Exhibit 10.1

 

 

ASSET PURCHASE AGREEMENT

DATED AS OF OCTOBER 30, 2008

BY AND AMONG

MSC PRE FINISH METALS (MV) INC.,

MATERIAL SCIENCES CORPORATION,

BRIGHTSMITH, LLC,

THEODORUS A. BUS

AND

JAMES P. BUS

 

 

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TABLE OF CONTENTS

 

         

Page

ARTICLE 1 PURCHASE AND SALE OF ASSETS

   1

Section 1.1.

  

Purchased Assets

   1

Section 1.2.

  

Inventory and Supplies

   2

Section 1.3.

  

Excluded Assets

   3

Section 1.4.

  

Assumed Liabilities

   4

Section 1.5.

  

Excluded Liabilities

   4

Section 1.6.

  

Liens and Encumbrances

   4

ARTICLE 2 CONSIDERATION AND MANNER OF PAYMENT

   4

Section 2.1.

  

Purchase Price

   4

Section 2.2.

  

Payment of Purchase Price

   4

Section 2.3.

  

Section 1031 Treatment and Purchase Price Allocation

   4

Section 2.4.

  

Risk of Loss

   5

ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER

   6

Section 3.1.

  

Organization; Good Standing

   6

Section 3.2.

  

Authorization

   6

Section 3.3.

  

Consents and Approvals

   6

Section 3.4.

  

No Violation

   7

Section 3.5.

  

Brokers or Finders

   7

Section 3.6.

  

Title to Purchased Assets

   7

Section 3.7.

  

No Litigation; Compliance with Laws

   7

Section 3.8.

  

Licenses and Permits

   8

Section 3.9.

  

Taxes

   8

Section 3.10.

  

Insurance

   8

Section 3.11.

  

Labor and Employment Matters

   8

Section 3.12.

  

Disclaimer of Other Representations and Warranties

   8

ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER

   9

Section 4.1.

  

Buyer’s Organization

   9

Section 4.2.

  

Authorization

   9

Section 4.3.

  

Consents and Approvals

   9

Section 4.4.

  

No Violation

   9

Section 4.5.

  

No Brokers or Finders

   10

Section 4.6.

  

Financing

   10

ARTICLE 5 COVENANTS OF THE PARTIES

   10

Section 5.1.

  

Further Assurances

   10

Section 5.2.

  

Permits

   10

Section 5.3.

  

Conduct of Morrisville Facility Pending Closing

   10

Section 5.4.

  

Consummation of Transaction

   10

Section 5.5.

  

Public Announcements

   11

 

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Section 5.6.

  

Commonwealth of Pennsylvania Department of Revenue Bulk Sales Clearance

   11

Section 5.7.

  

Certain Employee Matters

   12

ARTICLE 6 CLOSING

   14

Section 6.1.

  

Closing

   14

Section 6.2.

  

Conditions to Buyer’s Obligation to Close

   14

Section 6.3.

  

Conditions to Seller’s Obligation to Close

   15

Section 6.4.

  

Deliveries by Seller

   15

Section 6.5.

  

Deliveries by Buyer

   16

ARTICLE 7 TERMINATION

   17

Section 7.1.

  

Events Permitting Termination

   17

Section 7.2.

  

Effect of Termination

   17

Section 7.3.

  

Treatment of Down Payment

   18

ARTICLE 8 INDEMNIFICATION

   18

Section 8.1.

  

Survival

   18

Section 8.2.

  

Indemnification

   18

Section 8.3.

  

Procedures for Claims

   20

Section 8.4.

  

Other Provisions.

   22

Section 8.5.

  

Environmental Matters.

   22

ARTICLE 9 MISCELLANEOUS

   24

Section 9.1.

  

Notices

   24

Section 9.2.

  

General Definitions

   25

Section 9.3.

  

Entire Agreement; Amendment; Confidentiality Agreement

   28

Section 9.4.

  

Counterparts; Deliveries

   28

Section 9.5.

  

Third Parties

   28

Section 9.6.

  

Expenses

   28

Section 9.7.

  

Waiver

   29

Section 9.8.

  

Governing Law

   29

Section 9.9.

  

Assignments

   29

Section 9.10.

  

Headings

   29

Section 9.11.

  

Jurisdiction of Courts

   29

Section 9.12.

  

Waiver of Jury Trial

   29

Section 9.13.

  

Construction

   30

Section 9.14.

  

Knowledge

   30

Section 9.15.

  

Interpretive Matters

   30

Section 9.16.

  

Counterparts

   30

 

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INDEX OF DEFINED TERMS

 

Term

  

Section

401(k) Plan

   5.7(e)

Accountants

   1.2(c)

Act of Acceleration

   8.5(b)

Affiliate

   9.2

Affiliated Group

   9.2

Agreed Tax Treatment

   2.3

Agreement

   Preamble

Assumed PTO Liability

   1.4

Base Purchase Price

   2.1

Bulk Sales Statutes

   5.6

Buyer

   Preamble

Buyer Indemnified Parties

   8.2(a)

Buyer Principals

   Preamble

Cap

   8.2.(b)

CERCLA

   9.2

Clearance Certificate

   5.6

Closing

   6.1

Closing Cash Amount

   2.2

Closing Date

   6.1

Closing Date Physical Inventory

   1.2(a)

Code

   9.2

Confidentiality Agreement

   9.3

Current Employees

   3.11

Damages

   8.2(a)

Deductible

   8.2(b)

Down Payment

   2.2

Effective Time

   6.1

Environment

   9.2

Environmental Actions

   8.5(b)

Environmental Laws

   9.2

Environmental Matters

   3.12

Equipment

   1.1(a)

Escrow Agent

   2.2

Escrow Agreement

   2.2

Excluded Assets

   1.3

Expenses

   9.6

GAAP

   9.2

Governmental Authority

   3.3

Hazardous Materials

   9.2

Indemnification Payment

   8.4(d)

Indemnified Party

   8.1

 

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Indemnifying Party

   8.1

Intellectual Property

   9.2

IRS

   9.2

Laws

   3.4(c)

Liens

   1.6

Loan Documents

   9.2

Major Damage

   2.4

Morrisville Facility

   Recitals

MSC

   Preamble

Occurrence Date

   2.4(b)

Other Claim

   8.3(c)

Other Claim Notice

   8.3(c)

PA DOR

   5.6

Patents

   9.2

Permits

   9.2

Permitted Liens

   9.2

Person

   9.2

Protest Notice

   1.2(b)

Purchase Price

   9.2

Purchased Assets

   1.1

Purchased Inventory and Supplies

   1.2(a)

Purchased Inventory Price

   1.2(b)

Purchased Inventory Price Notice

   1.2(b)

RCRA

   9.2

Real Estate Purchase Agreement

   1.3(j)

Recipient Plan

   5.7(e)

Records

   1.1(c)

Second Physical Inventory

   1.2(a)

Selected Inventory and Supplies

   1.2(a)

Seller

   Preamble

Seller Indemnified Parties

   8.2(c)

Seller Note

   2.2

Software

   9.2

Tax

   9.2

Tax Returns

   9.2

Third-Party Claim

   8.3(a)

Third-Party-Claim Notice

   8.3(a)

Title Insurer

   9.2

Trademarks

   9.2

Transaction Document

   9.2

Transactions

   9.2

Transferred Employees

   5.7(b)

Used Inventory and Supplies

   1.2(a)

Valid Claim Notice

   8.1

Valid Other Claim Notice

   8.3(c)

Valid Third-Party Claim Notice

   8.3(a)

WARN

   5.7(g)

 

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Exhibits

Exhibit A – Seller Note

Exhibit B – Open-End Mortgage, Security Agreement and Fixture Filing

Exhibit C – Guaranty

Exhibit D – Security Agreement

Schedules

Schedule 3.3 – Required Consents and Approvals

Schedule 3.4 – Violations

Schedule 3.7 – Litigation; Compliance with Laws

Schedule 3.8 – Licenses and Permits

Schedule 3.11(a) – Labor and Employment Matters

Schedule 3.11(b) – Terminations

 

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ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (this “Agreement”), dated as of October 30, 2008,
is by and among MSC Pre Finish Metals (MV) Inc., a Delaware corporation
(“Seller”); Material Sciences Corporation, a Delaware corporation (“MSC”);
Brightsmith, LLC, a Delaware limited liability company (the “Buyer”); Theodorus
A. Bus and James P. Bus (together, the “Buyer Principals”).

RECITALS

A. Seller owns and operates a coil coating facility located in Morrisville,
Pennsylvania (the “Morrisville Facility”).

B. Seller desires to sell to Buyer, and Buyer desires to purchase from Seller,
all plant and equipment and selected inventory and supplies at the Morrisville
Facility, other than the Excluded Assets, on the terms and conditions set forth
herein.

In consideration of the mutual promises and agreements contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereby agree as follows:

ARTICLE 1

PURCHASE AND SALE OF ASSETS

Section 1.1. Purchased Assets. On the terms and subject to the conditions set
forth in this Agreement, at the Closing, Seller agrees to sell, transfer, assign
and deliver to Buyer, and Buyer agrees to purchase and assume from Seller, all
of Seller’s right, title and interest in and to all plant and equipment of the
Morrisville Facility, other than the Excluded Assets (collectively, the
“Purchased Assets”), including:

(a) Tangible Personal Property. All rights, title and interest in the equipment
constituting the coil paint line, the slitter, material handling equipment, the
roll grinder and related office furniture and equipment, tooling, racking and
all other tangible personal property located at the Morrisville Facility
(collectively, the “Equipment”);

(b) Licenses, Permits and Approvals. All rights of Seller in and to any Permits
relating to the Morrisville Facility, to the extent assignable;

(c) Records. All operating data and records (excluding financial and customer or
product-specific data and records) necessary for the operation and maintenance
of the Equipment or for environmental reporting, all construction plans, all
blue prints and all operating manuals (collectively, the “Records”);

(d) Information Technology and Communication Hardware. All information
technology and communication hardware, including office computers and
telephones, wiring and other tangibles, but only to the extent physically
integrated into the Morrisville Facility; and

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(e) Print Rolls. All print rolls.

Section 1.2. Inventory and Supplies.

(a) Buyer may also purchase such portion of the inventory and supplies located
at the Morrisville Facility as selected by Buyer. On the Closing Date,
representatives of Buyer and Seller shall take a physical inventory (the
“Closing Date Physical Inventory”) of all of the inventory and supplies located
at the Morrisville Facility. Buyer shall keep the inventory and supplies located
at the Morrisville Facility on the Closing Date physically separate from any
inventory or supplies acquired by Buyer after the Closing Date until the date
that is 91 days after the Closing Date. On the date that is 90 days after the
Closing Date, representatives of Buyer and Seller shall again take a physical
inventory (the “Second Physical Inventory”) of all of the inventory and supplies
located at the Morrisville Facility. Upon completion of the Second Physical
Inventory, Buyer shall notify Seller in writing of the inventory and supplies
Buyer has selected for purchase, if any (the “Selected Inventory and Supplies”).
In addition, inventory and supplies that were present at the Closing Date
Physical Inventory and not present at the Second Physical Inventory (the “Used
Inventory and Supplies”) shall be deemed to have been selected by Buyer for
purchase hereunder. The Selected Inventory and Supplies and the Used Inventory
and Supplies shall collectively be referred to as the “Purchased Inventory and
Supplies.”

