Pepper Hamilton IIPAitomeyi it L»w

3000 Two Login SquareEighteenth and Arch StreetsPhiladelphia, PA 19103-2799

PFax .. , . -. .katauskasp@pepperkw.com

May?, 1998

HAND DELIVERYJoan A. Johnson, EsquireAssistant Regional CounselU.S. Environmental Protection AgencyRegion in841 Chestnut BuildingPhiladelphia, PA 19107

Re: Malvem TCE Superfund Site (Chemclene Corporation)258 N. Phoenixville Pike. Chester County. Malvern. PA

Dear Ms. Johnson:

I am writing as counsel for the Lavelle Company, which was mistakenly sent anApril 30,1998 letter from you addressed to Lavelle Aircraft Company. As you will note frommy enclosed June 30, 1997 letter to Benjamin Fields, Lavelle Company and Lavelle AircraftCompany are separate and distinct companies, and Lavelle Company is not a successor to LavelleAircraft. In the future, please communicate with Lavelle Aircraft via its bankruptcy attorney,Leslie Baskin, at Spector, Gadon & Rosen, P.C., Seven Penn Center, 1635 Market Street, 7thFloor, Philadelphia, Pennsylvania 19103.

Please telephone me if you have any questions about this matter.

Philip J. Katauskas

PJK/mjmEnclosure

cc: Leslie Baskin, Esquire - w/encl. (via hand delivery)

Waihington, D.C, Detroit. Michigan New York, New York Pimburgh, Pennsylvania

Wilmington, Delaware Harriiburg, Penniylrinii Berwyn, Penniylvini* Cherry Hill, New Jtncy

HROOI962

PEPPER, HAMILTON & SCHEETZ LLPATTOR.NEYS AT LAW

WASHINGTON, D.C. 3QOO LOQAN SQUARE W.LM.NGTON. DELAWARE

DETROIT, MICHIGAN EIGHTEENTH AND ARCH STREETS BERWYN. PENNSYLVANIANEW YORK, NEW YORK PHILADELPHIA. PENNSYLVANIA I9IO3-2799 CHERRY HILL. NEW JERSEY

PITTSBURGH. PENNSYLVANIA (1IB) •et-*°°° LONDON. ENGLAND

HARRISBURG. PENNSYLVANIA ' MOSCOW. RUSSIA

WRITER'S DIRECT NUMBER

(215)981-4314

I June 30,1997

Via Hand Delivery

Benjamin Fields, EsquireU.S. Environmental Protection AgencyRegion IH841 Chestnut BuildingPhiladelphia, PA 19107

Re: Malvern TCE Superfund Site (Chemclene Corporation)258 N. Phoenixville Pike. ' 'Hester County. Malvern. PA

Dear Mr. Fields:

I am writing on behalf of this firm's client, the Lavelle Company, which receiveda General Notice Letter from Abraham Ferdas, Associate Division Director for SuperfundPrograms, Hazardous Waste Management Division, dated November 14,1996, about theMalvern TCE Superfund Site (Chemclene Corporation), at 258 Phoenixville Pike, ChesterCounty, Malvern, PA ("the Site"). I know that you have had communications from the LavelleCompany and discussions with my associate, Lia Silva Grassi, about this General Notice Letter.I am writing to follow up on those communications and to provide you with additionalinformation establishing that the Lavelle Company and Lavelle Aircraft Company are separateand distinct companies and that the Lavelle Company is not a successor to Lavelle Aircraft.

We understand that the United States Environmental Protection Agency ("EPA")listed the Site on the National Priorities List in September 1983 and is currently in the process ofconducting a Remedial Investigation and Feasibility Study. The EPA has also prepared a DraftVolumetric Ranking Summary. The Lavelle Company is not identified on that Summary,although Lavelle Aircraft is listed as a generator. Lavelle Aircraft, a Pennsylvania corporation,filed for protection under Chapter 11 of the United States Bankruptcy Code on November 14,1994. A copy of the Bankruptcy Court Order dated January 12,1996, approving Lavelle

AROOI963

PEPPER, HAMILTON & SCHEETZ LU>

Benjamin Fields, EsquireJune 30, 1997Page 2

Aircraft's Sixth Amended Plan of Reorganization (the "Confirmation Order*') is attached heretoas Exhibit "A.1' It appears that Lavelle Aircraft has emerged from bankruptcy and is still inexistence, with offices in Philadelphia, Pennsylvania.

This firm's client, the Lavelle Company, is a Delaware Corporation, which wasincorporated on February 14, 1996. The Lavelle Company is in the business of manufacturingsheet metal components for the defense and civilian/commercial aerospace industries. TheLavelle Company is wholly owned by the Eastwind Corp. and was formed in order to purchasecertain of the assets of the Lavelle Aircraft Company pursuant to a Bankruptcy Court approvedAsset Purchase Agreement (the "Agreement"). A copy of the Agreement is attached as Exhibit"B." The Agreement, which was approved as part of the Confirmation Order, specificallyconveyed the assets "free and clear of all mortgages, liens, pledges, charges .... or otherencumbrances or rights of others." Sfifi Section 4.5 of the Agreement. Under the Agreement, theLavelle Company did not purchase Lavelle Aircraft's cash, accounts receivable, real property orcertain litigation assets. SfiC Section 1.3(a) of the Agreement. Moreover, except for certainlimited contractual obligations, the Lavelle Company did not expressly or impliedly assume anyof Lavelle Aircraft's liabilities. Sec Section 3.2 of the Agreement. In addition, the Agreement,states that "Buyer shall not be deemed a successor to Seller." IsL.

The directors of Lavelle Company are Albert Bailey, Ken Mone, Mike Schluppand John Thatch, and the officers are Albert Bailey, President and Chief Executive Officer andKen Mone, Vice President and Chief Financial Officer. With the exception of Mr. Thatch, noneof the directors or officers of the Lavelle Company were directors or officers of Lavelle Aircraft.Although the Lavelle Company hired many of the employees of Lavelle Aircraft because of theirindustry expertise, approximately 42% of the Lavelle Company's current employees are notformer Lavelle Aircraft employees.

Since the Lavelle Company is not a successor to Lavelle Aircraft, it would not beappropriate for the Lavelle Company to participate in any negotiations regarding this Site. Pleasetelephone me if you need additional information or if I can be of any further assistance.

truly yours.

Enclosures

cc: Albert C. Bailey, President, Lavelle Company (w/enc.)Robert D. Lane, Jr., Esquire (w/enc.)

A R O O I 9 6 U

IN THE UNITED STATES BANKRUPTCY COURTFOR THE EASTERN DISTRICT OF PENNSYLVANIA

IN RE: : CHAPTER 11•

LAVELLE AIRCRAFT COMPANY : BANKRUPTCY NO. 94-17496

Debtor :

ORDER CONFIRMING DEBTOR'S SIXTH AMENDEDPLAN OF REORGANIZATION. AS MODIFIED

IAND NOW, this| day of January, 1996, upon consideration of Debtor's

request for confirmation of its Sixth Amended Plan of Reorganization, As Modified as

filed on November 21, 1995 ("Plan") and the Affidavit of Paul DeJuliis filed in support

thereof, and

It having been determined after hearing and notice that:

A. On November 21, 1995, after a hearing and notice to all creditors, this

Court entered an Order Approving Sixth Amended Disclosure Statement, Voting

Materials, Plan Voting Procedures and Notice;

B. The November 21, 1995 Order was served on all creditors and interest

holders along with copies of the Plan, Disclosure Statement and Ballots for accepting the

Plan;

C. The Plan has been accepted or is deemed accepted in accordance with

Section 1126 of the Bankruptcy Code by all classes of claims whose acceptance is

required by law;

(i) Debtor's Report of Plan Voting having been filed with the Court on

December 28, 1995 which states that all classes of claims and interest have either voted

in favor of the Plan or are not impaired; and

AROOI965

(ii) the Court further finding that such acceptances were solicited after**

disclosure to holders of claims and interests in the Disclosure Statement; and

(iii) any objection filed being overruled by the Court;

(iv) the Court finds that notice of the Confirmation Hearing was noticed

and sufficient pursuant to F.R.B.P. 2002.£. _____ - —— ————————————————— ——— - _______

It is hereby ORDERED that:

1. Debtor's Plan is CONFIRMED pursuant to 11 U.S.C. Section 1129(t);

2; —— The iVsset Purcha<« Agraemint datsd Pocombcf 39r-t995-

U f— UOTvDu JafTOaTj _ , tyyo tat iicTcDy

The Asset Purchase Agreement dated December 29, 1995 was a result of

\ arms length negotiations and is a good faith transactionJand the pur eh AMI ilieiKumler

m afforded under 11 U.S.C* §3oJ(ia).

