ASSET PURCHASE AGREEMENT

Asset Purchase Agreement

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BASIN WATER, INC | ENVIROGEN, INC | SHAW ENVIRONMENTAL & INFRASTRUCTURE, INC | SHAW ENVIRONMENTAL, INC

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Title: ASSET PURCHASE AGREEMENT
Governing Law: Delaware Date: 9/22/2008
Industry: Water Utilities Law Firm: Winston Strawn Sector: Utilities

ASSET PURCHASE AGREEMENT, Parties: basin water inc , envirogen inc , shaw environmental & infrastructure inc , shaw environmental inc

Exhibit 2.1

CERTAIN MATERIAL (INDICATED BY AN ASTERISK) HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

ASSET PURCHASE AGREEMENT

Dated as of September 18, 2008

by and among

BASIN WATER, INC.,

SHAW ENVIRONMENTAL & INFRASTRUCTURE, INC.,

SHAW ENVIRONMENTAL, INC.

and

ENVIROGEN, INC.

TABLE OF CONTENTS


I. PURCHASE OF ACQUIRED ASSETS AND ASSUMPTION OF LIABILITIES		1

1.1. The Transaction		1
1.2. Acquired Assets		1
1.3. Excluded Assets		3
1.4. Assumption of Liabilities		4
1.5. Excluded Liabilities		4
1.6. Purchase Price		4
1.7. Payment of Purchase Price		4
1.8. Work in Process Adjustment Procedure.		5
1.9. Allocation of Purchase Price		6

II. CLOSING		7

2.1. Closing		7
2.2. Deliveries by the Sellers		7
2.3. Deliveries by the Purchaser		9
2.4. Third Party Consents		9

III. REPRESENTATIONS AND WARRANTIES OF THE SELLERS		10

3.1. Organization		10
3.2. Qualification		10
3.3. Intentionally omitted.		10
3.4. Authority and Enforceability		10
3.5. No Conflict or Violation		10
3.6. Financial Statements.		11
3.7. No Undisclosed Liabilities		11
3.8. Absence of Certain Changes		11
3.9. Acquired Assets.		12
3.10. Real Property.		12
3.11. Tax Matters		13
3.12. Contracts.		13
3.13. Litigation or Proceedings.		14
3.14. Intellectual Property.		15
3.15. Compliance with Laws		16
3.16. Environmental Matters.		16
3.17. Employee Benefits Matters.		16
3.18. Certain Transactions		17
3.19. Accounting Practices		17
3.20. Insurance		17
3.21. Product and Service Warranties		17
3.22. Brokers		17
3.23. Suppliers and Projects.		17
3.24. Employment Matters.		18

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3.25. Full Disclosure		18
3.26. No Other Representations or Warranties		18

IV. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER		19

4.1. Corporate Organization		19
4.2. Authorization of Agreement; No Violation		19
4.3. Litigation		19
4.4. Brokers		19
4.5. Financing		19

V. COVENANTS AND OTHER AGREEMENTS		20

5.1. Tax Matters.		20
5.2. Bulk Transfer Laws		20
5.3. Non-Competition; Non-Solicitation.		20
5.4. Transition		23
5.5. Employee Matters.		23
5.6. Notice of Developments		23
5.7. Preparation of Financial Statements		24
5.8. Excluded Intellectual Property		24
5.9. Subcontracting Arrangements		24
5.10. Further Assurances		24
5.11. Conflicts with Customer Consents		25

VI. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION		25

6.1. Survival of Representations and Warranties		25
6.2. Indemnification.		25
6.3. Limitations on Indemnification Obligations.		27
6.4. Tax Treatment of Indemnity Payments		27
6.5. Exclusive Remedies		27

VII. DEFINITIONS		28

7.1. Definitions		28

VIII. OTHER PROVISIONS		31

8.1. Expenses		31
8.2. Press Releases and Announcements		31
8.3. Severability		32
8.4. Notices		32
8.5. Headings		33
8.6. Entire Agreement		33
8.7. Counterparts		33
8.8. GOVERNING LAW		33

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8.9. [INTENTIONALLY OMITTED].		33
8.10. Waivers		33
8.11. Binding Effect		33
8.12. Assignment		34
8.13. No Third Party Beneficiaries		34
8.14. Amendment; Waivers; Remedies		34
8.15. Confidentiality		34

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ASSET PURCHASE AGREEMENT

This ASSET PURCHASE AGREEMENT (this “ Agreement ”) dated as of this 18th day of September, 2008 is made and entered into by and among Shaw Environmental & Infrastructure, Inc., a Louisiana corporation (“ Shaw E&I ”), Shaw Environmental, Inc., a Louisiana corporation (“ Shaw Environmental ”), Envirogen, Inc., a Delaware corporation (“ Envirogen ,” and, together with Shaw E&I and Shaw Environmental, the “ Sellers ”), and Basin Water, Inc., a Delaware corporation (the “ Purchaser ”). Each of the Sellers on one hand and the Purchaser on the other hand are sometimes referred to herein as a “ Party ” and collectively as the “ Parties ”. Certain capitalized terms used but not otherwise defined herein shall have the meanings assigned to them in Section 7.1 .

