Document:

exv10w1

Exhibit 10.1

Execution Copy

 

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

ADVANCED ENERGY INDUSTRIES, INC.,

PV POWERED, INC.

AND

NEPTUNE ACQUISITION SUB, INC.

Dated as of March 24, 2010

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	ARTICLE I THE MERGER
	 	 	2	 
	 
	 	 	 	 
	SECTION 1.1. The Merger
	 	 	2	 
	 
	 	 	 	 
	SECTION 1.2. Effective Time
	 	 	2	 
	 
	 	 	 	 
	SECTION 1.3. Effect of the Merger
	 	 	3	 
	 
	 	 	 	 
	SECTION 1.4. Articles of Incorporation; Bylaws
	 	 	3	 
	 
	 	 	 	 
	SECTION 1.5. Directors and Officers
	 	 	3	 
	 
	 	 	 	 
	ARTICLE II MERGER CONSIDERATION; CONVERSION OF SECURITIES
	 	 	3	 
	 
	 	 	 	 
	SECTION 2.1. Merger Consideration
	 	 	3	 
	 
	 	 	 	 
	SECTION 2.2. Payment of Merger Consideration
	 	 	4	 
	 
	 	 	 	 
	SECTION 2.3. Additional Consideration
	 	 	4	 
	 
	 	 	 	 
	SECTION 2.4. Effect on Capital Stock
	 	 	9	 
	 
	 	 	 	 
	SECTION 2.5. Dissenting Shares
	 	 	10	 
	 
	 	 	 	 
	SECTION 2.6. Termination of Company Options and Company Warrants
	 	 	11	 
	 
	 	 	 	 
	SECTION 2.7. Exchange Procedures
	 	 	11	 
	 
	 	 	 	 
	SECTION 2.8. Certain Payments
	 	 	12	 
	 
	 	 	 	 
	SECTION 2.9. No Fractional Shares
	 	 	12	 
	 
	 	 	 	 
	SECTION 2.10. Withholding Taxes
	 	 	13	 
	 
	 	 	 	 
	SECTION 2.11. Closing Statement
	 	 	13	 
	 
	 	 	 	 
	ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
	 	 	14	 
	 
	 	 	 	 
	SECTION 3.1. Organization and Qualification
	 	 	14	 
	 
	 	 	 	 
	SECTION 3.2. Subsidiaries
	 	 	14	 
	 
	 	 	 	 
	SECTION 3.3. Corporate Records
	 	 	14	 

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	 	 	Page	 
	SECTION 3.4. Capitalization; Owners of Shares
	 	 	14	 
	 
	 	 	 	 
	SECTION 3.5. Authority; Binding Obligation
	 	 	15	 
	 
	 	 	 	 
	SECTION 3.6. No Conflict; Required Filings and Consents
	 	 	16	 
	 
	 	 	 	 
	SECTION 3.7. Financial Statements and Condition
	 	 	17	 
	 
	 	 	 	 
	SECTION 3.8. Absence of Certain Developments
	 	 	17	 
	 
	 	 	 	 
	SECTION 3.9. Absence of Undisclosed Liabilities
	 	 	19	 
	 
	 	 	 	 
	SECTION 3.10. Litigation; Disputes
	 	 	19	 
	 
	 	 	 	 
	SECTION 3.11. Compliance with Laws; Permits
	 	 	20	 
	 
	 	 	 	 
	SECTION 3.12. Real Property Leases
	 	 	20	 
	 
	 	 	 	 
	SECTION 3.13. Tangible Personal Property
	 	 	21	 
	 
	 	 	 	 
	SECTION 3.14. Material Contracts and Company Customer Contracts
	 	 	21	 
	 
	 	 	 	 
	SECTION 3.15. Employee Relations
	 	 	22	 
	 
	 	 	 	 
	SECTION 3.16. Employment Terms
	 	 	22	 
	 
	 	 	 	 
	SECTION 3.17. Pension and Benefit Plans
	 	 	23	 
	 
	 	 	 	 
	SECTION 3.18. Taxes and Tax Matters
	 	 	24	 
	 
	 	 	 	 
	SECTION 3.19. Environmental Matters
	 	 	27	 
	 
	 	 	 	 
	SECTION 3.20. Intellectual Property; Software
	 	 	28	 
	 
	 	 	 	 
	SECTION 3.21. Insurance
	 	 	29	 
	 
	 	 	 	 
	SECTION 3.22. Arrangements With Related Parties
	 	 	29	 
	 
	 	 	 	 
	SECTION 3.23. Accounts Receivable and Payable
	 	 	30	 
	 
	 	 	 	 
	SECTION 3.24. Broker’s Fees
	 	 	30	 
	 
	 	 	 	 
	SECTION 3.25. Customers and Suppliers
	 	 	30	 
	 
	 	 	 	 
	SECTION 3.26. Warranties
	 	 	31	 
	 
	 	 	 	 
	SECTION 3.27. Accredited Investors
	 	 	31	 
	 
	 	 	 	 
	SECTION 3.28. Company Projections
	 	 	31	 

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	 	 	Page	 
	SECTION 3.29. Foreign Corrupt Practices Act
	 	 	31	 
	 
	 	 	 	 
	SECTION 3.30. Disclosure
	 	 	31	 
	 
	 	 	 	 
	ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR AND THE ACQUIROR SUB
	 	 	31	 
	 
	 	 	 	 
	SECTION 4.1. Organization and Qualification
	 	 	32	 
	 
	 	 	 	 
	SECTION 4.2. Capitalization
	 	 	32	 
	 
	 	 	 	 
	SECTION 4.3. Authority; Binding Obligation
	 	 	32	 
	 
	 	 	 	 
	SECTION 4.4. No Conflict; Required Filings and Consents
	 	 	33	 
	 
	 	 	 	 
	SECTION 4.5. Litigation; Disputes
	 	 	33	 
	 
	 	 	 	 
	SECTION 4.6. SEC Filings
	 	 	34	 
	 
	 	 	 	 
	SECTION 4.7. Financial Statements
	 	 	34	 
	 
	 	 	 	 
	SECTION 4.8. Disclosure
	 	 	34	 
	 
	 	 	 	 
	SECTION 4.9. No Prior Activities of Acquiror Sub
	 	 	34	 
	 
	 	 	 	 
	SECTION 4.11 No Knowledge of Breach
	 	 	35	 
	 
	 	 	 	 
	ARTICLE V COVENANTS AND AGREEMENTS
	 	 	35	 
	 
	 	 	 	 
	SECTION 5.1. Access to Information
	 	 	35	 
	 
	 	 	 	 
	SECTION 5.2. Conduct of the Business Pending the Closing
	 	 	36	 
	 
	 	 	 	 
	SECTION 5.3. Appropriate Action; Consents; Filings; HSR Act
	 	 	39	 
	 
	 	 	 	 
	SECTION 5.4. Notification of Certain Matters
	 	 	40	 
	 
	 	 	 	 
	SECTION 5.5. Further Assurances
	 	 	40	 
	 
	 	 	 	 
	SECTION 5.6. Negotiations with Others
	 	 	40	 
	 
	 	 	 	 
	SECTION 5.7. Publicity
	 	 	40	 
	 
	 	 	 	 
	SECTION 5.8. Related-Party Transactions
	 	 	41	 
	 
	 	 	 	 
	SECTION 5.9. Tax Matters
	 	 	41	 
	 
	 	 	 	 
	SECTION 5.10. Approval of Shareholders
	 	 	43	 

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	 	 	Page	 
	SECTION 5.11. Employee Benefit Plans
	 	 	44	 
	 
	 	 	 	 
	SECTION 5.12. Company Customers
	 	 	44	 
	 
	 	 	 	 
	SECTION 5.13. Payment of Indebtedness; Termination of Encumbrances
	 	 	44	 
	 
	 	 	 	 
	SECTION 5.14. Employees
	 	 	44	 
	 
	 	 	 	 
	SECTION 5.15. Termination of Company Options and Company Warrants
	 	 	45	 
	 
	 	 	 	 
	SECTION 5.16. Delivery of Interim Financial Statements
	 	 	45	 
	 
	 	 	 	 
	SECTION 5.17. Supplements to Schedules
	 	 	45	 
	 
	 	 	 	 
	SECTION 5.18. Registration
	 	 	45	 
	 
	 	 	 	 
	SECTION 5.19. Director and Officer Liability; Indemnification
	 	 	46	 
	 
	 	 	 	 
	ARTICLE VI CONDITIONS PRECEDENT
	 	 	47	 
	 
	 	 	 	 
	SECTION 6.1. Conditions to Obligations of Each Party Under this Agreement
	 	 	47	 
	 
	 	 	 	 
	SECTION 6.2. Additional Conditions to Obligations of Acquiror and Acquiror Sub
	 	 	47	 
	 
	 	 	 	 
	SECTION 6.3. Conditions to Obligations of the Company and the Shareholders
	 	 	49	 
	 
	 	 	 	 
	ARTICLE VII CLOSING
	 	 	50	 
	 
	 	 	 	 
	SECTION 7.1. Closing
	 	 	50	 
	 
	 	 	 	 
	ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER
	 	 	51	 
	 
	 	 	 	 
	SECTION 8.1. Termination
	 	 	51	 
	 
	 	 	 	 
	SECTION 8.2. Procedure Upon Termination
	 	 	52	 
	 
	 	 	 	 
	SECTION 8.3. Effect of Termination
	 	 	52	 
	 
	 	 	 	 
	ARTICLE IX INDEMNIFICATION
	 	 	52	 
	 
	 	 	 	 
	SECTION 9.1. Survival of Representations and Warranties
	 	 	52	 
	 
	 	 	 	 
	SECTION 9.2. Indemnification by the Shareholders
	 	 	53	 
	 
	 	 	 	 
	SECTION 9.3. Indemnification by the Acquiror
	 	 	54	 
	 
	 	 	 	 
	SECTION 9.4. Notice of Claim
	 	 	54	 

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	 	 	Page	 
	SECTION 9.5. Limitations
	 	 	57	 
	 
	 	 	 	 
	SECTION 9.6. Exclusivity of Remedy
	 	 	57	 
	 
	 	 	 	 
	ARTICLE X GENERAL PROVISIONS
	 	 	58	 
	 
	 	 	 	 
	SECTION 10.1. Confidentiality
	 	 	58	 
	 
	 	 	 	 
	SECTION 10.2. Notices
	 	 	58	 
	 
	 	 	 	 
	SECTION 10.3. Headings
	 	 	60	 
	 
	 	 	 	 
	SECTION 10.4. Severability
	 	 	60	 
	 
	 	 	 	 
	SECTION 10.5. Entire Agreement; No Third-Person Beneficiaries
	 	 	60	 
	 
	 	 	 	 
	SECTION 10.6. Waiver; Amendment
	 	 	60	 
	 
	 	 	 	 
	SECTION 10.7. Assignment
	 	 	61	 
	 
	 	 	 	 
	SECTION 10.8. Expenses
	 	 	61	 
	 
	 	 	 	 
	SECTION 10.9. Specific Performance
	 	 	61	 
	 
	 	 	 	 
	SECTION 10.10. Governing Law; Disputes
	 	 	61	 
	 
	 	 	 	 
	SECTION 10.11. Counterparts
	 	 	62	 
	 
	 	 	 	 
	SECTION 10.12. Non-Recourse
	 	 	62	 
	 
	 	 	 	 
	SECTION 10.13. Interpretation
	 	 	62	 
	 
	 	 	 	 
	SECTION 10.14. Shareholder Representative
	 	 	63	 
	 
	 	 	 	 
	SECTION 10.15. Disclosure Schedules
	 	 	65	 
	 
	 	 	 	 
	ARTICLE XI DEFINITIONS
	 	 	65	 

- v -

 

AGREEMENT AND PLAN OF MERGER

     This AGREEMENT AND PLAN OF MERGER, dated as of March 24 , 2010 (this “Agreement”), is
entered into by and among Advanced Energy Industries, Inc., a corporation organized under
the laws of the State of Delaware (the “Acquiror”), Neptune Acquisition Sub, Inc.,
a corporation organized under the laws of the State of Oregon (“Acquiror Sub”), and PV
Powered, Inc., a corporation organized under the laws of the State of Oregon
(the “Company”). The Acquiror, Acquiror Sub and the Company, individually hereinafter
referred to as “Party” and collectively hereinafter referred to as the “Parties.”
Capitalized terms used in this Agreement but not otherwise defined herein are defined in
Article XI.

     WHEREAS, upon the terms and subject to the conditions of this Agreement, and in accordance
with the Oregon Business Corporation Act (“Oregon Law”), Acquiror Sub will merge with and
into the Company (the “Merger”);

     WHEREAS, the Boards of Directors of Acquiror and Acquiror Sub have determined that the Merger
is advisable and fair to their respective companies and shareholders and approved and adopted this
Agreement and the transactions contemplated hereby, and contemporaneously with the execution of
this Agreement certain shareholders of the Company have executed voting agreements pursuant to
which such stockholders have agreed to vote in favor of the Merger;

     WHEREAS, pursuant to the Merger, among other things, all issued and outstanding shares of
capital stock of the Company shall be converted into the right to receive cash and shares of the
Acquiror in the amounts and on the terms set forth herein;

     NOW, THEREFORE, in consideration of the foregoing and the respective representations,
warranties, covenants and agreements set forth in this Agreement, and intending to be legally bound
hereby, the Parties agree as follows.

ARTICLE I

THE MERGER

     SECTION 1.1. The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with Oregon Law, at the Effective Time, Acquiror Sub
shall be merged with and into the Company, with the Company being the surviving entity (the
“Surviving Company”) in the Merger. Upon consummation of the Merger, the separate
corporate existence of Acquiror Sub shall cease, and the Surviving Company shall continue to exist
as an Oregon corporation.

     SECTION 1.2. Effective Time. Subject to the provisions of Article
VII, as promptly as practicable after the satisfaction or, if permissible, waiver of the
conditions set forth in Article VI, the Surviving Company shall cause the Merger to be
consummated by filing the Articles of Merger (the “Articles of Merger”) and any other
appropriate documents with the Secretary of State of the State of Oregon, in such form as required
by, and executed in

2

 

accordance with the relevant provisions of, Oregon Law (the date and time of such filing being
the “Effective Time”).

     SECTION 1.3. Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as set forth under Oregon Law. Without limiting the generality of the foregoing,
and subject thereto, at the Effective Time, all the property, rights, privileges, powers and
franchises of the Company and Acquiror Sub shall vest in the Surviving Company, and all debts,
liabilities and duties of the Company and Acquiror Sub shall become the debts, liabilities and
duties of the Surviving Company.

     SECTION 1.4. Articles of Incorporation; Bylaws.

          (a) The articles of incorporation of Acquiror Sub as in effect immediately prior to the
Effective Time shall be the articles of incorporation of the Surviving Company.

          (b) The bylaws of Acquiror Sub as in effect immediately prior to the Effective Time shall be
the bylaws of the Surviving Company.

     SECTION 1.5. Directors and Officers. At the Effective Time, the officers and
directors of Acquiror Sub immediately prior to the Effective Time shall be the officers and
directors of the Surviving Company, in each case until their respective successors are duly elected
or appointed and qualified.

ARTICLE II

MERGER CONSIDERATION; CONVERSION OF SECURITIES

     SECTION 2.1. Merger Consideration. The aggregate consideration to the
Shareholders, payable when and pursuant to the terms and conditions of this Agreement, shall be
equal to Ninety Million Dollars ($90,000,000), subject to Section 2.8, consisting of:

          (a) a cash amount equal to Thirty Five Million Dollars ($35,000,000) less the Closing Date
Indebtedness and Unsatisfied Transaction Costs payable pursuant to Section 2.8
(the “Cash Consideration”); plus

          (b) a number of shares of Common Stock, par value $0.001 per share, of the Acquiror
(the “Acquiror Common Shares”) with an aggregate value of Fifteen Million Dollars
($15,000,000), with the number of such Acquiror Common Shares to be determined based upon the
average closing stock price as reported by The Nasdaq Stock Market, Inc. of such shares over the
twenty (20) trading days immediately preceding the date hereof (the “Closing Share
Consideration” and together with the Cash Consideration, the “Aggregate Merger
Consideration Payable at Closing”); plus,

          (c) a cash amount of up to Forty Million ($40,000,000) to be calculated and paid in accordance
with Section 2.3 less the Interim CEO Payment (the “Additional Consideration”
together with the Aggregate Merger Consideration Payable at Closing, the “Merger
Consideration”).

3

 

     SECTION 2.2. Payment of Merger Consideration. On the Closing Date, the
Acquiror shall deposit with the Exchange Agent cash or immediately available funds in an amount
equal to the Cash Consideration and shall deposit with the Exchange Agent certificates representing
the Closing Share Consideration, together with cash in an amount sufficient to permit the payment
of cash in lieu of fractional shares pursuant to Section 2.9. In addition, the Acquiror
shall deposit with the Exchange Agent cash or immediately available funds in an amount equal to any
Additional Consideration payable at the time and pursuant to the terms and conditions of
Section 2.3. The Aggregate Merger Consideration Payable at Closing and the Additional
Consideration, if any, shall be distributed without duplication by the Exchange Agent to the
Shareholders in accordance with the amounts set forth in the Closing Statement and pursuant to the
provisions set forth in Section 2.7. At Closing, the Acquiror, the Shareholder
Representative and the Exchange Agent shall enter into an Exchange Agent Agreement pursuant to
which the Merger Consideration and the amounts payable pursuant to Section 2.8 shall be
deposited, held and disbursed.

     SECTION 2.3. Additional Consideration. The Shareholders shall be entitled to
receive the Additional Consideration, or such applicable portion thereof, as deferred payment of a
portion of the Merger Consideration, pursuant to the terms set forth below:

          (a) Calculation of Additional Consideration. If (i) PV Commercial Revenue recognized
under GAAP for the fiscal year ending December 31, 2010 is greater than Ten Million Dollars
($10,000,000), and (ii) the Gross Margin on the sales of Commercial Inverter Products representing
such recognized PV Commercial Revenue (“Commercial Gross Revenue”) is at least 28%
(collectively, the “Targets”), then an additional One Dollar ($1.00) of Additional
Consideration shall be payable by the Acquiror to the Shareholders in cash for each One Dollar
($1.00) of such PV Commercial Revenue so recognized by the Company and by the Acquiror above Ten
Million Dollars ($10,000,000); provided, however, that in no event shall the aggregate amount of
Additional Consideration exceed Forty Million Dollars ($40,000,000), less any amounts the Company
is entitled to withhold pursuant to Article IX below, or be less than zero dollars.

          (b) Operation During Earn-Out Period. The Company shall be operated on a “stand-alone
basis” during the period from Closing until December 31, 2010 (the “Earn-Out Period”) in
accordance with the 2010 Plan and the operational limitations and restrictions set forth in
Schedule 2.3(b) attached hereto (the “Operating Guidelines”). The General Manager
shall have the authority to make and implement decisions relating to the day-to-day operations of
the Surviving Company in accordance with the 2010 Plan and subject to the Operating Guidelines.
Notwithstanding the foregoing or anything to the contrary herein or in the Operating Guidelines, in
the event of a material failure to operate the Surviving Company in accordance with the Operating
Guidelines which failure, if capable of cure, is not cured within fifteen (15) Business Days after
receipt of written notice thereof, and provided that such breach was not caused by the material
breach by Acquiror of any provision of this Section 2.3, including the Operating
Guidelines, which Acquiror failed to cure within fifteen (15) Business Days of notice thereof from
the Shareholder Representative, then the Acquiror may take any action or direct or cause the
Surviving Company to take and/or refrain from taking any action or actions related to such breach
by the Surviving Company (an “Acquiror Decision”), which Acquiror Decision shall

4

 

not result in the acceleration or adjustment to the Additional Consideration payable hereunder
and shall otherwise be deemed consented to by the General Manager and the Shareholder
Representative, and the Acquiror shall be entitled to exercise any rights of indemnification,
including rights of offset against the Additional Consideration, for any Losses arising as a result
thereof under Article IX. For the avoidance of doubt, the failure by the Surviving Company
to obtain any particular level of financial performance shall not alone constitute a material
failure or be grounds for an Acquiror Decision. The Acquiror and the Shareholder Representative
shall promptly notify each other in writing of any breach of the other party’s obligations under
this Section 2.3 or the Operating Guidelines of which it has Knowledge, including any fraud
in the operation of the Surviving Company during the Earn-Out Period (provided that the General
Manager shall have complied with Paragraph 7 of the Operating Guidelines) within fifteen (15)
Business Days of the occurrence thereof.

          (c) Funding 2010 Operating Plan. The Acquiror agrees to fully fund the operating
expenses of the Surviving Company during the Earn-Out Period solely as set forth in the 2010 Plan
less the amount of the Evans Advance disbursed at Closing pursuant to Section 2.8. These
funds will be available within no more than three (3) Business Days following a draw request
delivered to the Acquiror by the General Manager (with a copy to and after consultation with the
Shareholder Representative) as a line of credit during 2010 to support the 2010 Plan, and any
interest associated with such line of credit shall not be used in the calculation of Commercial
Gross Margin. The Acquiror is not required to fund any amounts in excess of the amounts set forth
in the 2010 Plan. Any amounts funded in excess of the amounts set forth in the 2010 Plan shall be
approved in advance by the Shareholder Representative.

          (d) Earn-Out Statement. As promptly as reasonably practicable and in any event no
later than five (5) Business Days after delivery to the Acquiror of copies of the completed and
closed books and records of the Surviving Company and the audited financial statements by the
Surviving Company (each in a form reasonably satisfactory to the Acquiror and the Shareholder
Representative), with respect to the twelve-month period ending December 31, 2010, the Acquiror
shall prepare, or cause to be prepared, and deliver to the Shareholder Representative a detailed
statement (the “Earn-Out Statement”) (i) containing its calculation of the amount of PV
Commercial Revenue, Commercial Gross Margin and the Additional Consideration, if any, in each case
prepared in accordance with this Section 2.3 and Schedule 2.3(b), and
(ii) reflecting adjustment, if any, to the Additional Consideration as a result of the Acquiror’s
exercise of its rights of offset under Article IX.

