Execution Version

Exhibit 10.1

 

 

 

ASSET PURCHASE AGREEMENT

dated as of October 22, 2014

by and between

EMCORE CORPORATION

and

NEOPHOTONICS CORPORATION

 

 

 

--------------------------------------------------------------------------------

TABLE OF CONTENTS

 

          Page  

Article 1. DEFINITIONS

     1   

Section 1.1

   Definitions      1   

Section 1.2

   Glossary of Defined Terms      10   

Section 1.3

   Interpretation      13   

Article 2. PURCHASE AND SALE

     14   

Section 2.1

   Purchase and Sale of the Purchased Assets      14   

Section 2.2

   Excluded Assets      16   

Section 2.3

   Assumed Liabilities      16   

Section 2.4

   Excluded Liabilities      17   

Article 3. PURCHASE PRICE

     18   

Section 3.1

   Purchase Price      18   

Section 3.2

   Consideration      18   

Section 3.3

   Working Capital Adjustment      18   

Section 3.4

   Revenue Purchase Price Adjustment      20   

Section 3.5

   Purchase Price Allocation      21   

Section 3.6

   Escrow      21   

Section 3.7

   Security      22   

Article 4. CLOSING

     22   

Section 4.1

   Closing Date      22   

Section 4.2

   Closing Deliveries by Seller      23   

Section 4.3

   Closing Deliveries by Purchaser      24   

Article 5. REPRESENTATIONS AND WARRANTIES OF SELLER

     24   

Section 5.1

   Organization, Authority and Qualification      24   

Section 5.2

   No Conflict      25   

Section 5.3

   Governmental Consents and Approvals      25   

Section 5.4

   Financial Statements      25   

Section 5.5

   Litigation      26   

Section 5.6

   Sufficiency of the Purchased Assets; Inventory      26   

Section 5.7

   Title      27   

Section 5.8

   Compliance with Laws; Permits      27   

Section 5.9

   Material Contracts      28   

 

i

--------------------------------------------------------------------------------

Section 5.10

   Environmental Matters      29   

Section 5.11

   Employee Benefits      29   

Section 5.12

   Tax Matters      30   

Section 5.13

   Intellectual Property      31   

Section 5.14

   Customers and Suppliers      32   

Section 5.15

   Labor and Employment Matters      33   

Section 5.16

   Brokers      34   

Section 5.17

   Disclaimer      34   

Article 6. REPRESENTATIONS AND WARRANTIES OF PURCHASER

     34   

Section 6.1

   Organization and Authority of Purchaser      34   

Section 6.2

   No Conflict      35   

Section 6.3

   Governmental Consents and Approvals      35   

Section 6.4

   Litigation      36   

Section 6.5

   Compliance with Laws      36   

Section 6.6

   Sufficiency of Funds      36   

Section 6.7

   Solvency      36   

Section 6.8

   No Bankruptcy Proceedings      36   

Section 6.9

   Brokers      36   

Section 6.10

   Financial Statements      36   

Section 6.11

   Investigation by Purchaser      37   

Article 7. ADDITIONAL COVENANTS AND AGREEMENTS

     37   

Section 7.1

   Conduct of the Business      37   

Section 7.2

   Access to Information; Other Operational Covenants; Confidentiality      39
  

Section 7.3

   Regulatory and Other Authorizations; Notices and Consents      41   

Section 7.4

   Notifications      42   

Section 7.5

   Release of Indemnity Obligations      42   

Section 7.6

   Intellectual Property Matters      42   

Section 7.7

   Further Action      43   

Section 7.8

   Intercompany Arrangements      44   

Section 7.9

   Books, Records and Files      45   

Section 7.10

   Restrictive Covenants      46   

Section 7.11

   Exclusivity      47   

Article 8. EMPLOYEE MATTERS

     47   

Section 8.1

   Transferred Employees      47   

 

ii

--------------------------------------------------------------------------------

Section 8.2

   Non-U.S. Business Employees      48   

Section 8.3

   Employee Liabilities      48   

Section 8.4

   Non-Solicitation      48   

Section 8.5

   No Third Party Beneficiaries      49   

Article 9. TAXES

     49   

Section 9.1

   Periodic Taxes      49   

Section 9.2

   Refunds      49   

Section 9.3

   Resolution of Tax Controversies      49   

Section 9.4

   Tax Cooperation      50   

Section 9.5

   Conveyance Taxes      50   

Article 10. CONDITIONS

     50   

Section 10.1

   Joint Conditions to Obligations      50   

Section 10.2

   Conditions to Obligations of Seller      51   

Section 10.3

   Conditions to Obligations of Purchaser      52   

Section 10.4

   Satisfaction of Closing Conditions      53   

Article 11. TERMINATION

     53   

Section 11.1

   Termination      53   

Section 11.2

   Effect of Termination      54   

Article 12. INDEMNIFICATION AND SURVIVAL

     54   

Section 12.1

   Survival of Representations and Warranties      54   

Section 12.2

   Indemnification by Purchaser      54   

Section 12.3

   Indemnification by Seller      55   

Section 12.4

   Limitations on Indemnification      56   

Section 12.5

   Claims for Indemnification      58   

Section 12.6

   Tax Effect; Refund or Credits      58   

Section 12.7

   Insurance Offset      59   

Section 12.8

   Exclusive Remedy      59   

Section 12.9

   Treatment of Indemnification Payments      59   

Article 13. MISCELLANEOUS

     59   

Section 13.1

   Assignment      59   

Section 13.2

   Public Announcements      59   

Section 13.3

   Expenses      60   

Section 13.4

   Severability      60   

Section 13.5

   No Third-Party Beneficiaries      60   

 

iii

--------------------------------------------------------------------------------

Section 13.6

   Waiver      60   

Section 13.7

   Governing Law      60   

Section 13.8

   Jurisdiction      60   

Section 13.9

   Waiver of Jury Trial      61   

Section 13.10

   Specific Performance      61   

Section 13.11

   Headings      61   

Section 13.12

   Counterparts      61   

Section 13.13

   Further Documents      61   

Section 13.14

   Notices      62   

Section 13.15

   Entire Agreement      63   

Section 13.16

   Bulk Sales Law      63   

SCHEDULES

 

1.1(a) – 1    

  Seller Knowledge Persons

1.1(b)

  Permitted Encumbrances

2.1

  Purchased Assets

2.2(b)

  Excluded Accounts Receivable

2.2(d)

  Excluded Contracts

2.2(j)

  Excluded Assets

5.2

  No Conflict

5.3

  Governmental Consents and Approvals

5.4

  Financial Statements

5.6

  Sufficiency of Purchased Assets; Inventory

5.8

  Compliance with Laws; Permits

5.9

  Material Contracts

5.11

  Employee Benefits

5.12

  Tax Matters

5.13

  Intellectual Property

5.14

  Customers and Suppliers

7.1

  Conduct of the Business

7.2(b)

  Business Unit Financial Statements

10.3(c)

  Third Party Consents

 

* Omitted. Per Regulation S-K, Item 601(b)(2), the Registrant hereby agrees to
furnish supplementally a copy of any omitted exhibit or schedule to the
Commission upon request.

EXHIBITS

A

  Form of Promissory Note

B

  Form of Bill of Sale and Assignment and Assumption Agreement

C

  Form of Intellectual Property Assignment Agreement

D

  Form of Intellectual Property License Agreement

E-1

  Form of Supply Agreement

E-2

  Form of Supply Agreement

F

  Form of Transition Services Agreement

G

  Form of Subordination Agreement

 

* Omitted. Per Regulation S-K, Item 601(b)(2), the Registrant hereby agrees to
furnish supplementally a copy of any omitted exhibit or schedule to the
Commission upon request.

 

iv

--------------------------------------------------------------------------------

Execution Version

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT, dated as of October 22, 2014, is entered into by
and between EMCORE Corporation, a New Jersey corporation (“Seller”), and
NeoPhotonics Corporation, a Delaware corporation (“Purchaser”). Seller and
Purchaser are each referred to individually as a “Party” and collectively as the
“Parties.” Capitalized terms used but not otherwise defined herein have the
meanings set forth in Section 1.1 herein.

WHEREAS, Seller is engaged in, among other things, the Business;

WHEREAS, Seller wishes to sell or cause to be sold to Purchaser, and Purchaser
wishes to purchase from Seller, all right, title and interest in and to the
Purchased Assets, and in connection therewith Purchaser is willing to assume the
Assumed Liabilities, all upon the terms and subject to the conditions set forth
herein; and

WHEREAS, Seller and its Affiliates also conduct the Seller’s Other Businesses at
numerous locations both within and outside the United States, which businesses
and operations are being retained by Seller and its Affiliates and are not being
transferred to, or acquired by, Purchaser.

NOW, THEREFORE, in consideration of the premises and mutual covenants,
agreements and provisions herein contained, and intending to be legally bound,
the parties hereto agree as follows:

ARTICLE 1.

DEFINITIONS

Section 1.1 Definitions. The following terms have the following meanings when
used herein:

“Action” means any claim, action, lawsuit, arbitration, inquiry, proceeding or
investigation of any kind, at law or in equity (including actions or proceedings
seeking injunctive relief) by or before any Governmental Authority.

“Affiliate” means, with respect to any Person, any other Person directly or
indirectly controlling or controlled by, or under direct or indirect common
control with, such Person. For purposes of this definition, a Person shall be
deemed to control another Person if it possesses the power, directly or
indirectly, to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities, by contract or
otherwise.

“Agreement” means this Asset Purchase Agreement, including all schedules and
exhibits hereto, as it may be amended from time to time in accordance with its
terms.

“Ancillary Agreements” means each of (a) the Bill of Sale and Assignment and
Assumption Agreement; (b) the Intellectual Property Assignment Agreement;
(c) the Intellectual Property License Agreement; (d) the Supply Agreements;
(e) the Transition Services Agreement, (f) the Escrow Agreement; (g) the
Security Agreement and (h) the Subordination Agreement.

--------------------------------------------------------------------------------

“Bill of Sale and Assignment and Assumption Agreement” means a bill of sale and
assignment and assumption agreement, with respect to the Purchased Assets and
the Assumed Liabilities of Seller, in substantially the form attached hereto as
Exhibit B.

“Books, Records and Files” means any studies, reports, books, records (including
shipping and personnel records), books of account, files, data or databases,
invoices, surveys, data (including financial, sales, purchasing and operating
data), computer data, disks, tapes, marketing plans, sales and promotional
materials and records, manuals, training materials and similar items, customer
lists and records, supplier lists and records, prospect lists and records,
mailing lists, correspondence, memoranda, notes and other documents or papers
and other evidence thereof.

“Business” means the telecommunications business unit of Seller, which consists
of the development, manufacture and sale of the Products, as such business is
conducted by Seller immediately prior to the date of this Agreement (subject to
any changes permitted in accordance with Section 7.1).

“Business Day” means any day that is not a Saturday, a Sunday or other day on
which banks are required or authorized by Law to be closed in the City of New
York or the City of San Francisco, California.

“Claim Notice” means written notification of a Third-Party Claim, specifying the
nature of and basis for such Third-Party Claim, together with the amount or, if
not then reasonably determinable, the estimated amount, determined in good
faith, of the Loss arising from such Third-Party Claim.

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

“Comerica Consent” means the consent of the required banks under the Comerica
Facility to the consummation of the transactions contemplated by this Agreement
(including the issuance and repayment of the Promissory Note in accordance with
its terms and the arrangements contemplated by the Security Agreement and
Subordination Agreement).

“Comerica Facility” means the Revolving Credit and Term Loan Agreement, dated
March 21, 2013, by and among Purchaser, Comerica Bank, as agent, and the lenders
party thereto.

“Compensation and Benefit Plans” means each bonus, deferred compensation,
pension, retirement, profit-sharing, thrift, savings, employee stock ownership,
stock bonus, stock purchase, restricted stock, restricted stock unit, stock
option, employment, termination, severance, incentive, change in control,
compensation, welfare (including medical, health, dental, vision, life,
disability and similar benefits), vacation, paid time off, leave, fringe,
cafeteria or other plan, agreement, policy or arrangement.

 

2

--------------------------------------------------------------------------------

“Competition Law” means any Law that prohibits, restricts or regulates actions
having the purpose or effect of monopolization or restraint of trade or
lessening of competition through merger or acquisition.

“Competitive Business” means any business that develops, manufactures, sells or
supports the Products or substantially similar Products or otherwise competes in
any material respect with the Business as conducted by Seller immediately prior
to the Closing Date and as Seller has a bona fide intention, as of the Closing,
to conduct.

“Competitive Product” means any product that is being manufactured, processed,
sold, stored, transported or distributed by the Business as of the Closing Date
(each a “Competitive Product”), including the Products.

“Confidential Information” means all trade secrets and other confidential and/or
proprietary information of a Person, including information contained in or
derived from reports, investigations, research, work in progress, codes,
marketing and sales programs, financial projections, cost summaries, pricing
formulas, contract analyses, financial information, projections, confidential
filings with any state or federal agency, and all other confidential concepts,
methods of doing business, ideas, materials or information prepared or performed
for, by or on behalf of such Person by its employees, officers, directors,
agents, representatives, or consultants.

“Consent” means any consent, approval, authorization, waiver, permit, grant,
agreement, certificate, exemption, order, registration, declaration, filing,
notice of, with or to any Person or under any Law, in each case required to
permit the consummation of the transactions contemplated by this Agreement.

“Contract” means any written or oral loan or credit agreement, bond, debenture,
note, mortgage, indenture, lease, supply agreement, license agreement,
development agreement or other contract, agreement, license, arrangement,
obligation, commitment or instrument, in each case that is legally binding,
including all amendments thereto.

“Definitive Proxy Statement” means the Seller’s Definitive Proxy Statement for
its 2015 Annual Meeting of Stockholders filed within 120 days of September 30,
2014.

“Encumbrance” means any lien, pledge, hypothecation, charge, claim, option,
mortgage, security interest or other encumbrance or restriction of any kind or
nature whatsoever (but excluding (a) licenses and other agreements related to
Intellectual Property which are not intended to secure an obligation and (b) any
obligation to accept returns of inventory).

“Environmental Law” means any Law related to (a) the protection, investigation
or restoration of the environment or natural resources; or (b) the handling,
use, disposal, release or threatened release of any Hazardous Substances.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and the applicable rules and regulations promulgated thereunder.

 

3

--------------------------------------------------------------------------------

“Escrow Account” means the escrow account designated by the Escrow Agent in
accordance with the Escrow Agreement.

“Escrow Agent” means Comerica Bank or any other Person that becomes its
successor under the Escrow Agreement.

“Escrow Agreement” means the escrow agreement to be entered into by and among
Seller, Purchaser, and the Escrow Agent in accordance with and including the
terms and conditions set forth in Section 3.6.

“Escrow Amount” means $1,500,000.

“GAAP” means United States generally accepted accounting principles, applied on
a consistent basis, as in effect from time to time.

“Governmental Authority” means any United States federal, state or local or any
non-United States governmental, regulatory or administrative authority, agency,
commission, entity, or instrumentality or any court, tribunal, or judicial or
arbitral body.

“Governmental Order” means any order, writ, judgment, injunction, decree,
stipulation, settlement, determination or award entered by or with any
Governmental Authority.

“Hazardous Substances” means all substances defined as Hazardous Substances,
Oils, Pollutants or Contaminants in the National Oil and Hazardous Substances
Pollution Contingency Plan, 40 C.F.R. § 300.5, or defined as such by, or
regulated as such under, any Environmental Law.

“Indemnified Party” means any Person asserting a claim for indemnification under
any provision of Article 12.

“Indemnifying Party” means any Person against whom a claim for indemnification
is being asserted under any provision of Article 12.

“Indemnity Notice” means written notification pursuant to Section 12.5(b) of a
claim for indemnity under Article 12 by an Indemnified Party, specifying the
nature of and basis for such claim, together with the amount or, if not then
reasonably determinable, the estimated amount, determined in good faith, of the
Losses arising from such claim.

“Intellectual Property” means all intellectual property rights, whether
protected, created or arising under the laws of the United States or any other
jurisdiction or under any international convention, including all (i) patents
and patent applications, including all continuations, divisionals,
continuations-in-part, and provisionals and patents issuing on any of the
foregoing, and all reissues, reexaminations, substitutions, renewals, extensions
and related priority rights of any of the foregoing (collectively, “Patents”),
(ii) trademarks, service marks, trade names, trade dress, logos, corporate names
and other source or business identifiers, together with the goodwill associated
with any of the foregoing, and all applications, registrations, renewals and
extensions of any of the foregoing (collectively, “Trademarks”), (iii) Internet
domain names, (iv) copyrights, works of authorship and moral rights, and all

 

4

--------------------------------------------------------------------------------

registrations, applications, renewals, extensions and reversions of any of the
foregoing, (v) mask works and mask sets, and all applications and registrations
of any of the foregoing, and (vi) confidential and proprietary information,
trade secrets, technology, know-how, databases, inventions, formulas, processes,
developments and research, in each case excluding any rights in respect of any
of the foregoing that comprise or are protected by Patents.

“Intellectual Property Assignment Agreement” means the intellectual property
assignment entered into between Seller and Purchaser to transfer the Purchased
Business Intellectual Property and Purchased Business Technology to Purchaser,
in substantially the form attached hereto as Exhibit C.

“Intellectual Property License Agreement” means the intellectual property
license agreement entered into between Seller and Purchaser to license certain
intellectual property to one another, in substantially the form attached hereto
as Exhibit D.

“Inventory Valuation Method” means the lower of cost or market, on a first-in,
first-out method (net of allowance for obsolete or slow moving Inventory) in
accordance with GAAP, consistently applied and consistent with Seller’s
historical accounting method.

“Inventory Value” means the net book value of the ITLA/micro-ITLA Inventory
appropriately accounted for on a balance sheet of Seller determined in
accordance with the Inventory Valuation Method.

“IRS” means the United States Internal Revenue Service.

“IT Systems” means all communications systems, computer systems, servers,
network equipment and other hardware used by Seller.

“ITLA/micro-ITLA Inventory” means the finished goods, raw materials, and work in
progress for the integrable tunable laser assemblies (ITLAs) and micro
integrable tunable laser assemblies (micro-ITLAs) Products.

“Knowledge” means, when used in connection with Seller with respect to any
matter in question, the actual knowledge, without any duty of investigation, of
those Persons listed on Schedule 1.1(a) – 1 of the Seller Disclosure Schedule
and, when used in connection with Purchaser with respect to any matter in
question, the actual knowledge, without any duty of investigation, of those
Persons listed on Schedule 1.1(a) – 2 of the Purchaser Disclosure Schedule.

“Law” means any United States federal, state or local or any foreign,
international or multinational constitution, statute, law, ordinance,
regulation, rule, code, order, license, approval, treaty, other requirement,
principle of common law or rule of law.

“Liabilities” means any and all debts, liabilities and obligations, whether
accrued or fixed, absolute or contingent, matured or unmatured or determined or
determinable, including those arising under any Law, Action or Governmental
Order and those arising under any Contract (but excluding any future performance
obligations under any such Contracts).

 

5

--------------------------------------------------------------------------------

“made available” means posted to the electronic data room maintained by or on
behalf of Seller with respect to the transactions contemplated hereby at least
one (1) Business Day before the date hereof.

“Material Adverse Effect” means any change, effect, event, occurrence, state of
facts or development that, individually or in the aggregate, has or would
reasonably be expected to have a material adverse effect on (A) the Business
(but not including prospects of the Business) or the Purchased Assets, taken as
a whole, or (B) the ability of Seller to consummate the transactions
contemplated hereby; provided, however, that none of the following shall be
deemed (either alone or in combination) 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 directly or proximately attributable to
the execution of this Agreement or the disclosure, pendency or consummation of
the transactions contemplated by this Agreement or any of the Ancillary
Agreements; (b) any change, effect, event, occurrence, state of facts or
development (i) in the domestic or international financial, credit, securities
or commodities markets, or domestic or international economic, regulatory or
political conditions in general or (ii) in the industries and markets in which
the Business operates in general (provided in the case of both clause (i) and
(ii) that such change, effect, event, occurrence, state of facts or development
does not have a materially disproportionate effect on the Business or the
Purchased Assets); (c) fluctuations in sales and earnings or failure of the
Business to meet internal or published sales, earnings or other financial or
non-financial projections and estimates (it being understood that the underlying
causes of such fluctuations or failures of the Business may be taken into
account in determining whether a Material Adverse Effect has occurred); (d) acts
of war or terrorism (or the escalation of the foregoing) or natural disasters or
other force majeure events; (e) changes in any Law applicable to the Business or
applicable accounting regulations or principles or the interpretation thereof;
(f) any action or inaction by Purchaser or its Affiliates, or approved or
consented to by Purchaser or its Affiliates after the date hereof; or (g) any
adverse change in or effect on the Business, assets, results of operations or
financial condition of Seller that is cured by Seller, or that Seller causes to
be cured, before the Closing, or that is adequately covered by insurance.

“Net Accounts Receivable” means Accounts Receivable minus Accounts Payable.

“Net Accounts Receivable Target” means $2,500,000.

“Permits” means all permits, licenses, clearances, franchises, approvals,
waivers, letters, exemptions, consents, decisions, authorizations,
registrations, certificates, variances and similar rights obtained, or required
to be obtained, from any Governmental Authority.

