Document:

Exhibit 10.73

 

Exhibit 10.73

SECURITIES PURCHASE AGREEMENT

Among

TANDEM HEALTH CARE, INC.

and

BEHRMAN CAPITAL II L.P.

and

STRATEGIC ENTREPRENEUR FUND II, L.P.

Dated as of December 28, 2004

 

 

SECURITIES PURCHASE AGREEMENT

     SECURITIES PURCHASE AGREEMENT, dated as of December 28, 2004, among TANDEM HEALTH CARE, INC.,
a Pennsylvania corporation (the “Company”), BEHRMAN CAPITAL II L.P., a Delaware limited
partnership (“Behrman Capital II”), and STRATEGIC ENTREPRENEUR FUND II, L.P., a Delaware
limited partnership (“SEFII”) (Behrman Capital II and SEFII being hereinafter referred to
individually as a “Purchaser” and collectively as the “Purchasers”).

     WHEREAS, the Company has been formed to engage in the business of providing post-acute care
services and acquiring or developing additional skilled nursing facilities and other businesses
related to the provision of post-acute care services (collectively, the “Business”); and

     WHEREAS, on the Closing Date, the Company wishes to issue and sell to the Purchasers, and the
Purchasers, severally and not jointly, wish to purchase on the terms and subject to the conditions
hereinafter set forth, an aggregate 1,587,302 shares of Series G Convertible Preferred Stock, par
value $.01 per share, (the “Convertible Preferred Shares”), and an aggregate 4,761,904
shares of Series H Redeemable Preferred Stock (the “Redeemable Preferred Shares”), in the
amounts set forth opposite the names of the Purchasers in Schedule I attached hereto under
the headings “Convertible Preferred Shares” and “Redeemable Preferred Shares” as the case may be,
to finance working capital and general corporate purposes.

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

 

 

ARTICLE I

PURCHASE AND SALE OF SECURITIES

     Section 1.01 Issuance, Sale and Delivery of Convertible Preferred Shares and Redeemable
Preferred Shares on the Closing Date.

     (a) Subject to the terms and conditions set forth herein, on the Closing Date, the Company
shall issue, sell and deliver to each Purchaser, and each Purchaser shall purchase from the
Company, (i) the number of Convertible Preferred Shares set forth opposite the name of such
Purchase in Schedule I hereto under the heading “Convertible Preferred Shares,” at a purchase price
of $2.52 per Convertible Preferred Share, and (ii) the number of Redeemable Preferred Shares set
forth opposite the name of such Purchase in Schedule I hereto under the heading “Redeemable
Preferred Shares,” at a purchase price of $2.52 per Redeemable Preferred Share (collectively
referred to herein as “Preferred Stock”). On the Closing Date, the Company shall issue
certificates in definitive form, registered in the name of each Purchaser, evidencing the
Convertible Preferred Shares and Redeemable Preferred Shares being purchased by each such Purchaser
hereunder.

     (b) The Company acknowledges that it has previously received from each Purchaser, as payment
in full for the Convertible Preferred Shares and the Redeemable Preferred Shares being purchased by
each Purchaser hereunder, immediately available funds in the amount set forth opposite the name of
such Purchaser on Schedule I hereto under the heading “Aggregate Purchase Price.”

     Section 1.02 Closing Date. The closing of the sale and purchase of the Convertible
Preferred Shares and Redeemable Preferred Shares shall take place at the offices of Buchanan

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Ingersoll Professional Corporation, One Oxford Centre, 301 Grant Street, 20th
Floor, Pittsburgh, Pennsylvania, 15219-1410, at 10:00 a.m., Eastern Time, on December 28, 2004, or
at such other date and time as may be mutually agreed upon among the Purchasers and the Company
(such closing being herein called the “Closing” and such date and time being herein called
the “Closing Date”).

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     The Company represents and warrants to the Purchasers as follows:

     Section 2.01 Organization, Qualification and Corporate Power. The Company is a
corporation duly incorporated, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania. Except as set forth in Schedule 2.01 hereto, neither the nature of
the business transacted by the Company nor the character of the properties owned or held by it
makes licensing or qualification as a foreign corporation in any other jurisdiction necessary,
except where the failure to be so licensed or qualified would not have a material adverse effect on
the properties, assets, condition (financial or other), prospects, operating results or business of
the Company or any of its subsidiaries (a “Material Adverse Effect”). The Company has the
corporate power and authority to own and hold its properties and to carry on its business as
currently conducted and to execute, deliver and perform this Agreement and to issue its Preferred
Stock as provided for herein.

     Section 2.02 Authorization of Agreement, etc. (a) Each of (i) the execution and
delivery by the Company of this Agreement and (ii) the performance by the Company of its
obligations hereunder has been duly authorized by all requisite corporate action and will not (x)
violate any provision of law, any order of any court or other agency of government, the Articles

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of Incorporation or By-laws of the Company, or any provision of any indenture, agreement or
other instrument to which the Company or any of its subsidiaries is a party or by which it or any
of its properties or assets is bound or affected, (y) conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any such indenture, agreement
or other instrument, or (z) result in the creation or imposition of any lien, charge or encumbrance
of any nature whatsoever upon any of the properties or assets of the Company or any of its
subsidiaries.

     (b) The issuance and delivery of the Preferred Stock has been duly authorized by the Company,
and, when issued and delivered, such Preferred Stock will be validly issued and outstanding, fully
paid and nonassessable shares of the Company’s capital stock. The issuance and delivery of the
Preferred Stock is not subject to any preemptive rights of shareholders of the Company or any
subsidiary, or to any right of first refusal or other similar right in favor of any person, that
has not been waived in writing.

     Section 2.03 Validity. This Agreement has been duly executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the Company, enforceable in
accordance with its terms.

     Section 2.04 Governmental Approvals. No registration or filing with, or consent or
approval of, or other action by, any federal, state or other governmental agency or instrumentality
is or will be necessary for the valid execution, delivery and performance of this Agreement by the
Company or any of its subsidiaries, or the issuance and delivery by the Company of the Preferred
Stock.

     Section 2.05 Absence of Adverse Changes. No material adverse change in the business,
results of operations or financial condition of the Company and its subsidiaries, taken as a whole,
has occurred since December 31, 2003.