WHEREAS, the Sellers are engaged in the business of designing, manufacturing, fabricating, and installing Bioreactors for (a) the treatment of contaminated groundwater in industrial, municipal or federal applications whereby the treated groundwater is re-injected, discharged under a National Pollution Discharge Elimination System permit, used for “reuse water applications” or supplied to potable water distributors; (b) for the treatment of wastewater in industrial, municipal or federal applications; and (c) for the treatment of air in industrial, municipal or federal applications for odor control or contaminant removal (the “ Business ”);

WHEREAS, the Sellers desire to sell and the Purchaser desires to purchase substantially all of the assets of the Business, subject to the Purchaser’s assumption of certain Liabilities, upon the terms and subject to the conditions of this Agreement; and

WHEREAS, in order to induce the Purchaser to enter into this Agreement, the Sellers have agreed to enter into this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, the parties hereto agree as follows:

I. PURCHASE OF ACQUIRED ASSETS AND ASSUMPTION OF LIABILITIES

1.1. The Transaction. Upon the terms and subject to the conditions of this Agreement, the Sellers agree to sell, assign, transfer, convey and deliver to the Purchaser, and the Purchaser agrees to purchase, at the Closing (as defined in Section 2.1 ), all of the Sellers’ right, title and interest in and to the Acquired Assets (as defined in Section 1.2 ), free and clear of all Liens (other than Permitted Encumbrances).

1.2. Acquired Assets. The term “ Acquired Assets ” means all of the assets of the Business (other than the Excluded Assets) in which the Sellers have rights, title or interests, including, without limitation, the following:

(a) all former, current and prospective customer and supplier lists and names (in whatever form or medium) and all other mailing lists, customer records, vendor files and rental list history related to the Business;

(b) all Intellectual Property used solely in connection with the Business, including, without limitation any Intellectual Property listed on Schedule 1.2(b) , goodwill associated therewith, licenses and sublicenses granted and obtained with respect thereto, and rights thereunder, remedies against infringements thereof, and rights to protection of interests therein under the Laws of all jurisdictions (collectively, the “ Acquired Intellectual Property ”);

(c) all of the rights of the Sellers under the contracts and agreements set forth on Schedule 1.2(c) (the “ Assumed Contracts ”);

(d) all books and records of the Sellers solely relating to the Business, including, without limitation, shipping records, operating data and records, sale and purchase correspondence and files (in whatever form or medium), biofilter and bioreactor design records, general layout drawings, pro formas, discount cash flows and risk analyses relating to project records related to the Assumed Contracts;

(e) all rights of the Sellers in and to products sold and services provided in connection with the Business prior to the Closing Date (as defined in Section 2.1 ), including, but not limited to, work-in-process, inventory and products hereafter returned;

(f) all rights of the Sellers in and to all open purchase orders of the Business as of the Closing Date as set forth on Schedule 1.2(f) ;

(g) all goodwill and similar intangible property of the Sellers relating to the Acquired Assets and the Business (except those relating to the Excluded Assets);

(h) all credits, prepaid expenses, advance payments, security deposits and prepaid items solely relating to the Business, except those relating to Excluded Assets;

(i) all computer hardware and software used solely in the Business, including without limitation the computer hardware and software listed on Schedule 1.2(i) , and all user’s manuals, training manuals, sales programs, literature and other system and operations documentation relating to such hardware and software in any format;

(j) all licensed computer software listed on Schedule 1.2(j) (the “ Licensed Computer Software ”) and all user’s manuals, training manuals, sales programs, literature and other system and operations documentation relating to such software in any format;

(k) all guaranties, warranties, indemnities and similar rights in favor of the Sellers with respect to any Acquired Asset;

(l) all telephone numbers used in or related to the Business as listed on Schedule 1.2(l) ;

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(m) all internet domain names used in or related to the Business, as listed on Schedule 1.2(m) ;

(n) the assets set forth on Schedule 1.2(n); and

(o) all unbilled accounts receivable (cost and earnings in excess of billings) of the Sellers related to the Business as of the Closing Date as set forth in Schedule 1.8 (the “ Acquired Accounts Receivables ”).

