ASSET PURCHASE AND SALE AGREEMENT

Exhibit 2.1

ASSET PURCHASE AND SALE AGREEMENT

BY AND AMONG

DIAMOND FOODS, INC.,

GSH HOLDINGS, INC.,

HARMONY FOODS CORPORATION

AND

THE INDEMNITY REPRESENTATIVE

Dated as of May 9, 2006

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EXHIBITS

ASSET PURCHASE AND SALE AGREEMENT

     THIS ASSET PURCHASE AND SALE AGREEMENT (this “ Agreement ”) is made and entered into as of May 9, 2006, by and among Diamond Foods, Inc., a Delaware corporation (“ Buyer ”), GSH Holdings, Inc., a Delaware corporation (“ Parent ”), Harmony Foods Corporation, a Delaware corporation and a wholly-owned subsidiary of Parent (“ Seller ” or “ Harmony ”) and SPC Partners II, L.P. as the representative of Seller and Parent (the “ Indemnity Representative ”). Buyer, Parent, Seller and the Indemnity Representative are sometimes referred to herein individually as a “ Party ” and collectively as the “ Parties .”

RECITALS

     A. Seller is engaged in the Business. Seller desires to sell to Buyer, and Buyer desires to purchase from Seller, on the terms and subject to the conditions set forth herein, the Purchased Assets of Seller described herein.

     B. The Board of Directors of Seller and Buyer each believes it is in the best interests of such Party that the transactions contemplated hereby be consummated and, in furtherance thereof, each has approved this Agreement and the transactions contemplated hereby.

     C. Buyer and Seller desire to make certain representations, warranties, covenants and other agreements in connection with the transactions contemplated hereby.

AGREEMENT

     NOW, THEREFORE, in consideration of the covenants and representations set forth herein, and for other good and valuable consideration, the parties agree as follows:

ARTICLE 1

DEFINITIONS

     As used in this Agreement, the following terms have the following meanings (terms defined in the singular to have a correlative meaning when used in the plural and vice versa). Certain other terms are defined in the text of this Agreement.

      1.1 “ Accounts Receivable ” means all trade accounts receivable of the Seller as of the Closing Date which relate exclusively to the Business, together with any claim, remedy or other right related to any of the foregoing.

      1.2 “ Accrued Expenses ” means the accrued expenses related to the Business that are set forth in Section 2.2(b)(iii) of the Seller Disclosure Letter, which states the dollar amount of each accrued expense as of the Closing.

      1.3 “ Actions or Proceeding ” means any action, suit, proceeding, arbitration or Governmental Body investigation or audit.

      1.4 “ Affiliate ” means any Person that directly or indirectly, through one or more intermediaries, controls or is controlled by or is under common control with the Person specified. For purposes of this definition, control of a Person means the power, direct or indirect, to direct or cause the direction of the management and policies of such Person whether by voting power, Contract or otherwise and, in any event and without limitation of the previous sentence, any Person owning ten percent (10%) or more of the voting securities of another Person shall be deemed to control that Person.

      1.5 “ Ancillary Agreements ” means the Escrow Agreement, the Supply Agreement, the Assignment Instruments and the Assumption Instruments.

      1.6 “ Assets ” of any Person means all assets and properties of every kind, nature, character and description (whether real, personal or mixed, whether tangible or intangible, whether absolute, accrued, contingent, fixed or otherwise and wherever situated), including the goodwill related thereto, operated, owned or leased by such Person, including without limitation, accounts and notes receivable, chattel paper, documents, instruments, general intangibles, real estate, equipment, inventory and goods.

      1.7 “ Assigned Contracts ” shall have the meaning set forth in Section 2.1(b)(vii).

      1.8 “ Assigned Permits ” shall have the meaning set forth in Section 2.1(b)(viii).

      1.9 “ Assignment Instruments ” shall have the meaning set forth in Section 2.3(e).

      1.10 “ Assumed Liabilities ” shall have the meaning set forth in Section 2.2(b).

      1.11 “ Assumption Instruments ” shall have the meaning set forth in Section 2.3(e).

      1.12 “ Benefit Plan ” means any Retirement Plan and any plan, program, policy, practice, contract, agreement or other arrangement providing for loans (other than travel allowances and relocation packages), severance, termination pay, deferred compensation, incentive programs, performance awards, stock or stock-related awards, vacation, health, sickness, post-employment welfare, dental, vision, life, disability, or accidental death and dismemberment benefits, or other material employee benefits or material remuneration of any kind, whether written or unwritten or otherwise, funded or unfunded, including, without limitation, each “employee benefit plan,” within the meaning of Section 3(3) of ERISA, which is or has been maintained, contributed to, or required to be contributed to, by Seller or its ERISA Affiliates for the benefit of any Transferred Employee, or with respect to which Seller or its ERISA Affiliates have or may have any liability or obligation to any Employee.

      1.13 “ Books and Records ” means all files, documents, instruments, papers, books and records owned by Seller relating primarily to the Purchased Assets, the Assumed Liabilities or the Business, including without limitation, financial statements, Tax Returns, budgets, reliability and cost data, pricing guidelines, accounting records, ledgers, journals, deeds, title policies, Assigned Contracts, customer lists, retrieval programs, operating data and plans and environmental studies and plans related to the Fishers Facility, but excluding in all cases income Tax Returns, stock ledgers and minute books.

      1.14 “ Business ” means (i) the development, formulation, manufacture, mixing, packaging (collectively such activities “ Processing ”), marketing and sale of all of Seller’s products (including products currently under development) that are Processed, marketed or sold at the Fishers Facility, and (ii) the marketing and sale of certain products that are supplied pursuant to the Supply Agreement; provided, however , that (A) for avoidance of doubt, the Business includes customer relationships with existing customers of Seller to the extent that such relationships relate to the sale to such customers of products to be purchased by Buyer under the Supply Agreement, including certain rights under Seller’s contracts with such customers and certain rights to receive payments from such customers to the extent such payments relate to products described in (i) or (ii) above, and (B) the Business excludes Seller’s tangible and intangible property and assets that relate to the Processing, marketing or sale of nutraceutical or enhanced nutritional products or the Processing of Seller’s products that are Processed at the Santa Cruz Facility including those to be supplied pursuant to the Supply Agreement.

      1.15 “ Business Contracts ” shall have the meaning set forth in Section 3.10.

      1.16 “ Business Day ” shall mean a day other than Saturday and Sunday or any day on which banks located in the State of California are authorized or obligated to close.

      1.17 “ Business Intellectual Property ” shall mean any and all Intellectual Property owned by Seller and exclusively used in the Business in the manner currently conducted.