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ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

     Each Purchaser, severally and not jointly, represents and warrants to the Company as follows:

     Section 3.01 Authorization of Agreement, etc. The execution and delivery by such
Purchaser of this Agreement has been duly authorized by all requisite action on the part of such
Purchaser and will not violate any provision of law, any order of any court or other agency of
government, the charter or other governing documents of such Purchaser, or any provision of any
indenture, agreement or other instrument by which such Purchaser or any of such Purchaser’s
properties or assets are bound, or conflict with, result in a breach of or constitute (with due
notice or lapse of time or both) a default under any such indenture, agreement or other instrument,
or result in any claim upon any of the properties or assets of such Purchaser.

     Section 3.02 Validity. This Agreement has been duly executed and delivered by such
Purchaser and constitutes the legal, valid and binding obligation of such Purchaser, enforceable
against such Purchaser in accordance with its terms.

     Section 3.03 Investment Representations. (a) Such Purchaser is acquiring the
Preferred Stock being purchased by such Purchaser hereunder for such Purchaser’s own account, for
investment, and not with a view toward the resale or distribution thereof.

     (b) Such Purchaser understands that it must bear the economic risk of such Purchaser’s
investment for an indefinite period of time, because the Preferred Stock is not registered under
the Securities Act of 1933, as amended (the “Securities Act”), or any applicable state
securities laws and may not be resold unless subsequently registered under the Securities Act and
such other laws or unless an exemption from such registration is available. Such

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Purchaser also understands that it is not contemplated that any registration will be made
under the Securities Act or that the Company will take steps that will make the provisions of Rule
144 or Rule 144A under the Securities Act available to permit resale of the Preferred Stock. Such
Purchaser agrees not to pledge, transfer, convey or otherwise dispose of any of the Preferred
Stock, except in a transaction that is the subject of either (i) an effective registration
statement under the Securities Act and any applicable state securities laws, or (ii) an opinion of
counsel to the effect that such registration is not required (which opinion and counsel shall be
reasonably satisfactory to the Company, and may be relied on by the Company in making such
determination).

     (c) Such Purchaser is able to fend for itself in the transactions contemplated by this
Agreement and has the ability to bear the economic risks of the investment in the Preferred Stock
being purchased by it hereunder for an indefinite period of time.

     (d) Such Purchaser represents that it has been organized and is existing as a limited
partnership under the laws of the State of Delaware.

     Section 3.04. Governmental Approvals. No registration or filing with, or consent or
approval of, or other action by, any federal, state or other governmental agency or instrumentality
is or will be necessary by such Purchaser for the valid execution, delivery and performance of this
Agreement.

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ARTICLE IV

CONDITIONS PRECEDENT TO CLOSING

     Section 4.01. Conditions of Company. The obligations of each Purchaser to carry out
its obligations under this Agreement are, at its option, subject to the satisfaction, on or before
the Closing Date, of the following conditions:

     (a) The representations and warranties of the Company contained in this Agreement shall be
true and correct in all material respects on the Closing Date, with the same force and effect as
though such representations and warranties had been made on and as of such date.

     (b) The Company shall have performed and complied with all agreements and conditions contained
herein required to be performed or complied with by it prior to or on the Closing Date.

     (c) All corporate and other proceedings to be taken by the Company and all waivers and
consents to be obtained by the Company and its subsidiaries in connection with the transactions
contemplated hereby shall have been taken or obtained by the Company and all documents incident
thereto shall be satisfactory in form and substance to the Purchasers and their counsel.

     (d) No legal action or proceeding shall have been instituted or threatened seeking to
restrain, prohibit, invalidate or otherwise affect the consummation of the transactions
contemplated hereby.

     (e) The Company shall have obtained all consents required to be obtained pursuant to Section
5.04 hereof.

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     (f) On or prior to the Closing Date, the shareholders of the Company shall have approved the
Company’s Fourth Amended and Restated Articles of Incorporation as attached hereto as Exhibit
Y.

     Section 4.02. Conditions of Purchasers. The obligations of Company to carry out its
obligations under this Agreement, are, at its option, subject to the satisfaction, on or before the
Closing Date, of the following conditions:

     (a) The representations and warranties of the Purchasers contained in this Agreement shall be
true and correct in all material respects on the Closing Date, with the same force and effect as
though such representations and warranties had been made on and as of such date.

     (b) The Purchasers have performed and complied with all agreements and conditions contained
herein required to be performed or complied with by them prior to or on the Closing Date.

     (c) All corporate and other proceedings to be taken by the Purchasers and all waivers and
consents to be obtained by the Purchasers and their subsidiaries in connection with the
transactions contemplated hereby shall have been taken or obtained by the Purchasers and all
documents incident thereto shall be satisfactory in form and substance to the Company and its
counsel.

     (d) No legal action or proceeding shall have been instituted or threatened seeking to
restrain, prohibit, invalidate or otherwise affect the consummation of the transactions
contemplated hereby.

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ARTICLE V

COVENANTS

     Section 5.01 Financial Statements, Reports, etc. So long as any Purchaser or any
transferee thereof shall hold any of the Preferred Stock purchased by it pursuant to this
Agreement, the Company shall furnish to each such Purchaser and to each such subsequent holder:

     (a) within 120 days after the end of each fiscal year of the Company, a consolidated balance
sheet of the Company and each of its subsidiaries as of the end of such fiscal year and the related
consolidated statements of operations and retained earnings, changes in stockholders’ equity and
cash flows of the Company and each of its subsidiaries for the fiscal year then ended, together
with supporting notes thereto, certified in accordance with generally accepted accounting
principles, without qualification as to scope of audit, by a firm of independent public accountants
of recognized national standing selected by the Company and reasonably acceptable to the
Purchasers;

     (b) within 45 days after the end of each fiscal quarter in each fiscal year (other than the
last fiscal quarter in each fiscal year), a consolidated balance sheet of the Company and each of
its subsidiaries and the related consolidated statements of operations and retained earnings and
cash flows of the Company and each of its subsidiaries, unaudited but certified by the principal
financial officer of the Company and each such subsidiary, respectively, such balance sheet to be
as of the end of such fiscal quarter and such statements of operations and retained earnings and
cash flows to be for such fiscal quarter, for the corresponding fiscal quarter of the immediately
preceding fiscal year, for the period from the beginning of the fiscal year to the end of such
fiscal quarter and for the period from the beginning of the immediately preceding fiscal year to
the end

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of the corresponding fiscal quarter in such fiscal year, in each case subject to normal
year-end adjustments;