1.3. Excluded Assets. The term “ Excluded Assets ” means:

(a) all cash and cash equivalents of the Sellers as of the Closing Date;

(b) except for the Acquired Accounts Receivables, all accounts receivable of the Sellers as of the Closing Date;

(d) all rights or interests in and with respect to any Employee Benefit Plan;

(e) all insurance policies of the Sellers, and all rights thereunder;

(f) except as set forth on Schedule 1.2(c) , all rights of the Sellers under all contracts, agreements, licenses, leases and other agreements, including, without limitation, under any indentures, mortgages, lines of credit, instruments, security interests, guaranties, capital leases or other similar arrangements constituting Indebtedness (as defined in Section 7.1 ), and rights thereunder, of the Sellers, including without limitation the contracts, agreements, licenses, leases and other agreements listed on Schedule 1.3(j) ; and

(g) all rights to tax refunds in respect of the periods preceding the Closing;

(h) all computer software and websites, owned by or licensed to Sellers or their affiliates, other than software and websites described in Section 1.2 ;

(i) except for the Acquired Intellectual Property, all Intellectual Property of the Sellers, including without limitation the Intellectual Property listed on Schedule 1.3(i) ;

(j) all of the rights of the Sellers under the contracts and agreements set forth on Schedule 1.3(j) ; and

(k) the corporate charter, qualifications to conduct business as a foreign corporation, arrangements with registered agents relating to foreign qualifications, taxpayer and other identification numbers, seals, minute books, stock transfer books, blank stock certificates, original tax returns and other documents relating to the organization, maintenance and existence of the Sellers as corporations.

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1.4. Assumption of Liabilities. On the terms and subject to the conditions set forth in this Agreement, from and after the Closing, the Purchaser will assume and satisfy or perform when due only the following Liabilities of the Sellers relating to the Acquired Assets (the “ Assumed Liabilities ”) but no others:

(a) Liabilities of the Sellers under the Assumed Contracts arising after the Closing Date, other than Liabilities arising from any breach or default under such Assumed Contracts occurring prior to the Closing Date.

(b) Liabilities arising out of the operation of the Business and ownership of the Acquired Assets and occurring or accruing after the Closing Date, including Liabilities under open purchase orders set forth on Schedule 1.2(f) , accrued costs in respect of periods ending on the Closing Date set forth on Schedule 1.8 and warranty obligations related to the Assumed Contracts arising on or after the Closing Date.

1.5. Excluded Liabilities. Except with respect to the Assumed Liabilities specified in Section 1.4 and regardless of any disclosure to the Purchaser, the Purchaser shall not assume any Liabilities of the Sellers. Without limiting the generality of the foregoing sentence, (i) the Purchaser shall not assume Liabilities relating to or arising out of the operation of the Business or the ownership of the Acquired Assets prior to the Closing, and (ii) the Purchaser shall not assume any Liabilities arising out of or otherwise in respect of any Employee Benefit Plan, any programs or arrangements that pay bonus, severance, change of control or similar payments, health care continuation coverage and any employment action or practice of the Sellers in connection with persons previously employed, employed or seeking to be employed by the Sellers, whether incurred prior to, on or after the Closing Date (collectively, the “ Excluded Liabilities ”). The Sellers shall retain responsibility for all of the Excluded Liabilities and any notices required under Sellers’ Employee Benefit Plans.

1.6. Purchase Price . The consideration for the Acquired Assets shall be an amount equal to One Million Five Hundred Thousand Dollars ($1,500,000), which amount shall be subject to adjustment by the amount of the Updated WIP Adjustment pursuant to Section 1.8 below (the “ Purchase Price ”), and other good and valuable consideration as set forth in this Agreement, including without limitation the terms of the Settlement Agreement set forth as Exhibit G attached hereto.

1.7. Payment of Purchase Price. At the Closing, the Purchase Price shall be paid as follows:

(a) that amount, if any, of the Purchase Price necessary to be paid to applicable lenders and other creditors of the Sellers to pay off Indebtedness or obtain clear title to the Acquired Assets, shall be paid to such lenders and other creditors in accordance with the payoff letters provided by such creditors;

(b) and the balance of the Purchase Price, if any, shall be paid to the Sellers, to an account designated in writing to the Purchaser by the Sellers prior to the Closing Date by wire transfer or other immediately available funds.

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1.8.

Work in Process Adjustment Procedure .