          (e) Disputes. The Earn-Out Statement (and the computation of the Additional
Consideration indicated thereon) prepared and delivered by the Acquiror to the Shareholder
Representative in accordance with Section 2.3(d) shall be conclusive and binding upon the
Parties unless the Shareholder Representative, within fifteen (15) Business Days after delivery of
the Earn-Out Statement notifies the Acquiror in writing that the Shareholder Representative
disputes any of the amounts set forth therein, specifying the nature of the dispute and the basis
therefor (the “Dispute Notice”); provided, however, that the Shareholder Representative
shall not be entitled to dispute the computation of the Additional Consideration set forth in the
Earn-Out Statement to the extent the amount disputed is a direct result of any actions or failure
to act on the part of the Acquiror that the Shareholder Representative did not timely dispute, or
that was

5

 

otherwise deemed consented to or resolved, pursuant to the provisions of Section
2.3(b), Section 2.3(f) or Section 2.3(g). The Acquiror shall provide the
Shareholder Representative reasonable access to the books and records (including financial
statements) during normal business hours for the sole purpose of verifying or contesting the amount
of the Additional Consideration. If the Shareholder Representative so notifies the Acquiror that it
disputes any of the amounts set forth on the Earn-Out Statement, the Acquiror and the Shareholder
Representative shall in good faith attempt to promptly resolve the dispute and, if the Acquiror and
the Shareholder Representative so resolve all disputes, the Earn-Out Statement (and the computation
of the Additional Consideration indicated thereon), as amended to the extent necessary to reflect
the resolution of the dispute, shall be conclusive and binding on the Acquiror and the
Shareholders. If the Acquiror and the Shareholder Representative do not reach agreement in
resolving the dispute within fifteen (15) Business Days after delivery of the Dispute Notice, the
Acquiror and the Shareholder Representative shall submit the dispute to the Arbiter for resolution.
Promptly, but no later than twenty (20) days after acceptance of his or her appointment as
Arbiter, the Arbiter shall determine (it being understood that in making such determination, the
Arbiter shall be functioning as an expert and not as an arbitrator), based solely on written
submissions by the Acquiror and the Shareholder Representative, and not on independent review, only
those issues in dispute and shall render a written report as to the resolution of the dispute and
the resulting computation of the Additional Consideration, which shall be conclusive and binding on
the Parties. All proceedings conducted by the Arbiter shall take place in Salt Lake City, Utah, or
such other location as the Parties may agree. In resolving any disputed item, the Arbiter (x)
shall be bound by the provisions of this Section 2.3, and (y) may not assign a value to any
item greater than the greatest value for such items claimed by either the Acquiror or the
Shareholder Representative or less than the smallest value for such items claimed by either the
Acquiror or the Shareholder Representative. The fees, costs and expenses of the Arbiter shall be
allocated to and borne by the Acquiror on the one hand and the Shareholders on the other hand (and
among them, based on their Pro Rata Share of the Merger Consideration) based on one (1) minus the
percentage that the Arbiter’s determination (before such allocation) bears to the total amount of
the total items in dispute as originally submitted to the Arbiter. For example, should the items
in dispute total in amount to $1,000 and the Arbiter awards $600 in favor of the Acquiror’s
position, 40% of the costs of its review would be borne by the Acquiror and 60% of the costs would
be borne by the Shareholders. Any such amounts to be borne by the Shareholders shall be deducted by
the Acquiror from the Additional Consideration, if any, so determined to be payable, and if the
Additional Consideration is not sufficient to cover such expenses, then the Shareholders shall
promptly reimburse, and indemnify and hold harmless, the Acquiror for the full amount of such
expenses.

          (f) Payment of Additional Consideration. The Acquiror shall deposit with the Exchange
Agent cash or immediately available funds in the amount of the Additional Consideration payable
hereunder (less the amount of the Interim CEO Payment payable pursuant to Section 2.8 and
less any amounts in dispute in accordance with Section 2.3(e)) within ten (10) Business
Days following approval by the Board of Directors of the Acquiror (the “Acquiror Board”),
at its regularly scheduled meeting held in February 2011, of the PV Commercial Revenue, the
Commercial Gross Margin and the resulting Additional Consideration payable as set forth in the
Earn-Out Statement, or promptly following the determination of such amounts by

6

 

an Arbiter in the event of a dispute as contemplated by Section 2.3(e); provided that
if the PV Commercial Revenue and Commercial Gross Margin targets set forth in Section
2.3(a) have been achieved prior to the regularly scheduled meeting of the Acquiror Board held
prior to the end of the fiscal year ending December 31, 2010, then such payment to the Exchange
Agent shall be made promptly following approval of the Acquiror Board at such meeting. The
Exchange Agent shall promptly disburse to each Shareholder his, her or its Pro Rata Share of the
Additional Consideration (other than any amounts that are subject to dispute). The Acquiror shall
furnish to the Shareholder Representative at least five (5) days advance written notice of the
Acquiror Board meeting, together with all materials provided to the Acquiror Board relating to the
calculation and approval of the Additional Consideration as well as any recommendations contained
therein. The standard for the Acquiror Board approval of the Additional Consideration is whether
the calculations of PV Commercial Revenue and Commercial Gross Margin set forth in the Earn-Out
Statement were determined in accordance with the terms of this Agreement. If the Acquiror Board
approves any modification to the calculation of the Additional Consideration set forth in the
Earn-Out Statement, the Acquiror shall notify the Shareholder Representative of such modification,
specifying the basis therefor and the computation of Additional Consideration so approved by the
Acquiror Board. Any late payment of the Additional Consideration shall bear interest at the then
senior bank rate available to the Acquiror plus 200 basis points. Notwithstanding anything to the
contrary herein, if there is a dispute with respect to the amount of Additional Consideration
payable hereunder, the Acquiror shall promptly deposit with the Exchange Agent any undisputed
portion of the Additional Consideration as otherwise required by this Section 2.3(f);
provided that if the Acquiror has a reasonable basis for claiming fraud or intentional
material misrepresentation in the conduct of the business of the Surviving Company during the
Earn-Out Period, the Acquiror shall provide the Shareholder Representative with notice thereof,
specifying in reasonable details the basis for such claim, and shall be entitled to withhold the
entire amount of Additional Consideration pending determination of the amounts recoverable by the
Acquiror pursuant to Article IX.

          (g) Limitation of Liability. In no event shall the Acquiror have any liability for a
breach of this Section 2.3 (other than for a breach of its funding obligations under
Section 2.3(c) or payment obligations under Section 2.3(f)) unless the Shareholder
Representative gives the Acquiror notice of such breach within fifteen (15) Business Days after it
has Knowledge of the occurrence thereof, and the Acquiror fails to cure such breach within fifteen
(15) Business Days of the date of such notice, and the Shareholder Representative can reasonably
demonstrate that such breach directly impacted PV Commercial Revenue and/or Commercial Gross Margin
during the Earn-Out Period, the amount of such impact and the amount of Additional Consideration
that would have been payable had such breach not occurred (such amount being the “Earn-Out
Loss”), in which event the liability of the Acquiror shall be limited solely to the amount of
such Earn-Out Loss not paid to the Shareholders. If the Acquiror disputes the amount of such
Earn-Out Loss then the Acquiror shall be entitled, within thirty (30) days of notice from the
Shareholder Representative of such amount, to provide a written objection (an “Acquiror
Objection”) to the Shareholder Representative, the General Manager and the Board of Directors
of the Surviving Company detailing the basis for such objection. After receipt of such Acquiror
Objection, the Acquiror and the Shareholder Representative shall negotiate in good faith the amount
of the Earn-Out Loss. If Acquiror and the Shareholder Representative cannot reach

7

 

agreement on Earn-Out Loss within five (5) Business Days after delivery of the Acquiror
Objection, then the Acquiror and the Shareholder Representative shall submit the dispute to the
Board of Directors of the Surviving Company for review. If the Board of Directors of the Surviving
Company and the Shareholder Representative are unable to resolve such dispute within five (5)
Business Days after submission for their review, they shall submit the dispute to the Arbiter for
review. The Arbiter shall be engaged to provide an independent assessment of the extent to which
the breach by the Acquiror directly impacted PV Commercial Revenue and/or Commercial Gross Margin
during the Earn-Out Period and the amount of the Earn-Out Loss, and such determinations shall be
deemed binding upon the parties hereto. To the extent that the parties agree or the Arbiter
determines that there is an Earn-Out Loss, such amount shall be paid to the Shareholders not more
than three (3) Business Days after such determination (subject to the Deductible and the cap set
forth in Section 9.5).

          By tendering his, her or its Certificate(s) and accepting the Merger Consideration hereunder,
each Shareholder understands and agrees that following the Closing, (i) the Acquiror has no duty,
obligation or liability to operate or conduct the business of the Company or the Acquiror following
the Closing in any manner, except to the extent expressly set forth herein, (ii) no Shareholder
shall have any claim against the Acquiror, the Surviving Company or their respective Affiliates
with respect to the conduct of the business of the Company or the Acquiror following the Closing or
the Additional Consideration, other than a failure to pay any Additional Consideration as expressly
required by this Agreement, (iii) no Shareholder shall have any claim against the Acquiror, the
Surviving Company or their respective Affiliates with respect to any services provided by the
Acquiror at the request of the Surviving Company on a voluntary basis, including the sufficiency of
such services or the determination by Acquiror not to provide such services, or any determination
by the Acquiror or the Board of Directors of the Surviving Company to approve or consent to, or to
not approve or consent to, any matters requiring their approval or consent under the Operating
Guidelines, and (iv) the Additional Consideration is contingent on reaching the applicable PV
Commercial Revenue and Commercial Gross Margin goals set forth in this Section 2.3, and
there is no guarantee such Targets will be reached or the Additional Consideration Paid unless it
is earned. The Acquiror makes no representation and expresses no opinion as to (x) the value of
this Section 2.3 to the Shareholders or (y) whether or not this Section 2.3 will
increase the Merger Consideration payable to the Shareholders. The Acquiror understands and agrees
that there is no guarantee the Targets will be reached during the Earn-Out Period.

          (h) Acquiror Change in Control. If there is an Acquiror Change in Control during the
Earn-Out Period, the obligations of the Acquiror under this Section 2.3 will be assumed in
full in writing by the surviving or acquiring company in such Acquiror Change in Control, and any
Additional Consideration, to the extent earned, will be paid in 2011 as soon as reasonably
practicable once the board of directors of such company reviews and approves such calculation as if
the Acquiror Change in Control had not occurred, which review and approval shall occur at the first
regularly scheduled meeting of such board of directors following the later of the date the Earn-Out
Statement is delivered or the closing of such Acquiror Change in Control. Acquiror shall notify the
Shareholder Representative of an Acquiror Change of Control as soon as it is required to make such
disclosure under applicable Law to the public.

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          (i) Rights of Shareholder Representative. Nothing contained herein shall entitle the
General Manager or Acquiror to take any action to bind the Shareholder Representative. The General
Manager shall provide to the Shareholder Representative the materials and any notices provided to
the Board of Directors of the Surviving Company when such materials or notices are provided to the
Board of Directors as well as the information provided in Paragraph 6 of Schedule 2.3(b).
The Acquiror shall provide to the Shareholder Representative the monthly financial statements of
the Surviving Company, including separate breakdowns of the PV Commercial Revenue and Commercial
Gross Margin, as soon as practicable after completion thereof. The General Manager shall be
available on reasonable advance notice and during normal business hours to answer reasonable
inquiries from the Shareholder Representative regarding PV Commercial Revenue and Commercial Gross
Margin, and the Shareholder Representative shall be entitled periodically to inspect the facilities
and the books and records of the Surviving Company for purposes of verifying the progress of the
Surviving Company in the achievement of the Targets. In the event of the departure of the General
Manager or any Director level or above employee of the Surviving Company for any reason, the
Shareholder Representative shall have the right to consent to any replacement thereof, such consent
not to be unreasonably withheld or delayed. The Shareholder Representative shall at all times
maintain the confidentiality of all information and materials, in whatever medium, furnished to the
Shareholder Representative or to which the Shareholder Representative has access pursuant to the
terms and conditions of a confidentiality agreement to be entered into by and between the
Shareholder Representative and the Acquiror at Closing (the “Shareholder Representative
Confidentiality Agreement”).

     SECTION 2.4. Effect on Capital Stock. As of the Effective Time, by virtue of
the Merger and without any action on the part of the Acquiror, Acquiror Sub or the Company, or of
the holders of any shares of common stock of the Company (the “Common Shares”), any shares
of preferred stock of the Company (the “Preferred Shares” and together with the Common
Shares, the “Company Shares”), or any shares of capital stock of Acquiror Sub:

          (a) Subject to the other provisions of this Section 2.4, each issued and outstanding
Common Share (excluding for these purposes Dissenting Shares) shall be converted into the right to
receive, upon the surrender of the certificate formerly representing such Common Share (or lost
share affidavit in a form reasonably acceptable to Acquiror), and without interest, (i) cash in an
amount equal to the Cash Consideration (less the amount of the Closing Date Indebtedness and
Unsatisfied Transaction Costs paid pursuant to Section 2.8) divided by the Base Number (the
“Per Share Closing Cash Consideration”), (ii) a number of Acquiror Common Shares equal to
the Closing Share Consideration divided by the Base Number (the “Per Share Closing Share
Consideration”), and (iii) the right to receive a portion of the Additional Consideration, if
any, payable pursuant to Section 2.3 equal to the Additional Consideration (less the
subsequent Interim CEO Payment not paid at Closing) divided by the Base Number (the “Per Share
Additional Consideration”).

          (b) Subject to the other provisions of this Section 2.4, each issued and outstanding
Preferred Share (excluding for these purposes Dissenting Shares) shall be converted into the right
to receive, upon the surrender of the certificate formerly representing such Preferred Share, and
without interest, (i) cash in an amount equal to the Per Share Closing Cash

9

 

Consideration multiplied by 1.15, (ii) a number of Acquiror Common Shares equal to the Per
Share Closing Share Consideration multiplied by 1.15, and (iii) the right to receive a portion of
the Additional Consideration, if any, payable pursuant to Section 2.3 equal to the Per
Share Additional Consideration multiplied by 1.15.

          (c) Each such Common Share and Preferred Share (excluding for these purposes Dissenting
Shares) shall no longer be outstanding and shall be cancelled and shall cease to exist, and each
holder of a stock certificate which immediately prior to the Effective Time represents any such
Common Share or Preferred Share shall cease to have any rights with respect thereto, except the
right to receive the Merger Consideration payable pursuant to Section 2.4(a) and
Section 2.4(b), as applicable.

          (d) Each share of capital stock of the Company that is owned by the Company (as treasury or
otherwise), and by the Acquiror or any Subsidiary of the Acquiror, including without limitation,
Acquiror Sub, immediately prior to the Effective Time shall be cancelled and shall cease to exist
and no payment shall be made with respect thereto.

     SECTION 2.5. Dissenting Shares. Common Shares and Preferred Shares that are
issued and outstanding immediately prior to the Effective Time and that are held by a Shareholder
who has not voted such shares in favor of the Merger and who has demanded or may properly demand
appraisal rights in the manner provided under applicable provisions of Oregon Law (“Dissenting
Shares”) shall not be converted into a right to receive a portion of the Merger Consideration
unless and until the Effective Time has occurred and the holder of such Dissenting Shares becomes
ineligible for such appraisal rights. The holders of Dissenting Shares shall be entitled only to
such rights as are granted under applicable provisions of the Oregon Law. Each holder of
Dissenting Shares who becomes entitled to payment for such shares pursuant to applicable provisions
of Oregon Law shall receive payment therefor from the Surviving Company in accordance with Oregon
Law; provided, however, that (a) if any such holder of Dissenting Shares shall have
failed to establish entitlement to appraisal rights as provided under applicable provisions of
Oregon Law, or (b) if any such holder of Dissenting Shares shall have effectively withdrawn demand
for appraisal of such shares or lost the right to appraisal and payment for such shares under
applicable provisions of Oregon Law, such holder of Dissenting Shares shall forfeit the right to
appraisal of such shares and each such Dissenting Share shall be treated as if it had been, as of
the Effective Time, converted into a right to receive the applicable portion of the Merger
Consideration, without interest thereon, as provided in Section 2.3 of this Agreement. The
Company shall give the Acquiror prompt notice of any demands received by the Company for appraisal
of any Common Shares or Preferred Shares and the Acquiror shall have the right to participate in
all negotiations and proceedings with respect to such demands, provided that the Acquiror shall not
have authority to bind the Company in such negotiations and proceedings. The Company shall not,
except with the prior written consent of the Acquiror, make any payment with respect to, or settle
or offer to settle, any such demands, with respect to any holder of Dissenting Shares before the
Effective Time. Notwithstanding the foregoing, as provided in Article VI, it is a condition
to the Acquiror’s obligations pursuant to this Agreement that holders of Company Shares
representing in excess of 95% of the issued and outstanding Company Shares immediately prior to the
Effective Time shall not have demanded payment or exercised appraisal rights under applicable
provisions of Oregon Law.

10

 

     SECTION 2.6. Termination of Company Options and Company Warrants. Each
Company Option and each Company Warrant that shall not have been exercised prior to the Effective
Time and is not terminated automatically or otherwise in accordance with the Company Option Plans
shall be terminated immediately prior to the Effective Time.

     SECTION 2.7. Exchange Procedures.

          (a) Exchange of Certificates. Prior to receiving any portion of the Merger Consideration,
each holder of record of a certificate or certificates that immediately prior to the Effective Time
represented issued and outstanding Company Shares (each, a “Certificate” and, collectively,
the “Certificates”), shall have delivered to the Exchange Agent (i) a properly completed
and duly executed letter of transmittal (a “Letter of Transmittal”) and (ii) the
Certificates held of record by such holder. Such Letter of Transmittal shall have been previously
delivered by the Exchange Agent to such holder along with instructions thereto and a notice to the
effect that delivery of the Certificates shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange Agent. Upon
surrender of a Certificate to the Company, together with such Letter of Transmittal, duly executed,
the holder of such Certificate shall be entitled to receive in exchange therefor the consideration
into which the shares represented by such Certificate shall have been converted pursuant to
Section 2.4, and the Certificate so surrendered shall be canceled. If the portion of the
Merger Consideration is to be paid to a Person other than the Person in whose name the Certificate
so surrendered is registered, it shall be a condition of exchange that such Certificate shall be
properly endorsed or otherwise in proper form for transfer and that the Person requesting such
exchange shall pay any transfer or other Taxes required by reason of the exchange to a Person other
than the registered holder of such Certificate or establish to the reasonable satisfaction of the
Surviving Company that such Tax has been paid or is not applicable. Until surrendered as
contemplated by this Section 2.7, each Certificate shall be deemed as of the Effective Time
of the Merger to represent only the right to receive, upon surrender of such Certificate in
accordance with this Section 2.7, the consideration into which the shares represented by
such Certificate shall have been converted pursuant to Section 2.3. If any certificate
evidencing any Company Share shall have been lost, stolen or destroyed, the Exchange Agent may, in
its discretion and as a condition precedent to the issuance of any consideration pursuant to
Section 2.3, require the owner of such lost, stolen or destroyed certificate to provide an
appropriate affidavit with respect to such certificate.

          (b) At any time following the twelve (12) month anniversary of the Closing Date, the Acquiror
shall be entitled to require the Exchange Agent to deliver to it any funds (including any interest
received with respect thereto) that had been deposited with the Exchange Agent and which have not
been disbursed to the Shareholders, and thereafter, such Shareholders shall be entitled to look
only to the Surviving Company (subject to abandoned property, escheat or other similar laws) as
general creditors thereof with respect to the payment of any Merger Consideration that would
otherwise be payable upon surrender of any Certificates held by such Shareholders, as determined
pursuant to this Agreement, without any interest thereon. Any amounts remaining unclaimed by such
Shareholders at such time at which such amounts would otherwise escheat to or become property of
any Governmental Entity shall become, to the extent permitted by applicable Laws, the property of
the other Shareholders on a pro rata basis, free and

11

 

clear of all claims or interests of any Person previously entitled thereto, and shall be
deposited in a separate account maintained solely for holding such funds by the Surviving Company.
Notwithstanding the foregoing, none of the Acquiror, Acquiror Sub or the Surviving Company shall be
liable to any former Shareholder for any portion of the Merger Consideration or interest thereon
properly delivered to a public official pursuant to any applicable abandoned property, escheat or
other similar Law, or deposited into a separate account maintained by the Company pursuant to the
immediately prior sentence.

          (c) No Further Ownership Rights in Common Shares. All consideration paid upon the
surrender of the Certificates in accordance with the terms of this Article II shall be
deemed to have been paid in full satisfaction of all rights pertaining to the shares of Common
Shares previously represented by such Certificates. At the close of business on the day on which
the Effective Time occurs, the stock transfer books of the Company shall be closed and there shall
be no further registration of transfers on the stock transfer books of the Surviving Company of
the shares of Common Shares that were outstanding immediately prior to the Effective Time. If, at
any time after the Effective Time, Certificates are presented to the Surviving Company or the
Acquiror for any reason, they shall be canceled and exchanged as provided in this Article
II.

          (d) No Liability. None of the Exchange Agent, Acquiror, Acquiror Sub, the Company or
the Surviving Company shall be liable to any Person in respect of any Merger Consideration
delivered to a public official pursuant to any applicable abandoned property, escheat or similar
Law.

