Document:

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Exhibit 10.6

ASSET PURCHASE AGREEMENT

     THIS ASSET PURCHASE AGREEMENT (this “Agreement”) is entered into as of May 31, 2005,
by and among Torgo Ltd., a Texas limited partnership (the “Purchaser”), ELK TECHNOLOGY
GROUP, INC., a Delaware corporation (the “Parent”), and OEL, Ltd., d.b.a. “Ortloff
Engineers, Ltd.”, a Nevada corporation (the “Company”). Certain capitalized terms used in
this Agreement are defined in the attached Exhibit A.

     The Parent owns all of the outstanding shares of capital stock (the “Shares”) of the
Company. The Purchaser desires to purchase certain assets of the Company and to assume certain of
the obligations and liabilities of the Company, and the Company desires to sell such assets to the
Purchaser and to assign such obligations and liabilities to the Purchaser on the terms and
conditions set forth in this Agreement (such sale, purchase, assignment and assumption, the
“Transaction”).

     In consideration of the foregoing recitals, the mutual representations, warranties and
covenants set forth in this Agreement, and other good and valuable consideration, the receipt and
sufficiency of which the parties acknowledge, the parties agree as follows:

ARTICLE 1

PURCHASE AND SALE

     1.1 Purchase and Sale of Assets. Subject to the terms and conditions of this
Agreement, at the Closing, except as otherwise specifically provided in this Agreement, the Company
will grant, sell, assign, transfer and deliver to the Purchaser, and the Purchaser will purchase
and acquire from the Company, all right, title and interest of the Company in and to (a) the
business of the Company as a going concern (the “Business”) and (b) all of the assets,
properties and rights of the Company of every kind and description, real, personal and mixed,
tangible and intangible, wherever situated other than the Excluded Assets including, but not
limited to, those assets set forth on Schedule 1.1 (which Business, assets, properties and
rights are collectively referred to in this Agreement as the “Assets”), free and clear of
all mortgages, liens, pledges, security interests, charges, claims, restrictions and encumbrances
of any nature whatsoever, except Assumed Liabilities and liens for taxes not yet due and payable.
The Company and the Parent shall use commercially reasonable efforts to obtain consents, to the
extent required pursuant to Sections 6.1(f) and 6.2(f), of other parties to the Contracts included
in the Assets.

     1.2 Excluded Assets. Notwithstanding anything to the contrary set forth in this
Agreement, the Assets will not include (a) if the Effective Date is the Closing Date, cash, cash
equivalents and marketable securities, (b) the corporate charter, qualifications to conduct
business as a foreign corporation, arrangements with registered agents relating to foreign
qualifications, taxpayer and other identification numbers, seals, minute books, stock transfer
books, blank stock certificates, and other documents relating to the organization, maintenance, and
existence of the Company as a corporation, (c) the rights that accrue to the Company under this
Agreement and any documents, instruments or agreements executed in connection herewith, (d) the
Company Long Term Receivables, (e) 25% of the Scheduled Relationships Receivables, (f) prepaid
Taxes, (g) prepaid insurance, (h) notes payable by the Company’s employees to ElkCorp or any of its
Affiliates and (i) all accounts receivable owed by OGP/PGB in the approximate amount of $242,892
(collectively, the “Excluded Assets”).

     1.3 Assumed Liabilities. The Purchaser will assume, in connection with the
Contemplated Transactions, the liabilities and obligations of the Company described on Schedule
1.3 (collectively, the “Assumed Liabilities”). To the extent that Parent or the
Company pay any Assumed Liabilities after Closing, Purchaser shall promptly reimburse Purchaser or
Company for the amount of such payment upon

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presentation of reasonably appropriate documentation. If any third-party’s consent or approval
to the assignment or other transfer to the Purchaser of a contract to be transferred pursuant to
this Agreement has not been obtained prior to the Closing, then as to the burdens, obligations,
rights or benefits under or pursuant to such contracts (collectively, the “Rights”) not
assignable to the Purchaser because such consent or approval has not been obtained: (a) Company or
Parent, as the case may be, shall hold the Rights in trust for Purchaser, for the account and
benefit of Purchaser; (b) after the Closing, (i) Company or Parent, as the case may be, shall take
such reasonable actions and do all such things as shall be reasonably necessary or desirable in
order that the value of the Rights shall be preserved and shall inure to the benefit of Purchaser
and such that all benefits under the Rights may be received by Purchaser, and (ii) Purchaser shall
perform the burdens and obligations under such Rights; and (c) after the Closing, Company, Parent
and Purchaser shall continue to use their respective reasonable efforts to obtain such consent or
approval. All liabilities of the Company other than the Assumed Liabilities shall remain the sole
responsibility of and shall be retained, paid, performed and discharged solely by the Company.
Purchaser is not assuming any debt, liability or obligation of the Company, whether known or
unknown, fixed or contingent, except as herein specifically otherwise provided.

     1.4 Purchase Price. The cash purchase price (the “Purchase Price”) for the
Assets is the sum of (a) $14,257,108 plus (b) the amount of the Purchase Price Adjustment
calculated pursuant to Section 1.8 plus (c) if the Effective Date is May 1, 2005, the
amount of the cash advances (including by way of loans) by the Parent to the Company subsequent to
April 30, 2005 and prior to the Closing Date in the Ordinary Course of Business less the
aggregate amounts of cash distributed (including by way of repayment of loans) by the Company to
the Parent subsequent to April 30, 2005 and prior to the Closing Date. As of the date of this
Agreement, the cash amount to be paid is $13,619,722. At the Closing, the Purchaser will pay to the
Parent the Purchase Price by wire transfer of immediately available funds to an account designated
by the Parent on the Closing Date. In addition, the Purchaser shall pay to the Parent the Company
Long Term Receivables and Scheduled Relationship Receivables referred to in Section 1.2 pursuant to
Section 9.5 promptly after Purchaser’s receipt of payment for such receivables.

     1.5 Allocation of Purchase Price. The parties hereto agree that the Purchase Price
shall be allocated to the Assets in accordance with Schedule 1.5 hereto. The parties
hereto acknowledge that such allocation is based on the fair market value of the Assets and shall
be binding upon the parties hereto for Tax purposes. Each party covenants to report gain or loss
or cost basis, as the case may be, in a manner consistent with Schedule 1.5 for Tax
purposes. As soon as practicable following Closing, the parties shall exchange mutually acceptable
and completed IRS Forms 8594 which they shall use to report the Contemplated Transactions to the
Internal Revenue Service in accordance with such allocation.

     1.6 Closing. The parties agree to conduct the closing of the Transaction
(“Closing”) at the offices of Baker & McKenzie LLP, counsel for the Parent, at 2300
Trammell Crow Center, 2001 Ross Avenue, Dallas, Texas 75201, on May 31, 2005, or, if all of the
conditions set forth in Article 6 have not been satisfied or waived on such date, on such mutually
agreeable later date as soon as practicable but in no event later than three (3) business days
after satisfaction or waiver of such conditions, or at such other time and place as the Company,
the Parent and the Purchaser may agree in writing (such date of the Closing, the “Closing
Date”).

     1.7 Closing Deliveries. At the Closing:

          (a) the Parent and the Company will deliver to the Purchaser the various certificates,
instruments, documents and agreements referred to in Section 6.2 of this Agreement; and

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          (b) the Purchaser will deliver to the Parent and the Company (i) the various certificates,
instruments and documents referred to in Section 6.1 of this Agreement and (ii) the Purchase Price.

     1.8 Purchase Price Adjustment. If the Effective Date is May 1, 2005, the Purchase
Price Adjustment described in Section 1.4 shall be $78,462, which is the difference, if any between
the Initial Date Net Working Capital (as defined below) shown on the Initial Working Capital Detail
and the net working capital as of April 30, 2005, as agreed between the parties. If the Effective
Date is the Closing Date, the Purchase Price Adjustment described in Section 1.4 shall be
calculated as follows:

          (a) The net working capital of the Company as of March 31, 2005 (“Initial Date Net Working
Capital”) to be transferred as part of the Assets was calculated in accordance with GAAP and is
defined as set forth on the Working Capital Detail attached as Schedule 1.8 and referred to
in this Section 1.8 as “Initial Working Capital Detail.” Within 30 days after the Closing
Date, the Parent shall deliver to the Purchaser a written calculation (“Closing Date Working
Capital Detail”) of the net working capital of the Company as of the Closing Date (“Closing
Date Net Working Capital”). The Closing Date Working Capital Detail shall be (i) prepared by
the Company at the Company’s expense on a basis consistent with the Initial Working Capital Detail
and with adjustments on the same basis as the adjustments set forth in the Initial Working Capital
Detail and (ii) delivered to the Purchaser together with a written statement by the Company of the
difference, if any between the Initial Date Net Working Capital shown on the Initial Working
Capital Detail and the Closing Date Net Working Capital shown on the Closing Date Working Capital
Detail, such difference, if any, to be referred to herein as the “Closing Date
Adjustment”). The Parent shall consult with the Purchaser in good faith in connection with the
preparation of the Closing Date Working Capital Detail and employees of the Parent shall be
permitted to meet with employees of the Purchaser in connection with the preparation of the Closing
Date Working Capital Detail.

          (b) The Purchaser shall have 30 days after delivery to the Purchaser of the Closing Date
Working Capital Detail (the “Review Period”) to review the Closing Date Working Capital
Detail and the Company’s calculation of the Closing Date Adjustment. The Purchaser shall notify
the Company in writing prior to the expiration of the Review Period of the Purchaser’s acceptance
of or disagreement with the Closing Date Working Capital Detail and the Closing Date Adjustment.
Failure by the Purchaser to notify the Company of either acceptance of or disagreement with the
Company’s calculation of the Closing Date Adjustment shall be deemed acceptance thereof. If the
Purchaser disputes the Company’s determination of the Closing Date Adjustment, the Purchaser shall,
prior to the expiration of the Review Period, notify the Company of the Purchaser’s objections and
deliver with such notice the Purchaser’s proposed calculation of the Closing Date Adjustment. The
Company shall have 20 days after delivery of the Purchaser’s proposed calculation of the Closing
Date Adjustment to review the Purchaser’s proposed Closing Date Adjustment. If the Company
disputes the Purchaser’s proposed Closing Date Adjustment, then the Purchaser and the Company shall
engage an independent accounting firm of national reputation (other than the Purchaser’s CPA or the
Company’s CPA) to resolve the dispute and determine the Closing Date Adjustment, which
determination shall be final and binding upon the parties. The fees and expenses of such
independent accounting firm shall be paid one-half by the Company and one-half by the Purchaser.

          (c) Upon the final determination of the Closing Date Adjustment, the Purchase Price shall be
(i) decreased dollar-for-dollar to the extent that the Initial Date Net Working Capital shown on
the Initial Working Capital Detail is greater than the Closing Date Net Working Capital shown on
the Closing Date Working Capital Detail and (ii) increased dollar-for-dollar to the extent that the
Initial Date Net Working Capital shown on the Initial Working Capital Detail is less than the
Closing Date Net Working Capital shown on the Closing Date Working Capital Detail. The Company
shall promptly pay to the Purchaser the amount of any such decrease in the Purchase Price in cash
no later than 10 days after

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the date of determination of the Closing Date Adjustment, by wire transfer of immediately
available funds to an account designated by the Purchaser. The Purchaser shall promptly pay to the
Company the amount of any such increase in the Purchase Price in cash no later than 10 days after
the date of determination of the Closing Date Adjustment, by wire transfer of immediately available
funds to an account designated by the Company.

ARTICLE 2

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     Except as set forth on the disclosure schedule attached as Exhibit B-1 to this
Agreement (the “Company Disclosure Schedule”) (it being agreed that an item included on a
particular section of the Company Disclosure Schedule referenced in any Section or subsection of
this Article 2 is deemed to relate to each other Section or subsection of this Article 2 to the
extent such relationship is reasonably apparent), the Company represents and warrants to the
Purchaser that the statements set forth in this Article 2 are true and complete. Notwithstanding
any other provision of this Agreement, the Company will not be deemed to have breached the
representations and warranties contained in this Article 2 (a) if the Company’s Senior Management
has, on or before the Closing Date, knowledge of any fact, event or circumstance giving rise to the
alleged breach or inaccuracy or (b) unless the fact, event or circumstance giving rise to the
alleged breach or inaccuracy, individually or taken together with all other facts, events or
circumstances inconsistent with any representation or warranty contained in this Article 2, has had
or would reasonably be expected to have a Material Adverse Effect (whether or not any provisions of
this Article 2 are qualified individually by any references to materiality).

     2.1 Corporate Organization.

          (a) The Company is a corporation duly organized, validly existing, and in good standing under
the laws of the State of Nevada, and is duly qualified to conduct business and is in good standing
under the laws of each jurisdiction in which any facts require qualification, except where the
failure to so qualify would not result in a Material Adverse Effect. The Company has all corporate
power and corporate authority it needs to carry on its operations and own its assets.

          (b) Section 2.1(b) of the Company Disclosure Schedule sets forth the corporate name and
jurisdiction of incorporation of each Subsidiary.

     2.2 Capitalization. As of the date of this Agreement, the authorized capital stock of
the Company consists of 1,000 shares of common stock, par value $0.01 per share, all of which have
been duly authorized and are validly issued, fully paid and nonassessable. There are no
outstanding or authorized options, warrants, rights, agreements or commitments to which the Company
is a party or which are binding upon the Company providing for the issuance or redemption of any
shares of the Company’s capital stock.

     2.3 Authorization. The Company has all corporate power and corporate authority it
requires to execute, deliver and perform its obligations under this Agreement. The Company has
obtained all approvals from its directors, and all other corporate approvals, if any, necessary for
the due and valid authorization prior to the Closing Date of the Company’s execution, delivery and
performance of this Agreement and the consummation by the Company of the Transaction and each of
the other transactions contemplated by this Agreement (collectively, the “Contemplated
Transactions”). The Company has duly and validly executed and delivered this Agreement.
Assuming the due authorization, execution and delivery of this Agreement by the Purchaser, this
Agreement is a valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, subject to (a) laws of general

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application relating to bankruptcy, insolvency, and the relief of debtors and (b) rules of law
governing specific performance, injunctive relief and other equitable remedies.

     2.4 No Conflict. Except for the disclosures on Section 2.4 of the Company Disclosure
Schedule, the requirements of the HSR Act and any antitrust or other competition law of
jurisdictions outside the United States of America (if and to the extent any of the foregoing laws
may apply), the Company’s execution, delivery, and performance of this Agreement and/or the
consummation by the Company of the Contemplated Transactions do not (a) conflict with or violate
any provision of the Company’s articles of incorporation or bylaws, (b) require the Company to make
any filing with, or obtain any permit, authorization, consent or approval of, any Governmental
Entity, (c) result in a breach or default under, create in any person the right to accelerate,
terminate, modify or cancel, or require any notice, consent or waiver under, any Material Contract,
material governmental permit, indebtedness, Security Interest or other material agreement or
obligation to which the Company is a party or to which any of its assets is subject, in any case
with or without due notice or lapse of time or both, (d) result in the imposition of any Security
Interest upon any assets of the Company or (e) violate any law, order, writ, or injunction
applicable to the Company or any of its assets; provided, however, that this Section 2.4 shall not
apply with respect to those agreements, contracts, leases, licenses, and other arrangements
described on Exhibit B to the Assignment and Assumption Agreement of even date herewith.

     2.5 Financial Matters.

          (a) Attached as Appendix A to the Company Disclosure Schedule is the balance sheet of
the Company at March 31, 2005 (the “Most Recent Balance Sheet”), together with the related
statement of operations for the eight-month period so ended, and the balance sheets of the Company
at June 30, 2000, 2001, 2002, 2003 and 2004, together with related statements of operations for the
twelve month periods so ended (collectively, the “Financial Statements”). The Financial
Statements fairly present in all material respects the financial condition and results of
operations of the Company as of the dates and periods stated.

          (b) Since the date of the Most Recent Balance Sheet, (i) there has not been any Material
Adverse Change, nor has there occurred any event or development which would reasonably likely
result in such a Material Adverse Change in the future, and (ii) neither the Company nor any
Subsidiary has taken any of the actions set forth in paragraphs (i) through (ix) of Section 5.1(a)
hereof.

     2.6 Tax Matters.

          (a) Each of the Company and each Subsidiary has filed all Tax Returns that it was required to
file, and all such Tax Returns were complete and accurate, except for any errors or omissions that
would not reasonably be expected to have, individually or in the aggregate, a Material Adverse
Effect. Each Affiliated Group has filed all Tax Returns that it was required to file with respect
to any Affiliated Period, and all such Tax Returns were complete and accurate, except for any
errors or omissions which are not, individually or in the aggregate, reasonably likely to have a
Material Adverse Effect.

          (b) Each of the Company and each Subsidiary and each member of an Affiliated Group has paid
all Taxes shown as due and payable on the Tax Returns referred to in Section 2.6(a) above, except
for any failures to pay which are not, individually or in the aggregate, reasonably likely to have
a Material Adverse Effect. Neither the Company nor any Subsidiary has any actual or overtly
threatened liability for any Tax obligation of any taxpayer (including without limitation any
Affiliated Group) other than the Company and the Subsidiaries, including any obligation under any
Tax sharing agreement or under Treasury Regulations Section 1.1502-6 or any similar provision of
law.

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          (c) All Taxes that the Company or any Subsidiary is or was required by law to withhold or
collect have been duly withheld or collected and, to the extent required, have been paid to the
proper Governmental Entity, except for any such Taxes with respect to which the failure to
withhold, collect or pay would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.

          (d) To the knowledge of the Company, no examination or audit of any Tax Return of the Company
or any Subsidiary by any Governmental Entity is currently in progress or threatened. Neither the
Company nor any Subsidiary has waived any statute of limitations with respect to Taxes or agreed to
an extension of time with respect to a Tax assessment or deficiency affecting the Company or its
Subsidiaries, which waiver or extension of time is currently outstanding. No Assets are subject to
any lien arising in connection with any failure or alleged failure to pay any Tax.

     2.7 Assets Generally. Each of the Company and each Subsidiary owns or leases all
tangible assets necessary for the conduct of its businesses as presently conducted and planned to
be conducted. Each such tangible asset is free from defects, has been maintained in accordance
with normal industry practice, is in good operating condition and repair (subject to normal wear
and tear) and is suitable for the purposes for which it presently is used. No asset of the Company
or any Subsidiary (tangible or intangible) is subject to any Security Interest.

     2.8 Intellectual Property.

          (a) Each of the Company and each Subsidiary owns, or has the right to use, or at the Closing
will own or have the right to use, all Intellectual Property necessary for, or used in, the
operation of its business as presently conducted (the “Company Intellectual Property”).
The Company has taken reasonable measures to protect the proprietary nature of each item of Company
Intellectual Property, except for any failure that would not reasonably be expected to have a
Material Adverse Effect. To the knowledge of the Company, no other person is infringing, violating
or misappropriating any of the Company Intellectual Property, except for any infringement,
violation or misappropriation that would not reasonably be expected to have a Material Adverse
Effect. Section 2.8(a) of the Company Disclosure Schedule lists each patent, patent application,
copyright registration or application therefor, mask work registration or application therefor, and
trademark, service mark and domain name registration or application therefor of the Company or any
Subsidiary, including such registrations and applications to be transferred from the Parent to the
Company pursuant to Section 5.2(c) and included in the Assets.

          (b) None of the activities or business presently conducted by the Company or any Subsidiary
infringes or violates, or constitutes a misappropriation of, any Intellectual Property rights of
any person, except for any infringement, violation or misappropriation that would not reasonably be
expected to have a Material Adverse Effect.

          (c) The Company Intellectual Property constitutes all Intellectual Property necessary to
conduct the business of the Company as currently conducted and as it will be conducted through the
Closing Date and to conduct the business of the Company immediately after the Closing Date as it is
being conducted as of the date hereof and as it will be conducted through the Closing Date.

     2.9 Owned Real Property. Neither the Company nor any Subsidiary owns any real
property.

     2.10 Legal Compliance. Each of the Company and each Subsidiary, and the conduct and
operations of its business, are and have been in compliance with each law, which (a) affects or
relates to this Agreement or the consummation of any Contemplated Transaction or (b) is applicable
to the

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Company or any Subsidiary or its respective business except where the failure to so comply
would not have a Material Adverse Effect.

     2.11 Contracts.

          (a) Except for the contracts described in Section 2.11 of the Company Disclosure Schedule
(collectively, the “Material Contracts”) or to which the Purchaser has consented (which
consent shall not be unreasonably withheld, conditioned or delayed), the Company is not a party to
or bound by the following:

               (i) any material distributor, sales, advertising or manufacturer’s representative contract
that is not terminable within sixty (60) days by the Company and involving the payment by the
Company of more than $100,000;

               (ii) any continuing contract for the purchase of materials, supplies, equipment or services
involving payment by the Company of more than $100,000 over the life of the contract;

               (iii) any contract that expires, or may be renewed at the option of any person other than the
Company so as to expire, more than one year from the date of this Agreement, and that involves
payment by the Company of more than $100,000 over the remaining life of the contract;

               (iv) any trust indenture, mortgage, promissory note, loan agreement or other contract for the
borrowing of money, any currency exchange, commodities or other hedging arrangement involving more
than $100,000 or any material leasing transaction of the type required to be capitalized in
accordance with GAAP;

               (v) any contract requiring capital expenditures by the Company in excess of $100,000 in the
aggregate;

               (vi) any contract materially limiting the freedom of Company to engage in any line of business
or to compete;

               (vii) any contract pursuant to which the Company is a lessor of any machinery, equipment,
motor vehicles, office furniture, fixtures or other personal tangible property involving in the
case of any such contract more than $100,000 in payments to the Company over the remaining life of
the contract;

               (viii) any contract pursuant to which the Company has obtained a license to use the
Intellectual Property of any other person and such use by the Company is material to the Company’s
business;

               (ix) any material agreement of guarantee, support, indemnification, assumption or endorsement
of, or any similar commitment to become liable for the obligations or other Liabilities of any
other person in an amount in excess of $100,000 other than in connection with the license or sale
of products in the Ordinary Course; or

               (x) any lease of (A) real property by the Company or (B) personal property used in the
business of the Company and involving payment by the Company of more than $100,000.

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          (b) The Company has performed in all material respects all of the obligations required to be
performed by it and is entitled to in accordance with the terms hereof all material benefits under
each Material Contract, and has not received notice that it is in default in any material respect
in respect of any Material Contract. Each of the Material Contracts is in full force and effect
and has not been amended, and there exists no default or event of default or event, occurrence,
condition or act, with respect to Company, or to Company’s knowledge with respect to the other
contracting party, which, with the giving of notice, the lapse of time or the happening of any
other event or conditions, would become a default or event of default under any Material Contract.

          (c) Notwithstanding the foregoing, this Section 2.11 shall not apply with respect to those
agreements, contracts, leases, licenses, and other arrangements described on Exhibit B to
the Assignment and Assumption Agreement of even date herewith.

     2.12 Powers of Attorney. There are no outstanding powers of attorney executed on
behalf of the Company or any Subsidiary.

     2.13 Legal Proceedings. Except as described in Section 2.13 of the Company Disclosure
Schedule, there is no Legal Proceeding pending or, to the Company’s knowledge, threatened against
the Company, any Subsidiary or its assets. Neither the Company nor any Subsidiary is subject to
any outstanding judgment, injunction or other order or ruling of, or settlement issued or approved
by, any court or other Governmental Entity.

     2.14 Brokers’ Fees. Neither the Company nor any Subsidiary has any Liability to pay
any fees or commissions to any broker, finder or agent with respect to the Contemplated
Transactions.

     2.15 Licensees. Section 2.15 of the Company Disclosure Schedule sets forth an
accurate and complete list of each licensee of the Company Intellectual Property and the amount of
revenues accounted for by each such licensee through December 31, 2004.

     2.16 Insurance. Section 2.16 of the Company Disclosure Schedule lists each insurance
policy (including fire, theft, casualty, general liability, workers’ compensation, business
interruption, environmental, product liability and automobile insurance policies and bond and
surety arrangements) to which the Company or any Subsidiary is a party, a named insured, or
otherwise the beneficiary of coverage at any time within the past year. All premiums due and
payable under those policies have been paid. Each of the Company and each Subsidiary is covered by
insurance in scope and amount customary and reasonable for the businesses in which it is engaged.

     2.17 Employees. Section 2.17 of the Company Disclosure Schedule contains an accurate
and complete list of (a) all current executive officers of the Company and each Subsidiary along
with the position, date of hire or engagement, and the compensation and benefits of such
individuals and (b) the aggregate number of employees and independent contractors in each division
of the Company. To the knowledge of the Company, no employee or group of employees has any plans
to terminate employment with the Company or enter into any business which would compete with or
would be similar to the business of the Company. Neither the Company nor any Subsidiary is a party
to or bound by any collective bargaining agreement, nor has the Company experienced any strikes,
grievances, claims of unfair labor practices or other collective bargaining disputes. The Company
has no knowledge of any organizational effort made or threatened, either currently or within the
past two years, by or on behalf of any labor union with respect to employees of the Company or any
Subsidiary.

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     2.18 Employee Benefits.

          (a) Section 2.18(a) of the Company Disclosure Schedule contains a complete and accurate list
of all “employee pension benefit plans” (as defined in Section 3(2) of ERISA), all “employee
welfare benefit plans” (as defined in Section 3(1) of ERISA), and any other plan, agreement or
arrangement involving direct or indirect compensation, including without limitation insurance
coverage, severance benefits, disability benefits, deferred compensation, bonuses, stock options,
stock purchase, phantom stock, stock appreciation or other forms of incentive compensation or
post-retirement compensation maintained by the Company or any Subsidiary for the benefit of any
current or former employee, director or consultant of the Company or any Subsidiary and with
respect to which the Company or any Subsidiary may have any Liability following the Closing Date
(the “Employee Benefit Plans”). The Company does not have any commitment to establish any
Employee Benefit Plans for the employees of the Company or any Subsidiary (except to the extent
required by law). Each Employee Benefit Plan has been administered in all material respects in
accordance with its terms and each of the Company and its Subsidiaries has in all material respects
met its obligations with respect to those Employee Benefit Plan and has, in all material respects,
made all required contributions thereto. Each Employee Benefit Plan has, in all material respects,
been operated in compliance with the currently applicable provisions of ERISA and the Code and the
regulations thereunder.

          (b) Any Employee Benefit Plan intended to be qualified under Section 401(a) of the Code and
each trust intended to qualify under Section 501(a) of the Code has obtained a favorable
determination, notification, advisory and/or opinion letter, as applicable, as to its tax-qualified
status from the Internal Revenue Service.

          (c) Except as disclosed on Section 2.18(c) of the Company Disclosure Schedule, neither the
Company nor any affiliate within the meaning of Section 414(b), (c), (m) or (o) of the Code and the
regulations thereunder (“ERISA Affiliate”) has ever maintained an Employee Benefit Plan
subject to Section 412 of the Code or Title IV of ERISA.

          (d) Except as disclosed on Section 2.18(d) of the Company Disclosure Schedule, at no time has
the Company or any ERISA Affiliate been obligated to contribute to any “multiemployer plan” (as
defined in Section 4001(a)(3) of ERISA).

          (e) No Employee Benefit Plan promises or provides retiree medical or other retiree life,
disability or other insured benefits to any person, except as required by the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended, or similar state law.

          (f) Section 2.18(f) of the Company Disclosure Schedule lists the following: (i) employment,
severance and change of control agreement with any executive officer or other key employee of the
Company or any Subsidiary (A) the benefits of which are contingent upon the occurrence of a
transaction involving the Company or any Subsidiary of the nature of the Contemplated Transactions
(either alone or upon termination of employment following such transactions) or (B) providing any
term of employment or compensation guarantee; and (ii) agreement or plan binding the Company or any
Subsidiary, including without limitation any stock option plan, stock appreciation right plan,
restricted stock plan, stock purchase plan, severance benefit plan or Employee Benefit Plan, any of
the benefits of which will be increased, or the vesting of the benefits of which will be
accelerated, by the consummation of the Contemplated Transactions (either alone or upon the
termination of employment following such transactions).

     2.19 Environmental Matters. Neither the Company nor any Subsidiary has released any
hazardous materials or waste or other substances regulated by any Environmental law into the

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environment at any real property or other facility formerly or currently owned, leased,
operated or controlled by the Company or any Subsidiary. Section 2.19 of the Company Disclosure
Schedule lists all environmental reports, investigations and audits possessed or controlled by the
Company that were obtained from, or conducted by or on behalf of the Company or any Subsidiary, any
Governmental Entity, or any person during the past five (5) years and relating to premises
currently or previously owned, leased, operated or controlled by the Company.

     2.20 Certain Business Relationships with Affiliates. Except for ElkCorp’s rights in
Company Intellectual Property and the agreements described on Section 2.20(a) of the Company
Disclosure Schedule, which are to be conveyed to the Company at or prior to Closing in accordance
with Section 5.2(c) below, or as disclosed on Section 2.20(b) of the Company Disclosure Schedule,
neither Parent nor, to the knowledge of the Company, any director, officer or Affiliate of the
Company (a) owns any material tangible or intangible property or right which is used in the
business of the Company, (b) has any claim or cause of action against the Company or (c) owes any
money to the Company or is owed money by the Company (other than compensation and benefits owed to
employees under agreements disclosed in the Company Disclosure Schedule).

     2.21 Relationship with UOP. The Parent and the Company have no knowledge that UOP
expects or intends to materially reduce its business with the Business.

     2.22 Title to Assets. The Company has (or will have at Closing) good and valid title
to all of its properties and assets which are included in the Assets, including, without
limitation, the Company Intellectual Property described in Schedule 2.8(a), free and clear
of all mortgages, liens, pledges, security interests, charges, claims, restrictions, and other
encumbrances and defects of title of any nature whatsoever, except for liens for current ad valorem
or similar taxes which are not yet due and payable and Assumed Liabilities.

     2.23 Absence of Certain Changes. Since December 31, 2004, there has not been (i) any
amendment, termination or revocation, or threatened termination, revocation or modification of any
license, permit or franchise required for the continued operation of the Business or the Assets,
other than in the Ordinary Course of Business; (ii) any sale or transfer of the Assets other than
in the Ordinary Course of Business; (iii) any pledge or subjection to lien, charge or encumbrances
of any kind, of, on or affecting any of the Assets other than for taxes which are not yet due and
payable; or (iv) any material damage, destruction or loss of or to the Assets, whether or not
covered by insurance.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF THE PARENT

     Except as set forth on the disclosure schedule attached as Exhibit B-2 to this
Agreement (the “Parent Disclosure Schedule”) (it being agreed that an item included on a
particular section of the Parent Disclosure Schedule referenced in any Section or subsection of
this Article 3 is deemed to relate to each other Section or subsection of this Article 3 to the
extent such relationship is reasonably apparent), the Parent represents and warrants to the
Purchaser that the statements contained in this Article 3 are true and complete.

     3.1 Corporate Organization. The Parent is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware.

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     3.2 Ownership of Capital Stock. Parent owns beneficially and of record all of the
Shares, free and clear of any Claims. There are no agreements to which either the Parent is a
party or is bound with respect to the voting (including voting trusts or proxies) of the Shares.