(a) Schedule 1.8 sets forth a list of projects related to the Business that are being transferred by Sellers to Purchaser as of the Closing Date (each a “ Project ”, and collectively, the “ Projects ”), together with (with respect to each Project) a good faith estimate of (i) the percentage of completion, earned revenues, and costs incurred as of the Closing Date, all determined and compiled on an accrual basis in accordance with GAAP, applied in a manner consistent with Sellers’ past practices, and (ii) the billings submitted through the Closing Date, and (iii) the costs accrued in connection with (i) above in respect of periods ending on the Closing Date. For each Project, the work in process adjustment as reflected on Schedule 1.8 will be the net result of:

(A) Revenue earned and recorded as of the Closing Date

(B) Less billings submitted through the Closing Date

The sum of the work in process adjustments for the Projects will be an adjustment to the Purchase Price. Therefore, if the work in process adjustment total is greater than zero ($0), then the Purchase Price will be increased by such amount, and if the work in process adjustment total less than zero ($0), then the Purchase Price will be decreased by such amount. As set forth on Schedule 1.8 , after taking into consideration all Projects, Sellers estimate as of the Closing Date in good faith that the net adjustment to the Purchase Price will be a decrease to the Purchase Price in the amount of [*******] (the “ Estimated WIP Adjustment ”).

(b) Intentionally omitted.

(c) Within thirty (30) days after Closing, Sellers will close its books relating to the Projects and will prepare and furnish to Purchasers an updated and proposed final list of actual earned revenues, incurred costs and amounts invoiced related to each Project as of the Closing Date (the “ Updated Project List ”), all determined and compiled on an accrual basis in accordance with GAAP applied in a manner consistent with Sellers’ past practices. Together with the Updated Project List, Sellers shall calculate any adjustments to the Estimated WIP Adjustment that are required based on the Updated Project List (the “ Updated WIP Adjustment ”). The Purchaser shall have the opportunity to examine the work papers, schedules and other documents prepared, referenced or relied upon by the Sellers in connection with the preparation of the Updated Project List and Updated WIP Adjustment. The Updated Project List and Updated WIP Adjustment shall be final and binding on the parties unless, within ten (10) days after delivery to the Purchaser, written notice is given to the Sellers of its objection setting forth in reasonable detail the basis for such objection.

(d) If the parties are unable to reach agreement within 20 days after the notice of objection has been given, the dispute shall be referred for resolution to Grant Thornton

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or, if Grant Thornton is unavailable or unwilling to act in such capacity, another public accounting firm acceptable to all Parties (the “ Firm ”) as promptly as practicable. The Firm will make a determination as to only the items in dispute, which determination will be (i) in writing, (ii) furnished to each of the parties hereto as promptly as practicable after the items in dispute have been referred to the Firm, (iii) made in accordance with this Agreement, and (iv) conclusive and binding upon each of the parties hereto. The Firm will consider only those items and amounts set forth in the notice of objection that the parties are unable to resolve. In resolving any disputed item, the Firm may not assign a value to any item greater than the greatest value for such item claimed by any Party or less than the smallest value for such item claimed by any Party. The scope of the disputes to be arbitrated by the Firm is limited to whether the preparation of the Updated Project List and the calculation of Updated WIP Adjustment were done in a manner consistent with this Agreement and GAAP and whether there were mathematical errors in the preparation of the Updated Project List and the calculation of Updated WIP Adjustment, and the Firm is not to make any other determination. In connection with their determination of the disputed items, the Firm will be entitled to rely on the workpapers, schedules and other documents prepared, referenced or relied on by the Sellers and the Purchasers in connection with the preparation of the Updated Project List and Updated WIP Adjustment. The fees and expenses of the Firm will be paid by Sellers, on the one hand, or the Purchaser, on the other hand, in inverse proportion as they may prevail on matters resolved by the Firm, which proportionate allocation shall be determined by the Firm in accordance with the percentage of the total aggregate amount resolved in favor of Sellers, on the one hand, or the Purchaser, on the other hand. Each of the Parties will use commercially reasonable efforts to cause the Firm to render its decision as soon as reasonably practicable, including, without limitation, by promptly complying with all reasonable requests by the Firm for information, books, records and similar items. The date on which the Updated WIP Adjustment is finally determined pursuant to this Section 1.8(d) shall be hereinafter referred to as the “ Settlement Date .”

(e) After the final determination of the Updated Project List and Updated WIP Adjustment, (x) in the event the Updated WIP Adjustment is less than the Estimated WIP Adjustment, then the Sellers shall within three business days after the Settlement Date pay to the Purchaser the amount of such deficiency on a dollar for dollar basis, and (y) in the event the Updated WIP Adjustment is more than the Estimated WIP Adjustment, then the Purchaser shall within three business days after the Settlement Date pay to Sellers an amount equal to such surplus on a dollar for dollar basis. Any payment required pursuant to this Section 1.8(e) shall be made by wire transfer of immediately available funds, as directed by the recipient in writing. In the event that the payment required by this Section 1.8(e) is not made by the appropriate party within three business days of the Settlement Date, such payment shall accrue interest thereon from the Settlement Date to the payment date at the rate of [*********] per month or the maximum rate permissible by law.