     SECTION 2.8. Certain Payments. On the Closing Date, the Acquiror shall, on
behalf of the Company and the Shareholders, as applicable, pay to such account or accounts as the
Company specifies to the Acquiror in writing at least three (3) Business Days prior to the Closing
Date, the aggregate amount of any Closing Date Indebtedness, Unsatisfied Transaction Costs and the
Evans Advance, along with evidence reasonably satisfactory to the Acquiror of such amounts so due
and payable. The Cash Consideration paid at Closing shall be reduced by the aggregate amount of any
such payments of Closing Date Indebtedness and Unsatisfied Transaction Costs, but not by the amount
of the Evans Advance which shall be paid directly by Acquiror to Evans Renewable Holdings III, LLC
by wire transfer of same day funds. For the avoidance of doubt, the Evans Advance shall not be
considered part of the Merger Consideration or Cash Consideration and shall be paid at Closing in
addition to the Merger Consideration and Cash Consideration (as so reduced pursuant to the
preceding sentence). On the date any Additional Consideration is payable pursuant to Section
2.3, the Acquiror shall, on behalf of the Company, pay to such account or accounts as the
Shareholder Representative specifies to the Acquiror in writing at least one (1) Business Day prior
to such date of payment, the aggregate amount of the Interim CEO Payment, which amount shall reduce
the Additional Consideration payable to the Shareholders under Section 2.3.

     SECTION 2.9. No Fractional Shares. No certificates representing fractional
Acquiror Shares shall be issued upon the surrender for exchange of Certificates and such a
fractional share shall not entitle the record or beneficial owner thereof to vote or to any other
rights as a stockholder of the Acquiror. In lieu of receiving any such fractional share, each
holder of Acquiror Shares who would otherwise have been entitled thereto upon the surrender of

12

 

Certificates for exchange will receive cash (without interest) in an amount rounded to the
nearest whole cent, determined by multiplying such fractional share by the average closing stock
price as reported by The Nasdaq Stock Market, Inc. of such shares over the twenty (20) trading days
immediately preceding the Closing Date. No certificates representing fractional Acquiror Shares
shall be issued and such a fractional share shall not entitle the record or beneficial owner
thereof to vote or to any other rights as a stockholder of Acquiror. In lieu of receiving any such
fractional share, each Shareholder who would otherwise have been entitled thereto will receive cash
(without interest) in an amount rounded to the nearest whole cent, determined by multiplying such
fractional share by the applicable Future Average Price. Acquiror shall make available to the
Exchange Agent the cash necessary for this purpose.

     SECTION 2.10. Withholding Taxes. Notwithstanding anything to the contrary
contained herein, the Exchange Agent, the Acquiror, Acquiror Sub, the Company or the Surviving
Company (as appropriate) shall be entitled to deduct and withhold from the Merger Consideration
otherwise payable to or on behalf of a Shareholder or other recipient of consideration as
contemplated hereby such amounts as such Party is required to deduct and withhold with respect to
the making of such payment under the Code or under any provision of state, local or foreign Tax
Law. To the extent that amounts are so withheld, (a) such withheld amounts shall be treated for
all purposes of this Agreement as having been paid to the Shareholder in respect of which such
deduction and withholding was made, and (b) the Exchange Agent, the Acquiror, Acquiror Sub, the
Company or the Surviving Company (as appropriate) shall provide to such Shareholder written notice
of the amounts so deducted or withheld.

     SECTION 2.11. Closing Statement.

          (a) Not less than three (3) Business Days prior to the Closing Date, the Company shall deliver
to the Acquiror a statement (the “Closing Statement”) signed by the Chief Financial Officer
of the Company (on behalf and in the name of the Company), which sets forth in reasonable detail
(i) the payee and amount of any Closing Date Indebtedness, Evans Advance and Unsatisfied
Transaction Costs, (ii) Base Number, (iii) the name of each holder of Common Shares and the number
of Common Shares outstanding and held by each such Shareholder immediately prior to Closing,
(iv) the name of each holder of Preferred Shares and the number of Common Shares into which the
Preferred Shares outstanding and held by each such Shareholder are convertible immediately prior to
the Closing pursuant to Article IV of the Company’s Articles of Incorporation, (v) the name of each
holder of a Company Option and a Company Warrant who has elected to exercise such Company Option or
Warrant and the number of Common Shares issuable as a result of such exercise, (vi) the Per Share
Closing Cash Consideration and the Per Share Closing Share Consideration (each determined in
accordance with the Articles of Incorporation) allocated to each Shareholder and each holder of a
Company Option and Company Warrant, and (vii) the Per Share Additional Consideration allocated to
each Shareholder and each holder of a Company Option and Company Warrant (to the extent that each
holder of a Company Option and Company Warrant are not set forth in the definition of Shareholder).

13

 

          (b) The Company shall attach to the Closing Statement such documents as are necessary to
confirm to the satisfaction of the Acquiror that, upon payment of the respective amounts to the
Shareholders as specified in the Closing Statement, each Shareholder shall have been paid in full,
in accordance with the Articles of Incorporation, such Shareholder’s allocation of the Merger
Consideration based on the number of Common Shares and Preferred Shares held by such Shareholder.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     Except as specifically set forth in the Schedules (with specific references to the Section or
subsection of this Agreement to which the information stated in such disclosure relates), the
Company hereby represents, warrants to and agrees with the Acquiror and Acquiror Sub as follows, in
each case as of the date of this Agreement and as of the Closing Date:

     SECTION 3.1. Organization and Qualification. The Company is a corporation
duly organized, validly existing and in good standing under Oregon Law, and has the full corporate
power and authority to own, operate and lease its assets, to carry on its business as currently
conducted, to execute and deliver this Agreement and to carry out the transactions contemplated
hereby. The Company is duly qualified or authorized to conduct business as a foreign corporation
and is in good standing in the states, countries and territories listed in Schedule 3.1 and
in each jurisdiction where the nature of its business or the character of the assets owned, leased
or otherwise held by it makes such qualification or authorization necessary, other than where the
failure to be so qualified, authorized or in good standing would not have, individually or in the
aggregate, a Company Material Adverse Effect.

     SECTION 3.2. Subsidiaries. The Company does not have any Subsidiaries.

     SECTION 3.3. Corporate Records.

          (a) The Company has furnished to the Acquiror a true and complete copy of the articles of
incorporation of the Company which is filed with the Oregon Secretary of State and a true and
complete copy of the Company’s bylaws, and all amendments thereto, as in effect on the date of this
Agreement.

          (b) Except as set forth in Schedule 3.3, the stock records and financial records of
the Company are complete and correct in all material respects and have been maintained in
accordance with reasonable business practices for companies similar to the Company, and the Company
will have prior to Closing made available to the Acquiror the minutes for all meetings of the Board
of Directors and/or shareholders of the Company, for which minutes were taken, held as of the date
hereof (or written consents in lieu of such meetings when such actions were taken pursuant to
written consent).

     SECTION 3.4. Capitalization; Owners of Shares. The authorized capital stock
of the Company consists of (i) 2,000,000,000 Common Shares, of which 1,245,675 Common Shares are
issued and outstanding, all of which are duly authorized, validly issued, fully paid and

14

 

nonassessable and (ii) 260,000,000 Preferred Shares of which all such shares are designated
Series A Convertible Preferred, all of which are issued and outstanding, and all of which are duly
authorized, validly issued. Schedule 3.4(a) sets forth the names and addresses of all
holders of record of Company Shares and the number and class of shares held by each such holder.
No other Company Shares have been reserved for any purpose. Except as set forth in Schedule
3.4(b) (which shows the Company Options and Company Warrants) or as set forth in the articles
of incorporation of the Company, there are no securities convertible into or exchangeable for
Company Shares or any other securities of Company, and no outstanding or authorized options, rights
(preemptive or otherwise), warrants, rights of redemption, claims of any character, or other
rights, contingent or otherwise, to purchase or to sell or subscribe for any shares of such shares
or other securities of the Company. Except as set forth in Schedule 3.4(b) or (c),
there are no outstanding Contracts affecting or relating to the voting, issuance, purchase,
redemption, registration, repurchase or transfer of Common Shares, any other securities of the
Company, except as contemplated hereunder. There are no dividends or similar distributions which
have accrued or been declared but are unpaid on the capital stock or other equity interests of the
Company, and the Company is not subject to any obligation (contingent or otherwise) to pay any
dividend or otherwise to make any distribution or payment (whether related to Taxes or otherwise)
to any current or former holder of the Company’s capital stock. Except as set forth in
Schedule 3.4, the Company has never purchased, redeemed or otherwise acquired, or
effectuated any split, combination, reclassification or recapitalization of any of its shares of
capital stock or other equity interests, or entered into any agreement to do any of the foregoing.
The Company has complied in all material respects with all applicable Law in connection with the
offer, sale, issuance, purchase, redemption or acquisition, or any split, combination,
reclassification or recapitalization, of any of its capital stock or other equity interests and, to
the Company’s Knowledge, there are no rights of rescission under applicable Law with respect
thereto.

     SECTION 3.5. Authority; Binding Obligation. The Company has all requisite
corporate power, authority and legal capacity to execute and deliver this Agreement and each of the
other agreements, documents, certificates or other instruments executed and delivered by the
Company and contemplated to be so executed and delivered by the Company hereby (the “Company
Documents”), to perform its obligations hereunder and thereunder and to consummate the
transactions hereby and thereby. The execution, delivery and performance by the Company of this
Agreement, the execution, delivery and performance by the Company of the Company Documents, and the
consummation by the Company of the transactions contemplated hereby and thereby, have been duly
authorized and approved by all necessary corporate action, and no other corporate proceeding on the
part of the Company is necessary to authorize this Agreement and the Company Documents, or to
consummate the transactions contemplated hereby and thereby, other than the approval and adoption
of this Agreement by the Company in accordance with Oregon Law and the Company’s articles of
incorporation (as amended) and bylaws. This Agreement has been, and the Company Documents will be
at or prior to the Closing, duly executed and delivered by the Company. This Agreement
constitutes, and the Company Documents when so executed and delivered, will constitute a legal,
valid and binding obligation of the Company, enforceable in accordance with its terms except for
the Enforceability Exceptions; provided, however, that the Merger will not become effective
until the Articles of Merger are filed with the office of the Secretary of State of the State
of Oregon.

15

 

     SECTION 3.6. No Conflict; Required Filings and Consents. The execution,
delivery and performance by the Company of this Agreement and the Company Documents, the
fulfillment of and compliance with the respective terms and provisions hereof and thereof, and the
consummation by the Company of the transactions contemplated hereby and thereby, do not and will
not:

          (a) conflict with, or violate any provision of, the articles of incorporation or bylaws of the
Company;

          (b) except as set forth in Schedule 3.6(b), conflict with or violate in any material
respect any Law applicable to the Company or any of its assets;

          (c) subject to obtaining the consents and approvals set forth in Schedule 3.6(c),
conflict with, result in any material breach of, or constitute a material default (or an event that
with notice or lapse of time or both would become a default), result in a change of control or
result in the termination or acceleration, or create in another Person a put right, purchase
obligation or similar right under any Material Contract to which the Company is a party or by which
the Company or any of its assets, is bound;

          (d) result in or require the creation or imposition of, or result in the acceleration of, any
Indebtedness or any Encumbrance of any nature upon, or with respect to, the Company or any of the
assets now owned or hereafter acquired by the Company, except as set forth on Schedule
3.6(d).

          (e) subject to obtaining the consents and approvals set forth in Schedule 3.6(c) and
except as set forth in Schedule 3.6(e), require any consent, approval, authorization or
permit of, or filing with or notification to, any Person not party to this Agreement, except (i)
the filing and acceptance for record of the Articles of Merger as required by Oregon Law; (ii) the
approval of the holders of at least fifty percent (50%) of the outstanding Company Shares (voting
on an as converted to Common Share basis) of this Agreement; and (iii) the pre-merger notification
requirements under the HSR Act; or

          (f) subject to obtaining the consents and approvals set forth in Schedule 3.6(c) and
except as set forth in Schedule 3.6(f), result in or give rise to any penalty, forfeiture,
Contract termination, right of termination, amendment or cancellation, or restriction on business
operations of the Company.

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     SECTION 3.7. Financial Statements and Condition.

          (a) Schedule 3.7(a) sets forth copies of (i) the unaudited balance sheets of the
Company as at December 31, 2008 and 2007 and the related unaudited statements of income,
stockholders’ equity and cash flows of the Company for the years then ended, (ii) the audited
balance sheet of the Company as at December 31, 2009 and the related audited statements of
operations, stockholders’ equity and cash flows of the Company for the year then ended (the
“Audited Financial Statements”), and (iii) the internally prepared unaudited balance sheet
of the Company as of and at January 31, 2010, and the related consolidated statements of income and
cash flows of the Company for the one-month period then ended (the “Interim Financial
Statements”) (such statements, including the related notes and schedules thereto, are referred
to herein as the “Financial Statements”). Each of the Financial Statements is complete and
correct in all material respects, subject, in the case of the Interim Financial Statements, to
normal year end adjustments and the absence of notes thereto, has been prepared in accordance with
generally accepted accounting principles in the United States (“GAAP”) consistently applied
by the Company without modification of such accounting principles used in the preparation thereof
throughout the periods presented, presents fairly in all material respects, the consolidated
financial position and results of operations, changes in stockholders’ equity and cash flows of the
Company as at the dates and for the periods indicated therein. For the purposes hereof, the
unaudited balance sheet of the Company at January 31, 2010 is referred to as the “Balance
Sheet” and January 31, 2010 is referred to as the “Balance Sheet Date.”

          (b) The Company maintains internal controls over financial reporting sufficient in all
material respects to provide reasonable assurances (a) that material transactions are recorded as
necessary (i) to permit preparation of financial statements in conformity in all material respects
with GAAP (subject to adjustments consistent with the past practice) and (ii) to maintain
accountability of material assets and (b) that transactions are executed, and access to assets is
permitted, in accordance with management’s general or specific authorizations. During the periods
covered by the Audited Financial Statements, (i) there has been no change in such internal controls
that has materially affected such internal controls, (ii) there is no material deficiency or
weakness that has materially adversely affected the Company’s ability to record, process, summarize
or report financial information, and (iii) there has been no fraud to the Company’s Knowledge that
involves management or other employees of the Company who have a significant role in the operation
of the Company’s internal controls. Each exception to this Section 3.7(b) set forth on the
Company Disclosure Schedule, if any, has been previously reported to the Company’s Board of
Directors. The Company has not received any written or oral complaint, allegation or claim that it
has engaged in improper accounting or other financial business practices. Nothing contained herein
contains any representation or warranty that the Company has satisfied the requirements of Section
404 of the Sarbanes-Oxley Act.

     SECTION 3.8. Absence of Certain Developments. Except for the transactions
contemplated hereby and except as set forth in Schedule 3.8, since December 31, 2009 the
Company has conducted its business in the Ordinary Course of Business and there has not been any
event, change, occurrence or circumstance that, individually or in the aggregate with any such
events, changes, occurrences or circumstances, has had or based upon the Company’s Knowledge as to
not only the facts, but also as to the reasonable likelihood of a Company

17

 

Material Adverse Effect subject to the MAE Exceptions, based upon the facts known as of the
date of this representation (which for the avoidance of doubt, the date of this representation
shall be deemed to be date hereof and the Closing Date), would reasonably be likely as modified by,
or except as otherwise permitted under Section 5.2 hereof, would reasonably be expected to
have a Company Material Adverse Effect. Without limiting the generality of the foregoing, since
December 31, 2009, except as set forth in Schedule 3.8:

          (a) there has not been any damage, destruction or loss, whether or not covered by insurance,
with respect to the assets of the Company (whether tangible or intangible) having a replacement
cost of more than $25,000 for any single loss or $50,000 for all such losses, including without
limitation, writing down the value of inventory or writing off notes or accounts receivable;

          (b) there has not been any declaration, setting aside or payment of any dividend or other
distribution in respect of any shares of capital stock of the Company or any repurchase, redemption
or other acquisition by the Company of any outstanding shares of capital stock or other securities
of, or other ownership interest in, the Company;

          (c) except as disclosed to the Acquiror prior to the date hereof in writing or on Schedule
3.8, the Company has not awarded or paid any bonuses to any employees which would bind,
obligate or become a liability of the Surviving Company after Closing, or entered into any
employment, deferred compensation, severance or similar agreement (nor amended any such agreement)
or agreed to increase the compensation payable or to become payable by it to any employees or any
of the Company’s directors, independent consultants, agents or representatives or agreed to
increase the coverage or benefits available under any severance pay, termination pay, vacation pay,
company awards, salary continuation for disability, sick leave, deferred compensation, bonus or
other incentive compensation, insurance, pension or other employee benefit plan, payment or
arrangement made to, for or with such employees, independent consultants, directors, agents or
representatives, which would bind, obligate or become a liability of the Surviving Company after
Closing;

          (d) there has not been any change by the Company in accounting or Tax reporting principles,
methods or policies;

          (e) the Company has not made or rescinded any election relating to Taxes or settled or
compromised any claim relating to Taxes;

          (f) the Company has not entered into any transaction or Contract other than in the Ordinary
Course of Business or as contemplated hereby;

          (g) the Company has not failed to promptly pay and discharge current liabilities except where
disputed in good faith by appropriate proceedings or in the Ordinary Course of Business;

          (h) the Company has not made any loans, advances or capital contributions to, or investments
in, any Person;

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          (i) the Company has not paid any fees or expenses to any Shareholder or any director, officer,
partner, shareholder or Affiliate of any Shareholder, other than in the Ordinary Course of Business
or as reflected on the books and records of the Company;

          (j) the Company has not (i) mortgaged, pledged or subjected to any Encumbrance any of the
assets of the Company, or (ii) acquired any assets or sold, assigned, transferred, conveyed, leased
or otherwise disposed of any material assets;

          (k) the Company has not discharged or satisfied any Encumbrance, or paid any liability, except
in the Ordinary Course of Business;

          (l) the Company has not canceled or compromised any debt or claim or amended, canceled,
terminated, relinquished, waived or released any Contract or right;

          (m) the Company has not made or committed to make any capital expenditures or capital
additions or betterments in excess of $10,000 in the aggregate;

          (n) except for the Evans Advance, the Company has not issued, created, incurred, assumed,
guaranteed, endorsed or otherwise become liable or responsible with respect to (whether directly,
contingently, or otherwise) any Indebtedness in an amount in excess of $20,000 in the aggregate;

          (o) the Company has not granted any license or sublicense of any rights under or with respect
to any Proprietary Rights;

          (p) the Company has not instituted or settled any Legal Proceeding;

          (q) there has been no event, occurrence, development, state of circumstances, facts, or
condition of any character that has had or would reasonably be expected to have, individually or in
the aggregate, a Company Material Adverse Effect subject to the MAE Exceptions; and

          (r) the Company has not agreed, committed, arranged or entered into any understanding to do
anything set forth in this Section 3.8.

     SECTION 3.9. Absence of Undisclosed Liabilities. Except as set forth in
Schedule 3.9, there are no liabilities or obligations (whether accrued, absolute or
contingent, matured or unmatured, known or unknown or otherwise) (whether or not required under
GAAP to be reflected on a balance sheet or the notes thereto) of the Company other than those (i)
specifically reflected on and fully reserved against in the Balance Sheet, or (ii) incurred in the
Ordinary Course of Business since the Balance Sheet Date (or prior to the Balance Sheet Date but
not invoiced until after the date), none of which, in the aggregate, exceed $10,000 in amount, or
(iii) under Contracts not required to be listed in Schedule 3.14(a) of the Company
Disclosure Schedules

     SECTION 3.10. Litigation; Disputes. Except as set forth in Schedule
3.10(a), there are no Legal Proceedings, individually or in the aggregate, in excess of $25,000
pending or, to the

19

 

Company’s Knowledge, threatened against the Company or any of the assets or its business, or
which question the validity or enforceability of this Agreement or any action contemplated herein.
The Company is not operating under or subject to, or in default with respect to, any Order of any
Governmental Entity. Schedule 3.10(b), sets forth all agreements entered into by the
Company since January 1, 2007 (i) settling or otherwise terminating actions, suits, claims,
governmental investigations or arbitration proceedings against the Company or any of the assets or
businesses in excess of $20,000, provided, however, with respect to claims by
customers of the Company, Schedule 3.10(b) sets forth only those agreements relating to
written claims received from such customers or (ii) which question the validity or enforceability
of this Agreement or any action contemplated herein. Except as set forth in Schedule
3.10(c), no material disputes currently exist with any customer of the Company or, to the
Company’s Knowledge, have been threatened by any customer of the Company in writing that could
reasonably be expected to result in future liabilities in excess of $20,000. The Company has not
received a written expression of dissatisfaction from a Material Customer of the Company with
respect to the Company’s products or services provided to such customer which may reasonably be
expected to lead to such customer’s termination of its Company Customer Contract or business
relationship with the Company.

     SECTION 3.11. Compliance with Laws; Permits. The Company has complied and is
in compliance in all material respects with all Laws applicable to Company and its business or
assets. Since January 1, 2005, the Company has not been cited, fined or otherwise notified of any
asserted past or present failure to comply, in any material respect, with any Laws and no
investigation or proceeding with respect to any such violation is pending or, to the Company’s
Knowledge, threatened.

        Schedule 3.11 lists all material Permits which are required for the operation of the
business of the Company as presently conducted. All such Permits are valid and in full force and
effect, the Company is in material compliance with their requirements, and the Company is not in
default or violation, and no event has occurred which, with notice or the lapse of time or both,
would constitute a default or violation, of any term, condition or provision of any Permit to which
it is a party, to which its business is subject or by which its properties or assets are bound, and
no proceeding is pending or, to the Company’s Knowledge, threatened to revoke or amend any of the
Permits, unless same would not reasonably be expected to have a Company Material Adverse Effect.
The Company has delivered to the Acquiror a true and complete copy of each of the Permits.

