STOCK PURCHASE AGREEMENT

Stock Purchase Agreement

AGREEMENTS / CONTRACTS

CLAUSES

Bristol, Inc | Carlyle Group | Diversified Machine, Inc | HLI Operating Company, Inc | HLI Suspension Holding Company, Inc | Montague, Inc

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Title: STOCK PURCHASE AGREEMENT
Governing Law: Michigan Date: 6/8/2007
Industry: Auto and Truck Parts Sector: Consumer Cyclical

EXHIBIT 10.23

STOCK PURCHASE AGREEMENT

BY AND AMONG

DIVERSIFIED MACHINE, INC.

and

HLI OPERATING COMPANY, INC.

and

HLI SUSPENSION HOLDING COMPANY, INC.

Dated as of
February 1, 2007

TABLE OF CONTENTS

ARTICLE I

DEFINITIONS AND TERMS

ARTICLE II

PURCHASE AND SALE OF SHARES

ARTICLE III

CLOSING


Section 3.1	Closing	11
Section 3.2	Deliveries by Seller and the Companies	11
Section 3.3	Deliveries by Purchaser	13
Section 3.4	Simultaneous Transactions	14
Section 3.5	Purchase Price Adjustment	14
Section 3.6	Allocation of Purchase Price	17

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF SELLER

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF SELLER
WITH RESPECT TO THE COMPANIES


Section 5.1	Organization and Qualification	18
Section 5.2	Financial Statements; Receivables; Inventories	19
Section 5.3	Absence of Certain Changes or Events	19
Section 5.4	Ownership of Stock; Capitalization	20
Section 5.5	Consents and Approvals; No Violation	21
Section 5.6	Absence of Litigation	21
Section 5.7	Related Party Agreements	21
Section 5.8	Permits; Compliance with Laws	21
Section 5.9	Employee Benefit Plans; ERISA	22
Section 5.10	Material Contracts	23
Section 5.11	Personal Property	25
Section 5.12	Environmental Matters	25
Section 5.13	Real Property	26
Section 5.14	Labor Matters	27
Section 5.15	Insurance	28
Section 5.16	Intellectual Property	28
Section 5.17	Taxes	28
Section 5.18	Products Liability	31
Section 5.19	Brokers	31
Section 5.20	Corporate Records	31
Section 5.21	Sufficiency of Assets and Intercompany Services	31
Section 5.22	Material Customers and Suppliers	31
Section 5.23	Employees; Employment Contracts	32
Section 5.24	No Undisclosed Liabilities	32
Section 5.25	Disclaimer of Warranties	32

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF PURCHASER


Section 6.1	Organization	33
Section 6.2	Authority; Binding Effect	33


Section 6.3	No Violation; Consents and Approvals	33
Section 6.4	Acquisition of Shares for Investment	33
Section 6.5	Absence of Litigation	34
Section 6.6	Financing	34
Section 6.7	Brokers	34
Section 6.8	Investigation	34

ARTICLE VII

COVENANTS


Section 7.1	Conduct of Business	35
Section 7.2	Commercially Reasonable Efforts	37
Section 7.3	Consents	37
Section 7.4	Antitrust Notification	37
Section 7.5	Further Assurances	37
Section 7.6	Access to Information; Confidentiality	37
Section 7.8	Inter-Company Obligations; Affiliate Agreements	38
Section 7.9	Supplements to Disclosure Schedule	38
Section 7.10	Access to Books and Records Following the Closing	38
Section 7.11	Resignations	39
Section 7.12	Covenant Not To Compete	39
Section 7.13	Transition Services Agreement	40
Section 7.14	Patent Assignment	40
Section 7.15	Public Announcements	41
Section 7.16	Use of Names	41
Section 7.17	Employees; Employee Benefits	41
Section 7.18	Assignment and Assumption of Contracts	43
Section 7.19	Tax Returns	44
Section 7.20	Purchaser’s Due Diligence Reports	46
Section 7.21	Insurance	46

iii

ARTICLE VIII

CONDITIONS TO CLOSING

ARTICLE IX

INDEMNIFICATION OBLIGATIONS; SURVIVAL

ARTICLE X

TERMINATION

ARTICLE XI

MISCELLANEOUS


Section 11.1	Notices	54
Section 11.2	Amendment; Waiver	55
Section 11.3	Assignment	55
Section 11.4	Entire Agreement	56
Section 11.5	Fulfillment of Obligations	56
Section 11.6	Parties in Interest	56
Section 11.7	Expenses	56
Section 11.8	Brokers	56
Section 11.9	Governing Law; Jurisdiction	56


Section 11.10	Counterparts	56
Section 11.11	Headings	56
Section 11.12	Further Assurances	56
Section 11.13	Specific Performance	57
Section 11.14	Knowledge	57
Section 11.15	Severability	57
Section 11.16	No Strict Construction	57
Section 11.17	UIA Form 1027	57

LIST OF EXHIBITS AND SCHEDULES


EXHIBITS
Exhibit A		Accounting Principles
Exhibit B		Calculation of Base Amount
Exhibit C		Resolution of Stockholders of the Companies re Officers and Directors
Exhibit D		Financial Statements
Exhibit E		Form of Transition Services Agreement
Exhibit F		Form of Patent Assignment
Exhibit G		Form of Escrow Agreement
Exhibit H		Form of Amendment to the Alcoa License Agreement


SCHEDULES
2.1		Ferndale Assets
3.5(g)		Property Tax Prorations
3.6		Allocation of Purchase Price
4.3		Title to Shares
4.4		No Violation
4.5		Absence of Litigation: Sellers
5.1		Organization and Qualification
5.2(a)		Financial Statements and Inventories: Accounting Principles
5.2(b)		Financial Statements and Inventories: Receivables
5.3		Absence of Certain Changes or Events
5.4(a)		Ownership of Stock; Capitalization: Issued and Outstanding Capital Stock
5.4(b)		Ownership of Stock; Capitalization: Options and Warrants
5.4(c)		Ownership of Stock; Capitalization: Liens on Shares
5.5(a)		Consents and Approvals; No Violation: Consents
5.5(b)		Consents and Approvals; No Violation: Conflicts
5.6		Absence of Litigation: Companies
5.7		Related Party Agreements
5.8		Permits; Compliance With Laws
5.9(a)		Employee Benefit Plans; ERISA: List of Plans
5.9(c)		Employee Benefit Plans; ERISA: ERISA Plan Assets
5.9(g)		Employee Benefit Plans; ERISA: Retiree Medical Plans
5.9(h)		Employee Benefit Plans; ERISA: Retention Agreements
5.10(a)		Material Contracts
5.10(b)		Material Contracts: Breach
5.11		Personal Property
5.12(a)		Environmental Matters: Compliance and Permits
5.12(b)		Environmental Matters: Claims and Releases
5.12(c)		Environmental Matters: Hazardous Materials
5.12(e)		Environmental Claims


SCHEDULES
5.13(a)		Real Property: Owned Realty
5.13(b)		Real Property: Liens
5.14		Labor Matters
5.15		Insurance
5.16		Intellectual Property
5.17		Taxes
5.18		Products Liability
5.20		Corporate Records
5.21		Sufficiency of Assets and Intercompany Services
5.22		Material Customers and Suppliers
5.23		Employees; Employment Contracts
5.24		No Undisclosed Liabilities
6.3(b)		No Violation; Consents and Approvals: Consents
7.1		Conduct of Business
7.8		Intercompany Obligations; Affiliate Agreements
7.11		Resignations
7.14		Patent Assignment
7.17(a)		Continuing Ferndale Employees
7.17(f)		Continuing Employees Receiving Short-Term Disability Benefits
7.18		Assignment and Assumption of Contracts
8.1(c)		Consents

vii

STOCK PURCHASE AGREEMENT (this “ Agreement ”), dated as of February 1, 2007, by and among Diversified Machine, Inc. a Delaware corporation (“ Purchaser ”), HLI Operating Company, Inc., a Delaware corporation (“ HLI Opco ”) and HLI Suspension Holding Company, Inc., a Michigan corporation (“ HLI Suspension ”). HLI Opco and HLI Suspension, jointly and severally, shall be referred to collectively as “Seller.”