1.9. Allocation of Purchase Price . The Purchaser and the Sellers shall use commercially reasonable efforts to agree upon the allocation of the Purchase Price and the Assumed Liabilities to the Acquired Assets as soon as practicable following the Closing (the “ Allocation ”). The Purchaser and the Sellers acknowledge that the Allocation shall be

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determined pursuant to arms’ length bargaining between the parties regarding the fair market values of the Acquired Assets in accordance with Section 1060 of the Internal Revenue Code of 1986, as amended (the “ Code ”). The parties shall report the sale and purchase of the Acquired Assets on all tax returns and tax forms (including, without limitation, Form 8594 of the Internal Revenue Service) in a manner consistent with such Allocation and shall not, in connection with the filing of such returns or forms or in any examination, claim for refund, or any contest (administrative or judicial) of any adjustment to any return, make any Allocation of the Purchase Price and the Assumed Liabilities or take any position which is inconsistent with the Allocation. The parties agree to consult with one another with respect to any examination, claim for refund or any contest (administrative or judicial) of any adjustment to any return relating to the Allocation.

II. CLOSING

2.1. Closing. The closing of the transactions contemplated by this Agreement (the “ Closing ”) shall take place at the offices of Winston & Strawn LLP, 35 West Wacker Drive, Chicago, Illinois 60601 by 5:00 p.m., local time, on or before September 30, 2008, or at such other location, time or date as the Purchaser and the Sellers may mutually agree (the “ Closing Date ”). The parties agree that no closing meeting will be held, but that the Closing shall occur by telephone, electronic mail, facsimile or other electronic transmission of documents, followed by overnight delivery of originally executed transaction documents.

2.2. Deliveries by the Sellers. At the Closing, in addition to any other documents or agreements required under this Agreement, the Sellers shall deliver to the Purchaser the following:

(a) Consents and Approvals . The Sellers shall deliver all consents, authorization and approvals under all Laws of any Person required to be obtained by them in connection with the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, including those set forth on Schedule 2.2(a ) and shall provide such other documents as the Purchaser or its counsel may reasonably request to demonstrate satisfaction of the conditions and compliance with the agreements set forth in this Agreement.

(b) Secretary’s Certificate . The Sellers shall deliver a certificate of the Secretary of each of the Sellers dated as of the Closing Date that (i) certifies as to the incumbency of the officers of each of the Sellers executing the documents delivered in connection with the transactions contemplated by this Agreement; (ii) attaches copies of the resolutions of the Board of Directors of each of the Sellers authorizing the transactions contemplated by this Agreement and (iii) attaches a good standing certificate of each of the Sellers as of the most recent practicable date from the Secretary of State of each of the following States: with respect to each of Shaw E&I and Shaw Environmental: Arizona, Arkansas, California, Florida, Georgia, Louisiana, Massachusetts, Michigan, Nevada, New Jersey, North Carolina, Pennsylvania, Texas and Wisconsin; and with respect to Envirogen: Delaware.

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(c) FIRPTA Certificate . The Sellers shall deliver a certificate, duly completed and executed by each of the Sellers pursuant to Section 1.1445-2(b)(2) of the Treasury Regulations, certifying that such Seller is not a “foreign person” within the meaning of Section 1445 of the Code.

(d) Bill of Sale and Assignment Agreement . Each of the Sellers shall execute and deliver to the Purchaser the Bill of Sale and Assignment Agreement substantially in the form attached hereto as Exhibit A (the “Bill of Sale and Assignment Agreement”).

(e) Trademark Assignment Agreement . Each of the Sellers shall execute and deliver to the Purchaser the Trademark Assignment Agreement substantially in the form attached hereto as Exhibit C (the “Trademark Assignment Agreement”) .

(f) Patent Assignment Agreement . Each of the Sellers shall execute and deliver to the Purchaser the Patent Assignment Agreement substantially in the form attached hereto as Exhibit D (the “Patent Assignment Agreement”) .

(g) Real Estate Subleases . The applicable Seller or Seller affiliate shall execute and deliver to the Purchaser the Subleases substantially in the form attached hereto as Exhibit E (the “ Subleases ”).

(h) Transition Services Agreement . Each of the Sellers shall execute and deliver to the Purchaser a transition services agreement substantially in the form attached hereto as Exhibit F (the “ Transition Services Agreement ”).

(i) Settlement Agreement . Each of Shaw E&I and Shaw Environmental shall execute and deliver to the Purchaser a settlement agreement substantially in the form attached hereto as Exhibit G (the “ Settlement Agreement ”).