     (c) within 45 days after the end of each month in each fiscal year (other than the last month
in each fiscal quarter), a consolidated balance sheet of the Company and each of its subsidiaries
and the related consolidated statement of operations and retained earnings, unaudited but certified
by the principal financial officer of the Company and each of its subsidiaries, such balance sheets
to be as of the end of such month and such statements of operations and retained earnings to be for
such month and for the period from the beginning of the fiscal year to the end of such month, in
each case subject to normal year-end adjustments;

     (d) prior to the beginning of each fiscal year of the Company (and with respect to any
revision thereof, promptly after such revision has been prepared), a proposed annual operating
budget for the Company and each of its subsidiaries, including projected monthly income statements,
cash flow statements during such fiscal year and a projected consolidated balance sheet as of the
end of such fiscal year, and each monthly financial statement furnished pursuant to (c) above shall
reflect variances from such operating budget, as the same may from time to time be revised;

     (e) promptly upon filing, copies of all registration statements, prospectuses, periodic
reports and other documents filed by the Company or any of its subsidiaries with the Securities and
Exchange Commission; and

     (f) promptly, from time to time, such other information regarding the operations, business,
affairs and financial condition of the Company or any subsidiary as any Purchaser may reasonably
request.

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     The obligations of the Company under paragraphs (c), (d) and (e) above shall cease at such
time as the Company shall have effected an initial public offering of its equity securities
registered under the Securities Act.

     Section 5.02 Rights of Inspection. The Company shall, and shall cause its
subsidiaries, officers, directors, employees, representatives, advisors and agents to, afford, from
the date hereof, the representatives, advisors and agents of Behrman Capital II complete access at
all reasonable times during normal business hours to its officers, employees, agents, properties,
books, records and work papers, and shall furnish Behrman Capital II all financial, operating and
other information and data that Behrman Capital II may reasonably request through such
representatives, advisors or agents. The Company shall promptly furnish to Behrman Capital II a
copy of all material written correspondence, filings, communications (or memoranda setting forth
the substance thereof) between the Company or any of its officers, employees, representatives,
advisors or agents and any governmental entity with respect to the obtaining of any waivers,
consents or approvals and the making of any registrations or filings that are necessary to the
transactions contemplated by this Agreement. Behrman Capital II agrees to keep confidential any
confidential business information that may be provided to it by the Company pursuant to this
Agreement, unless disclosure is required by law as advised by counsel.

     Section 5.03 Notice of Certain Events. The Company shall give the Purchasers prompt
notice of (i) the occurrence, or failure to occur, of any event that such party believes would be
likely to cause (x) any of the representations or warranties of the Company contained in this
Agreement to be untrue or inaccurate in any material respect at any time from the date hereof or
(y) any covenant, condition or agreement contained in this Agreement not to be complied with or
satisfied in any material respect; (ii) any failure of the Company, or any officer, director,

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employee or agent thereof, to comply in any material respect with or satisfy in any material
respect any covenant, condition or agreement to be complied with or satisfied by it hereunder;
(iii) any event of default under any agreement with respect to indebtedness for borrowed money or a
purchase money obligation, and any event which, upon notice or lapse of time or both, would
constitute such an event of default, that would permit the holder of such indebtedness or
obligation to accelerate the maturity thereof; (iv) any material default under any agreement with
Health Care REIT, Inc. or any agreement with a similar entity engaged in the financing of
post-acute care facilities; and (v) any action, suit or proceeding at law or in equity or by or
before any governmental instrumentality or agency which, if adversely determined, would materially
impair the right of the Company to carry on its business substantially as now or then conducted,
and which, in the case of each of the items set forth in clauses (i) through (v) above, would be
likely to have a Material Adverse Effect.

     Section 5.04 Consents and Approval. Prior to the Closing Date, the Company shall
promptly apply for or otherwise seek and use its best efforts to obtain all authorizations,
consents, waivers and approvals (whether by or from any person, entity, court or governmental
agency or authority) as may be required in connection with the consummation of this Agreement and
the transactions contemplated hereby.

     Section 5.05 Compliance with Laws. The Company shall comply, and shall cause each of
its subsidiaries to comply, with all applicable laws, rules, regulations and orders, the
noncompliance with which could have a Material Adverse Effect.

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ARTICLE VI

MISCELLANEOUS

     Section 6.01 Notices. Any notice or other communications required or permitted
hereunder shall be deemed to be sufficient if contained in a written instrument delivered in person
or duly sent by national overnight courier service or first class certified mail, postage prepaid,
or by telecopy addressed to such party at the address or telecopy number set forth below:

	 	 	 	 	 	 	 
	 

	 	 	(1	)	 	if to the Company, to it at:
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	Tandem Health Care, Inc.
	 

	 	 	 	 	 	800 Concourse Parkway South
	 

	 	 	 	 	 	Suite 200
	 

	 	 	 	 	 	Maitland, FL 32751
	 

	 	 	 	 	 	Attention:          Lawrence R. Deering
	 

	 	 	 	 	 	Facsimile:          (407) 571-0595
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	With a copy to:
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	Tandem Health Care, Inc.
	 

	 	 	 	 	 	One Oxford Center
	 

	 	 	 	 	 	Suite 1600
	 

	 	 	 	 	 	Pittsburgh, PA 15219
	 

	 	 	 	 	 	Attention:           Rosemary L. Corsetti, Esq.
	 

	 	 	 	 	 	Facsimile:          (412) 281-4435-
	 
	 	 	 	 	 	 
	 

	 	 	(2	)	 	if to Behrman Capital II or SEF II, to it at:
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	126 East 56th Street
	 

	 	 	 	 	 	New York, NY 10022
	 

	 	 	 	 	 	Attention:          Mark P. Visser
	 

	 	 	 	 	 	Facsimile:          (212) 980-7024

or, in any case, at such other address or addresses as shall have been furnished in writing by such
party to the other parties hereto. All such notices and other communications shall be deemed to
have been received (a) in the case of personal delivery, on the date of such delivery, (b) in the
case of national overnight courier service, on the first business day following delivery to such

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service, (c) in the case of mailing, on the fifth business day following the date of such mailing
and (d) in the case of facsimile, when received.

     Section 6.02 Brokerage. Each party hereto will indemnify and hold harmless the others
against and in respect of any claim for brokerage or other commissions relative to this Agreement
or to the transactions contemplated hereby, based in any way on agreements, arrangements or
understandings made or claimed to have been made by such party with any third party.

     Section 6.03 Parties in Interest. All covenants and agreements contained in this
Agreement by or on behalf of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto whether so expressed or not.

