Document:

Exhibit No. 10.39

Exhibit No. 10.39

February 28, 2005

Mr. Jay Zager

Senior Vice President and Chief Financial Officer

Gerber Scientific, Inc.

83 Gerber Road West

South Windsor, Connecticut 06074

Dear Jay: 

    Gerber Scientific, Inc. (the "Company") considers it essential to the best interests of its stockholders to foster the continuous employment of key management personnel.  In this connection, should the Company face a possible Change in Control (as defined in Section 2 of this Agreement), such as the acquisition of a substantial share of the equity or voting securities of the Company, the Board of Directors of the Company (the "Board") has determined that it is imperative that it and the Company be able to rely upon your continued services without concern that you might be distracted by the personal uncertainties and risks that the possibility of a Change in Control might entail.

    Accordingly, the Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company's management to their assigned duties without distraction in the face of potentially disturbing circumstances that could arise out of a possibility for a Change in Control of the Company.

 

    In order to induce you to remain in the employ of the Company and its subsidiaries and in consideration of your agreement set forth in Section 2(B) hereof, the Company agrees that you shall receive the severance benefits set forth in this letter agreement ("Agreement") in the event your employment with the Company and its subsidiaries is terminated subsequent to a Change in Control under the circumstances described below.

1.  Term of Agreement   
    This Agreement shall commence on the date hereof and shall continue in effect through April 30, 2005, provided, however, the term of this Agreement shall automatically be extended for one additional year commencing on May 1, 2005 and on each May 1 thereafter, unless, not later than April 30 of the preceding year, the Company shall have given notice that it does not wish to extend this Agreement; provided further that, notwithstanding any such notice by the Company not to extend, if a Change in Control shall have occurred during the original or any extended term of this Agreement, this Agreement shall continue in effect for a period of twenty-four (24) months beyond the expiration of the term in effect immediately before such Change in Control; provided further that, notwithstanding anything herein to the contrary, if at any time prior to a Change in Control you, for whatever reason, cease to be Senior Vice President and Chief Financial Officer of the Company, then this Agreement shall automatically terminate and, at all times thereafter, shall be null and void and of no further force and effect and you shall not be entitled to any benefits whatsoever hereunder.

2.  Change in Control  

    (A)  No benefits shall be payable hereunder unless there shall have been a Change in Control of the Company, as set forth below. For purposes of this Agreement a "Change in Control" of the Company shall mean the occurrence of any one or more of the following events:

            (i)  the Company shall (1) merge or consolidate with or into another corporation or entity or enter into a share exchange between the Company or stockholders of the Company and another individual, corporation or other entity and as a result of such merger, consolidation or share exchange less than fifty percent (50%) of the outstanding voting securities of the surviving or resulting corporation or entity shall then be owned in the aggregate by the former stockholders of the Company; or (2) sell, lease, exchange or otherwise dispose of more than two-thirds (2/3) of the Company's property and assets in one transaction or a series of related transactions to one or more individuals, corporations or other entities that are not subsidiaries of the Company, assuming that if consummation of such transaction is subject, at the time of such approval by stockholders, to the consent of any government or governmental agency, such consent by the government or governmental agency is obtained (either explicitly or implicitly by consummation of the transaction);

            (ii)  the stockholders of the Company adopt a plan of complete liquidation of the Company;

            (iii)  any "person" (as such term is used in Sections 13(d) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) (other than the Employee, the Company, any of the Company's subsidiaries, any employee benefit plan of the Company and/or one or more of its subsidiaries or any person or entity organized, appointed or established pursuant to the terms of any such employee benefit plan) becomes the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of voting securities of the Company representing thirty percent (30%) or more of the total number of votes eligible to be cast at any election of directors of the Company; provided, however, that no Change in Control shall be deemed to have occurred under this subparagraph (iii) if such "person" becomes a holder of the Company's securities in one or more transactions initiated or pursued by the Company unless after such transaction(s) less than fifty percent (50%) of the outstanding voting securities of the Company shall be owned in the aggregate by the former stockholders of the Company; or           
(iv)  as a result of, or in connection with, any tender offer or exchange offer, share exchange, merger, consolidation or other business combination, sale, lease, exchange or other disposition of more than two-thirds (2/3) of the Company's assets, a contested election, or any combination of the foregoing transactions, the persons who are directors of the Company on the date hereof (the "Incumbent Board") shall cease to constitute a majority of the Board of Directors of the Company or any successor to the Company; provided that any person becoming a director subsequent to the date hereof whose election or nomination for election by the Company's stockholders was approved by a vote of at least three-quarters (3/4) of the directors comprising the Incumbent Board (either by a specific vote or by approval of a proxy statement of the Company in which such person is named as a nominee for director without any objection to such nomination) shall be, for purposes herein, considered as though such person were a member of the Incumbent Board.

    (B)  In exchange for the benefits under this Agreement, you agree that, subject to the terms and conditions herein, in the event of a potential Change in Control of the Company occurring after the date hereof, you will not voluntarily terminate your employment with the Company and its subsidiaries until the earlier of (i) the date which is six months after the occurrence of such potential Change in Control of the Company or (ii) the occurrence of a Change in Control of the Company.  If more than one potential Change in Control occurs during the term of this Agreement, the provisions of the preceding sentence shall be applicable to each potential Change in Control occurring prior to an actual Change in Control.   For the purposes of this Agreement, a "potential Change in Control" of the Company shall be deemed to have occurred if: (i) the Company enters into an agreement, the consummation of which would result in the occurrence of a Change in Control; (ii) any person (including the Company) publicly announces an intention to take or to consider taking actions which if consummated would constitute a Change in Control; or (iii) the Board adopts a resolution to the effect that, for purposes of this Agreement, a potential Change in Control of the Company has occurred.
3. 

Termination Following Change in Control.  If any of the events described in Section 2 hereof constituting a Change in Control shall have occurred, you shall be entitled to the benefits provided in Section 4 hereof upon the subsequent termination of your employment with the Company and its subsidiaries during the term of this Agreement and within two (2) years of the Change in Control, unless such termination is (x) a result of your death, Disability, or Retirement; (y) by you for other than Good Reason (as defined in Section 3(A)); or (z) by the Company or any of its subsidiaries for Cause (as defined in Section 3(C)).  The benefits provided in Section 4 shall be in lieu of any termination, separation, severance or similar benefits under your employment agreement, if any, or under the Company's termination, separation, severance or similar plans or policies, if any (other than benefit plans of the Company which incidently provide for benefits in the event of a change in control, as such term is defined in such plans). If your employment is terminated as a result of your death, Disability or Retirement, by you for other than Good Reason or by the Company or any of its subsidiaries for Cause, then you shall not be entitled to any termination, separation, severance or similar benefits under this Agreement, and you shall be entitled to benefits under your employment agreement, if any, and/or under the Company's termination, separation, severance or similar plans or policies, if any, only in accordance with the terms of any such employment agreement, plans and policies.

    (A)  Good Reason. You shall be entitled to terminate your employment for Good Reason.  For the purposes of this Agreement, "Good Reason" shall mean the occurrence, without your express written consent, of any of the following circumstances:
            (i)  a significant change in the nature or scope of your authorities, duties or responsibilities from those applicable to you immediately prior to the date on which a Change in Control occurs;

            (ii)  a reduction in your base annual salary from that provided to you immediately prior to the date on which a Change in Control occurs;           
(iii)  a diminution in your eligibility to participate in compensation plans and employee benefits and perquisites which provide opportunities to receive overall compensation and benefits and perquisites from the greater of:

                    (a)the opportunities provided by the Company (including its subsidiaries) for executives with comparable duties; or

                    (b)the opportunities under any such plans and perquisites under which you were participating immediately prior to the date on which a Change in Control occurs;

            (iv)  a change in the location of your principal place of employment by the Company (including its subsidiaries) by more than fifty (50) miles from the location where you were principally employed immediately prior to the date on which a Change in Control occurs;
            (v)  a significant increase in the frequency or duration of your business travel; ora reasonable determination by the Board of Directors of the Company that, as a result of a Change in Control and a change in circumstances thereafter significantly affecting your position, you are unable to exercise the authorities, powers, functions or duties attached to your position immediately prior to the date on which a Change in Control occurs.

    (B)  Disability; Retirement.  
            (i)  For purposes of this Agreement, "Disability" shall mean permanent and total disability as such term is defined under Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code").  Any question as to the existence of your Disability upon which you and the Company cannot agree shall be determined by a qualified independent physician selected by you (or, if you are unable to make such selection, such selection shall be made by any adult member of your immediate family or your legal representative) and approved by the Company, said approval not to be unreasonably withheld.  The determination of such physician shall be made in writing to the Company and to you and shall be final and conclusive for all purposes of this Agreement.

            (ii)  For purposes of this Agreement, "Retirement" shall mean your voluntary termination of employment with the Company at or after the age of 65 in accordance with the Company's retirement policies (excluding early retirement) generally applicable to its salaried employees or in accordance with any retirement arrangement established with your consent with respect to you.   
(C)  Cause.  For purposes of this Agreement, "Cause" shall mean (a) the willful and continued failure by you to substantially perform your duties with the Company (other than any such failure from your incapacity due to physical or mental illness or any such actual or anticipated failure after the issuance of a Notice of Termination in the manner provided for in Section 3(D) by you for Good Reason) after written demand for substantial performance is delivered to you by the Board, which demand specifically identifies the manner in which the Board believes that you have not substantially performed your duties, or (b) the willful engaging by you in conduct which is demonstrably and materially injurious to the Company, monetarily or otherwise.  For purposes of this Section 3(C), no act, or failure to act, on your part shall be deemed "willful" unless done, or omitted to be done, by you not in good faith and without reasonable belief that your action or omission was in the best interest of the Company.  Notwithstanding the foregoing, you shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to you a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice to you and an opportunity for you, together with your counsel, to be heard before the Board), finding that, in the good faith opinion of the Board you were guilty of conduct set forth above in this Section 3(C) and specifying the particulars thereof.

    (D)  Any termination of your employment by the Company or any of its subsidiaries or by you shall be made by written notice of termination to the other party.  Such "Notice of Termination" shall mean a written document specifying the provision in this Agreement being relied upon and setting forth a summary of the facts and circumstances which provide the basis for termination of your employment.  The "Date of Termination" shall be the date upon which the Notice of Termination is given.
4. 

Compensation upon Termination Following a Change in Control 

    (A)   If your employment shall be terminated for any reason otherwise than (x) as a result of your death, Disability or Retirement; (y) by you for other than Good Reason; or (z) by the Company or any of its subsidiaries for Cause, within two (2) years following a Change in Control (as defined in Section 2), then you shall be entitled to the benefits provided below:
            (i)  The Company or one of its subsidiaries shall pay you, not later than the fifth business day following the Date of Termination ("Payment Date"), the sum of your full base salary through the Date of Termination, as earned by you but not yet paid to you, at the salary level in effect on (x) the Date of Termination or (y) the day immediately preceding the date of the Change in Control, whichever is higher ("full base salary"), and your pro rata share of your annual incentive bonus payment in effect on the Date of Termination.  The Company or one of its subsidiaries shall also pay you all other amounts to which you are entitled under any compensation plan of the Company applicable to you, at the time such payments are due.  For purposes of this Section 4 and the other provisions of this Agreement, "your annual incentive bonus payment in effect on the Date of Termination" shall mean the target amount of your annual incentive bonus payment (under the Company's Annual Incentive Bonus Plan or any successor plan) for the year in which the Notice of Termination is given.  Your pro rata share of your annual incentive bonus payment in effect on the Date of Termination shall be that percentage of your annual incentive bonus payment in effect on the Date of Termination that is equal to the number of days in the fiscal year completed prior to the Date of Termination divided by 365.

            (ii)  On the Payment Date the Company shall also pay you a severance payment equal to two and one-half (2
1/2) times the sum of (x) your full base salary and (y) your annual incentive bonus payment in effect on the Date of Termination.
            (iii)  The Company shall cause (x) all unvested stock options or other stock grants held by you on the Date of Termination immediately to vest and be fully exercisable as of the Date of Termination, (y) any restrictions on all restricted stock held by you on the Date of Termination immediately to lapse and all shares of such stock to fully vest as of the Date of Termination, and (z) any accrued benefit or deferred arrangement of the Company that you otherwise would become entitled to if you continued employment with the Company immediately to vest as of the Date of Termination.

            (iv)  The Company shall maintain in full force for two and one-half (2
1/2) year(s) following the Date of Termination (the "Benefit Period") all life insurance, health (medical and dental), accidental death and dismemberment, pension and disability plans and programs in which you are entitled to participate immediately prior to the Date of Termination, or if your continued participation is not possible under the general terms and provisions of such plans and programs,  the Company shall provide you with benefits equivalent to those provided by such plans and programs, provided that the Company will not be required to maintain these plans and programs, or the equivalent thereof, beyond your reaching the age of 65 or upon your securing new full time employment which makes such benefits available to you.  Additional years of service equal to the length of the Benefit Period will be credited to you for purposes of calculating your benefits under the Company's Pension Plans at the rate of your full base salary and annual incentive bonus payment in effect on the Date of Termination (as defined in Section 4(A)(i) hereof).           
(v)  The Company shall make available to you, at the Company's expense, outplacement counseling services.  You may select the organization that will provide you with such services, provided that the Company shall not be required to pay more than $50,000 for any such services.

    (B)  There shall be no limit on the amount of payments due you under Section 4(A) unless (i) your net income from the payments made under Section 4(A) would be maximized, in consideration of federal, state and local income and excise taxes, from limiting the sum of payments (the "Total Lump Sum Payment") in Section 4(A) to 2.99 times your prior five years' average income, or "base amount" as defined in Section 280G of the Internal Revenue Code, as amended (the "Code"), and (ii) the Total Lump Sum Payment due to you is more than 2.99 times your base amount but not more than 3.5 times your base amount.  In such case, your Total Lump Sum Payment will be reduced to 2.99 times your base amount.
    (C)  In the event that any payment or benefit received or to be received by you pursuant to the terms of this Agreement (the "Contract Payments") or in connection with your termination of employment or contingent upon a Change in Control of the Company pursuant to any plan or arrangement or other agreement with the Company (or any affiliate) ("Other Payments" and, together with the Contract Payments, the "Payments") would be subject to the excise tax (the "Excise Tax") imposed by Section 4999 of the Code, as determined as provided below, and has not been subject to the modified cap described in Section 4(B), the Company shall pay to you, at the time specified in Section 4(C)(iii) below, an additional amount (the "Gross-Up Payment") such that the net amount retained by you, after deduction of the Excise Tax on Contract Payments and Other Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this Section 4(C), and any interest, penalties or additions to tax payable by you with respect thereto, shall be equal to the total present value of the Contract Payments and Other Payments at the time such Payments are to be made.

            (i)  For purposes of determining whether any of the Payments will be subject to the Excise Tax and the amounts of such Excise Tax
                    (a)the total amount of the Payments shall be treated as "parachute payments" within the meaning of Section 280G(b)(2) of the Code, and all "excess parachute payments" within the meaning of Section 280G(b)(1) of the Code shall be treated as subject to the Excise Tax, except to the extent that, in the opinion of independent tax counsel retained by the Company's independent auditors and reasonably acceptable to you ("Tax Counsel"), a Payment (in whole or in part) does not constitute a "parachute payment" within the meaning of Section 280G(b)(2) of the Code, or such "excess parachute payments" (in whole or in part) are not subject to the Excise Tax;

                    (b)the amount of the Payments that shall be treated as subject to the Excise Tax shall be equal to the lesser of (A) the total amount of the Payments or (B) the amount of "excess parachute payments" within the meaning of Section 280G(b)(1) of the Code (after applying the previous clause); and

                    (c)the value of any noncash benefits or any deferred payment or benefit shall be determined by Tax Counsel in accordance with the principles of Sections 280G(d)(3) and (4) of the Code.

            (ii)  For purposes of determining the amount of the Gross-Up Payment, you shall be deemed to pay federal income tax at the highest marginal rates of federal income taxation applicable to individuals in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rates of taxation applicable to individuals as are in effect in the state and locality of your residence for tax purposes in the calendar year in which the Gross-Up Payment is to be made, net of the maximum reduction in federal income taxes that can be obtained from deduction of such state and local taxes, taking into account any limitations applicable to individuals subject to federal income tax at the highest marginal rates.           
(iii)  The Gross-Up Payments provided for in this Section 4(C) hereof shall be made upon the earlier of (x) the payment to you of any Contract Payment or Other Payment or (y) the imposition upon you or payment by you of any Excise Tax.

            (iv)  If it is established pursuant to a final determination of a court or an Internal Revenue Service proceeding or the opinion of Tax Counsel that the Excise Tax is less than the amount taken into account under this Section 4(C), you shall repay to the Company within five (5) business days of your receipt of notice of such final determination or opinion the portion of the Gross-Up Payment attributable to such reduction (plus the portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed on the Gross-Up Payment being repaid by you if such repayment results in a reduction in Excise Tax or a federal, state and local income tax deduction) plus any interest received by you on the amount of such repayment.  If it is established pursuant to a final determination of a court or an Internal Revenue Service proceeding or the opinion of Tax Counsel that the Excise Tax exceeds the amount taken into account hereunder (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess within five (5) business days of the Company's receipt of notice of such final determination or opinion.   
(D)  The Company shall also pay to you all legal fees and expenses, if any, reasonably incurred by you in connection with seeking to obtain or enforce any right or benefit provided by this Agreement.

    (E)  You shall not be required to mitigate the amount of any payment provided for in this Section 4 by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in this Section 4 be reduced by any compensation earned by you as the result of employment by another employer or by retirement benefits received after the Date of Termination or otherwise.
5. 

Successors; Binding Agreement 

    (A)  The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no succession had taken place.  Failure of the Company to obtain such assumption and agreement within thirty days following the effectiveness of any such succession shall be a breach of this Agreement and shall entitle you to compensation from the Company in the same amount and on the same terms as you would be entitled hereunder if you had terminated your employment for Good Reason following a Change in Control, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination.  As used in this Agreement, "Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.
    (B)  This Agreement shall inure to the benefit of and be enforceable by your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.  If you should die while any amount would still be payable to you hereunder if you had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to your devisee, legatee or other designee or, if there is no such designee, to your estate.

6. 

Confidential Information. You shall hold in fiduciary capacity for the benefit of the Company or its subsidiaries all secret or confidential information, knowledge or data relating to the Company, the subsidiaries and their respective businesses, which shall have been obtained during your employment by the Company or its subsidiary and which shall  not be public knowledge (other than by acts by you or your representatives in violation of this Agreement). After termination of your employment with the Company or its subsidiaries, you shall not, without prior written consent of the Company or its subsidiaries, communicate or divulge any such information, knowledge or data to anyone other than the Company or its subsidiaries or those designated by them.  The preceding two sentences shall not apply with respect to any information you are required to disclose pursuant to a valid and effective subpoena or order issued by a court of competent jurisdiction or with respect to any information you are reasonably required to disclose in enforcing the terms of this Agreement.  In no event shall an asserted violation of this Section 6 constitute a basis for deferring or withholding any amounts otherwise payable to you under this Agreement, nor will any asserted violation of this Section 6 relieve you of your responsibilities under this Agreement.
7. 
Agreement Not to Compete. You agree that for a period of one year following the Date of Termination, you will not engage, directly or indirectly, whether as a principal, agent, distributor, representative, consultant, employee, partner, stockholder, limited partner or other investor (other than an investment of not more than two percent (2%) of the stock or equity of any corporation the capital stock of which is publicly traded) or otherwise, in the same or a substantially similar business as that conducted and carried on by the Company or any of its subsidiaries and being directly competitive with the Company or any of its subsidiaries on the Date of Termination or at any time during such one-year period.

8. 
Notice.  For the purpose of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the address set forth on the first page of this Agreement with respect to the Company and on the signature page with respect to you, provided that all notices to the Company shall be directed to the attention of the President of the Company, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.
9. 
Miscellaneous.  No provision of this Agreement may be modified, waived or discharged unless such modification, waiver or discharge is agreed to in writing and signed by you and such officer as may be specifically designated by the Board.  No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any conditions or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.  Further, the validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Connecticut.  All references to sections of the Code or Exchange Act shall be deemed also to refer to any successor provisions to such sections.  Any payments provided for hereunder shall be paid net of any applicable withholding required under federal, state or local law.

10. 
Integration.  This Agreement contains the entire agreement of the parties hereto and supersedes all previous agreements between the parties, written or oral, express or implied, covering the subject matter hereof. 
11. 
Validity.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

12. 
Counterparts.  This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.    If this letter sets forth our agreement on the subject matter hereof, kindly sign and return to the Company the enclosed copy of this letter which will then constitute our agreement on this subject.

	 	
Sincerely,

Gerber Scientific, Inc.

