Asset Purchase Agreement

ASSET PURCHASE AGREEMENT


This Agreement is entered into as of the 5th day of August, 1997, by and between VALLEY INDUSTRIES, LLC, a Delaware limited liability company (the "Buyer"), AAS HOLDINGS, LLC, a Delaware limited liability company (the "Parent", and together with Buyer, the "Buyer Companies"), VALLEY INDUSTRIES, INC., a Delaware corporation (the "Company"), FISHER FAMILY HOLDINGS LIMITED PARTNERSHIP, a Nevada limited partnership ("FHLP", and together with the Company, individually, a "Seller" and, jointly, the "Sellers"), FISHER FAMILY HOLDINGS, INC., a Nevada corporation ("FFHI"), FISHER PARENT HOLDINGS, INC., a Nevada corporation ("FPHI"), FISHER PARENT HOLDINGS LIMITED PARTNERSHIP, a Nevada limited partnership ("Parent LP"), ROBERT L. FISHER ("Fisher"), ROGER T. MORGAN ("Morgan", and together with FFHI, FPHI, Parent LP and Fisher, individually, an "Equityholder" and, collectively, the "Equityholders"). The Buyer Companies, Sellers and Equityholders are sometimes referred to herein individually as a "Party" and, collectively, as the "Parties." The Sellers and Equityholders are sometimes referred to herein, jointly, severally and collectively, as the "Selling Group Members."


RECITALS


A. The Company is engaged in the business (the "Company Business") of designing, engineering, manufacturing, marketing, selling and distributing towing products, including trailer hitches, trailer balls, ball mounts, couplers, tow bars and brush guards. As of the Closing (as defined below), substantially all of the assets, rights and properties used in the conduct of the Company Business (as further defined hereinbelow, the "Valley Assets") are owned by the Sellers.


B. The Equityholders collectively own directly or indirectly all of the capital stock, partnership interests and other equity interests in the Sellers.


C. Pursuant to the terms and conditions herein set forth, the Buyer will purchase and acquire all of the right, title and interest of the Sellers in and to all of the Valley Assets and Third Party Property from the Sellers and the Sellers will sell, transfer, assign and convey all of their respective right, title and interest in and to Valley Assets and Third Party Property to the Buyer.


Now, therefore, in consideration of the premises and the mutual promises herein made, and in consideration of the representations, warranties, and covenants herein contained, the Parties agree as follows.


1. DEFINITIONS.


As used in this Agreement, the following terms shall have the
meaning ascribed to them in this Section 1:


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"Action" means any action, suit, arbitration, inquiry, proceeding,
hearing or investigation by or before any court, arbitration tribunal or
panel or any Governmental Authority.


"Adjustment Date" has the meaning defined in Section 3(c)(iv) below.


"Adjustment Notice" has the meaning set forth in Section 3(c)(i) below.


"Affiliate" means, as to any Person, any other Person (i) which
directly or indirectly controls, is controlled by, or is under
common control with such Person, (ii) which beneficially owns or holds
5% or more of any class of voting interests or other equity interests
of such Person or (iii) 5% or more of any class of voting interests or
other equity interests of which is beneficially owned or held, directly
or indirectly, by such Person. As used herein, the term "control" of a
Person shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by contract
or otherwise.

"Affiliate Debt" means the indebtedness of the Sellers described on
EXHIBIT A-1 attached hereto and any other indebtedness of either Seller
to any Equityholder or any Affiliate of either Seller or any
Equityholder otherwise unpaid on the Closing Date.

"Affiliated Group" means any affiliated group within the meaning of Code
Section 1504(a).

"Allocable Portion" means, with respect to the share of any Selling
Group Member in a particular amount, (i) in the case of Morgan, a
percentage amount equal to ten percent (10%) and (ii) in the case
of each of the other Selling Group Members, jointly, severally and
collectively, a percentage amount equal to ninety percent (90%).

"Applicable Laws" means, as to the Person to which reference is made,
all laws (including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder) of all
Governmental Authorities applicable to such Person, its assets or
properties or its operations.