     Section 6.04 Entire Agreement; Assignment. This Agreement (together with its
Schedules, Exhibits and Annexes) constitutes the entire agreement of the parties with respect to
the subject matter hereof and may not be amended or modified nor any provisions waived except in a
writing signed by the parties hereto. This Agreement may not be assigned by any party without the
prior written consent of the others.

     Section 6.05 Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an original instrument, but
all such counterparts shall constitute but one agreement.

     Section 6.06 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania.

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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day
and year first above written.

	 	 	 	 	 
	 	 	TANDEM HEALTH CARE, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Lawrence R. Deering 
	 

	 	 	 	 
	 

	 	 	 	          Chairman and Chief Executive Officer
	 
	 	 	 	 
	 	 	BEHRMAN CAPITAL II L.P.
	 
	 	 	 	 
	 

	 	By:
	 	          Behrman Brothers LLC,

          its General Partner
	 
	 	 	 	 
	 

	 	By:	 	/s/ William M. Matthes 
	 

	 	 	 	 
	 

	 	 	 	          Managing Member
	 
	 	 	 	 
	 	 	STRATEGIC ENTREPRENEUR FUND II, L.P.
	 
	 	 	 	 
	 

	 	By:	 	/s/ William M. Matthes 
	 

	 	 	 	 
	 

	 	 	 	          General Partner

 

 

Schedule I

Purchasers

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Name and Address of Purchaser	 	Convertible	 	 	Redeemable	 	 	Aggregate	 
	 	 	Preferred	 	 	Preferred	 	 	Purchase Price	 
	 	 	Shares	 	 	Shares	 	 	 	 	 
	Behrman Capital II L.P.
	 	 	1,566,068	 	 	 	4,698,202	 	 	$	11,999,999	 
	Strategic Entrepreneur
Fund II, L.P.
	 	 	21,234	 	 	 	63,702	 	 	$	$4,000,001	 
	Total
	 	 	1,587,302	 	 	 	4,761,904	 	 	$	16,000,000exv10w1

 

Exhibit
10.1

SETTLEMENT AGREEMENT

     THIS SETTLEMENT AGREEMENT (“Settlement Agreement”) is made as of this 3rd day of October, 2005
(the “Effective Date”), by and between MKS Instruments, Inc., a Massachusetts corporation with its
principal place of business in Wilmington, Massachusetts and Applied Science and Technology, Inc.,
a Delaware corporation with its principal place of business in Wilmington, Massachusetts, on the
one hand, and Advanced Energy Industries, Inc., a Delaware corporation with its principal place of
business in Fort Collins, Colorado, on the other hand.

     WHEREAS, MKS is the owner of U.S. Patent No. 6,150,628, U.S. Patent No. 6,388,226, U.S. Patent
No. 6,486,431, U.S. Patent No. 6,552,296, and U.S. Patent No. 6,559,408 (collectively the
“Patents-in-Suit”);

     WHEREAS, on July 23, 2004, a jury in the United States District Court for the District of
Delaware (the “Court”) returned a verdict in MKS
Instruments, Inc. and Applied Science and
Technology, Inc. v. Advanced Energy Industries, Inc., Civil Action No. 03-469 (JJF), that
Advanced Energy Industries, Inc.’s Xstream brand products, and the methods embodied therein,
infringe claims of the ‘628 patent, the ‘226 patent and the ‘296 patent; and

     WHEREAS, the parties desire to resolve all aspects of the present dispute without the further
time and expense of litigation or other legal action;

     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, MKS and Advanced Energy agree as follows:

1. DEFINITIONS

     1.1 “Advanced Energy” shall mean Advanced Energy Industries, Inc. and its wholly
owned subsidiaries.

     1.2 “Claims” shall mean:

(a) any and all claims, counterclaims, third-party claims, contribution claims, indemnity
claims, demands, actions, causes of action, and all other claims of every kind and nature
in law, equity, arbitration, or other forum, whether arising under state, federal,
international or other law, which were asserted in or which arise from the same
transactions or occurrences as those claims which were asserted in the Patent Litigations
(as defined in Section 1.8); and

(b) any and all other claims directed to any Toroidal Plasma Generator Product made,
used, sold, offered for sale, had made or imported by either MKS or Advanced Energy
anywhere in the world, including any claim of infringement of U.S. Patent No. 6,046,546,

 

 

whether such claims described in subparagraphs (a) and (b) of this Section were absolute or
contingent, direct or indirect, known or unknown. The term “Claims” shall include only claims
existing as of the Effective Date of this Settlement Agreement.

     1.3 “Foreign Toroidal Plasma Generator Patents” shall mean any and all foreign
counterparts to any of the U.S. Toroidal Plasma Generator Patents (as defined in Section 1.12
that contain a claim that is coextensive with a claim of the U.S. Toroidal Plasma Generator
Patents, whether a presently existing patent, or later issued from a patent application that
is presently pending.

     1.4 “License Period” shall mean the period from the Effective Date of this Settlement
Agreement to the first anniversary of the Effective Date .

     1.5 “Licensed Products” shall mean the only following Rapid products, referred to
here by name and model number, and any Rapid products that merely represent insubstantial
changes from the following Rapid products:

	 	 	 	 	 
	 

	 	Rapid-F
	 	(AE part nos. 3151801-001, -002, -003, -004)
	 
	 	 	 	 
	 

	 	Rapid-FE/“Evolution”
	 	(AE part nos. 3151805-001, -002, -003, -004)
	 
	 	 	 	 
	 

	 	Rapid-O
	 	(AE part nos. 3151802-001, -002)
	 
	 	 	 	 
	 

	 	Rapid-OE
	 	(AE part nos. 3151802-003, -004)

     1.6 “MKS” shall mean MKS Instruments, Inc. and its wholly owned subsidiaries
(including, without limitation, Applied Science and Technology, Inc.)

     1.7 “Net Sales” shall mean Advanced Energy’s invoice amount for each Licensed
Product provided (i.e., sold, leased, rented or otherwise transferred) to another Person less
the sum of the following:

     1.7.1 sales, tariff duties and/or use taxes directly imposed and with reference to
particular sales;

     1.7.2 outbound transportation prepaid or allowed; and

     1.7.3 returns, rebates, credits and discounts actually granted as a result of the
Advanced Energy’ customers purchasing Licensed Products, but only to the extent the
amounts or percentages are customary in the trade.

