ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (“Agreement”) is dated as of July 31, 2006, between Titan Tire Corporation of Bryan, an Ohio corporation (“Purchaser”), Titan Tire Corporation, an Illinois corporation and an Affiliate of Purchaser (“Parent”), and Continental Tire North America, Inc., an Ohio corporation (“Seller”). Section 10 of this Agreement defines certain capitalized terms used but not elsewhere defined in this Agreement.

A.   Seller, among other things, is engaged in the Business.

B.   Purchaser desires to purchase certain of the assets of Seller used exclusively by Seller in the operation of the Business, including the Facility, and Seller desires to sell such assets of the Business to Purchaser, all upon the terms and conditions hereinafter set forth.

NOW, THEREFORE, for and in consideration of the mutual promises and covenants herein contained and for other good and valuable consideration, the receipt and adequacy of which hereby are acknowledged, the parties hereto agree as follows:

1.    AGREEMENT TO SELL AND AGREEMENT TO PURCHASE

1.1    Assets to be Conveyed . On the terms and subject to the conditions set forth herein, and except as provided in Section 1.2 hereof, on the Closing Date (as defined in Section 1.3 hereof), Seller shall and shall cause its Affiliates, where appropriate, to convey, sell, transfer, assign and deliver to Purchaser free and clear of any Liens of any nature whatsoever, and Purchaser shall and shall cause its Affiliates, where appropriate, to purchase, acquire and accept from Seller and such Affiliates of Seller, all of the tangible assets used exclusively in the operation of the Business as of the Closing Date (whether or not located at the Facility) and the certain intangible assets related thereto (collectively, the “Acquired Assets”), which Acquired Assets include the following:

(a)    All inventories of finished goods wherever located and recorded, in the internal accounting records of Seller, as directly owned by Seller, and all raw materials (including raw materials in transit and owned by Seller), work in process, supplies, tooling, dies, jigs, spare parts, replacement and component parts located at the Facility including those set forth on Schedule 1.1(a) which Schedule shall be dated no earlier than sixty (60) days before the date hereof and shall be updated thereafter from time to time by Seller as appropriate (raw materials, inventory and work in process collectively referred to herein as, the “Inventory”); provided, however, that, with respect to any tooling owned by a third party, which tooling is listed on Schedule 1.1(a), possession of such items will be transferred to Purchaser if and only to the extent that Purchaser assumes the contract between Seller and such third party pursuant to Section 1.1(e) or, if no written contract exists, the obligations of Seller with respect to such tooling. To the extent any of the Acquired Assets described in this Section 1.1(a) are located at a site other than the Facility, Purchaser shall be provided a reasonable period after the Closing Date, but not to exceed sixty (60) days, to remove all such Acquired Assets;

(b)    All molds, wherever located, and all machinery and equipment located at the Facility including those items listed on Schedule 1.1(b) (“MM&E”); provided, however, that, with respect to items of MM&E owned by a third party, which items are listed on Schedule 1.1(b), possession of such item will be transferred to Purchaser if and only to the extent that Purchaser assumes the contract between Seller and such third party pursuant to Section 1.1(e) or, if no written contract exists, the obligations of Seller with respect to such items;

(c)    All furniture, fixtures, owned vehicles and owned computer hardware located at the Facility. Schedule 1.1(c) lists all owned and leased vehicles and all owned and leased computer hardware located at the Facility;

(d)    All customer lists, sales brochures, data bases, books and records, correspondence and production records and the following proprietary software systems that are in stand-alone operation at the Facility: (i) the program for Foxpro used for tracking production, quality information and shipping data, (ii) the program for Access that runs scales for weighing compounds in the mixing department, (iii) the program for Access used for cure press monitoring and control, and (iv) the “birth certificate” system;

(e)    All warranties and guaranties by, and rights, choses in action and claims, known or unknown, matured or unmatured, accrued or contingent against, third parties;