     3.3 Authorization. The Parent has all corporate power and corporate authority it
requires to execute, deliver and perform its obligations under this Agreement. The Parent has
obtained all corporate approvals necessary for the due and valid authorization prior to the Closing
Date of the Parent’s execution, delivery and performance of this Agreement and the consummation by
the Parent of the Contemplated Transactions. The Parent has duly and validly executed and
delivered this Agreement. Assuming the due authorization, execution and delivery of this Agreement
by the Purchaser, this Agreement is a valid and binding obligation of the Parent, enforceable
against the Parent in accordance with its terms, subject to (a)laws of general application relating
to bankruptcy, insolvency, and the relief of debtors and (b)rules of law governing specific
performance, injunctive relief and other equitable remedies.

     3.4 No Conflict. Except for the requirements of the HSR Act and any antitrust or
other competition law of jurisdictions outside the United States of America (if and to the extent
any of the foregoing laws may apply) or as disclosed on Section 3.4 of the Parent Disclosure
Schedule, the Parent’s execution, delivery, and performance of this Agreement and/or the
consummation by the Parent of the Contemplated Transactions do not (a)conflict with or violate any
provision of the Parent’s certificate of incorporation or bylaws, (b)require the Parent to make any
filing with, or obtain any permit, authorization, consent or approval of, any Governmental Entity,
(c)result in a breach or default under, create in any person the right to accelerate, terminate,
modify or cancel, or require any notice, consent or waiver under any agreement or instrument to
which the Parent is a party or (d)violate any law, order, writ, or injunction applicable to the
Parent or any of its assets, except in any case that would not reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect.

     3.5 Brokers’ Fees. Except with respect to Texas Corporate Capital Advisors, the
Parent has no Liability to pay any fees or commissions to any broker, finder or agent with respect
to the Contemplated Transactions.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

     The Purchaser represents and warrants to the Parent and the Company that the statements
contained in this Article 4 are true and complete.

     4.1 Organization and Good Standing. The Purchaser is a limited partnership duly
organized and validly existing under the laws of Texas, and has full power and authority to carry
on its business as now conducted.

     4.2 Authorization of Transaction. The Purchaser has all power and authority it
requires to execute, deliver and perform its obligations under this Agreement. The Purchaser has
obtained all approvals necessary for the due and valid authorization prior to the Closing Date of
the Purchaser’s execution, delivery and performance of this Agreement and the consummation by the
Purchaser of the Contemplated Transactions. The Purchaser has duly and validly executed and
delivered this Agreement. Assuming the due authorization, execution and delivery of this Agreement
by the Parent and the Company, this Agreement is a valid and binding obligation of the Purchaser,
enforceable against the Purchaser in accordance with its terms, subject to (a)laws of general
application relating to bankruptcy,

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insolvency, and the relief of debtors and (b)rules of law governing specific performance,
injunctive relief and other equitable remedies.

     4.3 Noncontravention. Except for the requirements of the HSR Act and any antitrust or
other competition law of jurisdictions outside the United States of America (if and to the extent
any of the foregoing laws may apply), the Purchaser’s execution, delivery, and performance of this
Agreement and/or the consummation by the Purchaser of the Contemplated Transactions do not
(a)conflict with or violate any provision of the Purchaser’s agreement or certificate of limited
partnership, (b)require the Purchaser to make any filing with, or obtain any permit, authorization,
consent or approval of, any Governmental Entity, (c)result in a breach or default under, create in
any person the right to accelerate, terminate, modify or cancel, or require any notice, consent or
waiver under any agreement or instrument to which the Purchaser is a party or (d)violate any law,
order, writ, injunction, or decree applicable to the Purchaser, except in any case that would not
reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.

     4.4 Litigation. There is no Legal Proceeding pending or, to the Purchaser’s
knowledge, threatened against the Purchaser which questions or challenges the validity of this
Agreement or the ability of the Purchaser to consummate the Contemplated Transactions.

     4.5 Brokers’ Fees. The Purchaser has no Liability to pay any fees or commissions to
any broker, finder or agent with respect to the Contemplated Transactions for which the Parent or
its Affiliates could become liable or obligated.

     4.6 Adequacy of Funds. The Purchaser has adequate financial resources to satisfy its
monetary and other obligations under this Agreement including, without limitation, the payment of
the Purchase Price in accordance herewith.

     4.7 Terms of Sale. The Purchaser has had the opportunity to inspect the Assets, visit
with the Parent and the Company and meet with the Parent’s and the Company’s representatives to
discuss the Business. The Purchaser acknowledges that EXCEPT AS OTHERWISE SPECIFICALLY SET FORTH
IN THIS AGREEMENT, THE ASSETS ARE BEING SOLD TO THE PURCHASER ON AN “AS-IS, WHERE-IS” BASIS WITHOUT
ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED.

     4.8 No Knowledge of Inaccuracies. As of the date of this Agreement, the Purchaser has
no knowledge of any inaccuracies in any representation or warranty made by the Parent or Company in
this Agreement.

ARTICLE 5

PRECLOSING COVENANTS

     5.1 Covenants of the Parent and the Company.

          (a) Conduct of Business. Except as otherwise required by this Agreement, during the
period from the date of this Agreement to the Closing Date, the Company and each Subsidiary will
conduct its operations in the Ordinary Course. Without limiting the generality of the foregoing
and except as required by this Agreement, prior to the Closing Date, the Company and each
Subsidiary will not take or cause to be taken any of the following actions, without the prior
written consent of the Purchaser (which shall not unreasonably be withheld):

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               (i) except for borrowings that will not be Assumed Liabilities or borrowings from the Parent
or an Affiliate in the Ordinary Course of Business, borrow any money;

               (ii) voluntarily incur any Liability other than in the Ordinary Course or in connection with
the performance or consummation of the Contemplated Transactions;

               (iii) incur or commit to incur any capital expenditures in excess of $100,000 other than
capital expenditures and commitments which were made prior to the date of this Agreement;

               (iv) lease, license, sell, transfer, encumber or permit to be encumbered any asset,
Intellectual Property or other property associated with the business of the Company or any
Subsidiary (including sales or transfers to Affiliates of the Company), except for (A)licenses
granted and property sold in the Ordinary Course and (B)cash applied in payment of Liabilities in
the Ordinary Course;

               (v) dispose of any of its material assets;

               (vi) waive or release any material right or claim;

               (vii) (A)issue or sell any shares of capital stock of the Company or any Subsidiary, or issue
or create any warrants, obligations, subscriptions, options, convertible securities, or other
commitments to issue shares of capital stock of the Company or any Subsidiary or (B)merge,
consolidate or reorganize with any person;

               (viii) make or change any election, change any annual accounting period, adopt or change any
accounting method, file any amended Tax Return, enter into any closing agreement, settle any Tax
claim or assessment relating to the Company or any Subsidiary, surrender any right to claim refund
of Taxes, consent to any extension or waiver of the limitation period applicable to any Tax claim
or assessment relating to the Company or any Subsidiary, or take any other action or omit to take
any action, if any such election, adoption, change, amendment, agreement, settlement, surrender,
consent or other action or omission would have the effect of increasing the Tax Liability of the
Company or any Subsidiary;

               (ix) do anything that would cause there to be a Material Adverse Change; or

               (x) agree to do any of the things described in the preceding clauses(i) through (ix) of this
Section 5.1(a).

          (b) Access to Information. Until the Closing, the Parent will allow the Purchaser, at
its sole expense, and its legal, accounting and other representatives and agents free access upon
reasonable notice and during normal working hours to the following information about the Company
and each Subsidiary: files; books; records; and offices, including, without limitation, any and
all information relating to Taxes, commitments, contracts, leases, licenses, and personal property
and financial condition. Until the Closing, the Parent will cause the Company’s accountants, at
the Purchaser’s sole expense, to cooperate with the Purchaser and its representatives and agents in
making available the consolidated financial information and Tax information of the Company and each
Subsidiary as reasonably requested, including, without limitation, the right to examine all working
papers pertaining to all of the consolidated financial statements of the Company and the
Subsidiaries prepared by such accountants.

          (c) Exclusivity. Between the date of this Agreement and the Closing or the date this
Agreement is terminated pursuant to Article 7 hereof (the “Expiration Date”), each of the
Parent and the

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Company will not take any action to solicit, initiate, seek, encourage or support any inquiry,
proposal or offer from, furnish any information to, or participate in any negotiations with, any
person (other than with the Purchaser) regarding an Acquisition. The Parent agrees that any such
negotiations in progress as of the date of this Agreement will be terminated or suspended during
such period.

     5.2 Mutual Covenants.

          (a) Confidentiality.

               (i) For purposes of securities law compliance, each party agrees not to issue any press
release or make any other public announcement relating to this Agreement without the prior written
approval of the other party, except that each of the Parent and the Purchaser reserves the right,
without the other party’s prior consent, to make any public disclosure it believes in good faith is
required by applicable securities laws or securities listing standards (in which case the
disclosing party agrees to use reasonable efforts to advise the other party prior to making the
disclosure).

               (ii) Each party agrees to continue to abide by that certain confidentiality letter agreement
dated as of September 15, 2004 (the “Nondisclosure Agreement”), by and between the Parent
and the Purchaser, the terms of which are incorporated by reference in this Agreement, and which
terms will survive the Closing or the termination of this Agreement in accordance with its terms.

               (iii) Each party acknowledges that it has reviewed with its own tax advisers, to the extent it
desired to do so, the Tax consequences of the Contemplated Transactions. Each party agrees that
(A)it is not relying upon the other parties or the other parties’ professional advisers for any Tax
advice relating to the Contemplated Transactions and (B)no party is making any representations to
the other parties as to the particular Tax consequences that will or will not arise in connection
with those transactions.

          (b) Regulatory Filings; Consents. Subject to the terms and conditions of this
Agreement, the parties agree to use their respective Best Efforts to (A) make all necessary and
appropriate filings with all applicable Governmental Entities and obtain required approvals and
clearances with respect thereto, (B) obtain all consents, waivers, approvals, authorizations and
orders required in connection with the authorization, execution and delivery of this Agreement and
the consummation of the Transaction and (C) take, or cause to be taken, all appropriate action, and
do, or cause to be done, all things necessary, proper or advisable to consummate and make effective
the transactions contemplated hereby as promptly as practicable, with the objective of consummating
the Transaction and completing the Closing no later than May 27, 2005.

          (c) Arrangements with the Parent. At or prior to the Closing, the Parent shall cause
ElkCorp and its Affiliates (other than the Company and each Subsidiary) to transfer and assign to
the Company any and all of their respective rights in and to (A) the Company Intellectual Property
described on Section 5.2(c) of the Company Disclosure Schedule or otherwise exclusively used in
connection with the business of the Company and (B) the agreements described on Section 2.20(a) of
the Company Disclosure Schedule and the accounts receivable under such agreements, and cause the
Company to assume any and all of ElkCorp and its Affiliates’ respective obligations thereunder.

          (d) Satisfaction of Conditions Precedent. Each party agrees to use its respective
Best Efforts to satisfy or cause to be satisfied all the conditions precedent that are set forth in
Article 6, and the parties will use their respective Best Efforts to cause the Contemplated
Transactions to be consummated, and, without limiting the generality of the foregoing, to obtain
all consents and authorizations of third

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parties and to make all filings with, and give all notices to, third parties which may be
necessary or reasonably required on their part in order to effect the transactions contemplated
hereby.

          (e) Further Assurances. Prior to and following the Closing, each party agrees to
cooperate fully with the other parties and to execute such further instruments, documents and
agreements, and to give such further written assurances, as may be reasonably requested by any
other party to evidence and reflect better the transactions described and contemplated in this
Agreement and to carry into effect the intents and purposes of this Agreement. This covenant to
provide further assurances shall include without limitation the Company’s covenant to execute such
further instruments, documents and agreements reasonably necessary to assign, and the Purchaser’s
covenant to execute such further instruments, documents and agreements reasonably necessary to
assume, the agreements, contracts, leases, licenses, and other arrangements referred to in the
definition of Assets

          (f) Taxes. The Company and the Purchaser shall each pay 50% of any sales and transfer
taxes arising out of or in connection with the sale and transfer of the Assets and Assumed
Liabilities to the Purchaser pursuant to this Agreement. The Company shall pay all Taxes, file all
Tax Returns and be responsible for all Tax Contests related to the Business and the Assets for any
and all taxable periods ending on or before the Effective Date. The Purchaser shall pay all Taxes,
file all Tax Returns and be responsible for all Tax Contests related to the Business, the Assets
and the Assumed Liabilities for any and all taxable periods beginning after the Effective Date.
For any taxable period beginning before and ending after the Effective Date (“Straddle
Period”), the responsibility for the payment of ad valorem Taxes assessed with respect to any
of the Assets (whether for real or personal property) will be prorated between the parties with the
Parent being responsible for a proportional share based on the number of calendar days in the
portion of the Straddle Period ending on the Effective Date and the Purchaser being responsible for
a proportional share based on the number of calendar days in the portion of the Straddle Period
beginning after the Effective Date. If the amount of such ad valorem Taxes incurred during a
Straddle Period with respect to the Assets cannot be determined on or before the Closing Date, the
Parties shall prorate ad valorem Taxes equal to the amount of such Taxes assessed for the prior
equivalent period of time. In the event the actual amount of ad valorem Taxes payable with respect
to the Straddle Period vary from the amount used pursuant to the preceding sentence, then the
Company and the Purchaser shall prorate the difference within ten (10) days following a request by
any Party based upon actual assessment of ad valorem Taxes.

ARTICLE 6

CONDITIONS PRECEDENT

     6.1 Conditions to the Obligations of the Parent and the Company. The obligations of
the Parent and the Company to close the Contemplated Transactions are subject to the fulfillment or
satisfaction on and as of the Closing of each of the following conditions (any one or more of which
may be waived by the Parent and the Company, but only in a writing signed by the Parent and the
Company).

          (a) Accuracy of Representations and Warranties. The representations and warranties of
the Purchaser in Article 4 must be accurate in all material respects as of the Closing (except to
the extent any such representation or warranty speaks as of the date of this Agreement or any other
specific date, in which case such representation or warranty will have been accurate in all
material respects as of such date), except that (i)any inaccuracies in such representations and
warranties will be disregarded for purposes of this Section 6.1(a) if the Parent has specific
knowledge of any such inaccuracies as of the date of this Agreement and (ii)any inaccuracies in
such representations and warranties will be disregarded for purposes of this Section 6.1(a) if such
inaccuracies (considered collectively) do not have a Material Adverse Effect as of the Closing
Date.

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          (b) Covenants. The Purchaser must have performed or complied in all material respects
with its agreements and covenants required to be performed or complied with under this Agreement as
of or prior to the Closing Date.

          (c) Authorizations. The Parent and the Company must have received from the Purchaser
written evidence that the execution, delivery and performance of the Purchaser’s obligations under
this Agreement have been duly and validly approved and authorized and that all necessary
partnership approvals of the Purchaser have been obtained.

          (d) No Litigation. No judgment, writ or order of any Governmental Entity or other
legal restraint or prohibition may be in effect, and no Legal Proceeding may be pending or
threatened, that in any case would (i)prevent the Contemplated Transactions or (ii)cause the
Contemplated Transactions to be rescinded.

          (e) Government Approvals. All consents and approvals of any Governmental Entity
required in connection with the consummation of the Contemplated Transactions must have been
obtained.

          (f) Required Consents. The Parent and the Company must have obtained the consents to
the Contemplated Transactions required under the contracts and agreements set forth on Section
6.1(f) of the Company Disclosure Schedule (such consents, the “Company Required Consents”)
and have been released from any and all further liability and obligation under such contracts and
agreements.

          (g) Ancillary Agreements. The Purchaser must have executed and delivered to the
Parent and the Company (i) an Assignment and Assumption Agreement providing for the Company’s
assignment and the Purchaser’s assumption of the Assumed Liabilities and (ii) Assignments of
Patents and Trademarks, each in a form reasonably acceptable to the Parent and the Company.

          (h) Officer’s Certificate. The Purchaser must have delivered to the Parent and the
Company a certificate signed by an officer of the Purchaser (without qualification as to knowledge
or materiality or otherwise) to the effect that each of the conditions specified in this Agreement
(insofar as Section 6.1(d) relates to Legal Proceedings involving the Purchaser) is satisfied in
all respects.

     6.2 Conditions to the Purchaser’s Obligations. The obligations of the Purchaser are
subject to the fulfillment or satisfaction on and as of the Closing of each of the following
conditions (any one or more of which may be waived by the Purchaser, but only in a writing signed
by the Purchaser):

          (a) Accuracy of Representations and Warranties. The representations and warranties of
the Company in Article 2 and the Parent in Article 3 must be accurate in all material respects as
of the Closing (except to the extent any such representation or warranty speaks as of the date of
this Agreement or any other specific date, in which case such representation or warranty will have
been accurate in all material respects as of such date), except that (i)any inaccuracies in such
representations and warranties will be disregarded for purposes of this Section 6.2(a) if the
Purchaser has specific knowledge of any such inaccuracies as of the date of this Agreement and
(ii)any inaccuracies in such representations and warranties will be disregarded for purposes of
this Section 6.2(a) to the extent that the Company’s Senior Management had knowledge of any fact,
event or circumstance giving rise to the alleged inaccuracy as of the Closing Date.

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          (b) Covenants. The Parent and the Company must have performed or complied in all
material respects with its agreements and covenants required to be performed or complied with under
this Agreement as of or prior to the Closing Date.

          (c) Authorizations. The Purchaser must have received from each of the Parent and the
Company written evidence that the execution, delivery and performance of its obligations under this
Agreement have been duly and validly approved and authorized and that all necessary corporate
approvals of the Parent and the Company have been obtained.

          (d) No Litigation. No judgment, writ or order of any Governmental Entity or other
legal restraint or prohibition may be in effect, and no Legal Proceeding may be pending or
threatened, that in any case would (i)prevent the Contemplated Transactions or (ii)cause the
Contemplated Transactions to be rescinded.

          (e) Government Approvals. All material consents and approvals of any Governmental
Entity required in connection with the consummation of the Contemplated Transactions must have been
obtained.

          (f) Required Consents. The Parent and the Company must have obtained and delivered to
the Purchaser all consents from each person necessary for the assignment and transfer of the
Contracts and/or Assets listed on Schedule 6.2(f) to Purchaser, in each case without
condition, qualification or limitation of any kind (the “Purchaser Required Consents”).

          (g) Other Documents. The Purchaser must have received such other certificates and
instruments (including, without limitation, certificates of good standing of the Company and each
Subsidiary in their jurisdictions of organization and the various foreign jurisdictions in which
they are qualified, certified charter documents, certificates as to the incumbency of officers and
the adoption of authorizing resolutions) as it may reasonably request at least ten(10) days prior
to the Closing.

          (h) Ancillary Agreements. The Purchaser must have received from the Company (i) a
Bill of Sale covering all of the Assets; (ii) an Assignment and Assumption Agreement providing for
the Company’s assignment and the Purchaser’s assumption of the Assumed Liabilities and (iii)
Assignments of Patents and Trademarks and Company Intellectual Property, each in form and substance
reasonably acceptable to the Purchaser.

          (i) Officer’s Certificates.

               (i) The Parent must have delivered to the Purchaser a certificate signed by an officer of the
Parent (without qualification as to knowledge or materiality or otherwise) to the effect that each
of the conditions specified in this Agreement (insofar as Section 6.2(d) relates to Legal
Proceedings involving the Parent) is satisfied in all respects.

               (ii) The Company must have delivered to the Purchaser a certificate signed by an officer of
the Company (without qualification as to knowledge or materiality or otherwise) to the effect that
each of the conditions specified in this Agreement (insofar as Section 6.2(d) relates to Legal
Proceedings involving the Company) is satisfied in all respects.

          (j) No Conflict. Neither the consummation nor the performance of the Transaction by
the Parent and the Company will, directly or indirectly (with or without notice or lapse of time),
contravene or conflict with or result in a violation of any material agreement to which the Parent
or the Company is a party or by which any of their respective properties or assets is bound.

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          (k) Material Adverse Change. No Material Adverse Change in the Business or in the
Assets shall have occurred between the date hereof and the Closing Date.

ARTICLE 7

TERMINATION OF AGREEMENT

     7.1 Termination. This Agreement may be terminated at any time prior to the Closing:

          (a) By mutual consent of the Purchaser, the Company and the Parent;

          (b) By either the Purchaser, the Company or the Parent for any reason if the Closing has not
occurred by the date that is sixty(60) days following the date of this Agreement, unless otherwise
mutually agreed in writing by the parties, or such later date as the parties may agree in writing,
provided that a party cannot terminate under this provision if the failure of the Closing
to occur is the result of the failure on the part of such party to perform any of its obligations
hereunder (except the failure on the part of such party to satisfy a closing condition over which
such party has no control);

          (c) By either the Purchaser or the Parent at any time prior to the Closing in the event the
other party (and, in the case of the Parent, the Company) has breached any material representation,
warranty, or covenant contained in this Agreement in any material respect, the non-breaching party
has notified the breaching party of the breach, and the breach has continued without cure for a
period of fifteen(15) business days after the notice of breach; or

          (d) By either the Purchaser, the Company or the Parent if any Governmental Entity will have
issued an order, injunction, decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the Contemplated Transactions and such order, injunction,
decree, ruling or other action will have become final and nonappealable.

Any termination of this Agreement under this Section 7.1 is effective by the delivery of written
notice by the terminating party to the other parties.

     7.2 Effect of Termination. Upon termination of this Agreement pursuant to this
Article 7, this Agreement and the rights and obligations of the parties under this Agreement
automatically end without any Liability against any party or its Affiliates, except that nothing in
this Section 7.2 relieves any party from Liability for the breach of any provisions of this
Agreement prior to termination and the provisions of Section 5.2(a) “Confidentiality”, this Section
7.2, Section 7.3 “Certain Effects of Termination”, Section 10.1 “Governing Laws and Forum” and
Section 10.6 “Expenses” will remain in force and survive any termination of this Agreement.

     7.3 Certain Effects of Termination. If the Purchaser or the Parent terminates this
Agreement pursuant to this Article 7, each party shall comply with the Nondisclosure Agreement
regarding the return and/or destruction of any documents furnished to the other parties in
connection with this Agreement.

ARTICLE 8

INDEMNIFICATION

     8.1 Indemnification by the Parent. In the event the Closing occurs, and subject to
the limitations expressly set forth in Section 8.4 hereof, the Parent will indemnify, defend and
hold harmless the Purchaser and its partners, directors, officers, employees, agents and Affiliates
(collectively, the

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“Purchaser Indemnitees”) from and against any and all Damages incurred or suffered by
the Purchaser Indemnitees arising or resulting from, directly or indirectly, (a) any breach of (i)
any representation or warranty set forth in Article 2 or Article 3 of this Agreement or in any
certificate delivered by the Parent or the Company in connection with this Agreement to the extent
a claim for indemnification against the Parent is made in accordance with Section 8.3 hereof during
the Indemnification Period or (ii) any covenant of the Parent or the Company set forth in this
Agreement, (b) any Taxes related to the Business or the Assets attributable to the Pre-Closing
Period and (c)the Legal Proceedings described in Section 2.13 of the Company Disclosure Schedule.
Additionally, the Parent agrees to indemnify and hold Purchaser harmless against all debts, claims,
liabilities and obligations of the Company not expressly assumed by Purchaser hereunder, and to pay
any and all reasonable attorneys’ fees and out of pocket legal costs incurred by Purchaser in
connection therewith.

     8.2 Indemnification by the Purchaser. In the event the Closing occurs, and subject to
the limitations expressly set forth in Section 8.4 hereof, the Purchaser will indemnify, defend and
hold harmless the Parent and its stockholders, directors, officers, employees, agents and
Affiliates (collectively, the “Parent Indemnitees”) from and against any and all Damages
incurred or suffered by the Parent Indemnitees arising or resulting from, directly or indirectly,
(a) any breach of (i)any representation or warranty set forth in Article 4 of this Agreement or in
any certificate delivered by the Purchaser in connection with this Agreement to the extent a claim
for indemnification against the Purchaser is made in accordance with Section 8.3 hereof during the
Indemnification Period or (ii)any covenant of the Purchaser set forth in this Agreement, and (b)
any Taxes related to the Business or the Assets attributable to the Post-Closing Period.

     8.3 Claim Procedure.

          (a) Claim Notice. A party which seeks indemnity under this Article 8 (an
“Indemnified Party”) will give written notice (a “Claim Notice”) to the party from
whom indemnification is sought (an “Indemnifying Party”), whether the Damages sought arise
from matters solely between the parties or from third party claims described in Section 8.3(d).
The Claim Notice must contain (i)a description and, if known, estimated amount (the “Claimed
Amount”) of any Damages incurred or reasonably expected to be incurred by the Indemnified
Party, (ii)a reasonable explanation of the basis for the Claim Notice to the extent of facts then
known by the Indemnified Party and (iii)a demand for payment of those Damages.

          (b) Response to Notice of Claim. Within thirty(30) days after delivery of a Claim
Notice, the Indemnifying Party will deliver to the Indemnified Party a written response (the
“Response”) in which the Indemnifying Party will either:

               (i) agree that the Indemnified Party is entitled to receive all of the Claimed Amount and the
Indemnifying Party will pay the Claimed Amount in accordance with a payment and distribution method
reasonably acceptable to the Indemnified Party; or

               (ii) dispute that the Indemnified Party is entitled to receive any of the Claimed Amount (in
such an event, the Response will be referred to as an “Objection Notice”). If no Response
is delivered by the Indemnifying Party to the Indemnified Party within such 30-day period, the
Indemnifying Party is deemed to have disputed that the Indemnified Party is entitled to receive any
of the Claimed Amount.

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          (c) Contested Claims.

               (i) In the event that the Indemnifying Party disputes the Claimed Amount, as soon as
practicable but in no event later than ten(10) days after the receipt of the Objection Notice or,
if no Response is provided within the thirty (30) day period referred to in Section 8.3(b)(ii)
above, as soon as practicable but in no even later than ten (10) days after the expiration of such
thirty (30) day period, the parties will submit the matter to non-binding mediation by a
mutually-acceptable mediator to be chosen within ten(10) days thereafter. Neither party may
unreasonably withhold consent to the selection of the mediator. If the parties cannot resolve the
dispute relating to the Claimed Amount within fifteen(15) days after the commencement of the
mediation proceedings (the “Mediation Period”), the parties will submit the matter to
binding arbitration in Dallas County, Texas. All claims will be settled by three(3) arbitrators in
accordance with the Commercial Arbitration Rules then in effect of the American Arbitration
Association (the “AAA Rules”). The Parent, on the one hand, and the Purchaser on the other
hand, will each designate one(1) arbitrator within five(5) days after termination of the Mediation
Period. The Parent and the Purchaser will cause such designated arbitrators to agree mutually upon
and designate a third arbitrator within fifteen(15) days after termination of the Mediation Period.
In the event that either party fails to timely designate an arbitrator or the so-designated
arbitrators fail to timely designate a third arbitrator, then the resulting vacancy will be filled
by an arbitrator appointed in accordance with the AAA Rules no later than twenty(20) days after
termination of the Mediation Period. The Parent and the Purchaser will cause the arbitrators to
decide the matter to be arbitrated pursuant hereto as soon as commercial practicable but in no
event more than thirty(30) days after the appointment of the last arbitrator. The arbitrators’
decision will relate solely to whether the Indemnified Party is entitled to receive the Claimed
Amount (or a portion thereof) pursuant to the applicable terms of this Article 8 and will not
provide for any Damages or remedies that would not be available in a court of competent
jurisdiction located in Texas hearing such matter. The costs and expenses incurred in connection
with the arbitration will be shared evenly by the parties. The final decision of a majority of the
arbitrators will be furnished to the Parent and the Purchaser in writing and will constitute a
conclusive determination of the issue in question, binding upon the Parent and the Purchaser, and
will not be contested by either party. Such decision may be used in a court of law only for the
purpose of seeking enforcement of the arbitrators’ award.

               (ii) Upon receipt by the parties of the final award of the majority of the arbitrators, the
Parent and the Purchaser will thereupon take such actions as are reasonably necessary to comply
with such agreement or instructions.

          (d) Third Party Claims.

               (i) In the event that the Indemnified Party is entitled, or is seeking to assert rights, to
indemnification under this Article 8 relating to a third party claim, the Indemnified Party will
give written notification to the Indemnifying Party of the commencement of any Legal Proceeding
relating to such third party claim. Such notification will be given within five(5) days after
receipt by the Indemnified Party of notice of such suit or proceeding, will be accompanied by
reasonable supporting documentation submitted by such third party (to the extent then in the
possession of the Indemnified Party) and will describe in reasonable detail (to the extent known by
the Indemnified Party) the facts constituting the basis for such suit or proceeding and the amount
of the claimed damages; provided, however, that no delay or deficiency on the part
of the Indemnified Party in so notifying the Indemnifying Party will relieve the Indemnifying Party
of any Liability or obligation hereunder except to the extent of any Damage or Liability caused by
or arising out of such failure. Within thirty (30) days after delivery of such notification, the
Indemnifying Party may, upon written notice thereof to the Indemnified Party, assume control of the
defense of such suit or proceeding with counsel reasonably satisfactory to the Indemnified Party;
provided, however, that the Indemnifying Party may not assume control of the
defense

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of a suit or proceeding involving criminal liability. If the Indemnifying Party does not so
assume control of such defense, the Indemnified Party will control such defense.

               (ii) The party not controlling such defense (the “Non-controlling Party”) may
participate therein at its own expense. The party controlling such defense (the “Controlling
Party”) will keep the Non-controlling Party reasonably advised of the status of such suit or
proceeding and the defense thereof and will consider in good faith recommendations made by the
Non-controlling Party with respect thereto. The Non-controlling Party will furnish the Controlling
Party with such information as it may have with respect to such suit or proceeding (including
copies of any summons, complaint or other pleading which may have been served on such party and any
written claim, demand, invoice, billing or other document evidencing or asserting the same) and
will otherwise cooperate with and assist the Controlling Party in the defense of such suit or
proceeding.

               (iii) The Indemnifying Party will not agree to any settlement of, or the entry of any judgment
arising from, any such suit or proceeding without the prior written consent of the Indemnified
Party, which will not be unreasonably withheld or delayed; provided, however, that
the consent of the Indemnified Party will not be required if the Indemnifying Party agrees in
writing to pay any amounts payable pursuant to such settlement or judgment and such settlement or
judgment includes a full, complete and unconditional release of the Indemnified Party from further
Liability. The Indemnified Party will not agree to any settlement of, or the entry of any judgment
arising from, any such suit or proceeding without the prior written consent of the Indemnifying
Party, which will not be unreasonably withheld or delayed.

          (e) Survival of Representations and Warranties. All representations and warranties
contained in this Agreement and any certificate delivered pursuant to this Agreement (i)survive the
Closing and any investigation at any time made by or on behalf of an Indemnified Party and
(ii)expire on the three hundred sixty-sixth(366th) day following the Closing Date (such
period, the “Indemnification Period”). If an Indemnified Party delivers to an Indemnifying
Party, before expiration of a representation or warranty, either a Claim Notice based upon a breach
of such representation or warranty, or a notice that, as a result of a legal proceeding instituted
by or claim made by a third party, the Indemnified Party reasonably expects to incur Damages (an
“Expected Claim Notice”), then the applicable representation or warranty will survive
until, but only for purposes of, the resolution of the matter covered by such notice. If the legal
proceeding or written claim with respect to which an Expected Claim Notice has been given is
definitively withdrawn or resolved in favor of the Indemnified Party, the Indemnified Party will
promptly so notify the Indemnifying Party.