^ Debtor is hereby directed to , acute such documents and do such things as

may be necessary and appropriate to effectuate the provisions of the Plan;

£ The sale of the Premises (as defined in the Plan) under the Plan shall be

deemed for all purposes as a transfer occurring under and pursuant to the Plan and

shall be exempt from transfer, recording and similar taxes pursuant to Section 1146(c)

of the Bankruptcy Code. In order to effectuate Section 1146(c), each Recorder of Deeds

or similar official for any County or governmental unit in which deeds for the transfer

of the Premises are to be recorded shall not refuse to accept such deed for recording by

reason of non-payment of any transfer, recording or similar taxes;

All executory contracts and unexpired leases listed on Debtor's Schedules

not previously rejected by Order of this Court or by the Plan, shall be deemed assumed

A Th'S v*"y c pure it eft pu,* s**** £ * pf&n r). rtt* $&*"?$-f 3t3(w) l»&p/Uit-**4.~

RROOI966

and no adequate assurance of future performance other than the promise to perform*•shall be required;

£/ All requests for approval of payment and administrative expenses,

including fees and expenses shall be filed within 45 days of the date of the entry of the

Ordertiu tluill It fniUU MiretfffgBrastlling AUlu iequal fiuui UIL Cjtatu——

Pursuant to Rule 3002(c)(4), claims if any, arising out of the rejection of

any executory contract must be filed within forty-five (45) days of the date hereof;

Debtor may file with the Court within sixty (60) days from the date hereof

any objection to allowance of any claim of a creditor or any requests for payment of

administrative claims not heretofore objected to, and in the event of the failure of

Debtor to do so, any objections to allowance of claims shall be deemed waived; provided

however, that such time period may be extended by the Court upon proper application

made prior to the expiration of Such sixty day period;

10. —— TTpnn tha Plnn Fiffrftirr Pntr Pilifni ih

permitted by Section 1141(d)(l) of the Bankruptey-CodeT from any debt that arose prior

to Confirmation and ny-tffSTof any kind specified hi Section 502(g), 502(h) or 502(i) of

Code;

14* —— Pnrnmnt tit Frrtfan HJ?(r} nf thi "•" r'r'try r™1ffr uoo" the Plan

Effective Date, except for the encumbrances which secure the Midlantic Banjg f r

Secured Claim, PIDA Secured Claim and PIDC-LDC Secured Talra or as otherwise

provided in the Plan, the property deaUwjtfc-bythe Plan will be free and clear of all

claims and interests tcrethTors (and/or their successors or assigns), equity security

all guch entities shall be enjoined pursuant to Section 524(a)(2) from

AROOI967

hinder or delay the scheduling and holding of the sale and

provided for in the Plan), employing processjjc-airtfcTto collect or recover from or

offset any debt as ap softflMTaEiiity of the Debtor, whether or not discharge of such

The Court shall retain subject matter jurisdiction of Post-Confirmation

disputes only to the extent allowed by Federal Bankruptcy Law, any language in the

Plan notwithstanding;

Debtor shall send notice of this Order as required by Federal Rule of

Bankruptcy Procedure 2002(0(7).A ;J Ar^ -.v.vW A-fMint* TOE COURT:

/KPI**-

LJ.&DIANE W SIGMUND

Copies to Interested Parties:

Joseph F. Minni, EsquireOffice of the U.S. Trustee601 Walnut StreetCurtis Center - Suite 950 WestPhiladelphia, PA 19106

Alan R. Gordon* EsquireSAUL, EWING, REMICK & SAUL3800 Centre Square WestPhiladelphia, PA 19102

Notices nailed on

Deputy

AROOI968

Joel C. Shapiro, EsquireBLANK ROME COMISKY & McCAULEYFour Perm Center PlazaPhiladelphia, PA 19103

Louis Lipsky, EsquireLipsky & Brandt2920 PSFS BuildingPhiladelphia, PA 19107

John G. Narkin, EsquireCommonwealth of PennsylvaniaDepartment of CommerceOffice of Chief Counsel416 Forum BuildingHarrisburg, PA 17120

Scott R. Hatz, EsquireBond, Schoeneck & King, LLPOne Lincoln CenterSyracuse, NY 13202-1355

Eric Frank, EsquireMILLER & MILLER1640 PSFS Building12 S. 12th StreetPhiladelphia, PA 19107

Laveile Aircraft Company275 Geiger RoadPhiladelphia, PA 19115

F:\Cwn\Zambrano\UvelIe\Conflrm.Ord January 4, 1996

AROOI969

ASSET PURCHASE AGREEMENT

DATED AS OF DECEMBER 29, 1995

BY AND BETWEEN

LAVELLE COMPANY (BUYER)

AND

LAVELLE AIRCRAFT COMPANY (SELLER)

EXHIBIT "G"

AROOI970

TABLE OF CONTENTSPage

SECTION i Assets to be Acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.1 Description of Assets . . . . . . . . . . . . . . . . . . . . . . . . . 21.2 Definition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41.3 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41.4 Special Provisions Regarding Executory Contracts . . . . . . . 4

SECTION 2 The Purchase Price and Related Matters . . . . . . . . . . . . . . . . . . 52.1 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52.2 Adjustment to Purchase Price . . . . . . . . . . . . . . . . . . . . 6

SECTION 3 Assumption of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

SECTION 4 Representations and Warranties of Seller . ................. 84.1 Organization and Good Standing .................. 84.2 Authority ................................ 94.3 No Violation .............................. 94.4 Consents and Approvals of Governmental Authorities *

and Others ............................... 9 '4.5 Title to Assets ............................. 104.6 Litigation; Compliance with Laws ................. 104.7 Certain Fees .... ......................... 114.8 Assets ......... ......................... 114.9 Licenses ................................. 114.10 Insurance ................................ 124.11 Absence of Sensitive Payments ................... 124.12 Taxes .................................. 134.13 Employment Matters .......................... 134.14 Disclosure ............................... 14

SECTION 5 Representations and Warranties of Buyer ................. 155.1 Organization .............................. 155.2 Execution and Delivery ....................... 155.3 Certain Fees .............................. 15

SECTION 6 Further Agreements and Assurances .................... 166.1 Contact with Employees ....................... 166.2 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166.3 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 166.4 Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166.5 Bankruptcy Coun Approval . . . . . . . . . . . . . . . . . . . . . 176.6 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . 17

A R O O I 9 7 I

SECTION 7 The Closing ................................... is

SECTION 8 Conditions Precedent to the Obligations of Buyer . . . . . . . . . . . . is8.1 Government Approvals . . . . . . . . . . . . . . . . . . . . . . . . 198.2 Corporate Action . . . . . . . . . . . . . . . . . . . . . . . . . . . 198.3 Representations and Warranties . . . . . . . . . . . . . . . . . . . 198.4 Performance of Obligations ..................... 198.5 Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198.6 Instruments of Conveyance, Etc. . . . . . . . . . . . . . . . . . . 198.7 Collective Bargaining Agreements . . . . . . . . . . . . . . . . . 208.8 Due Diligence ............................. 208.9 Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208.10 Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208.11 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . 208.12 Financing ................................ 218.13 Other Conditions of Buyer Related to Bankruptcy ........ 21