(f)    Other than the contracts, agreements and commitments set forth on Schedule 1.1(f) (the “Excluded Contracts”) (which Schedule 1.1(f) and Excluded Contracts will expressly include the Union Contracts), all of Seller’s right, title and interest in and to all contracts, agreements and commitments (including unfilled customer and purchase orders) to which Seller is a party at the Closing Date or by which any of the Acquired Assets is then bound and, in each case, which are utilized exclusively in the conduct of the Business, including, without limitation, all warranty agreements and off-take agreements entered into by Seller exclusively in the conduct of the Business (all of the foregoing to be assigned to Purchaser pursuant hereto (subject to Section 5.3) are hereinafter referred to collectively as the “Assumed Contracts” and individually as an “Assumed Contract”); provided, however, that the parties acknowledge that agreements that otherwise would be included in the definition of “Assumed Contracts” that are between Seller and Affiliates of Seller (“Affiliate Contracts”) shall not be assumed by Purchaser and shall be included on Schedule 1.1(f); provided, further, that Seller will cause such Affiliates to enter into new arrangements with Purchaser as of the Closing on terms substantially similar to those set forth in such Affiliate Contracts but in any case the pricing of products supplied under such Affiliate Contracts shall not exceed cost plus 5%. An Affiliate shall not terminate an Affiliate Contract except upon six (6) months advance written notice to Purchaser.

(g)    All telephone and telecopy numbers;

(h)    The owned real estate encompassing the Facility, together with all rights of way, licenses, permits, easements and appurtenances thereto (the “Owned Real Property”); and

(i)    All governmental approvals, licenses and permits which are utilized in the conduct of the Business at the Facility, including those listed on Schedule 1.1(g) (the “Transferred Permits”).

1.2    Excluded Assets . Notwithstanding anything contained in Section 1.1 hereof to the contrary, Seller is not selling, and Purchaser is not purchasing (i) any assets of Seller set forth in this Section 1.2 and (ii) any assets of Seller not used exclusively in the operation of the Business, all of which shall be retained by Seller (the “Excluded Assets”). To the extent that any of the Excluded Assets are located at the Facility, Seller shall be provided a reasonable period after the Closing Date, but not to exceed sixty (60) days, to remove all such Excluded Assets. The Excluded Assets include, but are not limited to:

(a)    Any cash, investments and other cash equivalents;

(b)    Seller’s minute books, Tax returns and other organizational documents, and Seller’s financial records and employment records, other than those employment records pertaining to Employees and allowed to be transferred to Purchaser under applicable Laws;

(c)    All qualifications to transact business as a foreign corporation, arrangements with registered agents with respect to foreign qualifications, and taxpayer and other identification numbers;

(d)    Any Tax benefits and rights to refunds, including rights to any net operating losses;

(e)    Any contracts (other than the Assumed Contracts) or rights relating to borrowed money;

(f)    Except as provided for in the Trademark License, all trademarks, trade names and business names, including “Continental,” “General” and any and all variations thereof and any related intangibles, trademark applications and registrations, and internet domain names which consist of or incorporate the names “Continental” and “General” and any and all variations thereof;

(g)    Any prepaid items, deposits, advance payments, deferred charges and other similar assets;

(h)    All accounts and notes receivable and any security held by Seller for the payment thereof;

(i)    Except as provided for in the Know-How License, all business, proprietary and confidential information, including trade secrets, capabilities, technical information, know-how, process technology, ideas, designs, processes, procedures, algorithms, discoveries, inventions, blueprints, engineering data, patterns, bills of materials, and drawings and specifications, and all improvements thereof (the “Know-How”); provided, however, that the Know-How related to the compounds used in the Business known as “B1035” and “B1548” shall not be included in the Know-How provided in the Know-How License, but rather will be supplied and delivered to Purchaser pursuant to the terms of the Compound Supply Agreement;

(j)    Except as provided for in the Know-How License, all intellectual property licenses, patents, patent applications, copyrights, copyright applications, computer programs and formula not used exclusively in the operations of the Business;

(k)    Employee benefit plans, policies and arrangements except as set forth in the Retiree Medical, Pension and Union Related Agreements referenced in Section 5.16 below; and

(l)    All inventories of finished goods owned by those reporting entities of Seller identified (by code number and name) on Schedule 1.2(l).