      1.18 “ Buyer’s Assumed Environmental Liabilities ” means, with respect to the Fishers Facility, any Liability, obligation, judgment, penalty, fine, cost or expense, (including reasonable attorneys’ fees and environmental consultant costs) of any kind or nature for which the Seller would otherwise be responsible, or any existing duty of Seller to indemnify, defend or reimburse any Person with respect to: (i) the presence or release on or before the Closing Date of any Hazardous Material in the soil, groundwater, surface water, air or building materials of the Fishers Facility, or known by Buyer or Seller to be migrating to the Fishers Facility as of the Closing Date (“ Pre-Existing Contamination ”); (ii) the migration at any time prior to or after the Closing Date of Pre-Existing Contamination to any other real property, or the soil, groundwater, surface water, air or building materials thereof; (iii) the exposure of any Person to Pre-Existing Contamination or to Hazardous Materials in the course of or as a consequence of any activities at the Fishers Facility prior to the Closing, without regard to whether any health effect of the exposure has been manifested as of the Closing Date; (iv) the violation of any Environmental Laws in connection with the operation of the Fishers Facility prior to the Closing Date by Seller or its agents, employees, predecessors in interest, contractors, invitees or licensees; and (v) any actions or proceedings brought or threatened in writing by any third party with respect to any of the foregoing that existed as of the Closing Date.

      1.19 “ Closing ” shall have the meaning set forth in Section 2.3(a).

      1.20 “ Closing Adjustment Amount ” shall have the meaning set forth in Section 2.1(a)(iii).

      1.21 “ Closing Date ” means the date of this Agreement.

      1.22 “ Closing Documents ” means all documents, deeds and other instruments which are required by the Definitive Agreements or by operation of law for the consummation of the Transaction.

      1.23 “ Closing Time ” shall have the meaning set forth in Section 2.3(a).

      1.24 “ Closing Working Capital ” means the Working Capital as of the Closing Time, as certified in the Closing Working Capital Statement.

      1.25 “ Closing Working Capital Statement ” shall have the meaning set forth Section 2.3(c).

      1.26 “ COBRA ” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.

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

      1.28 “ Continuing Service Provider ” means both Transferred Employees and Transition Consultants.

      1.29 “ Customer Information ” shall have the meaning set forth in Section 3.8(e).

      1.30 “ Damages ” means any loss, damage, injury, decline in value, claim, demand, settlement, judgment, award, fine, penalty, Tax, fee, including reasonable legal fees, expert fees, accounting fees or advisory fees, and reasonable costs of investigation, but excluding consequential, special or punitive damages, restitution, lost profits, lost opportunity costs, damage to reputation or the like, and mental or emotional distress.

      1.31 “ Definitive Agreements ” means this Agreement, the Ancillary Agreements, and any other agreements reasonably required by Buyer as a condition to Closing, together with any schedules or exhibits thereto.

      1.32 “ DOL ” means the United States Department of Labor.

      1.33 “ Employee ” means each current employee or consultant, including without limitation the Transferred Employees and Transition Consultants , of Seller or any ERISA Affiliate of Seller who is employed in connection with the Business.

      1.34 “ Employment Agreement ” shall mean each management, employment, severance, consulting, relocation, repatriation, expatriation, visa, work permit or other agreement, contract or understanding between Seller or any ERISA Affiliate and any Employee.

      1.35 “Employment Liabilities ” shall mean any and all claims, debts, liabilities, commitments and obligations, whether fixed, contingent or absolute, matured or unmatured, liquidated or unliquidated, accrued or unaccrued, known or unknown, whenever or however arising, including all costs and expenses relating thereto arising under law, rule, regulation, permit, action or proceeding before any governmental authority, order or consent decree or any award of any arbitrator of any kind relating to any Benefit Plan, Employment Agreement or

otherwise relating to an Employee and his or her employment with Seller or any ERISA Affiliate, including, without limitation, any Termination Liabilities.

      1.36 “ Environmental Insurance Policy ” means the insurance policy purchased by Buyer prior to the Closing, in the form attached at Annex A , which (i) names Buyer as the named insured, (ii) lists Seller as an additional insured, (iii) covers the Buyer’s Assumed Environmental Liabilities for a period of five (5) years after the Closing Date, (iv) provides $3,000,000 in coverage for Buyer’s Assumed Environmental Liabilities, and (v) provides for a $50,000 retention or deductible per occurrence for all matters (the “ Insurance Deductible ”).

      1.37 “ Environmental Insurance Policy Cost ” means the premium and broker commissions incurred in connection with the Environmental Insurance Policy, which cost shall not exceed $48,000.

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

      1.39 “ ERISA Affiliate ” shall mean each subsidiary of Seller and any other person or entity under common control with Seller or any of its subsidiaries within the meaning of Section 414(b), (c), (m) or (o) of the Code and the regulations issued thereunder.

      1.40 “ Escrow ” shall have the meaning set forth in Section 2.3(f).

      1.41 “ Escrow Agent ” shall be Bank of the West.

      1.42 “ Escrow Agreement ” means the Escrow Agreement by and among Buyer, Seller, the Indemnity Representative and the Escrow Agent, in substantially the form attached hereto as Exhibit A .

      1.43 “ Escrow Amount ” shall mean $1,000,000.

      1.44 “ Excluded Agreements ” has the meaning set forth in Section 2.2(c)(iii).

      1.45 “ Excluded Assets ” has the meaning set forth in Section 2.1(c).

      1.46 “ Excluded Liabilities ” has the meaning set forth in Section 2.2(c).

      1.47 “ Expensed Items ” means supplies and similar consumable material on hand at the Fishers Facility that are related to and of a nature customarily used in the Business.

      1.48 “ Final Working Capital ” shall have the meaning set forth in Section 2.4(c).

      1.49 “ Fishers Facility ” means Seller’s facility located in Fishers, Indiana, including the land, the improvements thereon, the groundwater thereunder and the surface water thereon.

      1.50 “ Fishers Lockbox ” means the bank account at PNC Bank, which is primarily used for customers to send payments for products of the Business.

      1.51 “ Fishers Operating Account ” means the bank account at PNC Bank, which is primarily used for operations.

      1.52 “ Fixed Assets ” means all items of plant, equipment, machinery, tools, furniture and furnishings, computers and computer supplies, office materials and supplies and other fixed assets owned by Seller and listed in Annex B . Annex B sets forth the book value of each fixed asset as of the Closing.

      1.53 “ Governmental Body ” means any applicable:

          (i) federal, provincial, state, local, municipal, foreign, or other government;

          (ii) governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal); or

          (iii) multi-national organization body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature.

      1.54 “ Indebtedness ” of any Person means all obligations of such Person (i) for borrowed money, (ii) evidenced by notes, bonds, debentures or similar instruments, (iii) for the deferred purchase price of goods or services (other than trade payables or accruals incurred in the ordinary course of business), (iv) under capital leases (other than those capital leases listed on Schedule 1.54 attached hereto) or (v) in the nature of guarantees of the obligations described in clauses (i) through (iv) above of any other Person.