“Permitted Encumbrances” means (a) statutory Encumbrances for Taxes or other
governmental charges not yet due and payable or the amount or validity of which
is being contested in good faith by appropriate proceedings; (b) mechanics’,
materialmen’s, architects’, carriers’, workers’, repairers’, warehousemen’s,
landlords’ and other like statutory Encumbrances arising or incurred in the
ordinary course of business, either securing payments not yet due or that are
being contested in good faith by appropriate proceedings; (c) restrictions under
leases, subleases, licenses or occupancy agreements that are Purchased Assets;
(d) easements, licenses, covenants, rights-of-way and other similar restrictions
of record; (e) (i) zoning, building codes and other land use laws and
(ii) Encumbrances that have been placed by any developer, landlord

 

6

--------------------------------------------------------------------------------

or other third party on property over which Seller has easement rights and
subordination or similar agreements relating thereto; (f) deposits or pledges
made in connection with, or to secure payment of, worker’s compensation,
unemployment insurance, old age pension programs mandated under applicable Law
or other social security; (g) restrictions on the transfer of securities arising
under federal and state securities Law; (h) Encumbrances arising under equipment
leases with third parties entered into in the ordinary course of business;
(i) Encumbrances securing any obligations under any of the Assigned Contracts;
(j) any contractual restrictions contained in the Assigned Contracts; (k) such
Encumbrances as do not, individually or in the aggregate, materially detract
from the value of the Purchased Assets (taken as a whole), or materially impair
the present use of the Purchased Assets (taken as a whole); and (l) the
Encumbrances set forth on Schedule 1.1(b) of the Seller Disclosure Schedule;
provided, however, that, in the case of (l), such Encumbrances are discharged
and released at or prior to Closing.

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

“Post-Closing Tax Period” means any taxable period (or portion thereof)
commencing on the Closing, including such portion of any Straddle Period
commencing on the Closing.

“Pre-Closing Tax Period” means any taxable period (or portion thereof) ending
prior to the Closing, including such portion of any Straddle Period ending prior
to the Closing.

“Products” means integrable tunable laser assemblies (ITLAs) and micro
integrable tunable laser assemblies (micro-ITLAs) based on external-cavity laser
technology platform, and tunable transmitter optical subassemblies (T-TOSA),
receiver optical subassemblies (ROSAs), as well as small form factor pluggable
(T-XFP) transceivers for 10 gigabits per second transmission applications, and
all derivatives of the foregoing currently in development by the Business,
including integrated coherent transmitters.

“Promissory Note” means the promissory note made by Purchaser in favor of Seller
in the form attached hereto as Exhibit A.

“Promissory Note Maturity Date” means the date which is the earlier of (i) the
date which is the second (2nd) anniversary of the Closing Date and (ii) such
other date on which the Promissory Note is to be repaid in full in accordance
with its terms.

“Purchaser Disclosure Schedule” means the Schedules of Purchaser delivered to
Seller as of the date hereof.

“Real Property” means all land, buildings and other structures, facilities or
improvements located thereon and all easements, licenses, rights and
appurtenances relating to the foregoing.

“Reference Inventory Value” means $1,380,000 to $1,500,000.

 

7

--------------------------------------------------------------------------------

“Registered IP” means all issued Patents, pending Patent applications,
registered Trademarks, pending applications for registration of Trademarks,
registered copyrights, pending applications for registration of copyrights,
registered mask works, pending applications for registration of mask works and
Internet domain names owned, filed or applied for by Seller and used exclusively
or primarily in the Business.

“Representative” means, with respect to any Person, any and all directors,
officers, employees, consultants, financial advisors, counsel, accountants and
other agents of such person.

“Restricted Geography” means anywhere in the world.

“Restricted Customer” means (a) any Person that was a customer of the Business
as of the Closing Date or at any time during the two-year period prior to the
Closing Date; or (b) any Person that is a customer of Purchaser in respect of
the Business at any time during the Restricted Period.

“Restricted Period” means a period of three (3) years after the Closing Date.

“Security Agreement” means the security agreement to be entered between
Purchaser and Seller as of the Closing Date in accordance with Section 3.7.

“Schedules” means the schedules attached hereto.

“Seller Change of Control” means the occurrence of any of the following events
or circumstances, whether accomplished directly or indirectly, or in one or a
series of related transactions:

(a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d)
of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act) of more than 50% of the total voting power of the
outstanding capital stock of Seller;

(b) Seller merges with or into, or consolidates with, or consummates any
reorganization or similar transaction with, another Person and, immediately
after giving effect to such transaction, less than 50% of the total voting power
of the outstanding capital stock of the surviving or resulting Person is
“beneficially owned” (within the meaning of Rule 13d-3 under the Exchange Act)
in the aggregate by the shareholders of Seller immediately prior to such
transaction; or

(c) Seller (including through one or more of its Affiliates and including
through any liquidation or dissolution, other than a liquidation or dissolution
in connection with a reorganization or similar transaction in which the holders
of the voting stock of Seller immediately prior to such transaction continue to
“beneficially own” (within the meaning of Rule 13d-3 under the Exchange Act)
more than 50% of the total voting power of the outstanding capital stock of the
surviving entity immediately after giving effect to such transaction) sells,
assigns, conveys, transfers, leases or otherwise disposes of all or
substantially all of the assets and properties (including the capital stock of
Affiliates) of Seller, but excluding sales, assignments, conveyances, transfers,
leases or other dispositions of assets and properties (including the capital
stock of Affiliates) by Seller or its Affiliates to any Affiliates of Seller.

 

8

--------------------------------------------------------------------------------

“Seller Disclosure Schedule” means the Schedules of Seller delivered to
Purchaser as of the date hereof.

“Seller ERISA Affiliate” means any trade or business that together with Seller
would be treated as a single employer for purposes of Section 4001(b) of ERISA
or Section 414 of the Code.

“Seller’s Other Businesses” means all businesses conducted prior to the Closing
by Seller and its Affiliates, in each case that are not included in the
Business. Seller’s Other Businesses also includes the activities of Seller’s
corporate department, administrative departments and other support functions.

“Straddle Period” means any taxable period beginning before the Closing Date and
ending on or after the Closing Date.

“Subordination Agreement” means the subordination agreement to be entered
between Purchaser, Seller and Comerica Bank (or such other relevant lender, if
any) as of the Closing Date in substantially the form attached hereto as Exhibit
G.

“Supply Agreements” means the supply agreements entered into between Seller and
Purchaser in substantially the form attached hereto as Exhibit E-1 and Exhibit
E-2.

“Tangible Personal Property” means all machinery, tooling, equipment, parts,
tools, supplies, office equipment and supplies, vehicles, tools, spare parts,
production supplies, furniture, fixtures, furnishings, signage, leasehold
improvements and other items of tangible personal property (other than
Inventory) owned by Seller and used exclusively or primarily in connection with
the ownership, maintenance or operation of the Business.

“Tax” or “Taxes” means any federal, state, local or foreign taxes, charges,
fees, duties, tariffs, levies or other assessments, including income, gross
receipts, net proceeds, ad valorem, turnover, real property, personal property,
sales, use, franchise, excise, value added, goods and services, license,
payroll, unemployment, environmental, customs duties, capital stock, disability,
stamp, user, transfer, fuel, excess profits, occupational and interest
equalization, windfall profits, alternative or add-on minimum, estimated,
registration, withholding, social security (or similar), or other tax of any
kind whatsoever, whether computed on a separate or consolidated, unitary or
combined basis or in any other manner, including any interest, penalty, or
addition thereto, whether disputed or not.

“Tax Return” means any return, report, declaration, election, estimate,
information statement, claim for refund and return, or other document (including
any related or supporting information and any amendment to any of the foregoing)
filed or required to be filed with any taxing authority with respect to Taxes.

“Technology” means all software, information, designs, circuit block libraries,
formulae, algorithms, procedures, methods, techniques, ideas, know-how, research
and

 

9

--------------------------------------------------------------------------------

development, technical data, programs, subroutines, tools, materials,
specifications, processes, inventions (whether patentable or unpatentable and
whether or not reduced to practice), apparatus, creations, improvements and
other similar materials, and all recordings, graphs, drawings, reports, analyses
and other writings, and other tangible embodiments of any of the foregoing, in
any form whether or not specifically listed herein.

“Transition Services Agreement” means a transition services agreement with
Purchaser and, to the extent applicable, its Affiliates, in substantially the
form attached hereto as Exhibit F, which shall provide for the provision of such
services between Seller and Purchaser (or their respective Affiliates) and for
such time periods as the Parties may mutually and reasonably agree in good
faith.

“United States” means the United States of America and its territories and
possessions (other than Puerto Rico).

Section 1.2 Glossary of Defined Terms. The following terms have the meanings set
forth in the Sections set forth below:

 

Definition

  

Section

Accounting Firm

   Section 3.3(a)(ii)

Accounts Payable

   Section 2.3

Accounts Receivable

   Section 2.1(h)

Acquired Patents

   Section 7.6(b)

Acquired Personal Property

   Section 2.1(c)

Action

   Section 1.1

Affiliate

   Section 1.1

Agreement

   Section 1.1

Allocation

   Section 3.5

Ancillary Agreements

   Section 1.1

Assets Lists

   Section 2.1(i)

Assigned Contracts

   Section 2.1(g)

Assumed Liabilities

   Section 2.3

Assumed Purchase Orders

   Section 2.1(f)

Bankruptcy and Equity Principles

   Section 5.1

Basket

   Section 12.4(b)(ii)

Bill of Sale and Assignment and Assumption Agreement

   Section 1.1

Books, Records and Files

   Section 1.1

Business

   Section 1.1

Business Day

   Section 1.1

Business Employee

   Section 8.1(a)(i)

Claim Notice

   Section 1.1

Closing

   Section 4.1(a)

Closing Date

   Section 4.1(a)

Closing Inventory Value

   Section 3.3(a)(i)

Closing Net Accounts Receivable

   Section 3.3(a)(i)

Code

   Section 1.1

 

10

--------------------------------------------------------------------------------

Comerica Consent

   Section 1.1

Comerica Facility

   Section 1.1

Compensation and Benefit Plans

   Section 1.1

Competition Law

   Section 1.1

Competitive Business

   Section 1.1

Competitive Product

   Section 1.1

Confidential Information

   Section 1.1

Confidentiality Agreement

   Section 7.2(g)

Consent

   Section 1.1

Contract

   Section 1.1

Conveyance Taxes

   Section 9.5

Covered Losses

   Section 12.4(b)(ii)

Definitive Proxy Statement

   Section 1.1

Delayed Closing Date

   Section 4.1(b)

Dispute Notice

   Section 3.3(a)(ii)

Employee Benefit Plans

   Section 5.11(a)

Encumbrance

   Section 1.1

Environmental Law

   Section 1.1

ERISA

   Section 1.1

Escrow Account

   Section 1.1

Escrow Agent

   Section 1.1

Escrow Agreement

   Section 1.1

Escrow Amount

   Section 1.1

Excess Revenues

   Section 7.2(d)

Excluded Assets

   Section 2.2

Excluded Contracts

   Section 2.2(d)

Excluded Liabilities

   Section 2.4

FCPA

   Section 5.8(b)

Final Inventory Value

   Section 3.3(a)(ii)

Final Net Accounts Receivable

   Section 3.3(a)(ii)

Final Purchase Price

   Section 3.1

Financial Statements

   Section 5.4(a)

GAAP

   Section 1.1

Governmental Authority

   Section 1.1

Governmental Order

   Section 1.1

Hazardous Substances

   Section 1.1

Indemnified Party

   Section 1.1

Indemnifying Party

   Section 1.1

Indemnity Notice

   Section 1.1

Intel Agreement

   Section 7.6(b)

Intellectual Property

   Section 1.1

Intellectual Property Assignment Agreement

   Section 1.1

Intellectual Property License Agreement

   Section 1.1

Inventory

   Section 2.1(a)

Inventory Valuation Method

   Section 1.1

Inventory Value

   Section 1.1

 

11

--------------------------------------------------------------------------------

Inventory Value Adjustment

   Section 3.3(b)(i)

IP Licenses

   Section 2.1(e)

IRS

   Section 1.1

IT Systems

   Section 1.1

ITLA/micro-ITLA Inventory

   Section 1.1

Knowledge

   Section 1.1

Law

   Section 1.1

Liabilities

   Section 1.1

Losses

   Section 12.2

made available

   Section 1.1

Major Customers

   Section 5.14(a)

Major Vendors

   Section 5.14(b)

Material Adverse Effect

   Section 1.1

Material Contracts

   Section 5.9(a)

Minimum Amount

   Section 12.4(b)(i)

Net Accounts Receivable

   Section 1.1

Net Accounts Receivable Adjustment

   Section 3.3(b)(ii)

Net Accounts Receivable Target

   Section 1.1

Outside Date

   Section 11.1(b)

Parties

   Preamble

Party

   Preamble

Patents

   Section 1.1

Periodic Taxes

   Section 9.1

Permits

   Section 1.1

Permitted Encumbrances

   Section 1.1

Person

   Section 1.1

Post-Closing Periodic Tax Period

   Section 9.1

Post-Closing Tax Period

   Section 1.1

Pre-Closing Periodic Tax Period

   Section 9.1

Pre-Closing Tax Period

   Section 1.1

Preliminary Purchase Price

   Section 3.1

Products

   Section 1.1

Promissory Note

   Section 1.1

Promissory Note Maturity Date

   Section 1.1

Proposed Closing Statement

   Section 3.3(a)(i)

Purchased Assets

   Section 2.1

Purchased Business Intellectual Property

   Section 2.1(b)

Purchased Business Technology

   Section 2.1(b)

Purchaser

   Preamble

Purchaser Disclosure Schedule

   Section 1.1

Purchaser Financial Statements

   Section 6.10

Purchaser Indemnified Party

   Section 12.3

Purchaser Related Agreements

   Section 6.1

Real Property

   Section 1.1

Reference Inventory Value

   Section 1.1

Registered IP

   Section 1.1

 

12

--------------------------------------------------------------------------------

Representative

   Section 1.1

Restricted Customer

   Section 1.1

Restricted Geography

   Section 1.1

Restricted Period

   Section 1.1

Retained Marks

   Section 7.6(a)

Revenue Purchase Price Adjustment Amount

   Section 7.2(d)

Review Period

   Section 3.3(a)(ii)

Sales Forecast

   Section 7.2(d)

Schedules

   Section 1.1

Security Agreement

   Section 1.1

Seller

   Preamble

Seller Change of Control

   Section 1.1

Seller Disclosure Schedule

   Section 1.1

Seller ERISA Affiliate

   Section 1.1

Seller Indemnified Party

   Section 12.2

Seller Related Agreements

   Section 5.1

Seller’s Certificate

   Section 4.1(b)

Seller’s Other Businesses

   Section 1.1

Solvent

   Section 6.7

Straddle Period

   Section 1.1

Subordination Agreement

   Section 1.1

Supply Agreements

   Section 1.1

Tangible Personal Property

   Section 1.1

Tax

   Section 1.1

Tax Return

   Section 1.1

Taxes

   Section 1.1

Technology

   Section 1.1

Third-Party Claim

   Section 12.5(a)

Trademarks

   Section 1.1

Transferred Employee

   Section 8.1(a)(ii)

Transition Services Agreement

   Section 1.1

United States

   Section 1.1

Waiver Date

   Section 4.1(b)

Wells Fargo

   Section 10.1(c)

Section 1.3 Interpretation. Unless otherwise required by the context in which
any term appears:

(a) The singular shall include the plural, the plural shall include the
singular, and the masculine shall include the feminine and neuter.

(b) References to “Articles,” “Sections,” “Schedules” or “Exhibits” shall be to
articles, sections, schedules or exhibits, respectively, of or to this
Agreement, and references to “paragraphs” or “clauses” shall be to separate
paragraphs or clauses of the section or subsection in which the reference
occurs.

 

13

--------------------------------------------------------------------------------

(c) The words “herein,” “hereof,” “herewith” and “hereunder” and words of
similar import shall refer to this Agreement as a whole and not to any
particular section or subsection of this Agreement, the words “include,”
“includes” or “including” shall mean “including, without limitation” and the
word “or” shall not be exclusive.

(d) The term “day” shall mean a calendar day, commencing at 12:00 a.m.
(prevailing Pacific time). Whenever an event is to be performed or a payment is
to be made by a particular date and the date in question falls on a day which is
not a Business Day, the event shall be performed, or the payment shall be made,
on the next succeeding Business Day; provided, however, that all calculations
shall be made regardless of whether any given day is a Business Day and whether
or not any given period ends on a Business Day.

(e) All references to “dollars” or “$” shall be deemed references to the lawful
money of the United States of America. References in this Agreement to dollar
amount thresholds, deductibles or baskets shall not be deemed to be evidence of
a Material Adverse Effect or materiality.

(f) All references to a particular entity shall include such entity’s successors
and permitted assigns unless otherwise specifically provided herein.

(g) All references herein to any Law or to any Contract or other agreement shall
be to such Law, Contract or other agreement as amended, supplemented or modified
from time to time unless otherwise specifically provided herein.

(h) The Parties have participated jointly in the negotiation and drafting of
this Agreement. In the event of 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 provisions of this
Agreement. The language in all parts of this Agreement shall be construed, in
all cases, according to its fair meaning.

ARTICLE 2.

PURCHASE AND SALE

Section 2.1 Purchase and Sale of the Purchased Assets. Subject to the terms and
conditions set forth herein, at the Closing, Seller shall sell, assign,
transfer, convey and deliver to Purchaser, and Purchaser shall purchase from
Seller, free and clear of any Encumbrances (other than Permitted Encumbrances),
all of Seller’s right, title and interest in, to and under all of the assets,
properties and rights of every kind and nature, whether real, personal or mixed,
tangible or intangible (including goodwill), wherever located and whether now
existing or hereafter acquired, which exclusively or primarily relate to, or are
used or held for use exclusively in connection with, the Business (other than
the Excluded Assets) (collectively, the “Purchased Assets”), including the
following:

 

14

--------------------------------------------------------------------------------

(a) the inventory, finished goods, raw materials, work in progress, packaging,
supplies and parts used in the Business (“Inventory”), a list of which as of
June 30, 2014 is set forth on Schedule 2.1(a) of the Seller Disclosure Schedule;

(b) Intellectual Property to the extent existing as of the Closing Date that is
owned by Seller and exclusively or primarily used in the Business (the
“Purchased Business Intellectual Property”) and Technology that is owned by
Seller and exclusively or primarily used in the Business (the “Purchased
Business Technology”), including such items listed on Schedule 2.1(b) of the
Seller Disclosure Schedule;

(c) all Tangible Personal Property, including those items listed on Schedule
2.1(c) of the Seller Disclosure Schedule (the “Acquired Personal Property”);

(d) all of Seller’s rights, to the extent transferable, under warranties,
indemnities and all similar rights against third parties to the extent
exclusively or primarily related to the Business or any Purchased Assets;

(e) all Contracts pursuant to which Seller licenses from any Person Intellectual
Property or Technology for use exclusively or primarily within the Business,
including such Contracts that are set forth on Schedule 2.1(e) of the Seller
Disclosure Schedule (the “IP Licenses”);

(f) all purchase orders outstanding as of the Closing Date (the “Assumed
Purchase Orders”); a list of outstanding purchase orders as of October 1, 2014
is set forth on Schedule 2.1(f) of the Seller Disclosure Schedule;

(g) all Contracts exclusively or primarily related to the Business, including
those all Contracts listed on Schedule 2.1(g) of the Seller Disclosure Schedule
(the “Assigned Contracts”);

(h) all accounts or notes receivable held by Seller, and any security, claim,
remedy or other right, in each case related to any of the Purchased Assets or
the Business (“Accounts Receivable”);

(i) all Books, Records and Files (other than income and similar Tax Returns and
related Books, Records and Files), to the extent exclusively or primarily used
in, or exclusively or primarily related to, the Business; provided, however,
that Seller may redact any information to the extent exclusively used in, or
exclusively related to, the Excluded Assets or Seller’s Other Businesses from
Books, Records and Files; and

(j) all goodwill and the going concern value of the Business.

Seller and Purchaser shall review, update as necessary and use their respective
reasonable best efforts to finalize each section of the Seller Disclosure
Schedule referred to this Section 2.1 (collectively, the “Assets Lists”) at
least three (3) but not more than five (5) Business Days prior to the Closing;
provided that nothing in this updating process shall relieve Seller of its
obligations to comply with the covenants set forth in Section 7.1.

 

15

--------------------------------------------------------------------------------

Section 2.2 Excluded Assets. Notwithstanding the foregoing, the Purchased Assets
shall not include, Purchaser shall not purchase, and Seller shall retain, all
assets of Seller not included in the definition of the Purchased Assets,
including the following assets (collectively, the “Excluded Assets”):

(a) Cash and Cash Equivalents;

(b) the accounts and notes receivable held by Seller listed on Schedule 2.2(b);

(c) all prepaid expenses, credits, advance payments, claims, security, refunds,
rights of recovery, rights of set-off, rights of recoupment, deposits, charges,
sums and fees;

(d) all Contracts (i) to which Seller is a party or by which Seller or any of
its properties or assets may be bound that are not IP Licenses, Assumed Purchase
Orders or Assigned Contracts or (ii) listed on Schedule 2.2(d) (collectively,
the “Excluded Contracts”);

(e) the corporate seals, organizational documents, minute books, stock books,
Tax Returns, books of account or other records having to do with the corporate
organization of Seller;

(f) all Employee Benefit Plans and assets attributable thereto;

(g) the rights which accrue or will accrue to Seller under this Agreement, the
Ancillary Agreements and the transactions contemplated thereby;

(h) all insurance benefits to Seller, including rights and proceeds, arising
prior to the Closing from or relating to the Business, the Purchased Assets or
the Assumed Liabilities;

(i) all rights to any Actions of any nature available to or being pursued by
Seller to the extent related to the Business and actions or omissions prior to
the Closing, whether arising by way of counterclaim or otherwise;

(j) all interests in and to refunds of Taxes relating to Pre-Closing Tax Periods
or the Excluded Assets;

(k) the assets, properties, and rights specifically set forth on Schedule 2.2(j)
of the Seller Disclosure Schedule; and

(l) all assets used exclusively or primarily in Seller’s Other Businesses.