     1.8 The “Patent Litigations” shall mean:

	 	(a)	 	MKS Instruments, Inc. and Applied Science and Technology, Inc. v.
Advanced Energy Industries. Inc., Civil Action No. 03-469 (JJF) (D. Del.);

 

 

	 	(b)	 	Advanced Energy Industries, Inc. v. MKS Instruments, Inc., Civil Action
No. 04-014 (JJF) (D. Del.);
	 
	 	(c)	 	Advanced Energy Industries, Inc. v. MKS Instruments, Inc.,
Civil Action No. 04-848-JJF (D. Del.);
	 
	 	(d)	 	MKS Instruments, Inc. and Applied Science and Technology, Inc. v. Advanced
Energy Industries, Inc., Civil Action No. 00-1004 (JJF) (D.
Del.);
	 
	 	(e)	 	Applied Science and Technology v. Advanced Energy Industries
GmbH, Docket No. 7 O 385/04 (District Court of Manheim, Germany); and
	 
	 	(f)	 	Advanced Energy Industries GmbH v. Applied Science and
Technology, Federal Patent Court, Germany, filed October 21, 2004 (the “nullity action”).

     1.9 “Person” shall mean an individual, corporation, partnership, association, trust,
enterprise or other entity or organization, including a government or political subdivision or an
agency or instrumentality thereof.

     1.10 “Subject Patents” shall mean the U.S. Toroidal Plasma Generator Patents (as
defined in Section 1.12) and the Foreign Toroidal Plasma Generator Patents (as defined in
Section 1.3).

     1.11 “Toroidal Plasma Generator Product” shall mean any product that generates a
toroidal plasma in a plasma body (which may or may not be a toroidal plasma body) using an AC
power supply (which may or may not be an AC switching power supply and may or may not use
an impedance matching network) and that has a transformer for inducing an electric field
within the plasma body, the toroidal plasma completing a secondary circuit of the transformer. Toroidal
Plasma Generator Products shall include, without limitation, Advanced Energy’s Rapid FE,
Rapid OE and Xstream products, MKS Instruments’ Astron and Revolution products, and any
derivatives, modifications, enhancements, changes or improvements from or to any of Advanced
Energy’s Rapid and Xstream products and MKS Instruments’ Astron and Revolution products.

     1.12 “U.S. Toroidal Plasma Generator Patents” shall mean U. S. Patent No. 6,150,628
(the ‘628 patent), U.S. Patent No. 6,388,226 (the ‘226 patent), U.S. Patent No. 6,486,431 (the
‘431 patent), U.S. Patent No. 6,552,296 (the ‘296 patent), and U.S. Patent No. 6,559,408 (the
‘408 patent), and any continuations, continuations-in-part, divisionals, reexaminations, reissues,
and extensions thereof, whether presently existing patents, or later issued from patent
applications that are presently pending.

2.0 PAYMENT

     Within one business day of the Effective Date, Advanced Energy shall pay to MKS an amount in
cash, by wire transfer of immediately available funds, equal to Three Million Dollars (U.S.) ($
3,000,000).

 

 

3.0 RESTRICTED ACTIVITIES

     3.1 Advanced Energy agrees that it shall not make, use, sell, rent, lease, offer to sell,
have made and/or import any Toroidal Plasma Generator Product in the United States for the
entire time period extending from the Effective Date until the date that the last of the U.S.
Toroidal Plasma Generator Patents expires, or, in the case of a pending patent application, is
abandoned.

     3.2 Advanced Energy agrees that it shall not make, use, sell, rent, lease, offer to sell,
have made and/or import any Toroidal Plasma Generator Product into any country in which a
Foreign Toroidal Plasma Generator Patent exists for the entire time period from the Effective
Date until the date that the last of the Foreign Toroidal Plasma Generator Patents in that
country expires.

     3.3 Advanced Energy shall withdraw all Toroidal Plasma Generator Products from
the market in any and all countries in which at least one Subject Patent is effective. Advanced
Energy shall not reintroduce any Toroidal Plasma Generator Product into the market of any such
country until all of the Subject Patents are effective in that country have expired Advanced
Energy shall be permitted to honor its warranty obligations with respect to Toroidal Plasma
Generator Products sold prior to the Effective Date of this Agreement during the applicable
warranty periods, which shall in any event not exceed a period of 15 months from the Effective
Date of this Agreement.

     3.4 The License Agreement between MKS and Advanced Energy dated August 26,
2002 (the “2002 License Agreement”) is hereby terminated as of the Effective Date, except that
Sections 5.2, 6, 7, 8, 9,10.3-10.6 and 11 of the 2002 License Agreement shall survive the
termination.

     3.5 Notwithstanding the provisions of this Section 3, MKS hereby grants to Advanced
Energy, for the duration of the License Period, a non-transferable, non-exclusive, royalty-bearing, license under the Subject Patents, to make, have made, use, sell, rent, lease, offer to sell,
and to import Licensed Products solely to Applied Materials, Inc. (“AMAT”).

     3.6 The license granted pursuant to this Settlement Agreement does not (a) include
the right to grant sublicenses; (b) extend to any Person other than to AMAT, (c) include the right
to make, use, sell, offer for sale, rent, lease and import any Licensed Product for the purpose of
being installed, used or operated on or in combination with any MKS product, and (d) extend to
any product designed by another Person or designed by Advanced Energy for another Person and
manufactured, sold, leased, licensed or otherwise transferred from Advanced Energy to that
Person for sale under a mark not owned by Advanced Energy. The foregoing is not intended to
exclude Advanced Energy’s sale of Toroidal Plasma Generator Products acquired from another
Person so long as such products are Licensed Products that have been designed, developed and
manufactured by or for Advanced Energy and sold by Advanced Energy to AMAT under a
trademark owned by Advanced Energy. The license granted under Sections 3.5 and 3.6 of this
Settlement Agreement shall terminate at the end of the License Period.

 

 

     3.7 Advanced Energy shall cause all Licensed Products made, used or sold in the
United States to be marked in legible print with a legend that includes the United States patent
numbers of the Subject Patent(s) on each Licensed Product. Advanced Energy may also mark, at
its discretion, catalogs and price pages. To the extent that the inclusion of such marking is
impractical for any Licensed Product, Advanced Energy shall mark in a manner acceptable to
MKS. The legend shall take the following form: “Licensed under U.S. Patent No(s). [list
applicable patents]”. To demonstrate compliance with its marking obligations, Advanced
Energy shall provide MKS with sample data plates, packaging materials and pages of applicable
product manuals for each Licensed Product either in advance of selling such Licensed Product or
within sixty (60) days of the Effective Date of this Settlement Agreement, whichever comes
later.