      1.55 “ Indemnification Threshold ” shall have the meaning set forth in Section 9.5(b)(i).

      1.56 “ Indemnitee ” and “ Indemnitees ” shall have the meanings set forth in Section 9.1.

      1.57 “ Indemnifying Parties ” shall have the meaning set forth in Section 9.1.

      1.58 “ Intellectual Property ” means any or all of the following and all worldwide common law and statutory rights in, arising out of, or associated therewith: (i) United States and foreign patents and utility models and applications therefor and all reissues, divisions, reexaminations, renewals, extensions, provisionals, continuations and continuations-in-part thereof (“ Patents ”); (ii) inventions (whether patentable or not), improvements, trade secrets, proprietary information, know-how, and any rights in technology, invention disclosures, technical data and customer lists, and all documentation relating to any of the foregoing; (iii) copyrights, copyright registrations and applications therefor, and all other rights corresponding thereto throughout the world; (iv) domain names, uniform resource locators (“ URLs ”), other names and locators associated with the Internet, and applications or registrations therefor (“ Domain Names ”); (v) industrial designs and any registrations and applications therefor; (vi) trade names, logos, common law trademarks and service marks, trademark and service mark registrations, related goodwill and applications therefor throughout

the world (“ Trademarks ”); (vii) all rights in databases and data collections; (viii) all moral and economic rights of authors and inventors, however denominated; and (ix) any similar or equivalent rights to any of the foregoing (as applicable).

      1.59 “ Intellectual Property Contracts ” shall have the meaning specified in Section 3.9(a)(ii).

      1.60 “ Inventories ” means the inventories of Seller, including finished goods, work in process, raw materials, spare parts and other materials and supplies to be used or consumed by Seller in the production of finished goods in the Business, listed on Annex C , excluding any inventories of packaging materials located at the Seller Cruz Facility.

      1.61 “Knowledge” means, with respect to a Person, the actual knowledge, awareness or belief of such Person with respect to the subject matter. Seller’s Knowledge shall mean the Knowledge of any of (i) Shawn Hecht, (ii) George Pappas, (iii) Matt Herzog, (iv) Troy Rosenow, (v) Sara Cox, (vi) Mark Klein, (vii) John Aplin, (viii) Linda Johnson, or (ix) Bill Hungate. No other individual’s knowledge shall be imputed to the foregoing nine individuals.

      1.62 “ Law ” means any applicable law, statute, rule, regulation, ordinance, extension order, or other pronouncement having the effect of law of the United States, any foreign country or any U.S. or foreign state, county, city or other political subdivision or of any Governmental Body.

      1.63 “ Liability ” means any obligation or other liability of a Person (whether absolute, accrued, contingent, fixed or otherwise, or whether due or to become due).

      1.64 “ Lien ” means any lien, pledge, hypothecation, charge, mortgage, security interest, encumbrance, right of first refusal, preemptive right or restriction on use with respect to an Asset, including any restriction on the transfer of any Asset, any restriction on the receipt of any income derived from any Asset, and any restriction on the possession, exercise or transfer of any other attribute of ownership of any Asset, in all cases other than Permitted Liens.

      1.65 “ Litigation ” shall have the meaning set forth in Section 3.12.

      1.66 “ Material Adverse Effect ” means any adverse change in the business, operations, assets (including intangible assets), liabilities (contingent or otherwise), results of operations or financial performance, or condition (financial or otherwise) of Seller, which is material to the Business taken as a whole, except to the extent that any such change directly results from: (A) changes in general economic or financial conditions (provided that such changes do not affect Seller disproportionately in an adverse manner relative to other participants in Seller’s industry); (B) changes affecting generally the industry in which Seller operates (provided that such changes do not affect Seller disproportionately in an adverse manner relative to other participants in Seller’s industry); or (C) a material breach of this Agreement by Buyer.

      1.67 “ Miscellaneous Liabilities ” means the Liabilities related to the Business that are set forth in Section 2.2(b)(vii) of the Seller Disclosure Letter, which states the dollar amount of each such Liability as of the Closing.

      1.68 “ Multiemployer Plan ” shall mean any “Pension Plan” which is a “multiemployer plan,” as defined in Section 3(37) of ERISA.

      1.69 “ Objection Notice ” shall have the meaning set forth in Section 2.4(b).

      1.70 “ Obsolete Inventories ” means all (i) discontinued products, (ii) packaging materials for discontinued packaging designs, (iii) work in process, raw materials, spare parts and other materials and supplies to be used or consumed by Seller only in the production of discontinued products, and (iv) finished goods with a remaining shelf life of four (4) months or less as of the Closing Date.

      1.71 “ Open Purchase Orders ” means all open purchase orders representing Seller purchase obligations related to the Business that are set forth in Section 2.2(b)(v) of the Seller Disclosure Letter or which impose a purchase obligation in an amount less than $10,000, individually, and less than $50,000 in the aggregate, as of the Closing.

      1.72 “ Order ” means any writ, judgment, decree, injunction, administrative order, directive or similar order or directive of any Governmental Body (in each such case whether preliminary or final).

      1.73 “ Payables ” means the accounts payable of the Seller as of the Closing Date which are set forth in Schedule 1.73 , which list sets forth the dollar value of each account payable as of the Closing.

      1.74 “ Pension Plan ” means each Employee Plan which is an “employee pension benefit plan,” within the meaning of Section 3(2) of ERISA.

      1.75 “ Permit ” means the licenses, permits, authorizations, registrations, certificates, variances, approvals, consents and franchises and similar rights obtained from any Governmental Body with respect to the Business (including, without limitation, all Environmental Permits), and any pending applications relating to the foregoing.

      1.76 “ Permitted Liens ” means, collectively: (i) Liens granted by Buyer to any Person; (ii) mechanics’, warehousemen’s, materialmen’s, contractors’, workmen’s, repairmen’s, carriers’ and other similar Liens; (iii) real estate taxes, assessments and other governmental levies, fees, or charges imposed with respect to any real property lease which are not due and payable as of the Closing or are being contested by appropriate proceedings and listed on Schedule 1.76 ; (iv) matters of record and any state of facts which an accurate survey or inspection of the leased real property used exclusively in the conduct and operation of the Business would disclose and listed on Schedule 1.76 ; (v) easements, rights-of-way, servitudes, permits, licenses, surface leases and other rights; conditions, covenants or other restrictions; and easements for streets, alleys, highways, telephone lines, power lines, railways and other easements and rights-of-way on, over or in respect of the real property, which in the case of each of the foregoing does not materially interfere with the operation of any of the affected real property; (vi) precautionary UCC filings with respect to operating leases as set forth on Schedule 1.76 ; and (vii) Liens incurred in the ordinary course of business which do not constitute Indebtedness and do not impair the use of the Assets.