	 	 
	 	
By:  /s/ Marc T. Giles      

       Marc T. Giles

       President and Chief Executive Officer

Agreed to this      1     day of
    March     ,  2005

By: /s/ Jay Zager                                

      Jay Zager, Senior Vice President

       and Chief Financial Officer

       83 Gerber Road West

       South Windsor, CT 06074

       Address of ExecutiveMilso asset purchase agreement

 

Exhibit
10.1

 

 

ASSET
PURCHASE AGREEMENT

 

BY
AND AMONG

 

THE
YORK GROUP, INC.,

 

MIDNIGHT
ACQUISITION CORPORATION,

 

MILSO
INDUSTRIES, INC.,

 

MILSO
INDUSTRIES, LLC,

 

SBC
HOLDING CORPORATION,

 

THE
SHAREHOLDERS IDENTIFIED HEREIN AND

 

MATTHEWS
INTERNATIONAL CORPORATION

 

MAY
28, 2005

 

 

ARTICLE
ICERTAIN
DEFINITIONS1

 

1.1Accounts
Receivable1

 

1.2Accrued
Expenses1

 

1.3Adjustment
Target Date1

 

1.4Affiliate1

 

1.5Agreement2

 

1.6Ancillary
Agreements2

 

1.7Applicable
Laws2

 

1.8Assignment
and Assumption Agreement2

 

1.9Assumed
Contracts2

 

1.10Assumed
Liabilities2

 

1.11Assumed
Real Property Leases2

 

1.12Balance
Sheet2

 

1.13Balance
Sheet Date2

 

1.14Base Cash
Consideration2

 

1.15Base
Operating Profit2

 

1.16Bill of
Sale2

 

1.17Books and
Records2

 

1.18Buyer
Damages2

 

1.19Buyer
Indemnitees2

 

1.20Business2

 

1.21Business
Day2

 

1.22Buyer2

 

1.23CERCLA2

 

1.24Closing2

 

1.25Closing
Balance Sheet2

 

1.26Closing
Date3

 

1.27Closing
Date Cash Consideration3

 

1.28Closing
Inventory3

 

1.29Closing
Working Capital3

 

1.30Code3

 

1.31Confidential
Information3

 

1.32Confidentiality
Agreement3

 

1.33Consideration3

 

1.34Contingent
Consideration Payment3

 

1.35Contract3

 

1.36Employees3

 

1.37Employment
Agreements3

 

1.38Encumbrance3

 

1.39Environment3

 

1.40Environmental
Laws3

 

1.41Environmental
Liabilities and Costs4

 

1.42Environmental
Permits4

 

1.43ERISA4

 

1.44ERISA
Plans4

 

1.45Escrow
Agent4

 

1.46Escrow
Agreement4

 

1.47Escrow
Amount4

 

1.48Escrow
Fund4

 

1.49Excluded
Assets4

 

1.50Excluded
Liabilities4

 

1.51GAAP4

 

1.52Governmental
Authority4

 

1.53Hazardous
Substances4

 

1.54HSR
Act5

 

1.55Indemnified
Party5

 

1.56Indemnifying
Party5

 

1.57Indemnity
Period5

 

1.58Independent
Accounting Firm5

 

1.59Inventory5

 

1.60Key
Employees5

 

1.61Knowledge
or to the knowledge of Sellers5

 

1.62Lease5

 

1.63Lease
Consent5

 

1.64Leased
Property5

 

1.65Losses5

 

1.66Machinery
and Equipment5

 

1.67Material
Adverse Effect5

 

1.68Matthews5

 

1.69Operating
Profit6

 

1.70Other
Leases6

 

1.71Party6

 

1.72Payables6

 

1.73Pension
Plan6

 

1.74Permits6

 

1.75Permitted
Encumbrances6

 

1.76Person7

 

1.77Plans7

 

1.78Prepaid
Expenses7

 

1.79Products7

 

1.80Proprietary
Rights7

 

1.81Purchased
Assets7

 

1.82Real
Property7

 

1.83Real
Property Leases7

 

1.84Release7

 

1.85Remedial
Action7

 

1.86Seller
and Sellers7

 

1.87Security
Deposits7

 

1.88Seller
Damages7

 

1.89Seller
Indemnitees8

 

1.90Shareholder8

 

1.91Subsidiary8

 

1.92Supply
Letter Agreement8

 

1.93Tax
Returns8

 

1.94Taxes8

 

1.95Working
Capital Calculation8

 

ARTICLE
IITRANSFER
OF ASSETS AND PROPERTIES; CLOSING8

 

2.1Purchased
Assets8

 

2.3Equitable
Assignment11

 

2.4Closing11

 

ARTICLE
IIIPURCHASE
PRICE12

 

3.1Purchase
Price12

 

3.2Allocation
of Purchase Price13

 

3.3Transfer
Taxes13

 

3.4Proration
of Taxes and Certain Charges13

 

3.5Escrow
Agreement14

 

3.6Adjustment
to Seller’s Consideration15

 

ARTICLE
IVASSUMPTION
OF LIABILITIES; EMPLOYEE MATTERS16

 

4.1General
Limitation on Assumption of Liabilities16

 

4.2Assumed
Liabilities and Obligations17

 

4.3Offers of
Employment17

 

4.4Other
Employee Benefits18

 

4.5Employment
Taxes19

 

ARTICLE
VCLOSING19

 

5.1Deliveries
by Sellers19

 

5.2Deliveries
by Buyer20

 

5.3Escrow
Fund Delivery20

 

5.4Delivery
of Possession20

 

ARTICLE
VIREPRESENTATIONS
AND WARRANTIES OF SELLERS AND THE SHAREHOLDERS20

 

6.1Organization,
Good Standing and Power20

 

6.2Authorization
of Agreement and Enforceability21

 

6.3No
Violation; Consents21

 

6.4Financial
Statements21

 

6.5Accounts
Receivable21

 

6.6Inventory22

 

6.7Absence
of Certain Changes or Events22

 

6.8Title to
Properties; Absence of Liens and Encumbrances22

 

6.9Proprietary
Rights23

 

6.10Contracts
and Commitments23

 

6.11Permits,
Licenses24

 

6.12Compliance
with Laws24

 

6.13Legal
Proceedings24

 

6.14Absence
of Undisclosed Liabilities25

 

6.15Books and
Records25

 

6.16Employees25

 

6.17Labor
Matters, etc25

 

6.18Employee
Benefit Plans and Related Matters25

 

6.19No
Finder26

 

6.20Interest
in Business27

 

6.21Condition
of Assets27

 

6.22Affiliate
Transactions; Loans27

 

6.23Environmental
Matters27

 

6.24Sufficiency
of Assets28

 

6.25Territorial
Restrictions28

 

6.26Leased
Property28

 

6.27Suppliers;
Raw Materials28

 

6.28Customers29

 

6.29Product
Warranties29

 

6.30Absence
of Certain Business Practices29

 

6.31Taxes29

 

6.32Thomas
Pontone30

 

ARTICLE
VIIREPRESENTATIONS
AND WARRANTIES OF BUYER30

 

7.1Organization,
Good Standing, Power30

 

7.2Authorization
of Agreement and Enforceability30

 

7.3No
Violations; Consents30

 

7.4Legal
Proceedings30

 

7.5Availability
of Funds31

 

7.6No
Finder31

 

ARTICLE
VIIICOVENANTS
OF SELLERS PRIOR TO CLOSING DATE31

 

8.1Required
Actions31

 

8.2Prohibited
Actions33

 

8.3No
Merger, Etc.34

 

8.4TP
Settlement Documents.34

 

ARTICLE
IXCOVENANTS
OF BUYER PRIOR TO CLOSING DATE34

 

9.1Required
Actions34

 

9.2Investigation35

 

9.3Approvals,
Consents35

 

9.4Access to
Information35

 

ARTICLE
XCONDITIONS
PRECEDENT TO OBLIGATIONS OF BUYER35

 

10.1Accuracy
of Representations and Warranties35

 

10.2Performance
of Agreement36

 

10.3Sellers’
Certificates36

 

10.4Secretary’s
Certificates36

 

10.5Injunction36

 

10.6Actions
and Proceedings36

 

10.7HSR Act
Waiting Period36

 

ARTICLE
XICONDITIONS
PRECEDENT TO THE OBLIGATIONS OF SELLERS36

 

11.1Accuracy
of Representations and Warranties36

 

11.2Performance
of Agreement36

 

11.3Buyer’s
Certificate36

 

11.4Secretary’s
Certificate36

 

11.5Injunction37

 

11.6Actions
or Proceedings37

 

11.7HSR Act
Waiting Period37

 

ARTICLE
XIIOBLIGATIONS
AFTER THE CLOSING DATE37

 

12.1Confidentiality37

 

12.2Covenant
Not to Interfere37

 

12.3Noncompetition37

 

12.4Transition
of Employees38

 

12.5Administrative
Assistance by Seller38

 

12.6Further
Assurances38

 

12.7Retention
of and Access to Records; Cooperation38

 

12.8Accounts
Receivable Payment38

 

12.9Use of
Business Name38

 

12.10Operation
of Business38

 

12.11Director
Appointments39

 

ARTICLE
XIIITERMINATION39

 

13.1Termination
of Agreement39

 

13.2Return of
Documents40

 

13.3Effect of
Termination40

 

ARTICLE
XIVSURVIVAL
OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION40

 

14.1Survival
of Representations and Warranties40

 

14.2Sellers’
Agreement to Indemnify40

 

14.3Sellers’
and Shareholders’ Agreement to Indemnify41

 

14.4Limitations
on Sellers’ and Shareholders’ Indemnity41

 

14.5Buyer’s
Agreement to Indemnify42

 

14.6Limitation
on Buyer’s Indemnity42

 

14.7Third
Party Indemnification43

 

14.8Payment
of Indemnification Obligations43

 

14.9Interest
on Unpaid Obligations43

 

14.10Cooperation
with Proceedings44

 

14.11Treatment
of Indemnification Payments44

 

14.12Exclusive
Remedy44

 

ARTICLE
XVGENERAL44

 

15.1Expenses44

 

15.2Publicity44

 

15.3Waivers44

 

15.4Binding
Effect; Benefits44

 

15.5Bulk
Transfers Laws45

 

15.6Notices45

 

15.7Entire
Agreement45

 

15.8Counterparts46

 

15.9Headings46

 

15.10Matters
of Construction, Interpretation and the Like46

 

15.11Governing
Law and Choice of Forum46

 

15.12WAIVER OF
RIGHT TO TRIAL BY JURY46

 

15.13Severability46

 

15.14Successors
and Assigns46

 

15.15Shareholders47

 

15.16Guaranty47

 

 

EXHIBITS

 

Exhibit A-1 Real
Property Descriptions

 

Exhibit
A-2 Form of
Real Property Lease

 

Exhibit B Escrow
Agreement

 

Exhibit C Employment
Agreement

 

Exhibit
D Supply
Letter Agreement

 

 

ASSET
PURCHASE AGREEMENT

 

ASSET
PURCHASE AGREEMENT (this
“Agreement”) dated
as of ________, 2005 by and among The York Group, Inc., a Delaware corporation
(“York”),
Midnight Acquisition Corporation, a Delaware corporation (“Subsidiary”) (York
and Subsidiary are collectively referred to herein as “Buyer”), Milso
Industries, Inc., a New York corporation (“Milso
Inc.”),
Milso Industries, LLC, an Indiana limited liability company (“Milso
LLC”), SBC
Holding Corporation, a New York corporation (“SBC”) (each
of Milso Inc., Milso LLC and SBC shall also be referred to herein as a
“Seller” and
collectively as “Sellers”), the
shareholders and members of Sellers identified on the signature pages of this
Agreement (solely for the purposes described in Section 3.5, 4.3.1, 8.1, 8.2,
8.4, 12.1, 12.3, 12.8, 14.3, 14.4.4, 15.1 through 15.4 and 15.6 through 15.15)
(collectively, the “Shareholders”) and
Matthews International Corporation, a Pennsylvania corporation (“Matthews”).

 

RECITALS:

 

This
Agreement sets forth the terms and conditions upon which Buyer has agreed to
purchase from Sellers, and Sellers have agreed to sell to Buyer, substantially
all of the assets used by Sellers in the conduct of the Business (as that term
is hereafter defined) (the “Contemplated
Transaction”).

 

At the
time of the execution and delivery of this Agreement, the Real Property Leases
and the Employment Agreements have been executed and delivered by the parties
thereto; provided that the same shall only become effective as of the Closing
Date.

 

In
consideration of the mutual agreements, covenants, representations and
warranties contained herein, and in reliance thereon, Buyer, Sellers and the
Shareholders, intending to be legally bound, hereby agree as
follows:

 

ARTICLE
I  

 

 

CERTAIN
DEFINITIONS

 

As used
herein, the following terms shall have the following meanings:

 

1.1  Accounts
Receivable shall
mean as of any date all accounts receivable associated with the Business as of
such date, other than any account receivable due from an Affiliate of a Seller
including, but not limited to, loans and interest receivables (except for loans
related to life insurance policies).

 

1.2  Accrued
Expenses shall
mean as of any date accrued payroll and benefits, taxes (other than income
taxes) and other accrued expenses associated with and incurred in the ordinary
course of the Business as would appear on a balance sheet of the Business as of
such date, including those described in Schedule 1.2, but
excluding any amounts payable to Affiliates of Sellers or Shareholders, other
than their accrued but unpaid salaries, wages, vacation and sick pay, incentive
compensation and any other similar current liabilities, obligations and
commitments and employment-related expense reimbursement obligations, any
compensation to Employees or others contingent solely upon or payable solely as
a result of the Contemplated Transaction.

 

1.3  Adjustment
Target Date shall
have the meaning given to such term in Section 3.6.1.

 

1.4  Affiliate shall
mean with respect to any Person, any other Person, who, directly or indirectly,
controls, is controlled by or is under common control with the
Person.

 

1.5  Agreement shall
mean this Asset Purchase Agreement.

 

1.6  Ancillary
Agreements shall
mean the documents referred to in Section 5.1 and 5.2.

 

1.7  Applicable
Laws shall
mean the applicable provisions of all (i) constitutions, treaties,
statutes, laws (including the common law), rules, regulations, ordinances, codes
or orders of any Governmental Authority, (ii) Governmental Approvals and
(iii) orders, decisions, injunctions, judgments, awards and decrees of or
agreements with any Governmental Authority, in each case as in effect on the
date of this Agreement.

 

1.8  Assignment
and Assumption Agreement shall
have the meaning given to such term in Section 5.1.4.

 

1.9  Assumed
Contracts shall
have the meaning given to such term in Section 2.1.2.

 

1.10  Assumed
Liabilities shall
have the meaning given to such term in Section 4.2.

 

1.11  Assumed
Real Property Leases shall
have the meaning given to such term in Section 2.1.2.

 

1.12  Balance
Sheet shall
mean the balance sheet of the Business as of March 31, 2005.

 

1.13  Balance
Sheet Date shall
mean March 31, 2005.

 

1.14  Base
Cash Consideration shall
have the meaning given to such term in Section 3.1.

 

1.15  Base
Operating Profit shall
mean $16,000,000.

 

1.16  Bill
of Sale shall
have the meaning given to such term in Section 5.1.3.

 

1.17  Books
and Records shall
have the meaning given to such term in Section 6.15.

 

1.18  Buyer
Damages shall
have the meaning given to such term in Section 14.2.

 

1.19  Buyer
Indemnitees shall
have the meaning given to such term in Section 14.2.

 

1.20  Business shall
mean the sales, marketing, manufacture and distribution of products and services
in the death care industry as presently conducted by Sellers.

 

1.21  Business
Day shall
mean any day other than a Saturday, Sunday or any day on which banks located in
the State of New York are authorized or required to be closed for the conduct of
regular banking business.

 

1.22  Buyer shall
have the meaning given to such term in the preamble of this
Agreement.

 

1.23  CERCLA shall
mean the Comprehensive Environmental Response, Compensation and Liability Act,
as amended, 42 U.S.C. 9601 et seq.

 

1.24  Closing shall
have the meaning given to such term in Section 2.4.

 

1.25  Closing
Balance Sheet shall
have the meaning given to such term in Section 3.6.1.

 

1.26  Closing
Date shall
have the meaning given to such term in Section 2.4.

 

1.27  Closing
Date Cash Consideration shall
have the meaning given to such term in Section 3.1.

 

1.28  Closing
Inventory shall
mean all Inventory used or held for use in the Business on the Closing
Date.

 

1.29  Closing
Working Capital shall
mean cash and cash equivalents, Inventory, Accounts Receivable, Prepaid Expenses
and Security Deposits securing performance by the Business of obligations due to
be paid or performed within one year of the Closing Date (but not other Security
Deposits)), which are being purchased by the Buyer under this Agreement, minus
Accrued Expenses and Payables which are being assumed by Buyer under this
Agreement. Closing Working Capital shall be calculated in accordance with
Schedule 1.29 attached to this Agreement (the “Matthews
Accounting Policies”).

 

1.30  Code shall
mean the Internal Revenue Code of 1986, as it may be amended from time to time,
and any successor thereto. Any reference herein to a specific section or
sections of the Code shall be deemed to include a reference to any corresponding
provision of future law.

 

1.31  Confidential
Information shall
have the meaning given to such term in Section 12.1.

 

1.32  Confidentiality
Agreement shall
mean the Confidentiality Agreement dated as of September 10, 2004 between
Matthews and Milso Inc.

 

1.33  Consideration shall
have the meaning given to such term in Section 3.1.

 

1.34  Contingent
Consideration Payment shall
have the meaning given to such term in Section 3.1.1.

 

1.35  Contract shall
mean any contract, agreement, indenture, note, bond, loan, instrument, lease,
sublease, license, sub license, commitment or other arrangement or agreement,
whether oral or written.

 

1.36  Employees shall
have the meaning given to such term in Section 6.18.1.

 

1.37  Employment
Agreements shall
mean the employment agreements attached as Exhibit
C to this
Agreement, each of which by its terms will take effect upon the
Closing.

 

1.38  Encumbrance shall
mean any claim, lien, pledge, option, charge, easement, security interest, deed
of trust, mortgage, right-of-way, encroachment, building or use restriction,
conditional sales agreement, encumbrance or other right of third parties,
whether voluntarily incurred or arising by operation of law, and includes any
agreement to give any of the foregoing in the future, and any contingent sale or
other title retention agreement or lease in the nature thereof.

 

1.39  Environment shall
mean soil, surface waters, groundwaters, land, sediments, surface or subsurface
strata, ambient air, and any other environmental medium.

 

1.40  Environmental
Laws shall
mean all Applicable Laws relating to pollution, natural resources, protection of
the Environment or public health and safety or exposure of persons to Hazardous
Substances applicable to the parties to this Agreement, including, without
limitation, Applicable Laws relating to the manufacture, processing,
distribution, use, sale, treatment, storage, release, disposal, handling or
transportation of Hazardous Substances or the operation, handling and disposal
of medical and biological waste.

 

1.41  Environmental
Liabilities and Costs shall
mean all Losses, whether direct or indirect, known or unknown, current or
potential, past, present or future, imposed by, under or pursuant to
Environmental Laws, including, without limitation, all Losses related to
Remedial Actions, and all fees, disbursements and expenses of counsel, experts,
personnel and consultants based on, arising out of or otherwise in respect of:
(i) the ownership or operation of the Business or the Real Property by a
Seller, or any of their predecessors or Affiliates prior to the Closing Date;
(ii) the environmental conditions existing on the Closing Date on, at,
under, from, above, or about any Real Property or any other assets, equipment or
facilities currently or previously owned, leased or operated by a Seller, or any
of their predecessors or Affiliates; and (iii) the transportation, disposal
or other disposition prior to the Closing Date of any Hazardous Substances,
other wastes or recycled or reclaimed materials generated by a
Seller.

 

1.42  Environmental
Permits shall
mean any federal, state and local permit, license, registration, consent, order,
administrative consent order, certificate, approval or other authorization with
respect to a Seller necessary for the conduct of the Business as currently
conducted under any Environmental Law.

 

1.43  ERISA shall
mean the Employee Retirement Income Security Act of 1974, as
amended.

 

1.44  ERISA
Plans shall
mean defined benefit pension plans and defined contribution pension plans
qualified under Section 401(a) of the Code.

 

1.45  Escrow
Agent shall
mean the Escrow Agent as defined in the Escrow Agreement.

 

1.46  Escrow
Agreement shall
have the meaning given to such term in Section 3.5.1.

 

1.47  Escrow
Amount shall
have the meaning given to such term in Section 3.5.1.

 

1.48  Escrow
Fund shall
mean the amount of the Escrow Amount then held by the Escrow Agent subject to
the Escrow Agreement.

 

1.49  Excluded
Assets shall
mean those assets that are not included in the sale contemplated hereby and as
are further defined in Section 2.2.

 

1.50  Excluded
Liabilities shall
mean all liabilities related to the Business that are not Assumed
Liabilities.

 

1.51  GAAP shall
mean, as of the applicable date, United States generally accepted accounting
principles.

 

1.52  Governmental
Authority shall
mean any United States, foreign, international, supranational, national,
provincial, regional, federal, state, municipal or local government, any
instrumentality, subdivision, court, administrative or regulatory agency or
commission or other authority thereof, or any quasi-governmental or private body
exercising any regulatory, taxing, importing or other governmental or
quasi-governmental authority.

 

1.53  Hazardous
Substances shall
mean any substance that: (i) is or contains asbestos, urea formaldehyde
foam insulation, polychlorinated biphenyls, petroleum or petroleum derived
substances or wastes, radon gas or related materials, lead-based paint or
microbial matter, (ii) requires investigation, removal or remediation under
any Environmental Law, or is defined, listed or identified as a “hazardous
waste,” “hazardous substance,” “solid waste,” “pollutant” or “contaminant”
thereunder, or (iii) is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic, or otherwise hazardous and is regulated by
any Governmental Authority or Environmental Law.

 

1.54  HSR
Act shall
mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, 15
U.S.C. Section 18a, and the rules promulgated thereunder.

 

1.55  Indemnified
Party shall
have the meaning given to such term in Section 14.7.1.

 

1.56  Indemnifying
Party shall
have the meaning given to such term in Section 14.7.1.

 

1.57  Indemnity
Period shall
have the meaning given to such term in Section 14.1.

 

1.58  Independent
Accounting Firm shall
have the meaning given to such term in Section 3.6.2.

 

1.59  Inventory shall
mean all inventories of raw materials, supplies, work in process and finished
products used or held for use in the Business.

 

1.60  Key
Employees shall
mean Harry Pontone, Louis Pontone, Michael Pontone, Steven Pontone, Scott G.
Pontone, Thomas Pontone (son of Louis Pontone) and Andrew G.
Pontone.

 

1.61  Knowledge or to
the knowledge of Sellers (or
similar phrases) shall mean the actual knowledge of Harry Pontone, Louis
Pontone, Michael Pontone, Steven Pontone, Scott G. Pontone, Thomas Pontone (son
of Louis Pontone) and Andrew G. Pontone.

 

1.62  Lease shall
have the meaning given to such term in Section 6.26.

 

1.63  Lease
Consent shall
have the meaning given to such term in Section 8.1.7.

 

1.64  Leased
Property shall
mean the real property leased by Sellers as lessee and used in connection with
the Business as more fully described in Schedule 6.26
hereof.

