STOCK EXCHANGE AGREEMENT

THIS STOCK EXCHANGE AGREEMENT (this “ Agreement ”) is made and entered into as of October 30 ^th 2008 (the “ Signing Date ”), by and among SOLAR THIN FILMS, INC. , a Delaware corporation (“ STF ”); ALGATEC SOLAR AG , a German corporation (the “ Company ” or “ Algatec ”); ALGATEC EQUITY PARTNERS, L.P. , a Delaware limited partnership (“ AEP ”); RAINER RUSCHKE , an individual (“ R. Ruschke ”); ULLRICH JANK , an individual (“ U. Jank ”); DR. STEFAN MALIK , an individual (“ S. Malik ”); ANDRE FREUD , an individual (“ A. Freud ”); and ROLAND RICHTER,   ESQ., an individual, acting as trustee for R. Ruschke (the “ Trustee ”). R. Ruschke, U. Jank, S. Malik and A. Freud are sometimes individually referred to as the “ Management Stockholder ” and collectively as the “ Management Stockholders .” AEP and the Management Stockholders are hereinafter sometimes individually referred to as a “ Company Stockholder ” and collectively as the “ Company Stockholders .” STF, AEP, the Company, and the Company Stockholders are hereinafter sometimes individually referred to as a “ Party ” and collectively as the “ Parties .” Capitalized terms not otherwise defined herein shall of the meanings set forth in Article X of this Agreement.

As a material inducement for STF to enter into this Agreement and to consummate the transactions contemplated hereby, the Management Stockholders make the factual recitals set forth in paragraph A and in paragraph C through G below, each of which constitutes a representation and warranty of the Management Stockholders unless otherwise modified in the Schedules. As a material inducement for the Company, the Trustee, the Management Stockholders and STF to enter into this Agreement and to consummate the transactions contemplated hereby, AEP makes the factual recital set forth in paragraphs B and C below, which constitutes representations and warranties of AEP unless otherwise modified in the Schedules. As a material inducement for the Company, the Trustee, the Management Stockholders and AEP to enter into this Agreement and to consummate the transactions contemplated hereby, STF makes the factual recital set forth in paragraph H below, which constitutes representations and warranties of STF unless otherwise modified in the Schedules.

A.   The Company is a stock corporation ( Aktiengesellschaft ) organized under the laws of Germany, registered with the commercial register ( Handelsregister ) of the local court ( Amtsgericht ) of Cottbus under registration number HRB 8146 CB, having its registered office ( Sitz ) in Röderland, Germany and having a registered share capital in the amount of EUR 50,000, which is divided into 50,000 no par-value bearer shares ( Inhaber/-Stückaktien ) each representing a notional participation of EUR 1 (herein collectively the “ Company Shares ” and each a “ Company Share ”). The articles of association of the Company, as in effect on the Signing Date, are attached as Exhibit A/1 (the “ Company Articles of Association ”) and, as of the Signing Date, a current excerpt of the Company’s commercial register is attached to this Agreement as Exhibit A/2 , provided, however, that the appointment of R. Ruschke, U. Jank and S. Malik has not been recorded in the commercial register .

B.   AEP   is a limited partnership formed under the laws of the state of Delaware/USA.

C.   On the Signing Date, the Management Stockholders, Mr. Roland Richter, Esq., an individual acting as Trustee for R. Ruschke, and AEP have entered into a Share Purchase Agreement (the “ Share Purchase Agreement ”) pursuant to which the Trustee sold to AEP certain Company Shares. The Share Purchse Agreement and the Exhibits and Schedules thereto have been furnished to STF. Upon closing of the transactions contemplated by the Share Purchase Agreement, the Company Shares will be held as follows:

D.   Under the terms of the Share Purchase Agreement, the funds contributed by AEP to the capital reserves of the Company will be used by the Company to acquire, in a series of transactions, the business currently operated by Trend Capital GmbH & Co. Algatec Solarwerke Brandenburg KG (such entity “ Trend Capital KG ” and the transactions the “ Trend Capital Business Transfer ”).

E.   As of the Signing Date, Algatec is a party to a share purchase agreement dated as of October 28, 2008 (deed-roll no. 1304/2008 of notary Sabine Taugnitz/Riesa), a copy of which   is attached as Exhibit E , relating to the acquisition by Algatec of all of the issued and outstanding shares of SOLAR INVEST GMBH, a limited liability company ( Gesellschaft mit beschränkter Haftung ) organized under the laws of Germany, registered with the commercial register ( Handelsregister ) of the local court ( Amtsgericht ) of Cottbus under registration number 6628 CB (“ Solar Invest ”). The business of the Company resulting from (i) the Trend Capital Business Transfer and (ii) the transfer of the shares in Solar Invest contemplated by this paragraph E is herein referred to as the “ Algatec Business ”.

F.   As of the Signing Date, the Company (as purchaser) and GB Grundbesitz Brandenburg GmbH (as seller) are party to a real estate purchase agreement dated October 23, 2008 (deed-roll no. 1290/2008 of notary Sabine Taugnitz/Riesa), a copy of which   is attached as Exhibit F , relating to the real estate set forth therein in Prösen, Germany, (the “ Prösen Real Estate ”), pursuant to which GB Grundbesitz Brandenburg GmbH has sold the Prösen Real Estate to the Company for a purchase price equal to € 530,000, which is payable in twelve installments (the first installment being due on November 1, 2008 and any further installment being due on the first day of the respective following month), provided that the in rem transfer of ownership of the Prösen Real Estate to the Company becomes effective after full payment of the purchase price by the Company.

G.   As of the Signing Date, (a) Algatec has placed a purchase order with KOMAX GROUP AG (“ Komax ”), dated September 4, 2008, a true and complete copy of which has been furnished to STF for the purchase of certain equipment (the “ Komax Purchase Order ”), and (b) is party to a Frame Contract No. ALG/2009, dated September 25, 2008 with Q-CELLS INTERNATIONAL GMBH (“ Q-Cells ”), a true and complete copy of which   has been furnished to STF, for the sale of solar modules to Q-Cells (the “ Q-Cells Agreement ”).

H.   STF is a Delaware corporation with its principal place of business at 25 Highland Boulevard, Dix Hills, New York 11746. STF has an authorized share capital of 152,700,000 shares, of capital stock divided into:

(i)   150,000,000 shares of common stock, $0.01 par value per share (the “ Common Stock ”), of which an aggregate of 57,783,601 shares of STF Common Stock is currently issued and outstanding,

(ii)   1,200,000 shares of Series A preferred stock, $0.01 par value per share (the “ Series A Preferred Stock ”), of which no shares of Series A Preferred Stock are issued or outstanding, and

(iii)   1,500,000 shares of Series B preferred stock, $0.01 par value per share, containing such rights, privileges and designations as the Board of Directors of STF may, from time to time, designate by resolution providing for the issue of such series (the “ Series B Preferred Stock ”) of which (A) 228,652 shares of Series B Preferred Stock designated as Series B-1 Preferred Stock and (convertible into 228,652 shares of Common Stock) are issued and outstanding, (B) 500,000 shares of Series B Preferred Stock designated as B-2 Preferred Stock were eliminated on April 10, 2003, (C) 47,518 shares of Series B Preferred Stock designated as Series B-3 Preferred Stock (convertible into 1,520,576 shares of Common Stock) are issued and outstanding, and (D) none of the 100,000 shares of Series B Preferred Stock designated as Series B-4 Preferred Stock are issued and outstanding.