      1.77 “ Person ” means any individual, corporation (including any non-profit corporation), company, general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, labor union, Governmental Body or other entity.

      1.78 “ Personal Property Leases ” shall have the meaning set forth in Section 2.1(b)(iii).

      1.79 “ Post-Closing Purchase Price Decrease Amount ” shall have the meaning set forth in Section 2.4(d)(i).

      1.80 “ Post-Closing Purchase Price Increase Amount ” shall have the meaning set forth in Section 2.4(d)(ii).

      1.81 “ Pre-Closing Employment Liabilities ” means any and all Employment Liabilities that are accrued (or properly should be accrued) on the books and records of Seller as of the Closing Date with respect to the Employees but which have not been satisfied by Seller, including accrued vacation, paid time off, sick leave of Transferred Employees relating to periods prior to the Closing Date and any Termination Liabilities.

      1.82 “ Prepaid Expenses ” means all prepaid expenses set forth in Section 2.1(b)(iv) of the Seller Disclosure Letter, including deposits under leases, which states the dollar amount of each prepaid expense as of the Closing. Prepaid Expenses shall not include prepaid expenses that are associated with Excluded Assets, Excluded Agreements, or Excluded Liabilities.

      1.83 “ Proceeding ” means any action, arbitration, audit, hearing, investigation, litigation or suit (whether civil, criminal, administrative, judicial or investigative, whether formal or informal, whether public or private) commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental Body or arbitrator.

      1.84 “ Proprietary Mix Formulations ” means all proprietary mix formulations owned by Seller and used exclusively in the Business, including those formulations described on Schedule 2.1(b)(x) .

      1.85 “ Purchase Price ” shall have the meaning set forth in Section 2.1(a)(ii).

      1.86 “ Purchased Assets ” shall have the meaning set forth in Section 2.1(b).

      1.87 “ Receivables Reserve ” means the reserve in an amount equal to $290,204.30 as set forth in both the Closing Working Capital Statement and the Updated Working Capital Statement, in each case specifically for (i) Receivables aged 120 days or more, (ii) returns and potential uncollectability of accounts and (iii) Accounts Receivables owing from insolvent customers.

      1.88 “ Registered Intellectual Property ” means all United States, international and foreign: (i) patents, including applications therefor; (ii) registered trademarks, applications to register trademarks, including intent-to-use applications, or other registrations or applications related to trademarks; (iii) copyright registrations and applications to register copyrights;

(iv) registered mask works and applications to register mask works; and (v) domain name registrations.

      1.89 “ Representatives ” means, with respect to a Person, that Person’s officers, directors, accountants, counsel, investment bankers and financial advisors.

      1.90 “ Restricted Business ” means the development, marketing, manufacturing, distribution or selling of (i) trail mix and snack mixes containing dried fruits or nuts and/or seeds, (ii) yogurt- or chocolate-covered confection products sold by Seller as of the Closing or during the three years prior to Closing, (iii) yogurt- or chocolate-covered confection products currently under development by Seller, (iv) dried fruits or (v) nuts and/or seeds, but excluding in each case, the development, marketing, manufacturing, distributing or selling of (x) nutraceutical or enhanced nutritional products or products enriched with vitamins or minerals (other than calcium infused yogurt- or chocolate-covered confection products containing dried fruits, nuts, seeds or pretzels, sold by Seller as of the Closing), dietary supplements, whole food powder or extracts or (y) any cereals or bars, regardless of the ingredients used therein.

      1.91 “ Retirement Plan ” means an employee pension benefit plan (as such term is defined under Section 3(2) of ERISA).

      1.92 “ Santa Cruz Facility ” means the Seller’s facility located in Santa Cruz, California.

      1.93 “ Santa Cruz Lockbox ” means the lockbox at PNC Bank, which is primarily used for customers to send payments for products primarily manufactured and sold from the Santa Cruz Facility.

      1.94 “ Seller Owned Intellectual Property ” means all Business Intellectual Property that is owned by, or exclusively licensed to, Seller or any of its direct and indirect subsidiaries.

      1.95 “ Seller Registered Intellectual Property ” shall mean all of the Business Intellectual Property that is Registered Intellectual Property.

      1.96 “ Seller’s Retained Product Liabilities ” means all product liabilities of Seller relating to any products manufactured or sold by Seller prior to the Closing Time, including any claims based upon negligence, strict liability, breach of warranty of fitness, or under any statute governing products liability.

      1.97 “ Special Items ” shall have the meaning set forth in Section 9.5(b)(ii).

      1.98 “ Subsidiaries ” means any and all corporations, partnerships, joint ventures, associations and other entities controlled by the applicable Person directly or indirectly through one or more intermediaries.

      1.99 “ Supply Agreement ” means the Supply Agreement between Buyer and Seller in substantially the form attached hereto as Exhibit B .

      1.100 “ Tax ” or “ Taxes ” shall have the meaning set forth in Section 3.7.

      1.101 “ Termination Liabilities ” shall have the meaning set forth in Section 5.1.

      1.102 “ Third Party Consents ” shall have the meaning set forth in Section 3.4.

      1.103 “ Trademarks, Patents and Domain Names ” means the trademarks, patents and domain names set forth on Annex D .

      1.104 “ Transferred Employee ” means any Employee or other individual providing services to Seller prior to the Closing and who accepts employment with Buyer, as listed on Schedule 5.1 .

      1.105 “ Transaction ” means the sale and acquisition of certain assets and liabilities of the Business as a “going concern” and any related matters as set forth in this Agreement and the Ancillary Agreements.

      1.106 “ Transition Consultant ” means any Employee or other individual providing services to Seller prior to the Closing and who enters into a consulting agreement with Buyer, as listed on Schedule 5.1 .

      1.107 “ Updated Working Capital ” shall have the meaning set forth in Section 2.4(a).

      1.108 “ Updated Working Capital Statement ” shall have the meaning set forth in Section 2.4(a).

      1.109 “ Working Capital ” means (A) the sum of (x) the Accounts Receivable, including those on Schedule 1.1 attached hereto, plus (y) the Inventories, plus (z) the Prepaid Expenses, each as reflected on the Closing Working Capital Statement, minus (B) the sum of (w) the Payables, plus (x) the Accrued Expenses, plus (y) the Miscellaneous Liabilities plus (z) the Receivables Reserve, each as reflected on the Closing Working Capital Statement. Notwithstanding anything contained herein to the contrary, for purposes of calculating Working Capital, Inventories shall be valued in accordance with Section 3.23 and Obsolete Inventories shall be excluded.

ARTICLE 2

PURCHASE AND SALE OF ASSETS

      2.1 Purchase and Sale of Assets .

          (a)  Purchase and Sale; Consideration; Closing Adjustment Amount .