     8.4 Limitations.

          (a) Parent’s Liability.

               (i) In no event will the Parent’s Liability under this Agreement (whether under this Article 8
or otherwise) exceed $5,000,000, net of any valid claims that the Parent may have under other
provisions of this Agreement or by law. Notwithstanding anything to the contrary in this
Agreement, the Purchaser Indemnitees will not be entitled to assert any claims for indemnification
under this Article 8 unless and until the aggregate Damages are in excess of $100,000 (the
“Deductible”) and, in such event, only for amounts in excess of the Deductible.

               (ii) The parties acknowledge that (A)except as expressly provided in this Agreement or any
certificate delivered by the Company or the Parent pursuant to this Agreement, neither the Parent
nor the Company has made or is making any representations, warranties or commitments whatsoever
regarding the subject matter of this Agreement, express or implied and (B)except as expressly

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provided in this Agreement or any certificate delivered by the Company or the Parent pursuant
to this Agreement, the Purchaser is not relying and has not relied on, any representations,
warranties or commitments whatsoever regarding the subject matter of this Agreement, express or
implied.

               (iii) Without limiting the effect of any other limitation contained in this Article 8, for
purposes hereof, no representation or warranty of the Company is deemed to be or to have been
inaccurate if:

                    (A) on or prior to the date of this Agreement, the Purchaser had specific knowledge of the
inaccuracy of such representation or warranty;

                    (B) following the date of this Agreement and prior to the Closing, (I)the Purchaser obtained
specific knowledge of the inaccuracy of such representation or warranty, (II)such inaccuracy,
considered together with all other inaccuracies of any representations or warranties of which the
Purchaser had specific knowledge, was of a nature that would have caused the condition set forth in
Section 6.2(a) not to be satisfied and (III)the Purchaser elected nonetheless to proceed with the
Closing;

                    (C) following the Closing, as expressly stated in the introductory language to Article 2; or

                    (D) the Company’s Senior Management had knowledge of the inaccuracy of such representation or
warranty.

          (b) Purchaser’s Liability.

               (i) In no event will the Purchaser’s Liability under this Agreement (whether under this
Article 8 or otherwise) exceed $5,000,000, net of any valid claims that the Purchaser may have
under other provisions of this Agreement or by law. Notwithstanding anything to the contrary in
this Agreement, the Parent Indemnitees will not be entitled to assert any claims for
indemnification under this Article 8 unless and until the aggregate Damages are in excess of
$100,000 (the “Deductible”) and, in such event, only for amounts in excess of the
Deductible.

               (ii) The parties acknowledge that (A)except as expressly provided in this Agreement any
certificate delivered by the Purchaser pursuant to this Agreement, the Purchaser has not made and
is not making any representations, warranties or commitments whatsoever regarding the subject
matter of this Agreement, express or implied and (B)except as expressly provided in this Agreement
or any certificate delivered by the Purchaser pursuant to this Agreement, neither the Parent nor
the Company is relying and has not relied on, any representations, warranties or commitments
whatsoever regarding the subject matter of this Agreement, express or implied.

               (iii) Without limiting the effect of any other limitation contained in this Article 8, for
purposes hereof, no representation or warranty of the Purchaser is deemed to be or to have been
inaccurate if:

                    (A) on or prior to the date of this Agreement, the Parent or the Company had specific
knowledge of the inaccuracy of such representation or warranty; or

                    (B) following the date of this Agreement and prior to the Closing; (I)the Parent or the
Company obtained specific knowledge of the inaccuracy of such representation or warranty, (II)such
inaccuracy, considered together with all other inaccuracies of any representations or

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warranties of which the Parent or the Company had specific knowledge, was of a nature that
would have caused the condition set forth in Section 6.1(a) not to be satisfied and (III)the Parent
and the Company elected nonetheless to proceed with the Closing

          (c) No Limit for Fraud. Nothing in this Agreement will limit the Liability of any
person to any other party for intentional fraud, willful misconduct or a breach of Article 9.

          (d) Other Benefits. The amount of any and all Damages for which indemnification is
provided pursuant to this Article 8 will be net of any Tax benefit to which an Indemnified Party is
entitled by reason of payment of such obligation or Liability (taking into account any tax cost or
reduction in such Tax benefits by reason of receipt of the indemnification payment) and any amounts
of any insurance proceeds, indemnification payments, contribution payments or reimbursements
actually received or receivable by the Indemnified Party with respect to such Damages or any of the
circumstances giving rise thereto.

     8.5 Exclusive Remedy. From and after the Closing, the sole and exclusive remedy of
any Purchaser Indemnitee with respect to any and all Damages arising in connection with the
Contemplated Transactions will be pursuant to the indemnification obligations set forth in Section
8.1. The Parent will not have any Liability under this Agreement except to the extent provided in
Section 8.4(a)(i); provided, however, that the foregoing will not prohibit any
Purchaser Indemnitee from bringing a claim for fraud against the Parent, subject in any event to
Section 8.6.

     8.6 Exercise of Remedies by Purchaser Indemnitees Other than the Purchaser. No
Purchaser Indemnitee (other than the Purchaser or any successor or assignee of the Purchaser) is
entitled to assert any indemnification claim or exercise any other remedy under this Agreement
unless the Purchaser (or any successor or assignee of the Purchaser) consents to the assertion of
the indemnification claim or the exercise of the other remedy.

ARTICLE 9

OTHER AGREEMENTS

     9.1 Employee Benefits. As of the Closing, the Purchaser will offer employment to each
individual employed by the Company (excluding independent contractors and Thomas D. Karol, Richard
A. Nowak, Gregory J. Fischer, James. J. Waibel, David G. Sisler and Thomas W. Cave) on the Closing
Date (the “Company Employees”) with job positions, compensation, vacation and benefit
packages substantially similar to those provided to such employees immediately prior to the Closing
Date but, with respect to benefits packages, only to the extent that the Purchaser is able to
provide such benefits without unreasonable costs. The immediately preceding sentence does not
limit the Purchaser’s ability to alter, amend, change or add to any benefit plans or policies as it
deems prudent based on business needs after the Closing. Any Company Employees accepting the
Purchaser’s offer of employment shall be referred to herein as the “Hired Employees.”
Notwithstanding anything herein to the contrary, the Purchaser shall honor and be responsible for
all vacation benefits that the Company Employees are entitled to as of the Closing Date. The
Purchaser shall be responsible for any and all liabilities, obligations and claims of any kind
arising out of employment (or termination of employment, whether actual or constructive) of the
Company Employees after the Closing Date, including, but not limited to, any severance, termination
pay, or similar obligations with respect to employees terminated after the Closing Date or
resulting from the consummation of the Transaction or from the change in any benefits provided to
the Hired Employees after the Closing Date. Purchaser shall not be responsible for the matters
disclosed in Section 2.18(f) of the Company Disclosure Schedule. The Purchaser shall also be
responsible for any and all liabilities, obligations and claims of any kind arising out of or
relating to its offers of employment to the Company Employees. The

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Hired Employees shall be entitled to participate in all benefit plans and arrangements which
are initially available or subsequently become available on the same basis as the Purchaser’s
employees. For purposes of eligibility to participate and vesting requirements in the Purchaser’s
employee benefit plans for which any Company Employee may be eligible upon hire by the Purchaser,
to the extent permissible under the relevant plans, service by a Company Employee with the Company
shall be deemed to have been in service with the Purchaser; provided, however, that
no such service credit shall be made in connection with any stock option grants to be made by the
Purchaser, if any, to such employees.

     9.2 Use of Parent’s Name.

          (a) Within fifteen (15) days after the Closing, the Purchaser and the Company agree to
(i)remove “ElkCorp,” “Elcor Corporation,” “Elcor” or other similar marks and any other trademark,
design or logo previously or currently used by the Parent or any of its Affiliates (the “Parent
Marks”) from all buildings, signs and vehicles of the Company or any Subsidiary, and (ii)cease
using the Parent Marks in electronic databases, web sites, product instructions, packaging and
other materials, printed or otherwise (all such materials, together with buildings, signs and
vehicles, the “Marked Assets”).

          (b) Immediately after the Closing, the Purchaser, the Company and each Subsidiary will cease
using the Parent Marks in all invoices, letterhead, advertising and promotional materials, office
forms and business cards.

          (c) From and after the Closing, the Purchaser, the Company and each Subsidiary will use
reasonable best efforts to remove the Parent Marks from all assets of the Company and each
Subsidiary (including all Marked Assets); provided, however, that in no event will
the Purchaser, the Company or any Subsidiary use the Parent Marks after the three-month anniversary
of the Closing Date.

          (d) The Purchaser and the Company acknowledge and agree that Parent is the owner of the Parent
Marks and all goodwill attached thereto. This Agreement does not give the Purchaser, the Company
or any Subsidiary the right to use the Parent Marks except in accordance with this Agreement. The
Purchaser and the Company agree not to attempt to register the Parent Marks nor to register
anywhere in the world a mark the same as or similar to the Parent Marks.

          (e) In no event will the Purchaser, the Company, the Subsidiary or any Affiliate of those
persons advertise or hold itself out as Parent or any Affiliate of Parent after the Closing Date.

          (f) Within fifteen (15) days after the Closing, the Company will amend its organizational and
governing instruments and take all other action necessary to change its name and cease using any
reference to OEL, Ltd., Ortloff Engineers, Ltd. or any similar name.

          (g) Upon request by Purchaser from time to time after Closing, Parent, at its expense, will
promptly arrange for the assignment to Purchaser, and recording in the name of Purchaser or its
designee, of all Company Intellectual Property.

     9.3 Records Retention. The Purchaser will cause all books and records relating to the
Company as of the Closing (the “Records”) to be retained for seven (7) years after the
Closing. In addition, to the extent any books and records relating to the Company are retained by
the Parent or the Company following the Closing (the “Retained Records”), the Parent or the
Company will retain the Retained Records for seven (7) years after the Closing. During such term,
each party shall allow the other parties and their representatives access to inspect or copy the
Records and Retained Records, as appropriate, during normal business hours.

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     9.4 Litigation.

          (a) After the Closing Date, the Purchaser will cooperate, at its expense, with the Company,
the Parent and their counsel in the contest or defense of, and make available its personnel and
provide any testimony and access to its books and Records in connection with, any Legal Proceeding
involving or relating to the Business, the Assets, the Excluded Assets and the Assumed Liabilities.
Neither the Company or the Parent is waiving, and will not be deemed to have waived or diminished,
any of their respective attorney work-product protections, attorney-client privileges or similar
protections or privileges as a result of the disclosure of information to the Purchaser in
connection with this Agreement and the Transaction. The Purchaser, the Company and the Parent
(i)share a common legal and commercial interest in all of the information and communications that
may subject to such protections and privileges, (ii) are or may become joint defendants in Legal
Proceedings to which such protections and privileges may relate and (iii) intend that such
protections and privileges remain intact should either party become subject to any actual or
threatened Legal Proceeding to which such information or communications relate. The Purchaser
agrees that it will have no right or power after the Closing Date to assert or waive any such
protection or privilege included in the Assets. The Purchaser will take any actions reasonably
requested by the Parent or the Company, at the sole cost and expense of the Parent or the Company
in order to permit the Company or the Parent to preserve and assert any such protection or
privilege included in the Assets.

          (b) After the Closing Date, Parent and the Company will cooperate, at their expense, with the
Purchaser and its counsel in the contest or defense of, and make available its personnel and
provide any testimony and access to its books and the Retained Records in connection with, any
Legal Proceeding involving or relating to the Business, the Assets, the Excluded Assets and the
Assumed Liabilities. Purchaser is not waiving, and will not be deemed to have waived or diminished
any of its attorney work product protections, attorney-client privileges or similar protections or
privileges as a result of disclosure of information to the Parent or the Company in connection with
this Agreement and the Transaction. The Purchaser, the Company and the Parent (i) share a common
legal and commercial interest in all of the information and communications that may subject to such
protections and privileges, (ii) are or may become joint defendants in Legal Proceedings to which
such protections and privileges may relate and (iii) intend that such protections and privileges
remain intact should either party become subject to any actual or threatened Legal Proceeding to
which such information or communications relate. Parent and the Company agree that they will have
no right or power after the Closing Date to assert or waive Purchaser’s protection or privilege
included in the Assets. Parent and the Company will take any actions reasonably requested by the
Purchaser, at the sole cost and expense of the Purchaser in order to permit the Purchaser to
preserve and assert any of Purchaser’s protection or privilege included in the Assets.

     9.5 Collection and Turnover of Company Long Term Receivables and Scheduled Relationship
Receivables.

          (a) The Company appoints the Purchaser as its attorney in fact to collect and receive payment
of any and all Company Long Term Receivables. The Purchaser shall, promptly upon receipt of
payment (in whole or in part) of any Company Long Term Receivable, deliver to the Parent or its
assignee all funds received, less a fee payable to the Purchaser in an amount equal to ten
percent (10%) of the funds delivered to Parent or, if such funds are delivered directly to the
Company or Parent and the Purchaser has not received such fee, the Company or Parent shall promptly
pay such fee to the Purchaser. In the event that (i) the Company or the Parent in good faith
determine that the Purchaser fails to use all reasonable efforts to collect the Company Long Term
Receivables, and such failure continues for more than 30 days after the Company or the Parent gives
notice to Purchaser of its determination, or (ii) any of the Company Long Term Receivables are more
than 120 days past due, the Company or the Parent may

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terminate, at any time, the appointment of the Purchaser as the Company’s attorney in fact
and, thereafter directly or indirectly, collect for its own account the Company Long Term
Receivables without any further obligation to pay the Purchaser the ten percent (10%) fee
referenced above. The Purchaser shall, subsequent to any such termination, cooperate, without
compensation, with the Parent and the Company with respect to their efforts to collect any Company
Long Term Receivable.

          (b) The Purchaser shall promptly notify the Company and the Parent of each agreement the
Purchaser or its Affiliate enters into with respect to any of the Scheduled Relationships from the
Closing Date until the expiration of four (4) years thereafter. An agreement, for the purposes of
this Section 9.5(b) shall be deemed to have been entered into upon the earlier of (i) the execution
of an agreement with respect to a Scheduled Relationship, (ii) the ordering of equipment for a
prospective agreement with respect to a Scheduled Relationship or (iii) the date on which the
Purchaser would be entitled to seek damages with respect to such Scheduled Relationship for a claim
of infringement if the other party to the Scheduled Relationship failed to obtain a license or pay,
when due, any compensation, fee or royalty. The Purchaser shall, promptly upon receipt of payment
of any Scheduled Relationship Receivables, deliver to the Parent or its assignee twenty-five
percent (25%) of all such funds received.

          (c) The Purchaser shall use its best efforts to collect all Company Long Term Receivables and
Scheduled Relationship Receivables. Within thirty (30) days after the end of each calendar year,
the Purchaser shall deliver to the Parent an accounting of all Company Long Term Receivables and
Scheduled Relationship Receivables received by the Purchaser and its Affiliates and monies paid to
the Company.

     9.6 Audit Rights of the Company; Parent and Purchaser.

          (a) The Purchaser shall, on a quarterly basis and at such other times as Parent may reasonably
request, provide Parent with a listing of Company Long-Term Receivables and Scheduled Relationships
Receivables earned, accrued or collected by the Purchaser since the date of this Agreement and the
status of any of the Scheduled Relationships, each in reasonable detail and otherwise containing
such information as Parent may reasonably request. Parent shall, on a quarterly basis and at such
other times as Purchaser may reasonably request, provide the Purchaser with a listing of all
Company Long-Term Receivables earned, accrued or collected by the Company or Parent since the date
of this Agreement, in reasonable detail and otherwise containing such information as Purchaser may
reasonably request.

          (b) The Company or the Parent will have the right to audit Purchaser’s books and records,
including the Records, pertaining or relating to the Business, Assets, Company Long Term
Receivables, Scheduled Relationships and Scheduled Relationship Receivables once every twelve (12)
months. The Company or the Parent will give the Purchaser reasonable notice of its intent to
audit, and the parties will attempt to schedule such audit so as to not unnecessarily interfere
with the Purchaser’s operations. If an audit determines that there is any discrepancy in amounts
owed by the Purchaser to the Company, such amounts will immediately be paid. The Company will be
solely responsible for the costs of any audit; provided, however, that if an audit determines that
the Purchaser has failed to pay and turn over to the Company an amount equal to or greater than 5%
of Company Long Term Receivables and Scheduled Relationship Receivables actually paid during the
period under audit, then the Purchaser shall immediately pay to the Company all costs and expenses
incurred in connection with such audit.

          (c) The Purchaser will have the right to audit the Company’s and Parent’s books and records
pertaining or relating to the Company Long Term Receivables once every twelve (12) months. The
Purchaser will give the Company and Parent reasonable notice of its intent to audit, and the
parties will attempt to schedule such audit so as to not unnecessarily interfere with the Company’s
and Parent’s

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operations. If an audit determines that there is any discrepancy in amounts owed by the
Company or Parent to the Purchaser in connection with such Company Long Term Receivables, such
amounts will immediately be paid. The Purchaser will be solely responsible for the costs of any
audits; provided, however, that if an audit determines that the Company or Parent has failed to pay
and turn over to the Purchaser an amount equal to or greater than 5% of the amounts payable to the
Purchaser pursuant to Section 9.5(a) during the period under audit, then the Company and the Parent
shall immediately pay to the Purchaser all costs and expenses incurred in connection with such
audit.

     9.7 Additional Assistance. Each of the Parent, the Company and the Purchaser agree
that it will:

          (a) provide assistance to the other party as reasonably requested in preparing and filing Tax
Returns and responding to Tax Contests;

          (b) make available to the other party as reasonably requested all information, records, and
documents relating to Taxes concerning the Company or the Business;

          (c) provide timely notice to the other party in writing of any pending or threatened Tax
audits, assessments or Tax proceedings for which such party may have a Liability under this
Agreement;

          (d) furnish the other party with copies of all correspondence received from any taxing
authority in connection with any Tax audit or Tax proceedings with respect to any taxable period
for which such party may have a Liability under this Agreement; and

          (e) retain any books and records that could reasonably be expected to be necessary or useful
in connection with any preparation by any other party of any Tax Return, or for any audit,
examination, or proceeding relating to Taxes. Such books and records will be retained until the
expiration of the applicable statute of limitations (including extensions thereof);
provided, however, that in the event of an audit, examination, investigation or
proceeding has been instituted prior to the expiration of the applicable statute of limitations (or
in the event of any claim under this Agreement), the books and records will be retained until there
is a final determination thereof (and the time for any appeals has expired).

ARTICLE 10

MISCELLANEOUS

     10.1 Governing Laws and Forum. Except as expressly provided in this Agreement
(including Article 8 or any exhibit or schedule to this Agreement), the internal laws of the State
of Delaware (without reference to its principles of conflicts of law) govern the construction,
interpretation and other matters arising out of or in connection with this Agreement and its
exhibits and schedules (whether arising in contract, tort, equity or otherwise). With respect to
any action or other Legal Proceeding arising out of or in connection with this Agreement (whether
arising in contract, tort, equity or otherwise) other than pursuant to Article 8 of this Agreement,
the parties irrevocably (a)consent and submit to the exclusive jurisdiction of federal and state
courts located in New Castle County, Delaware (except to the extent another provision of this
Agreement specifies a different forum or procedure for a particular matter), (b)waive any objection
to that choice of forum based on venue or to the effect that the forum is not convenient and
(c)WAIVE TO THE FULLEST EXTENT PERMITTED BY LAW ANY RIGHT TO TRIAL OR ADJUDICATION BY JURY.

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     10.2 Binding Effect and Assignment. This Agreement binds and benefits the parties and
their respective successors and assignees, except that the Purchaser will not assign any of its
rights under this Agreement prior to the Closing without the prior written consent of the Parent.
No party may delegate any performance of its obligations under this Agreement, except that the
Purchaser may at any time delegate the performance of its obligations to any Affiliate of the
Purchaser so long as the Purchaser remains fully responsible for the performance of the delegated
obligation.

     10.3 Severability. If any provision of this Agreement is determined to be invalid,
illegal or unenforceable, the remaining provisions of this Agreement will remain in full force, if
the essential terms and conditions of this Agreement for each party remain valid, binding and
enforceable.

     10.4 Entire Agreement. This Agreement together with its exhibits and schedules
constitutes the final agreement between the parties, and is the complete and exclusive statement of
the parties’ agreement on the matters contained in this Agreement. All prior and contemporaneous
negotiations and agreements between the parties on the matters contained in this Agreement are
superseded by this Agreement.

     10.5 Counterparts. The parties may execute this Agreement in multiple counterparts,
each of which constitutes an original as against the party that signed it, and all of which
together constitute one agreement. This Agreement is effective upon delivery of one executed
counterpart from each party to the other parties. The signatures of all parties need not appear on
the same counterpart. The delivery of signed counterparts by facsimile or email transmission which
includes a copy of the sending party’s signature(s) is as effective as signing and delivering the
counterpart in person.

     10.6 Expenses. Except to the extent specified otherwise in this Agreement, each party
will pay its own professional fees and other expenses incurred by it in connection with this
Agreement and the Contemplated Transactions.

     10.7 Amendment. The parties may amend this Agreement only by a written agreement
signed by each party to be bound by the amendment and that identifies itself as an amendment to
this Agreement.

     10.8 Waiver. The parties may waive a provision of this Agreement only by a writing
signed by the party intended to be bound by the waiver. A party is not prevented from enforcing
any right, remedy or condition in the party’s favor because of any failure or delay in exercising
any right or remedy or in requiring satisfaction of any condition, except to the extent that the
party specifically waives the same in writing. A written waiver given for one matter or occasion
is effective only in that instance and only for the purpose stated. A waiver once given is not to
be construed as a waiver for any other matter or occasion. Any enumeration of a party’s rights and
remedies in this Agreement is not intended to be exclusive, and a party’s rights and remedies are
intended to be cumulative to the extent permitted by law and include any rights and remedies
authorized in law or in equity.

     10.9 Notices. Each party giving any notice required or permitted under this Agreement
will give the notice in writing, and use one of the following methods of delivery to the party to
be notified, at the address set forth below or another address of which the sending party has been
notified in accordance with this Section 10.9 (a)personal delivery, (b)facsimile or telecopy
transmission with a reasonable method of confirming transmission, (c)commercial overnight courier
with a reasonable method of confirming delivery, or (d)pre-paid, United States of America certified
or registered mail, return receipt requested. Notice to a party is effective for purposes of this
Agreement only if given as provided in this Section 10.9 and if the intended addressee has actually
received the notice.

Asset Purchase Agreement

28

 

	 	 	 
	If to the Parent:

	 	ELK TECHNOLOGY GROUP, INC.
	 

	 	14911 Quorum Drive, Suite 600
	 

	 	Dallas, Texas 75254
	 

	 	Facsimile: (972) 851-0552
	 

	 	Attention: General Counsel
	 
	 	 
	With a copy to:

	 	Baker & McKenzie LLP
	 

	 	2001 Ross Avenue, Suite 2300
	 

	 	Dallas, Texas 75201
	 

	 	Facsimile: (214) 978-3099
	 

	 	Attention: Alan Harvey, Esq.
	 
	 	 
	If to the Company:

	 	OEL, LTD., D.B.A. ORTLOFF ENGINEERS, LTD.
	 

	 	14911 Quorum Drive, Suite 600
	 

	 	Dallas, Texas 75254
	 

	 	Facsimile: (972) 851-0552
	 

	 	Attention: General Counsel
	 
	 	 
	With copies to:

	 	ELK TECHNOLOGY GROUP, INC.
	 

	 	14911 Quorum Drive, Suite 600
	 

	 	Dallas, Texas 75254
	 

	 	Facsimile: (972) 851-0552
	 

	 	Attention: General Counsel
	 
	 	 
	 

	 	Baker & McKenzie LLP
	 

	 	2001 Ross Avenue, Suite 2300
	 

	 	Dallas, Texas 75201
	 

	 	Facsimile:(214) 978-3099
	 

	 	Attention: Alan Harvey, Esq.
	 
	 	 
	If to the Purchaser:

	 	TORGO LTD.
	 

	 	415 West Avenue, Suite 2000
	 

	 	Midland, Texas 79701-4438
	 

	 	Facsimile: (432) 685-0256
	 

	 	Attention: President
	 
	 	 
	With a copy to:

	 	Lynch, Chappell & Alsup, P.C.
	 

	 	The Summit, Suite 700
	 

	 	Midland, Texas 79701
	 

	 	Facsimile: (432) 683-2587
	 

	 	Attention: Thomas W. Ortloff

     10.10 Construction of Agreement.

          (a) Where this Agreement states that a party “shall” or “will” perform in some manner or
otherwise act or omit to act, it means that the party is legally obligated to do so in accordance
with this Agreement.

          (b) In the negotiation of this Agreement, each party has received advice from its own
attorney. This Agreement is not to be construed for or against any party based on which party
drafted any of the provisions of this Agreement.

Asset Purchase Agreement

29

 

          (c) The captions, titles and headings, and table of contents, included in this Agreement are
for convenience only, and do not affect this Agreement’s construction or interpretation.

          (d) This Agreement does not, and is not intended to, confer any rights or remedies in favor of
any person other than the parties signing this Agreement, except as may be specifically set forth
in other provisions of this Agreement.

          (e) The words “including,” “includes,” or “include” are to be read as
listing non-exclusive examples of the matters referred to, whether or not words such as
“without limitation” or “but not limited to” are used in each instance. Any
reference in this Agreement to wire transfers or other payments requires payment in dollars of the
United States of America unless some other currency is expressly stated in that reference.

          (f) Any reference in this Agreement to the singular includes the plural where appropriate.
Any reference in this Agreement to the masculine, feminine or neuter gender includes the other
genders where appropriate.

     10.11 No Joint Venture. Nothing in this Agreement creates a joint venture or
partnership between the parties. This Agreement does not authorize any party (a)to bind or commit,
or to act as an agent, employee or legal representative of, another party, except as may be
specifically set forth in other provisions of this Agreement or (b)to have the power to control the
activities and operations of another party. The parties are independent contractors with respect
to each other under this Agreement. Each party agrees not to hold itself out as having any
authority or relationship contrary to this Section 10.11.

     10.12 Bulk Transfer Laws. The Purchaser acknowledges that the Company will not comply
with the provisions of any bulk transfer laws of any jurisdiction in connection with the
transactions contemplated by this Agreement.

(This space intentionally left blank)

Asset Purchase Agreement

30

 

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

	 	 	 	 	 	 	 
	"Purchaser”	 	“Parent”
	 
	 	 	 	 	 	 
	TORGO LTD., a Texas limited partnership	 	ELK TECHNOLOGY GROUP, INC., a
Delaware corporation
	 
	 	 	 	 	 	 
	By:

	 	 	 	By:	 	 
	 

	 	 
	 	 	 	 
	Name:

	 	 	 	Name:	 	 
	 

	 	 
	 	 	 	 
	Title:

	 	 	 	Title:	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	“Company”
	 
	 	 	 	 	 	 
	 	 	 	 	OEL, LTD., D.B.A. ORTLOFF
ENGINEERS, LTD., a Nevada
corporation
	 
	 	 	 	 	 	 
	 

	 	 	 	By:	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 

Signature Page to Asset Purchase Agreement

 

 

EXHIBIT A

Certain Definitions

For purposes of the Agreement (including this Exhibit A):

     “AAA Rules” has the meaning set forth in Section 8.3(c)(i).

     “Acquisition” means any of the following transaction or series of transactions: (a)any
merger, consolidation, share exchange, business combination, issuance of securities, acquisition of
securities, tender offer, exchange offer or other similar transaction (i)in which the Company is a
constituent corporation, (ii)in which a person or “group” (as defined in the Securities Exchange
Act of 1934, as amended, and the rules promulgated thereunder) of persons directly or indirectly
acquires beneficial or record ownership or voting power of securities representing more than fifty
percent(50%) of the outstanding securities of any class of voting securities of the Company or
(iii)in which the Company issues securities representing more than fifty percent (50%) of the
outstanding voting securities of the Company; or (b)any sale, lease, exchange, transfer, license,
acquisition or disposition of any business or businesses or assets of the Company that constitute
or account for fifty percent(50%) or more of the consolidated net revenues, net income or assets of
the Company.

     “Affiliate” means (A)in the case of an individual, the members of the immediate family
(including parents, siblings and children) of (i)the individual, (ii)the individual’s spouse and
(iii)any Business Entity that directly or indirectly, through one or more intermediaries controls,
or is controlled by, or is under common control with any of the foregoing individuals or (B)in the
case of a Business Entity, another Business Entity or a person that directly or indirectly, through
one or more intermediaries controls, or is controlled by, or is under common control with the
Business Entity.

     “Affiliated Group” means a group of corporations with which the Company or any
Subsidiary has filed consolidated, combined, unitary or similar Tax Returns.

     “Affiliate Indemnified Party” has the meaning set forth in Section 9.2(a).

     “Affiliated Period” means any period in which the Company or any Subsidiary was a
member of an Affiliated Group.

     “Agreement” has the meaning set forth in the introductory paragraph.

     “Assets” has the meaning set forth in Section 1.1.

     “Assumed Liabilities” has the meaning set forth in Section 1.3.

     “Best Efforts” means the efforts that a prudent person desirous of achieving a result
would use in similar circumstances to ensure that such result is achieved as expeditiously as is
reasonable; provided, however, that an obligation to use Best Efforts under this Agreement does not
require the person subject to that obligation to take actions that would require extraordinary
out-of-pocket expenditures of cash, involve commencement of legal proceedings against a third
person or in a Material Adverse Change or significant diminution of the benefits to such person of
the Contemplated Transactions.

     “Business” has the meaning set forth in Section 1.1.

 

 

     “business day” means any day other than Saturday, Sunday or any day on which banking
institutions in the State of Texas are closed either under applicable law or action of any
Governmental Entity.

     “Business Entity” means any corporation (including any non-profit corporation),
general partnership, limited partnership, limited liability partnership, joint venture, estate,
trust, company (including any limited liability company or joint stock company), firm or other
enterprise, association, organization or entity.

     “Claimed Amount” has the meaning set forth in Section 8.3(a).

     “Claim Notice” has the meaning set forth in Section 8.3(a).

     “Claims” means any security interests, liens, pledges, charges, escrows, options,
rights of first refusal, mortgages, indentures, security agreements or other encumbrances, claims,
agreements, arrangements or commitments of any kind or character, whether written or oral and
whether or not relating in any way to credit or the borrowing of money.

     “Closing” has the meaning set forth in Section 1.6.

     “Closing Date” has the meaning set forth in Section 1.6.

     “Closing Date Adjustment” has the meaning set forth in Section 1.8(a).

     “Closing Date Net Working Capital” has the meaning set forth in Section 1.8(a).

     “Closing Date Working Capital Detail” has the meaning set forth in Section 1.8(a).

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

     “Company” has the meaning set forth in the introductory paragraph.

     “Company Cash” means all cash and cash equivalents (including marketable securities
and short term investments) calculated in accordance with GAAP applied on a basis consistent with
past practice.

     “Company Disclosure Schedule” has the meaning set forth in introductory language to
Article 2.

     “Company Employee” has the meaning set forth in Section 9.1.

     “Company Intellectual Property” has the meaning set forth in Section 2.8(a).