"Arbitrator" means the accounting firm of Deloitte & Touche LLP or,
subject to the mutual agreement of the Buyer and the Valley
Equityholder Representative, such other firm of certified public
accountants as may be so mutually agreed.

"Assumed Contracts" means each of the Contracts, other than any Excluded
Contracts.

"Assumed Funded Debt" means the portion of the Funded Debt, to the
extent outstanding as of the Closing Date, identified on EXHIBIT A-2
attached hereto.

"Assumption Documents" means each of the instruments and other
documents which are executed by the Buyer and delivered to the Sellers
to further evidence the Buyer's assumption of the obligations of the
Sellers to pay and discharge the Valley Liabilities and


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otherwise assume all of the liabilities and obligations of the Sellers'
under the terms of the Assumed Contracts.

"Auburn Hills Lease" means that certain Lease between the Company and
Herman Kaplan and Shirley Kaplan dated October 1, 1996, relating to the
real property and improvements located at 1972 Brown Road in Auburn
Hills, Michigan, as amended, modified or supplemented.

"Base Equity Value" means an amount equal to $23,645,000.

"Blanket Purchase Orders" mean such purchase orders for products of the
Company as have been submitted to the Company by customers such as
Chrysler Corporation, Ford Motor Company and General Motors Corporation
and which cover all or a portion of such customer's annual requirements
for a particular product.

"Business Day" means a day other than a Saturday, Sunday, holiday or
other day on which commercial banks in the locale of any Party are
authorized by law to be closed.

"Buyer" has the meaning set forth in the preface above.

"Buyer Auditors" means Price Waterhouse L.L.P. or such other firm of
independent certified public accountants as may be designated by the
Buyer.

"Buyer Companies" has the meaning set forth in the preface above.

"Charter Documents" mean the respective certificates of incorporation,
bylaws, partnership agreements and other agreements, instruments or
documents (i) pursuant to which the Selling Group Members have, as
applicable, been formed, incorporated or organized or (ii) which
otherwise govern or restrict the respective rights, powers and
authority of the Selling Group Members.

"Claims Period" has the meaning set forth in 7(a) below.

"Closing" has the meaning set forth in Section 3(e) below.

"Closing Asset Value" means the Net Book Value of the Valley Assets
determined as of the Closing Date on the basis of the Closing Balance
Sheet, provided, that, notwithstanding anything to the contrary herein,
in determining the Closing Asset Value (a) no value shall be
recognized for or in respect of (i) the deferred loss on the
sale/leaseback relating to the Dequindre Road real property and
improvements, (ii) prepaid travel expenses, (iii) unamortized
tooling or (iv) nonreimbursable tooling and (b) the lost contract
reserve shall be fixed at the amount of $128,000.

"Closing Balance Sheet" has the meaning set forth in Section 3(c)(i)
below.


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"Closing Date" has the meaning set forth in Section 3(e) below.

"Closing Equity Value" means an amount equal to the difference between
the Closing Asset Value and Closing Liability Value, provided, however,
that no effect shall be given to any increase in property, plant or
equipment as a result of an "involuntary conversion" as defined in
GAAP.

"Closing Liability Value" means the Net Book Value of the Valley
Liabilities determined as of the Closing Date on the basis of the
Closing Balance Sheet.

"Code" means the Internal Revenue Code of 1986, as amended.

"Company" has the meaning set forth in the preface above.

"Company Business" has the meaning set forth in Recital A above.

"Confidential Information" means any confidential information
pertaining to the Company and Company Business as of the date hereof,
including, but not limited to, information concerning its financial
condition, prospects, customers, sources of leads, methods of doing
business, and the manner of design, manufacture, financing, marketing
and distribution of its products, provided, however, that Confidential
Information does not include information that is or becomes generally
available to the public other than as a result of a disclosure
in violation of Section 8(d) by any Covered Person.

"Contract" means each contract, agreement or arrangement, whether
written or oral, to which the Company is a party, or by which the
Company or any of its assets is bound.

