Document:

exv10w1

Exhibit 10.1

ASSET PURCHASE AGREEMENT

dated as of July 21, 2010

between

Hitachi Metals, Ltd.

and

Advanced Energy Industries, Inc.

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	ARTICLE I
	 	DEFINITIONS	 	 	1	 
	1.1
	 	Definitions	 	 	1	 
	1.2
	 	Other Defined Terms	 	 	6	 
	ARTICLE II
	 	PURCHASE AND SALE	 	 	9	 
	2.1
	 	Purchase and Sale of the Purchased Assets	 	 	9	 
	2.2
	 	Excluded Assets	 	 	11	 
	2.3
	 	Assumed Liabilities	 	 	11	 
	2.4
	 	Purchase Price	 	 	13	 
	2.5
	 	Purchase Price Adjustment	 	 	13	 
	2.6
	 	Allocation	 	 	14	 
	2.7
	 	Consents	 	 	14	 
	ARTICLE III
	 	CLOSING	 	 	15	 
	3.1
	 	Closing Date	 	 	15	 
	3.2
	 	Deliveries by Seller at the Closing	 	 	16	 
	3.3
	 	Deliveries by Buyer at the Closing	 	 	17	 
	ARTICLE IV
	 	REPRESENTATIONS AND WARRANTIES OF SELLER	 	 	17	 
	4.1
	 	Organization and Good Standing	 	 	18	 
	4.2
	 	Authority and Enforceability	 	 	18	 
	4.3
	 	No Conflicts; Consents	 	 	18	 
	4.4
	 	Financial Statements	 	 	19	 
	4.5
	 	No Undisclosed Liabilities	 	 	19	 
	4.6
	 	Inventory	 	 	19	 
	4.7
	 	Taxes.	 	 	20	 
	4.8
	 	Compliance with Law	 	 	21	 
	4.9
	 	Business Authorizations	 	 	22	 
	4.10
	 	Title to Personal Properties	 	 	22	 
	4.11
	 	Condition of Tangible Assets	 	 	22	 
	4.12
	 	Real Property	 	 	23	 
	4.13
	 	Intellectual Property.	 	 	24	 
	4.14
	 	Absence of Certain Changes or Events	 	 	28	 
	4.15
	 	Contracts	 	 	29	 

i

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	4.16
	 	Sufficiency of Purchased Assets	 	 	31	 
	4.17
	 	Litigation	 	 	31	 
	4.18
	 	Employee Benefits.	 	 	31	 
	4.19
	 	Labor and Employment Matters.	 	 	34	 
	4.20
	 	Environmental.	 	 	37	 
	4.21
	 	Insurance	 	 	39	 
	4.22
	 	Product Warranty	 	 	40	 
	4.23
	 	Suppliers and Customers	 	 	41	 
	4.24
	 	Solvency	 	 	41	 
	4.25
	 	Brokers or Finders	 	 	41	 
	4.26
	 	FCPA	 	 	41	 
	4.27
	 	Completeness of Disclosure	 	 	42	 
	ARTICLE V
	 	REPRESENTATIONS AND WARRANTIES OF BUYER	 	 	42	 
	5.1
	 	Organization and Good Standing	 	 	42	 
	5.2
	 	Authority and Enforceability	 	 	42	 
	5.3
	 	No Conflicts; Consents	 	 	43	 
	5.4
	 	Litigation	 	 	43	 
	5.5
	 	Availability of Funds	 	 	43	 
	5.6
	 	Brokers or Finders	 	 	43	 
	ARTICLE VI
	 	COVENANTS OF SELLER	 	 	43	 
	6.1
	 	Conduct of Business	 	 	43	 
	6.2
	 	Negative Covenants	 	 	44	 
	6.3
	 	Access to Information; Investigation; Conducting of Physical Inventory	 	 	45	 
	6.4
	 	Confidentiality	 	 	46	 
	6.5
	 	Release of Liens	 	 	46	 
	6.6
	 	Consents	 	 	46	 
	6.7
	 	Notification of Certain Matters	 	 	47	 
	6.8
	 	Restrictive Covenants	 	 	47	 
	6.9
	 	Reserved	 	 	48	 
	6.10
	 	Environmental Investigation	 	 	48	 
	6.11
	 	Exclusivity	 	 	48	 

ii

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	ARTICLE VII
	 	COVENANTS OF BUYER AND SELLER	 	 	49	 
	7.1
	 	Regulatory Approvals	 	 	49	 
	7.2
	 	Public Announcements	 	 	50	 
	7.3
	 	Names	 	 	50	 
	7.4
	 	Employees.	 	 	51	 
	7.5
	 	Taxes and Transfer Costs.	 	 	53	 
	7.6
	 	JSI Agreement	 	 	54	 
	7.7
	 	Bulk Sales Laws	 	 	54	 
	7.8
	 	Discharge of Business Obligations After Closing	 	 	54	 
	7.9
	 	Access to Books and Records	 	 	54	 
	7.10
	 	Continuity of Supply	 	 	55	 
	7.11
	 	Customer Communications	 	 	55	 
	7.12
	 	Further Assurances	 	 	55	 
	ARTICLE VIII
	 	CONDITIONS TO CLOSING	 	 	55	 
	8.1
	 	Conditions to Obligations of Buyer and Seller	 	 	55	 
	8.2
	 	Conditions to Obligation of Buyer	 	 	56	 
	8.3
	 	Conditions to Obligation of Seller	 	 	57	 
	ARTICLE IX
	 	TERMINATION	 	 	58	 
	9.1
	 	Termination	 	 	58	 
	9.2
	 	Effect of Termination	 	 	59	 
	9.3
	 	Remedies	 	 	59	 
	ARTICLE X
	 	INDEMNIFICATION	 	 	60	 
	10.1
	 	Survival	 	 	60	 
	10.2
	 	Indemnification by Seller	 	 	60	 
	10.3
	 	Indemnification by Buyer	 	 	61	 
	10.4
	 	Indemnification Procedures for Third Party Claims	 	 	62	 
	10.5
	 	Indemnification Procedures for Non-Third Party Claims	 	 	65	 
	10.6
	 	Effect of Investigation; Waiver	 	 	65	 
	10.7
	 	Exclusive Remedy	 	 	65	 
	ARTICLE XI
	 	MISCELLANEOUS	 	 	65	 
	11.1
	 	Notices	 	 	65	 

iii

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	11.2
	 	Amendments and Waivers	 	 	66	 
	11.3
	 	Expenses	 	 	67	 
	11.4
	 	Successors and Assigns	 	 	67	 
	11.5
	 	Governing Law	 	 	67	 
	11.6
	 	Consent to Jurisdiction	 	 	67	 
	11.7
	 	Counterparts	 	 	67	 
	11.8
	 	Third Party Beneficiaries	 	 	68	 
	11.9
	 	Entire Agreement	 	 	68	 
	11.10
	 	Captions	 	 	68	 
	11.11
	 	Severability	 	 	68	 
	11.12
	 	Specific Performance	 	 	68	 
	11.13
	 	Interpretation	 	 	68	 

iv

 

ASSET PURCHASE AGREEMENT

     ASSET PURCHASE AGREEMENT, dated as of July 21, 2010 (the “Agreement”), between Hitachi Metals,
Ltd., a Japanese corporation (“Buyer”), and Advanced Energy Industries, Inc., a Delaware
corporation (“Seller”).

     WHEREAS, Seller and certain of its Subsidiaries (as hereinafter defined), including Advanced
Energy Japan, K.K. and Advanced Energy Shenzhen (collectively, the “Seller Group”) are engaged in
the business of the development, manufacture, production, marketing, sale and distribution of the
gas and liquid flow-management systems, mass flow controller products and exhaust pressure valve
products set forth on Schedule I attached hereto (the “Flow Products”) and the services related
thereto (the “Business”); and

     WHEREAS, the parties desire that the Seller Group sell, assign, transfer, convey and deliver
to Buyer, and that Buyer purchase and acquire from the Seller Group, all of the right, title and
interest of the Seller Group in and to the Purchased Assets (as hereinafter defined), and that
Buyer assume the Assumed Liabilities (as hereinafter defined), upon the terms and subject to the
conditions of this Agreement.

     NOW, THEREFORE, in consideration of the foregoing premises and the respective representations
and warranties, covenants and agreements contained herein, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

     1.1 Definitions. When used in this Agreement, the following terms shall have the
meanings assigned to them in this Article I or in the applicable Section of this Agreement to which
reference is made in this Article I.

     “Accounts Receivable” means (a) any trade accounts receivable and other rights to payment from
customers for the sale of Flow Products and (b) any other account or note receivable Related to the
Business, together with, in each case, the full benefit of any security interest of any member of
the Seller Group therein.

     “Affiliate” means, with respect to any specified Person, any other Person directly or
indirectly controlling, controlled by or under common control with such specified Person.

     “Ancillary Agreements” means the Bill of Sale, the Assignment and Assumption Agreement, the
Master Services Agreement, the Authorized Service Provider Agreement, the China Asset Transfer
Agreement, the Japan Office Space Lease, the Japan Real Estate Purchase Agreement, the IP
Assignments, the Software License Agreement, the Sublease Agreements and the other agreements,
instruments and documents delivered at the Closing.

     “Authorization” means any authorization, approval, consent, certificate, license, permit or
franchise of or from any Governmental Entity or pursuant to any Law.

     “Benefit Plan” means (a) any “employee benefit plan” as defined in ERISA Section 3(3),
including any (i) nonqualified deferred compensation or retirement plan or arrangement which is an
Employee Pension Benefit Plan (as defined in ERISA Section 3(2)), (ii) qualified defined
contribution retirement plan or arrangement which is an Employee Pension Benefit Plan, (iii)
qualified defined benefit retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multiemployer

 

 

Plan (as defined in ERISA Section 3(37)) and (iv) Employee Welfare Benefit Plan (as defined in
ERISA Section 3(1)) or material fringe benefit plan or program, or (b) stock purchase, stock
option, severance pay, employment, change-in-control, vacation pay, company awards, salary
continuation, sick leave, excess benefit, bonus or other incentive compensation, life insurance, or
other employee benefit plan, contract, program, policy or other arrangement, whether or not subject
to ERISA.

     “Books and Records” means books of account, general, financial, warranty and shipping records,
invoices, supplier lists, product specifications, product formulations, drawings, correspondence,
engineering, maintenance, operating and production records, advertising and promotional materials,
credit records of customers and other documents, records and files, in each case Related to the
Business, including books and records relating to Seller Group Intellectual Property and the
employee and personnel records of the Transferred Employees.

     “Business Day” means a day other than a Saturday, Sunday or other day on which banks located
in New York, New York USA or Tokyo, Japan are authorized or required by Law to close.

     “Business Employee” means any of the employees of the Seller Group listed on Schedule 1.1(a)
attached hereto.

     “Change in Control’ shall be deemed to have occurred when (i) any “person” or “group” (as such
terms are used in Sections 13(e) and 14(d) of the Exchange Act) is or becomes the beneficial owner
of shares representing more than 50% of the combined voting power of the then outstanding
securities entitled to vote generally in elections of directors of Seller (the “Voting Stock”) or
(ii) Seller (A) consolidates with or merges into any other corporation or any other corporation
merges into Seller, and in the case of any such transaction, the outstanding Common Stock of Seller
is changed or exchanged into other assets or securities as a result, unless the stockholders of
Seller immediately before such transaction own, directly or indirectly immediately following such
transaction, at least a majority of the combined voting power of the outstanding voting securities
of the corporation resulting from such transaction in substantially the same proportion as their
ownership of the Voting Stock immediately before such transaction, or (B) conveys or transfers all
or substantially all of its assets to any Person.

     “Charter Documents” means, with respect to any entity, the certificate of incorporation, the
articles of incorporation, by-laws, articles of organization, limited liability company agreement,
partnership agreement, formation agreement, joint venture agreement or other similar organizational
documents of such entity (in each case, as amended).

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

     “Contract” means any agreement, contract, license, lease, commitment, arrangement or
understanding, written or oral, including any Open Customer Purchase Orders or Open Supplier
Purchase Orders.

     “Equipment” means machinery, fixtures, furniture, supplies, accessories, materials, equipment
including all manufacturing and test equipment, parts, tooling, tools, molds, office equipment,
computers, telephones and all other items of tangible personal property, in each case Related to
the Business.

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

     “ERISA Affiliate” means any entity which is a member of a “controlled group of corporations”
with, under “common control” with or a member of an “affiliated services group” with, the Seller
Group, as defined in Section 414(b), (c), (m) or (o) of the Code.

2

 

     “Excluded Intellectual Property” means the rights, title and interest of a member of the
Seller Group in, to or under the Retained Names, the SAP Licenses, the Seller’s proprietary factory
information system software being licensed to Buyer pursuant to the Software License Agreement, and
other Intellectual Property, including standard, off-the-shelf software licenses, that is set forth
on Schedule 4.15(a)(xiv).

     “Foreign Antitrust Laws” means the antitrust and competition Laws of all jurisdictions other
than those of the United States.

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

     “Governmental Entity” means any entity or body exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to United States federal, state, local, or
municipal government, foreign, Japanese national, prefectural or city government or other
instrumentality or political subdivision thereof, international, multinational or other government,
including any department, commission, board, agency, bureau, subdivision, instrumentality, official
or other regulatory, administrative or judicial authority thereof, and any non-governmental
regulatory body to the extent that the rules and regulations or orders of such body have the force
of Law.

     “Governmental Order” means any award, injunction, judgment, decree, order, ruling, subpoena or
verdict or other decision issued, promulgated or entered by or with any Governmental Entity of
competent jurisdiction.

     “Indebtedness” means any of the following: (a) any indebtedness for borrowed money, (b) any
obligations evidenced by bonds, debentures, notes or other similar instruments, (c) any obligations
to pay the deferred purchase price of property or services, except trade accounts payable and other
current Liabilities arising in the ordinary course of the Business, (d) any obligations as lessee
under capitalized leases, (e) any indebtedness created or arising under any conditional sale or
other title retention agreement with respect to acquired property, (f) any obligations, contingent
or otherwise, under acceptance credit, letters of credit or similar facilities, and (g) any
guaranty of any of the foregoing.

     “Indemnitee” means any Person that is seeking indemnification from an Indemnitor pursuant to
the provisions of this Agreement.

     “Indemnitor” means any party hereto from which any Indemnitee is seeking indemnification
pursuant to the provisions of this Agreement.

     “Inventory” means all raw materials, work-in-process, finished goods, supplies, manufactured
and processed parts, spare parts and other inventories Related to the Business, including all such
items (a) located on the Real Property, (b) in transit from suppliers of the Business, (c) held for
delivery by suppliers of the Business, or (d) held on consignment by third parties.

     “Knowledge” of Seller or any similar phrase means, with respect to any fact or matter, the
actual knowledge of the individuals identified on Schedule 1.1(b) attached hereto, together with
such knowledge that such individuals could reasonably be expected to discover after due inquiry
concerning the existence of the fact or matter in question, including due inquiry of the directors,
executive officers and other vice president level and above employees of Seller having direct
responsibility relating to the matter in question.

3

 

     “Law” means any statute, law (including common law), constitution, treaty, ordinance, code,
order, decree, judgment, rule, regulation and any other binding requirement or determination of any
Governmental Entity.

     “Lien” means, with respect to any property or asset, any mortgage, lien, pledge, charge,
security interest, adverse claim or other encumbrance in respect of such property or asset.

     “Material Adverse Change” means any fact, circumstance, event, change, effect or occurrence
that, individually or in the aggregate with all other facts, circumstances, events, changes,
effects or occurrences (a) has had or would reasonably be expected to have a material adverse
effect on the condition (financial or otherwise) or operations of the Business or the Purchased
Assets and Assumed Liabilities, taken as a whole, or (b) would materially impair the ability of the
Seller to consummate the transactions contemplated by this Agreement and excluding the effect of
(i) any change generally affecting the industry in which the Business operates (including general
pricing changes affecting the industry as a whole); (ii) any change in the economy or the financial
or securities markets in the United States or elsewhere in the world; (iii) any outbreak or
escalation of hostilities, declared or undeclared acts of war, sabotage or terrorism, or other
force majeure events; in each case as to clauses (i) — (iii) above as do not have a
disproportionate effect on the Seller Group, (iv) any actions taken, or actions not taken, or such
other changes or conditions, in each case that the Buyer and the Seller have approved or consented
to, or required by the terms of this Agreement or any Ancillary Agreement, and (v) the announcement
of this Agreement and the transactions contemplated hereby, including the termination, modification
or, or reduction in, any Contracts with any customers, suppliers, distributors or contractors of
any member of the Seller Group, as the case may be, to the extent due to the announcement and
performance of this Agreement or the identity of the Buyer or the Seller, as the case may be, or
the performance of this Agreement and the consummation of the transactions contemplated hereby;
provided, however, that the foregoing clause (v) shall not apply to any loss or reduction of
Business Employees other than to the extent the loss of Business Employees arises out of or is due
to the terms of employment offered by Buyer to any such Business Employee, the effect of which
shall be excluded from the determination of whether a Material Adverse Change has occurred.

     “Material Customers and Suppliers” means the customers and suppliers listed on Schedule 1.1(c)
hereto.

     “Open Customer Purchase Orders” means Seller’s backlog of unfilled purchase orders from
customers of Seller for the purchase from Seller or a member of the Seller Group of Flow Products
with a scheduled delivery date after the Closing Date.

     “Open Source Materials” means any software that contains, or is derived in any manner (in
whole or in part) from, any software that is distributed as free software, open source software
(e.g., Linux) or similar licensing or distribution models, including software licensed or
distributed under any of the following licenses or distribution models, or licenses or distribution
models similar to any of the following: (a) GNU’s General Public License (GPL) or Lesser/Library
GPL, (b) the Artistic License (e.g., PERL), (c) the Mozilla Public License, (d) the Netscape Public
License, (e) the Sun Community Source License (SCSL), (f) the Sun Industry Standards License
(SISL), (g) the BSD License, and (h) the Apache License.

     “Open Supplier Purchase Orders” means purchase orders to suppliers of Seller for the purchase
by Seller of raw materials, supplies, parts and other items used for the manufacture of Flow
Products by Seller or a member of the Seller Group with a scheduled delivery date after the Closing
Date.

4

 

     “Permitted Liens” means (a) Liens for current real or personal property Taxes not yet due and
payable and with respect to which the Seller Group maintains adequate reserves, (b) workers’,
carriers’ and mechanics’ or other like Liens incurred in the ordinary course of the Business with
respect to which payment is not due and that do not impair the conduct of the Business or the
present or proposed use of the affected property and (c) Liens that are immaterial in character,
amount, and extent and which do not detract from the value or interfere with the present or
proposed use of the properties they affect.

     “Person” means an individual, a corporation, a partnership, a limited liability company, a
trust, an unincorporated association, a Governmental Entity or any other entity or body.

     “Pre-Closing Environmental Liabilities” means Liabilities arising under Environmental Law
arising out of or related to (a) the ownership or operation of the Business at any time on or prior
to the Closing or (b) the ownership, operation or condition of the Real Property or any other real
property currently or formerly owned, operated or leased by any member of the Seller Group Related
to the Business at any time on or prior to the Closing, including but not limited to any such
Liabilities based upon or arising out of (i) a failure to obtain, maintain or comply with any
Environmental Permit, (ii) a Release of any Hazardous Substance, or (iii) the use, generation,
storage, transportation, treatment, sale or other off-site disposal of Hazardous Substances.

     “Related to the Business” means used, held for use or acquired or developed for use in the
Business or otherwise necessary to, or arising out of, the operation or conduct of the Business, in
each case excluding the services for repair or servicing of the Flow Products provided by the
Seller Group at its Service Centers.

     “SAP License” means the R/3 Software Individual End User License Agreement dated September 29,
1995 by and between Seller and SAP America, Inc., as amended.

     “Seller Owned Intellectual Property” means Intellectual Property that is owned (exclusively,
jointly with another Person or otherwise) by any member of the Seller Group, that constitutes
Purchased Assets and is Related to the Business as it is currently conducted or as proposed to be
conducted, including, without limitation, the Intellectual Property set forth in Schedule 2.1(e).

     “Service Centers” means the Seller’s facilities, or the facilities of Seller’s designees in
locations in which Seller does not have a physical presence, to service Flow Products located in
Seoul, Korea; Shanghai, China; Taipei, Taiwan; Singapore; Filderstadt, Germany; Dresden, Germany;
Austin, Texas; Dallas, Texas; and the portion of the facility in Hachioji, Japan designated for
service of Flow Products.

     “Service-Related Inventory” means (i) raw materials designated for use in the repair or
servicing of Flow Products, and (ii) repaired or refurbished products designated for use as
replacement units for Flow Products, in each case located at Service Centers (other than in
Seller’s facilities in Hachioji, Japan).

     “Subsidiary” or “Subsidiaries” means, with respect to any party, any Person, of which at least
a majority of the securities or other interests having by their terms ordinary voting power to
elect a majority of the board of directors or others performing similar functions with respect to
such Person is directly or indirectly owned or controlled by such party and/or by any one or more
of its Subsidiaries.

     “Tax” or “Taxes” means any and all federal, state, local, or foreign net or gross income,
gross receipts, net proceeds, sales, transfer, use, ad valorem, value added, franchise, bank
shares, withholding, payroll, employment, excise, property, deed, stamp, alternative or add-on
minimum, environmental, profits, windfall profits, transaction, license, lease, service, service
use, occupation, severance, energy,

5

 

unclaimed property, escheat, unemployment, social security, workers’ compensation, capital,
premium, and other taxes, assessments, customs, duties, fees, levies, or other governmental charges
of any nature whatever, whether disputed or not, together with any interest, penalties, additions
to tax, or additional amounts with respect thereto.

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

     “Taxing Authority” means any Governmental Entity having jurisdiction with respect to any Tax.

     “WARN Act” means the Worker Adjustment and Retraining Notification Act of 1988.

     “$” means United States dollars.

     1.2 Other Defined Terms. The following terms have the meanings assigned to such terms
in the Sections of the Agreement set forth below:

			
	Accounting Principles
	 	 2.6(a)(i)
	 	 	 
	Action
	 	 4.17(a)
	 	 	 
	Agreement
	 	Preamble
	 	 	 
	Allocation Statement
	 	 2.7
	 	 	 
	Applicable Survival Period
	 	 10.1(d)
	 	 	 
	Assigned Business Authorizations
	 	 7.1(d)
	 	 	 
	Assigned Contracts
	 	 2.1(f)
	 	 	 
	Assignment and Assumption Agreement
	 	 3.2(b)
	 	 	 
	Assumed Liabilities
	 	 2.3
	 	 	 
	Authorized Service Provider Agreement
	 	 3.2(d)
	 	 	 
	Balance Sheet Date
	 	 2.6(a)(i)
	 	 	 
	Base Amount
	 	 2.6(a)(ii)
	 	 	 
	Bill of Sale
	 	 3.2(a)
	 	 	 
	Business
	 	Recitals
	 	 	 
	Business Authorizations
	 	 4.9(a)
	 	 	 
	Buyer
	 	Preamble
	 	 	 
	Buyer’s Benefit Plans
	 	 7.4(c)
	 	 	 
	Buyer Closing Certificate
	 	 8.3(c)
	 	 	 
	Buyer Indemnitees
	 	 10.2(a)
	 	 	 
	Buyer Warranty Losses
	 	 10.2(b)
	 	 	 
	Cash Consideration
	 	 2.5(a)
	 	 	 
	CERCLA
	 	 4.20(a)(i)
	 	 	 
	China Asset Transfer Agreement
	 	 3.2(e)
	 	 	 
	Closing
	 	 3.1

6

 

			
	Closing Date
	 	 3.1
	 	 	 
	Closing Inventory Amount
	 	 2.6(a)(iii)
	 	 	 
	Closing Inventory Statement
	 	 2.6(a)(iv)
	 	 	 
	COBRA
	 	 7.4(k)
	 	 	 
	Confidentiality Agreement
	 	 6.3
	 	 	 
	Consents
	 	 4.3(a)
	 	 	 
	Copyrights
	 	 4.13(a)
	 	 	 
	Dispatched Employees
	 	 4.19(g)(viii)
	 	 	 
	Environment
	 	 4.20(a)(ii)
	 	 	 
	Environmental Action
	 	 4.20(a)(iii)
	 	 	 
	Environmental Clean-up Site
	 	 4.20(a)(iv)
	 	 	 
	Environmental Laws
	 	 4.20(a)(v)
	 	 	 
	Environmental Permit
	 	 4.20(a)(vi)
	 	 	 
	Excluded Assets
	 	 2.2
	 	 	 
	Excluded Contracts
	 	 2.2(b)
	 	 	 
	Excluded Liabilities
	 	 2.4
	 	 	 
	FCPA
	 	 4.26
	 	 	 
	Flow Products
	 	Recitals
	 	 	 
	Foreign Plans
	 	 4.18(n)
	 	 	 
	Hazardous Substances
	 	 4.20(a)(vii)
	 	 	 
	In-Bound Licenses
	 	 4.13(a)(c)
	 	 	 
	Intellectual Property
	 	 4.13(a)
	 	 	 
	Intellectual Property Rights
	 	 4.13(a)
	 	 	 
	IP Assignments
	 	 3.2(h)
	 	 	 
	Japan Buildings
	 	 2.1(a)
	 	 	 
	Japan Business Employees
	 	 4.19(g)(i)
	 	 	 
	Japan Collective Bargaining Agreements
	 	 4.19(g)(iii)
	 	 	 
	Japan Land
	 	 2.1(a)
	 	 	 
	Japan Office Space Lease
	 	 3.2(f)
	 	 	 
	Japan Personnel
	 	 4.19(g)(vii)
	 	 	 
	Japan Plans
	 	 4.18(o)
	 	 	 
	Japan Real Estate Purchase Agreement
	 	 3.2(g)
	 	 	 
	Japan Work Rules
	 	 4.19(g)(vi)
	 	 	 
	JSI Agreement
	 	 7.6
	 	 	 
	June Income Statement
	 	 4.4(a)
	 	 	 
	Lease
	 	 4.12(c)

7

 

			
	Leased Real Property
	 	 4.12(a)
	 	 	 
	Liabilities
	 	 4.5
	 	 	 
	Losses
	 	 10.2(a)
	 	 	 
	Marks
	 	 4.13(a)
	 	 	 
	Master Services Agreement
	 	 3.2(c)
	 	 	 
	Material Contracts
	 	 4.15(b)
	 	 	 
	Noncompetition Period
	 	 6.8(a)
	 	 	 
	Nondisclosure Agreements
	 	 4.13(i)
	 	 	 
	Notice of Claim
	 	 10.4(a)
	 	 	 
	Out-Bound Licenses
	 	 4.13(d)
	 	 	 
	Owned Real Property
	 	 4.12(a)
	 	 	 
	Patents
	 	 4.13(a)
	 	 	 
	PCBs
	 	 4.20(i)
	 	 	 
	Pension Plan
	 	 4.18(b)
	 	 	 
	Personal Property
	 	 4.10(a)
	 	 	 
	Policies
	 	 4.21(a)
	 	 	 
	Post-Closing Tax Period
	 	 7.5(b)
	 	 	 
	Pre-Closing Tax Period
	 	 7.5(b)
	 	 	 
	Products
	 	 4.22(a)
	 	 	 
	Proprietary Information
	 	 4.13(a)
	 	 	 
	Purchase Price
	 	 2.5(a)
	 	 	 
	Purchased Assets
	 	2.1
	 	 	 
	Real Property
	 	4.12(a)
	 	 	 
	Release
	 	4.20(a)(viii)
	 	 	 
	Representatives
	 	6.3
	 	 	 
	Restricted Business
	 	6.8(a)
	 	 	 
	Restricted Contract
	 	2.8(a)
	 	 	 
	Retained Names
	 	7.3
	 	 	 
	Section 1060 Forms
	 	2.7
	 	 	 
	Seller
	 	Preamble
	 	 	 
	Seller Closing Certificate
	 	8.2(c)
	 	 	 
	Seller Disclosure Schedule
	 	Preamble Article IV
	 	 	 
	Seller Employees
	 	7.4(e)
	 	 	 
	Seller Group
	 	Recitals
	 	 	 
	Seller Group Benefit Plans
	 	4.18(a)
	 	 	 
	Seller Indemnitees
	 	10.3(a)

8

 

			
	Seller Intellectual Property
	 	4.13(e)
	 	 	 
	Seller June Balance Sheet
	 	2.6(a)(i)
	 	 	 
	Seller Owned Intellectual Property
	 	4.13(b)
	 	 	 
	Seller Registered Items
	 	4.13(f)
	 	 	 
	Seller Warranty Losses
	 	10.3(b)
	 	 	 
	Software
	 	4.13(a)
	 	 	 
	Software License Agreement
	 	3.2(i)
	 	 	 
	Statements of Operations
	 	4.4(a)
	 	 	 
	Sublease Agreements
	 	3.2(j)
	 	 	 
	Third Party Claim
	 	10.4(a)
	 	 	 
	Third Party Defense
	 	10.4(b)
	 	 	 
	Transfer Taxes
	 	7.5(a)
	 	 	 
	Transferred Employees
	 	7.4(b)
	 	 	 
	US Plans
	 	4.18(a)
	 	 	 
	Work Product Agreements
	 	4.13(j)

ARTICLE II

PURCHASE AND SALE

     2.1 Purchase and Sale of the Purchased Assets. Upon the terms and subject to the
conditions of this Agreement, at the Closing, Seller shall sell, assign, transfer, convey and
deliver, and shall cause each other relevant member of the Seller Group to sell, assign, transfer,
convey and deliver, to Buyer or a Subsidiary of Buyer designated by Buyer in writing to Seller not
less than three Business Days prior to the Closing, and Buyer or such Subsidiary shall purchase,
acquire and accept from the Seller Group, free and clear of Liens except for Permitted Liens, the
entire right, title and interest of Seller and each other member of the Seller Group in, to and
under all of the assets, properties and rights of every kind and description, real, personal and
mixed, tangible and intangible, wherever situated, that are Related to the Business other than the
Excluded Assets (the “Purchased Assets”). The Purchased Assets include the following assets,
properties and rights:

          (a) all (i) Owned Real Property located in Hachioji, Japan (the “Japan Land”), and (ii)
buildings, fixtures, structures, signage and improvements erected or located on the Japan Land (the
“Japan Buildings”);

          (b) the leasehold interest of Seller for the real property constituting a parking lot leased
by Seller in Hachioji, Japan and described on Schedule 2.1(b);

          (c) all Inventory other than Service-Related Inventory;

          (d) all Equipment, including Equipment located in Seller’s clean room located in Shenzhen,
China and in Seller’s clean room and lab space located in Fort Collins, Colorado, and all Equipment
located at Seller’s facilities in Hachioji, Japan, except the Equipment at such locations that is
set forth on Schedule 2.1(d), which schedule shall be delivered by Seller to Buyer at least two (2)

9

 

Business Days prior to Closing, to the extent the items on such Schedule are approved by Buyer
prior to Closing;

          (e) all Intellectual Property owned by Seller or any member of the Seller Group and Related to
the Business, including the Intellectual Property set forth on Schedule 2.1(e);

          (f) all Contracts Related to the Business that are (i) in effect as of the date of this
Agreement and set forth on Schedule 2.1(f) or (ii) entered into by any member of the Seller Group
between the date hereof and the Closing Date in compliance with the provisions of this Agreement,
provided that the Seller and Buyer mutually agree prior to Closing that such Contracts (including
Open Customer Purchase Orders and Open Supplier Purchase Orders), shall be listed in a supplement
to Schedule 2.1(f) (the “Assigned Contracts”);

          (g) all Business Authorizations and Environmental Permits;

          (h) all Books and Records; provided that if any Books and Records also contain information
relating to any business of any member of the Seller Group other than the Business, then only those
portions of the Books and Records relating to the Business shall be included, and Seller may retain
a copy of such Books and Records in accordance with Seller’s applicable document retention
policies;

          (i) all claims, causes of action, choses in action, rights of recovery and rights under all
warranties, representations and guarantees made by suppliers of products, materials or equipment,
or components thereof, arising from or relating to the Purchased Assets or the Assumed Liabilities;

          (j) all insurance benefits, including rights and proceeds, arising from or relating to the
Purchased Assets or the Assumed Liabilities;

          (k) all prepaid expenses relating to the Purchased Assets (other than relating to Taxes) set
forth on Schedule 2.1(k) (as such Schedule may be updated at Closing as mutually agreed by the
Seller and Buyer);

          (l) all security deposits, earnest deposits and all other forms of deposit or security placed
with or by any member of the Seller Group for the performance of an Assigned Contract; and

          (m) all goodwill of the Business as a going concern.