SECTION 9 Conditions Precedent to the Obligations of Seller . . . . . . . . . . . . 219.1 Representations and Warranties ................... 219.2 Execution and Delivery ....................... 229.3 Lease .................................. 259.4 Payment ................................. 22

SECTION 10 Bankruptcy Court Approval ......................... 22

SECTION 11 Conduct of Business Prior to Closing .................... 23

SECTION 12 Representations and Warranties Do Survive ................ 25

SECTION 13 Competition ................................... 25

SECTION 14 Termination: Modification or Waiver .................... 2514.1 Termination .............................. 2514.2 Modification .............................. 2614.3 Waiver ................................. 26

SECTION 15 Costs Incident to Preparation of Agreement ................ 27

SECTION 16 Parties in Interest and Assignment ..................... 27

SECTION 17 Investigation by Buyer ............................ 27

SECTION 18 Risk of Loss; Damage Prior to Closing .................. 28

ui

AROOI972

SECTION 19 Best Efforts ................................... 29

SECTION 20 Choice of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

SECTION 21 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

SECTION 22 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

IV

AROOI973

GLOSSARY OF TERMS

Defined Term

Agreement HeadingAssets 1-2Bankruptcy Code PreambleBankruptcy Court PreambleBanks 6.6Business PreambleBuyer HeadingClosing 7Closing Date 7Code 2-2Deposit 2-°ERISA 4-13<a>Final Bankruptcy Order 10-1Motion 6*6Plan I0*1Purchase Price 2.1Seller Headin*

ARQOI971*

EXHIBITS

Exhibit A Plan of Reorganization of Seller

Exhibit B Lease of Premises at 275 Geiger Road. Philadelphia. PA

SCHEDULES

1. l(a) Fixtures and Equipment1.1 (c) Personal Property1.1 (e) Contracts. Agreements and Leases1.1 (j) Other Assets Owned by Seller4.4 Consents4.6 Litigation4.10 Insurance4.12 Taxes4.13(a) Employee Information4.13(b) Employment Agreements in Force4.13 (c) Union Contracts

VI

AROOI975

ASSET PURCHASE AGREEMENT

ASSET PURCHASE AGREEMENT dated this day of , 1995

("Agreement") by and between LAVELLE COMPANY, a Delaware corporation to be formed

("Buyer") and LAVELLE AIRCRAFT COMPANY, a Pennsylvania corporation, as debtor and

Debtor-in-Possession ("Seller").

WITNESSETH:

WHEREAS. Seller is a contract manufacturer of sheetmetal parts for aircraft jet

engines, missiles and commercL. products (the "Business");

WHEREAS, Seller filed a voluntary petition under Chapter 11 of the Bankruptcy

Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the Eastern District

of Pennsylvania on November 14. 1994 (the "Bankruptcy Court") such matter being designated

as No. 94-17496-DWS (the "Proceedings"); and

WHEREAS, Seller desires to sell, and Buyer desires to acquire, certain of the

assets of Seller used in the Business as more fully described below, together with all other

licenses, permits or authorizations issued by any regulatory agency in connection therewith, free

and clear of ail liabilities, claims, liens and encumbrances with approval of the Bankruptcy Court

as pan of a plan of reorganization of Seller (the "Plan"), ail upon the terms and conditions set

forth herein:

NOW THEREFORE, in consideration of the premises and mutual covenants,

agreements, representations and warranties set forth herein, and intending to be legally bound,

the panies hereto agree as follows:

AROOI976

SECTION 1. ASSETS TO BE ACQUIRED

1.1 Description of Assets. Subject to the terms and conditions of this

Agreement, and in reliance on the representations, warranties and covenants contained herein.

on and as of the Closing Date (capitalized terms shall be used as defined in the Sections

mentioned in the Glossary of Terms to this Agreement) Seller will sell, convey, assign, transfer

and deliver to Buyer, and Buyer will purchase and acquire, all subject to Bankruptcy Court

approval, the following assets:

(a) all fixtures, tooling, machines and equipment set forth on Schedule

1. l(a) or used in connection with and for the operation of the Business and all trademarks, trade

names including the name "Lavelle", "Lavelle Aircraft Company" or any derivative thereof.

service marks, jingles, slogans, copyrights, patents and applications therefor (if any), trade!

secrets and know-how used or useful in the operation of the Business and the goodwill of Seller

associated with the Business;

(b) all inventory, raw materials, components, supplies and work-in-

process owned by the Seller on the Closing Date;

(c) ail of the personal pioperry used or useful in the operation of the

Business in the normal course of Business as listed on Schedule l.l(c), and any additions

thereto or substitutions therefor,

(d) rights to ail pending and current private and government contracts,

together with the right to use government equipment loaned to Seller in connection with any

government contracts:

FJanuarv :. 1446

flROOI977

(e) the licenses, certifications, contracts, agreements, permits and

leases, other than for employment or other personal services, listed and described on Schedule

I. l(e)f which are in effect on the date hereof, together with any similar agreements entered into

in the ordinary course cf Seller's Business berween the date of this Agreement and the Closing

Date, all as consented to by Buyer such consent not to be unreasonably withheld or delayed; and

provided, however, that Buyer shall not be required to assume any contracts that require consent

by a third party to the assignment thereof without Buyer's consent (except as expressly provided

below) unless such consent shall have been obtained prior to the Closing Date or any collective

bargaining agreements or any contracts that would require Buyer to pay any amounts owed by

Seller;

(f) Note receivable from DIM Holding, Inc. (later changed to DT\f

Aerospace, Inc.) to Seller in the original principal amount of 5300,000.00, since reduced by

payments on account to $145,637.00; and,

(g) in particular, and without limiting the generality of the foregoing.

the Assets include:

(i) all other licenses, permits or authorizations issued by anygovernmental agency which are used or useful in theoperation of the Business;

(ii) all Business records relating solely to the operation of theBusiness, including without limitation, advertising lists.procedures m**?"1*. customer lists (including files),metallurgical data, promotional materials and publications,surveys, certain financial records, supplier lists and filesand research data;

(iii) engineering data, blueprints, computers and computersoftware programs; and.

FJanuarv 2. 1996

AROOI978

(iv) all other assets owned by Seller, which are described onSchedule l.l(g).

1.2 Definition. The assets to be sold by Seller to Buyer pursuant to Section

l.l hereof are hereinafter collectively referred to as the "Assets."

1.3 Excluded Assets.

(a) The Assets do not include cash, real property, accounts receivable.

a certain claim and cause of action against Richard Ludwig filed with the Bankruptcy Court on

May 15, 1995, Adversary Proceeding No. 95-0284. corporate records or any other assets of

Seller not used or useful in the operation of the Business (collectively the "Excluded Assets").

(b) With regard to certain of the Excluded Assets, Buyer undertakes

to: •

i. use its best efforts to collect the accounts receivableoutstanding on the Closing Date as agent for the benefit ofSeller and/or Midlantic Bank, N.A.;

ii. finance the adversary proceeding referred to in Section1.3(a), above, in an amount up to 550,000 to allow Sellerto pursue Seller's cause of action against Richard Ludwig;and,

iii. lease from Seller the real property owned by Seller andused in die Business known as 275 Geiger Road,Philadelphia, PA 19115, which lease is attached hereto asExhibit B and made a pan hereof, which terms areconsistent with Seller's Plan of Reorganization.