I.   Upon the terms and subject to the conditions set forth in this Agreement, STF desires to acquire from the Company Stockholders all, and not less than all, of the outstanding Company Shares.

J.   The Company Stockholders have agreed to exchange the outstanding Company Shares in consideration for the “ Exchange Shares ” (as hereinafter defined).

K.   STF desires to acquire the outstanding Company Shares, and the Company Stockholders desire to exchange such Company Shares for the Exchange Shares, all upon the terms and subject to the conditions set forth herein.

NOW THEREFORE , the Parties hereto do each severally (and not jointly) hereby agree as follows:

NOW, THEREFORE , in consideration of the premises and of the mutual covenants contained herein, the Parties agree as follows:

ARTICLE I. – TRANSFER OF COMPANY SHARES

1.1   Transfer of Company Shares .

(a)   On the terms and subject to the conditions of this Agreement, at the Closing referred to in Section 3.1 hereof, the Company Stockholders shall convey, assign, transfer and deliver to STF and STF shall acquire and accept delivery of the Company Shares.

(b)   The share capital of the Company is evidenced by 50,000 Company Shares, which represent one hundred percent (100%) of the issued and outstanding share capital of the Company on the Closing Date, on a fully-diluted basis, after giving effect to the exercise of all options, warrants or other rights to acquire Company Shares, and all securities convertible into Company Shares that are outstanding as of the Closing Date.

(c)   The Company Shares shall be delivered to STF by the Company Stockholders, free and clear of any and all liens, claims, mortgages, charges, restrictions, pledges, security interests, options, leases or subleases, easements, encroachments, or encumbrances or any other rights or adverse interests of any kind of any third Person (collectively, “ Liens ”).

(d)   To effect the transfers contemplated by this Section 1.1 , at the Closing, the Company Stockholders shall deliver or cause to be delivered to STF, against delivery of the consideration therefor in accordance with Section 2.1 hereof, certificates evidencing all, and not less than all, of the Company Shares outstanding as of the Signing Date, with the shares certificates duly endorsed in blank [with the signatures of the owners thereof notarized by an official notary public or guaranteed by a bank or trust company.

2.1   STF Series B-5 Preferred Stock . On the Closing Date, against delivery of the Company Shares in accordance with Section 1.1(d) , STF shall deliver, transfer and assign to the Company Stockholders (pro-rata as among each of the Company Stockholders as their respective interests in the Company Shares bear to each other, all set forth on Schedule 2.1 annexed hereto and made a part hereof), an aggregate of 50,000 shares of the Series B Preferred Stock of STF, to be designated as 6% Series B-5 Convertible Voting Preferred Stock (the “ STF Series B-5 Preferred Stock ”). The Management Stockholders and the Trustee as a group shall be issued 25,500 of the shares of STF Series B-5 Preferred Stock, and AEP shall be issued 24,500 of the shares of STF Series B-5 Preferred Stock. The number of shares of STF Series B-5 Preferred Stock to be issued to each of the Management Stockholders is set forth on Schedule 2.1 to this Agreement.

2.2   The Exchange Shares .   The fifty thousand (50,000) shares of STF Series B-5 Preferred Stock are hereinafter sometimes collectively referred to as the “ Exchange Shares .” Such Exchange Shares shall contain the rights privileges and designations set forth in the Certificate of Designations of STF Series B-5 Preferred Stock annexed hereto as Exhibit 2.2 and made a part hereof (the “ Certificate of Designations ”).

2.3     STF Reverse Stock Split .   On or prior to the Closing Date, STF shall effect a one-for-two reverse stock split of its issued and outstanding shares of Common Stock.

3.1   Closing . The consummation of the exchange of the Company Shares for the Exchange Shares and the other transactions contemplated by this Agreement (the “ Closing ”) will take place at 10:00 a.m. (local time) on a date to be agreed by the Parties, which shall be no later than the fifth Business Day after satisfaction or waiver of the conditions set forth in Article VII of this Agreement (the " Closing Date "), at the offices of Hodgson Russ LLP, 1540 Broadway, 24 ^th Floor, New York, New York 10036, counsel to STF, unless another date, time or place is agreed to in writing by the Parties hereto. In no event, however, shall the Closing Date occur after March 31, 2009, unless otherwise mutually agreed upon by the Company Stockholders and STF.

3.2   Deliveries by the Company Stockholders . At or prior to the Closing, the Company Stockholders shall deliver to STF:

(i)   Shareholder’s list of the Company and stock certificates representing all, and not less than all, of the Company Shares, duly endorsed by the record owners in blank,

(ii)   Minutes of the Shareholders’ meeting of the Company Stockholders approving the transfer of the Company Shares;

(iii)   the minute books of the Company;

(iv)   a certificate executed by the Company Stockholders to the effect that the conditions set forth in Section 7.2 (b) have been satisfied;

(v)   possession of all originals and copies of agreements, instruments, documents, deeds, books, records, files and other data and information within the possession of the Company Stockholders or any Affiliate of the Company Stockholders pertaining to the Company (collectively, the “ Records ”); provided , however , that the Company Stockholders may retain (1) copies of any tax returns and copies of Records relating thereto; (2) copies of any Records that the Company Stockholders is reasonably likely to need for complying with requirements of law; and (3) copies of any Records that in the reasonable opinion of the Company Stockholders will be required in connection with the performance of their obligations under Article VIII hereof; and, provided, also , that all such agreements, instruments, documents, deeds, books, records, files and other data and information within the possession the Company Stockholders or any Affiliate of the Company Stockholders pertaining to the Company which the Company is under a legal duty to keep shall be delivered to the Company rather than STF; and

(vi)   evidence satisfactory to STF that the Management Stockholders shall be the only authorized signatories with respect to the Company’s various accounts, credit lines, safe deposit boxes or vaults;

(vii)   duly executed copies of the Voting Agreement and the Registration Rights Agreement.