W I T N E S S E T H :

WHEREAS, HLI Opco is the direct record and beneficial owner of all of the issued and outstanding shares of capital stock of HLI Suspension;

WHEREAS, HLI Suspension is the direct record and beneficial owner of all of the issued and outstanding shares of capital stock (the “HLI Bristol Shares”) of Hayes Lemmerz International – Bristol, Inc., a Michigan corporation (“ HLI Bristol ”) and all of the issued and outstanding shares (the “HLI Montague Shares”) of capital stock of Hayes Lemmerz International – Montague, Inc., a Michigan corporation (“ HLI Montague ”);

WHEREAS, the Companies (as defined below) are engaged in the business of designing, fabricating, procuring, marketing, selling and distributing cast aluminum and/or machined suspension components for the automotive industry in the North American market (the “ Business” ) and, in connection therewith, own and operate certain manufacturing facilities located in Bristol, Indiana; and Montague, Michigan (collectively, the “ Plants ”);

WHEREAS, Purchaser desires to acquire from Seller, and Seller desires to sell to Purchaser, the Companies, the Business and the Plants by means of the purchase and sale (the “ Stock Purchase ”) of the HLI Bristol Shares and the HLI Montague Shares (collectively, the “Shares”), all upon the terms and subject to the conditions contained herein; and

WHEREAS, the respective Boards of Directors and requisite shareholders of Seller and Purchaser have approved this Agreement and the transactions contemplated hereby.

NOW, THEREFORE, in consideration of the mutual covenants and undertakings contained herein, and subject to and on the terms and conditions herein set forth, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS AND TERMS

Section 1.1 Certain Definitions. As used in this Agreement, the following terms shall have the meanings set forth or as referenced below:

“ Accounting Firm ” shall have the meaning set forth in Section 3.5(b) hereof.

“ Accounting Principles ” shall mean the methodologies, practices, accounting applications and assumptions of the Companies set forth on Exhibit A hereto.

“ Affiliate ” shall mean, as to any Person (as hereinafter defined), any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. The term “ control ” (including, with correlative meanings, the terms “ controlled by ” and “ under common control with ”), as applied to any Person, means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or other ownership interest, by contract or otherwise.

“ Affiliate Agreements ” shall have the meaning set forth in Section 7.8 hereof.

“ Agreement ” shall mean this Agreement, as the same may be amended or supplemented from time to time in accordance with the terms hereof.

“ Balance Sheets ” shall have the meaning set forth in Section 5.2(a) hereof.

“ Base Amount ” shall mean the twelve month trailing average of Working Capital as the last day of each month for the twelve full months immediately prior to the Closing Date. If the Closing Date occurs in January 2007, the Base Amount shall be Twenty-Nine Million Six Hundred Thirty-Two Thousand Dollars ($29,632,000), as calculated in accordance with Exhibit B . If the Closing Date occurs after January 2007, the Base Amount shall be calculated in a manner consistent with Exhibit B .

“ Business ” shall have the meaning set forth in the recitals hereto.

“ Business Day ” shall mean any day other than a Saturday, a Sunday or a day on which banks in the City of New York are authorized or obligated by law or executive order to close.

“ Capital Expenditures Adjustment ” shall have the meaning set forth in Section 2.3(a) hereof.

“ Capital Expenditures Budget ” shall have the meaning set forth in Section 2.3(a) hereof.

“ Closing ” shall mean the closing of the transactions contemplated by this Agreement, as provided for in Section 3.1 hereof.

“ Closing Date ” shall have the meaning set forth in Section 3.1 hereof.

“ Closing Working Capital ” shall have the meaning set forth in Section 3.5(a) hereof.

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

“ Companies ” shall mean and include each of HLI Bristol and HLI Montague.

“ Confidentiality Agreement ” shall mean the Confidentiality Agreement, dated May 8, 2006, between Purchaser and Seller.

“ Consents ” shall have the meaning set forth in Section 5.5(a) hereof.

“ Continuing Employees ” shall have the meaning set forth in Section 7.17(b) hereof.

“ Continuing Ferndale Employees ” shall have the meaning set forth in Section 7.17(a) hereof.

“ Contracts ” shall have the meaning set forth in Section 5.10(a) hereof.

“ Credit Agreement ” shall mean the Amended and Restated Credit Agreement, dated as of April 11, 2005, by and among Seller, as Borrower, Hayes Lemmerz International, Inc., the Lenders and Issuers listed therein, Citicorp North America, Inc., as First Lien Agent, Second Lien Agent and Collateral Agent, Lehman Commercial Paper, Inc., as Syndication Agent, and General Electric Capital Corporation, as Documentation Agent, including any related Mortgages, Deeds of Trust, Guaranties, Pledge and Security Agreements, or other documents executed in connection therewith by Seller or any of the Companies, all as amended through the date hereof.

“ Damages ” shall have the meaning set forth in Section 9.1(a) hereof.

“ Environmental Claim ” means any claim, action, cause of action, investigation or written notice by any person or entity, either pending or threatened in writing, alleging potential liability (including, without limitation, potential liability for investigatory costs, remediation costs, governmental response costs, natural resources damages, property damages, personal injuries, or penalties) arising out of, based on or resulting from (a) the presence or Release of any Hazardous Materials at any location whether or not owned or operated by any of the Companies, or (b) circumstances forming the basis of any violation of any Environmental Law.

“ Environmental Laws ” shall mean all United States federal, state and local laws and regulations relating to pollution or protection of human health or the environment, including laws relating to Releases or threatened Releases of Hazardous Materials or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials and all laws and regulations with regard to recordkeeping, notification, disclosure and reporting requirements respecting Hazardous Materials.

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

“ ERISA Affiliate ” shall mean each trade or business (whether or not incorporated) that together with one or more of the Companies would be deemed to be a “single employer” within the meaning of Section 4001(b) of ERISA.

“ ERISA Plans ” shall have the meaning set forth in Section 5.9(a) hereof.

“ Escrow Agent ” shall mean LaSalle Bank or another entity mutually acceptable to Seller and Purchaser.

“ Escrow Agreement ” shall have the meaning set forth in Section 9.3(d) hereof.

“ Escrow Amount ” shall have the meaning set forth in Section 3.3(a) hereof.

“ Estimated Closing Working Capital ” shall have the meaning set forth in Section 2.3(b) hereof.

“ Excepted Seller Claims ” shall have the meaning set forth in Section 9.3(b) hereof.

“ Final Closing Working Capital ” shall have the meaning set forth in Section 3.5(c) hereof.

“ Financial Statements ” shall have the meaning set forth in Section 5.2(a) hereof.

“ GAAP ” shall mean generally accepted accounting principles and practices in effect from time to time in the United States as consistently applied.

“ Governmental Authority ” shall have the meaning set forth in Section 5.5(a) hereof.

“ HLI Bristol ” shall have the meaning set forth in the recitals hereto.