Section 2.3 Assumed Liabilities. At the Closing, Purchaser shall assume and
agree to pay, perform and discharge when due all Liabilities arising out of or
based upon Purchaser’s ownership and operation of the Business and the Purchased
Assets from and after the Closing Date (the “Assumed Liabilities”), including,
without limitation all accounts payable relating to the Purchased Assets and the
Business existing at the Closing (other than as contemplated by Section 2.4(i)
below) (the “Accounts Payable”); provided, however, that with respect to
Liabilities arising out of or based upon the Assumed Purchase Orders or the
Assigned Contracts, the Assumed Liabilities shall not include any Liabilities
that arise after the Closing as a result of a breach of any applicable Assumed
Purchase Order or Assigned Contract, as the case may be, by Seller prior to the
Closing.

 

16

--------------------------------------------------------------------------------

Section 2.4 Excluded Liabilities. At the Closing, Seller or its Affiliates shall
retain (or, if necessary, expressly assume), and shall be responsible for
paying, performing and discharging when due, and Purchaser shall not assume or
have any responsibility for, any Liabilities not specifically included in the
definition of “Assumed Liabilities” (collectively, the “Excluded Liabilities”),
including the following Liabilities:

(a) all Liabilities of Seller or any of its Affiliates to the extent relating
any employment arrangement entered into with any of its employees prior to
Closing, whether the payment obligation thereunder occurs before or after
Closing;

(b) all Liabilities of Seller or any of its Affiliates to the extent relating to
any real property which Seller or one of its Affiliates owns or of which Seller
or one of its Affiliates is the lessee or sublessee, including any associated
Contracts;

(c) all Liabilities of Seller or any of its Affiliates to the extent relating to
or arising out of Seller’s Other Businesses or the Excluded Assets;

(d) all Liabilities retained by Seller pursuant to Section 8.3 and Article 9;

(e) all indebtedness for borrowed money of Seller under any note, bond, credit
agreement or similar instrument with any financial institution, officer,
shareholder, Affiliate or otherwise to any other Person;

(f) all intercompany payables and loans between Seller and any of its
Affiliates, or between any Affiliate of Seller and any other Affiliate of
Seller;

(g) any Liabilities of Seller under this Agreement or the Ancillary Agreements;

(h) any Liabilities of Seller in respect of all Taxes (other than as set forth
in Section 9.5);

(i) any Liabilities of Seller under any Excluded Contracts, including the
associated accounts payable; and

(j) any Liabilities to the extent arising out of or based upon Seller’s
ownership and operation of the Business and the Purchased Assets prior to the
Closing Date, including, without limitation, (i) any Liabilities resulting from
infringement, misappropriation or other violations arising out of or based upon
Seller’s ownership and operation of the Business and the Purchased Assets prior
to the Closing Date and (ii) those Liabilities under the Assumed Purchase Orders
or the Assigned Contracts that arise as a result of a breach of any Assumed
Purchase Order or Assigned Contract, as the case may be, by Seller prior to the
Closing.

 

17

--------------------------------------------------------------------------------

ARTICLE 3.

PURCHASE PRICE

Section 3.1 Purchase Price. Subject to Section 3.3 and Section 3.4, the
aggregate purchase price for the sale and purchase of the Purchased Assets and
the assumption of the Assumed Liabilities shall be fifteen million dollars
($17,500,000) (the “Preliminary Purchase Price” and, as such may be adjusted
pursuant to Section 3.3 or Section 3.4, the “Final Purchase Price”), payable in
the manner set forth below.

Section 3.2 Consideration.

(a) As promptly as practicable, but in no event any later than ten (10) Business
Days from the date hereof, Purchaser shall deposit the Escrow Amount into the
Escrow Account to be held in escrow and released by the Escrow Agent pursuant to
the terms of the Escrow Agreement and Section 3.6.

(b) At the Closing, Purchaser shall deliver to Seller the Promissory Note made
by Purchaser in favor of Seller in the form attached hereto as Exhibit A, which
Promissory Note shall, among other things, be (i) in the original principal
amount equal to the sum of (1) $16,000,000 as it may be adjusted in accordance
with Section 3.3 or Section 3.4 plus (2)(x) a rate of return of five percent
(5%) per annum, payable semi-annually, from the Closing Date to, and including,
the first anniversary of the Closing and (y) a rate of return of thirteen
percent (13%) per annum, payable semi-annually, from the day following such
first anniversary date to, and including, the Promissory Note Maturity Date and
(ii) be secured by a Lien on collateral as set forth in Section 3.7.

Section 3.3 Working Capital Adjustment.

(a) Preparation of the Closing Statement.

(i) As soon as practicable, but no later than sixty (60) days after the Closing
Date, Purchaser shall prepare and deliver to Seller a statement (the “Proposed
Closing Statement”) setting forth Purchaser’s calculation of the Inventory Value
and the Net Accounts Receivable, in each case as of immediately prior to the
Closing (respectively, the “Closing Inventory Value” and the “Closing Net
Accounts Receivable”). The Parties agree that the Closing Inventory Value and
Closing Net Accounts Receivable shall be calculated in a manner consistent with
the calculation methodology used by the Parties in establishing the Reference
Inventory Value and the Reference Net Accounts Receivable Target.

(ii) If Seller disagrees with Purchaser’s calculation of the Closing Inventory
Value and/or the Closing Net Accounts Receivable, Seller shall promptly, but in
no event later than thirty (30) days after receiving the Proposed Closing
Statement (the “Review Period”), deliver to Purchaser written notice describing
in reasonable detail and with appropriate supporting documentation its
calculation of the Inventory Value and/or the Net Accounts Receivable, as
applicable, and its dispute by specifying those items or amounts as to which
Seller disagrees, together with Seller’s determination of such disputed items
and amounts (a “Dispute

 

18

--------------------------------------------------------------------------------

Notice”); provided that Seller shall be deemed to have agreed with all items and
amounts that are not disputed in the Dispute Notice. If Seller fails to deliver
a Dispute Notice within the Review Period, Seller and Purchaser agree that the
Proposed Closing Statement shall be deemed to set forth the Final Inventory
Value and the Final Net Accounts Receivable. If Seller delivers a Dispute Notice
to Purchaser within the Review Period, Purchaser and Seller will use reasonable
good faith efforts to resolve the dispute during the 30-day period commencing on
the date Seller delivers the Dispute Notice to Purchaser. If Seller and
Purchaser are not able to resolve all disputed items within such 30-day period,
then the items remaining in dispute shall be submitted immediately to an
independent nationally recognized firm with no existing or former business
relationship with any Party hereto mutually agreeable to Seller and Purchaser
(the “Accounting Firm”). The Accounting Firm shall be given reasonable access to
all relevant records of Purchaser and Seller to calculate the Closing Inventory
Value and/or the Closing Net Accounts Receivable, as applicable. If any
remaining issues in dispute are submitted to the Accounting Firm for resolution,
each of Seller and Purchaser will be afforded an opportunity to present to the
Accounting Firm any material relating to the determination of the matters in
dispute and to discuss such matters with the Accounting Firm. The Accounting
Firm shall act as an expert and not as an arbitrator to calculate, based solely
on the written submissions of Seller, on the one hand, and Purchaser, on the
other, and not by independent investigation, the Inventory Value and/or the Net
Accounts Receivable, as applicable, and shall be instructed that its calculation
(A) with respect to the Inventory Value, must be made in accordance with the
Inventory Valuation Method, (B) with respect to the Net Accounts Receivable, in
a manner consistent with the calculation methodology used by the Parties in
establishing the Reference Net Accounts Receivable Target, and (C) with respect
to each item in dispute, must be within the range of values established for such
amount as determined by reference to the value assigned to such amount by Seller
in the Dispute Notice and by Purchaser in the Proposed Closing Statement. The
Accounting Firm shall submit such calculation to Purchaser and Seller as soon as
practicable, but in any event within thirty (30) days after the remaining issues
in dispute are submitted to the Accounting Firm. The determination by the
Accounting Firm of the Closing Inventory, as set forth in a written notice
delivered to Seller and Purchaser by the Accounting Firm in accordance with this
Agreement absent manifest error will be binding and conclusive on Seller and
Purchaser. Closing Inventory Value as finally determined in accordance with this
Section 3.3(a)(ii) is referred to herein as the “Final Inventory Value.” Closing
Net Accounts Receivable as finally determined in accordance with this
Section 3.3(a)(ii) is referred to herein as the “Final Net Accounts Receivable.”

(iii) In the event Seller and Purchaser submit any unresolved objections to an
Accounting Firm for resolution as provided in Section 3.3(a)(ii) above, the fees
and expenses of such Accounting Firm will be shared equally between Seller and
Purchaser.

(iv) Purchaser shall make its financial records available to Seller and its
accountants and other Representatives, and Seller shall make its financial
records available to Purchaser and its accountants and other Representatives, in
each case, at reasonable times during the period beginning on the Closing Date
and ending on the date of the final determination of the Final Inventory Value
and the Final Net Accounts Receivable pursuant to Section 3.3(a)(ii) above,
subject to customary indemnification and other agreements that may be requested
by Representatives of the Parties.

 

19

--------------------------------------------------------------------------------

(b) Purchase Price Adjustment.

(i) Inventory Adjustment. If the Final Inventory Value as determined pursuant to
Section 3.3(a)(ii) above is greater than the Reference Inventory Value or less
than the Reference Inventory Value, the Preliminary Purchase Price will be
adjusted as follows (the “Inventory Value Adjustment”):

(A) If the Final Inventory Value exceeds the Reference Inventory Value, the
Preliminary Purchase Price shall, automatically, without further action by the
Parties, be increased by the amount by which the Final Inventory Value exceeds
the Reference Inventory Value; and

(B) If the Reference Inventory Value exceeds the Final Inventory Value, the
Preliminary Purchase Price shall, automatically, without any further action by
the Parties, be decreased by the amount by which the Reference Inventory Value
exceeds the Final Inventory Value.

(ii) Net Accounts Receivable Adjustment. If the Final Net Accounts Receivable as
determined pursuant to Section 3.3(a)(ii) above is greater than the Net Accounts
Receivable Target or less than the Net Accounts Receivable Target, the
Preliminary Purchase Price will be adjusted as follows (the “Net Accounts
Receivable Adjustment”):

(A) If the Final Net Accounts Receivable exceeds the Net Accounts Receivable
Target, the Preliminary Purchase Price shall, automatically, without further
action by the Parties, be increased by the amount by which the Final Net
Accounts Receivable exceeds the Net Accounts Receivable Target; and

(B) If the Net Accounts Receivable Target exceeds the Final Net Accounts
Receivable, the Preliminary Purchase Price shall, automatically, without any
further action by the Parties, be decreased by the amount by which the Reference
Inventory Value exceeds the Net Accounts Receivable Target exceeds the Final Net
Accounts Receivable.

(c) Adjustment to Promissory Note. The principal amount of the Promissory Note
shall, automatically without any further action by the Parties, be increased or
decreased, as applicable, to reflect to the Inventory Value Adjustment and the
Net Accounts Receivable Adjustment. The amount of any accrued interest on the
Promissory Note shall be retroactively adjusted to the Closing Date to reflect
any changes to the principal amount of the Promissory Note made pursuant to this
Section 3.3(c).

Section 3.4 Revenue Purchase Price Adjustment. If, at Closing, Excess Revenues
exist, as mutually agreed by the Parties in good faith, the Preliminary Purchase
Price and the principal amount under the Promissory Note shall, automatically,
without any further action by the Parties, be decreased by the amount of the
Revenue Purchase Price Adjustment Amount as mutually determined by the Parties
in good faith within five (5) Business Days of Closing.

 

20

--------------------------------------------------------------------------------

Section 3.5 Purchase Price Allocation. Within ninety (90) Business Days after
the determination of the Final Inventory Value and the Final Net Accounts
Receivable in accordance with the provisions of Section 3.3(a), Purchaser shall
provide to Seller an allocation of the Final Purchase Price among the Purchased
Assets (the “Allocation”). The Allocation shall be prepared by Purchaser in
accordance with Section 1060 of the Code. Seller shall be entitled to review and
comment on such schedule for thirty (30) Business Days, and Purchaser shall
consider such comments in good faith. Thereafter, Purchaser shall provide Seller
with Purchaser’s final allocation schedule. Each of Seller and Purchaser shall
(a) be bound by the Allocation for purposes of determining Taxes and (b) prepare
and file, and cause its Affiliates to prepare and file, its Tax Returns on a
basis consistent with the Allocation. Seller and Purchaser shall not take any
position inconsistent with the Allocation in any Tax Return, in any refund
claim, in any litigation, or otherwise unless required by a final determination
by an applicable taxing authority.

Section 3.6 Escrow.

(a) As promptly as practicable, but in no event any later than ten (10) Business
Days from the date hereof, the Parties shall negotiate in good faith and enter
into the Escrow Agreement with the Escrow Agent. The Escrow Agreement shall be
in form and substance reasonably satisfactory to Seller and Purchaser, and shall
provide for the release of the Escrow Amount in accordance with Section 3.6(b).

(b) The Escrow Agreement shall provide that the Escrow Amount shall be released
as follows, in each case without any action being required by Purchaser:

(i) to Seller at the Closing as part of the Preliminary Purchase Price;

(ii) if (1) Purchaser’s conditions to Closing set forth in Section 10.1 and
Section 10.3 (other than those conditions that by their nature are to be
satisfied at Closing) have been satisfied and Seller delivers to Purchaser the
Seller’s Certificate to that effect, (2) the Closing Date has not been delayed
by Purchaser in accordance with Section 4.1(b), (3) Purchaser’s conditions to
Closing set forth in Section 10.1 and Section 10.3 that by their nature are to
be satisfied at Closing have in fact been satisfied, (4) Closing does not occur
on the Closing Date specified in Section 4.1(a) as a result of any failure of
any of Seller’s conditions to Closing set forth in Section 10.2 to be satisfied
at the Closing, and (5) as a result thereof, this Agreement shall be terminated
in accordance Article 11 hereof, to Seller within one (1) Business Day of the
date on which this Agreement shall be terminated;

(iii) if (1) Purchaser’s conditions to Closing set forth in Section 10.1 and
Section 10.3 (other than those conditions that by their nature are to be
satisfied at the Closing) have been satisfied and Seller delivers to Purchaser
the Seller’s Certificate to that effect, (2) the Closing Date has been delayed
by Purchaser in accordance with Section 4.1(b), (3) Seller has satisfied the
condition to Closing set forth in Section 10.3(a)(ii) as of the Delayed Closing
Date, and (4) Purchaser’s conditions to Closing set forth in Section 10.1 and
Section 10.3 that by their nature are to be satisfied at Closing have in fact
been satisfied, (4) Closing does not occur on the Delayed Closing Date as a
result of any failure of any of the Seller’s conditions to Closing set forth in
Section 10.2 to be satisfied at the Closing, and (5) as a result thereof, this
Agreement shall be terminated in accordance Article 11 hereof, to Seller within
one (1) Business Day of the date on which this Agreement shall be terminated;
and

 

21

--------------------------------------------------------------------------------

(iv) if (1) Purchaser’s conditions to Closing set forth in Section 10.1 and
Section 10.3 (other than those conditions that by their nature are to be
satisfied at the Closing) have been satisfied and Seller delivers to Purchaser
the Seller’s Certificate to that effect, (2) the Closing Date has been delayed
by Purchaser in accordance with Section 4.1(b), (3) Closing does not occur on
the Delayed Closing Date as a result of the failure of (x) Purchaser’s condition
to Closing set forth in Section 10.3(a)(ii) to be satisfied at the Delayed
Closing Date or (y) Purchaser’s conditions to Closing set forth in Section 10.1
and Section 10.3 that by their nature are to be satisfied at Closing to in fact
be satisfied, and (4) as a result thereof, this Agreement shall be terminated in
accordance Article 11 hereof, to Purchaser within one (1) Business Day of the
date on which this Agreement shall be terminated,

unless, in each case, the Parties provide a joint instruction to the Escrow
Agent not to release the Escrow Account.

(c) Purchaser and Seller shall require, and take all necessary action to cause,
the Escrow Agent to hold and safeguard the Escrow Amount until its release, to
treat such fund as a trust fund in accordance with the terms of the Escrow
Agreement and without any right of set-off, and to hold and release the Escrow
Amount only in accordance with the terms of the Escrow Agreement and
Section 3.6(b).

Section 3.7 Security. As promptly as practicable after the date hereof, the
Parties shall negotiate in good faith the Security Agreement, which shall
(i) grant to the Seller, on the Closing Date, a valid and perfected first
priority security interest in and lien on the Acquired Personal Property, the
Purchased Business Intellectual Property and the Purchased Business Technology
or such other collateral as may be reasonably satisfactory to Seller and
Purchaser, and (ii) otherwise be on customary and commercially reasonable terms
and conditions.

ARTICLE 4.

CLOSING

Section 4.1 Closing Date.

(a) On the terms and subject to the conditions of this Agreement, subject to
Section 4.1(b), on the sale and purchase of the Purchased Assets and the
assumption of the Assumed Liabilities contemplated by this Agreement shall take
place at a closing (the “Closing”) to be held at the offices of Skadden, Arps,
Slate, Meagher & Flom LLP, 300 South Grand Avenue, Suite 3400, Los Angeles, CA
90071, at 10:00 a.m. Los Angeles time, on the second (2nd) Business Day
following the satisfaction or waiver of each of the conditions set forth in
Article 10 (other than those conditions that by their nature are to be satisfied
at the Closing, but subject to the satisfaction or waiver of those conditions at
the Closing) or at such other place, time or date as Seller and Purchaser may
mutually agree in writing (the day on which the Closing takes place, the
“Closing Date”). The Closing shall be deemed to be effective for all purposes at
12:01 a.m. Los Angeles time on the Closing Date.

 

22

--------------------------------------------------------------------------------

(b) Notwithstanding the foregoing, upon satisfaction of each of the conditions
set forth in Sections 10.1 and 10.3 (other than those conditions that by their
nature are to be satisfied at the Closing) and delivery to Purchaser of a
certificate to such effect duly executed by Seller (the “Seller’s Certificate”),
Purchaser may elect in its sole discretion to delay the Closing Date until
January 2, 2015 (such date, the “Delayed Closing Date”) subject to satisfaction
by Purchaser of each of the following terms and conditions: (1) Purchaser shall
notify Seller in writing of its desire to delay the Closing Date no later than
two (2) Business Days’ following receipt of the Seller’s Certificate and
(2) Purchaser shall waive all of Purchaser’s conditions to Closing set forth in
Sections 10.1 and 10.3 (other than the conditions set forth in
Section 10.3(a)(ii) and other than those conditions that by their nature are to
be satisfied at the Closing, but subject to the satisfaction or waiver of those
conditions at the Closing) on the Delayed Closing Date. In the event the Closing
Date is delayed pursuant to this Section 4.1(b), the Closing Date shall be
deemed to be the date the Seller’s Certificate is delivered to Purchaser for all
purposes under Article 5 and Article 12. The date on which Purchaser shall
deliver to Seller the notice contemplated clause (1) above and waive the
conditions to Closing pursuant to clause (2) above is referred to herein as the
“Waiver Date.”

Section 4.2 Closing Deliveries by Seller. At the Closing, Seller shall deliver
to Purchaser:

(a) a duly executed counterpart of the Bill of Sale and Assignment and
Assumption Agreement;

(b) a duly executed counterpart of the Intellectual Property Assignment
Agreement;

(c) a duly executed counterpart of the Intellectual Property License Agreement;

(d) a duly executed counterpart of the Supply Agreements;

(e) a duly executed counterpart of the Transition Services Agreement;

(f) the certificate required by Section 10.3(d) and a certificate of the
secretary or assistant secretary of Seller attaching and certifying (i) the
certificate of incorporation and bylaws of Seller as then in effect and (ii) the
resolutions of the board of directors of Seller approving the transactions
contemplated hereby;

(g) a duly executed certification that Seller is not a foreign person within the
meaning set forth in Treasury Regulation section 1.1445-2(b)(2);

(h) evidence that it has obtained the Consent of each Person or Governmental
Entity whose Consent shall be required in connection with the transactions
contemplated hereby; and

(i) evidence that it has obtained the release of any and all Encumbrances (other
than Permitted Encumbrances) on the Purchased Assets.

 

23

--------------------------------------------------------------------------------

Section 4.3 Closing Deliveries by Purchaser. At the Closing, Purchaser shall
deliver to Seller:

(a) the duly executed Promissory Note;

(b) a duly executed counterpart of the Security Agreement;

(c) duly executed counterparts of the Subordination Agreement executed by each
of Purchaser and Comerica Bank (and/or such other relevant lenders, if any);

(d) a duly executed counterpart of the Bill of Sale and Assignment and
Assumption Agreement;

(e) a duly executed counterpart of the Intellectual Property Assignment
Agreement;

(f) a duly executed counterpart of the Intellectual Property License Agreement;

(g) a duly executed counterpart of the Supply Agreements;

(h) a duly executed counterpart of the Transition Services Agreement; and

(i) the certificate required by Section 10.2(c) and a certificate of the
secretary or assistant secretary of Purchaser attaching and certifying (i) the
certificate of incorporation and bylaws of Purchaser as then in effect and
(ii) the resolutions of the board of directors of Purchaser approving the
transactions contemplated hereby.