1.4 Special Provisions Regarding Executory Contracts. To the extent any

of the Assets constitute unassumed executory contracts within the meaning of §365 of the

Bankruptcy Code. Seller shall either forthwith file with the Bankruptcy Court a motion seeking

to assume and assign such contracts (subject to closing hereunder) or shall assume and assign

F FILES-IT114-CPFDOCS'. ASSETPUR. 32Janwrv I. 19M6

AROOI979

such contracts to Buyer in accordance with the Plan. If Seller determines to reject any executory

contract, Seller shall give Buyer prior written notice of Seller's intention to reject each such

contract and Seller's reason for such rejection and shall furnish a copy of each such contract to

Buyer (if not already so furnished). Nothing herein shall (a) prevent Seller from rejecting any

executory contract; (b) obligate Buyer to assume any liabilities for damages or otherwise with

respect to any rejected contract; or (c) obligate Buyer to purchase the Assets under this

Agreement if Buyer, in its sole discretion, determines such rejected contract or contracts are

material to. or required for. Buyer's operation of the Business; provided, however, that Buyer

shall have five Business days following receipt of the notice and ail other material required by

the immediately preceding sentence to object in writing to Seller's proposed action. The absence

of a response from Buyer within the time set forth above shall be deemed a consent by Buyer

to Seller's proposed action, and Seller's engaging in such action on the terms described in the

notice will not excuse Buyer from performing under this Agreement. If Buyer objects to such

proposed action and Seller thereafter engages in the proposed action. Buyer may terminate this

Agreement upon written notice to Seller.

SECTION 2. THE PURCHASE PRICE AND RELATED MATTERS

2.1 Purchase Price.

(a) In consideration of the sale, conveyance, assignment, transfer and

delivery of the Assets, Buyer agrees to pay and deliver to Seller (the "Purchase Price") equal

to the following:

F,'anuap-1 I. I

flROOI980

(i) $1,224,500.00 in cash, in federal funds, in an account

designated by the Bankruptcy Court;

(ii) by credit, by Buyer assuming certain existing tax liabilities

of Seller, consistent with the terms of the Plan, and

classified as Class 2 Claims of Seller's Plan of

Reorganization, in an amount up to a total of THREE

HUNDRED THOUSAND DOLLARS (5300,000.00).

(b) The cash portion Purchase Price will be used to purchase the Assets

and fund the Plan payments which are required to be paid on the Effective Date of the Plan of

Reorganization. The Purchase Price shall be paid by (i) Buyer depositing the sum of TEN

THOUSAND (510,000.00) Dollars in escrow in an interest bearing account, pending

consummation or termination of this Agreement (the deposit, together with all interest earned

thereon, being herein referred to as the "Deposit"), and (ii) the balance on the Closing Date in

cash by wire transfer in immediately available funds to an account designated by order of the

Bankruptcy Court.

2.2 A4iustmeot to Purchase Price. Operation of the Business and the

collected income and expenses attributable thereto up to 12:01 a.m. on the Closing Date shall

be for the account of Seller and thereafter for the account of Buyer. Expenses, including, but

not limited to. such items as power and utilities charges, personal property taxes, insurance

premiums, rents and sales commissions, shall be prorated between Seller and Buyer at or as of

the Closing Date. This proration shall be made and paid, insofar as feasible, on the Closing

Date, by either adding to or subtracting from the amount to be paid at Closing under Section

FJjnuarv :, IWft

A R O O I 9 8

2.1. Notwithstanding anything in this Agreement to the contrary, after entry of the Confirmation

Order, no adjustment to the Purchase Price will be made on account of any breach of any

representation, warranty or covenant; nor shall such breach create any offset or claim in favor

of Buyer; provided that Buyer may elect, on account of any such breach, to terminate its

obligations hereunder in accordance with Section 14 hereof. Nothing herein shall be interpreted

to require Seller's lenders to accept any distribution other than that set forth in the Plan.

SECTION 3. ASSUMPTION OF LIABILITIES

3.1 Effective upon the Closing Date, Buyer will assume and pay or discharge

all of Seller's obligations accruing from and after the Closing Date under the leases, contracts

and other agreements described in Schedule l.l(e) and transferred hereunder at the Closing:

Date.

3.2 Except as set forth in Section 3.1 and 2.1(a), Buyer shall assume no

obligations or liabilities, contingent or otherwise, of Seller of any nature, whether arising in

contract, ton or otherwise, whether now existing or hereafter arising, related to, arising from

or connected with the Assets or the Business, including, but not limited to, any liability for

property damage, death or personal injury (whether suffered prior to or after the Closing) or

arising with respect to services rendered by Seller, and Seller shall convey no such obligations

or liabilities, contingent or otherwise, to Buyer, it being the itttenrym of the Buyer and Seller

that Buver shall not be deemed a successor to Seller.

F FILET:-lU.CPFDOCS\ASSrr?UR.3:January;. :•*»

AROOI982

3.3 Without limiting the generality of the foregoing provision, all claims and

obligations under, pursuant to or in connection with any welfare, medical, insurance, disability

or other benefit plans of Seller incurred on or before the Closing Date or resulting or arising

from events or occurrences occurring or commencing on or prior to the Closing Date shall

remain the responsibility of Seller. Seller shall terminate all employees on the Closing Date,

other than employees under contracts assumed by Buyer. Buyer shall have and assume no

obligation or liability under or in connection with any such plan and shall assume no obligation

with respect to any preexisting conditions of any employee of Seller which is hired as an

employee of Buyer. Buyer shall have no obligations to any of Seller's employees for accrued

benefits, severance or deferred pay or any other payments or benefits, which may be or become

due to such employees from Seller, including without limitation any liabilities to employees of-

Seller pursuant to the Worker Adjustment Retraining and Notification Act. Buyer shall not

assume any collective bargaining agreemen. ? which Seller is a party or which is applicable to

any of Seller's employees.

SECTION 4. REPRESENTATIONS AND WARRANTIES OF SELLER

Seller represents and warrants to Buyer on the date hereof and on the Closing

Date that:

4.1 Organization and Good Standing. Seller is a Pennsylvania corporation

validly existing in good standing under the laws of the Commonwealth of Pennsylvania, with full

power and authority to carry on its Business as presently conducted by it.

F FILES\:T:U>C?FDOCS-.ASSETPUR.J:January :. i«%

A R O O I 9 8 3

4.2 Authority. Subject to approval by the Bankruptcy Court, Seller has full

power and authority to execute and deliver this Agreement and the instruments of transfer and

other documents delivered or to be delivered pursuant hereto and to consummate the transactions

contemplated hereby and thereby. This Agreement and all instruments of transfer and other

documents delivered or to be delivered by Seller in connection with this Agreement have been

duly authorized and approved by all necessary and proper corporate action of Seller and

constitute, and will constitute, the valid and binding obligations of Seller enforceable in

accordance with their respective terms.

4.3 No Violation. Neither the execution and delivery of this Agreement by

Seller and the performance by Seller hereunder, nor the consummation of the transactions

contemplated hereby, will violate, conflict with, result in the breach of or accelerate the-

performance required by any of the terms, conditions or provisions of the certificate of

incorporation or bylaws of Seller or any covenant, agreement or understanding to which Seller

is a party or any order, ruling, decree, judgment, arbitration award or stipulation to which Seller

is subject, or constitute a default thereunder or result in the creation or imposition of any lien,

charge or encumbrance thereunder upon any of the Assets, or allow any person or entity to

accelerate any debt secured by any Asset, or allow any person or entity to interfere with Buyer's

full use and enjoyment of any of the Assets.

4.4 Consents and Approvals of Governmental Authorities and Others.

Except for the approval of the Bankruptcy Court and the approval of the federal government to

the assignment of any government contracts, receipt of which approvals are conditions precedent

to the obligations of Buyer and Seller as more fully set forth in Section 10, no approval or

r FILES-rU-r.CPrTX)CS\A$SEm'R.3:

AROOI981*

authorization of, filing or registration with, or notification to, any governmental or regulatory

authority is required in connection with the execution and delivery of this Agreement by Seller

or the performance of its obligations hereunder or the consummation of the transactions

contemplated hereby. Except as disclosed in Schedule 4.4. no consent, approval or authorization

of any person is required in connection with the execution or delivery of this Agreement by

Seller, the transfer to Buyer of the Assets or the performance by Seller of any other obligation

under this Agreement.