     3.8 In consideration of the license granted herein from MKS to Advanced Energy,
Advanced Energy shall pay MKS royalties on Licensed Products in the amounts and manner
hereinafter provided to the end of the License Period: royalties in an amount equal to fifteen
(15%) of Net Sales of each Licensed Product provided to AMAT on or after the Effective Date.

     3.9
On the dates specified in Section 3.11 below for the submission of royalty reports
and royalty report summaries by Advanced Energy, Advanced Energy shall, irrespective of its
own business and accounting methods, pay to MKS the royalties payable for such quarterly
period as shown on the royalty report. Each royalty report shall be sent to an independent
accounting firm selected and hired by MKS (currently PriceWaterhouseCoopers LLP) together
with a photocopy of the payment. Each such royalty report shall be maintained confidential and
not disclosed to MKS. However, at the request of legal counsel for MKS, the independent firm
shall provide (on an attorneys’ eyes only basis) the quantity of Licensed Products sold for each
royalty rate listed in the royalty report. The payment In United States dollars for the royalties
due, shall be sent to MKS at the address specified in Section 5.11, or at such other address as
MKS shall, from time-to-time, specify to Advanced Energy by written notice. If any currency
conversion shall be required in connection with the payment of royalties hereunder, such
conversion shall be made by using the exchange rate published in the Wall Street Journal on the
last business day of the calendar quarterly reporting period to which such royalty payments
relate.

     3.10 In no event shall Advanced Energy be entitled to a refund or credit for any
royalties previously due or already paid to MKS.

     3.11 Advanced Energy shall deliver to the independent firm specified in Section 3.9
true and accurate quarterly royalty reports, giving such particulars of the business conducted by
Advanced Energy under this Settlement Agreement as shall be pertinent to royalty accounting
hereunder, within thirty (30) days after March 31, June 30, September 30 and December 31, of
each year, regardless of whether any royalties are then due and owing to MKS by Advanced
Energy. Advanced Energy shall submit a quarterly royalty report in the manner provided herein
corresponding to each of the first six quarters ending after the Effective Date. The royalty
reports shall contain all particulars that may be necessary for the purpose of determining the
amounts payable to MKS hereunder. In addition, these reports shall include at least the
following:

 

 

     3.11.1 name, model number, order (or invoice) number, and quantity provided;

     3.11.2 accounting for Net Sales, including Advanced Energy’s invoice amount
and the applicable deductions; and

     3.11.3 royalty rates and royalties due under Section 3.8.

     3.12 Notwithstanding any other provision in this Settlement Agreement, Advanced
Energy shall furnish whatever additional information the independent firm specified in Section
3.9 may reasonably request from time-to-time to ascertain the amount of royalties due to MKS
hereunder.

     3.13 The amounts due under Section 3.8 shall, if overdue, bear interest until payment
at a per-annum rate Two Percentage points (2%) above the prime rate as published in the Wall
Street Journal on the due date, provided, however, that if the amount of such late payment charge
exceeds the maximum permitted by law for any such charge., such charge shall be reduced to
such maximum amount. The payment of such interest shall not foreclose MKS from exercising
any other rights it may have as a consequence of the lateness of any payment.

     3.14 In the event the exchange rate specified in Section 3.9 shall be discontinued, or
the prime rate specified in Section 3.13 becomes unavailable for any reason, the exchange or
prime rate issued by the largest bank in New York City in terms of assets, issuing an exchange or
prime rate, shall be used.

     3.15 Advanced Energy shall keep full, true and accurate books of account containing
all particulars that may be necessary for the purpose of determining the amounts payable to MKS
hereunder. Said books of account (and all other records and accounts as may, under recognized
accounting practices, contain information bearing upon the amount of royalty payable to MKS
under this Settlement Agreement) shall be kept at Advanced Energy in its Fort Collins, Colorado
facility. Said books and the supporting data shall be open at all reasonable times for three (3)
years following the end of the calendar year to which they pertain, to the inspection of the
independent firm specified in Section 3.9, solely at the discretion of MKS, for the purpose of
verifying Advanced Energy’s royalty statement or compliance in other respects with this
Settlement Agreement. MKS shall have the right to have such independent firm conduct such
inspection at such Advanced Energy facility once per year after providing thirty (30) days
written notice to Advanced Energy. Should such inspection lead to the discovery of a greater
than five percent (5%) discrepancy in royalty reporting to the detriment of MKS, Advanced
Energy agrees to pay the full cost of such inspection.

     3.16 Prompt adjustment shall be made to the proper party to compensate for any errors
or omissions disclosed by such examination or audit. Neither such right to examine and audit
nor the right to receive such adjustments shall be affected by any statement to the contrary,
appearing on checks or otherwise, unless such statement appears in a letter signed by the party
having such right and delivered to the other party, expressly waiving such right.

 

 

     3.17
Advanced Energy shall at all times during the term of this Settlement Agreement and
thereafter, indemnify, defend and hold MKS, its trustees, directors, officers, employees and
affiliates, harmless against all claims, proceedings, demands and liabilities of any kind
whatsoever, including legal expenses and reasonable attorneys fees, arising out of the death of or
injury to any person or persons or out of any damage to property, resulting from the production,
manufacture, sale, use, lease, consumption or advertisement of the Licensed Products or arising
from any obligation of Advanced Energy hereunder.

4.0 CONSENT JUDGMENT, MUTUAL RELEASE AND COVENANT NOT TO SUE

     4.1 Within three business days of the Effective Date of this Settlement Agreement,
the parties shall: (1) jointly file a letter withdrawing all pending motions and requesting the
United States District Court for the District of Delaware to enter a Final Judgment in Civil
Action No. 03-469 (JJF) in the form attached hereto (Exhibit 1); (2) file stipulations of dismissal
in the United States District Court for the District of Delaware to dismiss with prejudice all
claims and counterclaims in Civil Action 04-014 (JJF), each party to bear its own costs; and (3)
dismiss all actions in Germany related to European Patent 0 992 059 Bl and German part DE
698 11 497 T2 of the European Patent 0992 059 Bl, including the infringement action and the
nullity action in Germany.

