stockholders all of the equity securities of the Company outstanding as of the Closing Date.

Witnesseth

     NOW, THEREFORE, the Parties, intending to be legally bound hereby, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and in consideration
of the mutual covenants contained herein, hereby agree as follows:

1. Definitions.

     For convenience, certain terms used in more than one part of this Agreement are listed in
alphabetical order and defined below (such terms as well as any other terms defined elsewhere in
this Agreement shall be equally applicable to both the singular and plural forms of the terms
defined).

     “Accounts Receivable” means, as of any date, any trade accounts receivable and trade notes
receivable of the Business of the Company Group Members, as indicated by the context in which used.

     “Action” is defined in Section 10.6.

     “Adjustment Amount” is defined in Section 2.4.

     “Affiliates” means, with respect to a particular Person, (i) if an individual, each other
member of such individual’s Family, any Person that is directly or indirectly controlled by any one
or more members of such individual’s Family, any Person in which members of such individual’s
Family hold (individually or in the aggregate) a Material Interest, and any Person with respect to
which one or more members of such individual’s Family serves as a director, officer, partner,
executor or trustee (or in a similar capacity); or (ii) if other than an individual, Persons or
entities controlling, controlled by or under common control with that Person.. For purposes of this
definition, (a) “control” (including “controlling,” “controlled by,” and “under common control
with”) means the

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possession, direct or indirect, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting securities, by
contract or otherwise, and shall be construed as such term is used in the rules promulgated under
the Securities Act; (b) the “Family” of an individual includes (i) the individual, (ii) the
individual’s spouse, (iii) any other natural person who is related to the individual or the
individual’s spouse within the second degree and (iv) any other natural person who resides with
such individual; and (c) “Material Interest” means direct or indirect beneficial ownership (as
defined in Rule 13d-3 under the Exchange Act) of voting securities or other voting interests
representing at least ten percent (10%) of the outstanding voting power of a Person or equity
securities or other equity interests representing at least ten percent (10%) of the outstanding
equity securities or equity interests in a Person.

     “Agreement” means this Agreement and the Exhibits and Disclosure Schedules hereto.

     “Applicable Representations” is defined in Section 10.4(i).

     “Assets” means all of the assets, properties, goodwill and rights of every kind and
description, real, personal, tangible and intangible, wherever situated and whether or not
reflected in the most recent Financial Statements, which are owned or possessed by any Company
Group Member.

     “Balance Sheet” is defined in Section 4.5.

     “Balance Sheet Date” is defined in Section 4.5.

     “Benefit Plan” means any “employee benefit plan” as defined in Section 3(3) of ERISA, and any
other pension, profit sharing, bonus, deferred compensation, incentive compensation, stock option,
welfare benefit, severance, vacation, holiday, sick day, salary continuation, death benefit,
medical, dental or other employee fringe benefit, compensation or benefit plan, program agreement
or arrangement or payroll practice provided, contributed to or entered for the benefit of
employees.

     “Bonus Plan Payments” is defined in Section 2.3(a).

     “Building
Purchase Agreement” means the agreement between *** and Company or
one of the Existing Subsidiaries pursuant to which Company or one of the Existing Subsidiaries will
purchase the land and building located at 337 Vincent Street in the City of Milton, State of
Wisconsin, to be executed in connection with the Closing, substantially in the form attached hereto
as Exhibit A.

     “Business” means the entire business, operations and facilities of the Company Group Members,
and all related support services conducted by the Company Group Members.

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     “Business Day” means any day, other than a Saturday or Sunday or a day on which the banking
institutions of the State of New York are authorized or obligated by law or executive order to
close.

     “Buyer” is defined above in the preamble.

     “Buyer’s Accountants” is defined in Section 2.5(a).

     “Cash Purchase Price” is defined in Section 2.3(a).

     “Charter Documents” means an entity’s certificate or articles of incorporation, certificate
defining the rights and preferences of securities, articles of organization, by-laws, general or
limited partnership agreement, certificate of limited partnership, operating agreement, joint
venture agreement or similar document governing the entity.

     “Claim” is defined in Section 10.3.

     “Claim Notice” is defined in Section 10.4(a).

     “Claim Response” is defined in Section 10.4(a).

     “Closing” is defined in Section 3.1.

     “Closing Certificates” means the certificates to be delivered by the Seller Parties at the
Closing under Section 3.2.

     “Closing Date” is defined in Section 3.1.

     “Closing Date Balance Sheet” is defined in Section 2.5(a).

     “Closing Date Net Working Capital” is defined in Section 2.5(a).

     “Closing Payment” is defined in Section 2.3(b)(i).

     “Closing Shares” is defined in Section 4.4(c).

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

     “Company Group Member” means the Company and each of the Existing Subsidiaries.

     “Company Software” is defined in Section 4.18(g)(ii).

     “Component” means any software, Software Product, Company Software, Licensed Software,
Hardware, Database or Embedded Control.

     “Company Benefit Plans” is defined in Section 4.20(a).

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     “Company Employee Bonus Plans” means the Company’s Business Incentive Program (BIP), Marketing
Incentive Plan (MIP) and Senior Management Incentive Plan (SMIP).

     “Confidential Information” means any confidential technical or business information of any
Company Group Member relating to the Business, including Trade Secrets, personnel information,
know-how and other technical information, advertising and marketing plans or systems, distribution
and sales methods or systems, sales and profit figures, customer and client lists, customer, client
and supplier information and any relationships with dealers, distributors, wholesalers, customers,
clients, suppliers and any other Persons who have, or have had, business dealings with the
Business.

     “Consulting Agreements” means those agreements between Buyer
and each of *** to be executed in connection with the Closing, substantially in the form attached
hereto as Exhibits B-1 and B-2, pursuant to which such persons will provide consulting services to
Buyer.

     “Contract” means any written or oral contract, agreement, lease, instrument, or other document
or commitment, arrangement, undertaking, practice or authorization that is binding on any Person or
its property under any applicable Law.

     “Copyrights” means all copyrights in both published and unpublished works and registrations or
applications for registration of copyrights in any jurisdiction, and any renewals or extensions
thereof.

     “Court Order” means any judgment, decree, injunction, order or ruling of any federal, state,
local or foreign court, regulatory body or other Governmental Entity that is binding on any Person
or its property under applicable Law.

     “Customary Qualifications,” when used with respect to the enforceability of a Contract
(including, where appropriate, a Transaction Document), means that the enforceability of the
Contact in question is limited by (i) bankruptcy, insolvency, moratorium or other similar laws
affecting the enforcement of creditors’ rights generally or (ii) the application of general
equitable principles (regardless of whether such enforce ability is considered in a proceeding in
equity or at law).

     “Damages” is defined in Section 10.1.

     “Database” means all data and other information recorded, stored, transmitted and retrieved in
electronic form by a System, whether located on any System or archived in storage media of a type
employed or used in conjunction with any System.

     “Deductible Amount” is defined in Section 10.4(f).

     “Default” means (a) a breach, default or violation, (b) the occurrence of an event that with
or without the passage of time or the giving of notice, or both, would constitute a breach, default
or violation or cause an Encumbrance to arise, or (c) with respect to any Contract, the occurrence
of an event that with or without the passage of time or the giving

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of notice, or both, would give rise to a right of termination, renegotiation or acceleration
or a right to receive damages or a payment of penalties.

     “Derivative” means the Interest Rate Swap between Tomah Products, Inc. and Tomah Reserve, Inc
and M&I Marshall and Ilsley Bank dated March 8, 2004, with the original principal of $8,750,000,
bank reference 87T.

     “Disclosure Schedule” means any of the Schedules hereto containing information relating to the
Company Group Members pursuant to Section 4 and other sections and provisions hereof that have been
provided to Buyer on the date hereof.

     “Dispute Notice” is defined in Section 2.5(b).

     “Dispute Resolution Procedure” is defined in Section 2.5(b).

     “Embedded Control” means any microprocessor, microcontroller, smart instrumentation or other
sensor, driver, monitor, robotic or other device containing a semiconductor, memory circuit, BIOS,
PROM or other microchip.

     “Employees” is defined in Section 4.19.

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

     “Encumbrances” means any lien, mortgage, security interest, pledge, restriction on
transferability, option, right of first refusal, encroachment, easement, defect of title or other
claim, charge or encumbrance of any nature whatsoever on any property or property interest,
including any restriction on the use, voting, transfer, receipt of income or exercise of any
attributes of ownership.

     ““Environment” shall mean soil, land surface or subsurface strata, surface waters (including
navigable waters and ocean waters), groundwaters, drinking water supply, stream sediments, ambient
air (including indoor air), plant and animal life and any other environmental medium or natural
resource.

     “Environmental Law” means any Law that requires or relates to (a) advising appropriate
authorities, employees or the public of intended or actual Releases of pollutants or hazardous
substances or materials, violations of discharge limits or other prohibitions and the commencement
of activities, such as resource extraction or construction, that could have significant impact on
the Environment; (b) preventing or reducing to legally permitted levels the Release of pollutants
or hazardous substances or materials into the Environment; (c) reducing the quantities, preventing
the Release or minimizing the hazardous characteristics of wastes that are generated; (d)
protecting resources, species or ecological amenities; (e) transportation of Hazardous Substances;
(f) cleaning up pollutants that have been Released, preventing the threat of Release or paying the
costs of such clean up or prevention; or (g) making responsible parties pay private parties, or
groups of them, for damages done to their health or the Environment or permitting self-appointed
representatives of the public interest to recover for injuries

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done to public assets, in each case for injuries or damages arising out of a Release of or
exposure to a Hazardous Substance or pollutant.

     “Environmental Liabilities” means any cost, damages, expense, liability, obligation or other
responsibility arising from or under any Environmental Law, including those consisting of or
relating to (a) any environmental matter or condition (including on-site or off-site
contamination); (b) any fine, penalty, judgment, award, settlement, legal or administrative
proceeding, damages, loss, claim, demand or response, remedial or inspection cost or expense
arising under any Environmental Law; (c) financial responsibility under any Environmental Law for
cleanup costs or corrective action, including any cleanup, removal, containment or other
remediation or response actions (“Cleanup”) required by any Environmental Law (whether or not such
Cleanup has been required or requested by any Governmental Entity or any other Person) and for any
natural resource damages; or (d) any other compliance, corrective or remedial measure required
under any Environmental Law. As used herein, the terms “removal,” “remedial” and “response action”
include the types of activities covered by the United States Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (“CERCLA”).

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

     “ERISA Affiliate” means any person or entity that is a member of a controlled group,
affiliated service group or is under common control with any Company Group Member within the
meaning of Code Sections 414(b), (c), (m) or (o).

     “Escrow Agent” means JP Morgan Chase Bank.

     “Escrow Agreement” means the Escrow Agreement among Buyer, the Stockholders’ Representative
and the Escrow Agent in the form attached hereto as Exhibit C.

     “Escrow Funds” is defined in Section 2.4(b)(ii).

     “Estimated Closing Date Balance Sheet” is defined in Section 2.4.

     “Estimated Net Working Capital” is defined in Section 2.4.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     “Executive
Loan” means that certain loan by the Company to *** represented
by a certain Promissory Note dated July 1, 2005, in the original
principal amount of ***.

     “Exempt Employees” means those Employees employed in positions classified as “exempt” under
the Fair Labor Standards Act of 1938, as amended.

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     “Existing Subsidiaries” means Tomah Products, Inc. (a Wisconsin corporation), Tomah Reserve,
Inc. (a Delaware corporation), and Tomah Products Properties LLC (a Wisconsin limited liability
company).

     “Facility” means (a) any building, structure, installation, equipment, pipe or pipeline
(including any pipe into a sewer or publicly owned treatment works), well, pit, pond, lagoon,
impoundment, ditch, landfill, storage, container, motor vehicle, rolling stock, or aircraft, or (b)
any site or area where a hazardous substance has been deposited, stored, disposed of, or place, or
otherwise come to be located; but does not include any consumer product in consumer use or any
vessel.

     “Financial Statements” is defined in Section 4.5.

     “GAAP” means U.S. generally accepted accounting principles.

     “Good Standing” means good standing under the laws of the applicable jurisdiction, except that
with respect to the State of Wisconsin which does not recognize the concept of good standing, good
standing means that the entity in question is in active status under the laws of the State of
Wisconsin.

     “Governmental Entity” means any federal, state, local, foreign or other governmental or
quasi-governmental agency, authority, court, arbitrator or body or any other type of regulatory
body.

     “Governmental Permits” means all governmental permits, licenses, registrations, certificates
of occupancy, approvals and other authorizations of any Governmental Entity.

     “Hardware” means any mainframe, midrange computer, personal computer, notebook or laptop
computer, server, switch, printer, modem, driver, peripheral or any component of any of the
foregoing.

     “Hazardous Activity” means the distribution, generation, handling, importing, management,
manufacturing, processing, production, refinement, Release, storage, transfer, transportation,
treatment or use (including any withdrawal or other use of groundwater) of Hazardous Substances in,
on, under, about or from any of the Real Property or any part thereof into the Environment

     “Hazardous Substances” means any substance, material or waste which is currently regulated or
currently proposed to be regulated by any Governmental Entity, including any material, substance or
waste which is defined as a “hazardous waste,” “hazardous material,” “hazardous substance,”
“extremely hazardous waste,” “restricted hazardous waste,” “contaminant,” “toxic waste” or “toxic
substance” under any provision of Environmental Law, and including petroleum, petroleum products,
asbestos, presumed asbestos-containing material or asbestos-containing material, urea formaldehyde
and polychlorinated biphenyls.

     “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

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     “Imposition” means, individually or collectively, any institutional control, restriction or
use limitation placed on real estate.

     “Indemnification Cap” is defined in Section 10.4(e).

     “Indemnification Share” means, with respect to each Stockholder, the percentage set forth
opposite such Stockholder’s name on Exhibit D.

     “Indemnified Buyer Party” is defined in Section 10.1.

     “Indemnified Liabilities” means all Liabilities of the Company or any Company Group Member or
any of their respective Affiliates to the extent relating to or arising out of or in connection
with events, circumstances or conditions existing or arising prior to the Closing, other than those
Liabilities: (i) to the extent adequately reflected and reserved against in the Closing Date
Balance Sheet, (ii) specifically listed on Schedule 4.12, (iii) that relate to Taxes, which are
dealt with exclusively in Sections 4.13, 7.5 and 10.1.2 or (iv) that are Environmental Liabilities
or relate to or arise with respect to violation or noncompliance with an Environmental Law.

     “Indemnified Party” is defined in Section 10.4(a).

     “Indemnified Seller Party” is defined in Section 10.2.

     “Indemnitor” is defined in Section 10.4(a).

     “Intellectual Property” means any Copyrights, Patents, Trademarks, technology rights and
licenses, Trade Secrets, inventions, discoveries, know-how, formulae, specifications and ideas,
rights in research and development, and commercially practiced processes and inventions, whether
patentable or not in any jurisdiction, and any other intellectual property used by any Company
Group Member in the Business.

     “Inventory” means all inventories of the Company Group Members, including raw materials,
supplies, packaging supplies, work in process and finished goods.

     “Law” means any statute, law, ordinance, regulation, order or rule of any Governmental Entity,
including those covering environmental, energy, safety, health, transportation, bribery, record
keeping, zoning, antidiscrimination, antitrust, wage and hour, and price and wage control matters.

     “Legal Proceeding” means any lawsuit, action, suit, arbitration, administrative or other
proceeding, criminal prosecution or other investigation or inquiry of any Governmental Entity.

     “Licensed Software” is defined in Section 4.18(g)(i).

     “Liability” means any direct or indirect liability, indebtedness, obligation, expense, claim,
loss, damage, deficiency, guaranty or endorsement of or by any Person,

9

 

absolute or contingent, known or unknown, accrued or unaccrued, due or to become due,
liquidated or unliquidated.

     “LIBOR” means the interest rate offered by major banks in the interbank market in London,
England for 1 (one) month, published by the British Bankers’ Association at 11:00 a.m. (London
time) 2 (two) Business Days prior to the interest payment date.

     “Liquidated Claim Notice” is defined in Section 10.4(a).

     “Management
Bonuses” means the cash bonuses payable the Company *** in consideration of his past efforts on
behalf of the Company. For avoidance of doubt, *** is not included in Management
Bonuses.

     “Material Adverse Effect” means any event, change or effect that is or may reasonably be
expected to be materially adverse to the Business or the Company Group Members taken as a whole, or
the operations, assets, personnel, condition (financial or otherwise), or results of operations of
the Company Group Members, taken as a whole.

     “Minor Contract” means any Contract that is terminable by a Company Group Member on not more
than 30 days’ notice without any Liability and any Contract under which the obligation of the
Company Group Members (fulfilled and to be fulfilled) involves an amount of less than $25,000.

     “Net Working Capital” means the aggregate value of the Company Group Members’ trade
receivables and Inventory, net of allowances and reserves, less trade payables, all as determined
in accordance with GAAP and in a manner consistent with the Company’s June 30, 2005 balance sheet.

     “Net Working Capital Valuation” is defined in Section 2.6(a).

     “No Further Action Determination” means written concurrence of a Governmental Entity with
jurisdiction over an Environmental Liability that no further action is necessary to address the
Environmental Liability. A No Further Action Determination may be conditioned on Impositions.

     “Non-Competition
Agreements” means the Non-Competition Agreements executed by *** respectively, in favor of Buyer and the Company Group Members, in substantially the form
attached hereto as Exhibit E.

     “Non-Exempt Employees” means those Employees employed in positions classified as “non-exempt”
under the Fair Labor Standards Act of 1938, as amended.

     “Non-Real Estate Leases” is defined in Section 4.9.

     “Off-the-Shelf Software” is defined in Section 4.18(a)(i).

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     “Option Obligations” means all obligations of the Company with respect to Outstanding Options.

     “Option Payment” means the amount necessary to discharge and terminate all Option Obligations
pursuant to the terms of the Outstanding Options.

     “Option” is defined in Section 2.2.

     “Option Waiver” is defined in Section 2.2.

     “Order” means any order, writ, judgment, injunction, decree, ruling, assessment, stipulation,
determination or award entered by or with any court, arbitrator or other Governmental Entity.

     “Ordinary course” or “ordinary course of business” means, with respect to any Person, an
action taken by such Person if such action is consistent 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.

     “Outstanding Options” is defined in Section 4.4(b).

     “Parties” means Buyer and the Seller Parties.

     “Patents” means all patents, any extensions, reexaminations and reissues of such patents,
patents of addition, patent applications, divisions, continuations, continuations-in-part, and any
subsequent filings in any country or jurisdiction claiming priority therefrom.

     “Performance
Bonus” *** .

     “Permitted Encumbrances” shall mean (a) Encumbrances set forth on Schedule 4.6; (b) such
Encumbrances as do not materially detract from the value or materially impair the use of the
property subject thereto; (c) liens for Taxes not yet due or penalties for nonpayment or which are
being actively contested in good faith by appropriate proceedings and which have been sufficiently
accrued or reserved against in the Balance Sheet; or (d) industrial use restrictions that are a
matter of public record or that are imposed by Law which do not interfere in any material respect
with the use, occupancy or operation of the property of the Business as it is currently used,
occupied or operated by the appropriate Company Group Member.

     “Person” means any natural person, business trust, corporation, partnership, limited liability
company, joint stock company, proprietorship, association, trust, joint venture, unincorporated
association or any other legal entity of whatever nature.

     “Phantom Stock Payment” means the amount necessary to discharge and terminate all obligations
pursuant to the Phantom Stock Plan.

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     “Phantom Stock Plan” means the Tomah Holdings, Inc. 1999 Phantom Stock Plan, effective August
2, 1999, as amended as of December 8, 2003.

     “Possible Breach” is defined in Section 10.4(f).

     “Preferred Redemption Payment” is defined in Section 2.2.

     “Preferred Stock” is defined in Section 4.4(a).

     “Pro Rata Share” means the percentage specified with respect to a particular Stockholder on
Schedule 2.3.

     “Prime Rate” means the prime lending rate as announced from time to time by the Chase
Manhattan Bank, New York Branch, as its prime rate.

     “Purchase Price” is defined in Section 2.3(a).

     “Real Property” is defined in Section 4.7.

     “Release” means any release, spill, emission, leaking, pumping, pouring, dumping, emptying,
injection, deposit, disposal, discharge, dispersal, leaching or migration on or into the
Environment.

     “Remedial Action” means all actions, including any capital expenditures, required or
voluntarily undertaken (a) to clean up, remove, treat or in any other way address any Hazardous
Substances or other substance; (b) to prevent the Release or threat of Release or to minimize the
further Release of any Hazardous Substances or other substance so it does not migrate or endanger
or threaten to endanger public health or welfare or the Environment; (c) to perform pre-remedial
studies and investigations or post-remedial monitoring and care; or (d) to bring all Real Property
and the operations conducted thereon into compliance with Environmental Laws and environmental
Governmental Permits

     “Required Consents” is defined in Section 4.3.

     “Resolution Period” is defined in Section 10.4(c).

     “Response Period” is defined in Section 10.4(a).

     “ *** Options” means the
Company’s outstanding options *** .

     “SEC” means the U.S. Securities and Exchange Commission.

     “Second Working Capital Valuation” is defined in Section 2.5(b).

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

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     “Seller Parties” means the Stockholders and the Company.

     “Software Products” means any computer software products, other than Off-the-Shelf-Software,
and all computer operating, security or programming software, that is owned by or licensed to any
Company Group Member or used, in whole or in part, directly or indirectly, or has been developed or
designed for or is in the process of being developed or designed for use, in whole or in part,
directly or indirectly, in the conduct of the Business of any nature whatsoever, including all
systems software, all applications software, whether for general business usage (e.g., accounting,
finance, word processing, graphics, spreadsheet analysis, etc.) or specific, unique-to-the-Business
usage (e.g., telephone call processing, etc.), and any and all documentation and object and source
codes related thereto.

     “Specifically Applicable Representations” is defined in Section 10.4(f).

     “Stockholders” is defined above in the preamble.

     “Stockholders Accountants” is defined in Section 2.5(b).

     “Stockholders’ Representative” is defined in Section 10.8(a).

     “Subsidiary” means any and all corporations, partnerships, associations, trusts, joint
ventures, limited liability companies and other entities with respect to which any Person, directly
or indirectly, (i) owns a majority of the outstanding capital stock or (ii) owns securities or
other interests having the power to elect a majority of the board of directors or similar body
governing the affairs of such entity.

     “System” means any combination of two or more Components.

     “Target Net Working Capital” is defined in Section 2.4.

     “Taxes” means any federal, state, local, or foreign income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall profits, environmental
(including taxes under Code § 59A), customs duties, capital stock, franchise, profits, withholding,
social security (or similar), unemployment, disability, real property, personal property,
in-lieu-of payments, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not.

     “Tax Return” means any return, declaration, report, claim for refund, or information return,
or statement relating to Taxes, including any schedule or attachment thereto, and including any
amendment thereof.

     “Termination Date” is defined in Section 3.1.

     “the Company’s knowledge” or “knowledge of the Company” means the actual knowledge, after due
inquiry of any fact or matter, or representation or warranty contained in this Agreement, of a
group consisting of any director or officer of any

13

 

Company
Group Member, including *** (the “Knowledge Group”). “Due
inquiry” by a director shall be such inquiry that a director would make in the performance of his
duties as a director, provided that the foregoing shall not serve to diminish the due inquiry
obligation of any director who is also an officer of any Company Group Member.

     “Third Accounting Firm” is defined in Section 2.6(b).

     “TMT”
means *** .

     “Total Debt Amount” means, without duplication, (a) all obligations for money borrowed; (b)
all obligations evidenced by notes, debentures, bonds or other similar instruments for the payment
of which the Company is responsible or liable; (c) all obligations issued or assumed for deferred
purchase price payments associated with acquisitions, divestments or material transactions; (d) all
obligations under leases required to be capitalized in accordance with GAAP, as consistently
applied, except for leases incurred in the ordinary course of business; (e) all obligations for the
reimbursement on any letter of credit, banker’s acceptance, guarantees or similar credit
transaction, in each case, that has been claimed against; but excluding in all cases in clauses (a)
through (e) accounts payable and incurred in the ordinary course of business. As of December 31,
2005, the Total Debt Amount was $48,971,869.

     “Trade Secrets” means all know-how, trade secrets, customer lists, software, technical
information, data, process technology, plans, drawings (including engineering and auto-cad
drawings), innovations, designs, ideas, proprietary information and blue prints, owned, used or
licensed either directly or indirectly (as licensor or licensee) by any Company Group Member,
except for any such item that is generally available to the public.