3.3       Deliveries by STF . At or prior to the Closing, STF shall deliver to the Company Stockholders:

(i)   certificates evidencing the Exchange Shares pursuant to Section 2.1 hereof;

(ii)   evidence satisfactory to the Company Stockholders of the filing of the Series A Preferred Stock Certificate of Designations with the Secretary of State of the State of Delaware and the completion of the transactions contemplated pursuant to Section 2.3 hereof;

(iii)   a certificate executed by an authorized officer of STF, on behalf of STF, to the effect that the conditions set forth in Section 7.1 (b) and (c) have been satisfied;

(iv)   the Certificate of Designations in the form of Exhibit 2.2 annexed hereto and made a part hereof; and

(v)   duly executed copies of the Voting Agreement and the Registration Rights Agreement.

3.4   Termination in Absence of Closing .

(a)   In the event that a STF Termination Event, or an Algatec Termination Event occurs or if the Closing has not occurred by the close of business on March 31, 2009, then any Party hereto may thereafter terminate this Agreement by written notice to such effect, to the other Parties hereto, without liability of or to any Party to this Agreement or any shareholder, director, officer, employee or representative of such Party unless the reason for Closing having not occurred is (i) such Party’s willful breach of the provisions of this Agreement, or (ii) if all of the conditions to such Party’s obligations set forth in Article VII have been satisfied or waived in writing by the date scheduled for the Closing pursuant to Section 4.1, the failure of such Party to perform its obligations under this Article III on such date; provided , however , that any termination pursuant to this Section 3.4 shall not relieve any Party hereto who was responsible for Closing having not occurred as described in clauses (i) or (ii) above of any liability for (x) such Party’s willful breach of the provisions of this Agreement, or (y) if all of the conditions to such Party’s obligations set forth in Article VII have been satisfied or waived in writing by the date scheduled for the Closing pursuant to Section 3.1, the failure of such Party to perform its obligations under this Article III on such date.

(b)   Notwithstanding the approval of the Board of Directors of STF, this Agreement and the transactions contemplated herein may be terminated and abandoned at any time on or prior to the Closing Date by STF, if any of the following shall have occurred (each, a “ STF Termination Event ”):

(i)   any representation or warranty made herein by the Company Stockholders for the benefit of STF, or any certificate, schedule or document furnished by the Company or the Company Stockholders to STF pursuant to this Agreement shall be untrue or incorrect in any material respect and the cause for such incorrectness is either not possible to be cured or has not been cured within 20 Business Days from the Parties becoming aware of such incorrectness; or

(ii)   the Company, the Company Stockholders or any of their Affiliates shall have defaulted in any material respect in the performance of any material obligation under this Agreement on their part to be performed and such default is either not possible to be cured or has not been cured within 20 Business Days from the date the Company or the Company Stockholders shall have received notice of default from STF of its occurrence; or

(iii)   the Company or the Company Stockholders shall be subject to a Material Adverse Effect; or

(iv)   the Algatec Financing shall not be consummated by March 31, 2009.

(c)   This Agreement and the transactions contemplated herein may be terminated and abandoned at any time on or prior to the Closing Date by the Company Stockholders, if any of the following shall have occurred (each, an “ Algatec Termination Event ”):

(i)   any representation or warranty made herein by STF for the benefit of the Company Stockholders, or any certificate, schedule or document furnished by STF to the Company Stockholders pursuant to this Agreement shall be untrue or incorrect in any material respect and the cause for such incorrectness is either not possible to be cured or has not been cured within 20 Business Days from the Parties becoming aware of such incorrectness; or

(ii)   STF or any of their Affiliates shall have defaulted in any material respect in the performance of any material obligation under this Agreement on their part to be performed and such default is either not possible to be cured or has not been cured within 20 Business Days from the date STF shall have received notice of default from Algatec or the Company Stockholders; or

(iii)   STF shall be subject to a Material Adverse Effect

(iv)   in the event (and only in the event) that STF shall be required by the rules of any stock exchange, or otherwise, to call a meeting of STF stockholders (the “ STF Stockholders Meeting ”) to approve and ratify this Agreement and the transactions contemplated hereby, or elect to call such STF Stockholders Meeting, the Board of Directors of STF shall have (A) failed to make the STF Recommendation, (B) withdrawn the STF Recommendation, or (C) modified the STF Recommendation in a manner adverse to the Company Stockholders; or

(v)   the Algatec Financing shall not be consummated by March 31, 2009.

Subject to the limitations, qualifications and disclosures set forth in this Agreement and its Exhibits and Schedules, and the disclosures set forth in the Share Purchase Agreement and its Exhibits and Schedules and the disclosures in the Due Diligence Information, each of AEP, the Trustee and each of the Management Stockholders severally (not jointly and severally) represents and warrants to STF that the following statements and representations are true and correct as of the Signing Date and on the Closing Date, unless such statement expressly indicates that it is or shall be limited in time or made as of only one or the other of the Signing Date or Closing Date, in which case, such statement and representation shall be true and correct only as to the date it was made.

For the purposes of this Agreement, “to the knowledge of the Management Stockholders” means the actual knowledge ( positive Kenntnis ) of any one or more of the Management Stockholders.

4A.   By AEP .   AEP represents and warrants to STF, the Trustee and the Management Stockholders only as to the following and makes no other representations or warranties hereunder.

a.   AEP is the record owner of forty-nine (49%) percent of the Share Capital of the Company.

b.   The General Partner of AEP has been expressly authorized and directed by each of the Limited Partners of AEP to sell and exchange forty-nine (49%) percent of the Share Capital of the Company to STF for twenty-four thousand five hundred (24,500) shares of the STF Series B-5 Preferred Stock, as contemplated hereby.

c.   This Agreement has been duly executed and delivered by AEP. This Agreement constitutes a legal, valid and binding obligation of AEP enforceable in accordance with its terms.

4B.   By the Trustee.  The Trustee represents and warrants to STF, AEP and the Management Stockholders only as to the following and makes no other representations and warranties hereunder.

a.   The Trustee is the legal owner of the Company Shares set out next to the Trustee’s name in Recital C.

b:   The Trustee is holding the Company Shares held by him for the sole benefit of Ruscke and/or other Management Stockholders in accordance with trust agreements.

c.   This Agreement has been duly executed and delivered by the Trustee. This Agreement constitutes a legal, valid and binding obligation of the Trustee enforceable in accordance with its terms.

4C.   By the Management Stockholders .

4.1   Ownership of the Sold Shares .   Each Management Stockholder, upon consummation of the Second Closing (as defined under the Share Purchase Agreement) is the legal owner of all Company Shares set out next to such Management Shareholder’s name in Recital C. The Company Shares to be transferred by the Management Stockholders and the Trustee to STF on the Closing Date will be transferred to STF free and clear of any of any Lien.

4.2   Organization and Qualification . The Company is a corporation and Solar Invest is a limited liability company, validly existing under the laws of Germany, with full power and authority (corporate and other) to own, lease, use and operate its properties and to carry on its business as and where now owned, leased, used, operated and conducted. The Company and Solar Invest are each duly qualified as a foreign corporation/limited liability company to do business and in good standing in every jurisdiction in which their ownership or use of property or the nature of the business conducted by them makes such qualification necessary except where the failure to be so qualified or in good standing would not have a Material Adverse Effect.