4.5 Title to Assets. Seller has good and marketable title to the Assets and

upon confirmation of the Plan of Reorganization by the Bankruptcy Court and entry of a final

and non-appealable order of the Bankruptcy Court confirming the Plan of Reorganization,

assignment and transfer of the Assets free and clear of claims, liens and encumbrances of

whatever nature, whether known or unknown, pursuant to 11 U.S.C Sections 363 and 365, will

transfer and convey the Assets to Buyer free and clear of all mortgages, liens, pledges, charges.

title retention or security agreements, claims, restrictions, leases, options, rights of first offer

or first refusal, confidentiality or secrecy agreements, noncompetition agreements, defects of title

or other encumbrances or rights of others.

4.6 Litigation; Compliance with Laws. Except for the adversary proceeding

against Richard Ludwig in which Seller is Plaintiff and except as disclosed in Schedule 4.6,

Seller is not engaged in, or a parry to. or threatened with, any legal action, suit, investigation

or other proceeding arising with respect to the Business or the Assets, by or before any court.

arbitrator or administrative agency, and after diligent inquiry. Seller does not know of any basis

tor any such action, investigation or proceeding. There are no outstanding orders, rulings.

F FlLES\riU'-CPFOOCS\ASSETFUR.3:J-uiuarv :. IVWt 10

AROOI985

decrees, judgments or stipulations or proceedings relating to or arising in connection with the

Business or the Assets to which Seller is a party or by which Seller is bound, by or with any

court, arbitrator or administrative agency, other than orders issued by the Bankruptcy Court.

Seller is operating the Business in compliance with the requirements of all federal, state and

local laws, regulations, judgments, injunctions, decrees, court orders and administrative orders

regarding such operations, including, without limitation, operating the Business in compliance

with the requirements of all federal, state and local laws, regulations and administrative orders

of the Navy, including, but not limited to conducting all necessary proofs of performance.

4.7 Certain Fees. Neither Seller nor any of its officers, directors, employees

or other affiliates has agreed to pay or has incurred any claims for any brokerage fees,

commissions or finders' fees in connection with the transactions contemplated hereby. *

4.8 Assets. The Assets include all tangible and intangible personal property

which are necessary or related to the operation of the Business. The Assets being transferred

are sufficient to operate the Business. All technical equipment, including without limitation, the

equipment listed on Schedule 1,1 (a) is in accordance with standard engineering practices in the

industry. Seller is selling, and Buyer is purchasing, the Assets "AS IS" and "WITH ALL

FAULTS", and without representation or warranty, express or implied, of any nature

whatsoever, including any representation or warranty of title, merchantability or fitness for any

particular purpose, except as specifically stated herein.

4.9 Licenses. Seller currently holds all franchises, agreements, licenses and

grants of authority as are necessary or advisable in connection with the conduct by it of its

Business as now conducted and as presently proposed to be conducted. Except as disclosed on

11

AROOI986

Schedule 4.9, no complaint has been filed respecting the Business and no such complaint which

has been filed has any merit; there is no pending or threatened governmental investigation or

inquiry into the Business. All of such other franchises, agreements, licenses and grants of

authority were duly and validly issued by the respective governmental authorities or agencies,

are in full force and effect and are valid and enforceable in accordance with their terms. There

exists no fact or circumstance which constitutes or which, with the passage of time or the giving

of notice, or both, would constitute, a default under any such other franchises, agreements.

licenses or grants of authority or would permit the grantor thereof to cancel or terminate the

rights thereunder, except upon the expiration of the full term thereof. Seller has given Buyer

true and correct copies of all such other franchises, agreements, licenses and grants of authority

including all amendments thereto. *

4.10 Insurance. Set forth on Schedule 4.10 is a list of ail insurance policies

held by or on behalf of Seller as of the date hereof and of all public liability insurance policies

held by or on behalf of Seller for the past five years, copies of which have been supplied to

Buyer. Seller maintains such types and amounts of insurance against such risks and losses as

are required by law or the terms of any contract and as-are customary for companies similarly

situated in the Business in which Seller is engaged and at the locations where Seller conducts

such Business, and except as set forth on Schedule 4.10, Seller has not received any notice of

actual or proposed cancellation or of reduction in coverage of, or of any increase in premium

under, such policies of insurance.

4.11 Absence of Sensitive Payments. Seller has not made any contributions.

payments or gifts to or for the private use of any governmental official, governmental employee

F F1LES\:?IU'.C?FDOC$\A$SET7U*.3:L9% 12

AROOI987

or governmental agent in any amount where either the payment or the purpose in making such

contribution, payment or gift is illegal under the laws of the United States or any other

jurisdiction and in the case of the laws of any jurisdiction other than the United States could

subject the Business Assets to any liability; Seller has not established or maintained any

unrecorded fund or asset for any purpose or made any false or artificial entries on its books; and

Seller has not made any payments to any person with the intention or understanding that any part

of such payment was to be used for any purpose other than that described in the document

supporting the payment.

4.12 Taxes. Except as described on Schedule 4.12, and except as provided in

the Plan, Seller has duly and timely filed all tax returns required to be filed by it or for which

it may be held responsible, and has paid all taxes, interest, penalties, duties, assessments and

deficiencies due and payable by it.

4.13 Employment Matters.

(a) Schedule 4.13(a) contains a true and complete list of names and

positions of all employees of the Business, including current hourly wages or monthly salary and

other compensation amounts. Seller has complied in ail respects with all applicable laws relating

to the employment of labor, including, without limitation, the Employee Retirement Income

Securiry Act of 1974, as amended ("ERISA"), Continuation Coverage Requirements of Group

Health Plans, Department of Defense Procurement Regulations and those relating to wages,

hours, collective bargaining, unemployment insurance, worker's compensation, equal

employment opportunity, age and handicapped discrimination, immigration control and the

payment and withholding of taxes.

AROOI988

(b) Except as set forth on Schedule 4.13(b), Seller has no employment

agreements, either written or oral, with any person which would require Buyer to employ any

person after the Closing Date. From and after the Closing Date, Buyer may. but shall have no

obligation to. offer employment to any of the current employees of Seller as Buyer may desire

on terms acceptable to Buyer.

(c) Schedule 4.13(c) contains a true and complete list of all contracts

with labor organizations to which Seller is a parry. Other than those contained on the Schedule

4.13(c), Seller is not a party to any contract with any tabor organization, and neither has Seller

agreed to recognize any union or other collective bargaining unit, nor has any union or other

collective bargaining unit been certified as representing any of its employees, nor has Seller

received any requests from any party for recognition as a representative or employees for

collective bargaining purposes.

(d) Buyer is not quired to continue any defined benefit, defined

contribution or other employee benefit plan subject to the jurisdiction of ERISA to which Seller

is. or may currently be, a parry.

4.14 Disclosure. No representations or warranties made by Seller in this

Agreement and no statements made by Seller in any certificate, schedule, exhibit or other writing

delivered by Seller or referred to in or pursuant to this Agreement contain, or at the date of its

delivery will contain, any untrue statement of material fact or omit or will omit any statement

of a material fact necessary to make complete, accurate and not misleading every representation.

warranty and statement of Seller set forth in this Agreement or any such certificate, schedule.

exhibit or other wriiina.

F FILES1.:"! U CPFDOCSvASSETWRj:Jovian I. 199« 14

AROOI989

SECTION 5. REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer represents and warrants to Seller as follows:

5.1 Organization. Buyer is a corporation to be formed under the laws of the

State of Delaware and at the Closing Date will be duly incorporated, existing and in good

standing under the laws of the State of Delaware and will be duly qualified to do business in

Pennsylvania and will have full corporate power to execute this Agreement and the other

documents delivered or to be delivered pursuant hereto and to consummate the transactions

contemplated hereby and thereby.