(b) The purchase price for the Purchased Inventory and Supplies (the “Purchased
Inventory Price”) shall be the aggregate of the lower of cost or market value
for each item, as reflected on MSC’s records as of September 1, 2008. Buyer may
test inventory samples to confirm that the value reflected on MSC’s records as
of September 1, 2008 is equal to the lower of cost or market value for such
item. Within five Business Days of the completion of the Second Physical
Inventory, Seller shall advise Buyer in writing of the Purchased Inventory Price
(the “Purchased Inventory Price Notice”). Within 10 Business Days of Seller’s
delivery of the Purchased Inventory Price Notice, Buyer may deliver written
notice (the “Protest Notice”) to Seller of any objection thereto, specifying any
contested items and the basis therefor. The failure of Buyer to deliver such
Protest Notice within the prescribed time period will constitute Buyer’s
acceptance of the Purchased Inventory Price as determined by Seller.

(c) If Buyer and Seller are unable to resolve any disagreement with respect to
the Purchased Inventory Price within 10 Business Days following Seller’s receipt
of the Protest Notice, then the items in dispute (and solely such items) will be
referred to the Grant Thornton LLP (the “Accountants”) for final determination
within 45 calendar days. Buyer and Seller shall provide to the Accountants a
copy of the Purchased Inventory Notice delivered by Seller to Buyer and a copy
of the Protest Notice provided by Buyer to Seller. Any determination by the
Accountants, with respect to any disputed item, shall not be outside the range
defined by the respective amounts in the Purchased Inventory Price Notice
proposed by Seller and Buyer’s proposed adjustments thereto, and such
determination shall be final, binding and non-appealable upon the parties. Each
of Buyer on the one hand, and Seller, on the other hand, shall bear that
percentage of the fees and expenses of the Accountants equal to the proportion
of the dollar value of the unresolved disputed issues determined in favor of the
other party, as determined by the Accountants.

 

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Section 1.3. Excluded Assets. Notwithstanding anything to the contrary herein,
Seller shall not convey, assign or transfer to Buyer the Excluded Assets, and
Buyer shall not acquire any Excluded Assets. “Excluded Assets” shall mean the
following assets of Seller:

(a) Cash. All cash and cash equivalents, including without limitation, checking
accounts and marketable securities of Seller;

(b) Company Records. All corporate records and minute books of Seller;

(c) Accounts Receivable. All accounts receivable, notes or other evidences of
indebtedness of any Person held by Seller;

(d) Proprietary Rights. All Intellectual Property of Seller and all goodwill
associated therewith, including without limitation all rights and licenses to
Seller’s enterprise resource planning (ERP) system;

(e) IBM AS400. The IBM AS400 computer located in Elk Grove Village, Illinois,
which is used to operate Seller’s enterprise resource planning (ERP) system;

(f) Customer Information. All customer information, sales representative
information, accounting records, and all other files, programs, plans, data and
related information, in whatever form, except for the Records;

(g) Books and Records. All books and records relating to the operation of the
Morrisville Facility, including all records, files, papers, sales and purchase
correspondence, accounting records, financial records, and the employment
records of any employees of Seller, except for the Records;

(h) Employee Benefit Plans. All assets of or relating to any employee benefit
plans;

(i) Excluded Inventory and Supplies. Inventory and supplies other than the
Purchased Inventory and Supplies; and

(j) Real Estate. The real property on which the Morrisville Facility is located,
which is being transferred pursuant to a Real Estate Purchase Agreement dated as
of the date hereof among Seller, MSC, K. Matkem of Morrisville, LP and the Buyer
Principals (the “Real Estate Purchase Agreement”).

 

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Section 1.4. Assumed Liabilities. Buyer shall at the Closing assume, agree to
pay, perform and discharge all liabilities and obligations for accrued but
unused vacation, personal or sick time to which any Transferred Employee is
entitled pursuant to the vacation, personal or sick policies applicable to such
Transferred Employee immediately prior to the Closing Date (the “Assumed PTO
Liability”).

Section 1.5. Excluded Liabilities. Except for the Assumed PTO Liability and as
provided in Section 8.5, Buyer will not pursuant to this Agreement assume, agree
to pay, perform or discharge, or in any way be responsible for, any debts
(including interest and/or penalties thereon), liabilities or obligations of
Seller of any kind or nature whatsoever.

Section 1.6. Liens and Encumbrances. At the Closing, Seller shall sell,
transfer, assign and deliver to Buyer the Purchased Assets free and clear of all
liens, mortgages, charges, security interests, pledges and other encumbrances or
adverse claims or interests of any nature (“Liens”) other than Permitted Liens.

ARTICLE 2

CONSIDERATION AND MANNER OF PAYMENT

Section 2.1. Purchase Price. The aggregate cash consideration for the Purchased
Assets shall be (a) $4,500,000 (the “Base Purchase Price”), plus (b) the
Purchased Inventory Price, if any, minus (c) the amount of the Assumed PTO
Liability. The Purchase Price shall be paid as set forth in this Article 2.

Section 2.2. Payment of Purchase Price. Upon signing this Agreement, Buyer shall
deliver to Wells Fargo Bank, National Association (the “Escrow Agent”), by wire
transfer of immediately available funds, an amount equal to $400,000 (the “Down
Payment”), to be held pursuant to the terms of an escrow agreement (the “Escrow
Agreement”) among Buyer, Seller and the Escrow Agent, dated as of the date
hereof. For avoidance of doubt, the Down Payment is in addition to the Down
Payment to be paid pursuant to the Real Estate Purchase Agreement, but the
Escrow Agreement shall be the same Escrow Agreement referred to in the Real
Estate Purchase Agreement. Subject to Section 7.3 (Treatment of Down Payment) if
this Agreement is terminated, at the Closing, (a) the Escrow Agent shall pay to
Seller the amount (the “Closing Cash Amount”) equal to the difference between
$5,000,000 and the purchase price paid to Seller by the Escrow Agent pursuant to
the Real Estate Purchase Agreement, and (b) Buyer shall deliver to Seller a
promissory note (the “Seller Note”) in the form attached hereto as Exhibit A in
the original principal amount equal to the difference between the Purchase Price
and the Closing Cash Amount.

Section 2.3. Section 1031 Treatment and Purchase Price Allocation. Buyer
recognizes and understands that this transaction may be part of a contemplated
“like kind” exchange for Seller, at Seller’s sole cost and expense, under
Section 1031 of the Code (the “Agreed Tax Treatment”). As such, Buyer agrees to
cooperate with Seller in effectuating the Agreed Tax Treatment, which
cooperation may include the execution of documents, and the taking of other
reasonable action, as is reasonably necessary, in the opinion of Seller, to
accomplish the Agreed Tax Treatment; provided, however that Buyer shall not be
required to assume any additional third-party expense or liability in connection
with, or as a part of its cooperation with, the Agreed Tax Treatment, nor shall
Buyer be required to extend the Closing for purposes of accommodating the Agreed
Tax Treatment.

 

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Neither party shall take any position inconsistent with the Agreed Tax
Treatment, and the parties shall file all Tax returns and reports (including IRS
Form 8824 if required) with respect to the transaction contemplated hereby, and
each party shall promptly give to the other written notice of any disallowance
of or challenge to such reporting by any taxing governmental authority.

Subject to the Agreed Tax Treatment, Buyer and Seller and each of their
respective Affiliates shall take all actions and properly and timely file all
Tax Returns (including, but not limited to IRS Form 8594 (Asset Acquisition
Statement)) consistent with the allocation as finally determined. For this
purpose, the Base Purchase Price and the Purchased Inventory Price (and any
other item of consideration for purposes of Section 1060 of the Internal Revenue
Code of 1986, as amended, including any adjustment thereto) shall be allocated
among the Classes (as used and defined in IRS Form 8594, the instructions
thereto, and Treasury Regulation Section 1.338-6) of the Purchased Assets as
follows:

 

Class I

  

$0;

Class II

  

$0;

Class III

  

$0;

Class IV

  

$ an amount equal to the Purchased Inventory Price;

Class V

  

$ an amount equal to the difference between the Base Purchase Price and the
Assumed PTO Liability;

Class VI

  

$0; and

Class VII

  

$0.

The allocation of the Purchase Price shall in no way limit the equitable or
legal relief to which any party thereto may be entitled in the event of any
breach of any representation, warranty or covenant contained in this Agreement.

Section 2.4. Risk of Loss. If, prior to the Closing, all or a material portion
of the Equipment is damaged by fire or other casualty, Seller shall promptly
give Buyer written notice of such damage.

(a) If such damage is not Major Damage (as hereinafter defined), then Buyer
shall have the right at Closing to receive a credit against the Base Purchase
Price in the amount of the deductible portion of Seller’s insurance (or such
lesser amount as is equal to the estimated cost of repair) plus all insurance
proceeds received by Seller as a result of such loss, and an assignment of
Seller’s rights to such insurance proceeds. This Agreement shall continue in
full force and effect with no further reduction in the Purchase Price, and
Seller shall have no further liability or obligation to repair such damage or to
replace the Equipment.

 

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(b) If such damage occurs prior to Closing and the cost to repair such damage
exceeds $3,000,000 or would materially interfere with the operation of the
Equipment (“Major Damage”), then Seller may, at its election, (i) repair such
damage and restore the Equipment to a condition that would permit the operation
of the Equipment in substantially the same manner as it operated prior to the
damage, and the Closing shall be postponed until such repairs have been
completed or (ii) terminate the Agreement in accordance with Section 7.1(e).
Seller shall provide written notice to Buyer of its election pursuant to this
Section 2.4(b) within 30 days of the date on which Seller becomes aware that
Major Damage has occurred (the “Occurrence Date”). If Seller elects to repair
such damage, but the Equipment has not been (or the Buyer and Seller agree that
it cannot be) restored on or before the date that is six months after the
Occurrence Date to a condition that would permit the operation of the Equipment
in substantially the same manner as it operated prior to the damage, the Buyer
may, at its election, terminate this Agreement in accordance with
Section 7.1(f).

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF SELLER

Seller hereby represents and warrants to Buyer that:

Section 3.1. Organization; Good Standing. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite power and authority to own, lease and operate its
assets, properties and business and to carry on its business as now being
conducted. Seller is duly qualified or otherwise authorized as a foreign entity
to transact business in Pennsylvania and in each other jurisdiction in which the
nature of its business or the location of the Purchased Assets requires it to so
qualify.