 

1.65  Losses shall
mean all losses, costs, claims, liabilities, fines, penalties, damages and
expenses, including interest which may be imposed in connection therewith and
court costs and reasonable fees and disbursements of counsel and consultants,
but after taking into account any insurance proceeds received by the party
incurring the Losses (net of any premium increases resulting therefrom), any net
tax benefits to such party resulting therefrom and any reserves on the books and
records relating thereto.

 

1.66  Machinery
and Equipment shall
have the meaning given to such term in Section 2.1.1.

 

1.67  Material
Adverse Effect shall
mean any state of facts, events, changes or effects that materially impairs the
conduct or operation of the Business taken as a whole, other than as a result of
(A) changes in economic or business conditions generally or in the burial
and memorialization products industry specifically, (B) changes in
Applicable Laws impacting the burial and memorialization products industry
generally or (C) changes or effects resulting in whole or in part from the
execution, announcement or performance of this Agreement or the transactions
contemplated by this Agreement.

 

1.68  Matthews shall
mean Matthews International Corporation, a Pennsylvania
corporation.

 

1.69  Operating
Profit shall
mean, for the fiscal year ending September 30, 2006 only, the net income of the
Business determined on a pro forma stand
alone basis, but otherwise determined in accordance with GAAP, excluding (i) any
provision for interest expense or income taxes, (ii) any adjustments made for
purchase accounting purposes resulting from the Contemplated Transaction which
otherwise would have an impact on Operating Profit, including in depreciation
and amortization resulting from the re-valuation for purchase accounting
purposes of tangible and intangible assets acquired in the Contemplated
Transaction and the cost of sales impact related to the re-valuation for
purchase accounting purposes of any inventory acquired in the Contemplated
Transaction (but except as provided below, no such adjustments to the
calculation of Operating Profit shall be made in respect of any acquisitions
other than the Contemplated Transaction) and (iii) any non-recurring costs or
expenses related to the integration of the Business with the operations of Buyer
or Matthews and (iv) all other extraordinary, non-recurring items (as
determined in good faith with the agreement of Harry Pontone or Scott Pontone).
If the Closing occurs after October 1, 2005, the Operating Profit shall be
annualized by taking the Operating Profit for the period beginning on the day
following the Closing Date through and including September 30, 2006 and
multiplying it by a fraction, the numerator of which shall be 365 and the
denominator of which shall be the number of days in such period. In calculating
Operating Profit all administrative and financial services performed by Matthews
or its Affiliates for the Business (including without limitation accounting,
accounts receivable processing, accountS payable processing, payroll processing,
human resources and benefits support services, retirement and pension plan
administration), and shall be charged as an expense at an amount not to exceed
the cost to the Business as of the date of this Agreement of any such service.
With respect to future acquisitions by the Buyer, if either Harry Pontone or
Scott Pontone is the President of the Company, unless the President agrees in
writing to include those operating results and the related attributes of the
acquisition (such as interest expense, integration costs and depreciation and
amortization charges), they shall be excluded from the calculation of Operating
Profit using such methodologies as shall be agreed in good faith by the
President of the Company and Matthews. Under no circumstances shall any amounts
payable as purchase price pursuant to this Agreement be treated as charges
against net income for purposes of calculating Operating Profit.

 

1.70  Other
Leases shall
mean the leases, subleases, licenses and occupancy agreements pursuant to which
any Seller or Shareholder is a lessor, sublessor or licensor of any part of the
Real Property.

 

1.71  Party shall
mean any Seller, Shareholder or Buyer, individually, as the context so requires,
and the term “Parties” shall
mean Sellers, Shareholders and Buyer together.

 

1.72  Payables as of
any date shall mean any of the trade accounts payable incurred in the ordinary
course and associated with the Business as of such date, other than accounts
payable to any Affiliate of Sellers or Shareholders.

 

1.73  Pension
Plan shall
mean a pension plan as defined in Section 3(2) of ERISA which is not an
individual account plan as defined in Section 3(34) of ERISA.

 

1.74  Permits shall
have the meaning given to such term in Section 6.11.

 

1.75  Permitted
Encumbrances shall
mean with respect to any Purchased Asset any (a) defect in title that does
not materially adversely impacts the use of such Purchased Asset or the
operation of the Business, (b) Encumbrances securing Assumed Liabilities,
(c) Encumbrances securing the performance of bids, tenders, leases,
contracts (other than for the repayment of debt), statutory obligations, surety,
customs and appeal bonds and other obligations of like nature, incurred as an
incident to and in the ordinary course of the Business, (d) Encumbrances
imposed by law, such as carriers’, warehouseman’s, mechanics’, materialmen’s,
landlords’, laborers’ suppliers’ and vendors’ liens, incurred in good faith in
the ordinary course of the Business and securing obligations which are not yet
due or which are being contested in good faith by appropriate proceedings, each
of which proceedings is set forth on Schedule 1.75,
(e) extensions, renewals and replacements of Encumbrances referred to in
(a) through (d) of this sentence; provided that any
such extension, renewal or replacement Encumbrance shall be limited to the
property or assets covered by the Encumbrance extended, renewed or replaced and
that the obligations secured by any such extension, renewal or replacement
Encumbrance shall be in an amount not greater than the amount of the obligations
secured by the original Encumbrance extended, renewed or replaced, none of
which, individually or in the aggregate, have a Material Adverse
Effect.

 

1.76  Person shall
mean any natural person, firm, partnership, joint venture, limited liability
company, association, corporation, trust, business trust, unincorporated
organization, Governmental Authority or other entity.

 

1.77  Plans shall
have the meaning given to such term in Section 6.18.

 

1.78  Prepaid
Expenses as of
any date shall mean Sellers’ rights to receive goods, services or other benefits
in connection with the Business, to the extent paid for and not yet
received.

 

1.79  Products shall
mean any of the products manufactured, marketed, sold or distributed by any
Seller in the conduct of the Business as of the Closing Date.

 

1.80  Proprietary
Rights shall
have the meaning given to such term in Section 6.9.1.

 

1.81  Purchased
Assets shall
have the meaning given to such term in Section 2.1.

 

1.82  Real
Property shall
mean the real property related to any lease assumed by or entered into by Buyer
in connection with the transaction contemplated by this Agreement, including the
Real Property Leases with the Sellers, the Shareholders, or their
Affiliates.

 

1.83  Real
Property Leases shall
mean leases with respect to the Real Property owned by the Sellers or their
Affiliates and described in Exhibit A-1, in
substantially the form of Exhibit
A-2 to this
Agreement.

 

1.84  Release shall
mean any releasing, disposing, discharging, injecting, spilling, leaking,
leaching, pumping, dumping, emitting, escaping, emptying, seeping, dispersal,
migration, transporting, placing and the like, including without limitation, the
moving of any materials through, into or upon, any land, soil, surface water,
ground water or air, or otherwise entering into the environment.

 

1.85  Remedial
Action shall
mean all actions required to (i) clean up, remove, treat or in any other
way remediate any Hazardous Substances; (ii) prevent the release of
Hazardous Substances so that they do not migrate or endanger or threaten to
endanger public health or welfare or the environment; or (iii) perform
studies, investigations and care (including any financial responsibility
requirement) related to any such Hazardous Substances.

 

1.86  Seller and
Sellers shall
have the meaning given to such terms in the preamble of this
Agreement.

 

1.87  Security
Deposits shall
have the meaning given to such term in Section 2.1.15.

 

1.88  Seller
Damages shall
have the meaning given to such term in Section 14.5.

 

1.89  Seller
Indemnitees shall
have the meaning given to such term in Section 14.5.

 

1.90  Shareholder shall
have the meaning given to such term in the preamble of this
Agreement.

 

1.91  Subsidiary shall
have the meaning given to such term in the preamble of this
Agreement.

 

1.92  Supply
Letter Agreement shall
mean an agreement in the form of Exhibit D.

 

1.93  Tax
Returns shall
mean all federal, state, local, and foreign Tax returns, declarations,
statements, reports, schedules, forms, and information returns and any amended
Tax Returns relating to Taxes.

 

1.94  Taxes shall
mean all taxes, duties, charges, fees, levies or other assessments imposed by
any taxing authority, including, without limitation, income, gross receipts,
value-added, excise, withholding, personal property, real estate, sale, use, ad
valorem, license, lease, service, severance, stamp, transfer, payroll,
employment, customs, duties, alternative, add-on, minimum, estimated and
franchise taxes (including any interest, penalties or additions attributable to
or imposed on or with respect to any such assessment).

 

1.95  Working
Capital Calculation shall
have the meaning given to such term in Section 3.6.1.

 

ARTICLE
II  

 

 

TRANSFER
OF ASSETS AND PROPERTIES; CLOSING

 

2.1  Purchased
Assets. Subject
to the terms and conditions of this Agreement, and except as otherwise expressly
provided in this Agreement, at the Closing, Sellers shall sell and convey to
Buyer, free and clear of all Encumbrances (other than Permitted Encumbrances),
and Buyer shall purchase and accept from Sellers, all of Sellers’ rights, title
and interest in and to the assets, properties and rights of every kind and
description, real, personal and mixed, tangible and intangible, wherever
situated which are used or useful in the conduct of the Business (such rights,
title and interests in and to all such assets, properties and rights being
collectively referred to in this Agreement as the “Purchased
Assets”),
including, without limitation, the following:

 

2.1.1  Equipment,
Machinery and other Tangible Personal Property. All
machinery, equipment, leasehold improvements, trucks, automobiles, supplies,
materials, office furniture and office equipment, computing and
telecommunications equipment and other items of personal property that are owned
or leased by Sellers and used primarily in connection with the Business,
wherever located, including those set forth in Schedule 2.1.1 hereto
(but excluding any asset listed on Schedule 2.1.1 and
subsequently disposed of without breach of any covenant contained in this
Agreement) (“Machinery
and Equipment”);

 

2.1.2  Contracts
Relating to the Business. To the
extent transferable, (a) all leases (including leases and subleases of
leased real property (“Assumed
Real Property Leases”) and of
Machinery and Equipment) and (b) all other Contracts primarily related to
the Business set forth on Schedule 2.1.2A (the
“Assumed
Contracts”), but
excluding any Contract listed on Schedule 2.1.2B and any
Contract subsequently terminated without breach of any covenant contained in
this Agreement;

 

2.1.3  Customer
Lists, Sales and Marketing Materials. All
customer lists, sales data, catalogs, brochures, supplier names, mailing lists,
art work, photographs and advertising material that relate primarily to the
Business, whether in electronic form or otherwise;

 

2.1.4  Permits,
Licenses. All
governmental permits, licenses, registrations, orders and approvals relating
primarily to the Business and in existence on the Closing Date, including those
listed in Schedule 2.1.4 hereto,
to the extent such permits, licenses, registrations, orders and approvals are
transferable to Buyer;

 

2.1.5  Trade
Secrets. All
trade secrets, secret processes and procedures, engineering, production,
assembly, design, installation, other technical drawings and specifications,
working notes and memos, market studies, consultants’ reports, technical and
laboratory data, competitive samples, engineering prototypes, and all similar
property of any nature, tangible or intangible, of Sellers relating to the
Business;

 

2.1.6  Intellectual
Property. All
patents, trademarks, trademark registrations, trade names, service marks,
copyrights and copyright registrations described in Schedule 2.1.6;

 

2.1.7  Property,
Personnel and Accounting Records. To the
extent transferable under applicable law, all other records of Sellers relating
to the Business, including property records and copies of personnel records of
Employees who become employees of Buyer; provided,
however, that
Seller shall be entitled to retain copies of all such records;

 

2.1.8  Goodwill. All
right, title and interest of Sellers in and to the goodwill incident to the
Business;

 

2.1.9  Cash
and Cash Equivalents. All
cash and cash equivalents of the Business on the Closing Date;

 

2.1.10  Inventory. All
Closing Inventory;

 

2.1.11  Accounts
Receivable. All
Accounts Receivable existing on the Closing Date;

 

2.1.12  Prepaid
Expenses. Except
as set forth in Section 2.2.1, all Prepaid Expenses of, or for the benefit
of, the Business on the Closing Date including those described in Schedule 2.1.12, to the
extent the benefits thereof are transferable to Buyer;

 

2.1.13  Computer
Software. To the
extent transferable, all computer applications software, owned or licensed,
whether for general business usage (e.g., accounting, word processing, graphics,
spreadsheet analysis, etc.) or specific, unique-to-the-business usage (e.g.,
order processing, manufacturing, process control, shipping, etc.) and all
computer operating, security or programming software, owned or licensed by
Sellers and used primarily in the Business;

 

2.1.14  Other
Intangible Assets. All
other assets (including all causes of action, rights of action, contract rights
and warranty and product liability claims against third parties, all telephone
numbers, telecopier numbers, websites, domain names, and email addresses) that
are owned by Sellers and used primarily in the Business, regardless of whether
any value is ascribed thereto in the Sellers’ financial statements;
and

 

2.1.15  Security
Deposits. All
prepaid security deposits related to the Assumed Contracts (“Security
Deposits”).

 

Notwithstanding
the foregoing provisions of this Section 2.1, the transfer of the Purchased
Assets pursuant to this Agreement shall not include the assumption of any
liability or obligation related to the Purchased Assets, unless such liability
or obligation is expressly included in the Assumed Liabilities.

 

2.2  Excluded
Assets.
Notwithstanding anything to the contrary in this Agreement, the Purchased Assets
shall not include any of Sellers’ rights, title or interests in the following
(collectively, the “Excluded
Assets”):

 

2.2.1  Any
insurance policies maintained by Sellers with respect to the Business or any of
its employees or any Shareholder and all of Sellers’ prepaid insurance premiums
and insurance deposits and rights to refunds or adjustments in respect of
periods prior to the Closing Date with respect to insurance premiums and
insurance deposits and all rights to insurance proceeds or other insurance
Contract recoveries in respect of periods prior to the Closing
Date;

 

2.2.2  All bank
accounts and all accounts receivable from Affiliates of Sellers existing on the
Closing Date;

 

2.2.3  All
consideration paid, payable or deliverable to Sellers pursuant to this
Agreement, except such funds as may be payable to the Buyer pursuant to the
Escrow Agreement;

 

2.2.4  All
claims that Sellers may have against any third Person with respect to any
Excluded Asset;

 

2.2.5  Claims
for refunds of Taxes and other governmental charges to the extent such refunds
(i) are in respect of Taxes for which the Buyer could not be held liable and
which could not result in a lien on a Purchased Asset or (ii) relate to periods
ending on or prior to the Closing Date, whether or not relating to the
Business;

 

2.2.6  All
property and assets listed on Schedule 2.2.6 and any
proceeds from the disposition thereof;

 

2.2.7  All
(i) shares of capital stock or other equity or other ownership interests of
any Person that are owned by Seller or any Affiliate of any Seller or securities
convertible into, exchangeable or exercisable for shares of capital stock or
other equity or other ownership interests of any Person and (ii) corporate
seals, minute books, charter documents, stock transfer records, record books,
original Tax and financial records and such other files, books and records
relating to any of the Excluded Assets or to the organization, existence or
capitalization of any Seller or of any other Person;

 

2.2.8  All
Machinery and Equipment and Inventory transferred, consumed or otherwise
disposed of by Sellers in the ordinary course of the Business before the Closing
Date;

 

2.2.9  Except
for the Assumed Real Property Leases, and subject to the provisions of the Real
Property Leases, any interest in real property;

 

2.2.10  The
Contracts listed on Schedule 2.1.2B hereof;
and

 

2.2.11  All
rights of Sellers under this Agreement and the Ancillary Agreements and any
Contract entered into pursuant to the provisions of this Agreement.

 

2.3  Equitable
Assignment.

 

2.3.1  Notwithstanding
anything to the contrary contained in this Agreement, other than Section 10.7
and 11.7, to the extent that the sale, assignment, transfer, conveyance or
delivery or attempted sale, assignment, transfer, conveyance or delivery to
Buyer, as contemplated hereunder, of any Purchased Asset is prohibited by its
terms or by any Applicable Laws or would require any governmental or any third
party consent or approval, and any such consent or approval shall not have been
obtained prior to the Closing (a “Delayed
Consent”), this
Agreement shall not constitute a sale, assignment, transfer, conveyance or
delivery, or any attempted sale, assignment, transfer, conveyance or delivery,
thereof and (subject to the conditions expressly set forth in this Agreement)
the parties nonetheless shall complete the Closing. Following the Closing, the
Parties shall use commercially reasonable efforts and shall cooperate with each
other, to obtain promptly each Delayed Consent (but Sellers shall not be
required to incur any material expense or make any material commitment in
connection therewith). Pending receipt of each Delayed Consent with respect to a
Purchased Asset or if any such Delayed Consent is not obtained, the Parties
hereto shall cooperate with each other in any reasonable and lawful arrangements
(each an “Equitable
Arrangement”),
effectively transferring to Buyer from and after the Closing, the rights and
benefits of, and entitlements to exercise the Sellers’ rights under, and
effectively causing the Buyer to assume all Assumed Liabilities with respect to,
such Purchased Asset and operations of the Business as if such assets and
operations had been transferred by Sellers to Buyer at the Closing and any
liabilities or obligations associated with the arrangements specifically
established by Buyer and Sellers pursuant to this Section 2.3. Once each
Delayed Consent with respect to a Purchased Asset is obtained, the Sellers shall
assign, transfer, convey and deliver, or cause to be assigned, transferred,
conveyed and delivered, such Purchased Asset to Buyer; provided that no
additional consideration shall be paid by Buyer to Sellers for such relevant
Purchased Asset. This Section 2.3 shall not affect Sellers’ obligations
under Section 8.1.6 or Section 8.1.7 hereof or Buyer’s obligations
under Section 9.3 hereof.

 

2.3.2  If (i) an
Assumed Real Property Lease is not conveyed to Buyer at Closing, (ii) any
Delayed Consent is not received with respect to such Assumed Real Property Lease
within 90 days of Closing and (iii) the Parties are not able to reach an
Equitable Arrangement with respect to such Assumed Real Property Lease within 90
days of Closing, at Buyer’s cost and expense, Seller shall take such actions as
may be reasonably requested by Buyer to place Buyer in actual possession and
control of any Purchased Assets located at the property subject to such Assumed
Real Property Lease.

 

2.4  Closing. Subject
to the satisfaction or waiver, if permissible, of the conditions set forth in
Articles X and XI (other than those conditions that by their nature are to
be fulfilled only at the Closing, but subject to the fulfillment or waiver of
such conditions), the closing of the Contemplated Transaction (the “Closing”) shall
take place at the offices of Clifford Chance, New York, New York, no later than
ten (10) days after the date that the waiting period, if any, under
Title II of the HSR Act applicable to the purchase and sale of the
Purchased Assets has terminated or expired (or if that day is not a Business
Day, on the next succeeding Business Day), or on such other date as may be
agreed upon by Buyer and Sellers (the “Closing
Date”).

 

ARTICLE
III  

 

 

PURCHASE
PRICE

 

3.1  Purchase
Price. The
consideration for the Purchased Assets shall be $95,000,000 (the “Base
Cash Consideration”), plus
the Contingent Consideration Payment, if any, plus the assumption of the Assumed
Liabilities (together, the “Consideration”),
subject to adjustment after the Closing as provided in Section 3.6 below.
The Base Cash Consideration, less the Escrow Amount (the “Closing
Date Cash Consideration”), shall
be paid at the Closing to Sellers by wire transfer of immediately available
funds to such bank account or accounts as shall be specified in written
instructions delivered to Buyer by SBC at least three Business Days prior to the
Closing.

 

3.1.1  Contingent
Consideration. Sellers
shall be eligible for a further payment, in addition to the Base Cash
Consideration, of $7.5 million (the “Contingent
Consideration Payment”). The
Contingent Consideration Payment will be payable only if the Operating Profit of
the Business exceeds the Base Operating Profit. As promptly as reasonable
practicable after September 30, 2006, but in any event before November 30,
2006, Buyer shall deliver to Sellers a calculation of the Operating Profit
showing in reasonable detail the basis therefor (the “Operating
Profit Statement”). Buyer
shall deliver to Sellers any supporting documentation for the Operating Profit
Statement promptly upon request.

 

3.1.2  Sellers
may dispute the calculation of the Operating Profit, but only on the basis that
the Operating Profit was not arrived at in accordance with the terms of this
Agreement; provided,
however, that
Sellers shall have notified Buyer in writing of each disputed item, specifying
the amount thereof in dispute and setting forth, in reasonable detail, the basis
for such dispute, within twenty (20) Business Days following delivery the
Operating Profit Statement. In the event of such dispute, Buyer and Sellers
shall attempt to reconcile their differences, and any resolution by them as to
any disputed amounts shall be final, binding and conclusive upon Buyer and
Sellers. If Buyer and Sellers are unable to reach a resolution with such effect
within twenty (20) days after receipt of such written notice of dispute, Buyer
and Sellers shall submit the items remaining in dispute for resolution to an
accounting firm independent of Buyer and Sellers mutually acceptable to Buyer
and Sellers (the “Independent
Accounting Firm”), which
shall, within thirty (30) days after such submission, determine and report to
Buyer and Sellers upon such remaining disputed items, and such report shall be
final, binding and conclusive. Buyer and Sellers will furnish or cause to be
furnished to the Independent Accounting Firm such work papers and other
documents and information reasonably relating to the disputed issues as the
Independent Accounting Firm may reasonably request and as are reasonably
available to that party or its agents and will be afforded the opportunity to
present to the Independent Accounting Firm any material relating to the disputed
issues and to discuss the issues with the Independent Accounting Firm. The
Independent Accounting Firm shall be authorized to resolve only those items
remaining in dispute between Buyer and Sellers, in accordance with the
provisions of this Section 3.1.2 within the range of differences between
Buyer’s position and Seller’s position. The fees and expenses of the Independent
Accounting Firm shall be allocated between Buyer and Sellers in the same
proportion that the aggregate amount of all such remaining disputed items so
submitted to the Independent Accounting Firm that is unsuccessfully disputed by
each such party (as finally determined by the Independent Accounting Firm) bears
to the total amount of such remaining disputed items so submitted.