"Conveyance Documents" means each of the instruments and other
documents which are executed by either of the Sellers and delivered to
the Buyer to further evidence the sale, transfer, assignment or other
conveyance of the rights, title and interests of the Sellers in and to
the Valley Assets and Third Party Property by the Sellers to
Buyer.

"Covered Persons" has the meaning set forth in Section 8(d) below.

"Customer Tooling" means the tooling identified on EXHIBIT B attached
hereto.

"Dequindre Road Lease" means that certain Lease Agreement between the
Company and Valley Realty dated January 21, 1997, relating to the real
property and improvements located at 32451 and 32501 Dequindre Road in
Madison Heights, Michigan, as amended, modified or supplemented.

"Disputed Matter(s)" has the meaning set forth in Section 3(c)(iii)
below.


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"Documents" mean this Agreement, the Parent Subscription Documents, the
Reorganization Documents, the Employment Agreement, the Conveyance
Documents and the Assumption Documents, in each instance, each as
amended, modified or supplemented from time to time.

"Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee
Pension Benefit Plan, (b) qualified defined contribution retirement
plan or arrangement which is an Employee Pension Benefit Plan, (c)
qualified defined benefit retirement plan or arrangement which is an
Employee Pension Benefit Plan, or (d) Employee Welfare Benefit Plan.


"Employee Pension Benefit Plan" has the meaning set forth in ERISA
Section 3(2).


"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
Section 3(1).


"Employment Agreement" means an Employment Agreement, dated as of the
Closing Date between the Buyer and Morgan, in form satisfactory to
Morgan.


"Environmental Claim" means any notice or claim, written or oral, by any
Person or any governmental authority alleging potential liability
(including, without limitation, potential liability for investigatory
costs, cleanup costs, governmental response costs, natural resources
damages, property damages, personal injuries or penalties) arising out
of, based on or resulting from now or at any time in the past on property
currently or formerly owned or operated by the Company (a) the presence,
or release into the environment, of any Material of Environmental Concern
at any location, whether or not owned or leased by the Company presently
or at any time in the past or (b) any violation, or alleged violation, of
any Environmental Law.


"Environmental Laws" means all federal, state, local and foreign laws and
regulations relating to pollution or protection of the environment
(including, without limitation, ambient air, surface water, ground water,
land surface or subsurface strata) or the protection of human health from
environmental hazards, including, without limitation, laws and
regulations relating to emissions, discharges, releases or threatened
releases of Materials of Environmental Concern, or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Materials of Environmental Concern.


"Equityholder" and "Equityholders" have the meaning set forth in the
preface above.


"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.


"Excluded Assets" means the Excluded Contracts and such other assets,
rights and properties identified on EXHIBIT C attached hereto.


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"Excluded Contracts" means the Excluded Debt Documents and each of the
other Contracts identified on EXHIBIT D attached hereto.


"Excluded Debt Closing Payments" has the meaning set forth in Section
3(b)(ii).


"Excluded Debt Documents" means each of the Contracts which evidence any
Excluded Obligations or any security therefor or other agreements
incidental thereto.


"Excluded Funded Debt" means the Funded Debt to the extent not Assumed
Fund Debt.


"Excluded Obligations" means, collectively, the Excluded Funded Debt,
Affiliate Debt and such other liabilities, indebtedness and obligations
of the Company identified on EXHIBIT E attached hereto.


"Excluded Representations and Warranties" means those representations and
warranties of the Parties set forth in subsections (a), (b), (c), (d),
(e), (f), (g), and, as to matter of title, (h) of Section 4 hereof and
subsections (a), (b), (c), (d) and (f) of Section 5 hereof.


"Facility Leases" means the Auburn Hills Lease, the Dequindre Road Lease
and the Turner Road Lease.


"FFHI", "FHLP" and "FPHI" have the meaning set forth in the preface
above.


"Financial Statements" has the meaning set forth in Section 4(i) below.


"Fisher" has the meaning set forth in the preface above.