     “Trademarks” means registered trademarks, registered service marks, trademark and service mark
applications and unregistered trademarks and service marks, brand names, certification marks, trade
dress, goodwill associated with the foregoing and registrations in any jurisdictions, and
applications in any jurisdiction to register, the foregoing, including any extension, modification
or renewal of any such registration or application used by any Company Group Member in the
operation of the Business.

     “Transaction Documents” means this Agreement, the Non-Competition Agreements, the Consulting
Agreements, the Building Purchase Agreement and the Escrow Agreement and all other documents
executed in connection herewith.

     “Transaction Expenses” means any and all expenses paid or payable by any Stockholder or any
Company Group Member, or for which any Company Group Member is or may become liable, with respect
to the Transactions, including all accounting expenses, legal or Tax expenses, finders’ fees,
facilitation fees, fees for advisory or other

14

 

services of any nature or Taxes incurred directly as a result of the completion of the
Transactions.

     “Transactions” means the purchase and sale of the Closing Shares at the Closing and the other
transactions contemplated by the Transaction Documents.

     “Unliquidated Claim” is defined in Section 10.4(a).

     “Unreasonable Action” shall mean any action by Buyer (including a communication with a
Governmental Entity) unless such action is (a) required by Law; (b) reasonably necessary in order
to avoid a Legal Proceeding by a Governmental Entity under any Law; (c) reasonably necessary in
order to prevent or mitigate a threat to human health or the environment; (d) consistent in nature,
scope and magnitude with Buyer’s past practices and is taken in the ordinary course of Buyer’s
normal operations (including the performance of capital improvements, operations and maintenance,
and reasonable construction and renovation activities); or (e) undertaken in connection with
environmental investigation and other due diligence activity (including any Phase I or Phase II
Environmental Assessment) by a bona fide prospective purchaser, assignee or sublessee of any Real
Property who is not affiliated with Buyer, and which activity is taken in connection with the
prospective sale or other transfer of interest in such Real Property by Buyer.

     “U.S.” means the United States of America.

     “Welfare Plan” is defined in Section 4.20(g).

     “***

     “Working Capital Notice” is defined in Section 2.6(a).

2. Purchase and Sale of Closing Shares and Other Payments.

     2.1 Purchase and Sale. Subject to the terms and conditions of this Agreement, Buyer
shall buy from each Stockholder, and each Stockholder shall sell to Buyer, free and clear of all
Encumbrances, the Closing Shares owned by such Stockholder as of the Closing Date.

     2.2 Redemption of Preferred Stock; Cancellation of Options. .

          (a) Concurrently with the Closing, the Company shall redeem all outstanding shares of its
Preferred Stock for a redemption price per share equal to (i) the Series B Preferred Stock Per
Share Stated Value (as defined in that certain Amended and Restated Stockholders’ Agreement, dated
as of December 8, 2003, as amended) plus (ii) all accrued but unpaid dividends to the date of
redemption (the “Preferred Redemption Payment”), such that the capitalization of the Company as of
the Closing Date shall be as set forth in Section 4.4(b) hereof. 

15

 

          (b) Concurrently with the Closing, the Company shall obtain from those Persons having any
option, call, warrant, commitment or other right of any character (including conversion or
preemptive rights) (each an “Option”) relating to the acquisition of any issued or unissued capital
stock or other securities of any Company Group Member a waiver of such Option or a binding and
unconditional statement of non-exercise of such Option (the “Option Waivers”), in writing and
irrevocable.

     2.3 Purchase Price.

          (a) The total purchase price for the Closing Shares payable to the Stockholders (the “Purchase
Price”) shall be paid to or for the benefit of the Stockholders as the Stockholders shall direct in
writing. To the extent that the Stockholders direct that certain amounts shall be paid on behalf
of the Company, such amounts shall be treated as capital contributions by the Stockholders to the
Company and then a payment by the Company. The Purchase Price shall consist of (i) $116,617,000
(the “Cash Purchase Price”), less (1) such amount as is required to redeem the Preferred Stock and
repay the Total Debt Amount, including any interest, any prepayment penalty or premium and any
other obligation owing under the terms of any indebtedness for money borrowed by the Company and
not repaid at or prior to the Closing), (2) the amount necessary to discharge and terminate all
Option Obligations pursuant to the terms of the Outstanding Options (the “Option
Payment”), (3) the amount necessary to discharge and terminate all obligations pursuant to the
Phantom Stock Plan (the “Phantom Stock Payment”), (4) the amount necessary to discharge and
terminate all obligations pursuant to the terms of the Company Employee Bonus Plans (the “Bonus
Plan Payments”), (5) the Management Bonuses, (6) the
*** Bonus, (7) the Performance Bonus and
(8) the Transaction Expenses (the difference being referred to herein as the “Closing Date Shares
Purchase Price”), plus or minus, as the case may be, any Adjustment Amount determined in accordance
with Section 2.4 hereof.

          (b) Buyer shall pay the Cash Purchase Price at the Closing as follows:

               (i) an
amount equal to the Closing Date Shares Purchase Price, less *** (the “Closing
Payment”) to the Stockholders in the respective amounts set forth on Schedule 2.3;

               (ii) delivery
of *** in cash to the Escrow Agent in accordance with the Escrow
Agreement (such cash, together with any investment proceeds thereon, is referred to herein as the
“Escrow Funds”); and

               (iii) the remainder of the Cash Purchase Price to allow the Seller Parties to redeem the
Preferred Stock and to discharge the Total Debt Amount, the Option Payment, the Phantom Payment,
the Bonus Plan Payments, the Management Bonuses, the *** Bonus, the Performance Bonus and the
Transaction Expenses.

          (c) The payment of the cash obligations in Section 2.3(b)(i) and 2.3(b)(ii) shall be made by
wire transfer of immediately available funds.

     2.4 Closing Date Purchase Price Adjustment.

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          (a) On or prior to the Closing Date, the Company shall deliver to Buyer an estimated Closing
Date Balance Sheet (the “Estimated Closing Date Balance Sheet”). If the Net Working Capital as
reflected on the Estimated Closing Date Balance Sheet (the “Estimated Net Working Capital”) is (i)
less than $8,864,474 (the “Target Net Working Capital”), then the Purchase Price shall be reduced
by the amount of such difference or (ii) more than the Target Net Working Capital, then the
Purchase Price shall be increased by the amount of such difference (in either case, such difference
is referred to herein as the “Adjustment Amount”.) No adjustment to the Purchase Price under this
Section 2.4(a) shall be made at Closing in the event the Estimated Net Working Capital equals the
Target Net Working Capital.

          (b) On or prior to the Closing Date, the Company shall deliver to the Buyer an estimate of the
aggregate amount of the Income Tax liabilities of the Company Group Members for all Tax periods
beginning on July 1, 2005, and ending on or before the Closing Date, in all cases assuming that
there is no deduction for the amount of the *** (together, the “Compensation
Payments”) and, further, that any increase in Income Taxes as a result thereof shall reduce such
Income Tax liabilities as appropriate (such assumptions, the “Hypothetical Income Tax Assumptions”)
(such estimate, the “Estimated Aggregate Income Tax Liability”). The Purchase Price shall be
increased or decreased on a dollar-for-dollar basis as follows:

               (i) The
Purchase Price shall be increased to the extent *** (that is, the aggregate
amount of estimated tax payments, credits, and deposits of the Company Group Members for Income
Taxes for all Tax periods beginning on July 1, 2005, and ending on or before the Closing Date, all
as set forth on Schedule 2.4) (the “Aggregate Income Tax Paid”) exceeds the Estimated Aggregate
Income Tax Liability.

               (ii) The Purchase Price shall be decreased to the extent the Estimated Aggregate Income Tax
Liability exceeds the Aggregate Income Tax Paid.

          (c) On or prior to the Closing Date, the Company shall deliver to the Buyer an estimate of the
aggregate amount of the Tax liabilities other than Income Tax liabilities of the Company Group
Members for all Tax periods beginning on or after July 1, 2005, and ending on or before the Closing
Date and an estimate of the aggregate amount of Pre-Closing Tax liabilities other than Income Tax
liabilities of the Company Group Members for that portion of all Straddle Periods (as defined in
Section 7.5(a)(iii)) through and including the Closing Date as determined under Section 7.5(a)(iii)
(the “Estimated Pre-Closing Non-Income Tax Liabilities”). The Purchase Price shall be decreased on
a dollar-for-dollar basis by the amount of the Estimated Pre-Closing Non-Income Tax Liabilities.

     2.5 Post-Closing Purchase Price Adjustment.

          (a) The Purchase Price shall be decreased on a dollar-for-dollar basis to the extent that the
Net Working Capital (the “Closing Date Net Working Capital”) as set forth on a balance sheet (the
“Closing Date Balance Sheet”) prepared as of the

17

 

Closing Date (the “Net Working Capital Valuation”), as determined by Buyer’s independent
accountants (“Buyer’s Accountants”), shall be less than the lesser of (A) the Target Net Working
Capital and (B) the Estimated Net Working Capital; or the Purchase Price shall be increased on a
dollar-for-dollar basis to the extent that the Closing Date Net Working Capital, as determined by
Buyer’s Accountants, shall be more than the greater of (A) the Target Net Working Capital and (B)
the Estimated Net Working Capital. Buyer shall cause Buyer’s Accountants to perform the Net
Working Capital Valuation within 30 days after the Closing Date. Within 10 days after the
completion of the Net Working Capital Valuation, Buyer shall give the Stockholders’ Representatives
notice (the “Working Capital Notice”) of the results of the Net Working Capital Valuation and
whether such results provide for any increase or decrease in the Purchase Price. In the event that
the Working Capital Notice reflects an increase or decrease in the Purchase Price, then, within 20
days of receipt of the Working Capital Notice, or, in the alternative, within 20 days of the final
resolution of any dispute of the Net Working Capital Valuation, the Stockholders shall pay to Buyer
an amount equal to the amount by which the Closing Date Net Working Capital is less than the lesser
of (A) the Target Net Working Capital and (B) the Estimated Net Working Capital or Buyer shall pay
to the Stockholders an amount equal to the amount by which the Closing Date Net Working Capital is
more than the greater of (A) the Target Net Working Capital and (B) the Estimated Net Working
Capital.

          (b) Subject to this Section 2.5(b), the Net Working Capital Valuation performed by Buyer’s
Accountants shall be final, binding and conclusive on the parties hereto. The Stockholders’
Representatives may dispute the Net Working Capital Valuation in the following manner. Within 10
days after the Stockholders’ Representatives receives the Working Capital Notice from Buyer, the
Stockholders’ Representatives shall give Buyer notice of any disagreement with the Net Working
Capital Valuation (the “Dispute Notice”), and such notice shall specify in detail the nature of the
disagreement. During the 20 days after the day on which any Dispute Notice is given, the
Stockholders’ Representatives and Buyer shall attempt to resolve such dispute in good faith. If
they fail to reach a written agreement regarding the dispute, the Stockholders’ Representatives
shall refer the matter to a firm of certified independent accountants (the “Stockholders’
Accountants”) that is different from the firm that initially prepared the Net Working Capital
Valuation, and request the Stockholders’ Accountants to also determine the Closing Date Net Working
Capital (the “Second Working Capital Valuation”). Buyer shall be entitled to have its independent
accountants or other representatives observe the Second Working Capital Valuation. The
Stockholders’ Representatives shall give Buyer prompt notice of the results of the Second Working
Capital Valuation. If Buyer and the Stockholders’ Representatives are unable to agree upon the
Closing Date Net Working Capital, the amounts remaining in dispute shall be submitted to a third
independent accounting firm of national reputation mutually agreeable to Buyer and Stockholders’
Representatives for resolution (the “Third Accounting Firm”), which firm shall, within 30 days
after such submission, determine and report to Buyer and Stockholders’ Representatives upon such
remaining disputed amounts, and such report shall be final, binding and conclusive on the Parties
hereto. The fees and disbursements of the Third Accounting Firm shall be allocated among Buyer and
the Stockholders so that Stockholders’ share of such fees and disbursements shall be in

18

 

the same proportion that the aggregate amount of such remaining disputed amounts so submitted
to the Third Accounting Firm that is unsuccessfully disputed by Stockholders’ Representatives (as
finally determined by the Third Accounting Firm) bears to the total amount of such remaining
disputed amounts so submitted to the Third Accounting Firm. Stockholders shall pay the fees
portion of the fees and expenses of the Third Accounting Firm for which they are responsible, as
well as the fees and expenses of Stockholders’ Accountants, in connection with this Section 2.5(b).
The resolution procedure set forth in this Section 2.5(b), including the standard for paying
costs, is referred to as the “Dispute Resolution Procedure.”

          (c) Any rights accruing to any Party under this Section 2.5 shall be in addition to and
independent of the rights to indemnification under Section 10 and any payments made to any Party
under this Section 2.5 shall not be subject to the requirements of Section 10.

2.6 Additional Post-Closing Purchase Price Adjustments.

          (a) On or prior to 90 calendar days after the delivery of the Tax schedules, documents, and
information to Stockholders as set forth in Section 7.5(c), the Stockholders shall deliver to Buyer
the aggregate amount of Income Tax liabilities of the Company Group Members for all Tax periods
beginning on July 1, 2005, and ending on or before the Closing Date, in all cases calculated using
the Hypothetical Income Tax Assumptions (the “Final Aggregate Income Tax Liability”) and the amount
of the “Income Tax Benefits” (as defined in Section 2.6(b) below). The Purchase Price shall be
increased or decreased on a dollar-for-dollar basis as follows;

               (i) The Purchase Price shall be increased to the extent the Estimated Aggregate Income Tax
Liability exceeds the Final Aggregate Income Tax Liability; or

               (ii) The Purchase Price shall be decreased to the extent the Final Aggregate Income Tax
Liability exceeds the Estimated Aggregate Income Tax Liability.

Stockholders’ calculation of the Final Aggregate Income Tax Liability shall be final, binding, and
conclusive on the Parties hereto unless the Buyer disputes such calculation in accordance with
Section 2.6(d).

          (b) The Purchase Price shall also be decreased on a dollar-for-dollar basis to the extent that
Income Tax benefits (“Income Tax Benefits”) do not equal or
exceed *** as a result of the
deduction for the amount of the Compensation Payments. Income Tax Benefits for this purpose shall
be equal to (i) the amount of Current Income Tax Benefits plus (ii) the amount of Future Income Tax
Benefits. Current Income Tax Benefits shall be equal to the difference between (x) the aggregate
amount of Income Tax liabilities of the Company Group Members for all Tax periods ending on or
before the Closing Date as set forth on Schedule 2.6(b), in all cases calculated using the
Hypothetical Income Tax Assumptions AND (y) the aggregate amount of actual Income

19

 

Tax liabilities of the Company Group Members for all Tax periods ending on or before the
Closing Date as set forth on Schedule 2.6(b) (that is, the amount of the Compensation Payments are
deductible as contemplated herein and any net operating or other loss is carried back to the full
extent as permitted by Tax Law). Future Income Tax Benefits shall be equal to the net operating or
other loss or other Income Tax attribute (if any) after carry back as described above as a result
of deducting such Compensation Payments multiplied by the sum of (x) the highest marginal federal
(i.e., 35%) plus (y) the highest marginal applicable state and local Income Tax rate in effect in
each Company Group Member’s fiscal Tax year beginning July 1, 2005 (for state or local Income Tax
purposes, any net operating or other loss carry forward shall be computed using the apportionment
factors for each applicable Company Group Member’s fiscal Tax year the Compensation Payments were
deducted and the Income Tax rates shall be reduced by multiplying such applicable state and local
Income Tax rates by 65%). Stockholders’ calculation of the Income Tax Benefits shall be final,
binding, and conclusive on the Parties hereto unless the Buyer disputes such calculation in
accordance with Section 2.6(d).

          (c) On or prior to 90 calendar days after the delivery of the Tax schedules, documents, and
information to Stockholders as set forth in Section 7.5(c), the Stockholders shall deliver to Buyer
the aggregate amount of Tax liabilities other than Income Tax liabilities of the Company Group
Members for all Tax periods beginning on July 1, 2005, and ending on or before the Closing Date and
the aggregate amount of Pre-Closing Tax liabilities other than Income Tax liabilities of the
Company Group Members for that portion of all Straddle Periods through and including the Closing
Date as determined under Section 7.5(a)(iii) (the “Final Pre-Closing Non-Income Tax Liabilities”).
The Purchase Price shall be increased or decreased on a dollar-for-dollar basis as follows:

               (i) The Purchase Price shall be increased to the extent the Estimated Pre-Closing Non-Income
Tax Liabilities exceeds the Final Pre-Closing Non-Income Tax Liabilities; or

               (ii) The Purchase Price shall be decreased to the extent the Final Pre-Closing Non-Income Tax
Liabilities exceeds the Estimated Pre-Closing Non-Income Tax Liabilities.

Stockholders’ calculation of the Final Pre-Closing Non-Income Tax Liabilities shall be final,
binding, and conclusive on the Parties hereto unless the Buyer disputes such calculation in
accordance with Section 2.6(d).

          (d) Within 15 days after Buyer receives the calculation of Final Aggregate Income Tax
Liability, the Income Tax Benefits, the Final Pre-Closing Non-Income Tax Liabilities, Recomputed
Aggregate Income Tax Liability, and/or Recomputed Income Tax Benefits, Buyer shall give
Stockholders notice of any disagreement with the Final Aggregate Income Tax Liability, the Income
Tax Benefits, Final Pre-Closing Non-Income Tax Liabilities, Recomputed Aggregate Income Tax
Liability, and/or Recomputed Income Tax Benefits, and such notice shall specify in detail

20

 

the nature of the disagreement. Any such dispute shall then be resolved in a manner using
procedures similar to those set forth in Section 2.5(b).

          (e) Any increase or decrease in Purchase Price pursuant to this Section 2.6 shall be paid by
or refunded to the Stockholders within 20 days of the later of the delivery of such calculation to
Buyer or final resolution of any dispute over such calculation.

     2.7 Additional Post-Closing Purchase Price Adjustments for Income Tax Audits. If the
Internal Revenue Service or other state or local Income Tax authority audits any Income Tax Return
of any Company Group Member for any Income Tax period ending on or before the Closing Date, then
within 20 days after receipt of the adjustments as finally determined or agreed to (i.e., after
such audit and any subsequent Tax Proceedings (as defined in Section 7.5(b) are completed and
final), the Stockholders shall recompute the Final Aggregate Income Tax Liability (“Recomputed
Aggregate Income Tax Liability”) and the Income Tax Benefits (“Recomputed Income Tax Benefits”)
taking into account any adjustments as finally determined or agreed to provided that Buyer
materially complies with its obligations set forth in Section 7.5. If the Recomputed Aggregate
Income Tax Liability is different from the Final Aggregate Income Tax Liability, then:

               (i) The Buyer shall pay the Stockholders the difference between the Final Aggregate Income Tax
Liability less the Recomputed Income Tax Liability; or

               (ii) The Stockholders shall pay the Buyer the difference between the Recomputed Aggregate
Income Tax Liability less the Final Aggregate Income Tax Liability, provided that Buyer materially
complies with its obligations set forth in Section 7.5.

Stockholders shall pay Buyer to the extent Recomputed Income Tax Benefits do not equal or exceed
the difference between (x) *** less (y) any purchase price adjustment pursuant to Section
2.6(b) plus any prior amounts paid pursuant to this paragraph, provided that Buyer materially
complies with its obligations set forth in Section 7.5. This Section 2.7 continues to apply until
all of the applicable statute of limitations for assessing Income Taxes against any Company Group
Member for all Income Tax periods ending on or before the Closing Date have expired. If after one
payment is made under this Section 2.7, there are one or more subsequent Income Tax audits,
payments due hereunder shall be adjusted by all prior payments made under this Section 2.7.
Stockholders’ calculation(s) of the Recomputed Aggregate Income Tax Liability and the Recomputed
Income Tax Benefits shall be final, binding, and conclusive on the Parties hereto unless the Buyer
disputes such calculation in accordance with Section 2.6(d). Any payment due hereunder shall be
paid within 20 days after final determination.

3.
Closing.

21

 

     3.1 Location, Date. The closing for the Transactions (the “Closing”) shall be
held at the offices of Foley & Lardner LLP in Milwaukee, Wisconsin at 10:00 a.m. (local time) as
promptly as practicable (and in any event within three Business Days) after the date on which there
has been a satisfaction or waiver of the conditions to the consummation of the Transactions set
forth in Sections 8 and 9, but in any event not later than May 1, 2006, (the “Termination Date”),
or at such other time, place or date as the Parties may agree. The date on which the Closing
occurs is referred to herein as the “Closing Date.” All of the actions to be taken and documents
to be executed and delivered at the Closing (under this Agreement and including the Transaction
Agreements) shall be deemed to be taken, executed and delivered simultaneously, and no such action,
execution or delivery shall be effective until all are complete, except as specifically provided
herein. The Closing shall be deemed to be effective as of the Effective Time.

     3.2 Deliveries. At the Closing, subject to the terms and conditions contained herein,
the Parties shall take the respective actions specified below:

          (a) Buyer shall pay the Closing Payment to the Stockholders and the Escrow Funds to the Escrow
Agent in accordance with Section 2.3;

          (b) the Stockholders shall deliver to Buyer the original stock certificates representing the
Closing Shares, duly endorsed for transfer to Buyer or with separate stock transfer powers attached
thereto and signed in blank;

          (c) the Parties shall deliver, or cause to be delivered, to each other executed counterparts
of the Non-Competition Agreements, the Consulting Agreements, the Building Purchase Agreement, the
Escrow Agreement and each of the other Transaction Documents;

          (d) the Company shall deliver to Buyer a payoff letter or payoff letters, in form and
substance reasonably satisfactory to Buyer, executed by each financial institution to which any
Company Group Member is obligated with respect to any portion of the Total Debt Amount, together
with original UCC termination statements and other lien releases terminating all Encumbrances
securing such amounts, and on behalf of the Company Group Members, Buyer shall pay all such amounts
on the Closing Date;

          (e) the Company shall deliver to Buyer an Option Waiver, duly executed and delivered by each
holder of any Outstanding Options who received the required payment therefor on or prior to the
Closing Date, the Company shall deliver to Buyer an officer’s certificate certifying that the
Option Payment has been made to such holders, and such certificate shall be deemed a representation
of the Seller Parties for the purposes of Section 10, and on behalf of the Stockholders the Buyer
shall pay an amount equal to the Option Payment to the Company;

          (f) the Bonus Plan Payments shall have been paid by the Company, the Executive Loan shall have
been repaid to the Company and all employment agreements for any employee of any Company Group
Member shall have been

22

 

terminated and the Company shall deliver to Buyer an officer’s certificate to such effect, and
such certificate shall be deemed a representation of the Seller Parties for the purposes of Section
10, and on behalf of the Stockholders the Buyer shall pay an amount equal to the Bonus Plan
Payments to the Company;

          (g) the Seller Parties shall deliver to Buyer an officer’s certificate certifying that (i) the
Phantom Stock Payment and the Performance Bonus have been paid in full, (ii) the Management Bonuses
and *** Bonuses have been paid in full, (iii) the Derivative has been unwound and (iv) the
Preferred Stock has been fully redeemed and the capitalization of the Company is as set forth on
Schedule 4.4(b), and such certificate shall be deemed a representation of the Seller Parties for
the purposes of Section 10, and on behalf of the Stockholders the Buyer shall pay an amount equal
to the Phantom Stock Payment, the Performance Bonus, the Management
Bonuses, the *** Bonus and
the Preferred Redemption Payment to the Company;

          (h) the Seller Parties shall deliver to Buyer an officer’s certificate representing the total
amount of all Transaction Expenses, and the Persons to whom such amounts are owed, and on behalf of
the Seller Parties or any Company Group Member, as the case may be, Buyer shall pay such amounts to
such Persons, and such certificate shall be deemed a representation of the Seller Parties for the
purposes of Section 10;

          (i) each Stockholder and the Company shall deliver to Buyer a certificate to the effect set
forth in Sections 9.1 and 9.2, and such certificate shall be deemed a representation of the Seller
Parties for the purposes of Section 10;

          (j) Buyer shall deliver to the Stockholders a certificate of an executive officer of Buyer to
the effect set forth in Sections 8.1 and 8.2, and such certificate shall be deemed a representation
of Buyer for the purposes of Section 10;

          (k) the Seller Parties shall deliver to Buyer an opinion of Foley & Lardner LLP, counsel to
the Seller Parties, in substantially the form of Exhibit F;

          (l) the Seller Parties shall deliver to Buyer the Required Consents (or, in lieu thereof,
waivers) and all approvals and actions of, filings with and notices to any Governmental Entity as
necessary to permit the Seller Parties to perform their obligations under this Agreement, to enable
Buyer to operate the Business as it was operated on the date hereof and to consummate the
Transactions, and each such Required Consent, approval, filing or notice (A) shall be in form and
substance reasonably satisfactory to Buyer, (B) shall not be subject to the satisfaction of any
condition that has not been satisfied or waived, and (C) shall be in full force and effect;

          (m) the Seller Parties shall deliver resignations from each of the members of the Board of
Directors (and each committee thereof) and the officers (in their capacity as officers) of each
Company Group Member;

          (n) the Seller Parties shall deliver the original minute books, stock books, stock ledgers and
the corporate seal of each Company Group Member; and

23

 

          (o) the Parties shall deliver to each other the respective agreements and other documents and
instruments, as well as good standing certificates, certified resolutions, cross receipts and such
other items as may be reasonably requested.