 

3.1.3  The
Operating Profit Statement shall be deemed final for purposes of
Section 3.1.1 upon the earliest of (i) the failure of Sellers to
notify Buyer of a dispute within twenty (20) Business Days following the
delivery of the Operating Profit Statement to Sellers, (ii) the
resolution of all disputes, pursuant to Section 3.1.2 by Buyer and Sellers,
and (iii) the resolution of all disputes, pursuant to Section 3.1.2,
by the Independent Accounting Firm. Within five (5) Business days of the
Contingent Consideration Payment being deemed final, such payment shall be made
in accordance with written wire instructions provided to Buyer from
Sellers.

 

3.2  Allocation
of Purchase Price.
Seventy-two percent of the Consideration shall be allocated to the Purchased
Assets of SBC and Milso Inc. and twenty-eight percent of the Consideration shall
be allocated to the Purchased Assets of Milso LLC. Within a reasonable period of
time following Closing, Buyer and Sellers shall agree on the allocation of the
Consideration among the Purchased Assets, which allocation shall be consistent
with Section 1060 of the Code and the rules and regulations thereunder (the
“Tax
Allocation”).
Except as required by Applicable Law, Buyer and Sellers agree to use the Tax
Allocation in filing all required forms under Section 1060 of the Code, and
all other Tax Returns. For the avoidance of doubt, the Tax Allocation shall not
be made prior to the Closing on account of the Contingent Consideration unless
and until such consideration is payable under Section 3.1.1, and if such
consideration becomes so payable the parties shall allocate the amount of such
consideration solely to goodwill and going concern value. Buyer and Sellers
further agree that the payment of the Closing Date Cash Consideration and the
Contingent Consideration to Sellers contemplated by Article III may be made
to a single Seller that is designated by SBC in writing as being authorized to
act as agent for all Sellers, whereupon each Seller shall be deemed to have
received the Cash Consideration allocable to the Purchased Assets owned by such
Seller in accordance with the allocation determination under this
Section 3.2. In connection with the determination of the foregoing Tax
Allocation, the parties shall cooperate with each other and provide such
information as any of them shall reasonably request. The parties will each
report the federal, state and local and other Tax consequences of the purchase
and sale contemplated hereby (including the filing of Internal Revenue Service
Form 8594) in a manner consistent with the Tax Allocation.

 

3.3  Transfer
Taxes. Buyer
(on the one hand) and Sellers (on the other) each shall bear 50% of the cost of
all Taxes (excluding Taxes based on or measured by income, which shall be solely
the responsibility of the Sellers) that are or may be imposed by any government
or political subdivision thereof and that are payable or arise as a result of
this transfer of the Purchased Assets, notwithstanding the Party upon which such
Taxes are actually imposed. Buyer and Sellers shall jointly prepare any Tax
Returns relating to such Taxes, and the party or parties responsible for filing
each such return will file that return. Buyer and Sellers shall cooperate with
each other in determining the amount of such Taxes payable and in preparing and
filing the applicable Tax Returns. Buyer shall furnish to Sellers properly
completed exemption certificates for any Taxes from which Buyer claims to be
exempt.

 

3.4  Proration
of Taxes and Certain Charges. Except
as otherwise expressly provided in this Agreement, all real property Taxes,
personal property Taxes or similar ad valorem obligations levied with respect to
the Purchased Assets for any taxable period that includes the day before the
Closing Date and ends on or after the Closing Date, whether imposed or assessed
before or after the Closing Date, shall be prorated between Sellers and Buyer as
of 12:01 A.M. on the Closing Date. If any Taxes subject to proration are
paid by Buyer, on the one hand, or Sellers, on the other hand, the proportionate
amount of such Taxes paid (or in the event a refund of any portion of such Taxes
previously paid is received, such refund) shall be paid promptly by (or to) the
other after the payment of such Taxes (or promptly following the receipt of any
such refund). Except as otherwise expressly provided in this Agreement, all
installments of special assessments or other charges on or with respect to the
Purchased Assets payable by Sellers for any period in which the Closing Date
shall occur, including base rent, common area maintenance, royalties, all
municipal, utility or authority charges for water, sewer, electric or gas
charges, garbage or waste removal, and cost of fuel, shall be apportioned as of
the Closing Date and each party shall pay its proportionate share promptly upon
the receipt of any bill, statement or other charge with respect thereto. If such
charges or rates are assessed either based upon time or for a specified period,
such charges or rates shall be prorated as of 12:01 A.M. on the Closing
Date. If such charges or rates are assessed based upon usage of utility or
similar services, such charges shall be prorated based upon meter readings taken
on the Closing Date. Except as otherwise expressly provided in this Agreement,
all amounts due or paid pursuant to the terms of the Assumed Contracts, for any
period in which the Closing Date shall occur shall be prorated as of
12:01 A.M. on the Closing Date.

 

3.5  Escrow
Agreement.

 

3.5.1  An amount
equal to $10 million (the “Escrow
Amount”) shall
be deposited by wire transfer of immediately available funds with the Escrow
Agent, under an escrow agreement to be entered into on the Closing Date by the
Escrow Agent, Sellers and Buyer substantially in the form of Exhibit B (the
“Escrow
Agreement”). The
Escrow Fund shall be used for indemnity purposes as set forth in
Article XIV, to ensure the retention of Key Employees as described herein
and for payment of the Closing Working Capital Adjustment, if any. On the date
that is ten (10) days following the end of the Indemnity Period, any remaining
amounts in the Escrow Fund not subject to pending claims shall be distributed to
the Sellers pursuant to the terms and conditions set forth herein and in the
Escrow Agreement and the Shareholder’s Representative and Buyer shall direct the
Escrow Agent to make such distributions in an instruction letter executed by the
Shareholders’ Representative and Buyer, which instruction letter shall set forth
the amount to be distributed to the Shareholders and the wire instructions with
respect to each such payment. The Shareholders’ Representative and Buyer shall
each instruct the Escrow Agent to, and use commercially reasonable efforts to
cause the Escrow Agent to, keep confidential all information relating to this
Agreement and the Escrow Agreement; provided that,
(a) at the request of the Shareholders’ Representative or Buyer such
information may be disclosed to the Shareholders’ Representative and Buyer,
(b) such information may be disclosed as required by Applicable Law and
(c) such information may be disclosed in an action or proceeding brought by
the Escrow Agent, a Seller, Shareholder or Buyer in pursuit of its rights or in
exercise of its remedies under this Agreement or the Escrow Agreement. Each
Shareholder agrees and acknowledges that the Shareholder Representative (as
defined in the Escrow Agreement) shall have the full power and authority to act
on their behalf.

 

3.5.2  Shareholders’
Representative. By
executing and delivering this Agreement, each Shareholder hereby irrevocably
agrees that the Shareholders’ Representative shall be entitled to take any
action under Article III and Article XIV of this Agreement without consultation
with, notice to, or agreement by, such Shareholder, including the exercise of
the power to (i) agree to, negotiate, enter into settlements and compromises of
and comply with orders of courts with respect to claims under this Article XIV
of this Agreement or the Escrow Agreement, (ii) resolve any claims under this
Article XIV of this Agreement or the Escrow Agreement, and (iii) take all
actions necessary in the judgment of the Shareholders’ Representative for the
accomplishment of the foregoing and all of the other terms, conditions and
limitations of this Agreement and the Escrow Agreement and the transactions
contemplated hereby and thereby. Each Shareholder will be bound by all actions
taken by the Shareholders’ Representative in connection with this Agreement or
the Escrow Agreement and the transactions contemplated hereby and thereby. The
Shareholders’ Representative will incur no liability to any Shareholder (i) with
respect to any action taken or suffered by it in reliance upon any notice,
direction, instruction, consent, statement or other document believed by it to
be genuine and to have been signed by the proper Person (and shall have no
responsibility to determine the authenticity thereof), nor (ii) for any other
action or inaction taken pursuant to this Agreement, except for its own willful
misconduct or bad faith. In all questions arising under this Agreement or the
Escrow Agreement and the transactions contemplated hereby or thereby, the
Shareholders’ Representative may rely on the advice of counsel, and the
Shareholders’ Representative will not be liable to any Shareholder for anything
done, omitted or suffered in good faith.

 

3.6  Adjustment
to Seller’s Consideration. The
Consideration to be paid to Sellers shall be subject to adjustment after Closing
Date as follows:

 

3.6.1  Closing
Balance Sheet.

 

(i)  As soon
as practicable, but in no event later than ninety (90) days following the
Closing Date (the “Adjustment
Target Date”), Buyer
shall deliver to Sellers a Closing Balance Sheet of the Business as of the
Closing Date (“Closing
Balance Sheet”) and a
reasonably detailed calculation of the Closing Working Capital (the
“Working
Capital Calculation”). The
Closing Balance Sheet shall be audited and prepared in accordance with GAAP and
the Matthews Accounting Policies, without giving effect to the Contemplated
Transaction. Buyer shall also deliver to Sellers any supporting documentation
for the Closing Balance Sheet and the Working Capital Calculation to the Sellers
promptly upon request.

 

(ii)  Buyer
shall grant such access to the Business and Buyer shall make financial personnel
of the Business and Buyer available to Sellers and its agents after the Closing
Date during reasonable business hours and as shall be reasonably required to
verify the Closing Balance Sheet and the Working Capital Calculation. The cost
of preparation of the Closing Balance Sheet and the Closing Working Capital
shall be paid by Buyer.

 

3.6.2  Disputes.

 

(i)  Subject
to clause (ii) of this Section 3.6.2, the Closing Balance Sheet and the
calculation of Closing Working Capital delivered by Buyer shall be final,
binding and conclusive.

 

(ii)  Sellers
may dispute the Closing Balance Sheet and the Working Capital Calculation, but
only on the basis that (A) the amounts reflected on the Closing Balance Sheet
and in the Working Capital Calculation were not arrived at in accordance with
this Agreement and (B) such nonconformance caused the Closing Working Capital to
vary by more than $50,000 from the amount which it would have been after giving
effect to the amounts disputed by Sellers; provided,
however, that
Sellers shall have notified Buyer in writing of each disputed item, specifying
the amount thereof in dispute and setting forth, in reasonable detail, the basis
for such dispute, within twenty (20) Business Days following delivery of the
Closing Balance Sheet and Working Capital Calculation to Sellers. In the event
of such dispute, Buyer and Sellers shall attempt to reconcile their differences,
and any resolution by them as to any disputed amounts shall be final, binding
and conclusive upon Buyer and Sellers. If Buyer and Sellers are unable to reach
a resolution with such effect within twenty (20) days after receipt of such
written notice of dispute, Buyer and Sellers shall submit the items remaining in
dispute for resolution to an accounting firm independent of Buyer and Sellers
mutually acceptable to Buyer and Sellers (the “Independent
Accounting Firm”), which
shall, within thirty (30) days after such submission, determine and report to
Buyer and Sellers upon such remaining disputed items, and such report shall be
final, binding and conclusive. Buyer and Sellers will furnish or cause to be
furnished to the Independent Accounting Firm such work papers and other
documents and information reasonably relating to the disputed issues as the
Independent Accounting Firm may reasonably request and as are reasonably
available to that party or its agents and will be afforded the opportunity to
present to the Independent Accounting Firm any material relating to the disputed
issues and to discuss the issues with the Independent Accounting Firm. The
Independent Accounting Firm shall be authorized to resolve only those items
remaining in dispute between Buyer and Sellers, in accordance with the
provisions of this Section 3.6 within the range of differences between Buyer’s
position and Sellers’ position. The fees and expenses of the Independent
Accounting Firm shall be (i) allocated between Buyer and Sellers in the same
proportion that the aggregate amount of all such remaining disputed items so
submitted to the Independent Accounting Firm that is unsuccessfully disputed by
each such party (as finally determined by the Independent Accounting Firm) bears
to the total amount of such remaining disputed items so submitted.

 

3.6.3  Adjustment
to Sellers Consideration. The
Closing Balance Sheet and the Working Capital Calculation shall be deemed final
for purposes of this Section 3.6 upon the earliest of (i) the failure of Sellers
to notify Buyer of a dispute within twenty (20) Business Days following the
delivery of the Closing Balance Sheet and the Working Capital Calculation to
Sellers, (ii) the resolution of all disputes, pursuant to Section 3.6.2(ii), by
Buyer and Sellers, and (iii) the resolution of all disputes, pursuant to Section
3.6.2(ii), by the Independent Accounting Firm. Within five (5) Business Days of
the Closing Balance Sheet and the Working Capital Calculation being deemed
final, an adjustment to the Consideration shall be made as follows:

 

(i)  If the
Closing Working Capital is less than $21,000,000, the difference, up to
$2,500,000, shall be paid by wire transfer from the Escrow Fund to an account
specified by Buyer.

 

(ii)  If the
Closing Working Capital is equal to or greater than $21,000,000, no adjustment
to the Consideration shall be made.

 

(iii)  Buyer and
the Shareholder’s Representative shall promptly give a joint written instruction
to the Escrow Agent specifying the dollar amounts to be paid from the Escrow
Fund as determined under this Section 3.6.3, if any. Any such payment shall be
made without regard to the “Qualifying Claim” and “deductible” provided for in
Section 14.4.1.

 

ARTICLE
IV  

 

 

ASSUMPTION
OF LIABILITIES; EMPLOYEE MATTERS

 

4.1  General
Limitation on Assumption of Liabilities. Except
for Permitted Encumbrances and as otherwise provided in Section 4.2 below,
Sellers shall transfer the Purchased Assets to Buyer free and clear of all
Encumbrances, and without any assumption of liabilities and obligations, and
Buyer shall not, by virtue of its purchase of the Purchased Assets or otherwise,
assume or become responsible for any liabilities or obligations of Sellers or
any other Person. For purposes of this Section 4.1, the phrase “liabilities
and obligations” shall include, without limitation, any direct or indirect
indebtedness, guaranty, endorsement, claim, loss, damage, deficiency, cost,
expense, obligation or responsibility, fixed or unfixed, known or unknown,
asserted or unasserted, choate or inchoate, liquidated or unliquidated, secured
or unsecured.

 

4.2  Assumed
Liabilities and Obligations. Subject
to the other provisions hereof, at the Closing, Buyer shall assume or accept
assignment from Sellers and thereafter pay, perform or discharge the following,
and only the following, liabilities and obligations, excluding any liabilities
and obligations to Affiliates of Sellers other than as reflected on the Closing
Balance Sheet (as finally determined pursuant to Section 3.6.3)
(collectively, the “Assumed
Liabilities”):

 

4.2.1  All
liabilities, obligations and commitments of Sellers under the Assumed Contracts,
to the extent incurred or arising after the Closing (to the extent not arising
from a breach of Sellers or their Affiliates before the Closing);

 

4.2.2  All
liabilities, obligations and commitments of Sellers accruing after the Closing
Date under the permits and licenses identified in Schedule 2.1.4;
provided that
Buyer shall not assume or discharge any obligation relating to a breach of the
terms of any permit or license (including the failure to procure any required
permit or license) that occurred prior to the Closing Date or is caused by the
assignment thereof to Buyer at the Closing;

 

4.2.3  The
Payables and Accrued Expenses reflected on the final Closing Balance Sheet (as
finally determined pursuant to Section 3.6.3);

 

4.2.4  All
service obligations and all express or implied warranty obligations of Sellers
to repair or replace defective goods sold by the Business under the terms of any
written contract, commitment or sale transaction entered into in the ordinary
course of business relating to products shipped prior to the Closing Date;
provided, that
such obligations do not exceed $100,000 in the aggregate and provided
further, that
Buyer assumes no obligation of Sellers for incidental or consequential damages
or for any personal injury, or for intellectual property infringement, the sole
warranty obligation of Buyer assumed hereunder being the obligation to repair or
replace defective goods;

 

4.2.5  All
liabilities, obligations and commitments of any nature or description which
arise from or are incurred in connection with the operation of the Business, or
the ownership, use or operation of the Purchased Assets, by Buyer or its
Affiliates following the Closing; and

 

4.2.6  All
accrued but unpaid salaries, wages, vacation and sick pay, incentive
compensation and any other similar current liabilities, obligations and
commitments of Seller with respect to the Transferred Employees, each as
reflected on the Closing Balance Sheet.

 

Except
for the obligations expressly assumed by Buyer pursuant to the foregoing
provisions of this Section 4.2, it is understood and agreed that Buyer does
not and will not assume or become obligated to pay or perform with respect to
third parties any debts, liabilities, contracts or other obligations of Sellers
or their Affiliates, or intercompany liabilities among Sellers and their
Affiliates, whether now existing or hereafter arising, for which Sellers or any
of their Affiliates is or may become liable however arising, including without
limitation obligations arising pursuant to the law of contracts, tort, strict
liability or other applicable laws, rules, regulations, or ordinances. Without
limiting the scope of the foregoing, Excluded Liabilities shall include, but are
not limited to (i) any Environmental Liabilities and Costs accrued prior to
the Closing Date or (ii) any liabilities or obligations of the Sellers or
the Business for Taxes accrued prior to the Closing Date.

 

4.3  Offers
of Employment. The
following shall apply with respect to employment matters:

 

4.3.1  Sellers
will use all reasonable efforts to cause the employees employed by Sellers to
make available their employment services to Buyer. For a period of two
(2) years from the Closing Date, Sellers and Shareholders will not, and
will not permit any of their Affiliates to, solicit, offer to employ or retain
the services of or otherwise interfere with the relationship of Buyer with any
Person employed by or otherwise engaged to perform services for Buyer in
connection with the operation of Business.

 

4.3.2  Buyer
shall offer employment on and as of the Closing Date, on an at-will basis, to
the persons named on Schedule 4.3.2, other
than the Key Employees, at base wages or salaries which are no less than those
presently in effect as described on Schedule 4.3.2. In
addition, for a period of twenty-four months after Closing (other than with
respect to group health coverage, for which such period shall be the 12 months
following the Closing), the welfare, benefit plans, programs and arrangements
and salary and wages provided to any Transferred Employee (as defined below)
shall be substantially similar in the aggregate to the programs and arrangements
and salary and wages applicable to such employee immediately prior to the
Closing Date. In determining any Transferred Employee’s eligibility to
participate in and vesting under Buyer’s defined contribution retirement plans,
employee welfare and benefit plans, programs and arrangements, and the level of
vacation under Buyer’s policies, the Transferred Employees will receive full
credit, to the extent legally permitted, for all service with Seller prior to
the Closing (to the same extent such Transferred Employees received such credit
with respect to such plans, programs and arrangements maintained by Seller). For
a period of twenty-four months after Closing, each Transferred Employee shall be
entitled to not less than three days of sick pay per year. Buyer will provide
group health coverage to the Transferred Employees and their dependents without
imposing any pre-existing condition exclusions, waiting periods or
actively-at-work requirements except to the extent such requirements were
applicable to the Transferred Employee or dependent under an applicable group
health plan of Seller immediately prior to the Closing Date. Those employees who
accept such offers of employment effective as of the Closing Date shall be
referred to herein as the “Transferred
Employees.”
Effective as of the Closing Date, Buyer shall assume the liability of Sellers in
respect of the Transferred Employees for accrued but unpaid salaries, wages,
vacation and sick pay and incentive compensation, but only to the extent such
liability is reflected on the Balance Sheet or arose after the Balance Sheet
Date in the ordinary course of business, consistent with the prior practice of
Sellers. Buyer shall assume no such liability or obligations with respect to
employees who are not Transferred Employees and Sellers shall retain, consistent
with their normal employment practices, all liabilities and obligations with
respect to such employees. Sellers shall remain responsible for payment of any
and all employee termination costs, retention, change in control, severance or
other similar compensation or benefits which are or may become payable in
connection with the consummation Contemplated Transaction.

 

4.4  Other
Employee Benefits. Sellers
agree that, with respect to claims for workers’ compensation and all claims
under Sellers’ employee benefit programs by persons working for the Business
arising out of events occurring prior to the Closing, whether reported or
unreported as of the Closing and whether insured or uninsured (including, but
not limited to, workers’ compensation, life insurance, medical and disability
programs), Sellers shall, at their own expense, honor or cause its insurance
carriers to honor such claims in accordance with the terms and conditions of
such programs or applicable workers’ compensation statutes. Without limiting the
scope of the preceding sentence, Sellers shall be responsible for any and all
claims and liabilities arising out of or relating to (i) employment by
Sellers of the Employees (other than Transferred Employees as provided in
Section 4.3.2), (ii) the termination by Sellers of the employment of any
such Employee and (iii) the provision of any employee benefits to such
Employees (and their beneficiaries and eligible dependents) attributable to
their employment with, or their participation in any plans or programs
maintained or contributed to by, Sellers or any of their Affiliates, including,
but not limited to, benefits and/or liabilities arising on or before the Closing
Date under WARN and/or COBRA which are or may become payable in connection with
the consummation of the Contemplated Transaction. By way of amplification of the
definition of “Excluded Liabilities,” the Sellers shall remain responsible for
the payment of all benefits accrued or claims incurred under the terms of the
Sellers’ or their Affiliates’ Plans (as defined by Section 6.18 below) with
respect to any employee, former employee or director of Sellers and their
Affiliates, including each Transferred Employee. Buyer shall not at any time
assume any liability for the benefits of an active, inactive or terminated,
vested or retired participant in any of the Sellers’ or its Affiliates’
Plans.

 

The terms
of Sections 4.3 and 4.4 are an agreement between the Sellers and the Buyer
only. Nothing in Sections 4.3 or 4.4, whether express or implied, confers
upon any employee of Sellers or Buyer, any Transferred Employee or any other
Person any rights or remedies, including, but not limited to, (A) any right
of employment or recall, (B) any right to continued employment for any
specified period, or (C) any right to claim any particular compensation,
benefit or aggregate of the benefits, of any kind or nature whatsoever, as a
result of Sections 4.3 and 4.4.