               (i)  Purchase and Sale . Upon the terms and subject to the conditions set forth in this Agreement, at the Closing and effective as of the Closing Time, Seller shall irrevocably sell, convey, assign, transfer and deliver to Buyer, and Buyer shall purchase and acquire from Seller, free and clear of all Liens, all of Seller’s right, title and interest in and to the Purchased Assets.

               (ii)  Consideration . The consideration for the Purchased Assets (the “ Purchase Price ”) shall be: (i) an amount of cash equal to (A) $18,000,000, plus or minus (B) the Closing Adjustment Amount, and minus (C) the Environmental Insurance Policy Cost; and (ii) the assumption of the Assumed Liabilities. The Purchase Price will be subject to adjustment after the Closing in accordance with Section 2.4 below.

               (iii)  Closing Adjustment Amount . As used in this Agreement, the “ Closing Adjustment Amount ” (which may be a positive or negative number) will be equal to the amount determined by subtracting $4,500,000 from the Closing Working Capital. If the Closing Adjustment Amount is positive, the Purchase Price will be increased by the Closing Adjustment Amount. If the Closing Adjustment Amount is negative, the Purchase Price will be decreased by the Closing Adjustment Amount. For example, if the Closing Working Capital is $5,500,000, the Purchase Price will be increased by $1,000,000, and if the Closing Working Capital is $3,500,000, the Purchase Price will be decreased by $1,000,000.

          (b)  Purchased Assets . For all purposes of and under this Agreement, the term “ Purchased Assets ” shall mean, the following property and assets, whether real, personal or mixed, tangible or intangible, belonging to Seller (but specifically excluding the Excluded Assets):

               (i) the Fixed Assets, Inventories, Expensed Items, and all other tangible personal property (whether depreciated or expensed) located at the Fishers Facility on the Closing Date (the “ Tangible Personal Property ”);

               (ii) all Accounts Receivable;

               (iii) all rights of Seller in, to or under (A) the leases or subleases of Tangible Personal Property described in Schedule 2.1(b)(iii)(A) as to which Seller is the lessor or sublessor, and (B) the leases of Tangible Personal Property described in Schedule 2.1(b)(iii)(B) as to which Seller is the lessee or sublessee, together with any options to purchase the underlying property (the leases and subleases described in subclauses (A) and (B) above being referred to herein as the “ Personal Property Leases ”);

               (iv) all Prepaid Expenses;

               (v) the Trademarks, Patents and Domain Names;

               (vi) all Books and Records, including all Customer Information, provided, however, that if certain Books and Records relate to both the Business and the business retained by Seller, (A) Seller shall be entitled to keep original copies of such Books and Records and will provide appropriately redacted copies of such Books and Records to Buyer if such Books and Records relate primarily to the business retained by the Seller, and (B) Buyer shall be entitled to keep original copies of such Books and Records and Seller shall make copies of such Books and Records for its records if such Books and Records relate primarily to the Business;

               (vii) all rights under the contracts, indentures, mortgages, instruments, Liens, guaranties or other agreements of Seller that are listed on Schedule 2.1(b)(vii) (the

“ Assigned Contracts ”), which list is intended to include all contracts currently in effect with customers of the Business;

               (viii) to the extent transferable, all Permits (including applications therefor) used or held by Seller for use in the conduct of the Business at the Fishers Facility, including all Permits set forth on Schedule 2.1(b)(viii) (the “ Assigned Permits ”);

               (ix) all claims, actions, deposits, prepayments, refunds, causes of action, choses in action, rights of recovery, rights of set off, and rights of recoupment of any kind or character to the extent attributable to the Assigned Contracts, the other Purchased Assets or the Assumed Liabilities;

               (x) all Proprietary Mix Formulations;

               (xi) the Fishers Lockbox; and

               (xii) the goodwill associated with the Purchased Assets.

          (c)  Excluded Assets . Notwithstanding anything to the contrary set forth in this Section 2.1 or elsewhere in this Agreement, the term “ Purchased Assets ” shall not include the following assets of Seller (collectively, the “ Excluded Assets ”), which assets shall remain the property of Seller after the Closing:

               (i) all Obsolete Inventories;

               (ii) all claims, actions, deposits, prepayments, refunds, causes of action, choses in action, rights of recovery, rights of set off, and rights of recoupment of any kind or nature to the extent attributable to the Excluded Agreements, the other Excluded Assets or the Excluded Liabilities;

               (iii) all claims, actions, deposits, prepayments, refunds or rights of recovery relating to Taxes;

               (iv) all rights of Seller under the Definitive Agreements and Closing Documents;

               (v) all books and records of Seller which are not Books and Records, provided, however , that Buyer shall be entitled to have copies of such books and records to the extent they relate to the Business, the Purchased Assets or Assumed Liabilities and do not contain confidential information or privileged materials;

               (vi) all insurance policies, and refunds paid or payable in connection with the cancellation or discontinuance of any such insurance policies following the Closing related to or connected with the Business or the Purchased Assets prior to the Closing Date;

               (vii) all shares of capital stock of Seller held in treasury and any and all shares of capital or equity interests of any other Person held by Seller;

               (viii) all contracts of Seller that do not constitute Assigned Contracts, including without limitation those contracts listed in Schedule 2.1(c)(viii) ;

               (ix) the Benefit Plans;

               (x) all intercompany notes and receivables;

               (xi) all cash and cash equivalents;

               (xii) all bank accounts of Seller other than the Fishers Lockbox;

               (xiii) all Intellectual Property of Seller other than the Trademarks, Patents and Domain Names and the Proprietary Mix Formulations; and

               (xiv) the property and assets specifically listed in Schedule 2.1(c)(xiv) .

      2.2 Assumption of Liabilities .

          (a)  Assumption . Upon the terms and subject to the conditions set forth herein, at the Closing, Buyer shall assume from Seller, and Seller shall irrevocably convey, transfer and assign to Buyer, all of the Assumed Liabilities. Buyer shall not assume any liabilities of Seller under this Agreement, other than the Assumed Liabilities.

          (b)  Assumed Liabilities . For all purposes of and under this Agreement, the term “ Assumed Liabilities ” shall mean, refer to and include only the following liabilities of Seller with respect to the Business (but specifically excluding the Excluded Liabilities):

               (i) all Liabilities related to the Transferred Employees arising from any facts or circumstances occurring after the Closing Date;

               (ii) all Payables;

               (iii) all Accrued Expenses;

               (iv) all Liabilities arising after the Closing under the Assigned Contracts (other than any payment obligations for goods or services delivered prior to the Closing and other than the Seller’s Retained Product Liabilities);

               (v) all Open Purchase Orders;

               (vi) the Buyer’s Assumed Environmental Liabilities; and

               (vii) the Miscellaneous Liabilities.