     SECTION 3.12. Real Property Leases. The Company does not own real property,
nor has the Company ever owned any real property. Schedule 3.12(a) sets forth a list of
all real property and interests in real property currently, or at any time since January 1,
2007, leased by the Company which are referred to herein as the “Real Property
Leases.” Except as set forth in Schedule 3.12(b), the Company has a valid and
enforceable leasehold interest under each of the Real Property Leases, free and clear of all
Encumbrances other than the Permitted Encumbrances. Each of the Real Property Leases is in full
force and effect, and the Company has not received or given any notice of any default or event that
with notice or lapse of time, or both, would constitute a default by the Company under any of the
Real Property Leases and, to the Knowledge of the Company, no other party is in default thereof,
and no party to the Real

20

 

Property Leases has exercised any termination rights with respect thereto. The leased real
property described in Schedule 3.12(a) constitute all interests in real property currently
used or currently held for use in connection with the business of the Company and which are
necessary for the continued operation of the business of the Company as the business is currently
conducted. All of the leased real property, buildings, fixtures and improvements thereon owned or
leased by the Company is in good operating condition and repair (subject to normal wear and tear
and maintenance). The Company has delivered or otherwise made available to the Acquiror true,
correct and complete copies of all Real Property Leases, together with all amendments,
modifications or supplements, if any, thereto. Except as set forth in Schedule 3.12(b),
the Company does not own or hold, and is not obligated under or a party to, any option, right of
first refusal or other contractual right to purchase, acquire, sell, assign or dispose of any real
estate or any portion thereof or interest therein.

     SECTION 3.13. Tangible Personal Property. The Company has good title to, or a
valid leasehold interest in, all of its tangible assets and properties, free and clear of all
Encumbrances other than Permitted Encumbrances or as listed on Schedule 3.13, and such
tangible assets comprise the assets necessary to conduct the businesses of the Company as currently
conducted. All tangible assets owned or leased by the Company are in normal operating condition
and repair, ordinary wear and tear excepted and any obsolete or non-working assets have been
removed from the Company’s list of assets in accordance with GAAP.

     SECTION 3.14. Material Contracts and Company Customer Contracts.

          (a) Schedule 3.14(a) lists each Material Contract. A “Material Contract”
shall mean any Contract (other than a Company Customer Contract) to which the Company is a party or
by which the Company, or any of its assets, is bound pursuant to which the obligations, of either
party thereto are, or are contemplated to be, $20,000 or more.

          (b) Each Material Contract is in full force and effect, constitutes a valid and binding
obligation of and is legally enforceable in accordance with its terms against the Company (except
for the Enforceability Exceptions) and, to the Knowledge of the Company, the Material Contracts are
valid, binding and enforceable obligations of the other parties thereto (except for the
Enforceability Exceptions). The Company has complied, in all material respects, with all of the
provisions of such Material Contracts. Except as set forth in Schedule 3.14(b), with
respect to any Material Contract there has not been (i) any failure by the Company or, to the
Knowledge of the Company, any other party to any such Material Contract to comply with all material
provisions thereof, (ii) any material default by the Company or, to the Knowledge of the Company,
any other party thereunder and there has not occurred any event which (whether with or without
notice, lapse of time, or the happening or occurrence of any other event) would constitute such a
default, (iii) to the Company’s Knowledge, any threatened cancellation thereof or (iv) any material
outstanding dispute thereunder. Except as set forth in Schedule 3.14(b), the execution of
this Agreement by the Company and its performance hereunder will not cause, or result in, a breach
or default, or require any consent or notice, under any Material Contract.

          (c) The Company has provided to the Acquiror a list of all customers of the Company, as of
March, 2010 and will provide a list of all customers that support the projections

21

 

of PV Commercial Revenue in the 2010 Plan. Each Company Customer Contract is in full force
and effect, constitutes a valid and binding obligation of and is legally enforceable in accordance
with its terms against the Company except for the Enforceability Exceptions and, to the Knowledge
of the Company, the Company Customer Contracts are valid, binding and enforceable obligations of
the other parties thereto except for the Enforceability Exceptions. The Company has complied, in
all material respects, with all of the provisions of such Company Customer Contracts. Except as
set forth in Schedule 3.14(c), with respect to any Company Customer Contract there has not
been (i) any uncured failure by the Company or, to the Knowledge of the Company, any other party to
any such Company Customer Contract to comply with all material provisions thereof, (ii) any uncured
material default by the Company or, to the Knowledge of the Company, any other party thereunder and
there has not occurred any event which (whether with or without notice, lapse of time, or the
happening or occurrence of any other event) would constitute such a default, (iii) any threatened
cancellation thereof or (iv) any material outstanding dispute thereunder. Except as set forth in
Schedule 3.14(c), the execution of this Agreement by the Company and its performance
hereunder will not cause, or result in, a breach or default, or require any consent or notice,
under any Company Customer Contract (except to the extent that such item is already scheduled under
3.14(b)).

     SECTION 3.15. Employee Relations. There are no collective bargaining or other
labor union agreements to which the Company is a party and there are no labor or collective
bargaining agreements which pertain to employees of the Company. There is no union organization
activity involving any of the employees pending or, to the Knowledge of the Company, threatened,
nor has there ever been union representation involving any of the employees with respect to the
Company. There are, and for the past two (2) years have been, no strikes, slowdowns, lockdowns,
arbitrations, work stoppages or material grievances or other organized labor disputes pending or,
to the Knowledge of Company, threatened or reasonably anticipated between the Company and (a) any
current or former employees of the Company or (b) any union or other collective bargaining unit
representing such employees. The Company has complied, in all material respects, and is in
compliance with, in all material respects, all Laws relating to employment or the workplace,
including, without limitation, Laws relating to wages, hours, collective bargaining, safety and
health, work authorization, equal employment opportunity, immigration, withholding, unemployment
compensation, worker’s compensation, employee privacy and right to know. The Company is in
compliance, in all material respects, with all Laws relating to the employment of labor, including
all such Laws relating to wages, hours, the Worker Adjustment and Retraining Notification Act and
any similar state or local “mass layoff” or “plant closing” law (“WARN”), collective
bargaining, discrimination, civil rights, safety and health, workers’ compensation and the
collection and payment of withholding and/or social security taxes and any similar tax, except for
immaterial non-compliance. There has been no “mass layoff” or “plant closing” (as defined by WARN)
with respect to the Company.

     SECTION 3.16. Employment Terms. The Company has delivered to the Acquiror a
true and complete list containing the names and positions of all employees of the Company as of the
date hereof, together with (a) each employee’s current annual salary or wage, (b) the amount and
date of any scheduled salary increase for each employee, (c) bonus compensation, paid or

22

 

payable to each such employee and the terms thereof, (d) commissions due and draws outstanding
for each employee (e) any and all other compensation, whether payable in cash or equity, for each
employee and the terms thereof, and (f) other advances or receivables owing to the Company from
each employee. Except as set forth in Schedule 3.16, to the Company’s Knowledge, none of
the Company’s employees has expressed a present intention, as of the date of this Agreement, to
resign or retire from employment.

     SECTION 3.17. Pension and Benefit Plans.

          (a) Each Company Benefit Plan is set forth in Schedule 3.17(a). The Company has
delivered to the Acquiror prior to the execution of this Agreement true and complete copies (or
written descriptions, where no written plan exists) of (i) the documents setting forth the terms of
each Company Benefit Plan; including all amendments thereto, (ii) all related trust agreements or
annuity agreements (and any other funding document) for each Company Benefit Plan, (iii) for the
three most recent plan years, all annual reports (form 5500 series) for each Company Benefit Plan
or a statement as to why such annual reports were not required to be filed, (iv) the current
summary plan description and the subsequent summaries of material modifications, if applicable, for
each Company Benefit Plan, (v) all correspondence, rulings, opinions or advice issued by the U.S.
Department of Labor, the Internal Revenue Service or the Pension Benefit Guaranty Corporation with
respect to each Company Benefit Plan, (vi) the most recently prepared actuarial report or financial
statement, if any, relating to each Company Benefit Plan, and (vii) the most recently received
Internal Revenue Service determination letter or opinion letter, relating to each Company Benefit
Plan. The Company has set forth in the Schedule 3.17(a) (i) a list of all of the Company
Benefit Plans and (ii) a list of the Company Benefit Plans that are Company Pension Plans.

          (b) Except as set forth in Schedule 3.17(b), no Company Benefit Plan is or has been
(i) a Multiemployer Plan or could subject the Company or any ERISA Affiliate to liability under
Sections 4063 or 4064 of ERISA, (ii) a voluntary employees’ beneficiary association within the
meaning of Code Section 501(c)(9) or (iii) an employee stock ownership plan within the meaning of
Code Section 4975(e)(7) or otherwise invests in employer securities within the meaning of Code
Section 409(l).

          (c) From their inception, all Company Benefit Plans (i) have been and are presently operated
and administered substantially according to their terms and (ii) have been and are presently in
material compliance (in form and in operation) with the applicable terms of ERISA, the Code and any
other applicable Laws. Each Company Benefit Plan that is a nonqualified deferred compensation plan
within the meaning of Code Section 409A(d)(1) has been operated in material compliance with Code
Section 409A and the guidance issued thereunder.

          (d) With respect to each Company Benefit Plan, there has not occurred, and no person is
contractually bound to enter into, (i) any prohibited transaction within the meaning of Code
Section 4975(c) or ERISA Section 406, which transaction is not exempt under Code Section 4975(d) or
ERISA Section 408, or (ii) any breach of responsibilities or obligations imposed upon fiduciaries
under Title I of ERISA.

23

 

          (e) All liabilities (contingent or otherwise) under any Company Benefit Plan are, or will be
prior to Closing, fully paid except for liabilities owed to participants and/or their beneficiaries
that are not payable prior to Closing. All contributions, premiums and other payments with respect
to each Company Benefit Plan that have become due and payable have been paid.

          (f) Intentionally deleted.

          (g) The Company has no obligations for retiree health or other welfare benefits under any
Company Benefit Plan or otherwise, except as required by Law, and there are no restrictions on the
rights of the Company to unilaterally amend or terminate any such Company Benefit Plan at any time
without incurring any material liability thereunder.

          (h) Except as set forth in Schedule 3.17(h), neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated hereby will (i) result in any
payment (including, without limitation, severance, golden parachute or otherwise) becoming due to
any person under any Company Benefit Plan or otherwise, (ii) increase any benefits otherwise
payable under any Company Benefit Plan, (iii) result in any acceleration of the time of payment or
vesting of any such benefits or (iv) result in any breach or violation of, or default under, any
Company Benefit Plan.

          (i) Each Company Benefit Plan which is intended to be qualified under Section 401(a) has
received a favorable determination letter from the IRS that it is so qualified or is entitled to
rely on a favorable opinion letter issued by the IRS, and no fact or event has occurred that could
adversely affect such qualified status.

          (j) The Company has not incurred any liability under, and have complied in all respects with,
the WARN and the regulations promulgated thereunder applicable to it and do not reasonably expect
to incur any such liability as a result of actions taken or not taken prior to the consummation of
the Merger.

          (k) No ERISA Affiliate maintains, maintained or participated in (i) a Multi-Employer Plan,
(ii) an employee pension benefit plan that could reasonably likely subject the Company to liability
under section 4063 or 4064 of ERISA or (iii) an employee pension benefit plan subject to Title IV
of ERISA or section 412 of the Code.

     SECTION 3.18. Taxes and Tax Matters.

          (a) Except as set forth on Schedule 3.18(a), (i) the Company has timely (taking into
account extensions of time to file) filed all Tax Returns required to be filed by the Company, and
all such Tax Returns were true, correct, and complete in all material respects; (ii) the Company
has paid all Taxes shown thereon or otherwise due; (iii) the Company has provided adequate accruals
(without taking into account any reserve for deferred taxes) in the Balance Sheet for any Taxes
that have not been paid, but were owed or accrued as of the date of the Balance Sheet, whether or
not shown as being due on any Tax Returns; (iv) other than Taxes incurred in the Ordinary Course of
Business, the Company has no liability for unpaid Taxes

24

 

accruing after the Balance Sheet Date; and (v) the accruals for deferred Taxes reflected in
the Balance Sheet are adequate to cover any deferred Tax liability of the Company determined in
accordance with GAAP through the date of this Agreement.;

          (b) Except as set forth on Schedule 3.18(b), the net operating losses or other Tax
attributes of the Company Group are not currently subject to any limitation under Code Sections
382, 383 or 384.

          (c) All Tax Returns filed by or with respect to the Company through the taxable periods ending
December 31, 2005 have been examined and closed or are Tax Returns with respect to which the
applicable period for assessment under applicable Law, after giving effect to extensions or
waivers, has expired.

          (d) Except as set forth on Schedule 3.18(d), no request for information related to
Taxes has been received from any Governmental Entity since December 31, 2006, no audit or other
administrative proceeding is pending, being conducted, or, to the Knowledge of the Company,
threatened by any Tax authority, and no judicial proceeding is pending or being conducted that
involves any Tax or Tax Return filed or paid by or on behalf of the Company.

          (e) No claim or deficiency against the Company for the assessment or collection of any Taxes
has been asserted or proposed which claim or deficiency has not been settled with all amounts
determined to have been due and payable having been timely paid.

          (f) No claim has ever been made or, to the Knowledge of the Company, threatened by a Tax
authority in a jurisdiction where the Company has never filed Tax Returns asserting that the
Company is or may be subject to Taxes imposed by that jurisdiction, nor, to the Knowledge of the
Company, is there any factual basis for any such claim.

          (g) The Company has deducted, withheld and timely paid to the appropriate Governmental Entity
(or will deduct, withhold and timely pay to the appropriate Governmental Entity when due) all Taxes
required to be deducted, withheld or paid in connection with income allocated to or amounts owing
to any employee, independent contractor, creditor, stockholder or interest holder and has complied
or will comply with all applicable Tax Laws relating to the payment, withholding, reporting and
recordkeeping requirements relating to any Taxes required to be collected or withheld. All
individuals paid for services by the Company have been properly classified as either employees or
independent contractors in accordance with the Code and applicable Tax Laws.

          (h) There are no Encumbrances, other than Permitted Encumbrances, for Taxes upon the
properties or assets of the Company.

          (i) The Company has made available to Acquiror true, correct and complete copies of all
federal income Tax Returns, examination reports, and statements of deficiencies assessed against or
agreed to by the Company with respect to taxable periods ended after December 31, 2005. 
Schedule 3.18(i) lists all federal, state, local, and foreign income Tax

25

 

Returns filed with respect to the Company for taxable periods ended after December 31, 2005
that have been audited and/or that currently are the subject of an audit by a Tax authority.

          (j) Except as set forth on Schedule 3.18(j), the Company is not and never has been a
party to any Tax sharing, Tax indemnity, Tax allocation or similar agreements with respect to
Taxes, nor does the Company have any liability or potential liability to another party under any
such agreement.

          (k) None of the Shareholders is a “foreign person” as defined in Code Section 1445(f)(3), and
the rules and regulations promulgated thereunder, or a “disregarded entity” as defined in Treasury
Regulation Section 1.1445-2(b)(2)(iii).

          (l) The Company does not have any Liability for the Taxes of any Person under Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local, or foreign Law), as a
transferee or successor, by contract or otherwise.

          (m) The Company is not and has never been a “reporting corporation” subject to the information
reporting and record maintenance requirements of Code Section 6038A.

          (n) Except as set forth on Schedule 3.18(n), the Company has not made any payment, is
not obligated to make any payment and is not a party to any agreement that under any circumstance
could obligate it to make any payments as a result of the consummation of the transactions
contemplated by this Agreement that would not be fully deductible under Code Section 280G and
Section 162(m).

          (o) Except as set forth on Schedule 3.18(o), the Company has not executed or entered
into with, or received from (and prior to the close of business on the Closing Date will not
execute or enter into with, or receive from) any Governmental Entity (i) any agreement, waiver or
other document extending or having the effect of extending or waiving the period for assessments or
collection of any Taxes for which the Company would or could be liable or (ii) any closing
agreement pursuant to Code Section 7121, or any predecessor provision thereof or any similar
provision of state, local or foreign Law, (iii) any private letter ruling or private letter ruling
request; or (iv) any power of attorney with respect to any Tax matter which is currently in force.

          (p) The Company has not taken any position in any income Tax Return that would give rise to a
substantial understatement of federal income Tax within the meaning of Code Section 6662.

          (q) Except as set forth on Schedule 3.18(q), the Company has not participated in any
“reportable transaction” or any “listed transaction” within the meaning of Treasury Regulation
Section 1.6011-4.

          (r) Except as set forth on Schedule 3.18(r), the Company will not be required to
include any item of income in, or exclude any item of deduction from, taxable income for any
taxable period ending after the Closing Date as a result of any (A) change in accounting method

26

 

for any taxable period ending on or before the Closing Date (“Pre-Closing Period”)
under Code Section 481 (or any similar provision of state, local, or foreign Law), (B) written
agreement with a Governmental Entity with regard to the Tax liability of the Company for any
Pre-Closing Period, (C) deferred intercompany gain described in the Treasury Regulations under Code
Section 1502 (or any similar provision of state, local or foreign Law) arising from any transaction
that occurred prior to the Closing Date or prior to the Closing on the Closing Date, (D)
installment sale or open transaction disposition made prior to the Closing Date or prior to the
Closing on the Closing Date, or (E) prepaid amount received on or prior to the Closing Date.

          (s) The Company is not and has never been a United States real property holding corporation
within the meaning of Code Section 897(c)(2) during the applicable period specified in Code Section
897(c)(1)(A)(ii).

          (t) The Company Group has not constituted either a “distributing corporation” or a “controlled
corporation” (within the meaning of Code Section 355(a)(1)(A)) in a distribution of shares
described in Code Section 355 (i) in the two years prior to the date of this Agreement or (ii) in a
distribution that could otherwise be reasonably expected to constitute part of a “plan” or “series
of related transactions” (within the meaning of Code Section 355(e)) that includes the transactions
contemplated by this Agreement.

          (u) No property of the Company is property that the Company is or will be required to treat as
being owned by another Person under the provisions of Code Section 168(f)(8) (as in effect prior to
amendment by the Tax Reform Act of 1986) or is “tax-exempt use property” within the meaning of Code
Section 168.

          (v) The Company is not and has not been a party to any transaction or other arrangement which
is, or Tax items relating thereto are or will be, subject to adjustment under Code Section 482
(including any similar provision of state, local, or foreign Law).

     SECTION 3.19. Environmental Matters. There are no facts, circumstances, or
conditions existing, initiated or occurring prior to the Closing Date, which have or will result in
a material liability to the Company under Environmental Laws. There are no pending or to the
Knowledge of the Company, threatened Legal Proceedings relating to any Environmental Laws, and
neither the Company nor any officer or director has directly or indirectly received any written
notice of any such Legal Proceedings from any governmental authority or any other person or entity
that is reasonably likely to have a Company Material Adverse Effect or has Knowledge of any facts,
circumstances, or conditions prior to the Closing which would reasonably form the basis for any
Legal Proceeding regarding any material item. “Environmental Laws” means any Laws
(including, without limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act), relating to the remediation, production, installation, use, storage, treatment,
transportation, release, threatened Release, or disposal of hazardous materials, or noise control,
or the protection of human health, safety, natural resources, or the environment.

27

 

     SECTION 3.20. Intellectual Property; Software.

          (a) Schedule 3.20(a) sets forth a complete and correct list of all registered or
Proprietary Rights owned or used by the Company in connection with the businesses of the Company as
now conducted and as currently proposed to be conducted (other than software used by the Company
pursuant to the terms of standard off-the-shelf licenses) (the “Company Intellectual
Property”). Each registration of, or application to register, each Proprietary Right owned by
the Company as listed in Schedule 3.20(a) is valid and subsisting, in full force and effect
in all material respects, and, to the extent registered, has not been canceled, expired or
abandoned.

          (b) Except as set forth in Schedule 3.20(b), (i) the Company owns and possesses all
right, title and interest in and to, or has a written and enforceable license to use, all of the
material Company Intellectual Property, free and clear of all Encumbrances (other than Permitted
Encumbrances); (ii) the Company has not received any written notice of any claim by any third party
contesting the validity, enforceability, use or ownership of any material Company Intellectual
Property, nor, to the Company’s Knowledge, is any such claim threatened; (iii) the Company has not
infringed, misappropriated or otherwise conflicted, and to the Company’s Knowledge, no third party
has infringed, misappropriated or otherwise conflicted, with any Proprietary Rights of any third
party, nor will any infringement, misappropriation or conflict by the Company’s acts or omissions
occur as a result of the continued operation of the businesses of the Company as currently
conducted or as currently proposed to be conducted; (iv) all Company Intellectual Property set
forth in Schedule 3.20(a) will be owned by or available for use by the Company immediately
subsequent to Closing on identical terms and conditions as currently owned or used; (v) the Company
has made the necessary filings and recordations, and has paid all required fees, to record and
maintain its ownership of all registered Proprietary Rights owned by the Company; (vi) no trade
secret or confidential know-how either of which is material to the businesses of the Company has,
to its Knowledge, been disclosed or authorized to be disclosed to any third party, other than
pursuant to a non-disclosure agreement that protects the Company’s proprietary interests in and to
such trade secrets and confidential know-how and (vii) the Company has at all times complied in all
material respects with and is in compliance in all material respects with all applicable laws
relating to privacy, data protection or the collection, retention, use and disclosure of personal
information.

          (c) Section 3.20(c) of the Company Disclosure Schedule sets forth a correct and
complete list of (i) all software owned by the Company (“Company Proprietary Software”),
and (ii) all software licensed by the Company other than pursuant to standard off the shelf
licenses (“Company Licensed Software”). All software identified on Section 3.20(c)
of the Company Disclosure Schedule, as well as all information technology equipment and systems
used by the Company in connection therewith, operate and perform in all material respects in
accordance with their documentation and functional specifications and otherwise as required in
connection with the operation of the businesses of the Company and none of such software and
information technology equipment and systems have materially malfunctioned or failed within the
past twelve (12) months. The Company has implemented reasonable backup, security and disaster
recovery technology consistent with industry practices. None of the Company

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Proprietary Software is subject to any “copyleft” or other obligation or condition (including any
obligation or condition under any “open source” license such as the GNU Public License, Lesser GNU
Public License or Mozilla Public License) that: (i) could or does require, or could or does
condition the use or distribution of such Company Proprietary Software on, the disclosure,
licensing or distribution of any source code for any portion of such Company Proprietary Software;
or (ii) could or does otherwise impose any limitation, restriction or condition on the right or
ability of the Company to use or distribute any Company Proprietary Software. The source code for
Company Proprietary Software currently in use by the Company or that is subject to any license
arrangement and revealed to the Company is maintained in confidence.