4.3   Subsidiaries . The Company has no Subsidiaries except, as of the Second Closing Date (as defined under the Share Purchase Agreement), for Solar Invest. Solar Invest will be, as of the Second Closing Date (as defined under the Share Purchase Agreement), a wholly-owned subsidiary of Algatec. The shares held by Algatec in Solar Invest as of the Second Closing Date (as defined under the Share Purchase Agreement) will be owned free and clear of any Liens.

4.4   Authorization; Enforcement . The Management Stockholders, the Trustee and the Company have all requisite corporate (or other) power and authority, to enter into and perform and/or deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by Algatec and the consummation of the transactions contemplated hereby have been duly authorized by the Algatec Management Board and by all of the Management Stockholders. This Agreement has been duly executed and delivered by each of the Trustee, Algatec and each of the Management Stockholders. This Agreement constitutes, a legal, valid and binding obligation of the Trustee, the Management Stockholders and Algatec enforceable against each of them in accordance with their terms.

4.5   Issuance of Company Shares . The Company Shares are duly authorized, validly issued, fully paid and non-assessable, and free from all Liens and are not subject to preemptive rights or other similar rights of shareholders of the Company and will not impose personal liability upon the holder thereof.

4.6   No Conflicts . The execution, delivery and performance of this Agreement by those of the Trustee, the Management Stockholders and Company and the consummation of the transactions contemplated hereby will not (i) conflict with or result in a violation of any provision of the Company Articles of Association, or (ii), to the knowledge of the Management Stockholders, violate or conflict with, or result in a breach of any provision of, or constitute a default (or an event which with notice or lapse of time or both could become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement or instrument to which the Company, Trend Capital KG or Solar Invest is a Party or is otherwise bound or is a beneficiary, or (iii) to the knowledge of the Management Stockholders, result in a violation of any law, rule, regulation, order, judgment or decree (including federal, state and foreign securities laws and regulations and regulations of any self-regulatory organizations to which Company, Trend Capital KG or Solar Invest or their its securities are subject) applicable to Company, Trend Capital KG or Solar Invest or by which any property or asset of any of Company, Trend Capital KG or Solar Invest is bound or affected (except for such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect). None of Company, Trend Capital KG or Solar Invest is in violation of its articles of association and, to the knowledge of the Management Stockholders, none of them is in default (and no event has occurred which with notice or lapse of time or both could put the any of them in default) under, and, to the knowledge of the Management Stockholders, none of Company, Trend Capital KG and Solar Invest have taken any action or failed to take any action that would give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which any of them is a Party or by which any property or assets of any of them is bound or affected, except for possible defaults as would not, individually or in the aggregate, have a Material Adverse Effect. To the knowledge of the Management Stockholders, the businesses of Company, Trend Capital KG and Solar Invest are not being conducted in violation of any law, ordinance or regulation of any governmental entity material to the business of such entity, except where violation thereof would not reasonably be expected to have a Material Adverse Effect. Except as specifically contemplated by this Agreement and as required under any applicable laws of the Federal Republic of Germany, none of the Trustee, the Management Stockholders, Company or Solar Invest is required to obtain any consent, authorization or order of, or make any filing or registration with, any court, governmental agency, regulatory agency, self regulatory organization or stock market, in order for the execution, delivery or performance of any of its obligations under this Agreement in accordance with the terms hereof.

4.7   Accuracy of Recital Representations and Warranties .   As of the Signing Date (subject to the transactions contemplated in the Share Purchase Agreement), the statements in the Recitals under paragraphs A and C through G are true and correct.

4.8   Financial Information. Prior to the Signing Date, STF has been furnished with (i) the balance sheets and statements of operations of (y) Trend Capital KG as at December 31, 2006, and December 31, 2007, and (z) Solar Invest as at December 31, 2006, and for the respective fiscal years then ended (the “ Audited Financial Statements ”) and (ii) (y) an interim balance sheet and statements of operations of Trend Capital KG (the headings of which erroneously refer to Algatec) as at June 30, 2008 and for the six month period then ended and (z) earnings statements ( betriebswirtschaftliche Auswertungen ) of Solar Invest and Trend Capital KG as at September 30, 2008, and for the nine month period then ended (the “ Unaudited Financial Statements ” and together with the Audited Financial Statements, the “ Financial Statements ”) which are attached hereto as Exhibit 4.8  The Audited Financial Statements and, to the knowledge of the Management Stockholders, the Unaudited Financial Statements fairly represent in all material respects the financial position of the respective entity as at such dates and the results of its operations for the periods then ended. The Audited Financial Statements and, to the knowledge of the Management Stockholders, the Unaudited Financial Statements were prepared in all material respects, in accordance with German GAAP applied on a consistent basis with prior periods, except that the Unaudited Financial Statements may not include all notes normally included under such generally accepted accounting principles. To the knowledge of the Management Stockholders, the books of account and other financial records of the Company, Solar Invest and Trend Capital KG are complete and correct in all material respects and are maintained in accordance with good business and accounting practices.

4.9   Absence of Certain Changes . Since September 30, 2008 and unless otherwise disclosed by the Management Stockholders to STF prior to the Closing Date, there has been no material adverse change and no material adverse development in the assets, liabilities, business, properties, operations, financial condition, results of operations or prospects of the Algatec Group, when taken as a consolidated whole, provided, however, that none of the following shall be deemed a material adverse change: (i) events or changes in general economic conditions and in particular the development of the financial and credit markets, (ii) events or changes generally affecting companies in the industries in which the Algatec Group operates, (iii) changes in legislation and the regulatory environment, and (iv) developments, changes or disruptions attributable (wholly or in part) to the announcement of this Agreement or the transactions contemplated hereby or to any action by AEP or STF.

4.10   Absence of Litigation . Except as set forth in Exhibit 4.10 , unless otherwise disclosed by the Management Stockholders prior to the Second Closing Date there is no action, suit, claim, proceeding, inquiry or investigation before or by any Government Agency, self-regulatory organization or body pending or, to the knowledge of the Management Stockholders, threatened against or affecting any of the Company, Solar Invest or Trend Capital KG, or affecting their respective officers or directors in their capacity as such, that is reasonably to be expected to result in a Material Adverse Effect. None of the Management Stockholders has knowledge of any facts or circumstances which would reasonably be expected to give rise to any of the foregoing.