ARTICLE 5.

REPRESENTATIONS AND WARRANTIES OF SELLER

Except as set forth in the Seller Disclosure Schedule (it being understood and
agreed by the Parties that disclosure of any item in any section or
subsection of the Seller Disclosure Schedule shall be deemed disclosure with
respect to any other section or subsection of the Seller Disclosure Schedule to
which the relevance of such item is reasonably apparent), Seller hereby
represents and warrants to Purchaser as follows:

Section 5.1 Organization, Authority and Qualification. Seller is a corporation
duly incorporated, validly existing and in good standing under the Laws of the
State of New Jersey and has all requisite power and authority to own, lease and
operate its properties and assets and to carry on the Business as it is now
being conducted and is duly qualified to conduct business in each jurisdiction
in which the Business is conducted (where such qualification is necessary).
Seller has all necessary corporate power and authority to enter into, execute
and deliver this Agreement and each other agreement, instrument or document to
be executed and delivered by Seller pursuant hereto (collectively, the “Seller
Related Agreements”), to carry out its obligations hereunder and thereunder and
to consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance by Seller of this Agreement and the Seller Related

 

24

--------------------------------------------------------------------------------

Agreements and the consummation by Seller of the transactions contemplated
hereby and thereby are within Seller’s corporate powers, have been duly
authorized by all necessary corporate action on the part of Seller and no other
proceeding on the part of Seller is necessary to authorize this Agreement or the
Seller Related Agreements or to consummate the transactions contemplated hereby
and thereby. This Agreement has been duly executed and delivered by Seller, and,
assuming due authorization, execution and delivery by Purchaser, constitutes a
valid and binding obligation of Seller, enforceable against it in accordance
with its terms, subject in each case to the effect of any applicable bankruptcy,
reorganization, insolvency, moratorium, rehabilitation, liquidation, fraudulent
conveyance, preferential transfer or similar Laws now or hereafter in effect
relating to or affecting creditors’ rights and remedies generally and subject,
as to enforceability, to the effect of general equitable principles (regardless
of whether enforcement is sought in a proceeding in equity or at law)
(collectively, the “Bankruptcy and Equity Principles”). Upon its execution and
delivery by Seller, each Seller Related Agreement will constitute the valid and
binding obligation of Seller, enforceable against Seller in accordance with its
terms, except as enforceability may be limited by Bankruptcy and Equity
Principles.

Section 5.2 No Conflict. Assuming that all Consents and other actions described
in Section 5.3 have been obtained and except as set forth on Schedule 5.2 of the
Seller Disclosure Schedule, the execution, delivery and performance of this
Agreement and the Seller Related Agreements by Seller does not, and the
consummation of the transactions contemplated hereby and thereby shall not,
(a) violate, conflict with or result in the breach of the articles of
incorporation or bylaws, in each case as amended or restated, of Seller,
(b) result in a violation or breach of, or cause acceleration, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, amendment, cancellation or acceleration) under any of
the terms, conditions or provisions of, require payment under, or result in the
creation of any Encumbrance (other than Permitted Encumbrances) on any of the
Purchased Assets pursuant to any Contract to which Seller is a party or pursuant
to which its property or assets are bound, or (c) conflict with or violate any
Law or Governmental Order applicable to Seller or its assets, properties or
businesses, except, in the case of clauses (b) and (c) above, as would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect. Neither the negotiation nor the execution of this Agreement by
Seller violates, conflicts with or results in the breach of any exclusive
dealing or similar arrangement in any agreement.

Section 5.3 Governmental Consents and Approvals. Except as set forth on
Schedule 5.3 of the Seller Disclosure Schedule, the execution, delivery and
performance of this Agreement and the Seller Related Agreements by Seller does
not, and the consummation of the transactions contemplated hereby and thereby
shall not, require any Consent of, action by, filing with or notification to any
Governmental Authority, except (a) as may be necessary as a result of any facts
or circumstances relating solely to Purchaser or any of its Affiliates or (b) to
the extent that the failure to obtain any such Consent or to take such action,
make such filing or make such notification individually or in the aggregate has
not had and would not reasonably be expected to have a Material Adverse Effect.

Section 5.4 Financial Statements.

(a) Seller has delivered to Purchaser unaudited balance sheets, income
statements and cash flow statements of the Business as of and for the fiscal
year ended

 

25

--------------------------------------------------------------------------------

September 30, 2013 and as of and for the nine (9) months ended June 30, 2014
(collectively, the “Financial Statements”). The Financial Statements have been
prepared in accordance with GAAP and derived from the Books, Records and Files
and fairly present in all material respects the financial condition and results
of operations of the Business as of the respective dates of and for the periods
referred to herein, other than normal year-end audit adjustments (which will not
be material to the Business) and the absence of footnotes.

(b) The Books, Records and Files are true, correct and complete in all material
respects.

(c) Seller has no Liabilities pertaining to the Business required to be
reflected or reserved against on a balance sheet of Seller prepared in
accordance with GAAP, except Liabilities pertaining to the Business
(i) reflected or reserved against on the balance sheet of the Business as of the
nine (9) months ended June 30, 2014 included in the Financial Statements;
(ii) expressly contemplated by this Agreement or otherwise incurred in
accordance herewith; or (iii) incurred after June 30, 2014 in the ordinary
course of business that do not have, and are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect.

(d) Since June 30, 2014, (i) no Material Adverse Effect has occurred, and no
event, occurrence or circumstance has arisen that would be reasonably expected
to have a Material Adverse Effect, (ii) Seller has conducted the Business in the
ordinary course of business, and (iii) Seller has not taken any action
exclusively or primarily related to the Business that if taken after the date of
this Agreement, would require Purchaser’s consent under Section 7.1.

(e) All of the Accounts Receivable, whether billed or unbilled, of Seller as of
the date hereof arose in the ordinary course of business, and are carried at
values determined in accordance with GAAP.

Section 5.5 Litigation. No material Action by or against Seller that relates to
the Business or the Purchased Assets, or that challenges or may have the effect
of making illegal, or otherwise interfering with, the transactions contemplated
by this Agreement, is pending or, to the Knowledge of Seller, threatened, by or
before any Governmental Authority or by any third party. Seller is not party to
or in default under any Governmental Order that relates to the Business or any
of the Purchased Assets that would, individually or in the aggregate, have a
Material Adverse Effect.

Section 5.6 Sufficiency of the Purchased Assets; Inventory.

(a) Assuming all required Consents of third Persons (including as contemplated
by Section 7.7) are obtained and alternative arrangements contemplated by
Section 7.7(b) are performed, except for such Contracts and assets utilized by
Seller for the ordinary course provision of goods and services on an
enterprise-wide or similar basis and included as an Excluded Asset, the
Purchased Assets, including the Purchased Business Intellectual Property, taken
together with the services and assets to be provided under the Ancillary
Agreements and any assets described in Schedule 5.6 of the Seller Disclosure
Schedule, constitute substantially all of the assets necessary to operate the
Business in all

 

26

--------------------------------------------------------------------------------

material respects in the manner immediately after the Closing as it is conducted
by Seller and its Affiliates immediately prior to the Closing (it being
understood and agreed that nothing set forth in this Section 5.6 constitutes a
representation or warranty that the Purchased Assets can or will be operated at
the existing performance levels following the Closing Date).

(b) Schedule 2.1(a) of the Seller Disclosure Schedule contains a true, accurate
and complete list of all Inventory in existence as of the date hereof. Except as
disclosed on Schedule 5.6(b) of the Seller Disclosure Schedule, all
ITLA/micro-ITLA Inventory included on Schedule 2.1(a) of the Seller Disclosure
Schedule is usable and in saleable condition in the ordinary course of business,
and such Inventory has been manufactured in all material respects in accordance
with the Seller’s standard manufacturing procedures and is free from material
defects in construction and design. Except as disclosed on Schedule 5.6(b) of
the Seller Disclosure Schedule, at the time of Closing, such Inventory will have
been manufactured in all material respects in accordance with Seller’s standard
manufacturing procedures and will be free from material defects in construction
and design.

Section 5.7 Title. Seller is the true and lawful owner of, and owns all right,
title and interest to all of the tangible Purchased Assets, free and clear of
all Encumbrances (other than Permitted Encumbrances). Upon the sale of the
tangible Purchased Assets to Purchaser pursuant to this Agreement, all right,
title and interest in and to all tangible Purchased Assets, free and clear of
all Encumbrances (other than Permitted Encumbrances), will pass to Purchaser on
the Closing Date.

Section 5.8 Compliance with Laws; Permits.

(a) Seller is and has been since January 1, 2013 in compliance with all Laws
applicable to Seller with respect to the Business or the Purchased Assets,
except as would not have, individually or in the aggregate, a Material Adverse
Effect.

(b) Seller has performed all activities of or related to the Business or the
Purchased Assets, directly or indirectly, by through or on behalf of Seller, in
form and substance in accordance with the applicable Laws of the jurisdiction
where the activities were to be performed, including the U.S. Foreign Corrupt
Practices Act of 1977, as amended from time to time (“FCPA”), irrespective of
whether the FCPA applies by force of law in the jurisdiction in question.
Neither Seller nor, to the Knowledge of Seller, any director, officer, agent or
employee of Seller has, for or on behalf of Seller with respect to the Business
or the Purchased Assets, (i) used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity; or
(ii) made any other payment in violation of applicable Law.

(c) Seller does not sell or solicit any products to any entity or enterprise
located in those countries that are identified in Part 746 (Embargoes and Other
Special Controls) of the U.S. Export Administration Regulations, in the
Sanctions Program of the U.S. Department of Commerce, by the U.S. Foreign Assets
Control Regulations, or on the U.S. Department of State Defense Trade Controls
Embargo Reference Chart. None of the Products are controlled under or subject to
the International Traffic in Arms Regulations. Schedule 5.8(c) of the Seller
Disclosure Schedule includes a true, correct and complete list of all ECCNs, and
any export licenses or CCATs (as applicable) for all Products currently sold by,
and all technologies of, the

 

27

--------------------------------------------------------------------------------

Business. Seller is and has at all times been since September 1, 2009, and is
currently, in material compliance with all U.S. and foreign customs and import
Laws, has paid all fees, duties, levies and other amounts required to be paid
pursuant thereto and has used reasonable care when importing goods into each
jurisdiction.

(d) Seller possesses all material Permits required by applicable provisions of
Laws necessary for the operation of the Business as currently conducted, all of
which are listed on Schedule 5.8(d) of the Seller Disclosure Schedule. All of
such material Permits are in full force and effect.

(e) Notwithstanding the foregoing, this Section 5.8 shall not apply to
(i) Environmental Laws and any permits required thereunder, which are
exclusively the subject of the representations and warranties contained in
Section 5.10, (ii) employee benefits, which are exclusively the subject of the
representations and warranties contained in Section 5.11 or (iii) Tax matters,
which are exclusively the subject of the representations and warranties
contained in Section 5.12.

Section 5.9 Material Contracts.

(a) Except for those agreements set forth on Schedule 5.9(a) of the Seller
Disclosure Schedule (collectively, the “Material Contracts”), as of the date
hereof, none of the Contracts exclusively or primarily relating to the Business
constitute:

(i) Contracts for the employment of any officer, employee or other person on a
full-time, part-time, consulting or other basis (excluding, for the avoidance of
doubt, customary at-will employment arrangements) or any other agreement
providing for deferred compensation, severance or similar benefits to any
person, including upon a change of control of Seller or any of its Affiliates;

(ii) Contracts entered into in the ordinary course of business involving
aggregate committed payments to or from Seller in excess of $75,000 per year;

(iii) Contracts between Seller or any of its subsidiaries, on the one hand, and
any Affiliate of Seller or any of its subsidiaries, on the other;

(iv) Contracts for the disposition of any assets of Seller or any of its
subsidiaries or any agreement for the acquisition of any assets or business of
any other entity, in each case, involving consideration in excess of $75,000;

(v) Contracts limiting the ability of Seller or any of its Affiliates to engage
in any line of business or to compete with any Person;

(vi) collective bargaining agreements, labor contracts or other written
agreements, or arrangements with any labor union or any employee organization;

(vii) IP Licenses, other than licenses pertaining to “off the shelf” or
commercially available software used pursuant to shrink wrap or click-through
license agreements on non-negotiated terms for an annual license fee of no more
than $20,000; and

 

28

--------------------------------------------------------------------------------

(viii) other Contracts entered into outside the ordinary course of business
involving more than $75,000 per year or $150,000 over the life of such contract.

(b) Except as set forth on Schedule 5.9, true, correct and complete copies of
each of the Material Contracts and Assumed Purchase Orders have been delivered
to Purchaser. Schedule 5.9 of the Seller Disclosure Schedule contains a complete
and accurate description of any oral Material Contract or Assumed Purchase
Order. Each Material Contract and each Assumed Purchase Order is a valid,
binding and legally enforceable obligation of Seller and, to the Knowledge of
Seller, of the other parties thereto, except, in each case, as enforcement may
be limited by Bankruptcy and Equity Principles, and is in full force and effect.
Seller is not (with or without notice or lapse of time, or both) in breach or
default under any material provision of any Material Contract or any Assumed
Purchase Order and, to Seller’s Knowledge, no other party to any such Material
Contract or Assumed Purchase Order is as of the date hereof (with or without
notice or lapse of time, or both) in breach or default thereunder.

Section 5.10 Environmental Matters. With respect to the Purchased Assets and the
ownership or operation thereof:

(a) To the Knowledge of Seller, Seller is in compliance with all applicable
Environmental Laws with respect to the operation by Seller of the Business and
the ownership and operation of the Purchased Assets in furtherance thereof,
except where failure to be in compliance would not, individually or in the
aggregate, have a Material Adverse Effect; and

(b) Seller has not received written notice of and, to the Knowledge of Seller,
is not the subject of, any actions, causes of action, claims, investigations,
demands or notices by any Person alleging liability under or non-compliance with
any Environmental Law that would, individually or in the aggregate, have a
Material Adverse Effect;

The representations and warranties made by Seller in this Section 5.10 are the
exclusive representations and warranties made to Purchaser relating to
environmental matters.

Section 5.11 Employee Benefits.

(a) Schedule 5.11(a) of the Seller Disclosure Schedule sets forth a complete and
accurate list of each material Compensation and Benefit Plan currently
maintained, sponsored or contributed to, or required to be contributed to, by
Seller or any Seller ERISA Affiliate for the benefit of any Business Employee or
any former employee employed by Seller or one of its Affiliates who primarily
performed his or her services for, or with respect to, the Business
(collectively, the “Employee Benefit Plans”).

(b) With respect to each of the Employee Benefit Plans, Seller has made
available to Purchaser copies of each of the following documents: (i) each
Employee Benefit Plan (including all amendments thereto); (ii) the annual report
and actuarial report, if required under ERISA or the Code, with respect to each
such Employee Benefit Plan for the last plan year ending prior to the date
hereof; (iii) the most recent summary plan description, together with each
summary of material modifications, if required under ERISA, with respect to such
Employee Benefit Plan; and (iv) the most recent determination, opinion or
advisory letter received from the IRS with respect to each Employee Benefit Plan
that is intended to be qualified under Section 401(a) of the Code.

 

29

--------------------------------------------------------------------------------

(c) Each of the Employee Benefit Plans has been operated and administered in
substantial compliance with their terms and with all applicable Laws, including
ERISA and the Code, except as would not, individually or in the aggregate, have
a Material Adverse Effect. There are no pending or, to the Knowledge of Seller,
threatened claims by or on behalf of any of the Employee Benefit Plans, by any
Business Employee or beneficiary thereof covered under any such Employee Benefit
Plan or otherwise involving any such Employee Benefit Plan (other than routine
claims for benefits), except as would not, individually or in the aggregate,
have a Material Adverse Effect. Each Employee Benefit Plan intended to qualify
under Section 401(a) of the Code has either received a favorable determination
letter from the IRS with respect to its qualified status under the Code, or may
rely on the opinion or advisory letter received by the preapproved plan sponsor.

(d) No Employee Benefit Plan is a pension plan subject to Title IV of ERISA, a
“multiemployer plan” as defined in Section 3(37) of ERISA, a plan described in
Section 413 of the Code, or a plan subject to the minimum funding standards of
Section 412 of the Code or Section 302 of ERISA.

(e) No Employee Benefit Plan provides benefits (including, without limitation,
death or medical benefits), whether or not insured, with respect to any Business
Employee (or former employee whose employment with Seller or any of its
Affiliates primarily related to the Business), or any spouse or dependent of any
such employee, beyond the employee’s retirement or other termination of
employment with Seller and its Affiliates (other than coverage mandated by Part
6 of Title I of ERISA or Section 4980B of the Code).

(f) The representations and warranties made by Seller in this Section 5.11 are
the exclusive representations and warranties made to Purchaser relating to
employee benefits matters.

Section 5.12 Tax Matters. All material Tax Returns that were required to have
been filed by Seller in respect of or in relation to the Business or the
Purchased Assets have been filed (taking into account any extensions of time in
which to file). Seller has paid or withheld and remitted all material Taxes due
with respect to the Business or the Purchased Assets whether or not shown as due
on any Tax Return or has established (or has had established on its behalf and
for its sole benefit and recourse) an adequate accrual for all material Taxes
through the end of the last period for which Seller ordinarily records items on
its books. There are no material Encumbrances for Taxes upon any of the
Purchased Assets (other than Permitted Encumbrances). To the Knowledge of
Seller, no Governmental Authority has claimed that the Purchased Assets or the
Business are subject to a Tax in a jurisdiction in which the required Tax
Returns have not been filed by Seller. The representations and warranties set
forth in this Section 5.12 and Section 5.11 constitute Seller’s sole
representations and warranties with respect to Taxes.

 

30

--------------------------------------------------------------------------------

Section 5.13 Intellectual Property.

(a) Registered IP. Schedule 5.13(a) of the Seller Disclosure Schedule sets forth
a complete and accurate list of all Registered IP. Each item of Registered IP
has been duly registered with, filed in or issued by, as the case may be, the
United States Patent and Trademark Office, the United States Copyright Office or
other filing offices, domestic or foreign and, to the Knowledge of Seller, each
such issued item of Registered IP is valid, enforceable and remains in full
force and effect. There is no pending, or to the Knowledge of Seller, threatened
opposition, interference or cancellation proceeding before any court or
registration authority against any of the Registered IP. Except as set forth in
Schedule 5.13(a) of the Seller Disclosure Schedule, there are no actions that
must be taken within sixty (60) days after the date of this Agreement, including
the payment of any registration, maintenance or renewal fees or the filing of
any documents, applications or certificates, for the purposes of maintaining,
perfecting or preserving or renewing any Registered IP.

(b) Ownership. (i) Seller owns all right, title and interest in and to the
Purchased Business Intellectual Property and the Purchased Business Technology
free from Encumbrances (other than Permitted Encumbrances or outbound license
agreements entered into in the ordinary course of business), (ii) Seller has
good and valid title to, or has the right to use and otherwise exploit, all
other material items of Purchased Business Intellectual Property and Purchased
Business Technology as the same is used and otherwise exploited by Seller in the
Business as presently conducted, and (iii) Seller has not received any written
or, to the Knowledge of Seller, oral notice or claim challenging Seller’s
ownership of any Purchased Business Intellectual Property or Purchased Business
Technology. No Purchased Business Intellectual Property or Purchased Business
Technology is subject to any outstanding Governmental Order against Seller
restricting the use, sale or exploitation thereof by Seller.

(c) Non-Infringement. As of the date hereof, (i) Seller has not, in its conduct
of the Business since January 1, 2012, infringed, misappropriated or otherwise
violated any Intellectual Property of any Person, (ii) there is no such claim
pending or, to the Knowledge of Seller, threatened against Seller in writing,
and (iii) to the Knowledge of Seller as of the date hereof, no Person is
infringing, misappropriating or otherwise violating any Purchased Business
Intellectual Property, and no such claims are pending or threatened against any
Person by Seller. Notwithstanding any other provision of this Agreement, this
Section 5.13(c) constitutes the only representation and warranty of Seller with
respect to any actual or alleged infringement or other violation of any
Intellectual Property or Technology of any Person.

(d) Source Code; Open Source. Seller (i) is not subject to any Contract with any
Person pursuant to which Seller has deposited, or would be required to deposit,
into escrow the source code of any software that is material to the Business and
(ii) has not disclosed or delivered the source code for any software that is
material to the Business to any Person who is not an independent contractor
(subject to confidentiality obligations) or an employee of Seller. No material
Purchased Business Intellectual Property or Purchased Business Technology that
is comprised of software is subject to the terms of any “open source” license
that requires, or would reasonably be expected to require, the disclosure,
delivery, license or distribution of the source code of any such software of
Seller to any Person.

(e) Security. Seller takes commercially reasonable precautions to protect the
confidentiality, integrity, operation and security of its software and IT
Systems against any

 

31

--------------------------------------------------------------------------------

unauthorized use, access, interruption, modification or corruption. To the
Knowledge of Seller as of the date hereof, there have been no material security
breaches or distributions, viruses, malware, disruptions or similar events
suffered by the software or IT Systems.

(f) Standards Organizations. Schedule 5.13(f) of the Seller Disclosure Schedule
identifies and describes each instance in which Seller has participated in any
standards-setting process or has made or undertaken any commitment or obligation
to license, or offer to license, any Intellectual Property as a result of or in
connection with its participation in any standards-setting or other industry
organization. Seller is in compliance with, and Seller has never been in breach
or violation of, its material duties and obligations arising from its
participation in standards-setting processes or activities and the Intellectual
Property policies and rules of the standards-setting or industry organization in
question.