          (d) All Material Contracts granting the Company rights in the Company Intellectual Property
are in full force and effect. The consummation of the transactions contemplated by this Agreement
will neither violate nor result in the breach, modification, cancellation, termination, or
suspension of, or release from escrow of any Company Intellectual Property under, any such Material
Contract in accordance with the terms of such Contract. The Company is in material compliance
with, and has not breached any material term of, any such Contract and, to the Knowledge of the
Company, all other parties to such Contracts are in compliance in all material respects with, and
have not breached any material term of, any such Contract. After the Closing Date the Company or a
Subsidiary of the Company will be permitted to exercise all of the Company’s rights or such
Subsidiary’s rights under such Contracts to the same extent that the Company or such Subsidiary
would have been able to do so had the transactions contemplated by this Agreement not occurred and
without the payment of any additional amounts or consideration other than ongoing fees, royalties,
or payments that the Company or such Subsidiary would otherwise be required to pay.

          (e) Without limiting the generality of the foregoing, the Terminating Agreement grants to the
Company a worldwide, perpetual, irrevocable and royalty free license and right to use, copy,
modify, perform, distribute, market, sell, create derivative works of and otherwise exploit in any
way and in any medium the Proprietary Rights purported to be licensed thereunder (the “Inverter
IP”) in the conduct the Company’s business as is currently conducted and currently proposed to
be conducted, free and clear of any Encumbrances.

     SECTION 3.21. Insurance. Schedule 3.21 lists all insurance policies
covering the businesses of the Company and including, asset, fire, hazard, casualty, liability,
life, worker’s compensation and other forms of insurance of any kind owned or held by the Company,
including insurance policies covering compliance with Laws relating to state and federal securities
laws. All such policies: (a) are with insurance companies reasonably believed by the Company to be
financially sound and reputable; (b) are in full force and effect; (c) are sufficient for
compliance in all material respects by the Company with all requirements of Law and of all Material
Contracts; (d) are, to the Knowledge of the Company, valid and outstanding policies enforceable
against the insurer and (e) have the policy expiration dates as set forth in Schedule 3.21.

     SECTION 3.22. Arrangements With Related Parties. Except as set forth in the
notes to the Audited Financial Statements, Schedule 3.22 and compensation to employees for
services to

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the Company who are also Shareholders, no officer, director, employee, shareholder or member
or any Affiliate of the Company, any member of his or her immediate family or any of their
respective Affiliates (“Related Persons”) currently or within the last three most recently
completed fiscal years of the Company (i) is or was a party to any Material Contract with the
Company, (ii) has or had any interest in the assets of the Company (except indirectly as a
shareholder) or (iii) has or had any cause of action or other suit, action or claim whatsoever
against, or owes any amount to, the Company, except for claims arising in the Ordinary Course of
Business from any such Person’s service to the Company as a director, officer or employee. Except
as set forth in Schedule 3.22, no Related Person currently or in the last three most
recently completed fiscal years of the Company owes or owed any amount to the Company nor does the
Company owe, nor has it owed during such three-year period, any amount to any Related Person, nor
has the Company committed to make any loan or extend or guarantee credit to or for the benefit of
any Related Person.

     SECTION 3.23. Accounts Receivable and Payable. All accounts receivable of the
Company (i) represent valid obligations arising from bona fide sales actually made, or services
actually performed, or to be performed, in the Ordinary Course of Business and are payable on
ordinary trade terms and (ii) are valid and legally binding obligations of the respective debtors,
enforceable in accordance with their terms subject to Enforceability Exceptions and are not subject
to any asserted refund or adjustment or any defense, right of set-off, assignment, restriction,
security interest or other Encumbrance, subject to reasonable reserves consistent with past
practices and set forth on the Audited Financial Statements. To the Knowledge of the Company,
there are no disputes regarding the collectibility of any such receivables (other than immaterial
disputes which are otherwise reserved for on the Company’s books). Since January 1, 2009, the
Company has collected all accounts receivables in the Ordinary Course of Business (subject to any
reserves or write-offs reflected in the Financial Statements). All accounts payable of the Company
reflected on the Balance Sheet or arising after the date thereof are the result of bona fide
transactions in the Ordinary Course of Business and have been paid or are not yet due and payable
or if due and payable are to be paid in the Ordinary Course of Business.

     SECTION 3.24. Broker’s Fees. Except for the amounts payable to Interim CEO
pursuant to Section 2.8, which are the full responsibility of the Shareholders, the Company
has no liability or obligation to pay any fees or commissions to any broker, finder, or similar
agent with respect to the transactions contemplated by this Agreement.

     SECTION 3.25. Customers and Suppliers. There has been no termination or
cancellation of (or any intent to terminate or cancel by the other party) the business relationship
of the Company with (i) any single customer or any group of affiliated customers who represented
five percent (5%) or more of the revenues or potential revenues of the Company during the fiscal
year ended December 31, 2009 or (ii) any single supplier or any group of affiliated suppliers who
provided five percent (5%) or more of the requirements of the business of the Company during the
fiscal year ended December 31, 2009. Except as set forth on Schedule 3.25, there is no
existing condition, state of facts or circumstances that in the reasonable judgment of the Company
will cause the Company or, to the Company’s Knowledge, any of its customers to terminate or
materially alter their relationships or refuse to consider a

30

 

prospective relationship with the Company. To the Knowledge of the Company, none of the
business of the Company or prospective business of the Company as reflected in the 2010 Plan is in
any manner dependent upon the making or receipt of any payments, discounts or other inducements to
any officers, directors, employees, representatives or agents of any customer.

     SECTION 3.26. Warranties. The Company does not make any express warranty or
guaranty as to products or services provided by the Company other than as set forth in
Schedule 3.26, and there is no pending or, to the Knowledge of the Company, threatened
claim alleging any breach of any such warranty or guaranty other than as reserved for on the
Balance Sheet or for immaterial claims made in the Ordinary Course of Business since the Balance
Sheet Date. The Company has no any material liability under any such warranty.

     SECTION 3.27. Accredited Investors. To the Company’s Knowledge, and except as
set forth on Schedule 3.27 (such Schedule prepared to the Company’s Knowledge), no more
than thirty-five (35) stockholders of the Company on the date hereof fail, and as of the Closing
Date will fail, to meet the definition of “accredited investors” as such term is defined in
Regulation D of the Securities Act.

     SECTION 3.28. Company Projections. Schedule 3.28 contains a true and
accurate copy of the 2010 Plan. The financial projections contained in the 2010 Plan were made by
the Company in good faith and were based on assumptions that were when made and are as of the date
hereof and as of the Closing reasonable in the good faith judgment of the Company’s Chief Executive
Officer. There is no guarantee that the 2010 Plan will be achieved.

     SECTION 3.29. Foreign Corrupt Practices Act. The Company (including any of
its officers, directors, employees and others acting on behalf of the Company) has not taken any
action which would cause it to be in violation of the Foreign Corrupt Practices Act of 1977, as
amended, or any rules or regulations thereunder.

     SECTION 3.30. Disclosure. To the Company’s Knowledge, no representation or
warranty made by the Company in this Agreement, or any Company Document contains an untrue
statement of a material fact or omits to state a material fact required to be stated herein or
therein or necessary to make the statements contained herein or therein not misleading unless such
statements would not individually or in the aggregate result in a Company Material Adverse Effect
subject to the MAE Exceptions.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

OF THE ACQUIROR AND THE ACQUIROR SUB

     Except as specifically set forth in the Schedules (with specific references to the Section or
subsection of this Agreement to which the information stated in such disclosure relates), the
Acquiror and Acquiror Sub hereby represents, warrants to and agrees with the Company follows, in
each case as of the date of this Agreement and as of the Closing Date:

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     SECTION 4.1. Organization and Qualification. Each of the Acquiror and
Acquiror Sub is a corporation duly organized, validly existing and in good standing under the laws
of their respective jurisdictions of incorporation, and has the full corporate power and authority
to own, operate and lease its assets, to carry on its business as currently conducted, to execute
and deliver this Agreement and to carry out the transactions contemplated hereby. Each of the
Acquiror and Acquiror Sub is duly qualified or authorized to conduct business as a foreign
corporation and is in good standing in the states, countries and territories in which the nature of
the business conducted by it or the character of the assets owned, leased or otherwise held by it
makes such qualification or authorization necessary, other than where the failure to be so
qualified, authorized or in good standing would not have an Acquiror Material Adverse Effect.

     SECTION 4.2. Capitalization. The authorized capital stock of the Acquiror
consists of (i) 70,000,000 shares of Common Stock of which 42.044 million shares of Common Stock
are issued and outstanding as of December 31, 2009 and of which 42.429 million shares are reserved
for issuance and (ii) 1,000,000 shares of Preferred Stock, none of which are issued and outstanding
and none of which are reserved for issuance. Except for shares issuable pursuant to this
Agreement, 4.826 million shares of Common Stock issuable under outstanding stock options, and 0.385
million non-vested restricted stock units, there are no options, warrants or other agreements
obligating the Acquiror to issue or sell any shares of capital stock of, or other equity interests
in the Acquiror. There are no outstanding obligations of the Acquiror to repurchase, redeem or
otherwise acquire any shares of its capital stock or to register with the SEC any shares of its
capital stock. At the Effective Time, the Acquiror will have sufficient number of authorized (and
otherwise unreserved) shares of Common Stock to cover the Closing Share Consideration. Upon
consummation of the Merger, and as of the Effective Time, the Acquiror Common Shares to be issued
in the Merger will be duly and validly issued, fully paid and non-assessable, free and clear of all
Encumbrances imposed by Acquiror, except as contemplated hereby. The Acquiror Common Shares to be
issued in the Merger will be free from any warrants, options, commitments or rights of any kind
(including, without limitation, rights of first refusal, tag-along and drag-along rights), voting
agreements, voting trust agreements or shareholder or similar agreements relating thereto.
Assuming the accuracy of the representations and warranties of the Shareholders contained in the
Accredited Investor Questionnaires, the Acquiror Common Shares to be issued in the Merger are being
issued in a manner that is exempt from the registration requirements of federal and state
securities laws.

     SECTION 4.3. Authority; Binding Obligation. Each of the Acquiror and
Acquiror Sub has all requisite corporate power, authority and legal capacity to execute and deliver
this Agreement and each of the other agreements, documents, certificates or other instruments
contemplated hereby (the “Acquiror Documents”), to perform its respective obligations
hereunder and thereunder and to consummate the transactions hereby and thereby. The execution,
delivery and performance by the Acquiror and Acquiror Sub of this Agreement, the execution,
delivery and performance by the Acquiror and Acquiror Sub of the Acquiror Documents, and the
consummation by the Acquiror and Acquiror Sub of the transactions contemplated hereby and thereby,
have been duly authorized and approved by all necessary corporate action, and no other corporate
proceeding on the part of the Acquiror and Acquiror Sub is necessary to authorize this Agreement
and the Acquiror Documents, or to consummate the

32

 

transactions contemplated hereby and thereby, other than the approval and adoption of this
Agreement by the Acquiror in accordance with the Delaware General Corporation Law and the
Acquiror’s and Acquiror Sub’s articles of incorporation and bylaws. This Agreement has been, and
the Acquiror Documents will be at or prior to the Closing, duly executed and delivered by the
Acquiror and Acquiror Sub. This Agreement constitutes, and the Acquiror Documents when so executed
and delivered will constitute a legal, valid and binding obligation of the Acquiror and Acquiror
Sub, enforceable in accordance with its terms; provided, however, that the Merger
will not become effective until the Articles of Merger are filed with the office of the Secretary
of State of the State of Oregon. No consent of any shareholder of Acquiror or Acquiror Sub or any
Affiliate thereof is required for the consummation of the Merger and the transactions contemplated
hereby.

     SECTION 4.4. No Conflict; Required Filings and Consents. The execution,
delivery and performance by the Acquiror and Acquiror Sub of this Agreement and the Acquiror
Documents, the fulfillment of and compliance with the respective terms and provisions hereof and
thereof, and the consummation by the Acquiror and Acquiror Sub of the transactions contemplated
hereby and thereby, do not and will not:

          (a) conflict with, or violate any provision of, the certificate or articles of incorporation
or the bylaws of the Acquiror or of Acquiror Sub;

          (b) conflict with or violate any Law applicable to the Acquiror or Acquiror Sub, except for
such conflicts or violations that, either individually or in the aggregate, would not have an
Acquiror Material Adverse Effect or prevent or materially delay the consummation of the
transactions contemplated by this Agreement;

          (c) conflict with, result in any breach of, or constitute a default (or an event that with
notice or lapse of time or both would become a default) under any material Contract to which the
Acquiror or Acquiror Sub is a party or by which the Acquiror or Acquiror Sub or any of their
respective assets may be bound, except for such conflicts, breaches or defaults that, either
individually or in the aggregate, would not have an Acquiror Material Adverse Effect or prevent or
materially delay the consummation of the transactions contemplated by this Agreement; or

     (d) require any consent, approval, authorization or permit of, or filing with or notification
to, any Person not party to this Agreement, except the filing and recordation of the Articles of
Merger as required by Oregon Law and the pre-merger notification requirements under the HSR Act.

     SECTION 4.5. Litigation; Disputes. There are no Legal Proceedings pending or,
to the Knowledge of the Acquiror or Acquiror Sub, threatened against the Acquiror or Acquiror Sub
or any of their respective assets or businesses, that would reasonably be expected to result in an
Acquiror Material Adverse Effect or prevent or materially delay the consummation of the
transactions contemplated by this Agreement. Except under proceedings that have been publicly
disclosed by the Acquiror in its periodic or current reports filed with the SEC, the Acquiror is
not operating under nor is it subject to any judgment, writ, order, injunction, award or decree of
any

33

 

court, judge, justice or magistrate, including any bankruptcy court or judge, or any order of,
or by, any Governmental Entity.

     SECTION 4.6. SEC Filings. The Acquiror is eligible to use a registration
statement on Form S-3 for the registration for resale of the Acquiror Common Shares to be issued
hereunder. The reports filed with the SEC required by the Securities Exchange Act of 1934, as
amended (the “Exchange Act”) (a) comply as to form in all material respects and were
prepared in accordance with the requirements of the Exchange Act and (b) did not, at the time they
were filed, contain any untrue statements of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not misleading.

     SECTION 4.7. Financial Statements. The audited financial statements filed by
the Acquiror in its most recent Annual Report on Form 10-K and the unaudited financial statements
included in the Quarterly Reports on Form 10-Q for the year ended December 31, 2009 present fairly,
in all material respects, the financial condition of the Acquiror as of the respective dates and
the results of operations and cash flows for the respective periods indicated and have been
prepared in accordance with GAAP applied on a consistent basis, except for the absence of required
footnotes with respect to the unaudited financial statements. Acquiror has the requisite cash to
pay for the Cash Consideration and Additional Consideration and such cash is free, or at the time
of payment will be free, from Encumbrances.

     SECTION 4.8. Disclosure. To the Acquiror’s Knowledge, no representation or
warranty made by the Acquiror or Acquiror Sub in this Agreement, any Acquiror Document contains an
untrue statement of a material fact or omits to state a material fact required to be stated herein
or therein or necessary to make the statements contained herein or therein not misleading unless
such statements would not individually or in the aggregate result in an Acquiror Material Adverse
Effect subject to the MAE Exceptions.

     SECTION 4.9. No Prior Activities of Acquiror Sub. Except for obligations
incurred in connection with its incorporation or organization or the negotiation and consummation
of this Agreement and the transactions contemplated hereby, Acquiror Sub has neither incurred any
obligation or liability nor engaged in any business or activity of any type or kind whatsoever or
entered into any agreement or arrangement with any Person.

     SECTION 4.10 Examination. Neither Acquiror nor Acquiror Sub is relying on any
forecasted operating results or budgets of the Company prepared by or on behalf of Acquiror or
Acquiror Sub. Any claims Acquiror or Acquiror Sub may have for breach of representation or
warranty shall be based solely on the representations and warranties of the Company set forth in
Article III herein.

34

 

     SECTION 4.11 No Knowledge of Breach. As of the date of this Agreement, to
Acquiror’s or Acquiror Sub’s Knowledge, they are not aware (a) that any of the representations or
warranties contained in Article III is untrue or incorrect in any material respect or (b)
of any other condition or circumstance that would excuse Acquiror or Acquiror Sub from its timely
obligations hereunder.

ARTICLE V

COVENANTS AND AGREEMENTS

     SECTION 5.1. Access to Information.

          (a) Prior to the Closing Date, to the extent permitted by this Section 5.1 and
applicable Law, the Acquiror shall be entitled, through its officers, employees and representatives
(including its legal advisors and accountants), to make such investigation of the properties,
businesses and operations of the Company and such examination of the books and records and Tax
reporting positions of the Company as it reasonably requests and to make extracts and copies of
such books and records at the Acquiror’s own expense. Any such investigation and examination shall
be conducted during regular business hours, upon reasonable notice through the Chief Executive
Officer of the Company or his designee and under reasonable circumstances and shall be subject to
restrictions under applicable Law and the existing confidentiality agreement in place between the
Company and the Acquiror. The Company shall cause the officers, employees, consultants, agents,
accountants, attorneys and other representatives of the Company to reasonably cooperate with the
Acquiror and the Acquiror’s representatives in connection with such reasonable investigation and
examination, and the Acquiror and its representatives shall cooperate with the Company and its
representatives and shall use their commercially reasonable efforts to minimize any disruption to
the business. Notwithstanding the foregoing, the Acquiror and its representatives shall not have
any contact with the customers, clients or employees of the Company without the prior written
consent of the Company, which shall not be unreasonably withheld or delayed, other than (i) contact
with any individual set forth in Schedule 5. 1, or (ii) contact with any client, vendor or
customer at which at least one of the individuals listed in Schedule 5.1 is present.

          (b) Prior to the Closing Date, to the extent permitted by this Section 5.1 and
applicable Law, the Company shall be entitled, through its officers, employees and representatives
(including its legal advisors and accountants), to make such reasonable investigation of the
properties, businesses and operations of the Acquiror and the Acquiror Subsidiaries and such
examination of the books and records and Tax reporting positions of the Acquiror and the Acquiror
Subsidiaries to the extent that such information is available to the shareholders of the Acquiror
and furnish extracts and copies of such books and records, at the Company’s expense, of the same.
Any such investigation and examination shall be conducted during regular business hours and under
reasonable circumstances and shall be subject to restrictions under applicable Law. The Acquiror
shall cause the officers, employees, consultants, agents, accountants, attorneys and other
representatives of the Acquiror and the Acquiror Subsidiaries to cooperate with the Company and the
Company’s representatives in connection with such investigation and examination, and the Company
and its representatives shall

35

 

cooperate with the Acquiror and its representatives and shall use their commercially
reasonable efforts to minimize any disruption to the business.

     SECTION 5.2. Conduct of the Business Pending the Closing.

          (a) From the date hereof until the Closing, except (i) as set forth in Schedule
5.2(a), (ii) as otherwise contemplated by this Agreement or (iii) with the prior written
consent of the Acquiror (which consent shall not be unreasonably withheld) or delayed, the Company
shall:

               (i) conduct the respective businesses of the Company only in the Ordinary Course of Business
and in accordance with the 2010 Plan (provided that the Company otherwise obtains adequate
funding);

               (ii) use its commercially reasonable efforts to preserve the present business operations,
organization and goodwill of the Company and preserve the relationships and goodwill of the Company
with customers, suppliers, employees and other Persons having business relations with the Company;

               (iii) collect all receivables and pay all accounts payable and other liabilities when due in
the Ordinary Course of Business;

               (iv) maintain its existence and good standing in its jurisdiction of organization and in each
jurisdiction in which the ownership or leasing of its property or the conduct of its business
requires such qualification; and

               (v) duly and timely, including applicable extensions, file or cause to be filed all material
reports and returns required to be filed with any Governmental Entity and promptly pay or cause to
be paid when due, including applicable extensions, all Taxes, assessments and governmental charges,
including interest and penalties levied or assessed, unless contested in good faith by appropriate
proceedings.