Section 3.2. Authorization. Seller has all requisite corporate authority to
execute, deliver and perform its obligations under this Agreement and each
Transaction Document to which Seller is a party and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Transaction Documents to which Seller is a party, the
performance of its obligations hereunder and thereunder and the consummation by
it of the Transactions have been duly authorized by all requisite action in
accordance with applicable Law, and no other proceeding on the part of Seller is
necessary. This Agreement and the Transaction Documents to which Seller is a
party have been duly executed and delivered by Seller and constitute the legal,
valid and binding obligation of Seller enforceable against it in accordance with
their respective terms, except that such enforceability may be limited by
(a) bankruptcy, insolvency, reorganization, moratorium or other similar Laws
affecting or relating to creditors’ rights generally, and (b) the availability
of injunctive relief and other equitable remedies.

Section 3.3. Consents and Approvals. Except as set forth in Schedule 3.3, no
consent, approval, order or authorization of, or registration, declaration or
filing with, or notice to, any multi-national, national, state, provincial,
local, governmental, judicial, public, quasi-public, administrative or
self-regulatory authority, agency, commission, board, organization or
instrumentality (collectively,

 

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“Governmental Authority”) or other Person is required to be made or obtained in
connection with the authorization, execution, delivery and performance by Seller
of this Agreement and the Transaction Documents, or the consummation of the
Transactions.

Section 3.4. No Violation. The execution, delivery and performance by Seller of
this Agreement and the Transaction Documents to which Seller is a party and the
consummation by Seller of the Transactions do not and will not:

(a) conflict with or result in a violation of any provisions of the Certificate
of Incorporation or By-Laws of Seller;

(b) except as set forth on Schedule 3.4, result in the breach of any of the
terms or conditions of, or constitute (with or without notice or lapse of time
or both) a default under or an event which would give rise to any right of
notice, modification, acceleration, payment, cancellation or termination under
any mortgage, note, bond, indenture, contract, agreement, license or other
instrument or obligation of any kind or nature, in any case whether written or
oral, by which the Purchased Assets will be adversely affected or which would
have an adverse effect on Seller’s ability to perform its obligations under this
Agreement;

(c) violate or conflict with any law, federal, state or local, order, permit,
writ, injunction, judgment, rule, regulation, statute, principle, ordinance,
treaty, constitution, directive, code, order, decree or other decision of any
court, administrative agency, or Governmental Authority (collectively, “Laws”);
or

(d) result in the creation or imposition of any Lien upon any Purchased Asset.

Section 3.5. Brokers or Finders. Neither Seller nor any Affiliate of Seller has
retained any broker or finder, or made any statement or representation to any
Person that would entitle such Person to, or agreed to pay, any broker’s,
finder’s or similar fees or commissions in connection with the Transactions.

Section 3.6. Title to Purchased Assets. Seller is the owner of, and has good and
marketable title to all of the Purchased Assets, free and clear of any and all
Liens other than Permitted Liens. Upon Seller’s transfer of the Purchased Assets
to Buyer pursuant to this Agreement, Buyer will have good and marketable title
to the Purchased Assets free and clear of all liens and encumbrances, except for
Permitted Liens.

Section 3.7. No Litigation; Compliance with Laws.

(a) Except as set forth on Schedule 3.7, there are no judgments against Seller,
and there is no litigation or actions, suits, proceedings, or investigations,
either judicial or administrative, pending, or to Seller’s Knowledge, threatened
in writing against or relating to or materially or adversely affecting the
Purchased Assets or Seller’s ability to consummate the Transactions.

 

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(b) Except as set forth on Schedule 3.7, during the five years prior to Closing,
Seller has not received any written notice of any material violation of any
Laws, ordinances, orders, rules, regulations, requirements, codes, covenants or
restrictions, including without limitation as to use, zoning, occupancy,
construction, administration, health or safety, affecting the use of the
Equipment which remains uncorrected.

Section 3.8. Licenses and Permits. Seller and/or one of its Affiliates holds all
Permits for the Morrisville Facility, all of which are identified on Schedule
3.8, and complete and correct copies of which have previously been furnished to
Buyer. Except as set forth on Schedule 3.8, Seller and/or its Affiliates are in
compliance with such Permits, all of which are in full force and effect, and
Seller and its Affiliates have not received any notices (written or oral) to the
contrary.

Section 3.9. Taxes. All Taxes due and payable by Seller have been timely paid in
full. Seller has timely filed all federal, state, county, local and foreign Tax
Returns that it is required to have filed, and such returns are complete and
correct in all material respects. There are no Liens on any of the Purchased
Assets that arose in connection with any failure (or alleged failure) to pay any
Tax, other than Permitted Liens.

Section 3.10. Insurance. Seller has maintained and will maintain through the
Closing Date insurance coverage for the Purchased Assets in an amount not less
than $5,000,000.

Section 3.11. Labor and Employment Matters. Set forth on Schedule 3.11(a) is a
true and complete list of all employees of the Seller at the Morrisville
Facility as of August 14, 2008 (the “Current Employees”), setting forth which
such employees are represented by a union and which such employees are not
represented by a union. Also set forth on Schedule 3.11(a) with respect to the
Current Employees are their respective positions, rates of pay, most recent
bonus paid, payroll schedule (current or in arrears) and dates of hire. For each
Current Employee on a leave of absence, Schedule 3.11(a) indicates the nature of
the leave of absence and (to the extent known) the employee’s anticipated date
of return to active employment. With respect to the Current Employees, Seller is
in substantial compliance with all Laws respecting employment and employment
practices, terms and conditions of employment, and wages and hours, and is not
engaged in any unfair labor practice. Schedule 3.11(b) identifies each of
Seller’s employees terminated within the 90 days preceding August 14, 2008 and
the date of each such employee’s termination.

Section 3.12. Disclaimer of Other Representations and Warranties. EXCEPT AS
EXPRESSLY SET FORTH IN THIS ARTICLE 3, THE PURCHASED ASSETS ARE BEING SOLD BY
SELLER TO BUYER ON AN “AS-IS, WHERE-IS” BASIS. THE DISCLOSURE OF ANY MATTER OR
ITEM IN ANY SCHEDULE HERETO SHALL NOT BE DEEMED TO CONSTITUTE A REPRESENTATION
OR WARRANTY OR AN ACKNOWLEDGEMENT THAT ANY SUCH MATTER IS REQUIRED TO BE
DISCLOSED. SELLER MAKES NO OTHER REPRESENTATIONS OR WARRANTIES, EXPRESS OR
IMPLIED, AT LAW OR EQUITY, REGARDING THE PURCHASED ASSETS OR THE CONDITION OF
THE PURCHASED ASSETS. BUYER ACKNOWLEDGES THAT SELLER MAKES NO REPRESENTATIONS
AND WARRANTIES PERTAINING TO ENVIRONMENTAL, HEALTH OR SAFETY MATTERS OR
CONDITIONS, INCLUDING WITHOUT LIMITATION THOSE ARISING UNDER CERCLA OR ANY OTHER
ENVIRONMENTAL LAWS, OR ANY OTHER ENVIRONMENTAL MATTERS (“ENVIRONMENTAL
MATTERS”).

 

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ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer hereby represents and warrants to Seller that:

Section 4.1. Buyer’s Organization. Buyer is a limited liability company duly
organized and validly existing under the laws of the State of Delaware. Buyer
has the power and authority to own all of its properties and assets and to
conduct its business, except where the failure to have such power would not have
a material adverse effect on its ability to consummate the Transactions.

Section 4.2. Authorization. The execution and delivery of this Agreement and the
Transaction Documents to which Buyer is a party, the performance by Buyer of its
obligations hereunder and thereunder and the consummation by Buyer of the
Transactions have been duly authorized by all requisite corporate action in
accordance with applicable Law, and no other act or proceeding on the part of
Buyer is necessary. Buyer has all requisite power and authority to enter into,
execute and deliver this Agreement and the Transaction Documents to which it is
a party and to perform its obligations hereunder and thereunder. This Agreement
and the Transaction Documents to which Buyer is a party have been duly executed
and delivered by Buyer and constitute the valid and legally binding obligations
of Buyer, enforceable in accordance with their respective terms.

Section 4.3. Consents and Approvals. No consent, approval or authorization of,
or declaration, filing or registration with, or notice to, any Governmental
Authority or other Person is required to be made or obtained by Buyer in
connection with Buyer’s authorization, execution and delivery of this Agreement
or the Transaction Documents to which Buyer is a party, the performance by Buyer
of its obligations hereunder and thereunder, and the consummation by Buyer of
the Transactions.

Section 4.4. No Violation. The execution, delivery and performance by Buyer and
the Buyer Principals of this Agreement and the Transaction Documents to which
any of them is a party and the consummation of the Transactions do not and will
not:

(a) result in the breach of any of the terms or conditions of, or constitute
(with or without notice or lapse of time of both) a default under or an event
which would give rise to any right of notice, modification, acceleration,
payment, cancellation or termination under, or in any manner release any party
thereto from any obligation under, any mortgage, note, bond, indenture,
contract, agreement, license or other instrument or obligation of any kind or
nature by which Buyer, or the Buyer Principals may be bound or affected which
would have an adverse effect on Buyer’s, or the Buyer Principals’ ability to
perform its obligations under this Agreement or the Transaction Documents;

(b) violate any Laws; or

 

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(c) violate any provision of the certificate of incorporation or bylaws of
Buyer.

Section 4.5. No Brokers or Finders. Neither Buyer nor any Affiliate thereof has
retained any broker or finder, made any statement or representation to any
Person that would entitle such Person to, or agreed to pay, any broker’s,
finder’s or similar fees or commissions in connection with the Transactions.

Section 4.6. Financing. The Buyer Principals have furnished Seller with their
balance sheets and income statements as of and for the annual periods ending
December 31, 2006 and December 31, 2007, which fairly present their assets and
liabilities as of the date thereof. Since December 31, 2007, the Buyer
Principals have not suffered a material adverse effect on their financial
position.

ARTICLE 5

COVENANTS OF THE PARTIES

Section 5.1. Further Assurances. Each of the parties hereto agrees that
subsequent to the Closing, upon the reasonable request of any other party hereto
from time to time, it shall execute and deliver, or cause to be executed and
delivered, such further reasonable instruments and take such other commercially
reasonable actions as may be necessary to carry out the Transactions or to vest,
perfect or confirm ownership of the Purchased Assets in Buyer.

Section 5.2. Permits. Promptly following the date hereof and for a period of 12
months following the Closing, Seller will use commercially reasonable efforts to
have all Permits transferred or otherwise issued to Buyer; it being understood
that, in any event, Seller and its Affiliates shall not be obligated to commence
any litigation or to offer or grant any accommodation (financial or otherwise)
to any Person or to incur any other obligation or liability therefor.