          (c)  Excluded Liabilities . The Excluded Liabilities shall remain the sole responsibility of Seller and shall be retained, paid, performed and discharged solely by Seller. “ Excluded Liabilities” shall mean every Liability of Seller other than the Assumed Liabilities. Excluded Liabilities include without limitation:

               (i) all accounts payable of Seller that are not Assumed Liabilities;

               (ii) subject to Section 2.6, all Liabilities of Seller for Taxes, including (A) any Taxes arising as a result of Seller’s operation of the Business or ownership of the Purchased Assets prior to the Closing Time, including any deferred Taxes, and (B) any Taxes that will arise as a result of the sale of the Purchased Assets pursuant to this Agreement;

               (iii) all Liabilities under Business Contracts that are not Assigned Contracts or Open Purchase Orders (the “ Excluded Agreements ”), including but not limited to each agreement listed on Schedule 2.2(c)(iii) ;

               (iv) all Liabilities for Indebtedness of Seller, on its own behalf or on behalf of other Persons, to banks, financial institutions or other Persons with respect to borrowed money, including any accrued interest payable in respect thereof;

               (v) all Liabilities of Seller for capital lease obligations, except for those capital leases set forth on Section 2.2(c)(v) of the Seller Disclosure Letter;

               (vi) all Liabilities arising out of or relating to Seller’s failure to comply with the terms and conditions of any credit facilities or any security interest related thereto;

               (vii) the Seller’s Retained Product Liabilities;

               (viii) except as set forth in Section 2.2(b), all Employment Liabilities;

               (ix) all Liabilities of Seller to any of its stockholders or any Affiliate of Seller or any of its stockholders;

               (x) all Liabilities to indemnify, reimburse or advance amounts to any officer, director, employee or agent of Seller;

               (xi) all Liabilities to distribute to any of Seller’s stockholders or otherwise apply all or any part of the consideration received hereunder;

               (xii) all Liabilities for legal, accounting, audit and investment banking fees, brokerage commissions, and any other expenses incurred by Seller in connection with the Transaction;

               (xiii) all Liabilities arising out of any Proceeding pending against Seller (or any Representative, employee or agent of Seller to the extent such Proceeding relates to the Business) as of the Closing Time;

               (xiv) all Liabilities arising out of any Proceeding against Seller (or any Representative, employee or agent of Seller to the extent such Proceeding relates to the Business) commenced after the Closing Time and arising out of or relating to any occurrence or event caused by or happening prior to the Closing Time which do not constitute any Assumed Liabilities;

               (xv) all Liabilities arising out of or resulting from Seller’s noncompliance with any Law or Order of any Governmental Body (other than the Buyer’s Assumed Environmental Liabilities);

               (xvi) all Liabilities of Seller under the Definitive Agreements and any Closing Documents;

               (xvii) all Liabilities to the extent attributable to any of the Excluded Assets;

               (xviii) all Liabilities under all of Seller’s warranty arrangements for products manufactured or sold on or before the Closing Date;

               (xix) all Liabilities of Seller arising out of or in any way related to the infringement of Intellectual Property arising out of the conduct of the Business by Seller before the Closing Time, including, without limitation, liability for consequential and punitive damages in connection with the foregoing; and

               (xx) all Liabilities of Seller based upon Seller’s acts or omissions occurring after the Closing Time (except to the extent that such Liability results from Buyer’s breach of the Definitive Agreements).

      2.3 Closing .

          (a) The consummation of the purchase and sale of the Purchased Assets and the assumption of the Assumed Liabilities (the “ Closing ”) shall take place at such place as Buyer and Seller mutually agree, at 8:00 A.M. Pacific Time, on the Closing Date unless otherwise mutually agreed by Buyer and Seller (the “ Closing Time ”). The Closing shall be deemed to be effective as of the Closing Time.

          (b) As soon as practicable following the date hereof and at all times until the purchase by Buyer of all of the Purchased Assets and the assumption of the Assumed Liabilities, Buyer and Seller shall cooperate in good faith to formulate and effect a plan and closing schedule for the transfer of the Purchased Assets to Buyer and the assumption of the Assumed Liabilities by Buyer pursuant to this Agreement.

          (c) At least five (5) Business Days prior to the Closing Date, Seller shall furnish to Buyer a statement of the Closing Working Capital in form reasonably acceptable to Buyer (“ Closing Working Capital Statement ”) certified by a duly authorized officer of Seller. Seller shall provide Buyer with full access to the relevant records and working papers used to prepare the Closing Working Capital Statement.

          (d) At the Closing, on the terms and subject to the conditions set forth in this Agreement, Buyer shall pay the Purchase Price less the Escrow Amount (as defined in Section 2.3(f) below), by wire transfer of immediately available funds in United States Dollars to the account(s) set forth in Schedule 2.3(d) .

          (e) At the Closing, and simultaneously with the payment of the Purchase Price pursuant to Section 2.3(d), (i) Seller shall assign and transfer to Buyer all of its rights, title and interest in and to the Purchased Assets, free and clear of all Liens, by delivery of: (A) a General Assignment and Bill of Sale in form and substance reasonably acceptable to Buyer (the “ General Assignment ”), duly executed by Buyer and Seller; (B) a Trademark Assignment in form and substance reasonably acceptable to Buyer (the “ Trademark Assignment ”), duly executed by Buyer and Seller; (C) a Patent Assignment in form and substance reasonably acceptable to Buyer (the “ Patent Assignment ”), duly executed by Buyer and Seller; and (D) such other instruments of conveyance, assignment and transfer as Buyer shall reasonably request, in form and substance reasonably acceptable to Buyer, as shall be effective to vest in Buyer good and valid title to the applicable Purchased Assets (the General Assignment, Trademark Assignment, Patent Assignment, and the other instruments being collectively referred to herein as the “ Assignment Instruments ”), (ii) Buyer and Seller shall duly execute the Ancillary Agreements; and (iii) Buyer shall assume from Seller the due payment, performance and discharge of the Assumed Liabilities by delivery of (A) an Assumption Agreement in form and substance reasonably acceptable to Seller (the “ Assumption Agreement ”), duly executed by Buyer and Seller, and (B) such other instruments of assumption as Seller shall reasonably request, in form and substance reasonably acceptable to Seller as shall be effective to cause Buyer to assume the Assumed Liabilities as and to the extent provided in Section 2.2(b) (the Assumption Agreement and such other instruments referred to in clause (ii)(B) being collectively referred to herein as the “ Assumption Instruments ”). At the Closing, there shall also be delivered to Seller and Buyer the Closing Documents and any other closing deliveries required to be delivered pursuant to Article VII hereof.

          (f) At the Closing, $1,000,000 cash, representing a portion of the Purchase Price (the “ Escrow Amount ”), shall be paid to the Escrow Agent to be held and administered by the Escrow Agent in escrow as security for the indemnification obligations of Seller for Damages under Article IX (the “ Escrow ”) pursuant to the terms of the Escrow Agreement. Within three (3) Business Days after the date which is fifteen (15) months after the Closing, Buyer and Seller shall each execute and deliver to the other and to the Escrow Agent written instructions to release to Seller any amounts then held in Escrow and not previously paid in respect of any claims for indemnification under Article IX and not subject to any pending claims under Article IX. Any amounts earned in respect of the Escrow Amount shall be considered a part of the Escrow and held pursuant to the Escrow Agreement.