“ HLI Bristol Shares ” shall have the meaning set forth in the recitals hereto.

“ HLI Montague ” shall have the meaning set forth in the recitals hereto.

“ HLI Montague Shares ” shall have the meaning set forth in the recitals hereto.

“ HLI Suspension ” shall have the meaning set forth in the recitals hereto.

“ Hazardous Materials ” shall mean all substances defined as Hazardous Substances, Oils, Pollutants or Contaminants in the National Oil and Hazardous Substances Pollution Contingency Plan 40 C.F.R. § 300.5.

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

“ Indebtedness ” of any Person at any date shall include (a) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services (other than current trade liabilities incurred in the ordinary course of business and payable in accordance with customary practices), (b) any other indebtedness of such Person that is evidenced by a note, bond, debenture or similar instrument, (c) all obligations of such Person in respect of acceptances issued or created for the account of such

Person, including, but not limited to, letters of credit, (d) all liabilities secured by any Lien (as hereinafter defined) on any property owned by such Person even though such Person has not assumed or otherwise become liable for the payment thereof and (e) all direct or indirect guarantees of any of the foregoing for the benefit of another Person.

“ Indenture ” shall mean the Indenture dated as of June 3, 2003 with respect to Seller’s 10 ¹ / 2 % Senior Notes Due 2010, as amended or supplemented from time to time.

“ Initial Purchase Price ” shall have the meaning set forth in Section 2.3(a) hereof.

“ Intellectual Property ” shall have the meaning set forth in Section 5.16 hereof.

“ IRS ” shall mean the Internal Revenue Service of the United States.

“ Knowledge of Purchaser ” shall have the meaning set forth in Section 11.14 hereof.

“ Knowledge of Seller ” shall have the meaning set forth in Section 11.14 hereof.

“ Labor Laws ” shall have the meaning set forth in Section 5.14 hereof.

“ Laws ” shall mean any United States federal, state or local law, statute, ordinance, rule, regulation, order, judgment or decree, administrative order or decree, administrative or judicial decision, and any other executive or legislative proclamation.

“ Liens ” shall mean any lien, security interest, mortgage, pledge, charge or similar encumbrance.

“ Litigation ” shall have the meaning set forth in Section 5.6 hereof.

“ Material Adverse Effect ” shall mean a material adverse effect on the business, assets, results of operations, condition (financial or otherwise) or prospects (such prospects limited to the existing book of business with current customers) of the Companies, taken as a whole, except any such effect resulting primarily from (a) this Agreement, the transactions contemplated by this Agreement or the announcement thereof, (b) Purchaser’s announcement or other disclosure of its plans or intentions with respect to the conduct of the Business (or any portion thereof) of the Companies or (c) changes or conditions (including changes in economic, financial market, regulatory or political conditions, whether resulting from acts of terrorism or war or otherwise) affecting the United States economy or the industry in which the Companies operate generally, to the extent such changes or conditions do not have a significant impact on the Companies or their customers.

“ Material Contracts ” shall have the meaning set forth in Section 5.10(b) hereto.

“ Multiemployer Plan ” shall have the meaning set forth in Section 5.9(e) hereto.

“ Net Sales ” shall have the meaning set forth in Section 7.12(a) hereof.

“ Non-Production Inventory ” shall have the meaning set forth in Section 2.3(a) hereof.

“ Non-Production Inventory Shortfall ” shall have the meaning set forth in Section 2.3(a) hereof.

“ Owned Realty ” shall have the meaning set forth in Section 5.13(a) hereof.

“ Patent Assignment ” shall have the meaning set forth in Section 7.14 hereof.

“ Permits ” shall have the meaning set forth in Section 5.8 hereof.

“ Permitted Liens ” means (i) mechanics’, carriers’, workmen’s, repairmen’s or other like Liens arising or incurred in the ordinary course of business with respect to liabilities that are not yet due or delinquent, (ii) Liens for Taxes (as hereinafter defined), assessments and other governmental charges which are not delinquent or which may hereafter be paid without penalty or which are being contested in good faith by appropriate proceedings (for which reserves have been made in the Financial Statements, but only if and to the extent reserves for such Taxes in this subparagraph (ii) have been expressly stated in the Financial Statements), (iii) other imperfections of title or encumbrances, if any, which imperfections of title or other encumbrances, individually or in the aggregate, would not materially detract from the value of the property or asset to which it relates or materially impair the ability of the Companies to use the property or asset to which it relates in substantially the same manner as it was used prior to the Closing Date, (iv) liens created by Purchaser in connection with the financing of the acquisition of the Owned Realty, (v) any Liens on the Wenzler Montague Equipment existing by virtue of the Wenzler Lease; and (vi) all Liens disclosed on Schedule 5.11 and Schedule 5.13(b) , other than those indicated thereon to be released or terminated on the Closing Date. The Permitted Liens described in (i) and (iii) above shall not exceed a total of Five Hundred Thousand Dollars ($500,000) and Seller shall disclose all such Liens to the Knowledge of Seller over Fifty Thousand Dollars ($50,000) on Schedule 5.11 , Schedule 5.13(b) or Schedule 5.17 .

“ Person ” shall mean an individual, a corporation, a partnership, a limited liability company, an association, a trust or other entity or organization.

“ Plans ” shall have the meaning set forth in Section 5.9(a) hereof.

“ Plants ” shall have the meaning set forth in the recitals hereto.

“ Pre-Closing Tax Period ” shall have the meaning set forth in Section 9.2 hereof.

“ Purchase Price Adjustment ” shall have the meaning set forth in Section 3.5(a) hereof.

“ Purchaser ” shall have the meaning set forth in the preamble hereto.

“ Purchaser Group ” shall have the meaning set forth in Section 9.1(a) hereof.

“ Purchaser Plans ” shall have the meaning set forth in Section 7.17(b) hereof.

“ Purchaser’s Closing Schedule ” shall have the meaning set forth in Section 3.5(a) hereof.

“ Purchaser’s Savings Plan ” shall have the meaning set forth in Section 7.17(d) hereof.

“ Related Party Agreements ” shall have the meaning set forth in Section 5.7 hereof.

“ Release ” shall mean any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration into the indoor or outdoor environment (including ambient air, surface water, groundwater and surface or subsurface strata), including the movement of Hazardous Materials through or in the air, soil, surface water, groundwater or property.

“ Schedule ” shall mean any of the disclosure schedules being delivered by Seller concurrently with the execution of this Agreement, as the same may be amended from time to time by the delivery of amended or supplemental disclosure schedules as provided in Section 7.9 hereof.

“ Securities Act ” shall mean the Securities Act of 1933, as amended.

“ Seller ” shall have the meaning set forth in the recitals hereto.

“ Seller Claims ” shall have the meaning set forth in Section 9.1(a) hereof.

“ Seller’s Business ” shall have the meaning set forth in Section 7.12(b) hereof.

“ Seller’s Dispute Notice ” shall have the meaning set forth in Section 3.5(a) hereof.

“ Seller’s Estimated Closing Schedule ” shall have the meaning set forth in Section 2.3(b) hereof.

“ Seller’s Plans ” shall have the meaning set forth in Section 7.17(b) hereof.

“ Seller’s Savings Plan ” shall have the meaning set forth in Section 7.17(d) hereof.

“ Shares ” shall have the meaning set forth in the recitals hereto.

“ Stock Purchase ” shall have the meaning set forth in the recitals hereto.

“ Tax Law ” shall mean any Law relating to Taxes.

“ Tax Return ” shall mean any return, report, information return or other document (including any related or supporting information) with respect to Taxes.