     2.2 Excluded Assets. The Purchased Assets do not include, and neither Seller nor any
other member of the Seller Group is selling, assigning, transferring, conveying or delivering, and
neither Buyer nor any Subsidiary of Buyer is purchasing, acquiring or accepting from Seller or any
other member of the Seller Group, any of the assets, properties or rights set forth in this Section
2.2 (collectively, the “Excluded Assets”):

          (a) all cash, cash equivalents and bank accounts of the Seller Group;

          (b) all Contracts that are not Assigned Contracts (the “Excluded Contracts”);

          (c) the Seller’s Service Centers, including clean rooms, Service-Related Inventory and
Equipment, in each case located at Seller’s Service Centers (other than Equipment and Inventory in
Seller’s facilities in Hachioji, Japan);

          (d) the Seller’s clean room located in Shenzhen, China;

10

 

          (e) the Equipment located at Seller’s facilities in Hachioji, Japan set forth on Schedule
2.1(d) as mutually agreed by Seller and Buyer;

          (f) the corporate seals, Charter Documents, minute books, stock books, Tax Returns, books of
account or other records having to do with the corporate organization of any member of the Seller
Group;

          (g) all Policies and, subject to Section 2.1(j) hereof, all rights and benefits thereunder;

          (h) the assets, properties and rights specifically set forth on Schedule 2.2(h);

          (i) the shares of capital stock of any member of the Seller Group; 

          (j) all Accounts Receivable;

          (k) the Excluded Intellectual Property; and

          (l) the rights which accrue or will accrue to Seller and any member of the Seller Group under
this Agreement and the Ancillary Agreements.

     2.3 Assumed Liabilities. Upon the terms and subject to the conditions of this
Agreement, Buyer or a Subsidiary of Buyer designated by Buyer in writing to Seller not less than
three Business Days prior to the Closing shall assume effective as of the Closing, and from and
after the Closing Buyer or such Subsidiary shall pay, discharge or perform when due, as
appropriate, only the following Liabilities of the Seller Group (the “Assumed Liabilities”), and no
other Liabilities:

          (a) all Liabilities in respect of the Assigned Contracts, including the Open Supplier Purchase
Orders and the Open Customer Purchase Orders, but only to the extent that such Liabilities
thereunder are required to be performed after the Closing Date and do not relate to any failure to
perform, improper performance, warranty (other than as provided in Section 2.3(b)) or other breach,
default or violation by any member of the Seller Group on or prior to the Closing;

          (b) all warranty, product liability and other customer and third-party claims relating to
defective or nonconforming Flow Products sold by Seller in the ordinary course of business prior to
the Closing Date to the extent such claims do not exceed in the aggregate $630,000; and

          (c) all Transfer Taxes, regardless of the Person on whom such Taxes are imposed by Law.

     2.4 Excluded Liabilities. Neither Buyer nor any of its Affiliates shall assume any
Liabilities of the Seller Group (such unassumed Liabilities, the “Excluded Liabilities”) other than
those specifically set forth in Section 2.3. Without limiting the generality of the foregoing, in
no event shall Buyer or any of its Affiliates assume or incur any Liability in respect of, and the
Seller Group shall remain bound by and liable for, and shall pay, discharge or perform when due,
the following Liabilities of the Seller Group:

          (a) all Liabilities for (i) Taxes relating to the Business or the Purchased Assets for any
Pre-Closing Tax Period and (ii) Taxes of Seller or any Affiliate of Seller, excluding Transfer
Taxes;

          (b) all Liabilities in respect of the Excluded Contracts and other Excluded Assets;

11

 

          (c) all Liabilities arising from or related to any breach, failure to perform, torts related
to the performance of, violations of Law, infringements or indemnities under, guaranties pursuant
to and overcharges or underpayments under, any Assigned Contract prior to the Closing Date;

          (d) other than as set forth in Section 2.3(b), all product Liability, warranty and similar
claims for damages or injury to person or property, claims of infringement of Intellectual Property
Rights and all other Liabilities, regardless of when made or asserted, which arise out of or are
based upon any events occurring or actions taken or omitted to be taken by any member of the Seller
Group, or otherwise arising out of or incurred in connection with the conduct of the Business, on
or before the Closing Date;

          (e) all Pre-Closing Environmental Liabilities;

          (f) all Indebtedness of the Business;

          (g) all Liabilities under Seller Group Benefit Plans;

          (h) all accounts payable; and

          (i) all Liabilities of any member of the Selling Group arising out of or incurred in
connection with the negotiation, preparation and execution of this Agreement and the Ancillary
Agreements and the consummation of the transactions contemplated hereby and thereby, including
Taxes (other than Transfer Taxes) and fees and expenses of counsel, accountants and other experts,
except as otherwise provided in Section 7.1.

     2.5 Purchase Price.

          (a) The consideration to be paid by Buyer to Seller for the Purchased Assets (the “Purchase
Price”) shall be (i) $44,000,000 (the “Cash Consideration”), subject to adjustment as set forth in
Section 2.6, and (ii) the assumption of the Assumed Liabilities.

          (b) Seller shall have the right to direct, by written notice to Buyer not later than three
Business Days prior to the Closing Date, that all or any part of the Cash Consideration be paid
directly to one or more members of the Seller Group that is selling Purchased Assets to Buyer
pursuant hereto; provided that no such direction shall relieve Seller of any of its obligations
hereunder.

     2.6 Purchase Price Adjustment.

          (a) For purposes of this Section 2.6, the following terms shall have the meanings assigned to
them in this Section 2.6(a):

                (i) "Accounting Principles” means GAAP applied on a basis consistent with its
application in the preparation of the balance sheet of the Seller (the “Seller June Balance Sheet”)
at June 30, 2010 (the “Balance Sheet Date”).

                (ii) "Base Amount” means $8,000,000.

                (iii) "Closing Inventory Amount” means the aggregate dollar amount of Inventory that
are Purchased Assets, net of applicable reserves, as of the date two (2) Business Days prior to the
Closing Date, calculated in accordance with the Accounting Principles.

12

 

                (iv) "Closing Inventory Statement” means an unaudited statement of Closing Inventory
Amount that is prepared in accordance with the Accounting Principles.

          (b) Within five (5) Business Days, but not less than two (2) Business Days prior to the
Closing Date, Buyer shall have conducted, or at Buyer’s option shall have caused a third party to
conduct, a physical inventory for purposes of preparing the Closing Inventory Statement. Seller
shall, and shall cause each other member of the Seller Group to, provide reasonable access to Buyer
to the facilities of each member of the Seller Group for the purpose of preparing the Closing
Inventory Statement. Seller and its representatives shall have the right to observe the taking of
such physical inventory and Buyer and the Seller shall cooperate in good faith with respect to any
such physical inventory. Subject to the consent of the Seller with respect to the amount of the
Closing Inventory Amount, such consent not to be unreasonably withheld or delayed, no later than
two (2) Business Days prior to the Closing Date, Buyer will prepare, or cause to be prepared, and
deliver to Seller the Closing Inventory Statement which shall set forth the calculation of the
Closing Inventory Amount as mutually agreed by Buyer and the Seller.

          (c) Within five (5) Business Days, but not less than two (2) Business Days, prior to the
Closing Date, Seller shall take a physical count of the Inventory of the Business (other than
Service Related Inventory) located at Seller’s Service Centers. Buyer shall be entitled to have
its representatives present at such Inventory count conducted by Seller and Seller shall give Buyer
at least twenty-four (24) hours advance notice of the date and time of the Inventory count. Prior
to the Closing Seller shall deliver a true and correct certificate to Buyer setting forth in
reasonable detail the Inventory (other than Service Related Inventory) located at each Service
Center and the amount set forth in such certificate shall be included in the calculation of the
Closing Inventory Amount set forth in the Closing Inventory Statement.

          (d) The Inventory of the Business shall be valued at Seller’s standard cost for each item,
excluding the reserve for obsolete or excess Inventory in its entirety as reflected in the Seller
June Balance Sheet (adjusted to reflect any changes in total Inventory as of the Closing Date).
For purposes of this Section, Seller’s standard cost and inventory reserve shall be calculated
consistent with the accounting principles, policies and practices that were used in preparing the
Seller June Balance Sheet. Seller’s books and records reflect a value of the Inventory at the lower
of Seller’s cost or fair market value as of July 1, 2010.

          (e) The Purchase Price shall be adjusted as follows: (i) if the Closing Inventory Amount is
less than the Base Amount, the Cash Consideration shall be reduced by the difference between the
Base Amount and the Closing Inventory Amount; or (ii) if the Closing Inventory Amount is greater
than the Base Amount, the Cash Consideration shall be increased by the difference between the Base
Amount and the Closing Inventory Amount.

     2.7 Allocation. As soon as reasonably practicable following the Closing, Buyer shall
deliver to Seller an allocation statement setting forth Buyer’s proposed allocation of the Purchase
Price for Tax purposes pursuant to Section 1060 of the Code and any other applicable Tax Laws (as
the same may be revised pursuant to the following sentence, the “Allocation Statement”). If,
within 20 days after the receipt of the proposed Allocation Statement, Seller notifies Buyer in
writing that Seller disagrees with the proposed Allocation Statement, then Buyer and Seller shall
attempt in good faith to resolve their disagreement within the 20 days following Seller’s
notification to Buyer of such disagreement. If Seller does not so notify Buyer within 20 days of
receipt of the proposed Allocation Statement, or upon

13

 

resolution of the dispute by Buyer and Seller, the proposed Allocation Statement (or such
other Allocation agreed upon in writing by Buyer and Seller in resolving such dispute) shall become
the final Allocation Statement. If Buyer and Seller are unable to resolve their disagreement within
the 20 days following any such notification by Seller, the dispute shall be submitted to a
nationally recognized independent valuation firm chosen jointly by Buyer and Seller, for resolution
within 20 days of such submission. Buyer and Seller shall each cooperate fully with the other
party to facilitate a prompt determination of the allocation. The fees, costs and expenses of the
valuation firm retained to resolve any dispute with respect to the Allocation, if applicable, shall
be borne equally by Seller, on the one hand, and Buyer, on the other. Except as otherwise required
by Law, Buyer and Seller shall, and Seller shall cause each other member of the Seller Group to,
file all Tax Returns (such as IRS Form 8594 or any other forms or reports required to be filed
pursuant to Section 1060 of the Code or any comparable provisions of Law (“Section 1060 Forms”)) in
a manner that is consistent with the Allocation Statement and refrain from taking any action
inconsistent therewith. Buyer and Seller shall, and Seller shall cause each other member of the
Seller Group to, cooperate in the preparation of Section 1060 Forms and file such Section 1060
Forms timely and in the manner required by applicable Law. Not later than 30 days prior to the
filing of their respective Forms 8594 relating to the transactions contemplated by this Agreement,
Buyer and Seller each shall deliver to the other party a copy of its Form 8594. Buyer and Seller
agree to treat any payments made pursuant to the indemnification provisions of this Agreement as an
adjustment to the Purchase Price for Tax purposes.

     2.8 Consents.

          (a) Notwithstanding anything in this Agreement to the contrary, this Agreement shall not
constitute an agreement to sell, assign, transfer, convey or deliver any Purchased Asset or any
benefit arising under or resulting from such Purchased Asset if the sale, assignment, transfer,
conveyance or delivery thereof, without the Consent of a third party, (i) would constitute a breach
or other contravention of the rights of such third party or (ii) would be ineffective with respect
to any party to a Contract concerning such Purchased Asset. If the sale, assignment, transfer,
conveyance or delivery by any member of the Seller Group to, or any assumption by Buyer of, any
interest in, or Liability under, any Purchased Asset requires the Consent of a third party, then
such sale, assignment, transfer, conveyance, delivery or assumption shall be subject to such
Consent being obtained. Without limiting Section 2.8(b), to the extent any Assigned Contract may
not be assigned to Buyer by reason of the absence of any such Consent (“Restricted Contract”),
Buyer shall not be required to assume any Assumed Liabilities arising under such Restricted
Contract, until such time, if any, as such Restricted Contract is assigned to Buyer. Further
notwithstanding anything in this Agreement to the contrary, (x) to the extent Seller is unable to
assign to Buyer or terminate any Open Supplier Purchase Order prior to the Closing, Buyer shall
acquire from Seller the raw materials, supplies, parts and other items used for the manufacture of
Flow Products for which Seller is unable to assign or terminate its purchase obligation at the same
cost and on the same terms and conditions as contained in any such Open Supplier Purchase Order;
and (y) to the extent Seller is unable to assign to Buyer (or terminate) its obligations to
manufacture, sell and distribute any Flow Products that are subject to an Open Customer Purchase
Order, Seller shall issue a purchase order to Buyer for, and Buyer shall fulfill and timely deliver
to Seller, the Flow Products that are covered by any such Open Customer Purchase Order, and Seller
shall pay all amounts payable under such purchase order, on the same terms and conditions as set
forth in such Open Customer Purchase Order. To the extent any agreement with a provider of raw
materials, supplies, parts or other items used for the manufacture of, repair or otherwise in
connection with the Flow Products contains exclusivity provisions limiting the ability of such
provider to sell raw materials, supplies, parts or other items to Buyer, Seller hereby waives such
exclusivity provisions as they relate to the sale of raw materials, supplies parts or other items
to Buyer for the manufacture of, repair or otherwise use in connection with the Flow Products by
Buyer after Closing. Seller further agrees to take all necessary actions, including, without
limitation, executing any documents required by any of provider of raw materials, supplies, parts
or other items used for the

14

 

manufacture of, repair or otherwise in connection with the Flow Products, to effectuate the
intent and purpose of this Section.

          (b) To the extent that any Consent in respect of a Restricted Contract or any other
Purchased Asset shall not have been obtained on or before the Closing Date, Seller shall continue
to use reasonable efforts to obtain any such Consent for the 12-month period following the Closing
Date until such time as it shall have been obtained or, with respect to a Restricted Contract,
until such time as Buyer shall have entered into a Contract providing for substantially the same
benefits and rights as contained in such Restricted Contract. Seller shall, and shall cause each
other relevant member of the Seller Group to, cooperate with Buyer in any economically feasible
arrangement permitted by applicable Law and under the applicable Contract proposed by Buyer to
provide that Buyer shall receive the interest of Seller or such member of the Seller Group in the
benefits under such Restricted Contract or other Purchased Asset until such Consent is obtained. As
soon as a Consent for the sale, assignment, transfer, conveyance, delivery or assumption of a
Restricted Contract or other Purchased Asset is obtained, Seller shall promptly assign, transfer,
convey and deliver such Restricted Contract or Purchased Asset to Buyer, and Buyer shall assume the
Assumed Liabilities under any such Restricted Contract from and after the date of assignment to
Buyer pursuant to a special-purpose assignment and assumption agreement substantially similar in
terms to those of the Assignment and Assumption Agreement.

          (c) With respect to material Contracts, including the Contracts with Material Customers and
Material Suppliers (other than Assigned Contracts) that Relate to the Business and also relate to
other business of the Seller, Seller agrees, and shall cause any other member of the Seller Group,
upon the reasonable request of Buyer, to use its reasonable efforts to facilitate (with respect to
a reasonable number of Contracts in the aggregate) the entry by Buyer or the relevant Buyer
Affiliate and the other party to each such Contract into a new Contract that only relates to Flow
Products.

ARTICLE III

CLOSING

     3.1 Closing Date. The closing of the Transactions contemplated by this Agreement (the
"Closing”) shall take place at the offices of Morgan, Lewis & Bockius LLP, One Market, Spear Street
Tower, San Francisco, California, 94105, at 10:00 a.m. on a date to be specified by the parties
which shall be no later than two Business Days after satisfaction (or waiver as provided herein) of
the conditions set forth in Article VIII (other than those conditions that by their nature will be
satisfied at the Closing), unless another time, date and/or place is agreed to in writing by the
parties. The date on which the Closing occurs is referred to in this Agreement as the “Closing
Date.”

     3.2 Deliveries by Seller at the Closing. At the Closing, Seller shall deliver to
Buyer the following:

          (a) a Bill of Sale in the form of Exhibit A hereto (the “Bill of Sale”) duly executed by each
member of the Seller Group;

          (b) an Assignment and Assumption Agreement in the form of Exhibit B hereto (the “Assignment
and Assumption Agreement”) duly executed by each member of the Seller Group;

          (c) a Master Services Agreement in the form of Exhibit D hereto (the “Master Services
Agreement”) duly executed by each relevant member of the Seller Group;

15

 

          (d) an Authorized Service Provider Agreement in the form of Exhibit E hereto (the “Authorized
Service Provider Agreement”) duly executed by each relevant member of the Seller Group;

          (e) an Asset Transfer Agreement in the form of Exhibit F hereto (the “China Asset Transfer
Agreement”) duly executed by each relevant member of the Seller Group;

          (f) a Japan Office Space Lease in such form as is reasonably acceptable to Buyer and to Seller
(the “Japan Office Space Lease”), provided that such lease shall provide for the lease of 10,000 to
13,000 square feet of space at market rates and terms to be mutually agreed upon by Buyer and
Seller and for a term of one year with two one-year renewal periods, duly executed by each relevant
member of the Seller Group;

          (g) a Japan Real Estate Purchase Agreement with respect to the Japan Land and the Japan
Buildings, in the form of Exhibit H hereto, duly executed by each relevant member of the Seller
Group (the “Japan Real Estate Purchase Agreement”);

          (h) IP Assignments in the form of Exhibit I hereto (the “IP Assignments”) duly executed by
each relevant member of the Seller Group;

          (i) a Software License Agreement covering the license of the Seller’s proprietary factory
information system software in the form of Exhibit L hereto (the “Software License Agreement”);

          (j) sublease agreements in forms reasonably acceptable to Seller and Buyer (the “Sublease
Agreements”) for the sublease by Buyer of certain laboratory and office space located at Seller’s
facilities in Fort Collins, Colorado and San Jose,
California1;

          (k) such other good and sufficient instruments of transfer as Buyer reasonably deems necessary
and appropriate to vest in Buyer all right, title and interest in, to and under the Purchased
Assets;

          (l) the Seller Closing Certificate; and

          (m) a completed certification of non-foreign status pursuant to Section 1.1445-2(b)(2) of the
Treasury regulations duly executed by each member of the Seller Group that is selling Purchased
Assets to Buyer pursuant hereto.

     3.3 Deliveries by Buyer at the Closing. At the Closing, Buyer shall deliver to Seller
the following:

          (a) the Cash Consideration by wire transfer of immediately available funds to an account or
accounts of Seller designated in writing by Seller to Buyer no later than three Business Days prior
to the Closing Date or to such other accounts of the Seller Group as may be directed by Seller in
accordance with Section 2.5(b);

 

			
	1	 	Subject to landlord consent.

16

 

          (b) the Assignment and Assumption Agreement duly executed by Buyer or its designee pursuant to
Section 2.1;

          (c) the Master Services Agreement duly executed by Buyer or its designee pursuant to Section
2.1;

          (d) the Authorized Service Provider Agreement duly executed by Buyer or its designee pursuant
to Section 2.1;

          (e) the Japan Office Space Lease duly executed by Buyer or its designee pursuant to Section
2.1;

          (f) the China Asset Transfer Agreement duly executed by Buyer or its designee pursuant to
Section 2.1;

          (g) the Japan Real Estate Purchase Agreement duly executed by Buyer or its designee pursuant
to Section 2.1;

          (h) the Software License Agreement duly executed by Buyer or its designee pursuant to Section
2.1;

          (i) the Sublease Agreements duly executed by Buyer or its designee pursuant to Section
2.1; and

          (j) the Buyer Closing Certificate.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF SELLER

     Seller represents and warrants to Buyer as of the date hereof and as of the Closing Date that
the statements contained in this Article IV are true and correct, except as set forth in the
disclosure schedule dated and delivered as of the date hereof by Seller to Buyer (the “Seller
Disclosure Schedule”), which is attached to this Agreement and is designated therein as being the
Seller Disclosure Schedule. The Seller Disclosure Schedule shall be arranged in paragraphs
corresponding to each representation and warranty set forth in this Article IV. Any information
disclosed in one Section of the Seller Disclosure Schedule shall be considered to be made for
purposes of another Section of the Seller Disclosure Schedule to the extent that the relevance or
applicability of the disclosure is reasonably apparent on the face of such disclosure.

     4.1 Organization and Good Standing. Each member of the Seller Group is a corporation,
limited liability company or other legal entity duly organized, validly existing and in good
standing under the Laws of the jurisdiction of its incorporation or formation, has all requisite
power to own, lease and operate its properties and to carry on its business as now being conducted
and as proposed to be conducted, and is duly qualified to do business and is in good standing in
each jurisdiction in which it owns or leases property or conducts any business so as to require
such qualification except for those jurisdictions where the failure to be so qualified and in good
standing could not individually or in the aggregate have a material adverse effect on the Purchased
Assets or the condition (financial or otherwise), operations or results of operations of the
Business or any member of the Seller Group. No member of the Seller Group is in default under its
Charter Documents.

17

 

     4.2 Authority and Enforceability.

          (a) Seller has the requisite power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Seller. Seller has duly executed and delivered this Agreement.
This Agreement constitutes the valid and binding obligation of Seller, enforceable against it in
accordance with its terms, except as such enforceability may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar Laws affecting or relating to creditors’
rights generally, and (ii) the availability of injunctive relief and other equitable remedies.

          (b) Each member of the Seller Group has the requisite power and authority to enter into each
Ancillary Agreement to which it is, or specified to be, a party and to consummate the transactions
contemplated thereby. The execution and delivery by each member of the Seller Group of each
Ancillary Agreement to which it is, or specified to be, a party and the consummation of the
transactions contemplated thereby have been duly authorized by all necessary corporate, limited
liability company or other action on the part of each such member of the Seller Group. Prior to
the Closing each member of the Seller Group will have duly executed and delivered each Ancillary
Agreement to which it is, or specified to be, a party. Each such Ancillary Agreement will
constitute the valid and binding obligation of each such member of the Seller Group party thereto,
enforceable against it in accordance with its terms, except as such enforceability may be limited
by (i) bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting or
relating to creditors’ rights generally, and (ii) the availability of injunctive relief and other
equitable remedies. The Ancillary Agreements will effectively vest in Buyer good, valid and
marketable title to all the Purchased Assets free and clear of all Liens.

     4.3 No Conflicts; Consents.

          (a) The execution and delivery of this Agreement by Seller do not, and the execution and
delivery of each Ancillary Agreement to which each member of the Seller Group is, or specified to
be, a party, the performance by Seller and each member of the Seller Group of its obligations
hereunder and thereunder and the consummation by Seller and each member of the Seller Group of the
transactions contemplated hereby and thereby (in each case, with or without the giving of notice or
lapse of time, or both), will not, directly or indirectly, (i) violate the provisions of any of the
Charter Documents of any member of the Seller Group, (ii) violate or constitute a material default,
an event of material default or an event creating rights of acceleration, termination,
cancellation, imposition of additional material obligations or loss of material rights relating to
the Business under any Assigned Contract or any Material Contract, (iii) violate or conflict with
any Law, Authorization or Governmental Order applicable to any member of the Seller Group, or give
any Governmental Entity or other Person the right to challenge any of the transactions contemplated
by this Agreement or the Ancillary Agreements or to exercise any remedy, obtain any relief under or
revoke or otherwise modify any rights held under, any such Law, Authorization or Governmental
Order, or (iv) result in the creation of any Liens upon any of the Purchased Assets other than
Permitted Liens. Section 4.3(a) of the Seller Disclosure Schedule sets forth all consents, waivers,
assignments and other approvals and actions that are required in connection with the transactions
contemplated by this Agreement with respect to any Purchased Asset or under any Assigned Contract
to which any member of the Seller Group is a party (collectively, “Consents”) in order to sell,
assign, transfer, convey and deliver to, Buyer all rights and benefits of the Seller Group
thereunder without any impairment or alteration whatsoever.

          (b) No Authorization or Governmental Order of, registration, declaration or filing with, or
notice to, any Governmental Entity or other Person, is required by or with respect to any member

18

 

of the Seller Group in connection with the execution and delivery of this Agreement and the
Ancillary Agreements and the consummation of the transactions contemplated hereby and thereby.

     4.4 Financial Statements.

          (a) Seller has previously furnished Buyer with unaudited financial information of the
Business, which includes management reports prepared for internal use by Seller in the management
of the Business and in the form of statements of operations for the Business (the “Statements of
Operations”) for the fiscal year ended December 31, 2009 and for the three-month period ended June
30, 2010 (the “June Income Statement”), copies of which are set forth as an exhibit to Section 4.4
of the Seller Disclosure Schedule. The Statements of Operations are true, complete and correct in
all material respects and have been prepared on a basis consistent with Seller’s historical
accounting policies and procedures with respect to the Business and fairly and accurately present
in all material respects the financial position and results of operations of the Business, as if
the Business were operated on a stand-alone basis, without allocations for overhead costs or
expenses, for each of the periods then ended.

          (b) Except as set forth on Section 4.4 of the Seller Disclosure Schedule, the Statements of
Operations have been derived from financial information that has been prepared in accordance with
GAAP.

     4.5 No Undisclosed Liabilities. There are no liabilities, obligations or commitments
relating to the Purchased Assets of any nature whatsoever, asserted or unasserted, known or
unknown, absolute or contingent, accrued or unaccrued, matured or unmatured or otherwise
(“Liabilities”), except (a) those which are adequately reflected or reserved against in the Seller
June Balance Sheet as of the Balance Sheet Date, (b) those which have been incurred in the ordinary
course of the Business and consistent with past practice since the Balance Sheet Date and which are
not, individually or in the aggregate, material in amount, (c) those arising under Contracts
disclosed in Section 4.15 of the Seller Disclosure Schedule or not required to be disclosed
therein, and (d) those set forth on Section 4.5 of the Seller Disclosure Schedule.

     4.6 Inventory. Each item of Inventory that constitutes a Purchased Asset (a) is free
of any material defect or other deficiency, (b) is of a quality, quantity and condition useable
and, as to finished goods, saleable in the ordinary course of the Business (subject to any obsolete
items or excess inventory for which an adequate reserve has been made in the Seller June Balance
Sheet), (c) is properly stated on the Seller June Balance Sheet (to the extent existing on the date
thereof) and on the books and records of the Seller at the lesser of cost or fair market value or
net realizable value, (d) were or shall be acquired and maintained in the ordinary course of
business of the Business and (e) are the property of Seller, are free and clear of any Lien (other
than Permitted Liens) and, except for obsolete items for which an adequate reserve has been made in
the Seller June Balance Sheet, conform in all material respects to all standards applicable to such
Inventory or its use or sale imposed by any applicable Law. No material write-down of such
Inventory has been made or should have been made in the period since December 31, 2009. All of
such Inventory is located at the facilities of the Seller Group and no Inventory is held on a
consignment basis.

     4.7 Taxes.

          (a) With respect to the Business or the Purchased Assets, all Tax Returns required to have
been filed by or with respect to each member of the Seller Group have been duly and timely filed
(or, if due between the date hereof and the Closing Date, will be duly and timely filed), and each
such Tax Return correctly and completely reflects Liability for Taxes and all other information
required to be reported thereon. With respect to the Business or the Purchased Assets, all Taxes
owed by any member of the Seller Group (whether or not shown on any Tax Return) have been timely
paid (or, if due between

19

 

the date hereof and the Closing Date, will be duly and timely paid). Each member of the
Seller Group has adequately provided for, in its books of account and related records and on the
balance sheet of Seller as of December 31, 2009, Liability for all unpaid Taxes, being current
Taxes not yet due and payable.

          (b) In each case with respect to the Business or the Purchased Assets, (i) there is no action
or audit now proposed, threatened or pending against, or with respect to, any member of the Seller
Group in respect of any Taxes, (ii) no member of the Seller Group is the beneficiary of any
extension of time within which to file any Tax Return except with respect to the Tax Return of
Seller for the taxable year 2009 for which a timely extension has been filed, nor has any member of
the Seller Group made (or had made on its behalf) any requests for such extensions, (iii) no claim
has ever been made by an authority in a jurisdiction where any member of the Seller Group does not
file Tax Returns that any of them is or may be subject to taxation by that jurisdiction or that any
of them must file Tax Returns, and (iv) there are no Liens on any of the stock or assets of any
member of the Seller Group with respect to Taxes.

          (c) There are no Liens for Taxes on any of the Purchased Assets other than Permitted Liens.
Each member of the Seller Group has withheld and timely paid all Taxes required to have been
withheld and paid with respect to the Purchased Assets, and has complied with all information
reporting and backup withholding requirements, including maintenance of required records with
respect thereto.

          (d) In each case with respect to the Purchased Assets or the Business, (i) there is no dispute
or claim concerning any Liability for Taxes with respect to any member of the Seller Group for
which notice has been provided, or which is asserted or threatened, or which is otherwise known to
any member of the Seller Group, (ii) no issues have been raised in any Taxes examination with
respect to any member of the Seller Group which, by application of similar principles, could be
expected to result in Liability for Taxes for any member of the Seller Group or period not so
examined, and (iii) no member of the Seller Group has waived (or is subject to a waiver of) any
statute of limitations in respect of Taxes or has agreed to (or is subject to) any extension of
time with respect to a Tax assessment or deficiency.

          (e) No member of the Seller Group has ever been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code. No foreign member of the Seller
Group has ever held a “United States real property interest” within the meaning of Section
897(1)(1) of the Code. Seller is not a “foreign person” within the meaning of Section 1445 of the
Code. No member of the Seller Group has made any payments, is obligated to make any payments, or
is a party to any agreement that under certain circumstances could obligate it to make payments
that would result in a nondeductible expense under Section 280G of the Code or an excise Tax to the
recipient of such payments pursuant to Section 4999 of the Code. No member of the Seller Group has
participated in or cooperated with an international boycott as defined in Section 999 of the Code.