     3.3 Default at Closing. Notwithstanding anything herein to the contrary, if any
Stockholder shall fail or refuse to deliver any of the Closing Shares in breach of its obligations
hereunder, Buyer may refuse to complete the transactions contemplated hereby and thereby terminate
all of its obligations hereunder. Each Stockholder acknowledges that the Closing Shares are unique
and otherwise not available and agrees that in addition to any other remedies, Buyer may invoke any
remedies available under applicable Law to enforce delivery of such shares hereunder.

4. Representations and Warranties of Seller Parties.

     As a material inducement to Buyer to enter into this Agreement and to consummate the
transactions contemplated herein, the Seller Parties hereby represent and warrant to Buyer, as of
the date hereof and also at and as of the Closing Date as though then made (except to the extent
such representations and warranties speak as of a particular date, in which case such
representations and warranties shall be made only as of such particular date) as follows:

     4.1 Corporate Status. Each Company Group Member (except for Tomah Products Properties
LLC) is a corporation duly organized, validly existing and in Good Standing under the Laws of the
jurisdiction in which it was incorporated and is qualified to do business as a foreign corporation
in each jurisdiction where it is required to be qualified except where the failure of any Company
to be so qualified would not be material to such Company Group Member. Tomah Products Properties
LLC is a limited liability company duly organized, validly existing and in Good Standing under the
Laws of the State of Wisconsin and is not qualified to do business in any jurisdiction other than
the State of Wisconsin. The Charter Documents of each Company Group Member have been delivered to
Buyer, and such Charter Documents are effective as of the date hereof under applicable Laws and are
current, correct and complete.

     4.2 Authorization. Each Company Group Member has the requisite power and authority to
own such Company Group Member’s Assets and to carry on such Company Group Member’s portion of the
Business. Each Seller Party has the requisite power and authority to execute and deliver the
Transaction Documents to which it is or will be a party, and perform the Transactions performed or
to be performed by such Seller Party. Such execution, delivery and performance by each Seller
Party has been duly authorized by all necessary corporate or other action, including, where
necessary, approval by the stockholders or members of each such Seller Party. Each Transaction
Document executed and delivered by any Seller Party has been duly executed and delivered by such
Seller Party and constitutes a valid and binding obligation of such Seller Party, enforceable
against such Seller Party in accordance with its terms.

     4.3 Consent and Approvals. Except as specified in Schedule 4.3 (collectively the
“Required Consents”) and with respect to the HSR Act, neither the execution and

24

 

delivery by any Seller Party of the Transaction Documents to which it is a party, nor the
performance of the Transactions performed or to be performed by any Seller Party, require any
filing, consent, notice, registration, renegotiation or approval, constitute a Default or cause any
payment obligation to arise under (a) any Law or Court Order to which any Stockholder or any
Company Group Member is subject, (b) the Charter Documents of any Stockholder or any Company Group
Member or (c) any Contract or Governmental Permit to which any Stockholder or any Company Group
Member is a party or by which the material properties or other material Assets of any Stockholder
or Company Group Member may be bound.

     4.4 Capitalization and Stock Ownership.

          (a) As of the date of this Agreement, the total authorized capital stock of the Company
consists of: (i) 1,854,000 shares of common stock, consisting of (A) 618,000 shares of Series A
Common Stock, $.001 par value per share, of which 492,358 shares are issued and outstanding on the
date hereof, and (B) 1,236,000 share of Series B Common Stock, $.001 par value per share, of which
984,716 shares are issued and outstanding on the date hereof, and (ii) 1000 shares of Series B
Preferred Stock, $.001 par value per share, of which 1000 shares are issued and outstanding on the
date hereof (all such outstanding shares of Preferred Stock are referred to herein as the
“Preferred Stock”). Except as set forth on Schedule 4.4 hereto, there are no existing options,
warrants, calls, commitments or other rights of any character (including conversion or preemptive
rights) relating to the acquisition of any issued or unissued capital stock or other securities of
the Company.

          (b) Schedule 4.4 sets forth the name of each holder of any option, warrant or other right to
purchase any capital stock or other securities of the Company (the “Outstanding Options”),
including the *** Options, as well as the number of shares subject to purchase pursuant to
any Outstanding Options, the date of grant and the exercise price therefor. Upon payment of the
amounts set forth on the Closing Statement with respect to Outstanding Options, all Outstanding
Options will have been terminated in accordance with the terms of the governing Contract, and the
Company shall have no further obligation of any nature in connection therewith. Schedule 4.4 sets
forth all awards or grants made under the Phantom Stock Plan. Upon payment of the amounts set
forth on the Closing Statement with respect to the Phantom Stock Plan, all obligations under the
Phantom Stock Plan will have been terminated in accordance with the terms of the Phantom Stock Plan
and any other governing document, and the Company shall have no further obligation of any nature in
connection therewith.

          (c) As of the Closing, the total authorized capital stock of the Company will consist of: (i)
1,854,000 shares of common stock, consisting of (A) 618,000 shares of Series A Common Stock, $.001
par value per share, of which 492,358 shares will be issued and outstanding, and (B) 1,236,000
share of Series B Common Stock, $.001 par value per share, of which 984,716 shares will be issued
and outstanding (all such outstanding shares of Common Stock are referred to herein as the “Closing
Shares”), and (ii) 1000 shares of Series B Preferred Stock, none of which will be issued and
outstanding on the Closing Date. Except as set forth on Schedule 4.4 hereto, as of

25

 

the Closing Date, there will be no existing options, warrants, calls, commitments or other
rights of any character (including conversion or preemptive rights) relating to the acquisition of
any issued or unissued capital stock or other securities of the Company.

          (d) All of the Closing Shares are duly and validly authorized and issued and are fully paid
and non-assessable. The Stockholders are the record and beneficial owners of all of the Closing
Shares in the respective amounts specified on Schedule 4.4. The Company has complied with all
applicable Laws in connection with the issuance of the Closing Shares, and none of the Closing
Shares was issued in violation of any Contract binding upon the Company. There is no Contract
among or between the Company and the Stockholders, or any of them, relating to the Closing Shares,
including any restriction affecting transfer or voting rights or any other incidents of record or
beneficial ownership. Upon completion of the Transactions at the Closing, Buyer will receive valid
title to all of the Closing Shares, free and clear of all Encumbrances. At the time of such
receipt, all of the Closing Shares shall be freely transferrable except as limited by any
applicable securities Law.

     4.5 Financial Statements. Attached as Schedule 4.5 are correct and complete copies of
audited consolidated financial statements for the Business at June 30, 2003, 2004, and 2005 and the
related statements of income and cash flows for the years then ended. The Company has also
delivered to Buyer an unaudited consolidated balance sheet as of February 28, 2006, and the related
statements of income and cash flows for the eight months then ended. All such financial statements
are referred to herein collectively as the “Financial Statements.” The Financial Statements have
been prepared in accordance with GAAP (except that the unaudited financial statements do not have
the necessary footnotes and adjustments typically made at fiscal year-end and which are consistent
with past practice have not been made) and are consistent in all material respects with the books
and records of the Company Group Members. The balance sheets included in the Financial Statements
present accurately the financial position of the Company Group Members as of the dates thereof.
The profit and loss statements included in the Financial Statements present accurately the results
of the operations of the Business for the periods indicated thereon, and reflect all costs that
historically have been incurred by the Business. The balance sheet of the Company Group Members
as of February 28, 2006 that is included in the Financial Statements is referred to herein as the
“Balance Sheet,” and the date thereof is referred to as the “Balance Sheet Date.”

     4.6 Title to Assets and Related Matters. Each Company Group Member has good title to,
valid leasehold interests in or valid licenses to use, all of its Assets, free from any
Encumbrances except those specified in Schedule 4.6 and Permitted Encumbrances. The use of such
Assets is not subject to any Encumbrances (other than those specified in the preceding sentence).
All tangible personal property (other than Inventory) owned by any Company Group Member is suitable
for the purposes for which such Assets are used, is structurally sound and in good working
condition, reasonable wear and tear and defects which, individually or in the aggregate, do not
interfere with the use thereof excepted, and is free from any latent or patent defects. The Assets
constitute all of the Assets required for, or material to, the continued operation of the Business
by Buyer as operated by the Company Group Members during the past 12

26

 

months. The Assets, taken as a whole, constitute all the assets relating to or used or held
for use in connection with the Business during the past 12 months (except for such Assets that have
been acquired, sold or disposed of in the ordinary course of the Company’s business consistent with
past practice. There are no Assets used in the operation of the Business that are owned by any
Person other than a Company Group Member that are not licensed or leased to a Company Group
Member under valid, current license arrangements or leases.

     4.7 Real Property. Schedule 4.7 lists all real estate used in the operation of the
Business as well as any other real estate owned or leased by any Company Group Member, and the
improvements (including buildings and other structures) located on such real estate (collectively,
the “Real Property”), and lists any leases under which any such Real Property is possessed (the
“Real Estate Leases”). Each Company Group Member has good and marketable title, subject to
Permitted Encumbrances, to all of its Real Property. All Real Property owned by any Company Group
Member is suitable for the purpose for which it is used, is structurally sound and in good working
condition, reasonable wear and tear and defects which, individually or in the aggregate, do not
interfere with the use thereof excepted, and such use does not encroach on the property or rights
of anyone else. Except as set forth on Schedule 4.7, no Company Group Member or any Affiliate
thereof has any ownership interest in any real property used in the Business. Schedule 4.7 also
accurately describes any other real estate previously owned, leased or otherwise operated by any
Company Group Member or any predecessor thereof and the time periods of any such ownership, lease
or operation. All of the Real Property (a) is usable in the ordinary course of business and is in
good operating condition and repair, reasonable wear and tear and defects which, individually or in
the aggregate, do not interfere with the use thereof excepted and (b) conforms, in all material
respects, with any applicable Laws relating to its construction, use and operation. The Real
Property complies with applicable zoning Laws. Each Company Group Member, or, to the Company’s
knowledge, the landlord of any Real Property leased by any Company Group Member, has obtained all
licenses and rights-of-way from Governmental Entities or private parties that are necessary to
ensure vehicular and pedestrian ingress and egress to and from the Real Property. Each Real Estate
Lease is in full force and effect and, except as set forth on Schedule 4.7, has not been assigned,
modified, supplemented or amended and, to the Company’ knowledge, neither landlord nor tenant under
any such lease is in Default under any such lease, and no circumstance or set of facts exist which,
with the giving of notice or passage of time, or both, would permit landlord or tenant to terminate
any such lease.

     4.8 Certain Personal Property. Schedule 4.8 is a list of all fixed Assets of each
Company Group Member having a carrying value of at least $10,000. Except as specified in Schedule
4.8, since the Balance Sheet Date, no Company Group Member has acquired any items of tangible
personal property that have a carrying value in excess of $10,000. All of such personal property
included in Schedule 4.8 is, and any such personal property acquired after the date hereof in
accordance with Section 6.1 will be, usable in the ordinary course of business, and conforms and
will conform with any applicable Laws relating to its construction, use and operation. Except for
those items subject to the Non-Real Estate Leases, no Person other than the Company Group

27

 

Members owns any vehicles, equipment or other tangible assets located on the Real Property
that have been used in the Business or that are necessary for the operation of the Business.

     4.9 Non-Real Estate Leases. Schedule 4.9 lists all assets and property used in the
Business (other than Real Property and Intellectual Property) that are possessed by the Company
Group Members under an existing lease, including all trucks, automobiles, forklifts, machinery,
equipment, furniture and computers, except for any lease under which the aggregate annual payments
are less than $15,000 (each, an “Immaterial Lease”). Schedule 4.9 also lists the leases under
which such assets and property listed in Schedule 4.9 are possessed. All of such leases (excluding
Immaterial Leases) are referred to herein as the “Non-Real Estate Leases.”

     4.10 Accounts Receivable. The Accounts Receivable (net of any reserve shown on the
Balance Sheet) of the Company Group Members are bona fide Accounts Receivable created in the
ordinary course of business. To the Company’s knowledge, all of the Accounts Receivable are
collectible within 90 days from the respective dates of sale. Except as set forth on Schedule
4.10, there are no setoffs, counterclaims or disputes asserted or conditions precedent to payment
therefor with respect to any such Accounts Receivable, and no setoff, counterclaim, dispute,
discount or allowance from any such Accounts Receivable has been made or agreed to. The Company
Group Members know of no facts or circumstances (other than general economic conditions) that are
likely to result in any material increase in the uncollectability of such Accounts Receivable.

     4.11 Inventory. Except as described in Schedule 4.11, all Inventory (net of any
reserve shown on the Balance Sheet) consists of a quality and quantity usable and salable in the
ordinary course of business, except for obsolete items and items of below-standard quality, all of
which have been written off or written down to net realizable value in the Balance Sheet. Such
Inventory is recorded in the Financial Statements in accordance with GAAP at the lower of average
cost or market value. Schedule 4.11 also specifies that portion of the Inventory that consists of
reworked items. The quantities of each class of Inventory (whether raw materials, work-in-process,
or finished goods) are not excessive, but are reasonable in the present circumstances and
consistent with historical amounts of the Company Group Members.

     4.12 Liabilities. The Company Group Members have no Liabilities, other than (a)
Liabilities specified in Schedule 4.12, (b) Liabilities adequately reflected and reserved against
in the Balance Sheet (except as heretofore paid or discharged), (c) current Liabilities incurred in
the ordinary course since the Balance Sheet Date, or (d) executory Liabilities under any Contracts
that are specifically disclosed in Schedule 4.16 (or not required to be disclosed because of the
term or amount involved) that were not required under GAAP to have been specifically disclosed or
reserved for on the Balance Sheet.

     4.13 Taxes. Except as set forth in Schedule 4.13: (i) each of the Company Group
Members has filed all Tax Returns that it was required to file. All such Tax Returns were correct
and complete in all material respects. All Taxes due and owing by

28

 

any of the Company Group Members (as shown on any Tax Return) have been paid. None of the
Company Group Members currently is the beneficiary of any extension of time within which to file
any Tax Return. With regards to tax periods beginning on or after July 1, 2000 but before the date
hereof, no claim has been made by a Governmental Entity in a jurisdiction where any of the Company
Group Members does not file Tax Returns that it is or may be subject to taxation by that
jurisdiction.; (ii) each Company Group Member has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee, independent contractor,
creditor, stockholder, or other third party. There is no dispute or claim concerning any Tax
Liability of any of the Company Group Members either (A) claimed or raised by any Governmental
Entity in writing or (B) to the knowledge of the Company based upon personal contact with any agent
of such Governmental Entity. Schedule 4.13 lists all Tax Returns filed with respect to any of the
Company Group Members for taxable periods ended on or after June 30, 2000, indicates those Tax
Returns that have been audited, and indicates those Tax Returns that currently are the subject of
audit. The Seller Parties have delivered to Buyer correct and complete copies of all Tax Returns,
examination reports, and statements of deficiencies assessed against or agreed to by any of the
Company Group Members since June 30, 2000; (iv) except as shown on Schedule 4.13, none of the
Company Group Members has waived any statute of limitations in respect of Taxes or agreed to any
extension of time with respect to a Tax assessment or deficiency. None of the Company Group
Members has been a United States real property holding corporation within the meaning of Code
§897(c)(2) during the applicable period specified in Code §897(c)(1)(A)(ii). None of the Company
Group Members has taken any position on its federal income Tax Returns nor has any Company Group
Member conducted its Tax affairs in a manner that could give rise to an accuracy-related penalty
on underpayments within the meaning of Code §6662. None of the Company Group Members has had a
reportable transaction understatement that could give rise to an accuracy-related penalty on
underpayments within the meaning of Code §6662A. None of the Company Group Members is a party with
any other Company Group Member to any Income Tax allocation or sharing agreement. None of the
Company Group Members (A) has been a member of an affiliated group (as defined by Code §1504(a))
filing a consolidated federal income Tax Return (other than a group the common parent of which was
the Company) or (B) has any Liability for the Taxes of any Person (other than any of the Company
Group Members) under Reg. §1.1502-6 (or any similar provision of state, local, or foreign law), as
a transferee or successor, by contract, or otherwise; (vi) the reserve for Tax Liability (rather
than any reserve for deferred Taxes established to reflect timing differences between book and Tax
income) set forth on the face of the June 30, 2005 balance sheet (rather than in any notes thereto)
was fairly stated in accordance with GAAP and the unpaid Taxes of the Company Group Members do not
exceed that reserve as adjusted for the passage of time through the date hereof in accordance with
the past custom and practice of the Company Group Members in filing their Tax Returns; (vii) none
of the Company Group Members will be required to include any item of income in, or exclude any item
of deduction from, taxable income for any taxable period (or portion thereof) ending after the
Closing Date as a result of any: (A) change in method of accounting for a taxable period ending on
or prior to the Closing Date under Code §481(c) (or any corresponding or similar provision of
state, local or foreign income Tax

29

 

law); (B) “closing agreement” as described in Code §7121 (or any corresponding or similar
provision of state, local or foreign income Tax law) executed on or prior to the Closing Date; (C)
installment sale or open transaction disposition made on or prior to the Closing Date; or (D) a
material prepaid amount received on or prior to the Closing Date.

     4.14 Subsidiaries. Except for the Existing Subsidiaries, no Company Group Member
owns, directly or indirectly, any interest or investment (whether equity or debt) in any
corporation, partnership, limited liability company, trust, joint venture or other legal entity.
There are no existing options, warrants, calls, commitments or other rights of any character
(including conversion or preemptive rights) relating to the acquisition of any issued or unissued
capital stock or other securities of any Existing Subsidiary, nor does any Company Group Member
have any Contract to acquire any equity securities or other securities of or interest in any Person
or any direct or indirect equity or ownership interest in any other business except as set forth on
Schedule 4.14. Except as set forth on Schedule 4.14, all of the outstanding capital stock of each
Existing Subsidiary has been duly and validly authorized and issued and is fully paid and
non-assessable. The Company is the record owner of all of the outstanding capital stock of each
Existing Subsidiary in the respective amounts specified on Schedule 4.14. Each such Existing
Subsidiary has complied with all applicable Laws in connection with the issuance of shares of its
capital stock, and no such shares were issued in violation of any Contract binding upon any Company
Group Member. Except as set forth on Schedule 4.14, the outstanding capital stock of each Existing
Subsidiary is owned by the Company free and clear of all Encumbrances. There is no Contract
relating to the capital stock of any Existing Subsidiary, including any restriction affecting
transfer or voting rights or other incidents of record or beneficial ownership pertaining to any of
such capital stock.

     4.15 Legal Proceedings and Compliance with Law.

          (a) Except as set forth in Schedule 4.15(a), (i) there is no Legal Proceeding that is pending
or, to the Company’s knowledge, threatened against any Company Group Member; (ii) there has been no
Default under any Laws, including Environmental Laws, applicable to the Business and no Company
Group Member has received any notice from any Governmental Entity regarding any alleged Defaults
applicable to any Company Group Member under any Laws; and (iii) there has been no Default with
respect to any Court Order applicable to any Company Group Member.

          (b) Except as set forth on Schedule 4.15(b):

               (i) Each Company Group Member is, and at all times has been, in full compliance with, and has
not been and is not in violation of or liable under, any Environmental Law; and no Stockholders or
Company Group Member has any basis to expect, nor has any of them or any other Person for whose
conduct they are or may be held to be responsible received, any actual or threatened Order, notice
or other communication from (i) any Governmental Entity or private citizen acting in the public
interest, or (ii) the current or prior owner or operator of any Real Property or Assets, of any
actual or potential violation of or failure to comply with any Environmental Law, or of any actual
or threatened obligation to undertake or bear the cost of any Environmental

30

 

Liabilities with respect to any of the Real Property or any other properties or Assets in
which any Company Group Member has had an interest, or with respect to any property or Real
Property at or to which Hazardous Substances were generated, manufactured, refined, transferred,
imported, used or processed by any Company Group Member or any other Person for whose conduct they
are or may be held responsible, or from which Hazardous Substances have been transported, treated,
stored, handled, transferred, disposed, recycled, or received; and

               (ii) The Company has delivered or made available to Buyer complete copies of all final written
reports, studies or assessments in the possession or control of the Company Group Members, any
Affiliate or any agents thereof that relate to any environmental condition on the Real Property.
Schedule 4.15(b) identifies any other final reports, studies or assessments that relate to any
environmental condition on the Real Property of which any Seller Party has knowledge.

     4.16 Contracts.

          (a) Schedule 4.16 lists all Contracts of the following types to which any Company Group Member
is a party or by which it is bound, except for Minor Contracts:

               (i) Contracts with any present or former stockholder, director, officer, employee, partner or
consultant of such Company Group Member or any Affiliate thereof;

               (ii) Contracts for the future purchase of, or payment for, supplies or products, or for the
lease of any real or personal property from or the performance of services by a third party, in
excess of $50,000 in any individual case, or any Contracts for the sale of products that involve an
amount in excess of $50,000 with respect to any one supplier or other party;

               (iii) Contracts to sell or supply products or to perform services that involve an amount in
excess of $50,000 in any individual case;

               (iv) Contracts to lease to or to operate for any other party any real or personal property
that involve an amount in excess of $50,000 in any individual case;

               (v) Any license, franchise, distributorship, sales agency or other arrangements, including
those that relate in whole or in part to any technical information, software technical assistance
or other know-how used in the past 24 months;

               (vi) Any notes, debentures, bonds, conditional sale agreements, equipment trust agreements,
letter of credit agreements, reimbursement agreements, loan agreements or other Contracts for the
borrowing or lending of money (including loans to or from officers, directors, partners,
stockholders or Affiliates of the Company Group Members or any members of their immediate
families), agreements or arrangements for a

31

 

line of credit or for a guarantee of, or other undertaking in connection with, the
indebtedness of any other Person;

               (vii) Contracts for any capital expenditure or leasehold improvements with a Contract value in
excess of $50,000;

               (viii) Any Contracts under which any Encumbrances other than Permitted Encumbrances exist; and

               (ix) Any Contract (other than Minor Contracts and those described in any of (i) through (viii)
above) not made in the ordinary course of business.

          (b) Each Company Group Member has delivered to Buyer complete and correct copies of all
written Contracts, together with all amendments thereto, and accurate descriptions of all material
terms of all oral Contracts, set forth or required to be set forth on Schedule 4.16.

     (c) The Contracts listed in Schedule 4.16 and the Minor Contracts excluded from Schedule 4.16
based on the term or amount thereof are referred to herein as the “Company Group Member Contracts.”
No Company Group Member is in Default under any Company Group Member Contract (including any Real
Estate Leases and Non-Real Estate Leases), which Default or Defaults could result in a Liability on
the part of such Company Group Member in excess of $10,000 in any individual case or $25,000 in the
aggregate. No Company Group Member has received any communication from, and has not given any
communication to, any other party indicating that such Company Group Member or such other party, as
the case may be, is in Default under any Company Group Member Contract. To the Company’s
knowledge, (i) none of the other parties to any Company Group Member Contract is in material
Default thereunder, and (ii) each Company Group Member Contract is enforceable against any other
parties thereto in accordance with terms thereof.

     4.17 Insurance. Schedule 4.17 lists all policies or binders of insurance held by or
on behalf of each Company Group Member, specifying with respect to each policy the insurer, the
amount of the coverage, the type of insurance, the risks insured, the expiration date, the policy
number and any pending claims thereunder. There is no material Default with respect to any such
policy or binder, nor has there been any failure to give any notice or present any claim under any
such policy or binder in a timely fashion or in the manner or detail required by the policy or
binder. There is no notice of non-renewal or cancellation with respect to, or disallowance of any
claim under, any such policy or binder that has been received by Company Group Member. Schedule
4.17 includes information with respect to the insurance coverage that each Company Group Member has
had in place throughout the past ten years.

4.18 Intellectual Property,

          (a) Contracts.