Section 5.3. Conduct of Morrisville Facility Pending Closing. Except (i) as
required by applicable Laws or (ii) with the prior written consent of Buyer
(which consent shall not be unreasonably withheld, delayed or conditioned), from
and after the date hereof and prior to the Closing or such earlier date as this
Agreement may be terminated in accordance with its terms, Seller shall not:

(a) sell, transfer, lease, license, pledge or encumber any of the Purchased
Assets, except in the ordinary course of business;

(b) enter into an agreement to do any of the foregoing, or to authorize,
recommend or announce an intention to do any of the foregoing; or

(c) intentionally take any other action or omit to take any other action that
would cause the representations contained in Article 3 to be untrue, as of the
Closing, with respect to the period from the date of this Agreement through the
Closing Date.

Section 5.4. Consummation of Transaction. Upon the terms and subject to the
conditions set forth in this Agreement, each of the parties shall use its
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, and to assist

 

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and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, as promptly as practicable, the
Transactions in accordance with the terms of this Agreement, including (i) the
obtaining of all necessary approvals under any applicable Laws required in
connection with this Agreement and the Transactions, (ii) the obtaining of all
necessary actions or nonactions, waivers, consents, approvals and authorizations
from Governmental Authorities and the making of all necessary registrations and
filings (including filings with Governmental Authorities) and the taking of all
commercially reasonable steps as may be necessary to obtain an approval or
waiver from, or to avoid an action or proceeding by, any Governmental
Authorities, (iii) the obtaining of all necessary waivers, consents, approvals
and authorizations from third parties and (iv) the execution and delivery of any
additional instruments necessary to consummate the Transactions in accordance
with the terms of this Agreement and fully to carry out the purposes of this
Agreement; provided, however, that reasonable best efforts of Seller shall not
require Seller to expend any funds to obtain such waivers, consents, approvals,
authorizations or the like from third parties, other than immaterial amounts for
legal fees associated with obtaining the same. Without limiting the foregoing,
at the Closing, Buyer shall sign all the Loan Documents and cause all of the
parties thereto (other than Seller) (a) to sign all the Loan Documents, (b) to
deliver the original stock, partnership interest and membership interest
certificates and (c) to obtain all third-party consents necessary to effect the
transactions contemplated by the Loan Documents, including without limitation
the Pledge Agreement included therein.

Section 5.5. Public Announcements. Prior to or at the Closing, any announcement
related to the Transactions shall be approved and agreed upon by Buyer and
Seller, but neither Buyer nor Seller shall unreasonably withhold, delay or
condition approval thereof. Thereafter, Buyer, on the one hand, and Seller, on
the other hand, shall, to the extent feasible, consult with each other before
issuing, and provide each other reasonable opportunity to review and comment
upon, any press release or other public statements with respect to the
Transactions and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by applicable
Law. Buyer acknowledges that Seller must make press releases and filings as
required by Law and that Seller must inform its customers of the Transactions in
order to facilitate an orderly transition of the business, and Buyer will
cooperate with Seller with respect to these obligations.

Section 5.6. Commonwealth of Pennsylvania Department of Revenue Bulk Sales
Clearance. As promptly as is practical following the Closing Date, Seller shall
apply to the Pennsylvania Department of Revenue (“PA DOR”) upon PA DOR Form
REV-181 (or such successor form as is then prescribed by PA DOR) to obtain, with
respect to the sale of the Purchased Assets from Seller to Buyer pursuant to
this Agreement, a Tax Clearance Certificate (the “Clearance Certificate”)
pursuant to Section 1403 of the Pennsylvania Fiscal Code, 72 P.S. Sec. 1403 and
Section 321.1 of the Pennsylvania Tax Reform Code, 72 P.S. Sec. 7321.1
(collectively, the “Bulk Sales Statutes”). Seller shall thereafter diligently
prosecute the application for the Clearance Certificate to successful conclusion
and the issuance of the Clearance Certificate (including the payment of all
Taxes required to obtain the issuance of the Clearance Certificate) and shall
deliver a copy of the Clearance Certificate to Buyer within 10 business days of
Seller’s receipt.

 

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Section 5.7. Certain Employee Matters.

(a) Termination of Employment and Hiring. Simultaneously with the Effective
Time, Seller will cease to employ the Current Employees. From the date hereof
until the Closing Date, Seller will provide Buyer with reasonable access to the
Current Employees for the purpose of determining which such employees Buyer
desires to offer employment. On or prior to the Closing Date, Buyer shall make
offers of employment to no less than 20 of the Current Employees on terms and
conditions that are substantially comparable to the terms and conditions
applicable to such Current Employees immediately prior to the Closing Date.

(b) Transferred Employees and Benefit Plans. Current Employees of Seller who
accept employment with Buyer or one of its Affiliates shall be referred to
herein as the “Transferred Employees.” Buyer shall, or shall cause one of its
Affiliates to, take the following actions with respect to the Transferred
Employees under any employee plans for which such employee may become eligible
after the Closing: (A) waive any limitations regarding pre-existing conditions
and eligibility waiting periods under any welfare or other employee benefit plan
maintained by Buyer or any of its Affiliates on and after the Closing, to the
extent such pre-existing condition or waiting period did not apply to such
employee under a comparable plan of Seller or any of its Affiliates immediately
prior to the Closing and (B) for all purposes (other than for purposes of
benefit accruals under any pension or profit sharing plan intended to qualify
under Code Section 401(a)) under all employee benefit plans applicable to the
Transferred Employees, treat all service by the Transferred Employees with
Seller or any of its Affiliates before the Closing as service with Buyer and its
Affiliates.

(c) Seller’s Responsibilities. Seller shall retain responsibility for (i) any
and all liability and obligations with respect to Current Employees who do not
accept Buyer’s offer of employment on the terms set forth herein and (ii) any
and all former employees of Seller, and Buyer shall not assume or have
responsibility with respect to such employees for any period except as
specifically provided in this Agreement; provided, however, that Current
Employees who are hired by Buyer or any of its Affiliates within six months
after the Closing shall be treated for purposes of this Agreement as Transferred
Employees, but that Buyer shall have no obligation with respect to any salary,
wages, benefits, claims, liabilities or other matters that may arise or accrue
with respect to such Current Employees prior to their first day of active
service with Buyer or one of its Affiliates and provided, further, that Buyer
shall be liable for the Assumed PTO Liability to the extent that the Purchase
Price is reduced thereby and Buyer shall be liable for any Damages caused by its
breach of its covenants in this Section 5.7 in accordance with Article 8.

(d) Accrued Paid Time Off. Seller shall pay, in accordance with applicable law,
earned, but unused vacation pay, sick leave or other paid time off as of the
close of business on the Closing Date to any Current Employees who do not become
Transferred Employees; provided, however, that Buyer shall be liable for the
Assumed PTO Liability to the extent that the Purchase Price is reduced thereby.

 

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(e) 401(k) Plan. Buyer shall cause the trustee of the trust for a plan
maintained by Buyer or its Affiliate which is qualified under Sections 401(a)
and 401(k) of the Code (the “Recipient Plan”) to accept on behalf of such plan
rollover contributions from any Transferred Employee or, at the request of a
Transferred Employee, a direct rollover from the trustee of the Material
Sciences Corporation Savings and Investment Plan (the “401(k) Plan”) of an
amount representing a Transferred Employee’s interest under the 401(k) Plan
(including for this purposes, the in-kind rollover of any loan to such
Transferred Employee which is part of such Transferred Employee’s account
balance), all subject to and in accordance with the provisions of the Recipient
Plan and applicable law. Buyer agrees to notify, or to cause an Affiliate to
notify, the Transferred Employees of their right to make a rollover contribution
or a direct rollover to the Recipient Plan.

(f) COBRA. Buyer agrees to provide any required notice under COBRA and any other
applicable Law for qualifying events incurred by Transferred Employees and their
dependents after the Closing. Buyer shall indemnify and hold harmless Seller and
its Affiliates with respect to any liability (other than liabilities with
respect to Current Employees who do not accept Buyer’s offer of employment as
provided in Section 5.7(a) (and their dependents) and any former employee of the
Seller (and their dependents), all of which are retained by Seller) under COBRA
or other comparable Law arising from the actions (or inactions) of Buyer or its
Affiliates on or after the Closing Date.

(g) WARN Obligations. Buyer agrees to provide any required notice under the
Worker Adjustment and Retraining Notification Act (“WARN”) and any other
applicable Law and to otherwise comply with any such statute with respect to any
“plant closing” or “mass layoff” (as defined in WARN) or similar event affecting
employees and occurring after the Effective Time. Buyer shall indemnify and hold
harmless Seller and its Affiliates with respect to any liability (other than
liabilities retained by Seller with respect to non-Transferred Employees
pursuant to Section 5.7(c)) under WARN or other comparable Law arising from the
actions (or inactions) of Buyer or its Affiliates after the Effective Time.

(h) Successor Employer. Seller and Buyer shall take any and all actions required
under applicable Laws, or otherwise, for Buyer to be designated as successor
employer of the Transferred Employees for all 2008 payroll tax and income tax
withholding purposes. Buyer shall prepare or cause to be prepared 2008 W-2
statements for all Transferred Employees, and Seller agrees to cooperate with
Buyer to provide Buyer with all year-to-date wage history and payroll data with
respect to the Transferred Employees. Seller agrees, if requested by Buyer, to
consent to the designation of Buyer or one or more Affiliates of Buyer as
successor employer for payroll tax and income tax withholding purposes and for
purposes of unemployment insurance contribution ratings and/or worker’s
compensation premium ratings under applicable state Law.

 

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ARTICLE 6

CLOSING

Section 6.1. Closing. Subject to the terms and conditions set forth herein, the
transactions that are the subject of this Agreement shall be consummated at a
closing (the “Closing”), which shall take place through an escrow, at the
offices of the Title Insurer, 33 South Seventh Street, Allentown, PA 18105 on
the first business day after the date that is 30 days after the date hereof or
as soon thereafter as practicable (but not more than three business days)
following the satisfaction (or waiver) of the conditions to closing set forth in
Sections 6.2 and 6.3 (other than conditions with respect to actions the parties
will take at the Closing itself) or such other date as may be agreed to in
writing by the parties hereto (the “Closing Date”). The Closing shall be deemed
effective at 11:59 p.m. on the Closing Date (the “Effective Time”).

Section 6.2. Conditions to Buyer’s Obligation to Close. The obligation of Buyer
to effect the Closing shall be subject to the satisfaction at or prior to the
Closing of the following conditions, any one or more of which may be waived by
Buyer:

(a) No Injunction. There shall not be in effect any injunction, order or decree
of a court of competent jurisdiction that prohibits or delays consummation of
any material part of the Transactions, or that will require any material
divestiture by Buyer as a result of Buyer’s acquisition of the Purchased Assets.

(b) Representations and Warranties. The representations and warranties of Seller
contained in Section 3.6 and the first sentence of Section 3.8 shall be true and
correct in all material respects as of the Closing Date.

(c) Covenants. Seller shall have performed and complied in all material respects
with the agreements contained in this Agreement required to be performed and
complied with by it prior to or at the Closing (except in each case for those
agreements that are qualified as to “material,” “materiality,” “Material Adverse
Change” or similar expressions, which shall have been performed or complied with
in all respects).