          (f) No member of the Seller Group has received (or is subject to) any ruling from any Taxing
Authority or has entered into (or is subject to) any agreement with a Taxing Authority. Each
member of the Seller Group has disclosed on its federal income Tax Returns all positions taken
therein that could give rise to a substantial understatement of federal income Tax within the
meaning of Section 6662 of the Code.

          (g) No member of the Seller Group is a party to any Tax allocation or sharing agreement. No
member of the Seller Group has any Liability for the Taxes of any Person, other than under Section
1.1502-6 of the Treasury regulations (or any similar provision of state, local, or foreign Law)
with respect to any Relevant Group of which such member of the Seller Group currently is a member,
(i) as a transferee or successor, (ii) by contract, (iii) under Section 1.1502-6 of the Treasury
regulations (or any similar provision of state, local or foreign Law), or (iv) otherwise. No
member of the

20

 

Seller Group is a party to any joint venture, partnership or other arrangement that is treated
as a partnership for federal income tax purposes.

          (h) No member of the Seller Group that is incorporated in a non-U.S. jurisdiction is, or at
any time has been, engaged in the conduct of a trade or business within the United States, or
treated as or considered to be so engaged.

     4.8 Compliance with Law.

          (a) Each member of the Seller Group has conducted, and is conducting, the Business in
compliance in all material respects with all applicable Laws.

          (b) To Seller’s Knowledge, no event has occurred and no circumstances exist that (with or
without the passage of time or the giving of notice) could reasonably be expected to result in a
violation of, conflict with or failure on the part of any member of the Seller Group to conduct the
Business in compliance in all material respects with, any applicable Law. No member of the Seller
Group has received written notice regarding any violation of, conflict with, or failure to conduct
the Business in compliance in all material respects with, any applicable Law.

     4.9 Business Authorizations.

          (a) Each member of the Seller Group owns, holds or lawfully uses in the operation of the
Business all material Authorizations which are necessary for it to conduct the Business as
currently conducted or for the ownership and use of the assets owned or used by such member of the
Seller Group in the conduct of the Business (the “Business Authorizations”) free and clear of all
Liens, other than Permitted Liens. Such Business Authorizations are valid and in full force and
effect. All Business Authorizations are listed in Section 4.9 of the Seller Disclosure Schedule.

          (b) No event has occurred and no circumstances exist that (with or without the passage of time
or the giving of notice) may result in a violation of, conflict with, failure on the part of any
member of the Seller Group to comply with the terms of, or the revocation, withdrawal, termination,
cancellation, suspension or modification of any material Business Authorization. No member of the
Seller Group has received written notice regarding any violation of, conflict with, failure to
comply with the terms of, or any revocation, withdrawal, termination, cancellation, suspension or
modification of, any material Business Authorization. No member of the Seller Group is in default,
nor has any such member of the Seller Group received written notice of any claim of default, with
respect to any material Business Authorization.

          (c) No Person other than a member of the Seller Group owns or has any proprietary, financial
or other interest (direct or indirect) in any Business Authorization.

     4.10 Title to Personal Properties.

          (a) The Seller Disclosure Schedule sets forth a complete and accurate list of all personal
properties and tangible assets (“Personal Property”) owned by the Seller Group that are Purchased
Assets as of the date of this Agreement, with a current fair market value in excess of $3,000.

          (b) With respect to Personal Property that constitute a Purchased Asset that it purports to
own including all Personal Property reflected as owned on the Seller June Balance Sheet (other than
Inventory sold in the ordinary course of the Business since the date thereof), a member of the
Seller Group has good and transferable title to all such Personal Property, free and clear of all
Liens except for Permitted Liens.

21

 

          (c) No Personal Property that constitutes a Purchased Asset is leased by any member of the
Seller Group.

     4.11 Condition of Tangible Assets. All Purchased Assets that are tangible property
are structurally sound, are in good operating condition and repair (subject to normal wear and tear
given the use and age of such assets), are usable in the ordinary course of the Business (other
than obsolete Inventory for which an adequate reserve has been made in the Seller June Balance
Sheet) and conform in all material respects to all Laws and Authorizations relating to their
construction, use and operation.

     4.12 Real Property.

          (a) The Seller Disclosure Schedule contains (i) a list of all real property and interests in
real property owned in fee by any member of the Seller Group Related to the Business that
constitute a Purchased Asset (the “Owned Real Property”), and (ii) a list of all real property and
interests in real property leased by any member of the Seller Group Related to the Business that
constitute a Purchased Asset (the “Leased Real Property” and, together with the Owned Real
Property, the “Real Property”).

          (b) With respect to each parcel of Owned Real Property:

                (i) A member of the Seller Group has good and marketable title to each such parcel
of Owned Real Property free and clear of all Liens, except (A) Permitted Liens and (B) zoning and
building restrictions, easements, covenants, rights-of-way and other similar restrictions of
record, none of which impairs the current or proposed use of such Owned Real Property.

                (ii) Seller has provided to Buyer copies of the deeds and other instruments (as
recorded) by which the relevant member of the Seller Group acquired such parcel of Owned Real
Property, and copies of all title insurance policies, opinions, abstracts and surveys in the
possession of the Seller Group with respect to such parcel.

                (iii) There are no outstanding options or rights of first refusal to purchase such
parcel of Owned Real Property, or any portion thereof or interest therein.

          (c) With respect to Leased Real Property, Seller has delivered to Buyer a true and complete
copy of every lease and sublease pursuant to which any member of the Seller Group is a party or by
which it is bound (each, a “Lease”). The relevant member of the Seller Group has peaceful,
undisturbed and exclusive possession of the Leased Real Property.

          (d) To Seller’s Knowledge, the uses for which the buildings, facilities and other improvements
located on the Owned Real Property are zoned do not restrict, or impair, the use of the Owned Real
Property for purposes of the Business. To Seller’s Knowledge, the uses for which the buildings,
facilities and other improvements located on the Leased Real Property are zoned do not restrict, or
impair, the use of the Leased Real Property for purposes of the Business.

          (e) No Governmental Entity having the power of eminent domain over the Real Property has
commenced or, to Seller’s Knowledge, intends to exercise the power of eminent domain or a similar
power with respect to all or any part of the Real Property. There are no pending or, to Seller’s
Knowledge, threatened condemnation, fire, health, safety, building, zoning or other land use
regulatory proceedings, lawsuits or administrative actions relating to any portion of the Real
Property or any other matters which do or may reasonably be expected to materially adversely effect
the current use, occupancy or value thereof. No member of the Seller Group has received written
notice of any pending or threatened special assessment proceedings affecting any portion of the
Real Property.

22

 

          (f) The Real Property and all present uses and operations of the Real Property comply in all
material respects with all Laws, covenants, conditions, restrictions, easements, disposition
agreements and similar matters affecting the Real Property. The Owned Real Property, and to
Seller’s Knowledge the Leased Real Property, and the continued use, occupancy and operation of the
Real Property as used, occupied and operated in the conduct of the Business do not constitute a
nonconforming use and are not the subject of a special use permit under any Law.

          (g) The Real Property is in suitable condition in all material respects for the conduct of the
Business as currently conducted. Each member of the Seller Group has good and valid rights of
ingress and egress to and from all Owned Real Property from and to the public street systems for
usual street, road and utility purposes.

          (h) No Person other than a member of the Seller Group is in possession of any of the Real
Property or any portion thereof (other than common use areas), and there are no leases, subleases,
licenses, concessions or other agreements, written or oral, granting to any Person other than the
Seller Group the right of use or occupancy of the Real Property or any portion thereof (other than
common use areas). No easement, utility transmission line or water main located on the Real
Property materially adversely affects the use of the Real Property or any improvement on the Real
Property.

          (i) All water, sewer, gas, electric, telephone and drainage facilities, and all other
utilities required by any Law or by the use and operation of the Real Property in the conduct of
the Business are operable and are adequate to service the Real Property in the operation of the
Business and to permit compliance in all material respects with the requirements of all Laws in the
operation thereof. To Seller’s Knowledge, no fact or condition exists which could reasonably be
expected to result in the termination or material reduction of the current access from the Real
Property to existing roads or to sewer or other utility services presently serving the Real
Property.

          (j) A member of the Seller Group owns each of the Japan Buildings free and clear of any Liens
except Permitted Liens. All of the Japan Buildings comply with all applicable material building
codes, fire codes and other applicable Laws. All of the Japan Buildings comply with all applicable
material building codes, fire codes and other applicable Laws, including but not limited to, the
current earthquake standard under the Building Standards Act (kenchiku kijun ho) (Act No. 201 of
1950).

          (k) No lawsuit, arbitration, conciliation or administrative proceeding with regard to the
Owned Real Property is pending, and to Seller’s Knowledge, there is no reasonable likelihood
thereof.

          (l) There is no third party of which any attachment, provisional attachment, or preservative
measures are accepted with respect to the Owned Real Property and to Seller’s Knowledge, no filing
has been made therefor.

          (m) There is no flaw or defect in the Owned Real Property that would prevent the Buyer from
consummating the transactions contemplated by the Japan Real Estate Purchase Agreement on account
thereof.

     4.13 Intellectual Property.

          (a) As used in this Agreement, “Intellectual Property” means: (i) inventions (whether or not
patentable), trade secrets, technical data, databases, customer lists, designs, tools, methods,
processes, technology, ideas, know-how, source code, product road maps and other proprietary
information and materials (“Proprietary Information”); (ii) trademarks and service marks (whether
or not registered), trade names, logos, trade dress and other proprietary indicia and all goodwill
associated

23

 

therewith; (iii) documentation, advertising copy, marketing materials, web-sites,
specifications, mask works, drawings, graphics, databases, recordings and other works of
authorship, whether or not protected by Copyright; (iv) computer programs, including any and all
software implementations of algorithms, models and methodologies, whether in source code or object
code, design documents, flow-charts, user manuals and training materials relating thereto and any
translations thereof (collectively, “Software”); and (v) all forms of legal rights and protections
that may be obtained for, or may pertain to, the Intellectual Property set forth in clauses (i)
through (iv) in any country of the world (“Intellectual Property Rights”), including all letters
patent, patent applications, provisional patents, design patents, PCT filings, invention
disclosures and other rights to inventions or designs (“Patents”), all registered and unregistered
copyrights in both published and unpublished works (“Copyrights”), all trademarks, service marks
and other proprietary indicia (whether or not registered) (“Marks”), trade secret rights, mask
works, moral rights or other literary property or authors rights, and all applications,
registrations, issuances, divisions, continuations, renewals, reissuances and extensions of the
foregoing.

          (b) The Seller Disclosure Schedule lists (by name, owner and, where applicable, registration
number and jurisdiction of registration, application, certification or filing) all Seller Owned
Intellectual Property; provided that the Seller Disclosure Schedule is not required to list items
of Seller Owned Intellectual Property which are both (i) immaterial to the Business and (ii) not
registered or the subject of an application for registration. Except as described in the Seller
Disclosure Schedule, a member of the Seller Group owns the entire right, title and interest to all
Seller Owned Intellectual Property free and clear of all Liens, other than Permitted Liens.

          (c) The Seller Disclosure Schedule lists all licenses, sublicenses, joint operation (kyodo
jigyo) and other agreements (“In-Bound Licenses”) pursuant to which a third party authorizes any
member of the Seller Group to use, practice any rights under, or grant sublicenses with respect to,
any Intellectual Property Related to the Business and owned by a third party, including the
incorporation of any such Intellectual Property into products of any member of the Seller Group
and, with respect to each such In-Bound License, whether the In-Bound License is exclusive or
non-exclusive.

          (d) The Seller Disclosure Schedule lists all licenses, sublicenses, joint operation (kyodo
jigyo) and other agreements (“Out-Bound Licenses”) pursuant to which any member of the Seller Group
authorizes a third party to use, practice any rights under, or grant sublicenses with respect to,
any Seller Owned Intellectual Property or pursuant to which any member of the Seller Group grants
rights to use or practice any rights under any Intellectual Property owned by a third party and,
with respect to each such Out-Bound License, whether the Out-Bound License is exclusive or
non-exclusive.

          (e) The members of the Seller Group (i) exclusively own the entire right, interest and title
to each item of Seller Owned Intellectual Property free and clear of Liens (other than Permitted
Liens), or (ii) otherwise rightfully use or otherwise enjoy Intellectual Property used in the
Business as currently conducted (including the design, manufacture, license and sale of all
products currently under development or in production) pursuant to the terms of a valid and
enforceable In-Bound License. The Seller Owned Intellectual Property, together with the Seller
Group’s rights under the In-Bound Licenses listed in the Seller Disclosure Schedule (collectively,
the “Seller Intellectual Property”), constitutes all the Intellectual Property used in or necessary
for the operation of the Business as it is currently conducted and as proposed to be conducted by
Seller.

          (f) All registration, maintenance and renewal fees related to Patents, Marks, Copyrights and
any other certifications, filings or registrations that are owned by any member of the Seller Group
and Related to the Business (“Seller Registered Items”) that are currently due have been paid and
all documents and certificates related to such Seller Registered Items have been filed with the
relevant Governmental Entity or other authorities in the United States or foreign jurisdictions, as
the case

24

 

may be, for the purposes of maintaining such Seller Registered Items. There are no actions
that must be taken by Buyer within 180 days after the date hereof, 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 Seller
Registered Items. All Seller Registered Items are held in compliance with all applicable legal
requirements and enforceable by the Seller Group in all material respects. All Patents Related to
the Business that have been issued to any member of the Seller Group are valid.

          (g) Except as set forth in Section 4.13(g) of the Seller Disclosure Schedule, Seller is not
aware of any challenges (or any basis therefor) with respect to the validity or enforceability of
any Seller Owned Intellectual Property. The Seller Disclosure Schedule lists the status of any
proceedings or actions before the United States Patent and Trademark Office or any other
Governmental Entity anywhere in the world related to any of the Seller Owned Intellectual Property,
including the due date for any outstanding response by any member of the Seller Group in such
proceedings. No member of the Seller Group has taken any action or failed to take any action that
could reasonably be expected to result in the abandonment, cancellation, forfeiture,
relinquishment, invalidation, waiver or unenforceability of any Seller Owned Intellectual Property.
The Seller Disclosure Schedule lists all previously held Seller Registered Items that any member of
the Seller Group has abandoned, cancelled, forfeited or relinquished during the 12 months prior to
the date of this Agreement.

          (h) Except as set forth in Section 4.13(h) of the Seller Disclosure Schedule, none of the
products or services currently or formerly developed manufactured, sold, distributed, provided,
shipped or licensed by any member of the Seller Group, or which are currently under development, in
each case Related to the Business, has infringed or infringes upon, or otherwise unlawfully used or
uses, the Intellectual Property Rights of any third party. No member of the Seller Group, by
conducting the Business as currently conducted (including the design, manufacture, license and sale
of all products currently under development or in production) has infringed or infringes upon, or
otherwise unlawfully used or uses, any Intellectual Property Rights of a third party. No member of
the Seller Group has received any written communication alleging that any member of the Seller
Group has violated or, by conducting the Business as currently conducted (including the design,
manufacture, license and sale of all products currently under development or in production), would
violate, any Intellectual Property Rights of a third party nor, to Seller’s Knowledge, is there any
basis therefor. No Action has been instituted, or, to Seller’s Knowledge, threatened, relating to
any Intellectual Property currently used by any member of the Seller Group Related to the Business
and none of the Seller Intellectual Property is subject to any outstanding Governmental Order. To
Seller’s Knowledge, no Person has infringed or is infringing any Intellectual Property Rights of
any member of the Seller Group Related to the Business or has otherwise misappropriated or is
otherwise misappropriating any Seller Intellectual Property.

          (i) With respect to the Proprietary Information of the Seller Group Related to the Business,
the documentation relating thereto is current, accurate in all material respects and sufficient in
detail and content to identify and explain it and to allow its full and proper use without reliance
on the special knowledge or memory of others. Each member of the Seller Group has taken
commercially reasonable steps to protect and preserve the confidentiality of all Proprietary
Information owned by any member of the Seller Group Related to the Business that is not covered by
an issued Patent. Any receipt or use by, or disclosure to, a third party of Proprietary Information
Related to the Business owned by any member of the Seller Group has been pursuant to the terms of
binding written confidentiality and non-use agreement between a member of the Seller Group and such
third party (“Nondisclosure Agreements”). True and complete copies of the Nondisclosure
Agreements, and any amendments thereto, have been provided to Buyer. Each member of the Seller
Group is, and to Seller’s Knowledge, all other parties thereto are, in compliance with the
provisions of the Nondisclosure Agreements. To Seller’s Knowledge, each member of the Seller Group
is in compliance with the terms of all Contracts pursuant to which a

25

 

third party has disclosed to, or authorized such member of the Seller Group to use, material
Proprietary Information Related to the Business owned by such third party.

          (j) All current and former employees, consultants and contractors of the Business who conceive
or develop Intellectual Property Related to the Business have executed and delivered, and are in
compliance with, enforceable agreements regarding the protection of Proprietary Information and
providing valid written assignments of all Intellectual Property Related to the Business conceived
or developed by such employees, consultants or contractors in connection with their services for
the Business (“Work Product Agreements”). True and complete copies of the Work Product Agreements
have been provided or made available to Buyer. No current or former employee, consultant or
contractor or any other Person has any right, claim or interest to any of the Seller Owned
Intellectual Property.

          (k) No employee, consultant or contractor of any member of the Seller Group has been, is or
will be, by performing services for the Business, in violation of any term of any employment,
invention disclosure or assignment, confidentiality or noncompetition agreement or other
restrictive covenant or any Governmental Order as a result of such employee’s, consultant’s or
contractor’s employment in the Business or any services rendered by such employee, consultant or
contractor, which violation would reasonably be expected to have a material adverse effect on the
Business or the Purchased Assets.

          (l) All Intellectual Property that has been distributed, sold or licensed to a third party by
any member of the Seller Group Related to the Business that is covered by warranty conformed and
conforms to, and performed and performs in accordance with, the representations and warranties
provided with respect to such Intellectual Property by or on behalf of the Seller Group for the
time period during which such representations and warranties apply.

          (m) The execution and delivery of this Agreement by Seller does not, and the consummation of
the transactions contemplated hereby (in each case, with or without the giving of notice or lapse
of time, or both), will not, directly or indirectly, result in the loss or impairment of, or give
rise to any right of any third party to terminate or reprice or otherwise renegotiate any member of
the Seller Group’s rights to own any of its Intellectual Property or their respective rights under
any Out-Bound License or In-Bound License, nor require the consent of any Governmental Entity or
other third party in respect of any such Intellectual Property.

          (n) The Seller Disclosure Schedule lists all Open Source Materials that is or was used in any
Flow Products, and describes the manner in which such Open Source Materials are or were used (such
description shall include, without limitation, whether (and, if so, how) the Open Source Materials
were modified and/or distributed by any member of the Seller Group). No member of the Seller Group
has used any Open Source Materials in a manner that requires the Seller Intellectual Property or
any product of any member of the Seller Group Related to the Business to be (a) disclosed or
distributed in source code form, (b) licensed for the purpose of making derivative works, or (c)
redistributable at no charge.

          (o) No member of the Seller Group has participated in any standards setting activities or
joined any standards setting organizations that would affect the proprietary nature of any Seller
Intellectual Property, or restrict the ability of any member of the Seller Group to enforce,
license, or exclude others from using the Seller Intellectual Property.

     4.14 Absence of Certain Changes or Events. Since the Balance Sheet Date to the date
of this Agreement (with respect to the representation and warranty made as of the date of this
Agreement) and to the Closing Date (with respect to the representation and warranty made as of the
Closing Date):

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          (a) there has not been any Material Adverse Change;

          (b) no member of the Seller Group has, except in the ordinary course of business and except as
set forth on Section 4.14(b) of the Seller Disclosure Schedule, (i) materially increased or
modified the compensation or benefits payable or to become payable by such member of the Seller
Group to any Business Employees or consultants or contractors of the Business, (ii) materially
increased or modified any Benefit Plan applicable to any Business Employees or consultants or
contractors of the Business, or (iii) entered into any employment, severance or termination
agreement with any Business Employee;

          (c) no member of the Seller Group has sold, leased, transferred or assigned any Purchased
Assets, except for (i) the sale of Inventory, and (ii) the sale of obsolete Equipment, in each case
in the ordinary course of the Business consistent with past practice;

          (d) no member of the Seller Group has incurred, assumed or guaranteed any Indebtedness Related
to the Business, other than obligations relating to equipment or lease financing arrangements
entered into in the ordinary course of the Business;

          (e) no member of the Seller Group has mortgaged, pledged or subjected to Liens any assets,
properties or rights Related to the Business, except for Liens arising under lease financing
arrangements existing as of the Balance Sheet Date and Permitted Liens;

          (f) no member of the Seller Group has entered into, amended, modified, canceled or waived any
rights under, any Assumed Contract and no Assumed Contract has been terminated or cancelled;

          (g) no member of the Seller Group has taken any action outside the ordinary course of the
Business;

          (h) there has not been any labor dispute, other than individual grievances, or any activity or
proceeding by a labor union or representative thereof to organize any employees of the Business;

          (i) there has not been any material violation of, or material conflict with, any applicable
Law or any Business Authorization;

          (j) there has not been any material damage, destruction or loss with respect to the Purchased
Assets, whether or not covered by insurance;

          (k) no member of the Seller Group has made any change in the accounting practices Related to
the Business;

          (l) no member of the Seller Group has made any Tax election, changed its method of Tax
accounting or settled any claim for Taxes, in each case Related to the Business; and

          (m) no member of the Seller Group has agreed, whether in writing or otherwise, to do any of
the foregoing.

     4.15 Contracts.

          (a) Except as set forth in Section 4.15 of the Seller Disclosure Schedule, no member of the
Seller Group is party to, or bound by, in each case Related to the Business:

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                (i) any Contract or series of related Contracts for the purchase of materials,
supplies, goods, services, equipment or other assets that involves (A) annual payments by the
members of the Seller Group of $200,000 or more, or (B) aggregate payments by the members of the
Seller Group of $2,000,000 or more;

                (ii) any Contract or series of related Contracts for the sale by the members of the
Seller Group of (A) materials, supplies, goods, services, equipment or other assets, that involves
a specified annual minimum dollar sales amount of $200,000 or more, or (B) pursuant to which the
members of the Seller Group received payments of more than $200,000 in the year ended December 31,
2009;

                (iii) any Contract that requires any member of the Seller Group to purchase its
total requirements of any product or service from a third party or that contains “take or pay”
provisions;

                (iv) any Contract or series of related Contracts that (A) continues over a period of
more than six months from the date hereof or (B) involves payments to or by any member of the
Seller Group exceeding $200,000, other than arrangements disclosed pursuant to the preceding
paragraphs (i) and (ii);

                (v) any partnership, joint venture or similar Contract;

                (vi) any distribution, dealer, representative or sales agency Contract;

                (vii) any Lease;

                (viii) any Contract for the lease of personal property which provides for payments
to or by any member of the Seller Group in any one case of $200,000 or more annually or $600,000 or
more over the term of the Contract;

                (ix) any Contract which provides for the indemnification by a member of the Seller
Group of any Person (other than customary indemnification provisions contained in Contracts entered
into in the ordinary course to which no claims for indemnification are outstanding), the
undertaking by any member of the Seller Group to be responsible for consequential damages, or the
assumption by any member of the Seller Group of any Tax or environmental Liability;

                (x) any Contract with any Governmental Entity;

                (xi) any note, debenture, bond, equipment trust, letter of credit, loan or other
Contract for Indebtedness or lending of money (other than to employees for travel or business
expenses in the ordinary course of the Business) or Contract for a line of credit or guarantee,
pledge or undertaking of the Indebtedness of any other Person, in each case involving Indebtedness
in excess of $200,000;

                (xii) any Contract for any capital expenditure or leasehold improvement in any one
case in excess of $200,000 or any such Contracts in the aggregate greater than $600,000;

                (xiii) any Assigned Contract which restrains the ability of any member of the Seller
Group to engage in any business or compete in any manner in any business;

                (xiv) any Out-Bound License or In-Bound License;

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                (xv) any Contract relating to the acquisition or disposition of any material
business (whether by merger, sale of stock, sale of assets or otherwise);

                (xvi) any collective bargaining Contract or other Contract with any labor
organization, union or association;

                (xvii) any Contract that is an employment, consulting, termination or severance
Contract with any Business Employee, other than non-binding offer letters; and

                (xviii) any Contract that is otherwise material to any member of the Seller Group
and not previously disclosed pursuant to this Section 4.15.

          (b) Each Contract required to be listed in Section 4.15 of the Seller Disclosure Schedule
(collectively, the “Material Contracts”) is valid and enforceable in accordance with its terms,
except as such enforceability may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium or other similar Laws affecting or relating to creditors’ rights generally, and (ii) the
availability of injunctive relief and other equitable remedies. The member of the Seller Group
party to such Material Contract has materially complied with and is in material compliance with,
and to Seller’s Knowledge, all other parties thereto have materially complied with and are in
material compliance with, the provisions of each Material Contract.

          (c) No member of the Seller Group is, and to Seller’s Knowledge, no other party thereto is, in
default in the performance, observance or fulfillment of any material obligation, covenant,
condition or other term contained in any Material Contract, and no member of the Seller Group has
given or received written notice to or from any Person relating to any such alleged or potential
default that has not been cured. No event has occurred which with or without the giving of notice
or lapse of time, or both, may conflict with or result in a violation or breach of, or give any
Person the right to exercise any remedy under or accelerate the maturity or performance of, or
cancel, terminate or modify, any Material Contract.

          (d) Seller has delivered accurate and complete copies of each Material Contract to Buyer.

     4.16 Sufficiency of Purchased Assets.

          (a) The Purchased Assets include all assets, properties and rights Related to the Business
reflected on the Seller June Balance Sheet other than (i) Inventory sold, (ii) Accounts Receivable,
(iii) prepaid expenses realized, (iv) items of obsolete Equipment disposed of and (v) the Excluded
Assets, in the case of each of (i)-(iv) in the ordinary course of the Business consistent with past
practice.

          (b) The Purchased Assets and the performance by Seller under the Ancillary Agreements will be
sufficient for the conduct and operation of the Business by Buyer following the Closing in the same
manner as conducted and operated by the members of the Seller Group on the Balance Sheet Date;
provided, however, that Buyer acknowledges that, except with respect to the Assigned Contracts,
Seller is not assigning any other Contracts Related to the Business.

          (c) The products listed in Schedule I of the Seller Disclosure Schedule constitute all
products currently or formerly used in the operation of the Business, including products currently
under development or production.

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     4.17 Litigation.

          (a) There is no action, suit or proceeding, claim, arbitration, litigation or governmental
investigation (each, an “Action”), in each case Related to the Business, (i) pending or, to
Seller’s Knowledge, threatened against or affecting any member of the Seller Group, or (ii) that
challenges or seeks to prevent, enjoin or otherwise delay the transactions contemplated by this
Agreement or the Ancillary Agreements. No event has occurred or circumstances exist that may give
rise or serve as a basis for any such Action.

          (b) There is no unsatisfied judgment, penalty or award, in each case Related to the Business,
against or affecting any member of the Seller Group or any of the Purchased Assets.

     4.18 Employee Benefits.

          (a) Section 4.18(a) of the Seller Disclosure Schedule sets forth a complete and accurate list
of all Benefit Plans maintained or contributed to by Seller or any member of the Seller Group for
the benefit of any present or former employees, contractors or consultants of the Business
(collectively, “Seller Group Benefit Plans”) covering employees located in the United States (the
"US Plans”).

          (b) Each US Plan has been and is currently administered in compliance with all reporting,
disclosure and other requirements of ERISA and the Code applicable to such US Plan. Each US Plan
that is an employee pension benefit plan (as defined in Section 3(2) of ERISA) and which is
intended to be qualified under Section 401(a) of the Code (a “Pension Plan”), has been determined
by the Internal Revenue Service to be so qualified and no condition exists that would adversely
affect any such determination. No US Plan is a “defined benefit plan” as defined in Section 3(35)
of ERISA.

          (c) No member of the Seller Group or any ERISA Affiliate or any trustee or agent of any US
Plan has been or is currently engaged in any prohibited transactions as defined by Section 406 of
ERISA or Section 4975 of the Code for which an exemption is not applicable which could subject any
member of the Seller Group, any ERISA Affiliate or any trustee or agent of any US Plan to the Tax
or penalty imposed by Section 4975 of the Code or Section 502 of ERISA.

          (d) No member of the Seller Group or any ERISA Affiliate has been or is currently party to any
“multi-employer plan,” as that term is defined in Section 3(37) of ERISA.

          (e) True and correct copies of the most recent annual report on Form 5500 and any attached
schedules for each US Plan (if any such report was required by applicable Law) and a true and
correct copy of the most recent determination letter issued by the Internal Revenue Service for
each Pension Plan have been made available to Buyer.

          (f) With respect to each US Plan, there are no actions, suits or claims (other than routine
claims for benefits in the ordinary course) pending or, to Seller’s Knowledge threatened against
any US Plan, any member of the Seller Group, any ERISA Affiliate or any trustee or agent of any US
Plan.

          (g) With respect to each US Plan to which a member of the Seller Group or any ERISA Affiliate
is a party which constitutes a group health plan subject to Section 4980B of the Code, each such US
Plan complies, and in each case has complied, in all material respects with all applicable
requirements of Section 4980B of the Code.

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          (h) Full payment has been made of all amounts which any member of the Seller Group or any
ERISA Affiliate was required to have paid as a contribution to any US Plan as of the last day of
the most recent fiscal year of each of the Benefit Plans ended prior to the date of this Agreement.

          (i) Each US Plan is, and its administration is and has been during the six-year period
preceding the date of this Agreement, in compliance with, and no member of the Seller Group or any
ERISA Affiliate has received any claim or notice that any such US Plan is not in compliance with,
all applicable Laws and Governmental Orders and prohibited transaction exemptions, including to the
extent applicable, the requirements of ERISA, in each case in all material respects.

          (j) No US Plan other than a Pension Plan or severance plan provides benefits to any Business
Employee after termination of employment.

          (k) Except as set forth in the Seller Disclosure Schedule, the consummation of the
transactions contemplated by this Agreement will not (i) entitle any Business Employee, contractor
or consultant of the Business to severance pay, unemployment compensation or any other payment
(except to the extent required by applicable Law), (ii) accelerate the time of payment or vesting,
or increase the amount of, compensation due to any such Business Employee, contractor or
consultant, or result in the payment of any other benefits to any Person or the forgiveness of any
Indebtedness of any Person, (iii) result in any prohibited transaction described in Section 406 of
ERISA or Section 4975 of the Code for which an exemption is not available or (iv) result (either
alone or in conjunction with any other event) in the payment or series of payments by any member of
the Seller Group or any of its Affiliates to any Person of an “excess parachute payment” within the
meaning of Section 280G of the Code.

          (l) With respect to each US Plan that is funded wholly or partially through an insurance
policy, all premiums required to have been paid to date under the insurance policy have been paid,
all premiums required to be paid under the insurance policy through the Closing will have been paid
on or before the Closing and, as of the Closing, there will be no liability of any member of the
Seller Group or any ERISA Affiliate under any insurance policy or ancillary agreement with respect
to such insurance policy in the nature of a retroactive rate adjustment, loss sharing arrangement
or other Liability arising wholly or partially out of events occurring prior to the Closing.