(j) Biological Materials Sales Agreement . Each of the Sellers shall execute and deliver to the Purchaser a biological materials sales agreement, substantially in the form attached hereto as Exhibit H (the “ Biological Materials Sales Agreement ”).

(k) Transfer Documents . The Sellers shall deliver to the Purchaser at the Closing all documents, certificates and agreements necessary to transfer to the Purchaser good and marketable title to the Acquired Assets, free and clear of all Liens (other than Permitted Encumbrances).

(l) Opinion of Counsel . The Purchaser shall receive from Kean, Miller, Hawthorne, D’Armond, McCowan & Jarman, L.L.P., counsel to the Sellers, an opinion substantially in the form attached hereto as Exhibit I and dated as of the Closing Date.

(m) Seconding Agreement . Each of the Sellers shall execute and deliver to the Purchaser a seconding agreement, substantially in the form attached hereto as Exhibit J (the “ Seconding Agreement ”).

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2.3. Deliveries by the Purchaser. At the Closing, in addition to any other documents or agreements required under this Agreement, the Purchaser shall deliver to the Sellers the following:

(a) The payment of the Purchase Price pursuant to Section 1.7 .

(b) Secretary’s Certificate . The Sellers shall receive a certificate of the Secretary of the Purchaser dated as of the Closing Date and certifying as to the incumbency of the officers of the Purchaser executing the documents delivered in connection with the transactions contemplated by this Agreement.

(d) Transition Services Agreement . The Purchaser shall execute and deliver to the Sellers the Transition Services Agreement.

(e) Settlement Agreement . The Purchaser shall execute and deliver to the Sellers the Settlement Agreement.

(f) Biological Materials Sales Agreement . The Purchaser shall execute and deliver to the Sellers the Biological Materials Sales Agreement.

(g) Seconding Agreement . The Purchaser shall execute and deliver to the Sellers the Seconding Agreement.

(h) Assumption Agreement . The Purchaser shall deliver to the Sellers (i) an assumption agreement relating to the Assumed Liabilities substantially in the form attached hereto as Exhibit B (the “ Assumption Agreement ”); and (ii) such other documents as the Sellers or their counsel may reasonably request to demonstrate satisfaction of the conditions and compliance with the agreements set forth in this Agreement.

2.4. Third Party Consents. To the extent that the Sellers’ rights under any agreement, contract, commitment, lease, permit or other asset to be assigned to the Purchaser under this Agreement may not be assigned without the consent of another Person which has not been obtained, this Agreement shall not constitute an agreement to assign the same if an attempted assignment would constitute a breach thereof or be unlawful, and the Sellers shall use commercially reasonable efforts to obtain any such required consent(s) as promptly as possible. If any such consent shall not be obtained or if any attempted assignment would be ineffective or would impair the Purchaser’s rights under the asset in question so that the Purchaser would not in effect acquire the benefit of all such rights, the Sellers, to the maximum extent permitted by Law, shall act after the Closing as the Purchaser’s agent in order to obtain for it the benefits thereunder and shall cooperate, to the maximum extent permitted by Law, with the Purchaser in any other reasonable arrangement designed to provide such benefits to the Purchaser, and to the extent the Purchaser receives such benefits, the Purchaser shall be responsible for the performance of Sellers’ obligations thereunder. Nothing in this Section 2.4 shall be deemed a

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waiver by the Purchaser of its right to have received on or before the Closing an effective assignment of all of the Acquired Assets nor shall this Section 2.4 be deemed to constitute an agreement to exclude from the Acquired Assets any assets described under Section 1.2 .

III. REPRESENTATIONS AND WARRANTIES OF THE SELLERS

The Sellers, jointly and severally, represent and warrant to the Purchaser as follows:

3.1. Organization. Each of the Sellers is a corporation duly organized, validly existing and in good standing under the Laws of its respective State of incorporation and has the corporate power and authority to carry on the Business as now being conducted and to own and operate the Acquired Assets. Each of the Sellers has delivered to the Purchaser a complete and correct copy of its respective Certificate of Incorporation and By-Laws, in each case, as amended and in effect on the date hereof. None of the Sellers is in violation of any of the provisions of its respective Certificate of Incorporation or By-Laws.

3.2. Qualification. Each of the Sellers is duly licensed or qualified to do business relating to the Business as a foreign corporation and is in good standing in each jurisdiction listed on Schedule 3.2 , which such jurisdictions are the only jurisdictions in which the operation of the Business or the character of the properties owned, leased or operated by any of the Sellers in connection with the Business makes such qualification or licensing necessary.