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               (i) Schedule 4.18(a)-1 contains a complete and accurate list and summary description,
including any royalties paid or received by each Company Group Member, of all Contracts relating to
the Intellectual Property to which any Company Group Member is a party or by which any Company
Group Member is bound, except for any license implied by the sale of a product and perpetual,
paid-up royalty free and transferable license rights for “off-the-shelf” third party application
software that any Company Group Member licenses for use in the Business, in any individual case,
under a license with a maximum payment obligation on the part of Company Group Member of less than
$10,000 (“Off-the-Shelf Software”). There are no outstanding and no threatened disputes or
disagreements with respect to any such Contract. Except specifically set forth on Schedule
4.18(a)-2, no current or former employee of any Company Group Member and no other Person owns or
has any proprietary, financial or other interest, direct or indirect, in whole or in part, and
including any right to royalties or other compensation, in any of the Intellectual Property, or in
any application therefor.

               (ii) All employees and consultants of each Company Group Member who are involved in the design
or development of the Intellectual Property have executed a non-disclosure and assignment of
inventions agreement (a “Confidentiality Agreement”).

               (iii) Except as specified on Schedule 4.18(a)-2, none of the employees or consultants of any
Company Group Member is subject to any contractual or legal restrictions that might interfere with
the use of his or her best efforts to promote the interests of the Business. To the Company’s
knowledge, no employee of any Company Group Member has entered into any Contract that restricts or
limits in any way the scope or type of work in which the employee may be engaged or requires the
employee to transfer, assign, or disclose information concerning his or her work to anyone other
than the Company Group Members.

               (iv) To the Company’s knowledge, no employee or consultant of any Company Group Member (a) has
used any other Persons’ Trade Secrets or other information that is confidential in the course of
his or her work or, (b) is, or is currently expected to be, in material Default under any term of
any employment contract, agreement or arrangement relating to the Intellectual Property, or any
Confidentiality Agreement or any other Contract or any restrictive covenant relating to the
Intellectual Property, or the development or exploitation thereof.

          (b) Know-How Necessary for the Business.

               (i) Except as described on Schedule 4.18(b), the Company Group Members are the owner or have a
right to use each item of the Intellectual Property.

               (ii) Except as set forth in Schedule 4.18(b), all current or former employees of the Company
Group Members who are or were involved in the design or development of the Intellectual Property
have executed written Contracts with the Company Group Members that assign to the Company Group
Members all rights to

33

 

any inventions, improvements, discoveries, or information made during or derived from their
relationship to the Company Group Members.

          (c) Patents.

               (i) Schedule 4.18(c) contains a complete and accurate list and summary description of all
Patents in which the Company Group Members have an ownership interest. The Company Group Members
own all right, title and interest in and to each of the Patents except for those Patents identified
as being co-owned, and as to those co-owned Patents the rights and obligations of the co-owners
with respect to such Patents are set forth in Schedule 4.18(c). To the Company’s knowledge, there
are no recorded or unrecorded Encumbrances with respect to any Patent.

               (ii) All of the issued Patents are currently in compliance with formal legal requirements
(including payment of filing, examination, and maintenance fees and proofs of working or use), and
are not subject to any maintenance fees or taxes or actions falling due within 90 days after the
Closing Date which have not already been paid or responded to by Company Group Members.

               (iii) No Patent has been or is now involved in any interference, reissue, reexamination, or
opposition proceeding. To the Company’s knowledge, there is no potentially interfering patent or
patent application of any third party and no third party is infringing any Patent.

               (iv) No challenge to any Patent is pending and, to the Company’s knowledge, no such challenge
has been threatened. To the Company’s knowledge, none of the products manufactured and sold, nor
any process or know-how used by any Company Group Member, infringes or is alleged to infringe any
patent or other proprietary right of any other Person.

               (v) To the knowledge of the Company, no third party is infringing or is alleged to be
infringing any of the Patents.

               (vi) The Company Group Members have used reasonable best efforts to assure that all products
made, used or sold under the Patents have been marked with the proper patent notice.

          (d) Trademarks.

               (i) Schedule 4.18(d) contains a complete and accurate list and summary description of all
Trademarks in which any Company Group Member has an ownership interest. The Company Group Members
are the owners of all right, title and interest in and to each of the Trademarks. To the Company’s
knowledge, neither such Trademark, nor the ownership thereof, is subject to any claim of any third
party.

               (ii) All Trademarks that have been registered with the USPTO and any foreign Trademark Office
are currently in compliance with all formal legal requirements (including the timely
post-registration applications), and are not subject to

34

 

any maintenance fees or taxes or actions falling due within 90 days after the Closing Date
which have not already been paid or responded to by Company Group Member.

               (iii) No Trademark has been or is now involved in any opposition, invalidation or cancellation
and, to the knowledge of the Company, no such action has been threatened with respect to any of the
Trademarks. To the Company’s knowledge, there is no potentially interfering or infringing trademark
or trademark application of any third party.

               (iv) No challenge to any Trademark is pending or, the the Company’s knowledge, threatened in
any way.. To the knowledge of the Company, none of the Trademarks used by any Company Group Member
infringes, or is alleged to infringe, any trade name, trademark, or service mark of any third
party.

               (v) To the knowledge of the Company, no third party is infringing or misusing or is alleged to
be infringing or misusing any of the Trademarks.

               (vi) The Company Group Members have used reasonable best efforts to assure that all products
and materials containing a registered or unregistered Trademark bear the proper notice where and as
permitted or required by law.

          (e) Copyrights.

               (i) Schedule 4.18(e) contains a complete and accurate list and summary description of all
registered Copyrights in which any Company Group Member has an ownership interest. The Company
Group Members are the owner of all right, title and interest in and to each of the registered
Copyrights, free and clear of any Encumbrances.

               (ii) All of the Copyrights that have been registered and are currently in compliance with
formal legal requirements, to the Company’s knowledge, are valid and enforceable, and are not
subject to any maintenance fees or taxes or actions falling due within 90 days after the date of
Closing.

               (iii) To the Company’s knowledge, no Copyright is infringed or has been challenged or
threatened in any way. To the Company’s knowledge, none of the subject matter of any of the
Copyrights infringes or is alleged to infringe any copyright or any third party or is a derivative
work based on the work of at third party.

               (iv) The Company has made reasonable efforts to mark all works encompassed by the registered
Copyrights with the proper copyright notice.

          (f) Trade Secrets.

               (i) With respect to each Trade Secret, the documentation relating to such Trade Secret is
current, accurate, and sufficient in detail and content to identify and explain it and to allow its
full and proper use without reliance on the knowledge or memory of any individual.

35

 

               (ii) Each Company Group Member has taken all reasonable precautions to protect the secrecy,
confidentiality and value of its Trade Secrets.

               (iii) Each Company Group Member owns and has the right to use its Trade Secrets. To the
Company’s knowledge, the Trade Secrets are not part of the public knowledge or literature and have
not been used, divulged, or appropriated either for the benefit of any Person (other than Company
Group Member) or to the detriment of the Business. To the Company’s knowledge, no Trade Secret is
subject to any adverse claim or has been challenged or threatened in any way.

          (g) Software.

               (i) Schedule 4.18(g)(i) contains a complete and accurate list of all material Software
Products and Databases (except Off-the-Shelf Software) that are used by any Company Group Member
for which such Company Group Member is the licensee or lessee or the right to use which any Company
Group Member has otherwise obtained (“Licensed Software”). Schedule 4.18(g)(i) also sets forth a
list of all license fees, rents, royalties or other charges that any Company Group Member is
required or obligated to pay with respect to Licensed Software. Prior to the date of this
Agreement, the Seller Parties have delivered to Buyer true and complete copies of all Contracts
under which the Company Group Members have the right to use any such Licensed Software. The
Company Group Members are in compliance with all provisions of any Contract pursuant to which any
Company Group Member has the right to use the Licensed Software.

               (ii) Schedule 4.18(g)(ii) contains a list or description of all Software Products and
Databases developed or owned by any Company Group Member and which are used in the Business. Such
software and Licensed Software (collectively, the “Company Software”), constitutes all material
Software Products developed or owned by any Company Group Member and which are used in the
Business. The consummation of the Transactions contemplated by this Agreement will not cause a
material Default under any Contract relating to the Company Software or impair in a material way
the ability of any Company Group Member or the Buyer to use the Company Software in the same manner
as such Company Software is currently used or intended to be used by any Company Group Member. To
the knowledge of the Company, no Company Group Member is infringing, misappropriating or diluting
any intellectual property rights of any other Person with respect to the Company Software, and, to
the knowledge of the Company, no other Person is infringing or misappropriating any Intellectual
Property rights of any Company Group Member with respect to the Company Software.

     4.19 Employee Relations. Schedule 4.19 sets forth a true and complete list of the
names, job title, base salaries and date of employment of all employees of each Company Group
Member involved in the operation of the Business (the “Employees”). Except as set forth on
Schedule 4.19, each Company Group Member: (i) is in compliance in all material respects with all
applicable Laws respecting employment, employment practices, terms and conditions of employment and
wages and hours, in each case, with respect to Employees, including the Worker Adjustment and
Retraining Notification Act

36

 

of 1988, as amended; (ii) has withheld and reported all amounts required by Law or by
agreement to be withheld and reported with respect to wages, salaries and other payments to
Employees; (iii) is not liable for any material arrears of wages or any material Taxes or any
material penalty for failure to comply with any of the foregoing; and (iv) is not liable for any
material payment to any trust or other fund governed by or maintained by or on behalf of any
Governmental Entity, with respect to unemployment compensation benefits, social security or other
benefits or obligations for Employees. There are no material pending or, to the knowledge of the
Company, threatened or reasonably anticipated claims or actions against any Company Group Member
under any worker’s compensation policy or long-term disability policy. Except as set forth in
Schedule 4.19, there are no actions, suits, claims, labor disputes or grievances pending, or, to
the knowledge of the Company, threatened or reasonably anticipated relating to any labor, safety or
discrimination matters involving any Employee, including charges of unfair labor practices or
discrimination complaints. No Company Group Member has engaged in any unfair labor practices
within the meaning of the National Labor Relations Act. Except as set forth in Schedule 4.19, no
Company Group Member is presently, nor has it been in the past ten (10) years, a party to, or bound
by, any collective bargaining agreement or union contract with respect to any Employees and no
collective bargaining agreement is being negotiated by any Company Group Member. No consent of any
union (or similar group or organization) is required in connection with the consummation of the
transactions contemplated hereby. There are no pending, or, to the knowledge of the Company,
threatened (a) union representation petitions respecting the Employees, (b) efforts being made to
organize any of the Employees, or (c) strikes, slow downs, work stoppages, or lockouts or threats
affecting the Employees.

     4.20 ERISA.

          (a) Schedule 4.20 contains a complete list of all Benefit Plans that are sponsored or
maintained by any Company Group Member or ERISA Affiliate or under which any Company Group Member
is obligated (each, a “Company Benefit Plan”). The Company Group Members have delivered to Buyer
(i) accurate and complete copies of all Company Benefit Plan documents and all other material
documents relating thereto, including (if applicable) all summary plan descriptions, summaries of
material modification, trust agreements, summary annual reports and insurance policies or
contracts, (ii) accurate and complete detailed summaries of all unwritten Company Benefit Plans and
any funding arrangements therefor, (iii) accurate and complete copies of the most recent financial
statements and actuarial reports with respect to all Company Benefit Plans for which financial
statements or actuarial reports are required or have been prepared, and (iv) accurate and complete
copies of all annual reports for all Company Benefit Plans (for which annual reports are required)
prepared within the last three years and all other filings required by ERISA or the Code. Each
Company Benefit Plan providing benefits that are funded through a policy of insurance is indicated
by the word “insured” placed by the listing of the Benefit Plan in Schedule 4.20.

          (b) All Company Benefit Plans conform (and at all times have conformed), and are being
administered and operated (and have at all time been administered and operated) in compliance with,
the requirements of ERISA, the Code and

37

 

all other applicable Laws, including without limitation the Americans with Disabilities Act of
1990, the Family Medical Leave Act of 1993 and the Health Insurance Portability and Accountability
Act of 1996. All material returns, reports and disclosure statements required to be made under
ERISA and the Code with respect to all Company Benefit Plans have been timely filed or delivered.
There have not been any “prohibited transactions,” as such term is defined in Section 4975 of the
Code or Section 406 of ERISA involving any of the Company Benefit Plans and any Company Group
Member officer, director or employee, or to the knowledge of the Company, involving any other
party, that could subject any Company Group Member to any material penalty or tax imposed under the
Code or ERISA.

          (c) Except as is set forth in Schedule 4.20, any Company Benefit Plan that is intended to be
qualified under Section 401(a) of the Code and exempt from tax under Section 501(a) of the Code has
been determined by the Internal Revenue Service to be so qualified (or is a prototype plan subject
to an opinion letter that may be relied on) or an application for such determination is pending.
Any such determination that has been obtained remains in effect and has not been revoked, and with
respect to any application that is pending, the Company Group Members have no reason to suspect
that such application for determination will be denied. Nothing has occurred since the date of any
such determination that is reasonably likely to affect adversely such qualification or exemption,
or result in the imposition of excise taxes or income taxes on unrelated business income under the
Code or ERISA with respect to any such Company Benefit Plan.

          (d) No Company Group Member now sponsors or has ever sponsored any defined benefit plan
subject to Title IV of ERISA or has ever contributed to any multiemployer plan (as defined in
Section 3(37) of ERISA), nor does any Company Group Member have a current or contingent obligation
to contribute to any multiemployer plan (as defined in Section 3(37) of ERISA). No Company Group
Member has any liability with respect to any employee benefit plan (as defined in Section 3(3) of
ERISA) other than in accordance with the terms of the Company Benefit Plans.

          (e) There are no pending or, to the knowledge of the Company, any threatened claims by or on
behalf of any Company Benefit Plans, or by or on behalf of any individual participants or
beneficiaries of any such Benefit Plans, alleging any breach of fiduciary duty on the part of any
Company Group Member or any of its officers, directors or employees under ERISA or any other
applicable Law, relating to the Company Benefit Plans, nor is there, to the knowledge of the
Company, any basis for such claim. The Company Benefit Plans are not the subject of any pending
(or to the knowledge of the Company, any threatened) investigation or audit by the Internal Revenue
Service or the Department of Labor.

          (f) Each Company Group Member and ERISA Affiliate has timely made all required contributions
under the Company Benefit Plans.

          (g) With respect to any Company Benefit Plan that is an employee welfare benefit plan (within
the meaning of Section 3(1) of ERISA) (a “Welfare Plan”)

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and except as specified in Schedule 4.20, (i) each Welfare Plan for which contributions are
claimed by any Company Group Member as deductions under any provision of the Code complies with all
applicable requirements pertaining to such deduction, (ii) with respect to any welfare benefit fund
(within the meaning of Section 419 of the Code) related to a Welfare Plan, there is no disqualified
benefit (within the meaning of Section 4976(b) of the Code) that would result in the imposition of
a tax under Section 4976(a) of the Code, (iii) any Benefit Plan that is a group health plan (within
the meaning of Section 4980B(g)(2) of the Code) complies, and in each and every case has complied,
with all of the applicable requirements of Section 4980B of the Code, ERISA, Title XXII of the
Public Health Service Act and the Social Security Act, and (iv) all Welfare Plans may be amended or
terminated by the Buyer at any time on or after the Closing Date. Except as specified in Schedule
4.20, no Company Benefit Plan provides any health, life or other welfare coverage to employees of
Company Group Member beyond termination of their employment with any Company Group Member by reason
of retirement or otherwise, other than coverage as may be required under Section 4980B of the Code
or Part 6 of ERISA, or under the continuation of coverage or conversion provisions of the Laws of
any state or locality.

          (h) Except as otherwise set forth on Schedule 4.20, neither the execution and delivery of this
Agreement nor the consummation of the Transactions will (i) result in any payment to be made by an
Affiliate of any Company Group Member (including severance, unemployment compensation, golden
parachute (as defined in Code Section 280G or otherwise)) becoming due to any employee or former
employee, officer or director, or (ii) increase or vest any benefits payable under any Benefit
Plan.

          (i) Except as otherwise set forth on Schedule 4.20, any amount that could be received (whether
in cash or property or the vesting of property) as a result of any of the Transactions by any
employee, officer or director of Company Group Member who is a “disqualified individual” (as such
term is defined in proposed Treasury Regulation Section 1.280G-1) under any employment, severance
or termination agreement, other compensation arrangement or Benefit Plan currently in effect would
not be characterized as an “excess parachute payment” (as such term is defined in Section 280(b)(1)
of the Code).

     4.21 Corporate Records. The books of account, minute books, stock record books and
other records of each Company Group Member, all of which have been made available to Buyer, contain
complete, correct and current copies of its Charter Documents and of all minutes of formal
meetings, resolutions and other proceedings of its stockholders, Board of Directors and committees
of such Board of Directors, and have been maintained in the ordinary course of business, and in
accordance with sound business practices, and no formal meeting of any such stockholders, Board of
Directors, or committee has been held for which minutes have not been prepared and are not
contained in such minute books. At the Closing, all of those original books and records will be in
the possession of the Company Group Members.

     4.22 Absence of Certain Changes. Except as set forth on Schedule 4.22 or as
contemplated by this Agreement, the Business has been conducted in the ordinary course

39

 

since January 1, 2005, and there has not been with respect to any Company Group Member any of
the items specified below since January 1, 2005:

          (a) any change that has had or is reasonably likely to have a Material Adverse Effect;

          (b) any distribution or payment declared or made in respect of its capital stock by way of
dividends, purchase or redemption of shares or otherwise;

          (c) any increase in the compensation payable or to become payable to any director, officer,
employee or agent, except for increases for non-officer employees made in the ordinary course of
business, nor any other change in any employment or consulting arrangement;

          (d) any sale, assignment or transfer of Assets, or any additions to or transactions involving
any Assets, other than those made in the ordinary course of business;

          (e) other than in the ordinary course of business, any waiver or release of any claim or right
or cancellation of any debt held;

          (f) any damage, destruction or loss, whether or not covered by insurance, (A) materially and
adversely affecting the Assets or the operations, assets, properties or prospects of the Business
or (B) of any item or items carried on its books of account individually or in the aggregate at
more than $100,000, or any repeated, recurring or prolonged shortage, cessation or interruption of
supplies or utility or other services required to conduct the Business;

          (g) receipt of notice or actual or threatened labor trouble, strike or other occurrence, event
or condition of any similar character which has had or could reasonably be expected to adversely
affect the Assets, the Business or the transactions contemplated by this Agreement or any other
Transaction Document;

          (h) capital expenditures or capital additions in excess of an aggregate of $500,000, or the
lease of capital equipment or property under which the annual lease charges exceed $500,000 in the
aggregate;

          (i) any payments to any Affiliate of a Company Group Member, other than wages and
reimbursements in accordance with past practices and except as specified in Schedule 4.22.

     4.23 Previous Sales; Warranties. No Company Group Member has breached any express or
implied warranties in connection with the sale or distribution of goods or the performance of
services, except for breaches that, individually and in the aggregate, are not material and are
consistent with past practice of the Business.

     4.24 Customers and Suppliers. Each Company Group Member has used reasonable business
efforts to maintain, and currently maintains, adequate working

40

 

relationships with each of the customers and suppliers of the Business. Schedule 4.24
specifies for each of the two fiscal years ending June 30, 2004 and 2005, and for the 6-month
period ending December 31, 2006, the names of the respective customers that were, in the aggregate,
the 20 largest customers in terms of dollar value of products or services, or both, sold by the
Business. Except as specified on Schedule 4.24, none of such customers has given any Company Group
Member written (or, to the knowledge of the Company, oral) notice terminating, canceling or
threatening to terminate or cancel any Contract or relationship with such Company Group Member.
Schedule 4.24 also specifies for each year of the three years ending December 31, 2003, 2004 and
2005, the names of the respective suppliers that were, in the aggregate, the 20 largest suppliers
in terms of dollar value of products or services, or both, used by each Company Group Member. None
of such suppliers has given any Company Group Member written (or, to the knowledge of the Company,
oral) notice terminating, canceling or threatening to terminate or cancel any Contract or
relationship with such Company Group Member.

     4.25 Operation of the Business. Except as described on Schedule 4.25, (a) the
Business has been conducted only through the Company Group Members and not through any other
divisions or any direct or indirect Subsidiary or Affiliate of any Company Group Member, and (b) no
part of such Business has been operated by any Person other than the Company Group Members. To the
knowledge of the Company, no Stockholder who is also an officer of the Company or a member of the
Knowledge Group engages, directly or indirectly, in any business activities that are competitive
with the Business.

     4.26 Finder’s Fees. No Seller Party or Company Group Member is, nor will be,
responsible or subject to a claim for any commission or finder’s or similar fee in connection with
the Transactions.

     4.27 Accuracy of Information. No representation or warranty by any Seller Party in
this Agreement or in the Disclosure Schedule or in any Transaction Document and no information
contained therein or otherwise delivered by or on behalf of any Seller Party to Buyer in connection
with the Transactions, including any Closing Certificate, the Financial Statements, Disclosure
Schedule and Exhibits hereto, (i) contains any untrue statement of a material fact as specifically
stated or (ii) to the Knowledge of the Company, omits to state any material fact necessary in order
to make the statements contained herein or therein not misleading in light of the circumstances
under which such statements were made.

5. Representations and Warranties of Buyer. Buyer hereby represents and warrants to the
Seller Parties as of the date hereof and also at and as of the Closing Date as though then made
(except to the extent such representations and warranties speak as of a particular date, in which
case such representations and warranties shall be made only as of such particular date) as follows:

     5.1 Organizational Status. Buyer is a corporation duly organized, validly existing
and in good standing under the Laws of the jurisdiction of its incorporation and is qualified to do
business in any jurisdiction where it is required to be so qualified.

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     5.2 Authorization. Buyer has the requisite power and authority to execute and deliver
the Transaction Documents to which it is a party and to perform the Transactions performed or to be
performed by it. Such execution, delivery and performance by Buyer has been duly authorized by all
necessary corporate action. Each Transaction Document executed and delivered by Buyer has been
duly executed and delivered by Buyer and constitutes a valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms, subject to Customary Qualifications.

     5.3 Consents and Approvals. Except for compliance with the HSR Act, neither the
execution and delivery by Buyer of the Transaction Documents to which it is a party, nor the
performance of the Transactions performed or to be performed by Buyer, require any filing, consent
or approval, constitute a Default or cause any payment obligation to arise under (a) any Law or
Court Order to which Buyer is subject, (b) the Charter Documents or bylaws of Buyer or (c) any
Contract, Governmental Permit or other document to which Buyer is a party or by which the material
properties or other material assets of Buyer may be bound.

     5.4 Investment Intent. The Closing Shares are being acquired by Buyer for investment
only and not with the view to resale or other distribution. Buyer acknowledges that such
securities have not been registered under the Securities Act or any applicable state securities (or
“blue sky”) Laws and, therefore, cannot be resold unless so registered or exempted from such
registration. Buyer has sufficient knowledge and experience in financial and business matters that
it is capable of evaluating the economic risks of investment in the Closing Shares. Buyer is an
“accredited investor” as that term is defined in Rule 501 of Regulation D promulgated by the
SEC. 

     5.5 No Financing. Neither the Closing nor Buyer’s obligations hereunder are subject
to any contingency respecting financing and Buyer has readily available funds or availability on
its existing credit facilities to consummate the Transactions and satisfy its obligations
hereunder.

     5.6 Finder’s Fees. No Person retained by Buyer is or will be entitled to any
commission or finder’s or similar fee in connection with the Transactions.