(d) Litigation. No action or proceeding shall have been instituted by any
Governmental Authority and, at what would otherwise have been the Closing Date,
remain pending to restrain or prohibit any material part of the Transactions or
to seek any material divestiture or to revoke or suspend any material license,
permit, order or approval by reason of any of the Transactions; nor shall any
Governmental Authority have notified any party to this Agreement or any of their
respective Affiliates that consummation of any material part of the Transactions
would constitute a violation of the laws of any jurisdiction or that it intends
to commence an action or proceeding to restrain or prohibit any material part of
the Transactions or to require such material divestiture, revocation or
suspension; unless, in either such case, such Governmental Authority shall have
withdrawn such notice and abandoned such action or proceeding.

(e) Real Estate Purchase Agreement. The conditions to the obligation of K.
Matkem of Morrisville, LP to close the transactions contemplated by the Real
Estate Purchase Agreement shall have been met, and the Real Estate Purchase
Agreement shall not have been terminated. Closing under this Agreement is
conditioned upon simultaneous closing of, and shall simultaneously close with
the closing of, the transactions contemplated by the Real Estate Purchase
Agreement.

 

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Section 6.3. Conditions to Seller’s Obligation to Close. The obligations of
Seller to effect the Closing shall be subject to the satisfaction at or prior to
the Closing of the following conditions, any one or more of which may be waived
by Seller:

(a) No Injunction. There shall not be in effect any injunction, order or decree
of a court of competent jurisdiction that prohibits or delays consummation of
any material part of the Transactions.

(b) Covenants. Buyer shall have performed and complied in all material respects
with the agreements contained in this Agreement required to be performed and
complied with by it prior to or at the Closing (except in each case for those
agreements that are qualified as to “material,” “materiality,” “Material Adverse
Change” or similar expressions, which shall have been performed or complied with
in all respects).

(c) Litigation. No action or proceeding shall have been instituted by any
Governmental Authority and, at what would otherwise have been the Closing Date,
remain pending to restrain or prohibit any material part of the Transactions or
to seek any material divestiture or to revoke or suspend any material license,
permit, order or approval by reason of any of the Transactions; nor shall any
Governmental Authority have notified any party to this Agreement or any of their
respective Affiliates that consummation of any material part of the Transactions
would constitute a violation of the laws of any jurisdiction or that it intends
to commence an action or proceeding to restrain or prohibit any material part of
the Transactions or to require such material divestiture, revocation or
suspension; unless, in either such case, such Governmental Authority shall have
withdrawn such notice and abandoned such action or proceeding.

(d) Real Estate Purchase Agreement. The conditions to Seller’s obligation to
close the transactions contemplated by the Real Estate Purchase Agreement shall
have been met, and the Real Estate Purchase Agreement shall not have been
terminated. Closing under this Agreement is conditioned upon simultaneous
closing of, and shall simultaneously close with the closing of, the transactions
contemplated by the Real Estate Purchase Agreement.

Section 6.4. Deliveries by Seller. At the Closing, Seller shall deliver or cause
to be delivered to Buyer:

(a) bills of sale, assignments, endorsements and other documents of title and
other good and sufficient instruments of conveyance and transfer, as are
effective to vest Buyer with full, complete and marketable right, title and
interest in and to the Purchased Assets, free and clear of all Liens, in form
and substance satisfactory to Buyer;

(b) a certificate executed and delivered by the Secretary of Seller in form and
substance reasonably satisfactory to Buyer, attesting and certifying as to:
(i) the certificate of incorporation (as also certified as of a recent date by
the Secretary of the

 

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State of the State of Delaware); (ii) copies of resolutions of the board of
directors and sole stockholder of Seller authorizing the Transactions to which
Seller is a party; and (iii) incumbency and specimen signature certificates with
respect to the representatives of Seller;

(c) a certificate, executed by an authorized officer of Seller, certifying that
the conditions specified in Section 6.2(b) have been fulfilled;

(d) certificate of good standing of Seller issued not earlier than 15 days prior
to the Closing Date by the Secretaries of State of the States of Delaware and
Pennsylvania;

(e) the Records;

(f) keys to the Morrisville Facility; and

(g) such other documents and instruments as Buyer may reasonably require in
order to effectuate the transactions that are the subject of this Agreement.

All documents and instruments delivered to Buyer shall be in form and substance
reasonably satisfactory to Buyer.

Section 6.5. Deliveries by Buyer. At the Closing, Buyer shall deliver or cause
to be delivered to Seller:

(a) federal funds wire transfer(s) in accordance with Section 2.2;

(b) a certificate, executed and delivered by the sole member of Buyer in form
and substance reasonably satisfactory to Seller, attesting and certifying as to:
(i) the certificate of formation and operating agreement of Buyer adopting and
authorizing the Transactions to which Buyer is a party and (ii) incumbency and
specimen signature certificates with respect to an officer of the sole member
Buyer;

(c) a certificate of good standing of Buyer issued not earlier than 15 days
prior to the Closing Date from the Secretary of State of Pennsylvania;

(d) a certificate, executed by an authorized officer of Buyer, certifying that
the conditions specified in Section 6.3(b) have been fulfilled;

(e) the Seller Note and the Loan Documents, executed by the Buyer Principals, an
authorized officer of each of Buyer and K. Matkem of Morrisville, L.P. and each
other party thereto (other than Seller);

(f) a Pennsylvania Exemption Certificate executed by Buyer relating to the
exemption of the Purchased Inventory and Supplies from Pennsylvania sales tax;
and

(g) such other documents and instruments as Seller may reasonably require in
order to effectuate the transactions that are the subject of this Agreement.

 

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All documents and instruments delivered to Seller shall be in form and substance
reasonably satisfactory to Seller.

ARTICLE 7

TERMINATION

Section 7.1. Events Permitting Termination. This Agreement may be terminated by
written notice given to all parties hereto prior to the Closing in the manner
hereinafter provided:

(a) At any time prior to the Closing Date by agreement in writing between the
parties;

(b) By Buyer or Seller if the Closing shall not have occurred on or before the
date that is 60 days after the date hereof (or such other date as may have been
agreed upon in writing by Buyer and Seller), other than as a result of the
terminating party’s default hereunder; provided, however, that if Major Damage
has occurred, the parties’ termination rights shall be governed by Sections
2.4(b), 7.1(e) and 7.1(f), and neither Buyer nor Seller shall have a right to
terminate under this Section 7.1(b);

(c) By Buyer, provided it is not then in breach of its obligations hereunder, if
Seller fails to perform any covenant in this Agreement in any material respect
when performance thereof is due and has failed to cure such breach within 10
business days after receipt by Seller of written notice of such breach from
Buyer;

(d) By Seller, provided it is not then in breach of its obligations hereunder,
if Buyer fails to perform any covenant in this Agreement in any material respect
when performance thereof is due and has failed to cure such breach within 10
business days after receipt by Buyer of written notice of such breach from
Seller;

(e) By Seller, if Major Damage occurs after the date hereof and prior to the
Closing Date; or

(f) By Buyer, if Major Damage occurs after the date hereof and prior to the
Closing Date and the Equipment has not been (or the Buyer and Seller agree that
it cannot be) restored on or before the date that is six months after the
Occurrence Date to a condition that would permit the operation of the Equipment
in substantially the same manner as it operated prior to the damage.

Section 7.2. Effect of Termination. The rights of termination under Section 7.1
are in addition to any other rights Buyer or Seller may have under this
Agreement and the exercise of a right of termination will not be an election of
remedies. If this Agreement is terminated pursuant to Section 7.1, all further
obligations of Buyer and Seller under this Agreement will terminate, except that
Article 8, Sections 9.8, 9.11 and 9.12 shall survive the termination of this
Agreement; provided that (a) if this Agreement is terminated by Buyer because of
a breach of this Agreement by Seller or because one or more of the conditions to
Buyer’s obligations to consummate the Transactions under this Agreement is not
satisfied as a result of Seller’s failure to comply with its obligations under
this Agreement, Buyer’s right to pursue all available remedies at law
(consistent with this Agreement) shall survive such termination unimpaired; and
(b) if this Agreement is terminated by Seller because of a breach of this
Agreement by Buyer or because

 

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one or more of the conditions to the Seller’s obligations to consummate the
Transactions under this Agreement is not satisfied as a result of Buyer’s
failure to comply with its obligations under this Agreement, Seller’s right to
pursue remedies (consistent with this Agreement) shall survive such termination
unimpaired.

Section 7.3. Treatment of Down Payment. If this Agreement is terminated pursuant
to Section 7.1(a), (b), (c), (e) or (f), the Down Payment shall be promptly
returned to Buyer. If this Agreement is terminated pursuant to Section 7.1(d),
the Down Payment shall be promptly paid to Seller.

ARTICLE 8

INDEMNIFICATION

Section 8.1. Survival. The representations and warranties made in this Agreement
or in any Transaction Document shall survive the Closing until the close of
business on the date that is 18 months after the Closing Date and shall
thereupon expire, together with any right to indemnification for breach thereof,
except to the extent a Valid Third Party Claim Notice or Valid Other Claim
Notice (each a “Valid Claim Notice”) shall have been given prior to such date in
accordance with this Article 8 by the party seeking indemnification under this
Agreement (the “Indemnified Party”) to the party from whom indemnification is
being sought under this Agreement (the “Indemnifying Party”), in which case the
representation or warranty alleged in the Valid Claim Notice to have been
breached shall survive, to the extent of the claim set forth in the Valid Claim
Notice only, until such claim is resolved; provided, however, that the
representations and warranties set forth in Sections 3.1 (Organization; Good
Standing), 3.2 (Authorization), 3.3 (Consents and Approvals), 3.4 (No
Violation), 3.5 (Brokers or Finders) and 3.6 (Title to Purchased Assets) and
Article 4, together with any right to indemnification for breach thereof, shall
survive the Closing until the close of business on the 60th calendar day
following the expiration of the applicable statute of limitations. The covenants
and agreements contained herein (other than the covenant and agreement to
indemnify against breach of representations and warranties, which shall expire
as set forth in the first sentence of this Section 8.1) shall survive the
Closing until the expiration of the applicable statute of limitations.

Section 8.2. Indemnification.

(a) Subject to this Article 8 and consummation of the Closing, Seller and MSC,
jointly and severally, shall indemnify Buyer and its Affiliates and each of
their respective present and future directors, officers, agents, representatives
and employees (collectively, the “Buyer Indemnified Parties”) and hold them
harmless from and against any losses, claims, damages, liabilities, costs or
expenses (including reasonable attorneys’ fees and disbursements) (collectively,
“Damages”), that are incurred or suffered by any of them by reason of (i) the
untruth or inaccuracy of any of the representations or warranties made by Seller
in this Agreement, (ii) the failure by Seller to perform or comply with any
covenant or agreement in this Agreement, (iii) any Taxes imposed on Seller with
respect to any period (or portion of any period) ending on or before the Closing
Date and any Taxes imposed on Seller with respect to the Transactions, except as
provided in the Real Estate Purchase Agreement or Section 9.6 or (iv) any unpaid
Taxes (except as provided in Section 9.6) owed by Seller to the Commonwealth of
Pennsylvania

 

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in respect of taxable periods to and including the Closing Date, whether or not
at that time such Taxes have been settled, assessed or determined, and for which
the PA DOR holds Buyer liable under the Bulk Sales Statutes by reason of
Seller’s failure to procure and present to Buyer on or before the Closing Date,
a PA DOR Clearance Certificate.