4.11   Patents, Copyrights, Trademarks . The Algatec Group, when taken as a consolidated whole, owns or possesses the requisite licenses or rights to use all material patents, patent applications, patent rights, inventions, know-how, trade secrets, trademarks, trademark applications, service marks, service names, trade names and copyrights (“ Intellectual Property ”) necessary to enable it to conduct its business as now operated in all material respects; there is, as of the Signing Date, no claim or action by any Person pertaining to, or proceeding pending, or to the knowledge of any of the Management Stockholders threatened, which challenges the right of the Algatec Group with respect to any Intellectual Property necessary to enable it to conduct its business as now operated (and, to the knowledge of the Management Stockholders, as presently contemplated to be operated in the future); to the knowledge of the Management Stockholders, neither the current and intended products, services and processes of the Algatec Group infringe on any Intellectual Property or other rights held by any Person; and none of the Company Stockholders has knowledge of any facts or circumstances which might give rise to any of the foregoing.

4.12   Tax Status . Each of the Company, Solar Invest and Trend Capital KG have made or filed all federal, state and foreign income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject when due and has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, when due, except those being contested in good faith and has set aside on its Financial Statements provisions reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction. None of the Algatec Group have executed a waiver with respect to the statute of limitations relating to the assessment or collection of any tax. None of the Corporation’s tax returns is presently being audited by any taxing authority.

4.13   Permits; Compliance . Each of the Company, Solar Invest and Trend Capital KG are in possession of all franchises, grants, authorizations, licenses, permits, consents, certificates, approvals and orders necessary to own, lease and operate its properties and to carry on its business as it is now being conducted (collectively, the “ Permits ”), except where the absence of a Permit would not reasonably be expected to result in a Material Adverse Effect, and there is, as of the Signing Date, no action pending or, to the knowledge of the Management Stockholders, threatened regarding suspension or cancellation of any of the Permits, except where such suspension or cancellation would not reasonably be expected to result in a Material Adverse Effect. To the knowledge of the Company Stockholders, none of the Company, Solar Invest and Trend Capital KG is in material conflict with, or in material default or violation of, any of the Permits, except for any such conflicts, defaults or violations which, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect. Since September 30, 2008, none of the Company, Solar Invest and Trend Capital KG have received any notification with respect to possible violations of applicable laws, except for notices relating to possible violations, which would not reasonably be expected to have a Material Adverse Effect.

4.14   Environmental Matters . To the knowledge of the Management Stockholders, there are, with respect to the Company, Solar Invest and Trend Capital KG, no past or present violations of Environmental Laws (as defined below), releases of any material into the environment, actions, activities, circumstances, conditions, events, incidents, or contractual obligations which may give rise to any liability under any Environmental Laws of Germany or of other countries in which the Company, Solar Invest and Trend Capital KG conduct business, and none of them has received any notice with respect to any of the foregoing, nor is, as of the Signing Date, any action pending or, to the knowledge of the Management Stockholders, threatened in connection with any of the foregoing. The term “ Environmental Laws ” means all laws relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata), including, without limitation, laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants contaminants, or toxic or hazardous substances or wastes (collectively, “ Hazardous Materials ”) into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved thereunder. Other than those that are or were stored, used or disposed of in compliance with applicable law, to the knowledge of the Management Stockholders, no Hazardous Materials are contained on or about any real property currently owned, leased or used by any of the Algatec Group, and no Hazardous Materials were released on or about any real property previously owned, leased or used the Company, Solar Invest and Trend Capital KG during the period the property was owned, leased or used by such entity, except in the normal course of their businesses. There are no underground storage tanks on or under any real property owned, leased or used by the Company, Solar Invest and Trend Capital KG that are not in compliance with applicable law.

4.15   Title to Property . The Algatec Group, when taken as a consolidated whole, has good and marketable title to all real property or holds under valid leases or other rights to use all real property, plants, machinery and equipment necessary for the conduct of its business as presently conducted, and has good and marketable title to all personal property owned by it which is material to its business, in each case free and clear of all Liens and defects except such as would not have a Material Adverse Effect. Any real property and facilities held under lease by the Company, Solar Invest or Trend Capital KG are held by them under valid, subsisting and enforceable leases with such exceptions as would not have a Material Adverse Effect.

4.16   Insurance . The Company, Solar Invest or Trend Capital KG are insured by insurers of recognized financial responsibility against such losses and risks, including casualty and liability insurance, and in such amounts as the Company Stockholders believe to be prudent and customary in the Algatec Business. None of the Company Stockholders have any reason to believe that the Algatec Group will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue such businesses at a cost that would not have a Material Adverse Effect.

4.17   Material Contracts . The Company has furnished to STF or its representatives true and complete copies of all of the material contracts, agreements and purchase orders to which the Company, Solar Invest or Trend Capital KG is a party as of the Signing Date (except for such contracts which are verbal contracts), all of which are listed on Schedule 4.17 hereto (collectively, the “ Algatec Material Contracts ”). Unless otherwise disclosed by the Management Stockholders prior to the Closing Date, all such Algatec Material Contracts, including without limitation, the Q-Cells Agreement and the Komax Purchase Order, are in full force and effect and no event has occurred, which with the passage of time, the giving of notice or both, would constitute a default or event of default by the Company, Solar Invest or Trend Capital KG thereunder, or to the knowledge of the Management Stockholders, the other parties thereto. None of the Management Stockholders has been advised (orally or in writing) or has any reason to believe that Q-Cells Solar AG will not renew the Q-Cells Agreement for the calendar year ending December 31, 2010.

4.18   Product Warranties . Except as would not reasonably be expected to result in a Material Adverse Effect, since September 30, 2008 no claims have been alleged or to the knowledge of the Management Stockholder threatened under or pursuant to any warranty, whether express or implied, on products or services sold by the Company. Except as would not reasonably be expected to result in a Material Adverse Effect, since September 30, 2008 no claims have been alleged and to the knowledge of the Management Stockholders there is no basis for any claim against the Company for injury to persons, animals or property as a result of the sale, distribution or manufacture of any product or performance of any service by the Company, including, but not limited to, claims arising out of the defective or unsafe nature of its products or services.

4.19   Transactions With Affiliates . Except as set forth on Schedule 4.19 and except for normal advances to employees consistent with past practices, payment of compensation for employment to employees, and participation in scheduled pension or related benefit plans or programs by employees, the Algatec Group is not engaged in any significant transaction with any of the Management Stockholders of their Affiliates. Except as set forth on Schedule 4.19 , neither the Management Stockholders, nor any of their Affiliates is indebted to the Algatec Group for money borrowed or other loans or advances, and the Algatec Group is not indebted to any such Affiliate.