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

“ Threshold Indemnification Amount ” shall have the meaning set forth in Section 9.2(b) hereof.

“ Transition Services Agreement ” shall have the meaning set forth in Section 7.13 hereof.

“ WARN Act ” shall have the meaning set forth in Section 5.14 hereof.

“ Wenzler Lease ” shall mean that certain Master Lease Agreement made as of July 29, 2005 between Merrill Lynch Capital, a division of Merrill Lynch Business Financial Services, Inc. and HLI Suspension, including Equipment Schedule No.1 (as amended October 16, 2006), Rider No.1 and Rider 2 thereto, Equipment Schedule No.2, Rider No.1 and Rider 2 thereto, and Equipment Schedule No.3, Rider No.1 and Rider 2 thereto, a complete and accurate copy of which has been delivered to Purchaser.

“ Wenzler Montague Debt ” means the outstanding balance of the “Total Invoice Cost” (as defined in the Wenzler Lease) for the Wenzler Montague Equipment as of the Closing Date. As of January 1, 2007 the Wenzler Montague Debt is Five Million One Hundred Seventy-Five Thousand Nine Hundred Twenty-Six Dollars ($5,175,926).

“ Wenzler Montague Equipment ” shall mean that equipment that is being financed under the Wenzler Lease for use in connection with the operations of HLI Montague, which consists of Unit #6 identified on Equipment Schedule No. 1 to the Wenzler Lease and all equipment identified on Equipment Schedule No. 2 and Equipment Schedule No. 3 to the Wenzler Lease.

“ Working Capital ” shall mean, as of any date of determination: (i) the sum of (A) trade accounts receivable less allowance for bad debt, (B) inventory, (C) prepaid expenses and (D) any other current assets (excluding inter-company assets), minus (ii) the sum of (A) accounts payable, (B) the current portion of accrued expenses and (C) any other current liabilities (excluding inter-company liabilities), including liabilities attributable to the Companies and previously accrued or incurred but not recorded on Seller’s corporate accounts for medical and workers compensation expenses and short term incentive plan and gainsharing plan expenses, in each case calculated on a consolidated basis for all Companies and in accordance with the Accounting Principles. Working Capital explicitly excludes Indebtedness (but only to the extent provided in parts (a) and (b) of the definition of Indebtedness), cash and cash equivalents, factory supplies net of reserves, income or profit taxes payable, inter-company accounts receivable and inter-company accounts payable. In calculating Working Capital, all

reserves and other accounts shall be calculated in accordance with the Accounting Principles. In calculating Working Capital, inventory shall include raw materials, work in process and finished goods, net of applicable reserves, determined in accordance with the Accounting Principles and as used in determining the Base Amount.

Section 1.2 Other Terms. Other terms may be defined elsewhere in the text of this Agreement and, unless otherwise indicated, shall have such meaning throughout this Agreement.

Section 1.3 Other Definitional Provisions.

(a) The words “ hereof ”, “ herein ”, “ hereto ”, “ hereunder ” and “ hereinafter ” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement.

(b) The terms defined in the singular shall have a comparable meaning when used in the plural, and vice versa.

(d) The word “ including ” shall mean including, without limitation, and the words “include” and “includes” shall have corresponding meanings.

ARTICLE II

PURCHASE AND SALE OF SHARES

Section 2.1 Purchase and Sale of the Shares. Upon the terms and subject to the conditions of this Agreement, at the Closing, Seller shall sell, convey, assign, transfer and deliver to Purchaser, and Purchaser shall purchase, acquire and accept from Seller, all right, title and interest in and to the Shares, free and clear of any and all Liens. Immediately prior to the execution of this Agreement, Seller has caused the transfer to HLI Montague of the owned assets and, to the extent permitted by the lessor thereof, the assignment of the lease for the leased assets of the HLI Ferndale Technical Center set forth in Schedule 2.1 , free and clear of any and all Liens except Permitted Liens.

Section 2.2 Conveyance. Such sale, conveyance, assignment, transfer and delivery shall be effected by delivery by Seller to Purchaser or, at Purchaser’s request, to any other designee of Purchaser, of stock certificates representing the Shares, duly endorsed or accompanied by stock powers duly executed in blank with appropriate transfer stamps, if any, affixed, and/or any other documents that are necessary to transfer title to the Shares to Purchaser (or to any designee of Purchaser), free and clear of any and all Liens and in compliance with all applicable laws.

Section 2.3 Consideration.

(a) Upon the terms and subject to the conditions of this Agreement, in consideration of such sale, conveyance, assignment, transfer and delivery of the Shares by Seller, Purchaser shall (i) pay or cause to be paid to Seller, an aggregate amount in cash equal to: Thirty-Seven Million Five Hundred Thousand Dollars ($37,500,000), (A) plus the amount of cash and cash equivalents held by the Companies at the Closing, (B) minus the Wenzler Montague Debt, (C) plus the Capital Expenditures Adjustment if positive or minus the Capital Expenditures Adjustment if negative, (D) minus the Non-Production Inventory Shortfall, if any, and (E) plus the amount, if any, by which the Estimated Closing Working Capital exceeds the Base Amount, but not to exceed One Million Dollars ($1,000,000), or minus the amount, if any, by which the Base Amount exceeds the Estimated Closing Working Capital (the “Initial Purchase Price”), subject to adjustment pursuant to Section 3.5 hereof; and (ii) assume, and agree to pay, perform and discharge when due, all of the Companies’ and HLI Suspension’s obligations arising under the Wenzler Lease on or after the Closing Date with respect to the Wenzler Montague Equipment. Notwithstanding anything to the contrary in this Section 2.3 or in Section 3.5, in no event shall the Final Closing Working Capital exceed the Base Amount by more than One Million Dollars ($1,000,000). “Capital Expenditures Adjustment” means a positive adjustment to the extent the capital expenditures from February 1, 2006 through the Closing Date exceed the Capital Expenditures Budget and a negative adjustment to the extent the Capital Expenditures Budget exceeds the capital expenditures from February 1, 2006 through the Closing Date. The “Capital Expenditures Budget” means the amount equal to the sum of Eight Million Nine Hundred Sixty-Eight Thousand Dollars ($8,968,000), representing the budgeted amounts through January 31, 2007, plus an amount equal to Seventy Thousand Dollars ($70,000) for each Business Day (for purposes of this provision, Presidents’ Day, February 19, 2007, shall be considered a Business Day) during February 2007. For example, if the Closing Date is February 15, 2007, the Capital Expenditures Budget would be Nine Million Seven Hundred Thirty Eight Thousand Dollars ($9,738,000) ($8,968,000 + (11 * $70,000)).

The Capital Expenditures Adjustment shall not take into account any capital expenditures associated with the following projects: GMT 900 or the Cyclone intake manifold. The “Non-Production Inventory Shortfall” shall be the amount, if any, by which the aggregate issues/withdrawals (excluding obsolescence) out of Non-Production Inventory for both Plants for the period from September 1, 2006 through the Closing Date exceed aggregate receipts for both Plants into Non-Production Inventory during such period, which amounts are accounted for in Hyperion Account 1381 – Non-Production Materials for HLI Bristol and HLI Montague as of such dates, determined in a consistent manner in accordance with past practices. “Non-Production Inventory” means spare parts, parts used in maintenance and repairs, perishable tooling and other supplies not incorporated into the final product, but necessary for production (commonly referred to as “maintenance, repair and other supplies”).