          (m) Each US Plan that constitutes a “welfare benefit plan,” within the meaning of Section 3(1)
of ERISA, and for which contributions are claimed by any member of the Seller Group or any ERISA
Affiliate as deductions under any provision of the Code, is in compliance with all applicable
requirements pertaining to such deduction. With respect to any welfare benefit fund (within the
meaning of Section 419 of the Code) related to a welfare benefit plan, there is no disqualified
benefit (within the meaning of Section 4976(b) of the Code) that would result in the imposition of
a Tax under Section 4976(a) of the Code. All welfare benefit funds intended to be exempt from Tax
under Section 501(a) of the Code have been determined by the Internal Revenue Service to be so
exempt and no event or condition exists which would adversely affect any such determination.

          (n) Section 4.18(n) of the Seller Disclosure Schedule sets forth all Benefit Plans covering
Business Employees outside of the United States (the “Foreign Plans”). The Foreign Plans have been
operated in accordance, and are in compliance, with all applicable Laws and have been operated in
accordance, and are in compliance, in each case in all material respects, with their respective
terms. There are no unfunded liabilities under or in respect of the Foreign Plans, and all
contributions or other payments required to be made to or in respect of the Foreign Plans prior to
the Closing have been made or will be made prior to the Closing.

          (o) With respect to all Foreign Plans covering Business Employees in Japan (the “Japan
Plans”):

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                (i) No written notice of non-compliance has been received by any member of the
Seller Group from any such Governmental Entity with respect to any of the Japan Plans.

                (ii) Each Japan Plan to which any member of the Seller Group contributes that is
intended to qualify for any Tax benefit under applicable Law has received any required confirmation
of such qualification from an appropriate Governmental Entity and is in material compliance with
all requirements of applicable Law, as to both form and operation, necessary to maintain such
qualification. Each member of the Seller Group, as applicable, has performed all of its material
obligations in relation to the Japan Plans in accordance with the governing documentation of the
Japan Plans and the requirements of all applicable Laws.

                (iii) There are no criminal proceedings against, and no civil, arbitration,
administrative or other proceedings or disputes by or against, the trustees, managers or
administrators of the Japan Plans or any member of the Seller Group in relation to the Japan Plans
and none is pending, or to Seller’s Knowledge, threatened.

     4.19 Labor and Employment Matters.

          (a) The Seller Disclosure Schedule sets forth (i) a list of all Business Employees (including
title and position), contractors and consultants of the Business as of the date hereof, and (ii)
the base compensation and benefits of each such Business Employee, contractor and consultant. The
employment of all Business Employees, contractors and consultants, except for the employment of
Business Employees located in Japan, may be terminated at any time with or without cause and
without any severance or other Liability to the members of the Seller Group. The list of Business
Employees includes all employees of the Seller Group who perform services Related to the Business
(other than employees who perform only incidental services Related to the Business).

          (b) No member of the Seller Group is a party or subject to any labor union or collective
bargaining agreement in connection with the Business. There have not been since January 1, 2008,
and there are not pending or, to Seller’s Knowledge, threatened, any labor disputes, work
stoppages, requests for representation, pickets, work slow-downs due to labor disagreements or any
actions or arbitrations that involve Business Employees. There is no unfair labor practice, charge
or complaint pending, unresolved or, to Seller’s Knowledge, threatened before the National Labor
Relations Board. No event has occurred or circumstance exist that may provide the basis of any
work stoppage or other labor dispute in connection with the Business.

          (c) Each member of the Seller Group has complied in all material respects with each, and is
not in material violation of any, Law relating to anti-discrimination and equal employment
opportunities in connection with the Business. There are, and have been, no violations of any other
Law respecting the hiring, hours, wages, occupational safety and health, employment, promotion,
termination or benefits of any Business Employee. Each member of the Seller Group has filed all
reports, information and notices required under any Law respecting the hiring, hours, wages,
occupational safety and health, employment, promotion, termination or benefits of any Business
Employee, and will timely file prior to Closing all such reports, information and notices required
by any Law to be given prior to Closing.

          (d) Each member of the Seller Group has paid or properly accrued in the ordinary course of the
Business all wages and compensation due to Business Employees, including all vacations or vacation
pay, holidays or holiday pay, sick days or sick pay, and bonuses.

          (e) No member of the Seller Group is a party to any Contract which restricts any member of the
Seller Group from relocating, closing or terminating any of its operations or facilities or any
portion thereof with respect to the Business. The consummation of the transactions contemplated by

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this Agreement will not create liability for any act by any member of the Seller Group on or
prior to the Closing under the WARN Act or any other Law respecting reductions in force or the
impact on employees of plant closings or sales of businesses.

          (f) Each member of the Seller Group has complied and is in compliance with, in all material
respects, the requirements of the Immigration Reform and Control Act of 1986. The Seller Disclosure
Schedule sets forth a true and complete list of all Business Employees working in the United States
who are not U.S. citizens and a description of the legal status under which each such Business
Employee is permitted to work in the United States. All Business Employees who are performing
services for the Seller Group in the United States are legally able to work in the United States.

          (g) With respect to labor and employment matters in Japan:

                (i) In addition to the information otherwise required to be set forth under Section
4.19(a) above, the Seller Disclosure Schedule sets forth for each Business Employee located in
Japan (the “Japan Business Employees”) the date of employment, date of commencement of continuous
employment (if different), term of employment, number of accrued but unused annual paid vacation
days, employee classification (whether eligible or non-eligible for overtime pay), and status as a
full-time, part-time or temporary/fixed term employee. Each member of the Seller Group, as
applicable, has complied at all times with all applicable Laws and material Contract terms relating
to such Japan Business Employees, including, but not limited to, terms relating to the calculation
and payment of wages (including overtime pay, late-night work pay, holiday work pay and salary
deduction), maximum hours of work, vacation, child labor restrictions, equal employment
opportunity, occupational safety and health, workers’ compensation, unemployment compensation, the
payment of social security and other Taxes, unfair labor practices, dispatched workers and other
contingent workers, employment of handicapped individuals and prohibition of discrimination and
harassment. There are no workers’ compensation, labor, or similar employment related claims or
disputes pending or threatened against any member of the Seller Group with respect to the Japan
Business Employees or the Business in Japan. Except as may be set forth in any Japan Plans, the
members of the Seller Group are not required by Law, Japan Work Rules (as defined below) or
Contract to pay any bonus, commission or other incentive compensation to any Japan Business
Employee.

                (ii) The employment of any terminated former employee of any member of the Seller
Group in connection with the Business in Japan has been terminated in compliance with any
applicable material terms of any Contract (including Work Rules) and applicable Law, and no member
of the Seller Group has any material Liability under any Contract (including Work Rules) or
applicable Law toward any such terminated employee, except as may be set forth in any Japan Plans.
The consummation of the transactions contemplated by this Agreement will not cause any of the
members of the Seller Group to incur or suffer any Liability relating to, or obligation to pay
severance, termination or other payment to, any present or former employee in connection with the
Business in Japan.

                (iii) True, correct and complete copies of all collective bargaining agreements and
similar agreements between a member of the Seller Group and any trade union or similar organization
representing the Japan Business Employees have been provided to Buyer (collectively, the “Japan
Collective Bargaining Agreements”). There is no current or threatened dispute between any member
of the Seller Group and any trade union or similar organization with respect to the Japan Business
Employees. No Action is pending or, to the Seller’s Knowledge, threatened against any of the
members of the Seller Group respecting or involving any applicant for employment of any member of
the Seller Group in Japan, any Japan Business Employee or any former employee in Japan of any
member of the Seller Group, or any class of the foregoing, by or before any Governmental Entity.

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                (iv) There has been no dismissal of employees in Japan undertaken by or on behalf of
any member of the Seller Group in the past three years, other than a dismissal of 33 employees in
the aggregate whose employment terminated in 2008 and in the first and second quarters of 2009. No
orders, awards, improvements, prohibitions or other notices have been served upon and no other
enforcement or similar proceedings have been taken against any of the members of the Seller Group
in the past three years pursuant to any legislation, regulations, orders or codes of conduct of any
Governmental Entity in respect of the Japan Business Employees.

                (v) The Seller Disclosure Schedule lists by position or title and regular salary or
wage level (but not by name) each Japan Business Employee who is (x) absent from active employment
due to short or long term disability, (y) absent from active employment on a leave required to be
granted under applicable Law by reason of a medical or other condition of such employee or any
family member or (z) absent from active employment on any other leave or approved absence (together
with the reason for such leave or absence).

                (vi) The Seller Disclosure Schedule lists all the employment-related rules,
regulations and policies of any member of the Seller Group located in Japan (the “Japan Work
Rules”). True, correct and complete copies of all Japan Work Rules documents have been provided or
made available to Buyer. Each member of the Seller Group, as applicable, has duly submitted the
Japan Work Rules and labor-management agreements to the applicable Government Entities and has duly
updated them in accordance with applicable Laws. There are no agreements or other arrangements
with any Japan Business Employees which may depart from the Japan Work Rules. There are no current
negotiations with any union or similar organization for any material change in the rate of
remuneration or the bonus, incentives, or private pension benefits of any Japan Business Employee,
and any other employment terms and conditions. Execution, delivery and performance by the Seller
of this Agreement and the other documents contemplated by this Agreement and the consummation by
the Seller of the transactions contemplated by this Agreement and such other documents, do not and
will not, directly or indirectly (with or without notice or lapse of time), violate, breach,
conflict with, constitute a default under, accelerate or permit the acceleration of the performance
required by, any Japan Work Rules, Japan Collective Bargaining Agreements or Employment Contracts
respecting the Japan Business Employees. No member of the Seller Group has made any oral or
written representations or warranties or such other commitments to any Japan Business Employees
and/or any labor union or other labor organization with respect to the terms and conditions of
employment of the Japan Business Employees after the Closing.

                (vii) No third party has claimed to any member of the Seller Group or, to the
Seller’s Knowledge, has reason to claim, that any Japan Business Employee or any consultant or
outsourced employee of any member of the Seller Group engaged in connection with the Business in
Japan, including, but not limited to, any Dispatched Employee (as defined below) (collectively, the
"Japan Personnel”), (x) has violated or may be violating any of the terms or conditions of his or
her employment (or engagement), non-competition, non-solicitation or non-disclosure agreement with
such third party, (y) has or may have disclosed or utilized any trade secret or proprietary
information or documentation of such third party, or (z) has in his or her capacity as an employee,
consultant, outsourced employee or Dispatched Employee of any member of the Seller Group interfered
or may be interfering in the employment relationship between such third party and any of its
present or former employees. To Seller’s Knowledge, no Japan Personnel has employed or has
proposed to employ any trade secret or any information or documentation proprietary to any former
employer or violated any confidential relationship which such Japan Personnel may have had with any
other Person, in connection with the development of any Product (as defined below) or proposed
Product or the development or sale of any service or proposed service of any member of the Seller
Group.

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               (viii) The Seller Disclosure Schedule lists each individual (but not by name) who is
employed by a third party and dispatched by such third party to a member of the Seller Group to
provide services to such member of the Seller Group in Japan in connection with the Business (the
"Dispatched Employees”) and shows for each such individual the position or title of such
individual, the location in which such individual is providing services to such member of the
Seller Group, the nature and duration of such services, the name of such third party dispatcher and
the monthly fees payable to such third party dispatcher for such services. Each member of the
Seller Group has complied at all times with all applicable Laws and Contract terms relating to such
individuals and the services they are providing to such member of the Seller Group.

     4.20 Environmental.

          (a) As used in this Agreement, the following words and terms have the following definitions:

               (i) The term “CERCLA” means the Comprehensive Environmental Response, Compensation,
and Liability Act, 42 U.S.C. Section 9601 et seq.

               (ii) The term “Environment” means all indoor or outdoor air, surface water,
groundwater, surface or subsurface land, including all fish, wildlife, biota and all other natural
resources.

               (iii) The term “Environmental Action” means any claim, proceeding or other Action
under any Environmental Law or the assertion of any claim with respect to Pre-Closing Environmental
Liabilities.

               (iv) The term “Environmental Clean-up Site” means any location which is listed on
the National Priorities List, the Comprehensive Environmental Response, Compensation and Liability
Information System, or on any similar state or foreign list of sites requiring investigation or
cleanup.

               (v) The term “Environmental Laws” means any and all applicable Laws and
Authorizations issued, promulgated or entered into by any Governmental Entity relating to the
Environment, worker health and safety to the extent relating to the presence, Release or exposure
to Hazardous Substances, preservation or reclamation of natural resources, or to the management,
handling, use, generation, treatment, storage, transportation, disposal, manufacture, distribution,
formulation, packaging, labeling, Release or threatened Release of or exposure to Hazardous
Substances; and any similar or implementing state or local Law, and any Japanese Laws and
regulations of similar import, including but not limited to the Basic Act for Environmental
Pollution Control (kankyo kihon ho) (Act No. 91 of 1993), Industrial Safety and Health Act (rodo
anzen eisei ho) (Act No.57 of 1972), the Air Pollution Control Act (taiki osen boshi ho) (Act No.
97 of 1968), the Water Pollution Control Act (suishitsu odaku boshi ho) (Act No. 138 of 1970), the
Soil Contamination Countermeasures Act (dojo osen taisaku ho) (Act No. 53 of 2002), and the Waste
Management and Public Cleaning Act (haikibutsu no shori oyobi seiso ni kansuru horitsu) (Act No.
137 of 1970), any applicable U.S. and non-U.S. Laws and regulations of similar import, and all
amendments or regulations promulgated thereunder prior to the date hereof; and any common law
doctrine, including but not limited to, negligence, nuisance, trespass, personal injury, or
property damage related to or arising out of the presence, Release, or exposure to Hazardous
Substances.

               (vi) The term “Environmental Permit” means any Authorization under Environmental Law
and includes any and all Governmental Orders issued or entered into by a Governmental Entity under
Environmental Law.

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               (vii) The term “Hazardous Substances” means all explosive or regulated radioactive
materials or substances, hazardous or toxic materials, wastes or chemicals, petroleum and petroleum
products (including crude oil or any fraction thereof), asbestos or asbestos containing materials,
and all other materials, chemicals or substances which are regulated by, form the basis of
liability or are defined as hazardous, extremely hazardous, toxic or words of similar import, under
any Environmental Law.

               (viii) The term “Release” means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, or disposing of Hazardous Substances
into the Environment.

          (b) Each member of the Seller Group has obtained, and is in compliance in all material
respects with, all Environmental Permits required in connection with the Business and the Real
Property. Each such Environmental Permit, together with the name of the Governmental Entity
issuing such Environmental Permit, is set forth in the Seller Disclosure Schedule. All such
Environmental Permits are valid and in full force and effect and all renewal applications for such
Environmental Permits have been timely filed with the appropriate Governmental Entity. None of such
Environmental Permits will be terminated or impaired or become terminable as a result of the
consummation of the transactions contemplated by this Agreement. No Environmental Law imposes any
obligation arising out of or as a condition to the transactions contemplated by this Agreement,
including but not limited to, any requirement to file a notice or other submission with a
Governmental Entity, the placement of any notice, restriction, acknowledgement or covenant in any
land records, or the modification of or provision of notice under any agreement, consent order or
consent decree. Each member of the Seller Group has been and is currently, in compliance with all
Environmental Laws in all material respects and no member of the Seller Group has received written
notice alleging that any member of the Seller Group is not in compliance with Environmental Laws,
in each case Related to the Business and the Real Property.

          (c) There are no past, pending or, to Seller’s Knowledge, threatened Environmental Actions
against or affecting any member of the Seller Group Related to the Business or the Real Property,
and Seller is not aware of any facts or circumstances which would reasonably be expected to form
the basis for any such Environmental Action. No member of the Seller Group has entered into or
agreed to, nor does it contemplate entering into, any consent decree or order under Environmental
Law in each case Related to the Business or the Real Property.

          (d) No member of the Seller Group has entered into or agreed to any Governmental Order, and no
member of the Seller Group is a party to any Governmental Order, relating to compliance with any
Environmental Law or to investigation or cleanup of a Hazardous Substance under any Environmental
Law, in each case Related to the Business or the Real Property.

          (e) No Lien has been attached to, or asserted against, any assets (other than Real Property),
Owned Real Property or rights Related to the Business pursuant to any Environmental Law, and, to
Seller’s Knowledge, no such Lien has been threatened. To Seller’s Knowledge, there are no facts,
circumstances or other conditions that would reasonably be expected to give rise to any Liens on or
affecting the Real Property under Environmental Law.

          (f) With respect to the Owned Real Property, and to Seller’s Knowledge with respect to the
Leased Real Property, (i) there has been no treatment, storage, disposal or Release of any
Hazardous Substance at, from, into, on or under any Real Property or any other property currently
or formerly owned, operated or leased by any member of the Seller Group Related to the Business,
and (ii) no Hazardous Substances are present in, on, about or migrating to or from any Real
Property that, in

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the case of (i) and (ii), would reasonably be expected to give rise to an Environmental Action
against any member of the Seller Group.

          (g) No member of the Seller Group has (i) received a CERCLA 104(e) information request, (ii)
been named a potentially responsible party for any National Priorities List site under CERCLA or
any other site under analogous Environmental Law, or (iii) received an analogous notice or request
from any non-U.S. Governmental Entity, in each case in connection with the Business.

          (h) Except as set forth in the Seller Disclosure Schedule, to Seller’s Knowledge, there are no
aboveground tanks or underground storage tanks on, under or about the Real Property and any
aboveground or underground tanks previously situated on the Real Property have been removed in
accordance with all Environmental Laws.

          (i) To Seller’s Knowledge, there are no polychlorinated biphenyls (“PCBs”) leaking from any
article, container or equipment on, under or about the Real Property and there are no such
articles, containers or equipment containing PCBs in, at, on, under or within the Real Property.

          (j) Except as set forth in the Seller Disclosure Schedule, to Seller’s Knowledge, there is no
asbestos containing material or lead based paint containing materials in at, on, under or within
the Real Property. No member of the Seller Group has in connection with the Business (i)
manufactured or distributed or otherwise incorporated into any product it manufactured or
distributed, or (ii) ever acquired any company that manufactured or distributed or
otherwise incorporated into any product it manufactured or distributed, any asbestos or
asbestos-containing materials.

          (k) To Seller’s Knowledge, no member of the Seller Group has in connection with the Business
transported or arranged for the treatment, storage, handling, disposal, or transportation of any
Hazardous Material to any off-site location which is an Environmental Clean-up Site.

          (l) None of the Real Property is an Environmental Clean-up Site.

          (m) Seller has provided to Buyer true and complete copies of, or access to, all non-privileged
written environmental assessments, materials, reports, data, analyses and compliance audits that
have been prepared by or on behalf of any member of the Seller Group with respect to the Real
Property or any other real property formerly owned, operated or leased by any member of the Seller
Group in connection with the Business, in each case, to the extent in the Seller Group’s possession
or control.

          (n) Notwithstanding any other provision of this Agreement, this Section 4.20 sets forth the
sole and exclusive representations and warranties of Seller with respect to Environmental Laws
Environmental Permits, Releases and Environmental Actions.

     4.21 Insurance.

          (a) The Seller Disclosure Schedule sets forth (i) an accurate and complete list of each
insurance policy and fidelity bond which covers the Business and any member of the Seller Group
with respect to the Business (the “Policies”) and (ii) with respect to the Business, a list of all
pending claims and the claims history for the Seller Group during the current year and the
preceding three years (including with respect to insurance obtained but not currently maintained).
There are no pending claims under any of such Policies with respect to the Business as to which
coverage has been questioned, denied or disputed by the insurer or in respect of which the insurer
has reserved its rights.

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          (b) The Seller Disclosure Schedule describes any self-insurance arrangement by or affecting
the Seller Group with respect to the Business, including any reserves thereunder, and describes the
loss experience for all claims that were self-insured in the current year and the preceding three
years.

          (c) All Policies are in full force and effect and are enforceable in accordance with their
terms. Such Policies provide adequate insurance coverage for the Business, and are sufficient for
compliance with all Laws and Material Contracts to which any member of the Seller Group is a party
or by which it is bound in connection with the Business.

          (d) All premiums due under the Policies have been paid in full or, with respect to premiums
not yet due, accrued. No member of the Seller Group has received a notice of cancellation of any
Policy or of any material changes that are required in the conduct of the Business as a condition
to the continuation of coverage under, or renewal of, any such Policy. There is no existing default
or event which, with the giving of notice or lapse of time or both, would reasonably be expected to
constitute a default under any Policy or entitle any insurer to terminate or cancel any Policy with
respect to the Business. No member of the Seller Group has any Knowledge of any threatened
termination of any Policy.

     4.22 Product Warranty.

          (a) There are no warranties (express or implied) outstanding with respect to any Flow Products
currently or formerly manufactured, sold, distributed, shipped or licensed (“Products”), by any
member of the Seller Group in connection with the Business, beyond that set forth in the standard
conditions of sale or service, copies of which are included in the Seller Disclosure Schedule.

          (b) Each Product manufactured, sold, distributed, shipped or licensed by the members of the
Seller Group in connection with the Business has been in conformity in all material respects with
all applicable contractual commitments and warranties. There are no material design, manufacturing
or other defects, latent or otherwise, with respect to any Products and such Products are not toxic
when used in accordance with their intended use. Each Product that has been manufactured, sold,
distributed, shipped or licensed during the three-year prior to Closing contains all warnings
required by applicable Law and such warnings are in accordance with reasonable industry practice.

          (c) The Seller June Balance Sheet reflects adequate reserves (in accordance with GAAP) for
product design and warranty claims and other damages in connection with any Flow Product
manufactured, sold, distributed, shipped or licensed, or service rendered, by the members of the
Seller Group in connection with the Business on the Balance Sheet Date. The accounting records of
the Business set forth on Schedule 4.22 of the Seller Disclosure Schedule will reflect adequate
reserves (in accordance with Seller’s estimates and GAAP) for all such claims in connection with
Products manufactured, sold, distributed, shipped or licensed, or services rendered by, any member
of the Seller Group in connection with the Business on or prior to the Closing.

     4.23 Suppliers and Customers.

          (a) Section 4.23 of the Seller Disclosure Schedule sets forth with respect to the Business:

               (i) each supplier from whom purchases exceeded $200,000 in the year ended December
31, 2009 or 2008 or that is otherwise material to the Business and the type and amount of goods
purchased;

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               (ii) each supplier that constitutes a sole source of supply to the Business and the
type and amount of goods purchased; and

               (iii) with respect to each year ended December 31, 2009 or 2008 and the three-month
period ended June 30, 2010, each customer that has contributed in excess of five percent (5%) of
the revenues of the Business for such year or period and the type and amount of goods purchased.

          (b) The relationships of the Business with each supplier and customer required to be listed in
Section 4.23 of the Seller Disclosure Schedule are commercially reasonable working relationships.
As of the date hereof, no such supplier or customer has canceled or otherwise terminated, or
threatened in writing to cancel or otherwise terminate, its relationship with the Business or
limited its services, supplies or materials to or purchases from the Business. Section 4.23 of the
Seller Disclosure Schedule sets forth a description of each written notice received by any member
of the Seller Group that any such supplier or customer may cancel, terminate or otherwise
materially and adversely modify its relationship with the Business or limit its services, supplies
or materials to or purchases from the Business, either as a result of the consummation of the
transactions contemplated by this Agreement or otherwise.

     4.24 Solvency. No member of the Seller Group is insolvent or will be rendered
insolvent by any of the transactions contemplated by this Agreement and the Ancillary Agreements.
“Insolvent” means, with respect to any Person, that the sum of the debts and other probable
Liabilities of such Person exceeds the present fair saleable value of such Person’s assets.

     4.25 Brokers or Finders. Seller represents, as to itself and its Affiliates, that no
agent, broker, investment banker or other firm or Person is or will be entitled to any broker’s or
finder’s fee or any other commission or similar fee in connection with any of the transactions
contemplated by this Agreement and the Ancillary Agreements, except GCA Savvian, whose fees and
expenses will be paid by Seller.

     4.26 FCPA. No member of the Seller Group (nor any director, officer, agent, employee,
consultant of or other Person associated with or acting on behalf of a member of the Seller Group
in the Business) has (a) made, authorized, offered or promised to make any payment or transfer of
anything of value, directly, indirectly or through a third party, to any foreign government
official, employee or other representative (including employees of a government owned or controlled
entity or public international organization and including any political party or candidate for
public office), in violation of the United States Foreign Corrupt Practices Act of 1977 (the
“FCPA”), or any Law of similar effect in any jurisdiction to which such Person is subject or (b)
otherwise taken any action which would cause any member of the Seller Group to be in violation of
the FCPA, or any Law of similar effect in any jurisdiction to which such Person is subject. For
the purposes of this Section 4.26, the acts specified include, but are not limited to (x) the
making or payment of any illegal contributions, commissions, fees, gifts, entertainment, travel or
other unlawful expenses relating to political activity, (y) the direct or indirect payment, gift,
offer, promise or authorization to make a payment, gift, offer or promise of, anything of material
value to any foreign government representative and (z) the making of any bribe, illegal payoff,
influence payment, kickback or other unlawful payment, using funds of a member of the Seller Group
or otherwise on behalf of a member of the Seller Group.

     4.27 Completeness of Disclosure. No representation or warranty by Seller in this
Agreement, and no statement made by Seller in the Seller Disclosure Schedule, the Ancillary
Agreements or any certificate or other document furnished or to be furnished to Buyer pursuant
hereto, contains or will at the Closing contain any untrue statement of a material fact or omits or
will omit to state a material fact required to be stated herein or therein or necessary to make any
statement herein or therein, in light of the circumstances in which it was made, not misleading.

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ARTICLE V

REPRESENTATIONS AND WARRANTIES OF BUYER

     Buyer represents and warrants to Seller that each statement contained in this Article V is
true and correct as of the date hereof.

     5.1 Organization and Good Standing. Buyer is a kabushiki kaisha duly organized and
validly existing under the Laws of Japan and has the requisite corporate power to own, lease and
operate its properties and to carry on its business as now being conducted.

     5.2 Authority and Enforceability. Buyer has the requisite corporate power and
authority to enter into this Agreement and the Ancillary Agreements to which it is a party and to
consummate the transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Ancillary Agreements to which Buyer is a party and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all necessary corporate
action on the part of Buyer. This Agreement has been, and the Ancillary Agreements to which Buyer
is a party will be, duly executed and delivered by Buyer and, assuming due authorization, execution
and delivery by Seller, constitutes the valid and binding obligations of Buyer, enforceable against
it in accordance with their respective terms, except as such enforceability may be limited by (a)
bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting or relating to
creditors’ rights generally, and (b) the availability of injunctive relief and other equitable
remedies.

     5.3 No Conflicts; Consents.

          (a) The execution and delivery of this Agreement by Buyer do not, and the execution and
delivery of the Ancillary Agreements to which Buyer is a party and the consummation of the
transactions contemplated hereby and thereby will not, (i) violate the provisions of any of the
Charter Documents of Buyer, (ii) violate any Contract to which Buyer is a party, (iii) violate any
Law of any Governmental Entity applicable to Buyer on the date hereof, or (iv) result in the
creation of any Liens upon any of the assets owned or used by Buyer, except in each such case where
such violation or Lien would not reasonably be expected materially to impair or delay the ability
of Buyer to perform its obligations under this Agreement or the Ancillary Agreements.

          (b) No Authorization or Governmental Order of, registration, declaration or filing with, or
notice to any Governmental Entity is required by Buyer in connection with the execution and
delivery of this Agreement and the Ancillary Agreements to which it is a party and the consummation
of the transactions contemplated hereby and thereby, except for such Authorizations, Governmental
Orders, registrations, declarations, filings and notices (i) as may be required under the Foreign
Antitrust Laws, or (ii) the failure to obtain which would not reasonably be expected to materially
impair the ability of Buyer to perform its obligations under this Agreement and the Ancillary
Agreements to which Buyer is a party.

     5.4 Litigation. There is no Action pending or, to the knowledge of Buyer, threatened
against, Buyer which (a) challenges or seeks to enjoin, alter or materially delay the consummation
of the transactions contemplated by this Agreement, or (b) would reasonably be expected to have a
material adverse effect on Buyer.

     5.5 Availability of Funds. Buyer has cash available or has existing borrowing
facilities which together are sufficient to enable it to consummate the transactions contemplated
by this Agreement.

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     5.6 Brokers or Finders. Buyer represents, as to itself and its Affiliates, that no
agent, broker, investment banker or other firm or Person is or will be entitled to any broker’s or
finder’s fee or any other commission or similar fee in connection with any of the transactions
contemplated by this Agreement and the Ancillary Agreements.

ARTICLE VI

COVENANTS OF SELLER

     6.1 Conduct of Business. During the period from the date of this Agreement and
continuing until the earlier of the termination of this Agreement or the Closing Date, except with
the prior written consent of Buyer, Seller shall, and shall cause each other member of the Seller
Group to:

          (a) (i) maintain its corporate existence, (ii) pay or perform the Liabilities of the Business
when due, (iii) carry on the Business in the usual, regular and ordinary course in a manner
consistent with past practice and in accordance with the provisions of this Agreement and in
compliance in all material respects with all Laws, Business Authorizations and the Material
Contracts, and (iv) keep the level and quality of its Inventory and supplies (A) in approximately
the same proportions as reflected on the Seller June Balance Sheet, (B) in a manner consistent with
past practice and (C) so as to be sufficient for the conduct of the Business by Buyer following the
Closing in a manner consistent with the past practice of the Business;

          (b) use its reasonable best efforts consistent with past practices and policies to preserve
intact its Business organization, keep available the services of its present Business Employees and
preserve its relationships with customers, suppliers, distributors, licensors, licensees and others
having dealings with the Business;

          (c) maintain the Real Property and other assets, properties and rights included in the
Purchased Assets in substantially the same state of repair, order and conditions as they are on the
date hereof, reasonable wear and tear excepted;

          (d) maintain the Books and Records in accordance with past practice, and use its reasonable
best efforts to maintain in full force and effect all Business Authorizations and Policies;

          (e) promptly notify Buyer of any event or occurrence Related to the Business not in the
ordinary course of the Business, unless such event or occurrence is immaterial to the Business; and

          (f) use its reasonable best efforts to (i) conduct the Business in such a manner that on the
Closing Date the representations and warranties of Seller contained in this Agreement shall be true
and correct in all material respects, as though such representations and warranties were made on
and as of such date, and (ii) cause all of the conditions to the obligations of Buyer under this
Agreement to be satisfied as soon as practicable following the date hereof.