5.2 Execution and Delivery. The execution and delivery of this Agreement

by Buyer and consummation by Buyer of the transactions contemplated hereby will have been

duly authorized by all necessary corporate action of Buyer, and will constitute the valid and;

binding obligation of Buyer, enforceable in accordance with its terms, except as such

enforceabiliry may be limited by bankruptcy, insolvency, reorganization or similar laws relating

to or affecting the enforcement of creators' rights generally and by general equity principles.

regardless of whether such enforceabiliry is considered in a proceeding in equity or at law.

5.3 Certain Fees. Neither Buyer nor any of its officers, directors, employees

or other affiliates has agreed to pay or has incurred any claims for any brokerage fees,

commissions or finders* fees in connection with the transactions contemplated hereby.

AROOI990

SECTION 6. FURTHER AGREEMENTS AND ASSURANCE

6.1 Contact with Employees. Seller shall permit Buyer to discuss the

possibility of employment with current employees of the Business and shall not interfere with

or impede, directly or indirectly, this right.

6.2 Taxes. Seller agrees that it will pay all sales, use and transfer taxes, if

any, arising from the sale of the Assets, consistent with 11 U.S.C. §1146(c).

6.3 Employee Matters.

(a) Seller agrees to assume ail responsibility for maintenance and/or

distribution of benefits accrued under any qualified plans maintained by Seller pursuant to the

plan provisions of all such plans sponsored by Seller. Buyer will assume neither any liability

for any such accrued benefits nor any fiduciary or administrative responsibility to account for

or dispose of any such accrued benefits maintained under any qualified plans sponsored by

Seller.

(b) Seller shall comply with all required provisions of the Worker

Adjustment Retraining and Notification Act.

6.4 Operations. From and after the date hereof until the Closing Date;

(a) Seller shall (i) give to Buyer's counsel, accountants and other

representatives full access during normal business hours to all the Assets; (ii) not make any

capital investment over Five Thousand and 00/100 (S5.000.00) Dollars except in the ordinary

course of business without consulting Buyer; (iii) continue to have between the date hereof and

the Closing Date, insurance coverage on the Assets and public liability insurance in substantially

the same amounts and coverage as presently existing: (iv) operate the Business in the normal and

F FILES•.::tU\C7FDOCS'>AS5STPUR.3:Jjcuan 2. iWft 16

AROOI99

usual manner in accordance with standard engineering and operating practices and in compliance

with all rules and regulations, and in the ordinary course; and (v) use its best efforts to preserve

for the Business its present customers and present business reputation.

(b) Buyer and Seller shall use their respective best efforts to join in

applications to be filed with the government, if any, requesting its written consent to the

assignment of any government contracts from Seller to Buyer.

(c) Seller agrees that prior to the Closing Date, if it becomes aware of

any violation of governmental rules and regulations, it will correct or remove all such violations

or be responsible for the costs of removing such violations, including the payment of any fines

that may be assessed for any such violation.

6.5 Bankruptcy Court Approval. Seller, at its option, shall either file with

the Bankruptcy Court a motion (the "Motion") or have as part of its Order confirming its Plan

of Reorganization a request seeking (a) approval of the form of this Agreement and (b) authority

for Seller to comply with the terms and conditions of this Agreement pending the sale of the

Assets to Buyer or to such other entity as may be the ultimately approved purchaser of the

Assets as determined by the Bankruptcy Court in accordance with the Bankruptcy Code and the

terms of the Plan. The Bankruptcy Court's approval of the form of this Agreement and Seller's

limited obligations to comply with the terms of this Agreement shall be deemed terminated if

Seller is authorized by the Bankruptcy Coun to execute and deliver an agreement for the sale

of Assets to another entity.

6.6 Further Assurances. From time to time after the Closing, at Buyer's or

Seller's request and without further consideration. Seller or Buyer will execute and deliver such

F FILES :-IU.CPFDOCS.ASSETPLTl.::I. 19*6 17

AROOI992

other and further instruments of conveyance, assignment and transfer, and take such other

action, as Buyer or Seller may reasonably request for the more effective conveyance and transfer

of the Assets to Buyer.

SECTION?. THE CLOSING

The closing of the sale and purchase of the Assets (the "Closing") shall take place

at the offices of SPECTOR GADON & ROSEN, P.C., 1700 Market Street. 29th Floor.

Philadelphia, Pennsylvania, at 10:00 a.m. local time on a date mutually agreed upon by Buyer

and Seller within twenty (20) days following satisfaction of all conditions precedent to the

obligations of buyer and Seller set forth in Sections 3, 9 and 10 hereof (such date being herein

sometimes referred to as the "Closing Date"); provided however, that in the event that as of

February 1, 1996, the Confirmation Order has not been entered, this Agreement shall

immediately and automatically terminate unless the parties have elected to extend such deadline

in writing and neither Midlantic Bank, N.A., nor the PIDA or PIDC-LDC (the "Banks") or any

other party to the proceedings have objected to such extension.

SECTION 8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER

The obligation of Buyer to acquire the Assets and pay the Purchase Price is

subject to the satisfaction, or waiver in writing by Buyer, on or prior to the Closing Date of the

conditions set forth in Section 10 hereof and each of the following conditions:

18

AROOI993

8.1 Government Approvals. The government's assent to the assignment of

the government contracts to Buyer shall have become final without any conditions unacceptable

to Buyer.

8.2 Corporate Action. All corporate and other actions necessary to authorize

and effecmate the consummation of the transactions contemplated hereby by Seller and/or Buyer

shall have been duty taken prior to the Closing, and Seller shall have delivered to Buyer a

certificate of a duly authorized officer of Seller to that effect, together with a certified copy of

the Seller's Certificate of Incorporation and Bylaws as in effect on the Closing Date.

8.3 Representations and Warranties. The representations and warranties of

Seller set forth in this Agreement shall be true and correct in all material respects on and as of

the Closing Date with the same effect as though all such representations and warranties have

been made on and as of such date and there shall have been delivered to Buyer a certificate to

that effect, dated the Closing Date, signed by a duly authorized officer of Seller.

8.4 Performance of Obligations. Each and all of the covenants and

agreements of Seller to be performed or complied with pursuant to this Agreement on or prior

to the Closing Date shall have been duly performed and complied with or duly waived and there

shall have been delivered to Buyer a certificate to that effect, dated the Closing Date, signed by

a duly authorized officer of the Seller.

8.5 Approvals. The final approvals or orders of the Bankruptcy Court and

the government required to be obtained pursuant to Section 10 shall be in full force and effect.

8.6 Instruments of Conveyance, Etc. Seller shall have delivered to Buyer

such bills of sale, assignments and instruments of transfer and conveyance and certificates of title

19

AROOI99I4

as shall be reasonably required by Buyer for the transfer to Buyer of all of Seller's right, title

and interest to and in the Assets.

8.7 Collective Bargaining Agreements. Any collective bargaining agreement

with a union representing any employees of the Business shall not contain a clause making such

agreement binding on successors and assigns, nor shall the Buyer have any duty to recognize

such union nor to bargain with such union regarding any employee of the Business under

applicable law or provision of such collective bargaining agreement.

8.8 Due Diligence. Buyer shall be satisfied with the results of its due

diligence investigation of Seller, and shall so notify Seller by February 8. 1996.

8.9 Delivery. On the Closing Date. Seller shall deliver physical possession

of all tangible personal property included in the Assets at 275 Geiger Road. Philadelphia;

Pennsylvania 19115 or to such other premises as Buyer shall advise Seller in writing prior to the

Closing.

8.10 Lease. On the Closing Date, Seller shall execute the lease for the real

property at 275 Geiger Road, Philadelphia, Pennsylvania, in substantially the form attached as

Exhibit B. As long as Buyer is not in default under the terms of the Lease, no party shall

dispossess Buyer of its use of the real property.

8.11 No Material Adverse Change. Prior to the Cosing Date, there shall have

been no material adverse change in the Business, nor in any of the assets used in the Business,

nor in any of the relationships between Seller and the suppliers, customers and employees of the

Business, nor in the prospects of the continuation of the Business with comparable revenues and

margins to those which previously applied.