          (b) From the date hereof until the Closing, except (i) as set forth in
Schedule 5.2(b), (ii) as otherwise contemplated by this Agreement or (iii) with the prior
written consent of the Acquiror (which consent shall not be unreasonably withheld), the Company
shall not:

               (i) declare, set aside, make or pay any dividend or other distribution in respect of the
capital stock of the Company, or repurchase, redeem or otherwise acquire any outstanding shares of
the capital stock or other securities of, or other ownership interests in, the Company (except for
shares issued upon a “cashless exercise” for the Company Warrants and Company Options);

               (ii) issue or sell any shares of capital stock, notes, bonds or other securities of the
Company or grant options, warrants, calls or other rights to purchase or otherwise acquire shares
of the capital stock or other securities of the Company;

36

 

               (iii) create, incur, assume or refinance any Indebtedness or guaranty any Indebtedness except
Transaction Expenses or the Evans Advance;

               (iv) effect any recapitalization, reclassification or like change in the capitalization of the
Company, except to the extent required by Law or as a result of the exercise of Company Warrants or
Company Options;

               (v) amend the articles of incorporation (excluding the filing of a certificate of correction
to clarify or correct any provision thereof) or by-laws or comparable organizational documents of
the Company;

               (vi) (A) increase the annual level of base compensation of any employee, officer or director
of the Company except as otherwise required by existing employment agreements or in the Ordinary
Course of Business, (B) grant any bonus not set forth in the Company’s bonus plan as reflected in
the 2010 Plan, benefit or other direct or indirect compensation to any employee, officer or
director, unless such compensation will be paid by the Company prior to Closing and will not, in
any event, bind, obligate or become a liability of the Surviving Company after Closing,
(C) materially increase the coverage or benefits available under any (or create any new) severance
pay, termination pay, vacation pay, company awards, salary continuation for disability, sick leave,
deferred compensation, bonus or other incentive compensation, insurance, pension or other employee
benefit plan or arrangement made to, for, or with any of the employees of the Company or otherwise
modify or amend or terminate any such plan or arrangement, unless such compensation, plan or
arrangement will be paid by the Company prior to Closing and will not, in any event, bind, obligate
or become a liability of the Surviving Company after Closing or (D) enter into any employment,
deferred compensation, severance, consulting, non-competition, retention or similar agreement with
any employee, officer or director of the Company (or amend any such agreement) to which the Company
is a party or involving any employee of the Company, except in the Ordinary Course of Business,
which would bind, obligate or become a liability of the Surviving Company after Closing;

               (vii) acquire any material properties or assets or sell, assign, license, transfer, convey,
lease or otherwise dispose of any of the material properties or assets of the Company (except
pursuant to an existing Contract for fair consideration in the Ordinary Course of Business or for
the purpose of disposing of obsolete or worthless assets);

               (viii) other than in the Ordinary Course of Business, cancel or compromise any material debt
or claim or waive or release any material right of the Company;

               (ix) enter into, modify, extend or terminate any labor or collective bargaining agreement or,
through negotiations or otherwise, make any commitment or incur any liability to any labor union,
labor organization, work council or other labor association;

               (x) enter into or agree to enter into any merger or consolidation with any corporation or
other entity, or agreement to acquire the securities of any other Person;

37

 

               (xi) enter into or modify any Contract with any Shareholder or any Affiliate of any
Shareholder;

               (xii) except to the extent required by Law, make or rescind any material election relating to
Taxes or settle or compromise any claim, investigation, audit or controversy relating to a material
amount of Taxes;

               (xiii) except to the extent required by Law or GAAP, make any material change to any of its
methods of accounting or methods of reporting revenue and expenses or accounting practices;

               (xiv) make any new capital expenditures exceeding $25,000 in the aggregate;

               (xv) enter into, modify, amend or terminate any Material Contract or waive, release or assign
any material rights or claims thereunder other than in the Ordinary Course of Business;

               (xvi) enter into any Contract which would be considered a Material Contract (which for purpose
of this covenant only would constitute a threshold of $100,000 per annum per agreement) to the
extent consummation of the transactions contemplated by this Agreement conflict with, or result in
a violation or breach of, or default (with or without notice or lapse of time, or both) under, or
give rise to a right of, or result in, termination, cancellation or acceleration of any obligation
or to the loss of a benefit under, or result in the creation of any Encumbrance in or upon any of
the properties or other assets of the Company under, or require the Acquiror to license or transfer
any of the Proprietary Rights or other material assets under, or give rise to any increased,
additional, accelerated, or guaranteed right or entitlements of any third party under, or result in
any material alteration of, any provision of such Contract; or

               (xvii) agree to do anything prohibited by this Section 5.2(b).

          (c) In connection with the continued operation of the Company during the period commencing on
the date hereof and ending on the Closing Date, and only in accordance with applicable Laws,
personnel designated by the Company shall confer in good faith on a regular and frequent basis with
the Acquiror regarding operational matters and the general status of on-going operations of the
Company to the extent reasonably requested by the Acquiror. The Company hereby acknowledges that,
absent a written waiver as to such matter, the Acquiror does not and shall not waive any right it
may have hereunder as a result of any such consultation. Notwithstanding the foregoing, nothing
contained herein shall give to the Acquiror, directly or indirectly, rights to control or direct
the operations of the Company prior to the Closing Date. Prior to the Closing Date, the Company
shall exercise, consistent with the terms and conditions of the Agreement, complete control and
supervision of the operation of the business of the Company in the Ordinary Course of Business.

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     SECTION 5.3. Appropriate Action; Consents; Filings; HSR Act.

          (a) Upon the terms and subject to the conditions set forth in this Agreement, the Parties
shall use their commercially reasonable efforts to take, or cause to be taken, all appropriate
action, and do, or cause to be done, all things necessary, proper or advisable under applicable Law
or otherwise to consummate and make effective the transactions contemplated by this Agreement as
promptly as practicable, including without limitation (i) executing and delivering any additional
instruments necessary, proper or advisable to consummate the transactions contemplated by, and to
carry out fully the purposes of, this Agreement, (ii) obtaining from any Governmental Entities any
Permits required to be obtained or made by the Acquiror, or Acquiror Sub, or the Company in
connection with the authorization, execution and delivery of this Agreement and the consummation of
the transactions contemplated herein, including, without limitation, the Merger and (iii) making
all necessary filings within six (6) Business Days from the date hereof, and thereafter making any
other required submissions, with respect to this Agreement and the Merger under any applicable Law;
provided that the Acquiror and the Company shall cooperate with each other in connection with the
making of all such filings, including providing copies of all such documents to the non-filing
Party and its advisors prior to filing and discussing all reasonable additions, deletions or
changes suggested in connection therewith. The Company and the Acquiror shall furnish to each
other all information required for any application or other filing to be made pursuant to the rules
and regulations of any applicable Law in connection with the transactions contemplated by this
Agreement.

          (b) The Company and the Acquiror shall file, within six (6) Business days from the date
hereof, any Notification and Report Forms and related material that it may be required to file with
the Federal Trade Commission and the Antitrust Division and the United States Department of Justice
under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended (the “HSR Act”),
shall use its best efforts to obtain an early termination of the applicable waiting period, and
shall make any further filings pursuant thereto that may be necessary, proper or advisable in
connection therewith. The Acquiror, on the one hand, and the Shareholders, on the other hand,
shall each pay one half of the filing fees under the HSR Act.

          (c) Except as the Parties may otherwise agree, the Company and the Acquiror shall give (and in
the case of the Acquiror, shall cause Acquiror Sub to give) any notices to third parties, and use
(and in the case of the Acquiror, shall cause Acquiror Sub to use) their commercially reasonable
efforts to obtain any third-party consents, approvals or waivers (A) required to consummate the
transactions contemplated in this Agreement, (B) disclosed or required to be disclosed in the
Schedules or (C) required to prevent a Company Material Adverse Effect or an Acquiror Material
Adverse Effect.

          (d) In the event that either the Company or the Acquiror shall fail to obtain any third-party
consent, approval or waiver described in Section 5.3(c), such Party shall use its
commercially reasonable efforts, and shall take any such actions reasonably requested by the other
Parties, to minimize any adverse effect upon the Company and the Acquiror or Acquiror Sub and their
respective businesses resulting, or which could reasonably be expected to result after the
Effective Time, from the failure to obtain such consent, approval or waiver.

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     SECTION 5.4. Notification of Certain Matters. From the date of this Agreement
until the Effective Time, the Company and the Acquiror shall promptly notify each other in writing
of any pending or, to the Knowledge of the Company or the Acquiror or Acquiror Sub, threatened
action, proceeding or investigation by any Governmental Entity or any other Person (i) challenging
or seeking damages in connection with the Merger or the conversion of Company Shares into the
Merger Consideration pursuant to the Merger or (ii) seeking to restrain or prohibit the
consummation of the Merger or otherwise limit the right of Acquiror or any Acquiror Subsidiary to
own or operate all or any portion of the businesses or assets of the Company. The Company and the
Acquiror shall cooperate with each other in defending any such action, proceeding or investigation,
including seeking to have any stay or temporary restraining order entered by any court or other
Governmental Entity vacated or reversed.

     SECTION 5.5. Further Assurances. Through the Closing, each of the Acquiror,
the Company and the Shareholders shall use its commercially reasonable efforts to (i) take all
actions necessary or appropriate to consummate the transactions contemplated by this Agreement and
(ii) cause the fulfillment of all of the conditions to their respective obligations to consummate
the transactions contemplated by this Agreement.

     SECTION 5.6. Negotiations with Others. From and after the date hereof until
the earlier of the Closing Date or the termination of this Agreement pursuant to Section
8.1 hereof, without the express written consent of the Acquiror,
the Company shall not
and shall neither cause nor permit the Shareholders or its officers, directors, employees or
agents, directly or indirectly, to (i) solicit, initiate discussions or engage in discussions or
negotiations with any Person other than the Acquiror (whether such negotiations are initiated by
the Company or otherwise), relating to the possible acquisition, whether by way of merger,
reorganization, purchase of capital stock, purchase of assets or otherwise (any such acquisition
being referred to in this Section 5.6 as an “Acquisition Transaction”), of any
interest in the Company, (ii) provide information with respect to any Shareholder or the Company to
any Person other than the Acquiror, in connection with a possible Acquisition Transaction or
(iii) enter into a transaction with any Person other than the Acquiror, concerning a possible
Acquisition Transaction. The Parties hereto recognize and acknowledge that a breach by the Company
of this Section 5.6 may cause irreparable and material loss and damage for the Acquiror,
the amount of which cannot be readily determinable and as to which it will not have any adequate
remedy at law or in damages. Accordingly, in addition to any remedy the Acquiror may have in
damages by an action at law, it shall be entitled to the issuance of an injunction restraining any
such breach or any other remedy at law or in equity for any such breach.

     SECTION 5.7. Publicity. The Acquiror and the Company will consult with each
other as to the form, substance and timing of the initial public disclosure of matters related to
this Agreement or any of the transactions contemplated hereby, and no such initial disclosure will
be made by one without the prior written consent of the other, which consent will not be
unreasonably withheld or delayed; provided, that each may make such disclosures as are
necessary to comply with any applicable Law after making good faith efforts to consult with the
other Parties and provided further it shall not be deemed unreasonable for the Company to withhold
consent regarding public disclosure of the Merger Consideration, except where necessary to comply
with any applicable Law. The Company shall not, and shall take reasonable

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steps to ensure that none of the Shareholders shall, issue any press release or public
announcement concerning this Agreement or the transactions contemplated hereby, without obtaining
the prior written consent of the Acquiror which shall not be unreasonably withheld or delayed.

     SECTION 5.8. Related-Party Transactions. Except for the matters listed in
Schedule 5.8 or compensation or employment arrangements with employees of the Company
reflected in the 2010 Plan, on or prior to the Closing Date, the Company shall (i) terminate all
Contracts with any of the Shareholders or their respective Affiliates and (ii) deliver releases
executed by such Affiliates with whom the Company has terminated such Contracts pursuant to this
Section 5.8 providing that no further payments are due, or may become due, under or in
respect of any such terminated Contracts; provided, that in no event shall the Company or
the Acquiror pay any fee or otherwise incur any expense or financial exposure with respect to any
such termination or release.

     SECTION 5.9. Tax Matters.

          (a) Tax Periods Ending on or Before the Closing Date. The Shareholder Representative
shall, at the Shareholder Representative’s expense, prepare or cause to be prepared and file or
cause to be filed all Tax Returns required to be filed by the Company (including such Tax Returns
filed pursuant to any valid extension of time to file and any amendments thereto) for all
Pre-Closing Periods (“Pre-Closing Period Tax Returns”), and the Shareholders shall be
liable for all Taxes with respect to such Pre-Closing Period Tax Returns (and any other Taxes
attributable to a Pre-Closing Period). Such Tax Returns shall be prepared on a basis consistent
with the prior Tax Returns for the Company. The Shareholder Representative shall permit Acquiror
to review and comment on each Pre-Closing Period Tax Return at least 30 days before such Tax Return
is required to be filed and shall consider in good faith any comments provided by Acquiror.
Acquiror shall cause the Surviving Company, at the expense of the Surviving Company, to prepare and
file, or cause to be prepared and filed all Tax Returns of the Surviving Company for all taxable
periods beginning on or after the Closing Date (“Post-Closing Periods”) (such Tax Returns,
“Post-Closing Period Tax Returns”), and the Surviving Company shall pay, or cause to be
paid, all Taxes with respect to such Post-Closing Period Tax Returns.

          (b) Straddle Period Tax Returns. Acquiror shall cause the Surviving Corporation, at
the expense of the Surviving Corporation, to prepare and file, or cause to be prepared and filed,
any Tax Returns required to be filed by the Company for any taxable periods which include (but do
not end on) the Closing Date (“Straddle Periods”) (such Tax Returns, “Straddle Period
Tax Returns”). Acquiror shall cause the Surviving Corporation to pay or cause to be paid all
Taxes with respect to such Straddle Period Tax Returns, subject to the Shareholders’ responsibility
for the Taxes of such Straddle Period attributable to the portion of the Straddle Period ending on
the Closing Date (“Pre-Closing Taxes”) as determined in accordance with Section
5.9(c). Acquiror shall provide a copy of each Straddle Period Tax Return and a statement
certifying the amount of Pre-Closing Taxes shown on such Straddle Period Tax Return, if any, that
are chargeable to the Shareholders (the “Tax Statement”) to the Shareholder Representative
for review and comment at least thirty (30) days before such

41

 

Straddle Period Tax Return is required to be filed and shall consider in good faith any
objections from the Shareholder Representative. If the Shareholder Representative and the Acquiror
are unable to resolve any such objections within five (5) Business Days, it shall be promptly
submitted to the Arbiter for prompt resolution. The Shareholders shall pay to the Surviving
Corporation an amount equal to the Pre-Closing Taxes due with any Straddle Period Tax Return and
payable by the Shareholders pursuant to this Section 5.9(b) at least three (3) Business
Days before the Surviving Corporation is required to pay or cause to be paid the related Tax
Liability or if later, within three (3) Business Days following resolution of any objection.

          (c) Calculation of Taxes for Straddle Period Tax Returns. Pre-Closing Taxes for
Straddle Period Tax Returns shall be calculated as though the taxable period of the Company
terminated as of the close of business on the Closing Date; provided, however, that in the case of
a Tax not based on income, receipts, proceeds, profits or similar items, Pre-Closing Taxes shall be
equal to the amount of Tax for the entire Straddle Period multiplied by a fraction, the numerator
of which is the total number of days from the beginning of the Straddle Period through the Closing
Date and the denominator of which is the total number of days in the Straddle Period. All Straddle
Period Tax Returns shall be prepared, and all determinations necessary to give effect to the
foregoing allocations shall be made, in a manner consistent with prior practice of the Company.

          (d) Tax Proceedings. The Acquiror shall notify the Shareholder Representative upon
the commencement of any Tax audit or administrative or judicial proceeding or of any demand or
claim on the Surviving Corporation (“Tax Proceeding”) by any Governmental Entity relating
to the liability of the Company for Taxes for any period described in Sections 5.9(a) and
5.9(b). The Shareholder Representative shall have the right to participate in any Tax
Proceeding, if and to the extent the result of such Tax Proceeding could impose additional Tax
liability with respect to periods prior to the Closing Date. The Shareholder Representative’s
right to participate shall include the right to receive copies of all correspondence from any
Governmental Entity relating to such Tax Proceeding and review and comment on submissions relating
to any such Tax Proceeding, and the Surviving Corporation shall consider in good faith any comments
provided by the Shareholder Representative. The Acquiror shall not agree to settle or cause or
permit the Surviving Company to settle any Tax Proceeding which has the effect of imposing
additional Tax liability on the Company with respect to any Pre-Closing Tax Period without the
consent of the Shareholder Representative, which consent may not be unreasonably withheld,
conditioned or delayed; provided that the Shareholders shall, in accordance with Article
IX, indemnify the Surviving Company for any increase in the Tax liability of the Surviving
Company for any period on or after the Closing as a direct result of the settlement of the Tax
Proceeding relating to the Pre-Closing Tax Period, and for any Losses incurred by an Acquiror
Indemnified Party in connection therewith, for any period ending after the Closing.

          (e) Transfer Taxes. The Shareholders on the one hand and Company on the other will
pay any real property transfer tax or real property gains tax, stamp tax, stock transfer tax, or
other similar Tax, and any penalties or interest with respect thereto (collectively, “Transfer
Taxes”) payable in connection with the transactions contemplated by this Agreement. Each party
agrees to cooperate with the other in the filing of any returns with respect to the

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Transfer Taxes, including promptly supplying any information in their possession that is
reasonably necessary to complete such returns.

          (f) Amendments, Modifications, etc. After the Closing Date, Acquiror or an
appropriate affiliate, to the extent permitted by Law, shall have the right to amend, modify or
otherwise change all Tax Returns of the Company for all Tax periods; provided that Acquiror or an
appropriate Affiliate shall indemnify Shareholders for any increase in their respective Tax
liability for any period prior to the Closing Date resulting from any amendment, modification or
change to any Tax Returns (other than any amendment, modification or change necessary in order to
comply with Law or to correct any inaccurate statement of fact), to the extent that the Shareholder
Representative has not consented to such amendment, modification or change, which consent will not
be unreasonably withheld.

          (g) Cooperation. Acquiror and the Company and the Shareholders shall cooperate fully,
as and to the extent reasonably requested by the other party, in connection with the preparation
and filing of Tax Returns pursuant to this Section 5.9 and any audit, litigation or other
proceeding with respect to Taxes. Such cooperation shall include signing any Tax Returns, amended
Tax Returns, claims or other documents necessary to settle any Tax controversy, the retention and
(upon the other party’s request) the provision of records and information which are reasonably
relevant to any such audit, litigation or other proceeding and making employees available on a
mutually convenient basis to provide additional information and explanation of any material
provided hereby.

          (h) Documentation. Acquiror and the Company and the Shareholders further agree, upon
request from the other party, to use their commercially reasonable efforts to obtain any
certificate or other document from any Governmental Authority or any other Person as may be
necessary to mitigate, reduce or eliminate any Tax that could be imposed (including, but not
limited to, with respect to the transactions contemplated hereby).

          (i) Tax Sharing Agreements. All tax sharing agreements or similar agreements with
respect to or involving the Company shall be terminated as of the Closing Date and, after the
Closing Date, no such party shall be bound thereby or have any liability thereunder.

     SECTION 5.10. Approval of Shareholders.The Company shall duly seek to obtain
the written consent of its Shareholders as soon as practicable hereafter (but not more than five
(5) Business Days after the receipt of information and documents from Acquiror needed to be
transmitted to Shareholders) for the purpose of approving this Agreement and the Merger under
applicable provisions of Oregon Law. The Company shall provide Acquiror with a copy of the
applicable statement and other disclosure materials, if any (“Proxy Statement”) provided to
the Shareholders in connection with the solicitation of such consent. The Board of Directors and
management of the Company shall recommend to the Shareholders approval of this Agreement, including
the Merger, and the transactions contemplated hereby, together with any matters incident thereto,
shall not, absent a material breach of this Agreement by Acquiror or Acquiror Sub, a Superior
Competing Transaction (unless not recommending a Superior Competing Transaction would not result in
the breach of the Board’s fiduciary duties) or the termination

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hereof in accordance with its terms, (x) withdraw, modify or qualify in any manner adverse to
the Acquiror such recommendation or (y) take any other action or make any other public statement
inconsistent with such recommendation (collectively, a “Change in Recommendation”), in each
case except and to the extent that the Board of Directors of the Company determines in good faith,
in light of a Superior Competing Transaction occurring after the date of this Agreement and prior
to the action on the Merger, and after consultation with outside legal counsel, that failure to
effect a Change in Recommendation would result in a breach of its fiduciary duties under applicable
Oregon law; provided, however, that notwithstanding anything to the contrary in the foregoing, the
Company shall solicit the consent of its Shareholders in accordance with the first sentence of this
Section 5.9 even if there shall have been a Change in Recommendation. Prior to making a
Change in Recommendation, the Company shall have (i) advised the Acquiror that it has received a
Superior Competing Transaction, (ii) provided a copy of such Superior Competing Transaction and
specified the terms and conditions thereof and the parties involved and (iii) negotiated in good
faith over a period of not less than three (3) days with the Acquiror to make such adjustments in
the terms and conditions of this Agreement that would enable the Company to not effect a Change in
Recommendation if and to the extent that the Acquiror elects to make such adjustments; provided,
however, that the Acquiror shall not be required to propose or agree to any such adjustment.

     SECTION 5.11. Employee Benefit Plans. Each Company Pension Plan that is subject to
Title IV of ERISA or Section 412 of the Code shall remain in place following the Closing.

     SECTION 5.12. Company Customers. At least two (2) Business Days before the
expected satisfaction of the latest to occur or, if permissible, waiver, of the conditions set
forth in Article VI, the Company shall deliver a list of all of the Company Customers as of
the Closing Date to the Acquiror.

     SECTION 5.13. Payment of Indebtedness; Termination of Encumbrances. The
Closing Date Indebtedness, the Evans Advance and the amounts paid to Interim CEO at Closing, which
shall be the only Indebtedness of the Company as of the Closing, shall be paid by the Acquiror at
the Closing pursuant to Section 2.8, and the Company will cause the termination of all
Encumbrances on any assets of the Company prior to the Effective Time, other than Permitted
Encumbrances and such Encumbrances securing such Indebtedness.

     SECTION 5.14. Employees. Effective at the Closing, Acquiror Sub shall
continue the employment on an “at will” basis of all current employees of the Company as
contemplated in the 2010 Plan and Schedule 2.3(b) (each, a “Transitioned
Employee”), at the aggregate compensation levels set forth in the 2010 Plan (subject to any
projected increases in such Plan). Acquiror agrees, on behalf of itself and its Affiliates, that
for a period from the date hereof through the Earn-Out Period, it (on behalf of itself or any
Affiliates) shall not directly or indirectly (x) cause or attempt to cause any person who is an
employee of the Company to terminate his or her employment or agency relationship with the Company
or hire any such person, or (y) solicit or attempt to solicit (other than by means of an
advertisement directed towards the general public) or hire any such employee of the Company with a
view to obtaining

44

 

him or her as an employee of Acquiror or such Affiliate; provided, however, that Acquiror may
hire any individual who applies for employment without prior solicitation by Acquiror (other than
by means of advertisement directed towards the general public).