"FHLP/Valley Assets" means that portion of the Valley Assets consisting
of (a) accounts and notes receivable, (b) inventory, and (c) prepaid
items.


"Funded Debt" means, without duplication, the aggregate amount (including
the current portions thereof) outstanding as of the Closing Date of all
(a) indebtedness of the Sellers for money borrowed from others and
purchase money indebtedness (other than accounts payable or trade letters
of credit issued in the ordinary course and outstanding as of the Closing
Date); (b) indebtedness of the type described in clause (a) in respect of
which a Seller has provided a Guaranty to any other Person, (c)
indebtedness of the type described in clause (a) above secured by any
Lien upon property owned by a Seller, even though each Seller has not in
any manner become liable for the payment of such indebtedness; and (d)
interest expense accrued but unpaid, and all prepayment premiums. on or
relating to any of such indebtedness.


"GAAP" means United States generally accepted accounting principles as in
effect from time to time, applied on a basis consistent with such
principles and methodologies as employed by the Company in the
preparation of the Financial Statements, so long as such


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principles and methodologies do not conflict with such United States
generally accepted accounting principles.


"Governmental Authority" means any foreign, federal, state or local
government or political subdivision, or any department or agency thereof.


"Guaranty" means, with respect to the Person to which reference is made,
any agreement, contingent or otherwise, excluding endorsements of checks,
instruments or other items of payment in the ordinary course for deposit
or collection, to guarantee or in effect guarantee or assure the payment
of, or performance with respect to, any indebtedness, liability or other
obligation of any other Person (a "primary obligor"), including, without
limitation, any agreement made with a creditor of such primary obligor,
primarily for the purpose of enabling such primary obligor to make
payment of the indebtedness or to assure the owners or holders of the
indebtedness against loss, (a) to supply funds to, or in any other manner
invest in, such primary obligor or (b) to purchase indebtedness, or
Co-purchase and pay for property if not delivered, or pay for services if
not performed.


"Hart-Scott-Rodino Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.


"Income Tax" means any federal, state, local, or foreign income tax,
including any interest, penalty, or addition thereto, whether disputed or
not, including any tax on or based upon net income, gross income, or
income as specially defined, or earnings, profits, or selected items of
income, earnings or profits, including all taxes payable in respect of
the Michigan Single Business Tax and California Corporate Income Tax.


"Income Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Income Taxes,
including any schedule or attachment thereto.


"Indemnifiable Loss" means, with respect to any claim for indemnification
made by a Party entitled to indemnification pursuant to this Agreement,
any and all losses, liabilities, claims (including assertion of claims),
damages, obligations, payments, costs and expenses incurred by such Party
(including attorney's fees and expenses) with respect to such claim,
including, without limitation, the costs and expenses of any and all
Actions, demands, assessments, judgments, settlements and compromises
relating thereto.


"Indemnified Party" has the meaning set forth in Section 7(e) below.


"Indemnifying Party" has the meaning set forth in Section 7(e) below.


"Indemnity Claim Notice" has the meaning set forth in Section 7(e) below.


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"Interim Balance Sheet" means the unaudited balance sheet of the Company
as of March 31, 1997.


"Interim Financial Statements" means the Interim Balance Sheet and the
related unaudited statement of income and changes in stockholders' equity
and cash flow for the three month period ending as of March 31, 1997.


"Knowledge" or "known" means actual knowledge of the matter to which
reference is made.


"Leased Property" means the property leased by the Company under the Real
Property Leases and each of the other leases identified on EXHIBIT F
attached hereto.


"Licensed Property" means the property or technology which is licensed to
the Company as identified on EXHIBIT G attached hereto.


"Lien" means any security interest mortgage, pledge, lien, encumbrance or
other charge upon any property, including the leasehold interest of the
lessor under any capital lease.


"Lodi Environmental Liabilities" means Indemnifiable Losses any of the
Buyer Indemnified Persons shall incur as a direct result of any breach or
inaccuracy in the representations and warranties of the Sellers under
Section 4(n) hereof to the extent relating to the Lodi Facility.