(b) For purposes of calculating the Initial Purchase Price payable by Purchaser pursuant to Section 2.3(a), Seller shall, at least three (3) Business Days prior to the Closing Date, prepare and deliver to Purchaser, for its review, an estimated closing schedule (the “ Seller’s Estimated Closing Schedule ”) prepared in accordance with the Accounting Principles setting forth in reasonable detail Seller’s good faith calculation of Working Capital as of the Closing Date (the “ Estimated Closing Working Capital ”) and the Wenzler Montague Debt, along with a copy of the computations and work papers used in connection with the preparation of Seller’s Estimated Closing Schedule. If Seller and Purchaser do not agree on the calculation of Estimated Closing Working Capital, the Estimated Closing Working Capital to be used at Closing shall be the Base Amount.

ARTICLE III

CLOSING

Section 3.1 Closing. The closing of the Stock Purchase (the “ Closing ”) shall take place at the offices of Seller, at 10:00 a.m. (local time), on the third Business Day following the satisfaction or waiver of the conditions precedent specified in Article VIII hereof, or at such other time and place as the parties hereto may mutually agree. The date on which the Closing occurs, which shall be the last day of a month or within the first fifteen days of a month, as determined by Seller, is referred to herein as the “ Closing Date .”

Section 3.2 Deliveries by Seller and the Companies. At the Closing, Seller and the Companies, as applicable, shall deliver or cause to be delivered to Purchaser (unless delivered previously) the following:

(a) certificates representing the Shares, duly endorsed or accompanied by stock powers duly executed in blank with appropriate transfer stamps, if any, affixed, and any other documents that are reasonably necessary to transfer title to the Shares;

(b) a resolution, substantially in the form attached hereto as Exhibit C , duly adopted by the stockholder of each Company pursuant to which (i) each Company accepts the resignations of its officers and directors listed on Schedule 7.11 and each of

the officers and directors of such Company appointed by Seller are released from any and all liabilities which they may have incurred as a result of their service to such Company, other than those resulting from gross negligence or willful misconduct, and (ii) any and all powers of attorney are cancelled;

(d) the Patent Assignment, duly executed by Seller and/or one or more of its Affiliates;

(e) an Assignment and Assumption Agreement with respect to the Contracts set forth in Schedule 7.18 , duly executed by Seller and/or one or more of its Affiliates;

(f) a release from Seller, in form and substance reasonably satisfactory to Seller and Purchaser, releasing the officers and directors of the Companies and their Affiliates from any claim arising on or prior to the Closing Date;

(g) an officer’s certificate dated as of the Closing Date certifying the satisfaction of the conditions set forth in Sections 8.2(a), (b) and (c);

(h) copies of the written resignations (effective as of the Closing) of the officers and members of the Board of Directors of the Companies set forth on Schedule 7.11 ;

(i) copies of releases in form and substance reasonably satisfactory to Purchaser releasing the Companies from any obligations under any agreements, guarantees, or other obligations, other than those set forth on Schedule 7.8, made by or on behalf of Seller or any Affiliate (other than the Companies);

(j) evidence in form and substance reasonably satisfactory to Seller and Purchaser, that all Affiliate Agreements, other than those set forth on Schedule 7.8 , have been terminated;

(k) releases of all Liens on the Shares and all Liens other than Permitted Liens on any of Companies’ assets, including without limitation any pay-off letters, UCC-3 termination statements and other documents required hereunder in connection with such releases, in each case, in form and substance reasonably satisfactory to Purchaser;

(l) delivery of all documents necessary to cause Chicago Title Insurance Company to issue Owner’s Title Insurance Policies insuring Purchaser’s fee simple interest in all real property owned by Companies, including the Plants, with standard or general exceptions deleted;

(m) the Amendment to the Alcoa License Agreement, duly executed by the parties thereto, in the form attached as Exhibit H;

(n) the Escrow Agreement, duly executed by Seller and/or one or more of its Affiliates;

(o) a lease, in form and substance satisfactory to Purchaser, pursuant to which Seller and/or one or more of its Affiliates leases to Purchaser a portion of Seller’s premises located at 1600 West Eight Mile Road, Ferndale, Michigan;

(p) all other documents, certificates, instruments or writings reasonably required to be delivered by Seller or the Companies at or prior to the Closing pursuant to this Agreement or otherwise reasonably required in connection herewith.

Section 3.3 Deliveries by Purchaser. At the Closing, Purchaser shall deliver or cause to be delivered to Seller (unless delivered previously) the following:

(a) a wire transfer of federal or other immediately available funds to one or more accounts designated by Seller in an aggregate amount equal to the Initial Purchase Price, less Two Million Five Hundred Thousand Dollars($2,500,000) (the “Escrow Amount”);

(b) a wire transfer of federal or other immediately available funds to one or more accounts designated by Escrow Agent in an aggregate amount equal to the Escrow Amount;

(c) an agreement, in form and substance satisfactory to Seller, pursuant to which Seller is released from all of the Companies’ obligations under the Wenzler Lease with respect to the Wenzler Montague Equipment;

(d) the Transition Services Agreement, duly executed by Purchaser or one of its Affiliates;

(e) the Patent Assignment, duly executed by Purchaser or one of its Affiliates;

(f) an Assignment and Assumption Agreement with respect to the Contracts set forth in Schedule 7.18 , duly executed by Purchaser and/or one or more of the Companies;

(g) a release, in form and substance satisfactory to Seller, of Seller’s obligations under that certain Master Lease Guaranty dated July 29, 2005 and made by Seller in favor of Merrill Lynch Capital, a division of Merrill Lynch Business Financial Services, Inc. guarantying the payment and performance of the obligations of HLI Suspension and/or HLI Montague under the Wenzler Lease;

(h) an officer’s certificate dated as of the Closing Date certifying the satisfaction of the conditions set forth in Sections 8.3(a) and (b);

(i) a release from the Companies, in form and substance reasonably satisfactory to Seller and Purchaser, releasing the officers and directors of Seller and the Companies from any claim arising on or prior to the Closing Date;

(j) the Escrow Agreement, duly executed by Purchaser;

(k) a lease, in form and substance satisfactory to Seller, pursuant to which Seller and/or one or more of its Affiliates leases to Purchaser a portion of Seller’s premises located at 1600 West Eight Mile Road, Ferndale, Michigan;

(l) all other documents, certificates, instruments or writings reasonably required to be delivered by Purchaser at or prior to the Closing pursuant to this Agreement or otherwise reasonably required in connection herewith.

Section 3.4 Simultaneous Transactions. All of the transactions contemplated by this Agreement shall be deemed to occur simultaneously, and no such transaction shall be deemed to have been consummated until all such transactions have been consummated.

Section 3.5 Purchase Price Adjustment.