6. Covenants of Seller Parties.

     6.1 Conduct of the Business. Except as may be approved in writing by an authorized
officer of Buyer, including any President or Vice President, or as expressly contemplated by this
Agreement, between the date hereof and the Closing:

          (a) the Company shall, and shall cause each other Company Group Member to, operate the
Business only in the ordinary course and, to the extent consistent with such operation, use its
commercially reasonable efforts to (i) preserve the current organization of the Business intact,
(ii) keep available the services of the Employees, (iii) continue normal purchasing, rental,
leasing, financing, marketing, advertising, promotional and maintenance expenditures and (iv)
preserve any significant beneficial

42

 

business relationships with all Persons having business dealings with any Company Group Member
with respect to the Business;

          (b) the Company shall, and shall cause each other Company Group Member to, use its
commercially reasonable efforts consistent with past practice to maintain (i) its Assets in good
operating condition and repair, subject to normal wear and tear and (ii) all insurance covering its
Business and its Employees and Assets in full force and effect until the Closing Date comparable in
amount, scope, and coverage to that in effect on the date of this Agreement;

          (c) the Company shall, and shall cause each other Company Group Member to, use its
commercially reasonable efforts consistent with past practice to (i) comply in all material
respects with all applicable Laws, (ii) perform all of its obligations under this Agreement or any
other Transaction Document to which any Company Group Member is or will be a party without Default,
(iii) not Default on any of its other Liabilities, except where payment of any such Liability is
being contested in good faith by appropriate proceedings and where appropriate reserves have been
established therefor, and (iv) maintain all of its books and records in the ordinary course;

          (d) the Company shall, and shall cause each other Company Group Member to, use its
commercially reasonable efforts consistent with past practice to comply in all material respects
with all its obligations under any Contract to which it is a party;

          (e) the Company shall not, and shall not permit any of the other Company Group Members to,
sell, rent, lease or otherwise dispose of any part of the Business or its Assets with an aggregate
value of greater than $25,000, except for any such sale, rental, lease or other disposition in the
ordinary course;

          (f) the Company shall not, and shall not permit any of the other Company Group Members to,
create or suffer to exist any new Encumbrance or defect of title on any of its Assets with a value
in excess of $10,000;

          (g) the Company shall not, and shall not permit any other Company Group Member to, issue any
note, bond or other debt security, or create, assume or incur any indebtedness for borrowed money
or capitalized lease obligations except for borrowings under the Company’s existing credit
facilities in the ordinary course of business or as contemplated in order for the Company to comply
with its obligations under Section 3.2 and, with respect to the Company Employee Bonus Plans,
7.8(b)(ii);

          (h) the Company shall not, and shall not permit any of the other Company Group Members to,
modify, terminate (before the expiration thereof) or renew any Contract or dispose of any right of
value accruing to it with respect to the Business, except in the ordinary course;

          (i) the Company shall not, and shall not permit any of the other Company Group Member to, take
any other action which could reasonably be expected to have a Material Adverse Effect;

43

 

          (j) the Company shall not, and shall not permit any of the other Company Group Members to,
merge with or into or consolidate with any Person other than Buyer;

          (k) the Company shall not, and shall not permit any of the other Company Group Members to,
issue and sell, or agree to issue and sell, any of its or their equity securities, or securities
convertible into or exercisable for equity securities except as provided in Section 2.2;

          (l) no Stockholder shall sell or offer for sale any shares of the Company’s capital stock that
such Stockholder currently own, or create any Encumbrance thereon;

          (m) the Company shall not, and shall not permit any of the other Company Group Members to,
redeem any capital stock or make any distributions or other payments to or transactions with any
stockholders of the Company or any of the other Company Group Members, except as provided in
Sections 2.2 and 2.3 hereof;

          (n) the Company shall not, and shall not permit any Company Group Members to: (i) make any
material modification or adjustment to the compensation of any Employee; (ii) grant any severance
or termination pay to any Employee except pursuant to written agreements outstanding, or policies
existing on the date hereof and as previously disclosed in writing or made available to Buyer, or
adopt any new severance plan, or amend or modify or alter in any manner any severance plan,
agreement or arrangement existing on the date hereof; (iii) adopt or amend any Benefit Plan, or
take any action which would result in increased liabilities under any Benefit Plan, or enter into
any employment agreement or collective bargaining agreement (other than offer letters and letter
agreements entered into in the ordinary course of business consistent with past practice with
Employees who are terminable “at will”); (iv) pay any special bonus or special remuneration to any
Employee; or (v) increase the salaries or wage rates or fringe benefits (including rights to
severance or indemnification) of its Employees except, in each case, as may be required by Law; and

          (o) the Company shall not, and shall not permit any of the other Company Group Members to,
agree or commit to do any of the foregoing.

     6.2 Access to Information. The Company shall, and shall cause each other Company
Group Member to, give to Buyer and its counsel, accountants and other representatives access during
the Company’s normal business hours upon reasonable prior notice to the premises of its Business
and its personnel, furnish to Buyer and such representatives all such additional documents,
financial and Tax information and information with respect to the Business as Buyer may from time
to time reasonably request and use its commercially reasonable efforts to cause its accountants to
permit Buyer to examine the records and working papers pertaining to their audits and other reviews
of its financial statements with respect to the Business or any of its Assets. The Company further
shall permit Buyer and its representatives to have the opportunity, within ten (10) days after the
date of this Agreement, to conduct such customer due

44

 

diligence as Buyer shall deem necessary and appropriate, including visits to or other
communications with customers and suppliers of the Business, such visits to be made only upon prior
notice to the Company and only with the participation of Company management. The Company and the
Stockholders acknowledge that no investigation by Buyer or its representatives shall affect or
limit the scope of the Company’s representations and warranties herein or limit the liability of
the Stockholders hereunder for any breach of such representations and warranties.

     6.3 No Solicitation. From and after the date hereof and up to and including the
Termination Date, without the prior written consent of Buyer, no Seller Party shall, and the
Company shall cause each Company Group Member not to, authorize or permit any Company Group Member,
or any representative thereof, to, directly or indirectly, solicit, initiate or encourage
(including by way of furnishing information) or take any other action to facilitate knowingly any
inquiries or the making of any proposal that constitutes or may reasonably be expected to lead to
an Acquisition Proposal from any Person, or engage in any discussion or negotiations relating
thereto or accept any Acquisition Proposal. If any Company Group Member receives any such
inquiries, offers or proposals it shall (a) notify Buyer orally and in writing of any such
inquiries, offers or proposals (including the terms and conditions of any such proposal and the
identity of the Person making it), within 24 hours of the receipt thereof and (b) keep Buyer
informed of the status and details of any such inquiry, offer or proposal. As used herein,
“Acquisition Proposal” means a proposal or offer (other than pursuant to this Agreement) for a
tender or exchange offer, merger, consolidation or other business combination involving any
proposal to acquire in any manner a substantial equity interest in, or all or substantially all of
the assets of, any Company Group Member.

     6.4 Related Parties. Each Stockholder shall use his or its reasonable best efforts to
cause the Company Group Members and any other Affiliate to take any action or refrain from taking
any action, in each case as may be necessary to carry out the Transactions.

     6.5 Updates. Between the date hereof and the Closing Date, the Seller Parties shall
promptly disclose to Buyer in writing (a) any information set forth in the Disclosure
Schedules delivered by Seller Parties that is no longer complete, true or applicable, (b)
any event or development that occurs, or information that becomes known, that, had it
existed or been known on the date hereof, would have been required to be disclosed by
Seller Parties under this Agreement, (c) any information of the nature of that set forth in
the Disclosure Schedules delivered by the Seller Parties that arises after the date hereof
and that would have been required to be included in the Disclosure Schedules delivered by
the Seller Parties if such information had been obtained on the date of delivery thereof,
and (d) any information that gives any Seller Party any reason to believe that any of the
conditions set forth in Section 8 or 9 will not be satisfied prior to the Termination Date;
provided, however, that none of such disclosures shall be deemed to modify, amend or
supplement the representations and warranties of the Seller Parties or the Schedules hereto
for the purposes of this Agreement (including Section 10), unless Buyer shall have
consented thereto in writing.

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7. Mutual Covenants.

     7.1 Fulfillment of Closing Conditions. At and prior to the Closing, each Party shall
use commercially reasonable efforts to fulfill, and to cause each other to fulfill the conditions
specified in Sections 8 and 9 to the extent that the fulfillment of such conditions is within its
or his control. In connection with the foregoing, each Party will (a) refrain from any actions
that would cause any of its representations and warranties to be inaccurate as of the Closing, and
take any reasonable actions within its control that would be necessary to prevent its
representations and warranties from being inaccurate as of the Closing, (b) execute and deliver the
applicable agreements and other documents referred to in Sections 8 and 9, (c) comply with all
applicable Laws in connection with its execution, delivery and performance of this Agreement and
the Transactions, (d) use commercially reasonable efforts to obtain in a timely manner all
necessary waivers, consents and approvals required under any Laws, Contracts or otherwise,
including any Required Consents, and (e) use commercially reasonable efforts to take, or cause to
be taken, all other actions and to do, or cause to be done, all other things reasonably necessary,
proper or advisable to consummate and make effective as promptly as practicable the Transactions.

     7.2 Consents. The Seller Parties and Buyer shall each cooperate, and use commercially
reasonable efforts, in as timely a manner as is reasonably practicable, to make all filings and
obtain all licenses, permits, consents, approvals, authorizations, qualifications and orders of
Governmental Entities and other third parties necessary to consummate the Transactions. Each of
the Parties shall furnish to the other Parties such necessary information and reasonable assistance
as such other Parties may reasonably request in connection with the foregoing and shall provide the
other parties with copies of all filings made by such Party with any Governmental Entity or any
other information supplied by such Party to a Governmental Entity in connection with this
Agreement.

     7.3 HSR Filing.

          (a) Without limiting the generality of Section 7.2, but subject to this Section 7.3(a), to the
extent such filings have not been completed prior to the execution of this Agreement, the
Seller Parties and Buyer shall each (i) take promptly all actions necessary to make the filings
required of such Party or any of its Affiliates under the HSR Act, including making the initial
filings within three Business Days after the date hereof, (ii) use commercially reasonable efforts
to comply with any request for additional information or documentary material received by such
Party or any of its Affiliates from the Federal Trade Commission or the Antitrust Division of the
Department of Justice pursuant to the HSR Act and (iii) cooperate with the other Parties in
connection with any filing of the Company under the HSR Act and in connection with resolving any
investigation or other inquiry concerning the Transactions commenced by either the Federal Trade
Commission or the Antitrust Division of the Department of Justice or state attorneys general;
provided, however, Buyer will have no obligation to make any divestiture of tangible or intangible
assets or business operations or agree to any other obligations, commitments or covenants in order
to secure the expiration or termination of

46

 

 the HSR waiting period or otherwise gain the approval of the Federal Trade Commission or the
Department of Justice, as the case may be.

          (b) Each Party shall promptly inform the other Parties of any material communication received
by such Party from the Federal Trade Commission, the Antitrust Division of the Department of
Justice or any other Governmental Entity regarding any of the Transactions. Each Party shall advise
the other Parties promptly of any understandings, undertakings or agreements that such Party
proposes to make or enter into with the Federal Trade Commission, the Antitrust Division of the
Department of Justice or any other Governmental Entity in connection with the Transactions.

     7.4 Public Announcements. The Parties shall consult with each other before issuing
any press release or making any public statement with respect to this Agreement and the
Transactions and, except as may be required by applicable Law, none of the Parties nor any other
party shall issue any such press release or make any such public statement without the prior
written consent of the other Parties; provided, however, that the Stockholders’ Representative is
authorized to give such consent on behalf of the Stockholders.

     7.5 Tax Matters.

          (a) Tax Returns.

               (i) Income Tax Returns for Tax Periods Ending On or Before the Closing Date. Within
90 calendar days of receiving the Tax schedules, documents, and information as provided in Section
7.5(c), the Stockholders shall prepare or cause to be prepared all Tax Returns, including all
amended Tax Returns and Tax refund claims carrying back any net operating or other loss, with
respect to income and/or state franchise tax based on net income (“Income Tax Returns”) of the
Company Group Members for all periods ending on or prior to the Closing Date which are filed after
the Closing Date in a manner consistent with the Company Group Members’ past practices and
consistent with the Closing Date Net Working Capital as agreed to by the parties or as finally
determined pursuant to Section 2.5(b). The Stockholders shall permit the Company and/or the Buyer
to review and comment on each such Income Tax Return prior to filing, and shall make such revisions
to such Tax Returns as are reasonably requested by the Company and/or the Buyer. Buyer shall cause
each Company Group Member to timely file and pay all Taxes due on such Tax Returns directly to the
applicable taxing authority on or prior to their due date (or extended due date if a valid
extension is timely filed).

               (ii) Non-Income Tax Returns for Tax Periods Ending On or Before the Closing Date. The
Company and/or the Buyer shall prepare or cause to be prepared all Tax Returns (except for Income
Tax Returns) of the Company Group Members for all periods ending on or prior to the Closing Date
which are filed after the Closing Date in a manner consistent with the Company Group Members’ past
practices and consistent with the Closing Date Net Working Capital as agreed to by the parties or
as finally determined pursuant to Section 2.5(b). The Company and/or the Buyer shall

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permit the Stockholders to review and comment on each such Tax Return by providing such Tax
Returns to Stockholders within 30 days after filing. Stockholders shall review and comment on such
Tax Returns within 30 days of receipt. Buyer shall file an amended Tax Return making such
revisions to such Tax Returns as are reasonably requested by the Stockholders. Buyer shall cause
each Company Group Member to timely file and pay all Taxes directly to the applicable taxing
authority on or prior to their due date (or extended due date if a valid extension is timely
filed).

               (iii) Tax Returns for Tax Periods Beginning Before and Ending After the Closing Date.
The Company and/or the Buyer shall prepare or cause to be prepared all Tax Returns of the Company
Group Members for Tax periods that begin before the Closing Date and end after the Closing Date
(“Straddle Period”). The Company and/or the Buyer shall permit the Stockholders to review and
comment on each such Tax Return by providing such Tax Returns to Stockholders within 30 days after
filing. Stockholders shall review and comment on such Tax Returns within 30 days of receipt.
Buyer shall file an amended Tax Return making such revisions to such Tax Returns as are reasonably
requested by the Stockholders. For purposes of this Section 7.5(a)(iii), in the case of any Taxes
that are imposed on a periodic basis and are payable for a taxable period that includes (but does
not end on) the Closing Date, the portion of such Tax which relates to the portion of such Taxable
period ending on the Closing Date (“Pre-Closing Taxes”) shall (x) in the case of any Taxes other
than Taxes based upon or related to income or receipts, be deemed to be the amount of such Tax for
the entire taxable period multiplied by a fraction the numerator of which is the number of days in
the taxable period ending on the Closing Date and the denominator of which is the number of days in
the entire Taxable period, and (y) in the case of any Tax based upon or related to income or
receipts be deemed equal to the amount which would be payable if the relevant Taxable period ended
on the Closing Date using the “closing of the books” method consistent with the Company Group
Members’ past practices closing the books at the end of a fiscal year and in a manner consistent
with the Closing Date Net Working Capital as agreed to by the parties or as finally determined
pursuant to Section 2.5(b). Any credits relating to a Taxable period that begins before and ends
after the Closing Date shall be taken into account as though the relevant Taxable period ended on
the Closing Date. All determinations necessary to give effect to the foregoing allocations shall
be made in a manner consistent with the Company Group Members’ past practices. Buyer shall cause
each Company Group Member to timely file and pay all Taxes due on such Tax Returns directly to the
applicable taxing authority on or prior to their due date (or extended due date if a valid
extension is timely filed).

               (iv) Elections and Changes. In preparing the Tax Returns referenced in this Section
7.5(a), none of Buyer or any Buyer Affiliate, Stockholders, or any Company Group Member shall make
or cause to be made any material Tax election or change any material income Tax accounting method
or period without giving prior written notice to and receiving the prior written consent of the
other Parties, which such consent shall not be unreasonably withheld; provided, however, such prior
written consent shall not be required if and to the extent such change or election (A) is required
by Law and no other reasonable method exists to comply with such Law or (B) will not materially
increase the amount of Taxes that would be owing for periods covered by such

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Tax Return, with such materiality determined prior to such election or change. None of Buyer
or any Buyer Affiliate, Stockholders, or any Company Group Member shall make any election under
Code Section 338 (or any corresponding or equivalent election under state, local, foreign, or other
Tax Laws), engage in any transaction, or otherwise treat the purchase and sale of the Company Stock
as a sale of assets for Income Tax purposes.

               (v) Amended Tax Returns. Except for such amended Income Tax Returns and Income Tax
refund claims as contemplated to be filed pursuant to Section 7.5(a)(i), Buyer shall not, and shall
not permit any Company Group Member to, (i) amend any Tax Return, amended Tax Return, or Tax refund
claim filed by or with respect to any Company Group Member for a taxable period which Stockholders
may be liable for the payment of any portion of the Taxes shown as due on such Tax Return pursuant
to Section 7.5, without the express written consent of the Stockholders, which such consent shall
not be unreasonably withheld, or (ii) initiate any voluntary audit by a Tax authority for a taxable
period which Stockholders may be liable for the payment of any portion of the Taxes shown as due on
such Tax Return pursuant to Section 7.5, without the express written consent of the Stockholders,
which such consent shall not be unreasonably withheld.

               (vi) Consolidated Income Tax Returns. Buyer shall cause each Company Group Member to
join, and/or become a member or includable corporation of, its affiliated group commencing on the
first day after the Closing Date and shall include each Company Group Member in Buyer’s
consolidated or combined Income Tax Returns for the period which includes such date (thereby
causing each Company Group Member’s fiscal year beginning July 1, 2005 to end on the Closing Date
for Income Tax purposes).

          (b) Audits. Buyer shall cause the Company Group Members to notify promptly
Stockholders in writing upon receipt by a Company Group Member or any of its Affiliates of notice
of any pending or threatened Tax audits or assessments that may affect the Tax liabilities of
Company and for which Stockholders may be liable under Section 2.7 or 10.1.2. Stockholders shall
have the sole right to represent a Company Group Member’s interests in any Tax matter, including
without limitation any audit, appeal, hearing, and/or administrative or other proceeding, all
judicial proceedings, the determination to extent, toll, or waive the statute of limitations, or
the filing of any amended return, that involves a Tax liability or potential Tax liability for
which Stockholders may be liable under Section 2.7 or 10.1.2 unless such Tax liability or potential
Tax liability is subject to the Deductible Amount and is reasonably expected to be less than the
Deductible Amount (after taking into consideration all other items subject to the Deductible
Amount) (a “Tax Proceeding”), and to employ counsel of their choice at their expense. Buyer shall,
and Buyer shall cause each Company Group Member to, cooperate fully with Stockholders and its
counsel in the defense or compromise of any Tax Matter, including providing Stockholders or
Stockholders’ attorneys, accountants, employees, or agents the necessary power of attorney or other
authorization to represent the Company Group Member. The Buyer, together with counsel and other
professional experts of its choosing and expense may participate in the prosecution or defense of
any such Tax Proceeding. Stockholders, with their counsel and other professional experts of their
choosing and expense, may participate in the prosecution or defense of any Tax

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Proceeding that is reasonably expected to be less than the Deductible Amount, provided,
however, that Buyer shall be primarily responsible for such proceeding. The settlement or
compromise of any Tax liability for which Stockholders may be liable under Section 2.7 or 10.1.2
(whether or not subject to the Deductible Amount) shall be subject to approval by all of the
Parties, which such approval shall not be unreasonably withheld.

          (c) Cooperation on Tax Matters.

               (i) Buyer, the Stockholders, and the Company Group Members shall cooperate fully, as and to
the extent reasonably requested by the other Party, in connection with the preparation and/or
filing of Tax Returns pursuant to this Section 7.5 and any audit, appeal, hearing, litigation, or
other proceeding with respect to Taxes. Buyer shall prepare or cause to be prepared and provide or
cause to be provided to the Stockholders Tax schedules, documents, and information consistent with
each Company Group Members’ past practices as Stockholders shall request for Stockholders’ use in
preparing any Income Tax Return as set forth in Section 7.5(a)(i). Such Tax schedules, documents,
and information shall be completed and provided to Stockholders after, but within 30 calendar days
after, determination of the Closing Date Net Working Capital. Such cooperation shall also include
the retention and (upon the other Party’s request) the provision of records and information which
are reasonably relevant to any such audit, litigation or other proceeding and making employees,
officers, and advisors available on a mutually convenient and reasonable basis to provide
additional information and explanation of any material provided hereunder. Each of the Company
Group Members and Buyer agree (A) to retain all books and records with respect to Tax matters
pertinent to the Stockholders and ownership of the Company Group Members relating to any taxable
period beginning before the Closing Date until the expiration of the statute of limitations (and,
to the extent notified by Buyer, the Stockholders, or the Company Group Members, any extensions
thereof) of the respective taxable periods, and to abide by all record retention agreements entered
into with any taxing authority, and (B) to give the other parties reasonable written notice prior
to transferring to a third party, destroying or discarding any such books and records and, if
requested, the Buyer and/or each Company Group Member shall allow the Stockholders to copy such
books and records that are to be transferred or take possession of such books and records that
would otherwise be destroyed or discarded.

               (ii) Buyer, the Stockholders, and the Company Group Members further agree, upon request, to
use commercially reasonable efforts to obtain any certificate or other document from any person,
Governmental Entity or authority as may be necessary to mitigate, reduce, or eliminate any Tax that
could be imposed (including, without limitation, with respect to the transactions contemplated
hereby).

          (d) Certain Taxes. All transfer, documentary, stamp, registration and other such
Taxes and fees (including, without limitation, any penalties and interest) incurred in connection
with this Agreement (including, without limitation, any Transfer Tax), shall be paid by the Company
and/or Buyer when due, and the Company and/or Buyer will, at its own expense, file all necessary
Tax Returns and other documentation with respect to all such transfer, documentary, stamp,
registration and other Taxes and

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fees, and, if required by applicable law, the Stockholders will, and will cause their
respective affiliates, if any, to join in the execution of any such Tax Returns and other
documentation.

          (e) Refunds. Except for Income Tax Refunds (including any interest thereon) received
by a Company Group Member as a result of the deduction of the amount of the Compensation Payments,
all refunds or credits of Taxes (including any interest thereon) received by or credited to a
Company Group Member attributable to periods ending on or prior to the Closing Date or to that
portion of all Straddle Periods through and including the Closing Date as determined under Section
7.5(a)(iii) (collectively, “Stockholders’ Refunds”) shall be for the benefit of Stockholders, and
Buyer shall, and Buyer shall cause each Company Group Member to, use commercially reasonable
efforts to obtain any Stockholders’ Refunds and shall pay over to Stockholders any Stockholders’
Refunds within five business days of receipt thereof within the Tax Department of Buyer. In
addition, if the Pre-Closing Taxes other than Income Taxes with respect to a Straddle Period of a
Company Group Member are less than the payments previously made by or credited to a Company Group
Member with respect to such Straddle Period on or before the Closing Date, then Buyer shall cause
such Company Group Member to pay to Stockholders the excess of such previous payments over such
Pre-Closing Taxes upon such Company Group Member receiving the benefit of such excess payments
either through a refund of such excess payments and/or through a reduction in any Tax payment that
otherwise would be required to be made by such Company Group Member after the Closing Date.

          (f) Tax Information. Within 90 calendar days of receiving the Tax schedules,
documents, and information as provided in Section 7.5(c), the Stockholders shall prepare or cause
to be prepared a schedule setting forth the following information with respect to each of the
Company Group Members (or, in the case of clause (B) below, with respect to each of the Existing
Subsidiaries) as of the Closing Date (or as of June 30, 2005 for States where the Company Group
Members’ tax year does not end on the Closing Date): (A) the basis of each Company Group Member in
its assets; (B) the basis of the stockholder(s) of each Existing Subsidiary in its stock (or the
amount of any Excess Loss Account as defined in Treasury Regulation §1.1502-19 (or any
corresponding or similar provision of state, local or foreign income Tax Law)); (C) the amount of
any net operating loss, net capital loss, unused investment or other credit, unused foreign tax
credit, or excess charitable contribution allocable to each Company Group Member; and (D) the
amount of any deferred gain or loss allocable to each Company Group Member arising out of any
deferred inter-company transaction (as defined in Treasury Regulation §1.1502-13 (or any
corresponding or similar provision of state, local or foreign income Tax Law)).

     7.6 Expenses. Except as otherwise provided herein, the Parties shall each pay all of
their respective legal, accounting and other expenses incurred by such Party in connection with the
Transactions.

     7.7 Employees.

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     (a) Employees

          (i) Buyer
may identify *** (the “Excluded Employees”) or positions
that the Company will terminate, at Buyer’s expense, prior to the Closing.

          (ii) Effective as of the Closing, Buyer or its Affiliates shall employ (where employment
continues by operation of Law) each Employee other than those Excluded Employees. Each Employee
who continues in employment with the Buyer by operation of Law shall be referred to herein as a
“Transferring Employee.”

          (iii) Buyer will undertake not to terminate any Transferring Employees for reasons other than
cause during the first six months after Closing.

          (iv) Any Transferring Employee terminated within one year of Closing for reasons other than
cause will be paid by Buyer a severance amount (i) in the case
of Non-Exempt Employees, ***.

          (v) Buyer shall have the right to administer a standard drug test to each Employee. Any such
Employee who fails to take or pass such drug test shall be terminated by the Company prior to the
Closing at the expense of the Stockholders and shall not be employed by Buyer or its Affiliates,
and such Employee shall not be a “Transferring Employee” for all purposes of this Agreement.

          (vi) Upon the Closing, each Transferring Employee, shall receive a base salary or
hourly wage at least equal to his or her base salary or hourly wage in effect immediately prior to
the Closing and shall receive such other benefits and remuneration as generally provided by Buyer
or its Affiliates to their newly hired employees in similar job classifications in the same
geographic area.