(g) Confidentiality. Seller has taken commercially reasonable steps to protect
the rights in Seller’s confidential information and trade secrets, and, without
limiting the foregoing, Seller has required each employee and contractor to
execute a proprietary information/confidentiality agreement in the form set
forth in Schedule 5.13(g) of the Seller Disclosure Schedule and all current and
former employees and contractors of the Company and any of its subsidiaries have
executed such an agreement.

(h) Effect of Transaction. Neither this Agreement nor the transactions
contemplated by this Agreement will result in (i) any third party being granted
rights or access to, or the placement in or release from escrow, of any software
source code or other technology, (ii) Purchaser granting to any third party any
right in any Intellectual Property rights, (iii) Purchaser being bound by, or
subject to, any non-compete or other restriction on the operation or scope of
their respective businesses, or (iv) Purchaser being obligated to pay any
Intellectual Property royalties or other amounts to any third party in excess of
those payable by Seller prior to the Closing.

Section 5.14 Customers and Suppliers

(a) Schedule 5.14(a) sets forth a true, correct and complete list of the top
five (5) customers of Seller for the Business (by sales revenue) to which Seller
made sales during the twelve (12) month period ended July 31, 2014
(collectively, “Major Customers”). Except as set forth in Schedule 5.14(a) of
the Seller Disclosure Schedule, since July 31, 2013, Seller has not received any
written or, to the Knowledge of Seller, oral notice from a Major Customer that
such Major Customer will (or has threatened to) cancel, terminate, materially
limit or materially and adversely modify its current (or currently proposed)
business relationship with Seller other than with respect to requests by Major
Customers to delay shipment of products of Seller in the ordinary course of
business.

(b) Schedule 5.14(b) sets forth a true, correct and complete list of the top ten
vendors of Seller for the Business (by sales revenue) from which Seller
purchased products or services during twelve (12) month period ending July 31,
2014 (collectively, “Major Vendors”). Except as set forth in Schedule 5.14(b) of
the Seller Disclosure Schedule, since July 31, 2013, Seller has not received any
written or, to the Knowledge of Seller, oral notice indicating that such Major
Vendor has ceased, or will (or has threatened to) cancel, terminate, materially
limit or materially and adversely modify its current (or currently proposed)
business relationship with Seller.

 

32

--------------------------------------------------------------------------------

(c) Schedule 5.14(c) sets forth Seller’s standard warranty policy as of the date
hereof. Products manufactured, designed, licensed, leased or sold by Seller
(A) were free from material defects in construction and design and (B) satisfy
any and all Contract or other specifications related thereto to the extent
stated in writing in such Contracts or specifications, in each case, in all
material respects. No assertion of material product liability is pending or, to
the Knowledge of the Seller, threatened in writing by any Person, against Seller
relating to any Product. There has not been, nor is there under consideration by
Seller, any Product recall or post-sale warning conducted by or on behalf of
Seller concerning any Product.

Section 5.15 Labor and Employment Matters.

(a) No Business Employee is covered by any collective bargaining agreement,
labor contract or other written agreement or arrangement with any labor union,
and no collective bargaining agreement, labor contract or other written
agreement or arrangement with any labor union is being negotiated by Seller or
any of its Affiliates relating to any Business Employee.

(b) To the Knowledge of Seller, no union organizing campaign or activity is in
progress or anticipated with respect to any Business Employee.

(c) As of the date hereof, there are no pending or, to the Knowledge of Seller,
threatened strikes, lockouts, work stoppages or slowdowns involving the Business
Employees, except for any such strikes, lockouts, work stoppages or slowdowns
that would not, individually or in the aggregate, have a Material Adverse
Effect.

(d) As of the date hereof, there is no unfair labor practice proceeding
involving the Business Employees before the National Labor Relations Board
pending or, to the Knowledge of Seller, threatened against Seller or any of its
Affiliates, except for any such proceedings that would not, individually or in
the aggregate, have a Material Adverse Effect.

(e) As of the date hereof, there are no pending or, to the Knowledge of Seller,
threatened lawsuits, administrative charges, government investigations or other
proceedings against Seller involving the Business Employees, except for any such
lawsuits, administrative charges, government investigations or other proceedings
that would not, individually or in the aggregate, have a Material Adverse
Effect.

(f) Each Business Employee has completed and Seller has retained an Immigration
and Naturalization Service Form I-9 in accordance with applicable Law with
respect to each Business Employee for whom a Form I-9 is required under
applicable Law. During the last five years, for each Business Employee from whom
Seller has received written notification from a Governmental Authority
identifying an issue, potential issue, or discrepancy with regard to the
Business Employee’s social security number (or purported social security number)
or authorization to work, such Business Employee or Seller has resolved in
accordance with applicable Law each discrepancy or non-compliance with
applicable Law with respect to such social security number (or, if applicable,
such purported social security number) or other discrepancy regarding work
authorization, except where the failure to do so, either individually or in the
aggregate, would not be material.

 

33

--------------------------------------------------------------------------------

(g) Seller has taken reasonable steps to ensure that all persons performing
services to Seller or any of its Affiliates who are classified and treated as
independent contractors, contractors or in a similar capacity qualify as
independent contractors and not as employees under applicable Law, and to the
Knowledge of Seller all such persons qualify as independent contractors and not
as employees under applicable Law.

(h) Seller or its Affiliates have paid in full to all Business Employees all
wages, salaries, bonuses, vacation and other paid time off, and commissions due
and payable to such Business Employees and has fully reserved in its books of
account all amounts for wages, salaries, accrued vacation and other paid time
off, bonuses (estimated and prorated for the fiscal year to date), and
commissions due but not yet payable to such Business Employees, except where the
amount not so paid or reserved would not be material.

(i) Seller has previously made available to Purchaser a schedule setting forth
each Business Employee’s: (i) name, (ii) date of hire (and date of seniority, if
different), (iii) principal place of employment, (iv) classification as exempt
or non-exempt, (v) status as full-time, part-time or on-leave as of the Closing
Date, (vi) rate of base compensation as of the Closing Date, and (vii) target
bonus or incentive compensation for Seller’s current fiscal year.

Section 5.16 Brokers. Seller shall be solely responsible for the fees and
expenses of any broker, finder or investment banker entitled to any brokerage,
finder’s or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Seller.

Section 5.17 Disclaimer. Except as set forth in this Article 5, none of Seller,
its Affiliates or any of their respective officers, directors, employees,
agents, advisors or other representatives make, or have made, any other
representation or warranty, express or implied, at law or in equity, in respect
of Seller, its Affiliates, the Business or the Purchased Assets. Any such other
representation or warranty is hereby disclaimed.

ARTICLE 6.

REPRESENTATIONS AND WARRANTIES OF PURCHASER

Except as set forth in the Purchaser Disclosure Schedule (it being understood
and agreed by the Parties that disclosure of any item in any section or
subsection of the Purchaser Disclosure Schedule shall be deemed disclosure with
respect to any other Section or subsection of the Purchaser Disclosure Schedule
to which the relevance of such item is reasonably apparent), Purchaser hereby
represents and warrants to Seller as follows:

Section 6.1 Organization and Authority of Purchaser. Purchaser is a corporation
duly incorporated, validly existing and in good standing under the Laws of the
State of Delaware and has all necessary corporate power and authority to enter
into, execute and deliver this Agreement, the Promissory Note and each other
agreement, instrument or document to be

 

34

--------------------------------------------------------------------------------

executed and delivered by Purchaser pursuant hereto (collectively, the
“Purchaser Related Agreements”), to carry out its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and thereby,
including repayment in full of the Promissory Note in accordance with its terms.
The execution, delivery and performance by Purchaser of this Agreement, the
Promissory Note and the Purchaser Related Agreements and the consummation by
Purchaser of the transactions contemplated hereby and thereby, including
repayment in full of the Promissory Note in accordance with its terms, have been
duly authorized by all requisite corporate or similar action on the part of
Purchaser and no other proceeding on the part of Purchaser is necessary to
authorize this Agreement, the Promissory Note or the Purchaser Related
Agreements or to consummate the transactions contemplated hereby and thereby,
including repayment in full of the Promissory Note in accordance with its terms.
This Agreement has been duly executed and delivered by Purchaser, and
constitutes a valid and binding obligation of Purchaser enforceable against it
in accordance with its terms, except as enforceability may be limited by
Bankruptcy and Equity Principles. Upon its execution and delivery by Purchaser,
the Promissory Note will constitute the valid and binding obligation of
Purchaser, enforceable against Purchaser in accordance with its terms. Upon its
execution and delivery by Purchaser, each Purchaser Related Agreement will
constitute the valid and binding obligation of Purchaser, enforceable against
Purchaser in accordance with its terms, except as enforceability may be limited
by Bankruptcy and Equity Principles.

Section 6.2 No Conflict. Assuming that all Consents and other actions described
in Section 6.3 have been obtained, the execution, delivery and performance by
Purchaser of this Agreement, the Promissory Note and the Purchaser Related
Agreements do not and shall not (a) violate, conflict with or result in the
breach of any provision of the certificate of incorporation or bylaws (or
similar organizational documents), in each case as amended or restated, of
Purchaser, (b) conflict with or violate any Law or Governmental Order applicable
to Purchaser, its assets, properties or businesses or (c) conflict with, result
in any breach of, constitute a default (or event which with the giving of notice
or lapse of time, or both, would become a default) under, require any consent
under, or give to others any rights of termination, amendment, acceleration,
suspension, revocation or cancellation of, any note, bond, mortgage or
indenture, Contract, agreement, lease, sublease, license, permit, franchise or
other instrument or arrangement to which Purchaser is a party or pursuant to
which its property or assets are bound, except, in the case of clauses (b) and
(c), as would not materially and adversely affect the ability of Purchaser to
carry out its obligations under, and to consummate the transactions contemplated
by, this Agreement, the Promissory Note or the Purchaser Related Agreements.

Section 6.3 Governmental Consents and Approvals. The execution, delivery and
performance by Purchaser of this Agreement, the Promissory Note and the
Purchaser Related Agreements do not, and the performance by Purchaser of this
Agreement, the Promissory Note (including its repayment in full in accordance
with its terms) and the Purchaser Related Agreements shall not, require any
Consent of, action by, filing with, or notification to any Governmental
Authority, except where failure to obtain such Consent or to take such action,
make such filing or make such notification, would not prevent or materially
delay the consummation by Purchaser of the transactions contemplated by this
Agreement or the Promissory Note.

 

35

--------------------------------------------------------------------------------

Section 6.4 Litigation. No Action by or against Purchaser is pending or, to the
Knowledge of Purchaser, threatened, challenging the legality, validity or
enforceability of this Agreement or the consummation of the transactions
contemplated hereby.

Section 6.5 Compliance with Laws. To the Knowledge of Purchaser, Purchaser is
not in violation of any Law applicable to Purchaser, except for violations that
would not, individually or in the aggregate, have a material adverse effect on
the ability of Purchaser to perform its obligations under this Agreement or the
Promissory Note and consummate the transactions contemplated hereby or thereby,
including the repayment in full of the Promissory Note in accordance with their
respective terms.

Section 6.6 Sufficiency of Funds. Purchaser has, and will have as of the
Promissory Note Maturity Date, sufficient cash in immediately available funds to
repay the Promissory Note in full in accordance with their respective terms and
pay all costs, fees and expenses to be paid by Purchaser that are necessary to
consummate the transactions contemplated by this Agreement and to perform its
obligations hereunder.

Section 6.7 Solvency. Each of Purchaser and its subsidiaries is, and will be
immediately after the Closing and as of the Promissory Note Maturity Date will
be, Solvent. As used herein, the term “Solvent” means, with respect to an
entity, on a particular date, that on such date (a) the fair market value of the
assets of such entity is greater than the total amount of liabilities (including
contingent liabilities) of such entity, (b) the present fair salable value of
the assets of the entity is greater than the amount that will be required to pay
the probable liabilities of such entity on its debt as they become absolute and
mature, (c) the entity is able to realize upon its assets and pay its debts and
other liabilities (including contingent obligations) as they mature, and (d) the
entity does not have unreasonably small capital. None of Purchaser nor any of
its subsidiaries has taken any action nor have any steps been taken by any
third-party or legal, legislative or administrative proceedings been started or
threatened to (i) wind up, dissolve, make dormant, or eliminate the Company or
any of its subsidiaries or (ii) to withdraw, revoke or cancel any material
approvals to conduct the business of Purchaser or any of its subsidiaries.

Section 6.8 No Bankruptcy Proceedings. No action or steps have been taken and no
legal, legislative or administrative proceedings have been started or
threatened, to place Purchaser, any of its subsidiaries or any of their
respective Affiliates into bankruptcy, liquidation, receivership or subject any
of Purchaser, its subsidiaries or their respective Affiliates to any similar
proceeding.

Section 6.9 Brokers. Purchaser shall be solely responsible for the fees and
expenses of any broker, finder or investment banker entitled to any brokerage,
finder’s or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Purchaser.

Section 6.10 Financial Statements. Purchaser has delivered to Seller (i) audited
consolidated balance sheets, income statements and cash flow statements of the
Business as of and for the fiscal year ended December 31, 2013, including the
schedules and notes thereto and external auditors’ report thereon, and
(ii) unaudited consolidated balance sheets, income statements and cash flow
statements as of and for the six (6) months ended June 30, 2014

 

36

--------------------------------------------------------------------------------

(collectively, the “Purchaser Financial Statements”). The Purchaser Financial
Statements have been prepared in accordance with GAAP and derived from the
books, records and files of Purchaser and fairly present in all material
respects the financial condition and results of operations of Purchaser as of
the respective dates of and for the periods referred to herein (other than, with
respect to the unaudited Purchaser Financial Statements, normal year-end audit
adjustments (which will not be material to Purchaser) and the absence of
footnotes.

Section 6.11 Investigation by Purchaser. Purchaser has conducted its own
independent review and analysis of the Business and the Purchased Assets and
acknowledges that Purchaser has been provided access to the Business and the
Purchased Assets for this purpose. In entering into this Agreement, Purchaser
has relied solely upon its own investigation and analysis, and Purchaser
acknowledges that, except for the representations and warranties of Seller
expressly set forth in Article 5, neither Seller nor any of its directors,
officers, employees, agents or advisors or any other Person makes any
representation or warranty, either express or implied, as to the accuracy or
completeness of any of the information provided or made available to Purchaser
or any of its directors, officers, employees, agents or advisors. Without
limiting the generality of the foregoing, neither Seller nor any of its
directors, officers, employees, agents or advisors or any other Person has made
a representation or warranty to Purchaser with respect to any material,
documents or information relating to the Purchased Assets made available to
Purchaser or its directors, officers, employees, agents or advisors in any “data
room,” confidential memorandum, other offering materials or otherwise, except as
expressly and specifically covered by a representation or warranty set forth in
Article 5.

ARTICLE 7.

ADDITIONAL COVENANTS AND AGREEMENTS

Section 7.1 Conduct of the Business. From the date of this Agreement until the
Closing (or until the earlier termination of this Agreement in accordance with
Section 11.1), except as expressly required by applicable Law, as set forth on
Schedule 7.1 of the Seller Disclosure Schedule, as contemplated by or required
to implement this Agreement or any Ancillary Agreement, or as otherwise waived
or consented to in writing by Purchaser (which consent shall not be unreasonably
withheld, conditioned or delayed), Seller shall:

(a) operate and carry on the Business in the ordinary course of business
consistent with past practice;

(b) use commercially reasonable efforts to preserve intact the goodwill of the
Business and the relationships of Seller with its customers, vendors, suppliers,
Business Employees and others having business relations with the Business;

(c) continue to maintain the Books, Records and Files of Seller and its
Affiliates exclusively or primarily related to the Business on a basis
consistent with past practice; and

(d) continue to make all necessary and material filings and payments with
Governmental Authorities in connection with the Business (including all
Registered IP) in a timely manner, and use commercially reasonable efforts to
maintain in effect all material Permits required for the ongoing operation of
the Business as presently conducted;

 

37

--------------------------------------------------------------------------------

(e) perform all of Seller’s material obligations under the Assigned Contracts in
accordance with the terms thereof;

(f) refrain from making, changing or revoking any Tax election; refrain from
adopting or changing any accounting method with respect to Taxes; refrain from
filing any amended Tax Return; refrain from entering into any closing agreement,
settling or compromising any Tax claim or assessment; and refrain from
consenting to any extension or waiver of the limitation period applicable to any
claim or assessment with respect to Taxes; in each case to the extent taking
such action would adversely affect the Purchased Assets or the Business in a
Post-Closing Tax Period;

(g) pay and discharge all material Liabilities related to the Purchased Assets
as they become due and payable in the ordinary course of business, subject to
the Seller’s ability to pursue in good faith any bona fide disputes;

(h) not sell, lease, license, transfer, abandon, pledge, encumber (other than
Permitted Encumbrances), fail to maintain or otherwise dispose of any Purchased
Assets, other than the sale of Inventory and other dispositions of assets in the
ordinary course of business consistent with past practice;

(i) not (i) exclusively license, assign or transfer any Purchased Business
Intellectual Property or any Purchased Business Technology to any Person
(including any current or former employee or consultant of Seller or any
contractor or commercial partner of Seller); and (ii) dispose of, abandon, or
permit to lapse any rights in or to any Purchased Business Intellectual Property
or any Purchased Business Technology;

(j) not grant any allowances or discounts on Products outside the ordinary
course of business or sell Inventory in excess of consumption consistent with
past practices in the ordinary course of business;

(k) not manufacture, or enter into any purchase commitments to purchase,
Inventory in amounts outside the ordinary course of business;

(l) use commercially reasonable efforts not fail to keep current and in full
force and effect or renew any of the material Permits related to the Business;

(m) not amend, modify, cancel or terminate any Assigned Contract (other than
terminations or expirations at the end of the stated term after the date
hereof);

(n) not waive, release, assign or modify any material benefit or claim under any
Assigned Contract;

(o) not grant any Business Employee any increase in compensation or in severance
or termination pay, grant any severance or termination pay, or enter into any
new employment, deferred compensation or similar agreement with any such
employee (except for

 

38

--------------------------------------------------------------------------------

any retention bonus plan which may be mutually agreed between Seller and
Purchaser), or terminate the employment of any such employee without cause,
except in the ordinary course of business consistent with past practice;

(p) comply in all material respects with all Laws applicable to the Business
and, promptly following receipt thereof, give to the Purchaser copies of any
notice received from any Governmental Authority or other Person alleging any
violation of any such Laws; and

(q) not take any material actions that could reasonably be expected to delay the
Closing;

provided, however, except as expressly provided in this Section 7.1, nothing in
this Section 7.1 shall prohibit Seller or its Affiliates from conducting their
businesses, including the Business, in their reasonable discretion provided it
shall comply with the terms of the Agreement, including this Section 7.1.
Nothing contained herein shall give Purchaser, directly or indirectly, the right
to control or direct the operations of Seller prior to Closing.

Section 7.2 Access to Information; Other Operational Covenants; Confidentiality.

(a) From the date hereof until the Closing, upon reasonable notice, Seller
shall: (i) afford Purchaser and its authorized Representatives reasonable access
to the properties and Books, Records and Files of the Business, (ii) afford
Purchaser and its authorized Representatives reasonable access to Seller’s
officers and the Business Employees, including to interview such Business
Employees, and (iii) furnish to the officers, directors, employees, and
authorized Representatives of Purchaser such additional financial and operating
data and other information regarding the Business (or copies thereof), including
Seller’s compliance with the covenants contemplated by this Agreement, as
Purchaser may from time to time reasonably request; provided, however, that any
such access, interviews or furnishing of information shall be scheduled and
coordinated through Mark Weinswig at Seller and shall be conducted at
Purchaser’s expense, during normal business hours, under the reasonable
supervision of Seller’s personnel and in such a manner as not to unreasonably
interfere with the normal operations of the Business or any of Seller’s Other
Businesses. Notwithstanding anything to the contrary in this Agreement, Seller
shall not be required to disclose any information to Purchaser if such
disclosure would be reasonably likely to (x) cause significant competitive harm
to the Business if the transactions contemplated hereby are not consummated,
(y) jeopardize any attorney-client or other legal privilege or (z) contravene
any applicable Laws, fiduciary duty or binding agreement entered into prior to
the date hereof, and in no event shall Seller or any of its respective
Affiliates be required to provide access to or copies of any income Tax Returns
of Seller or any such Affiliate. Purchaser acknowledges and agrees that any
Evaluation Material (as defined in the Confidentiality Agreement) provided to
Purchaser pursuant to this Section 7.2 or otherwise by or on behalf of Seller
shall be subject to the terms and conditions of the Confidentiality Agreement.