(a) The Initial Purchase Price shall be subject to adjustment as set forth in this Section 3.5 (the “ Purchase Price Adjustment ”). As promptly as practicable, but in no event later than 75 days, after the Closing Date, Purchaser shall prepare and deliver to Seller a schedule (“ Purchaser’s Closing Schedule ”) prepared in accordance with the Accounting Principles setting forth in reasonable detail Purchaser’s calculation of Working Capital as of the Closing Date (“ Closing Working Capital ”), along with a copy of the computations and work papers used in connection with the preparation of Purchaser’s Closing Schedule. If Purchaser employs a firm of independent accountants in connection with the preparation of Purchaser’s Closing Schedule, Purchaser shall cause such independent accountants to deliver to Seller any computations and work papers used in the preparation of Purchaser’s Closing Schedule, subject to Seller having entered into a customary agreement with such firm of independent accountants regarding the use of such work papers, the confidentiality thereof and similar matters. Purchaser will give Seller and its representatives reasonable access, during the normal business hours of Purchaser, to all personnel, books and records (including bank statements, collection information and other accounts receivable information) of the Companies as reasonably requested by Seller to assist it in its review of Purchaser’s Closing Schedule. Seller will notify Purchaser in writing (“ Seller’s Dispute Notice ”) within 30 days after receiving Purchaser’s Closing Schedule if Seller disagrees with Purchaser’s calculation of Closing Working Capital as set forth in Purchaser’s Closing Schedule, which notice shall set forth in reasonable detail the basis for such disagreement, the dollar amounts involved and Seller’s calculation of the Closing Working Capital. If no Seller’s Dispute Notice is received by Purchaser within such 30-day period, then, in such case, Purchaser’s calculation of Closing Working Capital as set forth in Purchaser’s Closing Schedule shall be final and binding upon the parties hereto.

(b) Upon receipt by Purchaser of Seller’s Dispute Notice, Purchaser and Seller shall negotiate in good faith to resolve any disagreement with respect to Closing Working Capital. To the extent Purchaser and Seller are unable to agree with respect to Closing Working Capital within 30 days after receipt by Purchaser of Seller’s Dispute Notice and the parties have not mutually agreed to extend such deadline, Purchaser and Seller shall promptly select Plante & Moran, PLLC or another mutually acceptable, nationally recognized independent accounting firm (the “ Accounting Firm ”) with no material relationship to Purchaser or Seller or any of their respective Affiliates and submit their dispute to such Accounting Firm for a binding resolution. The fees and expenses of the Accounting Firm and arbitrator shall be paid one-half by Seller and one-half by Purchaser.

(c) Not later than 15 days after the engagement of the Accounting Firm (as evidenced by its written acceptance by facsimile or otherwise to the parties), Purchaser and Seller shall submit simultaneous briefs to the Accounting Firm (with a copy to the other party) setting forth their respective positions regarding the issues in dispute. Purchaser and Seller shall instruct the Accounting Firm to render its decision resolving the dispute within 15 days after submission of the simultaneous briefs. The determination of the Accounting Firm with respect to Closing Working Capital cannot, however, be less than the calculation of Closing Working Capital set forth in Purchaser’s Closing Schedule nor more than the calculation of Closing Working Capital set forth in Seller’s Dispute Notice. Closing Working Capital, as agreed upon by Purchaser and Seller, as deemed agreed upon pursuant to the last sentence of Section 3.5(a) or as determined by the Accounting Firm, in accordance with this Section 3.5(c) shall be referred to herein as the “ Final Closing Working Capital. ”

(d) The Purchase Price Adjustment shall be made as follows:

(i) if the Closing Working Capital set forth in Purchaser’s Closing Schedule is more than the Estimated Closing Working Capital, Purchaser shall pay to Seller the amount of such difference within five Business Days after the delivery of Purchaser’s Closing Schedule;

(ii) if the Estimated Closing Working Capital is more than the Closing Working Capital set forth in Purchaser’s Closing Schedule and no Seller’s Dispute Notice has been delivered, Seller shall pay to Purchaser the amount of such difference within five Business Days following the expiration of the time period for Seller to deliver Seller’s Dispute Notice;

(iii) if a Seller’s Dispute Notice has been delivered and the Estimated Closing Working Capital is more than the Closing Working Capital set forth in Seller’s Dispute Notice, Seller shall pay to Purchaser the amount of such excess within five Business Days after the delivery of Seller’s Dispute Notice;

(iv) if a Seller’s Dispute Notice has been delivered and (x) the Final Closing Working Capital is less than the Estimated Closing Working Capital, Seller shall pay to Purchaser the amount of such excess, less the amount

of any payment(s) made by Seller pursuant to clause (iii) of this Section 3.5(d), or (y) if the Estimated Closing Working Capital is less than the Final Closing Working Capital, Purchaser shall pay to Seller the amount of such excess, less the amount of any payment made by Purchaser pursuant to clause (i) of this Section 3.5(d), in either case within five Business Days after the determination of the Final Closing Working Capital pursuant to Section 3.5(c); and

(v) any payment required to be made pursuant to this Section 3.5(d) shall be made, in each case, by wire transfer of federal or other immediately available funds to an account or accounts designated by Purchaser or Seller, as the case may be, to the other party or parties, as applicable.

(e) The parties agree that the Purchase Price Adjustment contemplated by this Section 3.5 is intended to adjust the Purchase Price for changes in Working Capital from the Base Amount and that such changes may be measured only if the calculation is performed in accordance with (i) the procedures set forth in this Section 3.5 and the definition of Working Capital and (ii) the Accounting Principles. Notwithstanding anything contained herein to the contrary, in the event of any conflict between the requirements of GAAP, and the Accounting Principles used in connection with the preparation of the Balance Sheets and as used in determining the Base Amount, the Accounting Principles shall control.

(f) Purchaser agrees that, following the Closing through the date on which the Final Closing Working Capital becomes final and binding, it shall not, and will cause each of the Companies not to, take any actions with respect to any accounting books, records, policies or procedures on which the Final Closing Working Capital is to be based that would make it impossible or impracticable to calculate the Final Closing Working Capital in the manner and utilizing the methods required hereby.

(g) For purposes of calculating Closing Working Capital, real and personal property taxes shall be prorated as of the Closing Date in accordance with the fiscal year for each such tax, in the manner set forth in Schedule 3.5(g) .

Section 3.6 Allocation of Purchase Price. The parties hereto agree to allocate the Purchase Price among the Shares in the manner to be set forth on Schedule 3.6 , which allocation shall be completed within ninety (90) days after the Closing and comply with applicable Laws, including the Code. Seller and Purchaser each hereby agree that such allocation shall be conclusive and binding on each of them for purposes of all United States federal, state and local tax returns and that they will not voluntarily take any position inconsistent therewith. Seller and Purchaser each hereby agree to prepare and timely file all Tax returns required pursuant to applicable Laws, including the Code, and any other forms required by any Governmental Authority, to cooperate with each other in the preparation of such forms, and to furnish each other with a copy of such forms prepared in draft, within a reasonable period prior to the filing due date thereof. If Purchaser and Seller are unable to agree to the allocation of the Purchase Price, such disagreement shall be resolved by the Accounting Firm, following the same procedures set forth in Section 3.5.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF SELLER

HLI Opco and HLI Suspension, jointly and severally, as Seller hereby represents and warrants to Purchaser as follows as of the date of this Agreement and as of the Closing Date:

Section 4.1 Organization. HLI Suspension is duly organized, validly existing and in good standing under the laws of the State of Michigan, and has all requisite power and authority, corporate or otherwise, to own, lease and operate all of its properties and assets and to conduct its business as it is now being conducted. HLI Opco is duly organized, validly existing and in good standing under the laws of the State of Delaware, and has all requisite power and authority, corporate or otherwise, to own, lease and operate all of its properties and assets and to conduct its business as it is now being conducted.

Section 4.2 Authority; Binding Effect. Seller has all requisite power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement, and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action (including Board of Director and any requisite Shareholder approvals) on the part of Seller, and no other action, corporate or otherwise, on the part of Seller or its stockholders is required to authorize the execution, delivery and performance hereof, and the consummation of the transactions contemplated hereby. This Agreement has been duly executed and delivered by Seller and constitutes the valid and binding obligation of Seller enforceable against Seller in accordance with its terms, except that such enforcement may be subject to any bankruptcy, insolvency, reorganization, moratorium or other laws now or hereafter in effect relating to or limiting creditors’ rights generally and the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceedings therefor may be brought.