     “Company Sales Agreement” means an agreement entered into by the Company or its
Affiliates for the license, use, lease, sale or performance of the Company’s or its Affiliate’s
technology, services or products included in the Assets.

     “Company Long Term Receivables” means, with respect to each Company Sales Agreement
entered into prior to the Effective Date all amounts that are due and payable to the Company on or
after the expiration of 365 days from the Effective Date.

     “Company’s Senior Management” means John Wilkinson, Joe Lynch, Hank Hudson, Richard
Pitman and Don Tyler.

 

 

     “Contemplated Transactions” has the meaning set forth in Section 2.3.

     “Contract” has the meaning set forth in Schedule 1.1.

     “Controlling Party” has the meaning set forth in Section 8.3(d)(ii).

     “Damages” includes any Liabilities, losses, damages, settlements, judgments, awards,
penalties, fines, costs or expenses (including, without limitation, reasonable legal, expert and
consultant fees and expenses) but excluding (i)any special, indirect, consequential, exemplary and
punitive damages and also excluding any damages associated with any lost profits or lost
opportunities, and (ii)any legal fees incurred in connection with the dispute resolution process
described in Section 8.3(c).

     “Deductible” has the meaning set forth in Section 8.4(a)(i).

     “Effective Date” means (i) if the Closing Date is on or before May 31, 2005, then the
Effective Date shall be May 1, 2005 or (ii) if the Closing Date is after May 31, 2005, then the
Effective Date shall be the Closing Date, provided, however, that if the Closing Date does not
occur on or before May 31, 2005 primarily due to the fault of either the Parent or the Company,
then the Effective Date shall be May 1, 2005.

     “Employee Benefit Plan” has the meaning set forth in Section 2.18(a).

     “Environmental law” means any law statute, rule or regulation of any Governmental
Entity or the common law relating to the environment or occupational health and safety, including,
without limitation, any statute, regulation or order pertaining to (i)treatment, storage, disposal,
generation and transportation of toxic or hazardous substances or solid or hazardous waste;
(ii)air, water and noise pollution; (iii)groundwater and soil contamination; (iv)the release or
threatened release into the environment of toxic or hazardous substances, or solid or hazardous
waste, including, without limitation, emissions, discharges, injections, spills, escapes or dumping
of pollutants, contaminants or chemicals; (v)the protection of wild life, marine sanctuaries and
wetlands, including, without limitation, all endangered and threatened species; (vi)storage tanks,
vessels and containers; (vii)underground and other storage tanks or vessels, abandoned, disposed or
discarded barrels, containers and other closed receptacles; (viii)health and safety of employees
and other persons; and (ix)manufacture, processing, use, distribution, treatment, storage,
disposal, transportation or handling of pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances or oil or petroleum products or solid or hazardous waste. As used above, the
terms “release” and “environment” has the meaning set forth in the CERCLA.

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

     “ERISA Affiliate” has the meaning set forth in Section 2.18(c).

     “Excluded Assets” has the meaning set forth in Section 1.2.

     “Excluded Liabilities” has the meaning set forth in Section 1.3.

     “Expected Claim Notice” has the meaning set forth in Section 8.3(e).

     “Expiration Date” has the meaning set forth in Section 5.1(c).

     “Financial Statements” has the meaning set forth in Section 2.5(a).

 

 

     “GAAP” means generally accepted accounting principles in the United States.

     “Governmental Entity” means any of the following: (i)nation, state, commonwealth,
province, territory, county, municipality, district or other jurisdiction of any nature;
(ii)federal, state, local, municipal, foreign or other government; or (iii)governmental or
quasi-governmental authority of any nature (including any governmental division, department,
agency, commission, instrumentality, official, organization, unit, body or entity and any court or
other tribunal).

     “Hired Employee” has the meaning set forth in Section 9.1.

     “HSR Act” means the Hart Scott Rodino Antitrust Improvement Act of 1976, as amended.

     “Indemnification Period” has the meaning set forth in Section 8.3(e).

     “Indemnified Party” has the meaning set forth in Section 8.3(a).

     “Indemnifying Party” has the meaning set forth in Section 8.3(a).

     “Initial Date Net Working Capital” has the meaning set forth in Section 1.8(a).

     “Initial Working Capital Detail” has the meaning set forth in Section 1.8(a).

     “Intellectual Property” means all of the following anywhere in the world and all legal
rights, title, or interest in the following arising under the laws of the United States, any state,
or any other country or international treaty regime, whether or not filed, perfected, registered or
recorded and whether now or later existing, filed, issued or acquired, including all renewals:

          (i) all patents and applications for patents and all related reissues, reexaminations,
divisions, renewals, extensions, provisionals, continuations and continuations in part;

          (ii) all copyrights, copyright registrations and copyright applications, copyrightable works,
and all other corresponding rights;

          (iii) all mask works, mask work registrations and mask work applications, and all other rights
relating to semiconductor design and topography;

          (iv) all industrial designs, industrial models, utility models, certificates of invention and
other indices of invention ownership, and any related registrations and applications;

          (v) all trade dress and trade names, logos, Internet addresses and domain names, trademarks
and service marks and related registrations and applications, including any intent to use
applications, supplemental registrations and any renewals or extensions, all other indicia of
commercial source or origin, and all goodwill of the person’s business associated with any of the
foregoing;

          (vi) all inventions (whether patentable or not and whether or not reduced to practice),
invention disclosures, invention notebooks, file histories, know how, technology, technical data,
trade secrets, confidential business information, manufacturing and production processes and
techniques, research and development information, financial, marketing and business data, pricing
and cost information, business and marketing plans, and customer, distributor, reseller and
supplier lists and information, correspondence, records, and other documentation, and other
proprietary information of every kind;

 

 

          (vii) all computer software including but not limited to all source code, object or executable
code, firmware, software compilations, software implementations of algorithms, software tool sets,
compilers, software models and methodologies, development tools, files, records, technical
drawings, and data relating to the foregoing;

          (viii) all databases and data collections and all rights in the same; (ix)all rights of
paternity, integrity, disclosure, and withdrawal, and any other rights that may be known or
referred to as “moral rights,” in any of the foregoing;

          (x) any rights analogous to those set forth in the preceding clauses and any other proprietary
rights relating to intangible property;

          (xi) all tangible embodiments of any of the foregoing, in any form and in any media, in the
possession of the person (or other persons engaged or retained by the person);

          (xii) all versions, releases, upgrades, derivatives, enhancements and improvements of any of
the foregoing; and

          (xiii) all statutory, contractual and other claims, demands, and causes of action for
royalties, fees, or other income from, or infringement, misappropriation or violation of, any of
the foregoing, and all of the proceeds from the foregoing which are accrued and unpaid as of,
and/or accruing after, the date of this Agreement.

     The terms “knowledge” and “known” will qualify the matter referred to as being
the actual knowledge of an appropriate executive officer of the Company, the Parent or the
Purchaser, as applicable.

     “law” means any foreign, federal, state or local statute, ordinance, regulation, rule,
code, treaty, common law or other form of law.

     “Legal Proceeding” means any action, suit, litigation, arbitration proceeding
(including any civil, criminal, administrative, investigative or appellate proceeding), hearing,
inquiry, audit, examination or investigation commenced, brought, conducted or heard by or before,
or otherwise involving any court or other Governmental Entity or any arbitrator or arbitration
panel.

     “Liability” means any liability (whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become due).

     “Marked Assets” has the meaning set forth in Section 9.3(a).

     “Material Adverse Change” means a change which would have a Material Adverse Effect.

     A violation or other matter is deemed to have a “Material Adverse Effect” on (i)the
Purchaser, if such violation or other matter would be material on the ability of Purchaser to
perform its obligations under this Agreement or on the ability of Purchaser to consummate the
Contemplated Transactions, (ii)the Parent, if such violation or other matter would have a material
adverse effect on the ability of the Parent to perform its obligations under this Agreement or on
the ability of Parent to consummate the Contemplated Transactions or (iii)the Company or any
Subsidiary, if such violation or other matter either individually or in the aggregate with all
other circumstances, changes or effects, has a material adverse effect on the business, assets,
financial condition or results of operations of the Company and each Subsidiary, taken as a whole,
but excluding (x)effects or changes that are generally applicable to the

 

 

industries and markets in which the Company or any Subsidiary operates, (y)changes in the
United States or world financial markets or general economic conditions or (z)effects directly or
primarily arising out of the execution or delivery of this Agreement, the consummation of the
Contemplated Transactions or the public announcement thereof.

     “Material Contract” has the meaning set forth in Section 2.11(a).

     “Mediation Period” has the meaning set forth in Section 8.3(c)(i).

     “Most Recent Balance Sheet” has the meaning set forth in Section 2.5(a).

     “Non-controlling Party” has the meaning set forth in Section 8.3(d)(ii).

     “Nondisclosure Agreement” has the meaning set forth in Section 5.2(a)(ii).

     “Objection Notice” has the meaning set forth in Section 8.3(b)(ii).

     “Ordinary Course” means the ordinary course of business consistent with past custom
and practice (including with respect to frequency and amount) of the Company and each Subsidiary
and not material to the Company or any Subsidiary.

     “Parent” has the meaning set forth in the introductory paragraph.

     “Parent Disclosure Schedule” has the meaning set forth in introductory language to
Article 3.

     “Parent Indemnitees” has the meaning set forth in Section 8.2.

     “Parent Marks” has the meaning set forth in Section 9.3(a).

     “person” means any individual, Entity or Governmental Entity.

     “Post-Closing Period” means any taxable period or portion of a period that begins
after the Closing Date.

     “Pre-Closing Period” means any taxable period or portion of a period that begins on or
before the Closing Date and ends on the Closing Date.

     “Purchase Price” has the meaning set forth in Section 1.2.

     “Purchaser” has the meaning set forth in the introductory paragraph.

     “Purchaser Indemnitee” has the meaning set forth in Section 8.1.

     “Purchaser Required Consents” has the meaning set forth in Section 6.2(f).

     “Records” has the meaning set forth in Section 9.3.

     “Retained Records” has the meaning set forth in Section 9.3.

     “Response” has the meaning set forth in Section 8.3(b).

     “Review Period” has the meaning set forth in Section 1.8(b).

 

 

     “Rights” has the meaning set forth in Section 1.3.

     “Scheduled Relationships” means the projects generally described on Schedule 9.5.

     “Scheduled Relationships Receivables” means with respect to any of the Scheduled
Relationships as to which an agreement is entered into from the Closing Date until the expiration
of four (4) years thereafter, all amounts that are due and payable to the Purchaser (or its
Affiliates), or their respective successors or assigns, directly or indirectly, in connection with
such Scheduled Relationship. For the purposes of this definition, an agreement shall be deemed to
have been entered into on the date determined in accordance with Section 9.5(b)

     “Security Interest” means any mortgage, pledge, security interest, encumbrance, charge
or other lien (whether arising by contract or by operation of law), other than (i)mechanic’s,
materialmen’s and similar liens, (ii)liens arising under worker’s compensation, unemployment
insurance, social security, retirement and similar legislation or (iii)liens on goods in transit
incurred pursuant to documentary letters of credit, in each case arising in the Ordinary Course.

     “Shares” has the meaning set forth in the paragraph following the introductory
paragraph.

     “Straddle Period” means any taxable period that begins before and ends after the
Closing Date.

     “Subsidiary” means any Business Entity with respect to which the Company, directly or
indirectly, has the power to vote or direct the voting of sufficient securities to elect a majority
of the directors or managers.

     “Tax” means all taxes, including gross receipts, ad valorem, value-added, excise, real
property, personal property, sales, use, transfer, withholding, employment, unemployment,
insurance, social security, business license, business organization, environmental, workers
compensation, license, lease, service, service use, severance, stamp, occupation, customs, duties,
franchise and other taxes imposed by the United States of America or any state, local or foreign
government, or any agency thereof, or other political subdivision of the United States or any such
government, and any interest, penalties, assessments or additions to tax resulting from,
attributable to or incurred in connection with any tax or any contest or dispute thereof.

     “Tax Arbitrator” means a nationally recognized accounting or law firm mutually
acceptable to the parties engaged in a dispute related to a Tax Contest.

     “Tax Contest” means an audit, claim, dispute or controversy relating to Taxes.

     “Tax Returns” means all reports, returns, declarations, statements or other
information required to be supplied to a taxing authority in connection with Taxes.

     “Transaction” has the meaning set forth in the paragraph following the introductory
paragraph.

 

 

EXHIBIT B–1

Company Disclosure Schedule

 

 

EXHIBIT B–2

Parent Disclosure Schedule

 

 

SCHEDULE 1.1

Assets

     (a) all accounts, notes, licenses and other receivables, and all deposits, advances, prepaid
expenses (except for such expenses included within the definition of Excluded Assets) and credits;

     (b) all inventories, including raw material, supplies, cleaning and maintenance supplies,
office supplies, works in progress and other inventory items;

     (c) all machinery, equipment, business machines, vehicles, furniture, fixtures, parts,
improvements located on real property leased by the Company, and other tangible property;

     (d) all written or oral contracts or agreements, including real property and vehicle leases
(collectively, the “Contracts”);

     (e) all Company Intellectual Property, patents, copyrights, methods, know-how, software,
technical documentation, trade secrets, trademarks, trade names, service marks and other
intellectual property (and all rights thereto and applications therefor) which are used in the
Business and as to which the Company claims an ownership interest or as to which the Company is a
licensee or licensor, all trademarks and logos related thereto, and all stationary, forms, labels,
brochures, advertising materials and similar items bearing any of the foregoing, but excluding any
(i) trademarks, service marks, logos, trade dress, trade names and other names or identifiers of or
identifying or source-identifying the Parent, any Affiliate of the Parent other than Company and
each Subsidiary, or any third party, or (ii) Intellectual Property used in the business of the
Parent or any Affiliate of the Parent other than the Company or a Subsidiary;

     (f) all computer hardware and equipment (i) owned, leased or licensed by the Company; or
(ii)which is used exclusively in the Business, and all computer printouts, databases and related
items;

     (g) all rights to causes of action, lawsuits, judgments, claims and demands of any nature
available to or being pursued by the Company, whether arising by way of counterclaim or otherwise;

     (h) all guarantees, warranties, indemnities and similar rights in favor of the Company;

     (i) all governmental permits, licenses or similar rights relating to the Business;

     (j) all information, files, correspondence, records, data, plans, contracts and recorded
knowledge, including customer and supplier lists, and all accounting or other books and records of
the Company;

     (k) all telephone numbers and fax numbers utilized in the Business;

     (l) all other tangible and intangible assets (including the domain name “ortloff.com”) of any
kind or description, wherever located, that are carried on the books of the Company or which are
owned by the Company; and

     (m) subject to Section 9.2(f), all rights to the name OEL, Ltd., Ortloff Engineers, Ltd. and
Ortloff.

 

 

SCHEDULE 1.3

Assumed Liabilities

     Assumed Liabilities” means

     (a) all obligations of the Company under the agreements, contracts, leases, licenses, and
other arrangements referred to in the definition of Assets including without limitation the
agreements listed on Exhibit A of the Assignment and Assumption Agreement;

     (b) all liabilities of the Company set forth on the face of the Most Recent Balance Sheet; and

     (c) all liabilities of the Company which have arisen after the date of the Most Recent Balance
Sheet in the Ordinary Course;

provided, however, that the Assumed Liabilities shall not include (i) any liability
of the Company for Taxes measured on the income or revenue of the Company, (ii) any liability of
the Company for transfer, sales, use, and other taxes arising in connection with the consummation
of the transactions contemplated by this Agreement, (iii) any liability of the Company for costs
and expenses incurred in connection with this Agreement and the transactions contemplated hereby,
or (iv) any liability or obligation of the Company under this Agreement.

 

 

SCHEDULE 1.5

Allocation of Purchase Price

 

 

SCHEDULE 1.8

Working Capital Detail

 

 

SCHEDULE 6.2(f)

Purchaser Required Consents

Bank of America, N.A.

Required Holders under Note Purchase Agreement dated as of June 1, 2002

Required Holders under Note Purchase Agreement dated as of March 1, 2003

Required Holders under Note Purchase Agreement dated as of June 15, 2004

Consultancy Services Agreement, dated July 28, 2003, between OEL and Larsen & Toubro Limited

License Agreement dated effective as of June 30, 2001, between Elcor Corporation and Tengizchevroil

License Agreement dated effective November 24, 1993, between OEL and Amoco Corporation

License Agreement Concerning Amoco Sulfur Recovery Technology between The Ortloff Corporation and
Standard Oil Company (Indiana)

Global Technology License Terms Agreement dated September 9, 2002, by and between ElkCorp and
ExxonMobil Development Company, and six associated license agreements with Exxon affiliates

 

 

SCHEDULE 9.5

Scheduled Relationships

UOP/Foster Wheeler/Marathon Qatar

UOP/ConocoPhillips/GTL Plant Train 1

UOP/ConocoPhillips/GTL Plant Train 2

UOP/Total/Barzan Qatar

ExxonMobil/Qatargas 6

ExxonMobil/RasGas LNG Train 8

ExxonMobil/RasGas LNG Train 9exv10w7

 

Exhibit 10.7

PURCHASE AGREEMENT

BY AND BETWEEN

ELK PREMIUM BUILDING PRODUCTS, INC.

AND

JOSEPH PRESSUTTI AND

SUSAN PRESSUTTI, BOTH INDIVIDUALLY

AND AS TRUSTEES OF

THE PRESSUTTI FAMILY TRUST

AUGUST
25, 2005

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page
	1.	 	DEFINITIONS	 	 	1	 
	 
	 	 	 	 	 	 	 	 	 	 
	2.	 	PURCHASE AND SALE OF COMPANY SHARES, PURCHASED REAL ESTATE AND PURCHASED INTELLECTUAL PROPERTY	 	 	7	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(a)	 	Basic Transaction	 	 	7	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(b)	 	Purchase Price	 	 	7	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(c)	 	Allocation	 	 	8	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(d)	 	The Closing	 	 	8	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(e)	 	Deliveries at the Closing	 	 	8	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(f)	 	Inventory Valuation and Adjustment of Purchase Price	 	 	9	 
	 
	 	 	 	 	 	 	 	 	 	 
	3.	 	REPRESENTATIONS AND
WARRANTIES CONCERNING THE TRANSACTION, THE PURCHASED REAL ESTATE, AND THE PURCHASED INTELLECTUAL PROPERTY	 	 	10	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(a)	 	Representations and Warranties of the Sellers	 	 	10	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	(i)
	 	Organization; Authorization of Transaction
	 	 	10	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	(ii)
	 	Noncontravention
	 	 	11	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	(iii)
	 	Brokers’ Fees
	 	 	11	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	(iv)
	 	Company Shares
	 	 	11	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	(v)
	 	Purchased Real Estate
	 	 	11	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	(vi)
	 	Purchased Intellectual Property
	 	 	13	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(b)	 	Representations and Warranties of the Buyer	 	 	16	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	(i)
	 	Organization of the Buyer
	 	 	16	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	(ii)
	 	Authorization of Transaction
	 	 	16	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	(iii)
	 	Noncontravention
	 	 	16	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	(iv)
	 	Brokers’ Fees
	 	 	16	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	(v)
	 	Investment
	 	 	16	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	(vi)
	 	Tax Elections
	 	 	17	 
	 
	 	 	 	 	 	 	 	 	 	 
	4.	 	REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY AND ITS SUBSIDIARIES	 	 	17	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(a)	 	Organization, Qualification, and Corporate Power	 	 	17	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(b)	 	Capitalization	 	 	17	 

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	 	 	 	 	 	 	 	 	Page
	 	 	(c)	 	Noncontravention	 	 	18	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(d)	 	Brokers’ Fees	 	 	18	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(e)	 	Title to Assets	 	 	18	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(f)	 	Subsidiaries	 	 	18	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(g)	 	Financial Statements	 	 	19	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(h)	 	Events Subsequent to Most Recent Fiscal Year End	 	 	19	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(i)	 	Undisclosed Liabilities	 	 	22	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(j)	 	Legal Compliance	 	 	22	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(k)	 	Tax Matters	 	 	22	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(l)	 	Real Property	 	 	24	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(m)	 	Intellectual Property	 	 	25	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(n)	 	Tangible Assets	 	 	26	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(o)	 	Inventory	 	 	26	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(p)	 	Contracts	 	 	27	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(q)	 	Notes and Accounts Receivable	 	 	28	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(r)	 	Powers of Attorney	 	 	28	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(s)	 	Insurance	 	 	28	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(t)	 	Litigation	 	 	29	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(u)	 	Product Warranty and Advertising	 	 	29	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(v)	 	Product Liability	 	 	29	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(w)	 	Employees	 	 	30	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(x)	 	Employee Benefits	 	 	30	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(y)	 	Guaranties	 	 	32	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(z)	 	Environment, Health, and Safety	 	 	32	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(aa)	 	Certain Business Relationships with the Company and its Subsidiaries	 	 	33	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(bb)	 	Off-site Disposal of Hazardous Materials	 	 	33	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(cc)	 	Customers and suppliers	 	 	34	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(dd)	 	Projections	 	 	34	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(ee)	 	Disclosure	 	 	34	 

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	 	 	(ff)	 	Disclaimer	 	 	34	 
	 
	 	 	 	 	 	 	 	 	 	 
	5.	 	PRE-CLOSING COVENANTS	 	 	35	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(a)	 	General	 	 	35	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(b)	 	Notices and Consents	 	 	35	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(c)	 	Operation of Business	 	 	35	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(d)	 	Preservation of Business	 	 	36	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(e)	 	Access	 	 	36	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(f)	 	Notice of Developments	 	 	36	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(g)	 	Exclusivity	 	 	36	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(h)	 	Key Employee Agreements	 	 	36	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(i)	 	Releases	 	 	37	 
	 
	 	 	 	 	 	 	 	 	 	 
	6.	 	POST-CLOSING COVENANTS	 	 	37	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(a)	 	General	 	 	37	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(b)	 	Litigation Support	 	 	38	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(c)	 	Transition	 	 	38	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(d)	 	Confidentiality	 	 	38	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(e)	 	Covenant Not to Compete	 	 	39	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(f)	 	Non-solicitation of Employees	 	 	39	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(g)	 	Termination of Agreement with ABMT	 	 	39	 
	 
	 	 	 	 	 	 	 	 	 	 
	7.	 	CONDITIONS TO OBLIGATIONS TO CLOSE	 	 	39	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(a)	 	Conditions to Obligation of the Buyer	 	 	39	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(b)	 	Conditions to Obligation of the Sellers	 	 	41	 
	 
	 	 	 	 	 	 	 	 	 	 
	8.	 	REMEDIES FOR BREACHES OF THIS AGREEMENT	 	 	42	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(a)	 	Survival of Representations and Warranties	 	 	42	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(b)	 	Indemnification Provisions for Benefit of the Buyer	 	 	42	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(c)	 	Indemnification Provisions for Benefit of the Sellers	 	 	43	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(d)	 	Matters Involving Third Parties	 	 	43	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(e)	 	Determination of Adverse Consequences	 	 	45	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(f)	 	Exclusive Remedy	 	 	45	 

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	9.	 	TAX MATTERS	 	 	45	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(a)	 	Cooperation on Tax Matters	 	 	45	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(b)	 	Tax Sharing Agreements	 	 	46	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(c)	 	Certain Taxes	 	 	46	 
	 
	 	 	 	 	 	 	 	 	 	 
	10.	 	TERMINATION	 	 	46	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(a)	 	Termination of Agreement	 	 	46	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(b)	 	Effect of Termination	 	 	47	 
	 
	 	 	 	 	 	 	 	 	 	 
	11.	 	MISCELLANEOUS	 	 	47	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(a)	 	Press Releases and Public Announcements	 	 	47	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(b)	 	No Third Party Beneficiaries	 	 	47	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(c)	 	Entire Agreement	 	 	47	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(d)	 	Succession and Assignment	 	 	47	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(e)	 	Counterparts	 	 	47	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(f)	 	Headings	 	 	48	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(g)	 	Notices	 	 	48	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(h)	 	Governing Law	 	 	49	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(i)	 	Amendments and Waivers	 	 	49	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(j)	 	Severability	 	 	49	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(k)	 	Expenses	 	 	49	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(l)	 	Construction	 	 	49	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(m)	 	Incorporation of Exhibits, Annexes, and Schedules	 	 	50	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(n)	 	Specific Performance	 	 	50	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(o)	 	Submission to Jurisdiction	 	 	50	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	(p)	 	Joint and Several Obligations	 	 	50	 

	 	 	 
	Annex 1:

	 	Exceptions to the Representations and Warranties of the Sellers
	Annex 2:

	 	Exceptions to the Representations and Warranties of the Buyer
	Annex 3:

	 	Seller’s Personal Property
	Exhibit A:

	 	Form of Escrow Agreement
	Exhibit B-1:

	 	Purchased Intellectual Property
	Exhibit B-2:

	 	Intellectual Property Retained by Seller

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	 	 	Page
	Exhibit C:

	 	Purchased Real Estate
	Exhibit D:

	 	Forms of Assignments
	Exhibit E:

	 	Form of Assumption Agreement (Note and Deed of Trust)
	Exhibit F:

	 	Financial Statements
	Exhibit G:

	 	Capital Budget of the Company and its Subsidiaries
	Exhibit H:

	 	[Intentionally Omitted]
	Exhibit I:

	 	Agreement of Purchase and Sale of Real Estate and Escrow Instructions
	Exhibit J:

	 	Agreement of Purchase and Sale of Real Estate and Escrow Instructions
	Exhibit K:

	 	Preliminary Title Reports

-ii-

 

PURCHASE AGREEMENT

     Agreement
entered into as of August 25, 2005, by and between Elk Premium Building Products,
Inc., a Delaware corporation (the “Buyer”), and Joseph Pressutti (individually herein so
called) and Susan Pressutti (individually herein so called), both individually and as Trustees of
the Pressutti Family Trust (the “Pressutti Family Trust” and, together with Joseph
Pressutti and Susan Pressutti, the “Sellers”). The Buyer and the Sellers are referred to
collectively herein as the “Parties.”

RECITALS

     The Sellers own all of the outstanding capital stock of RGM Products, Inc., a California
corporation (the “Company”), certain real property and improvements on which the Company’s
manufacturing facility in Fresno, California is located and certain real property adjacent thereto,
and certain rights in patents and intellectual property utilized in the Company’s business.

     This Agreement contemplates a transaction in which the Buyer will purchase from the Sellers,
and the Sellers will sell to the Buyer, all of the outstanding capital stock of the Company and
certain rights in patents and intellectual property utilized in the Company’s business, and the
Buyer (or its designated Affiliate) will purchase from 3441 South Willow Investments, L.P. (herein
so called), an Affiliate of Sellers, and the Sellers will cause 3441 South Willow Investments, L.P.
to sell to the Buyer (or its designated Affiliate), the Purchased Real Estate.

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

	1.	 	DEFINITIONS.

     “3441 South Willow Investments, L.P.” has the meaning set forth in the Recitals above.

     “Adverse Consequences” means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments, orders, decrees,
rulings, damages, dues, penalties, fines, costs of defense and other costs, amounts paid in
settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and fees, including court
costs and reasonable attorneys’ fees and expenses.

     “Affiliate” has the meaning set forth in Rule 12b-2 of the regulations promulgated
under the Securities Exchange Act.

     “Affiliated Group” means any affiliated group within the meaning of Code §1504 or any
similar group defined under a similar provision of state, local, or foreign law.

     “Assumed Real Estate Debt” means the indebtedness in the principal amount of
$3,982,269 in favor of The Ohio National Life Insurance Company evidenced by that certain
Promissory Note dated May 31, 2005 executed by 3441 South Willow Investments, L.P., in the

1

 

original
principal amount of $4,000,000 and secured by the deed of trust liens on the Purchased Real Estate
pursuant to that certain Deed of Trust, Financing Statement, Security Agreement and Fixture Filing
(With Assignment of Rents and Leases) dated May 31, 2005 (the “Deed of Trust”), that Buyer (or its
Affiliate) will assume in accordance with §2 below.

     “Basis” means any past or present fact, situation, circumstance, status, condition,
activity, practice, plan, occurrence, event, incident, action, failure to act, or transaction that
forms or could form the basis for any specified consequence.

     “Buyer” has the meaning set forth in the preface above.

     “CERCLA” has the meaning set forth in §4(z) below.

     “Closing” has the meaning set forth in §2 below.

     “Closing Date” has the meaning set forth in §2 below.

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

     “Company” has the meaning set forth in the Recitals above.

     “Company Share” means any share of the Common Stock, no par value per share, of the
Company.

     “Confidential Information” means any information concerning the businesses and affairs
of the Company and its Subsidiaries that is not already generally known to those knowledgeable in
the roofing industry.

     “Confidentiality Agreement” means that certain confidentiality agreement dated
___, 2005 between the Buyer and Joseph Pressutti.

     “Controlled Group of Corporations” has the meaning set forth in Code §1563.

     “Deferred Intercompany Transaction” has the meaning set forth in Treas. Reg.
§1.1502-13.

     “Disclosure Schedule” has the meaning set forth in §4 below.

     “Employee Benefit Plan” means any (a) nonqualified deferred compensation or retirement
plan or arrangement which is an Employee Pension Benefit Plan, (b) qualified defined contribution
retirement plan or arrangement which is an Employee Pension Benefit Plan, (c) qualified defined
benefit retirement plan or arrangement which is an Employee Pension Benefit Plan (including any
Multiemployer Plan), or (d) Employee Welfare Benefit Plan or material fringe benefit plan or
program.

     “Employee Pension Benefit Plan” has the meaning set forth in ERISA §3(2).

2

 

     “Employee Welfare Benefit Plan” has the meaning set forth in ERISA §3(1).

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

     “Environmental Law” means applicable federal, state, and local laws including, without
limitation, statutes, regulations, ordinances, and judicial and administrative orders relating to
protection of the public health, welfare, and the Environment, including without limitation, those
laws relating to the storage, handling, and use of chemicals and other Hazardous Materials
(including without limitation California Proposition 65), those relating to the generation,
processing, treatment, storage, transport, disposal, investigation and remediation, or other
management of Hazardous Materials or waste materials of any kind, and those relating to the
protection of environmentally sensitive areas.

     “Environmental Permits” has the meaning set forth in Section 4(z).

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

     “Escrow Agreement” means that certain escrow agreement in the form attached hereto as
Exhibit A to be executed at the Closing by the Sellers, the Buyer, and the escrow agent thereunder.

     “Facilities” shall mean any real property, leaseholds, or other interests currently or
formerly owned or operated by the Company.

     “Fiduciary” has the meaning set forth in ERISA §3(21).

     “Financial Statement” has the meaning set forth in §4(g) below.

     “GAAP” means United States generally accepted accounting principles as in effect as of
the date of any document purported to be prepared in accordance with GAAP.

     “Hazardous Materials” shall mean any ‘hazardous substance,’ ‘pollutant or
contaminant,’ ‘petroleum’ and ‘natural gas liquids,’ as those terms are defined or used in Section
101 of CERCLA and any other waste or other substance that is listed, defined, designated, or
classified as, or otherwise determined to be, hazardous, radioactive, or toxic or a pollutant or a
contaminant under or pursuant to any Environmental Law and any other substances regulated because
of their effect or potential effect on public health and the Environment, including, without
limitation, RCRA 8 metals, aluminum, MEK, PCBs, lead paint, asbestos, vermiculite, urea
formaldehyde, mold, volatile and semi-volatile compounds, radioactive materials, all derivatives of
petroleum or synthetic substitutes for petroleum, and putrescible and infectious materials.