1.3    Closing . The closing of the transactions herein contemplated (the “Closing”) shall take place at 10 A.M., local time, on the later of July 31, 2006, or the second business day after the day on which the last of the conditions set forth in Section 6 hereof shall have been fulfilled or waived (the “Closing Date”) unless another date is agreed to by the parties, at a place mutually agreed to by the parties. The Closing will be effective as of 11:59 p.m. on the Closing Date.

2.    CONSIDERATION TO BE PAID BY PURCHASER

2.1    Purchase Price for Acquired Assets; Payment Thereof . Purchaser shall pay to Seller $52,900,000 (the “Initial Purchase Price”) as the aggregate purchase price for the Acquired Assets, subject to the post-Closing adjustments as provided in Section 2.4 below. On the Closing Date, Purchaser shall pay to Seller the Initial Purchase Price by wire transfer thereof in immediately available funds to an account designated by Seller. The Initial Purchase Price (as adjusted pursuant to Section 2.4) will be allocated among the Acquired Assets in the manner set forth in Section 2.6.

2.2    Liabilities Assumed by Purchaser . As further consideration for the purchase of the Acquired Assets and consummation of the other transactions contemplated hereby, on the Closing Date, Purchaser shall assume and agree to perform and discharge in full, when due, the liabilities of Seller and the Business arising under or associated with (collectively, the “Assumed Liabilities”):

(a)    Purchaser’s conduct of the Business after the Closing Date, including with respect to the use of the Acquired Assets and the hiring and employment of the Employees; provided that:

(i)    obligations for services rendered both prior to and after the Closing Date will be allocated between Purchaser and Seller based on the Closing Date (e.g., an invoice for services rendered for the third quarter would be allocated 1/3 to Seller as an Excluded Liability and 2/3 to Purchaser as an Assumed Liability;

(b)    All product liability claims caused by or the result of any product produced or manufactured by Purchaser after Closing;

(c)    All outstanding warranty claims and all warranty claims asserted in writing from and after the Closing;

(d)    Any recalls by a third party of a product of such third party which utilizes a product sold, distributed or otherwise placed in the stream of commerce by Purchaser in the Business after Closing (other than any such product that was manufactured by Seller on or before Closing), or manufactured by Purchaser in the Business after Closing;

(e)    Except as expressly provided in Section 2.3 below, any of the following matters: (i) any violation of any Environmental Law with respect to the operation of the Business; and (ii) any generation, treatment, storage, transport, management, use, handling, disposal, leakage, spill or release of any Hazardous Material with respect to the operation of the Business on, under or migrating from the Owned Real Property (collectively, items (i) and (ii) are hereinafter sometimes referred to as the “Environmental Liabilities”), regardless of when or where such Environmental Liabilities arose or arise, or whether the facts on which they are based occurred prior to or subsequent to the Closing; and

(f)    The Assumed Contracts.

2.3    Liabilities Retained by Seller . With respect to the Environmental Liabilities, notwithstanding the terms of Section 2.2(e) above, Seller will remain liable only for (and the Environmental Liabilities will not include), (i) any obligation or liability relating directly to or in connection with any disposal or arrangement for disposal of any Hazardous Material from the Owned Real Property on or before the Closing at any Off-Site Location and (ii) the Environmental Law liabilities, if any, of which Seller has Actual Knowledge including those listed on Schedule 4.7. Except for the assumption by Purchaser of the Assumed Liabilities, Seller will retain all liabilities relating to the Business (including those specifically referenced as retained in the first sentence of this Section 2.3) and, except for the Assumed Liabilities, Purchaser shall not assume nor be liable or responsible for, whether as a successor or otherwise, any obligation or liability of Seller or the Business of any kind or nature whatsoever (such liabilities collectively referred to herein as the “Excluded Liabilities”).