      2.4 Post-Closing Purchase Price Adjustment .

               (a)  Preparation of Updated Working Capital Statement . Within ninety (90) days after the Closing Date, Buyer shall prepare and deliver to Seller (at Buyer’s expense) an updated balance sheet as of the Closing Date (the “ Updated Balance Sheet ”) together with a statement (the “ Updated Working Capital Statement ”) setting forth Buyer’s updated calculation of Working Capital as of the Closing Time (“ Updated Working Capital ”). Seller shall provide such information as may reasonably be requested by Buyer and cooperate with Buyer to enable the Buyer to prepare the foregoing.

               (b)  Verification . As soon as reasonably practicable after its receipt of the Updated Working Capital Statement, but not later than forty-five (45) days after its receipt

thereof (such 45-day period being known as the “ Objection Period ”), Seller shall provide written notice to Buyer either that it agrees or that it disagrees with the Updated Working Capital Statement. During the Objection Period, Seller shall be given reasonable access, during regular business hours, to the relevant records and working papers used by Buyer to prepare the Updated Working Capital Statement. If Seller disagrees with the Buyer’s calculation of the Updated Working Capital, Seller shall provide written notice to Buyer (the “ Objection Notice ”) stating that Seller disagrees with the Updated Working Capital as calculated by the Buyer, together with (i) Seller’s calculation of the Updated Working Capital, (ii) a statement of values in the Updated Working Capital Statement with which Seller disagrees and an explanation of the reason(s) for Seller’s disagreement therewith, and (iii) documentation supporting Seller’s calculation of Updated Working Capital. If Seller does not provide an Objection Notice during the Objection Period, Seller shall be deemed to have accepted Buyer’s calculation of the Updated Working Capital.

               (c)  Disputes . Disputes between Buyer and Seller relating to the Updated Working Capital Statement that cannot be resolved by them within thirty (30) days after delivery by Seller of an Objection Notice shall be referred to an independent accounting firm agreed upon by Buyer and Seller for arbitration (the “ Independent Accountant ”) with respect to the Objection Notice. If Buyer and Seller cannot agree upon the Independent Accountant, Buyer and Seller shall each select an independent accounting firm within five (5) business days after such thirty-day period and the two accounting firms shall select the Independent Accountant. The Independent Accountant will be instructed to select, in its discretion, the individuals within its organization who will have primary responsibility for this matter and to reach a determination within forty-five (45) days from the date of referral. The Independent Accountant’s determinations hereunder shall be limited to determining the Updated Working Capital and the Independent Accountant will not have authority to alter or vary this Agreement. The expenses of the Independent Accountant shall be paid one-half by Seller and one-half by Buyer. The Updated Working Capital as adjusted by the Independent Accountant in accordance with this Section 2.4(c) (the “ Final Working Capital ”), shall be final and binding on the Parties. It is understood and agreed that the decision of the Independent Accountant shall not be subject to judicial review by any court or tribunal under any circumstances whatsoever and the Parties hereby expressly waive any right to appeal or otherwise seek judicial review of any decision of the Independent Accountant under this Section 2.4(c).

               (d)  Purchase Price Adjustment .

               (i)  Downward Adjustment . If (A) the Updated Working Capital is less than the Closing Working Capital and (i) Seller agrees with the Buyer’s calculation of such amount, or (ii) Seller does not provide an Objection Notice to Buyer within the Objection Period, or (B) the Final Working Capital (as determined in accordance with Section 2.4(c) above) is less than the Closing Working Capital (the amount of such shortfall in either clause (A) or (B) above being known as the “ Post-Closing Purchase Price Decrease Amount ”), Buyer shall be entitled to immediately recover the full Post-Closing Purchase Price Decrease Amount only from the Escrow.

               (ii)  Upward Adjustment . If (A) the Updated Working Capital is greater than the Closing Working Capital and (i) Seller agrees with the Buyer’s calculation of

such amount, or (ii) Seller does not provide an Objection Notice to Buyer within the Objection Period, or (B) the Final Working Capital (as determined in accordance with Section 2.4(c) above) is greater than the Closing Working Capital (the amount of such excess in either clause (A) or (B) above being known as the “ Post-Closing Purchase Price Increase Amount ”), Buyer shall promptly pay within two (2) Business Days the full Post-Closing Purchase Price Increase Amount by wire transfer of immediately available funds in United States Dollars to an account designated by Seller.

      2.5 Lockbox; Operating Account; Payments . At the Closing, Seller shall assign its rights to the Fishers Lockbox and Fishers Operating Account to Buyer. From and after the Closing, Seller shall promptly pay to Buyer all monies received by Seller attributable to any Purchased Asset (including any payments sent to the Santa Cruz Lockbox that belong to Buyer) and Buyer shall promptly pay to Seller all monies received by Buyer attributable to any Excluded Asset (including any payments sent to the Fishers Lockbox which belong to Seller). During the 6-month period after the Closing, Buyer and Seller shall account for such payments on a weekly basis and shall deliver monies belonging to the other party on a weekly basis.

      2.6 Taxes .

          (a)  Transfer Taxes . Seller shall bear any sales, use, value-added, gross receipts, excise, registration, stamp duty or other similar taxes or governmental fees arising out of the transfer of the Purchased Assets to Buyer pursuant hereto (“ Transfer Taxes ”). To the extent permitted by applicable law, Buyer and Seller shall cooperate in minimizing Transfer Taxes.

          (b)  Straddle Period Taxes . In the case of any real or personal property taxes or any similar ad valorem taxes attributable to the Purchased Assets for which Taxes are reported on a Tax Return covering a period commencing before the Closing and ending thereafter (a “ Straddle Period Tax ”), any such Straddle Period Taxes shall be prorated between Buyer and Seller on a per diem basis. The Party required by law to file a Tax Return with respect to Straddle Period Taxes shall do so within the time period prescribed by law and shall provide the other Party with a draft of such Tax Return.

          (c)  Tax Returns . To the extent relevant to the Business or the Purchased Assets, each Party shall (i) provide the other with such assistance as may reasonably be required in connection with the preparation of any Tax Return and the conduct of any audit or other examination by any governmental authority or in connection with judicial or administrative proceedings relating to any liability for Taxes and (ii) use its commercially reasonable efforts to retain and provide the other with all records or other information that may be relevant to the preparation of any Tax Returns, or the conduct of any audit or examination, or other proceeding related to Taxes.