     “Indemnified Party” has the meaning set forth in §8(d) below.

3

 

     “Indemnifying Party” has the meaning set forth in §8(d) below.

     “Intellectual Property” means, currently existing anywhere, (a) all inventions,
technology, processes and methods (whether patentable or unpatentable and whether or not reduced to
practice), all improvements thereto, and all patents, patent applications, and patent disclosures,
together with all reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, and any foreign or international patent and patent application taking
priority from any of the foregoing, (b) all trademarks, service marks, trade dress, logos, trade
names, corporate names, and domain names, together with all translations, adaptations, derivations,
and combinations thereof and including all goodwill associated therewith, and all applications,
registrations, and renewals in connection therewith, (c) all copyrights, all common law rights
similar or equivalent to copyrights, all works (whether or not copyrightable), and all
applications, registrations, and renewals in connection therewith, (d) all mask works and all
applications, registrations, and renewals in connection therewith, (e) all trade secrets and
confidential business information (including ideas, research and development, know-how, formulas,
compositions, manufacturing and production processes and techniques, technical data, designs,
drawings, specifications, customer and supplier lists, pricing and cost information, and business
and marketing plans and proposals), (f) all computer software (including data and related
documentation), (g) all other proprietary rights, and (h) all copies, manifestations,
representations, translations, transliterations and any other tangible embodiments of any kind
thereof (in whatever form or medium).

     “IP Purchase Price” has the meaning set forth in §2(b) below.

     “Joseph Pressutti” has the meaning set forth in the preface above.

     “Knowledge” means actual knowledge after reasonable investigation.

     “Liability” means any liability (whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become due), including any liability for Taxes.

     “Material Adverse Effect” or “Material Adverse Change” means an effect or
change that would be materially adverse on the business, financial condition, results of
operations, properties, profitability, business prospects, or operations of the Company and its
Subsidiaries taken as a whole; provided that none of the following shall be deemed to constitute,
and none of the following shall be taken into account in determining whether there has been, a
Material Adverse Effect: (A) any adverse change, event, development, or effect attributable to
general conditions affecting the United States economy which does not affect the Company and its
Subsidiaries materially disproportionately relative to other participants in the roofing industry,
(B) any adverse change, event, development, or effect affecting the roofing industry generally
which does not affect the Company and its Subsidiaries materially disproportionately relative to
other participants in the roofing industry, or (C) the taking of any action contemplated by this
Agreement or any of the other agreements contemplated hereby (or the omission to take any

4

 

action if
such omission is required by this Agreement or any of the other agreements contemplated hereby).

     “Most Recent Balance Sheet” means the balance sheet contained within the Most Recent
Financial Statements.

     “Most Recent Financial Statements” has the meaning set forth in §4(g) below.

     “Most Recent Fiscal Month End” has the meaning set forth in §4(g) below.

     “Most Recent Fiscal Year End” has the meaning set forth in §4(g) below.

     “Multiemployer Plan” has the meaning set forth in ERISA §3(37).

     “Non-compete Payment” has the meaning set forth in §2(b) below.

     “Occupational Safety and Health Law” shall mean any legal requirement designed to
provide safe and healthful working conditions and to reduce occupational safety and health hazards.

     “Off-site Waste Facilities” has the meaning set forth in §4(z) below.

     “Ordinary Course of Business” means the ordinary course of business consistent with
past custom and practice (including with respect to quantity and frequency).

     “Party” has the meaning set forth in the preface above.

     “PBGC” means the Pension Benefit Guaranty Corporation.

     “Person” means an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political subdivision
thereof).

     “Pressutti Family Trust” has the meaning set forth in the preface above.

     “Process Agent” has the meaning set forth in §11(o) below.

     “Prohibited Transaction” has the meaning set forth in ERISA §406 and Code §4975.

     “Purchased Intellectual Property” means the Intellectual Property described on Exhibit
B-1 and any and all other Intellectual Property currently owned by any of the Sellers or their
respective Affiliates (but not any other persons or entities) used or useful in the business of the
Company and its Subsidiaries, and all rights, title, and interest in and to all such Purchased
Intellectual Property, but specifically excluding all Intellectual Property owned or created by any
of the Sellers or their respective Affiliates described on Exhibit B-2 and all Intellectual
Property acquired or created after the Closing by any of the Sellers or their respective Affiliates
(other

5

 

than any improvements on existing Intellectual Property in the form of continuation-in-part
applications).

     “Purchased Real Estate” means the real property and improvements described on Exhibit
C.

     “Purchased Real Estate Agreements” means those certain Agreements For Purchase and
Sale of Real Estate and Escrow Instructions in the forms attached hereto as Exhibits I and J
executed by Buyer’s Affiliate and 3441 South Willow Investments, L.P., a California limited
partnership, for 3333 South Willow Avenue, Fresno, California 93725 and 3441 South Willow Avenue,
Fresno, California 93725.

     “Purchase Price” has the meaning set forth in §2(b) below.

     “Release” shall mean any spilling, leaking, emitting, discharging, depositing,
escaping, leaching, dumping, disposing, injecting, pumping, pouring, emptying, or other releasing
into the Environment, whether known or unknown and whether intentional or unintentional.

     “Reportable Event” has the meaning set forth in ERISA §4043.

     “Securities Act” means the Securities Act of 1933, as amended.

     “Securities Exchange Act” means the Securities Exchange Act of 1934, as amended.

     “Security Interest” means any mortgage, pledge, lien, encumbrance, charge, or other
security interest, other than (a) liens for Taxes not yet due and payable or for Taxes which are
being actively contested in good faith by appropriate proceedings, (b) mechanics’, materialmens’,
and similar liens, (c) purchase money liens and liens securing rental payments under capital lease
arrangements, (d) other liens arising in the Ordinary Course of Business and not incurred in
connection with the borrowing of money.

     “Sellers” has the meaning set forth in the preface above.

     “Seller’s Affiliates” includes all Affiliates of each Seller, including, without
limitation, the Pressutti Family Trust and 3441 South Willow Investments, L.P., and their
respective partners, owners, beneficiaries, officers, directors, trustees and representatives.

     “Share Purchase Price” has the meaning set forth in §2(b) below.

     “Subsidiary” means any corporation with respect to which a specified Person (or a
Subsidiary thereof) owns a majority of the common stock or has the power to vote or direct the
voting of sufficient securities to elect a majority of the directors.

     “Susan Pressutti” has the meaning set forth in the preface above.

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     “Tax” means any federal, state, local, or foreign income, gross receipts, license,
payroll, employment, excise, severance, stamp, occupation, premium, windfall profits,
environmental, customs duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether disputed or not.

     “Tax Return” means any return, declaration, report, claim for refund, or information
return or statement relating to Taxes, including any schedule or attachment thereto, and including
any amendment thereof.

     “Third Party Claim” has the meaning set forth in §8(d) below.

     “Title Reports” means the title reports attached hereto as Exhibit K.

	2.	 	PURCHASE AND SALE OF COMPANY SHARES, PURCHASED REAL ESTATE AND PURCHASED INTELLECTUAL PROPERTY.

     (a) Basic Transaction. For the consideration specified below in this §2, on and subject to
the terms and conditions of this Agreement, the Buyer agrees to purchase from the Sellers, and the
Sellers agree to sell to the Buyer: all of the outstanding Company Shares and the Purchased
Intellectual Property. Concurrently with the Closing, the Buyer agrees to purchase (or cause one
of its Affiliates to purchase), and the Sellers agree to cause 3441 South Willow Investments, L.P.
to sell to the Buyer (or an Affiliate of Buyer designated by Buyer), the Purchased Real Estate in
accordance with the terms and conditions of this Agreement and the Purchased Real Estate
Agreements.

     (b) Purchase Price. The Buyer agrees to pay to the Pressutti Family Trust at the Closing, in
cash payable by wire transfer or delivery of other immediately available funds to the Pressutti
Family Trust, for the Company Shares, $17,965,000 (the “Share Purchase Price”);
provided, however, that the Share Purchase Price is subject to adjustment pursuant to §2(f)
below. The Buyer also agrees to pay to Joseph Pressutti at the Closing, in cash payable by wire
transfer or delivery of other immediately available funds to Joseph Pressutti, $4,500,000 (the
“IP Purchase Price”) for the Purchased Intellectual Property (the Share Purchase Price and
the IP Purchase Price are collectively referred to as the “Purchase Price”); provided
that, notwithstanding the foregoing, $2,300,000 of the Share Purchase Price otherwise payable to
The Pressutti Family Trust at the Closing in accordance with this §2(b) shall be paid to the escrow
agent under, and to be held in accordance with, the Escrow Agreement in order to secure the
indemnification obligations of the Sellers contained in §8(b) (it being understood that $800,000 of
such $2,300,000 may not be used for indemnification obligations other than obligations based on any
purchase price adjustment payable by Sellers with respect to §2(f)). At the Closing, the Buyer
shall also pay to Joseph Pressutti $50,000 for his Covenant Not to Compete set forth in §6(e) (the
“Non-compete Payment”). In addition to paying the Purchase Price and Non-compete Payment
as set forth above, at the Closing the Buyer (or an Affiliate of Buyer designated by Buyer) will
pay to 3441 South Willow Investments, L.P. $2,502,279.69 for the Purchased Real Estate, and will
assume the Assumed Real Estate Debt, in each case upon the terms and

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conditions set forth in this
Agreement and the Purchased Real Estate Agreements (with $575,000 of such amount being allocated to
the Purchased Real Estate at 3333 South Willow, Fresno, California and the balance of such amount
being allocated to the Purchased Real Estate at 3441 South Willow, Fresno, California). The
Company shall distribute to the Sellers immediately prior to Closing all furniture, furnishings and
personal property in the Seller’s suite of offices and described on Annex 3 attached hereto. The
Parties agree that these items have a fair value of $1,000.

     (c) Allocation. The Buyer and the Sellers each acknowledge that the amount of Purchase Price
allocated to the Company Shares, Purchased Intellectual Property, Covenant Not to Compete, and
Purchased Real Estate in this §2 represents the fair market value of the assets being purchased,
determined pursuant to arm’s-length negotiation. The Buyer and the Seller each agree to report the
sale of the business for income tax purposes according to the allocations set forth in this Section
2(c) and not to take any position inconsistent with such allocation on its tax returns without the
written consent of the other, and each party will indemnify the other for any inconsistent position
taken.

     (d) The Closing. The closing of the transactions contemplated by this Agreement (the
“Closing”) shall take place at the offices of Baker & McKenzie in Palo Alto, California,
commencing at 10:00 a.m. local time, as promptly as reasonably practicable but in no event later
than the earlier of August 30, 2005 or the fifth business day following the satisfaction or waiver
of all conditions to the obligations of the Parties to consummate the transactions contemplated
hereby (other than conditions with respect to actions the respective Parties will take at the
Closing itself) or such other date as the Parties may mutually determine (the “Closing
Date”).

     (e) Deliveries at the Closing. The closing of the sale or exchange of the Purchased Real
Estate will take place simultaneously with the Closing of the purchase of the Company Shares and
the Purchased Intellectual Property. At the Closing, (i) the Sellers will deliver to the Buyer the
various certificates, instruments, and documents referred to in §7(a) below, (ii) the Buyer will
deliver to the Sellers the various certificates, instruments, releases, and documents referred to
in §7(b) below, (iii) the Sellers will deliver to the Buyer stock certificates representing all of
the outstanding Company Shares, endorsed in blank or accompanied by duly executed assignment
documents, (iv) the Sellers will execute, acknowledge (if appropriate), and deliver to the Buyer
assignments with respect to the Purchased Intellectual Property in the forms attached hereto as
Exhibits D-1 through D-2 and such other instruments of sale, transfer, conveyance and assignment
with respect to the Purchased Intellectual Property as the Buyer may reasonably request, (v) the
Buyer (or one of its Affiliates) will execute, acknowledge (if appropriate), and deliver to the
Seller and 3441 South Willow Investments, L.P. an assumption agreement with respect to the Assumed
Real Estate Debt in the form of Exhibit E and such other instruments of assumption with respect to
the Assumed Real Estate Debt as the Sellers and/or the lender under the Assumed Real Estate Debt
may reasonably request, (vi) the Sellers will cause 3441 South Willow Investments, L.P. to execute
and deliver to the Buyer a deed with respect to the Purchased Real Estate in the form attached
hereto as Exhibit D-3 and such other instruments of transfer, conveyance, and assignment with
respect to the Purchased Real Estate as the Buyer may reasonably request, (vii) the Sellers will
deliver, and will cause the Company to deliver, to Buyer the Assignment and Assumption of Lease,
Termination of Guaranty, and Release of Landlord in

8

 

the form attached hereto as Exhibit D-4, and
(viii) the Buyer will deliver the consideration specified in §2(b) above.

(f) Inventory Valuation and Adjustment of Purchase Price.

     (i) Buyer and Seller, and their respective representatives, will each examine and evaluate the
inventory of the Company as of the Closing Date (including raw materials, manufactured and
purchased parts, goods in process, and finished goods) promptly after the Closing, and each will
submit to the other within forty-five (45) days after the Closing a detailed written list and
description of all items and amounts he or it believes is obsolete, damaged or defective, or slow
moving and the value placed on each. The information exchanged shall be arranged so as to separate
the various items into the three (3) different categories, and the total value for each category,
and shall explain the valuation methodology used and how the values were arrived at. For purposes
of this subsection (f), “value” means the amount of money that is reasonably estimated to be
realized from the orderly disposal of such items in the normal course (not at a fire sale or
distressed proceed sale) and shall be determined in accordance with GAAP, and “slow moving” means
items that are reasonably likely to take more than twelve (12) months from and after the Closing
Date (based on the prior twelve (12) months sales) to dispose of in the normal course of the
Company’s business as presently conducted prior to the Closing (and disregarding any changes or
actions that Buyer makes or may make to the Company’s business or operations after the Closing
(e.g., deciding to terminate the sale of a product or product line).

     (ii) The parties will exchange information and discuss each other’s lists and valuations, and
attempt to reach agreement on the value of each category and the adjustment from the amount shown
for such inventory on the Company’s books. If the parties’ respective valuations of the obsolete,
damaged or defective, or slow moving inventories are within 10% of each other, then the agreed
value will be the average of the two. If not within 10%, and the parties cannot otherwise agree on
a value of the obsolete, damaged or defective, or slow moving inventories within five (5) days of
exchanging lists and values, then the parties agree to promptly have an unrelated and independent
third party (who has not worked or consulted for either Buyer or Seller (or any Affiliate) within
the last three (3) years and is employed by a nationally recognized accounting firm) to evaluate
and value the items and amount of obsolete, damaged or defective, and “slow moving” inventory. The
third party is to be mutually agreed upon within five (5) days after the parties cannot reach
agreement on value, and shall have at least five (5) years’ experience in evaluating inventory for
the premium roofing products industry. Each side shall pay one-half of the fees and costs of the
third party evaluator. The decision of the third party as to what is or is not obsolete, damaged
or defective, or slow moving inventory and the value thereof shall be final and binding on all
parties.

     (iii) For purposes hereof, Buyer consents to Robert Crum, Randy Fortel and other persons they
select (such as sales managers employed by the Company) providing reasonable assistance to Seller
after the Closing in examining, evaluating and valuing the inventory, and trying to bring to a
conclusion this matter. There shall be no charge to Seller for these persons’ services in this
matter. Buyer and Seller and their representatives shall have reasonable access to all inventory
and relevant information.

9

 

     (iv) The amount payable by Sellers to Buyer (which shall be an adjustment to the Share
Purchase Price) with respect to obsolete, damaged or defective, and slow moving inventory shall
equal the difference between (x)the cost of the Company’s inventory items as of the Closing Date
determined to be obsolete, damaged or defective, or slow-moving in accordance with this subsection
(f) less inventory reserves, in each case as reflected in the books of the Company as of the
Closing Date and [y] the agreed value (or the value determined by the third party evaluator) of the
Company’s obsolete, damaged or defective, and slow moving inventory as of the Closing Date, in each
case determined as provided in the subsection (f)).

     For example, if (A) the agreed value for all obsolete, damaged and slow moving
inventory is $400,000, and such inventory items are reflected on the Company’s books
at $825,000 (i.e., the parties agree that the value of such inventory items
are $425,000 less than the cost reflected on the books of the Company as of the
Closing Date), and (B) if the Inventory Reserve on such books is $75,000, then the
Buyer would get a Purchase Price adjustment of $350,000 [$825,000 less
$400,000 less $75,000]. $350,000 would be payable to Buyer from the
Sellers, and the parties would direct the escrow agent under the Escrow Agreement to
deliver such $350,000 to Buyer and would direct the escrow agent under the Escrow
Agreement to deliver to Sellers the difference between $800,000 and $350,000.

     (v) The parties shall use their best efforts to conclude this matter and have funds disbursed
from Escrow within ninety (90) days of the Closing. The parties shall promptly sign instructions
to the escrow agent under the Escrow Agreement in accordance with this subsection (f).
Notwithstanding the foregoing, Buyer shall be entitled to make a claim under the Escrow Agreement
for the amount it believes is owing to it in accordance with this subsection (f) even though the
agreed value for all obsolete, damaged and defective, and slow-moving inventory has not yet been
established in accordance with this subsection (f).

	3.	 	REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION, THE PURCHASED REAL ESTATE, AND THE
PURCHASED INTELLECTUAL PROPERTY.

     (a) Representations and Warranties of the Sellers. Except as set forth in Annex 1 attached
hereto, each of the Sellers represents and warrants to the Buyer that the statements contained in
this §3(a) are correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this §3(a)).

          (i) Organization; Authorization of Transaction. The Pressutti Family Trust is duly organized,
validly existing, and in good standing under the laws of the jurisdiction of its formation and has
full power and authority to execute and deliver this Agreement and to perform its obligations
hereunder. Each of the Sellers has full power and authority to execute and deliver this Agreement
and to perform his, her, or its obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of each of the Sellers, enforceable in accordance with its terms and
conditions. None of the Sellers need give any notice to, make any

10

 

filing with, or obtain any
authorization, consent, or approval of any government or governmental agency or other third party
in order to consummate the transactions contemplated by this Agreement, except as set forth on
Annex 1 attached hereto.

          (ii) Noncontravention. Neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will (A) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which any of the Sellers is subject or (B) conflict
with, result in a breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which any of the Sellers
is a party or by which he, she, or it is bound or to which any of his, her, or its assets is
subject, except as set forth on Annex 1 attached hereto or §4(c) of the Disclosure Schedule.

          (iii) Brokers’ Fees. None of the Sellers, the Company or any of its Subsidiaries has incurred
any Liability or obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement.

          (iv) Company Shares. The Pressutti Family Trust holds of record and owns beneficially 401,818
Company Shares, free and clear of any restrictions on transfer (other than any restrictions under
the Securities Act and state securities laws), Taxes, Security Interests, options, warrants,
purchase rights, contracts, commitments, equities, claims, and demands. The Pressutti Family Trust
is not a party to any option, warrant, purchase right, or other contract or commitment that could
require it to sell, transfer, or otherwise dispose of any capital stock of the Company (other than
this Agreement). The Pressutti Family Trust is not a party to any voting trust, proxy, or other
agreement or understanding with respect to the voting of any capital stock of the Company. Upon
delivery of the 401,818 Company Shares to the Buyer at the Closing, the Buyer will be the absolute
owner of all outstanding Company Shares free, clear, and discharged of and from any and all liens,
encumbrances, and marital rights and interests other than any liens or encumbrances created by the
Buyer.

          (v) Purchased Real Estate. The Purchased Real Estate is described on Exhibit C and is the
only real property that is owned by any of the Sellers or any of their respective Affiliates that
is utilized by the Company and its Subsidiaries. With respect to each parcel of the Purchased Real
Estate:

     (A) 3441 South Willow Investments, L.P. has good and marketable title to the
parcel of real property, free and clear of any Security Interest, easement,
covenant, or other restriction, except as described on the Title Reports or on Annex
I attached hereto and except for real estate taxes, assessments, and other
governmental levies, fees, or charges imposed with respect to such Purchased Real
Estate that are not due and payable as of the Closing and except for recorded
easements, covenants, and other restrictions which do not and will not materially
impair the use or occupancy of the property subject thereto in the operation of the
business of the Company and its Subsidiaries as currently

11

 

conducted thereon, and
except for zoning, building codes, and other land use laws regulating the use or
occupancy of such Purchased Real Estate or the activities conducted thereon that are
imposed by any governmental authority having jurisdiction over such Purchased Real
Estate and are not violated by the current use or occupancy of such Purchased Real
Estate or the operation of the business of the Company and its Subsidiaries as
currently conducted thereon (all such exceptions are referred to as “Permitted
Encumbrances”) and upon Closing the Buyer will acquire good and marketable title to
the parcel of real property, free and clear of any Security Interest, ownership
interest, easement, covenant, marital rights and interests, or other restriction,
except as described on the Title Report or Annex I attached hereto and except for
Permitted Encumbrances;

     (B) there are no pending or, to the Knowledge of any of the Sellers and the
directors and officers (and employees with responsibility for real estate matters)
of the Company and its Subsidiaries, threatened condemnation or zoning proceedings,
lawsuits, or administrative actions relating to the property or other matters that
could have a material adverse effect on the current use, occupancy, or value
thereof;

     (C) the buildings and improvements are located within the boundary lines of the
described parcels of land, are not in violation of applicable setback requirements,
zoning laws, and ordinances (and none of the properties or buildings or improvements
thereon are subject to “permitted non-conforming use” or “permitted non-conforming
structure” classifications), and do not encroach on any easement which may burden
the land, and the land does not serve any adjoining property for any purpose
inconsistent with the use of the land, the property is not located within any flood
plain or subject to any similar type restriction for which any permits or licenses
necessary to the use thereof have not been obtained where not having obtained any
such permits or licenses could have a Material Adverse Effect, and the property is
not located within a delineated earthquake fault zone;

     (D) all facilities have received all approvals, which are listed on Annex I
attached hereto, of governmental authorities (including licenses and permits)
required in connection with the ownership or operation as currently conducted
thereof and have been constructed, operated, and maintained in accordance with
applicable laws, rules, and regulations;

     (E) there are no leases, subleases, licenses, concessions, or other agreements,
written or oral, granting to any party or parties the right of use or occupancy of
any portion of the parcel of real property (other than in favor of the Company and
its Subsidiaries, which lease will be assigned to the Buyer free and clear of all
Security Interests (other than in favor of the lender under and to secure the
Assumed Real Estate Debt) at the Closing at no additional cost to the Buyer), and no
party (other than the Company and its Subsidiaries) is in possession of the parcel
of real property;

12

 

     (F) there are no outstanding options or rights of first refusal to purchase the
parcel of real property, or any portion thereof or interest therein;

     (G) all facilities located on the parcel of real property are supplied with
utilities and other services necessary for the operation of such facilities, in the
manner the Company and its Subsidiaries are presently using them in the conduct of
their business; and

     (H) the parcel of real property abuts on and has direct vehicular access to a
public road, or has access to a public road via a permanent, irrevocable,
appurtenant easement benefiting the parcel of real property, and access to the
property is provided by paved public right-of-way.

          (vi) Purchased Intellectual Property.

     (A) Except as set forth on §4(m) of the Disclosure Schedule, Joseph Pressutti
owns all rights, title, and interest in and to each and every item of the Purchased
Intellectual Property, free and clear of any restrictions on transfer, ownership or
license or other rights of any third party (including, without limitation, marital
rights and interests) (except in favor of the Company or its Subsidiaries), Taxes,
Security Interests, options, warrants, purchase rights, contracts, commitments,
equities, claims, and demands. Joseph Pressutti is not a party to any option,
warrant, purchase right, or other contract or commitment that could require him to
sell, transfer or otherwise dispose of any of the Purchased Intellectual Property
(other than this Agreement). Each item of Purchased Intellectual Property owned or
used by Joseph Pressutti immediately prior to the Closing will be owned or available
for use by the Buyer to the same extent and on identical terms and conditions
immediately subsequent to the Closing. Except as set forth on §4(m) of the
Disclosure Schedule, each current and former employee or contractor of Joseph
Pressutti who has worked on, created, developed, or is or was involved in or has
assisted with or contributed to the creation or development of, any Purchased
Intellectual Property has executed and delivered to Joseph Pressutti an agreement
(containing no exceptions to or exclusions from the scope of its coverage) assigning
to Joseph Pressutti all of such employee’s or contractor’s rights, title, and
interest in and to any such Purchased Intellectual Property. Except as set forth on
§4(m) of the Disclosure Schedule, each such employee or contractor, and any other
employee or contractor who has received or to whom was disclosed any trade secrets
or other confidential information that is part of any Purchased Intellectual
Property, has executed and delivered to Joseph Pressutti an agreement agreeing to
keep confidential and not disclose, or use for any purpose other than as permitted
by Joseph Pressutti, any such trade secrets or other confidential information.

     (B) Except as set forth on §4(m) of the Disclosure Schedule, none of the
Sellers with respect to the Purchased Intellectual Property has interfered with,

13

 

infringed upon, misappropriated, or otherwise come into conflict with any rights,
title, or interest in or to any Intellectual Property of any third parties. Except
as set forth on §4(m) of the Disclosure Schedule, none of the Sellers and the
directors and officers (and employees and agents with responsibility for
Intellectual Property matters) of the Company and its Subsidiaries (i) has ever
received any charge, complaint, claim, threat, demand, or notice alleging that any
such interference, infringement, misappropriation or violation (including, without
limitation, any offer to license, or claim that any Seller, the Company or any of
its Subsidiaries must license or refrain from using, any Intellectual Property
rights of any third party), or (ii) has any Knowledge that the continued operation
of the Company and its Subsidiaries or their business after the Closing would cause
or result in any such interference, infringement, misappropriation, or violation.

     (C) To the Knowledge of any of the Sellers and the directors and officers (and
employees and agents with responsibility for Intellectual Property matters) of the
Company and its Subsidiaries, except as set forth on §4(m) of the Disclosure
Schedule, (i) no third party has interfered with, infringed upon, misappropriated,
or otherwise come into conflict with any rights of the Sellers with respect to the
Purchased Intellectual Property, and (ii) there are no circumstances indicating that
any third party will or may be likely to interfere with, infringe upon,
misappropriate, or otherwise come into conflict with any rights with respect to the
Purchased Intellectual Property.

     (D) None of the Sellers and their respective Affiliates (i) has been issued any
patent, has obtained or acquired any patent or patent application, or has pending
applications for any patents or registrations that are part of the Purchased
Intellectual Property except as described on Exhibit B-1, (ii) has granted to any
third party any license, agreement or other permission with respect to any of the
Purchased Intellectual Property (other than the Company and its Subsidiaries), (iii)
has registered, has obtained or acquired any application or registration for, or has
pending any application for registration of any trademarks or copyrights included in
the Purchased Intellectual Property, or (iv) has sold, licensed, transferred, or
otherwise disposed of any Intellectual Property used or useful in the business of
the Company and its Subsidiaries or rights therein or thereto within the last two
years.

     (E) The Purchased Intellectual Property does not use, pursuant to license,
sublicense, agreement, or permission, any Intellectual Property that any third party
owns. None of the Sellers has disclosed or made available outside the operation of
the Company and its Subsidiaries’ business or without a confidentiality or
non-disclosure obligation, or failed to take all reasonable action to maintain and
protect, each item of the Purchased Intellectual Property, including, without
limitation, the confidentiality and secrecy of any trade secrets or other
confidential information that is part of any Purchased Intellectual Property.

14

 

     (F) To the Knowledge of any of the Sellers and the directors and officers (and
employees and agents with responsibility for Intellectual Property matters) of the
Company and its Subsidiaries, no product, system, program, or software module
designed, developed, sold, licensed, or otherwise used or made available by any of
the Sellers contains any “back door,” “time bomb,” “Trojan horse,” “worm,” “drop
dead device,” “virus,” or other software routines or hardware components designed to
permit unauthorized access or to disable or erase software, hardware, or data
without the consent of the user, or contains any open source code or software that
may be subject to an open source or general public license.

     (G) Disclaimer. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR ANY
AGREEMENT OR CERTIFICATE DELIVERED PURSUANT TO THIS AGREEMENT, SELLERS MAKE
NO REPRESENTATIONS, WARRANTIES, OR GUARANTEES, EXPRESS, IMPLIED, STATUTORY
OR OTHERWISE, AT LAW OR IN EQUITY, IN RESPECT OF THE COMPANY SHARES, THE PURCHASED
INTELLECTUAL PROPERTY, THE COMPANY OR ANY OF ITS ASSETS, LIABILITIES, ON-GOING
CONTRACTS AND OBLIGATIONS, OR ANY OF COMPANY’S OPERATIONS OR BUSINESSES, INCLUDING,
WITHOUT LIMITATION, WITH RESPECT TO MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR
PURPOSE, NON-INFRINGEMENT OR PROJECTED FINANCIAL RESULTS, AND ANY SUCH OTHER
REPRESENTATIONS OR WARRANTIES OR GUARANTEES ARE HEREBY EXPRESSLY DISCLAIMED.

     NOTWITHSTANDING ANYTHING TO THE CONTRARY, EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT OR ANY AGREEMENT OR CERTIFICATE DELIVERED PURSUANT TO THIS AGREEMENT, THE
SELLER IS GIVING NO ASSURANCES THAT ANY MANUFACTURER, SUPPLIER, LESSOR, CUSTOMER, OR
OTHER PARTY WITH WHICH THE SELLERS OR THE COMPANY HAS A RELATIONSHIP WILL CONTINUE
ON AND AFTER THE CLOSING TO MAINTAIN ITS RELATIONSHIP REGARDING THE COMPANY AND ITS
BUSINESS WITH THE BUYER OR THE COMPANY OR MAINTAIN SUCH RELATIONSHIP ON THE SAME
TERMS THAT IT IS NOW CONDUCTED WITH THE SELLERS AND THE COMPANY.

     IN CONNECTION WITH THE BUYER’S INVESTIGATION OF THE COMPANY, THE COMPANY
SHARES, THE PURCHASED INTELLECTUAL PROPERTY, AND THE PURCHASED REAL ESTATE, THE
BUYER HAS RECEIVED CERTAIN ESTIMATES, PROJECTIONS, AND OTHER FORECASTS REGARDING THE
COMPANY’S FUTURE RESULTS OF OPERATIONS AND FINANCIAL CONDITION. THE BUYER
ACKNOWLEDGES THAT THERE ARE UNCERTAINTIES

15

 

INHERENT IN ATTEMPTING TO MAKE SUCH
ESTIMATES, PROJECTIONS AND OTHER FORECASTS AND THAT THE BUYER IS FAMILIAR WITH SUCH
UNCERTAINTIES. ACCORDINGLY, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR ANY
AGREEMENT OR CERTIFICATE DELIVERED PURSUANT TO THIS AGREEMENT, THE SELLERS ARE NOT
MAKING ANY REPRESENTATION OR WARRANTY WITH RESPECT TO SUCH ESTIMATES, PROJECTIONS,
AND OTHER FORECASTS (INCLUDING THE REASONABLENESS OF THE ASSUMPTIONS UNDERLYING SUCH
ESTIMATES, PROJECTIONS, AND FORECASTS OR THAT SUCH ESTIMATES, PROJECTIONS, AND
FORECASTS WILL BE ACHIEVED).