2.4    Inventory Purchase Price Adjustment . Within 30 days after the Closing Date, Seller shall deliver to Purchaser a schedule (the “Closing Inventory Schedule”) setting forth the value of the Inventory used or useable by the Business as of the close of business on the last business day preceding the Closing Date (the “Closing Inventory”). The valuation of the Closing Inventory reflected on the Closing Inventory Schedule shall be determined on all Inventory produced or acquired by Seller in the Ordinary Course of Business as follows: (i) with respect to finished goods, the value of each class of OTR Tire as determined in a manner consistent with Seller’s accounting practices as set forth on below shall be used to determine the aggregate value of such finished goods, (ii) with respect to raw materials, the per pound value of each component thereof is set forth on Schedule 2.4 and the raw materials shall be valued in a manner consistent with Seller’s accounting practices and (iii) with respect to work in process, such value shall be determined in accordance with Seller’s established accounting practices. All Closing Inventory will be valued consistent with Seller’s accounting practices which include assessing inventory for reserves at the lower of cost or net realizable value and reserves for obsolete inventory in accordance with Seller’s applicable accounting principles (which accounting principles comply with GAAP except in respect to the capitalized costs related to pension and retiree, medical and depreciation, all of which are accounted for using principles in accordance with IFRS.)

(a)    The Closing Inventory as reflected in the Closing Inventory Schedule (the “Closing Inventory Value”), shall become final and binding upon the written agreement of the parties. In the event of any disagreement, Seller and Purchaser shall negotiate in good faith to resolve any differences. If within ten (10) days following receipt of the Closing Inventory Schedule by Purchaser, any such differences have not been resolved, they shall be resolved by KPMG or such other independent accounting firm of national reputation as may be mutually acceptable to Seller and Purchaser (the “Independent Accountants”). The Independent Accountants will be instructed to conduct such dispute resolution and perform their services as expeditiously as possible, and to deliver a revised Closing Inventory Value to Seller and Purchaser as a result thereof, which revised Closing Inventory Value shall be binding on the parties. The revised Closing Inventory Value shall be prepared by the Independent Accountants in compliance with Seller’s current accounting and inventory costing practices currently in place and established in Seller’s accounting manual. The fees and expenses of Independent Accountants in preparing the revised Closing Inventory Value and in taking the physical inventory shall be borne equally by Seller and Purchaser.

(b)    The final and binding Closing Inventory Value determined pursuant to Section 2.4(a), whether by (i) Seller’s and Purchaser’s mutual agreement in writing, or (ii) delivery thereof by the Independent Accountants, is hereinafter referred to as the “Final Closing Inventory Value.”

(c)    If the Final Closing Inventory Value is less than $11,500,000, then (A) the Initial Purchase Price shall be reduced, dollar for dollar, by the amount of such shortfall (with the amount of the Initial Purchase Price as so reduced referred to herein as the “Final Purchase Price”), and (B) Seller shall pay to Purchaser an amount equal to (x) the Initial Purchase Price less (y) the Final Purchase Price.

(d)    If the Final Closing Inventory Value is greater than $11,500,000, then (A) the Initial Purchase Price shall be increased, dollar for dollar, by the amount of such excess (with the amount of the Initial Purchase Price as so increased also referred to herein as the “Final Purchase Price”) and (B) Purchaser shall pay to Seller an amount equal to (x) the Final Purchase Price less (y) the Initial Purchase Price.

(e)    Any payment due by Seller to Purchaser or by Purchaser to Seller pursuant to this Section 2.4 shall be paid no later than three business days after the determination of the Final Closing Inventory Value, by wire transfer of immediately available funds to such account as shall be designated by the recipient.

(f)    Payments owing by one party to the other under this Section 2.4 shall bear interest at the Agreed Rate from the date of determination of the Final Closing Inventory Value until the date payment-in-full is made.

2.5    Sales Taxes . Provided that Purchaser delivers to Seller at the Closing the exemption certificate referenced in Section 6.3(d)(iii) below, Seller shall be responsible for and duly pay all sales, use, excise, transfer, value added and similar Taxes imposed by any Government in any jurisdiction on the purchase and sale of any of the Acquired Assets.