     SECTION 5.15. Termination of Company Options and Company Warrants. The
Company shall take all necessary action to provide that, immediately prior to the Effective Time,
(i) the Company Option Plan shall be terminated and (ii) each Company Option and each Company
Warrant has been exercised or terminated (in the case of termination of such Company Option or
Company Warrant, with the written consent of the holder of such Company Option or Company Warrant).

     SECTION 5.16. Delivery of Interim Financial Statements. Within five (5)
Business Days following the end of each calendar month during the period from the date of this
Agreement until the Closing Date, the Company shall deliver to the Acquiror unaudited consolidated
balance sheet of the Company as of the last day of each such month and statements of operations and
cash flows for the month then ended. The interim financial statements shall be complete and
correct in all material respects, shall have been prepared in accordance with GAAP consistently
applied by the Company without modification of such accounting principles used in the preparation
thereof throughout the periods presented and shall present fairly, in all material respects, the
consolidated financial position and results of operations, changes in stockholders’ equity and cash
flows of the Company as at the dates and for the periods indicated therein, subject to typical
year-end adjustments.

     SECTION 5.17. Supplements to Schedules. From time to time up to the Closing,
the Company shall promptly supplement or amend the Company Disclosure Schedule, or the Acquiror
shall promptly supplement or amend the Acquiror Disclosure Schedule that it has delivered, with
respect to any matter first existing or occurring following the date hereof that (a) if existing or
occurring at or prior to the date hereof, would have been required to be set forth or described in
the Disclosure Schedules, or (b) is necessary to correct any information in the Schedules that was
or has been rendered inaccurate thereby. No supplement or amendment to any Schedule shall cure any
breach of the Company’s representations and warranties in this Agreement or have any effect for the
purpose of determining the satisfaction of the conditions set forth in Section 6.2 or the
obligations of the Company under Section 9.1, however the parties acknowledge that the mere
existence or occurrence of any such new matter after the date hereof does not by itself constitute
a breach of any representations or warranties of the updating party in this Agreement.

     SECTION 5.18. Registration. Within sixty (60) days of the Closing Date,
Acquiror shall file a registration statement on Form S-3 (or such other form which Acquiror is then
eligible to use with respect to the resale of Acquiror Common Stock) (together with the prospectus
that forms a part thereof, any amendments and supplements thereto, including post-effective
amendments, and all exhibits and material incorporated by reference therein, the “Registration
Statement”) registering the public resale of the Acquiror Common Shares, and shall use its best
efforts to cause such Registration Statement to be promptly declared effective. Acquiror will use
best efforts to keep such Registration Statement in effect for a period expiring on the one year
anniversary of the date such Registration Statement is declared effective. Any

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such registration shall be subject to the customary terms and conditions used in connection
with resale prospectuses. Acquiror’s obligations under this Section 5.18 are contingent
upon each Shareholder providing promptly all information concerning the Shareholder and its
proposed plan of distribution as Acquiror may reasonably request in connection with any of the
foregoing. Notwithstanding the foregoing, Acquiror may by written notice to the Shareholders and
the Shareholder Representative defer or suspend the filing or effectiveness of the Registration
Statement or immediately suspend the use of any resale prospectus for a period not to exceed thirty
(30) consecutive days in any one instance and for a period not to exceed ninety (90) calendar days
in any 12-month period (each, a “Suspension Period”) pursuant to a Registration Statement
at any time that (a) Acquiror becomes engaged in a material business activity or negotiation that
is not disclosed therein under applicable Law and which Acquiror desires to keep confidential for
business purposes or (b) Acquiror reasonably determines that a particular disclosure so determined
to be required to be disclosed therein be premature or would materially adversely affect Acquiror
or its business or prospects. Acquiror will use its commercially reasonable efforts to ensure that
the use of any such Registration Statement may be resumed as soon as practicable within this time
period. Acquiror shall promptly notify the Shareholders and the Shareholder Representative of the
Suspension Period and reasons therefor (without the disclosure of any material nonpublic
information) upon the termination of any Suspension Period, promptly amend or supplement the
Registration Statement following the termination of such Suspension Period, if necessary, so that
it does not contain any untrue statement of material fact or amount to state a material fact
required to be stated therein in order to make the statements therein not misleading, and furnish
to the Shareholders such numbers of copies of the prospectus therein as so amended or supplemented
on documents incorporated by reference therein as the Shareholders may reasonably request. The
Company and Acquiror agree that the Effective Period shall be extended for a period of time equal
to the Suspension Period.

     SECTION 5.19. Director and Officer Liability; Indemnification.

          (a) Acquiror shall take any necessary actions to provide that all rights to indemnification
and all limitations on liability existing in favor of any current or former officers, directors,
managers, employees and/or agents of the Company (or their respective predecessors) (collectively,
the “Company Indemnitees”), as provided in the articles of incorporation or bylaws of the
Company in effect on the date of this Agreement shall continue in full force and effect on equal or
more favorable terms and be honored by the Acquiror after the Closing; provided, that any such
indemnification obligations shall be subject to limitations imposed from time to time by applicable
Law.

          (b) Prior to the Effective Time, the Surviving Company may purchase, and the Acquiror shall
pay or reimburse the Surviving Company for, a directors’ and officers’ liability and fiduciary
liability “tail” policy from an insurer with a Standard & Poor’s rating of at least A under the
Company’s existing directors’ and officers’ insurance policy, which (i) has an effective term of
six years from the Closing, (ii) covers each person currently covered by the Company’s directors’
and officers’ insurance policy in effect on the date of this Agreement for actions and omissions
occurring on or prior to the Closing and (iii) contains terms that are no less favorable than those
of the Company’s directors’ and officers’ insurance policy in effect on the date of this Agreement.

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ARTICLE VI

CONDITIONS PRECEDENT

     SECTION 6.1. Conditions to Obligations of Each Party Under this Agreement.
The respective obligations of each Party to effect the Merger and the other transactions
contemplated herein shall be subject to the satisfaction at or prior to the Effective Time of the
following conditions, any or all of which may be waived by agreement of Acquiror and Company, in
whole or in part, to the extent permitted by applicable Law:

          (a) No Injunction. No Law or Order enacted, issued, promulgated, enforced or entered
by any Governmental Entity shall be in effect (whether temporary, preliminary or permanent)
enjoining, restraining or prohibiting consummation of the Merger or making the consummation of the
Merger illegal.

          (b) Approval by Shareholders. This Agreement and the Merger shall be approved by the
requisite action of Shareholders as required under the Company’s articles of incorporation and
bylaws and under applicable Law.

          (c) Governmental Consents and Filings, HSR Act. All consents, approvals, orders or
authorizations of, or registrations, declarations or filings with, all Governmental Entities
required in connection with the execution, delivery or performance hereof shall have been obtained
or made. All applicable waiting periods under the HSR Act shall have expired or otherwise been
terminated.

     SECTION 6.2. Additional Conditions to Obligations of Acquiror and Acquiror
Sub. The obligations of the Acquiror and Acquiror Sub to effect the Merger and the other
transactions contemplated in this Agreement are also subject to the satisfaction at or prior to the
Effective Time of the following conditions, any or all of which may be waived by the Acquiror, in
whole or in part, to the extent permitted by applicable Law:

          (a) Representations and Warranties. The representations and warranties made by the
Company in Article III shall be true and correct in all material respects (except for those
representations and warranties that are qualified by materiality or Company Material Adverse
Effect, which shall be true and correct in all respects) on and as of the Closing Date with the
same effect as though such representations or warranties had been made or given on and as of the
Closing Date, except to the extent that such representations and warranties expressly relate to an
earlier date (in which case such representations and warranties shall be true and correct in all
material respects (except for those representations and warranties that are qualified by
materiality or Company Material Adverse Effect, which shall be true and correct in all respects) on
and as of such earlier date); and the Acquiror shall have received a signed certificate of the
President of the Company (in his capacity as an officer of the Company) to the foregoing effect.

          (b) Contracts and Covenants. The Company shall have performed or complied in all
material respects with its agreements and covenants required by this Agreement to be performed or
complied with by the Company on or prior to the Effective Time. The

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Acquiror shall have received a certificate of the President of the Company (in his capacity as
an officer of the Company) to that effect.

          (c) Company Material Adverse Effect. Since the Balance Sheet Date, no Company
Material Adverse Effect subject to the MAE Exceptions shall have occurred or be existing.

          (d) Consents. The Company shall have procured all consents of parties to Material
Contracts so required consent and Governmental Entities specified in Schedule 3.6(c) which
shall be delivered to the Acquiror at Closing.

          (e) Indebtedness. There shall be no outstanding Indebtedness (other than Closing Date
Indebtedness which shall be paid pursuant to Section 2.8) as of Closing, and all
Encumbrances other than Permitted Encumbrances shall have been released and/or paid in full, and
instruments and documents necessary to release such Indebtedness and the Encumbrances, including
appropriate UCC financing statement amendments (termination statements), shall be delivered to the
Acquiror at Closing (subject only in the case of Closing Date Indebtedness, the Evans Advance and
the payments made to Interim CEO, to the payment in full of such amounts pursuant to Section
2.8).

          (f) Releases. The Acquiror shall have received releases executed by each Shareholder
(except Shareholders holding Dissenting Shares) in the form satisfactory to the Acquiror
(collectively, the “Releases”) except, after using best efforts to obtain Releases from all
Shareholders, for Shareholders holding Company Shares entitled to receive less than $1,250
individually and not more than $25,000 in the aggregate in Merger Consideration.

          (g) Accredited Investor Questionnaire. The Shareholders (other than those holding
Dissenting Shares or those who are excluded from providing Releases under clause (f) above or are
not receiving any Closing Share Consideration as contemplated by Section 6.2(i)) shall have entered into the Accredited Investor Questionnaire in the form satisfactory to the
Acquiror (the “Accredited Investor Questionnaire”), which shall be delivered to the
Acquiror at Closing.

          (h) Legal Opinion. Acquiror shall have received from Gould & Ratner LLP, counsel to
the Company, an opinion as to the matters, in the form and substance satisfactory to Acquiror.

          (i) Private Placement. Acquiror, in its reasonable, good faith judgment, shall have
determined (based in part upon receipt of the Accredited Investor Questionnaires) that the issuance
of Acquiror Shares to the Shareholders pursuant to this Agreement complies in all respects with
Regulation D under the Securities Act. It is understood that to the extent that Acquiror does not
so conclude that this condition is met due to the number of Shareholders (the “Unaccredited
Shareholders”) who may not be accredited investors, Acquiror may either waive this condition if
another exemption from registration is available or require the Company to pay an amount of Cash
Consideration to the Unaccredited Shareholders equal to the amount of Acquiror Common Shares that
would have been issued to such Unaccredited Shareholders and to

48

 

issue such Acquiror Common Shares to the Shareholders who are not Unaccredited Shareholders.

          (j) Dissenting Shares. The Dissenting Shares shall not constitute more than 5% of the
total number of shares of Common Shares, determined on an as-converted basis, outstanding
immediately prior to the Closing.

          (k) Company Option Plans. The Company shall have terminated each of the Company
Option Plans, effective as of immediately prior to the Effective Time.

          (l) Termination of Company Options and Company Warrants. The Company shall have
delivered to Acquiror evidence satisfactory to it that all outstanding unexercised Company Options
and Company Warrants have been exercised or terminated as of or prior to the Effective Time.

          (m) Shareholder Representative Confidentiality Agreement. The Shareholder
Representative shall have delivered to the Acquiror a duly executed counterpart to the Shareholder
Representative Confidentiality Agreement.

          (n) Termination of Interim CEO Agreement. The Agreement dated August 15, 2008 between
the Company and Interim CEO shall have been terminated as of or prior to the Closing (subject to
the right of Interim CEO to receive payments when due and payable as a result of the Merger and
obligations of Interim CEO that survive termination of such Agreement pursuant to the terms
thereof).

     SECTION 6.3. Conditions to Obligations of the Company and the Shareholders.
The obligations of the Company to effect the Merger and the other transactions contemplated by this
Agreement are also subject to the satisfaction at or prior to the Effective Time of the following
conditions, any or all of which may be waived by the Company, in whole or in part, to the extent
permitted by applicable Law:

          (a) Representations and Warranties. The representations and warranties made by the
Acquiror and Acquiror Sub in Article IV shall be true and correct in all material respects
(except for those representations and warranties that are qualified by materiality, which shall be
true and correct in all respects) on and as of the Closing Date with the same effect as though such
representations or warranties had been made or given on and as of the Closing Date, except to the
extent that such representations and warranties expressly relate to an earlier date (in which case
such representations and warranties shall be true and correct in all material respects (except for
those representations and warranties that are qualified by materiality, which shall be true and
correct in all respects) on and as of such earlier date); and the Company shall have received a
signed certificate of an authorized officer of the Acquiror to the foregoing effect.

          (b) Releases. The Directors and Officers of Company (past and present) shall have
received releases executed by the Company in the form satisfactory to the Company.

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          (c) Acquiror Material Adverse Effect. Since the Balance Sheet Date, no Acquiror
Material Adverse Effect subject to the MAE Exceptions shall have occurred or be existing.

          (d) Agreements and Covenants. The Acquiror and Acquiror Sub shall have performed or
complied in all material respects with all agreements and covenants required by this Agreement to
be performed or complied with by them on or prior to the Effective Time. The Company shall have
received a certificate of an authorized officer of Acquiror and Acquiror Sub to that effect.

ARTICLE VII

CLOSING

     SECTION 7.1. Closing. Subject to the terms and conditions of this Agreement,
the closing of the Merger (the “Closing”) will take place on a date to be specified by the
Parties (the “Closing Date”), which shall be no later than the third (3rd)
Business Day following the satisfaction of the latest to occur or, if permissible, waiver, of the
conditions set forth in Article VI (other than those conditions that by their terms are to
be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions), at the
principal offices of the Acquiror, unless another date or place or means of delivery is agreed to
in writing by the Parties. Notwithstanding the foregoing, the Company shall have the option to
extend the Closing Date to May 2, 2010 (the “Extension”) upon reasonable notice to Acquiror.

          (a) Company Closing Deliveries(b) . At the Closing, the Company shall deliver, or cause to be
delivered, to the Acquiror the following:

               (i) a certificate executed by the President of the Company (in his capacity as an officer of
the Company) as to compliance with the conditions as required by Sections 6.2(a) and
6.2(b) in the form satisfactory to the Acquiror;

               (ii) a certificate by the Secretary or any Assistant Secretary of the Company (in his capacity
as an officer of the Company), dated the Closing Date in the form satisfactory to the Acquiror;

               (iii) the organizational record books, minute books and corporate seal of the Company;

               (iv) the Articles of Merger executed by the Company’s President;

               (v) a certificate of non-foreign status that complies with Treasury Regulation Section
1.1445-2(b)(2);

               (vi) all documents required to be delivered pursuant to Section 6.2; and

               (vii) all other documents required to be entered into by the Company pursuant to this
Agreement.

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          (c) Acquiror Closing Deliveries(d) . At the Closing, the Acquiror shall deliver, or cause to
be delivered, to the Company or the Exchange Agent, as applicable, the following:

               (i) the portion of the Merger Consideration to be paid and delivered at Closing pursuant to
Section 2.2 of this Agreement paid and delivered in accordance with such Section;

               (ii) a certificate of an authorized officer of the Acquiror as to compliance with the
conditions set forth in Sections 6.3(a) and 6.3(b) of this Agreement;

               (iii) the Articles of Merger executed by a duly authorized officer of the Acquiror and
Acquiror Sub; and

               (iv) all other documents required to be entered into or delivered by the Acquiror at or prior
to the Closing pursuant hereto.

ARTICLE VIII

TERMINATION, AMENDMENT AND WAIVER

     SECTION 8.1. Termination. This Agreement may be terminated at any time
(except where otherwise indicated) prior to the Effective Time, whether before or after approval of
this Agreement and the Merger by the Shareholders:

          (a) by mutual written consent of the Acquiror and the Company;

          (b) by the Acquiror, if (i) the Company is in breach of any covenant, representation or
warranty contained in this Agreement which would cause any of the conditions provided in
Section 6.2(a) or 6.2(b) not to be satisfied and such breach has not been cured (if
curable) within ten (10) Business Days following receipt by the Company of written notice of such
failure describing the extent and nature thereof in reasonable detail or (ii) there has been any
breach of any covenant, representation or warranty contained in this Agreement that renders the
conditions set forth in Section 6.2(a) or 6.2(b) incapable of being satisfied by
the Outside Date; provided that Acquiror is not in material default of its obligations hereunder;

          (c) by the Company, if the Acquiror is in breach of any covenant, representation or warranty
contained in this Agreement which would cause any of the conditions provided in Section
6.3(a) or 6.3(b) not to be satisfied and such breach has not been cured (if curable)
within ten (10) Business Days following receipt by the Acquiror of written notice of such failure
describing the extent and nature thereof in reasonable detail or (ii) or there has been any breach
of any covenant, representation or warranty contained in this Agreement that renders the conditions
set forth in Section 6.3(a) or 6.3(b) incapable of being satisfied by the Outside
Date; provided that the Company is not in material default of its obligations hereunder;

          (d) by either the Acquiror or the Company if there shall be in effect a final, nonappealable
Order restraining, enjoining or otherwise prohibiting the consummation of the transactions
contemplated hereby; it being agreed that the Parties shall use all commercially

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reasonable efforts
to promptly appeal any adverse determination which is not nonappealable and diligently pursue such
appeal; or

          (e) by either the Acquiror or the Company if the Merger shall not have been consummated by
April 30, 2010 for any reason other than delay or nonperformance of the Party seeking such
termination (the “Outside Date”) provided, however, that (i) if the Extension (as defined
in Section 7.1) is elected, then the Outside Date shall be May 7, 2010 and (ii) if the
reason the Merger shall not have been consummated on or prior to the Outside Date is due to the
waiting period under HSR having not expired or terminated, then the Outside Date shall
automatically be extended to June 15, 2010.

     SECTION 8.2. Procedure Upon Termination. In the event of termination and
abandonment by the Acquiror or the Company, or both, pursuant to Section 8.1 hereof,
written notice thereof shall forthwith be given to the other Party and this Agreement shall
terminate, and the Merger shall be abandoned, without further action by the Acquiror or the
Company.

     SECTION 8.3. Effect of Termination. Upon the termination of this Agreement in
accordance with Section 8.1 hereof, the Parties shall be relieved of any further
obligations under this Agreement; provided that no such termination shall relieve any Party
hereto from liability for any material breach by a Party of any representation, warranty or
covenant set forth in this Agreement; provided, further, that the obligations of
the Parties set forth in Article IX hereof shall survive any such termination and shall be
enforceable after such termination.

ARTICLE IX

INDEMNIFICATION

     SECTION 9.1. Survival of Representations and Warranties. The representations
and warranties of the Parties contained in this Agreement shall survive the Closing and shall
remain operative and in full force and effect for a period of one (1) year from the Closing;
provided that, notwithstanding the foregoing, the representations and warranties in (a)
Sections 3.18(Taxes and Tax Matters) shall survive until three (3) months after the
applicable statue of limitations (including any extensions and waivers thereof) has expired, (b)
3.19 (Environmental Matters) shall survive for three (3) years from the Closing and
(c) the representations and warranties in Sections 3.1 (Organization and Qualification),
3.2 (Subsidiaries), 3.3 (Corporate Records), 3.4 (Capitalization; Owners of
Shares), 3.5 (Authority; Binding Obligation), 3.20 (Intellectual Property;
Software, but only with respect to Losses arising out of or relating to the Inverter IP),
3.24 (Broker’s Fees), 4.1(Organization and Qualification), 4.2
(Capitalization), 4.3 (Authority; Binding Obligation) (clauses (a) through (c)
collectively, the “Excluded Representations”), shall survive indefinitely. All covenants
and agreements contained in this Agreement which are to be performed post-Closing will survive the
Closing in accordance with their terms. Any Claim pending on the expiration date of the survival
period for which an applicable written notice has been given in accordance with this Article
IX on or before such expiration date may continue to be asserted and indemnified against until
finally resolved. Any claim for indemnification not
made by the Acquiror on or prior to that date will be irrevocably and unconditionally released
and waived.

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     SECTION 9.2. Indemnification by the Shareholders. Subject to Sections
9.1 and 9.5, the Shareholders (other than those holding Dissenting Shares), severally
(i.e., based on the Pro Rata Share) and not jointly, shall indemnify and hold harmless the
Acquiror, the Acquiror Sub and their respective officers, directors and Affiliates (the
“Acquiror Indemnified Parties”) from and against any Losses incurred by them related to, or
arising directly or indirectly out of:

          (a) any inaccuracy or breach of a representation or warranty of the Company contained in
this Agreement or the Company Documents or contained in a certificate of any officer of the Company
delivered pursuant thereto;

          (b) any breach of any covenant or obligation of the Company contained in this Agreement or the
Company Documents, including for the avoidance of doubt Section 2.3 and any material
uncured breach of the Operating Guidelines (subject to any applicable limitations set forth in
Section 2.3);

          (c) any liability or obligation related to Closing Date Indebtedness, Evans Advance or
Unsatisfied Transaction Costs in excess of the amount set forth in the Closing Statement;

          (d) any and all Taxes of the Company with respect to Pre-Closing Tax Periods and the portion
of any Straddle Period ending on the Closing Date and any and all Tax claims resulting from,
arising out of or relating to: (i) any Taxes imposed on the Company with respect to any
Pre-Closing Tax Period and the portion of any Straddle Period ending on the Closing Date, (ii) all
liability for Taxes of the Company arising (directly or indirectly) as a result of the transactions
contemplated hereunder, (iii) any inaccuracy of a representation or warranty or breach of any
covenant or obligation, in each case with respect to Taxes set forth herein, (iv) any and all Taxes
of any Person (other than the Company) imposed on the Company as a transferee, successor, by
contract or pursuant to any law, rule or regulation, which Taxes relate to an event or transaction
occurring before the Closing Date, and (v) the Transfer Taxes for which the Shareholders are liable
pursuant to Section 5.9(e) hereunder;

          (e) any error in the Closing Statement relating to the allocation of the Merger Consideration
among the Shareholders; and

          (f) fraud or intentional material misrepresentation, including with respect to the operation
of the business following the Closing by the Surviving Company.