(b) Any recovery by the Buyer Indemnified Parties for indemnification shall be
limited as follows: (i) no Buyer Indemnified Party shall be entitled to any
recovery unless a claim for indemnification is made in accordance with
Section 8.3, so as to constitute a Valid Claim Notice, and within the time
period of survival set forth in Section 8.1; (ii) no Buyer Indemnified Parties
shall be entitled to recover any amount for indemnification claims under
Section 8.2(a) unless and until the amount that the Buyer Indemnified Parties
are entitled to recover in respect of such claims exceeds, in the aggregate,
$150,000 (the “Deductible”), in which event (subject to clause (iii) below) the
entire amount that the Buyer Indemnified Parties are entitled to recover in
respect of such claims less the Deductible shall be payable; and (iii) the
maximum amount recoverable by the Buyer Indemnified Parties for indemnification
claims under Section 8.2(a) shall in the aggregate be equal to 25% of the
Purchase Price (the “Cap”). No Damages shall be included in determining whether
the Deductible has been reached unless a Valid Claim Notice seeking
indemnification for such Damages has been given by a Buyer Indemnified Party to
Seller in accordance with Section 8.3. Notwithstanding the foregoing, the
Deductible and the Cap shall not apply to claims arising out of a breach of the
representations and warranties in Section 3.9 and claims described in clauses
(iii) and (iv) of Section 8.2(a).

(c) Buyer and the Buyer Principals, jointly and severally, shall indemnify
Seller and its Affiliates and each of their respective present and future
directors, officers, agents, representatives and employees (collectively, the
“Seller Indemnified Parties”) and hold each of them harmless from and against
all Damages that are incurred or suffered by any of them by reason of (i) the
untruth or inaccuracy of any of the representations or warranties made by Buyer
in this Agreement, (ii) the failure by Buyer to perform or comply with any
covenants or agreement in this Agreement or the Transaction Documents or
(iii) the Assumed PTO Liability. Seller shall not be entitled to any recovery
unless a claim for indemnification is made in accordance with Section 8.3, so as
to constitute a Valid Claim Notice, and within the time period of survival set
forth in Section 8.1.

(d) Any recovery by the Seller Indemnified Parties for indemnification shall be
limited as follows: (i) no Seller Indemnified Party shall be entitled to any
recovery unless a claim for indemnification is made in accordance with
Section 8.3, so as to constitute a Valid Claim Notice, and within the time
period of survival set forth in Section 8.1; (ii) no Seller Indemnified Parties
shall be entitled to recover any amount for indemnification claims under
Section 8.2(c)(i), unless and until the amount that the Seller Indemnified
Parties are entitled to recover in respect of such claims exceeds, in the
aggregate, the Deductible, in which event (subject to clause (iii) below) the
entire amount that the Seller Indemnified Parties are entitled to recover in
respect of such claims less the Deductible shall be payable; and (iii) the
maximum amount recoverable by the Seller Indemnified Parties

 

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for indemnification claims under Section 8.2(c)(i), shall in the aggregate be
equal to the Cap. No Damages shall be included in determining whether the
Deductible has been reached unless a Valid Claim Notice seeking indemnification
for such Damages has been given by a Seller Indemnified Party to Buyer in
accordance with Section 8.3.

Section 8.3. Procedures for Claims.

(a) In order for an Indemnified Party to be entitled to any indemnification
provided for under this Article 8 in respect of, arising out of or involving a
claim made by any third party against the Indemnified Party (a “Third-Party
Claim”), the Indemnified Party must notify the Indemnifying Party in writing of
the Third-Party Claim (a “Third-Party-Claim Notice”) promptly following receipt
by such Indemnified Party of written notice of the Third-Party Claim, which
notification, to be a valid Third-Party Claim Notice, with the effect set forth
in Sections 8.1 and 8.2 (a “Valid Third-Party Claim Notice”), must be
accompanied by a copy of the written notice, if any, of the third party claimant
to the Indemnified Party asserting the Third-Party Claim; provided, that the
failure to provide such notice promptly (so long as a Valid Third-Party Claim
Notice is given before the expiration of the applicable period set forth in
Section 8.1) shall not affect the obligations of the Indemnifying Party
hereunder except to the extent the Indemnifying Party is prejudiced thereby. The
Indemnified Party shall deliver to the Indemnifying Party copies of all other
notices and documents (including court papers), if any, received by the
Indemnified Party relating to the Third-Party Claim.

(b) The Indemnifying Party shall have the right to defend against any such
Third-Party Claim (including to conduct any proceedings or settlement
negotiations) with counsel of its own choosing. The Indemnified Party shall have
the right to participate in the defense of any Third-Party Claim (including the
right to participate in any settlement negotiations) and to employ its own
counsel (it being understood that the Indemnifying Party shall control such
defense and settlement negotiations), at its own expense, provided, however,
that if the Indemnified Party reasonably concludes, based on advice from
counsel, that the Indemnifying Party and the Indemnified Party have adversely
conflicting interests with respect to such Third-Party Claim, the reasonable
fees and expenses of counsel to the Indemnified Party solely in connection
therewith shall be considered “Damages” for purposes of this Agreement;
provided, however, that in no event shall the Indemnifying Party be responsible
for the fees and expenses of more than one counsel for all Indemnified Parties.
Whether or not the Indemnified Party participates in the defense of any
Third-Party Claim, the Indemnified Party shall be entitled to reasonable notice
of all court appearances and settlement negotiations and, to the extent
requested by the Indemnified Party, copies of all proceedings filed with any
Governmental Authority in connection with such Third-Party Claim. Prior to the
time the Indemnified Party is notified by the Indemnifying Party as to whether
the Indemnifying Party will assume the defense of a Third-Party Claim, the
Indemnified Party shall take all actions reasonably necessary to timely preserve
the collective rights of the parties with respect to such Third-Party Claim,
including responding timely to legal process. If the Indemnifying Party shall
decline to assume the defense of a Third-Party Claim (or shall fail to notify
the Indemnified Party of its election to defend such Third-Party Claim) within
30 days after

 

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the giving by the Indemnified Party to the Indemnifying Party of a Valid
Third-Party Claim Notice with respect to the Third Party Claim, the Indemnified
Party shall defend against the Third-Party Claim and the Indemnifying Party
shall be liable to the Indemnified Party for all reasonable fees and expenses
incurred by the Indemnified Party in the defense of the Third-Party Claim,
including the reasonable fees and expenses of counsel employed by the
Indemnified Party, if and to the extent that the Indemnifying Party is
responsible to indemnify for such Third-Party Claim, and such fees and expenses
shall be considered “Damages” for purposes of this Agreement. Regardless of
which party assumes the defense of a Third-Party Claim, the parties agree to
cooperate with one another in connection therewith. Such cooperation shall
include providing records and information that are relevant to such Third-Party
Claim, and making employees and officers available on a mutually convenient
basis to provide additional information and explanation of any material provided
hereunder and to act as a witness or respond to legal process. Whether or not
the Indemnifying Party assumes the defense of a Third-Party Claim, the
Indemnified Party shall not admit any liability, consent to the entry of
judgment with respect to, or settle, compromise or discharge, such Third-Party
Claim without the Indemnifying Party’s prior written consent. If the
Indemnifying Party assumes the defense of any Third-Party Claim, the
Indemnifying Party shall have the right to consent to the entry of judgment with
respect to, or otherwise settle, compromise or discharge, such Third-Party
Claim; provided, however, that the Indemnifying Party shall not, without the
prior written consent of the Indemnified Party (which consent shall not be
unreasonably withheld, delayed or conditioned), consent to the entry of judgment
with respect to, or otherwise settle, compromise or discharge, any Third-Party
Claim if such judgment, settlement, compromise or discharge involves equitable
or other non-monetary damages or otherwise requires the Indemnified Party or any
of its Affiliates to pay any amount to any Person, including the Indemnifying
Party, or to take any action or refrain from taking any action (other than the
execution of a customary release or covenant not to sue).

(c) In order for an Indemnified Party to be entitled to any indemnification
provided for under this Article 8 in respect of a claim that does not involve a
Third-Party Claim being asserted against such Indemnified Party (an “Other
Claim”), the Indemnified Party must promptly notify the Indemnifying Party in
writing of such Other Claim (the “Other Claim Notice”), which notification, to
be a Valid Other Claim Notice, with the effect set forth in Sections 8.1 and 8.2
(a “Valid Other Claim Notice”), must certify that the Indemnified Party has in
good faith already sustained some (though not necessarily all) Damages with
respect to such claim. The failure by any Indemnified Party to notify the
Indemnifying Party promptly (so long as a Valid Other Claim Notice is given
before the expiration of the applicable period set forth in Section 8.1) shall
not relieve the Indemnifying Party from any liability that it may have to such
Indemnified Party under Section 8.2, except to the extent that the Indemnifying
Party has been prejudiced by such failure. If the Indemnifying Party does not
notify the Indemnified Party in writing within 60 days from its receipt of an
Other Claim Notice that the Indemnifying Party disputes such Other Claim, the
Other Claim specified by the Indemnified Party in the Other Claim Notice shall
be deemed a liability of the Indemnifying Party hereunder and, within 20 days of
such date shall be paid by the Indemnifying Party to the Indemnified Party. Any
final and non-appealable judgment entered or settlement agreed upon with respect
to a Other Claim shall be binding upon the Indemnifying Party and shall be paid
within 10 days of the date of the relevant final judgment or settlement
agreement.

 

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Section 8.4. Other Provisions.

(a) Exclusive Remedy. Except in case of fraud, the right to the indemnification
provided in this Article 8 shall be the sole and exclusive monetary remedy for
any inaccuracy or breach of any representation or warranty made by Seller or
Buyer in this Agreement; provided, however, nothing herein shall be construed as
limiting the rights of the Indemnified Parties with respect to seeking equitable
or injunctive relief with respect to any covenant or agreement as expressly
provided in this Agreement.

(b) Adjustment to Purchase Price. All amounts payable by one party in
indemnification of the other shall be treated as an adjustment to the Purchase
Price by Buyer, Seller and their respective Affiliates, to the extent permitted
by law.

(c) Certain Damages. In no event shall Seller be liable for loss of profits or
consequential damages incurred by Buyer in connection with an Other Claim.

(d) Subrogation. Upon making any payment to an Indemnified Party for any
indemnification claim under this Agreement, the Indemnifying Party shall be
subrogated, to the extent of such payment (an “Indemnification Payment”), to any
rights which the Indemnified Party or its Affiliate may have against any other
parties (including under any insurance policies) with respect to the subject
matter underlying such indemnification claim. The Indemnified Party and its
Affiliates shall cooperate with the Indemnifying Party in the pursuit of such
rights and shall promptly turn over to the Indemnifying Party any payments (up
to the amount of the Indemnification Payment) received in respect of such
rights.