     4.2 MKS, on behalf of itself and its predecessors, successors, assigns, executors,
administrators, and its past, present and future officers, directors, employees, parents,
subsidiaries, divisions, attorneys, representatives, shareholders, trustees, agents, and advisors,
hereby releases, remises and forever discharges Advanced Energy and all of its predecessors,
successors, assigns, executors, administrators, and each of their past, present and future officers,
directors, employees, parents, subsidiaries, divisions, attorneys, representatives, shareholders,
trustees, agents, and advisors, from and on any and all Claims.

     4.3 Advanced Energy, on behalf of itself and its predecessors, successors, assigns,
executors, administrators, and its past, present and future officers, directors, employees, parents,
subsidiaries, divisions, attorneys, representatives, shareholders, trustees, agents, and advisors,
hereby releases, remises and forever discharges MKS and all of its predecessors, successors,
assigns, executors, administrators, and each of their past, present and future officers, directors,
employees, parents, subsidiaries, divisions, attorneys, representatives, shareholders, trustees,
agents, and advisors, from and on any and all Claims.

     4.4 Advanced Energy, hereby represents, warrants, covenants and agrees that (a) it
will refrain and forebear from instituting, commencing or prosecuting any litigation, action or
other proceeding against MKS based on, or arising out of or in connection with, any Claim that
is released, discharged, waived, relinquished, renounced or terminated by reason of Section 4.3
of this Settlement Agreement, and from in any way authorizing, enabling, assisting or
encouraging any third party to do so; and (b) it will refrain and forebear from instituting,
commencing or prosecuting any litigation, action or other proceeding against MKS based on, or
arising out of or in connection with MKS Instrument’s manufacture, use, sale, offering for sale,
or importation of any Toroidal Plasma Generator Product. Advanced Energy further represents,
warrants, covenants and agrees that it has not assigned or granted any right to any third party

 

 

with respect to any such claim and will not do so. Advanced Energy agrees that the remedy
for any breach of this Section 4.4 of this Settlement Agreement shall be immediate dismissal of all
such claims with prejudice and an award to MKS of all legal costs and fees associated with the
proceeding, including attorney fees.

5.0 GENERAL PROVISIONS

     5.1 Assignment. This Settlement Agreement shall be binding upon and inure to the
benefit of each party and its respective heirs, representatives, successors and assigns, including
as the result of or in connection with any merger, consolidation, sale, or other transfer of all or
substantially all of the assets or business of a party to which this Settlement Agreement relates
and also including as the result of or in connection with a sale of a division or product line
related to any Toroidal Plasma Generator Product. Subject to the foregoing, no party may assign
its rights or delegate its obligations under this Settlement Agreement, in whole or in part, without
the express written consent of the other parties. Any purported assignment or delegation in
violation of this provision shall be null and void.

     5.2
Absence of Implied Terms. Nothing contained in this Settlement Agreement shall
be construed as a warranty or representation as to the validity or scope of any patent.

     5.3 Reexamination and Validity. Advanced Energy shall be precluded from (a)
challenging the validity or enforceability of any of the U.S. Toroidal Plasma Generator Patents,
(b) engaging in any equivalent proceeding or making any equivalent claim with respect to any of
the Foreign Toroidal Plasma Generator Patents, (c) requesting reexamination of any Subject
Patent, and (d) assisting any other Person from engaging in any of the activities listed in this
Section 5.3 (a)-(c).

     5.4 No Partnership. Nothing contained in this Settlement Agreement shall be
construed as creating any relationship of agency, partnership, franchise, joint ventures,
employment or similar relationship between the parties.

     5.5 No Inducement. Each Party hereto represents and warrants that no promise or
other inducement to enter into this Settlement Agreement has been made to such Party that is not
expressly set forth in this Settlement Agreement.

     5.6 Duly Existing. Each of the parties represents and warrants that it is duly existing,
and each party hereto represents and warrants that it has the full power and authority to enter into
this Settlement Agreement, and that there are no other persons or entities whose consent to this
Settlement Agreement or whose joinder herein is necessary to make fully effective the provisions
of this Settlement Agreement.

     5.7 Legal Representation. Each party represents that it has had the opportunity to be
represented by counsel of its choice in negotiating this Settlement
Agreement. This Settlement
Agreement shall therefore be deemed to have been negotiated and prepared at the joint request,
direction, and instruction of each of the parties, at arms length, with the advice and
participation of counsel, and will be interpreted in accordance with its terms without favor to either
Party.

 

 

     5.8 Governing Law, Jurisdiction and Venue. This Settlement Agreement shall be
governed by, interpreted and construed in accordance with the laws of Massachusetts, without
reference to conflict of laws principles. Venue for any dispute arising under or resulting from
this Settlement Agreement shall be in Massachusetts and each of the parties hereby irrevocably
submits to the jurisdiction of the United States federal court (or, if such court does not have
subject matter jurisdiction, a state court) sitting in Massachusetts in any action, suit or
proceeding brought against it by the other party arising under, resulting from, or related to this
Settlement Agreement.

     5.9 Waiver. No waiver of any breach of any provision of this Settlement Agreement
shall constitute a waiver of any prior, concurrent or subsequent breach of the same or any
provisions hereof, and no waiver shall be effective unless made in writing and signed by an
authorized representative of the waiving party.

     5.10 Modifications In Writing. This Settlement Agreement may not be modified,
amended or supplemented except by written agreement executed by the duly authorized
representatives of each of the parties. No waiver of any provision of this Settlement Agreement
shall be valid or effective unless made in writing and signed by a duly authorized representative
of the party to be bound by such waiver,

     5.11
Notices. Any notice required or permitted by this Settlement Agreement shall be
in writing and shall be sent by a reliable overnight courier service, return receipt requested by
prepaid registered or certified mail, return receipt requested, or by facsimile to the other party at
the address below or to such other address for which such party shall give notice hereunder. Such
notice shall be deemed to have been given one (1) day or five (5) days, respectively, after the
date of sending by courier or by mail, or upon confirmed receipt if delivered by facsimile, except
that notice of change of address shall be effective only upon receipt.

If to MKS:

Leo Berlinghieri

President and CEO

MKS Instruments, Inc.

Corporate Headquarters

90 Industrial Way,

Wilmington, Massachusetts 01887

Fax: 978-284-4999

With cc to:

Joseph A. Capraro, Jr.

Proskauer Rose LLP 

One International Place

Boston, MA 02110 

Fax: 1-617-526-9899

 

 

]

If to Advanced Energy:

Hans Betz

President and CEO

Advanced Energy Industries, Inc.