(b) Seller acknowledges and understands that Purchaser will be required to
provide pro forma and historical audited financial statements for the Business
as part of its periodic public reporting obligations in the period following
Closing. Seller agrees to reasonably cooperate with Purchaser (at no incremental
cost to Purchaser other than as set forth in this Section 7.2(b)) in the
preparation of such financial statements set forth on Schedule 7.2(b) in

 

39

--------------------------------------------------------------------------------

accordance with the timeframes set forth therein. In connection with such
cooperation, Seller agrees to direct its independent accountants to perform such
procedures and audit such financial statements as may be reasonably requested by
Purchaser. In such event Purchaser shall be responsible for and directly pay the
incremental fees and expenses charged or incurred by such independent
accountants in connection with such work, including any pre-payments which may
be required by such independent accountants, in each case promptly as may be
required by such independent accountants. None of Seller or any Seller
Indemnified Party or any of their respective Representatives shall have, and
Purchaser agrees that none of such Persons shall have, any liability to
Purchaser or any Purchaser Indemnified Party or any other Person (including any
Person asserting claims on behalf of or in right of Purchaser) in connection
with or as a result of any failure by Purchaser to meet its public reporting
obligations. If Seller delivers to Purchaser all of the financial statements and
other documents set forth on Schedule 7.2(b) on or prior to their respective due
date as set forth on such Schedule, Purchaser shall pay to Seller by wire
transfer in immediately available funds to a bank account designated by Seller
in writing an amount in cash equal to the amounts set forth on such Schedule
(depending on the actual dates of delivery), if any, not later than two
(2) Business Days after Seller timely delivers the last of such required
financial statements to Purchaser.

(c) In order to facilitate the Closing, Seller shall prepare and deliver, at
least three (3) Business Days prior to the scheduled Closing Date, to Purchaser
a statement setting forth Seller’s good faith estimate of the Inventory Value
and the Net Accounts Receivable as of immediately prior to the Closing. Seller
shall also prepare and deliver to Purchaser, at the request of Purchaser, an
unaudited balance sheet (prepared on a basis consistent with the Seller balance
sheets referenced in Section 5.4(a)) reflecting Seller’s good faith estimate of
the financial condition of the Business as of the scheduled Closing Date. Such
request shall be delivered by Purchaser to Seller at least ten (10) Business
Days prior to the scheduled Closing Date and Seller shall deliver such balance
sheet in the prescribed form to Purchaser no later than the third (3rd) Business
Day prior to the scheduled Closing Date.

(d) As soon as practicable following the execution of this Agreement, and from
time to time thereafter as may be reasonably requested by Purchaser, Seller
shall in good faith deliver an updated version of its sales forecast for the
Business for the calendar quarters ending December 31, 2014, March 31, 2015 and
June 30, 2015 (the “Sales Forecast”). Seller further agrees that the sales price
for the Products in such shipments shall conform in all material respects to the
prices contemplated by such revised forecasts. If the revenues generated by the
shipment of Products by Seller during the period beginning on the date hereof
and ending on Closing exceeds the Shipment Forecast for such period (using a
straight line method) (such revenues in excess of the Shipment Forecast, “Excess
Revenues”, the Preliminary Purchase Price shall be decreased by an amount equal
to fifteen percent (15%) of such Excess Revenues (the “Revenue Purchase Price
Adjustment Amount”) in accordance with Section 3.4.

(e) As soon as practicable following the execution of this Agreement, and from
time to time thereafter as may be reasonably requested by Purchaser, Seller
shall in good faith deliver a revised summary of its purchase commitments and
purchase orders with its subcontractor manufacturers. Prior to Closing, Seller
shall write down the carrying value on its financial statements for Inventory
that is not ITLA/micro-ITLA Inventory to zero to the extent permitted by GAAP.

 

40

--------------------------------------------------------------------------------

(f) Prior to Closing, Purchaser shall have either (i) obtained the Comerica
Consent, and such Comerica Consent shall be in full force and effect at Closing,
or (ii) taken such actions as may be necessary such that the Comerica Consent is
not required to consummate the transactions contemplated by this Agreement
(including the issuance and repayment of the Promissory Note in accordance with
its terms and the arrangements contemplated by the Security Agreement and
Subordination Agreement).

(g) The terms of the Confidentiality Agreement, dated as of April 7, 2010,
between Purchaser and Seller (as amended, the “Confidentiality Agreement”),
shall continue in full force and effect until the Closing, at which time such
Confidentiality Agreement and the obligations of Purchaser under this
Section 7.2(g) shall terminate. From and after the Closing, except as would have
been permitted under the terms of the Confidentiality Agreement, (i) Purchaser
shall, and shall cause its officers, directors, employees, authorized
representatives and Affiliates to, treat and hold as confidential, and not
disclose to any Person the Confidential Information relating to Seller and the
Excluded Assets and Seller’s Other Businesses and (ii) Seller shall, and shall
cause its officers, directors, employees, authorized representatives and
Affiliates to, treat and hold as confidential, and not disclose to any Person
the Confidential Information relating to Purchaser, the Business and the
Purchased Assets. If this Agreement is, for any reason, terminated prior to the
Closing, the Confidentiality Agreement shall continue in full force and effect.

Section 7.3 Regulatory and Other Authorizations; Notices and Consents.

(a) Each of Seller and Purchaser shall use its reasonable best efforts to obtain
promptly all Consents of all Governmental Authorities that may be or become
necessary for the performance of its and the other Party’s obligations pursuant
to, and the consummation of the transactions contemplated by, this Agreement and
the Ancillary Agreements. Seller and Purchaser shall cooperate with one another
in promptly seeking to obtain all such Consents; provided, however, that Seller
shall not be required to pay any fees or other payments to any such Governmental
Authorities in order to obtain any such Consent. If any objections are asserted
with respect to the transactions contemplated hereby under any Competition Law
or if any suit or proceeding is instituted or threatened by any Governmental
Authority or any private party challenging any of the transactions contemplated
hereby as violative of any Competition Law, each of Purchaser and Seller shall
use its reasonable best efforts to promptly resolve such objections.

(b) Each Party shall promptly notify the other Party of any communication it or
any of its Affiliates receives from any Governmental Authority relating to the
matters that are the subject of this Agreement and permit the other Party to
review in advance any proposed communication by such Party to any Governmental
Authority relating to the matters that are the subject of this Agreement.
Neither Party shall agree to participate in any meeting with any Governmental
Authority in respect of any filings, investigation or other inquiry related to
the transactions contemplated by this Agreement unless it consults with the
other Party in advance and, to the extent permitted by such Governmental
Authority, gives the other Party the opportunity to attend and participate at
such meeting. Subject to the Confidentiality Agreement, the Parties shall
coordinate and cooperate fully with each other in exchanging such information
and providing such assistance as the other Party may reasonably request in
connection with the

 

41

--------------------------------------------------------------------------------

foregoing. Subject to the Confidentiality Agreement, the Parties shall provide
each other with copies of all correspondence, filings or communications between
them or any of their representatives, on the one hand, and any Governmental
Authority or members of its staff, on the other hand, with respect to this
Agreement and the transactions contemplated by this Agreement.

Section 7.4 Notifications.

(a) Prior to the Closing Date, (a) Seller shall promptly notify Purchaser in
writing of (i) the discovery by Seller of any breach by Seller of any of its
representations and warranties contained herein; or (ii) any event,
circumstance, change or development that, alone or in the aggregate, would have
a Material Adverse Effect on the Business, and (b) Purchaser shall promptly
notify Seller in writing of any event, circumstance, change or development that
would have a material adverse effect on the ability of Purchaser to perform its
obligations under this Agreement and the Ancillary Agreements and consummate the
transactions contemplated hereby and thereby; provided that no such notification
shall affect the representations, warranties or covenants of the Parties or the
conditions to the obligations of the Parties hereunder. Each of Seller and
Purchaser shall give prompt notice to the other Party of any notice or other
communication from any third party alleging that the Consent of such third party
is or may be required in connection with the transactions contemplated by this
Agreement.

(b) No such notification or disclosure shall have the effect of altering or
modifying (i) any of the conditions to Closing set forth in Article 10, (ii) the
termination rights of any Party set forth in Article 11, or (iii) the
indemnification rights and obligations of any Party set forth in Article 12.

Section 7.5 Release of Indemnity Obligations.

(a) Seller and Purchaser shall cooperate with each other with a view to entering
into arrangements effective as of the Closing whereby Purchaser would be
substituted for Seller in any guarantees, letters of comfort, indemnities or
similar arrangements entered into by Seller in respect of the Business (but only
to the extent such guarantees, letters of comfort, indemnities or arrangements
constitute Assumed Liabilities). If Purchaser cannot enter into such
arrangements, Seller shall not terminate such guaranty arrangements without
Purchaser’s consent; provided, however, that Purchaser shall enter into a
separate guaranty with Seller to guarantee the performance of the obligations of
the relevant Person pursuant to the Contract underlying such guaranty
arrangements.

(b) After the Closing, each of Seller and Purchaser, at the request of the other
Party, shall use, and shall cause their respective Affiliates to use,
commercially reasonable efforts to obtain any Consent, substitution or amendment
required to novate or assign all Assumed Liabilities to Purchaser and any
Excluded Liabilities to Seller, and obtain in writing the unconditional release
of Seller and its Affiliates with respect to the Assumed Liabilities and the
unconditional release of Purchaser with respect to the Excluded Liabilities.

Section 7.6 Intellectual Property Matters.

(a) Except as expressly set forth in this Section 7.6(a), no interest in or
right to use the name “EMCORE” or any derivation thereof or any other Trademarks
of Seller other than

 

42

--------------------------------------------------------------------------------

the Trademarks listed on Schedule 2.1(b) of the Seller Disclosure Schedule (the
“Retained Marks”), is being transferred or licensed to Purchaser pursuant to the
transactions contemplated by this Agreement. Seller hereby grants to Purchaser a
limited, worldwide, non-exclusive, non-transferable, non-sublicensable (except
to Purchaser’s distributors, resellers and sales agents), royalty-free license
to use any materials bearing Retained Marks and to sell, transfer and ship any
products or related materials bearing Retained Marks only to the extent:
(i) requested to do so by Seller, (ii) displayed on the hardcopy
(non-electronic) form or the softcopy electronic form of such materials
delivered to Purchaser at the Closing, or (iii) required under Assigned
Contracts with customers. The foregoing license shall expire upon the earliest
occurrence of (A) Purchaser having qualified the use of its Trademarks with each
customer, (B) the end of life of the applicable Product, and (C) nine (9) months
after the Closing Date. The foregoing license is subject to Seller’s standard
written Trademark usage guidelines, a copy of which has been provided to
Purchaser. Seller may terminate the foregoing license upon Purchaser’s material
non-compliance with the Trademark usage guidelines and failure to cure such
non-compliance within ten (10) Business Days or such longer period as may be
agreed upon by the Parties. Upon the expiration or termination of the foregoing
license, all materials bearing any Retained Mark in the possession of Purchaser,
any of any of its subsidiaries or any of their respective agents shall be
promptly destroyed.

(b) Purchaser acknowledges that certain of the Patents comprising Registered IP
identified on Schedule 5.13(a) of the Seller Disclosure Schedule that are marked
with an asterisk (*) (the “Acquired Patents”) are subject to the terms of the
Intellectual Property Agreement, dated as of February 22, 2008, by and between
Seller and Intel Corporation (the “Intel Agreement”). Purchaser acknowledges
that the Acquired Patents are encumbered by the license granted to Intel under
Section 3.3(b) of the Intel Agreement and understands that it will be acquiring
the Acquired Patents subject to such license.

Section 7.7 Further Action.

(a) At any time and from time to time after the date of this Agreement and
continuing after the Closing Date, each of Seller and Purchaser shall use its
commercially reasonable efforts to take, or cause to be taken, all appropriate
action, to do or cause to be done all things necessary, proper or advisable
under applicable Law, and to execute and deliver such documents and other papers
and any other agreements, as may be necessary to carry out the provisions of
this Agreement and the Ancillary Agreements and consummate and make effective
the sale, transfer and conveyance of the Purchased Assets and the assignment of
the Assumed Liabilities or the exclusion of the Excluded Liabilities pursuant to
this Agreement and to consummate and make effective the other transactions
contemplated by this Agreement and the Ancillary Agreements, including, using
commercially reasonable efforts to ensure satisfaction of the conditions
precedent to each Party’s obligations hereunder and thereunder and including, to
the extent practicable, to obtain all required Consents from third parties.
Purchaser shall be responsible for the payment of any amounts necessary to
obtain any required Consents from third parties. Notwithstanding the foregoing,
Seller shall not be required to enter into any contracts, agreements or
understandings with any third party (other than any Consents that it is required
to obtain to satisfy Section 10.1(c), 10.3(c) and 10.3(e) (as it relates to
Section 4.2(h)) hereof), the terms of which are not satisfactory to Seller in
its reasonable discretion.

 

43

--------------------------------------------------------------------------------

(b) Notwithstanding anything in this Agreement to the contrary, this Agreement
shall not constitute an agreement to assign, license, sublicense or otherwise
provide rights with respect to any Purchased Asset or any right thereunder if an
attempted assignment, license or other provision, without the Consent of, or
other action by, any third party, would constitute a breach or other
contravention of a Contract with such third party or would in any way adversely
affect the rights of Purchaser or Seller or any of their respective Affiliates
relating to such Purchased Assets. To the extent that any of the transfers,
distributions, licenses, deliveries and the assumptions required to be made in
connection with the transactions contemplated by this Agreement shall not have
been so consummated at Closing, the Parties shall cooperate and use their
commercially reasonable efforts to effect such consummation as promptly
thereafter as reasonably practicable, including executing and delivering such
further instruments of transfer and taking such other actions as the Parties may
reasonably request in order to effectuate the purposes of this Agreement or to
more effectively transfer to Purchaser or confirm Purchaser’s right, title to or
interest in, all of the Purchased Assets, to put Purchaser in actual possession
and operating control thereof and to permit Purchaser to exercise all rights
with respect thereto (including rights under Contracts and other arrangements as
to which the Consent of any third party to the transfer thereof shall not have
previously been obtained). In the event and to the extent that Seller and
Purchaser are unable to obtain any required Consents, Seller shall (i) at the
direction and expense of Purchaser, pay, perform and discharge fully all of its
obligations thereunder from and after the Closing and prior to assignment to
Purchaser and (ii) without further consideration therefor, pay, assign and remit
to Purchaser promptly all monies, rights and other consideration received in
respect of such agreements. Seller shall exercise or exploit its rights and
options under all such agreements, leases, licenses and other rights and
commitments when and only as reasonably directed by Purchaser. If and when any
such Consent shall be obtained (the cost of obtaining any such Consent, if any,
shall be borne by Purchaser) or such agreement, lease, license or other right
shall otherwise become assignable or sublicensable, Seller shall promptly assign
or sublicense its agreed-to rights and obligations thereunder to Purchaser
without payment of further consideration and Purchaser shall, without the
payment of any further consideration therefor, assume such rights and
obligations.

(c) If certain assets, rights or properties which properly constitute Purchased
Assets were not transferred to Purchaser at Closing, Seller shall promptly take
all steps reasonably necessary to transfer and deliver any and all of such
assets to Purchaser without the payment by Purchaser of any further
consideration therefor. If certain Excluded Assets were transferred to Purchaser
at Closing, then Purchaser shall promptly take all steps reasonably necessary to
transfer and deliver any and all of such Excluded Assets to Seller without the
payment by Seller of any further consideration therefor.

(d) In the event that any of the parties to the Comerica Facility shall propose
to amend or otherwise modify such credit arrangement and Seller would otherwise
have a consent right to such amendment or modification pursuant to the terms of
the Subordination Agreement, Seller agrees that it shall not unreasonably
withhold, delay or condition such consent.

Section 7.8 Intercompany Arrangements. No later than immediately prior to the
Closing, Seller shall, and shall cause its Affiliates to, terminate all
agreements or arrangements,

 

44

--------------------------------------------------------------------------------

written or unwritten, of any kind (other than any Ancillary Agreements,
including the Transition Services Agreement), between Seller or any of its
Affiliates, on the one hand, and the Business, on the other hand.

Section 7.9 Books, Records and Files.

(a) Seller shall deliver or otherwise provide to Purchaser (i) on the Closing
Date, all Books, Records and Files included in the Purchased Assets kept in
electronic form, (ii) as soon as practicable following the completion of each of
(x), (y) and (z) below, all Books, Records and Files included in the Purchased
Assets kept in physical form and which are used by Seller (and/or its auditors)
to (x) complete its audit for the fiscal year ended September 30, 2015, (y) to
prepare the Definitive Proxy Statement and (z) complete the financial statements
referenced in Section 7.2(b), and (iii) as soon as practicable following
Closing, all other Books, Records and Files included in the Purchased Assets
kept in physical form. Following Closing, Seller agrees to give Purchaser and
its representatives reasonable cooperation and access (including copies), as
needed, during normal business hours and upon reasonable notice, with respect to
the Books, Records and Files included in the Purchased Assets which are to be
delivered following the Closing Date pursuant to this Section 7.9(a), in each
case as may be necessary for general business purposes, including the defense of
litigation, the preparation of Tax returns and financial statements and the
management and handling of Tax audits; provided that such cooperation and access
does not unreasonably disrupt the normal operations of Seller or its Affiliates.

(b) Purchaser and Seller agree that Seller may maintain a copy of any Books,
Records and Files. Purchaser agrees to retain and maintain the Books, Records
and Files included in the Purchased Assets in accordance with its document
retention policies.

(c) During the period Purchaser retains the Books, Records and Files, Purchaser
agrees to give Seller and its representatives reasonable cooperation and access
(including copies), as needed, during normal business hours and upon reasonable
notice, with respect to the Books, Records and Files included in the Purchased
Assets, as may be necessary for general business purposes, including the defense
of litigation, the preparation of Tax returns and financial statements and the
management and handling of Tax audits; provided that such cooperation and access
does not unreasonably disrupt the normal operations of Purchaser or its
Affiliates.

(d) Seller agrees to give Purchaser and its representatives reasonable
cooperation and access, as needed, during normal business hours and upon
reasonable notice, with respect to the Books, Records and Files relating to the
Business and not included in the Purchased Assets, in each case as may be
necessary for general business purposes, including the defense of litigation,
the preparation of Tax returns and financial statements and the management and
handling of Tax audits; provided that such cooperation and access does not
unreasonably disrupt the normal operations of Seller or its Affiliates.

(e) Notwithstanding anything to the contrary contained in this Agreement,
neither party nor any of its respective Affiliates shall be required to provide
access to or copies of any income Tax Returns of the other party or any such
Affiliate.

 

45

--------------------------------------------------------------------------------

Section 7.10 Restrictive Covenants.

(a) During the Restricted Period, Seller shall not, and shall cause its
Affiliates not to, directly or indirectly, either alone or in conjunction with
any other Person:

(i) engage in or assist others in engaging in any Competitive Business anywhere
in the Restricted Geography, whether as an employee, consultant, adviser, board
member, owner, lender, guarantor (or other accommodation party) or investor;

(ii) sell, market, provide, attempt to sell, market or provide, or assist any
person or entity in the sale or provision of, any Competitive Product to any
Restricted Customers; or

(iii) intentionally interfere in any material respect with the relationship
between Purchaser and any of its customers, suppliers, distributors or other
business relations relating in any way to the Business or a Competitive Product;

provided, however, that it shall not be deemed to be a violation of this
Section 7.10(a) for Seller to, directly or indirectly: (i) invest in or own any
publicly-traded non-convertible debt securities of any Person; (ii) invest in or
own up to three percent (3%) of any class of securities which are publicly
traded or listed on any securities exchange or automated quotation system; or
(iii) own any interests in any mutual or other investment fund registered with
the Securities and Exchange Commission under the Investment Company Act of 1940,
as amended. Purchaser acknowledges that Seller engages in Seller’s Other
Businesses and, notwithstanding anything herein to the contrary, Purchaser
agrees that Seller shall not be in breach of any provision of this
Section 7.10(a) solely as a result of Seller continuing to engage in Seller’s
Other Businesses as conducted as of the Closing Date. Notwithstanding the
foregoing and anything herein to the contrary, this Section 7.10(a) (i) shall
not apply in connection with, and following, a Seller Change of Control and
(ii) in the event of an acquisition of the stock, business or assets of Seller
and/or any of its Affiliates (by asset purchase, stock purchase, merger,
consolidation or otherwise) by any Person who is not a current Affiliate of
Seller, this Section 7.10(a) shall neither prohibit nor apply to the business of
such Person as conducted prior to such acquisition.

(b) Seller acknowledges and agrees that the remedy at law for any breach or
threatened breach of any of the provisions of this Section 7.10 may be
inadequate and, accordingly, Seller covenants and agrees that Purchaser shall,
in addition to any other rights and remedies which Purchaser may have at law, be
entitled to seek equitable relief, including injunctive relief, and to seek the
remedy of specific performance with respect to any breach or threatened breach
of such covenant, as may be available from any court of competent jurisdiction.
In addition, Seller and Purchaser agree that the terms of the covenants in this
Section 7.10 are reasonable and properly required for the protection of
Purchaser and the goodwill and other intangible assets being acquired by
Purchaser pursuant to this Agreement. If, at any time of enforcement of any of
the provisions of this Section 7.10, a court of competent jurisdiction holds
that any particular provision or portion of this Section 7.10 is invalid and
unenforceable, the Parties agree that this Section 7.10 shall be deemed amended
to delete therefrom such provision or portion held to be invalid or
unenforceable, such amendment to apply only with respect to the operation of
this Section 7.10 in the particular jurisdiction in which such adjudication was
made.