"Lodi Facility" means the real property described on EXHIBIT H attached
hereto, and all buildings, improvements, fixtures and fittings thereon
and all easements, rights-of-way and other appurtenants thereto (such as
appurtenant rights in and to public streets).


"Material Adverse Change" and "Material Adverse Effect" mean, as related
to the circumstances, events or conditions to which reference is made,
any such circumstances, events or conditions which (a) has any material
adverse effect upon the validity or enforceability of any of the
Documents, (b) impairs, in any material respect, any of the rights of the
Buyer or Parent under any of the Documents or (c) is material and adverse
to the business, properties, assets, financial condition or results of
operations, of the Company Business, taken as a whole.


"Material Agreements" means, (a) the Real Property Leases, (b) each other
Material Lease and (c) other than the Excluded Contracts, each other
Contract of the following nature:


(i) letters of credit, pledges, bonds or similar arrangements
running to the account of or for the benefit of the Company,
excluding, however, trade letters of credit and bonds issued for
the benefit or account of the Company in the ordinary course of
business and, which do not evidence obligations in excess of
$25,000, determined as of the Closing Date;


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(ii) Contracts relating to the purchase, maintenance or
acquisition, or sale or furnishing of materials, supplies,
merchandise, machinery, equipment, parts or any other property or
services, excluding, however, any such Contract made in the
Ordinary Course of Business and which is expected to be fully
performed within 30 days of the Closing Date or which involves
revenues or expenditures of less than $50,000);


(iii) any collective bargaining agreement;


(iv) Contracts obligating the Company to refrain from competing
with any business, or to conduct any business with only certain
parties, or which otherwise restrains or prevents the Company from
carrying on any lawful business or which restricts the right of the
Company to use or disclose any information in its possession,
excluding, however, such nondisclosure arrangements incidental to
the Company's supply of product to customers pursuant to such
customer's designs or specifications;


(v) employment, compensation, severance or consulting Contracts,
not otherwise terminable by the Company, without penalty, on no
more than 30 days advance written notice, involving, in any
instance, an annual expenditure, by the Company, including any such
amounts as would be payable upon termination of such Contract
(computed as if so terminated effective as of the Closing Date), of
in excess of $25,000 (excluding however any such arrangements
provided for under the written employment policies of the Company
generally applicable to all employees of the Company);


(vi) any Contract with any Equityholder, or any Affiliate of any
Equityholder, excluding, however, any such Contract which has been
terminated, without further liability to the Company, effective as
of the Closing Date;


(vii) any Contract, not otherwise cancelable by the Company without
material penalty or loss, for capital expenditures or the
acquisition or construction of fixed assets for or in respect of
any real property involving payments in excess of $100,000 per
year;


(viii) any Contract granting any Person a Lien on any of the assets
of the Company, in whole or in part, other than a Permitted Lien
or, in the case of any real property, any Permitted Real Estate
Restriction;


(ix) any Contract, not otherwise cancellable without liability on
30 days notice, by which (A) the Company retains any manufacturer's
representatives, broker, sales agent or other distributor or (B)
the Company is appointed or authorized as a sales agent,
distributor or representative of any other Person;


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(x) any Contract under which the Company has granted or received
a license or sublicense or under which the Company is obligated to
pay, or has the right to receive. a royalty, license fee or similar
payment of in excess of $25,000 per annum;


(xi) any Contract for the Company's participation in any joint
venture or partnership;


(xii) any Contract for (A) the storage, transportation, treatment
and disposal of any materials subject to regulation under any
Environmental Laws, or (B) for storage, transportation or similar
services with carriers or warehousemen, excluding, however, any
such Contract entered into in the ordinary course and involving
annual expenditures not exceeding $25,000;


(xiii) other than as related to the insurance policies described on
SCHEDULE 4(U) hereto, any Employee Benefit Plan or any Contract
otherwise a Material Agreement or excluded by reason of the
foregoing provisions of this definition, any Contract which is
otherwise material to the assets, business, operations or financial
condition of the Company and (A) is not otherwise described in a
Schedule ...