2.6    Price Allocation . The Final Purchase Price shall be allocated in accordance with a schedule to be mutually agreed upon by the parties following the Closing. After the Closing, Purchaser and Seller shall make consistent use of the agreed upon allocation for all purposes (including financial and regulatory reporting purposes and Tax purposes). Purchaser and Seller further agree to file, as applicable, their respective U.S. federal income Tax returns and Form 8594 and, to the extent not in conflict with applicable Law, their other Tax returns reflecting such allocation and any other reports required by Section 1060 of the Code, in accordance with said allocation. Each party agrees to prepare and timely file all applicable IRS forms, to cooperate with the other party in the preparation of such forms and to furnish the other party with a copy of such forms prepared in draft, within a reasonable period before the due date thereof. In addition, each party agrees to notify the other party in the event any taxing authority takes or purports to take a position inconsistent with the agreed-upon allocations.

3.    REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser represents and warrants to Seller that:

3.1    Organization, Good Standing, Authority and Enforceability . Each of Parent and Purchaser is a corporation duly organized, validly existing and in good standing under the Laws of the State of its incorporation. Each of Parent and Purchaser has all requisite power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. This Agreement and each other agreement and instrument to be executed by Parent or Purchaser, as applicable, in connection herewith have been (or upon execution shall have been) duly executed and delivered by Parent or Purchaser, as applicable, have been duly authorized by all necessary corporate action and constitute (or upon execution shall constitute) legal, valid and binding obligations of Parent and Purchaser enforceable against Parent and Purchaser in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other Laws relating to or affecting the rights and remedies of creditors generally and to general principles of equity (regardless of whether considered in a proceeding in equity or at law).

3.2    Agreement Not in Breach of Other Instruments . Neither the execution and delivery of this Agreement or the Transaction Agreements by Parent or Purchaser nor the consummation of the transactions contemplated herein or therein shall result in a violation or breach of, or constitute a default under (i) any agreement, indenture or other instrument to which Parent or Purchaser is a party or by which it is bound, (ii) the organizational and charter documents of Parent or Purchaser, (iii) any judgment, decree, order or award of any court, Government or arbitrator by which parent or Purchaser is bound, or (iv) any Law applicable to Parent or Purchaser.

3.3    Consents . The execution and delivery of this Agreement and the Transaction Agreements by Parent and Purchaser and the consummation by them of the transactions contemplated in this Agreement and in the Transaction Agreements (i) do not require the consent, approval or action of, or any filing with or notice to, any Person or Government, including any filing under the HSR Act, other than as specified in Schedule 3.3, and (ii) do not require the consent or approval of Parent’s or Purchaser’s, as applicable, stockholders or board of directors, except such as have been obtained and are in full force and effect.

3.4    Available Funds . Purchaser has readily available to it funds sufficient to allow it to consummate the transactions contemplated by this Agreement on a timely basis.

3.5    No Brokerage Fees . Neither Parent, Purchaser nor anyone acting on their behalf has incurred any liability or obligation to pay fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement for which Seller or any of its Affiliates shall be liable.

4.    REPRESENTATIONS AND WARRANTIES OF SELLER

Seller represents and warrants to Purchaser that:

4.1    Organization, Good Standing and Authority . Seller is a corporation duly organized, validly existing and in good standing under the Laws of the State of Ohio. Seller has full corporate authority and power to carry on the Business as it is now conducted, and to own, lease or operate the Acquired Assets. Set forth in Schedule 4.1 is a true and correct list of all jurisdictions in which the Business owns or leases property for use in the Business.

4.2    Authorization of Agreement. 

(a)    Seller has all requisite power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. Subject to receipt of approval from the shareholders of Seller, this Agreement and each other agreement and instrument to be executed by Seller in connection herewith have been (or upon execution shall have been) duly executed and delivered by Seller, have been duly authorized by all necessary corporate and shareholder action and constitute (or upon execution shall constitute) legal, valid and binding obligations of Seller, enforceable against Seller in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other Laws relating to or affecting the rights and remedies of creditors generally and to general principles of equity (regardless of whether considered in a proceeding in equity or at law); and

(b)    Except as set forth in Schedule 4.2, neither the execution and delivery of this Agreement by Seller nor the consummation of the transactions contemplated herein shall result in a violation or breach of, or constitute a default under (i) the Articles of Incorporation or Code of Regulations of Seller, (ii) any material term or provision of any Assumed Contract or other contract, indenture, note, mortgage, bond, security agreement, loan agreement, guaranty, pledge, or other agreement, instrument or document to which Seller is a party or by which Seller is bound, (iii) any judgment, decree, order or award of any court, Government or arbitrator by which Seller is bound, or (iv) to Seller’s Knowledge any Law applicable to Seller.