     6.2 Negative Covenants. Except as expressly provided in this Agreement, Seller shall
not, and shall not permit any other member of the Seller Group to, do any of the following, in each
case with respect to the Business, without the prior written consent of Buyer:

          (a) (i) other than pursuant to existing obligations set forth in a written agreement, in the
ordinary course of Seller’s business or pursuant to a Seller Group Benefit Plan disclosed in the
Seller Disclosure Schedule in the amount required thereunder, (A) modify the compensation or
benefits payable or to become payable by any member of the Seller Group to any current Business
Employees, or contractors or consultants of the Business, or (B) modify any bonus, severance,
termination, pension, insurance or other employee benefit plan, payment or arrangement made to, for
or with any current

41

 

Business Employees, or contractors or consultants of the Business, or (ii) enter into any
employment, severance or termination agreement with any Business Employees;

          (b) establish, adopt, enter into, amend or terminate any Seller Group Benefit Plan or any
collective bargaining, thrift, compensation or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any current Business Employees, or contractors or consultants of the
Business;

          (c) sell, lease, transfer or assign any assets, properties or rights of any member of the
Seller Group Related to the Business, except (i) sales of Inventory, and (ii) the sale of Excluded
Assets, in each case in the ordinary course of the Business consistent with past practice;

          (d) assume, incur or guarantee any Indebtedness in excess of $200,000 or modify the material
terms of any existing Indebtedness involving amounts in excess of $200,000;

          (e) not cancel any debts or waive any claims or rights of substantial value;

          (f) mortgage, pledge or subject to Liens (other than Permitted Liens) any assets, properties
or rights that constitute Purchased Assets;

          (g) materially amend or modify, cancel or waive any material rights under any Contract which
is an Assigned Contract;

          (h) enter into any Contract that, if entered into prior to the date of this Agreement, would
be required to be listed as a Material Contract in Section 4.15 of the Seller Disclosure Schedule,
other than (A) any Contract in the ordinary course of the Business consistent with past practice
that is terminable by the relevant member of the Seller Group upon not more than sixty (60) days’
prior notice without Liability to the Seller Group, (B) any Contract for the purchase of raw
materials and supplies in the ordinary course of the Business consistent with past practice that
has an aggregate future Liability to the Business of not more than $200,000 not to exceed $600,000
for all such Contracts, and (C) any Contract for the sale of goods and services in the ordinary
course of the Business consistent with past practice.

          (i) take any action or engage in any transaction Related to the Business that is material to,
and outside the ordinary course of, the Business;

          (j) (i) make any capital expenditure, or commit to make any capital expenditure which in any
one case exceeds $200,000 or capital expenditures which in the aggregate exceed $600,000, or (ii)
except as permitted by clause (i), acquire any assets, properties or rights other than Inventory in
the ordinary course of the Business consistent with past practice;

          (k) make any filings or registrations with any Governmental Entity, except routine filings and
registrations made in the ordinary course of the Business consistent with past practice;

          (l) be party to any merger, acquisition, consolidation, recapitalization, liquidation,
dissolution or similar transaction involving the Business;

          (m) make any changes in its accounting methods, principles or practices;

          (n) make any Tax election, change its method of Tax accounting or settle any claim relating to
Taxes;

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          (o) take any action or omit to do any act which action or omission will cause it to breach any
obligation contained in this Agreement or cause any representation or warranty of Seller not to be
true and correct in any material respect as of the Closing Date; or

          (p) agree, whether in writing or otherwise, to do any of the foregoing.

     6.3 Access to Information; Investigation; Conducting of Physical Inventory. Subject
to the terms of the Confidentiality Agreement by and between Buyer and Seller dated April 10, 2009
(the “Confidentiality Agreement”), Seller shall, and shall cause each other member of the Seller
Group to, afford to Buyer’s officers, directors, employees, accountants, counsel, consultants,
advisors and agents (“Representatives”) free and full access to and the right to inspect, during
normal business hours, all of the Real Property, properties, assets, records, Contracts and other
documents Related to the Business, and shall permit them to consult with the officers, employees,
accountants, counsel, agents and Material Customers and Material Suppliers of the Seller Group at
such times and in the manner mutually agreed by Buyer and the Seller for the purposes of making
such investigation of the Business as Buyer shall desire to make and conducting a physical
inventory of the Inventory as permitted in Section 2.6 herein. Seller shall furnish to Buyer all
such documents and copies of documents and records and information with respect to the Business and
copies of any working papers relating thereto as Buyer may request. Notwithstanding the foregoing,
Buyer shall not have access to (a) any medical or other employee information that is contained in
the personnel records of Seller or any of its Affiliates and the disclosure of which would subject
Seller or such Affiliate to risk of liability; (b) any information which is the subject of any
attorney-client or other privilege in favor of Seller or its Affiliates; or (c) any information the
disclosure of which would cause Seller or any of its Affiliates to violate applicable Law or the
provisions of any Contract to which it is a party. Without limiting the foregoing, the Seller shall
permit, and will cause each other member of the Seller Group to permit, Buyer and Buyer’s
Representatives to conduct environmental due diligence of the Real Property, including the
collecting and analysis of samples of indoor or outdoor air, surface water, groundwater or surface
or subsurface land on, at, in, under or from the Owned Real Property.

     6.4 Confidentiality. From and after the Closing Date, Seller will, and will cause its
Affiliates to, hold, and will use its reasonable best efforts to cause its and their respective
Representatives to hold, in confidence any and all information, whether written or oral, concerning
the Purchased Assets and the Assumed Liabilities, except to the extent that Seller can show that
such information (a) is in the public domain through no fault of Seller or any of its Affiliates or
their respective Representatives or (b) is lawfully created or acquired by Seller or any of its
Affiliates after the Closing Date from sources that are not prohibited from disclosing such
information by a legal, contractual or fiduciary obligation. If Seller or any of its Affiliates or
Representatives is compelled to disclose any such information by judicial or administrative process
or by other requirements of Law, Seller shall promptly notify Buyer in writing and shall disclose
only that portion of such information that Seller is advised by its counsel in writing is legally
required to be disclosed; provided that Seller shall exercise its reasonable best efforts to obtain
an appropriate protective order or other reasonable assurance that confidential treatment will be
accorded such information. Seller shall enforce for the benefit of Buyer, at Buyer’s expense, all
confidentiality, assignment of inventions and similar agreements between any member of the Seller
Group and any other party relating to the Purchased Assets that are not Assigned Contracts.

     6.5 Release of Liens. Prior to the Closing Date, Seller shall cause to be released
all Liens (other than Permitted Liens) in and upon any of the Purchased Assets (all of such Liens
are set forth in the Seller Disclosure Schedule).

     6.6 Consents. Seller shall, and shall cause each other member of the Seller Group to,
use commercially reasonable efforts to obtain all Consents that are required under the Assigned
Contracts in

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connection with the consummation of the transactions contemplated by this Agreement so as to
preserve all rights of, and benefits to, Buyer thereunder that are material to the Business. All of
such Consents are set forth in the Section 4.3(a) of the Seller Disclosure Schedule.

     6.7 Notification of Certain Matters. Seller shall give prompt notice to Buyer of (a)
any fact, event or circumstance known to it that individually or taken together with all other
facts, events and circumstances known to it, has had or could reasonably be expected to result in a
Material Adverse Change, or could reasonably be expected to cause or constitute a breach of any of
its representations, warranties, covenants or agreements contained herein, (b) the failure of any
condition precedent to Buyer’s obligations hereunder, (c) 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 consummation of the transactions contemplated by this Agreement, (d) any notice or other
communication from any Governmental Entity in connection with the consummation of the transactions
contemplated by this Agreement, or (e) the commencement of any Action that, if pending on the date
of this Agreement, would have been required to have been disclosed pursuant to Section 4.17;
provided, however, (i) the delivery of any notice pursuant to this Section 6.7 shall not limit or
otherwise affect any remedies available to Buyer, and (ii) disclosure by Seller shall not be deemed
to amend or supplement the Seller Disclosure Schedule or prevent or cure any misrepresentation,
breach of warranty or breach of covenant.

     6.8 Restrictive Covenants.

          (a) Seller covenants that, commencing on the Closing Date and ending on the earlier of the
fifth anniversary of the Closing Date or the date on which Seller consummates a Change in Control
(the “Noncompetition Period”), and except as permitted or required by the Master Services Agreement
and for the repair services provided by Seller to Buyer at its Service Centers, Seller shall not,
and it shall cause its Affiliates not to, directly or indirectly, in any capacity, engage in or
have any direct or indirect ownership interest in, or permit Seller’s or any such Affiliate’s name
to be used in connection with, any business anywhere in the world which is engaged, either directly
or indirectly, in the business of developing, manufacturing, marketing or selling any products or
equipment or providing any services which are competitive with Flow Products manufactured,
marketed, sold or under development by, or services provided by, the Business (the “Restricted
Business”). It is recognized that the Restricted Business is expected to be conducted throughout
the world and that more narrow geographical limitations of any nature on this non-competition
covenant (and the non-solicitation covenant set forth in Section 6.8(b)) are therefore not
appropriate. Notwithstanding the foregoing, it shall not constitute a breach of this Section 6.8 if
Seller or any of its Affiliates during such five-year period (i) owns less than two percent (2%) of
the outstanding shares of capital stock, outstanding debt instruments or other securities
convertible into capital stock or debt instruments of any Person listed on a national securities
exchange or publicly traded on any nationally recognized over the counter market or (ii) acquires,
by way of merger, consolidation, asset purchase, or acquisition of stock or equity interests, or
similar business combination, control of any Person that sells products or equipment or provides
services that are competitive with the Restricted Business provided that (i) such products,
equipment or services are incidental to the overall business of such Person that is acquired, and
(ii) following the closing of such acquisition the revenue from products or services that are
competitive with the Restricted Business do not exceed 5% of the total revenue of the Seller Group
on a consolidated basis; provided further that if such revenue is in excess of 5% of the
consolidated revenue of the Seller Group following such acquisition, the Seller shall not be deemed
to be in violation of this Section 6.8(a) if it divests of all or a portion of such business that
is competitive with the Restricted Business within twelve (12) months of the closing of the
acquisition such that following such divestiture revenue from the competing business is less than
5% of the consolidated revenue of the Seller Group.

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          (b) Seller covenants that from the date hereof through the end of the Noncompetition Period,
Seller shall not, and it shall cause its Affiliates not to, solicit the employment or engagement of
services of any person who is or will be offered employment by Buyer pursuant to Section 7.4;
provided, however, that the foregoing provision will not prevent Seller and its Affiliates from
soliciting or employing any such person who contacts Seller or its Affiliate (i) on his or her own
initiative without any direct or indirect solicitation by or encouragement from Seller or its
Affiliate, or (ii) in response to a general solicitation of employment made by Seller or such
Affiliate in a trade journal or other publication or internet job posting site not specifically
targeted at any employee of Buyer.

          (c) Seller acknowledges that the restrictions contained in this Section 6.8 are reasonable and
necessary to protect the legitimate interests of Buyer and constitute a material inducement to
Buyer to enter into this Agreement and consummate the transactions contemplated by this Agreement.
Seller acknowledges that any violation of this Section 6.8 will result in irreparable injury to
Buyer and agrees that Buyer shall be entitled to preliminary and permanent injunctive relief,
without the necessity of proving actual damages, as well as an equitable accounting of all
earnings, profits and other benefits arising from any violation of this Section 6.8, which rights
shall be cumulative and in addition to any other rights or remedies to which Buyer may be entitled.
Without limiting the generality of the foregoing, the Noncompetition Period shall be extended for
an additional period equal to any period during which Seller or any Affiliate is in breach of its
obligations under this Section 6.8.

          (d) In the event that any covenant contained in this Section 6.8 should ever be adjudicated to
exceed the time, geographic, product or service or other limitations permitted by applicable Law in
any jurisdiction, then any court is expressly empowered to reform such covenant, and such covenant
shall be deemed reformed, in such jurisdiction to the maximum time, geographic, product or service
or other limitations permitted by applicable Law. The covenants contained in this Section 6.8 and
each provision thereof are severable and distinct covenants and provisions. The invalidity or
unenforceability of any such covenant or provision as written shall not invalidate or render
unenforceable the remaining covenants or provisions hereof, and any such invalidity or
unenforceability in any jurisdiction shall not invalidate or render unenforceable such covenant or
provision in any other jurisdiction.

     6.9 Reserved.

     6.10 Environmental Investigation. In connection with the execution of this Agreement,
Seller has provided to Buyer a Phase I Site Investigation Report with respect to the Owned Real
Property. Buyer may, at its expense, conduct such environmental site evaluations of the Real
Property as it shall deem appropriate provided Buyer shall obtain the prior written consent of
Seller. A copy of any reports prepared at the request of Buyer shall be delivered to Seller within
ten (10) Business Days of completion thereof. All such reports shall be kept confidential by Buyer
and shall be subject to the terms of the Confidentiality Agreement referred to in Section 6.3.

     6.11 Exclusivity. The Seller agrees as follows:

          (a) Except with respect to the transactions contemplated by this Agreement, the Seller agrees
upon execution of this Agreement and until the date, if any, on which this Agreement is terminated
pursuant to Article IX, that it will not, and it will cause its subsidiaries and its and their
respective Representatives not to, (i) initiate, solicit or seek, directly or indirectly, any
inquiries or the making or implementation of any proposal or offer with respect to an acquisition,
merger, consolidation or similar transaction involving, or any purchase of all or any substantial
portion of the assets of the Business (any such proposal or offer being hereinafter referred to as
a “Proposal”), or (ii) engage in any negotiations concerning, or provide any confidential
information or data to, or have any substantive discussions with, any person relating to a
Proposal, (iii) otherwise cooperate in any effort or attempt to

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make, implement or accept a Proposal, or (iv) enter into or consummate any agreement or
understanding with any person relating to a Proposal.

          (b) Except with respect to the Possible Transaction, the Seller shall immediately cease and
terminate, and it shall cause its subsidiaries and its and their respective Representatives
immediately to cease and terminate, any existing activities, including discussions or negotiations
with any parties conducted heretofore with respect to any Proposal.

          (c) The Seller shall upon execution of this Agreement and until the date, if any, on which
this Agreement is terminated pursuant to Article IX, notify Buyer promptly if any inquiries,
proposals or offers related to a Proposal are received by, any confidential information or data is
requested in connection with a Proposal from, or any negotiations or discussions related to a
Proposal are sought to be initiated or continued with, it or any of its subsidiaries or any of
their respective Representatives and will provide the terms of any such inquiry, proposal or offer
to Buyer.

ARTICLE VII

COVENANTS OF BUYER AND SELLER

     7.1 Regulatory Approvals.

          (a) Buyer and Seller shall each promptly apply for, and take all reasonably necessary actions
to obtain or make, as applicable, all Governmental Orders and Authorizations of, and all filings
with, any Governmental Entity or other Person required to be obtained or made by it for the
consummation of the transactions contemplated by this Agreement. Each party shall cooperate with
and promptly furnish information to the other party necessary in connection with any requirements
imposed upon such other party in connection with the consummation of the transactions contemplated
by this Agreement. Without limiting the generality of the foregoing, Buyer and Seller shall, as
promptly as practicable and before the expiration of any relevant legal deadline, file with any
Governmental Entity, any filings, reports, information and documentation required for the
transactions contemplated hereby pursuant to any Foreign Antitrust Laws. Each of Seller and Buyer
shall furnish to each other’s counsel such necessary information and reasonable assistance as the
other may request in connection with its preparation of any filing or submission that is necessary
under the any Foreign Antitrust Laws. Buyer and Seller shall each be responsible for one half of
all filing and other similar fees payable in connection with such filings and for any local counsel
fees.

          (b) Each of Buyer and Seller shall use its commercially reasonable efforts to promptly obtain
any clearance required under any Foreign Antitrust Laws for the consummation of the transactions
contemplated by this Agreement. Each of Buyer and Seller shall keep the other apprised of the
status of any communications with, and any inquiries or requests for additional information from
any Governmental Entities and shall comply promptly with any such inquiry or request.
Notwithstanding the foregoing, (i) Buyer shall not be required to (A) consent to the divestiture,
license or other disposition or holding separate (through the establishment of a trust or
otherwise) of any of its or its Affiliates’ assets or any Purchased Assets or (B) consent to any
other structural or conduct remedy or enter into any settlement or agree to any order regarding
antitrust matters respecting the transactions contemplated by this Agreement and (ii) Buyer and its
Affiliates shall have no obligation to contest, administratively or in court, any Governmental
Order or other action of any Governmental Entity or any other Person respecting the transactions
contemplated by this Agreement.

          (c) Buyer and Seller shall instruct their respective counsel to cooperate with each other and
use commercially reasonable efforts to facilitate and expedite the identification and resolution of
any issues arising under any Foreign Laws at the earliest practicable dates. Such commercially
reasonable efforts and cooperation include, but are not limited to, counsel’s undertaking (i) to
keep each

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other appropriately informed of communications from and to personnel of any Governmental
Entity, and (ii) to confer with each other regarding appropriate contacts with and response to
personnel of such Governmental Entity.

          (d) Seller shall take reasonable steps to assist Buyer in identifying the Authorizations
required by Buyer to operate and conduct the Business as it is currently conducted from and after
the Closing Date and will either transfer current Business Authorizations of the Seller Group to
Buyer if capable of transfer and set forth on Schedule 7.1(d) (the “Assigned Business
Authorizations”) or take reasonable steps, at Buyer’s cost, to assist Buyer in obtaining new
Business Authorizations.

     7.2 Public Announcements. Neither Buyer nor Seller shall, and Seller will cause the
other members of the Seller Group not to, issue any press releases or otherwise make any public
statements with respect to the transactions contemplated by this Agreement; provided, however, that
Buyer or Seller may, without such approval, make such press releases or other public announcement
as it believes are required pursuant to any listing requirements or agreement with any national
securities exchange or stock market or applicable securities Laws, in which case the party required
to make the release or announcement shall allow the other party reasonable time to comment on such
release or announcement in advance of such issuance; provided, further, that each of the parties
may make internal announcements to their respective employees that are consistent with the parties’
prior public disclosures regarding the transactions contemplated by this Agreement.

     7.3 Names. Seller agrees that, for a period of six months after the Closing Date,
Buyer may continue to distribute product literature that uses any Retained Names and distribute
products with labeling that uses any Retained Names to the extent that such product literature and
labeling exists on the Closing Date and Buyer has marked, or has caused the Business to mark, such
product literature and such labeling to obliterate the Retained Names, or, has otherwise provided
notice, or has caused the Business to otherwise provide notice, that the Business has been sold to
Buyer and is independent of Seller. In no event shall Buyer use any Retained Names after the
Closing in any manner or for any purpose different from the use of such Retained Names by the
Seller Group during the 180-day period preceding the Closing Date. “Retained Names” means “Advanced
Energy” or “AE” or any name, logo or trademark that includes “Advanced Energy” or “AE”, any
variation and derivatives thereof and any other product names (other than names of the Flow
Products), logos or trademarks of the Seller Group not transferred to Buyer pursuant to this
Agreement and the Ancillary Agreements.

     7.4 Employees.

          (a) Promptly following the execution of this Agreement, and subject to the confidentiality and
other restrictions set forth in Section 6.3 above, Seller shall, and shall cause each other member
of the Seller Group to, provide access to Buyer to the facilities and the personnel records of each
member of the Seller Group for the purpose of preparing for and conducting employment interviews
with Business Employees.

          (b) Buyer shall, or shall cause one of its Affiliates to, extend written offers of employment
to not less than 90% of the Business Employees located in the United States and Japan and employed
full-time by the Seller or its Affiliates immediately prior to the Closing, such employment to be
contingent upon and effective immediately following the Closing. Such written offers shall (i)
advise the Business Employee of the material terms and conditions and job duties of such employee’s
position with Buyer or its Affiliates; (ii) state, among other things, an annual base salary during
the first 12 months which shall be not less in the aggregate than that provided by Seller or the
applicable member of the Seller Group to the employee immediately prior to the Closing Date; and
(iii) include a summary of material benefits to which such employee shall be eligible to
participate. Seller shall use, and shall cause each other member of the Seller Group to use, its
reasonable best efforts to assist Buyer in employing as

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new employees of Buyer, all Business Employees to whom Buyer has offered employment pursuant
to this Section 7.4(b). The Business Employees who accept Buyer’s offer of employment and commence
employment with Buyer shall be referred to, collectively, as “Transferred Employees.” Seller shall
terminate the employment of all Transferred Employees with the Seller Group effective immediately
prior to the Closing. With respect to any Transferred Employees employed by the Seller Group in
Japan, Seller shall take all necessary measures to secure the termination and transfer of such
Transferred Employees in accordance with applicable Law, employment agreements, labor agreements,
union contracts and collective bargaining agreements, including without limitation, conducting
discussions and/or collective bargaining with any applicable labor union if required.

          (c) From and after the Closing Date, Buyer shall offer to Transferred Employees such Benefit
Plans and arrangements (the “Buyer’s Benefit Plans”) made available by Buyer to its similarly
situated employees. Buyer agrees that Transferred Employees will be eligible to immediately
commence participation in the Buyer’s Benefit Plans without regard to any eligibility period.
Buyer and its Affiliates will recognize all service of the Transferred Employees with Seller or any
member of the Seller Group for purposes of eligibility to participate and vesting (but not benefit
accruals in a Buyer’s Benefit Plans). Buyer and its Affiliates will waive to the fullest extent
permitted by the applicable Benefit Plans all waiting periods, evidence of insurability
requirements or pre-existing condition limitations and give credit under the Buyer’s Benefit Plans
for amounts paid under a corresponding Seller Benefit Plan for purposes of applying deductibles,
copayments and out-of-pocket maximums.

          (d) All Transferred Employees who are participants in a Seller Group Benefit Plan that is an
employee pension benefit plan shall retain their accrued benefits under such plans as of the
Closing Date, and Seller shall retain Liability for the payment of benefits as and when such
Transferred Employees become eligible therefor under such plans. All Transferred Employees shall
become fully vested in their accrued benefits under Seller’s pension benefit plans as of the
Closing Date.

          (e) Seller shall be liable for any and all Liabilities relating to or arising out of the
employment, or cessation of employment, any Person who is or was an employee of any member of the
Seller Group and who is not a Transferred Employee, including any Person whose employment with the
Business was terminated prior to the Closing (“Seller Employees”), including wages, deferred
compensation, and other remuneration earned and due, severance, separation, deferred compensation
or similar benefits that are payable to any Seller Employees.

          (f) Except as otherwise provided in this Section 7.4, Seller shall be liable for any and all
Liabilities relating to or arising out of the employment of any and all Transferred Employees based
on events or facts occurring on or prior to the close of business on the Closing Date, including
wages, deferred compensation and other remuneration earned and due on or before the close of
business on the Closing Date.

          (g) Except as otherwise provided in this Section 7.4, Buyer shall be liable for any and all
Liabilities relating to or arising out of the employment, or cessation of employment, of the
Transferred Employees based on events or facts occurring after the close of business on the Closing
Date, including wages, deferred compensation and other remuneration earned and due after the close
of business on the Closing Date, and any severance, separation or similar benefits that are payable
to Transferred Employees terminated on or after the Closing Date.

          (h) Seller shall be liable for any and all Liabilities relating to or arising out of the
cessation of employment of any Transferred Employees as of the close of business on the Closing
Date, including any severance, separation or similar benefits that are payable to Transferred
Employees, in each case to the extent that such Transferred Employee’s right to severance,
separation, deferred compensation

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or similar benefits arises as a result of the transactions contemplated by this Agreement and
the Ancillary Agreements.

          (i) Seller shall be liable for the administration and payment of all workers’ compensation
Liabilities and benefits with respect to (i) Transferred Employees to the extent resulting from
claims, events, circumstances, exposures, conditions or occurrences occurring on or prior to the
Closing, and (ii) Seller Employees. Buyer shall be liable for the administration and payment of
all workers’ compensation Liabilities and benefits with respect to Transferred Employees to the
extent resulting from claims, events, circumstances, exposures, conditions or occurrences occurring
after the Closing Date.

          (j) Seller shall be liable for the administration and payment of all health and welfare
Liabilities and benefits under the Seller Group Benefit Plans and Foreign Plans with respect to (i)
Transferred Employees to the extent resulting from claims, events, circumstances, exposures,
conditions or occurrences occurring on or prior to the Closing, and (ii) Seller Employees. Buyer
shall be liable for the administration and payment of all health and welfare Liabilities and
benefits under Buyer’s Benefit Plans with respect to Transferred Employees participating therein to
the extent resulting from claims, events, circumstances, exposures, conditions or occurrences
occurring after the Closing Date.

          (k) Seller shall retain and perform all Liabilities and maintain all insurance under the
Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) with respect to eligible Seller
Employees and their covered dependents; provided that Buyer shall perform all of its obligations
under COBRA with respect to Transferred Employees that become covered by any group health insurance
plan of Buyer.

          (l) Except as expressly set forth in this Section 7.4 with respect to Transferred Employees,
Buyer shall have no obligation with respect to any Business Employee or any other employee of the
Seller Group.

          (m) Nothing in this Agreement confers upon any Business Employee or Transferred Employee any
rights or remedies of any nature or kind whatsoever under or by reason of this Section 7.4.
Nothing in this Agreement shall limit the right of Buyer to terminate or reassign any Transferred
Employee after the Closing or to change the terms and conditions of his or employment in any
manner.

     7.5 Taxes and Transfer Costs.

          (a) Buyer shall pay all sales, use, transfer, documentary, stamp, registration, recording,
conveyance or other transfer charges or taxes, export costs and fees, shipping costs, customs and
duties (with Buyer, or its affiliate, being the importer of record), if any, due as a result of the
purchase, sale or transfer of the Purchased Assets (the “Transfer Taxes”) in accordance herewith
whether imposed by Law on the Seller Group or Buyer, provided that the Seller acknowledges and
agrees that it is responsible for any Taxes payable to terminate the Customs Supervision Period in
China in order to permit the transfer of Purchased Assets located in China. Except as provided in
the previous sentence, each party shall pay such Taxes imposed on them under applicable Law. The
Buyer and Seller shall cooperate with each other in connection with the foregoing Taxes, including
in the preparation of associated Tax Returns and the determination of the amount of such Taxes that
are due.

          (b) All real property Taxes, personal property Taxes and similar ad valorem obligations levied
with respect to the Purchased Assets for a taxable period that includes (but does not end on) the
Closing Date shall be apportioned between Seller and Buyer as of the Closing Date based on the
number of days of such taxable period included in the period ending with and including the Closing
Date (with respect to any such taxable period, the “Pre-Closing Tax Period”), and the number of
days of such

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taxable period beginning after the Closing Date (with respect to any such taxable period, the
“Post-Closing Tax Period”). Seller shall be liable for the proportionate amount of such Taxes that
is attributable to the Pre-Closing Tax Period, and Buyer shall be liable for the proportionate
amount of such Taxes that is attributable to the Post-Closing Period. If bills for such Taxes have
not been issued as of the Closing Date, and, if the amount of such Taxes for the period including
the Closing Date is not then known, the apportionment of such Taxes shall be made at Closing on the
basis of the prior period’s Taxes. After Closing, upon receipt of bills for the period including
the Closing Date, adjustments to the apportionment shall be made by the parties, so that if either
party paid more than its proper share at the Closing, the other party shall promptly reimburse such
party for the excess amount paid by them.

          (c) Buyer and Seller agree to furnish or cause to be furnished to each other, upon request, as
promptly as practicable, such information and assistance relating to the Business, the Purchased
Assets and Assumed Liabilities (including access to books and records) as is reasonably necessary
for the filing of all Tax Returns, the making of any election relating to Taxes, the preparation
for any audit by any Taxing Authority, and the prosecution or defense of any Action relating to any
Tax. Any expenses incurred in furnishing such information or assistance shall be borne by the
party requesting it.

     7.6 JSI Agreement; Other Software License Agreements. Buyer shall use commercially
reasonable efforts to enter into an agreement with JSI Logistic Corporation with respect to
inventory storage and shipping (the “JSI Agreement”) and to enter into such software license
agreements, including development and similar license agreements that are necessary to the
operation of the Business by Buyer following the Closing.

     7.7 Bulk Sales Laws. Buyer and Seller hereby waive compliance by Buyer and Seller
with the bulk sales Law and any other similar Laws in any applicable jurisdiction in respect of the
transactions contemplated by this Agreement and the Ancillary Agreements; provided, however, that
Seller shall pay and discharge when due all claims of creditors asserted against Buyer or the
Purchased Assets by reason of such noncompliance and shall take promptly all necessary actions
required to remove any Lien which may be placed upon any of the Purchased Assets by reason of such
noncompliance.

     7.8 Discharge of Business Obligations After Closing.

          (a) From and after the Closing, Seller shall, and shall cause each other member of the Seller
Group to, pay and discharge on a timely basis all of the Excluded Liabilities.

          (b) From and after the Closing, if any member of the Seller Group or any of their respective
Affiliates receives or collects any funds relating to any Purchased Asset, such member of the
Seller Group or its Affiliate shall remit such funds to Buyer within five Business Days after its
receipt thereof. From and after the Closing, if Buyer receives or collects any funds relating to
any Excluded Asset, Buyer shall remit any such funds to the relevant member of the Seller Group
within five Business Days after its receipt thereof.

     7.9 Access to Books and Records. Each of Seller and Buyer shall preserve all records
possessed or to be possessed by such party relating to any of the assets, Liabilities or business
of the Business prior to the Closing in accordance with its respective document retention policies,
provided that such policies require the retention of such records for at least five years following
the Closing Date. After the Closing Date, where there is a legitimate business purpose, such party
shall provide the other party with access, upon prior reasonable written request specifying the
purpose therefor, during regular business hours, to (i) the officers of such party and (ii) the
books of account and records of such party, but, in each case, only to the extent relating to the
assets, Liabilities or business of the Business prior to the Closing, and the other party and its
representatives shall have the right to make copies of such books

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and records at their sole cost; provided, however, that the foregoing right of
access shall not be exercisable in such a manner as to interfere unreasonably with the normal
operations and business of such party and shall be subject to the terms of the Confidentiality
Agreement.

     7.10 Continuity of Supply. During the two year period following the Closing Date,
Buyer will use reasonable efforts to consult with Seller in the event of any termination or phasing
out of currently existing Flow Products and will cooperate with customers of such products to
ensure that the customers are provided with a continuity of supply of Flow Products.

     7.11 Customer Communications. Prior to the Closing, Buyer and Seller will coordinate
their communications with customers of the Business and will confirm that certain customers are
generally supportive of the sale of the Purchased Assets. Prior to the Closing, the Seller may
require the assistance of Buyer in providing joint customer visits, and the Buyer shall not contact
any customer without Seller’s prior consent.

     7.12 Further Assurances. Buyer and Seller shall, and Seller shall cause the other
members of the Seller Group to, execute such documents and other instruments and take such further
actions as may be reasonably required or desirable to carry out the provisions of this Agreement
and the Ancillary Agreements and to consummate the transactions contemplated hereby and thereby.
Upon the terms and subject to the conditions hereof, Buyer and Seller shall each use its respective
reasonable best efforts to (a) take or cause to be taken all actions and to do or cause to be done
all other things necessary, proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement and the Ancillary Agreements and (b)
obtain in a timely manner all Consents and Business Authorizations and effect all necessary
registrations and filings. From time to time after the Closing, at Buyer’s request, Seller shall
execute, and Seller shall cause each other relevant member of the Seller Group to, acknowledge and
deliver to Buyer such other instruments of conveyance and transfer and will take such other actions
and execute and deliver such other documents, certifications and further assurances as Buyer may
reasonably require in order to vest more effectively in Buyer, or to put Buyer more fully in
possession of, any of the Purchased Assets.