     (b) Benefits

     (i) Service Credit and Group Health Plan Expenses. Buyer will treat all service of the
Transferring Employees earned while employed by the Company prior to the Closing as service with
Buyer for purposes of waiting periods under those Benefit Plans of Buyer made available to the
Transferring Employees and for any other purpose required by applicable Law. Any group
health plan of Buyer in which a Transferring Employee or his or her dependents participate
shall not recognize for purposes of calculating any deductible, co-pay or out of pocket maximum
thereunder the covered expenses that such Transferred Employee and such Employee’s dependents
incurred during 2006 in the group health plan of the same type with the Company prior to the
Closing.

     (ii) Buyer and its affiliates will not recognize service of the Transferring Employees earned
while employed by Company prior to the Closing Date as service with Buyer and its affiliates in its
retirement or severance plans.

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     (iii) Company shall terminate all of its existing Benefit Plans prior to the Closing,
including the Company Employee Bonus Plans, and shall pay out all amounts due and owing under the
Company Employee Bonus Plans prior to the Closing.

     (c) Vacation. Buyer shall credit service of each Transferring Employee earned while employed
by Company prior to the Closing as service with Buyer for purposes of determining each such
Transferring Employee’s vacation entitlement as of January 1, 2006 and thereafter minus any
vacation already taken in calendar year 2006.

     (d) No Third Party Beneficiaries. Nothing contained herein, expressed or implied, is intended
to confer upon any Employee any benefits under any Benefit Plans, including severance benefits or
the right to employment or continued employment with Buyer or any Affiliate of Buyer for any period
by reason of this Agreement. In addition, the provisions of this Agreement, including in
particular this Section 7.8, are for the sole benefit of the parties and their respective
Affiliates and are not for the benefit of any third parties.

8. Conditions Precedent to Obligations of Seller Parties. All obligations of the Seller
Parties to consummate the Transactions are subject to the satisfaction (or waiver by all Seller
Parties) prior thereto of each of the following conditions:

     8.1 Representations and Warranties. The representations and warranties made by the
Buyer in Section 5 that are not qualified by materiality or a Material Adverse Effect requirement
shall be true and correct in all material respects and the representations and warranties that are
qualified by materiality or a Material Adverse Effect requirement shall be true and correct, in
each case on the date hereof and also at and as of the Closing Date (except to the extent such
representations and warranties speak as of a particular date), with the same force and effect as if
made on and as of the Closing Date.

     8.2 Agreements, Conditions and Covenants. Buyer shall have performed or complied in
all material respects with all agreements, conditions and covenants required by this Agreement to
be performed or complied with by it on or before the Closing Date.

     8.3 Legal Matters. There shall not be (i) any Law or Court Order in effect that has
the effect of making the purchase and sale of the Closing Shares illegal or otherwise prohibiting
the consummation of such purchase and sale or (ii) any action, suit, proceeding or investigation
(A) instituted or threatened to restrain, prohibit or invalidate the purchase and sale of the
Closing Shares by any Governmental Authority of competent jurisdiction, or (B) instituted to
restrain, prohibit or invalidate such purchase and sale by any other third party (which has a
reasonable likelihood of so restraining, prohibiting or invalidating the consummation of such
purchase and sale); excluding, in each case, any such action, suit, proceeding or investigation,
which is in effect or is instituted as a result of a Seller Party’s actions (other than a Court
Order binding on the Parties prohibiting the consummation of such purchase and sale). 

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     8.4 Consents. Each of the Required Consents shall have been obtained and shall be in
full force and effect.

     8.5 Governmental Approvals. The waiting period applicable to the Transactions under
the HSR Act shall have expired or been terminated.

     8.6 Other Documents and Actions. Buyer shall have delivered each of the other
documents, and taken each of the other actions, required by Section 3.2 hereof.

9. Conditions Precedent to Obligations of Buyer. All obligations of Buyer to consummate
the Transactions are subject to the satisfaction (or waiver by Buyer) prior thereto of each of the
following conditions:

     9.1 Representations and Warranties. The representations and warranties made by the
Seller Parties in Section 4 that are not qualified by materiality or a Material Adverse Effect
requirement shall be true and correct in all material respects and the representations and
warranties that are qualified by materiality or a Material Adverse Effect requirement shall be true
and correct, in each case on the date hereof and also at and as of the Closing Date (except to the
extent such representations and warranties speak as of a particular date), with the same force and
effect as if made on and as of the Closing Date; provided, however, that for purposes of this
Section 9.1, all updates to the Disclosure Schedule made after the date of this Agreement shall be
disregarded (except to the extent Buyer shall have consented thereto in writing pursuant to Section
6.5).

     9.2 Agreements, Conditions and Covenants. The Seller Parties shall have performed or
complied in all material respects with all agreements, conditions and covenants required by this
Agreement to be performed or complied with or by them on or before the Closing Date.

     9.3 Legal Matters. There shall not be (i) any Law or Court Order in effect that has
the effect of making the purchase and sale of the Closing Shares illegal or otherwise prohibiting
the consummation of such purchase and sale or (ii) any action, suit, proceeding or investigation
(A) instituted or threatened to restrain, prohibit or invalidate the purchase and sale of the
Closing Shares by or with any Governmental Authority of competent jurisdiction, or (B) instituted
to restrain, prohibit or invalidate such purchase and sale by or with any other third party (which
has a reasonable likelihood of so restraining, prohibiting or invalidating the consummation of such
purchase and sale); excluding, in each case, any such action, suit, proceeding or investigation,
which is in effect or is instituted as a result of Buyer’s actions (other than a Court Order
binding on the Parties prohibiting the consummation of such purchase and sale). 

     9.4 No Claim Regarding Stock Ownership or Sale Proceeds. No claim shall have been
made or threatened by any Person asserting that such Person (a) is the holder or the beneficial
owner of, or has the right to acquire or obtain beneficial ownership of, any stock or other equity
or ownership interest in, any Company Group Member, or (b) is entitled to all or any portion of the
Purchase Price for the Closing Shares.

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     9.5 Consents. Each of the Required Consents shall have been obtained and shall be in
full force and effect, and Buyer shall have received copies thereof.

     9.6 Release of Liens. Before or at the Closing, the Seller Parties shall have
furnished to Buyer documentation reasonably satisfactory to Buyer releasing all Encumbrances
affecting the Closing Shares, to the extent applicable.

     9.7 No Material Adverse Effect. From the date hereof until the Closing, there
shall not have occurred any event or events resulting in a Material Adverse Effect.

     9.8. Governmental Approvals. The waiting period applicable to the Transactions under
the HSR Act shall have expired or been terminated, and no action by any Governmental Entity of any
jurisdiction having authority over the Transactions challenging or seeking to enjoin the
consummation of the Transactions shall be pending.

     9.9. Other Documents and Actions. The Seller Parties shall have delivered each of the
other documents, and taken each of the other actions, required by Section 3.2 hereof.

     9.10 FIRPTA Certificate. The Seller Parties shall deliver to Buyer on the Closing
Date a duly completed and executed certification of non-foreign status pursuant to Section 1.1445-2
of the Treasury Regulations.

10. Indemnification.

     10.1 By Stockholders.

     10.1.1 General Indemnity. From and after the Closing Date, the Stockholders, shall
defend, indemnify and hold harmless Buyer, the Company Group Members and their respective
successors and assigns, and each of their respective officers, directors, employees, stockholders,
agents, Affiliates and any Person who controls any of such Persons within the meaning of the
Securities Act or the Exchange Act (each, an “Indemnified Buyer Party”) from and against any
Liabilities, claims, demands, judgments, losses, diminution of value, costs, damages (including
property damage or damages relating to personal injury) or expenses whatsoever (including
reasonable attorneys’, consultants’ and other professional fees), and any direct or indirect,
consequential or special damages, but excluding punitive, exemplary or special damages, except for
punitive, exemplary or special damages payable to a third party, incurred by such Indemnified Buyer
Party in connection therewith (collectively, “Damages”) that such Indemnified Buyer Party may
sustain, suffer or incur and that result from, arise out of or relate to:

(a) any breach of any of the representations, warranties, covenants or agreements of the Seller
Parties contained in this Agreement or in the Closing Certificates, such breach to be determined
without regard to any limitation or qualification as to materiality or similar qualifications or
exceptions, such breach (and calculation of any Damages) to be determined without regard to any
limitation or qualification as to materiality or similar qualifications or exceptions,

55

 

(b) any Liability or Damages for:

     (i) any Environmental Liabilities arising out of or relating to (and any Actions by
third-parties seeking recovery for Environmental Liabilities based upon allegations concerning)
(A)(1) the ownership, operation or condition at any time on or prior to the Closing Date of the
Real Property or any other real properties or Facilities in which any Company Group Member has or
had an ownership or operational interest, or (2) any Hazardous Substances or other contaminants
that were present, on or before the Closing Date, on the Real Property or any other real properties
or Facilities in which any Company Group Member has or had an ownership or operational interest;
(B) any Hazardous Substances or other contaminants, wherever located, that were (or, in the case of
third-party Actions, allegedly were) generated, transported, stored, treated, Released, or
otherwise handled by any Company Group Member or by any other Person for whose conduct they are or
may be held responsible, at any time on or prior to the Closing Date; or (C) any Hazardous
Activities that were conducted by any Company Group Members at any time on or prior to the Closing
Date; or,

     (ii) any bodily injury (including illness, disability, and death), personal injury, property
damage (including trespass, nuisance, wrongful eviction, and deprivation of the use of real
property), or other damage of or to any Person, including any employee or former employee of any
Company Group Member or any other Person for whose conduct they are or may be held responsible, in
any way arising from (A) any Hazardous Activity conducted (or, in the case of third-party Actions,
allegedly conducted) with respect to the Real Property or the operation of the Company Group
Members prior to the Closing Date, or (B) any Release of or exposure to any Hazardous Substance
that occurred on or before the Closing Date on or at the Real Property (or on any other property,
if such Hazardous Substance emanated from any of the Real Property and was present on any of the
Real Property on or prior to the Closing Date), or (C) Released by any Company Group Member or any
other Person for whose conduct they are or may be held responsible, at any time on or prior to the
Closing Date, and

(c) any Indemnified Liability.

     10.1.2 Tax Indemnity. In addition to the foregoing, except to the extent of any
purchase price adjustment relating to Taxes under Sections 2.4 or 2.6 or 2.7 and except for Income
Taxes relating to the Compensation Payments (which are subject to a separate purchase price
adjustment set forth in Sections 2.4(b), 2.6, and 2.7), Stockholders shall defend, indemnify and
hold harmless Buyer and each Company Group Member from and against any (A) Pre-Closing Taxes of
any Company Group Member that relate to a Straddle Period, (B) Taxes other than Income Taxes
assessed against any Company Group Member with respect to taxable periods ending on or prior to the
Closing Date, and (C) Income Taxes assessed against any Company Group Member with respect to
taxable periods ending on or prior June 30, 2005 (Income Taxes with respect to periods beginning on
July 1, 2005, and ending on or prior to the Closing Date are subject a separate purchase price
adjustment as set forth in Sections 2.4, 2.6, and 2.7 above), in each case provided that Buyer
complies with its obligations set forth in Section 7.5; provided, however, that Buyer’s foregoing
obligation to comply with Section 7.5 shall not

56

 

limit the Stockholders’ indemnity obligations under this Section 10.1.2 except to the extent
that the Stockholders are prejudiced thereby.

     10.2 By Buyer. From and after the Closing Date, Buyer shall defend, indemnify and
hold harmless the Stockholders and their respective successors and assigns, and (if any) their
respective officers, directors, employees, stockholders, agents, Affiliates and any Person who
controls any of such Persons within the meaning of the Securities Act or the Exchange Act (each, an
“Indemnified Seller Party”) from and against any Damages that such Indemnified Seller Party may
sustain, suffer or incur and that result from, arise out of or relate to any breach of any of the
representations, warranties, covenants or agreements of Buyer contained in this Agreement or in a
Closing Certificate.

     10.3 Escrow. Upon notice to the Stockholders specifying in reasonable detail the
basis thereof, Buyer may seek indemnification to which it may be entitled under this Section 10
against the Escrow Funds by filing a claim with the Escrow Agent pursuant to the terms of the
Escrow Agreement, and complying with the resolution procedure identified in such Escrow Agreement.
The failure to give a notice of a Claim under the Escrow Agreement will not constitute an election
of remedies or limit Buyer in any manner in the enforcement of any other remedies that may be
available to it.

     10.4 Procedure for Claims.

          (a) Any Person who desires to seek indemnification under any part of this Section 10 (each, an
“Indemnified Party”) shall give written notice in reasonable detail (a “Claim Notice”) to each
Party responsible or alleged to be responsible for indemnification hereunder (an “Indemnitor”) and
the Escrow Agent prior to any applicable Expiration Date (as defined in Section 10.5). Such notice
shall briefly explain the nature of the claim and the parties known to be involved, and shall
specify the amount thereof. If the matter to which a claim relates shall not have been resolved as
of the date of the Claim Notice, the Indemnified Party shall estimate the amount of the claim in
the Claim Notice, but also specify therein that the claim has not yet been liquidated (an
“Unliquidated Claim”). If an Indemnified Party gives a Claim Notice for an Unliquidated Claim, the
Indemnified Party shall also give a second Claim Notice (the “Liquidated Claim Notice”) within 60
days after the matter giving rise to the claim becomes finally resolved, and the Second Claim
Notice shall specify the amount of the claim. Each Indemnitor to which a Claim Notice is given
shall respond to any Indemnified Party that has given a Claim Notice (a “Claim Response”) within 30
days (the “Response Period”) after the later of (i) the date that the Claim Notice is given or (ii)
if a Claim Notice is first given with respect to an Unliquidated Claim, the date on which the
Liquidated Claim Notice is given. Any Claim Response shall specify whether or not the Indemnitor
giving the Claim Response disputes the claim described in the Claim Notice. If any Indemnitor
fails to give a Claim Response within the Response Period, such Indemnitor shall be deemed not to
dispute the claim described in the related Claim Notice. If any Indemnitor elects not to dispute a
claim described in a Claim Notice, whether by failing to give a timely Claim Response in accordance
with the terms hereof or otherwise, then the

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amount of such claim shall be conclusively deemed to be an obligation of such Indemnitor.

          (b) If any Indemnitor shall be obligated to indemnify an Indemnified Party pursuant to this
Section 10, such Indemnitor shall pay to such Indemnified Party the amount to which such
Indemnified Party shall be entitled within 15 Business Days after the day on which such Indemnitor
became so obligated to the Indemnified Party. If the Indemnified Party shall be an Indemnified
Buyer Party, it shall first seek payment of the Damages to which it is entitled under this Section
10 from the Escrow Funds, but only to the extent that the Escrow Funds are not subject to other
claims for indemnification; thereafter, if the amount of the Escrow Funds available for payment of
Damages is less than the amount of Damages to which such Indemnified Buyer Party is entitled, such
Indemnified Buyer Party shall seek indemnification directly from the Stockholders. If any
Indemnitor fails to pay all or part of any indemnification obligation when due, then such
Indemnitor shall also be obligated to pay to the applicable Indemnified Party interest on the
unpaid amount for each day during which the obligation remains unpaid at an annual rate equal to
LIBOR plus 3% (three percent).

          (c) If, during the Response Period, an Indemnified Party receives a Claim Response from the
Indemnitor, then for a period of 45 days (the “Resolution Period”) after the Indemnified Party’s
receipt of such Claim Response, the Indemnified Party and the Indemnitor shall endeavor to resolve
any dispute arising therefrom. If such dispute is resolved by the parties during the Resolution
Period, the amount that the parties have specified as the amount to be paid by the Indemnitor, if
any, as settlement for such dispute shall be conclusively deemed to be an obligation of such
Indemnitor. If the parties are unable agree upon a resolution to such dispute prior to the
expiration of the Resolution Period (or any extension thereto to which the Indemnitor and
Indemnified Party agree in writing), the issue shall be resolved in accordance with Section 13.2
hereof.

          (d) If the Indemnified Party is an Indemnified Buyer Party and, pursuant to Section 10.4(b),
such Indemnified Buyer Party is obligated to seek any portion of the funds to which such
Indemnified Buyer Party is entitled from the Escrow Funds, then, within two Business Days from the
date on which such Indemnified Buyer Party became entitled to such funds, the Indemnified Party and
the Indemnitor shall provide written instructions to Escrow Agent as to (i) the amount of funds, if
any, to be dispersed from the Escrow Funds, and (ii) instructions as to the manner in which such
funds shall be dispersed to the Indemnified Buyer Party.

          (e) No Party will have any liability (for indemnification or otherwise) for any Damages for
punitive, exemplary or special damages of any nature, except to the extent such punitive, exemplary
or special damages are awarded to a third party against an Indemnified Party in circumstances in
which such Indemnified Party is entitled to indemnification hereunder.

          (f) Notwithstanding any other provision of this Section 10, except as provided below in this
subparagraph (f), the Indemnified Buyer Party, on the one hand,

58

 

and the Indemnified Seller Parties on the other hand, shall be entitled to indemnification
hereunder by Seller Parties or by Buyer, respectively, only when the aggregate of all Damages to
such Indemnified Buyer Parties exceeds *** (the “Deductible Amount”) and then only to the
extent of such excess amount; provided, however, that the Deductible Amount shall not apply with
respect to (i) a breach of Seller Parties’ representations or warranties under Sections 4.1, 4.2,
4.4, 4.14 or 4.26 or in the related provisions of the Closing Certificates, a breach of Buyer’s
representations or warranties under Sections 5.1, 5.2, 5.4, 5.5 or 5.6, or a breach of any
representations or warranty of a Party to this Agreement made with an intent to mislead or defraud,
(ii) a breach of any covenants hereunder or (iii) a claim for indemnification under Section
10.1.2(C). In addition, the calculation of the Deductible Amount shall include any Damages
incurred by an Indemnified Party for which the Indemnified Party would have been entitled to claim
indemnification under this Section 10 with respect to a breach of a representation or warranty but
for such Claim being excluded as a result of the qualification of such representation or warranty
by materiality or similar qualifications or exceptions. The maximum amount of Damages for which
the Stockholders or Buyer, respectively, shall be liable under this Agreement shall be limited to
the following (the “Indemnification Cap”):

     (w) as to any claim for which a Claim Notice is given on or before the 18-month anniversary
of the Closing Date — ***;

     (x) as to any claim for which a Claim Notice is given with respect to Section 10.1(c) after
the 18-month anniversary, but on or before the third anniversary, of the Closing Date —
***;

     (y) as to any claim for which a Claim Notice is given with respect to Section 10.1(b) after
the 18-month anniversary, but on or before the 24-month anniversary, of the Closing Date —
***; and

     (z) as to any claim for which a Claim Notice is given with respect to Section 10.1(b) after
the 24-month anniversary, but on or before the fifth anniversary, of the Closing Date —
***;

provided, however, the foregoing limitations of the Indemnification Cap shall not apply to (a) any
breach of the Seller Parties’ representations or warranties under Sections 4.1, 4.2, 4.4, 4.13,
4.14, or 4.26 or in the related provisions of the Closing Certificates, (b) a breach of any
representations or warranty of a Party to this Agreement made with an intent to mislead or defraud,
(c) a breach of any of the parties’ covenants or (d) a claim for indemnification under Section
10.1.2; and provided, further, any Damages for which Buyer may claim indemnification under Section
10.1(b) shall be prorated between Buyer and the Stockholders as follows:

	 	 	 	 	 	 	 	 	 
	Months after Closing Date	 	Buyer	 	 	Stockholders	 
	0-24
	 	 	***	 	 	 	***	 
	25-60
	 	 	***	 	 	 	***	 
	After month 60
	 	 	***	 	 	 	***	 

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          (g) Notwithstanding any other provision of this Section 10, the Stockholders shall not have an
obligation to indemnify or hold harmless the Indemnified Buyer Parties or any other obligation with
respect to (i) any Environmental Liability (including any Environmental Liability arising out of
the discovery of any environmental matter or condition) that is first discovered as a result of any
Unreasonable Action by or on behalf of Buyer; (ii) that portion of any Damages or Environmental
Liability that arises from any act or omission by Buyer or any other person or entity after the
Closing that exacerbates any Environmental Liability, including any environmental matter or
condition, in existence on or before Closing; and (iii) any Remedial Action except to the extent
such Remedial Action is required under applicable Environmental Law or by the relevant Governmental
Entity.

          (h) Notwithstanding any other provision of this Section 10, with respect to matters which are
subject to the indemnification provisions of Section 10.1(b),

          (i) Buyer shall be entitled to control any Remedial Action (including Cleanup), any
Legal Proceeding relating to an Environmental Claim and, any other Legal Proceeding;

          (ii) with respect to the pending request to the Wisconsin Department of Natural
Resources (the “WDNR”) for closure of the environmental condition referenced on Schedule
4.15(b) (the “Referenced Condition”), in the event the WDNR requires additional Remedial
Action of the Referenced Condition as a condition of closure, the costs associated with such
Remedial Actions, including, but not limited to, the costs of monitoring well closures,
shall be borne by the Stockholders without being subject to the Deductible Amount;

          (iii) Buyer shall pursue the request for closure of the Referenced Condition with the
WDNR and shall close all associated monitoring wells reasonably promptly upon receipt of
authorization from the WDNR to do so;

          (iv) all Remedial Actions shall be performed in a commercially reasonable manner and in
a manner consistent with applicable Environmental Laws. All Remedial Actions shall be
performed in a manner employing the most cost-effective means available that is acceptable
to the relevant Governmental Entity, including the use of Impositions where such does not
unreasonably impair or impede Buyer’s use of the Real Property as a chemical manufacturing
or chemical research and development facility. Remedial Actions shall be deemed to be
complete when (A) Buyer provides written confirmation to the Stockholders’ Representative
that the Remedial Action has been completed, which confirmation shall not be unreasonably
withheld or delayed, or (B) upon issuance of a No Further Action Determination;

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          (v) Buyer shall keep the Stockholders’ Representative apprised of the progress and
performance of all Remedial Actions, including, without limitation, providing the
Stockholders’ Representative with copies of any and all testing results, reports, agency
notices, correspondence to or from any Governmental Entity and other material documents
related to any Environmental Liability or Remedial Actions; and

          (vi) The Stockholders may retain, at the Stockholders’ expense, any environmental
consultant(s) as they select, in their sole discretion (“Stockholders’ Consultants”), to
consult with Buyer, Buyer’s consultants and any Governmental Entity with respect to Remedial
Actions. The Stockholder’s Representative and Stockholder’s Consultants, if retained, shall
not assume the control of or responsibility for any Remedial Actions. Notwithstanding the
foregoing, it is expressly agreed that, to the extent reasonably possible under the
circumstances, the Stockholder’s Representative shall have the right (and shall be provided
a reasonable opportunity) to review and comment upon any document(s) to be submitted to a
Governmental Entity which relate in any way to any Remedial Actions To the extent
reasonably possible in the circumstances, Buyer shall give the Stockholder’s Representative
prompt written notice of, and the Stockholders’ Representative and/or the Stockholder’s
Representative’s representative(s) shall have the right to participate in, any phone call or
meeting with any Governmental Entity at which any Remedial Action is to be substantively
discussed or addressed.

          (i) Whenever there is an event, condition or a circumstance (a “Possible Breach”) the subject
matter of which is covered by more than one of the representations and warranties contained in
Section 4 or Section 5 (the “Applicable Representations”) and one or more of such representations
(the “Specifically Applicable Representations”) more specifically relate to the subject matter of
the Possible Breach, then if such Possible Breach would cause a breach of any Specifically
Applicable Representations, the fact that a breach may have occurred with respect to any of the
more general Applicable Representations shall not affect an Indemnified Party’s ability to claim a
breach of the Specifically Applicable Representations.

     10.5 Claims Period. Any claim for indemnification under this Agreement shall be made
by giving a Claim Notice under Section 10.4 on or before the applicable “Expiration Date” specified
below in this Section 10.5, or the claim under this Section 10 shall be invalid. The following
claims shall have the following respective “Expiration Dates”: (a) eighteen (18) months after the
Closing Date -— any claims that are not specified in any of the succeeding clauses; (b) the third
(3rd) anniversary of the Closing Date — any claims for indemnification under Section
10.1(c); (c) the fifth (5th) anniversary of the Closing Date — any claims for
indemnification under Section 10.1(b), (d) the date on which the applicable statute of limitations
expires plus thirty (30) days — any claim for Damages related to (i) a breach of any covenant or
agreement, (ii) a breach of the Seller Parties’ representations or warranties under Sections 4.13
or 4.26, a breach of Buyer’s representations or warranties under Section 5.6, or a breach of any
representations or warranties of a Party to this Agreement that were made with an intent to mislead
or defraud, or (iii) any claims for indemnification under Section 10.1.2, and

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     (d) in perpetuity — a breach of the Seller Parties’ representations or warranties under
Sections 4.1, 4.2, 4.4 or a breach of Buyer’s representations or warranties under Sections 5.1 or
5.2. If more than one of such Expiration Dates applies to a particular claim, the latest of such
Expiration Dates shall be the controlling Expiration Date for such claim. So long as an
Indemnified Party gives a Claim Notice for an Unliquidated Claim on or before the applicable
Expiration Date, such Indemnified Party shall be entitled to pursue its rights to indemnification
regardless of the date on which such Indemnified Party gives the related Liquidated Claim Notice.