4.20   Budgets and Forecasts . Although the Management Stockholders (while not making any representation or warranty in this respect) believe that the budgets and forecasts submitted to STF with respect to potential revenues and earnings for fiscal 2008, 2009 and 2010 are reasonable and achievable (subject to consummation of the Algatec Financing by the end of 2008), STF recognizes that budgets and forecasts are subject to changes or adverse events affecting the Algatec Business, some of which may be beyond the control of Algatec and the Management Stockholders. Accordingly, subject only to the representations warranties, covenants and indemnities of the Management Stockholders expressly contained in this Agreement, STF confirms that in deciding on the acquisition of the Company Shares in exchange for the Exchange Shares it has not relied on nor will it make any claim against the Management Stockholders the Trustee, Algatec, Solar Invest or Trend Capital KG or any other person in respect of (i) any budget, forecast, estimate or other projection of any nature (in particular of projections of future revenues, future results of operations, future cash flows, future financial condition or the future business operations (or any underlying components thereof), or (ii) any other information with respect to the Algatec Business (in particular the Due Diligence Information) made available to the Partnership or its advisers prior to the Signing Date.

For the purposes of this Agreement, “to the knowledge of STF” means the actual knowledge ( positive Kenntnis ), of any one or more of the Chief Executive Officer, Chairman and Chief Financial Officer of STF. STF hereby represents and warrants to the Company and the Company Stockholders that:

5.1   Corporate Existence and Qualification . STF is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. STF has the corporate power to own, manage, lease and hold its Properties and to carry on its business as and where such Properties are presently located and such business is presently conducted; and STF is qualified to do business as a foreign corporation and in good standing in each jurisdiction in which it is required by law to be so qualified or in good standing.

5.2   Authority, Approval and Enforceability . This Agreement has been duly executed and delivered by STF, and each of STF have all requisite power and legal capacity to execute and deliver this Agreement and all Exhibits executed and delivered or to be executed and delivered in connection with the transactions provided for hereby, to consummate the transactions contemplated hereby and by the Exhibits, and to perform their obligations hereunder and under the Exhibits. This Agreement and each Exhibit to which STF is a Party constitutes, or upon execution and delivery will constitute, the legal, valid and binding obligation of STF, enforceable in accordance with its terms, except as such enforcement may be limited by general equitable principles or by applicable bankruptcy, insolvency, moratorium, or similar laws and judicial decisions from time to time in effect which affect creditors’ rights generally.

5.3   No Conflicts . The execution, delivery and performance of this Agreement by STF and the consummation of the transactions contemplated hereby and thereby will not (i) conflict with or result in a violation of any provision of the organizational documents of STF, or (ii), to the knowledge of the STF, violate or conflict with, or result in a breach of any provision of, or constitute a default (or an event which with notice or lapse of time or both could become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement or instrument to which STF or its Subsidiaries is a Party or is otherwise bound or is a beneficiary, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal, state and foreign securities laws and regulations and regulations of any self-regulatory organizations to which the STF or its Subsidiaries or their securities are subject) applicable to STF or its Subsidiaries or by which any property or asset of any of STF or its Subsidiaries is bound or affected (except for such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect). None of STF or its Subsidiaries is in violation of its articles of association and, to the knowledge of STF, none of them is in default (and no event has occurred which with notice or lapse of time or both could put the any of them in default) under, and, to the knowledge of STF, none of STF and its Subsidiaries have taken any action or failed to take any action that would give to others any rights of termination, amendment, acceleration or cancellation of, any Contract to which any of them is a party or by which any property or assets of any of them is bound or affected, except for possible defaults as would not, individually or in the aggregate, have a Material Adverse Effect. To the knowledge of STF, the business of STF and its Subsidiaries is not being conducted in violation of any law, ordinance or regulation of any governmental entity material to the business of such entity, except where violation thereof would not reasonably be expected to have a Material Adverse Effect. Except as specifically contemplated by this Agreement and as required under any applicable laws (and disclosed on Schedule 5.3 hereto), STF is not required to obtain any consent, authorization or order of, or make any filing or registration with, any Governmental Agency, self regulatory organization or stock market, in order for the execution, delivery or performance of any of its obligations under this Agreement in accordance with the terms hereof or thereof.

5.4   The STF Shares and Corporate Records .

(a)   The authorized, issued and outstanding shares of capital stock of STF are set forth in paragraph H of the Recitals hereto. The STF Shares are free and clear of all Liens. Except as set forth in paragraph H of the Recitals hereto, there are no shares of capital stock or other equity securities of STF authorized, issued or outstanding. No shares of common stock or other capital shares or equity securities are held in STF’s treasury.

(b)   All of the outstanding STF Shares are duly authorized, validly issued, fully paid and non-assessable and were not issued in violation of any: (i) preemptive or other rights of any Person to acquire securities of STF, or (ii) applicable United States securities laws. Except as set forth in the STF Public Filings, there are no outstanding subscriptions, options, convertible securities, rights (preemptive or otherwise), warrants, calls or agreements relating to any of the STF Shares or other shares of capital stock or other securities of STF. The Exchange Shares and the STF Conversion Shares to be issued pursuant to this Agreement and the Certificate of Designations will be duly authorized, validly issued, fully paid and non-assessable and will not be subject to preemptive rights created by statute, STF’s organizational documents or any agreement to which STF is a party or by which it is bound and will be free and clear of all Liens other than those arising from acts of the Company Stockholders.

(c)   The copies of the Certificate of Incorporation and Bylaws of STF provided to the Company Stockholders are true, accurate, and complete and reflect all amendments made through the Signing Date. STF’s stock and minute books made available to the Company Stockholders for review were correct and complete as of the date of such review, no further entries have been made through the date of this Agreement, and such minute books contain an accurate record of all shareholder and corporate actions of the shareholders and directors (and any committees thereof) of STF taken by written consent or at a meeting since inception. All corporate actions taken by STF have been duly authorized or ratified. All accounts, books, ledgers and official and other records of STF fairly and accurately reflect all of STF’s transactions, Properties, assets and liabilities.

(d)   STF does not own, directly or indirectly, any outstanding voting securities of or other interests in any other Person.

(e)   Other than (i) the outstanding Common Stock and the STF Series B Preferred Stock, as set forth in paragraph H of the Recitals hereto, (ii) outstanding warrants to purchase up to 12,000,000 shares of Common Stock at exercise prices ranging from $2.20 to $3.30 per share, (iii) such other securities issued and outstanding as disclosed on STF’s Form 10-Q Quarterly Report for the fiscal quarter ended June 30, 2008 (a true and complete copy of which has been furnished to the Management Stockholders), and (iv) as set forth on Schedule 5.4 hereto, (A) there are no securities outstanding which give the holder or any other Person a right to convert such security into, or otherwise receive STF Common Stock Shares; and (B) STF is not a party to any Contract under which any Person has a right to receive STF Common Stock.

5.5   No Defaults . Except as otherwise set forth in the STF Public Filings or on Schedule 5.5 hereto, STF nor any of its Subsidiaries are in violation of any provision of law or any judgment, award or decree or any indenture, agreement or other instrument to which STFand/or any of its Subsidiaries is a Party, or by which the properties or assets of STF or any of its Subsidiaries are bound or affected, or in conflict with, or breach of or default under, any such indenture, agreement or other instrument, in each case except to the extent that such violation, default or breach would not reasonably be expected to delay or otherwise significantly impair the ability of the Parties to consummate the transactions contemplated hereby.