(e) Compliance with Laws after Closing. Notwithstanding anything in this
Agreement to the contrary, Seller shall have no liability for any failure by
Buyer or any of its Affiliates to comply with applicable law after the Closing
by reason of the business being operated after the Closing in the manner
operated prior to the Closing; provided, however, that nothing in this sentence
shall affect Seller’s obligations under this Agreement with respect to the
period before the Closing.

Section 8.5. Environmental Matters.

(a) Buyer (on its own behalf and on behalf of its Affiliates and the successors
and assigns of any of the foregoing) each hereby waives any right to seek
contribution or other recovery from Seller or from any of its Affiliates that
any of them may now or in the future ever have under any Environmental Laws,
including, without limitation, 42 U.S.C. §§ 9607 and 9613(f) of

 

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CERCLA, as such laws were in the past or are currently in effect, or may in the
future be enacted or be in effect. Buyer (on its own behalf and on behalf of its
Affiliates and the successors and assigns of any of the foregoing) each hereby
further unconditionally releases Seller and its Affiliates from any and all
claims, demands and causes of action that any of them may now or in the future
ever have against Seller or any of its Affiliates for recovery under CERCLA or
under any other Environmental Laws as such laws were in the past or are
currently in effect, or may in the future be enacted or be in effect.

(b) UPON THE CLOSING, BUYER SHALL ASSUME THE RISK THAT ADVERSE ENVIRONMENTAL
MATTERS, MAY NOT HAVE BEEN REVEALED BY SELLER’S OR BUYER’S INVESTIGATIONS, AND
BUYER SHALL BE DEEMED TO HAVE WAIVED, RELINQUISHED AND RELEASED SELLER FROM AND
AGAINST ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTION (INCLUDING CAUSES OF
ACTION IN TORT), LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES (INCLUDING
ATTORNEYS’ FEES AND COURT COSTS) OF ANY AND EVERY KIND OR CHARACTER, KNOWN OR
UNKNOWN, WHICH BUYER OR ANY OTHER PERSON OR ENTITY MIGHT HAVE ASSERTED OR
ALLEGED AGAINST SELLER AT ANY TIME BY REASON OF OR ARISING OUT OF MATTERS
REGULATED UNDER OR FOR WHICH LIABILITY MAY EXIST UNDER ENVIRONMENTAL LAWS. BUYER
AGREES THAT SHOULD ANY INVESTIGATION, CLEANUP, REMEDIATION, CORRECTIVE ACTION OR
REMOVAL OF HAZARDOUS SUBSTANCES OR OTHER ENVIRONMENTAL CONDITIONS IN ANY WAY
PERTAINING TO THE PURCHASED ASSETS (INCLUDING ANY PAYMENTS, FINES OR PENALTIES
PERTAINING THERETO) (COLLECTIVELY, “ENVIRONMENTAL ACTIONS”), BE REQUIRED AFTER
THE CLOSING, SUCH ENVIRONMENTAL ACTIONS SHALL BE THE RESPONSIBILITY OF AND SHALL
BE PERFORMED AT THE SOLE COST AND EXPENSE OF BUYER. IN ADDITION AND NOT BY WAY
OF LIMITING THE FOREGOING, SELLER SHALL HAVE NO LIABILITY FOR ANY POST-CLOSING
LIABILITIES RESULTING IN WHOLE OR IN PART FROM ACTIONS UNDERTAKEN OR ALLOWED BY
BUYER, INCLUDING WITHOUT LIMITATION ENVIRONMENTAL INVESTIGATIONS OR TESTING OF
ANY SORT, THAT REASONABLY COULD BE ANTICIPATED TO ACCELERATE THE TIMING OF A
CLAIM ARISING FROM OR IN CONNECTION WITH THE PRESENCE OF HAZARDOUS MATERIALS ON,
IN, UNDER OR AROUND THE REAL PROPERTY ON WHICH THE MORRISVILLE FACILITY IS
LOCATED (“ACT OF ACCELERATION”). ACTS OF ACCELERATION SHALL INCLUDE, WITHOUT
LIMITATION, SOLICITING OR CONTACTING A GOVERNMENTAL AUTHORITY TO OBTAIN OR
REQUEST THE ISSUANCE OF AN ORDER OR DIRECTIVE REGARDING THE DISCLOSURE,
INVESTIGATION OR REMEDIATION OF HAZARDOUS MATERIALS OR ANY OTHER REMOVAL OR
REMEDIAL ACTION. NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, BUYER
ASSUMES ALL OBLIGATIONS, AND SELLER SHALL HAVE NO DUTY TO INDEMNIFY OR DEFEND
BUYER INDEMNIFIED PARTIES, FOR ANY DAMAGES RESULTING FROM OR IN CONNECTION WITH
AN ACT OF ACCELERATION OR ANY CONDITION DISCOVERED AS A RESULT

 

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THEREOF. NOTWITHSTANDING THE FOREGOING, SELLER AND NOT BUYER SHALL BE
RESPONSIBLE FOR ENVIRONMENTAL ACTIONS BROUGHT AGAINST SELLER WITH RESPECT TO
ACTIVITIES OCCURRING OR CONDITIONS EXISTING PRIOR TO CLOSING IF SUCH
ENVIRONMENTAL ACTIONS ARE NOT THE RESULT, IN WHOLE OR IN PART, OF ACTIONS
UNDERTAKEN (DIRECTLY OR INDIRECTLY) OR ALLOWED BY BUYER OR THE BUYER PRINCIPALS.

ARTICLE 9

MISCELLANEOUS

Section 9.1. Notices. All notices, reports, records or other communications that
are required or permitted to be given to the parties under this Agreement shall
be sufficient in all respects if given in writing and delivered in person, by
facsimile, by email, by overnight courier or by registered or certified mail,
postage prepaid, return receipt requested, to the receiving party at the
following address:

 

If to Seller or MSC:    Material Sciences Corporation    2200 East Pratt Blvd.
   Elk Grove Village, IL 60007    Email:    jim.froisland@matsci.com      
steve.hamilton@matsci.com    Attn:    Jim Froisland with a copy to:    Katten
Muchin Rosenman LLP    525 West Monroe Street    Chicago, Illinois 60661-3693   
Facsimile:    (312) 902-1061    Email:    matthew.brown@kattenlaw.com      
nancy.stern@kattenlaw.com    Attn:    Matthew S. Brown, Esq.       Nancy Laethem
Stern, Esq. If to Buyer    c/o ATAS International Inc. or the Buyer Principals:
   6612 Snowdrift Road    Allentown, PA 18106    Facsimile:    (610) 395-9342   
Email:    dbus@atas.com    Attn:    Theodorus A. Bus, President

 

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with a copy to:    Gross, McGinley, LaBarre & Eaton, LLP    33 South Seventh
Street, P.O. Box 4060    Allentown, PA 18105    Attn:    Michael A. Henry, Esq.
   Facsimile:    (610) 820-6006    Email:    mhenry@gmle.com

or such other address as such party may have given to the other parties by
notice pursuant to this Section 9.1. Notice shall be deemed given on (i) the
date such notice is personally delivered, (ii) three days after the mailing if
sent by certified or registered mail, (iii) one business day after the date of
delivery to the overnight courier if sent by overnight courier, or (iv) the next
succeeding business day after transmission by facsimile or email, followed by
mail delivery.

Section 9.2. General Definitions. For the purposes of this Agreement, the
following terms have the meaning set forth below:

“Affiliate” means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control with such Person,
and any officer, director or executive employee of such Person, and includes any
past or present Affiliate of any such Person. The term “control” (including,
with correlative meanings, the terms “controlling,” “controlled by” and “under
common control with”), as applied to any Person, includes the possession,
directly or indirectly, of 5% or more of the total number of votes which may be
cast by the holders of the total number of outstanding shares of stock of any
class or classes of such Person in any election of directors of such Person (or
in the case of a Person which is not a corporation, 5% or more of the ownership
interest, beneficial or otherwise) of such Person or the power otherwise to
direct or cause the direction of the management and policies of that Person,
whether through voting, by contract or otherwise.

“Affiliated Group” means an affiliated group as defined in Section 1504 of the
Code (or analogous combined, consolidated or unitary group defined under state,
local or foreign income Tax law).

“CERCLA” means the Comprehensive Environmental Response, Compensation and
Liability Act , 42 U.S.C. § 9601 et seq.

“Code” means the Internal Revenue Code of 1986, as amended.

“Environment” means soil, land surface or subsurface strata, surface waters
(including navigable waters, ocean waters, streams, ponds, drainage basins and
wetlands), groundwaters, drinking water supply, stream sediments, ambient air
(including indoor air), plant and animal life and any other environmental medium
or natural resource.

“Environmental Laws” means any Law that requires or relates to: pollution or
protection of human health and the Environment.

“GAAP” means generally accepted accounting principles set forth in the opinions
and pronouncements of the Accounting Principles Board of the American Institute
of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board or in such other statements by such other
entity as may be approved by a significant segment of the accounting profession
that are applicable to the circumstances from time to time.

 

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“Hazardous Materials” means (i) hazardous substances, as defined by CERCLA;
(ii) hazardous wastes as defined by RCRA; (iii) petroleum, including without
limitation, crude oil or any fraction thereof which is liquid at standard
conditions of temperature and pressure; (iv) any radioactive material,
including, without limitation, any source, special nuclear, or by-product
material as defined in 42 U.S.C. §2011 et seq.; (v) asbestos in any form or
condition; (vi) polychlorinated biphenyls; and (vii) any other material,
substance or waste to which liability or standards of conduct are imposed under
any Environmental Laws.

“Intellectual Property” means, collectively, in the United States and all
countries or jurisdictions foreign thereto, (i) all inventions (whether
patentable or unpatentable and whether or not reduced to practice), all
improvements thereto, and all Patents, (ii) all Trademarks, all goodwill
associated therewith, and all applications, registrations, and renewals in
connection therewith, (iii) all moral rights and copyrights in any work of
authorship (including but not limited to catalogues and related copy, databases,
software, and mask works) and all applications, registrations, and renewals in
connection therewith, (iv) all trade secrets and confidential business
information (including confidential ideas, research and development, know-how,
methods, formulas, compositions, manufacturing and production processes and
techniques, technical and other data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals), (v) all computer software and firmware
(including source code, executable code, data, databases, user interfaces and
related documentation) (collectively, “Software”), (vi) all other proprietary
and intellectual property rights, (vii) all copies and tangible embodiments of
any of the foregoing (in whatever form or medium), and (viii) all income,
royalties, damages and payments related to any of the foregoing (including
damages and payments for past, present or future infringements,
misappropriations or other conflicts with any intellectual property), and the
right to sue and recover for past, present or future infringements,
misappropriations or other conflict with any intellectual property.