     (b) Representations and Warranties of the Buyer. Except as set forth in Annex 2 attached
hereto, the Buyer represents and warrants to the Sellers that the statements contained in this
§3(b) are correct and complete as of the date of this Agreement and will be correct and complete as
of the Closing Date (as though made then and as though the Closing Date were substituted for the
date of this Agreement throughout this §3(b)).

          (i) Organization of the Buyer. The Buyer is a corporation duly organized, validly existing,
and in good standing under the laws of the jurisdiction of its incorporation.

          (ii) Authorization of Transaction. The Buyer has full corporate power and authority to
execute and deliver this Agreement and to perform its obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of the Buyer, enforceable in accordance with
its terms and conditions. The Buyer need not give any notice to, make any filing with, or obtain
any authorization, consent, or approval of any government or governmental agency or other person in
order to consummate the transactions contemplated by this Agreement.

          (iii) Noncontravention. Neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will (A) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which the Buyer is subject or any provision of its
charter or bylaws or (B) conflict with, result in a breach of, constitute a default under, result
in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice under any agreement, contract, lease, license, instrument, or other
arrangement to which the Buyer is a party or by which it is bound or to which any of its assets is
subject.

          (iv) Brokers’ Fees. The Buyer has no Liability or obligation to pay any fees or commissions
to any broker, finder, or agent with respect to the transactions contemplated by this Agreement.

          (v) Investment. The Buyer is not acquiring the Company Shares with a view to or for sale in
connection with any distribution thereof within the meaning of the Securities Act.

16

 

          (vi) Tax Elections. The Buyer has not made, and after the Closing the Buyer and the Company
will not make, in each case with respect to the transactions contemplated by this Agreement, any
election under the Internal Revenue Code of 1986, as amended, pursuant to Section 338 or 338(h)(10)
and/or any corresponding provisions of any State Revenue or Taxation Code.

4. REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY AND ITS SUBSIDIARIES. The Sellers
represent and warrant to the Buyer that the statements contained in this §4 are correct and
complete as of the date of this Agreement and will be correct and complete as of the Closing Date
(as though made then and as though the Closing Date were substituted for the date of this Agreement
throughout this §4), except as set forth in the disclosure schedule delivered by the Sellers to the
Buyer on the date hereof and initialed by Joseph Pressutti and the Buyer (the “Disclosure
Schedule”). Nothing in the Disclosure Schedule shall be deemed adequate to disclose an
exception to a representation or warranty made herein, however, unless the Disclosure Schedule
identifies the exception with reasonable particularity. Without limitation to the foregoing, the
mere listing (or inclusion of a copy) of a document or other item shall not be deemed adequate to
disclose an exception to a representation or warranty made herein (unless the representation or
warranty pertains to the existence of the document or other item itself). The Disclosure Schedule
will be arranged in paragraphs corresponding to the lettered and numbered paragraphs contained in
this §4.

     (a) Organization, Qualification, and Corporate Power. Each of the Company and its Subsidiaries
is a corporation duly organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation. Each of the Company and its Subsidiaries is duly authorized to
conduct its business as currently conducted and is in good standing under the laws of each
jurisdiction where such qualification is required, except where the failure to be so qualified
would not have a Material Adverse Effect. Each of the Company and its Subsidiaries has full
corporate power and authority and all licenses, permits, and authorizations necessary to carry on
its businesses as currently conducted and to own and use the properties owned and as currently used
by it, except to the extent the failure to have obtained such license, permit or authorization
would not have a Material Adverse Effect. §4(a) of the Disclosure Schedule lists the directors and
officers of each of the Company and its Subsidiaries. The Sellers have delivered to the Buyer
correct and complete copies of the charter and bylaws of each of the Company and its Subsidiaries
(as amended to date). The minute books (containing the records of meetings of the stockholders,
the board of directors, and any committees of the board of directors), the stock certificate books,
and the stock record books of each of the Company and its Subsidiaries are correct and complete in
all material respects. None of the Company and its Subsidiaries is in violation of any provision
of its charter or bylaws.

     (b) Capitalization. The entire authorized capital stock of the Company consists only of
1,000,000 Company Shares, of which 401,818 Company Shares are issued and outstanding and no Company
Shares are held in treasury. No other capital stock or equity securities of the Company are
authorized or outstanding. All of the issued and outstanding Company Shares have been duly
authorized, are validly issued, fully paid, and nonassessable, and are held beneficially and of
record by The Pressutti Family Trust. There are currently no outstanding or authorized

17

 

options,
warrants, purchase rights, subscription rights, conversion rights, exchange rights, or other
contracts or commitments that could require the Company to issue, sell, or otherwise cause to
become outstanding any of its capital stock. There are no outstanding or authorized stock
appreciation, phantom stock, profit participation, or similar rights with respect to the Company.
There are no voting trusts, proxies, or other agreements or understandings with respect to the
voting of the capital stock of the Company.

     (c) Noncontravention. Neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will (i) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which any of the Company and its Subsidiaries is
subject or any provision of the charter or bylaws of any of the Company and its Subsidiaries or
(ii) conflict with, result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, permit, instrument, or other arrangement to
which any of the Company and its Subsidiaries is a party or by which it is bound or to which any of
its assets is subject (or result in the imposition of any Security Interest upon any of its
assets), except as set forth in §4(c) of the Disclosure Schedule or except where the violation,
conflict, breach, default, acceleration, termination, modification, cancellation, failure to give
notice, or Security Interest would not have a Material Adverse Effect. None of the Company and its
Subsidiaries need give any notice to, make any filing with, or obtain any authorization, consent,
or approval of any government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement, except as set forth in §4(c) of the Disclosure
Schedule or except where the failure to give, make, or obtain any such authorization, consent, or
approval would not have a Material Adverse Effect.

     (d) Brokers’ Fees. None of the Company and its Subsidiaries has any Liability or obligation
to pay any fees or commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement.

     (e) Title to Assets. The Company and its Subsidiaries have good and marketable title to, or a
valid leasehold interest in, or valid license for, all properties and assets currently used by
them, located on their premises, or shown on the Most Recent Balance Sheet or acquired after the
date thereof, free and clear of all Security Interests, except for properties and assets used or
sold in the Ordinary Course of Business since the date of the Most Recent Balance Sheet.

     (f) Subsidiaries. §4(f) of the Disclosure Schedule sets forth for each Subsidiary of the
Company (i) its name and jurisdiction of incorporation, and (ii) the number of issued and
outstanding shares of each class of its capital stock. All of the issued and outstanding shares of
capital stock of each Subsidiary of the Company have been duly authorized and are validly issued,
fully paid, and nonassessable. The Company holds of record and owns beneficially all of the
outstanding shares of each Subsidiary of the Company, free and clear of any restrictions on
transfer (other than restrictions under the Securities Act and state securities laws), Taxes,
Security Interests, option, warrants, purchase rights, contracts, commitments, equities, claims,
and demands. There are no outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, or other contracts or commitments that

18

 

could require the Company to sell, transfer, or otherwise dispose of any capital stock of any of
its Subsidiaries or that could require any Subsidiary of the Company to issue, sell, or otherwise
cause to become outstanding any of its own capital stock. There are no outstanding stock
appreciation, phantom stock, profit participation, or similar rights with respect to any Subsidiary
of the Company. There are no voting trusts, proxies, or other agreements or understandings with
respect to the voting of any capital stock of any Subsidiary of the Company. None of the Company
and its Subsidiaries controls directly or indirectly or has any direct or indirect equity
participation in any corporation, partnership, trust, or other business association which is not a
Subsidiary of the Company.

     (g) Financial Statements. Attached hereto as Exhibit A are the following financial statements
(collectively the “Financial Statements”): (i) unaudited consolidated balance sheets and
statements of income, changes in stockholders’ equity, and cash flow as of and for the fiscal years
ended December 31, 2003 and December 31, 2004 (the “Most Recent Fiscal Year End”) for the
Company and its Subsidiaries, and (ii) unaudited consolidated balance sheets and statements of
income, changes in stockholders’ equity, and cash flow (the “Most Recent Financial
Statements”) as of and for the 7 months ended July 31, 2005 (the “Most Recent Fiscal Month
End”) for the Company and its Subsidiaries. The foregoing Financial Statements (including any
notes thereto) have been prepared in a manner consistent with the accounting principles that have
been historically applied and maintained by the Company and its Subsidiaries and present fairly the
financial condition of the Company and its Subsidiaries as of such dates and the results of
operations of the Company and its Subsidiaries for such periods, and are consistent with the books
and records of the Company and its Subsidiaries; provided, however, that the Most Recent Financial
Statements are subject to normal year-end adjustments (which will not be material individually or
in the aggregate) and all Financial Statements lack full footnotes and other presentation items.

     (h) Events Subsequent to Most Recent Fiscal Year End. Since the Most Recent Fiscal Year End,
there has not been any Material Adverse Change. Without limiting the generality of the foregoing,
and except as set forth on §4(h) of the Disclosure Schedule, since that date:

          (i) except as contemplated by the penultimate sentence of §2(b) and distributions to the
Sellers disclosed in §4(h)(xiii) of the Disclosure Schedule or as otherwise disclosed in §4(h)(i)
of the Disclosure Schedule, none of the Company and its Subsidiaries has sold, leased, transferred,
or assigned any of its assets, tangible or intangible, other than for fair consideration in the
Ordinary Course of Business;

          (ii) none of the Company and its Subsidiaries has entered into any agreement, contract, lease,
or license (or, except for purchase orders to buy raw materials or sell the Company and its
Subsidiaries’ products entered into in the Ordinary Course of Business, series of related
agreements, contracts, leases, and licenses) either involving more than $25,000 or outside the
Ordinary Course of Business;

          (iii) no party (including the Company and each of its Subsidiaries) has accelerated,
terminated, modified, or cancelled any agreement, contract, lease, or license (or

19

 

series of related
agreements, contracts, leases, and licenses) involving more than $25,000 to which the any of the
Company and its Subsidiaries is a party or by which it is bound other than modifications of
purchase order agreements that, in the aggregate, are not material to the business, financial
condition, results of operations, profitability, prospects, or operations of the Company and its
Subsidiaries and are not outside the Ordinary Course of Business or cancellation of purchase order
agreements that are not material to the business, financial condition, results of operations,
profitability, prospects, or operations of the Company and its Subsidiaries and are not outside the
Ordinary Course of Business and in which the Company or one of its Subsidiaries is the seller and
the buyer thereunder has compensated the Company or one of its Subsidiaries for corresponding raw
materials purchases made by the Company or one of its Subsidiaries such that none of the Company
and its Subsidiaries has suffered a Material Adverse Effect;

          (iv) none of the Company and its Subsidiaries has imposed any Security Interest upon any of
its assets, tangible or intangible;

          (v) none of the Company and its Subsidiaries has made any capital expenditure (or series of
related capital expenditures) either involving more than $25,000 or outside the Ordinary Course of
Business other than as contemplated on the Capital Budget of the Company and its Subsidiaries
attached hereto as Exhibit G;

          (vi) none of the Company and its Subsidiaries has made any capital investment in, any loan to,
or any acquisition of the securities or assets of, any other Person (or series of related capital
investments, loans, and acquisitions) either involving more than $25,000 or outside the Ordinary
Course of Business;

          (vii) none of the Company and its Subsidiaries has issued any note, bond, or other debt
security or created, incurred, assumed, or guaranteed any indebtedness for borrowed money or
capitalized lease obligation either involving more than $10,000 singly or $25,000 in the aggregate;

          (viii) none of the Company and its Subsidiaries has delayed or postponed the payment of
accounts payable beyond their stated terms or has delayed or postponed the payment of other
Liabilities outside the Ordinary Course of Business;

          (ix) none of the Company and its Subsidiaries has cancelled, compromised, waived, or released
any right or claim (or series of related rights and claims) either involving more than $25,000 or
outside the Ordinary Course of Business;

          (x) none of the Company and its Subsidiaries has granted any license or sublicense of any
rights under or with respect to any Intellectual Property;

          (xi) there has been no change made or authorized in the charter or bylaws of any of the
Company and its Subsidiaries;

20

 

          (xii) none of the Company and its Subsidiaries has issued, sold, or otherwise disposed of any
of its capital stock, or granted any options, warrants, or other rights to purchase or obtain
(including upon conversion, exchange, or exercise) any of its capital stock;

          (xiii) none of the Company and its Subsidiaries has declared, set aside, or paid any dividend
or made any distribution with respect to its capital stock (whether in cash or in kind) or
redeemed, purchased, or otherwise acquired any of its capital stock;

          (xiv) none of the Company and its Subsidiaries has experienced any destruction, disappearance,
loss, or material damage (whether or not covered by insurance) to its property;

          (xv) none of the Company and its Subsidiaries has made any loan to, or entered into any other
transaction with, any of its directors, officers, and employees either involving more than $5,000
in the aggregate or outside the Ordinary Course of Business, except as set forth on §4(h)(xv) of
the Disclosure Schedule;

          (xvi) none of the Company and its Subsidiaries has entered into any employment contract or
collective bargaining agreement, written or oral, or modified the terms of any existing such
contract or agreement, except as set forth on §4(h)(xvi) of the Disclosure Schedule;

          (xvii) none of the Company and its Subsidiaries has granted any increase in the base
compensation of any of its directors, officers, and employees;

          (xviii) none of the Company and its Subsidiaries has adopted, amended, modified, or terminated
any bonus, profit-sharing, incentive, severance, or other plan, contract, or commitment for the
benefit of any of its directors, officers, and employees (or taken any such action with respect to
any other Employee Benefit Plan);

          (xix) none of the Company and its Subsidiaries has made any other change in employment terms
for any of its directors, officers, and employees outside the Ordinary Course of Business;

          (xx) none of the Company and its Subsidiaries has made or pledged to make any charitable or
other capital contribution outside the Ordinary Course of Business;

          (xxi) no officer or key employee has terminated his/her employ or has been terminated from the
employ of the Company or any of its Subsidiaries, or has become disabled or incapacitated;

          (xxii) there has not been any other material occurrence, event, incident, action, failure to
act, or transaction outside the Ordinary Course of Business involving the Company or any of its
Subsidiaries and having or reasonably likely to have a Material Adverse Effect; and

          (xxiii) none of the Company and its Subsidiaries has committed to any of the foregoing.

21

 

     (i) Undisclosed Liabilities. None of the Company and its Subsidiaries has any Liability (and
to the Knowledge of any of the Sellers and the directors and officers of the Company and its
Subsidiaries there is no Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against it giving rise to any Liability), except
for (i) Liabilities set forth on the face of the Most Recent Balance Sheet (rather than in any
notes thereto), (ii) Liabilities which have arisen after the Most Recent Fiscal Month End in the
Ordinary Course of Business (none of which results from, arises out of, relates to, is in the
nature of, or was caused by any breach of contract, breach of warranty, tort, infringement, or
violation of law), and (iii) Liabilities set forth on §4(i) of the Disclosure Schedule.

     (j) Legal Compliance. Except as set forth on §4(j) of the Disclosure Schedule, the Company
and its Subsidiaries and their predecessors and Affiliates have complied with all applicable laws
(including rules, regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and
charges thereunder) of federal, state, local, and foreign governments (and all agencies thereof)
except to the extent that noncompliance will not and could not reasonably be expected to have a
Material Adverse Effect, and no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand, or notice has been filed or commenced against the Company or any of its
Subsidiaries alleging any failure so to comply. §4(j) of the Disclosure Schedule lists each
material license, franchise, permit, certificate, approval, or other similar authorization of any
governmental entity affecting, or relating in any way to, the business of the Company and its
Subsidiaries.

     (k) Tax Matters.

          (i) Except as set forth on §4(k) of the Disclosure Schedule, each of the Company and its
Subsidiaries has timely filed all Tax Returns that it was required to file. All such Tax Returns
were correct and complete in all material respects. All Taxes due and owing by any of the Company
and its Subsidiaries (whether or not shown on any Tax Return) have been paid. None of the Company
and its Subsidiaries currently is the beneficiary of any extension of time within which to file any
Tax Return. No claim has ever been made by an authority in a jurisdiction where the Company or any
of its Subsidiaries does not file Tax Returns that it is or may be subject to taxation by that
jurisdiction. There are no Security Interests on any of the assets of the Company or any of its
Subsidiaries that arose in connection with any failure (or alleged failure) to pay any Tax.

          (ii) Each of the Company and its Subsidiaries has withheld, deposited and paid all Taxes
required to have been withheld, deposited and/or paid by the each of Company and its Subsidiaries
in connection with amounts paid or owing to any employee, independent contractor, creditor,
stockholder, or other third party.

          (iii) None of the Sellers or any director or officer (or employee responsible for Tax matters)
of the Company or its Subsidiaries knows or has reason to know of any threatened or potential
additional assessments of Taxes for any period for which Tax Returns have or should have been
filed. There is no dispute or claim concerning any Tax Liability of the Company or any of its
Subsidiaries either (A) claimed or raised by any authority or (B) as to which any of the

22

 

Sellers
and the directors and officers (and employees responsible for Tax matters) of the Company and its
Subsidiaries has Knowledge. §4(k) of the Disclosure Schedule lists all federal, state, local, and
foreign income Tax Returns filed by the Company and its Subsidiaries for taxable periods for which
the statute of limitations is open, indicates those Tax Returns that have been audited, and
indicates those Tax Returns that currently are the subject of audit. The Sellers have delivered to
the Buyer correct and complete copies of all income Tax Returns, examination reports, statements of
deficiencies assessed against or agreed to by the Company and its Subsidiaries, and any other
written communications to or from a taxing authority for a taxable year for which the statute of
limitations is open.

          (iv) None of the Company and its Subsidiaries has waived any statute of limitations in respect
of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency.

          (v) Except as set forth on §4(k) of the Disclosure Schedule, none of the Company and its
Subsidiaries has made any payments, is obligated to make any payments, or is a party to any
agreement that under certain circumstances could obligate it to make any payments that will not be
deductible under Code §280G. None of the Company and its Subsidiaries has been a United States
real property holding corporation within the meaning of Code §897(c)(2) during the applicable
period specified in Code §897(c)(1)(A)(ii). Except with respect to its wholly-owned subsidiaries,
none of the Company and its Subsidiaries is a party to any Tax allocation, sharing or indemnity
agreement. None of the Company and its Subsidiaries (A) has been a member of an Affiliated Group
filing a consolidated federal income Tax Return or (B) has Liability for the Taxes of any Person
(other than any of the Company and its Subsidiaries) under Treas. Reg. §1.1502-6 (or any similar
provision of state, local, or foreign law), as a transferee or successor, by contract, or
otherwise.

          (vi) §4(k)(vi) of the Disclosure Schedule sets forth the following information with respect to
the Company and its Subsidiaries: (A) the basis of the Company and its Subsidiaries in their
assets; (B) the amount of any net operating loss, net capital loss, unused investment or other
credit, unused foreign tax, or excess charitable contribution allocable to the Company and its
Subsidiaries; and (C) the amount of any deferred gain or loss allocable to the Company and its
Subsidiaries arising out of any Deferred Intercompany Transaction.

          (vii) The unpaid Taxes of the Company and its Subsidiaries (A) did not, as of the Most Recent
Fiscal Month End, exceed the reserve for Tax Liability (rather than any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) set forth on the face of the
Most Recent Balance Sheet (rather than in any notes thereto) and (B) do not exceed that reserve as
adjusted for the passage of time through the Closing Date in accordance with the past custom and
practice of the Company and its Subsidiaries in filing their Tax Returns.

          (viii) None of the Company and its Subsidiaries has received any notices of increases in the
assessed value of its properties for Tax purposes since January 1, 2005.

23

 

          (ix) None of the Company and its Subsidiaries has participated in any reportable transaction
under Code §6011 and the applicable Treasury Regulations thereunder or any similar provision under
state, local, or foreign law.

     (l) Real Property.

          (i) None of the Company and its Subsidiaries owns any real property.

          (ii) §4(l) of the Disclosure Schedule lists and describes briefly all real property leased or
subleased to the Company and its Subsidiaries. The Sellers have delivered to the Buyer a correct
and complete copy of each such lease (as amended to date) listed in §4(l) of the Disclosure
Schedule. With respect to each of such leases:

     (A) the lease is legal, valid, binding, enforceable, and in full force and
effect;

     (B) the lease will continue to be legal, valid, binding, enforceable, and in
full force and effect on identical terms following the consummation of the
transactions contemplated hereby;

     (C) no party to the lease has given or received a currently pending notice of
breach or default, and, to the Knowledge of any of the Sellers and the directors and
officers (and employees with responsibility for real estate matters) of the Company
and its Subsidiaries, no event has occurred which, with notice or lapse of time,
would constitute a breach or default or permit termination, modification, or
acceleration thereunder;

     (D) no party to the lease has given or received notice repudiating any
provision thereof;

     (E) there are no disputes, oral agreements, or forbearance programs in effect
as to the lease;

     (F) none of the Company and its Subsidiaries has assigned, transferred,
conveyed, mortgaged, deeded in trust, or encumbered any interest in the leasehold;

     (G) to the Knowledge of any of the Sellers and the directors and officers (and
employees with responsibility for real estate matters) of the Company and its
Subsidiaries, all Facilities leased and all actions and activities of the Company
and its Subsidiaries thereunder have received all approvals of governmental
authorities (including licenses and permits) required in connection with the
operation thereof and have been operated and maintained in accordance with
applicable laws, rules, and regulations, except, in each case, as could not
reasonably be expected to have a Material Adverse Effect; and

24

 

     (H) all Facilities leased thereunder are supplied with utilities and other
services necessary for the operation of said Facilities as such Facilities are
presently being used by the Company and its Subsidiaries in the conduct of their
business.

     (m) Intellectual Property.

          (i) The Company and its Subsidiaries own or have the right to use pursuant to license,
sublicense, agreement, or permission all Intellectual Property used in the operation of the
businesses of the Company and its Subsidiaries as presently conducted. None of the Company and its
Subsidiaries is a party to any option, warrant, purchase right, or other contract or commitment
that could require the Company or any of its Subsidiaries to sell, transfer, or otherwise dispose
of any of its Intellectual Property. Each item of Intellectual Property owned or used by the
Company and its Subsidiaries immediately prior to the Closing will be owned or available for use by
the Company and its Subsidiaries to the same extent and on identical terms and conditions
immediately subsequent to the Closing. Each current and former employee or contractor of the
Company and its Subsidiaries who has worked on, created, developed, or is or was involved in or has
assisted with or contributed to the creation or development of, any of their Intellectual Property
has executed and delivered to the Company or its Subsidiaries an agreement (containing no
exceptions to or exclusions from the scope of its coverage) assigning to the Company all of such
employee’s or contractor’s rights, title, and interest in and to any such Intellectual Property.
Each such employee or contractor, and any other employee or contractor who has received or to whom
was disclosed any trade secrets or other confidential information that is part of the Company and
its Subsidiaries’ Intellectual Property, has executed and delivered to the Company an agreement
agreeing to keep confidential and not disclose, or use for any purpose other than as permitted by
the Company and its Subsidiaries, any such trade secrets or other confidential information.

          (ii) Neither the Company nor its Subsidiaries or the operation of the Company and its
Subsidiaries or their business have interfered with, infringed upon, misappropriated, or otherwise
come into conflict with any rights, title, or interest in or to any Intellectual Property of any
third parties. None of the Sellers and the directors and officers (and employees and agents with
responsibility for Intellectual Property matters) of the Company and its Subsidiaries (A) has ever
received any charge, complaint, claim, threat, demand, or notice alleging that any such
interference, infringement, misappropriation or violation (including, without limitation, any offer
to license, or claim that the Company or its Subsidiaries must license or refrain from using, any
Intellectual Property rights of any third party), or (B) has any Knowledge that the continued
operation of the Company and its Subsidiaries or their business after the Closing would cause or
result in any such interference, infringement, misappropriation, or violation.

          (iii) To the Knowledge of any of the Sellers and the directors and officers (and employees and
agents with responsibility for Intellectual Property matters) of the Company and its Subsidiaries,
(A) no third party has interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any rights of the Company and its Subsidiaries with respect to their Intellectual
Property, and (B) there are no circumstances indicating that any third party will

25

 

or may be likely
to interfere with, infringe upon, misappropriate, or otherwise come into conflict with any rights
with respect to the Company and its Subsidiaries’ Intellectual Property.

          (iv) Except as set forth on Section 4(m) of the Disclosure Schedule, none of the Company and
its Subsidiaries (A) has been issued any patent, has obtained or acquired any patent or patent
application, and has pending applications for any patents or registrations, (B) has granted to any
third party any license, agreement, or other permission with respect to any of its Intellectual
Property, (C) has registered, has obtained or acquired any application or registration for, and has
pending application for registration of any trademarks or copyrights, and (D) has sold, licensed,
transferred, or otherwise disposed of any Intellectual Property or rights therein or thereto within
the last two years.

          (v) The Company and its Subsidiaries’ Intellectual Property do not use, pursuant to license,
sublicense, agreement, or permission, any Intellectual Property that any third party owns (other
than the Purchased Intellectual Property). None of the Company and its Subsidiaries has disclosed
or made available outside the operation of the Company or its Subsidiaries’ business or without a
confidentiality or non-disclosure obligation, and each of the Company and its Subsidiaries has
taken reasonable actions to maintain and protect, each item of its Intellectual Property,
including, without limitation, the confidentiality and secrecy of any trade secrets or other
confidential information that is part of any of its Intellectual Property.

          (vi) To the Knowledge of the Sellers and the directors and officers (and employees and agents
with responsibility for Intellectual Property matters) of the Company and its Subsidiaries, no
product, system, program, or software module designed, developed, sold, licensed, or otherwise used
by the Company or its Subsidiaries contains any “back door,” “time bomb,” “Trojan horse,” “worm,”
“drop dead device,” “virus,” or other software routines or hardware components designed to permit
unauthorized access or to disable or erase software, hardware, or data without the consent of the
user, or contains any open source code or software that may be subject to an open source or general
public license.

     (n) Tangible Assets. Each of the Company and its Subsidiaries owns or leases all buildings,
machinery, equipment, and other tangible assets used in the conduct of its businesses as presently
conducted (except assets belonging to customers). Each such tangible asset is in reasonable
working condition and repair (subject to normal wear and tear). §4(n) of the Disclosure Schedule
is a property ledger listing the Company and its Subsidiaries’ tangible assets as of the Most
Recent Balance Sheet Date. All machinery, equipment, toolings, raw materials and supplies, and
other tangible assets provided to the Company and its Subsidiaries by their customers are readily
identifiable and are being maintained and used by the Company and/or its Subsidiaries in accordance
with all agreements the Company and its Subsidiaries have with such customers.

     (o) Inventory. The inventory of the Company and its Subsidiaries consists of raw materials
and supplies, manufactured and purchased parts, goods in process, and finished goods, all of which
is merchantable and fit for the purpose for which it was procured or manufactured, and none of
which is obsolete, damaged, or defective, subject only to the reserve for inventory writedown set
forth on the face of the Most Recent Balance Sheet (rather than in any notes

26

 

thereto) as adjusted
for the passage of time through the Closing Date in accordance with the past custom and practice of
the Company and its Subsidiaries except as set forth on §4(o) of the Disclosure Schedule. §4(o) of
the Disclosure Schedule is an inventory list that lists the inventory of the Company and its
Subsidiaries as of the Most Recent Balance Sheet Date.

     (p) Contracts. §4(p) of the Disclosure Schedule lists the following contracts and other
agreements to which any of the Company and its Subsidiaries is a party:

          (i) any agreement (or group of related agreements) for the lease of personal property to or
from any Person providing for remaining lease payments in excess of $25,000 per annum;

          (ii) except for non-continuing purchase orders to buy raw materials or sell the Company’s
products entered into in the Ordinary Course of Business, or modifications of purchase order
agreements that, in the aggregate, are not material to the business, financial condition, results
of operations, profitability, prospects, or operations of the Company and are not outside the
Ordinary Course of Business, any agreement (or group of related agreements) for the purchase or
sale of raw materials, commodities, supplies, products, or other personal property, or for the
furnishing or receipt of services, the continued performance of which will extend over a period of
more than one year, or involve consideration in excess of $25,000;

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

          (iv) any agreement (or group of related agreements) under which it has created, incurred,
assumed, or guaranteed any indebtedness for borrowed money, or any capitalized lease obligation, in
excess of $25,000 or under which it has imposed a Security Interest on any of its assets, tangible
or intangible;

          (v) any agreement concerning confidentiality or noncompetition;

          (vi) any agreement with any of the Sellers or any of their respective Affiliates (other than
the Company and its Subsidiaries);

          (vii) any profit sharing, stock option, stock purchase, stock appreciation, deferred
compensation, severance, or other material plan or arrangement for the benefit of its current or
former directors, officers, and employees;

          (viii) any collective bargaining agreement;

          (ix) any agreement for the employment of any individual on a full-time, part-time, consulting,
or other basis providing annual compensation in excess of $25,000 or providing severance benefits
or benefits triggered by a change in control of the Company or its Subsidiaries;

27

 

          (x) any agreement (or series of related agreements) under which it has advanced or loaned any
amount to any of its directors, officers, and employees outside the Ordinary Course of Business or
that involves singly or in the aggregate in excess of $5,000;

          (xi) any agreement relating to the disposal of solid waste or Hazardous Materials;

          (xii) any other agreement under which the consequences of a default or termination would or is
reasonably likely to have a Material Adverse Effect; or

          (xiii) any other agreement (or group of related agreements) the performance of which involves
consideration in excess of $40,000.

The Sellers have delivered to the Buyer a correct and complete copy of each written agreement (as
amended to date) listed in §4(p) of the Disclosure Schedule, and a written summary setting forth
the material terms and conditions of each oral agreement referred to in §4(p) of the Disclosure
Schedule. With respect to each such agreement: (A) the agreement is legal, valid, binding,
enforceable, and in full force and effect; (B) the agreement will continue to be legal, valid,
binding, enforceable, and in full force and effect on identical terms following the consummation of
the transactions contemplated hereby (except to the extent it will expire on its own terms (without
regard to the execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby) before such consummation); (C) none of the Company and its Subsidiaries has
given or received notice of breach or default, and to the Knowledge of the Sellers, the Company and
its Subsidiaries, no event has occurred which with notice or lapse of time would constitute a
material breach or default, or permit termination, modification, or acceleration, under the
agreement; and (D) no party has repudiated any provision of the agreement.

     (q) Notes and Accounts Receivable. All notes and accounts receivable of the Company and its
Subsidiaries are reflected properly on their books and records, are valid receivables subject to no
setoffs or counterclaims, are current and collectible within 90 days after the Closing, subject
only to the reserve for bad debts set forth on the face of the Most Recent Balance Sheet (rather
than in any notes thereto) as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of the Company and its Subsidiaries except as
described on §4(q) of the Disclosure Schedule.

     (r) Powers of Attorney. There are no outstanding powers of attorney executed on behalf of any
of the Company and its Subsidiaries.