5.6   No Defaults or Consents . Except as otherwise set forth in the STF Public Filings or on Schedule 5.6 attached hereto, neither the execution and delivery of this Agreement or the Exhibits by STF nor the carrying out of any of the transactions contemplated hereby or thereby by STF will, to the knowledge of STF:

(i)   violate or conflict with any of the terms, conditions or provisions of the organizational documents of STF;

(ii)   violate any Legal Requirements applicable to STF;

(iii)   violate, conflict with, result in a breach of, constitute a default under (whether with or without notice or the lapse of time or both), or accelerate or permit the acceleration of the performance required by, or give any other Party the right to terminate, any Contract or Permit binding upon or applicable to STF;

(iv)   result in the creation of any Lien on any Properties of STF; or

(v)   require either of STF to obtain or make any waiver, consent, action, approval or authorization of, or registration, declaration, notice or filing with, any private non-governmental third Party or any Governmental Authority.

5.7   No Proceedings . Except as set forth in STF’s Public Filings, no suit, action or other proceeding is pending or, to the knowledge of STF, threatened by or before any Governmental Authority (i) that would be material to the business of STF, or (ii) seeking to restrain STF or prohibit their entry into this Agreement or prohibit the Closing, or seeking damages against STF or its Properties as a result of the consummation of this Agreement.

5.8   Financial Statements; Liabilities; Accounts Receivable; Inventories .

(a)   Prior to the Signing Date, pursuant to the STF Public Filings, the Company Stockholders have been furnished with the balance sheets and statements of operations of STF as at December 31, 2006 and December 31, 2007 and for the respective fiscal year then ended (the “ STF Audited Financial Statements ”) and balance sheets and statements of operations of STF as at June 30, 2008, and for the six month period then ended (the “ STF Unaudited Financial Statements ” and together with the STF Audited Financial Statements,” the “ STF Financial Statements ”); all of which are set forth in the STF Public Filings. The STF Financial Statements fairly represent in all material respects the financial position of the respective entity as at such dates and the results of its operations for the periods then ended. The STF Financial Statements were prepared in all material respects, in accordance with United States generally accepted accounting principles (“ GAAP ”) applied on a consistent basis throughout the periods indicated (except as may be indicated in the notes thereto), each presented, or will present, fairly the consolidated financial position, results of operations and cash flows of STF and the consolidated subsidiaries of STF as of the respective dates thereof and for the respective periods indicated therein (subject, in the case of unaudited statements, to normal year-end adjustments which are not material in amount or kind) and each complied, or will comply, as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto. Except to the extent set forth in the STF Public Filings, no report of auditors in such STF Public Filings has been withdrawn or modified. 

(b)   Since January 1, 2005, STF has duly and timely filed with or furnished to the U.S. Securities and Exchange Commission (the “ SEC ”) all STF Public Filings. Except as disclosed therein, each of the STF Public Filings, at the time of its filing or furnishing and, to the extent applicable, its effective date or, in the case of a proxy or information statement, its mailing date, complied in all material respects, and each STF Public Filing to be filed or furnished after the date hereof, shall comply in all material respects with the requirements of the 33 Act, the 34 Act and the Sarbanes-Oxley Act of 2002 and the rules and regulations of the SEC promulgated thereunder and other federal, state and local laws, rules and regulations applicable to such documents, and did not, at the time filed or furnished, and, to the extent applicable, its effective date or, in the case of a proxy or information statement, its mailing date, and will not, if filed or furnished subsequent to the date hereof, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. As of the date hereof, there are no outstanding or unresolved comments in the comment letters received from the staff of the SEC with respect to the STF Public Filings. None of STF’s subsidiaries is required to file periodic reports with the SEC pursuant to the 34 Act.

(c)   STF and its subsidiaries have implemented and maintain a system of internal accounting controls sufficient to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP. STF (i) has implemented and maintains disclosure controls and procedures (as defined in Rule 13a-15(e) of the 34 Act) to ensure that material information relating to STF, including its consolidated subsidiaries, is made known to the Chief Executive Officer and the Chief Financial Officer of STF by others within those entities, and (ii) has disclosed, based on its most recent evaluation prior to the date of this Agreement, to STF’s outside auditors and the audit committee of STF’s Board of Directors (A) any significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting (as defined in Rule 13a-15(f) of the 34 Act) that would be reasonably likely to materially and adversely affect STF’s ability to record, process, summarize and report financial information and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in STF’s internal controls over financial reporting. A true, correct and complete summary of any such disclosures made by management to STF’s auditors and audit committee have been made available to the Company Stockholders.

(d)   Except for (i) trade payables and accrued expenses incurred in the ordinary course of business, none of which are material, (ii) executory contract obligations under Contracts listed on Schedule 5.12 , and (iii) the liabilities set forth in the STF Public Filings or on Schedule 5.8 , STF does not have any liabilities or obligations (whether accrued, absolute, contingent, known or otherwise, and whether or not of a nature required to be reflected or reserved against in a balance sheet in accordance with GAAP).

(e)   Except as otherwise set forth in the STF Public Filings or on Schedule 5.8 , the accounts receivable reflected on the September 30, 2008 balance sheet included in the STF Financial Statements referenced in Section 5.8(b) and all of STF’s accounts receivable arising since June 30, 2008 (the “ Balance Sheet Date ”) arose from bona fide transactions in the ordinary course of business, and the goods and services involved have been sold, delivered and performed to the account obligors, and no further filings (with governmental agencies, insurers or others) are required to be made, no further goods are required to be provided and no further services are required to be rendered in order to complete the sales and fully render the services and to entitle STF to collect the accounts receivable in full. Except as set forth in the STF Public Filings or on Schedule 5.8 , no such account has been assigned or pledged to any other Person, and no defense or set-off to any such account has been asserted by the account obligor or exists.

(f)   Except as otherwise set forth in the STF Public Filings or on Schedule 5.8 , the Inventory of STF as of the Signing Date consists and as of the Closing Date consists of items of a quality, condition and quantity consistent with normal seasonally-adjusted Inventory levels of STF are and shall be usable and saleable in the ordinary and usual course of business for the purposes for which intended. Except as otherwise set forth in the STF Public Filings or on Schedule 5.8 , STF’s Inventory is valued on STF’s books of account in accordance with GAAP (on an average cost basis) at the lower of cost or market, and the value of obsolete materials, materials below standard quality and slow-moving materials have been written down in accordance with GAAP.

(g)   Except as provided under the provisions of the agreements described in the STF Public Filings or on Schedule 5.8 , STF has and will have as of the Closing Date legal and beneficial ownership of its Properties, free and clear of any and all Liens and such Properties are sufficient for STF to conduct its business.