3.3. Intentionally omitted.

3.4. Authority and Enforceability. Each of the Sellers has the power and authority to enter into this Agreement and to carry out its respective obligations hereunder. The execution, delivery and performance of this Agreement and the other agreements and documents to be executed and delivered by each of the Sellers pursuant to the provisions of this Agreement have been duly authorized by all necessary action on the part of each of the Sellers. This Agreement has been duly executed and delivered on behalf of each of the Sellers and is a legal, valid and binding obligation of each of the Sellers enforceable against each of the Sellers in accordance with its terms, subject to the Enforceability Exceptions.

3.5. No Conflict or Violation. Except as set forth on Schedule 3.5 , neither the execution, delivery or performance of this Agreement nor the consummation of any of the transactions provided for in this Agreement by the Sellers (i) will violate or conflict with the Certificate of Incorporation or the By-Laws of any of the Sellers, (ii) will result in a breach of or default by any of the Sellers under any provision of any Assumed Contract or any other material contract or agreement of any kind to which it is a party or by which any of them are bound or to which any of their respective properties or assets is subject, (iii) will require the consent, authorization or approval of, or notice to, any Person to any contract or agreement to which any of the Sellers is a party or by which any of them are bound, (iv) is prohibited by, or requires any of the Sellers to obtain or make any consent, authorization, approval, registration or filing under, any Law of any Person, or (v) will result in the creation or imposition of any Lien upon, or give to any other Person any interest or right (including, without limitation, any right of termination or cancellation) in or with respect to, any of the Acquired Assets.

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3.6. Financial Statements.

(a) The Sellers have delivered to the Purchaser copies of the unaudited statements of income of the Business for the periods ended August 31, 2006 and 2007, and for the nine month period ended May 31, 2008 (collectively the “ Financial Statements ”).

(b) Each of the Financial Statements is complete and consistent with the books and records of the Business. Each of the Financial Statements has been prepared in accordance with GAAP, and presents fairly the results of operations of the Business at the dates and for the periods specified, subject to the absence of notes and the absence of normal recurring year-end adjustments and procedures (none of which require material adjustment or are inconsistent with past practice).

(c) The financial projections set forth on Schedule 3.6(c) have been prepared by the Sellers in good faith and with due care and are based on the assumptions set forth therein and are believed by the Sellers to reflect a reasonable estimate of the performance of the Business for the periods presented.

3.7. No Undisclosed Liabilities . Since July 16, 2008, Sellers have incurred no Liabilities or obligations of any kind, except for Liabilities or obligations incurred in the ordinary course of business consistent with past practice, none of which results from, arises out of, or was caused by any breach of contract, breach of warranty claims, product liability, tort, infringement or violation of Law and none of which, individually or in the aggregate, could have a Material Adverse Effect.

3.8. Absence of Certain Changes. Except as set forth on Schedule 3.8 , since July 16, 2008, the Sellers have conducted the Business only in the ordinary course consistent with past practice and has not, on behalf of, in connection with or relating to the Business or the Acquired Assets:

(a) entered into, amended or terminated any Material Contract (as defined in Section 3.12 ) or received any notice of termination of any Material Contract;

(b) sold, transferred, leased to others or otherwise disposed of any assets of the Business, except for inventory sold in the ordinary course of business, or canceled or compromised any debt or claim, or waived or released any material right;

(c) transferred or granted any rights under, or entered into any settlement regarding the breach or infringement of, any Intellectual Property, or modified any existing rights with respect thereto;

(d) made any change in its practices with respect to collection of receivables, payment of accounts payable or purchase and sale of inventory;

(e) made any capital expenditures or capital additions or improvements in excess of an aggregate of [*****];

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(f) instituted, settled or agreed to settle any litigation, action or proceeding before any court or governmental body relating to the Business or the Acquired Assets;

(g) lost any material customer or material supplier or had any material order canceled or knows of any threatened cancellation of any material order;

(h) paid or agreed to pay any legal, accounting, brokerage, finder’s fee, Taxes or other expenses in connection with, or incurred any severance pay obligations by reason of, this Agreement or the transactions contemplated hereby; or

(i) taken any action or omitted to take any action that could result in the occurrence of any of the foregoing.

3.9. Acquired Assets.

(a) The Sellers have good, valid and marketable title to all of the Acquired Assets, free and clear of all Liens, other than the Permitted Encumbrances. The Sellers have the right to convey, and upon the transfer of the Acquired Assets to the Purchaser at Closing, the Sellers will convey, good title and interest in and to the Acquired Assets, free and clear of all Liens, other than Permitted Encumbrances (subject to the Sellers’ obligation to pay any accrued taxes not yet due as of the Closing Date pursuant to Section 5.1(b)).