     (s) Insurance. §4(s) of the Disclosure Schedule lists each insurance policy to which any of
the Company and its Subsidiaries has been a party, a named insured, or otherwise the beneficiary of
coverage at any time within the past three years. There is no claim by the Company or any of its
Subsidiaries pending under any of such policies as to which, to the Knowledge of any of the Sellers
and the directors and officers (and employees responsible for insurance matters) of the Company and
its Subsidiaries, coverage has been questioned, denied, or disputed. All premiums due and payable
under each such policy have been paid and neither the

28

 

Company and its Subsidiaries nor, to the
Knowledge of any of the Sellers and the directors and officers (and employees responsible for
insurance matters) of the Company and its Subsidiaries, any other party to the policies is in
breach or default, and no event has occurred which, with notice or lapse of time, would constitute
such a breach or default, or permit termination, modification, or acceleration, under the policy,
and no party to the policy has repudiated any provision thereof. The Company and its Subsidiaries
have been covered during the past ten years by insurance in scope and amount customary and
reasonable for the business in which they have engaged during the aforementioned period for a
company of the size, net worth and with the financial resources of the Company, and manufacturing
and selling the products the Company did, at the various time during the period.

     (t) Litigation. None of the Company and its Subsidiaries is subject to any outstanding
injunction, judgment, order, decree, or ruling and none of the Company and its Subsidiaries is a
party or, to the Knowledge of any of the Sellers and the directors and officers (and employees with
responsibility for litigation matters) of the Company and its Subsidiaries, is threatened to be
made a party to any action, suit, proceeding, hearing, or investigation of, in, or before any court
or quasi-judicial or administrative agency of any federal, state, local, or foreign jurisdiction or
before any arbitrator. None of the Sellers and the directors and officers (and employees with
responsibility for litigation matters) of the Company and its Subsidiaries has any grounds to
believe that any such action, suit, proceeding, hearing, or investigation may be brought or
threatened against the Company or its Subsidiaries.

     (u) Product Warranty and Advertising. Each product manufactured, sold, leased, or delivered by
the Company and its Subsidiaries has been in conformity with all applicable contractual commitments
and all express and applicable implied warranties, and none of the Company and its Subsidiaries has
any Liability (and, to the Knowledge of the Company and its Subsidiaries, there is no Basis for any
present or future action, suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand against them giving rise to any Liability) for replacement or repair thereof or other
damages in connection therewith, subject only to the reserve for product warranty claims set forth
on the face of the Most Recent Balance Sheet (rather than in any notes thereto) as adjusted for the
passage of time through the Closing Date in accordance with the past custom and practice of the
Company and its Subsidiaries or, except as described in §4(u) of the Disclosure Schedule. None of
the Company and its Subsidiaries has engaged in deceptive or unsubstantiated advertising or other
promotional or other conduct in violation of the California Business and Professions Code or other
applicable Laws. Except as set forth on §4(u) of the Disclosure Schedule, no product manufactured,
sold, leased, or delivered by the Company or its Subsidiaries is subject to any guaranty, warranty,
or other indemnity beyond the applicable standard terms and conditions of sale or lease of and
limited warranty with respect to such product. §4(u) of the Disclosure Schedule includes copies of
the typical standard terms and conditions of sale or lease for the Company and its Subsidiaries
with respect to their principal customers and all forms of limited warranty issued for any and all
of the Company and its Subsidiaries’ products and services.

     (v) Product Liability. None of the Company and its Subsidiaries has any Liability (and, to the
Knowledge of the Company and its Subsidiaries, there is no Basis for any present or future action,
suit, proceeding, hearing, investigation, charge, complaint, claim, or demand

29

 

against any of them giving rise to any Liability) arising out of any injury to individuals or
property as a result of the ownership, possession, or use of any product manufactured, sold,
leased, or delivered by the Company or its Subsidiaries. None of the Company and its Subsidiaries
has manufactured, marketed, sold or distributed any asbestos or vermiculite or products containing
asbestos or vermiculite.

     (w) Employees. To the Knowledge of any of the Sellers and the directors and officers (and
employees with responsibility for employment matters) of the Company and its Subsidiaries, no
officer or group of employees has any plans to terminate employment with the Company or its
Subsidiaries. None of the Company and it Subsidiaries is a party to or bound by any collective
bargaining agreement, or has it experienced any strikes, grievances, claims of unfair labor
practices, or other collective bargaining disputes. To the Knowledge of any of the Sellers and the
directors and officers (and employees with responsibility for employment matters) of the Company
and its Subsidiaries, none of the Company and its Subsidiaries has committed any unfair labor
practice. None of the Sellers and the directors and officers (and employees with responsibility
for employment matters) of the Company and its Subsidiaries has any Knowledge of any organizational
effort presently being made or threatened by or on behalf of any labor union with respect to
employees of the Company and its Subsidiaries.

     (x) Employee Benefits.

          (i) §4(x) of the Disclosure Schedule lists each Employee Benefit Plan that the Company and its
Subsidiaries maintain or to which the Company or its Subsidiaries contributes.

     (A) Each such Employee Benefit Plan (and each related trust, insurance
contract, or fund) complies in all material respects with the applicable
requirements of ERISA, the Code, and other applicable laws.

     (B) All required reports and descriptions (including Form 5500 Annual Reports,
Summary Annual Reports, PBGC-1’s, and Summary Plan Descriptions, if applicable) have
been filed if due or distributed appropriately with respect to each such Employee
Benefit Plan. The requirements of Part 6 of Subtitle B of Title 1 of ERISA and of
Code §4980B have been met in all material respects with respect to each such
Employee Benefit Plan which is an Employee Welfare Benefit Plan.

     (C) All contributions (including all employer contributions and employee salary
reduction contributions) which are due have been paid to each such Employee Benefit
Plan which is an Employee Pension Benefit Plan and all contributions for any period
ending on or before the Closing Date which are not yet due have been paid to each
such Employee Pension Benefit Plan or accrued in accordance with the past custom and
practice of the Company and its Subsidiaries. All premiums or other payments for
all periods ending on or before the Closing Date have been paid or accrued with
respect to each such Employee Benefit Plan which is an Employee Welfare Benefit
Plan.

30

 

     (D) Each such Employee Benefit Plan which is an Employee Pension Benefit Plan
meets the requirements of a “qualified plan” under Code §401(a) and has received,
within the last three years, a favorable determination letter from the Internal
Revenue Service that the Employee Pension Benefit Plan satisfies the applicable
requirements of the Tax Reform Act of 1986, as amended.

     (E) The market value of assets under each such Employee Benefit Plan which is
an Employee Pension Benefit Plan (other than any Multiemployer Plan) equals or
exceeds the present value of all vested and nonvested Liabilities thereunder
determined in accordance with PBGC methods, factors, and assumptions applicable to
an Employee Pension Benefit Plan terminating on the date for determination.

     (F) The Sellers have delivered to the Buyer correct and complete copies of the
plan documents and summary plan descriptions, the most recent determination letter
received from the Internal Revenue Service, the most recent Form 5500 Annual Report,
and all related trust agreements, insurance contracts, and other funding agreements
which implement each such Employee Benefit Plan.

          (ii) With respect to each Employee Benefit Plan that the Company and its Subsidiaries maintain
or ever has maintained or to which any of them contributes, ever has contributed, or ever has been
required to contribute:

     (A) No such Employee Benefit Plan which is an Employee Pension Benefit Plan is
or has ever been subject to Section 302 or Title IV of ERISA.

     (B) There have been no Prohibited Transactions with respect to any such
Employee Benefit Plan. No Fiduciary has any Liability for breach of fiduciary duty
or any other failure to act or comply in connection with the administration or
investment of the assets of any such Employee Benefit Plan. No action, suit,
proceeding, hearing, or investigation with respect to the administration or the
investment of the assets of any such Employee Benefit Plan (other than routine
claims for benefits) is pending or, to the Knowledge of any of the Sellers and the
directors and officers (and employees with responsibility for employee benefits
matters) of the Company and its Subsidiaries, threatened. None of the Sellers and
the directors and officers (and employees with responsibility for employee benefits
matters) of the Company and its Subsidiaries has any Knowledge of any Basis for any
such action, suit, proceeding, hearing, or investigation.

          (iii) None of the Company and its Subsidiaries do contribute to, ever has contributed to, has
been required to contribute to any Multiemployer Plan, or has any Liability (including withdrawal
Liability) under any Multiemployer Plan.

31

 

          (iv) None of the Company and its Subsidiaries maintains, has ever maintained, contributes, has
ever contributed, or ever has been required to contribute to any Employee Welfare Benefit Plan
providing medical, health, or life insurance or other welfare-type benefits for current or future
retired or terminated employees, their spouses, or their dependents (other than in accordance with
Code §4980B).

     (y) Guaranties. The Company and its Subsidiaries are not guarantors or otherwise liable for
any Liability or obligation (including indebtedness) of any other Person.

     (z) Environment, Health, and Safety.

     Except as set forth in §4(z) of the Disclosure Schedule:

          (i) The Company and its Subsidiaries have obtained, and timely applied for renewals of, all
permits, licenses, certificates, approvals, registrations, applications, and other authorizations,
registrations, or exemptions (“Environmental Permits”) that are required in connection with
the conduct of their business as presently conducted under Environmental Law and related orders.
The Environmental Permits are listed in §4(z) of the Disclosure Schedule.

          (ii) The Company and its Subsidiaries are in compliance with the Environmental Permits.

          (iii) The Company and its Subsidiaries are, and at all times have been, in compliance with,
and have not been and are not in violation of or liable under any Environmental Law or Occupational
Safety and Health Law and have no Liability under the common law relating to the Environment. None
of any of the Sellers, the Company, or its Subsidiaries has received any order, notice, or other
communication from (i) any governmental authority or private citizen, or (ii) the current or prior
owner or operator of the Facilities or any facility to which waste from the site has been sent for
storage, transfer, recycling, or disposal (“Off-site Waste Facilities”), of any actual or
alleged violation or liability arising under any Environmental Law or Occupational Safety and
Health Law with respect to any of the Facilities, any other properties or assets (whether real,
personal, or mixed) which the Company or its Subsidiaries has owned or operated, or the Off-site
Waste Facilities. None of the Sellers, the Company, its Subsidiaries or any of their Affiliates
has received notice or is aware of any events, conditions, circumstances, activities, practices,
incidents, actions, or plans which may (i) interfere with or prevent compliance with Environmental
Law or Occupational Safety and Health Law, or (ii) give rise to any common law or legal liability,
including liability under the United States Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. §§9601 et seq., as amended (“CERCLA”), and any successor federal
statute, rule, or regulation or comparable state statute, rule, or regulation or other
Environmental Laws, or otherwise form the basis of any claim, action, demand, suit, proceeding,
hearing, or investigation, based on or related to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, handling, management, or Release of a Hazardous Material.

          (iv) There is not any civil, criminal, or administrative action, suit, demand, claim, hearing,
notice, or demand letter, notice of violation, investigation, or proceeding pending

32

 

or threatened against either the Company or any of its Subsidiaries in connection with the
conduct of their businesses relating in any way to Environmental Law, Occupational Safety and
Health Law, or the common law relating to the Environment.

          (v) The Sellers have delivered to Buyer true and complete copies and results of any reports,
studies, analyses, tests, or monitoring possessed by any of the Sellers, the Company or its
Subsidiaries pertaining to Hazardous Materials in, on, or under the Facilities, or concerning
compliance by the Sellers, the Company, its Subsidiaries or any other Person for whose conduct they
are or may be held responsible, with Environmental Law or Occupational Safety and Health Law.

          (vi) The Sellers each agree reasonably to cooperate with Buyer in connection with Buyer’s
application for the transfer, renewal, or issuance of any Environmental Permits and the filing of
any reports or notices or other actions necessary to satisfy any requirements arising under
Environmental Law or Occupational Safety and Health Law involving the Company and its Subsidiaries’
businesses for a period of one year after Closing; provided that, any transfer or application fees
and costs associated with such transfers or applications are to be borne by the Buyer.

          (vii) There has been no Release of any Hazardous Materials at or from the Facilities or, to
the Knowledge of any of the Sellers and any director or officer (or employee responsible for
environmental matters) of the Company and its Subsidiaries, at any other locations where any
Hazardous Materials were generated, manufactured, refined, transferred, produced, imported, used,
or processed from or by the Facilities, or from or by any other properties and assets (whether
real, personal, or mixed) in which any of the Sellers, the Company or its Subsidiaries has or had
an interest, or to the Knowledge of any of the Sellers and any director or officer (or employee
responsible for environmental matters) of the Company and its Subsidiaries, from or by any
geologically or hydrologically adjoining property, whether by the Company, its Subsidiaries or any
other Person.

          (viii) The Seller has provided to the Buyer a current Phase I Environmental Assessment in a
form acceptable to the Buyer with respect to the Purchased Real Estate. Buyer acknowledges receipt
of the Phase I Environmental Assessment.

     (aa) Certain Business Relationships with the Company and its Subsidiaries. None of the
Sellers, the members of Joseph Pressutti or Susan Pressutti’s immediate family, or their respective
Affiliates has been involved in any business arrangement or relationship with any of the Company
and its Subsidiaries within the past 24 months, and none of the Sellers, the members of Joseph
Pressutti or Susan Pressutti’s immediate family, or their respective Affiliates owns any asset,
tangible or intangible, which is used in the business of any of the Company and its Subsidiaries.

     (bb) Off-site Disposal of Hazardous Materials. The Company and its Subsidiaries have sent
Hazardous Materials for off-site disposal only to those off-site waste management or recycling or
reclamation facilities identified in §4(bb) of the Disclosure Schedule.

33

 

     (cc) Customers and suppliers.

          (i) §4(cc) of the Disclosure Schedule lists the 20 largest customers of the Company (on a
consolidated basis) for the most recent fiscal year and sets forth opposite the name of each such
customer the percentage of consolidated net sales attributable to the customer. §4(cc) of the
Disclosure Schedule also lists any additional current customers that the Company anticipated will
be among the 10 largest customers for the current fiscal year.

          (ii) Since the date of the Most Recent Balance Sheet, to the knowledge without independent
investigation of any of the Sellers and any director or officer of the Company, no material
supplier of the Company or any of its Subsidiaries has indicated that it will stop, or materially
decrease the rate of, supplying materials, products, or services to the Company or any of its
Subsidiaries. No customer listed on §4(cc) of the Disclosure Schedule has indicated that it will
stop, or materially decrease the rate of, buying materials, products, or services from the Company
or any of its Subsidiaries.

     (dd) Projections. In connection with the Buyer’s investigation of the Company, the Sellers
and/or the Company have provided the Buyer with certain estimates, projections, and other forecasts
regarding the Company’s future results of operations and financial condition. Although the Sellers
cannot guarantee that the Company’s actual future results and financial condition will be the same
as those so projected, such projections were prepared in good faith and, to the knowledge of any of
the Sellers and the officers and directors of the Company, they believe the assumptions used are
reasonable.

     (ee) Disclosure. The representations and warranties contained in this §4 do not contain any
untrue statement of a material fact or omit to state any material fact necessary in order to make
the statements and information contained in this §4 not misleading.

     (ff) Disclaimer. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR ANY AGREEMENT OR
CERTIFICATE DELIVERED PURSUANT TO THIS AGREEMENT, THE SELLERS MAKE NO REPRESENTATIONS,
WARRANTIES, OR GUARANTEES, EXPRESS, IMPLIED, STATUTORY, OR OTHERWISE, AT LAW OR IN EQUITY, IN
RESPECT OF THE COMPANY SHARES, THE PURCHASED INTELLECTUAL PROPERTY, THE COMPANY, ITS SUBSIDIARIES,
OR ANY OF THEIR ASSETS, LIABILITIES, ON-GOING CONTRACTS AND OBLIGATIONS, OR ANY OF COMPANY AND ITS
SUBSIDIARIES’ OPERATIONS OR BUSINESSES, INCLUDING, WITHOUT LIMITATION, WITH RESPECT TO
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, NON-INFRINGEMENT, OR PROJECTED FINANCIAL
RESULTS, AND ANY SUCH OTHER REPRESENTATIONS OR WARRANTIES OR GUARANTEES ARE HEREBY EXPRESSLY
DISCLAIMED.

     NOTWITHSTANDING ANYTHING TO THE CONTRARY, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR
ANY AGREEMENT OR CERTIFICATE DELIVERED PURSUANT TO THIS AGREEMENT, THE SELLER IS GIVING NO ASSURANCES THAT ANY MANUFACTURER, SUPPLIER, LESSOR,

34

 

CUSTOMER, OR OTHER PARTY WITH WHICH THE SELLERS OR THE COMPANY HAS A RELATIONSHIP WILL CONTINUE ON AND AFTER THE CLOSING TO
MAINTAIN ITS RELATIONSHIP REGARDING THE COMPANY AND ITS BUSINESS WITH THE BUYER OR THE COMPANY OR
MAINTAIN SUCH RELATIONSHIP ON THE SAME TERMS THAT IT IS NOW CONDUCTED WITH THE SELLERS AND THE
COMPANY.

     IN CONNECTION WITH THE BUYER’S INVESTIGATION OF THE COMPANY, THE COMPANY SHARES, THE PURCHASED
INTELLECTUAL PROPERTY, AND THE PURCHASED REAL ESTATE, THE BUYER HAS RECEIVED CERTAIN ESTIMATES,
PROJECTIONS, AND OTHER FORECASTS REGARDING THE COMPANY’S FUTURE RESULTS OF OPERATIONS AND FINANCIAL
CONDITION. THE BUYER ACKNOWLEDGES THAT THERE ARE UNCERTAINTIES INHERENT IN ATTEMPTING TO MAKE SUCH
ESTIMATES, PROJECTIONS, AND OTHER FORECASTS AND THAT THE BUYER IS FAMILIAR WITH SUCH UNCERTAINTIES.
ACCORDINGLY, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR ANY AGREEMENT OR CERTIFICATE
DELIVERED PURSUANT TO THIS AGREEMENT, THE SELLERS ARE NOT MAKING ANY REPRESENTATION OR WARRANTY
WITH RESPECT TO SUCH ESTIMATES, PROJECTIONS, AND OTHER FORECASTS (INCLUDING THE REASONABLENESS OF
THE ASSUMPTIONS UNDERLYING SUCH ESTIMATES, PROJECTIONS, AND FORECASTS AND FORECASTS OR THAT SUCH
ESTIMATES, PROJECTIONS, AND FORECASTS WILL BE ACHIEVED).

5. PRE-CLOSING COVENANTS. The Parties agree as follows with respect to the period between the
execution of this Agreement and the Closing.

     (a) General. Each of the Parties will use its reasonable best efforts to take all action and
to do all things necessary, proper, or advisable in order to consummate and make effective the
transactions contemplated by this Agreement (including satisfaction, but not waiver, of the closing
conditions set forth in §7 below).

     (b) Notices and Consents. The Sellers will cause each of the Company and its Subsidiaries to
give any notices to third parties, and will cause each of the Company and its Subsidiaries to use
its reasonable best efforts to obtain any third party consents, that the Buyer reasonably may
request in connection with the matters referred to in §3(a)(ii) and §4(c) above. Each of the
Parties will (and the Sellers will cause each of the Company and its Subsidiaries to) give any
notices to, make any filings with, and use its reasonable best efforts to obtain any
authorizations, consents, and approvals of governments and governmental agencies in connection with
the matters referred to in §3(a)(ii), §3(b)(ii), and §4(c) above.

     (c) Operation of Business. Unless with the prior express written consent of the Buyer in each
instance, the Sellers will not cause or permit any of the Company and its Subsidiaries to engage in
any practice, take any action, incur any material Liability, or enter into any transaction outside
the Ordinary Course of Business. Without limiting the generality of the foregoing, unless with the prior express written consent of the Buyer, the Sellers will not
cause

35

 

or permit any of the Company and its Subsidiaries to (i) declare, set aside, or pay any
dividend or make any distribution with respect to its capital stock other than in the Ordinary
Course of Business or redeem, purchase, or otherwise acquire any of its capital stock, or (ii)
otherwise engage in any practice, take any action, or enter into any transaction of the sort
described in §4(h) above.

     (d) Preservation of Business. The Sellers will cause each of the Company and its Subsidiaries
to exercise its reasonable best efforts to keep its business and properties substantially intact,
including its present operations, physical facilities, working conditions, and relationships with
lessors, licensors, suppliers, customers, and employees.

     (e) Access. The Sellers will permit, and the Sellers will cause each of the Company and its
Subsidiaries to permit, representatives of the Buyer to have access, at mutually agreed times in
accordance with the letter of intent between the parties and in a manner so as not to interfere
with the normal business operations of the Company and its Subsidiaries, and subject to the
Confidentiality Agreement, to all premises, properties, personnel, books, records (including Tax
records), contracts, and documents of or pertaining to each of the Company and its Subsidiaries and
Buyer shall have the right to take samples of various media upon reasonable notice at reasonable
times.

     (f) Notice of Developments. The Sellers will give prompt written notice to the Buyer of any
material adverse development causing a breach of any of the representations and warranties in §4
above. Each Party will give prompt written notice to the other of any material adverse development
causing a breach of any of its own representations and warranties in §3 above. No disclosure by
any Party pursuant to this §5(f), however, shall be deemed to amend or supplement Annex 1, Annex 2,
or the Disclosure Schedule or to prevent or cure any misrepresentation, breach of warranty, or
breach of covenant.

     (g) Exclusivity. The Sellers will not (and the Sellers will not cause or permit any of the
Company and its Subsidiaries or 3441 South Willow Investments, L.P. to) (i) solicit, initiate, or
encourage the submission of any proposal or offer from any Person relating to the acquisition of
any capital stock or other voting securities, or any substantial portion of the assets of, the
Company and its Subsidiaries (including any acquisition structured as a merger, consolidation, or
share exchange) or 3441 South Willow Investments, L.P. or (ii) participate in any discussions or
negotiations regarding, furnish any information with respect to, assist or participate in, or
facilitate in any other manner any effort or attempt by any Person to do or seek any of the
foregoing. The Sellers will notify the Buyer immediately if any Person makes any proposal, offer,
inquiry, or contact with respect to any of the foregoing, other than any inquiry made by any Person
that has made any such inquiries, offer, or proposals in advance of the date hereof and to whom the
Sellers reply with only a statement that such Seller is under an obligation not to engage in any
discussions or negotiations concerning such inquiry.

     (h) Key Employee Agreements. The Sellers will enter into “double-trigger” change of control
severance or similar agreements with the key employees of the Company listed on §5(h) of the
Disclosure Schedule, as and upon such terms as mutually agreed upon by the Sellers and the Buyer, to provide a specified severance package to such employees
if they are terminated

36

 

by the Company without cause or leave the Company for good reason before the
eighteen month anniversary of the Closing, and the Sellers shall not take any material action with
respect to such employees without prior consultation with the Buyer.

     (i) Releases. The Sellers will, prior to the Closing, cause all accounts receivables and
accounts payables (other than one of the Sellers obligations with respect to the Cadillac lease)
between the Company and its Subsidiaries and the Sellers and any of his, her, or its Affiliates
reflected on the Most Recent Balance Sheet or thereafter incurred in the Ordinary Course of
Business to be extinguished without payment of any kind. The parties will cooperate and use their
best efforts to arrange for a release of the Sellers and their respective Affiliates (other than
the Company and its Subsidiaries) of all personal guarantees and obligations with respect to the
Assumed Real Estate Debt and any other Liabilities of the Company and its Subsidiaries set forth on
§5(i) of the Disclosure Schedule effective at the Closing and, except to the extent the Buyer would
be entitled to indemnification against such Liabilities (without regard to whether such Liabilities
exceed the deductibles and thresholds referenced in the proviso of §8(b)), the Buyer will indemnify
and hold Sellers harmless (including reasonable attorneys fees) with respect to all such
Liabilities..

6. POST-CLOSING COVENANTS. The Parties agree as follows with respect to the period following the
Closing.

     (a) General. In case at any time after the Closing any further action is reasonably necessary
or desirable to carry out the purposes of this Agreement, each of the Parties will take such
further action (including the execution and delivery of such further instruments and documents) as
any other Party reasonably may request, all at the sole cost and expense of the requesting Party
(unless the requesting Party is entitled to indemnification therefore under §8 below). The Sellers
acknowledge and agree that from and after the Closing the Buyer will be entitled to possession of
all documents, books, records (including Tax records), agreements, and financial data of any sort
relating to the Company and its Subsidiaries subject to the Sellers being hereby entitled to review
or request and receive (to the extent such documents, books, records, agreements, and financial
data have not been destroyed) any copies thereof they in good faith believe to be necessary or
prudent in respect of its obligations or Liabilities hereunder or with respect to any domestic or
foreign Tax obligations or Tax Returns. The Buyer acknowledges and agrees that from and after the
Closing the Buyer will keep, maintain, and prevent the destruction of all documents, books, records
(including tax records), agreements, and financial data of the Company and its Subsidiaries for the
same length of time and in the same manner as the Buyer currently keeps and maintains such
materials, but not less than five years after the Closing. To the extent the Sellers have a
reasonable need for any such documents, books, records (including tax records), agreements, and
financial data of the Company at the end of such five year term, they may provide written notice to
the Buyer, within 90 days prior to the expiration of such five year term, specifying such need and
the documents, books (including tax records), agreements, and financial data that they wish for the
Buyer to not destroy, in which event the Buyer, at its sole discretion, may continue to retain such
documents, books, records (including tax records), agreements, and financial data or provide the
Sellers a reasonable opportunity to remove such documents, books, records, agreements, and
financial data at the Sellers’ cost.

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     (b) Litigation Support. In the event and for so long as any Party actively is contesting or
defending against any action, suit, proceeding, hearing, investigation, charge, complaint, claim,
or demand in connection with (i) any transaction contemplated under this Agreement or (ii) any
fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction on or prior to the Closing Date involving any of
the Company and its Subsidiaries, the other Party will cooperate with it and its counsel in the
contest or defense, making available its personnel, and providing such testimony and access to its
books and records as shall be reasonably necessary in connection with the contest or defense, all
at the sole cost and expense of the contesting or defending Party (unless the contesting or
defending Party is entitled to indemnification therefor under §8 below).

     (c) Transition. None of the Sellers will, directly or indirectly, take any action that is
designed or intended to have the effect of discouraging any lessor, licensor, customer, supplier,
or other business associate of any of the Company and its Subsidiaries from maintaining the same
business relationships with the Company and its Subsidiaries after the Closing as it maintained
with the Company and its Subsidiaries prior to the Closing, except as set forth on §6(c) of the
Disclosure Schedule. For the first eighteen months following the Closing, the Sellers will refer
all customer inquiries relating to products sold by the Company and its Subsidiaries within the two
year period immediately prior to the Closing to the Buyer, except as set forth on §6(c) of the
Disclosure Schedule.

     (d) Confidentiality. Each of the Sellers will treat and hold as such all of the Confidential
Information, refrain from using any of the Confidential Information except in connection with this
Agreement, and deliver promptly to the Buyer or destroy, at the request and option of the Buyer,
all tangible embodiments (and all copies) of the Confidential Information which are in any of their
possession. For purposes of this §6(d), Confidential Information does not include information
which is generally available to the public or generally known to persons knowledgeable in the
roofing industry immediately prior to the time of disclosure or use. If Buyer has knowledge that
Seller has or will be in breach of this §6(d), without in any way limiting any of Buyer’s rights
otherwise resulting or arising from any such breach, Buyer, as promptly as practicable, shall send
written notice to Seller of any such breach or alleged breach of this §6(d) specifying in
reasonable detail the breach or alleged breach. In the event that a Seller is requested or
required (by oral question or request for information or documents in any legal proceeding,
interrogatory, subpoena, civil investigative demand, or similar process) to disclose any
Confidential Information, the Seller will notify the Buyer promptly of the request or requirement
so that the Buyer may seek an appropriate protective order or waive compliance with the provisions
of this §6(d). If, in the absence of a protective order or the receipt of a waiver hereunder, the
Seller is, on the advice of counsel, compelled to disclose any Confidential Information to any
tribunal, the Seller may disclose the Confidential Information to the tribunal; provided, however,
that the Seller shall use his reasonable best efforts to obtain, at the request of the Buyer and at
Buyer’s sole expense, an order or other assurance that confidential treatment will be accorded to
such portion of the Confidential Information required to be disclosed as the Buyer shall designate.
The foregoing provisions shall not apply to any Confidential Information which is generally
available to the public or generally known to persons knowledgeable in the roofing industry
immediately prior to the time of use or disclosure for reasons other than a disclosure by the Seller not permitted by this §6(d). The obligations under this §6(d) shall

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survive for seven years from the Closing Date, except for Confidential Information constituting
trade secrets of the Company and its Subsidiaries, for which such obligations shall survive until
such information becomes part of the public domain.

     (e) Covenant Not to Compete. For a period of five (5) years from and after the Closing Date,
each Seller agrees that such Seller will not, and will cause his, her, or its Affiliates not to,
compete with the Company and its Subsidiaries or the Buyer by directly or indirectly owning,
engaging in, operating, controlling, or participating in the ownership, management, operation, or
control of, or being connected as a stockholder, agent, partner, joint venturer, or otherwise, with
any business engaged in any of the manufacture, sale, marketing, or distribution of any products
competitive with what the Company and its Subsidiaries currently sell, market, or distribute
anywhere in North America; provided, however, that the ownership of less than 2% of the outstanding
stock of any publicly traded corporation by the Sellers and their Affiliates shall not be deemed to
violate this sentence. If Buyer has knowledge that Seller has or will be in breach of this §6(e),
without in any way limiting any of Buyer’s rights otherwise resulting or arising from any such
breach, Buyer, as promptly as practicable, shall send written notice to Seller of any such breach
or alleged breach of this §6(e) specifying in reasonable detail the breach of alleged breach. If
the final judgment of a court of competent jurisdiction declares that any term or provision of this
§6(e) is invalid or unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope, duration, or area of the
term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable
term or provision with a term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within which the judgment may
be appealed.

     (f) Non-solicitation of Employees. Between the date hereof and the fifth anniversary of the
Closing Date, none of the Sellers or their respective Affiliates will directly or indirectly
attempt to hire, solicit, or hire any officer, employee, or independent individual contractor of
the Company or its Subsidiaries, without the prior written consent of Buyer.

     (g) Termination of Agreement with ABMT. In the event at any time within 90 days after the
Closing Date Buyer terminates, or provides notice of termination of, the agreement between the
Company and Advanced Building Materials Technology as in effect immediately prior to the Closing,
at the request of Buyer, Sellers shall promptly pay Buyer 50% of any costs incurred by Buyer as a
result of any such termination.