 

4.5  Employment
Taxes.

 

4.5.1  For tax
purposes only, Sellers and Buyer will (i) treat Buyer as a “successor
employer” and Sellers as a “predecessor,” within the meaning of
Sections 3121(a)(1) and 3306(b) (1) of the Code, with respect to
Transferred Employees who are employed by Buyer for purposes of Taxes imposed
under the United States Federal Unemployment Tax Act (“FICA”) or the
United States Federal Insurance Contributions Act (“FUTA”) and
(ii) cooperate with each other to avoid, to the extent possible, the filing
of more than one IRS Form W-2 with respect to each such Transferred
Employee for the calendar year within which the Closing Date
occurs.

 

4.5.2  At the
request of Buyer with respect to any particular applicable Tax law relating to
employment, unemployment insurance, social security, disability, workers’
compensation, payroll, health care or other similar Tax other than Taxes imposed
under FICA and FUTA, Sellers and Buyer will (i) treat Buyer as a successor
employer and Sellers as a predecessor employer, within the meaning of the
relevant provisions of such Tax law, with respect to Transferred Employees who
are employed by Buyer and (ii) cooperate with each other to avoid, to the
extent possible, the filing of more than one individual information reporting
form pursuant to each such Tax law with respect to each such Transferred
Employee for the calendar year within which the Closing Date
occurs.

 

ARTICLE
V  

 

 

CLOSING

 

5.1  Deliveries
by Sellers. At the
Closing, Sellers shall execute and deliver the following
instruments:

 

5.1.1  Certified
resolutions of Sellers approving this Agreement and the Ancillary Agreements and
all documents and instruments incident thereto;

 

5.1.2  Duly
executed certificates of Sellers as set forth in Sections 10.3 and 10.4
below;

 

5.1.3  A duly
executed bill of sale in a form reasonably acceptable to Buyer and Sellers (the
“Bill
of Sale”);

 

5.1.4  A duly
executed counterpart of assignment and assumption agreement in a form reasonably
acceptable to Buyer and Sellers (the “Assignment
and Assumption Agreement”),
together with all consents of third parties that are required to make each such
assignment effective as to such third parties;

 

5.1.5  A duly
executed counterpart of the Escrow Agreement;

 

5.1.6  Certificates
of title to all vehicles included in the Purchased Assets with assignments to
Buyer;

 

5.1.7  Appropriate
assignments and transfer documents for the Intellectual Property described on
Schedule 2.1.6;

 

5.1.8  A duly
executed counterpart of the Supply Letter Agreement; 

 

5.1.9  Duly
executed counterparts of the Real Property Leases;

 

5.1.10  Appropriate
lien releases for all liens and encumbrances on the Purchased Assets, duly
executed by Sellers’ lenders or other creditors; and

 

5.1.11  Such
additional instruments of conveyance and transfer as Buyer may reasonably
require in order to more effectively vest in it, and put it in possession of,
the Purchased Assets in accordance with the provisions of this
Agreement.

 

5.2  Deliveries
by Buyer. At the
Closing, Buyer shall deliver the following to Sellers:

 

5.2.1  The
Closing Date Cash Consideration, payable in the manner described in
Section 3.1;

 

5.2.2  A duly
executed counterpart of the Assignment and Assumption Agreement;

 

5.2.3  Duly
executed certificates of Buyer as set forth in Sections 11.3 and 11.4
below;

 

5.2.4  A duly
executed counterpart of the Escrow Agreement; 

 

5.2.5  A duly
executed counterpart of the Supply Letter Agreement; 

 

5.2.6  Duly
executed counterparts of the Real Estate Leases; and

 

5.2.7  Such
additional instruments of conveyance and transfer as Sellers may reasonably
require in order to more effectively vest in Buyer, and put Buyer in possession
of, the Purchased Assets.

 

5.3  Escrow
Fund Delivery. At the
Closing, Buyer shall deliver the Escrow Amount to the Escrow Agent.

 

5.4  Delivery
of Possession. Prior
to the Closing Date, Sellers shall take such actions as may be necessary or
appropriate so that on the Closing Date, Buyer shall be placed in actual
possession and control of all of the Purchased Assets.

 

ARTICLE
VI  

 

 

REPRESENTATIONS
AND WARRANTIES OF SELLERS AND THE SHAREHOLDERS

 

Sellers
jointly and severally make the following representations and warranties to
Buyer, except as otherwise set forth in written disclosure schedules (the
“Schedules”)
delivered to Buyer on or prior to the date hereof, a copy of which is attached
hereto:

 

6.1  Organization,
Good Standing and Power. Each
Seller is a legal entity validly existing under the laws of the jurisdiction of
its organization and has the requisite organizational power and authority to own
or lease and to operate all of its properties and assets and to carry on its
business as it is now being conducted and as presently proposed to be conducted.
Each Seller is duly qualified or licensed to do business and is in good standing
under the laws of each jurisdiction in which the conduct of its business or the
character or location of the properties and assets owned, leased or operated by
it requires such qualification, except where the failure to be so qualified
would not reasonably be expected to have a Material Adverse Effect. Each Seller
has the requisite power and authority to execute and deliver this Agreement and
the other documents and instruments to be executed and delivered by such Seller
pursuant hereto and to perform its obligations hereunder and
thereunder.

 

6.2  Authorization
of Agreement and Enforceability. The
execution and delivery by each Seller of this Agreement and the other documents
and instruments to be executed and delivered by such Seller pursuant hereto and
the performance of each Seller’s respective obligations hereunder and thereunder
have been duly authorized by all necessary corporate or other action on the part
of each Seller. This Agreement has been duly executed and delivered by each
Seller and constitutes, and when executed and delivered each of the other
documents and instruments to be executed and delivered by a Seller pursuant
hereto will constitute, a valid and binding agreement of such Seller enforceable
against such Seller in accordance with its terms.

 

6.3  No
Violation; Consents. The
execution, delivery and performance by each Seller of this Agreement and the
Ancillary Agreements, and the consummation of the Contemplated Transaction will
not (with or without the giving of notice or the lapse of time, or both)
(i) violate any provision of the certificate of incorporation, bylaws,
certificate of formation, operating agreement or other equivalent organizational
document of any Seller, (ii) violate or, except as required by the HSR Act
or applicable bulk sales laws, require any consent, authorization or approval
of, or exemption by, or filing under any provision of any law, statute, rule or
regulation to which any Seller, the Business or the Purchased Assets are
subject, (iii) violate any judgment, order, writ or decree of any court
applicable to any Seller, the Business or the Purchased Assets,
(iv) conflict with, result in a breach of, constitute a default under, or
accelerate or permit the acceleration of the performance required by, or require
any consent, authorization or approval under any contract, agreement or
instrument to which Seller is a party or any of the Purchased Assets is bound or
(v) result in the creation or imposition of any Encumbrance (other than a
Permitted Encumbrance) upon the Purchased Assets, which violation, conflict,
breach, default, acceleration or Encumbrance, or the failure to make or obtain
such filing, consent, authorization or approval, with respect to the matters
specified in clauses (ii) through (v) could, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect.

 

6.4  Financial
Statements. Sellers
have delivered to Buyer true and complete copies of (i) the combining
balance sheets of SBC and Milso LLC at December 31, 2002, 2003 and 2004 and
the related combining statements of operations and shareholders’ equity and
members’ capital for the years then ended, reviewed by Margolin, Miner &
Evans LLP, certified public accountants; and (ii) the unreviewed combining
balance sheets of SBC and Milso LLC at March 31, 2005 and the related combining
statements of operations and shareholders’ equity and members’ capital for the
interim periods then ended. True and correct copies of such financial statements
are attached hereto as Schedule 6.4. The
foregoing financial statements have been prepared in accordance with GAAP
consistently applied throughout the periods involved except as may be noted
therein. Such financial statements, including the related notes, fairly present
the financial position of the respective entities referred to therein at the
dates indicated and the results of operations and cash flows of those entities
for the periods indicated. References in this Agreement to the “Balance
Sheet” shall
mean the combining balance sheets at March 31, 2005 referred to above, and
references in this Agreement to the “Balance
Sheet Date” shall
be deemed to refer to March 31, 2005.

 

6.5  Accounts
Receivable. All
Accounts Receivable as set forth on the Balance Sheet (i) arose only in the
ordinary course of business consistent with past practice for goods sold and
delivered or services performed and (ii) are or will be valid and
collectible in full at the recorded amounts thereof (subject to no defenses,
setoffs or counterclaims) in the ordinary course of business (without resort to
litigation or assignment to a collection agency), net of any allowance for bad
debts reflected on the Balance Sheet.

 

6.6  Inventory. The
Inventory as set forth on the Balance Sheet was acquired and maintained in
accordance with the regular business practices of the Business and, on the
Balance Sheet Date, consisted of new and unused items of a quality and quantity
useable or saleable in the ordinary course of business consistent with past
practice. Raw materials reflected on the Balance Sheet were valued at purchase
costs, and work in progress and finished goods reflected on the Balance Sheet
were valued at the lower of cost or market value.

 

6.7  Absence
of Certain Changes or Events. Except
in respect of periods after the date of this Agreement for actions required or
expressly permitted under this Agreement, since the Balance Sheet Date, in its
conduct of the Business, Sellers have not:

 

6.7.1  amended
in any material respect or terminated any Assumed Contract other than in the
ordinary course of the Business consistent with past practice;

 

6.7.2  incurred
any damage or destruction by fire, storm, or similar casualty, whether or not
covered by insurance, except as would not reasonably be expected to result in a
Material Adverse Effect;

 

6.7.3  waived or
released any rights with respect to the Purchased Assets or the Business, except
as would not reasonably be expected to result in a Material Adverse
Effect;

 

6.7.4  transferred
or granted any rights to any Proprietary Rights, except as would not reasonably
be expected to result in a Material Adverse Effect;

 

6.7.5  entered
into any transaction or made any commitments (for capital expenditures or
otherwise) other than in the ordinary course of the Business consistent with
past practice;

 

6.7.6  changed
their methods of accounting in respect of the Business other than as required by
GAAP or Applicable Law;

 

6.7.7  increased
the compensation of Employees, except following normal review procedures or as
reasonably deemed necessary in the ordinary course of the Business consistent
with past practice; or

 

6.7.8  except
for changes required or expressly permitted pursuant to this Agreement or
associated with the announcement or implementation of the transactions provided
for in this Agreement and except as would not reasonably be expected to result
in a Material Adverse Effect, altered their customary course of dealing with
suppliers or customers of the Business.

 

6.8  Title
to Properties; Absence of Liens and Encumbrances. Sellers
have the power and right to sell, assign, transfer and deliver, as the case may
be, to Buyer the Purchased Assets and, at the Closing, Buyer will acquire all of
each Seller’s right, title and interest in, to and under all of the Purchased
Assets (or in the case of any leased or licensed Purchased Asset, each Seller’s
rights under such leases or licenses), in each case free and clear of any and
all Encumbrances other than Permitted Encumbrances.

 

6.9  Proprietary
Rights.

 

6.9.1  Schedule 2.1.6 sets
forth a correct and complete list of all patents, logos, trademarks, trade
names, service marks and applications or registrations therefor used in and
material to the Business, and Schedule 6.9 sets
forth a correct list of all other inventions, intellectual property and trade
secret assets used in and material to the Business (collectively, the
“Proprietary
Rights”).

 

6.9.2  Seller
owns or possesses adequate licenses or other valid right to use all the
Proprietary Rights. The Proprietary Rights included in the Purchased Assets
constitute all such rights necessary to conduct the Business in accordance with
past practice and are being conveyed to Buyer together with the other Purchased
Assets. To the Knowledge of the Sellers, the validity of the Proprietary Rights
and the rights therein of Sellers have not been questioned in any litigation to
which either Seller is a party, nor has any such litigation been threatened. To
the Knowledge of the Sellers, the conduct of the Business does not materially
conflict with patent rights, licenses, trademark rights, trade name rights,
copyrights or other intellectual property rights of others.

 

6.9.3  Seller
has no Knowledge of any material infringement of any Proprietary Rights owned or
licensed by Seller. No present or former director, officer, employee or
consultant of Seller or any Affiliate of Seller has any ownership interest in
any of the Proprietary Rights.

 

6.9.4  All
personnel, including employees, agents, consultants, and contractors, who have
contributed to or participated in the conception and development of the
Proprietary Rights on behalf of Sellers either (1) have been party to a
“work-for-hire” arrangement or agreement with the Seller, in accordance with
applicable federal and state law, that has accorded a Seller full, effective,
exclusive, and original ownership of all tangible and intangible property
thereby arising, or (2) have executed appropriate instruments of assignment
in favor of a Seller as assignee that have conveyed to Seller full, effective,
and exclusive ownership of all tangible and intangible property thereby
arising.

 

6.10  Contracts
and Commitments. Other
than Contracts that may be entered into following the date hereof without a
breach of this Agreement, no Seller is, with respect to the Purchased Assets or
the Business, a party to any written or oral:

 

6.10.1  agreement,
contract or commitment for the future purchase of, or payment for, supplies or
products, or for the performance of services by another party, involving in any
one case $75,000 or more;

 

6.10.2  agreement,
contract or commitment to sell or supply products or to perform services,
involving in any one case $75,000 or more;

 

6.10.3  agreement,
contract or commitment continuing over a period of more than six months from the
date hereof that exceeds $75,000 in value;

 

6.10.4  representative,
sales agency, dealer or distributor agreement, contract or
commitment;

 

6.10.5  note,
debenture, bond, conditional sale agreement, equipment trust agreement, letter
of credit agreement, loan agreement or other contract or commitment for the
borrowing or lending of money (including without limitation loans to or from
employees) or guarantee, pledge or undertaking of the indebtedness of any other
Person;

 

6.10.6  agreement,
contract or commitment for any charitable or political
contribution;

 

6.10.7  agreement,
contract or commitment limiting or restraining Seller or any successor or assign
from engaging or competing in any lines of business with any
Person;

 

6.10.8  license,
franchise, distributorship or other agreement, including those that relate in
whole or in part to any patent, trademark, trade name, service mark or copyright
or to any ideas, technical assistance or other know-how of or used by the
Business; or

 

6.10.9  any other
material agreement, contract or commitment not made in the ordinary course of
business.

 

Except
for those that have terminated in accordance with their terms or have been
terminated without a breach of this Agreement, each of the agreements,
contracts, commitments, leases and other instruments, documents and undertakings
listed on Schedule 2.1.2A is in
full force and effect and constitute valid and binding agreements of the Sellers
party thereto, enforceable in accordance with their respective terms against
such Seller, and to the Knowledge of Sellers, the other parties thereto. No
consent or approval of any party to any agreement, contract, commitment, lease
or other instrument, document or undertaking listed on Schedule 2.1.2A is
required for the execution of this Agreement or the consummation of the
Contemplated Transaction. No Seller or, to the Knowledge of Sellers, any other
party to any agreement, contract, commitment lease or other instrument, document
or undertaking listed on Schedule
2.1.2A is in
violation or breach of, or in default under, nor has there occurred any other
event or condition that with the passage of time or giving of notice (or both)
would constitute a default under, or permit the termination of, any of the same,
except in any case referred to in this sentence as would not reasonably be
expected to have a Material Adverse Effect.

 

6.11  Permits,
Licenses. Seller
has all material permits, licenses, registrations, orders and approvals of
federal, state or local government or regulatory bodies that are required to
operate the Business (including without limitation those required under any
Environmental Law) (collectively, the “Permits”) and
Seller is in compliance with the material terms and conditions of the Permits,
except as would not reasonably be expected to have a Material Adverse Effect.
Schedule 2.1.4 hereto
sets forth a correct and complete list of all material Permits, each one of
which is in full force and effect. To Sellers’ Knowledge, no suspension or
cancellation of any of the Permits has been threatened and no cause exists for
such suspension or cancellation. Any Permits that cannot be transferred are
identified as such on Schedule 2.1.4
hereto.

 

6.12  Compliance
with Laws. Seller
has at all times conducted, and is presently conducting, the Business so as to
comply with all laws, ordinances and regulations applicable to the conduct or
operation of the Business or the ownership or use of the Purchased Assets, in
each case except where the failure to comply would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. This
Section 6.12 does not apply to environmental matters, employee benefits and
ERISA-related matters, labor law matters or tax matters, which are covered
exclusively by, respectively, Sections 6.23, 6.18, 6.17 and
6.33.

 

6.13  Legal
Proceedings. There
is no claim, action, suit, proceeding, investigation or inquiry pending before
any federal, state or other court or governmental or administrative agency or to
the Knowledge of Sellers threatened against the Business or any of the Purchased
Assets, or relating to the Contemplated Transaction that would reasonably be
expected to have a Material Adverse Effect. No Seller is a party to or subject
to the provisions of any judgment, order, writ, injunction, decree or award of
any court, arbitrator or governmental, regulatory or administrative official,
body or authority that relates to the Purchased Assets or the Business or that
might affect the Contemplated Transaction and that reasonably would be expected
to have a Material Adverse Effect.

 

6.14  Absence
of Undisclosed Liabilities. Sellers
have no liabilities or obligations (as defined in Section 4.1) relating to
the Business and that will be Assumed Liabilities except (i) those
liabilities and obligations set forth on the Balance Sheet and not subsequently
paid or discharged; (ii) those liabilities and obligations arising in the
ordinary course of business consistent with past practice under any agreement,
contract or commitment specifically disclosed on Schedule 2.1.2A hereto;
and (iii) those liabilities and obligations incurred in the ordinary course
of business consistent with past practice since the Balance Sheet
Date.

 

6.15  Books
and Records. All
material books of account and other financial records of Sellers relating to the
Business (the “Books
and Records”) are
complete and correct in all material respects and have been made available to
Buyer.

 

6.16  Employees.
Schedule 6.16 sets
forth a true and correct list of all individuals employed by Sellers in the
conduct of the Business and their present position, rate of compensation and
incentive pay, date of hire and current employment status.

 

6.17  Labor
Matters, etc. No
Seller is a party to or bound by any collective bargaining agreement and there
are no labor unions or other organizations representing, purporting to represent
or attempting to represent any employees employed by a Seller. Since
December 31, 2004 there has not occurred or, to the Knowledge of Sellers,
been threatened any material strike, slowdown, picketing, work stoppage,
concerted refusal to work overtime or other similar labor activity with respect
to any employees employed by a Seller. There are no material labor disputes
currently subject to any grievance procedure, arbitration or litigation and
there is no trade union representation petition pending with respect to the
Transferred Employees. Seller has complied with all provisions of Applicable Law
pertaining to the employment of the Transferred Employees, including, without
limitation, all such laws relating to labor relations, equal employment, fair
employment practices, entitlements, prohibited discrimination or other similar
employment practices or acts, except for any failure so to comply that,
individually or together with all such other failures, has not and will not
result in a material liability or obligation on the part of Buyer, and has not
had or resulted in, and will not have or result in, a Material Adverse
Effect.

 

6.18  Employee
Benefit Plans and Related Matters.

 

6.18.1  Employee
Benefit Plans.
Schedule 6.18 sets
forth a true and complete list of each “employee benefit plan” as such term is
defined in section 3(3) of the ERISA, whether or not subject to ERISA, and
each bonus, incentive or deferred compensation, severance, termination,
retention, change of control, stock option, stock appreciation, stock purchase,
phantom stock or other equity-based, performance or other employee or retiree
benefit or compensation plan, program, arrangement, agreement, policy or
understanding, whether written or unwritten, that provides or may provide
benefits or compensation in respect of any employee or former employee employed
or formerly employed by Seller or the beneficiaries or dependents of any such
employee or former employee (such employees, former employees, beneficiaries and
dependents collectively, the “Employees”) or
under which any Employee is or may become eligible to participate or derive a
benefit and that is or has been maintained or established by Seller or any other
trade or business, whether or not incorporated, which, together with Seller is
or would have been at any date of determination occurring within the preceding
six years treated as a single employer under Section 414 of the Code (such
other trades and business collectively, the “Related
Persons”), or to
which Seller or any Related Person contributes or is or has been obligated or
required to contribute or with respect to which Seller may have any liability or
obligation (collectively, the “Plans”). With
respect to each such Plan, Seller has provided Buyer complete and correct copies
of: all written Plans; descriptions of all unwritten Plans; the most recent
Forms 5500 and all schedules thereto; the most recent IRS determination
letter; current summary plan descriptions; statements or other communications
regarding withdrawal or other multiemployer plan liabilities, if any; and all
amendments and modifications to any such document.

 

6.18.2  Qualification. Each
Plan intended to be qualified under section 401(a) of the Code, and the
trust (if any) forming a part thereof, has received a favorable determination
letter from the IRS as to its qualification under the Code and to the effect
that each such trust is exempt from taxation under section 501(a) of the
Code, and nothing to the Knowledge of Sellers has occurred since the date of
such determination letter that could adversely affect such qualification or
tax-exempt status.

 

6.18.3  Compliance;
Liability.

 

(i)  No
liability has been or is expected to be incurred by Seller or any Related Person
(either directly or indirectly, including as a result of an indemnification
obligation) under or pursuant to Title I or IV of ERISA or the penalty,
excise tax or joint and several liability provisions of the Code relating to
employee benefit plans that could, following the Closing, become a liability of
Buyer or of any employee benefit plan established or contributed to by Buyer
and, to the best knowledge of Seller after due inquiry, no event, transaction or
condition has occurred or exists that could result in any such liability to
Seller or, following the Closing, Buyer.

 

(ii)  To the
Knowledge of Sellers, each of the Plans has been operated and administered in
all respects in compliance with all Applicable Laws, except for any failure so
to comply that, individually or together with all other such failures, has not
and will not result in a material liability or obligation on the part of Seller,
or, following the Closing, Buyer, and has not had or resulted in, and will not
have or result in, a Material Adverse Effect.

 

(iii)  No Plan
is a “multiemployer plan” within the meaning of Section 4001(a)(3) of ERISA
or is a “multiple employer plan” within the meaning of section 4063 or 4064
of ERISA.

 

(iv)  No
Transferred Employee is or may become entitled to post-employment benefits of
any kind by reason of employment by Seller, including, without limitation, death
or medical benefits (whether or not insured), other than (a) coverage
provided pursuant to the terms of any Plan specifically identified as providing
such coverage in Schedule 6.18 or
mandated by section 4980B of the Code, (b) retirement benefits payable
under any Plan qualified under section 401(a) of the Code or
(c) deferred compensation accrued as a liability on the Balance Sheets or
incurred after December 31, 2003 in the ordinary course of business
consistent with the prior practice of Seller, pursuant to the terms of a
Plan.