     10.6 Third Party Claims. An Indemnified Party that desires to seek indemnification
under any part of this Section 10 with respect to any actions, suits or other administrative or
judicial proceedings (each, an “Action”) that may be instituted by a third party shall give each
Indemnitor prompt notice of a third party’s institution of such Action. After such notice, any
Indemnitor may, or if so requested by such Indemnified Party, any Indemnitor shall, participate in
such Action or assume the defense thereof, with counsel satisfactory to such Indemnified Party;
provided, however, that such Indemnified Party shall have the right to participate at its own
expense in the defense of such Action; and provided, further, that no Party shall consent to the
entry of any judgment or enter into any settlement, except with the written consent of the
Indemnitor or the Indemnified Party, as applicable (which consent shall not be unreasonably
withheld). Any failure to give prompt notice under this Section 10.6 shall not bar an Indemnified
Party’s right to claim indemnification under this Section 10, except to the extent that an
Indemnitor shall have been harmed by such failure.

     10.7 Effect of Investigation or Knowledge. Any claim by Buyer for indemnification
shall not be adversely affected by any investigation by or opportunity to investigate afforded to
Buyer, nor shall such a claim be adversely affected by Buyer’s knowledge on or before the Closing
Date of any breach of the type specified in the first sentence of Section 10.1 or of any state of
facts that may give rise to such a breach. The waiver of any condition based on the accuracy of
any representation or warranty, or on the performance of or compliance with any covenant or
obligation, will not adversely affect the right to indemnification, payment of Damages or other
remedy based on such representations, warranties, covenants or obligations.

10.8 General Rules on Payments by Stockholders

Notwithstanding anything contained in this Agreement to the contrary, except as specifically
provided in this Section 10.8, the obligation of each Stockholder with respect to the payment of
any amount to any Indemnified Buyer Party for any matter subject to this Section 10 shall be
several in proportion to such Stockholder’s respective Indemnification Share and not joint.
*** shall
be jointly and severally liable for all Stockholders with respect to (i) any obligation to pay any
amount under Section 2.5, (ii) any obligation to pay any amount under Sections 2.6 and 2.7 and
(iii) all Escrow Funds. Further, (v) *** shall be jointly and severally liable for all Stockholders with
respect to all indemnification obligations under Section 10.1(c) as to any claim for which

62

 

a Claim Notice is given on or before the 18-month anniversary of the Closing Date, (w) *** jointly and
severally, shall be solely liable for all Stockholders with respect to all indemnification
obligations under Section 10.1(c) as to any claim for which a Claim Notice is given after the
18-month anniversary, but on or before the 24-month anniversary, of the Closing Date, (x) *** shall be jointly
and severally liable for each such Stockholder’s Indemnification Share with respect to all
indemnification obligations under this Agreement, (y) *** shall be jointly and severally liable for each such Stockholder’s Indemnification Share
with respect to all indemnification obligations under this Agreement, and (z) *** shall be
jointly and severally liable for each such Stockholder’s Indemnification Share and the
Indemnification Share of *** with
respect to all indemnification obligations under this Agreement. Except as expressly provided in
this Section 10.8, nothing herein shall be deemed to restrict any Indemnified Buyer Party from
exercising all rights and remedies against any Stockholder with respect to the payment of any
amounts concurrently or in such order as the Indemnified Buyer Party shall elect, in its sole and
absolute discretion.

     10.9 Stockholder’s Representative.

          (a) *** shall act as the Stockholder’s representative (the “Stockholder’s
Representative”) and as exclusive agent and attorney-in-fact to act on behalf of any Stockholder
with respect to any and all matters, claims, controversies, or disputes arising out of the terms of
this Agreement. The Stockholder’s Representative shall have the power to take any and all actions
which the Stockholder’s Representative believes are necessary or appropriate or in the best
interests of the Stockholders, as fully as if each such Stockholder was acting on its, his or her
own behalf with respect to all matters concerning the Stockholders or any of them following the
Closing Date, including for the purpose of administering the Escrow Agreement, settling on behalf
of the Stockholders any indemnification claims made by any Indemnified Buyer Party under Section
10, representing the Stockholders in connection with the determination of the Net Working Capital
Valuation under Section 2.5, and taking any other action that is specifically delegated to the
Stockholder’s Representative hereunder. An Indemnified Buyer Party shall give notice under this
Section 10.9 of any claim for indemnification against the Stockholders to the Stockholders and the
Stockholder’s Representative, and only the Stockholder’s Representative shall be empowered,
following such notice, to respond to or take any other action on behalf of the Stockholders with
respect to the claim. The Stockholders shall be bound by any and all actions taken on their behalf
by the Stockholder’s Representative in accordance with this Agreement, and in particular, the
Stockholders shall be bound by the Escrow Agreement being executed by the Stockholder’s
Representative to the same extent as if they were signatories thereto. The Stockholder’s
Representative is expressly authorized to execute, deliver and perform the Escrow Agreement.

63

 

          (b) The authority granted hereunder is deemed to be coupled with an interest. Buyer shall
have the right to rely on any actions taken or omitted to be taken by the Stockholder’s
Representative as being the act or omission of any Stockholder, without the need for any inquiry,
and any such actions or omissions shall be binding upon each Stockholder, and shall not be liable
in any manner whatsoever for any action taken or not taken in reliance upon the actions taken or
not taken or communications or writings given or executed by the Stockholder’s Representative.
Except as specifically contemplated by the Escrow Agreement, Buyer shall be entitled to disregard
any notices or communications given or made by the Stockholders unless given or made through the
Stockholder’s Representative.

          (c) In the event of the death of the Stockholder’s Representative or his inability to perform
his functions hereunder, the Stockholders shall choose a successor Stockholder’s Representative by
a plurality vote of such Stockholders based upon Closing Shares held immediately prior to the
Closing Date.

          (d) The Stockholder’s Representative shall not be liable to any Stockholder or any other Party
for any action taken or omitted to be taken by him in his capacity as Stockholder’s Representative
except in the case of willful misconduct or gross negligence. The Stockholders shall jointly
indemnify the Stockholder’s Representative and hold him harmless from and against any loss,
liability or expense of any nature incurred by the Stockholder’s Representative arising out of or
in connection with the administration of his duties as Stockholder’s Representative, including
reasonable legal fees and other costs and expenses of defending or preparing to defend against any
claim or liability in the premises, unless such loss, liability or expense shall be caused by such
Stockholder’s Representative’s willful misconduct or gross negligence.

11. Termination.

     11.1 Grounds for Termination. The Parties may terminate this Agreement at any time
before the Effective Time as provided below:

          (a) by mutual written consent of each of the Seller Parties and Buyer;

          (b) by any Party, if the Closing shall not occurred on or before the Termination Date;
provided, however, that the right to terminate this Agreement under this Section 11.1(b) shall not
be available to any Party whose failure to fulfill any obligation under this Agreement has been the
cause of, or resulted in, the failure of the Closing to occur on or before the Termination Date;

          (c) by any Party, if a court of competent jurisdiction or other Governmental Entity shall have
issued a Court Order (which Court Order the Parties shall use commercially reasonable efforts to
lift) that permanently restrains, enjoins or otherwise prohibits the Transactions, and such Court
Order shall have become final and non-appealable;

64

 

          (d) by Buyer, if any of Seller Parties shall have breached, or failed to comply with, any of
its obligations under this Agreement or any representation or warranty made by Seller Parties shall
have been incorrect when made, and such breach, failure or misrepresentation is not cured within 20
days after notice thereof, and in either case, any such breaches, failures or misrepresentations,
individually or in the aggregate, results or would reasonably be expected to result in a Material
Adverse Effect on the Business;

          (e) by Seller Parties, if Buyer shall have breached, or failed to comply with any of its
obligations under this Agreement or any representation or warranty made by it shall have been
incorrect when made, and such breach, failure or misrepresentation is not cured within 20 days
after notice thereof, and in either case, any such breaches, failures or misrepresentations,
individually or in the aggregate, results or would reasonably be expected to affect materially and
adversely the benefits to be received by Buyer hereunder; or

     11.2 Effect of Termination. If this Agreement is terminated pursuant to Section 11.1,
the agreements contained in Section 7.7 shall survive the termination hereof and any Party may
pursue any legal or equitable remedies that may be available if such termination is based on a
breach of another Party.

12. General Matters.

     12.1 Contents of Agreement. This Agreement, together with the other Transaction
Documents, sets forth the entire understanding of the Parties with respect to the Transactions and
supersedes all prior agreements or understandings among the parties regarding those matters. There
have been no representations or warranties, written or oral, other than as provided in this
Agreement and/or the other Transaction Documents, and Buyer is relying solely on the
representations and warranties provided in this Agreement and/or the other Transaction Documents.

     12.2 Amendment, Parties in Interest, Assignment, Etc. This Agreement may be amended,
modified or supplemented only by a written instrument duly executed by each of the Parties. If any
provision of this Agreement shall for any reason be held to be invalid, illegal, or unenforceable
in any respect, such invalidity, illegality, or unenforceability shall not affect any other
provision hereof, and this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective heirs, legal representatives,
successors and permitted assigns of the Parties. Nothing in this Agreement shall confer any rights
upon any Person other than the Parties and their respective heirs, legal representatives,
successors and permitted assigns, except as provided in Section 10. No Party shall assign this
Agreement or any right, benefit or obligation hereunder. Any term or provision of this Agreement
may be waived at any time by the Party entitled to the benefit thereof by a written instrument duly
executed by such Party.

65

 

     12.3 Further Assurances. At and after the Closing, the Parties shall execute and
deliver any and all documents and take any and all other actions that may be deemed reasonably
necessary by their respective counsel to complete the Transactions.

     12.4 Interpretation. Unless the context of this Agreement clearly requires otherwise,
(a) references to the plural include the singular, the singular the plural, the part the whole, (b)
references to any gender include all genders, (c) “including” has the inclusive meaning frequently
identified with the phrase “but not limited to,” and (d) references to “hereunder” or “herein”
relate to this Agreement. The section and other headings contained in this Agreement are for
reference purposes only and shall not control or affect the construction of this Agreement or the
interpretation thereof in any respect. Section, subsection, Schedule and Exhibit references are to
this Agreement unless otherwise specified. Each accounting term used herein that is not
specifically defined herein shall have the meaning given to it under GAAP. Any reference to a
Party’s being satisfied with any particular item or to a Party’s determination of a particular item
presumes that such standard will not be achieved unless such Party shall be satisfied or shall have
made such determination in good faith in its sole or complete discretion.

     12.5 Counterparts. This Agreement may be executed in two or more counterparts, each
of which shall be binding as of the date first written above, and all of which shall constitute one
and the same instrument. Each such copy shall be deemed an original, and it shall not be necessary
in making proof of this Agreement to produce or account for more than one such counterpart.

     12.6 Disclosure Schedules. Any items listed or described on the Disclosure Schedules
shall be listed or described under a caption that specifically identifies the Section(s) of this
Agreement to which the item relates (which, in each case, shall constitute the only valid
disclosure with respect to such Section(s)).

13. Remedies.

     13.1 Exclusive. Other than with respect to the Non-Competition Agreements, the
Consulting Agreements and the Escrow Agreement, (i) the indemnification rights provided for in this
Agreement are the exclusive and the sole remedy (absent fraud or breach of this Agreement made by
the Party with knowledge, and except for claims asserted under the Securities Law or other
applicable securities Laws) available to a Party in enforcing any rights with respect to the
subject matter of this Agreement, and (ii) an indemnity claim under Section 10.1(b) by Buyer
against Stockholders shall be the sole and exclusive remedy of Buyer to recover from the
Stockholders for any Damages or other claims or Liabilities arising from any Environmental
Liabilities, Remedial Actions, Hazardous Substances, or Hazardous Activities.. Notwithstanding the
foregoing, each Party hereby expressly acknowledges that the other Parties may be irreparably
damaged if this Agreement is not specifically enforced. Upon a breach or threatened breach of the
terms, covenants or conditions of this Agreement by a Party, the non-breaching Parties shall, in
addition to all other remedies, be entitled to seek a temporary or permanent

66

 

injunction, without showing any actual damage, or a decree for specific performance, in
accordance with the provisions hereof.

     13.2 Dispute Resolution.

          (a) The Parties shall attempt in good faith to resolve any dispute, controversy or claim among
them arising out of or relating to this Agreement, including without limitation any dispute over
the breach, termination, interpretation, or validity thereof (the “Dispute”). Any party
may request through written notice that the Dispute be referred to senior executives of the parties
who have authority to resolve the Dispute. For purposes hereof, the Stockholder’s Representative
shall be deemed a senior executive for the Seller Parties. The executives shall attempt to resolve
the Dispute by agreement within thirty (30) days of such notice.

          (b) If the Parties to the Dispute are unable to resolve the Dispute as provided in Section
12.1(a) above, they may try in good faith to resolve the Dispute by mediation and may use any
mediator upon which they mutually agree. If the parties to the Dispute are unable to mutually agree
upon a mediator, the Dispute shall be referred to the Chicago office of JAMS or such other
mediation service as the parties to the Dispute may agree. The cost of the mediator will be split
equally between the parties to the Dispute unless they agree otherwise.

          (c) If the Parties have not (i) successfully resolved their Dispute through good faith
discussions; (ii) appointed a mediator; or (iii) where a mediator has been duly appointed, resolved
their dispute through mediation, each within 90 days of the Dispute notice in Section 12.1(a) being
issued, the Dispute shall be resolved by binding arbitration. The Parties shall select a mutually
agreed upon single arbitrator and may utilize any format and set of rules for the binding
arbitration upon which such parties may mutually agree. If the parties to the Dispute are unable
to agree on a format and set of rules for the arbitration within 10 days, the arbitration shall be
conducted in accordance with the Commercial Arbitration Rules of the American Arbitration
Association. Should such parties be unable to agree on a choice of arbitrator within thirty (30)
days from the demand for arbitration, then the arbitrator will be appointed by the Chicago office
of JAMS (provided that any JAMS appointed mediator under paragraph (b) is not selected as an
arbitrator under this paragraph (c)).

          (d) The costs of the arbitration shall be borne equally among the Parties. Each party shall
bear its own expenses for attorneys’ fees, expert fees, witness fees, travel costs and other
arbitration-related costs. In no event is the arbitrator authorized or empowered to award punitive
or exemplary damages. In no event is the arbitrator authorized or empowered to award damages in
excess of the limitations set forth in this Agreement.

          (e) Judgment upon an award rendered by the arbitrator may be entered in any court with
jurisdiction. The arbitrator may issue interim orders of protection as necessary or appropriate to
maintain the status quo, safeguard property or prevent irreparable injury. Notwithstanding the
foregoing, any Party may seek injunctive relief in

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a court of competent jurisdiction, which relief shall last until the arbitrator renders its
decision.

14. Notices.

     All notices that are required or permitted hereunder shall be in writing and shall be
sufficient if personally delivered or sent by registered or certified mail, facsimile message (with
receipt confirmed) or Federal Express or other nationally recognized overnight delivery service.
Any notices shall be deemed given upon the earlier of the date when received at, or the third day
after the date when sent by registered or certified mail or the day after the date when sent by
Federal Express or facsimile to, the address or facsimile number set forth below, unless such
address or facsimile number is changed by notice to the other Parties:

If to Seller Parties:

Tomah Holdings, Inc.

330 Vincent Street

P. O. Box 388

Milton, WI 53563-0388

Attn: ***

FAX: (608) 868-7098

with a required copy to:

Foley & Lardner LLP

Suite 3700

777 E. Wisconsin Avenue

Milwaukee, WI 53202

Attn: Luke E. Sims

FAX: (414) 297-4900

If to Buyer:

Air Products and Chemicals, Inc.

7102 Hamilton Boulevard

Allentown, PA 18195-1502

Attn: Corporate Secretary

FAX: (610) 481-5765

15. Governing Law. This Agreement shall be construed and interpreted in accordance with
the internal laws of the State of New York without regard to its provisions concerning choice of
laws or choice of forum.

16. Attorney/Client Privilege. Buyer acknowledges that Foley & Lardner LLP has previously
represented the Company Group Members and certain Stockholders, and is representing the
Stockholders in connection with the Transactions contemplated by this

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Agreement. The Parties recognize that, after the Closing, the Company and the other Company Group
Members will continue to have all right, title and interest in the work product and related
privileges associated with legal advice provided by Foley & Lardner LLP to the Company and other
Company Group Members. Buyer recognizes, however, that Foley & Lardner LLP is providing legal
advice to the Stockholders with respect to the sale of their Closing Shares, and that such advice
was provided to the Stockholders in their capacity as stockholders. Accordingly, Buyer
acknowledges that the Company shall not, upon Closing, obtain any right, title or interest in the
work product and related privileges associated with any legal advice provided to the Stockholders
in their capacities as stockholders, including, but not limited to, all written, computer-generated
or other materials containing, summarizing or embodying such communications, work product,
attorney/client privilege or otherwise.

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[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]

     IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto as of the day and
year first written above.

	 	 	 	 	 	 	 
	 	 	AIR PRODUCTS AND CHEMICALS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	TOMAH HOLDINGS, INC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	***	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	***	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	***	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	***	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	***	 	 
	 

	 	 	 	 	 	 

	 	 	 	 	 
	 	***	 
	 	By:  	 	 
	 	 	Name:  	***	 
	 	 	Title:  	Trustee 	 

70

 

	 	 	 	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 
	FIRST CITIZENS STATE BANK cust, f/b/o
***	 	 	 	FIRST CITIZENS STATE BANK cust f/b/o
***
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	 	 	By:	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	*** Attorney-in-Fact
	 	 	 	 	 	*** Attorney-in-Fact

	 
	 	 	 	 	 	 	 	 	 	 	 	 
	SBKGP, INC.	 	 	 	SEIDLER EQUITY PARTNERS, L.P.
	 	 	 	 	 	 	 	 	 By:	 	Seidler Equity Managers, LLC,

General Partner
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	 	 	By:	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	*** President	 	 	 	 	 	*** Director

	 
	 	 	 	 	 	 	 	 	 	 	 	 
	NORTHSTAR MEZZANINE	 	 	 	SEIDLER NORTH, L.P.
	 	 	PARTNERS, III L.P.	 	 	 	 	 	 	 	 
	By:	 	Northstar Capital, LLC, its general partner	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	 	 	By:	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	*** Managing Partner
	 	 	 	 	 	*** General Partner

	 
	 	 	 	 	 	 	 	 	 	 	 	 
	MASSACHUSETTS MUTUAL LIFE	 	 	 	C. M. LIFE INSURANCE COMPANY
	 	 	INSURANCE COMPANY	 	 	 	 	 	 	 	 
	By:	 	David L. Babson & Company, Inc., as	 	 	 	 	 	By: David L. Babson & Company, Inc., as
	 	 	Investment Adviser	 	 	 	 	 	Investment Sub-Adviser
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	 	 	By:	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	   Name:
	 	 	 	 	 	 	 	   Name:	 	 
	 

	 	 	 	 
	 	 	 	 	 	 	 	 
	 

	 	   Title:
	 	 	 	 	 	 	 	   Title:	 	 
	 

	 	 	 	 
	 	 	 	 	 	 	 	 

71

 

	 	 	 	 	 	 	 	 	 	 	 	 	 
	TOWER SQUARE CAPITAL	 	 	 	MASSMUTUAL CORPORATE
	 	 	PARTNERS L.P.	 	 	 	 	 	INVESTORS	 	 
	By:   David L. Babson & Company, Inc., as	 	 	 	 	 	 	 	 
	 	 	Investment Manager	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	 	 	By:	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	   Name:
	 	 	 	 	 	 	 	   Name:	 	 
	 

	 	 	 	 
	 	 	 	 	 	 	 	 
	 

	 	   Title:
	 	 	 	 	 	 	 	   Title:	 	 
	 

	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	This Agreement is executed on behalf
of MassMutual Corporate Investors,
organized under a Declaration of Trust,
dated September 13, 1985, as amended from
time to time. Under the terms of the
Trust, the obligations of such Trust are
not personally binding upon, nor shall
resort be had to the property of, any of
the Trustees, shareholders, officers,
employees or agents of such Trust, but
the Trust property alone shall be bound.
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	MASSMUTUAL PARTICIPATION

INVESTORS	 	 	 	ANTARES CAPITAL CORPORATION
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	 	 	By:	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	   Name:
	 	 	 	 	 	 	 	   Name:	 	 
	 

	 	 	 	 
	 	 	 	 	 	 	 	 
	 

	 	   Title:
	 	 	 	 	 	 	 	   Title:	 	 
	 

	 	 	 	 
	 	 	 	 	 	 	 	 
	This Agreement is executed on behalf
of MassMutual Participation Investors,
organized under a Declaration of Trust,
dated April 7, 1988, as amended from time
to time. Under the terms of the Trust,
the obligations of such Trust are not
personally binding upon, no shall resort
be had to the property of, any of the
Trustees, shareholder, officers, employees
or agents of such Trust, but the Trust
property alone shall be bound.	 	 	 	 	 	 	 	 

72

 

Attachments:

	 	 	 
	Exhibit A

	 	(Building Purchase Agreement)
	 
	 	 
	Exhibit B-1

	 	(Form of *** Agreement)
	 
	 	 
	Exhibit B-2

	 	(Form of *** Agreement)
	 
	 	 
	Exhibit C

	 	(Form of Escrow Agreement)
	 
	 	 
	Exhibit D

	 	(Indemnification Share)
	 
	 	 
	Exhibit E

	 	(Form of Non-Competition Agreement)
	 
	 	 
	Exhibit F

	 	(Form of Foley & Lardner LLP Legal Opinion)
	 
	 	 
	Disclosure Schedule
	 	 

73EX-10.1

 

Exhibit 10.1

AMENDED AND RESTATED

QUOTA SHARE RETROCESSION AGREEMENT

BY AND BETWEEN

PLATINUM UNDERWRITERS BERMUDA, LTD.

and

PLATINUM UNDERWRITERS REINSURANCE, INC.

     This Amended and Restated Quota Share Retrocession Agreement (this “Agreement”), dated as of
January 1, 2006, is made by and between Platinum Underwriters Bermuda, Ltd., a Bermuda-domiciled
insurance company (the “Retrocessionaire”), and Platinum Underwriters Reinsurance, Inc. a
Maryland-domiciled insurance company (the “Retrocedant”).

     WHEREAS, Retrocedant and Retrocessionaire entered into a Quota Share Retrocession Agreement,
dated as of January 1, 2004 (the “2004 Retrocession Agreement”);

     WHEREAS, Retrocedant and Retrocessionaire amended the 2004 Retrocession Agreement pursuant to
Addendum No. 2 to the Quota Share Retrocession Agreement, dated as of April 1, 2005;

     WHEREAS, Retrocedant and Retrocessionaire desire to amend the 2004 Retrocession Agreement, as
amended, and to restate their rights and obligations in this Agreement.

     NOW THEREFORE, in consideration of the premises and of the mutual promises set forth herein,
Retrocedant and Retrocessionaire agree as follows:

ARTICLE 1 - BUSINESS COVERED

     With respect to business classified by the Retrocedant as North American Property Catastrophe
Excess of Loss and International Property Catastrophe Excess of Loss (“Catastrophe Covers”), the
Retrocedant hereby obligates itself to retrocede to the Retrocessionaire and the Retrocessionaire
hereby obligates itself to accept a seventy percent (70%) quota share of the reinsurance and
retrocession contracts underwritten by Retrocedant on or after the Effective Date.

     With respect to Reinsurance Contracts not classified as North American Property Catastrophe
Excess of Loss and International Property Catastrophe Excess of Loss (“Non Catastrophe Covers”),
the Retrocedant hereby obligates itself to retrocede to the Retrocessionaire and the
Retrocessionaire hereby obligates itself to accept a eighty percent (80%) quota share of the
reinsurance and retrocession contracts underwritten by Retrocedant on or after the Effective.

     Catastrophe Covers and Non Catastrophe Covers may be collectively referred to herein as the
“Reinsurance Contracts.”

 

 

ARTICLE 2 - COMMENCEMENT AND TERMINATION

     This Agreement shall take effect and shall apply to all Reinsurance Contracts that incept on
or after 12:01 a.m. New York time, January 1, 2006 (the “Effective Date”). It shall remain
continuously in force but may be terminated by either party giving at least ninety (90) days’
notice in writing to the other party.