7. CONDITIONS TO OBLIGATIONS TO CLOSE.

     (a) Conditions to Obligation of the Buyer. The obligation of the Buyer to consummate the
transactions to be performed by it in connection with the Closing is subject to satisfaction of the
following conditions:

          (i) the representations and warranties set forth in §3(a) and §4 above shall be true and
correct in all material respects at and as of the Closing Date;

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          (ii) the Sellers shall have performed and complied with all of their covenants hereunder in
all material respects through the Closing;

          (iii) the Sellers, the Company and its Subsidiaries shall have procured all of the third party
consents specified in §5(b) above;

          (iv) no action, suit, or proceeding shall be pending or threatened before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign jurisdiction or
before any arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling, or charge
would (A) prevent consummation of any of the transactions contemplated by this Agreement, (B) cause
any of the transactions contemplated by this Agreement to be rescinded following consummation, (C)
affect adversely the right of the Buyer to own the Company Shares, the Purchased Real Estate, or
the Purchased Intellectual Property and to control the Company and its Subsidiaries and use the
Purchased Real Estate and the Purchased Intellectual Property, or (D) affect adversely the right of
the Company and its Subsidiaries to own their assets and to operate their businesses (and no such
injunction, judgment, order, decree, ruling, or charge shall be in effect);

          (v) the Sellers shall have delivered to the Buyer a certificate to the effect that each of the
conditions specified above in §7(a)(i)-(iii) is satisfied in all respects and that to the Knowledge
of the Sellers no contingency of the type referred to in §7(a)(iv) has occurred or is threatened;

          (vi) the Company and its Subsidiaries shall have received all authorizations, consents, and
approvals of governments and governmental agencies referred to in §3(a)(ii), §3(b)(ii), and §4(c)
above;

          (vii) the Sellers and the escrow agent thereunder shall have entered into the Escrow
Agreement;

          (viii) [intentionally omitted];

          (ix) the Buyer shall have received the resignations, effective as of the Closing, of each
director and officer of the Company and its Subsidiaries other than those whom the Buyer shall have
specified in writing at least five business days prior to the Closing, and the Buyer shall have
received evidence reasonably satisfactory to the Buyer that the authority of any and all directors,
officers, and employees of the Company and its Subsidiaries other than those whom Buyer shall have
specified in writing at least five (5) business days prior to the Closing to conduct bank
transactions on behalf of the Company has been terminated;

          (x) the Buyer shall have obtained a title insurance policy with respect to the Purchased Real
Estate in form and substance satisfactory to the Buyer;

          (xi) the Buyer shall be reasonably satisfied with the key employment contracts required
pursuant to §5(i) above;

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          (xii) the concurrent closing between Buyer (or an Affiliate of Buyer designated by Buyer) and
3441 South Willow Investments, L.P. of the transactions contemplated by the Purchased Real Estate
Agreements;

          (xiii) the gross fixed assets of the Company and its Subsidiaries plus their current assets,
less trade accounts payable and other current liabilities (other than current maturities or other
elements of indebtedness for borrowed money), calculated consistently with and in the same manner
and with the same methodology as in the past, are not less than reflected on the Company’s March
31, 2005 Balance Sheet; and

          (xiv) all actions to be taken by the Sellers in connection with consummation of the
transactions contemplated hereby and all certificates, opinions, instruments, and other documents
reasonably required to effect the transactions contemplated hereby will be reasonably satisfactory
in form and substance to the Buyer.

The Buyer may waive any condition specified in this §7(a) if it executes a writing so stating at or
prior to the Closing.

     (b) Conditions to Obligation of the Sellers. The obligation of the Sellers to consummate the
transactions to be performed by them in connection with the Closing is subject to satisfaction of
the following conditions:

          (i) the representations and warranties set forth in §3(b) above shall be true and correct in
all material respects at and as of the Closing Date;

          (ii) the Buyer shall have performed and complied with all of its covenants hereunder in all
material respects through the Closing;

          (iii) no action, suit, or proceeding shall be pending or threatened before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign jurisdiction or
before any arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling, or charge
would (A) prevent consummation of any of the transactions contemplated by this Agreement or (B)
cause any of the transactions contemplated by this Agreement to be rescinded following consummation
(and no such injunction, judgment, order, decree, ruling, or charge shall be in effect);

          (iv) the Buyer shall have delivered to the Sellers a certificate to the effect that each of
the conditions specified above in §7(b)(i) and (ii) is satisfied in all respects and that to the
actual Knowledge of the Buyer no contingency of the type referred to in §7(b)(iii) has occurred or
is threatened;

          (v) the Buyer and the escrow agent thereunder shall have entered into the Escrow Agreement;

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          (vi) the Sellers and their respective Affiliates shall be released from any guarantees or
other obligations under the Assumed Real Estate Debt and the other Liabilities set forth on the
Disclosure Schedule in a manner acceptable to the Sellers;

          (vii) the concurrent closing between the Buyer (or an Affiliate of Buyer designated by Buyer)
and 3441 South Willow Investments, L.P. of the Purchased Real Estate Agreements and the payment of
the Purchase Price and assumption of the Real Estate Debt by Buyer and release of Seller and
Seller’s Affiliates with respect thereto; and

          (viii) all actions to be taken by the Buyer in connection with consummation of the
transactions contemplated hereby and all certificates, instruments, and other documents reasonably
required to effect the transactions contemplated hereby will be reasonably satisfactory in form and
substance to the Sellers; and

          (ix) Seller is paid the Purchase Price and all other amounts due under §2 of this Agreement.

The Sellers may waive any condition specified in this §7(b) if they execute a writing so stating at
or prior to the Closing.

8. REMEDIES FOR BREACHES OF THIS AGREEMENT.

     (a) Survival of Representations and Warranties. All of the representations and warranties of
the Sellers contained in §3(a) and §4 (other than §§3(a)(i), 3(a)(ii), 3(a)(iii), 3(a)(iv),
3(a)(v)(A), 4(b), 4(k), and the first three sentences of 3(vi)(A)) shall survive the Closing
hereunder (even if the Buyer knew or had reason to know of any misrepresentation or breach of
warranty at the time of Closing) and continue in full force and effect for a period of two (2)
years thereafter, after which all such representations and warranties shall expire and be of no
force or effect. All of the other representations and warranties of the Parties contained in this
Agreement (including the representations and warranties of the Sellers contained in §3(a)(i),
3(a)(ii), 3(a)(iii), 3(a)(iv), 3(a)(v)(A), 4(b), 4(k), and the first three sentences of 3(vi)(A))
shall survive the Closing (even if the damaged Party knew or had reason to know of any
misrepresentation or breach of warranty at the time of Closing) and continue in full force and
effect forever thereafter (subject to any applicable statutes of limitations).

     (b) Indemnification Provisions for Benefit of the Buyer. In the event any of the Sellers
breaches any of his, her, or its representations, warranties, and covenants contained herein
(ignoring for purposes of determining whether or not any such breach has occurred, or the amount of
Adverse Consequences associated therewith, any materiality qualifiers in such representations,
warranties, and covenants or any language in such representations, warranties, and covenants
providing that a breach will only occur if it could reasonably be expected to have a Material
Adverse Effect or any similar language), and, if there is an applicable survival period pursuant to
§8(a) above, provided that the Buyer makes a written claim for indemnification against the Sellers
within the applicable survival period stated in §8(a), then the Sellers jointly and severally agree
to indemnify the Buyer from and against the entirety of any Adverse Consequences the Buyer suffers
through and after the date of the claim for indemnification

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(including any Adverse Consequences the Buyer may suffer after the end of the
applicable survival period) resulting from, arising out of, relating to, in the nature of, or
caused by such breach; provided, however, that the Sellers shall not have any
obligation to indemnify the Buyer from and against any Adverse Consequences resulting from, arising
out of, relating to, in the nature of, or caused by the breach of any representation or warranty of
the Sellers except to the extent the Adverse Consequences resulting from, arising out of, relating
to, in the nature of, or caused by such breach of a representation or warranty exceed a deductible
of $10,000 (at which point the Sellers will be obligated to indemnify only for amounts in excess of
the $10,000) and then not until the Buyer has suffered Adverse Consequences by reason of all such
breaches of all representations and warranties in excess of a $300,000 aggregate threshold (at
which point the Sellers will be obligated to indemnify the Buyer from and against all such Adverse
Consequences beyond such $300,000 threshold); provided further, that the Sellers’
and Seller’s Affiliates’ maximum aggregate liability to Buyer, collectively, under this Agreement
and ancillary documents, agreements, assignments and certificates (including, without limitation,
the Purchased Real Estate Agreements and the documents related to the Purchased Intellectual
Property) for breaches of any representations, warranties, covenants, or agreements shall not
exceed $1,500,000 (the “Liability Cap”) under any circumstance; provided further
that, notwithstanding the foregoing, the Liability Cap shall not apply to breaches of covenants and
agreements set forth in §§6 or 9 or as contemplated in the parenthetical contained in §8(d)(ii)(A)
and amounts paid by Sellers with respect to breaches of §§6 or 9 and the first $800,000 of any
purchase price adjustment payable by Sellers with respect to §2(f) shall not be counted in
determining whether the Liability Cap has been met (e.g. a purchase price adjustment payment
pursuant to §2(f) of $800,000 will not result in only $700,000 being available with respect
to breaches of this Agreement as a result of the Liability Cap).

     (c) Indemnification Provisions for Benefit of the Sellers. In the event the Buyer breaches any
of its representations, warranties, and covenants contained herein (even if one or more of the
Sellers knew or had reason to know of any misrepresentation or breach of warranty or covenant at
the time of Closing), and, if there is an applicable survival period pursuant to §8(a) above,
provided that the Sellers make a written claim for indemnification against the Buyer within the
applicable survival period stated in §8(a), then the Buyer agrees to indemnify the Sellers from and
against the entirety of any Adverse Consequences the Sellers may suffer through and after the date
of the claim for indemnification (including any Adverse Consequences the Sellers may suffer after
the end of the applicable survival period) resulting from, arising out of, relating to, in the
nature of, or caused by the breach.

     (d) Matters Involving Third Parties.

          (i) If any third party notifies any Party (the “Indemnified Party”) with respect to
any matter (a “Third Party Claim”) that may give rise to a claim for indemnification
against any other Party (the “Indemnifying Party”) under this §8, then the Indemnified
Party shall promptly notify each Indemnifying Party thereof in writing; provided, however, that no
delay on the part of the Indemnified Party in notifying any Indemnifying Party shall relieve the
Indemnifying Party from any obligation hereunder unless (and then solely to the extent) the
Indemnifying Party is thereby prejudiced. Notification of any claims for indemnity hereunder

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shall be provided regardless of whether the claimed amounts are above or below the $300,000
aggregate threshold amount.

          (ii) Any Indemnifying Party will have the right to defend the Indemnified Party against the
Third Party Claim with counsel of its choice reasonably satisfactory to the Indemnified Party so
long as (A) the Indemnifying Party notifies the Indemnified Party in writing within 15 days after
the Indemnified Party has given notice of the Third Party Claim that, notwithstanding any other
provision of this Agreement to the contrary (including without limitation the limitation on
liability set forth in §8(b)), the Indemnifying Party will indemnify the Indemnified Party from and
against the entirety of any Adverse Consequences the Indemnified Party may suffer resulting from,
arising out of, relating to, in the nature of, or caused by the Third Party Claim, (B) the
Indemnifying Party provides the Indemnified Party with evidence reasonably acceptable to the
Indemnified Party that the Indemnifying Party will have the financial resources to defend against
the Third Party Claim and fulfill its indemnification obligations hereunder, (C) the Third Party
Claim involves only money damages and does not seek an injunction or other equitable relief, (D)
settlement of, or an adverse judgment with respect to, the Third Party Claim is not, in the good
faith judgment of the Indemnified Party, likely to establish a precedential custom or practice
adverse to the continuing business interests of the Indemnified Party, and (E) the Indemnifying
Party conducts the defense of the Third Party Claim actively and diligently.

          (iii) So long as the Indemnifying Party is conducting the defense of the Third Party Claim in
accordance with §8(d)(ii) above, (A) the Indemnified Party may retain separate co-counsel at its
sole cost and expense and participate in the defense of the Third Party Claim, (B) the Indemnified
Party will not consent to the entry of any judgment or enter into any settlement with respect to
the Third Party Claim without the prior written consent of the Indemnifying Party (not to be
withheld unreasonably), and (C) the Indemnifying Party will not consent to the entry of any
judgment or enter into any settlement with respect to the Third Party Claim without the prior
written consent of the Indemnified Party (not to be withheld unreasonably).

          (iv) In the event any of the conditions in §8(d)(ii) above is or becomes unsatisfied, however,
(A) the Indemnified Party may defend against, and consent to the entry of any judgment or enter
into any settlement with respect to, the Third Party Claim in any manner it reasonably may deem
appropriate (and the Indemnified Party need not consult with, or obtain any consent from, the
Indemnifying Party in connection therewith), (B) the Indemnifying Party will reimburse the
Indemnified Party promptly and periodically for the costs of defending against the Third Party
Claim (including reasonable attorneys’ fees and expenses), and (C) the Indemnifying Party will
remain responsible for any Adverse Consequences the Indemnified Party may suffer resulting from,
arising out of, relating to, in the nature of, or caused by the Third Party Claim to the fullest
extent provided in this §8, but, in the case of both clause (B) and (C) immediately above, subject
to the limits on such liability set forth in §8(b). The Indemnifying Party may retain separate
counsel at its sole cost and expense and participate in the defense of the Third Party Claim.

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     (e) Determination of Adverse Consequences. The Parties shall make appropriate adjustments for
tax benefits and insurance coverage and take into account the time cost of money in determining
Adverse Consequences for purposes of this §8. All indemnification payments under this §8 shall be
deemed adjustments to the Purchase Price.

     (f) Exclusive Remedy. The Buyer and the Sellers acknowledge and agree that the foregoing
indemnification provisions in this §8 shall be the sole and exclusive monetary remedy and monetary
recourse (whether based in contract, tort, or on any other grounds) of the Buyer and the Sellers
with respect to this Agreement, any agreement, document, or certificate delivered pursuant hereto,
and the transactions contemplated by this Agreement and any agreement, document, or certificate
delivered pursuant hereto, including without limitation, with respect to the Purchased Real Estate
and the Purchased Intellectual Property. Without limiting the generality of the foregoing, the
Buyer and the Sellers hereby waive any statutory, equitable, or common law rights or remedies
relating to any environmental, health, or safety matters, including without limitation any such
matters arising under any Environmental Law, Occupational Safety and Health Law, including, without
limitation, CERCLA. Each Seller hereby agrees that he, she, or it will not make any claim for
indemnification against the Company by reason of the fact that he, she, or it was a director,
officer, employee, or agent of the Company or was serving at the request of the Company as a
partner, trustee, director, officer, employee, or agent of another entity (whether such claim is
for judgments, damages, penalties, fines, costs, amounts paid in settlement, losses, expenses, or
otherwise) with respect to any action, suit, proceeding, complaint, claim, or demand brought by the
Buyer against such Seller (whether such action, suit, proceeding, complaint, claim, or demand is
pursuant to this Agreement, applicable law, or otherwise).

9. TAX MATTERS. The following provisions shall govern the allocation of responsibility as between
the Buyer and the Sellers for certain tax matters following the Closing Date:

     (a) Cooperation on Tax Matters.

          (i) The Parties shall cooperate fully, as and to the extent reasonably requested by any other
Party, in connection with the filing of Tax Returns pursuant to this Section and any audit,
litigation, or other proceeding with respect to Taxes. Such cooperation shall include the
retention and (upon a Party’s reasonable request) the provision of records and information which
are reasonably relevant to any such audit, litigation, or other proceeding and making employees or
themselves available on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder.

          (ii) Buyer and Sellers further agree, upon request, to use their reasonable best efforts to
obtain any certificate or other document from any governmental authority or any other Person as may
be necessary to mitigate, reduce or eliminate any Tax that could be imposed (including, but not
limited to, with respect to the transactions contemplated hereby).

          (iii) Buyer and Sellers further agree, upon request, to provide the other party with all
information that either party may be required to report pursuant to Section 6043 of the Code and
all Treasury Department Regulations promulgated thereunder.

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          (iv) The Sellers shall prepare or cause to be prepared and timely file all income Tax Returns
for the Company and its Subsidiaries required to be filed for taxable periods ending at or prior to
the Closing and shall, except to the extent the Buyer and the Sellers may otherwise agree, control
and conduct all tax examinations involving income Taxes for any period ending at or prior to the
Closing; provided that the Sellers shall not take any actions, or fail to take any actions, that
would cause the Company to not be an S corporation within the meaning of §1361 of the Code at all
times prior to the Closing. The Company and its Subsidiaries shall prepare or cause to be prepared
all Tax Returns for the Company and its Subsidiaries required to be filed covering periods ending
after the Closing Date.

     (b) Tax Sharing Agreements. All tax sharing agreements or similar agreements with respect to
or involving the Company and its Subsidiaries shall be terminated as of the Closing Date and, after
the Closing Date, the Company and its Subsidiaries shall not be bound thereby or have any liability
thereunder.

     (c) Certain Taxes. All transfer, documentary, sales, use, stamp, registration and other such
Taxes and governmental fees (including any penalties and interest) incurred in transferring the
Company Shares, the Purchased Real Estate and the Purchased Intellectual Property from Sellers to
Buyer, shall be paid by Buyer when due, and Buyer will, at its own expense, file all necessary Tax
Returns and other documentation with respect to all such transfer, documentary, sales, use, stamp,
registration and other Taxes and governmental fees, and, if required by applicable law, Sellers
will, and will cause their respective affiliates to, join in the execution of any such Tax Returns
and other documentation.

10. TERMINATION.

     (a) Termination of Agreement. The Parties may terminate this Agreement as provided below:

          (i) the Buyer and the Sellers may terminate this Agreement by mutual written consent at any
time prior to the Closing;

          (ii) the Buyer may terminate this Agreement by giving written notice to the Sellers at any
time prior to the Closing (A) in the event any of the Sellers has breached any material
representation, warranty, or covenant contained in this Agreement in any material respect, the
Buyer has notified the Sellers of the breach, and the breach has continued without cure for a
period of 30 days after the notice of breach; or (B) if the Closing shall not have occurred on or
before August 30, 2005 by reason of the failure of any condition precedent under §7(a) hereof
(unless the failure results primarily from the Buyer itself breaching any representation, warranty,
or covenant contained in this Agreement); and

          (iii) the Sellers may terminate this Agreement by giving written notice to the Buyer at any
time prior to the Closing (A) in the event the Buyer has breached any material representation,
warranty, or covenant contained in this Agreement in any material respect, the Sellers have
notified the Buyer of the breach, and the breach has continued without cure for a

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period of 30 days after the notice of breach or (B) if the Closing shall not have occurred on or before August 30,
2005 by reason of the failure of any condition precedent under §7(b) hereof (unless the failure
results primarily from any of the Sellers itself breaching any representation, warranty, or
covenant contained in this Agreement).

     (b) Effect of Termination. If any Party terminates this Agreement pursuant to §10(a) above,
all rights and obligations of the Parties hereunder shall terminate without any Liability of any
Party to any other Party (except for any Liability of any Party then in breach); provided that the
terms and provisions of the Confidentiality Agreement shall survive any such termination pursuant
to §10(a) above.

11. MISCELLANEOUS.

     (a) Press Releases and Public Announcements. Neither party shall issue any press or news
release or make any similar public announcement relating to the subject matter of this Agreement
without the prior written approval of the other party; provided, however, that Buyer or its
Affiliate may make any public disclosure it believes in good faith is required by applicable law or
regulation (in which case the Buyer will use its reasonable best efforts to advise the Sellers
prior to making the disclosure).

     (b) No Third Party Beneficiaries. This Agreement shall not confer any rights or remedies upon
any Person other than the Parties and their respective successors and permitted assigns.

     (c) Entire Agreement. This Agreement (including the documents referred to herein) constitutes
the entire agreement among the Parties and supersedes any prior understandings, agreements, or
representations by or among the Parties, written or oral, to the extent they related in any way to
the subject matter hereof; provided, however, the Confidentiality Agreement shall survive in it
entirety except to the extent the Closing occurs, in which case the Confidentiality Agreement shall
have no further force or effect.

     (d) Succession and Assignment. This Agreement shall be binding upon and inure to the benefit
of the Parties named herein and their respective successors and permitted assigns. No Party may
assign either this Agreement or any of its rights, interests, or obligations hereunder without the
prior written approval of the other Party; provided, however, that the Buyer may (i) assign any or
all of its rights and interests hereunder to one or more of its Affiliates and (ii) designate one
or more of its Affiliates to perform its obligations hereunder (in any or all of which cases the
Buyer nonetheless shall remain responsible for the performance of all of its obligations
hereunder). Notwithstanding the foregoing, from and after the Closing, the Buyer may assign its
rights (but not its obligations) under this Agreement to any other Person that buys all or
substantially all of the business of the Company and its Subsidiaries from the Buyer.

     (e) Counterparts. This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original but all of which together will constitute one and the same instrument.

47

 

     (f) Headings. The section headings contained in this Agreement are inserted for convenience
only and shall not affect in any way the meaning or interpretation of this Agreement.

     (g) Notices. All notices, requests, demands, claims, and other communications hereunder will
be in writing. Any notice, request, demand, claim, or other communication hereunder shall be
deemed duly given if (and then five business days after) it is sent by registered or certified
mail, return receipt requested, postage prepaid, and addressed to the intended recipient as set
forth below:

If to the Sellers:

2525 W. Sierra

Fresno, California 93711

Attention: Mr. Joseph Pressutti

Facsimile No. (559) 439-3468

with a copy to:

Richard D. Rosman, Esq.

11777 San Vicente Boulevard, Suite 702

Los Angeles, California 90067

(310) 571-3822

If to the Buyer:

Elk Premium Building Products, Inc.

14911 Quorum Drive

Suite 600

Dallas, Texas 75254

Attn: David G. Sisler

Facsimile No.: (972) 851-0552

with a copy to:

Baker & McKenzie

2001 Ross Avenue, Suite 4500

Dallas, Texas 75201

Attention: Alan G. Harvey

Facsimile No.: (214) 978-3099

If to the Process Agent:

GKL Corporate Search

915 L. Street, Ste. 1250

Sacramento, California 95814-3705

48

 

Facsimile No. (916) 442-1797

Any Party may send any notice, request, demand, claim, or other communication hereunder to the
intended recipient at the address set forth above using any other means (including personal
delivery, expedited courier, messenger service, telecopy, telex, ordinary mail, or electronic
mail), but no such notice, request, demand, claim, or other communication shall be deemed to have
been duly given unless and until it actually is received by the intended recipient. Any Party may
change the address to which notices, requests, demands, claims, and other communications hereunder
are to be delivered by giving the other Parties notice in the manner herein set forth.

     (h) Governing Law. This Agreement shall be governed by and construed in accordance with the
domestic laws of the State of California without giving effect to any choice or conflict of law
provision or rule (whether of the State of California or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of California.

     (i) Amendments and Waivers. No amendment of any provision of this Agreement shall be valid
unless the same shall be in writing and signed by the Buyer and the Sellers. No waiver by any
Party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent default,
misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights
arising by virtue of any prior or subsequent such occurrence.

     (j) Severability. Any term or provision of this Agreement that is invalid or unenforceable in
any situation in any jurisdiction shall not affect the validity or enforceability of the remaining
terms and provisions hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.

     (k) Expenses. Each of the Parties will bear his or its own costs and expenses (including
legal fees and expenses) incurred in connection with this Agreement and the transactions
contemplated hereby. The Sellers agree that none of the Company and its Subsidiaries has borne or
will bear any of the Sellers’ costs and expenses (including any of their legal fees and expenses)
in connection with this Agreement or any of the transactions contemplated hereby. Without
limitation to the foregoing, the Buyer will be responsible for the costs and expenses of the Title
Policy and related Surveys (not to exceed $20,000) and the Taxes and other governmental fees
specified in §9(c).

     (l) Construction. The Parties have participated jointly in the negotiation and drafting of
this Agreement. In the event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of
proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state, local, or foreign
statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder,
unless the context requires otherwise. The word “including” shall mean including without
limitation. The Parties intend that each representation, warranty, and covenant contained herein
shall have independent significance.

49

 

     (m) Incorporation of Exhibits, Annexes, and Schedules. The Exhibits, Annexes, and Schedules
identified in this Agreement are incorporated herein by reference and made a part hereof.

     (n) Specific Performance. Each of the Parties acknowledges and agrees that the other Parties
would be damaged irreparably in the event any of the provisions of this Agreement are not performed
in accordance with their specific terms or otherwise are breached. Accordingly, each of the
Parties agrees that the other Party shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this Agreement and the
terms and provisions hereof in any action instituted in any court of the United States or any state
thereof having jurisdiction over the Parties and the matter (subject to the provisions set forth in
§11(o) below), in addition to any other remedy to which they may be entitled, at law or in equity.

     (o) Submission to Jurisdiction. Each of the Parties submits to the jurisdiction of any state
or federal court sitting in Dallas County, Texas, in any action or proceeding arising out of or
relating to this Agreement and agrees that all claims in respect of the action or proceeding may be
heard and determined in any such court. Each of the Parties waives any defense of inconvenient
forum to the maintenance of any action or proceeding so brought and waives any bond, surety, or
other security that might be required of any other Party with respect thereto. Each Party appoints
GKL Corporate Search (the “Process Agent”) as his or its agent to receive on his or its
behalf service of copies of the summons and complaint and any other process that might be served in
the action or proceeding. Any Party may make service on the other Party by sending or delivering a
copy of the process (i) to the Party to be served at the address and in the manner provided for the
giving of notices in §11(g) above or (ii) to the Party to be served in care of the Process Agent at
the address and in the manner provided for the giving of notices in §11(g) above. Nothing in this
§11(o), however, shall affect the right of any Party to bring any action or proceeding arising out
of or relating to this Agreement in any other court or to serve legal process in any other manner
permitted by law or at equity. Each Party agrees that a final judgment in any action or proceeding
so brought shall be conclusive and may be enforced by suit on the judgment or in any other manner
provided by law or at equity.

     (p) Joint and Several Obligations. The Sellers’ obligations under this Agreement
shall be joint and several obligations.

*****

50

 

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

BUYER:

ELK PREMIUM BUILDING PRODUCTS, INC.

	 	 	 	 	 	 	 
	By:	 	 	 	 
	 	 	 	 	 
	 

	 	Name:
	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:
	 	 	 	 
	 

	 	 	 	 	 	 

SELLERS:

	 	 	 
	Joseph Pressutti
	 	 
	 
	 	 
	Susan Pressutti
	 	 
	 
	 	 
	The Pressutti Family Trust
	 	 

	 	 	 	 	 
	By:

	 	 	 	 
	 

	 	 

Susan Pressutti, co-trustee
	 	 
	 
	 	 	 	 
	By:

	 	 	 	 
	 

	 	 

Joseph Pressutti, co-trustee
	 	 

51

 

ANNEX 1

EXCEPTIONS TO THE REPRESENTATIONS

AND WARRANTIES OF THE SELLERS

Annex 1 to Stock Purchase Agreement

 

 

ANNEX 2

EXCEPTIONS TO THE REPRESENTATIONS

AND WARRANTIES OF THE BUYER

None.

Annex 2 to Stock Purchase Agreement

 

 

ANNEX 3

SELLER’S PERSONAL PROPERTY

Annex 3 to Stock Purchase Agreement

 

 

EXHIBIT A

FORM OF ESCROW AGREEMENT

Exhibit A to Stock Purchase Agreement

 

 

EXHIBIT B-1

PURCHASED INTELLECTUAL PROPERTY

     A. Issued U.S. Patents

	 	 	 
	U.S. Patent	 	 
	Number	 	Title
	RE 36,858

	 	Low-Cost Highly Aesthetic and Durable Shingle
	5,365,711

	 	Low-Cost Highly Aesthetic and Durable Shingle
	4,920,721

	 	High Profile Fiberglass Shingle

     B. Patent Applications Still in Progress (not yet filed with USPTO)

	 	 	 
	Subject Matter of Patent Application	 	Inventors
	Continuation-in-part application to be prepared to cover improvements to
U.S. Application No. 10/453,699

	 	Joseph Pressutti,
Lawrence Penner,
Frank Gardanier and
Walter Becker
	Methods and machines for making the King Ridge and Chancellor products
– related to U.S. Application No. 10/288,202

	 	Lawrence Penner

Exhibit B to Stock Purchase Agreement

 

 

EXHIBIT B-2

INTELLECTUAL PROPERTY RETAINED BY SELLER

None.

Exhibit B to Stock Purchase Agreement

 

 

EXHIBIT C

PURCHASED REAL ESTATE

3333 S. Willow Avenue, Fresno, California

THE LAND REFERRED TO ABOVE IS SITUATED IN THE COUNTY OF FRESNO, STATE OF CALIFORNIA, AND IS
DESCRIBED AS FOLLOWS:

Parcel 2 of Parcel Map NO. 6421, according to the map thereof recorded in Book 41, Page 74 of
Parcel Maps, in the Office of the County Recorder of said County.

Excepting therefrom all oil, gas, minerals, and other hydrocarbon substances from the property
conveyed in Book 7056, Page 177 of Official Records, Document No. 66065, that portion thereof lying
below a depth of 500 feet, measured vertically, from the contour of the surface of said property
however, Grantor or its successors and assigns shall not have the right for any purpose whatsoever
to enter upon, into or through the surface of said property or any part thereof lying between said
surface and 500 feet below of said surface.

AND

3441 S. Willow Avenue, Fresno, California

THE LAND REFERRED TO ABOVE IS SITUATED IN THE COUNTY OF FRESNO, STATE OF CALIFORNIA, AND IS
DESCRIBED AS FOLLOWS:

That portion of Lot 30 of Malaga Tract, according to the map thereof recorded in Book 2 Page 17, of
Plats, Fresno County Records, described as follows:

Beginning at the Southeast corner of said Lot 30, thence North 89° 37’ 06” West, along the
Southerly line of said Lot 30, 766.33 feet; thence North 0° 13’16” East, 507.82 feet; thence South
89° 46’ 44” East, 776.29 feet to a point in the Easterly line of said Lot 30; thence South 0° 13’
01” West, along said Easterly line 510.00 feet to the point of beginning.

EXCEPTING THEREFROM all of the minerals and mineral ores of every kind and character now known to
exist or hereafter discovered upon, within or underlying said land or that may be produced
therefrom, including, without limiting the generality of the foregoing, all petroleum, oil, natural
gas and other hydrocarbon substances and products derived therefrom together with the exclusive
perpetual right of ingress and egress beneath the surface of said land to explore for, extract,
mine and remove the same, and to make such use of the said land beneath the surface as is necessary
or useful in connection therewith, which use may include lateral or slant drilling, boring, digging
or sinking of wells, shafts or tunnels, provided, however, that said grantor, its successors and
assigns, shall not use the surface of said land in the exercise of any of aid rights, and shall not
disturb the surface of said land or any improvements thereof, as reserved by Southern Pacific
Company, a Corporation, in the Deed recorded October 25, 1966, as Document No. 75882 in Book 5370,
Page 204 of Official Records.

Exhibit C to Stock Purchase Agreement

 

 

EXHIBIT D

FORMS OF ASSIGNMENTS

Exhibit D to Stock Purchase Agreement

 

 

EXHIBIT E

FORM OF ASSUMPTION AGREEMENT

(NOTE AND DEED OF TRUST)

Exhibit E to Stock Purchase Agreement

 

 

EXHIBIT F

FINANCIAL STATEMENTS

Exhibit F to Stock Purchase Agreement

 

 

EXHIBIT G

CAPITAL BUDGET OF THE COMPANY AND ITS SUBSIDIARIES

Exhibit G to Stock Purchase Agreement

 

 

EXHIBIT H

[Intentionally Omitted]

Exhibit H to Stock Purchase Agreement

 

 

EXHIBIT I

AGREEMENT OF PURCHASE AND SALE OF REAL ESTATE

AND ESCROW INSTRUCTIONS

Exhibit I to Stock Purchase Agreement

 

 

EXHIBIT J

AGREEMENT OF PURCHASE AND SALE OF REAL ESTATE

AND ESCROW INSTRUCTIONS

Exhibit J to Stock Purchase Agreement

 

 

EXHIBIT K

PRELIMINARY TITLE REPORTS

Exhibit K to Stock Purchase Agreement

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