          (d)  Withholding Rights . Buyer shall be entitled to deduct and withhold from the cash otherwise deliverable under this Agreement, and from any other payments otherwise required pursuant to this Agreement, to Seller such amounts as Buyer is required to deduct and withhold with respect to any such deliveries and payments under the Code or any provision of state, local, provincial or foreign Tax law. To the extent that amounts are so withheld, such

withheld amounts shall be treated for all purposes of this Agreement as having been delivered and paid to Seller in respect of which such deduction and withholding was made.

      2.7 Nontransferable Assets . To the extent that any Purchased Asset or Assumed Liability to be sold, conveyed, assigned, transferred, delivered or assumed to or by Buyer pursuant hereto, or any claim, right or benefit arising thereunder or resulting therefrom, is not capable of being sold, conveyed, assigned, transferred or delivered without the approval, consent or waiver of the issuer thereof or the other party thereto, or any third person (including a Governmental Body) or if such sale, conveyance, assignment, transfer or delivery or attempted sale, conveyance, assignment, transfer or delivery would constitute a breach or termination right thereof or a violation of any law, decree, order, regulation or other governmental edict, except as expressly otherwise provided herein, this Agreement shall not constitute a sale, conveyance, assignment, transfer or delivery thereof, or an attempted sale, conveyance, assignment, transfer or delivery thereof absent such approvals, consents or waivers. If any such approval, consent or waiver shall not be obtained, or if an attempted assignment of any such Purchased Asset or the assumption of any Assumed Liability by Buyer would be ineffective so that Buyer would not in fact receive all such Purchased Assets or assume all such Assumed Liabilities pursuant hereto, Seller and Buyer shall cooperate in a mutually agreeable arrangement and use reasonably diligent efforts to provide Buyer with the benefits and assume the obligations of such Purchased Assets and Assumed Liabilities in accordance with this Agreement, including subcontracting, sub-licensing, or sub-leasing to Buyer, or under which Seller, at Buyer’s expense, would enforce for the benefit of Buyer, with Buyer assuming all of Seller’s obligations thereunder, any and all rights of Seller against a third party thereto. Buyer agrees to reasonably cooperate with Seller and supply relevant information to such third party in order to assist Seller in its obligations under this Section 2.7.

      2.8 Taking of Necessary Action; Further Action . From time to time after the Closing Date, at the reasonable request of any Party and at the expense of such Party, the Parties shall execute and deliver such other instruments of sale, transfer, conveyance, assignment and confirmation and take such action as a Party may reasonably determine is necessary to transfer, convey and assign to Buyer, and to confirm Buyer’s title to, obligation under or interest in the Purchased Assets pursuant to this Agreement or the assumption of the Assumed Liabilities, to put Buyer in actual possession and operating control of such Purchased Assets as contemplated by this Agreement and to assist Buyer in exercising all rights with respect thereto.

      2.9 Allocation of Purchase Price . Within 90 days after the Closing, Buyer shall deliver to Seller (subject to Seller’s review and approval, not to be unreasonably withheld) an allocation (the “ Tax Allocation ”) of the Purchase Price and the Assumed Liabilities (except to the extent that such Assumed Liabilities are not required to be capitalized for income tax purposes) among the Purchased Assets and the covenant not to compete in Section 6.3 hereof as of the Closing Date. Any subsequent adjustments to the sum of the Purchase Price and Assumed Liabilities (except to the extent that such Assumed Liabilities are not required to be capitalized for income tax purposes) shall be reflected by Buyer (subject to Seller’s review and approval, not to be unreasonably withheld) in the Tax Allocation hereunder in a manner consistent with Section 1060 of the Code and the regulations thereunder (and any similar provision of state, local or foreign law, as appropriate). For all Tax purposes, Buyer and Seller agree to report the transactions contemplated in this Agreement in a manner consistent with the terms of this

Agreement, including filing all Tax Returns (including, but not limited to Internal Revenue Service Form 8594) in a manner consistent with the Tax Allocation, and that none of them will take any position inconsistent therewith in any Tax Return, in any refund claim, in any litigation, or otherwise, except as required by applicable law.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF SELLER AND PARENT

     Subject to such exceptions as are specifically disclosed in the disclosure letter (referencing the appropriate section numbers) supplied by Seller to Buyer (the “ Seller Disclosure Letter ”), Seller hereby represents and warrants to Buyer that the statements contained in this Article III (other than the statements made by Parent in Section 3.34) are true and correct as of the Closing; provided, that the representations and warranties made as of a specified date will be true and correct only as of such date. Subject to such exceptions as are specifically disclosed in the Seller Disclosure Letter (referencing the appropriate subsection of Section 3.34), Parent hereby represents and warrants to Buyer that the statements contained in this Section 3.34 are true and correct as of the Closing; provided, that the representations and warranties made as of a specified date will be true and correct only as of such date.

      3.1 Organization, Qualification, and Corporate Power . Seller is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware. Seller is a wholly-owned subsidiary of Parent. Except as set forth in Section 3.1 of the Seller Disclosure Letter, Seller does not own any subsidiaries. Seller has all necessary power and authority to enter into the Definitive Agreements, to carry out its obligations thereunder and to consummate the transactions contemplated thereby. Seller is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the properties owned or leased by it or the operation of the Business makes such licensing or qualification necessary, except to the extent that the failure to be so licensed or qualified would not have a Material Adverse Effect upon (i) the ability of Seller to carry out its obligations under, and to consummate the transactions contemplated by, the Definitive Agreements and (ii) the Purchased Assets.

      3.2 Authorization . The execution and delivery of the Definitive Agreements by Seller, the performance by Seller of its obligations thereunder and the consummation by Seller of the transactions contemplated thereby have been duly authorized by all requisite action on the part of Seller and no other corporate proceeding on the part of Seller is necessary to authorize Seller to enter into the Definitive Agreements or to consummate the transactions contemplated thereby. This Agreement has been duly and validly executed and constitute valid and legally binding obligations of Seller, enforceable against Seller in accordance with its respective terms and conditions, except as such enforceability may be limited by principles of public policy and subject to the laws of general application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific performance, injunctive relief or other equitable remedies.

      3.3 No Conflicts . Neither Seller’s execution and the delivery of the Definitive Agreements nor the consummation of the Transaction will (A) violate any constitution, Law,

injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which Seller is subject, (B) violate or conflict with any provision of the charter, bylaws or other organizational documents of Seller or (C) except as set forth in Section 3.3 of the Seller Disclosure Letter conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice or consent under, any Assigned Contract or Permit (or result in the imposition of any Lien upon any of the Purchased Assets).

      3.4 Consents . Except as set forth in Section 3.4 of the Seller Disclosure Letter, no consent, waiver, approval, order, license, permit, certificates, filing or authorization of, or registration, declaration or filing with, any Governmental Body or any third party (“ Third Party Consents ”) is required by or with respect to Seller in connection with the execution and