 

6.19  No
Finder. With
the exception of fees payable to UBS Investment Bank which will be paid by
Sellers, no Seller has taken any action that would give to any Person a right to
a finder’s fee or any type of brokerage commission in relation to, or in
connection with, the transactions contemplated by this Agreement.

 

6.20  Interest
in Business. Seller
has not granted, and there is not outstanding, any option, right, agreement or
other obligation pursuant to which any Person could claim a right to acquire in
any way all or any part of, or interest in, the Business or the Purchased
Assets.

 

6.21  Condition
of Assets. All
tangible assets and properties which are part of the Purchased Assets are in
good operating condition and repair and are usable in the ordinary course of the
Business consistent with past practice and conform in all material respects to
all applicable laws and regulations relating to their construction, use and
operation.

 

6.22  Affiliate
Transactions; Loans.
Schedule 6.22 hereto
sets forth a summary of all purchases of goods or services by Affiliates of
Seller for the three years ended December 31, 2004, 2003 and 2002. Except
as set forth in Schedule 6.22 hereto,
Seller and its Affiliates provide no services or products to the Business. All
amounts due and owing to the Sellers from Shareholders or Affiliates have been
or will be satisfied or released prior to Closing.

 

6.23  Environmental
Matters.

 

6.23.1  Permits. All
Environmental Permits are identified in Schedule 6.23.1, and
Sellers currently hold such Environmental Permits as are necessary to conduct
the Business. No Seller has been notified by any relevant Governmental Authority
that any material Environmental Permit will be modified, suspended, cancelled or
revoked, or cannot be renewed in the ordinary course of business without any
material change in any of the terms or conditions.

 

6.23.2  No
Violations; Releases. Sellers
have complied and are in compliance in all material respects with all
Environmental Permits and all applicable Environmental Laws. To the Knowledge of
Sellers, during the last five years there has not been a Release to the
Environment of any Hazardous Substance at, upon, in, from or under (i) any
of the real property subject to the Assumed Real Property Leases or the Real
Property Leases or (ii) at any location to or from which a Seller has
transported or arranged for the transportation of Hazardous
Substances.

 

6.23.3  Other.

 

(i)  To
Sellers’ Knowledge, none of the current or past operations, or any by-product
thereof, and none of the currently or formerly owned property or assets of
Seller, including without limitation the Assets and the Real Property, is
related to or subject to any investigation or evaluation by any Governmental
Authority, as to whether any Remedial Action is needed to respond to a Release
or threatened Release of any Hazardous Substances.

 

(ii)  No Seller
is subject to any outstanding order, judgment, injunction, decree or writ from,
or contractual or other obligation to or with, any Governmental Authority or
other Person in respect of which Buyer will be required by reason of the
completion of the Contemplated Transaction to incur any Environmental
Liabilities and Costs arising from the Release or threatened Release of a
Hazardous Substance.

 

(iii)  No Seller
has transported or arranged for transportation (directly or indirectly) of any
Hazardous Substances relating to the Purchased Assets or the Real Property to
any location that is, listed or proposed for listing under CERCLA, or on any
similar state list, or the subject of federal, state or local enforcement
actions or investigations or Remedial Action.

 

(iv)  No work,
repair, construction or capital expenditure is required or planned in respect of
the Real Property pursuant to or to comply with any Environmental Law, nor has
either Seller received any notice from any Governmental Authority of any such
requirement, except for such work, repair, construction or capital expenditure
as is not material to the ordinary course of business.

 

(v)  There are
no Hazardous Substances or underground storage tanks in, on, or under any real
property owned or leased by the Sellers as of the date hereof, except those that
are in compliance with all applicable Environmental Laws and Environmental
Permits.

 

(vi)  To the
Knowledge of the Sellers, there has been no Release of Hazardous Substances for
which Sellers could have any liability under any applicable Environmental Law at
any of the Real Property.

 

6.23.4  Full
Disclosure. Sellers
have disclosed and made available to Buyer all studies, analyses and test
results in the possession, custody or control of Sellers relating to
(i) the environmental conditions on, under or about the Real Property, and
(ii) Hazardous Substances used, managed, handled, transported, treated,
generated, stored or Released by Seller or any other Person at any time on any
Real Property.

 

6.24  Sufficiency
of Assets. Except
for the Excluded Assets, the Purchased Assets constitute all assets that are
owned, leased or licensed by Sellers and primarily used or held for use in the
Business as currently conducted.

 

6.25  Territorial
Restrictions. No
Seller is restricted by any written agreement or understanding with any other
Person from carrying on its business anywhere in the world. Buyer, solely as a
result of its purchase of the Purchased Assets from Seller pursuant hereto and
the assumption of the Assumed Liabilities, will not thereby become restricted in
carrying on any business anywhere in the world.

 

6.26  Leased
Property.
Schedule 6.26 contains
a complete and correct list of (i)(A) all real property owned by Sellers or
Shareholders or any of their Affiliates which is leased to the Business or is
used or useful to the Business and (B) each other lease for real property
which is leased in connection with the Business, and in the case of each of (A)
and (B) above setting forth the address, landlord, tenant and rental rate for
each such lease and (ii) each of the Other Leases, setting forth the
address, landlord, tenant and rental rate for each Other Lease. All written and
oral leases described in subsections (i)(A) and (B) above are referred to
herein as “Leases” and the
property with respect thereto is referred to herein as “Leased
Property.”
Sellers have made available to Buyer true and complete copies of all of the
Leases and Other Leases. Sellers enjoy peaceful and undisturbed possession under
their respective Leases for the Leased Property. There are no eminent domain or
other similar proceedings pending or, to the Knowledge of Sellers, threatened
affecting any portion of the Brooklyn Properties or the Richmond, Indiana
manufacturing facility. To the Knowledge of Sellers, there are no eminent domain
or other similar proceedings pending or threatened affecting any material
portion of the Leased Property.

 

6.27  Suppliers;
Raw Materials.
Schedule 6.27 sets
forth (a) the names and addresses of all suppliers (including without
limitation Sellers and any Affiliates thereof) from which Sellers ordered raw
materials, supplies, merchandise and other goods and services with an aggregate
purchase price for each such supplier of $500,000 or more during the
twelve-month period ended December 31, 2004 and (b) the amount for
which each such supplier invoiced Seller during such period. Sellers have not
received any notice nor do they have any reason to believe that there has been
any material adverse change in the price of such raw materials, supplies,
merchandise or other goods or services, or that any such supplier will not sell
raw materials, supplies, merchandise and other goods to Buyer at any time after
the Closing Date on terms and conditions similar to those used in its current
sales to Sellers, subject to general and customary price increases. To Knowledge
of Sellers, no supplier of Sellers described in clause (a) of the first
sentence of this Section has otherwise threatened to take any action described
in the preceding sentence as a result of the consummation of the Contemplated
Transaction. Each contract, agreement or arrangement with a supplier with an
aggregate purchase requirement of $500,000 or more during a twelve-month period
is terminable, without penalty or cancellation charge, on no more than
sixty (60) days notice.

 

6.28  Customers.
Schedule 6.28 sets
forth (a) the names and addresses of all customers of Sellers that ordered
goods and services from Sellers with an aggregate value for each such customer
of $100,000 or more during the twelve-month period ended December 31, 2004
and (b) the amount for which each such customer was invoiced during such
period. Sellers have not received any notice nor do they have any reason to
believe that any significant customer of Sellers (i) has ceased, or will
cease, to use the products, goods or services of Sellers, (ii) has
substantially reduced or will substantially reduce, the use of products, goods
or services of Sellers or (iii) has sought, or is seeking, to reduce the
price it will pay for products, goods or services of Sellers, including in each
case after the consummation of the transactions contemplated hereby. To the
Knowledge of Sellers, no customer described in clause (a) of the first
sentence of this Section has otherwise threatened to take any action described
in the preceding sentence as a result of the consummation of the Contemplated
Transaction. 

 

6.29  Product
Warranties. Except
as set forth in Schedule 6.29 and for
warranties under applicable law, (a) there are no warranties express or
implied, written or oral, with respect to the Products presently sold in the
Business and (b) there are no pending or threatened claims with respect to
any such warranty, and Seller has no liability with respect to any such
warranty, whether known or unknown, absolute, accrued, contingent or otherwise
and whether due or to become due.

 

6.30  Absence
of Certain Business Practices. No
Seller, any officer, employee or agent of Sellers, nor any other person acting
on their behalf, has, directly or indirectly, within the past five years given
or agreed to give any gift or similar benefit to any customer, supplier,
governmental employee or other person who is or may be in a position to help or
hinder Sellers (i) which subjected or might have subjected Sellers to any
damage or penalty in any civil, criminal or governmental litigation or
proceeding, (ii) which if not given in the past, might have had a Material
Adverse Effect, (iii) which if not continued in the future, might have a
Material Adverse Effect or subject Sellers to suit or penalty in any private or
governmental litigation or proceeding, (iv) for any of the purposes
described in Section 162(c) of the Code or (y) for the purpose of
establishing or maintaining any concealed fund or concealed bank
account.

 

6.31  Taxes.

 

6.31.1  Sellers
have (or by the Closing will have) duly and timely filed all Tax Returns with
respect to Taxes described in the next sentence required to be filed on or
before the Closing Date (“Tax
Returns”).
Sellers have (or by the Closing Date will have) paid all material Taxes that, if
unpaid, would become payable by Buyer or chargeable as a lien upon the Purchased
Assets (such material Taxes, “Applicable
Taxes”). All
material Taxes required to be withheld by or on behalf of Seller in connection
with amounts paid or owing to any employee, independent contractor, creditor or
other party (such material taxes, “Withholding
Taxes”) have
been withheld, and such withheld taxes have either been duly and timely paid to
the proper Governmental Authorities or set aside in accounts for such
purpose.

 

6.31.2  There are
no Applicable Taxes or Withholding Taxes asserted in writing, or to the
Knowledge of Sellers threatened to be asserted, by any Governmental Authority to
be due. No issue has been raised in writing by any Governmental Authority in the
course of any audit with respect to Applicable Taxes or Withholding Taxes that
have not been paid. No Applicable Taxes or Withholding Taxes are currently under
audit by any Governmental Authority. 

 

6.31.3  Buyer
will not be required to deduct and withhold any amount pursuant to
Section 1445(a) of the Code upon the transfer of the Purchased Assets to
Buyer.

 

6.31.4  There is
no litigation or administrative appeal pending or, to the Knowledge of Seller,
threatened against or relating to Seller in connection with any Applicable
Taxes.

 

6.32  Thomas
Pontone. Buyer
has received a true and correct copy of all release and settlement documents
related to the equity or other interests held by or for the benefit of Thomas
Pontone in any of the Sellers (the “TP
Settlement Documents”).

 

ARTICLE
VII  

 

 

REPRESENTATIONS
AND WARRANTIES OF BUYER

 

To induce
Sellers to enter into this Agreement, Buyer hereby makes, as of the date hereof
and as of the Closing Date, the following representations and warranties to
Sellers:

 

7.1  Organization,
Good Standing, Power. Buyer
is a Delaware corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation and has all requisite
corporate power and authority to own and lease all of its properties and assets
and to carry on its business as it is now being conducted and as presently
proposed to be conducted and to execute and deliver this Agreement and the
Ancillary Agreements to which Buyer is a party, to consummate the Contemplated
Transaction and to perform all the terms and conditions hereof and thereof to be
performed by it.

 

7.2  Authorization
of Agreement and Enforceability. Buyer
has taken all necessary corporate action to authorize the execution and delivery
of this Agreement and the Ancillary Agreements to which Buyer is a party, the
performance by it of all terms and conditions hereof and thereof to be performed
by it and the consummation of the Contemplated Transaction. This Agreement
constitutes, and the Ancillary Agreements, upon Buyer’s execution and delivery
thereof, will constitute, the legal, valid and binding obligations of Buyer,
enforceable in accordance with their terms.

 

7.3  No
Violations; Consents. The
execution, delivery and performance by Buyer of this Agreement and the Ancillary
Agreements to which Buyer is a party and the consummation of the Contemplated
Transaction and the transactions contemplated thereby will not (with or without
the giving of notice or the lapse of time, or both) (i) violate any
provision of the charter or bylaws of Buyer, (ii) violate, or, except as
required by the HSR Act or applicable bulk sales law, require any consent,
authorization or approval of, or exemption by, or filing under any provision of
any law, statute, rule or regulation to which Buyer is subject,
(iii) violate any judgment, order, writ or decree of any court applicable
to Buyer, (iv) conflict with, result in a breach of, constitute a default
under, or accelerate or permit the acceleration of the performance required by,
or require any consent, authorization or approval under any contract, agreement
or instrument to which Buyer is a party or any of its assets is bound or
(v) result in the creation or imposition of any Encumbrance upon its
assets, which violation, conflict, breach, default, acceleration or Encumbrance,
or the failure to make or obtain such filing, consent, authorization or
approval, with respect to the matters specified in clauses (ii) through
(v) could, individually or in the aggregate, reasonably be expected to have
a material adverse effect on Buyer or prevent or delay the consummation of the
Contemplated Transaction.

 

7.4  Legal
Proceedings. There
is no claim, action, suit, proceeding, investigation or inquiry pending before
any Governmental Authority or administrative agency or threatened against Buyer
or any of Buyer’s properties, assets, operations or businesses that might
prevent or delay the consummation of the Contemplated Transaction.

 

7.5  Availability
of Funds. Buyer
currently has sufficient immediately available funds and will have at the
Closing sufficient immediately available funds to pay the Base Cash
Consideration. Buyer will have sufficient immediately available funds to pay the
Contingent Consideration Payments at the time such payments may be required to
be made.

 

7.6  No
Finder. Buyer
has not taken any action which would give to any Person a right to a finder’s
fee or any type of brokerage commission in relation to, or in connection with,
the Contemplated Transaction.

 

ARTICLE
VIII  

 

 

COVENANTS
OF SELLERS PRIOR TO CLOSING DATE

 

8.1  Required
Actions. Between
the date of this Agreement and the Closing Date, Sellers and Shareholders
covenant that they will, in their conduct of the Business, except as otherwise
agreed by Buyer in writing:

 

8.1.1  Access
to Information. Subject
to Applicable Laws, give to Buyer and its counsel, accountants, consultants and
other representatives, at their sole expense and risk, reasonable access, during
normal business hours, to such of the properties, books, accounts, contracts and
records of Sellers as are relevant to the Purchased Assets and the Business, and
furnish or otherwise make available to Buyer all such information concerning the
Purchased Assets and the Business as Buyer may reasonably request, provided,
however, that
Buyer’s inspection of Sellers’ properties shall not include any environmental
sampling of any kind without Sellers’ prior written consent, and provided
further that the
confidentiality of any data or information so acquired shall be maintained as
confidential by Buyer and its representatives in accordance with
Section 9.1.1 and the Confidentiality Agreement.

 

8.1.2  Conduct
of Business. Except
as set forth on Schedule 8.1.2, or as
otherwise contemplated by this Agreement, operate the Business only in the
usual, regular and ordinary manner as such Business was conducted prior to the
date hereof and, to the extent consistent with such operation, use its
commercially reasonable efforts until the Closing Date to (i) preserve and
keep intact the Business, (ii) keep available the services of the Key
Employees, (iii) preserve its relationships with customers, suppliers and
others having material business dealings with a Seller in connection with the
Business and (iv) not accelerate the payment of accounts receivable or
liquidate inventory other than in the normal and ordinary course of
business.

 

8.1.3  Maintenance
of Properties.
Maintain the Purchased Assets, whether owned or leased, in good repair, order
and condition, in accordance with manufacturers’ instructions and Sellers’ past
practices, reasonable wear and tear excepted, other than as would not reasonably
be expected to have a Material Adverse Effect.

 

8.1.4  Maintenance
of Books and Records.
Maintain the Books and Records in the usual, regular and ordinary manner, on a
basis consistent with past practice.

 

8.1.5  Compliance
with Applicable Law. Comply
in all material respects with all Applicable Laws to which the Purchased Assets
or the Business are subject, other than as would not reasonably be expected to
have a Material Adverse Effect.

 

8.1.6  Approvals;
Consents. Subject
to the terms and conditions provided in this Agreement, as promptly as
practicable, (i) make all filings and submissions under the HSR Act,
(ii) use commercially reasonable efforts to cooperate with Buyer in
(x) determining which filings are required to be made prior to the Closing
Date with, and which material consents, approvals, permits or authorizations are
required to be obtained prior to the Closing Date from, any Governmental
Authority in connection with the execution and delivery of this Agreement and
the consummation of the Contemplated Transaction and (y) timely making all
such filings and timely seeking all such material consents, approvals, permits
or authorizations, and (iii) use commercially reasonable efforts to take,
or cause to be taken, all other action and do, or cause to be done, all other
things reasonably necessary or appropriate with respect to any Governmental
Authority to consummate the Contemplated Transaction as soon as practicable. In
connection with the foregoing, to the extent permitted by Applicable Law,
Sellers will promptly provide to Buyer, copies of all correspondence, filings or
communications (or memoranda setting forth the substance thereof) between such
party or any of its representatives, on the one hand, and any Governmental
Authority or members of its staff, on the other hand, with respect to all
filings and submissions required under this Agreement. Upon the terms and
subject to the conditions of this Agreement, Sellers shall use their
commercially reasonable efforts to take, or cause to be taken, all action, and
to do, or cause to be done, all things necessary, proper or advisable consistent
with Applicable Law to cause the conditions precedent to the Closing to be
satisfied and to cause the Closing to occur on or prior to the Termination Date
and to otherwise consummate the Contemplated Transaction in accordance with the
terms of this Agreement.

 

8.1.7  Leased
Property Consents. Use
commercially reasonable efforts to secure all necessary consents from Sellers’
landlords for the assignment of all Leased Property to Buyer (each, a
“Lease
Consent”);
provided, that
Seller shall not be required to incur any material expense or make any material
concessions in connection therewith.

 

8.1.8  Notice
of Material Damage. Give to
Buyer prompt written notice of any damage by fire or other casualty upon the
Purchased Assets or the Business that would reasonably be expected to have a
Material Adverse Effect.

 

8.1.9  Advise
of Changes. Give
prompt notice to Buyer of (i) the occurrence, or failure to occur, of any
event which occurrence or failure would be likely to cause any representation or
warranty of Sellers contained in this Agreement to be untrue or inaccurate in
any material respect and (ii) any material failure of Sellers to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder; provided,
however, that
such disclosure shall not be deemed to cure any breach of a representation,
warranty, covenant or agreement or to satisfy any condition. Sellers shall
promptly notify Buyer of any development that occurs before the Closing that
would reasonably be expected to have a Material Adverse Effect.

 

8.1.10  Termination;
WARN Act.
Terminate the employment of all Transferred Employees as of the Closing Date.
With respect to such termination of the Transferred Employees, comply, at its
sole cost and expense, with the provisions of the Worker Adjustment and
Retraining Notification Act, 29 U.S.C. Sections 2101 et seq., to the
extent applicable to such terminations (but not to any subsequent
terminations).

 

8.1.11  Transaction
Fees. All
Shareholders and Sellers costs and expenses related to the transaction proposed
hereby (including all costs, expenses and fees of UBS Investment, counsel and
accountants to the Sellers and the Shareholders) that have not either been paid
or accrued as a liability in the Seller financial statements dated
March 31, 2005, shall be paid or payable from the Base Cash Consideration
and not by the Business.

 

8.1.12  Union
Matters. The
Sellers shall keep the Buyer informed concerning any current labor negotiations.
This shall include disclosure of the current bid and ask amounts with respect to
such union negotiations. The Sellers shall not enter into any new or amended
collective bargaining agreement with regard to the Business without the written
consent of the Buyer.

 

8.2  Prohibited
Actions. Except
as set forth on Schedule 8.2 or as
otherwise contemplated by this Agreement, between the date of this Agreement and
the Closing Date, in their conduct of the Business, Sellers and Shareholders
shall not, except as otherwise agreed by Buyer in writing:

 

8.2.1  Sale
of Purchased Assets. Sell,
transfer, assign, lease, encumber or otherwise dispose of any of the Purchased
Assets other than in the ordinary course of the Business consistent with past
practices;

 

8.2.2  Business
Changes. Change
in any material respect the character of the Business;

 

8.2.3  Incurrence
of Material Obligations. Incur
any material fixed or contingent obligation or enter into any material
agreement, commitment or other transaction or arrangement that is not in the
ordinary course of the Business consistent with past practices;

 

8.2.4  Incurrence
of Liens. Subject
to lien, security interest or any other Encumbrance, other than Permitted
Encumbrances or Encumbrances that will be released at or prior to the Closing,
any of the Purchased Assets;

 

8.2.5  Change
in Employee Compensation and Benefits.
Increase the rate of compensation paid, or pay any bonus, to anyone connected
with the Business, except for those increases or bonuses planned, in the
ordinary course of business consistent with past practices, or amend, modify,
establish or adopt any collective bargaining agreement, pension or
profit-sharing plan, deferred compensation agreement or employee benefit
arrangement of any kind whatsoever covering or affecting Sellers’ Employees or
workforce;

 

8.2.6  Publicity;
Advertisement. Except
as required by law, publicize, advertise or announce to any third party, except
as required pursuant to this Agreement to obtain the consent of such third
party, the entering into of this Agreement, the terms of this Agreement or the
Contemplated Transaction;

 

8.2.7  No
Release. Except
in the ordinary course of the Business consistent with past practice, cancel,
release or relinquish any material debts of or claims against others held by
Sellers with respect to the Business or waive any material rights relating to
the Business; 

 

8.2.8  No
Termination or Modification.
Terminate or materially modify any Assumed Contract or other agreement affecting
the Business or the Purchased Assets or the operation thereof except in the
ordinary course of business; or

 

8.2.9  Confidentiality. Not
publish or disclose and not authorize or permit any of their respective
officers, employees, directors, agents or representatives or any third party to
publish or disclose any trade secrets, data, business or financial books,
records or other information of or pertaining to Buyer, which have been
furnished to Sellers or Shareholders by Buyer or to which Sellers or
Shareholders, or any of their officers, employees, directors, agents, attorneys
or accountants, or any financial institution have had access during any
investigation made in connection with this Agreement and which is not otherwise
available to Sellers or Shareholders, except as required by law.