ARTICLE VIII

CONDITIONS TO CLOSING

     8.1 Conditions to Obligations of Buyer and Seller. The obligations of Buyer and
Seller to consummate the transactions contemplated by this Agreement are subject to the
satisfaction on or prior to the Closing Date of the following conditions:

          (a) Any waiting period applicable to the consummation of the transactions contemplated by this
Agreement under the Foreign Antitrust Laws shall have expired or been terminated and] all other
Authorizations and Governmental Orders of, declarations and filings with, and notices to any
Governmental Entity, required to permit the consummation of the transactions contemplated by this
Agreement shall have been obtained or made and shall be in full force and effect.

          (b) No temporary restraining order, preliminary or permanent injunction or other Governmental
Order preventing the consummation of the transactions contemplated by this Agreement shall be in
effect. No Law shall have been enacted or shall be deemed applicable to the transactions
contemplated by this Agreement which makes the consummation of such transactions illegal.

     8.2 Conditions to Obligation of Buyer. The obligation of Buyer to consummate the
transactions contemplated by this Agreement is subject to the satisfaction (or waiver by Buyer in
its sole discretion) of the following further conditions:

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          (a) The representations and warranties of Seller set forth in this Agreement that are
qualified by materiality (considered collectively and individually) shall have been true and
correct at and as of the date hereof and shall be true and correct at and as of the Closing Date as
if made at and as of the Closing Date, and the representations and warranties that are not so
qualified (considered collectively and individually) shall have been true and correct in all
material respects at and as of the date hereof and shall be true and correct in all material
respects at and as of the Closing Date as if made at and as of the Closing Date, except to the
extent that such representations and warranties refer specifically to an earlier date, in which
case such representations and warranties shall have been true and correct as of such earlier date.

          (b) Seller shall have performed or complied in all material respects with all obligations and
covenants required by this Agreement to be performed or complied with by Seller at or prior to the
Closing.

          (c) Buyer shall have received a certificate dated the Closing Date signed on behalf of Seller
by an authorized officer of Seller (i) as to the accuracy of its representations and warranties as
of the date of this Agreement and as of the Closing Date in accordance with Section 8.2(a) and (ii)
as to performance and compliance with its obligations and covenants to be performed or complied
with at or prior to the Closing in accordance with Section 8.2(b) (the “Seller Closing
Certificate”); provided that no exceptions taken in such certificate will modify any of Seller’s
representations and warranties, covenants or agreements or have any effect for purposes of the
conditions to Buyer’s obligation to close the transactions contemplated hereby or Buyer’s rights of
indemnity hereunder.

          (d) There shall have been no Material Adverse Change.

          (e) No Action shall be pending or threatened before any court or other Governmental Entity or
before any other Person wherein an unfavorable Governmental Order would (i) prevent consummation of
any of the transactions contemplated by this Agreement or the Ancillary Agreements, (ii) affect
adversely the right of Buyer to own the Purchased Assets or (iii) restrain or prohibit Buyer’s
ownership or operation (or that of its Subsidiaries or Affiliates) of all or any material portion
of the Purchased Assets, or compel Buyer or any of its Subsidiaries or Affiliates to dispose of or
hold separate all or any material portion of the Purchased Assets or all or any material portion of
the business and assets of Buyer and its Subsidiaries. No such Governmental Order shall be in
effect.

          (f) No Law shall have been enacted or shall be deemed applicable to the transactions
contemplated by this Agreement or the Ancillary Agreements which has any of the effects set forth
in clauses (i) through (iii) in Section 8.2(e).

          (g) The Seller Group shall have performed or complied in all material respects with all
obligations and covenants required by the Japan Real Estate Purchase Agreement to be performed or
complied with by the Seller Group at or prior to the Closing in order to effectively vest title of
the Japan Land and Japan Buildings in Buyer.

          (h) Seller shall have obtained the Consent of each Person whose Consent is required under the
Assigned Contracts set forth in Schedule 8.2(h) and shall have provided evidence of each such
Consent in form and substance satisfactory to Buyer.

          (i) Buyer shall have received all Assigned Business Authorizations.

          (j) Seller shall have delivered to Buyer all agreements and other documents required to be
delivered by Seller to Buyer pursuant to Section 3.2 of this Agreement.

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          (k) Buyer shall have received evidence in form and substance satisfactory to Buyer that all
Liens other than Permitted Liens with respect to the Purchased Assets have been released.

          (l) JSI Logistic Corporation shall have entered into the JSI Agreement.

          (m) The Intellectual Property License Agreement dated December 31, 2009 by and between the
Seller and Advanced Energy Japan K.K. shall have been terminated and of no further force or effect.

     8.3 Conditions to Obligation of Seller. The obligation of Seller to consummate the
transactions contemplated by this Agreement is subject to the satisfaction (or waiver by Seller in
its sole discretion) of the following further conditions:

          (a) The representations and warranties of Buyer set forth in this Agreement that are qualified
by materiality (considered collectively and individually) shall have been true and correct at and
as of the date hereof and shall be true and correct at and as of the Closing Date as if made at and
as of the Closing Date, and the representations and warranties that are not so qualified
(considered collectively and individually) shall have been true and correct in all material
respects at and as of the date hereof and shall be true and correct in all material respects at and
as of the Closing Date as if made at and as of the Closing Date, except to the extent that such
representations and warranties refer specifically to an earlier date, in which case such
representations and warranties shall have been true and correct as of such earlier date.

          (b) Buyer shall have performed or complied in all material respects with all obligations and
covenants required by this Agreement to be performed or complied with by Buyer at or prior to the
Closing.

          (c) Seller shall have received a certificate dated the Closing Date signed on behalf of Buyer
by an authorized officer of Buyer to the effect that the conditions set forth in Section 8.3(a) and
8.3(b) have been satisfied (the “Buyer Closing Certificate”).

          (d) No Action shall be pending or threatened before any court or other Governmental Entity or
other Person wherein an unfavorable Governmental Order would (i) prevent consummation of any of the
transactions contemplated by this Agreement and the Ancillary Agreements or (ii) cause any of the
transactions contemplated by this Agreement and the Ancillary Agreements to be rescinded following
consummation. No such Governmental Order shall be in effect.

          (e) Buyer shall have delivered to Seller all agreements and other documents required to be
delivered by Buyer to Seller pursuant to Section 3.3 of this Agreement.

ARTICLE IX

TERMINATION

     9.1 Termination.

          (a) This Agreement may be terminated at any time prior to the Closing:

               (i) by mutual written consent of Buyer and Seller;

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               (ii) by Buyer or Seller if:

               (1) the Closing does not occur on or before October 21, 2010; provided that
the right to terminate this Agreement under this clause (ii)(1) shall not be available to
any party whose breach of a representation, warranty, covenant or agreement under this
Agreement has been the cause of or resulted in the failure of the Closing to occur on or
before such date; or

               (2) a Governmental Entity shall have issued an Governmental Order or taken
any other action, in any case having the effect of permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement, which Governmental
Order or other action is final and non-appealable;

               (iii) by Buyer if:

               (1) any condition to the obligations of Buyer hereunder becomes incapable of
fulfillment other than as a result of a breach by Buyer of any covenant or agreement
contained in this Agreement, and such condition is not waived by Buyer; or

               (2) so long as at such time a breach by Buyer of any of its representations,
warranties, covenants or agreements hereunder has not occurred and is continuing, there has
been a breach by Seller of any representation, warranty, covenant or agreement contained in
this Agreement or the Seller Disclosure Schedule, or if any representation or warranty of
Seller shall have become untrue, in either case such that the conditions set forth in
Sections 8.2(a) or 8.2(b) would not be satisfied and, in either case, such breach is not
curable, or, if curable, is not cured within fifteen (15) Business Days after written notice
of such breach is given to Seller by Buyer; or

               (iv) by Seller if:

               (1) any condition to the obligations of Seller hereunder becomes incapable of
fulfillment other than as a result of a breach by Seller of any covenant or agreement
contained in this Agreement, and such condition is not waived by Seller; or

               (2) so long as at such time a breach by Seller of any of its representations,
warranties, covenants or agreements hereunder has not occurred and is continuing, there has
been a breach by Buyer of any representation, warranty, covenant or agreement contained in
this Agreement, or if any representation or warranty of Buyer shall have become untrue, in
either case such that the conditions set forth in Sections 8.3(a) or 8.3(b) would not be
satisfied and, in either case, such breach is not curable, or, if curable, is not cured
within ten (10) Business Days after written notice of such breach is given to Buyer by
Seller.

          (b) The party desiring to terminate this Agreement pursuant to clause (ii), (iii) or (iv)
shall give written notice of such termination to the other party hereto.

     9.2 Effect of Termination. In the event of termination of this Agreement as provided
in Section 9.1, this Agreement shall immediately become null and void and there shall be no
Liability or obligation on the part of Seller or Buyer or their respective officers, directors,
stockholders or Affiliates, except as set forth in Section 9.3; provided, however, the provisions
of Section 7.2 (Public Announcements) and Section 9.3 (Remedies) and Article X of this Agreement
shall remain in full force and effect and survive any termination of this Agreement.

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     9.3 Remedies. Any termination of this Agreement pursuant to Section 9.1 shall be
without Liability of either party (or any Affiliate, stockholder, director, officer, employee,
agent, consultant or Representative of such Party) to the other party to this Agreement; provided
that a party shall have the right to recover damages sustained by such party as a result of any
breach by the other party of any representation, warranty, covenant or agreement contained in this
Agreement or fraud or willful misrepresentation; provided, however, that the party seeking relief
is not in breach of any representation, warranty, covenant or agreement contained in this Agreement
under circumstances which would have permitted the other party to terminate the Agreement under
Section 9.1.

ARTICLE X

INDEMNIFICATION

     10.1 Survival.

          (a) Except as set forth in Section 10.1(b), all representations and warranties contained in
this Agreement, the Ancillary Agreements, any Schedule, certificate or other document delivered
pursuant to this Agreement or the Ancillary Agreements, shall survive the Closing for a period of
12 months.

          (b) The representations and warranties of Seller contained in Sections 4.1 (Organization and
Good Standing), 4.2 (Authority and Enforceability), 4.10 (Title to Personal Properties), 4.12(b)(i)
(Title to Real Estate), 4.16 (Sufficiency of Purchased Assets), 4.25 (Brokers or Finders), and the
representations and warranties of Buyer contained in Sections 5.1 (Organization and Good Standing),
5.2 (Authority and Enforceability) and 5.6 (Brokers or Finders) shall survive the Closing
indefinitely. The representations and warranties of Seller contained in Sections 4.7 (Taxes), and
4.18 (Employee Benefits) shall survive the Closing until 60 days after the expiration of the
applicable statute of limitations period (after giving effect to any waivers and extensions
thereof). The representations and warranties of Seller contained in Article 4.20 (Environmental)
shall survive the Closing for a period of five years; provided, however, that if Seller elects to
conduct, at its cost, a Phase II environmental assessment on the Owned Real Property, and such
assessment does not identify any environmental conditions that require remediation under
Environmental Law that would reasonably be expected to result in a Liability in excess of $200,000
in the aggregate, then the representations and warranties of Seller contained in Article 4.20
(Environmental) shall survive the Closing for a period of three years.

          (c) The covenants and agreements which by their terms do not contemplate performance after the
Closing shall survive the Closing for a period of 12 months. The covenants and agreements which by
their terms contemplate performance after the Closing Date shall survive the Closing indefinitely.

          (d) The period for which a representation or warranty, covenant or agreement survives the
Closing is referred to herein as the “Applicable Survival Period.” In the event notice of claim
for indemnification under Section 10.2 or 10.3 is given within the Applicable Survival Period, the
representation or warranty, covenant or agreement that is the subject of such indemnification claim
(whether or not formal legal action shall have been commenced based upon such claim) shall survive
with respect to such claim until such claim is finally resolved. The Indemnitor shall indemnify the
Indemnitee for all Losses (subject to the limitations set forth herein, if applicable) that the
Indemnitee may incur in respect of such claim, regardless of when incurred.

     10.2 Indemnification by Seller.

          (a) From and after the Closing, Seller shall indemnify and defend Buyer and its Affiliates and
their respective stockholders, members, managers, officers, directors, employees, agents,

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successors and assigns (the “Buyer Indemnitees”) against, and shall hold them harmless from,
any and all losses, damages, claims (including third party claims), charges, interest, penalties,
Taxes, diminution in value, costs and expenses (including legal, consultant, accounting and other
professional fees, costs of sampling, testing, investigation, removal, treatment and remediation of
contamination and fees and costs incurred in enforcing rights under this Section 10.2)
(collectively, “Losses”) resulting from, arising out of, or incurred by any Buyer Indemnitee in
connection with, or otherwise with respect to:

               (i) the failure of any representation and warranty or other statement by Seller
contained in this Agreement, the Ancillary Agreements, the Seller Disclosure Schedule or any
certificate or other document furnished or to be furnished to Buyer in connection with the
transactions contemplated by this Agreement and the Ancillary Agreements to be true and correct in
all respects as of the date of this Agreement and as of the Closing Date;

               (ii) any breach of any covenant or agreement of Seller contained in this Agreement,
the Ancillary Agreements, the Seller Disclosure Schedule or any certificate or other document
furnished or to be furnished to Buyer in connection with the transactions contemplated by this
Agreement and the Ancillary Agreements;

               (iii) all warranty, product liability and other customer and third-party claims
relating to defective or nonconforming products of the Business sold by Seller in the ordinary
course of business prior to the Closing Date that exceed in the aggregate $630,000;

               (iv) any Excluded Liability, including any Pre-Closing Environmental Liability,
regardless of whether or not the Seller Disclosure Schedule discloses any such Excluded Liability;

               (v) any fees, expenses or other payments incurred or owed by any member of the
Seller Group to any agent, broker, investment banker or other firm or person retained or employed
by it in connection with the transactions contemplated by this Agreement and the Ancillary
Agreements;

               (vi) fraudulent transfer Laws or the failure to comply with any bulk sales Laws and
similar Laws;

               (vii) for a period of three (3) years after the Closing, any claim that Buyer’s
sale, manufacture, use or any other exploitation of the Flow Products infringes one or more claims
of the patents listed on Schedule 10.2(a)(vii) hereof; and

               (viii) any claim that Buyer does not own, free and clear of all Liens, all right,
title and interest in and to the Intellectual Property Rights claimed under the patent listed on
Schedule 10.2(a)(viii) hereof.

          (b) Seller shall not be liable for any Loss or Losses pursuant to Section 10.2(a)(i) and
Section 10.2(a)(vii) (“Buyer Warranty Losses”) (i) unless and until the aggregate amount of all
Buyer Warranty Losses incurred by the Buyer Indemnitees exceeds $150,000 in which event Seller
shall be liable for all Buyer Warranty Losses from the first dollar, and (ii) to the extent that
Buyer Warranty Losses exceed $6,000,000 in the aggregate; provided, however, nothing contained in
this Section 10.2(b) shall be deemed to limit or restrict in any manner any rights or remedies
which Buyer has, or might have, at Law, in equity or otherwise, based on fraud or a willful
misrepresentation or willful breach of warranty hereunder.

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     10.3 Indemnification by Buyer.

          (a) Buyer shall indemnify and defend Seller and its Affiliates and their respective
stockholders, members, managers, officers, directors, employees, agents, successors and assigns
(the “Seller Indemnitees”) against, and shall hold them harmless from, any and all Losses resulting
from, arising out of, or incurred by any Seller Indemnitee in connection with, or otherwise with
respect to:

               (i) the failure of any representation and warranty or other statement by Buyer
contained in this Agreement, the Ancillary Agreements or any certificate or other document
furnished or to be furnished to Seller pursuant to this Agreement to be true and correct in all
respects as of the date of this Agreement and as of the Closing Date;

               (ii) any breach of any covenant or agreement of Buyer contained in this Agreement,
the Ancillary Agreements or any certificate or other document furnished or to be furnished to
Seller in connection with the transactions contemplated hereby and thereby;

               (iii) any Assumed Liability;

               (iv) any Transfer Taxes; and

               (v) any fees, expenses or other payments incurred or owed by Buyer or any of its
Affiliates to any agent, broker, investment banker or other firm or person retained or employed by
it in connection with the transactions contemplated by this Agreement and the Ancillary Agreements.

          (b) Buyer shall not be liable for any Loss or Losses pursuant to 10.3(a)(i) (“Seller Warranty
Losses”) (i) unless and until the aggregate amount of all Seller Warranty Losses incurred by the
Seller Indemnitees exceeds $150,000, in which event Buyer shall be liable for all Seller Warranty
Losses from the first dollar, and (ii) to the extent that Seller Warranty Losses exceed $6,000,000
in the aggregate.

     10.4 Indemnification Procedures for Third Party Claims.

          (a) In the event that an Indemnitee receives notice of the assertion of any claim or the
commencement of any Action by a third party in respect of which indemnity may be sought under the
provisions of this Article X (“Third Party Claim”), the Indemnitee shall promptly notify the
Indemnitor in writing of such Third Party Claim (“Notice of Claim”). Failure or delay in notifying
the Indemnitor will not relieve the Indemnitor of any Liability it may have to the Indemnitee,
except and only to the extent that such failure or delay causes actual harm to the Indemnitor with
respect to such Third Party Claim. The Notice of Claim shall set forth the amount, if known, or,
if not known, an estimate of the foreseeable maximum amount of claimed Losses (which estimate shall
not be conclusive of the final amount of such Losses) and a description of the basis for such Third
Party Claim.

          (b) Subject to the further provisions of this Section 10.4, the Indemnitor will have 10 days
(or less if the nature of the Third Party Claim requires) from the date on which the Indemnitor
received the Notice of Claim to notify the Indemnitee that the Indemnitor will assume the defense
or prosecution of such Third Party Claim and any litigation resulting therefrom with counsel of its
choice and at its sole cost and expense (a “Third Party Defense”). If the Indemnitor assumes the
Third Party Defense in accordance with the preceding sentence, the Indemnitor shall be conclusively
deemed to have acknowledged that the Third Party Claim is within the scope of its indemnity
obligation hereunder and shall hold the Indemnitee harmless from and against the full amount of any
Losses resulting therefrom (subject to the terms and conditions of this Agreement). Any Indemnitee
shall have the right to employ separate counsel in any such Third Party Defense and to participate
therein, but the fees and expenses of

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such counsel shall not be at the expense of the Indemnitor unless (A) the Indemnitor shall
have failed, within the time after having been notified by the Indemnitee of the existence of the
Third Party Claim as provided in the first sentence of this paragraph (b), to assume the defense of
such Third Party Claim, or (B) the employment of such counsel has been specifically authorized in
writing by the Indemnitor, which authorization shall not be unreasonably withheld.

          (c) The Indemnitor will not be entitled to assume the Third Party Defense if:

               (i) the Third Party Claim seeks, in addition to or in lieu of monetary damages, any
injunctive or other equitable relief (except where non-monetary relief is merely incidental to a
primary claim or claims for monetary damages);

               (ii) the Third Party Claim relates to or arises in connection with any criminal
proceeding, action, indictment, allegation or investigation;

               (iii) under applicable standards of professional conduct, a conflict on any
significant issue exists between the Indemnitee and the Indemnitor in respect of the Third Party
Claim;

               (iv) the Third Party Claim involves a material customer or supplier of the Business;

               (v) the Indemnitee reasonably believes an adverse determination with respect to the
Third Party Claim would be materially detrimental to or materially injure the Indemnitee’s
reputation or future business prospects;

               (vi) upon petition by the Indemnitee, the appropriate court rules that the
Indemnitor failed or is failing to use commercially reasonable efforts to vigorously prosecute or
defend such Third Party Claim;

               (vii) the Indemnitor fails to provide reasonable assurance to the Indemnitee of its
financial capacity to prosecute the Third Party Defense and provide indemnification in accordance
with the provisions of this Agreement; or

               (viii) the Third Party Claim would give rise to Losses which are more than the
amount indemnifiable by the Indemnitor pursuant to this Article X.

          (d) If by reason of the Third Party Claim a Lien, attachment, garnishment or execution is
placed upon any of the property or assets of the Indemnitee, the Indemnitor, if it desires to
exercise its right to assume such Third Party Defense, must furnish a satisfactory indemnity bond
to obtain the prompt release of such Lien, attachment, garnishment or execution.

          (e) If the Indemnitor assumes a Third Party Defense, it will use reasonable efforts in the
defense, prosecution, or settlement of such claim or litigation and will hold all Indemnitees
harmless from and against all Losses caused by or arising out of such Third Party Claim (subject to
the last sentence of Section 10.4(b)). The Indemnitor will not consent to the entry of any
judgment or enter into any settlement except with the written consent of the Indemnitee (not to be
unreasonably withheld or delayed) to which the Indemnitor is obligated to furnish indemnification
pursuant to this Agreement; provided that the consent of the Indemnitee shall not be required if
all of the following conditions are met: (i) the terms of the judgment or proposed settlement
include as an unconditional term thereof the giving to the Indemnitees by the third party of a
release of the Indemnitees from all Liability in respect of such Third Party Claim, (ii) there is
no finding or admission of (A) any violation of Law by the Indemnitees (or any Affiliate thereof),
(B) any violation of the rights of any Person and (C) no effect on any other

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Action or claims of a similar nature that may be made against the Indemnitees (or any
Affiliate thereof), and (iii) the sole form of relief is monetary damages which are paid in full by
the Indemnitor. The Indemnitor shall conduct the defense of the Third Party Claim actively and
diligently, and the Indemnitee will provide reasonable cooperation in the defense of the Third
Party Claim. So long as the Indemnitor is reasonably conducting the Third Party Defense in good
faith, the Indemnitee will not consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written consent of the Indemnitor (not to
be unreasonably withheld or delayed). Notwithstanding the foregoing, the Indemnitee shall have
the right to pay or settle any such Third Party Claim; provided that, in such event, subject to the
following sentence, it shall waive any right to indemnity therefor by the Indemnitor for such claim
unless the Indemnitor shall have consented to such payment or settlement (such consent not to be
unreasonably withheld or delayed). If the Indemnitor is not reasonably conducting the Third Party
Defense in good faith, the Indemnitee shall have the right to consent to the entry of any judgment
or enter into any settlement with respect to the Third Party Claim without the prior written
consent of the Indemnitor and the Indemnitor shall reimburse the Indemnitee promptly for all Losses
incurred in connection with such judgment or settlement.

          (f) In the event that (i) an Indemnitee gives Notice of Claim to the Indemnitor and the
Indemnitor fails or elects not to assume a Third Party Defense which the Indemnitor had the right
to assume under this Section 10.4 or (ii) the Indemnitor is not entitled to assume the Third Party
Defense pursuant to this Section 10.4, the Indemnitee shall have the right, with counsel of its
choice, to defend, conduct and control the Third Party Defense, at the sole cost and expense of the
Indemnitor. In each case, the Indemnitee shall conduct the Third Party Defense actively and
diligently, and the Indemnitor will provide reasonable cooperation in the Third Party Defense. The
Indemnitee shall have the right to consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim on such terms as it may deem appropriate;
provided, however, that the amount of any settlement made or entry of any judgment consented to by
the Indemnitee without the consent of the Indemnitor shall not be determinative of the validity of
the claim, except with the consent of the Indemnitor (not to be unreasonably withheld or delayed).
Notwithstanding Section 11.6 hereof, in connection with any Third Party Claim, the Indemnitor
hereby consents to the nonexclusive jurisdiction of any court in which an Action in respect of a
Third Party Claim is brought against any Indemnitee for purposes of any claim that the Indemnitee
may have under this Article X with respect to such Action or the matters alleged therein and agrees
that process may be served on the Indemnitor with respect to such a claim anywhere in the world. If
the Indemnitor does not elect to assume a Third Party Defense which it has the right to assume
hereunder, the Indemnitee shall have no obligation to do so.

          (g) Each party to this Agreement shall use its commercially reasonable efforts to cooperate
and to cause its employees to cooperate with and assist the Indemnitee or the Indemnitor, as the
case may be, in connection with any Third Party Defense, including attending conferences, discovery
proceedings, hearings, trials and appeals and furnishing records, information and testimony, as may
reasonably be requested; provided that each party shall use its best efforts, in respect of any
Third Party Claim of which it has assumed the defense, to preserve the confidentiality of all
confidential information and the attorney-client and work-product privileges.

     10.5 Indemnification Procedures for Non-Third Party Claims. In the event of a claim
that does not involve a Third Party Claim being asserted against it, the Indemnitee shall send a
Notice of Claim to the Indemnitor. The Notice of Claim shall set forth the amount, if known, or,
if not known, an estimate of the foreseeable maximum amount of claimed Losses (which estimate shall
not be conclusive of the final amount of such Losses) and a description of the basis for such
claim. The Indemnitor will have 30 days from receipt of such Notice of Claim to dispute the claim
and will reasonably cooperate and assist the Indemnitee in determining the validity of the claim
for indemnity. If the Indemnitor does not give notice to the Indemnitee that it disputes such
claim within 30 days after its receipt of the Notice of

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Claim, the claim specified in such Notice of Claim will be conclusively deemed a Loss subject
to indemnification hereunder.

     10.6 Effect of Investigation; Waiver. An Indemnitee’s right to indemnification or
other remedies based upon the representations and warranties and covenants and agreements of the
Indemnitor will not be affected by any investigation or knowledge of the Indemnitee or any waiver
by the Indemnitee of any condition based on the accuracy of any representation or warranty, or
compliance with any covenant or agreement. Such representations and warranties and covenants and
agreements shall not be affected or deemed waived by reason of the fact that the Indemnitor knew or
should have known that any representation or warrant might be inaccurate or that the Indemnitor
failed to comply with any agreement or covenant. Any investigation by such party shall be for its
own protection only and shall not affect or impair any right or remedy hereunder.

     10.7 Exclusive Remedy. The indemnification rights of the parties under this Article X
will provide the exclusive remedy for any breach or inaccuracy of any representation or warranty or
breach of any covenant or other agreement set forth in this Agreement, except for the right to seek
specific performance, rescission or restitution, and except for rights set forth in any Ancillary
Agreement, none of which rights or remedies shall be affected or diminished hereby; provided,
however, nothing herein shall limit in any way any party’s remedies against any other party in
respect of fraud, intentional misrepresentation or intentional breach of any of the provisions of
this Agreement.

ARTICLE XI

MISCELLANEOUS

     11.1 Notices. Any notice, request, demand, waiver, consent, approval or other
communication which is required or permitted hereunder shall be in writing and shall be deemed
given (a) on the date established by the sender as having been delivered personally, (b) on the
date delivered by a private courier as established by the sender by evidence obtained from the
courier, (c) on the date sent by facsimile, with confirmation of transmission, if sent during
normal business hours of the recipient, if not, then on the next Business Day, or (d) on the fifth
day after the date mailed, by certified or registered mail, return receipt requested, postage
prepaid. Such communications, to be valid, must be addressed as follows:

     If to Buyer, to:

Hitachi Metals, Ltd.

SEAVANS North Bldg.

1-2-1, Shibaura, Minato-ku

Tokyo, Japan

Attn: Junichi Kamata

Facsimile: 81-3-5765-4597

With a required copy to:

Morgan, Lewis & Bockius LLP

101 Park Avenue

New York, NY 10178-0600

Attn: Alan J. Neuwirth, Esq.

Facsimile: 877.432.9652

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Morgan, Lewis & Bockius LLP

One Market, Spear Street Tower

San Francisco, CA 94105

Attn: William A. Myers, Esq.

Facsimile: 415.442.1001

If to Seller, to:

Advanced Energy Industries, Inc.

1625 Sharp Point Drive

Fort Collins, CO 80525

Telephone: 970-407-4670

Attn: Thomas McGimpsey, General Counsel

Facsimile: 970.407.5326

With a required copy to:

Hogan Lovells US LLP

1470 Walnut Street, Suite 200

Boulder, CO 80304

Attn: Carin M. Cutler, Esq.

Facsimile: 720.406.5301

or to such other address or to the attention of such Person or Persons as the recipient party has
specified by prior written notice to the sending party (or in the case of counsel, to such other
readily ascertainable business address as such counsel may hereafter maintain). If more than one
method for sending notice as set forth above is used, the earliest notice date established as set
forth above shall control.

     11.2 Amendments and Waivers.

          (a) Any provision of this Agreement may be amended or waived if, and only if, such amendment
or waiver is in writing and is signed, in the case of an amendment, by each party to this
Agreement, or in the case of a waiver, by the party against whom the waiver is to be effective.

          (b) No failure or delay by any party in exercising any right or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.

          (c) To the maximum extent permitted by Law, (i) no waiver that may be given by a party shall
be applicable except in the specific instance for which it was given and (ii) no notice to or
demand on one party shall be deemed to be a waiver of any obligation of such party or the right of
the party giving such notice or demand to take further action without notice or demand.

     11.3 Expenses. Except as otherwise provided herein, each party shall bear its own
costs and expenses in connection with this Agreement, the Ancillary Agreements and the transactions
contemplated hereby and thereby, including all legal, accounting, financial advisory, consulting
and all other fees and expenses of third parties, whether or not the transactions contemplated by
this Agreement are consummated.

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     11.4 Successors and Assigns. This Agreement may not be assigned by either party
hereto without the prior written consent of the other party; provided that, without such consent,
Buyer may transfer or assign this Agreement, in whole or in part or from time to time, to one or
more of its Affiliates, but no such transfer or assignment will relieve Buyer of its obligations
hereunder. Subject to the foregoing, all of the terms and provisions of this Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective executors, heirs,
personal representatives, successors and assigns.

     11.5 Governing Law. This Agreement and Schedules hereto shall be governed by and
interpreted and enforced in accordance with the Laws of the State of California, without giving
effect to any choice of Law or conflict of Laws rules or provisions (whether of the State of
California or any other jurisdiction) that would cause the application of the Laws of any
jurisdiction other than the State of California.

     11.6 Consent to Jurisdiction. Each party hereto irrevocably submits to the exclusive
jurisdiction of any state or federal court located in San Francisco County, California, for the
purposes of any Action arising out of this Agreement or the Ancillary Agreements or any transaction
contemplated hereby or thereby, and agrees to commence any such Action only in such courts. Each
party further agrees that service of any process, summons, notice or document by U.S. registered
mail to such party’s respective address set forth herein shall be effective service of process for
any such Action. Each party irrevocably and unconditionally waives any objection to the laying of
venue of any Action arising out of this Agreement, Ancillary Agreements or the transactions
contemplated hereby or thereby in such courts, and hereby irrevocably and unconditionally waives
and agrees not to plead or claim in any such court that any such Action brought in any such court
has been brought in an inconvenient forum. EACH PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE ANCILLARY AGREEMENTS AND THE TRANSACTIONS
CONTEMPLATED HEREBY AND THEREBY OR THE ACTIONS OF SUCH PARTY IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE AND ENFORCEMENT HEREOF AND THEREOF.

     11.7 Counterparts. This Agreement may be executed in any number of counterparts, and
any party hereto may execute any such counterpart, each of which when executed and delivered shall
be deemed to be an original and all of which counterparts taken together shall constitute but one
and the same instrument. This Agreement shall become effective when each party hereto shall have
received a counterpart hereof signed by the other party hereto. The parties agree that the delivery
of this Agreement, and the delivery of the Ancillary Agreements and any other agreements and
documents at the Closing, may be effected by means of an exchange of facsimile signatures with
original copies to follow by mail or courier service.