(b) There are no facts or conditions affecting the Acquired Assets which could, individually or in the aggregate, interfere in any material respect with the use, occupancy or operation thereof by the Purchaser following the Closing in the same manner as currently used, occupied or operated by any of the Sellers. There are no existing agreements, options, commitments or rights granted by or on behalf of the Sellers to or in any Person to acquire any of the Acquired Assets or any interest therein.

(c) Except as may relate to the Excluded Assets, the Acquired Assets comprise all of the assets, properties and rights used in or related to the Business and necessary to permit the Purchaser to carry on the Business following the Closing in substantially the same manner as conducted by the Sellers as of the date hereof.

3.10. Real Property.

(a) Except as set forth on Schedule 3.10(a) , no real property owned of record or beneficially by any of the Sellers is used or held for use in the operation of the Business.

(b) Schedule 3.10(b) sets forth a true and complete list of all real property leased or subleased by the Sellers, licensed to the Sellers, or otherwise used or occupied by each of the Sellers for the operation of the Business (the “ Leased Real Property ”), together with a true and complete copy of all leases related thereto, including all amendments, including all amendments, terminations and modifications thereof (each, a “ Lease ”). With respect to each such Lease: (i) Shaw Facilities, Inc. has a valid interest or estate in such Lease, free and clear of all Liens, other than the Permitted Encumbrances; (ii) such Lease is in full force and effect, valid and enforceable against the Sellers, as applicable, in accordance with its terms, subject to

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the Enforceability Exceptions; (iii) such Lease constitutes the entire agreement with respect to the subject Leased Real Property; (iv) the Sellers, as applicable, have not assigned, sublet, transferred, conveyed, mortgaged, deeded in trust or encumbered any interest in the interest or estate created thereby; (v) all facilities located on or comprising the Leased Real Property have received all material permits required in connection with the operation thereof and have been operated and maintained in accordance with all applicable Laws; (vi) all facilities located on or comprising the Leased Real Property are supplied with utilities and other services necessary for the operation of such facilities as such facilities have been operated prior to the date of this Agreement, including electricity, water, telephone, sanitary sewer, storm sewer and natural gas; (vii) the Sellers, as applicable, are not in receipt of any notice of default pursuant to such Lease, no rentals are past due and no condition exists that is or could be a material default by any party under such Lease or any default that permits the landlord thereunder to repossess the premises and (viii) upon written consent by the landlord thereunder, any sublease of such Lease that will be entered into in connection with this Agreement, will not result in a breach of or default by any of the Sellers.

3.11. Tax Matters. Except as set forth on Schedule 3.11 , the Sellers have duly and timely filed (and prior to the Closing Date will duly and timely file) true, correct and complete tax returns, reports or estimates, all prepared in accordance with applicable Laws, for all years and periods (and portions thereof) and for all jurisdictions (whether federal, state, local or foreign) in which any such returns, reports or estimates were (or are) due, for all such returns, reports and estimates which are required to be filed on or prior to the Closing Date. All Taxes shown as due and payable on such returns, reports and estimates have been (or will be) paid, and there is no current Liability for any Taxes due and payable in connection with any such returns. There are no existing Liens for Taxes upon, pending against or, to the knowledge of Sellers, threatened against any of the Acquired Assets. All applicable sales taxes, to the extent due, were paid by the Sellers when the Acquired Assets were acquired by the Sellers.

(a) With respect to the Business, the Sellers have (i) withheld all required amounts from its employees, agents, contractors and nonresidents and remitted such amounts to the proper agencies; (ii) paid all employer contributions and premiums and (iii) filed all federal, state, local and foreign returns and reports with respect to employee income tax withholding, and social security and unemployment taxes and premiums, all in compliance with the withholding tax provisions of the Code or any prior provision of the Code and other applicable Laws.

(b) Each of the Sellers is a U.S. Person within the meaning of Code Section 7701(c)(30).

(c) Neither the Code nor any other provision of Law requires the Purchaser to withhold any portion of the Purchase Price.

3.12. Contracts.

(a) Schedule 3.12(a) lists the following contracts and other agreements, written or oral, to which the Sellers are a party and which relate to the Business (the “ Material Contracts ”):

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(i) any agreement (or group of related agreements) for the purchase or sale of supplies, products or other personal property, or for the furnishing or receipt of services, pursuant to which the Sellers have prospective monetary obligations in excess of [*****] and all open purchase order commitments related to the Acquired Assets;

(ii) any agreement concerning a partnership or joint venture;

(iii) any agreement (or group of related agreements) under which the Sellers have created, incurred, assumed or guaranteed any Indebtedness or under which the Sellers have imposed a Lien on any of its assets, tangible or intangible;

(iv) any agreement concerning confidentiality or noncompetition;

(v) any agreement (A) for the employment of any individual on a full-time, par

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