Sale
Agreement
This
Sale Agreement (this "Sale Agreement") is made and entered
into by and among the undersigned at the address set forth
under their respective names (each a "Seller" and collectively
the "Sellers") and National Patent Development Corporation, a
Delaware corporation with principal executive offices at 10
East 40th Street, Suite 3110, New York, NY 10016
("NPDC") and Five Star Products, Inc., a Delaware with
principal offices at 10 East 40th Street, Suite 3110, New
York, NY 10016 ("Five Star").
NOW THEREFORE , in consideration of the mutual promises and
covenants contained herein, it is agreed as follows:
1.
Sale
of Shares .
(a) On
such date and time (the "Closing Date") and place as NPDC
shall purchase shares of NPDC common stock, par value $0.01,
(the "NPDC Common Stock") and shares of common stock, $0.01
par value, of Five Star Products, Inc. (the "Five Star Common
Stock") from Leslie Flegel pursuant to the terms of the
Agreement and Release made and entered into among Leslie
Flegel, NPDC and Five Star (the "Flegel Agreement"), each
Seller will sell the number of shares of the Five Star Common
Stock set forth next to its name to NPDC for $0.60 per share
at the closing (the "Closing") and NPDC shall purchase such
shares conditioned on the consummation of the closing provided
for in the Flegel Agreement. NPDC may elect not to
proceed with the purchase of any Seller's shares of Five Star
Common Stock if any other Seller does not sell its shares of
Five Star Common Stock to NPDC hereunder.
(b) At
the Closing, each Seller shall deliver to NPDC certificates
representing the Five Star Common Stock to be purchased by
NPDC endorsed in blank or having attached a duly executed
stock power, in each case in proper form for transfer, with
signatures guaranteed by a commercial bank, and with all
applicable stock transfer tax stamps affixed
thereto. By delivering
the certificates at the Closing, each Seller represents with
respect to the shares of Five Star Common Stock being sold by
it, that it owns beneficially and of record all of such
shares, free and clear of any and all pledges, liens,
encumbrances or security interests of any kind or nature other
than these resulting from acts or failure to act of NPDC and
except for the Lock-up Agreement between each Seller and Five
Star (the "Lock-up Agreement"). The Sellers
represent that except for the Lock-up Agreement they have full
right and authority to so transfer such shares to NPDC, and
all such transferred shares shall not be subject to any voting
trust, proxies or other agreements relating to the voting or
transfer thereof.
2.
Representations of the Sellers .
(a) Each
Seller acknowledges that NPDC may now or at the Closing Date
be in possession of material inside information regarding NPDC
or Five Star that such Seller is not aware
of. Nonetheless, each Seller willing has agreed to
sell the shares of Five Star Common Stock owned by it to NPDC
pursuant to the terms of this Agreement. Each
Seller represents that it has retained the services of Leslie
Flegel to advise it with respect the sale provided herein and
he is a "purchaser representative" as defined in Regulation D
under Securities Act of 1933, as amended and he is a
sophisticated investor with experience in transactions in
securities of the kind reflected in this Agreement and each
Seller has also sought and received the advice of legal
counsel familiar with transactions of this kind and it is not
relying on any disclosure or non-disclosure made or not made,
or the completeness thereof, in connection with or arising out
of its sale of such shares and has no claims against NPDC with
respect thereto and if any such claim exists, each Seller,
recognizing its disclaimer of reliance and NPDC's reliance on
such disclaimer as a condition for entering into the purchase
of such shares, covenants and agrees not to assert it against
NPDC or any affiliate of NPDC including Five
Star.
(b) Except
for the Lock-up Agreement, no authorization, consent or
approval of, or exemption by, any governmental or public body
or authority is required to authorize, or is required in
connection with, the execution, delivery and performance of
this Agreement, or the taking of any action contemplated
hereby, by each Seller, except those that have been obtained
or are available.
(c) Neither
the execution and delivery of this Agreement, nor compliance
with any of the terms and provisions hereof, nor the
consummation of any of the transactions herein contemplated
will: (i) violate any law, regulation, order, writ, injunction
or decree of any court or governmental department, commission,
board, bureau, agency or instrumentality applicable to any
Seller, or (ii) conflict or be inconsistent with, or result in
any breach of, any of the terms, covenants, conditions or
provisions of, or constitute a default under the terms of any
indenture, mortgage, deed of trust, agreement or other
instrument, to which any Seller is a party or by which it may
be bound or to which it may be subject except the Lock-up
Agreement.
3.
Specific
Performance . Each Seller understands and
agrees t