F FlLES'.riU.CPFDOC$\ASSETPUR.::Januarv :. I99e 20

AROOI995

8.12 Financing. Buyer shall have obtained adequate financing to consummate

the purchase on terms reasonably acceptable to it, including additional financing from the

issuance of convertible debt or convertible preferred stock with a private investor or investors

to supply a portion of the financing required for the purchase and for working capital purposes

with which to conduct the Business in amounts reasonably needed by the Buyer for such

purposes and on terms acceptable to it.

8.13 Other Conditions of Buyer Related to Bankruptcy. Notwithstanding

anything to the contrary in this Agreement. Buyer may but shall not be obligated to. perform

its obligations under this Agreement in the event:

a. A trustee is appointed pursuant to Title 11 of the United States

Code prior to the consummation of this Agreement; ;

b. Seller's Bankruptcy Proceeding commenced under Chapter 11 of

Title 11 of the United States Code is converted to Chapter 7 prior to the Closing of this

Agreement.

SECTION 9. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER

The obligation of Seller to sell or otherwise transfer the benefits of the Assets

hereunder is subject to the satisfaction, or waiver in writing by Seller, on or prior to the

Closing Date of the conditions set forth in Section 10 hereof and each of the following

conditions:

9.1 Representations and Warranties. The representations and warranties of

Buyer set forth in this Agreement shall be true and correct in all material respects on and as of

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flROOI996

the Closing Date with the same effect as though all such representations and warranties had been

made on and as of such date and there shall have been delivered to Seller a certificate to that

effect, dated the Closing Date, signed by a duly authorized officer of Buyer.

9:2 Execution and Delivery. The execution and delivery of this Agreement

by Buyer and consummation by Buyer of the transactions contemplated hereby shall have been

duly authorized by all necessary corporate action of Buyer, and, this Agreement and the other

documents delivered or to be delivered pursuant hereto shall constitute the valid and binding

obligations of Buyer, enforceable in accordance with their terms, except as such enforceabiliry

may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws

or equitable principles from time to time in effect relating to or affecting the rights of creditors

generally; and there shall have been delivered to Seller a certificate of a duly authorized officer

of the Buyer to that effect.

9.3 Lease. On the Closing Date, Buyer will execute the lease for the real

property at 275 Geiger Road, Philadelphia, Pennsylvania, in substantially the form attached as

Exhibit B, and which is consistent with the terms of Debtor's Plan of Reorganization.

9.4 Payment. Buyer shall have paid the Purchase Price for the benefit of

Seller pursuant to the Plan subject to any further order of the Bankruptcy Court.

SECTION 10. BANKRUPTCY COURT APPROVAL

In addition to all other conditions precedent set forth herein, the obligations of

Buyer and Seller under this Agreement are conditioned upon the following:

Januarv :. 19%

flROOI997

10.1 Except as to the obligations set forth in Sections 6.1, 6.4. 11. and 14. i

hereof, (i) entry of a Final and Nonappealable Order of the Bankruptcy Court (the "Confirmation

Order"), in form and substance satisfactory to Buyer and Seller, (A) confirming a plan of

reorganization for the Seller in form and substance substantially the same as Exhibit A attached

hereto or with such changes as are agreeable to Buyer. Seller and the Banks (the "Plan") and

(B) providing that the sale of the Assets to Buyer pursuant to this Agreement is. to the fullest

extent permitted by the Bankruptcy Code, free and clear of all liens, claims, and encumbrances.

including, without limitation, any claims that might otherwise be assemble against Buyer on the

basis of any theory of successor or transferee liability, and (ii) satisfaction of each of the

conditions precedent to the effectiveness of the Plan, as set forth therein. Notwithstanding the

foregoing, nothing herein shall affect the right of any party to rely on the provisions of §363(mj

of the Bankruptcy Code and each such parry expressly reserves and preserves such right

hereunder.

SECTION 11. CONDUCT OF BUSINESS PRIOR TO CLOSING

From the date hereof to the Closing Date, and in addition to Seller's obligations

pursuant to other Sections of this Agreement. Seller will (a) conduct the Business in the ordinary

course and consistent with past practices: (b) preserve the Assets in good working order

consistent with good engineering practice: (c) consistent with efficient and economical

management, use reasonable efforts to retain the services of the present employees and agents

of the Business to the end that the goodwill of the Business will be retained and its Business

relationships with customers, suppliers and others will be preserved, and to maintain in effect

F:\F1LES-C71 U\CPFDOCS\ASSETPtTl.32Jaiitarv :. 19% 23

AROOI998

all existing qualifications. Business permits, licenses, registrations and authorizations relatinz

to the Business. From the date hereof. Seller shall not, without the prior written consent of

Buyer, (i) mortgage, pledge, sell, lease, lend or otherwise dispose of any of the Assets or

contract to do so except a sale of substantially all the Assets to a competing buyer pursuant to

an order of the Bankruptcy Coun: or (HI make or suffer to occur any material adverse change

in the Assets or any change in the usual and customary manner of conducting the Business

consistent with past practice. Prior to the Closing Date. Seller will not change its accounting

policies or procedures affecting the operation of the Business from those used in prior years.

To the extent Seller desires to enter into a transaction prohibited by this Section or to conduct

its Business otherwise than as required by this Section, Seller shall give Buyer prior written

notice describing the transaction or conduct in detail and Seller's reasons for deviation from the

requirements of this Section. Buyer shall have five Business days following receipt of both such

notice and any additional information reasonably requested by Buyer within three Business days

after receipt of the notice to accept or reject Seller's proposed action. The absence of a response

from Buyer within the time set forth above shall be deemed an acceptance of Seller's proposed

action, and Seller's engaging in such action on the express terms described in the notice will not

excuse Buyer from performing under this Agreement. If Buyer rejects such proposed action and

Seller thereafter engages in the proposed action, such action shall constitute a breach of this

Agreement, and Buyer, in its sole discretion, may terminate this Agreement, in which case

Buyer shall be entitled to a return of the Deposit.

24

flROOI999

SECTION 12. REPRESENTATIONS AND WARRANTIES DO SURVIVE

The representations and warranties made by Seller and Buyer shall survive the

Closing.

SECTION 13. COMPETITION

13.1 Seller for itself and its successors and assigns (but not for any employees

or managers) will not engage, directly or indirectly, in or become associated with any person

or entity that is engaged or intends to engage in any Business involving the fabrication of

sheetmetal components without the prior written consent of Buyer (except ownership of less than

five percent (5%) of the shares or securities of a publicly .traded corporation).

13.2 Seller agrees that if it commits or threatens to commit a breach of any of;

the covenants and agreements contained in Section 13.1, Buyer shall have the right to seek and

obtain appropriate injunctive and other equitable remedies therefor, in addition to any other

rights and remedies that may be available at law, it being acknowledged and agreed that any

such breach would cause irreparable injury to Buyer and that money damages would not provide

an adequate remedy therefor.

SECTION 14. TERMINATION: MODIFICATION OR WAIVER

14.1 Termination.

(a) This Agreement may be terminated at any time prior to the Closing:

(i) by mutual written agreement of Buyer and Seller:

25

AR002000

(ii) by Buyer or Seller, if an order is issued by the BankruptcyCourt to restrain, enjoin or prohibit the consummation o"fthe transactions contemplated by this Agreement, or in thereasonable opinion of counsel for Buyer or Seller, is likelyto occur: or

(iii) by Buyer or Seller if (A) Seller or Buyer, respectively,breaches any of its representations, warranties or covenantshereunder. (B) any condition of Seller's or Buyer's.respectively, performance hereunder fails, or (C) the Planis not confirmed or does not become effective.

(b) In the event of a termination of this Agreement other than by reason

of a breach by Buyer under Section 14.1(a)(iii) or Buyer's failure to close after all conditions

for its benefit have been satisfied, the Deposit shall be returned to Buyer; otherwise, the Deposit

shall be retained by Seller as its sole remedy for such breach or failure.