 

46

--------------------------------------------------------------------------------

Section 7.11 Exclusivity. From the date of this Agreement until the Closing (or
until the earlier termination of this Agreement in accordance with
Section 11.1), Seller shall not, and shall ensure that no Affiliate of Seller or
any of their respective Representatives shall, directly or indirectly:
(i) discuss, solicit, facilitate or encourage the initiation of any inquiry,
proposal or offer from any Person (other than Purchaser) relating to the
acquisition, directly or indirectly, of the all or any portion of the Business;
(ii) participate in any discussions or negotiations or enter into any agreement
with, or provide any non-public information to, any Person (other than
Purchaser) relating to or in connection with any possible acquisition of the all
or any portion of the Business; or (iii) encourage or accept any proposal or
offer from any Person (other than Purchaser) relating to any possible
acquisition of the all or any portion of the Business. Seller shall promptly
(and in any event within one Business Day of receipt thereof) notify Purchaser
in writing of any bona fide indication of interest by any third party with
respect to any possible acquisition of the all or any portion of the Business
that is received by Seller or any Affiliate of Seller. Seller shall, and shall
ensure that each Affiliate of Seller and any of their respective
Representatives, immediately cease any discussions with any Person regarding any
possible acquisition whether directly or indirectly, of the all or any portion
of the Business, and Seller shall seek the return or destruction of all
information of the Business shared with any Person in connection with a possible
acquisition of the all or any portion of the Business.

ARTICLE 8.

EMPLOYEE MATTERS

Section 8.1 Transferred Employees.

(a) Definitions.

(i) “Business Employee” means any employee of the Business employed by Seller or
one of its Affiliates who (except as otherwise agreed to in writing by Purchaser
and Seller) primarily performs his or her services for, or with respect to, the
Business as of the date hereof, including in all cases any such employee who is
inactive because of leave of absence, vacation, holiday or short- or long-term
disability.

(ii) “Transferred Employee” means each Business Employee who accepts an offer of
employment with Purchaser or one of its Affiliates effective as of the opening
of business on the Closing Date, but subject to the Closing having occurred, and
who is actually employed by Purchaser or one of its Affiliates immediately
following the Closing.

(b) Transfer of Employment. In the period following the date of this Agreement
and prior to Closing, Purchaser shall be given reasonable access to the Business
Employees to make post-Closing hiring decisions. Any employment offers to be
made to any Business Employees shall be made effective as of the Closing. It is
the intent of Purchaser that all such offers of employment shall be made on
terms consistent with the employment packages offered to similarly situated
Purchaser employees in similar roles.

 

47

--------------------------------------------------------------------------------

Section 8.2 Non-U.S. Business Employees. Notwithstanding the other provisions of
this Article 8, in the case of any Business Employees whose principal place of
employment is outside the United States, Purchaser shall cause the offer to be
made pursuant to Section 8.1(b) and the terms and conditions of the employment
following Closing of those who become Transferred Employees to comply with
obligations or standards arising under applicable Laws or Contracts governing
the terms and conditions of their employment or severance of employment.

Section 8.3 Employee Liabilities. Seller shall be responsible for all
Liabilities relating to or arising out of the employment, engagement,
remuneration, or cessation of employment with Seller or any of its Affiliates of
(i) any Transferred Employee with respect to all periods prior to the Closing
Date, whether the related payment obligation occurs before or after the Closing
and (ii) any employee of Seller or any of its Affiliates other than the
Transferred Employees with respect to all periods prior to or after the Closing.
Seller shall pay each Transferred Employee all earned or accrued wages, salary,
commission, bonus, vacation pay, paid time off, and other employee compensation
and benefits related to employment with Seller or any of its Affiliates for all
periods through the date of termination of each such Transferred Employee’s
employment with Seller or any of its Affiliates in a timely fashion and not
later than the date such payment is required by Law or the provisions of any
benefit plan or contract under which such compensation is or becomes duly
payable. Seller shall be responsible for all Liabilities relating to or arising
from any Compensation and Benefit Plan sponsored, maintained, contributed to, or
required to be contributed to, by Seller or any Seller ERISA Affiliate.

Section 8.4 Non-Solicitation. Without the prior written consent of Purchaser,
neither Seller nor any of its Affiliates shall, for a period of two (2) years
following the Closing, solicit to employ any person who is a Transferred
Employee and who is employed by the Business (whether as an employee or
independent contractor); provided that Seller and its Affiliates (i) may solicit
and hire any such Transferred Employee whose employment or other relationship
with Purchaser or any of its Affiliates is terminated by Purchaser or any of its
Affiliates or (ii) hire such Transferred Employee who responds to a general
advertisement not targeted at employees or independent contractors of Purchaser
or any of its Affiliates without any solicitation in violation of this
Section 8.4. Without the prior written consent of Seller, neither Purchaser nor
any of its Affiliates shall, for a period of two (2) years following the
Closing, solicit to employ (i) any person who was employed by Seller or any of
its Affiliates (whether as an employee or independent contractor) in the
Business but who is not a Transferred Employee and who is employed by Seller or
any of its Affiliates, (ii) any person who was employed by Seller or any of its
Affiliates (whether as an employee or independent contractor) in the Business
but who is not a Transferred Employee and who resigned or retired from Seller or
any of its Affiliates within six (6) months prior to the Closing, (iii) any
person who is employed by Seller or any of its Affiliates in Seller’s Other
Businesses or (iv) any other employee of Seller or any Affiliate of Seller with
whom Purchaser came into contact in connection with the negotiation of this
Agreement; provided that Purchaser and its Affiliates (i) may solicit and hire
such person whose employment or other relationship with Seller or any of its
Affiliates is terminated by Seller or any of its Affiliates or (ii) hire such
person who responds to a general advertisement not targeted at employees or
independent contractors of Seller or any of its Affiliates without any
solicitation in violation of this Section 8.4.

 

48

--------------------------------------------------------------------------------

Section 8.5 No Third Party Beneficiaries. Without limiting the generality of
Section 13.5, the provisions of this Article 8 are solely for the benefit of the
Parties, and no current or former employee of Seller or its Affiliates shall be
regarded for any purpose as a third-party beneficiary of this Agreement. Nothing
in this Agreement shall be construed as an amendment to any Employee Benefit
Plan or other employee benefit plan for any purpose, or to obligate Purchaser to
employ any Business Employee for any period of time after the Closing.

ARTICLE 9.

TAXES

Section 9.1 Periodic Taxes. All personal property Taxes, real property Taxes and
similar ad valorem obligations levied with respect to the Purchased Assets or
the Business for a Straddle Period (“Periodic Taxes”) shall be apportioned
between Seller and Purchaser as of the Closing Date based on the number of days
of such Straddle Period prior to the Closing Date (with respect to any such
taxable period, the “Pre-Closing Periodic Tax Period”), and the number of days
of such Straddle Period beginning with and including the Closing Date (with
respect to any such taxable period, the “Post-Closing Periodic Tax Period”),
respectively. Seller shall be liable for the proportionate amount of such
Periodic Taxes that is attributable to the Pre-Closing Periodic Tax Period to
the extent not reserved or reflected on the most recent balance sheet included
in the Financial Statements, and Purchaser shall be liable for the proportionate
amount of such Periodic Taxes that is attributable to the Post-Closing Periodic
Tax Period. Purchaser shall be responsible for preparing and filing all Tax
Returns for Periodic Taxes required to be filed after the Closing; provided,
however, such Tax Returns shall be subject to the approval of Seller. Seller and
Purchaser agree to consult and resolve in good faith any issue arising as a
result of the review of such Periodic Tax Returns and to mutually consent to the
filing of such returns; provided, however, if Purchaser and Seller are unable to
resolve any disputed item then such disputed item shall be resolved by the
Accounting Firm. The fees and expenses of such Accounting Firm shall be borne
equally by Seller, on the one hand, and Purchaser, on the other hand. Seller
shall remit its share of such Periodic Taxes to Purchaser no earlier than ten
(10) days before the due date for such Taxes.

Section 9.2 Refunds. Seller shall be entitled to retain or, to the extent
actually received by or otherwise available to Purchaser or its Affiliates,
receive immediate payment from Purchaser or any of its Affiliates of, any refund
or credit with respect to Taxes (including without limitation refunds arising by
reason of amended Tax Returns filed after the Closing or otherwise) with respect
to any Pre-Closing Tax Period relating to the Purchased Assets or the Business.
Purchaser shall be entitled to retain or, to the extent actually received by
Seller or its Affiliates, receive immediate payment from Seller or any of its
Affiliates of, any refund or credit with respect to Taxes (including without
limitation refunds arising by reason of amended Tax Returns filed after the
Closing or otherwise) with respect to any Post-Closing Tax Period relating to
the Purchased Assets or the Business.

Section 9.3 Resolution of Tax Controversies. If a claim shall be made by any
Governmental Authority or taxing authority that might result in an indemnity
payment with respect to Taxes to Purchaser or any of its Affiliates pursuant to
Section 12.3, Purchaser shall promptly notify Seller of such claim. In the event
that a Governmental Authority or a taxing

 

49

--------------------------------------------------------------------------------

authority determines a deficiency in any Tax, the Party ultimately responsible
for such Tax under this Agreement, whether by indemnity or otherwise, shall have
authority to determine whether to dispute such deficiency determination and to
control the prosecution or settlement of such dispute; provided that with
respect to Straddle Periods, Purchaser shall control the dispute and Seller
shall have the right to participate in such dispute; provided further, however,
that Purchaser shall not settle or compromise any such dispute without written
consent from Seller. The Party that is not ultimately responsible for such Tax
under this Agreement shall have the right to participate at its own expense in
the conduct of any such proceeding involving a Tax claim that would adversely
affect such Party.

Section 9.4 Tax Cooperation. Seller and Purchaser agree to furnish or cause to
be furnished to the other Party, upon request, as promptly as practical, such
information and records and assistance (including, but not limited to, making
such of their respective officers, directors, employees and agents available as
may reasonably be requested by such other Party) in connection with the
preparation of any Tax Return, audit or other proceeding that relates to the
Purchased Assets or the Business, provided, that in no event shall any Party or
any of its respective Affiliates be required to provide access to or copies of
any income Tax Returns of such Party or any such Affiliate. Any expense incurred
in providing such information or assistance shall be borne by the Party
requesting it.

Section 9.5 Conveyance Taxes. Notwithstanding any other provision of this
Agreement to the contrary, all transfer, documentary, recording, sales, use,
registration, stamp and other similar Taxes (including all applicable real
estate transfer Taxes, but excluding any Taxes based on or attributable to
income or capital gains) together with any conveyance fees, notarial and
registry fees and recording costs (including any penalties and interest thereon)
imposed by any taxing authority or other Governmental Authority in connection
with the transfer of the Purchased Assets or the Business to Purchaser or its
Affiliates by this Agreement (“Conveyance Taxes”) shall be borne as follows:
(i) Purchaser shall bear the lesser of (x) 50% of the Conveyance Taxes and
(y) $150,000, and (ii) Seller shall bear the remainder of the Conveyance Taxes.
Purchaser and Seller shall jointly prepare, execute and file all necessary Tax
Returns and other documentation with respect to all such Conveyance Taxes, fees,
costs, charges and expenses. Purchaser agrees to reasonably cooperate with
Seller in its efforts to structure the Closing and the related transfer and
assignment of Purchased Assets in a manner to reduce such Conveyance Taxes to
the extent permitted by applicable Law.

ARTICLE 10.

CONDITIONS

Section 10.1 Joint Conditions to Obligations. The obligations of each Party to
consummate the transactions contemplated by this Agreement shall be subject to
satisfaction (or, to the extent permitted by applicable Law, waiver) at or prior
to the Closing of the following conditions:

(a) No Order. No Governmental Authority in the United States shall have enacted,
issued, promulgated, enforced or entered any Law or Governmental Order (whether
temporary, preliminary or permanent) that has the effect of making the
transactions contemplated by this Agreement illegal or otherwise prohibiting the
consummation of such transactions contemplated by this Agreement.

 

50

--------------------------------------------------------------------------------

(b) No Action. No Action shall have been filed in any court of competent
jurisdiction seeking to restrain, materially delay or prohibit the consummation
of any of the transactions contemplated by this Agreement nor shall any such
Action have been overtly threatened by any Governmental Authority.

(c) Wells Fargo Consent. Seller shall have received (i) consent from Wells Fargo
Bank, National Association (“Wells Fargo”) pursuant to the Credit and Security
Agreement, dated November 11, 2010, as amended, by and between Seller and Wells
Fargo authorizing Seller to consummate the transactions contemplated by this
Agreement and (ii) release of the security interest in the Intellectual Property
under the Patent and Trademark Security Agreement, dated November 11, 2010, by
and between Seller, Emcore Solar Power, Inc. and Wells Fargo, and such consent
and release shall be in form reasonably satisfactory to Seller and Purchaser.

Section 10.2 Conditions to Obligations of Seller. The obligations of Seller to
consummate the transactions contemplated by this Agreement shall be subject to
satisfaction (or, to the extent permitted by applicable Law, waiver) at or prior
to the Closing of the following conditions:

(a) Representations, Warranties and Covenants.

(i) (A) Each of the representations and warranties of Purchaser contained in
Sections 6.1 and 6.7 shall be true and correct in all respects as of the date of
this Agreement and at and as of the Closing with the same force and effect as if
made at and as of the Closing (other than such representations and warranties as
are made as of another date, which shall be true and correct as of such date)
and (B) all other representations and warranties of Purchaser contained in this
Agreement shall be true and correct as of the date of this Agreement and at and
as of the Closing with the same force and effect as if made at and as of the
Closing (other than such representations and warranties as are made as of
another date, which shall be true and correct as of such date), except, in the
case of this clause (B), in either case where any failure of such
representations and warranties to be so true and correct (without giving effect
to any qualification as to “materiality” or “material adverse effect” set forth
therein) would not have, individually or in the aggregate, a material adverse
effect on the ability of Purchaser to perform its obligations under this
Agreement or prevent or materially delay the consummation of the transactions
contemplated hereby in accordance with the terms hereof; and

(ii) Each of the covenants and agreements contained in this Agreement to be
complied with by Purchaser on or before the Closing shall have been complied
with in all material respects;

(b) Promissory Note. Seller shall have received the Promissory Note duly
executed by Purchaser.

(c) Certificate. Seller shall have received a certificate, dated as of the
Closing Date, signed on behalf of Purchaser by an officer of Purchaser to the
effect that, to each such officer’s knowledge, the conditions set forth in
Sections 10.2(a)(i) and (a)(ii) have been satisfied by Purchaser; and

 

51

--------------------------------------------------------------------------------

(d) Ancillary Agreements. Purchaser shall have delivered executed Ancillary
Agreements and each of the other documents contemplated by Section 4.3 to Seller
at the Closing and each such Ancillary Agreement and other document shall be in
full force and effect.

Section 10.3 Conditions to Obligations of Purchaser. The obligations of
Purchaser to consummate the transactions contemplated by this Agreement shall be
subject to satisfaction (or, to the extent permitted by applicable Law, waiver)
at or prior to the Closing of the following conditions:

(a) Representations, Warranties and Covenants.

(i) Each of the representations and warranties of Seller contained in
Sections 5.1, 5.7 and 5.16 shall be true and correct in all respects as of the
date of this Agreement and at and as of the Closing with the same force and
effect as if made at and as of the Closing (other than (x) such representations
and warranties made as of another date, which shall be true and correct as of
such date and (y) in the case of Section 5.7, for such failures to be true and
correct as are de minimis in effect) and (B) all other representations and
warranties of Seller contained in this Agreement shall be true and correct as of
the date of this Agreement and at and as of the Closing with the same force and
effect as if made at and as of the Closing, except, in the case of this clause
(B), where any failure of such representations and warranties to be so true and
correct (without giving effect to any qualification as to “materiality” or
“Material Adverse Effect” set forth therein) would not, individually or in the
aggregate, result in a Material Adverse Effect; and

(ii) Each of the covenants and agreements contained in this Agreement shall be
complied with by Seller on or before the Closing shall have been complied with
in all material respects;

(b) Material Adverse Effect. Since the date of this Agreement, there shall not
have been any event, change, effect, occurrence or circumstance that,
individually or in the aggregate, has had or would reasonably be expected to
have a Material Adverse Effect on the Business or the Purchased Assets, taken as
a whole;

(c) Third Party Consents. Seller shall have received the Consents set forth on
Schedule 10.3(c) of the Seller Disclosure Schedule, and such Consents shall be
in full force and effect;

(d) Certificate. Purchaser shall have received a certificate, dated as of the
Closing Date, signed on behalf of Seller by an officer of Seller, to the effect
that the conditions set forth in Sections 10.3(a)(i) and (a)(ii) (or, in the
case of a Closing on a Delayed Closing Date, Section 10.3(a)(ii) only) have been
satisfied by Seller;

(e) Ancillary Agreements. Seller shall have delivered executed Ancillary
Agreements (other than the Security Agreement and the Subordination Agreement)
and each of the other documents contemplated by Section 4.2 to Purchaser at the
Closing and each such Ancillary Agreement (other than the Security Agreement and
the Subordination Agreement) and other document shall be in full force and
effect; and

 

52

--------------------------------------------------------------------------------

(f) Seller shall have delivered to Purchaser the financial information required
by Section 7.2(c) in a timely manner.

Section 10.4 Satisfaction of Closing Conditions. The following conditions to
Closing shall be deemed for purposes of this Agreement to be “conditions that by
their nature are to be satisfied at Closing: Sections 10.2(b), 10.2(c), 10.2(d)
(as it relates to delivery of the documents referred to in Sections 4.3(a) and
4.3(i)), 10.3(d), 10.3(e) (as it relates to delivery of the documents referred
to in Section 4.2(f)) and 10.3(f).

ARTICLE 11.

TERMINATION

Section 11.1 Termination. This Agreement may be terminated at any time prior to
the Closing in the following circumstances:

(a) by the mutual written consent of Seller and Purchaser;

(b) by either Seller or Purchaser, if the Closing shall not have occurred by
11:59 p.m. Los Angeles time on January 2, 2015 (the “Outside Date”); provided,
however, that the right to terminate this Agreement under this Section 11.1(b)
shall not be available to any Party whose failure to fulfill any obligation
under this Agreement shall have been the cause of, or shall have resulted in,
the failure of the Closing to occur on or prior to such date;

(c) by either Seller or Purchaser prior to the Waiver Date in the event that any
Governmental Order of any Governmental Authority in the United States
restraining, enjoining or otherwise prohibiting the transactions contemplated by
this Agreement in such jurisdiction shall have become final and non-appealable;
provided that the Party seeking to terminate this Agreement pursuant to this
Section 11.1(c) shall have used reasonable commercial efforts to remove such
order, decree, ruling, judgment or injunction;

(d) by either Seller or Purchaser, by giving written notice of such termination
to the other Party, if such other Party or one of its Affiliates shall have
breached any of its material covenants, obligations or agreements under this
Agreement and such breach shall be incapable of cure or has not been cured
within twenty (20) days following the giving of written notice by the
non-breaching Party to the other Party of such breach (or, if the Outside Date
is fewer than twenty (20) days from provision of such notice, cured by the
Outside Date);

(e) by Seller, by giving written notice of such termination to Purchaser, if
there has been a breach of the representations and warranties of Purchaser
contained in this Agreement which (i) would result in the failure of the
condition set forth in Section 10.2(a)(i); and (ii) is incapable of cure or has
not been cured within twenty (20) days following the giving of written notice by
Seller to Purchaser of such breach (or, if the Outside Date is fewer than twenty
(20) days from provision of such notice, cured by the Outside Date); or

 

53

--------------------------------------------------------------------------------

(f) by Purchaser prior to the Waiver Date, by giving written notice of such
termination to Seller, if there has been a breach of the representations and
warranties of Seller contained in this Agreement which (i) would result in the
failure of the condition set forth in Section 10.3(a)(i); and (ii) is incapable
of cure or has not been cured within twenty (20) days following the giving of
written notice by Purchaser to Seller of such breach (or, if the Outside Date is
fewer than twenty (20) days from provision of such notice, cured by the Outside
Date).

Section 11.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 11.1, this Agreement shall forthwith become
void and there shall be no liability on the part of either Party except (a) as
set forth in Section 3.6, Section 7.2(g) and Article 13 and the Escrow Agreement
and (b) that nothing herein (including Section 3.6) shall relieve either Party
from liability for any breach of this Agreement occurring prior to such
termination. The exercise of a right of termination of this Agreement is not an
election of remedies.

ARTICLE 12.

INDEMNIFICATION AND SURVIVAL

Section 12.1 Survival of Representations and Warranties.

(a) Subject to Sections 12.1(b), (c) and (e), the representations, warranties
and covenants (to be performed before the Closing Date) of the Parties contained
in this Agreement shall survive the Closing for a period of twelve (12) months
from the Closing Date.

(b) The representations and warranties of the Parties contained in Sections 5.1,
5.7 and 6.1, 6.2 (with respect to the Promissory Note), 6.6, 6.7, and 6.8 of
this Agreement shall survive the Closing for a period of six (6) years from the
Closing Date.

(c) The representations and warranties of Seller contained in Section 5.12 of
this Agreement shall survive the Closing for the applicable statute of
limitations periods, plus any extensions or waivers thereof consented to by the
Parties.

(d) Notwithstanding Section 12.1(a), (b) and (c), for each claim for
indemnification hereunder regarding a representation or warranty that is
properly made before expiration of such representation or warranty, including by
timely delivery of a Claim Notice or Indemnity Notice, as the case may be, such
claim and associated right to indemnification (including any right to pursue
such indemnification, including via any Action) will not terminate before final
determination and satisfaction of such claim.

(e) The covenants and agreements of the Parties (including any indemnification
covenants and agreements) which by their terms are required to be performed
following the Closing shall survive the Closing Date indefinitely, subject to
any specific limitations set forth herein.