     11.8 Third Party Beneficiaries. No provision of this Agreement is intended to confer
upon any Person other than the parties hereto any rights or remedies hereunder; except that in the
case of Article X hereof, the other Indemnitees and their respective heirs, executors,
administrators, legal representatives, successors and assigns, are intended third party
beneficiaries of such sections and shall have the right to enforce such sections in their own
names.

     11.9 Entire Agreement. This Agreement, the Ancillary Agreements, the Schedules and
the other documents, instruments and agreements specifically referred to herein or therein or
delivered pursuant hereto or thereto set forth the entire understanding of the parties hereto with
respect to the transactions contemplated by this Agreement. All Schedules referred to herein are
intended to be and hereby are specifically made a part of this Agreement. Any and all previous
agreements and

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understandings between or among the parties regarding the subject matter hereof, whether
written or oral, are superseded by this Agreement, except for the Confidentiality Agreement which
shall continue in full force and effect in accordance with its terms.

     11.10 Captions. All captions contained in this Agreement are for convenience of
reference only, do not form a part of this Agreement and shall not affect in any way the meaning or
interpretation of this Agreement.

     11.11 Severability. Subject to Section 6.8(d), any provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall be ineffective to the extent of such
invalidity or unenforceability without invalidating or rendering unenforceable the remaining
provisions hereof, and any such invalidity or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.

     11.12 Specific Performance. Buyer and Seller each agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not performed by them in
accordance with the terms hereof and that each party shall be entitled to specific performance of
the terms hereof, in addition to any other remedy at Law or equity.

     11.13 Interpretation.

          (a) The meaning assigned to each term defined herein shall be equally applicable to both the
singular and the plural forms of such term and vice versa, and words denoting either gender shall
include both genders as the context requires. Where a word or phrase is defined herein, each of its
other grammatical forms shall have a corresponding meaning.

          (b) The terms “hereof”, “herein” and “herewith” and words of similar import shall, unless
otherwise stated, be construed to refer to this Agreement as a whole and not to any particular
provision of this Agreement.

          (c) When a reference is made in this Agreement to an Article, Section, paragraph, Exhibit or
Schedule, such reference is to an Article, Section, paragraph, Exhibit or Schedule to this
Agreement unless otherwise specified.

          (d) The word “include”, “includes”, and “including” when used in this Agreement shall be
deemed to be followed by the words “without limitation”, unless otherwise specified.

          (e) A reference to any party to this Agreement or any other agreement or document shall
include such party’s predecessors, successors and permitted assigns.

          (f) Reference to any Law means such Law as amended, modified, codified, replaced or reenacted,
and all rules and regulations promulgated thereunder.

          (g) The parties have participated jointly in the negotiation and drafting of this Agreement
and the Ancillary Agreements. Any rule of construction or interpretation otherwise requiring this
Agreement or the Ancillary Agreements to be construed or interpreted against any party by virtue of
the authorship of this Agreement or the Ancillary Agreements shall not apply to the construction
and interpretation hereof and thereof.

          (h) All accounting terms used and not defined herein shall have the respective meanings given
to them under GAAP.

63

 

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64

 

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

	 	 	 	 	 
	 	HITACHI METALS, LTD.

 	 
	 	By:  	/s/ Hiroyuki Fujii
 	 
	 	 	Name:  	Hiroyuki Fujii 	 
	 	 	Title:  	President & CEO 	 
	 

	 	 	 	 	 
	 	ADVANCED ENERGY INDUSTRIES, INC.

 	 
	 	By:  	/s/ Dr. Hans G. Betz
 	 
	 	 	Name:  	Dr. Hans G. Betz 	 
	 	 	Title:  	Chief Executive Officer 	 
	 

65exv10w1

Exhibit 10.1

Sales and Services Agreement

This Sales and Services Agreement (this “Agreement”) is entered into as of July 16, 2010, by and
between LaRoss Partners, LLC, a New York limited liability company (“LaRoss”), with its principal
office at 1 Expressway Plaza, Suite 114, Roslyn Heights, NY 11577, and Local.com Corporation, a
Delaware corporation (“Local.com”), with its principal office at One Technology Drive, Building G,
Irvine, California 92618. Local.com and LaRoss shall collectively be referred to herein as the
“Parties” and each a “Party”.

Recitals

WHEREAS, Local.com desires to engage LaRoss to sell certain of Local.com’s advertising
products in accordance with certain established customer acquisition criteria, as more
particularly described in the Agreement;

WHEREAS, Local.com desires to retain LaRoss to provide certain billing, settlement,
reporting and other services to Local.com for the customers acquired by LaRoss and other
customers of Local.com on Local.com’s behalf pursuant to this Agreement, each as more
specifically described in the Agreement;

     NOW, THEREFORE, in consideration of the foregoing and the covenants set forth herein and other
good and valuable consideration, the sufficiency of which is hereby acknowledged, LaRoss and
Local.com hereby agree as set forth below.

Section 1. Customer Acquisition.

(a) During the Term (as defined below), LaRoss will sell certain of its own and Local.com’s
advertising products on behalf of Local.com, including the initial products described in Exhibit
A-1 and Exhibit A-2 attached hereto and such other products as may be added to Exhibit A-1 and
Exhibit A-2 by the Parties upon mutual written agreement from time to time (the “Products”),
subject at all times to Local.com’s early termination rights set forth below. The Products will be
sold directly to small business customers at the prices set opposite the description of such
Product on Exhibit A-1 or Exhibit A-2, as may be modified by the Parties from time to time upon
subsequent written agreement.

(b) LaRoss will sell the Products via telesales efforts, either directly or via outsourced sales
channels, to potential customers meeting the following criteria:

	 	(i)	 	lead must be a business or service offering located in the United States;
	 
	 	(ii)	 	lead must not be an existing customer of Local.com or a previous customer of
Local.com that has cancelled within the last six (6) months and provided that
Local.com provides the information necessary for LaRoss to make this determination in
a manner as may be agreed by the Parties from time to time;

 

 

	 	(iii)	 	lead must be capable of being billed via their phone bill (“LEC billed”);
and
	 
	 	(iv)	 	lead’s contact information must not be on the Do Not Call lists of either
Local.com or LaRoss or any national Do Not Call list; (collectively, “Leads” and each,
a “Lead”).

As between Local.com and LaRoss, LaRoss will be solely responsible for sourcing and developing all
Leads necessary to meet the Sales Targets (as defined below). Local.com shall be responsible for
providing LaRoss with a file of its existing LEC customers, existing, non-LEC customers,
Do-Not-Calls, cancellations, and similar groups that will inform LaRoss’s development of its Lead
list on behalf of Local.com. LaRoss is responsible for managing its Lead list so as not to contact
existing Local.com customers, Do-Not-Calls, cancellations and such other groups of individuals as
may be specified by Local.com from time to time.

(c) LaRoss will ensure that all sales efforts under this Agreement, whether undertaken directly by
LaRoss or by outsourced sales channels:

	 	(i)	 	Comply with generally accepted marketing practices in line with the Direct
Marketing Association Guidelines for Ethical Business Practices;
	 
	 	(ii)	 	Comply with the federal law of the United States of America relative to
Telemarketing, including without limitation (1) the Federal Trade Commission (“FTC”)
Act, 15 U.S.C. §§ 41-58, as amended, dealing with unfair or deceptive acts or
practices, and FTC Regulations promulgated thereunder; (2) the FTC’s Telemarketing
Sales Rule as set forth in FTC’s publication “Complying with Telemarketing Sales Rule”
and FTC’s “Mail or Telephone Order Merchandise Rule” Telemarketing and Consumer Fraud
and Abuse Prevention Act; (3) the most current FTC Handbook on telemarketing; and (4)
adherence to the United States Federal “Do Not Call List” as posted by the National Do
Not Call Registry;
	 
	 	(iii)	 	Comply with all laws of the jurisdictions in which LaRoss operates, and all
applicable privacy policies in such jurisdictions, including with respect to LaRoss’s
transmission, storage and use of customer information, including without limitation
the identification of the Customer by name, address, telephone number, e-mail address
and billing information (collectively “Customer Information”);
	 
	 	(iv)	 	Comply (where appropriate and where LaRoss is transacting via credit cards)
at all times with the Payment Card Industry Data Security Standard (PCI DSS) and
agrees to implement and maintain reasonable security measures to protect cardholder
data in its possession;

 

 

	 	(v)	 	Comply with all applicable national and foreign laws, treaties and
regulations in connection with this Agreement, including those related to data
privacy, international communications and the transmission of technical or personal
data; and
	 
	 	(vi)	 	Will, in no instance, involve fraudulent or deceptive practices.

(d) LaRoss will ensure that all sales efforts under this Agreement are undertaken and completed
using selling and support scripts tailored, where appropriate, to Local.com’s specific Product
offering(s) identified in Exhibit A-1 or A-2, and as approved in writing (email sufficing) by
Local.com from time to time. Unless otherwise set forth in this Agreement, all sales efforts and
management of outsourced sales channels will be performed by LaRoss in accordance with the
processes and methodologies used by LaRoss for its own proprietary product offerings LaRoss will
ensure that all sales efforts under this Agreement are undertaken and completed in accordance with
such quality control criteria as specified in the LEC application and approval (including third
party verification) on a Product by Product basis and as are set forth in Exhibit B attached
hereto, as such exhibit may also be modified from time to time by the Parties upon subsequent
written agreement.

(e) Local.com agrees to provide LaRoss with such of its marketing, sales and training materials as
it deems necessary and appropriate to train the LaRoss sales team about Local.com and its Products.
Local.com agrees to train LaRoss’s U.S.-based telesales trainers and service managers regarding
Local.com’s Products, value proposition, customer service requirements and similar matters at a
time and in a manner to be agreed upon by the Parties.

(f) Each of the foregoing subsections (a) through (e) may be further defined or modified by the
Parties by subsequent schedule mutually adopted by the Parties in writing from time to time.

(g) Local.com may suspend or terminate the sale of any Product that Local.com fulfills and supports
at any time for any reason upon written notice to LaRoss. Notwithstanding anything to the contrary
set forth in this Section 1, Local.com shall not be required to accept from LaRoss any Leads that
have agreed to purchase the Products, except as follows:

     (i) from June 9, 2010 to June 23, 2010, Local.com shall accept from LaRoss up to *** Leads a
week that have agreed to purchase the Products in accordance with Section 1 hereof and otherwise
meet the requirements of this Agreement;

     (ii) from June 24, 2010 to July 23, 2010, Local.com shall accept from LaRoss up to *** Leads a
week that have agreed to purchase the Products in accordance with Section 1 hereof and otherwise
meet the requirements of this Agreement;

 

			
	***	 	- Portions of this page have been omitted pursuant to a request for confidential treatment and filed separately with the Securities and Exchange Commission

 

 

     (iii) From July 24, 2010 to August 23, 2010, Local.com shall accept from LaRoss up to ***
Leads a week that have agreed to purchase the Products in accordance with Section 1 hereof and
otherwise meet the requirements of this Agreement; and

     (iv) From and after August 24, 2010, Local.com shall not be required to accept any additional
Leads that have agreed to purchase the Products in accordance with Section 1 hereof from LaRoss,
except as set forth in Section 1(h) below.

(h) Notwithstanding Section 1(g)(iv) above, Local.com agrees to purchase from LaRoss on the first
day of each calendar quarter during the Initial Term starting October 1, 2010 a maximum of up to
*** Leads that:

     (i) have agreed to purchase certain of the Products listed on Exhibit A-2 in accordance with
Section 1 hereof;

     (ii) otherwise meet the requirements of this Agreement;

     (iii) have been billed at least four (4) consecutive months by LaRoss prior to purchase by
Local.com and have not been acquired from any other third party;

     (iv) are billed at no less than the prices set opposite the Products set forth in Exhibit A-2;
and

     (v) are capable of being transferred to a billing entity (sub-CIC) that already services
existing Local.com Customers (as defined below).

Section 2. Fulfillment and Administration Services.

(a) During the Term, LaRoss will provide certain administrative services to Local.com and on behalf
of the Leads that agree to purchase the Products in accordance with Section 1 hereof as well as
such other customers as may be identified by Local.com from time to time (each, hereinafter, a
“Customer”), including the following:

	 	(i)	 	LaRoss shall provide Local.com with account management services for all
Customers, providing at a minimum, those services set forth in Exhibit C hereof,
including those services as may be set forth on a Product by Product basis;
	 
	 	(ii)	 	Where necessary or appropriate, LaRoss shall undertake follow-up calls and
communications with Customers, provided that a follow-up call shall be made to a
Customer on the third (3rd) day after such Customer converts from being a
Lead in order to ascertain any information necessary to complete the order of a
Product for such Customer; and
	 
	 	(iii)	 	Undertaking a Quality Assurance check on each Customer with respect to
Product order details, in accordance LaRoss’s current Quality Assurance

 

			
	***	 	- Portions of this page have been omitted pursuant to a request for confidential treatment and filed separately with the Securities and Exchange Commission

 

 

	 	 	 	processes and procedures within two (2) days following conversion of a Lead into a
Customer, as such processes and procedures may be modified by the Parties upon
written agreement from time to time.

(b) During the Term, LaRoss will provide certain fulfillment and provisioning services where it
ensures timely delivery of the Product sold to the Customers including the following:

	 	(i)	 	Where applicable, consistent with the LaRoss’s own sales and fulfillment
processes and procedures, and consistent with the LEC approvals per product, providing
fulfillment of welcome kits (electronic or paper based fulfillment where appropriate)
to Customers within fourteen (14) days of such Customer converting from a Lead;
	 
	 	(ii)	 	Managing any and all communication with the Customer required to provision
the Product;
	 
	 	(iii)	 	Provisioning the Product per the agreement with the applicable LEC;
	 
	 	(iv)	 	Securing all approvals from the Customer (if required) that the Product has
been successfully provisioned and accepted by the Customer;
	 
	 	(v)	 	Providing any administrative or support function directly or indirectly
through third parties to provision the Product as required;
	 
	 	(vi)	 	Establishing any and all reporting to be provided to the Customer per the
agreement with the Customer with respect to the Product;
	 
	 	(vii)	 	Providing Local.com with any and all required information required by it
where Local.com is fulfilling the Product;
	 
	 	(viii)	 	Maintaining records of all provisioning activity and any changes to the Customers’
version of any Product;
	 
	 	(ix)	 	Delivering, where appropriate, a daily new Customer order file, pre Quality
Assurance, and providing Local.com with real time reporting capabilities that provide
visibility of all new Customer orders;
	 
	 	(x)	 	LaRoss will provide Local.com with access to the LaRoss CRM that contains a
Customer master file, which file with contain all of the information per entry
specified in Exhibit D attached hereto and necessary for immediate processing by
Local.com for Product fulfillment;

(c) During the Term, LaRoss will provide certain reporting services to Local.com with respect to
the Customers and otherwise, including the following:

 

 

	 	(i)	 	LaRoss will provide Local.com with an updated version of it current
management dashboard by which Local.com can manage and monitor its Customers;
	 
	 	(ii)	 	LaRoss will provide Local.com with access to the LaRoss CRM system where all
Customer Information will be stored by LaRoss on behalf of Local.com;
	 
	 	(iii)	 	LaRoss will provide Local.com, upon Local.com’s request, with access to any
third party reporting or management systems that LaRoss uses to fulfill, manage or
report on the product or service for Local.com’s customers
	 
	 	(iv)	 	Upon request from Local.com and reimbursement for all expenses associated
with same by Local.com, LaRoss will provide CRM access to daily sales reports
necessary to support the use of SalesForce.com as Local.com’s CRM of record;
	 
	 	(v)	 	LaRoss will provide access to all relevant clearinghouse accounts and other
accounts as appropriate and necessary for Local.com to review and audit settlement,
billing and credit information;
	 
	 	(vi)	 	LaRoss will provide Local.com with an operational dashboard that is
materially similar to the operational dashboard currently used by LaRoss for its own
internal operations, including access to core operating metrics for the entire
Customer lifecycle;
	 
	 	(vii)	 	Such other reports as Local.com may reasonably request from time to time and
that are reasonably prepared by LaRoss; and
	 
	 	(viii)	 	LaRoss will provide Local.com with such other base Lead information as Local.com may
request from time to time.

(d) During the Term, LaRoss will provide certain billing, settlement and financial reporting
services to Local.com, including the following:

	 	(i)	 	LaRoss will on a monthly basis, facilitate the billing of each Customer for
the price ascribed to the Product or Products purchased by such Customer, as set forth
in Exhibit A-1 or A-2 attached hereto as may be amended from time to time by the
Parties upon mutual written consent (email sufficing), in accordance with the billing
method agreed to by the Customer, subject to cancellation and/or termination of such
Product or Products by the Customer, provided that in performing the foregoing billing
services LaRoss will use commercially reasonable efforts to achieve an overall
settlement percentage that is within a percentage range as may be mutually agreed upon
by the Parties;

 

 

	(ii)	 	where, in accordance with the other provisions of this Agreement, LaRoss is
no longer providing the services set forth in Section 2(c)(i) hereof, LaRoss will
provide Local.com with a billing file in accordance with Local.com’s specifications;
	 
	(iii)	 	LaRoss will provide Local.com with access to one or more LEC billing
entities in order to bill those Customers that have selected to be billed on a LEC
based payment, including having sufficient capacity to handle current needs, as well
as contingent and/or projected needs;
	 
	(iv)	 	Within ninety (90) days of the date first set forth above, LaRoss will assist
Local.com in establishing a lockbox account arrangement with its LEC billing entities,
naming Local.com as the sole beneficiary of the account into which payment received
attributable to Customers will be paid solely at the direction of Local.com;
	 
	(v)	 	LaRoss will proactively review cancellations, credits and complaints by
Customers consistent with its current operations, and will respond on behalf of
Local.com to all attorney general and LEC inquiries in accordance with the direction
of Local.com, including the development of improvement plans and submission of same.
LaRoss will provide notice to Local.com of any such inquiries within two (2) business
days of receipt of same. The foregoing requirement applies to any LEC billing
entities for which LaRoss is providing or managing billing service whether owned by
LaRoss or Local.com.
	 
	(vi)	 	Local.com will provide LaRoss with any official communications sent to or
received by Local.com or any of its LEC billing entities or their nominees of or
relating to Customers;
	 
	(vii)	 	In the event any LEC billing entity is prohibited from operating, LaRoss
will use commercially reasonable efforts to migrate impacted Customer accounts to an
alternative LEC billing entity.

(e) During the Term, LaRoss will provide certain customer service functions to the Customer on
behalf of Local.com, including the following:

	 	(i)	 	Handling inbound call inquiries from Customers regarding the Product,
billing, Customer Information inquiries and such other information requests as may be
appropriately made by a Customer;
	 
	 	(ii)	 	Processing change requests related to the Product or Products subscribed for
by a Customer, including updating information, adding, deleting or modifying the
Product or Product(s) a Customer has subscribed for and other similar fulfillment
requests;

 

 

	 	(iii)	 	Attempting to retain a Customer in the event of a cancellation by such
Customer of a Product or Product(s), using such methods and offers as may be mutually
agreed upon by the Parties;
	 
	 	(iv)	 	Manage and where possible, attempt to minimize, refunds and credits to
Customer as may be mutually agreed upon by Local.com and LaRoss, tracking Customer
reasons for churn and cancellation, and using best practices to retain Customer;
	 
	 	(v)	 	Update and keep current the CRM system provided to Local.com by LaRoss with
respect to all Customer communications.

(f) Each of the foregoing subsections (a) through (e) may be further defined or modified by the
Parties by subsequent schedule mutually adopted by the Parties in writing from time to time.

Section 3. Additional Local.com Obligations.

     During the Term, in addition to its other obligations, as set forth herein, Local.com will
also fulfill the following obligations:

(a) Local.com will regularly, and in no case less than once per week, undertake quality assurance
on samplings of Leads and Customers to ensure that LaRoss is performing properly its obligations
under this Agreement.

(b) Local.com will fulfill Customer’s purchases of the Products in a commercially reasonable manner
in accordance with its current Product fulfillment policies and procedures.

(c) Local.com will provide LaRoss sales management staff and call center management with
information pertaining to Local.com Products, fulfillment and such other information as is
reasonably necessary to assist LaRoss’s sales and delivery efforts pursuant to this Agreement.

Section 4. Compensation.

(a) As the sole and exclusive consideration for the services to be provided by LaRoss pursuant to
Section 1 of this Agreement, Local.com agrees to pay LaRoss a one-time acquisition fee equal to the
fee set opposite the Product in Exhibit A-1 or A-2 attached hereto (as applicable) per Product sold
to a Customer (the “Acquisition Fee”), provided the following criteria have been met:

	 	(i)	 	In the case of those Products listed on Exhibit A-1 only, Customer has agreed
to and completed a thirty (30) day trial period for the Product, as

 

 

	 	 	 	evidenced by the audio recordings required pursuant to Section 4(a)(iii) hereof;
	 
	 	(ii)	 	LaRoss has provided Customer with proper disclosure of the billing terms for
the Product as evidenced by the audio recordings required pursuant to Section
4(a)(iii) hereof;
	 
	 	(iii)	 	LaRoss shall have made an audio recording of the call with the Lead pursuant
to which the Lead agrees to buy the Product on the disclosed term and, in so doing,
converts to a Customer in the case of those Products listed on Exhibit A-1 or becomes
a customer of LaRoss in the case of those Products listed on Exhibit A-2 or
alternatively, LaRoss will provide remote call monitoring where audio recording of the
call is not possible, and an audio recording of the subsequent verification of such
commitment by the Customer or LaRoss customer, which recordings will be accessible by
Local.com upon request;
	 
	 	(iv)	 	In the case of those Products listed on Exhibit A-1 only, Customer is
successfully billed for the Product at least one time, following the passage of the
trial period set forth in Section 4(a)(i) above;
	 
	 	(v)	 	In the case of those Products listed on Exhibit A-2 only, the satisfaction of
those criteria set forth in Section 1(h) hereof;
	 
	 	(vi)	 	LaRoss successfully completes its quality control process with respect to the
sales process;
	 
	 	(vii)	 	LaRoss successfully completes all fulfillment requirement required within
the first thirty days of a Customer’s purchase of a Product through LaRoss’ efforts in
accordance with this Agreement in a timely manner, in accordance with the requirement
set forth above, including without limitation, the electronic or postal delivery of a
welcome kit, the placement of a follow-up call to a new Customer and the delivery of a
final written pre-bill communication to such new Customer, where necessary or agreed
upon with Local.com; and
	 
	 	(viii)	 	the satisfactory completion, at the option of Local.com, of a sampling of sales
calls through remote call monitoring and an audit of sales verification recordings,
provided that in the case of those Products listed on Exhibit A-1 such audit is
completed within five (5) calendar days of the date of sale and does not and will not
interfere with the timely billing of Customer and, in the case of those Products
listed on Exhibit A-2, such audit is completed within ten (10) days prior to the date
of sale to Local.com pursuant to Section 1(h) hereof.

 

 

Each of the foregoing (a)(i) through (a)(viii) shall hereinafter be referred to as a “Sales
Criterion.” In the event that any of the Sales Criteria in Sections 4(a)(i) through 4(a)(v) are
not met, then LaRoss will not be eligible to receive the Acquisition Fee for the sale of the
Product to such Customer. In the event that any of the Sales Criteria in Sections 4(a)(vi) through
4(a)(viii) are not met then LaRoss will be deemed to be in material breach of this Agreement and,
in addition, Local.com may reduce the aggregate amount of all Acquisition Fees owed to LaRoss for a
calendar month by ten percent (10%) for each Sales Criterion not met by LaRoss during such calendar
month. It is understood and agreed that LaRoss will be solely responsible for any and all expenses
associated with the services it provides pursuant to Section 1 hereof and that the Acquisition Fee
shall be the sole and exclusive fee paid for such services.

(b) As the sole and exclusive consideration for the services to be provided by LaRoss pursuant to
Section 2 of this Agreement, Local.com agrees to pay LaRoss a recurring monthly service fee as more
specifically set forth in Exhibit E attached hereto on a per Product basis (collectively, the
“Monthly Service Fee”). It is understood and agreed that LaRoss will be solely responsible for any
and all expenses associated with the services it provides pursuant to Section 2 hereof and that the
Monthly Service Fee shall be the sole and exclusive fee paid for such services.

Notwithstanding the foregoing, no Monthly Service Fee will be paid with respect to any month in
which Customer does not pay for the Product. As such, no Monthly Service Fee will be paid during
the initial trial period nor in any month in which Customer fails to pay for the Product for any
reason or no reason at all.

(c) The Acquisition Fee and Monthly Service Fees payable hereunder are inclusive of all services
offered by LaRoss pursuant to this Agreement unless otherwise set forth herein. Notwithstanding
the foregoing, Local.com will be responsible for reimbursing LaRoss for all expenses agreed to by
Local.com in writing and in advance (email sufficing).

(d) LaRoss may invoice Local.com for Acquisition Fees and Monthly Service Fees earned by LaRoss in
accordance with this Agreement as frequently as weekly. Local.com will pay all undisputed invoices
within seven (7) calendar days of delivery of such invoice or thirty (30) calendar days in
connection with Acquisition Fees earned pursuant to Section 1(h).

(e) Notwithstanding anything to the contrary set forth in Section 4(a) through 4(d) above,
Local.com may be required to engage a third-party to provide certain Customer service functions and
such services may result in an additional charge to Local.com, but only where subsequently agreed
to by LaRoss and Local.com in writing, provided that Exhibit E set forth herein establishes those
additional third-party services for which Local.com has already agreed to assume pursuant to this
Agreement.

Section 5. LaRoss Warranties and Representations.

 

 

(a) LaRoss represents and warrants that it is duly organized and validly existing under the laws of
its jurisdiction and it has the full corporate power and authority to execute and deliver this
Agreement, or perform its obligations hereunder and to consummate the transactions contemplated
hereby.

(b) LaRoss represents and warrants that the execution, delivery and performance of this Agreement
by it has been duly authorized by all necessary corporate action, has been duly executed and
delivered by it and constitutes a legal, valid and binding obligation of it enforceable against it
in accordance with its terms and the execution, delivery and performance of this Agreement does not
and will not violate its certificate of incorporation or by-laws, or any applicable statute, law,
ordinance, rule or regulation, or any term or provision of any agreement or other instrument or any
judicial or administrative order or decree to which it is a party or by which it may be bound.

(c) LaRoss represents and warrants that there are no suits, actions, claims, proceedings
(including, without limitation, arbitral or administrative proceedings) or investigations (i)
pending or threatened against LaRoss or any of their respective properties, assets (including,
without limitation, LaRoss’s intellectual property necessary to perform all of the services
provided for in this Agreement (hereinafter, the “LaRoss Intellectual Property”)) or business or,
to the best knowledge of LaRoss, (ii) pending or threatened against any of the officers, directors,
employees, agents or consultants of LaRoss in connection with the business of LaRoss or (iii)
pending or threatened challenging the validity or propriety of the transactions contemplated by
this Agreement. There is no judgment, order, injunction, decree or award (whether issued by a
court, an arbitrator or an administrative agency) to which LaRoss is a party, or involving any of
LaRoss’s properties, assets (including, without limitation, the LaRoss Intellectual Property) or
business, which is unsatisfied or which requires continuing compliance therewith by LaRoss.

(d) LaRoss represents and warrants that it is in compliance with all applicable laws of any
governmental authority having jurisdiction over the conduct of its business or the ownership or use
of its properties, the noncompliance with which is reasonably likely to have a material adverse
effect on the LaRoss Intellectual Property.

(e) LaRoss represents and warrants the information and statements regarding LaRoss and the LaRoss
Intellectual Property contained herein do not contain any untrue statement of a material fact or
omit to include any material fact necessary to make such information or statements not misleading.
LaRoss represents and warrants that no order for relief or similar order has been entered in a
bankruptcy proceeding that orders relief of any kind that has or would result in a finding that
LaRoss is bankrupt, that a trustee or interim trustee should be appointed, or that in any other way
would interfere with LaRoss’s ability to provide the services and perform its obligations to
Local.com hereunder, including the use of the LaRoss Intellectual Property by Local.com to the
extent provided for herein.

 

 

(f) LaRoss represents and warrants that the LaRoss Intellectual Property necessary for LaRoss to
perform its obligations hereunder or any technology used in or related thereto (other than
permitted third party software) does not infringe any copyright, valid claims of a presently
existing registered patent or trademark, nor does it constitute an unlawful disclosure, use or
misappropriation of another person’s trade secret.

(g) LaRoss represents and warrants that it is not a party to or bound by any agreement that would
restrict or limit its right to carry on its business as now conducted or to solicit business from
any person or any geographical area or otherwise conduct its business as contemplated under this
Agreement.

(h) LaRoss represents and warrants that the CRM system, billing system, Lead generation system and
all other systems and software utilized by LaRoss to provide the services set forth in this
Agreement do not, and shall not, infringe, violate or misappropriate the Intellectual Property
Rights (as defined below) or any other rights of any third party. “Intellectual Property Rights”
mean any and all rights existing from time to time under patent, copyright, trademark, trade
secret, unfair competition, publicity rights, or privacy rights laws, and any and all other
proprietary rights.

(i) LaRoss represents and warrants that the CRM system, billing system, Lead generation system and
all other systems and software utilized by LaRoss to provide the services set forth in this
Agreement will not contain any defects, viruses, worms, Trojan horses or other harmful
components at any time during the Term of the Agreement.,

(j) LaRoss represents and warrants that the CRM system, billing system, Lead generation system
and all other systems and software utilized by LaRoss to provide the services set forth in this
Agreement will at all times during the Term of this Agreement be available for use by
Local.com as contemplated by this Agreement.

(k) LaRoss represents and warrants that all customers acquired by Local.com pursuant to
Section 1 hereof were obtained and acquired in accordance with the Anti-Cramming Best Practices
Guidelines, available at http://www.fcc.gov/Bureaus/Common_Carrier/Other/cramming/cramming.html.

(l) LaRoss represents and warrants that no third party billing agent (sub-CIC) used by LaRoss to
fulfill its obligations under this Agreement, including without limitation the billing of customers
to be aged prior to acquisition pursuant to Section 1(h) hereof, has ever received any complaints
above allowable LEC-established complaint thresholds or have otherwise been subject to shut down,
termination, or suspension proceedings.

Section 6. Local.com Warranties and Representations.

(a) Local.com represents and warrants that it is duly organized and validly existing under the laws
of its jurisdiction and it has the full corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby.

 

 

(b) Local.com represents and warrants that the execution, delivery and performance of this
Agreement by it has been duly authorized by all necessary corporate action, has been duly executed
and delivered by it and constitutes a legal, valid and binding obligation of it enforceable against
it in accordance with its terms and the execution, delivery and performance of this Agreement does
not and will not violate its certificate of incorporation or by-laws, or any applicable statute,
law, ordinance, rule or regulation, or any term or provision of any agreement or other instrument
or any judicial or administrative order or decree to which it is a party or by which it may be
bound.