1625 Sharp Point Drive

Fort Collins, CO 80525

Fax: 1-970-221-5583

With cc to:

James P. Brogan

Cooley Godward LLP

380 Interlocken Crescent, Suite 900

Broomfield, CO 80021

Fax: 1-720-566-4099

     5.12
Severability. If any provision of this Settlement Agreement shall be determined
to be invalid, illegal or unenforceable under any controlling body of law, that provision shall be
reformed, construed and enforced to the maximum extent permissible; and the validity, legality,
and enforceability of the remaining provisions shall not in any way be affected or impaired
thereby.

     5.13 Section Headings. The section headings used in this Settlement Agreement and
the attached Exhibits shall be intended for convenience only and shall not be deemed to
supersede or modify any provisions.

     5.14 Entire Agreement. This Settlement Agreement sets forth the entire agreement and
understanding between the parties as to the subject matter and merges all prior discussions
between them, and neither of the parties shall be bound by any conditions, definitions,
warranties, understandings or representations with respect to such subject matter other than as
expressly provided herein, or in any written agreement between the parties executed subsequent
to the date of execution hereof; and signed by a proper duly authorized representative of the
party to be bound thereby.

     5.15 Counterparts. This Settlement Agreement may be signed in counterparts, each of
which shall be deemed an original hereof, but all of which together shall constitute one and the
same instrument.

     5.16 Terms of Agreement Confidential. The parties agree that the terms of this
Agreement constitute confidential information. Except for the disclosure by MKS substantially
in the form attached hereto (Exhibit 2), each party will not: (i) otherwise issue any press releases
concerning the terms of this Agreement without the written consent of the other party; or (ii)
disclose the terms of this Agreement to any Person without the prior written consent of the other
party. Notwithstanding the prohibition in this paragraph, the Parties may disclose terms of this

 

 

Agreement: (i) in confidence to their respective attorneys, accountants, auditors, tax preparers,
and financial advisors; (ii) as necessary to fulfill standard or legally required corporate
reporting or disclosure requirements; (iii) upon request from any government entity; (iv) to the
extent necessary to comply with a validly issued court order; and (v) insofar as such disclosure
may be necessary to enforce its terms or as otherwise required by law.

IN WITNESS WHEREOF, the parties hereto have duly executed this Settlement Agreement by their
respective authorized representative on the date(s) specified below.

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	MKS Instruments, Inc.

	 	 	 	Applied Science and Technology, Inc.	 	 
	 
	 	 	 	 	 	 
	/s/
Leo Berlinghieri

	 	 	 	/s/ Ronald C. Weigner	 	 
	 

	 	 	 	 	 	 
	By: Leo Berlinghieri

	 	 	 	By: Ronald C. Weigner	 	 
	President and CEO

	 	 	 	Treasurer	 	 
	 
	 	 	 	 	 	 
	Advanced Energy Industries, Inc.
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	/s/ Hans Betz
	 	 	 	 	 	 
	 	 	 	 	 	 	 
	By: Hans Betz
	 	 	 	 	 	 
	President and CEO
	 	 	 	 	 	 

 

 

EXHIBIT 1

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF DELAWARE

	 	 	 	 	 	 	 
	 

	 	 	)	 	 	 
	MKS INSTRUMENTS INC. and APPLIED
	 	 	)	 	 	 
	SCIENCE AND TECHNOLOGY, INC.,

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	                                                         Plaintiffs,

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	v.

	 	 	)	 	 	Civil Action No. 03-469 (JJF)
	 

	 	 	)	 	 	 
	ADVANCED ENERGY INDUSTRIES, INC.,

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	                                                        Defendant.

	 	 	)	 	 	 
	

	 	 	)	 	 	 
	 

	 	 	 	 	 	 

FINAL JUDGMENT

     This
action came on for trial before the Court and a jury, Honorable Joseph J. Farnan, Jr.,
District Judge, presiding, and the issues having been tried and the jury having rendered its
verdict on July 23, 2004, and answered the Special Verdict form;

     AND, on Defendant’s withdrawal of all pending motions, including its motion for judgment as a
matter of law, and its claim of inequitable conduct, and on Plaintiffs’ withdrawal of all pending
motions and its request for trial on damages and willful infringement;

     NOW THEREFORE, IT IS ORDERED AND ADJUDGED that Judgment on the claim of infringement of U.S.
Patent No. 6,150,628 (the ‘628 patent), U.S. Patent No. 6,388,226 (the ‘226 patent), and U.S.
Patent No. 6,552,296 (the ‘296 patent) (collectively the “Patents-in-Suit”) is entered in favor of
Plaintiffs, MKS Instruments, Inc. and Applied Science and Technology, Inc., and against Defendant
Advanced Energy Industries, Inc.;

     AND IT IS FURTHER ORDERED that Advanced Energy Industries, Inc. its officers, directors,
employees, agents, and affiliates, and all other persons who receive actual notice of this order by
personal service or otherwise and who are acting in active concert or participation with Advanced
Energy Industries, Inc. and its officers, directors, employees, agents, and affiliates, (all,
collectively, “Advanced Energy”) are enjoined from infringing claims 1,19, and 42 of the ‘628
patent, claims 20, 21, and 24 of the ‘226 patent, and claims 1, 3,15, and 18 of the ‘296 patent,
until such time as said patents expire, and more particularly (subject to whatever limited rights
are given to Advanced Energy by MKS Instruments pursuant to a Settlement Agreement dated October 3,
2005) are hereby enjoined from making, using, selling, offering to sell, or importing into the
United States Advanced Energy Industries, Inc.’s Rapid, Rapid FE, Rapid OE, Xstream and any other
products related to or derived therefrom.

 

 

DATED AT
WILMINGTON, DELAWARE, THIS              DAY OF                                         , 2005

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	     Judge Joseph J. Farnan, Jr.	 	 
	 

	 	 	 	     United States District Judge	 	 

 

 

EXHIBIT 2

On October 3, 2005, MKS Instruments, Inc. and its subsidiary, Applied Science and Technology, Inc.
(collectively, “MKS”) and Advanced Energy Industries, Inc. (“Advanced Energy”) executed a
Settlement Agreement in connection with the patent infringement suit MKS had brought against
Advanced Energy in federal district court in Delaware. Pursuant to the Settlement Agreement, the
court issued a final judgment of infringement, and an injunction prohibiting Advanced Energy from
making, using, selling, offering to sell, or importing into the United States its Rapid, Rapid FE,
Rapid OE, Xstream products.

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