Section 4.3 Title to Shares. Except as set forth in Schedule 4.3 , HLI Suspension has good and valid title to all of the Shares, free and clear of all Liens and, subject to the satisfaction or, to the extent permitted by applicable Law, waiver of the conditions to consummation of the transactions contemplated hereby set forth in Article VIII hereof, at the Closing Seller will deliver to Purchaser good and valid title to all of the Shares, free and clear of all Liens.

Section 4.4 No Violation. The execution and delivery of this Agreement by Seller do not, and the performance of this Agreement by Seller and the consummation by Seller of the transactions contemplated hereby will not, except as set forth in Schedule 4.4 , (i) conflict with or violate the certificate of incorporation or by-laws, as currently in effect, of Seller, (ii) conflict with or violate in any material respect any Laws applicable to Seller or by which the Shares are bound or are subject, or (iii) result in any breach of, or constitute a default (or an event that with notice or lapse of time, or both, would constitute a default) under, or give to others any right of termination, amendment, acceleration or cancellation of, or require payment under, or result in the creation of a Lien on any of the Shares under, any note, bond, indenture, Contract, permit, franchise or other instrument or obligation (including, but not limited to, any letter of credit) to which Seller is a party or by which the Shares are bound or subject.

Section 4.5 Absence of Litigation. Except as set forth in Schedule 4.5 , there is no Litigation pending or, to the Knowledge of Seller, threatened against Seller, if adversely determined, nor any judgment, order or decree of any Governmental Authority to which Seller is a party or subject, that would reasonably be expected to impair, in any material respect, (i) Seller’s ability to perform its obligations hereunder or to consummate the transactions contemplated hereby or (ii) the ability of any of the Companies to conduct their respective businesses after the Closing Date in substantially the manner as they are now being conducted.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF SELLER
WITH RESPECT TO THE COMPANIES

HLI Opco and HLI Suspension, jointly and severally, as Seller hereby represents and warrants to Purchaser with respect to the Companies as follows as of the date of this Agreement and as of the Closing Date:

Section 5.1 Organization and Qualification. Each of the Companies is duly organized, validly existing, and in good standing, under the laws of the State of Michigan, and has all requisite power and authority, corporate or otherwise, to own, lease and operate all of its properties and assets and to conduct its business as it is now being conducted. Except as set forth in Schedule 5.1 , each of the Companies is duly qualified or licensed and in good standing to do business as a foreign corporation in each jurisdiction in which the nature of its business, or the ownership, leasing or operation of its

properties or assets, makes such qualification necessary. Seller has delivered to Purchaser a complete and correct copy of the articles of incorporation and by-laws, each as amended to date, of each of the Companies. The articles of incorporation and by-laws of each of the Companies are in full force and effect, and none of the Companies is in violation of any material provision thereof.

Section 5.2 Financial Statements; Receivables; Inventories.

(a) Exhibit D attached hereto includes the unaudited balance sheets of the Companies as of October 31, 2006, and the fiscal years ended January 31, 2005 and January 31, 2006 and the unaudited statements of operations and cash flows of the Companies for each of the fiscal years ended January 31, 2005 and January 31, 2006 and the nine month period ended October 31, 2006 (collectively, the “ Financial Statements ”). The Financial Statements have been prepared in accordance with the Accounting Principles, except as set forth in Schedule 5.2(a) , and fairly present the financial position, results of operations and cash flows of the Companies as of the date or for the period indicated therein. The unaudited balance sheets of the Companies as of January 31, 2005, January 31, 2006 and October 31, 2006 included in the Financial Statements are herein referred to as the “ Balance Sheets .” Seller has also provided to Purchaser the unaudited internal balance sheets, statements of operations and cash flows of the Companies for the months ended November 30, 2006 and December 31, 2006, which statements have been prepared in a manner consistent with the manner Seller has historically prepared such internal statements.

(b) Except as set forth in Schedule 5.2(b) , all accounts receivable and notes receivable of the Companies have arisen from bona fide transactions in the ordinary course of business and, to the Knowledge of Seller, are current and collectible net of any reserves reflected on the Balance Sheets (which reserves were determined in accordance with the Accounting Principles) and, to the Knowledge of Seller, customers have not taken, or threatened in writing, action to rescind, set off, reduce or debit such accounts receivable.

(c) The inventories of each of the Companies consist of a quality and quantity usable and saleable in the ordinary course of business and consistent with past practices of the Companies, subject to reserves reflected on the Balance Sheets (which reserves were determined in accordance with the Accounting Principles). All inventories have been reflected on the Balance Sheets at the lower of average cost or market.

Section 5.3 Absence of Certain Changes or Events. Except as set forth in Schedule 5.3 , since October 31, 2006, (a) each of the Companies has conducted its business only in the ordinary course of business and the Companies have not, on an aggregate basis, suffered or permitted (i) any changes in compensation other than changes in compensation of salaried employees not exceeding ten percent (10%) or across the board changes in compensation of non-salaried employees not exceeding three percent (3%), (ii) any asset sales or similar transactions totaling more than One Hundred Thousand Dollars ($100,000) outside of the ordinary course of business, (iii) any layoffs totaling more than twenty-five (25) employees, (iv) any transfer, termination or expiration of any

licenses, (v) any cancellations of Indebtedness totaling more Twenty-Five Thousand Dollars ($25,000) (excluding the transactions described in Section 7.8), or (vi) any capital expenditures or commitments for capital expenditures outside of the Capital Expenditures Budget totaling more than One Hundred Thousand Dollars ($100,000), and (b) there has not occurred, nor has there been any condition, event, circumstance, change or effect which, individually or in the aggregate, has had or would reasonably be expected to have, a Material Adverse Effect on the Companies, taken as a whole.

Section 5.4 Ownership of Stock; Capitalization.

(a) The authorized, issued and outstanding capital stock of each of the Companies is set forth on Schedule 5.4(a) . No shares of capital stock of any of the Companies are reserved for issuance upon exercise of outstanding stock options. No shares of capital stock of any of the Companies are held as treasury stock. Each issued and outstanding share of capital stock of each of the Companies has been duly authorized and validly issued, and is fully paid and nonassessable. None of the issued and outstanding shares of capital stock of any of the Companies has been issued in violation of, or is subject to, any preemptive or subscription rights. Schedule 5.4(a) sets forth each Person who owns, beneficially and of record, the issued and outstanding capital stock of the Companies and the number of shares owned by each such Person and the number of the stock certificate representing such shares. The certificates set forth on Schedule 5.4(a) are the only certificates outstanding with respect to such shares and all prior certificates have been cancelled.

(b) Except as set forth in Schedule 5.4(b) , (i) there is no option, warrant or other right, agreement, arrangement, or commitment of any kind whatsoever to which any of the Companies is a party relating to its issued or unissued capital stock or obligating it to grant, issue or sell any share of its capital stock by sale, lease, license or otherwise; (ii) there is no obligation, contingent or otherwise, of any of the Companies to (A) repurchase, redeem or otherwise acquire any share of its capital stock, or (B) provide funds to, or make any investment in (in the form of a loan, capital contribution or otherwise), or provide any guarantee with respect to the obligations of any other Person; (iii) none of the Companies, directly or indirectly, owns, or has agreed to purchase or otherwise acquire, the capital stock or other equity interests of, or any interest convertible into or exchangeable or exercisable for such capital stock or such equity interests of, any corporation, partnership, joint venture or other entity; and (iv) there is no voting trust, proxy or other agreement, arrangement, contract or other commitment of any kind whatsoever to which any of the Companies is a party, or by which any of the Companies, or any of their respective properties or assets, is bound with respect to the voting of any share of capital stock of any of the Companies.