Section 12.2 Indemnification by Purchaser. Subject to the other provisions of
this Article 12, from and after the Closing, Purchaser shall indemnify, hold
harmless and reimburse Seller and its Affiliates, officers, directors, agents,
successors and assigns (each, a “Seller

 

54

--------------------------------------------------------------------------------

Indemnified Party”) from and against and in respect of any and all losses,
Liabilities, costs and expenses (including reasonable attorneys’ fees) (with the
understanding of the Parties that, subject to Section 12.4, Losses will not be
limited to out of pocket costs or expenses) (collectively, “Losses”) which any
Seller Indemnified Party may actually suffer or incur to the extent arising out
of, resulting from or related to:

(a) any breach of or inaccuracy in any warranty or representation of Purchaser
contained in this Agreement;

(b) any breach by Purchaser of, or failure by Purchaser to perform, any of its
covenants or other agreements set forth in this Agreement which by its terms is
to be performed prior to or at the Closing;

(c) any breach by Purchaser of, or failure by Purchaser to perform, any of its
covenants or other agreements set forth in this Agreement not covered by
Section 12.2(b);

(d) the Promissory Note;

(e) the Assumed Liabilities;

(f) any other obligations of Liabilities undertaken or assumed by Purchaser
pursuant to this Agreement; and

(g) enforcing the indemnification rights of Seller pursuant to this Article 12.

Section 12.3 Indemnification by Seller. Subject to the other provisions of this
Article 12, from and after the Closing, Seller shall indemnify, hold harmless
and reimburse Purchaser and its Affiliates and their respective officers,
directors, agents, successors and assigns (each, a “Purchaser Indemnified
Party”) from and against and in respect of any and all Losses which any
Purchaser Indemnified Party may actually suffer or incur to the extent arising
out of, resulting from or related to:

(a) any breach of or inaccuracy in any warranty or representation of Seller
contained in this Agreement;

(b) any breach by Seller of, or failure by Seller to perform, any of its
covenants or other agreements set forth in this Agreement which by its terms is
to be performed prior to or at the Closing;

(c) any breach by Seller of, or failure by Seller to perform, any of its
covenants or other agreements set forth in this Agreement not covered by
Section 12.3(b);

(d) the Excluded Assets, Seller’s Other Businesses or the Excluded Liabilities;

(e) any Taxes that are the responsibility of Seller pursuant to Article 9; and

(f) enforcing the indemnification rights of Purchaser pursuant to this
Article 12.

 

55

--------------------------------------------------------------------------------

Section 12.4 Limitations on Indemnification.

(a) Notwithstanding anything to the contrary contained in this Agreement, no
amounts shall be payable as a result of any claim in respect of a Loss arising
under Section 12.2 or Section 12.3:

(i) unless the Indemnified Party has given the Indemnifying Party a Claim Notice
or Indemnity Notice, as applicable, with respect to such claim, setting forth in
reasonable detail the specific facts and circumstances pertaining thereto, as
soon as practical following the time at which the Indemnified Party discovered,
or reasonably should have discovered, such claim (except to the extent the
Indemnifying Party is not prejudiced by any delay in the delivery of such
notice) and, in any event, prior to the date on which the applicable
representation, warranty, covenant or agreement ceases to survive pursuant to
Section 12.1; or

(ii) to the extent that the Indemnified Party had a reasonable opportunity, but
failed, in good faith to mitigate the Loss;

(iii) to the extent it arises from or was caused by actions taken or failed to
be taken by the Indemnified Party or any of its Affiliates after the Closing;
and

(iv) to the extent an Indemnified Party asserts a claim for any punitive or
exemplary damages or damages that are not reasonably foreseeable (except in the
case when the Indemnified Party is required to pay any of such Losses in
connection with a Third Party Claim).

(b) Notwithstanding anything to the contrary contained in this Agreement, the
indemnity obligations of Seller under this Article 12 shall be limited as set
forth in this Section 12.4(b):

(i) no indemnity shall be payable by Seller under Sections 12.3(a) or 12.3(b)
with respect to any individual claim for Losses that does not exceed $1,000 (the
“Minimum Amount”)

(ii) with respect to individual Losses that are in excess of the Minimum Amount
(the “Covered Losses”), no indemnity shall be payable by Seller under
Sections 12.3(a) or 12.3(b) until the aggregate of such Covered Losses exceeds
$50,000 (the “Basket”) and then only for such Covered Losses in excess of the
Basket; provided, that the Basket shall not apply to the extent Losses are a
result of a breach of any of the representations and warranties set forth in
Sections 5.1, 5.7, and 5.12;

(iii) Seller shall have no further indemnity obligations for Losses under
Section 12.3(a) to the extent the aggregate of all Losses paid by it pursuant to
Section 12.3(a) exceeds $1,500,000, and Purchaser, on behalf of itself and the
other Purchaser Indemnified Parties, shall not be entitled to recover any Losses
or other payments, in each case for claims pursuant to Section 12.3(a), in
excess of such amount; provided, however, that the foregoing limitation shall
not apply with respect to the extent Losses are a result of a breach of any of
the representations and warranties set forth in Sections 5.1, 5.7, and 5.12;

 

56

--------------------------------------------------------------------------------

(iv) Seller shall have no further indemnity obligations for Losses under
Section 12.3(b) or Section 12.3(c) with respect to any breaches by Seller, or
failure by Seller to perform, any of its covenants or other agreements set forth
in Section 7.2(b) to the extent the aggregate of all Losses paid by it pursuant
to Section 12.3(b) and Section 12.3(c) with respect to such breaches or failures
exceeds $500,000, and Purchaser, on behalf of itself and the other Purchaser
Indemnified Parties, shall not be entitled to recover any Losses or other
payments, in each case for claims pursuant to Section 12.3(b) or Section 12.3(c)
with respect to such breaches or failures, in excess of such amount; and

(v) the aggregate amount required to be paid to the Purchaser Indemnified
Parties under Section 12.3 shall not exceed $7,500,000; provided, that the
limitation set forth in this Section 12.4(b)(v) shall not apply to claims
pursuant to Section 12.3(d).

(c) Notwithstanding anything to the contrary contained in this Agreement, the
indemnity obligations of Purchaser under this Article 12 shall be limited as set
forth in this Section 12.4(c):

(i) no indemnity shall be payable by Purchaser under Sections 12.2(a) or 12.2(b)
with respect to any individual claim for Losses that does not exceed the Minimum
Amount.

(ii) with respect to Covered Losses, no indemnity shall be payable by Purchaser
under Sections 12.2(a) or 12.2(b) until the aggregate of such Covered Losses
exceeds the Basket and then only for such Covered Losses in excess of the
Basket; provided, that the Basket shall not apply to the extent Losses are a
result of a breach of any of the representations and warranties set forth in
Sections 6.1, 6.2 (with respect to the Promissory Note), 6.6, 6.7, 6.8 and 6.9;

(iii) Purchaser shall have no further indemnity obligations for Losses under
Section 12.2(a) to the extent the aggregate of all Losses paid by it pursuant to
Section 12.2(a) exceeds $1,500,000, and Seller, on behalf of itself and the
other Seller Indemnified Parties, shall not be entitled to recover any Losses or
other payments, in each case for claims pursuant to Section 12.2(a), in excess
of such amount; provided, however, that the foregoing limitation shall not apply
with respect to the extent Losses are a result of a breach of any of the
representations and warranties set forth in Sections 6.1, 6.2 (with respect to
the Promissory Note), 6.6, 6.7, 6.8 and 6.9; and

(iv) the aggregate amount required to be paid to the Seller Indemnified Parties
under Section 12.2 shall not exceed $7,500,000; provided, that the limitation
set forth in this Section 12.4(c)(iv) shall not apply to claims pursuant to
Sections 12.2(d) and 12.2(e).

(d) Notwithstanding anything in this Agreement to the contrary, none of the
limitations set forth in this Section 12.4 shall apply to any Losses that may be
incurred by virtue of or result from any fraud or intentional misrepresentation.

(e) The Parties acknowledge that the same set of facts and circumstances could
give rise to indemnification obligations under one or more provisions of this
Article 12. The Party seeking indemnification shall be permitted to determine
the provision under which it shall make its claims in its sole discretion and,
at its option, shall be permitted to make claims in the alternative under
multiple provisions.

 

57

--------------------------------------------------------------------------------

Section 12.5 Claims for Indemnification. All claims for indemnification by any
Indemnified Party shall be asserted and resolved as set forth in this
Section 12.5:

(a) Third-Party Claims. In the event that any written claim or demand for which
an Indemnifying Party may be liable to any Indemnified Party hereunder is
asserted against or sought to be collected from any Indemnified Party by a third
party, such Indemnified Party shall promptly, but in no event later than fifteen
(15) days following such Indemnified Party’s receipt of such claim or demand
(including a copy of any related written third party demand, claim or complaint)
(the “Third-Party Claim”), deliver a Claim Notice to the Indemnifying Party. The
Indemnifying Party shall be relieved of its obligations to indemnify the
Indemnified Party with respect to such Third-Party Claim if the Indemnified
Party fails to timely deliver the Claim Notice and the Indemnifying Party is
actually prejudiced thereby. If a Third-Party Claim is made against an
Indemnified Party, the Indemnified Party shall be entitled to participate
therein and, to the extent that the Indemnified Party shall wish, to assume the
defense thereof. The Indemnifying Party shall cooperate fully with the
Indemnified Party and its counsel in the defense against any such Third-Party
Claim. The Indemnifying Party shall have the right to participate at its own
expense in the defense of any Third-Party Claim. Neither the Indemnifying Party,
on the one hand, nor the Indemnified Party, on the other hand, shall admit
liability to, or settle, compromise or discharge any Third-Party Claim without
the prior consent of the other Party, which consent shall not be unreasonably
withheld, conditioned or delayed In the event the Indemnified Party elects not
to defend any Third-Party Claim, the Indemnifying Party shall defend against
such Third-Party Claim in good faith and in a commercially reasonable manner
using counsel reasonably acceptable to the Indemnified Party and at the cost and
expense of the Indemnifying Party, and the Indemnified Party shall have the
right to participate in such defense at its own expense.

(b) Direct Claims. In the event any Indemnified Party should have a claim under
Section 12.2 or Section 12.3 against any Indemnifying Party that does not
involve a Third-Party Claim, the Indemnified Party shall promptly deliver an
Indemnity Notice to the Indemnifying Party. The Parties agree to promptly
attempt in good faith to negotiate a resolution of such Claim. If the Parties
are unable to reach a resolution within fifteen days, either Party may pursue
additional action, including submitting the claim to litigation. In addition, if
either Party refuses to participate in a meeting or phone call, the other Party
may pursue additional action, including, without limitation, submitting the
claim to litigation.

(c) In the event of any claim for indemnity under Section 12.3, Purchaser agrees
to give Seller and its representatives reasonable access to the books and
records and employees of Purchaser in connection with the matters for which
indemnification is sought to the extent Seller reasonably deems necessary in
connection with its rights and obligations under this Article 12.

Section 12.6 Tax Effect; Refund or Credits. The amount of any Loss subject to
indemnification under this Agreement shall be reduced by the amounts of any net
tax benefits that are actually received by the Indemnified Party in the year of
the related indemnification

 

58

--------------------------------------------------------------------------------

payment. As used in this Section 12.6, “tax benefit” shall mean the net Tax
savings attributable to any deduction, expense, loss, credit or refund to the
Indemnified Party. The amount of any tax benefit actually received shall be
equal to the actual reduction in Taxes of the Indemnified Party paid in cash, if
any, determined with the applicable Tax items and the indemnity payment made or
to be made taken into account as compared with the Taxes that would have been
payable without the applicable Tax items.

Section 12.7 Insurance Offset. If an Indemnified Party actually receives
insurance proceeds or indemnity, contribution or similar payments from an
unaffiliated insurance carrier or unaffiliated third party prior to being
indemnified, held harmless and reimbursed under Section 12.2 or Section 12.3, as
applicable, with respect to such Losses, the payment by an Indemnifying Party
under this Article 12 with respect to such Losses shall be reduced by the net
amount of such insurance proceeds or indemnity, contribution or similar payments
to the extent related to such Losses, less (a) reasonable attorney’s fees and
other expenses incurred in connection with such recovery (including the payment
of a deductible with respect to the same) and (b) the amount of any actual
premium increase related to such insurance claim. If the Indemnified Party
receives such insurance proceeds or indemnity, contribution or similar payments
from an unaffiliated insurance carrier or unaffiliated third party after being
indemnified and held harmless by an Indemnifying Party with respect to such
Losses, the Indemnified Party shall pay to the Indemnifying Party the net amount
of such insurance proceeds or indemnity, contribution or similar payment to the
extent related to such Losses, less reasonable attorney’s fees and other
expenses incurred in connection with such recovery (including the payment of a
deductible with respect to the same).

Section 12.8 Exclusive Remedy. After the Closing, the indemnities set forth in
this Article 12 shall be the sole and exclusive remedy for monetary damages of
the Parties, their successors and assigns, and their respective officers,
directors, employees, agents and Affiliates with respect to this Agreement, the
events giving rise to this Agreement and the transactions contemplated hereby,
except for claims related to or arising from fraud or intentional
misrepresentation or the Promissory Note. The indemnities set forth in this
Article 12 apply only to matters arising out of this Agreement or the Promissory
Note.

Section 12.9 Treatment of Indemnification Payments. To the extent permitted by
Law, any amounts payable pursuant to this Article 12 shall be considered
adjustments to the Final Purchase Price for all income Tax purposes and the
Parties and their respective Affiliates agree to take no position inconsistent
with such treatment in any Tax Return or proceeding before any Governmental
Authority.

ARTICLE 13.

MISCELLANEOUS

Section 13.1 Assignment. This Agreement shall be binding upon and inure to the
benefit of the Parties hereto and their respective successors and assigns;
provided, however, that no assignment shall be made by either Party without the
prior written consent of the other Party.

Section 13.2 Public Announcements.

 

59

--------------------------------------------------------------------------------

(a) Neither Party shall issue or make any public announcement, press release or
other public disclosure regarding this Agreement or its subject matter without
the other Party’s prior written consent, except for any such disclosure that is,
in the opinion of the disclosing Party’s counsel, required by applicable Law or
the rules of a stock exchange on which the securities of the disclosing party
are listed. In the event a Party is, in the opinion of its counsel, required to
make a public disclosure by applicable Law or the rules of a stock exchange on
which its securities are listed, such Party shall, to the extent practicable,
submit the proposed disclosure in writing to the other Party prior to the date
of disclosure and provide the other Party a reasonable opportunity to comment
thereon.

(b) Notwithstanding the foregoing, each of Seller and Purchaser shall be
permitted to discuss, in their reasonable discretion, the terms of this
Agreement with their respective customers, suppliers and vendors and the likely
impact of the transactions contemplated hereby on such relationship. As promptly
as practicable following the execution of this Agreement, each of Seller and
Purchaser agree to work together to prepare a set of “talking points” and
answers to “frequently asked questions” to be used by their respective employee
and Representative groups for purposes of such discussions and such Parties
shall use their reasonable best efforts to cause their respective employees and
Representative to convey such information in a manner consistent with such
talking points and FAQs.

Section 13.3 Expenses. Whether or not the transactions contemplated hereby are
consummated, and except as otherwise specified herein, each Party shall bear its
own expenses with respect to the transactions contemplated by this Agreement.

Section 13.4 Severability. Each of the provisions contained in this Agreement
shall be severable, and the unenforceability, invalidity or illegality of one
shall not affect the enforceability of any others or of the remainder of this
Agreement.

Section 13.5 No Third-Party Beneficiaries. This Agreement is for the sole
benefit of the Parties hereto and their permitted assigns and nothing herein,
express or implied, shall give or be construed to give to any Person, other than
the Parties hereto and their permitted assigns, any legal or equitable rights
hereunder except for those rights provided in Article 12 hereof.

Section 13.6 Waiver. The failure or delay of any Party to enforce any condition
or part of this Agreement at any time shall not be construed as a waiver of that
condition or part, nor shall it forfeit any rights to future enforcement
thereof. Any single or partial exercise of any right shall not preclude any
other or future exercise thereof or any other right. Any waiver hereunder shall
be effective only if delivered to the other Party hereto in writing by the Party
making such waiver.

Section 13.7 Governing Law. This Agreement shall be construed and enforced in
accordance with and governed by the Laws of the State of Delaware without regard
to the conflicts of Laws provisions thereof.

Section 13.8 Jurisdiction. The Parties hereto agree that any Action seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, this Agreement or the transactions contemplated hereby shall be brought in
any state or federal court of competent

 

60

--------------------------------------------------------------------------------

jurisdiction in the State of Delaware, so long as such court shall have subject
matter jurisdiction over such Action, and that any cause of action arising out
of this Agreement shall be deemed to have arisen from a transaction of business
in the State of Delaware, and each of the Parties hereby irrevocably consents to
the jurisdiction of such court (and of the appropriate appellate courts
therefrom) in any such Action and irrevocably waives, to the fullest extent
permitted by Law, any objection that it may now or hereafter have to the laying
of the venue of any such Action in any such court or that any such Action which
is brought in such court has been brought in an inconvenient forum. Process in
any such Action may be served on any Party anywhere in the world, whether within
or without the jurisdiction of such court. Without limiting the foregoing, each
Party agrees that service of process on such Party as provided in Section 13.14
shall be deemed effective service of process on such Party.

Section 13.9 Waiver of Jury Trial. EACH OF THE PARTIES HERETO WAIVES TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT. EACH OF THE PARTIES HERETO HEREBY (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER, AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED
TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 13.9.

Section 13.10 Specific Performance. The Parties acknowledge that, in view of the
uniqueness of the Business, the Purchased Assets and the transactions
contemplated by this Agreement, each Party would not have an adequate remedy at
Law for money damages in the event that this Agreement has not been performed in
accordance with its terms, and therefore agrees that the other Party shall be
entitled to specific enforcement of the terms hereof in addition to any other
remedy to which it may be entitled, at Law or in equity.

Section 13.11 Headings. The headings of the sections and subsections of this
Agreement and the titles of individual Schedules are inserted for convenience
only and shall not be deemed to constitute a part hereof and thereof.

Section 13.12 Counterparts. The Parties may execute this Agreement (including by
electronic transmission) in one or more counterparts, and each fully executed
counterpart shall be deemed an original.

Section 13.13 Further Documents. Each of Purchaser and Seller shall, and shall
cause its respective Affiliates to, at the request of the other Party, execute
and deliver to such other Party all such further instruments, assignments,
assurances and other documents as such other Party may reasonably request in
connection with the carrying out of this Agreement and the transactions
contemplated hereby.

 

61

--------------------------------------------------------------------------------

Section 13.14 Notices. All communications, notices and Consents provided for
herein shall be in writing and be given in person or by means of telex,
facsimile or other means of wire transmission (with request for assurance of
receipt in a manner typical with respect to communications of that type), by
overnight courier or by mail, and shall become effective: (a) on delivery if
given in person; (b) on the date of transmission if sent by telex, facsimile or
other means of wire transmission; (c) one (1) Business Day after delivery to the
overnight service; or (d) four (4) Business Days after being mailed, with proper
postage and documentation, for first-class registered or certified mail,
prepaid.

Notices shall be addressed as follows:

If to Purchaser, to:

NeoPhotonics Corporation

2911 Zanker Road

San Jose, CA 95134

Attn: Timothy Jenks and Judi Otteson, Esq.

Facsimile Number: (408) 321-5061

with a copy (which will not constitute notice) to:

O’Melveny & Myers LLP

2765 Sand Hill Road

Menlo Park, CA 94025

Attn: Steven Tonsfeldt, Esq.

Facsimile Number: (650) 473-2601

If to Seller, to:

EMCORE Corporation

10420 Research Road SE

Albuquerque, NM 87123

Attn: Mark Weinswig

Facsimile Number: (626) 293-3429

with copies (which will not constitute notice) to:

Skadden, Arps, Slate, Meagher & Flom LLP

300 South Grand Avenue

Suite 3400

Los Angeles, CA 90071

Attn: Brian J. McCarthy

Andrew D. Garelick

Facsimile Number: (213) 621-5070

                                 (213) 621-5124

provided, however, that if any Party shall have designated a different address
by notice to the others, then to the last address so designated.

 

62

--------------------------------------------------------------------------------

Section 13.15 Entire Agreement. This Agreement may not be amended, supplemented
or otherwise modified except by an instrument in writing signed by each of the
Parties hereto. This Agreement (including the Exhibits and Schedules annexed
hereto) and the Confidentiality Agreement contain the entire agreement of the
Parties hereto with respect to the transactions covered hereby and the subject
matter hereof, superseding all negotiations, prior discussions and preliminary
agreements, written or oral, made prior to the date hereof. The Exhibits and
Schedules annexed hereto or referred to herein are hereby incorporated in and
made a part of this Agreement as if set forth in full herein. Any capitalized
terms used in any Exhibit or Schedule annexed hereto but not otherwise defined
therein shall have the meaning as defined in this Agreement. When a reference is
made in this Agreement to a Section of, or an Exhibit or Schedule to, such
reference shall be to a Section of, or an Exhibit or Schedule to, this Agreement
unless otherwise indicated.

Section 13.16 Bulk Sales Law. Purchaser hereby waives compliance by Seller or
any of its Affiliates with any applicable bulk sale or bulk transfer laws of any
jurisdiction in connection with the sale of the Purchased Assets to Purchaser.

* * * * *

 

63

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
by their respective duly authorized officers as of the date first above written.

 

NEOPHOTONICS CORPORATION

By:

 

/s/ T. S. Jenks

  Name: T. S. Jenks   Title: CEO

EMCORE CORPORATION

By:

 

/s/ Hong Q Hou

  Name: Hong Q Hou   Title: Chief Executive Officer

[Signature Page to Asset Purchase Agreement]