14.2 Modification. This Agreement may be amended, modified and

supplemented only by written agreement of the parties hereto.

14.3 Waiver. Any failu of Seller or Buyer to comply with any obligation,

covenant, agreement or condition contained herein may be expressly waived in writing by Buyer

in the case of any such failure by Seller or by Seller in the case of any such failure by Buyer,

but such waiver or failure to insist upon strict compliance shall not operate as a waiver of, or

estoppel with respect to, any subsequent or other failure. Whenever this Agreement requires

or permits consent by or on behalf of any party hereto, such consent shall be given in writing

in a manner consistent with the requirements for a waiver of compliance as set forth in this

Section 14.3.

FJanuary :. 19% 26

flROOZOO

SECTION 15. COSTS INCIDENT TO PREPARATION OF AGREEMENT

Each of the panics hereto shall pay. without right of reimbursement from the

other, all costs incurred by it incident to the preparation, execution and delivery of this

Agreement and the performance of its obligations hereunder, whether or not the transactions

contemplated by this Agreement shall be consummated, including without limitation fees and

disbursements of legal counsel, accountants and consultants employed by the respective parties

hereto in connection with the transactions contemplated by this Agreement,

SECTION 16. PARTIES IN INTEREST AND ASSIGNMENT

16.1 This Agreement shall be binding upon, and inure to the benefit of, the

panics hereto and their respective successors and permitted assigns. This Agreement is noj

made for the benefit of any person, firm, corporation or other entity not a party hereto, and

nothing in this Agreement will be construed as giving any person, firm, corporation or other

entity, other than the parties hereto and their respective successors and permitted assigns, any

right, remedy or claim under or in respect of this Agreement, or any provision hereof.

16.2 Buyer may not assign this Agreement except to a corporation owning all

of the stock of Buyer. Seller shall not assign its rights and obligations under this Agreement

without the prior written consent of Buyer.

SECTION 17. INVESTIGATION BY BUYER

Buyer, through its agents and employees, will conduct an investigation of the

Assets and the operation of the Business. During the course of such investigation. Seller agrees

F F1LES 71U'.CPFDOCS\ASS6TPUR.3:Jonuarv :. !•*% 27

AR002002

to cause the facilities, operations, books, records, personnel and. on a best efforts basis.

accountants and attorneys of Seller to be made available for review (or interviews in the case

of personnel, accountants and attorneys) by such agents and employees and to cause to be

provided to Buyer such other information with respect to the Assets and the operation of the

Business as Buyer shall reasonably request. Seller will cooperate with Buyer to facilitate

Buyer's contacting customers and such other persons as Buyer and its representatives may

reasonably desire to contact in connection with Buyer's investigation of the operation of the

Business. Buyer must notify Seller that it has completed its due diligence investigation and is

satisfied with the results thereof no later than February 8, 1996.

SECTION 18. RISK OF LOSS; DAMAGE PRIOR TO CLOSING :

18.1 All risk of damage or loss of any son from any cause with respect to the

Assets shall remain with Seller until the Closing.

18.2 This Agreement as well as all obligations and liabilities of Seller and Buyer

hereunder shall terminate in the event of (i) a seizure by any governmental authority of all or

a material portion of the Assets, or (ii) material damage, destruction or other impairment of or

to all or a material portion of the Assets including, without limitation, damage, destruction or

other impairment caused by theft, fire, any casualty or the negligence of any person or entity

whatsoever, including Seller, if such seizure, damage, destruction or impairment shall not in

Buyer's sole opinion have been satisfactorily cured or remedied prior to the Closing Date:

F .FILES1-:? t U\CPFDOCS\ASSETPUIU:Januarv :. 19% 28

flR002003

provided, however, that nothing herein shall impose on Seller any obligation to rebuild, repair

or replace all or any portion of the Assets in the event of any such seizure, damage, destruction

or other impairment.

SECTION 19. BEST EFFORTS

Each of the panics covenants to use their best efforts to cause the satisfaction of

all conditions to Closing to be performed by them or satisfied on their pan at or prior to

Closing.

SECTION 20. CHOICE OF LAW

To the extent not covered by federal law, this Agreement shall be governed by,,

construed, interpreted and the rights of the panics determined in accordance with the laws of

the Commonwealth of Pennsylvania.

SECTION 21. WAIVER OF JURY TRIAL

Seller and Buyer hereby waive ail right to a trial by jury in any litigation relating

to this Agreement and the other documents executed in connection with the transactions

contemplated hereby.

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AR002001*

SECTION 22. MISCELLANEOUS

22.1 Any notice, request, consent, waiver or other communication required or

permitted to be given hereunder shall be effective only if in writing and shall be deemed

sufficiently given only if delivered in person or sent by telecopy, telegram, cable or by certified

or registered mail, postage prepaid, return receipt requested, addressed as follows:

If to Seller:

Lavelle Aircraft Company275 Geiger RoadPhiladelphia. PA 19115

With a copy to:

Leslie Bern Baskin. EsquireSpector, Gadon & Rosen. P.C.1700 Market Street. 29th Floor ;Philadelphia, PA 19103*3913

If to Buver:

Lavelle Company275 Geiger RoadPhiladelphia, PA 19115

With a coov to:

Peter O. Gauss, EsquireClark Ladner, Fortenbaugh & YoungOne Commerce Square2005 Market Street, 22nd FloorPhiladelphia, PA 19103

or to such other person or address as either such parry may have specified in a notice duly given

to the sender as provided herein. Such notice or communication shall be deemed to have been

given as of the date so delivered, telegraphed, cabled or mailed.

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AR002005

22.2 This Agreement (including the schedules and exhibits attached hereto) and

the document! referred to herein as having been entered into by any of the panics hereto or

delivered by a party hereto to another party hereto constitute the entire agreement and

understanding of the parties relating to the subject matter hereof and supersede all prior and

contemporaneous agreements and understandings, representations and warranties, whether oral

or written, relating to the subject matter hereof. The terms of this Agreement cannot be

changed, modified, released or discharged orally.

22.3 No delay or failure on the pan of any parry in exercising any rights

hereunder, and no partial or single exercise thereof, will constitute a waiver of such rights or

of any other rights hereunder. The rights and remedies provided in this Agreement are

cumulative and are not exclusive of any rights or remedies a party may otherwise have at law;

or in equity.

22.4 The unenforceability or invalidity of any Section or subsection or provision

of this Agreement shall not affect the enforceabiliry or validity of the balance of this Agreement.

22.5 The headings of the Sections and subsections contained in this Agreement

are for reference purposes only and shall not in any way affect the meaning, interpretation,

enforceabiliry or validity of this Agreement.

22.6 This Agreement may be executed in any number of counterparts, each of

which so executed will be deemed to be an original, but all of which together will constitute one

and the same agreement.

22.7 Any facsimile signature of any parry hereto shall constitute a legal, valid

and binding execution hereof by such parry.

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AR002006

22.8 All covenants, agreements and other provisions contained herein or arising

out of this Agreement or otherwise in connection herewith shall survive the Cosing hereunder

and shall, except as otherwise specifically set forth in mis Agreement, continue in full force and

effect thereafter.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement co be

executed as of the date first above written.

LAVELLE COMPANY

LAVELLE AIRCRAFT COMPANY, aPennsylvania corporation

ByPresident

L tfN Jii

AR002007

22.8 All covenants, agreements and other provisions contained herein or arising

out of this Agreement or otherwise in connection herewith shall survive the Closing hereunder

and shall, except as otherwise specifically set forth in this Agreement, continue in full force and

effect thereafter.

IN WITNESS WHEREOF, the panics hereto have caused this Agreement to be

executed as of the date first above written.

LAVELLE COMPANY

By

F-nLESUTlUVCWDOCJVAttETPUlUZ:. 19%

President

LAVELLE AIRCRAFT COMPANY, aPennsylvania corporation

Bv

AR002008