     Upon the expiration or termination of this Agreement, the Retrocessionaire shall remain liable
hereunder for it’s pro rata share of the Reinsurance Contracts until the expiration, cancellation
or termination of the Retrocedant’s liabilities under the Reinsurance Contracts.

ARTICLE 3 - ORIGINAL CONDITIONS

     All retrocessions assumed under this Agreement shall be subject to the same rates, terms,
conditions, waivers and interpretations, and to the same modifications and alterations, as the
respective Reinsurance Contracts.

     This Agreement is solely between the Retrocedant and the Retrocessionaire, and in no instance
shall any other party have any rights under this Agreement except as expressly provided otherwise
in the Insolvency Article.

ARTICLE 4 - PREMIUMS

     With respect to Catastrophe Covers, the Retrocedant shall retrocede to the Retrocessionaire an
amount equal to seventy (70%) of Gross Net Premium due under the Reinsurance Contracts.

     With respect to Non Catastrophe Covers, the Retrocedant shall retrocede to the
Retrocessionaire an amount equal to eighty percent (80%) of the Gross Net Premium due under the
Reinsurance Contracts.

     The Retrocessionnaire shall pay a ceding commission equal to the sum of (i) one hundred
percent (100%) of the actual expenses incurred by Retrocedant in acquiring the respective
Reinsurance Contracts, including all commissions and brokerage, and (ii) five percent (5%) of the
Gross Net Premium due under the respective Reinsurance Contracts.

     For purposes of this Agreement, the term “Gross Net Premium” is the amount equal to (i) the
Gross Premium ceded to Retrocedant under the respective Reinsurance Contracts less (ii) return
premium paid or payable by the Retrocedant under the respective Reinsurance Contracts, and (iii)
premiums paid or payable by the Retrocedant for inuring reinsurance as described in Article 7
hereof.

ARTICLE 5 - EXCLUSIONS

     The following Exclusion Clauses are attached to and form part of this Agreement:

	 	1.	 	Nuclear Incident Exclusion Clause – Liability – Reinsurance- U.S.A. (BRMA 35A).
	 
	 	2.	 	Nuclear Incident Exclusion Clause – Liability – Reinsurance – Canada (BRMA
35D).
	 
	 	3.	 	Pools, Associations, and Syndicates as per Pools, Associations, and syndicate
Exclusion Clause.
	 
	 	4.	 	War Risk Exclusion Clause.

2

 

	 	5.	 	Insolvency Funds Exclusion Clause.
	 
	 	6.	 	Any Excess of Loss Retrocession Agreement by and between Platinum Re (UK)
Limited and Platinum Underwriters Reinsurance, Inc.
	 
	 	7.	 	Reinsurance Contracts subject to certain Collateral Agreements, and which the
Retrocedent has identified or will identify in Appendix 2 to this Agreement.

ARTICLE 6 -  TERRITORY

     Coverage applies within the territorial limits of the Reinsurance Contracts covered hereunder.

ARTICLE 7 -  INURING REINSURANCE

     It is understood and agreed that when the Retrocedant warrants that it is in the best interest
of the Retrocedant and the Retrocessionaire, Retrocedant may purchase facultative reinsurance
and/or any other treaty reinsurance. The premium for said inuring reinsurance that inures to the
benefit of the Retrocessionaire will reduce the Gross Net Premium pursuant to Article 4 hereof.

     Notwithstanding the above, facultative and treaty reinsurance listed in Appendix 1 hereto
shall not inure to the benefit of the Retrocessionnaire.

ARTICLE 8 -  LOSS AND LOSS EXPENSE

     With respect to Catastrophe Covers, Retrocessionaire shall be liable for seventy
percent (70%) of all loss, loss adjustment expenses and other payment obligations as incurred by
Retrocedant under such Reinsurance Contracts on and after the Effective Date net of all salvages
and recoveries under inuring reinsurance.

     With respect to Non Catastrophe Covers, Retrocessionaire shall be liable for eighty percent
(80%) of all loss, loss adjustment expenses and other payment obligations as incurred by
Retrocedant under such Reinsurance Contracts on and after the Effective Date net of all salvages
and recoveries under inuring reinsurance.

     Notwithstanding the aforementioned, the Retrocessionaire’s loss from any single Property
Catastrophe Occurrence shall be subject to a per occurrence limit equal to $180,000,000. The
parties agree that this limit is applied to the loss assumed, net of any inuring reinsurance.

     For purposes of this Agreement, Property Catastrophe Occurrence shall mean each and every loss
or series of losses arising out of any one event. However, the duration and extent of any “loss
occurrence” so defined shall be limited to (i) 72 consecutive hours as regards a hurricane, a
typhoon, windstorm, rainstorm, hailstorm and/or tornado; (ii) 72 consecutive hours and within the
limits of one City, Town or Village as regards riots, civil commotions and malicious damage; or
(iii) 168 consecutive hours for any other catastrophe of whatsoever nature.

     No individual loss from whatever insured peril, which occurs outside these periods or areas,
shall be included in that “loss occurrence”. The Retrocedant may choose the date and time when any
such period of consecutive hours commences and if any event is of greater duration than the above
periods, the Retrocedant may divide that event into two or more “loss occurrences”, provided no two
periods overlap and provided no period commences earlier than the date and time of the happening of
the first recorded individual loss to the Retrocedant in that event.

3

 

ARTICLE 9 -  EXTRA CONTRACTUAL OBLIGATIONS

     This Agreement shall protect the Retrocedant and any original reinsured, within the limits
hereof, where the loss includes any Extra Contractual Obligations. The term “Extra Contractual
Obligations” is defined as those liabilities not covered under any other provision of this
Agreement and which arise from the handling of any claim on business covered hereunder, such
liabilities arising because of, but not limited to, the following: failure by any original
reinsured to settle within the policy limit, or by reason of alleged or actual negligence, fraud,
or bad faith in rejecting an offer of settlement or in the preparation of the defense or in the
trial of any action against its insured or reinsured or in the preparation or prosecution of an
appeal consequent upon such action.

     The date on which any Extra Contractual Obligation is incurred by any original reinsured shall
be deemed, in all circumstances, to be the date of the original disaster and/or casualty.

     However, this Article shall not apply where the loss has been incurred due (i) solely to the
acts, or failure to act, of the Retrocedant in handling its claims or (ii) to fraud by a member of
the Board of Directors or a corporate officer of any original reinsured acting individually or
collectively or in collusion with any individual or corporation or any other organization or party
involved in the presentation, defense or settlement of any claim covered hereunder.

ARTICLE 10 - EXCESS OF ORIGINAL POLICY LIMITS

     This Agreement shall protect the Retrocedant and any original reinsured, within the limits
hereof, in connection with loss in excess of the limit of its original policy, such loss in excess
of the limit having been incurred because of failure of the original reinsured to settle within the
policy limit or by reason of alleged or actual negligence, fraud, or bad faith in rejecting an
offer of settlement or in the preparation of the defense or in the trial of any action against its
insured or reinsured or in the preparation or prosecution of an appeal consequent upon such action.

     However, this Article shall not apply where the loss has been incurred due (i) solely to the
acts, or failure to act, of the Retrocedant in handling its claims or (ii) to fraud by a member of
the Board of Directors or a corporate officer of the original reinsured acting individually or
collectively or in collusion with any individual or corporation or any other organization or party
involved in the presentation, defense or settlement of any claim covered hereunder.

     For the purpose of this Article, the word “loss” shall mean any amounts for which the original
reinsured or Retrocedant would have been contractually liable to pay had it not been for the limit
of the original policy.

ARTICLE 11 — ADMINISTRATION OF REINSURANCE CONTRACTS

          SECTION 11.01 Administration. The parties agree that, as of the Effective Date,
Retrocedant shall have the sole authority to administer the Reinsurance Contracts in all respects,
which authority shall include, but not be limited to, authority to bill for and collect premiums,
adjust all claims and handle all disputes thereunder and to effect any and all amendments,
commutations and cancellations of the Reinsurance Contracts. Retrocedant shall not settle any
claims, waive any right, defense, setoff or counterclaim relating to the Reinsurance Contracts with
respect to amounts in excess of $5 million or make any ex gratia payments in each case without the
prior written consent of Retrocessionaire, which consent shall not be unreasonably withheld or
delayed.

4

 

          SECTION 11.02 Reporting and Regulatory Matters. Each party shall provide the
notices and filings required to be made by it to state regulatory authorities as a result of this
Agreement. Notwithstanding the foregoing, each party shall provide to the other party any
information in its possession regarding the Reinsurance Contracts as reasonably required by the
other party to make such filings and in a form as agreed to by the parties.

          SECTION 11.03 Duty to Cooperate. Upon the terms and subject to the conditions and
other agreements set forth herein, each party agrees to use its commercially reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and
cooperate with the other party in doing, all things necessary or advisable to perform the
transactions contemplated by this Agreement.

ARTICLE 12 — FOLLOW THE FORTUNES

     It is the intent of this Agreement that the Retrocessionaire shall in every case in which this
Agreement applies and in the proportions specified herein, “follow the fortunes” of the Retrocedant
in respect of risks the Retrocessionaire has accepted under this Agreement.

ARTICLE 13 — REPORTS AND REMITTANCES

     Within thirty (30) days after the close of each month, the Retrocedant will furnish the
Retrocessionaire with a report summarizing the written premium ceded less return premium,
allowances, commission, premiums for inuring reinsurance, losses paid, loss adjustment expense
paid, monies recovered, and net balance due either party. In addition, the Retrocedant will
furnish the Retrocessionaire a monthly statement showing the unearned premium, the total reserves
for outstanding losses including loss adjustment expense, a breakdown for paid and outstanding
catastrophe losses and loss adjustment expenses, and such other information as may be required by
the Retrocessionaire for completion of its statutory financial statements and other filings.

     The net balance will be paid within forty-five (45) days after the close of the respective
month. Any such amounts payable to the Retrocessionaire shall be paid into a trust account
established under Article 23 hereof, if such trust account has been established. Should payment
due from the Retrocessionaire exceed $5 million as respects any one loss, the Retrocedant may give
the Retrocessionaire notice of payment made or its intention to make payment on a certain date. If
the Retrocedant has paid the loss, payment will be made by the Retrocessionaire immediately. If
the Retrocedant intends to pay the loss by a certain date and has submitted a satisfactory proof of
loss or similar document, payment will be due from the Retrocessionaire twenty-four (24) hours
prior to the date, provided the Retrocessionaire has a period of seven (7) days after receipt of
said notice to dispatch the payment. Cash loss amounts specifically remitted by the
Retrocessionaire as set forth herein will be credited to its next monthly account.

     ARTICLE 14 — CURRENCY

     For purposes of this Agreement, where the Retrocedant receives premiums or pays losses in
currencies other than United States dollars, such premiums or losses shall be converted into United
States dollars at the actual rates of exchange at which these premiums or losses are entered in the
Retrocedant’s books.

5

 

ARTICLE 15 — ACCESS TO RECORDS

     The Retrocedant shall place at the disposal of the Retrocessionaire at all reasonable times,
and the Retrocessionaire shall have the right to inspect through its designated representatives,
during the term of this Agreement and thereafter, all books, records and papers of the Retrocedant
in connection with any reinsurance hereunder, or the subject matter hereof.

     The Retrocessionaire, except with the express prior written consent of the Retrocedant, shall
not directly or indirectly, communicate, disclose or divulge to any third party, any knowledge or
information that may be acquired either directly or indirectly as a result of the inspection of the
Retrocedant’s books, records and papers. The restrictions as outlined in this Article shall not
apply to communication or disclosures that the Retrocessionaire is required to make to its
statutory auditors, retrocessionaires, legal counsel, arbitrators involved in any arbitration
procedures under this Agreement or disclosures required upon subpoena or other duly-issued order of
a court or other governmental agency or regulatory authority.

ARTICLE 16 — ARBITRATION

          SECTION 16.01 As a condition precedent to any right of action under this Agreement, any
dispute or difference between the parties hereto relating to the formation, interpretation, or
performance of this Agreement, or any transaction under this Agreement, whether arising before or
after termination, shall be submitted for decision to a panel of three arbitrators (the
“Panel”) at the offices of Judicial Arbitration and Mediation Services, Inc. in accordance
with the Streamlined Arbitration Rules and Procedures of Judicial Arbitration and Mediation
Services, Inc.

          SECTION 16.02 The party demanding arbitration shall do so by written notice to the responding
party. Retrocessionaire hereby appoints its Chief Operating Officer as its agent to receive any
arbitration demand hereunder and Retrocedant hereby appoints its General Counsel as its agent to
receive any arbitration demand hereunder. The arbitration demand shall state the issues to be
resolved and shall name the arbitrator appointed by the demanding party.

          SECTION 16.03 Within thirty (30) days of receipt of the demand for arbitration, the responding
party shall notify the demanding party of any additional issues to be resolved in the arbitration
and the name of the responding party’s appointed arbitrator. If the responding party refuses or
neglects to appoint an arbitrator within thirty (30) days following receipt of the written
arbitration demand, then the demanding party may appoint the second arbitrator but only after
providing ten (10) days’ written notice of its intention to do so, and only if such other party has
failed to appoint the second arbitrator within such ten (10) day period.

          SECTION 16.04 The two arbitrators shall, before instituting the hearing, select an impartial
arbitrator who shall act as the umpire and preside over the hearing. If the two arbitrators fail
to agree on the selection of a third arbitrator within thirty (30) days after notification of the
appointment of the second arbitrator, the selection of the umpire shall be made by the American
Arbitration Association. Upon resignation or death of any member of the Panel, a replacement will
be appointed in the same fashion as the resigning or deceased member was appointed. All
arbitrators shall be active or former officers of property/casualty insurance or reinsurance
companies, or Lloyd’s underwriters, and shall be disinterested in the outcome of the arbitration.

          SECTION 16.05 Within thirty (30) days after notice of appointment of all arbitrators, the
Panel shall meet and determine timely periods for briefs, discovery procedures and schedules for
hearings. The Panel shall have the power to determine all procedural rules for the holding of
arbitration, including, but not limited to, the inspection of documents, examination of witnesses
and

6

 

any other matter relating to the conduct of the arbitration. The Panel shall interpret this
Agreement as an honorable engagement and not as merely a legal obligation and shall make its
decision considering the custom and practice of the applicable insurance and reinsurance business.
The Panel shall be relieved of all judicial formalities and may abstain from following the strict
rules of law. The decision of any two arbitrators shall be binding and final. The Panel shall
render its decision in writing within sixty (60) days following the termination of the hearing.
Judgment upon the award may be entered in any court of competent jurisdiction.

          SECTION 16.06 Each party shall bear the expense of its own arbitrator and shall share equally
with the other party the expense of the umpire and of the arbitration.

          SECTION 16.07 Arbitration hereunder shall take place in New York, New York unless the parties
agree otherwise.

          SECTION 16.08 The parties hereto hereby expressly (i) submit to the jurisdiction of the Panel,
(ii) agree to comply with all requirements necessary to give the Panel jurisdiction and (iii) agree
to abide by the final decision of the Panel.

          SECTION 16.09 This Article 16 shall survive termination of this Agreement.

ARTICLE 17 — INSOLVENCY

     In the event of the insolvency of the Retrocedant, this reinsurance shall be payable directly
to the Retrocedant, or to its liquidator, receiver, conservator or statutory successor on the basis
of reported claims allowed against the insolvent Retrocedant by any court in a liquidation
proceeding, without diminution because of the insolvency of the Retrocedant or because the
liquidator, receiver, conservator or statutory successor of the Retrocedant has failed to pay all
or a portion of any claim.

     It is agreed, however, that the liquidator, receiver, conservator or statutory successor of
the Retrocedant shall give written notice to the Retrocessionaire of the pendency of a claim
against the Retrocedant indicating the Reinsurance Contract reinsured, which claim would involve a
possible liability on the part of the Retrocessionaire within a reasonable time after such claim is
filed in the conservation or liquidation proceeding or in the receivership, and that during the
pendency of such claim, the Retrocessionaire may investigate such claim and interpose, at its own
expense, in the proceeding where such claim is to be adjudicated any defense or defenses that it
may deem available to the Retrocedant or its liquidator, receiver, conservator or statutory
successor. The expense thus incurred by the Retrocessionaire shall be chargeable, subject to the
approval of the court, against the Retrocedant as part of the expense of conservation or
liquidation to the extent of a pro rata share of the benefit which may accrue to the Retrocedant
solely as a result of the defense undertaken by the Retrocessionaire.

     As to all reinsurance made, ceded, renewed or otherwise becoming effective under this
Agreement, the reinsurance shall be payable as set forth above by the Retrocessionaire to the
Retrocedant or to its liquidator, receiver, conservator or statutory successor, except (1) where
the Reinsurance Contracts specifically provide another payee in the event of the insolvency of the
Retrocedant, or (2) where the Retrocessionaire with the consent of the insured or reinsureds, has
assumed such Reinsurance Contract obligations of the Retrocedant as direct obligations of the
Retrocessionaire to the payees under such Reinsurance Contracts and in substitution for the
obligations of the Retrocedant to such payees.

7

 

ARTICLE 18 — OFFSET

     The Retrocedant and the Retrocessionaire shall have the right to offset any balance or amounts
due from one party to the other under the terms of this Agreement. The party asserting the right
of offset may exercise such right at any time whether the balances due are on account of premiums,
losses or otherwise.

ARTICLE 19 — SALVAGE AND SUBROGATION

     The Retrocessionaire will be credited with its share of salvage and/or subrogation in respect
of claims and settlements under this Agreement, less its share of recovery expense. Should the
Retrocedant refuse or neglect to enforce its right of salvage and/or subrogation, the
Retrocessionaire is hereby empowered and authorized to institute appropriate action in the name of
the Retrocedant.

ARTICLE 20 — FEDERAL EXCISE TAX

     The Retrocessionaire will allow for the purpose of paying Federal Excise Tax a deduction, from
the premium payable to the Retrocessionaire hereunder, of an amount equal to the applicable
percentage of such premium representing the Federal Excise Tax (as imposed under Section 4371 of
the Internal Revenue Service Code) to the extent such premium is subject to such tax. In the event
of any return of premium, the Retrocessionaire will deduct the aforesaid percentage from the return
premium payable hereunder and the Retrocedant or its agent will recover such tax from the United
States Government. In all other instances, if the Retrocedant should recover any portion of a
Federal Excise Tax that was withheld from the premium paid to the Retrocessionaire, such recovered
amount shall be paid promptly to the Retrocessionaire.

ARTICLE 21 — SERVICE OF SUIT

     In the event the Retrocessionaire fails to pay any amount claimed due hereunder, the
Retrocessionaire, at the request of the Retrocedant, will submit to the jurisdiction of a court of
competent jurisdiction within the United States and will comply with all requirements necessary to
give that court jurisdiction. Nothing in this Article constitutes, or should be understood to
constitute, a waiver of the Retrocessionarie’s right to commence an action in any court of
competent jurisdiction in the United States, to remove an action to the United States District
Court, or to seek a transfer of a case to another court as permitted by the laws of the United
States or of any state in the United States. Service of process in such suit may be made upon
Dewey Ballantine LLP, New York, New York. In any suit instituted against it upon this Agreement,
Retrocessionaire will abide by the final decision of such court or of any appellate court in the
event of an appeal.

     The above named are authorized and directed to accept service of process on behalf of the
Retrocessionaire in any such suit and/or upon the request of the Retrocedant to give a written
undertaking to the Retrocedant that they will enter a general appearance upon the
Retrocessionaire’s behalf in the event such a suit is instituted.

     Further, pursuant to any statute of any state, territory, or district of the Untied States
that makes provision therefor, the Retrocessionaire hereby designates the Superintendent,
Commissioner, or Director of Insurance or other officer specified for that purpose in the statute
(or his successor or successors in office) as its true and lawful attorney upon whom may be served
any lawful process in any action, suit, or proceeding instituted by or on behalf of the Retrocedant
or any beneficiary hereunder arising out of this Agreement, and hereby designates the above named
as the person to which the said officer is authorized to mail such process or a true copy thereof.

8

 

ARTICLE 22 — ERRORS AND OMISSIONS

     Any inadvertent delay, omission, error or failure made in connection with this Agreement shall
not relieve either party hereto from any liability which would attach hereunder if such delay,
omission, error or failure had not been made, provided such delay, omission, error or failure is
rectified as soon as reasonably practicable after discovery.

ARTICLE 23 — SECURITY

     If Retrocessionaire is not licensed, or an accredited reinsurer in the State of Maryland,
Retrocessionaire shall establish and maintain a funds withheld account, trust fund or other form of
security for the benefit of Retrocedant as security for the obligations of Retrocessionaire under
this Agreement. The funds withheld account, trust fund or other form of security shall be in a
form reasonably satisfactory to Retrocedant and shall comply with the requirements under Maryland
Insurance Law applicable to trust funds, funds withheld accounts, or other forms of security
established for credit for reinsurance purposes.

ARTICLE 24 — MISCELLANEOUS PROVISIONS

          SECTION 24.01 Severability. If any term or provision of this Agreement shall be held
void, illegal, or unenforceable, the validity of the remaining portions or provisions shall not be
affected thereby.

          SECTION 24.02 Successors and Assigns. This Agreement may not be assigned by either
party without the prior written consent of the other. The provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties hereto and their
respective successors and assigns as permitted herein.

          SECTION 24.03 Execution in Counterparts. This Agreement may be executed by the
parties hereto in any number of counterparts and by each of the parties hereto in separate
counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an
original, but all such counterparts shall together constitute but one and the same instrument.

          SECTION 24.04 Headings. Headings used herein are not a part of this Agreement and
shall not affect the terms hereof.

          SECTION 24.05 Amendments; Entire Agreement. This Agreement may be amended only by
written agreement of the parties. This Agreement supersedes all prior discussions and written and
oral agreements and constitutes the sole and entire agreement between the parties with respect to
the subject matter hereof.

          SECTION 24.06 Negotiated Agreement. This Agreement has been negotiated at
arm’s-length, and the fact that the initial and final drafts will have been prepared by either
party will not give rise to any presumption for or against any party to this Agreement or be used
in any respect or forum in the construction or interpretation of this Agreement or any of its
provisions.

          SECTION 24.07 Governing Law. This Agreement shall be governed by the laws of the
State of New York without giving effect to any choice or conflict of laws provision or rule
(whether of the State of New York or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of New York.

9

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly
authorized representatives as of the date set forth below.

	 	 	 	 	 
	 	 	Platinum Underwriters Bermuda, Ltd.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Francois Bertrand
	 

	 	 	 	 
	 

	 	 	 	Name: Francois Bertrand
	 

	 	 	 	Title: Senior Vice President
	 

	 	 	 	Date: April 3, 2006
	 
	 	 	 	 
	 	 	Platinum Underwriters Reinsurance, Inc.
	 
	 	 	 	 
	 

	 	By :
	 	/s/ Edward F. Torres
	 

	 	 	 	 
	 

	 	 	 	Name: Edward F. Torres
	 

	 	 	 	Title: Senior Vice President
	 

	 	 	 	Date: April 6, 2006

10

 

Appendix 1:  List of facultative and treaty reinsurance that do not inure to the benefit of the Retrocessionnaire

Arrow Re Quota Share Agreement

Appendix 2:  List of Reinsurance Contracts subject to Collateral Agreements

11

 

Appendix 2

List of Reinsurance Contracts subject to Collateral Agreements

	 	 	 	 	 	 	 	 	 	 	 
	Contract	 	Effective	 	Expiration	 	 	 	 	 	 
	Number	 	Date	 	Date	 	Treaty Title	 	Company Name	 	Premium
	00003411000
	 	01-Jan-06	 	31-Dec-06	 	Prof. Liab 2nd XOL	 	XL Insurance (Bermuda) Ltd.	 	2,082,329
	00200954900
	 	01-Jan-06	 	31-Dec-06	 	Aviation General QS	 	XL Re Ltd.	 	899,986
	00200423700
	 	01-Jan-06	 	31-Dec-06	 	Gen Avn Occ XL	 	XL Reinsurance America Inc.	 	350,000
	00200699600
	 	01-Jan-06	 	31-Dec-06	 	Gen Avn Risk XL	 	XL Reinsurance America Inc.	 	300,000
	00004296700
	 	01-Jan-06	 	31-Dec-06	 	Risk Fac 3rd Excess	 	XL Reinsurance America Inc.	 	200,000
	00004296800
	 	01-Jan-06	 	31-Dec-06	 	Risk Fac 4th Excess	 	XL Reinsurance America Inc.	 	85,000
	00200407600
	 	01-Jan-06	 	31-Dec-06	 	Global Energy	 	Zurich Intern (Bermuda) Ltd	 	9,000,000

12

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