4.3    Acquired Assets . Except as set forth in Schedule 4.3, Seller is the lawful owner of or has the right to use each of the Acquired Assets free and clear of all Liens. Except for Excluded Assets and except as set forth on Schedule 4.3, there are no assets or properties used exclusively in and necessary for the operation of the Business as currently conducted and owned by any Person other than Seller that shall not be leased or licensed to Purchaser under a valid, current lease or license arrangement included among the Assumed Contracts. Seller has, and will, as of the Closing Date, have the right, power and authority to convey, transfer, assign and deliver the Acquired Assets to Purchaser free and clear of any Lien. The Acquired Assets comprise the tangible assets used or held for use by Seller and necessary to operate the Business as currently being operated by Seller. All Acquired Assets are in operating condition and have been reasonably maintained in accordance with normal industry practice.

4.4    Financial Statements . Seller previously has delivered to Purchaser copies of certain management measurements of income and losses and certain assets and liabilities with respect to the Business (collectively, the “Reports”). The Reports (a) were prepared in all material respects in accordance with the internal accounting practices of Seller and (b) were prepared in all material respects consistent with past practices of Seller for measuring income and loss for unincorporated business units based on business unit accounting and not necessarily in accordance with GAAP.

4.5    Real Property . Except as set forth in Schedule 4.5 and except with respect to matters arising under Environmental Laws, for which Seller makes only those representations and warranties set forth in Section 4.7:

(a)    Seller owns good and marketable fee simple title to the Owned Real Property, free and clear of all Liens;

(b)    the Owned Real Property constitutes all of the real property currently owned by Seller and used for the operation of the Business as presently conducted;

(c)    each parcel of Owned Real Property has adequate access to the existing roads and other public rights of way for the operation of the Business as presently conducted;

(d)    the present use, occupancy and operation of the Owned Real Property, and all aspects of the improvements to the Owned Real Property (the “Real Property Improvements”), are in compliance in all material respects with all applicable Laws;

(e)    all Real Property Improvements are located within the lot lines of the Owned Real Property (and within the mandatory set-backs from such lot lines established by applicable Law or otherwise) and not over areas subject to any easements or rights of way which would make the Owned Real Property unusable for its current use or impair the value of the Owned Real Property; and

(f)    all material certificates of occupancy and other permits and approvals required with respect to the Real Property Improvements and the use, occupancy and operation thereof have been obtained and paid for and are currently in effect, and Seller has not received any notices of violation in connection with such items.

4.6    Utilities . Except as set forth on Schedule 4.6, each parcel of Owned Real Property at which the Business is conducted has access to utilities (including electric, natural gas, water, sewer, telephone, and similar services but excluding electronic data transmission services) adequate to operate the Business operated at such parcel in the manner currently conducted.

4.7    Environmental Matters . To Seller’s Knowledge, Schedule 4.7 contains a list of all environmental studies, analyses and reports prepared during the last five years and in Seller’s possession or reasonably available to Seller relating to the environmental condition of the Owned Real Property and the operation of the Business (collectively, the “Environmental Reports”), and Seller has made available to Purchaser copies of all such Environmental Reports, if any. To the Actual Knowledge of Seller, except as set forth in Schedule 4.7, Seller is and has been conducting the Business and the Facility in compliance, in all material respects, with all applicable Environmental Laws.

4.8    Employment Matters . Seller or an Affiliate has withheld or collected from each payment made to each of the Employees the amount of all Taxes required to be withheld or collected therefrom, and Seller or an Affiliate has paid the same when due to the applicable Government agency.