 

8.3  No
Merger, Etc. Sellers
shall not directly or indirectly, (a) solicit any inquiries or proposals or
enter into or continue any discussions, negotiations or agreements relating to
(i) the sale or exchange of Sellers’ capital stock, (ii) the merger of
any Seller with, or the direct or indirect disposition of a significant amount
of the Purchased Assets or the Business to, any Person other than Buyer or
(iii) the licensing of Sellers’ Proprietary Rights to any Person other than
in the ordinary course of business consistent with past practice or
(b) provide any assistance or any information to or otherwise cooperate
with any Person in connection with any such inquiry, proposal or transaction.
Sellers hereby represent that neither Sellers nor any of their Affiliates is now
engaged in discussions or negotiations with any party other than Buyer with
respect to any transaction of the kind described in clauses (a)(i) through
(a)(iii) of the preceding sentence (a “Proposed
Acquisition Transaction”).
Sellers agree not to, and to cause each of its Affiliates not to, release any
third party from, or waive any provision of, any confidentiality or standstill
agreement to which any of them is a party. Sellers shall immediately notify
Buyer (orally and in writing) if any offer is made, any discussions or
negotiations are sought to be initiated, any inquiry, proposal or contact is
made or any information is requested with respect to any Proposed Acquisition
Transaction.

 

8.4  TP
Settlement Documents. None of
the Sellers or the Shareholders shall amend, modify or terminate the TP
Settlement Documents, before the Closing, without the prior written consent of
Buyer, which consent shall not be unreasonably withheld.

 

ARTICLE
IX  

 

 

COVENANTS
OF BUYER PRIOR TO CLOSING DATE

 

9.1  Required
Actions. Between
the date of this Agreement and the Closing Date, Buyer shall, except as
otherwise agreed by SBC in writing:

 

9.1.1  Confidentiality. Not
publish or disclose and not authorize or permit any of its officers, employees,
directors, agents or representatives or any third party to publish or disclose
any trade secrets or other Confidential Information or any data or business or
financial books, records or other information of or pertaining to Sellers, which
have been furnished to Buyer by Sellers or to which Buyer, or any of its
officers, employees, directors, agents, attorneys or accountants, or any
financial institution have had access during any investigation made in
connection with this Agreement and which is not otherwise available to Buyer,
except as required by law;

 

9.1.2  Advise
of Changes. Advise
Sellers promptly in writing of any fact that, if known at the Closing Date,
would have been required to be set forth or disclosed in or pursuant to this
Agreement, or which would result in the breach in any material respect by Buyer
of any of its representations, warranties, covenants or agreements hereunder;
and

 

9.1.3  Compliance
with Agreement. Not
undertake any course of action inconsistent with satisfaction of the conditions
applicable to it set forth in this Agreement, and do all such acts and take all
such measures as may be reasonably necessary to comply with the representations,
agreements, conditions and other provisions of this Agreement.

 

9.1.4  Publicity;
Advertisement. Except
as required by law, or as provided by this Agreement, not publicize, advertise
or announce to any third party the entering into of this Agreement, the terms of
this Agreement or the transactions contemplated hereby.

 

9.2  Investigation. Prior
to the Closing, Buyer shall use reasonable efforts to conduct its investigation
of the Business in such a manner as to prevent disruption of relations with the
employees, customers and suppliers of Sellers.

 

9.3  Approvals,
Consents. Subject
to the terms and conditions provided in this Agreement, as promptly as
practicable, Buyer shall (i) make all filings and submissions under the HSR
Act, (ii)  use commercially reasonable efforts to cooperate with each
other in (x) determining which filings are required to be made prior to the
Closing Date with, and which material consents, approvals, permits or
authorizations are required to be obtained prior to the Closing Date from, any
Governmental Authority in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby and
(y) timely making all such filings and timely seeking all such material
consents, approvals, permits or authorizations, and (iii) use commercially
reasonable efforts to take, or cause to be taken, all other action and do, or
cause to be done, all other things reasonably necessary or appropriate with
respect to any Governmental Authority to consummate the Contemplated Transaction
as soon as practicable. In connection with the foregoing, Buyer will promptly
provide to Sellers, copies of all correspondence, filings or communications (or
memoranda setting forth the substance thereof) between such party or any of its
representatives, on the one hand, and any Governmental Authority or members of
its staff, on the other hand, with respect to all filings and submissions
required under this Agreement. Upon the terms and subject to the conditions of
this Agreement, Buyer shall use its commercially reasonable efforts to take, or
cause to be taken, all action, and to do, or cause to be done, all things
necessary, proper or advisable consistent with Applicable Law to cause the
conditions precedent to the Closing to be satisfied and to cause the Closing to
occur on or prior to the Termination Date and to otherwise consummate the
Contemplated Transaction in accordance with the terms of this
Agreement.

 

9.4  Access
to Information. From
and after the Closing Date, Buyer shall give Sellers and Sellers’
representatives and agents reasonable access during normal business hours to the
books and records pertaining to the Excluded Assets and Excluded Liabilities
and, to the extent that Sellers retain any liabilities or obligations with
respect to such items, the Purchased Assets or Assumed Liabilities. Buyer shall,
and shall cause each of it Affiliates to, cooperate with Sellers as may
reasonably be requested by Sellers for such purposes.

 

ARTICLE
X  

 

 

CONDITIONS
PRECEDENT TO OBLIGATIONS OF BUYER

 

The
obligations of Buyer hereunder are subject to the fulfillment at or prior to the
Closing of each of the following conditions:

 

10.1  Accuracy
of Representations and Warranties. Other
than as would not have a Material Adverse Effect, the representations and
warranties of Sellers contained in this Agreement (without regard to any
materiality or Knowledge qualifier contained in any such representation or
warranty) shall have been true on the date hereof and shall be true on and as of
the Closing Date with the same force and effect as though made on and as of the
Closing Date (except for changes permitted or contemplated by this Agreement and
except that the representations and warranties that were made as of a specific
date need be true and correct only as of such date).

 

10.2  Performance
of Agreement. Sellers
shall have performed in all material respects all obligations and agreements and
complied in all material respects with all covenants contained in this Agreement
to the extent required to be performed or complied with by it at or prior to the
Closing Date.

 

10.3  Sellers’
Certificates. Buyer
shall have received a certificate from each Seller, dated as of the Closing
Date, reasonably satisfactory in form and substance to Buyer and its counsel,
certifying as to the matters specified in Section 10.1 and
Section 10.2 hereof.

 

10.4  Secretary’s
Certificates. Buyer
shall have received a certificate, dated the Closing Date, of the Secretary or
any Assistant Secretary of each Seller with respect to the incumbency and
specimen signature of each officer or representative of each Seller executing
this Agreement, the certificate referred to in Section 10.3 and the
Ancillary Agreements to which each Seller is a party.

 

10.5  Injunction. On the
Closing Date, there shall be no injunction, writ, preliminary restraining order
or any order of any nature in effect issued by a court of competent jurisdiction
directing that the Contemplated Transaction not be consummated as herein
provided.

 

10.6  Actions
and Proceedings. All
corporate actions, proceedings, instruments and documents required to carry out
the transactions contemplated by this Agreement or incidental thereto and all
other related legal matters shall be reasonably satisfactory to counsel for
Buyer, and such counsel shall have been furnished with such certified copies of
such corporate actions and proceedings and such other instruments and documents
as it shall have reasonably requested.

 

10.7  HSR
Act Waiting Period. Any
waiting period applicable to the consummation of the transactions contemplated
by this Agreement under the HSR Act shall have expired or
terminated.

 

ARTICLE
XI  

 

 

CONDITIONS
PRECEDENT TO THE OBLIGATIONS OF SELLERS

 

The
obligations of Sellers are subject to the fulfillment at or prior to the Closing
of each of the following conditions:

 

11.1  Accuracy
of Representations and Warranties. The
representations and warranties of Buyer contained in this Agreement (without
regard to any materiality or knowledge qualifier contained in any such
representation or warranty) shall have been true in all material respects on the
date hereof and shall be true on and as of the Closing Date in all material
respects with the same force and effect as though made on and as of the Closing
Date.

 

11.2  Performance
of Agreement. Buyer
shall have performed in all material respects all obligations and agreements and
complied in all material respects with all covenants and conditions contained in
this Agreement to be performed or complied with by it at or prior to the Closing
Date.

 

11.3  Buyer’s
Certificate. Sellers
shall have received a certificate from Buyer, dated as of the Closing Date,
reasonably satisfactory in form and substance to Sellers and their counsel,
certifying as to the fulfillment of all matters specified in Section 11.1
and Section 11.2 hereof. The matters set forth in such certificate shall
constitute representations and warranties hereunder.

 

11.4  Secretary’s
Certificate. Sellers
shall have received a certificate, dated the Closing Date, of the Secretary or
any Assistant Secretary of Buyer with respect to the incumbency and specimen
signature of each officer or representative of Buyer executing this Agreement,
the certificate referred to in Section 11.3 and the Ancillary Agreements to
which Buyer is a party.

 

11.5  Injunction. On the
Closing Date, there shall be no injunction, writ, preliminary restraining order
or any order of any nature in effect issued by a court of competent jurisdiction
directing that the transactions provided for herein, or any of them, not be
consummated as herein provided.

 

11.6  Actions
or Proceedings. All
corporate actions, proceedings, instruments and documents required to carry out
the transactions contemplated by this Agreement or incidental thereto and all
other related legal matters shall be reasonably satisfactory to counsel for
Sellers, and such counsel shall have been furnished with such certified copies
of such corporate actions and proceedings and such other instruments and
documents as it shall have reasonably requested.

 

11.7  HSR
Act Waiting Period. Any
waiting period applicable to the consummation of the transactions contemplated
by this Agreement under the HSR Act shall have expired or
terminated.

 

ARTICLE
XII  

 

 

OBLIGATIONS
AFTER THE CLOSING DATE

 

12.1  Confidentiality. Sellers
and Shareholders hereby covenant and agree that, except as may be required by
law, rule or regulation or court order, or as permitted by this Agreement,
unless this Agreement is terminated, they will not at any time reveal, divulge
or make known to any Person (other than Buyer or its agents or Affiliates) any
information that relates to this Agreement, the transactions contemplated hereby
or the Business (whether now possessed by Sellers or furnished by Buyer after
the Closing Date), including, but not limited to, customer lists or other
customer information, trade secrets or formulae, marketing plans or proposals,
financial information or any data, written material, records or documents used
by or relating to the Business that are of a confidential nature (collectively,
the “Confidential
Information”).

 

12.2  Covenant
Not to Interfere. Both
Sellers and Buyer hereby covenant and agree that, unless this Agreement is
terminated, for a period of five (5) years after the Closing Date, they
will not, whether for their own account or for the account of any other Person,
endeavor to entice away from the other Party any person who is an employee of
such Party.

 

12.3  Noncompetition. For the
period beginning on the Closing Date and ending on the fifth anniversary
thereof, no Seller or Shareholder will, directly or indirectly, unless acting in
accordance with Buyer’s written consent, own, manage, operate, finance or
participate in the ownership, management, operation or financing of or permit
its name to be used by or in connection with any business or enterprise engaged
in the manufacture, processing, marketing, distribution or sale of products
comparable to the Products in the United States. Each Seller and Shareholder
acknowledges that the provisions of this Section are reasonable and necessary to
protect the interests of Buyer, that any violation of this Section will result
in an irreparable injury to Buyer and that damages at law would not be
reasonable or adequate compensation to Buyer for violation of this Section and
that, in addition to any other available remedies, Buyer shall be entitled to
have the provisions of this Section specifically enforced by preliminary and
permanent injunctive relief without the necessity of proving actual damages or
posting a bond or other security and to an equitable accounting of all earnings,
profits and other benefits arising out of any violation of this Section. In the
event that the provisions of this Section shall ever be deemed to exceed the
time, geographic, product or other limitations permitted by applicable law, then
the provisions shall be deemed reformed to the maximum extent permitted by
applicable law.

 

12.4  Transition
of Employees. From
and after the Closing Date, Buyer and Sellers shall reasonably cooperate to
ensure an orderly transition of the Transferred Employees.

 

12.5  Administrative
Assistance by Seller. Except
as otherwise agreed, Sellers shall provide such accounting, data processing and
other support services to Buyer as are reasonably required in connection with
the transfer of the Business to Buyer without cost to Buyer. Sellers shall
cooperate with Buyer’s auditors in connection with the preparation of any report
or filing required in connection with the transactions contemplated hereby, such
cooperation to be provided by Sellers at no cost to Buyer.

 

12.6  Further
Assurances. In
addition to the provisions of this Agreement, from time to time after the
Closing Date, Sellers and Buyer will use commercially reasonable efforts to
execute and deliver such other instruments of conveyance, transfer, or
assumption, as the case may be, and take such other action as may be reasonably
requested to implement more effectively the transactions contemplated
hereby.

 

12.7  Retention
of and Access to Records; Cooperation. For a
period of not less than seven years after the Closing Date, Buyer shall preserve
and retain the corporate, accounting, legal, auditing and other books and
records of the Business (including but not limited to, any governmental or
non-governmental actions, suits, proceedings or investigations arising out of
the conduct of the business and operations of the Business prior to the Closing
Date); provided,
however, that
such seven-year period shall be extended in the event that any action, suit,
proceedings or investigation has been commenced or is pending or threatened at
the termination of such seven-year period and such extension shall continue
until any such action, suit, proceeding or investigation has been settled
through judgment or otherwise or is no longer pending or threatened.
Notwithstanding the foregoing, Buyer may discard or destroy any of such books
and records prior to the end of such seven-year period or period of extension,
if applicable, if it has given Sellers 60 days prior written notice of its
intent to do so and Sellers have not taken possession of such books and records,
at its expense, within such 60-day period. Notwithstanding anything to the
contrary in this Section 12.7 or elsewhere in this Agreement, Sellers shall
retain all tax records of the Business prepared prior to the Closing Date, for a
reasonable period of time based upon the nature of such tax records. Buyer shall
provide reasonable access to Sellers to review any records that Buyer retains
and to make copies thereof and shall cooperate fully with Sellers (including,
without limitation, making available employees to assist Sellers at reasonable
rates to be agreed by the Parties) in preparation and documentation of all
necessary financial statements, tax returns and reports or the resolution of any
tax audits, claims, litigation or disputes concerning Sellers’ tax liabilities
or the Assumed Liabilities. In the event Buyer sells or otherwise transfers the
Business before the seventh anniversary of the Closing Date, to the extent
reasonably obtainable Buyer agrees to include in the documents transferring such
Business a provision obligating the new purchaser or transferee to abide by
these provisions, in which event Buyer shall be relieved of any obligation
hereunder.

 

12.8  Accounts
Receivable Payment. In the
event that either Party hereto at any time receives any funds from any third
party that are properly payable to the other Party hereto, the Party receiving
such funds shall promptly remit such funds to the Party entitled to such
funds.

 

12.9  Use of
Business Name. After
the Closing, no Seller will, directly or indirectly, do business, or allow any
Affiliate to do business, or assist any third party in using or doing business,
under the name and mark “Milso” (or any other name confusingly similar to such
names and marks). Promptly after Closing Sellers shall change their corporate
names to not include “Milso.”

 

12.10  Operation
of Business. After
Closing, and in the continued operation of the Business, the Key Employees shall
be required to adhere to the internal control standards and codes of conduct as
defined by the Sarbanes-Oxley Act of 2002, established regulatory standards and
published Matthews’ policies.

 

12.11  Director
Appointments. From
and after the Closing Matthews shall cause two Key Employees to be appointed to
the York board of directors. Harry Pontone and Scott Pontone shall be appointed
to the board of directors pursuant to the foregoing so long as each is employed
by York. In the event that either Harry Pontone or Scott Pontone is no longer
employed by York, the other shall be entitled to designate the second Key
Employee to be appointed to the York board of directors by Matthews pursuant to
this Section. If neither Scott Pontone nor Harry Pontone is employed by York, a
majority of the remaining Key Employees shall be entitled to designate the two
Key Employees to be appointed to the York board of directors by Matthews
pursuant to this Section.

 

ARTICLE
XIII  

 

 

TERMINATION

 

13.1  Termination
of Agreement. This
Agreement may be terminated at any time prior to the Closing Date:

 

13.1.1  by
written agreement of SBC and Buyer;

 

13.1.2  by SBC or
Buyer, by written notice to the other, if the Closing has not been consummated
within sixty days following the date hereof (as may be extended pursuant to this
Section 13.1.2, the “Termination
Date”);
provided,
however, that if
the Closing has not occurred by such date solely due to the waiting period (or
any extension thereof) or approvals under the HSR Act not having expired or been
terminated, then such date shall be extended, but in no event to a date later
than six months from the date hereof; and provided further, that the right to
terminate this Agreement under this Section 13.1.2 shall not be available to any
Party whose failure to fulfill any obligation under this Agreement shall have
been a primary cause of the failure of the Closing to occur prior to such
date;

 

13.1.3  by Buyer
or SBC, by written notice to the other, if there is any law or regulation that
makes consummation of the Contemplated Transaction illegal or otherwise
prohibited, or if any judgment, injunction, order or decree permanently
restraining, prohibiting or enjoining Buyer or Sellers from consummating the
Contemplated Transaction is entered and such judgment, injunction, order or
decree shall become final;

 

13.1.4  by Buyer,
upon written notice to Sellers, if there shall have been a breach by any Seller
of any of its representations, warranties, covenants or agreements contained in
this Agreement, which breach would result in the failure to satisfy one or more
of the conditions set forth in Article X, and such breach shall be
incapable of being cured prior to the Termination Date or, if capable of being
cured prior to the Termination Date, (x) shall not have been cured within
20 days after written notice thereof shall have been received by the
Sellers and (y) such Seller shall not have provided Buyer with adequate
assurances of such Seller’s ability to remedy such breach on or prior to such
20th day; provided,
however, that
Buyer shall not have the right to terminate this Agreement under this
Section 13.1.4 if Buyer is in material breach of any of its representations
or warranties contained in this Agreement or has failed in any material respect
to perform any of its obligations under this Agreement; or

 

13.1.5  by SBC,
upon written notice to Buyer, if there shall have been a breach by Buyer of any
of its representations, warranties, covenants or agreements contained in this
Agreement, which breach would result in the failure to satisfy one or more of
the conditions set forth in Article XI, and such breach shall be incapable
of being cured prior to the Termination Date or, if capable of being cured prior
to the Termination Date, (x) shall not have been cured within 20 days
after written notice thereof shall have been received by Buyer and
(y) Buyer shall not have provided the Sellers with adequate assurances of
Buyer’s ability to remedy such breach on or prior to such 20th day; provided,
however, that
the Sellers shall not have the right to terminate this Agreement under this
Section 13.1.5 if any Seller is in material breach of any of its
representations or warranties contained in this Agreement or has failed in any
material respect to perform any of its obligations under this
Agreement.

 

13.2  Return
of Documents. If this
Agreement is terminated for any reason pursuant to this Article XIII, each
Party shall promptly, and in any event within ten (10) Business Days, return to
the other Party all documents and copies thereof which shall have been furnished
to it by such other Party or, with the agreement of the other Party, shall
destroy all such documents and copies thereof and certify in writing to the
other Party any such destruction.

 

13.3  Effect
of Termination. In the
event of termination of this Agreement pursuant to Section 13.1, this
Agreement shall become null and void and have no effect and no party hereto
shall have any liability to the other parties hereto or their respective
Affiliates, directors, officers, employees, representatives or shareholders,
except (i) that the obligations of the parties to this Agreement contained
in Sections 13.3 15.1, 15.2, 15.4 and 15.6 through 15.15 and the
Confidentiality Agreement shall continue in full force and effect and
(ii) that nothing in this Agreement will relieve any party from liability
for any breach of any representation, warranty, covenant or agreement set forth
in this Agreement prior to such termination (a “Breach”). The
Parties acknowledge and agree that any claim for a Breach must be brought within
180 days after this Agreement is validly terminated.

 

ARTICLE
XIV  

 

 

SURVIVAL
OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION

 

14.1  Survival
of Representations and Warranties. All
representations and warranties of the Parties shall survive for two (2) years
after the Closing Date (the “Indemnity
Period”);
provided, that
any claim that has been duly asserted prior to the termination of such survival
period shall survive such period until resolved in accordance with this Article
XIV. Except as otherwise expressly provided in this Agreement, all covenants,
agreements, undertakings and indemnities set forth in this Agreement shall
survive indefinitely. No investigation made by any Parties hereto (whether prior
to, on or after the Closing Date) shall in any way limit the representations and
warranties of the other Parties.

 

14.2  Sellers’
Agreement to Indemnify. Subject
to the terms and conditions set forth herein, from and after the Closing,
Sellers shall indemnify and hold harmless Buyer and Matthews and their
respective directors, officers, employees, affiliates, controlling persons,
agents and representatives and their successors and assigns (collectively,
“Buyer
Indemnitees”) from
and against all liabilities, demands, claims, actions or causes of action,
assessments, losses, damages, costs and expenses (including, without limitation,
reasonable attorneys’ fees and expenses) (collectively, “Buyer
Damages”)
asserted against or incurred by any Buyer Indemnitee as a result of or arising
out of (i) a breach of any representation or warranty contained in
Article VI of this Agreement, (ii) the Excluded Liabilities or
Excluded Assets, (iii) a breach of any agreement or covenant of any Seller
in this Agreement, (iv) any attempt (whether or not successful) by any
Person to cause or require Buyer to pay any liability of, or claim against,
Sellers of any kind in respect of the operation of the Business prior to the
Closing Date, to the extent not specifically assumed or subject to an indemnity
by Buyer under the terms of this Agreement, (v) any and all claims made by
Thomas Pontone, (vi) all Environmental Liabilities and Costs in any way
related to Seller’s operation of the Business before the Closing Date or any
environmental conditions in, on, under, from or about the Real Property, the
Purchased Assets or other properties or assets owned, leased or used by Sellers,
which were created, existed or arose prior to the Closing Date, except to the
extent that any such environmental condition was exacerbated by Buyer’s actions
after Closing, or which relate to the Excluded Assets, or (vii) any product
liability claim with respect to products sold by the Business prior to the
Closing.