“IRS” means the Internal Revenue Service of the United States.

“Loan Documents” means the Seller Note, that certain Open-End Mortgage, Security
Agreement and Fixture Filing granted by K. MATKEM of Morrisville, L.P., as
Mortgagor, to Seller, in substantially the form attached hereto as Exhibit B,
that certain Guaranty in favor of Seller in substantially the form attached
hereto as Exhibit C, and that certain Security Agreement in favor of Seller in
substantially the form attached hereto as Exhibit D, including all annexes or
exhibits to any of the foregoing.

“Patents” means all letters patent and pending applications for patents of the
United States and all countries and jurisdictions foreign thereto and all
reissues, reexaminations, divisions, continuations, continuations-in-part,
revisions, and extensions thereof.

“Permits” means all rights of Seller in and to permits, licenses (but excluding
licenses to use intellectual property), certifications, registrations,
qualifications, approvals and authorizations by or of Governmental Authorities
or third parties needed for or used in connection with its operation of the
Business.

 

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“Permitted Liens” means (a) materialmen’s, mechanics’, carriers’, workmen’s,
warehousemen’s, repairmen’s and other like Liens arising in the ordinary course
of business and (b) Liens for Taxes not yet due and payable, or being contested
in good faith by appropriate proceedings.

“Person” means any individual, sole proprietorship, partnership, limited
liability company, joint venture, trust, unincorporated association, corporation
or other entity or any Governmental Authority.

“Purchase Price” means the Base Purchase Price, plus the Purchased Inventory
Price, minus the Assumed PTO Liability.

“RCRA” means the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et
seq.

“Tax” means any multi-national, federal, state, local, municipal or foreign
income, gross receipts, franchise, estimated, alternative minimum, add-on
minimum, sales, use, transfer, registration, value added, excise, natural
resources, sewer charges, sewer taxes, entertainment, amusement, severance,
stamp, occupation, premium, windfall profit, environmental, customs, duties,
real property, personal property, ad valorem, capital stock, social security,
unemployment, disability, payroll, license, employee or other withholding, or
other tax, of any kind whatsoever, including any interest, penalties or
additions to Tax or additional amounts in respect of the foregoing; the
foregoing shall include any transferee or secondary liability for a Tax and any
liability assumed by agreement or arising as a result of being (or ceasing to
be) a member of any Affiliated Group (or being included (or required to be
included) in any Tax Return relating thereto).

“Tax Returns” means returns, declarations, reports, claims for refund,
information returns or other documents (including any related or supporting
schedules, statements or information) filed or required to be filed in
connection with the determination, assessment or collection of any Tax of any
party or the administration of any laws, regulations or administrative
requirements relating to any Tax.

“Title Insurer” means Gross, McGinley, LaBarre & Eaton, LLP, Agent for Stewart
Title Guaranty Company.

“Trademarks” mean, in the United States and all countries and jurisdictions
foreign thereto, registered trademarks, registered service marks, trademark and
service mark applications, unregistered trademarks and service marks, registered
trade names and unregistered trade names, corporate names, fictitious names,
trade dress, logos, slogans, Internet domain names, rights in telephone numbers,
and other indicia of origin, together with all translations, adaptations,
derivations, combinations and renewals thereof.

“Transaction Document” means any written agreement, document, certificate or
instrument delivered pursuant to or in connection with this Agreement.

 

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“Transactions” means the transactions contemplated by the Transaction Documents.

Section 9.3. Entire Agreement; Amendment; Confidentiality Agreement. This
Agreement, including the exhibits and schedules hereto, the Transactions
Documents and the instruments and agreements executed in connection herewith and
therewith contain all of the terms, conditions and representations and
warranties agreed upon by the parties relating to the subject matter of this
Agreement and supersede all prior and contemporaneous agreements, negotiations,
correspondence, undertakings and communications of the parties, oral or written,
respecting such subject matter, except for (a) the Confidentiality and
Non-Disclosure Agreement dated as of April 7, 2008 by and among ATAS
International, Inc., Theodorus A. Bus, James P. Bus and Seller (the
“Confidentiality Agreement”) and (b) the Real Estate Purchase Agreement. This
Agreement shall not be amended or modified except by an agreement in writing
duly executed by each of the parties hereto. Buyer shall, and shall cause its
officers, directors, employees, Affiliates, financial advisors and agents to,
comply with the provisions of the Confidentiality Agreement with respect to
information received prior to the Closing, and the provisions of the
Confidentiality Agreement are hereby incorporated herein by reference with the
same effect as if fully set forth herein.

Section 9.4. Counterparts; Deliveries. This Agreement may be executed
simultaneously in counterparts, each of which shall be deemed an original but
all of which together shall constitute one and the same instrument. This
Agreement, the Transaction Documents and each other agreement or instrument
entered into in connection herewith or therewith or contemplated hereby or
thereby, and any amendments hereto or thereto, to the extent signed and
delivered by means of a facsimile machine or other electronic transmission,
shall be treated in all manner and respects and for all purposes as an original
agreement or instrument and shall be considered to have the same binding legal
effect as if it were the original signed version thereof delivered in person. At
the request of any party hereto or to any such agreement or instrument, each
other party hereto or thereto shall re-execute original forms thereof and
deliver them to all other parties, except that the failure of any party to
comply with such a request shall not render this Agreement invalid or
unenforceable. No party hereto or to any such agreement or instrument shall
raise the use of a facsimile machine or other electronic transmission to deliver
a signature or the fact that any signature or agreement or instrument was
transmitted or communicated through the use of a facsimile machine or other
electronic transmission as a defense to the formation or enforceability of a
contract and each such party forever waives any such defense.

Section 9.5. Third Parties. Nothing in this Agreement, express or implied, is
intended to confer any right or remedy under or by reason of this Agreement on
any Person other than the parties signatory hereto, the Buyer Indemnified
Parties, the Seller Indemnified Parties and their respective heirs,
representatives, successors and assigns, nor is anything set forth herein
intended to affect or discharge the obligation or liability of any third Persons
to any party to this Agreement, nor shall any provision give any third party any
right of subrogation or action over against any party to this Agreement.

Section 9.6. Expenses. Each of the parties shall pay all costs and expenses
incurred or to be incurred by it in negotiating and preparing this Agreement and
all documents executed in connection herewith and in closing and carrying out
the Transactions including, but not limited to, legal and accounting fees and
expenses (collectively, the “Expenses”). Buyer shall be solely responsible for
all other sales, transfer, documentary, stamp, recording, conveyance and similar
taxes and fees (including any penalties and interest) due with regard to the
Transactions contemplated by this Agreement.

 

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Section 9.7. Waiver. No failure of any party to exercise any right or remedy
given to such party under this Agreement or otherwise available to such party or
to insist upon strict compliance by any other party with its obligations
hereunder, and no custom or practice of the parties in variance with the terms
hereof, shall constitute a waiver of any party’s right to demand exact
compliance with the terms hereof, unless such waiver is set forth in writing and
executed by such party. Any such written waiver shall be limited to those items
specifically waived therein and shall not be deemed to waive any future breaches
or violations or other non-specified breaches or violations unless, and to the
extent, set forth therein.

Section 9.8. Governing Law. This Agreement shall be construed and governed in
accordance with the internal laws of the State of Pennsylvania without regard to
the principles of conflicting laws.

Section 9.9. Assignments. This Agreement will be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. This Agreement may not be assigned by Buyer without the prior written
consent of Seller, except that Buyer may, without the requirement of prior
written consent of Seller, assign this Agreement to an Affiliate. Any such
permitted assignment shall not release Buyer from its obligations under this
Agreement. Notwithstanding anything in this Agreement to the contrary, Seller’s
rights under this Agreement may be assigned as necessary to effectuate the
Agreed Tax Treatment.

Section 9.10. Headings. The subject headings of articles and sections of this
Agreement are included for purposes of convenience of reference only and shall
not affect the construction or interpretation of any of its provisions.

Section 9.11. Jurisdiction of Courts. Any Proceeding initiated over any dispute
arising out of or relating to this Agreement or any of the Transactions shall be
initiated in any federal or state court located within Bucks County,
Pennsylvania, and the parties further agree that venue for all such matters
shall lie exclusively in those courts. The parties hereby irrevocably waive, to
the fullest extent permitted by applicable Law, any objection that they may now
or hereafter have, including, but not limited to, any claim of forum
non conveniens, to venue in the Court of Common Pleas of Bucks County,
Pennsylvania or the United States District Court for the Eastern District of
Pennsylvania. The parties agree that a judgment in any such dispute may be
enforced in other jurisdictions by Proceedings on the judgment or in any other
manner provided by Law.

Section 9.12. Waiver of Jury Trial. Each of the parties hereto hereby
irrevocably waives any and all right to trial by jury of any claim or cause of
action in any legal proceeding arising out of or related to this Agreement or
the transactions or events contemplated hereby or any course of conduct, course
of dealing, statements (whether verbal or written) or actions of any party
hereto. The parties hereto each agree that any and all such claims and causes of
action shall be tried by the court without a jury. Each of the parties hereto
further waives any right to seek to consolidate any such legal proceeding in
which a jury trial has been waived with any other legal proceeding in which a
jury trial cannot or has not been waived.

 

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Section 9.13. Construction. The language used in this Agreement shall be deemed
to be the language chosen by the parties to express their mutual intent, and no
rule of strict construction shall be applied against any party.

Section 9.14. Knowledge. For purposes of this Agreement and the Transaction
Documents, “knowledge of Seller” and each phrase having equivalent meaning
(e.g., “known to Seller” or “to Seller’s knowledge”) shall mean the facts or
other information actually known by Steven Hamilton or Joe Domaracki.

Section 9.15. Interpretive Matters. Unless the context otherwise requires,
(a) all references to Articles, Sections or Schedules are to Articles, Sections
or Schedules in this Agreement, (b) each accounting term not otherwise defined
in this Agreement has the meaning assigned to it in accordance with GAAP,
(c) words in the singular or plural include the singular and plural, and
pronouns stated in either the masculine, the feminine or neuter gender shall
include the masculine, feminine and neuter and (d) whenever the words “include,”
“includes” or “including” are used in this Agreement they shall be deemed to be
followed by the words “without limitation.”

Section 9.16. Counterparts. This Agreement may be executed and delivered in
several counterparts, each of which, when so executed and delivered, shall
constitute an original, fully enforceable counterpart for all purposes.

[Signature pages follow.]

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.

 

MSC PRE FINISHED METALS (MV) INC. By:  

/s/ Clifford D. Nastas

  Clifford D. Nastas, Chief Executive Officer MATERIAL SCIENCES CORPORATION By:
 

/s/ Clifford D. Nastas

  Clifford D. Nastas, Chief Executive Officer BRIGHTSMITH, LLC By:   J.P. Tab,
Inc., its sole member By:  

/s/ James P. Bus

  James P. Bus

/s/ Theodore A. Bus

Theodorus A. Bus

/s/ James P. Bus

James P. Bus