(a)    Schedule 4.8(a) lists all current non-represented Employees, as of May 1, 2006, and their hourly rates of compensation or base salaries. To the extent any Employees were on a leave of absence as of January 1, 2005, Schedule 4.8(b) indicates the nature of such leave of absence and each such Employee’s anticipated date of return to active employment. Seller has complied, in all material respects, with all Laws relating to the recruitment and hiring and the employment of the Employees, including Laws relating to wages, hours, equal opportunity, immigration, collective bargaining and occupational health and safety.

(b)    Schedule 4.8(b) list all workers’ compensation and occupational disease claims and occurrences by any existing Employees or Former Employees of the Business made since January 1, 2006, and all claims made prior to that date that remain open.

4.9    Employee Benefit Plans . To Seller’s Knowledge, except as set forth on Schedule 4.9, each Plan, and the administration of each Plan, complies with all applicable Laws (including, in the case of Plans which are intended to be tax-qualified, all applicable provisions of the Code, including Sections 401(a) and 401(k)), except for any noncompliance that would not reasonably be expected to have a Material Adverse Effect. Except as set forth on Schedule 4.9, Seller has not, with respect to the Business, established, maintained or contributed to or otherwise participated in a multi-employer retirement plan (as defined in Section 3(37)(A) of ERISA), any defined benefit plan within the meaning of Section 3(35) of ERISA, or any other plan which is subject to the provisions of Sections 302 or Title IV of ERISA or Section 412 of the Code, and Seller and its ERISA Affiliates have timely made any contributions required by them to any such plan, and have no unpaid withdrawal liability or termination liability under Title IV of ERISA with respect to any such plan. Schedule 4.9 identifies all Employees and Former Employees and their dependents eligible for health benefits as required by COBRA from Seller or any of its ERISA Affiliates. To Seller’s Knowledge, notice in accordance with the requirements of COBRA, has been provided to all Employees and Former Employees (and their spouses and dependants) entitled thereto, and all such persons electing such coverage are being (or will be or have been, as applicable) provided such coverage, except to the extent failure to give such notice would not result in a Material Adverse Effect.

4.10    Consents . The execution and delivery of this Agreement and the Transaction Agreements by Seller and the consummation by Seller of the transactions contemplated in this Agreement and in the Transaction Agreements (i) do not require the consent, approval or action of, or any filing with or notice to, any Government entity other than as specified in Schedule 4.10, and (ii) requires the consent and approval of Seller’s shareholders and board of directors.

4.11    Disclaimer. EXCEPT AS EXPRESSLY AND SPECIFICALLY SET FORTH HEREIN, (i) ALL ACQUIRED ASSETS ARE BEING CONVEYED HEREUNDER ON AN “AS IS, WHERE IS” BASIS AND (ii) SELLER MAKES NO WARRANTIES OR REPRESENTATIONS, EXPRESS OR IMPLIED, WITH RESPECT TO THE ACQUIRED ASSETS OR THE BUSINESS, INCLUDING WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND WARRANTIES AS TO THE PROSPECTS OF THE BUSINESS AFTER THE CLOSING, ALL OF SUCH EXPRESS AND IMPLIED WARRANTIES AND REPRESENTATIONS ARE HEREBY EXCLUDED.

4.12    Absence of Changes . Except as provided for in this Agreement or as set forth in Schedule 4.12, since March 31, 2006:

(a)    no event has occurred that has had or would reasonably be expected to have a Material Adverse Effect;

(b)    the Business has been operated in the Ordinary Course of Business;

(c)    no liability or obligation (whether absolute, accrued, contingent or otherwise) in excess of $250,000 has been incurred by Seller with respect to the Business, other than liabilities incurred in the Ordinary Course of Business;

(d)    Seller has not (i) paid any judgment in excess of $250,000 resulting from any Action against Seller relating to the Acquired Assets or (ii) made any payment to any Person in excess of $250,000 in settlement of any Action against Seller relating to the Business or the Acquired Assets;

(e)    there has been no sale, transfer, lease or other disposition of any assets of Seller that are necessary for or used exclusively in the Business, other than sales of Inventory in the Ordinary Course of Business and any other asset that is not material to the current operation of the Business; or

(f)    Seller has not entered into any contract, oral or written, to do or engage in any of the foregoing after the date hereof.