 

14.3  Sellers’
and Shareholders’ Agreement to Indemnify. Subject
to the terms and conditions set forth herein, from and after the Closing,
Sellers and Shareholders shall, jointly and severally, indemnify and hold
harmless the Buyer Indemnitees from and against all Buyer Damages asserted
against or incurred by any Buyer Indemnitee as a result of or arising out of
(i) all Environmental Liabilities and Costs in any way related to Sellers’
operation of the Business or any environmental conditions in, on, under, from or
about the following properties: 536 Union Street, 538 Union Street, 540 Union
Street, 542 Union Street, 577 Union Street, 495 President Street, 496 President
Street, 497 President Street, 499 President Street, 534 Union Street, 586
Sackett Street and 585 Union Street, each in Brooklyn, New York (the
“Brooklyn
Properties”), which
Environmental Liabilities and Costs were created, accrued, existed or arose
prior to the Closing Date, and (ii) liability for any Taxes which were
created, accrued, existed or arose prior to the Closing Date.

 

14.4  Limitations
on Sellers’ and Shareholders’ Indemnity.
Sellers’ obligations to indemnify Buyer Indemnitees pursuant to
Section 14.2 hereof, and Sellers’ and Shareholders’ obligation to indemnify
Buyer Indemnitee pursuant to Section 14.3 hereof, are subject to the
following limitations:

 

14.4.1  No
indemnification shall be made by Sellers or the Shareholders with respect to any
claim unless (x) the amount of such claim exceeds $20,000 (any such claim,
a “Qualifying
Claim”) and
(y) the aggregate amount of Buyer Damages under all Qualifying Claims
exceeds $500,000 and, in such event, indemnification shall be made by Sellers
and the Shareholders only to the extent Buyer Damages exceed $500,000 in the
aggregate, it being understood that such amount shall be a
“deductible.”

 

14.4.2  Sellers’
aggregate obligation to indemnify Buyer Indemnitees for all claims made pursuant
to Section 14.2 shall not exceed the Escrow Fund and Buyer Indemnitees’
claims with respect thereto shall be made only against, and shall be limited
solely to, the Escrow Fund as provided in the Escrow Agreement. This limitation
shall not apply to Sellers’ and Shareholders’ obligation to indemnify Buyer
Indemnitees for any claims made pursuant to Section 14.3.

 

14.4.3  The
amount of any Buyer Damages shall be reduced by (i) any amount received by
a Buyer Indemnitee with respect thereto under any insurance coverage or from any
other party alleged to be responsible therefor and (ii) the amount of any
tax benefit available to the Buyer or the SBC as a result, directly or
indirectly, of the damages. Buyer Indemnitees shall use commercially reasonable
efforts to collect any amounts available under such insurance coverage and from
such other party alleged to have responsibility. If a Buyer Indemnitee receives
an amount under insurance coverage or from such other party with respect to
Buyer Damages at any time subsequent to any indemnification provided by Sellers
pursuant to this Article XIV, then such Buyer Indemnitee shall promptly
reimburse Sellers, for any payment made or expense incurred by Sellers in
connection with providing such indemnification up to such amount received by
Buyer Indemnitee, but net of any expenses incurred by such Buyer Indemnitee in
collecting such amount.

 

14.4.4  Sellers
and the Shareholders shall have no obligation to indemnify or hold harmless any
Buyer Indemnitee with respect to any claim asserted under Section 14.2(vi)
or otherwise with respect to any Environmental Liabilities and Costs unless
Shareholders are given notice asserting a claim before the eighth anniversary of
the Closing Date. In no event shall the aggregate liability of the Shareholders
under Section 14.3 exceed 100% of Purchase Price.

 

Sellers
shall be obligated to indemnify Buyer Indemnitees under Section 14.2 only
for those claims giving rise to Buyer Damages as to which Buyer Indemnitees have
given Sellers and Escrow Agent written notice prior to the end of the Indemnity
Period (to the extent the Indemnity Period applies to such Buyer Damages). Any
written notice delivered by a Buyer Indemnitee to Sellers and Escrow Agent with
respect to Buyer Damages shall set forth with as much supporting detail as is
reasonably practicable the basis of the claim for Buyer Damages and, to the
extent reasonably practicable, a reasonable estimate of the amount
thereof.

 

14.5  Buyer’s
Agreement to Indemnify. Subject
to the terms and conditions set forth herein, from and after the Closing, Buyer
shall indemnify and hold harmless each Seller and their respective directors,
officers, employees, affiliates, controlling persons, agents and representatives
and their successors and assigns (collectively, the “Seller
Indemnitees”) from
and against all liability, demands, claims, actions or causes of action,
assessments, losses, damages, costs and expenses (including, without limitation,
reasonable attorneys’ fees and expenses) (collectively, “Seller
Damages”)
asserted against or incurred by any Seller Indemnitee as a result of or arising
out of (i) the Assumed Liabilities, (ii) a breach of any
representation or warranty contained in Article VII of this Agreement or
(iii) a breach of any agreement or covenant of Buyer in this
Agreement.

 

14.6  Limitation
on Buyer’s Indemnity. Buyer’s
obligation to indemnify Seller Indemnitees pursuant to Section 14.5 hereof
is subject to the following limitations:

 

14.6.1  No
indemnification shall be made by Buyer with respect to any such claim unless
(x) such claim is a Qualifying Claim and (y) the aggregate amount of
Seller Damages under all Qualifying Claims exceeds $500,000 and, in such event,
indemnification shall be made by Buyer only to the extent Sellers’ Damages
exceed $500,000 in the aggregate, it being understood that such amount shall be
a “deductible.”

 

14.6.2  Buyer’s
aggregate obligation to indemnify Seller Indemnitees for all claims made
pursuant to Section 14.5 shall not exceed $10 million.

 

14.6.3  The
amount of any Seller Damages shall be reduced by (i) any amount received by
a Seller Indemnitee with respect thereto under any insurance coverage or from
any other party alleged to be responsible therefore and (ii) the amount of
any tax benefit available to the Seller as a result, directly or indirectly of
the damages. Seller Indemnitees shall use commercially reasonable efforts to
collect any amounts available under such insurance coverage and from such other
party alleged to have responsibility. If a Seller Indemnitee receives an amount
under insurance coverage or from such other party with respect to Seller Damages
at any time subsequent to any indemnification provided by Buyer pursuant to
Article XIV, then such Seller Indemnitee shall promptly reimburse Buyer for
any payment made or expense incurred by Buyer in connection with providing such
indemnification up to such amount received by the Seller Indemnitee, but net of
any expenses incurred by such Seller Indemnitee in collecting such
amount.

 

Buyer
shall be obligated to indemnify the Seller Indemnitees only for those claims
giving rise to Seller Damages and to which the Seller Indemnitees have given
Buyer written notice thereof prior to the end of the Indemnity Period. Any
written notice delivered by a Seller Indemnitee to Buyer with respect to Seller
Damages shall set forth with as much specificity as is reasonably practicable
the basis of the claim for Seller Damages and, to the extent reasonably
practicable, a reasonable estimate of the amount thereof.

 

14.7  Third
Party Indemnification. The
obligations of any Indemnifying Party to indemnify any Indemnified Party under
this Article XIV with respect to Buyer Damages or Seller Damages, as the
case may be, resulting from the assertion of liability by third parties (a
“Claim”), will
be subject to the following terms and conditions:

 

14.7.1  Any party
against whom any Claim is asserted (the “Indemnified
Party”) will
give the party required to provide indemnity hereunder the “Indemnifying
Party”)
written notice of any such Claim promptly after learning of such Claim, and the
Indemnifying Party may at its option undertake the defense thereof by
representatives of its own choosing. Failure to give prompt notice of a Claim
hereunder shall not affect the Indemnifying Party’s obligations under this
Section, except to the extent that the Indemnifying Party is materially
prejudiced by such failure to give prompt notice. If the Indemnifying Party,
within thirty days after notice of any such Claim, fails to assume the defense
of such Claim, the Indemnified Party against whom such claim has been made will
(upon further notice to the Indemnifying Party) have the right to undertake the
defense, compromise or settlement of such claim on behalf of and for the account
and risk, and at the expense, of the Indemnifying Party, subject to the right of
the Indemnifying Party to assume the defense of such Claim at any time prior to
settlement, compromise or final determination thereof.

 

14.7.2  Anything
in this Section to the contrary notwithstanding, (i) the Indemnified Party
shall not settle a claim for which it is indemnified without the prior written
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld, and (ii) the Indemnifying Party shall not enter into any
settlement or compromise of any action, suit or proceeding or consent to the
entry of any judgment for other than monetary damages to be borne by the
Indemnifying Party without the prior written consent of the Indemnified Party,
which consent shall not be unreasonably withheld.

 

14.7.3  If the
Indemnifying Party shall not assume the defense of any such claim by a third
party, or litigation resulting therefrom, after receipt of notice from the
Indemnified Party, the Indemnified Party may defend against such claim or
litigation in such manner as it deems appropriate.

 

14.7.4  If the
Indemnifying Party shall not, within thirty (30) days after its receipt of the
notice required by Section 14.7 hereof, advise the Indemnified Party that
the Indemnifying Party denies the right of the Indemnified Party to indemnity in
respect of the claim, then the amount of such claim shall be deemed to be
finally determined between the Parties hereto. If the Indemnifying Party shall
notify the Indemnified Party that it disputes any claim made by the Indemnified
Party, then the Parties hereto shall endeavor to settle and compromise such
claim, and if unable to agree on any settlement or compromise, such claim for
indemnification shall be settled by appropriate litigation, and any liability
established by reason of such settlement, compromise or litigation shall be
deemed to be finally determined. Any claim that is finally determined in the
manner set forth above shall be paid promptly by the Indemnifying
Party.

 

14.8  Payment
of Indemnification Obligations. Each
Party with indemnity obligations under this Article XIV shall pay promptly
to any Party being indemnified the amount of all damages, losses, deficiencies,
liabilities, costs, expenses, claims and other obligations to which the
foregoing provisions of this Article XIV relates.

 

14.9  Interest
on Unpaid Obligations. If all
or part of any indemnification obligation under this Agreement is not paid when
due, the Party with indemnity obligations under this Article XIV shall pay
the Party being indemnified interest on the unpaid amount of such obligation for
each day from the date the amount became due until it is paid in full, payable
on demand, at the rate equal to the lower of (i) the maximum rate permitted
by law or (ii) two percent (2%) per annum plus the “Prime Rate” as
published from time to time in The
Wall Street Journal.

 

14.10  Cooperation
with Proceedings. The
parties hereto agree to cooperate with each other and to provide each other with
all information and documentation reasonably necessary to permit the defense in
connection with any and all proceedings (including, without limitation tax
audits) and to promptly provide each other party with any and all notices that
may be received by any of them that could reasonably be expected to result in a
claim for indemnification under this Article XIV.

 

14.11  Treatment
of Indemnification Payments. All
indemnification payments made by Parties under this Article XIV shall be
deemed adjustments to the Consideration.

 

14.12  Exclusive
Remedy.
Following the Closing, indemnification pursuant to this Article XIV shall
be the sole and exclusive remedy for each Party and its respective Affiliates
with respect to any and all claims based on any breach of, or inaccuracy in any
representation or warranty contained in, this Agreement.

 

ARTICLE
XV  

 

 

GENERAL

 

15.1  Expenses. Except
as otherwise provided in this Agreement, and whether or not the transactions
herein contemplated shall be consummated, Buyer, Sellers and the Shareholders
shall pay their own fees, expenses and disbursements, including the fees and
expenses of their respective counsel, accountants and other experts, in
connection with the subject matter of this Agreement and all other costs and
expenses incurred in performing and complying with all conditions to be
performed under this Agreement.

 

15.2  Publicity. All
notices to third parties and all other publicity concerning the transactions
contemplated by this Agreement shall be jointly planned and coordinated by and
between Buyer and Sellers. Except as may be required by Applicable Law, no Party
shall act unilaterally in this regard without the prior written approval of the
other Party, such approval not to be unreasonably withheld. It is contemplated
that immediately following the execution this Agreement, each of SBC and Buyer
will consult with each other regarding the language of and issue a press release
or press releases disclosing such action. Thereafter, prior to the Closing,
except as otherwise agreed to by the Parties, no Party shall issue any report,
statement or press release or otherwise make any public statements with respect
to this Agreement or the transactions contemplated hereby, except as required by
Applicable Law, in which case SBC and Buyer will consult with each other prior
to the issuance of such a report, statement or press release.

 

15.3  Waivers. The
waiver by any Party hereto of a breach of any provision of this Agreement shall
not operate or be construed as a waiver of any subsequent breach.

 

15.4  Binding
Effect; Benefits. This
Agreement shall inure to the benefit of the Parties hereto, and shall be binding
upon the Parties hereto and their respective successors and assigns. Except for
the express provisions of Article XIV, nothing in this Agreement, express
or implied, is intended to confer on any Person other than the Parties hereto,
or their respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.

 

15.5  Bulk
Transfers Laws. Buyer
hereby waives compliance by Sellers with the provisions of any and all laws
relating to bulk transfers in connection with the sale of the Purchased Assets.
Sellers covenant and agree to indemnify and save harmless Buyer from and against
any and all losses, liability, cost and expense (including reasonable attorney’s
fees) arising out of noncompliance with such bulk transfers laws.

 

15.6  Notices. All
notices, requests, demands, elections and other communications which either
Party to this Agreement may desire or be required to give hereunder shall be in
writing and shall be deemed to have been duly given if delivered personally, by
a reputable courier service which requires a signature upon delivery, by mailing
the same by registered or certified first class mail, postage prepaid, return
receipt requested, or by telecopying with receipt confirmation (followed by a
first class mailing of the same) to the Party to whom the same is so given or
made. Such notice, request, demand, waiver, election or other communication will
be deemed to have been given as of the date so delivered or electronically
transmitted or seven days after mailing thereof.

 

If to
Sellers or Shareholders, to:

 

___________________________

 

___________________________

 

___________________________

 

___________________________

 

If to
Buyer, to:

 

The York
Group, Inc.

 

Two
NorthShore Center

 

Suite
100

 

Pittsburgh,
PA 15212

 

Fax No:
(412) 995-1690

 

Attn:
Joseph Bartolacci, President

 

With a
copy to:

 

Reed
Smith LLP

 

435 Sixth
Avenue

 

Pittsburgh,
PA 15219

 

Fax No:
(412) 288-3063

 

Attn:
Pasquale Gentile, Esq.

 

or to
such other address as such Party shall have specified by notice to the other
Party hereto.

 

15.7  Entire
Agreement. This
Agreement (including all exhibits, schedules and annexes hereto), the
Confidentiality Agreement and the instruments and documents to be executed
pursuant hereto constitute the entire agreement among the Parties hereto
relating to the subject matter of this Agreement and supersede all other prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the parties. This Agreement may be amended, supplemented or modified
only by a written instrument executed by the Buyer and SBC, or in the case of a
waiver, by the Party waiving compliance; provided that SBC
may execute a waiver on behalf of all Sellers. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provision of this Agreement (whether or not similar), and no such waiver
shall constitute a continuing waiver unless otherwise expressly
provided.

 

15.8  Counterparts. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original and all of which together shall constitute but
one and the same instrument.

 

15.9  Headings. The
article, section and other headings contained in this Agreement are for
reference purposes only and shall not be deemed to be a part of this Agreement
or to affect the meaning or interpretation of this Agreement.

 

15.10  Matters
of Construction, Interpretation and the Like. The
Buyer and the Sellers and the Shareholders have participated jointly in the
negotiation and drafting of this Agreement. If an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as if drafted
jointly by the Buyer and the Sellers and the Shareholders and no presumption or
burden of proof shall arise favoring or disfavoring either the Buyer and the
Sellers and the Shareholders because of the authorship of any of the provisions
of this Agreement. Any reference to any United States Federal, state, local or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise.
Unless the context of this Agreement otherwise requires, (a) words of any
gender are deemed to include each other gender; (b) words using the
singular or plural number also include the plural or singular number,
respectively; (c) the terms “hereof,” “herein,” “hereby,” “hereto,” and
derivative or similar words refer to this entire Agreement; (d) the terms
“ARTICLE” or “Section” refer to the specified ARTICLE or Section of this
Agreement; (e) the term “or” means “and/or”; (f) the term “party”
means, on the one hand, the Buyer, on the other hand, the Sellers and the
Shareholders, (g) the word “including” means “including without
limitation”; and (h) all references to “dollars” or “$” refer to currency
of the United States of America. The exhibits and schedules specified in this
Agreement are incorporated herein by reference and made a part
hereof.

 

15.11  Governing
Law and Choice of Forum. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware without regard to the rules of conflicts of laws of the State
of Delaware. Each Seller and Buyer (a) agree that any suit, action or
proceeding arising out of or relating to this Agreement shall be brought solely
in the state or federal courts of Delaware; (b) consents to the exclusive
jurisdiction of each such court in any suit, action or proceeding relating to or
arising out of this Agreement; (c) waives any objection that it may have to
the laying of venue in any such suit, action or proceeding in any such court;
and (d) agrees that service of any court paper may be made in such manner
as may be provided under applicable Laws or court rules governing service of
process.

 

15.12  WAIVER
OF RIGHT TO TRIAL BY JURY. SELLERS
AND BUYER HEREBY WAIVE TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY
RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY PROCEEDING DIRECTLY OR
INDIRECTLY ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR THE
CONTEMPLATED TRANSACTIONS (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY).

 

15.13  Severability. In the
event that any one or more of the provisions of this Agreement shall for any
reason be held to be invalid, illegal or unenforceable, the remaining provisions
of this Agreement shall be unimpaired, and the invalid, illegal or unenforceable
provision shall be replaced by a mutually acceptable provision, which being
valid, legal and enforceable, comes closest to the economic effect and intent of
the parties underlying the invalid, illegal or unenforceable
provision.

 

15.14  Successors
and Assigns. None of
the Sellers, the Shareholders or Buyer shall assign, or otherwise transfer this
Agreement or any interest in or obligation under this Agreement to any other
Person; provided that
Buyer may assign its rights under this Agreement to one or more wholly-owned
subsidiaries of Buyer, which assignment shall not relieve Buyer of any of its
obligations under this Agreement.

 

15.15  Shareholders. The
persons
named below under “Shareholders” are joining in the Agreement solely for the
purpose of confirming their agreement to the obligations of the Shareholders
described in Sections 3.5, 4.3.1, 8.1, 8.2, 8.4, 12.1, 12.3, 12.8, 14.3,
14.4.4, 15.1 through 15.4 and 15.6 through 15.15.

 

15.16  Guaranty.
Matthews unconditionally and irrevocably guarantees the timely payment and
performance of all agreements, covenants, obligations and liabilities of Buyer
and Buyer’s Affiliates (and their respective permitted successors and assigns)
under this Agreement and under any other agreement entered into pursuant to the
provisions hereof to which Buyer or an Affiliate of Buyer and a Seller or an
Affiliate of a Seller are parties (the “Guaranty”). The
Guaranty is in no way conditioned upon any event or contingency, and shall be
binding upon and enforceable against Matthews without regard to the validity or
enforceability of this Agreement or any term hereof or any other agreement, or
term thereof, entered into pursuant to the provisions hereof to which Buyer or
an Affiliate of Buyer and a Seller or an Affiliate of a Seller are parties. The
obligations of Matthews under the Guarantee shall be continuing, absolute,
unlimited and unconditional, and shall not be subject to any counterclaim,
set-off, deduction or defense based upon any claim that Matthews may have
against the Sellers or any of their Affiliates, and shall remain in full force
and without regard to, and, to the extent permitted by Applicable Laws, shall
not be released, discharged or in any way affected by any circumstance or
condition (whether or not Matthews shall have any knowledge or notice thereof)
whatsoever which might constitute a legal or equitable discharge or
defense.

 

Signatures
appear on the following pages

 

 

 

47

NYA
730432.9

NYA
730432.9

IN
WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as
of the date first written above.

 

THE YORK
GROUP, INC.

 

By:  

 

 

Name:

 

 

Title:

 

MIDNIGHT
ACQUISITION CORPORATION.

 

By:  

 

 

Name:

 

 

Title:

 

MILSO
INDUSTRIES, INC.

 

By:  

 

 

Name:

 

 

Title:

 

MILSO
INDUSTRIES, LLC

 

By:  

 

 

Name:

 

 

Title:

 

SBC
HOLDING CORP.

 

By:  

 

 

Name:

 

 

Title:

 

MATTHEWS
INTERNATIONAL CORPORATION

 

By:  

 

 

Name:

 

 

Title:

 

SHAREHOLDERS:

____________________________

HARRY
PONTONE

____________________________

LOUIS
PONTONE

____________________________

ANDREW
PONTONE, SR.

____________________________

ANDREW
PONTONE, JR.

____________________________

MICHAEL
PONTONE

____________________________

SCOTT
PONTONE

_____________________________

STEVEN
PONTONE

_____________________________

THOMAS
PONTONE

HARRY
PONTONE 2005 FAMILY TRUST

By: __________________________

Name: Scott
Pontone

Title: Trustee

ANDREW
PONTONE GRANTOR TRUST

By: ___________________________

Name: Michael
Pontone

Title: Trustee

LOUIS
PONTONE 2004 FAMILY TRUST

By: ____________________________

Name: Josephine
Pontone

Title: Trustee

By: ____________________________

Name: Thomas J.
Pontone

Title: Trustee

MICHAEL
PONTONE 2005 FAMILY TRUST

By: _____________________________

Name: Martha
Pontone

Title: Trustee

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