(c) Local.com represents and warrants that there are no suits, actions, claims, proceedings
(including, without limitation, arbitral or administrative proceedings) or investigations (i)
pending or threatened against Local.com or any of their respective properties, assets (including,
without limitation, Local.com’s intellectual property) or business or, to the best knowledge of
Local.com, (ii) pending or threatened against any of the officers, directors, employees, agents or
consultants of Local.com in connection with the business of Local.com or (iii) pending or
threatened challenging the validity or propriety of the transactions contemplated by this
Agreement. There is no judgment, order, injunction, decree or award (whether issued by a court, an
arbitrator or an administrative agency) to which Local.com is a party, or involving any of
Local.com’s properties, assets (including, without limitation, Local.com’s intellectual property)
or business, which is unsatisfied or which requires continuing compliance therewith by Local.com.

(d) Local.com represents and warrants that no consent, order, approval, permit or authorization or
notification of, or registration, declaration or filing with, any court, arbitrator or governmental
entity or other person or entity is required for the valid execution, delivery or performance by it
of this Agreement.

(e) Local.com represents and warrants that no order for relief or similar order has been entered in
a bankruptcy proceeding that orders relief of any kind that has or would result in a finding that
Local.com is bankrupt, that a trustee or interim trustee should be appointed, or that in any other
way would interfere with Local.com’s ability to perform its obligations hereunder, including the
use of Local.com’s intellectual property by Local.com.

(f) Local.com represents and warrants that Local.com’s intellectual property necessary for
Local.com to perform its obligations hereunder or any technology used in or related thereto (other
than permitted third party software) does not infringe any copyright, valid claims of a presently
existing registered patent or trademark, nor does it constitute an unlawful disclosure, use or
misappropriation of another person’s trade secret.

(g) Local.com represents and warrants that it is not a party to or bound by any agreement that
would restrict or limit its right to carry on its business as now conducted

 

 

or to solicit business
from any person or any geographical area or otherwise conduct its business as contemplated under
this Agreement.

Section 7. Intellectual Property

(a) LaRoss acknowledges and agrees that any and all information provided by or gathered from
Customers (“Customer Information”) will be co-owned by Local.com. LaRoss may use the Customer
Information solely to provide the services contemplated by this Agreement in accordance with this
Agreement. LaRoss must partition and keep the Customer Information separate from the information
of its other customers. Within 5 days of termination or expiry of this agreement, LaRoss must make
available to Local.com all Customer Information in LaRoss’s possession, power or control for
download from a secure site in a format this is accessible to and capable of manipulation and
further use by Local.com.

(b) Each Party hereto shall use the other Party’s licensed marks as set forth in Exhibit F hereto
only in accordance with the manner and form stipulated by such Party and shall conform to and
observe such standards as such Party shall from time to time approve, including, without
limitation, standards relative to the size, design, position, appearances, marking and color of
such licensed marks, and the manner, disposition and use of the licensed marks and accompanying
designations, on any document or other media. All goodwill associated with each Party’s licensed
marks will inure solely to the benefit of, and is the property of, such Party. Upon termination of
this Agreement, no monetary amount will be assigned or attributed to any goodwill associated with
either Party’s interest in the other Party’s licensed marks.

(c) Each Party acknowledges that the other Party’s licensed marks and all registrations and
applications for registration thereof that such Party owns or hereafter acquires are valid and that
such Party is the owner of same. Neither Party will (i) contest the validity of the other Party’s
licensed marks or any registrations or applications for registration thereof or assist anyone in
doing so; (ii) claim any property interest in the other Party’s licensed marks other than as
itself; (iii) use the other Party’s licensed marks in any form or manner inconsistent with this
Agreement and/or on or in connection with any goods, services or products other than those approved
by such other Party; or (iv) use any mark, name, design, label or other device identical or similar
to the other Party’s licensed marks except as permitted herein..

Section 8. Indemnification.

(a) LaRoss agrees to promptly defend, indemnify and hold Local.com and its directors, officers,
employees, agents and advisors (hereinafter called collectively the “Local.com Indemnities”)
harmless from and against, and pay or reimburse the Local.com Indemnities for, any and all claims,
liabilities, obligations, fines, costs, expenses, charges, royalties, proceedings, deficiencies, or
damages (whether absolute, accrued, conditional or otherwise and resulting from third party
claims), including, without limitation, reasonable attorney’s and accountants’ fees incurred in the

 

 

investigation of defense of any of the same or in asserting any of their respective rights
thereunder (hereinafter called collectively the “Losses”), resulting from or arising out of
(i) any inaccuracy of any representation or warranty made by LaRoss herein or in connection
herewith; (ii) any failure of LaRoss to perform any covenant or agreement hereunder; or (iii) any
alleged or actual infringement or wrongful use attributable to Local.com Indemnities’ use of the
LaRoss Intellectual Property. The indemnification obligations set forth in this Section 8(a) shall
survive indefinitely or, if indefinite survival is not enforceable under applicable law, for the
maximum period of time permitted by applicable law.

(b) Local.com agrees to defend, indemnify and hold LaRoss, its directors, officers, employees,
agents and advisors (hereinafter called collectively the “LaRoss Indemnities”) harmless from and
against any and all Losses resulting from or arising out of: (i) any inaccuracy of any
representation or warranty made by Local.com herein or in connection herewith; or (ii) any failure
of Local.com to perform any covenant or agreement hereunder or fulfill any other obligation in
respect hereof. The indemnification obligations set forth in this Section 8(b) shall survive
indefinitely or, if indefinite survival is not enforceable under applicable law, for the maximum
period of time permitted by applicable law.

(c) For purposes of Sections 8(a) through this 8(c), the Party seeking indemnification will be
known as the “Indemnified Party” and the Party from whom indemnification is sought will be known as
the “Indemnifying Party”.

	 	(i)	 	The Indemnified Party will provide written notice to the Indemnifying Party
of any Loss in respect of which an Indemnifying Party may be liable under Section 8(a)
or 8(b) (hereinafter called an “Indemnification Notice”). Such Indemnification Notice
will be dispatched by the Indemnified Party as soon as reasonably practicable after
receipt by the Indemnified Party of notice of any Losses, but in no event later than
90 days after the Indemnified Party’s discover of such Loss. The Indemnification
Notice will (i) reference this Agreement and (ii) set forth in reasonable detail the
facts and circumstances justifying such claim.
	 
	 	(ii)	 	The Indemnifying Party will pay for any Loss promptly in cash once its
responsibility has been finally determined. In the case of a Loss arising out of a
claim by a third party, the Indemnified Party will permit the Indemnifying Party, at
its option and expense, to assume the defense of such claim by counsel reasonably
satisfactory to the Indemnified Party and to settle or otherwise dispose of the same;
provided, however, that the Indemnified Party may in its discretion at all times
participate in such defense by counsel of its own choice, but the fees, expenses and
other charges of such counsel will be for the account of the Indemnified Party,
unless; (i) the employment of counsel by the Indemnified Party has been authorized in
writing by the Indemnifying Party, (ii) there is a conflict or potential conflict
(based on advice of counsel to the Indemnified Party

 

 

	 	 	 	reasonably acceptable to the
Indemnifying Party) between the Indemnified Party and the Indemnifying Party, or (iii)
the Indemnifying Party has not
in fact employed counsel to assume the defense of such action within a reasonable
time after receiving notice of this commencement of the action; and provided
further that the Indemnified Party will be entitled to control such defense jointly
with the Indemnifying Party in the case of any litigation referred to in clause
(ii) of the immediately preceding proviso to this sentence.
	 
	 	(iii)	 	The Indemnifying Party will not, in defense of any such claim, except with
the prior written consent of the Indemnified Party, enter into any settlement that
does not include as an unconditional term thereof the giving by the claimant or
plaintiff in question to the Indemnified Party a release of all liabilities in respect
of such claims.

Section 9. Limitation of Liabilities.

NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT OR OTHERWISE, EXCEPT FOR A PARTY’S
INDEMNIFICATION OBLIGATIONS PURSUANT TO SECTION 8 OF THIS AGREEMENT OR DAMAGES ARISING FROM A
PARTY’S BREACH OF SECTION 11 HEREOF, NEITHER PARTY SHALL HAVE ANY LIABILITY WITH RESPECT TO ITS
OBLIGATIONS UNDER THIS AGREEMENT OR OTHERWISE FOR CONSEQUENTIAL, EXEMPLARY, SPECIAL, INDIRECT OR
PUNITIVE DAMAGES, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITIES OF SUCH DAMAGES.

Section 10. Term and Termination

(a) This Agreement shall become effective upon the date first set forth above and, unless sooner
terminated as provide in this Agreement, shall remain effective until the date that is two year
from the date first set forth above (the “Initial Term”) and shall automatically renew for
subsequent one (1) year periods thereafter (each, a “Subsequent Term” and together with the Initial
Term, the “Term”), unless earlier terminated in accordance with Section 10(b) hereof.
Notwithstanding the foregoing, Local.com may suspend LaRoss’ performance pursuant to Section 1 of
this Agreement and Local.com’s obligations in light of that performance pursuant to Section 4 of
this Agreement upon at least forty-five (45) days prior written notice to LaRoss.

(b) Local.com may terminate this Agreement upon ninety (90) days prior written notice to LaRoss
prior to the end of the then-current term. Both Parties may terminate this Agreement at any time
upon the mutual written consent of LaRoss and Local.com. Either Party may terminate this agreement
upon six (6) months written notice prior to the end of the then-current term of this Agreement.

(c) Either Party (hereinafter called the “Terminating Party”), without prejudice to any other right
or remedy available to the Terminating Party under this Agreement or any

 

 

applicable law, shall have the right to terminate this Agreement upon the happening of any of the
following events:

	 	(i)	 	The other Party initiates or consents to proceedings relating to it, under
any bankruptcy, reorganization, insolvency, moratorium, intervention law or law with
similar effect, or under any law for the relief of, or relating to, debtors, or makes
or enters into a conveyance, assignment, arrangement, or composition with or for the
benefit of its creditors or appoints or applies for the appointment of an
administrator, receiver, trustee, intervener, or assignee for the benefit of creditors
(or other similar official) to take possession or control of a substantial part of all
its undertaking property, revenue or assets, or takes any proceeding under any law for
a readjustment or deferment of all or a material and significant portion of its
indebtedness;
	 
	 	(ii)	 	The proceedings are initiated against the other Party under any applicable
bankruptcy, reorganization, insolvency, moratorium or intervention law or law with
similar effect, or under any other law for the relief of, or relating to, debtors, or
an administrator, receiver, trustee, intervener or assignee for the benefit of
creditors (or other similar official) is appointed to take possession of control of
part or all of the undertaking or assets of the other Party, and any such proceedings
shall not have been successfully contested, dismissed or any such appointment shall
not have been terminated within 60 days after commencement or appointment, as the case
may be;
	 
	 	(iii)	 	An order is made or an effective resolution passed for winding-up,
liquidation or dissolution of the other Party;
	 
	 	(iv)	 	The other Party becomes insolvent or is generally unable to pay its debts as
and when they are due;
	 
	 	(v)	 	The other Party defaults in performance or observance of, or compliance with,
any of its obligations, covenants or warranties set out in this Agreement, which
default is material and is incapable of remedy or, if such default is capable of
remedy, is not remedied within fifteen (15) days after notice of such default shall
have been given to the other Party, or any representation or warranty referred to in
Section 5 or 6 hereof proves to have been incorrect or untrue in any material respect
when made or deemed made and materially and adversely affects performance under this
Agreement.

(d) Neither Party to this Agreement may assign this Agreement or any of its rights or delegate any
of its duties under this Agreement without the prior written consent of the other, which consent
shall not be unreasonably withheld.

 

 

(e) In the event this Agreement is terminated by Local.com or LaRoss pursuant to Section 10(b), in
its sole discretion, or by Local.com pursuant to Section 10(c), LaRoss shall continue to provide
upon written request from Local.com only such of the services set forth in Section 2 hereof as it
shall be permitted to by law and which shall be necessary for Local.com to properly service and
bill its Customers and to arrange for a successful transition of the services performed by LaRoss
pursuant to Section 2 to Local.com or its designated third party service provider, provided that
(i) such transition period shall not exceed 6 months and (ii) Local.com shall pay the Monthly
Service Fees to LaRoss during such terms pursuant to Section 4(b) hereof. During such transition
period, LaRoss shall do any and all things reasonably necessary to facilitate and assist Local.com
in transitioning the Customers and the billing of the Customers to Local.com or its third party
designee. ***

(f) Except as set forth herein, no termination of this Agreement will affect the Parties’ rights
and obligations with respect to events occurring prior to such termination.

Section 11. Confidentiality, Publicity and Non-Disparagement

(a) Each of the Parties agrees, for itself and its officers, directors, employees and other
representatives that, except as expressly permitted by this Agreement, (i) it will not use or
disclose any Confidential Information of the other Party that it receives from the other Party or
that it learns about the other Party in the course of performance of this Agreement, except for use
reasonably necessary for the performance of this Agreement, and (ii) it will take all reasonable
measures to maintain the confidentiality of all Confidential Information of the other Party in its
possession or control, which will in no event be less than the measures it uses to maintain the
confidentiality of its own information of similar importance. Notwithstanding the foregoing, each
Party may disclose the Confidential Information of the other Party (i) to the extent required by a
court or other governmental authority or otherwise as required by law, or (ii) on a “need-to-know”
basis under an obligation of confidentiality to its directors, officers, or those of its affiliates
and to its legal counsel, accountants and banks and other financing sources which are not known to
the receiving Party to be a person that competes (or has stated its intention to compete) with the
other Party in the provision of services similar to those provided hereunder, provided that the
receiving Party shall be responsible for any unauthorized use or disclosure by any such Person.
The foregoing restrictions shall not apply in a circumstance where any of the services set forth in
this Agreement are to be transferred to a third party for any reason.

(b) The obligation of confidentiality under Section 11(a) shall survive any termination or
expiration of this Agreement for a period of 2 years after such termination or expiration.

(c) Except as provided herein, no public statements concerning the existence or terms of this
Agreement shall be made or released in any medium except with the prior written approval of
Local.com and LaRoss or as required by law. Local.com may (i) make public statements concerning
the existence of this Agreement, and (ii) disclose

 

			
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and filed separately with the Securities and Exchange Commission

 

 

information regarding the number of Customers, revenue generated by such Customers and similar
performance information as it deems necessary or appropriate.

(d) The Parties and their respective directors, officers and employees, agree to refrain from any
disparagement, defamation, or slander of the other Party hereto, its subsidiaries or parent
company, if any, and their respective directors, officers, employees, Products, services, or
Customers. This provision will not apply to conduct as to which this provision would be unlawful.
This provision will survive the termination of the Agreement for any reason.

Section 12. Dispute Resolution

(a) Any controversy, claim or dispute (hereinafter called a “Dispute”) arising out of or in
connection with, or relating to this Agreement, its validity, interpretation, performance, or
termination, which cannot be settled by mutual good faith discussion between the executives of
Local.com and LaRoss without undue delay, may be submitted to arbitration by either Party and if so
submitted by such Party, shall be finally settled by arbitration conducted in accordance with the
International Arbitration Rules of the American Arbitration Association in effect at the time of
arbitration except as modified therein or by mutual agreement of the Parties. Any such arbitration
shall take place in the city of Irvine, California, Unites States of America, provided that, the
arbitrators may hold hearings in such other locations as the arbitrators determine to be most
convenient and efficient for all of the Parties to such arbitration under the circumstances.

(b) The arbitration will be conducted by three arbitrators. The Party initiating arbitration
(hereinafter called the “Claimant”) will select its arbitrator in its request for arbitration
(hereinafter called the “Request”). The other Party (hereinafter called the “Respondent”) will
select its arbitrator within 30 days of receipt of the Request and will notify the Claimant of such
selection in writing. If the Respondent fails to select an arbitrator within such 30-day period,
the arbitrator named in the Request will decide the Dispute as a sole arbitrator. Otherwise, the
two arbitrators selected by the parties will select a third arbitrator within 30 days after the
Respondent has notified the Claimant of the selection of the Respondent’s arbitrator. When the
arbitrators selected by the Claimant and the Respondent have selected a third arbitrator, and the
third arbitrator has accepted the selection, the two arbitrators will promptly notify the Parties
of the selection of the third arbitrator. If the two arbitrators selected by the Parties fail or
are unable to select a third arbitrator or so to notify the Parties, then the American Arbitration
Association will select the third arbitrator and will promptly notify the Parties of the selection
of the such arbitrator. The third arbitrator will act as chairman of the panel.

(b) In addition to the authority conferred on the arbitration tribunal by the rules specified
above, the arbitration tribunal will have the authority (i) to order such production of documents
as may reasonably be requested by either Party or by the tribunal itself, including the depositions
of witnesses, and (ii) to make awards, orders and rulings (hereinafter called collectively the
“Awards”) for interim relief, including injunctive relief. The Parties agree that (a) any Award by
the arbitration tribunal on

 

 

interim measures will be deemed to be a final award with respect to the subject matter of the Award
and will be fully enforceable as such and (b) a request for the interim measures to a court by any
Party to the arbitration will not be deemed incompatible with, or a waiver of, the agreement to
arbitrate set forth in this Section 12. The arbitration tribunal may, at its option, appoint one
or more experts to advise it with respect to any issue in the arbitration. If any expert is so
appointed, the parties will have the right to examine such expert’s report to the tribunal and to
question such expert at an oral hearing.

(c) All proceedings in connection with any arbitration, including its existence, the content of the
proceedings and any decision, will be kept confidential, except (a) as may be lawfully required in
judicial proceedings relating to the arbitration, including judicial proceedings to enforce an
Award, or (b) as may be otherwise required by applicable laws.

(d) The foregoing agreement to arbitrate will be specifically enforceable. Any award rendered by
the arbitrators will be in writing and will be final and binding upon the Parties, and may include
an award of costs, including reasonable attorneys’ fees and disbursements. The Parties waive any
right to challenge the arbitration Award. Judgment upon the Award rendered may be entered by any
court having jurisdiction thereof or having jurisdiction over the parties or their assets.

(e) For purposes only of enforcing the agreement to arbitrate set forth in this Section 12,
enforcing any arbitration Award, obtaining interim relief necessary to protect the Parties pending
arbitration, or resolving claims, if any, found not to be legally capable of arbitration, each
Party irrevocably and unconditionally submits to the non-jurisdiction of any state or federal court
located in the State of California.

Section 13. Miscellaneous

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

(b) This Agreement, including exhibits and schedules, constitutes the entire agreement and
understanding between the parties regarding the subject matter hereof and supersedes all prior
discussions, agreements and understandings, oral or written, of any nature between them related to
its subject matter. Except as and to the extent expressly set forth in this Agreement, neither
Party makes or has made any representation, warranty, covenant, or agreement whatsoever regarding
the subject matter of this Agreement and each Party disclaims all liability and responsibility for
any other representation, warranty, covenant, agreement, or statement made or information regarding
such subject matter communicated (orally or in writing) by any other Person. No amendment to, or
modification of any of the terms of, this Agreement will be valid unless in writing and signed by
an authorized representative of each Party.

 

 

(c) Local.com may assign this Agreement at any time. LaRoss may not assign this Agreement nor any
rights or obligations hereunder without the prior written consent of the Local.com, which shall not
be unreasonably withheld. Notwithstanding the foregoing, either Party may, without written consent
of the other Party, assign and delegate its rights and obligations hereunder to its wholly-owned
subsidiary or parent corporation. Except as otherwise provided in this Agreement, this Agreement
will be binding upon and inure to the benefit of the Parties and their respective successors and
permitted assigns. Except as expressly provided in this Agreement, there are no third-party
beneficiaries of this Agreement and this Agreement shall not provide any third party with any
remedy, claim, liability, reimbursement, claim of action, or other right in excess of those
existing without reference to this Agreement.

(d) All notices required or permitted hereunder must be given in writing addressed to the
respective Parties at the respective addresses first set forth above to the attention of General
Counsel in the case of Local.com and to the attention of Mark Magnozzi at Magnozzi and Kye at 1
Expressway Plaza, Suite 114, Rosslyn Heights, NY 11577, Facsimile (516) 299-5598 in the case of
LaRoss. All notices shall either be (a) personally delivered; (b) transmitted by postage prepaid
certified mail, return receipt requested; or (c) prepaid express or overnight deliver service, or
(d) transmitted by confirmed facsimile, and shall be deemed to have been given on the date of
receipt of delivered personally, or two business days after deposit in mail or one business day
after transmission of facsimile, as the case may be. Either Party may change its address for
purposes hereof by written notice to the other in accordance with the provisions of this Section
13(d).

(e) Except as otherwise provided in this Agreement, no failure or delay of either Party in
exercising any power, right or remedy under this Agreement will operate as a waiver thereof, nor
will any single or partial exercise of any such right or power, or any power, preclude any other or
further exercise thereof or the exercise of any other right, power, or remedy.

(f) This Agreement is to be interpreted in accordance with the following rules of construction:

	 	(i)	 	All definitions of terms apply equally to both the singular and plural forms
of the terms defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter terms.
	 
	 	(ii)	 	The words “include”, “includes” and “including” are deemed to be followed by
the phrase “without limitation”. The words “herein”, “hereof”, and “hereunder” and
words of similar import refer to this Agreement (including all Exhibits) in its
entirety and are not limited to any part hereof unless the context shall otherwise
require. The word “or” is not exclusive and means “and/or”.

 

 

	 	(iii)	 	All references in this Agreement to Sections and Exhibits are, respectively,
references to Sections of and Exhibits attached to, this Agreement, unless otherwise
specified.
	 
	 	(iv)	 	Any references in this Agreement to a “day” or number of “days” (without the
explicit qualification “business”) is a references to a calendar day or number of
calendar days. If any action or notice is to be taken or given on or by a particular
calendar day, and such calendar day is not a business day, then such action or notices
may be taken or given on the next business day. The Term “business day” means any day
other than a Saturday, a Sunday or a day on which banking institutions in Irvine,
California are required or authorized by law or executive order to be closed for
business.
	 
	 	(v)	 	Both Parties and their respective legal counsel have participated, or had the
opportunity to participate, in the drafting of this Agreement, and this Agreement
shall be construed simply and according to its fair meaning and not strictly for or
against either Party.
	 
	 	(vi)	 	The headings to the Sections of this Agreement are included merely for
convenience of reference and shall not affect the meaning of the language included
therein.

(g) Except as otherwise set forth in this Agreement, the provisions of this Agreement are
severable, and if any one or more such provisions are determined to be invalid, illegal or
unenforceable in whole or in part by a court of competent jurisdiction, the validity, legality and
enforceability of any of the remaining provisions or portions thereof will not in any way be
affected thereby and shall nevertheless be binding between the Parties. Such court of competent
jurisdiction may substitute a suitable and equitable provision of any such invalid, illegal or
unenforceable provision or portion thereof in order to carry out, so far as may be valid and
enforceable, the intent and purpose of the invalid, illegal or unenforceable provision and, if such
court shall fail or decline to do so, the Parties shall negotiate in good faith in an effort to
agree upon such a suitable and equitable provision.

(h) Neither Party will be liable to the other Party for failure to perform its obligations
hereunder because such performance is prevented by an event of “Force Majeure”. Force Majeure
shall mean an act of God, war (whether declared or not), riot, embargo, act of government or
military authority, strike, labor dispute, fire, a vendor’s inability to supply necessary
equipment, or similar cause beyond the Party’s control.

(i) This Agreement may be executed in two or more counterparts, each of which will be deemed an
original, but all of which together shall constitute one and the same instrument. For purposes
hereof, a facsimile copy of this Agreement, including the signature pages hereto shall be deemed to
be an original. Notwithstanding the foregoing,

 

 

the Parties shall deliver original execution copies of this Agreement to one another as soon as
practicable following execution thereof.

(j) LaRoss will not solicit, for itself or any third party, the Customers or any other customers of
Local.com that it learns about in the course of performance of this Agreement (e.g., there shall be
no solicitation against the existing customer file provided to LaRoss for de-duplication of any
Lead file it may create) during the Term and for a period of two (2) years thereafter.

     IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly
authorized representatives or officers as the day and year first written above:

	 	 	 	 	 	 	 	 	 	 	 

	Local.com Corporation	 	 	 	LaRoss Partners, LLC	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Richard Szatkowski
 

	 	 	 	By:
	 	/s/ Thomas Rossi
 

	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 Richard Szatkowski
	 	 	 	 	 	 Thomas Rossi	 	 
	 
	 	 	 	 	 	 
	Printed Name:
	 	 	 	Printed Name:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	SVP and General Manager
	 	 	 	 	 	Managing Director	 	 
	 
	 	 	 	 	 	 
	Title
	 	 	 	Title	 	 

 

 

Exhibit A-1

Products and Prices

	 	 	 	 	 	 	 
	 	 	 	 	 	 	Acquisition Fee per Product
	 	 	Product	 	Retail Sales Price	 	Per Customer
	1.
2.

	 	Web hosting

Google Business Card
	 	***

***
	 	***

***

Exhibit A-2

Products and Prices

	 	 	 	 	 	 	 
	 	 	 	 	 	 	Acquisition Fee per Product
	 	 	Product	 	Retail Sales Price	 	Per Customer
	1.
2.

	 	Web hosting

Google Business Card
	 	***

***
	 	****

****

 

*    Once Local.com has the results from at least *** months of settlements with respect to the sale
of Products pursuant to Exhibit A-2, the following adjustments will be made to the Acquisition Fee
per Product Per Customer with respect to those Products set forth in Exhibit A-2:

	 	(A)	 	the Acquisition Fee per Product Per Customer shall be adjusted upward by *** per each
*** decline in the average churn rate over the *** month period immediately
preceding the purchase of a block of Leads pursuant to Section 1(h) hereof (the
“Measurement Period”) compared to the average churn rate over the *** month period
immediately preceding the Measurement Period (using *** as the initial
baseline churn percentage);
	 
	 	(B)	 	the Acquisition Fee per Product Per Customer shall be adjusted downward by ***
dollars *** per each *** increase in the average churn rate over the
Measurement Period compared to the average churn rate over the *** month period
immediately preceding the Measurement Period (using *** as the initial
baseline churn percentage);
	 
	 	(C)	 	the Acquisition Fee per Product Per Customer shall be
adjusted upward by *** per each *** increase in the average settlement percentage rate over the
Measurement Period compared to the average churn rate over the *** month period
immediately preceding the Measurement Period (using *** as the initial
baseline settlement percentage rate); and

 

			
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	 	(D)	 	the Acquisition Fee per Product Per Customer shall be adjusted downward by *** per each *** decrease in the average settlement percentage rate
over the Measurement Period compared to the average churn rate over the *** month period
immediately preceding the Measurement Period (using *** as the initial
baseline settlement percentage rate).

Notwithstanding the foregoing, the minimum Acquisition Fee per Product Per Customer shall be ***
and the maximum Acquisition Fee per Product Per Customer shall be *** for Products listed on
Exhibit A-2.

 

			
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treatment and filed separately with the Securities and Exchange Commission

 

 

Exhibit B

Quality Control Criteria

[LaRoss to Subsequently Attach QC Criteria on a product by product basis]

 

 

Exhibit C

Account Management Services

LaRoss will provide Account Management Services under this agreement. The services to be provided
include but are not limited to the following:

For all Products and Customers Account Management Services include:

	 	•	 	Billing:

	 	•	 	Provision and post billing files at clearinghouses
	 
	 	•	 	QC Billing files
	 
	 	•	 	Process billing results and adjust records accordingly
	 
	 	•	 	Audit billing settlements and forward receipts

	 	•	 	Regulatory and Compliance:

	 	•	 	Ensure telemarketing filings are current
	 
	 	•	 	Respond to all AG, PSC, PUC FTC and other regulatory agencies letters and requests
	 
	 	•	 	Respond to all customer letters

	 	•	 	Customer Service:

	 	•	 	Handle overflow from clearinghouse of customer inquiry calls
	 
	 	•	 	Provide technical support.

For Web Hosting Customers the following additional Account Management Services are included:

	 	•	 	Marketing:

	 	•	 	Provide call center
	 
	 	•	 	Pay call center for new acquisitions
	 
	 	•	 	Provide sales scripts
	 
	 	•	 	Provide data
	 
	 	•	 	Data wash
	 
	 	•	 	Send welcome letter
	 
	 	•	 	Third Party Verification (TPV)
	 
	 	•	 	TPV Quality Control

	 	•	 	Fulfillment:

	 	•	 	Provide product or service for re-sale
	 
	 	•	 	Host, maintain and support product or service

For Google Business Card Customers the following additional Account Management Services include:

	 	•	 	Marketing:

	 	•	 	Provide call center
	 
	 	•	 	Pay call center for new acquisitions
	 
	 	•	 	Provide sales scripts
	 
	 	•	 	Provide data
	 
	 	•	 	Data wash
	 
	 	•	 	Send welcome letter

 

 

	 	•	 	TPV
	 
	 	•	 	TPV Quality Control

	 	•	 	Fulfillment:

	 	•	 	Provide product or service for re-sale
	 
	 	•	 	host, maintain and support product or service

 

 

Exhibit D

Customer Master File Requirements

LaRoss will provide the following Customer Master File data for each Customer:

[To be subsequently added.]

 

 

Exhibit E

Monthly Service Fee Schedule by Product

	 	 	 

	Offshore:

	 	Listing product
	 

	 	Local.com sold
	 

	 	LaRoss Account Management Fee *** per month
	 
	 	 
	LiveDeal:

	 	Listing product
	 

	 	Acquired base
	 

	 	LaRoss Account Management Fee *** per month
	 
	 	 
	Web Hosting:

	 	Webhosting product ***
	 

	 	Acquired base
	 

	 	*** Rev Share
	 
	 	 
	Web Hosting (Turner/ISW):

	 	Webhosting product
	 

	 	Acquired base
	 

	 	LaRoss Account Management Fee *** per month
	 

	 	LaRoss Fulfillment Fee *** per month
	 
	 	 
	Web Hosting (Turner 3):

	 	Webhosting product
	 

	 	Acquired base
	 

	 	LaRoss Account Management Fee *** per month
	 

	 	LaRoss Fulfillment/Cust Serv Fee *** per month
	 

	 	Fulfillment Fee for Turner *** per month
	 
	 	 
	Web Hosting (new/LR2):

	 	Webhosting product
	 

	 	Acquired base
	 

	 	LaRoss Account Management Fee *** per month
	 

	 	LaRoss Fulfillment Fee *** per month
	 
	 	 
	Business card:

	 	Additions at ***
	 

	 	LaRoss Account Management Fee *** per month
	 

	 	LaRoss Fulfillment Fee *** per month
	 
	 	 
	Web Hosting:

	 	Additions at ***
	 

	 	LaRoss Account Management Fee *** per month
	 

	 	LaRoss Fulfillment Fee *** per month

Unless subsequently agreed by the Parties in writing:

All LaRoss Fulfillment Fee’s for the Business Card product will be *** per month

All LaRoss Fulfillment Fee’s for the non-Rev Share Web Hosting product will be *** per month

All LaRoss Account Management Fee’s for non-Rev Share products will be *** per month.

 

			
	***	 	- Portions of this page have been omitted pursuant to a request for confidential
treatment and filed separately with the Securities and Exchange Commission

 

 

Exhibit F

Licensed Marks

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