4.13    Assumed Contracts . Schedule 4.13 hereto lists all of the Assumed Contracts. Except as set forth on Schedule 4.13, and assuming due execution and delivery by the counterparties thereto, each Assumed Contract is in full force and effect and is, in all material respects, a valid and binding obligation, enforceable in all material respects in accordance with its terms, subject only to bankruptcy, reorganization, receivership and other laws affecting creditors’ rights generally and to general principals of equity, whether invoked in a proceeding in equity or at law. Seller is not in default under or in violation of any of the Assumed Contract, and to Seller’s Knowledge, no event has occurred which, with notice or lapse of time or both, would constitute such a default or violation. To Seller’s Knowledge, there is no default under or violation of any of the Assumed Contracts by any other party thereto.

4.14    Compliance with Laws . Seller is and has been conducting the Business in compliance, in all material respects, with all applicable Laws relating to the Acquired Assets and the operation and conduct of the Business and no assertion of a violation of any such Laws has been received or, to Seller’s Knowledge, is threatened. Notwithstanding the foregoing or anything to the contrary in this Agreement, the representations or warranties in this Section 4.14 shall NOT apply to Environmental Laws and Seller may look only to the representations or warranties in Section 4.7 as they may relate to Seller’s compliance with Environmental Laws.

4.15    Customers and Suppliers . Schedule 4.15 sets forth the names of the ten (10) most significant (i) customers (by revenue, including percentages of total revenues) of the Business and (ii) suppliers (by expense) exclusively to the Facility, in each case for the twelve (12) month period ending December 31, 2005. Except as disclosed on Schedule 4.15, to Seller’s Knowledge, no material customer or supplier of the Business has canceled or otherwise terminated, or made any threat to cancel or otherwise terminate, its relationship with Seller. To Seller’s Knowledge, with respect to the Business, no such customer has provided written notice that such customer intends to cancel or otherwise terminate its relationship with Seller or to materially decrease its purchase of products and services from Seller.

4.16    No Broker’s Fees . Neither Seller nor anyone acting on Seller’s behalf has incurred any liability or obligation to pay fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement for which Purchaser or any Affiliate of Purchaser shall be liable.

4.17    No Other Representations and Warranties . Seller has not made, and Seller shall not be deemed to have made, any representation or warranty other than as expressly made by Seller in this Section 4, the Schedules or the Transaction Agreements . Without limiting the generality of the foregoing, and notwithstanding any representations and warranties made by Seller in this Section 4, Seller makes no representation or warranty with respect to (i) any projections, estimates or budgets delivered or made available to Purchaser or its Representatives at any time with respect to future revenues, expenses or expenditures or future results of operations, or (ii) except as expressly covered by a representation and warranty contained in this Section 4, any other information or documents (financial or otherwise) made available to Purchaser or its Representatives before or after the date of this Agreement. No representation or warranty of Seller contained in this Section 4 or in any Schedule hereto contains an untrue statement of material fact or omits to state a material fact required to be stated therein or necessary to make the statements made, in the context in which made, not false or misleading.

5.    CERTAIN UNDERSTANDINGS AND AGREEMENTS OF THE PARTIES

5.1    Reasonable Efforts; Further Assurances . Each party shall use its reasonable efforts to take or cause to be taken all actions necessary, proper or advisable to fulfill and perform its obligations in respect of this Agreement, or otherwise to consummate and make effective the transactions contemplated hereby and to cause its respective conditions set forth in Sections 6.1, 6.2 and 6.3 to be satisfied. From time to time after the Closing, each party shall execute and deliver any documents and take any other actions that the other party reasonably requests to confirm or effectuate the consummation of the transactions contemplated by this Agreement.

5.2    Employment Matters .

(a)    Purchaser and its Affiliates, as appropriate, shall:

(i)    effective as of the Closing Date, offer “at will” employment to all non-represented Employees who timely complete and deliver Purchaser’s standard employment application, which offer will be contingent upon such non-represented Employees passing Purchaser’s medical exam and drug test requirements. Said Employees shall also be offered the same benefits as currently available to Purchaser’s employees; provided, however, that such non-represented Employees shall be offered positions with b