5.9   Absence of Certain Changes .

(a)   Except as otherwise set forth in the STF Public Filings or on Schedule 5.9(a) attached hereto, since the Balance Sheet Date, to the knowledge of STF, there has not been:

(i)   any event, circumstance or change that had or might have a material adverse effect on the business, operations, prospects, Properties, financial condition or working capital of STF;

(ii)   any damage, destruction or loss (whether or not covered by insurance) that had or might have a material adverse effect on the business, operations, prospects, Properties or financial condition of STF; or

(iii)   any material adverse change in STF’s sales patterns, pricing policies, accounts receivable or accounts payable.

(b)   Except as otherwise set forth in Schedule 5.9(b) attached hereto, since the Balance Sheet Date, STF has not done any of the following:

(i)   merged into or with or consolidated with, any other Person or acquired the business or assets of any Person;

(ii)   purchased any securities of any Person;

(iii)   created, incurred, assumed, guaranteed or otherwise become liable or obligated with respect to any indebtedness, or made any loan or advance to, or any investment in, any Person, except in each case in the ordinary course of business;

(iv)   made any change in any existing election, or made any new election, with respect to any tax law in any jurisdiction which election could have an effect on the tax treatment of STF or STF’s business operations;

(v)   entered into, amended or terminated any material agreement;

(vi)   sold, transferred, leased, mortgaged, encumbered or otherwise disposed of, or agreed to sell, transfer, lease, mortgage, encumber or otherwise dispose of, any Properties except (i) in the ordinary course of business, or (ii) pursuant to any agreement specified in the STF Public Filings or on Schedule 5.9(b)(vi) ;

(vii)   settled any claim or litigation, or filed any motions, orders, briefs or settlement agreements in any proceeding before any Governmental Authority or any arbitrator;

(viii)   incurred or approved, or entered into any agreement or commitment to make, any expenditures in excess of $5,000 (other than those arising in the ordinary course of business or those required pursuant to any agreement specified in the STF Public Filings or on Schedule 5.9(b)(viii) ;

(ix)   maintained its books of account other than in the usual, regular and ordinary manner in accordance with GAAP and on a basis consistent with prior periods or made any change in any of its accounting methods or practices that would be required to be disclosed under GAAP;

(x)   adopted any Benefit Program, or granted any increase in the compensation payable or to become payable to directors, officers or employees (including, without limitation, any such increase pursuant to any bonus, profit-sharing or other plan or commitment), other than merit increases to non-officer employees in the ordinary course of business and consistent with past practice;

(xi)   suffered any extraordinary losses or waived any rights of material value;

(xii)   made any payment to any Affiliate or forgiven any indebtedness due or owing from any Affiliate to STF;

(xiii)   (A) liquidated Inventory or accepted product returns other than in the ordinary course, (B) accelerated receivables, (C) delayed payables, or (D) changed in any material respect STF’s practices in connection with the payment of payables and/or the collection of receivables;

(xiv)   engaged in any one or more activities or transactions with an Affiliate or outside the ordinary course of business;

(xv)   declared, set aside or paid any dividends, or made any distributions or other payments in respect of its equity securities, or repurchased, redeemed or otherwise acquired any such securities;

(xvi)   amended its charter or bylaws;

(xvii)   issued any capital stock or other securities, or granted, or entered into any agreement to grant, any options, convertible rights, other rights, warrants, calls or agreements relating to its capital stock; or

(xviii)   committed to do any of the foregoing.

5.10   Insurance . The insurance policies taken out by STF are sufficient for compliance by STF with all applicable Legal Requirements and all material Contracts. None of the insurance carriers has indicated to STF an intention to cancel any such policy or to materially increase any insurance premiums (including, without limitation, workers’ compensation premiums), or that any insurance required to be listed on Schedule 5.10 will not be available in the future on substantially the same terms as currently in effect. STF has no claim pending or anticipated against any of its insurance carriers under any of such policies and, to the knowledge of STF, there has been no actual or alleged occurrence of any kind which could reasonably be expected to give rise to any such claim. During the prior three years, all notices required to have been given by STF to any insurance STF have been timely and duly given, and no insurance STF has asserted that any claim is not covered by the applicable policy relating to such claim.

5.11   Compliance with Laws . Except as otherwise set forth in the STF Public Filings or on Schedule 5.11 , to the knowledge of STF, it is and has been in compliance in all respects with any and all Legal Requirements applicable to STF, other than failures to so comply that would not have a Material Adverse Effect. Except as otherwise set forth in the STF Public Filings or on Schedule 5.11 , STF (x) has not received or entered into any citations, complaints, consent orders, compliance schedules, or other similar enforcement orders or received any written notice from any Governmental Authority or any other written notice that would indicate that there is not currently compliance with all such Legal Requirements, except for failures to so comply that would not have a Material Adverse Effect, and (y) is not in default under, and no condition exists (whether covered by insurance or not) that with or without notice or lapse of time or both would constitute a default under, or breach or violation of, any Legal Requirement or Permit applicable to STF, which default would have a Material Adverse Effect. Without limiting the generality of the foregoing, STF has not received notice of and there is no basis for, any claim, action, suit, investigation or proceeding that might result in a finding that STF is not or has not been in compliance with Legal Requirements relating to (a) the development, testing, manufacture, packaging, distribution and marketing of products, (b) employment, safety and health, (c) environmental protection, building, zoning and land use and/or (d) the Foreign Corrupt Practices Act and the rules and regulations promulgated thereunder.

5.12   Litigation . Except as otherwise set forth in the STF Public Filings, there are no claims, actions, suits, investigations or proceedings against STF pending or, to the knowledge of STF, threatened in any court or before or by any Governmental Authority, or before any arbitrator, that might have an adverse effect (whether covered by insurance or not) on the business, operations, prospects, Properties or financial condition of STF and/or AEP and there is no basis for any such claim, action, suit, investigation or proceeding. Schedule 5.12 or such STF Public Filings also includes a true and correct listing of all material actions, suits, investigations, claims or proceedings that were pending, settled or adjudicated during the past three financial years and up to the date of Closing.

5.13   Real Property .

(a)   The STF Public Filings sets forth a list of all real property or any interest therein (including without limitation any option or other right or obligation to purchase any real property or any interest therein) currently owned, or ever owned, by STF, in each case setting forth the street address and legal description of each property covered thereby (the “ Owned Premises ”).

(b)   The STF Public Filings sets forth a list of all leases, licenses or similar agreements relating to STF’s use or occupancy of real estate owned by a third Party (“ Leases ”). The Leases and all guaranties with respect thereto, are in full force and effect and have not been amended in writing or otherwise, and no STF is not, and to its knowledge the other Party is not in default or breach under any such Lease. No event has occurred which, with the passage of time or the giving of notice or both, would cause a material breach of or defaul