(c) Upon delivery to Purchaser at the Closing of the Shares pursuant to Sections 2.1 and 2.2 hereof, and payment by Purchaser of the consideration therefor pursuant to Section 2.3(a) hereof, Purchaser shall directly acquire and receive all right, title and interest in and to 100% of the issued and outstanding capital stock of the Companies, free and clear of all Liens, except as set forth in Schedule 5.4(c) .

Section 5.5 Consents and Approvals; No Violation.

(a) The execution and delivery of this Agreement by Seller do not, and the performance by Seller of this Agreement and the consummation of the transactions contemplated hereby will not, require Seller or any Company to obtain (x) any consent, approval, waiver, authorization or permit of, or to make any filing or registration with or notification to (“ Consents ”), any court, agency or commission, or other governmental entity, authority or instrumentality, whether domestic or foreign (“ Governmental Authority ”), or (y) any Consent of any third party, except for (i) applicable filing requirements, if any, of the HSR Act; (ii) filings required to be made by Seller or its Affiliates with the United States Securities and Exchange Commission; and (iii) the Consents set forth in Schedule 5.5(a) .

(b) Provided Seller has obtained or made the Consents set forth in Schedule 5.5(a) , the execution and delivery of this Agreement by Seller do not, and the performance of this Agreement by Seller and the consummation of the transactions contemplated hereby will not, except as set forth in Schedule 5.5(b) , (i) conflict with or violate the articles of incorporation or by-laws, in each case as currently in effect, of any of the Companies, (ii) conflict with or violate any Laws applicable to any of the Companies or by or to which any of their respective properties or assets is bound or subject, or (iii) result in any breach of, or constitute a default (or an event that with notice or lapse of time or both would constitute a default) under, or give to others any right of termination, amendment, acceleration or cancellation of, or require payment under, or result in the creation of a Lien on any of the properties or assets of any of the Companies under, any note, bond, indenture, Contract, permit, franchise or other instrument or obligation to which such Company is a party or by or to which any of the Companies or any of their respective properties or assets is bound or subject, except for such of the foregoing which, individually or in the aggregate, have not had or would not reasonably be expected to have a Material Adverse Effect on the Companies, taken as a whole.

Section 5.6 Absence of Litigation. Except as set forth in Schedule 5.6 , (i) there is no claim, action, suit, proceeding or investigation at law or in equity (including actions or proceedings seeking injunctive relief), by or before any Governmental Authority (“ Litigation ”), pending or, to the Knowledge of Seller, threatened against any of the Companies or affecting any of their respective properties or assets, and (ii) none of the Companies is a party or subject to, or in default under, any judgment, order or decree of any Governmental Authority.

Section 5.7 Related Party Agreements. Except as set forth in Schedule 5.7 , neither Seller nor any of its Affiliates (other than the Companies) is a party to any agreement, arrangement, contract or other commitment (the “ Related Party Agreements ”) to which any of the Companies is a party or by or to which any of their respective properties or assets is bound or subject.

Section 5.8 Permits; Compliance with Laws. Each of the Companies possesses all material franchises, grants, authorizations, licenses, permits, easements, variances, exemptions, consents, certificates, approvals and orders necessary to own, lease and

operate its properties and assets and to carry on its business as it is now being conducted (other than those required under (i) Environmental Laws, which are governed by Section 5.12 hereof, (ii) ERISA and other Laws regarding employee benefit matters, which are governed by Section 5.9 hereof, (iii) Labor Laws, which are governed by Section 5.14 hereof, and (iv) Tax Laws, which are governed by Section 5.17 hereof) (collectively, the “ Permits ”), and there is no claim, action, suit, proceeding or investigation pending or, to the Knowledge of Seller, threatened regarding suspension or cancellation of any such Permits. Except as set forth in Schedule 5.8 , each of the Companies is in compliance in all material respects with such Permits and with all Laws applicable to it or by or to which any of its properties or assets is bound or subject (other than (i) Environmental Laws, which are governed by Section 5.12 hereof, (ii) ERISA and other Laws regarding employee benefit matters, which are governed by Section 5.9 hereof, (iii) Labor Laws, which are governed by Section 5.14 hereof, and (iv) Tax Laws, which are governed by Section 5.17 hereof). Except as set forth in Schedule 5.8, each Permit shall remain in full force and effect immediately following the Closing. Schedules 5.8, 5.9, 5.12, 5.14 and 5.17 list all of the material Permits.

Section 5.9 Employee Benefit Plans; ERISA.

(a) Schedule 5.9(a) sets forth a list of each bonus, deferred compensation, incentive compensation, stock purchase, stock option, severance or termination pay, hospitalization or other medical, life or other insurance, supplemental unemployment benefits, profit-sharing, pension or retirement plan, program or agreement, and each other employee benefit plan, program or agreement, sponsored, maintained or contributed to or required to be contributed to by any of the Companies or by any ERISA Affiliate, for the benefit of any employee or former employee of any of the Companies (individually a “Plan” and collectively, the “ Plans ”). Schedule 5.9(a) identifies each of the Plans that is an “employee pension plan,” as that term is defined in Section 3(3) of ERISA (such plans being hereinafter referred to collectively as the “ ERISA Plans ”). Seller has delivered or made available to Purchaser complete and accurate copies of all Plans (including all amendments thereto), available summary plan descriptions thereof, the Form 5500 annual reports for the three most recent plan years and the actuarial valuation report for the three most recent plan years with respect to each Plan (to the extent applicable).

(b) Each Plan has been created, operated and administered in all material respects in accordance with its terms and in compliance with applicable Laws.

(c) No liability under Title IV of ERISA has been incurred by any of the Companies or any ERISA Affiliate that has not been satisfied in full, and, to the Knowledge of Seller, no condition exists that would reasonably be expected to result in any of the Companies or any ERISA Affiliate of incurring a liability under Title IV of ERISA, other than liability for premiums due the Pension Benefit Guaranty Corporation (which premiums have been paid when due). Except as set forth in Schedule 5.9(c) , the assets of each ERISA Plan are at least equal in value to the present value of the accrued benefits of the participants in such ERISA Plan.

(d) Full payment has been made of all amounts that any of the Companies or any ERISA Affiliate is required to pay under the terms of each ERISA Plan and Section 412 of the Code as of the last day of the most recent Plan year thereof ended prior to the date of this Agreement, and all such amounts properly accrued through the Closing Date with respect to the current Plan year thereof will be paid on or prior to the Closing Date or will be properly recorded in the financial statements of the Companies in accordance with the Accounting Principles.

(e) No ERISA Plan is a “multiemployer plan,” as such term is defined in Section 3(37) of ERISA (a “Multiemployer Plan”) nor have any of the Companies or any ERISA Affiliate at any time been a participating employer in any Multiemployer Plan, nor have any of the Companies or any ERISA Affiliate incurred or been subject to a claim for withdrawal liability or any other liability in respect of any Multiemployer Plan.

(f) Each ERISA Plan that is intended to be “qualified” within the meaning of Section 401(a) of the Code has received a favorable determination letter to the effect that it is so qualified and that the trusts maintained thereunder are exempt from taxation under Section 501(a) of the Code, and, to the Knowledge of Seller, no circumstances exist that would reasonably be expected to result in such Plan no longer being qualified.

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