     It is further understood and agreed that notwithstanding any several liability set forth
above, no Shareholder shall have any liability for any representation, warranty, covenant or
agreement that relates specifically to another Shareholder. By way of illustration only, no
Shareholder shall be liable for the breach or inaccuracy of the second sentence of Section 3.4
except for the Shareholder for whom such representation was breached or inaccurate and such
Shareholder shall be fully liable for such breach or inaccuracy subject to the limitations set
forth in this Article IX.

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     SECTION 9.3. Indemnification by the Acquiror. Subject to Section
9.1 and 9.5, the Acquiror and Acquiror Sub jointly and severally agree to indemnify and
hold the Shareholders and their respective officers and directors (the “Shareholder
Indemnified Parties”) harmless from and against any Losses incurred by them related to, or
arising directly or indirectly out of:

          (a) any inaccuracy or breach of a representation or warranty of the Acquiror or the Acquiror
Sub contained in this Agreement or the Acquiror Documents;

          (b) any breach of any covenant or obligation of the Acquiror or the Acquiror Sub contained in
this Agreement or the Acquiror Documents, including for the avoidance of doubt Section 2.3
and any material uncured breach of the Operating Guidelines and any failure to timely pay the
Merger Consideration when payable hereunder (subject to any applicable limitations set forth in
Section 2.3);

          (c) any obligation related to Closing Date Indebtedness, the Evans Advance or Unsatisfied
Transaction Costs less than the amount set forth in the Closing Statement; and

          (d) any and all Taxes of the Company with respect to Post-Closing Tax Periods and the portion
of any Straddle Period beginning after the Closing Date and any and all Tax claims resulting from,
arising out of or relating to: (i) any Taxes imposed on the Company with respect to any
Post-Closing Tax Period and the portion of any Straddle Period beginning after the Closing Date,
(ii) any and all Taxes of any Person (other than the Company) imposed on the Company as a
transferee, successor, by contract or pursuant to any law, rule or regulation, which Taxes relate
to an event or transaction occurring after the Closing Date, and (iii) the Transfer Taxes for which
the Acquiror is liable pursuant to Section 5.9(e) hereunder; and

          (e) any violation of the WARN Act by Acquiror after Closing.

     SECTION 9.4. Notice of Claim.

          (a) If any action is brought against any Person entitled to indemnification pursuant to
Section 9.2 or 9.3 (a “Claimant”), in respect of a claim under Section
9.2 or 9.3 (an “Indemnifiable Claim”), the Claimant shall promptly notify the
liable party therefore (the “Indemnifying Party”) in writing of the institution of such
Indemnifiable Claim (but the failure to so notify the Indemnifying Party shall not relieve the
Indemnifying Party from any liability the Indemnifying Party may have except to the extent such
failure prejudices the Indemnifying Party); provided, however, the Parties agree to provide such
notice as soon as reasonably commercially practicable. If a Claimant becomes aware of a possible
Indemnifiable Claim (before the institution of such Indemnifiable Claim which is addressed in the
preceding sentence and which proceeding sentence shall govern upon the institution of such
Indemnifiable Claim), the Claimant shall use its commercially reasonable efforts to promptly notify
the Indemnifying Party in writing of Claimant’s knowledge of such possible Indemnifiable Claim.

          (b) Subject to the provisions of this Section 9.4, the Indemnifying Party shall have
the right to assume and direct the defense against, negotiate, settle or otherwise deal with an
Indemnifiable Claim, including the employment of counsel, and all fees, costs and expenses

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incurred in connection with defending or settling the Indemnifiable Claim by the Indemnifying Party
shall be borne solely by the Indemnifying Party; provided, however, that such counsel must be
satisfactory to the Claimant in the exercise of its reasonable judgment. If the Indemnifying Party
elects to defend against, negotiate, settle or otherwise deal with such Indemnifiable Claim, it
shall within seven (7) Business Days (or sooner, if the nature of the Indemnifiable Claim so
requires), notify the Claimant of its intent to do so and the Claimant agrees to cooperate fully
with the Indemnifying Party and its counsel in the settlement, compromise of, or defense against,
any such asserted liability.

          (c) The Indemnifying Party shall have the right to assume control of the defense of,
negotiate, settle or otherwise deal with such Indemnifiable Claim on such terms as they deem
appropriate; provided, however, the Indemnifying Party shall not settle or compromise any claim or
permit a default or consent to entry of any judgment without the prior written consent of the
Claimant, which consent shall not be unreasonably withheld or delayed, (i) unless such settlement,
compromise or consent includes an unconditional release of the Claimant and its officers,
directors, employees and affiliates from all liability arising out of such Indemnifiable Claim (to
the extent any such persons are named in the Indemnifiable Claim), (ii) does not contain any
admission or statement suggesting any wrongdoing or liability on behalf of the Claimant and (iii)
does not contain any equitable order, judgment or term that in any manner affects, restrains or
interferes with the business of the Claimant (“Settlement Conditions”).

          (d) If the Indemnifying Party elects not to defend against, negotiate, settle or otherwise
deal with any Indemnifiable Claim, fails to notify the Claimant of its election as herein provided
or contests its obligation to indemnify the Claimant, the Claimant may defend against, negotiate,
settle or otherwise deal with such Indemnifiable Claim. If the Claimant defends such Indemnifiable
Claim, then the Indemnifying Party shall reimburse the Claimant for the reasonable out-of-pocket
expenses of defending such Indemnifiable Claim, provided that Claimant shall not settle or
compromise any claim or permit a default or consent to entry of any judgment without the prior
written consent of the Claimant, which consent shall not be unreasonably withheld or delayed,
unless the Settlement Conditions are satisfied.

          (e) Notwithstanding an election by the Indemnifying Party to assume the defense of such action
or proceeding, the Claimant shall have the right, at its sole cost and expense, to employ one firm
of separate counsel (and one firm of local counsel) and to monitor the defense of such action or
proceeding; provided, however the Indemnifying Party shall bear the reasonable fees, costs and
expenses of such separate counsel (and shall pay such fees, costs and expenses at least quarterly),
if (i) the use of counsel chosen by the Indemnifying Party to represent the Claimant would present
such counsel with a conflict of interest that would have a material adverse effect on the Claim as
determined by counsel for the Indemnifying Party, (ii) the defendants in, or targets of, any such
action or proceeding include both a Claimant and the Indemnifying Party, and the Indemnifying Party
shall have reasonably concluded that there may be legal defenses available to Claimant that are
different from or additional to those available to the Indemnifying Party and the Indemnifying
Party desires to have Claimant’s
counsel pursue such legal defenses or (iii) the Indemnifying Party shall authorize, in
writing, the Claimant to employ separate counsel at the expense of the Indemnifying Party.

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          (f) The Claimant shall cooperate in all reasonable respects with the Indemnifying Party and
such attorneys in the investigation, trial and defense of such lawsuit or action and any appeal
arising therefrom. All reasonable, third party costs and expenses incurred in connection with a
Claimant’s cooperation shall be borne by the Indemnifying Party. In any event, the Claimant shall
have the right at its own expense to participate in the defense of such asserted liability. The
party controlling the defense of any such asserted liability shall deliver, or cause to be
delivered to the other party, upon the request of the other party, copies of all non-privileged
correspondence, pleadings, motions, briefs, appeals or other written statements relating to or
submitted in connection with the defense of any such claim, and timely notices of, and the right to
participate in (as an observer) in any hearing or other court proceeding relating to such claim.

          (g) A claim for indemnification for any matter not involving a third-Person claim shall be
promptly asserted by written notice to the party from whom indemnification is sought; provided,
however, that failure to so notify the Indemnifying Party shall not preclude the Claimant from any
indemnification which it may claim in accordance with this Article IX, except to the extent
such failure materially prejudices the Indemnifying Party.

          (h) In the event that an Acquiror Indemnified Party makes any claim for indemnification
pursuant to this Article IX that is not resolved prior to a date on which payments of the
Additional Consideration are made to the Shareholders, the Acquiror may withhold that portion of
the Additional Consideration (including any accrued interest thereon) that the Acquiror or the
Surviving Company believes in good faith is necessary to satisfy such unresolved claim until such
time as such indemnification claims are resolved as provided herein, and interest shall continue to
accrue on any such withheld portion until resolution of the indemnification claims.

          (i) With respect to indemnification claims that are resolved in favor of an Acquiror
Indemnified Party, prior to bringing any claims against the Shareholders pursuant to Section
9.4 or otherwise, the Acquiror shall first set off any Losses related thereto, and to which an
Acquiror Indemnified Party may be entitled, against any portion of the Additional Consideration
(including any accrued interest thereon) that has not been paid to the Shareholders. (ii) To the
extent such indemnification claims are resolved in favor of the Shareholders, the Acquiror shall
promptly remit to the Exchange Agent for the benefit of the Shareholders the amounts, if any, of
the Additional Consideration that the Acquiror withheld pursuant to this Article IX
(together with all interest accrued thereon) promptly following the resolution of any such claim.

          (j) The good faith exercise by the Acquiror of the right of set-off provided by this
Section 9.4, whether or not ultimately determined to be justified, shall not constitute a
violation of this Agreement or otherwise result in any liability to the Acquiror so long as
remittance is made in accordance with Section 9.4(i). Neither the exercise nor the failure
to exercise such right of set-off will constitute an election of remedies or will limit an Acquiror
Indemnified Party in any manner in the enforcement of any other remedies that may be available
to it.

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          (k) To the extent that the Additional Consideration (including any accrued interest thereon)
shall be insufficient to provide recovery against any Losses (after giving effect to pending claims
and the payment to the Shareholders, or set-off by the Acquiror pursuant to this Section
9.4, of the Additional Consideration), the Acquiror Indemnified Parties may institute a
proceeding in accordance with Section 9.4 against the Shareholders seeking indemnification
for such Losses, and the Shareholders shall, subject to the limitations and other provisions of
this Article IX, assume and pay such indemnification obligations with respect to such
Losses.

     SECTION 9.5. Limitations.

          (a) No Indemnifying Party shall have any liability under Sections 9.2(a),
9.2(b), 9.3(a) or 9.3(a) (other than with respect to Losses resulting from
breaches of the representations and warranties set forth in the Excluded Representations) unless
the aggregate amount of Losses incurred by the indemnified parties thereunder exceeds Four Hundred
Thousand Dollars ($400,000) (the “Deductible”) and, in such event, the indemnifying party
or parties shall only be required to pay the amount of all such Losses in excess of the Deductible.
In addition, all Losses (i) that an Acquiror Indemnified Party has the right to assert against the
Shareholders and (ii) that a Shareholder Indemnified Party has the right to assert against the
Acquiror and Acquiror Sub under Sections 9.2(a), 9.2(b), 9.3(a) or
9.3(a), respectively (other than with respect to Excluded Representations), may not, in
either case, exceed Seven Million Dollars ($7,000,000) in the aggregate. Notwithstanding anything
in this Article IX or elsewhere in this Agreement to the contrary, no Shareholder shall
have liability under this Article IX in excess of the amount of Merger Consideration
received by such Shareholder hereunder, and the Acquiror shall have no liability under this
Article IX to any single Shareholder (or his, her or its Affiliates) in excess of the
amount of the Merger Consideration received by such Shareholder.

          (b) For all purposes of this Article IX, Losses shall be net of any amounts actually
recovered by the Claimant under any insurance policies in effect prior to or after the Closing in
connection with the facts giving rise to the right of indemnification (net of any deductible
amounts and any other costs or expenses incurred in connection therewith, including, without
limitation, retrospective and prospective premium adjustments and experience-based premium
adjustments directly attributable to a claim for which indemnification is provided under this
Article IX).

          (c) The
Shareholders shall have no right of contribution or other recourse against the
Company or its employees, directors, Affiliates, agents, attorneys, representatives, assigns or
successors for any Indemnifiable Claims asserted by the Acquiror, Acquiror Sub their respective
officers, directors, employees, agents and Affiliates, and the Shareholders further acknowledge and
agree that the covenants and agreements of the Company are solely for the benefit of such parties.

          (d) Any amount paid under this Article IX shall be treated as an adjustment to the
Merger Consideration.

     SECTION 9.6. Exclusivity of Remedy. The Parties acknowledge and agree that, except
in the case of fraud or willful misconduct, following the Closing, the indemnification

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provisions
of this Article IX shall be the sole and exclusive remedies of the Acquiror, Acquiror Sub,
the Company and the Shareholders for any breach by the other Parties of the representations and
warranties in this Agreement and for any failure by the other Parties to perform and comply with
any covenants and agreements in this Agreement; provided, however, that each Party
hereby acknowledges that the rights of each Party to consummate the transactions contemplated
hereby are special, unique and of extraordinary character and that, in the event that any Party
violates or fails or refuses to perform any covenant or agreement made by it herein, the
non-breaching Party may be without an adequate remedy at law. In the event that any Party violates
or fails or refuses to perform any covenant or agreement made by such Party herein, the
non-breaching Party or Parties may, subject to the terms hereof and in addition to any remedy at
law for damages or other relief, institute and prosecute an action in accordance with Section
9.9 of this Agreement to enforce specific performances of such covenant or agreement or seek
any other equitable relief and receive prompt reimbursement for all of its reasonable attorneys’
fees and expenses to the extent that it is the prevailing party. Notwithstanding anything to the
contrary herein, the existence of this Article IX and of the rights and restrictions set forth
herein do not limit any legal remedy for claims based on fraud or intentional material
misrepresentation, including with respect to the operation of the business following the Closing by
the Surviving Company except that in such event rescission shall not be a remedy.

ARTICLE X

GENERAL PROVISIONS

     SECTION 10.1. Confidentiality. Each of the Company, the Acquiror and the
Acquiror Sub agrees that, unless and until the transactions contemplated hereby shall have been
consummated, the terms of the existing non-disclosure and confidentiality agreement dated as of
November 26, 2008 between the Acquiror and the Company shall remain in full force and effect.

     SECTION 10.2. Notices. All notices, requests and other communications
hereunder to a Party shall be in writing and shall be deemed to have been given (i) on the Business
Day sent, when delivered by hand, electronic mail or facsimile transmission (with confirmation)
during normal business hours, (ii) on the Business Day following the Business Day of sending, if
delivered by an overnight courier recognized as providing services nationally in the United States
or (iii) three (3) Business Days after being mailed to the recipient by certified or requested
mail, return receipt requested and postage prepaid, in each case to such Party at its address (or
number) set forth below or such other address (or number) as the Party may specify by notice to the
other Parties hereto:

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If
to the Acquiror or Acquiror Sub:

Advanced Energy Industries, Inc.

1625 Sharp Point Drive

Fort Collins, CO 80525

Telephone: 970-407-4670

Facsimile: 970-407-5326

Attention: Thomas McGimpsey, General Counsel

Email: Tom.McGimpsey@aei.com

With a copy (which shall not constitute notice) to:

Hogan & Hartson L.L.P.

1470 Walnut Street, Suite 200

Boulder, CO 80304

Facsimile: 720-406-5301

Attention: Carin M. Cutler, Esq.

Email: cmcutler@hhlaw.com

If to the Company:

PV Powered, Inc.

20720 Brinson Blvd.

PO Box 7348

Bend, OR 97708

Telephone: 541/312-3832

Facsimile: 541/383-2348

Attention: Mr. Gregg Patterson, Chief Executive Officer

Email: greggpatterson@pvpowered.com

With a copy (which shall not constitute notice) to:

Gould & Ratner, LLP

222 N. LaSalle Street

Suite 800

Chicago, IL 60601

Telephone: (312) 236-3003

Facsimile: (312) 236-3241

Attention: Fredric D. Tannenbaum, Esq.

Email: ftannenbaum@gouldratner.com

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    If to the Shareholder Representative:

Mr. Mark Fleischauer

821 Third Avenue

P. O. Box 2038

Longview, WA 98632

Telephone: (360) 423-5510

Facsimile: (360) 423-9170

Email: mfleisch@jhkelly.com

     SECTION 10.3. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or interpretation of this
Agreement.

     SECTION 10.4. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof. Upon such determination that any term or other
provision is invalid, illegal, or incapable of being enforced, (i) the Parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties
as closely as possible in an acceptable manner in order that the transactions contemplated hereby
are consummated as originally contemplated to the greatest extent possible and (ii) the remainder
of this Agreement and the application of such provision to other Persons, entities or circumstances
shall not be affected by such invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.

     SECTION 10.5. Entire Agreement; No Third-Person Beneficiaries. This Agreement
(including the schedules and exhibits hereto), the Company Documents and the Acquiror Documents
constitute the entire agreement between the Parties with respect to the transactions contemplated
hereby and supersede all prior agreements, written or oral, among the Parties with respect to the
subject matter of this Agreement. No representation, warranty, inducement, promise, understanding
or condition not set forth in this Agreement has been made or relied on by any Party in entering
into this Agreement. Nothing in this Agreement, expressed or implied, is intended to confer on any
Person, other than the Parties hereto or their respective successors, any rights, remedies,
obligations or liabilities.

     SECTION 10.6. Waiver; Amendment. Any provision of this Agreement may be
amended or waived, but only if the amendment or waiver is in writing and signed by the Party or
Parties that would have benefited by the provision waived or amended. No action taken pursuant to
this Agreement, including any investigation by or on behalf of any Party, shall be deemed to
constitute a waiver by the Party taking such action of compliance with any representation,
warranty, covenant or agreement contained herein. The waiver by any Party hereto of a breach of
any provision of this Agreement shall not operate or be construed as a further or continuing waiver
of such breach or as a waiver of any other or subsequent breach. No failure on the part of any
Party to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of such right, power or

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remedy by such Party preclude any other or further exercise thereof or the exercise of any
other right, power or remedy.

     SECTION 10.7. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder may be assigned by any of the Parties (whether by operation of
law or otherwise) without the prior written consent of the other Parties, and any purported
assignment in violation of this Section 10.7 will be void; provided, that this
Agreement (including the rights, interests and obligations hereunder) may be assigned by the
Acquiror to any Affiliate of the Acquiror (although such an assignment will not relieve the
Acquiror of its obligations under this Agreement). Subject to the preceding sentence, this
Agreement shall be binding upon, inure to the benefit of and be enforceable by the Parties hereto
and their respective heirs, personal representatives, successors and permitted assigns.

     SECTION 10.8. Expenses. Except as otherwise provided in this Agreement, each
Party will bear all expenses incurred by it in connection with this Agreement and each other
agreement, document and instrument contemplated by this Agreement and the consummation of the
transactions contemplated hereby and thereby, it being understood that all Transaction Expenses
shall be paid on or prior to Closing or pursuant to Section 2.7. Notwithstanding the
foregoing and except as otherwise paid pursuant to Section 2.7, the Shareholders shall be
responsible for, and shall pay directly or promptly reimburse the Acquiror for amounts paid by or
on behalf of the Acquiror for Transaction Expenses incurred by the Company prior to Closing and any
and all sales, transfer, use or other Taxes assessed upon or with respect to the transfer of the
Company Shares as set forth in this Agreement, the Company Documents and the Acquiror Documents and
the consummation of the transactions contemplated hereby and thereby. All fees and expenses of the
Exchange Agent shall be borne by the Acquiror, and the filing fees related to any filing made
pursuant to the HSR Act shall be borne equally by the Acquiror, on the one hand, and the
Shareholders, on the other hand.

     SECTION 10.9. Specific Performance. Without limiting or waiving in any
respect any rights or remedies of the Acquiror or Acquiror Sub under this Agreement now or
hereafter existing at law in equity or by statute, or otherwise provided in Section 9.6
hereof, (a) the Acquiror or Acquiror Sub shall be entitled to such specific performance of the
obligations to be performed by the other Parties in accordance with the provisions of this
Agreement and (b) the Company and Shareholder Representative shall be entitled to such specific
performance of the obligations to be performed by the other Parties in accordance with the
provisions of this Agreement. Such remedies shall, however, be cumulative and not exclusive and
shall be in addition to any other remedies which any Party may have under this Agreement or
otherwise.

     SECTION 10.10. Governing Law; Disputes. This Agreement, and all claims or
causes of action (whether in contract or tort) that may be based upon, arise out of or relate to
this Agreement or the negotiation, execution or performance of this Agreement (including any claim
or cause of action based upon, arising out of or related to any representation or warranty made in
or in connection with this Agreement), shall be governed by and construed in accordance with the
internal laws of the State of Colorado. Any action against any Party relating to the foregoing
shall be brought in any federal or state court of competent jurisdiction located within the State
of Colorado and the Parties hereto hereby irrevocably submit to the non-exclusive jurisdiction of

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any federal or state court located within the State of Colorado over any such action. The
Parties hereby irrevocably waive, to the fullest extent permitted by applicable Law, any objection
which they may now or hereafter have to the laying of venue of any such action brought in such
court or any defense of inconvenient forum for the maintenance of such action.

     SECTION 10.11. Counterparts. This Agreement may be executed in any number of
counterparts, each of which will constitute an original and all of which, when taken together, will
constitute one agreement. Any signature pages of this Agreement transmitted in .pdf format or by
facsimile will have the same legal effect as an original executed signature page.

     SECTION 10.12. Non-Recourse. No past, present or future director, officer,
employee, incorporator, member, partner, shareholder, Affiliate, agent, attorney or representative
of the Acquiror shall have any liability for any obligations or liabilities of the Acquiror under
this Agreement or for any claim based on, in respect of, or by reason of, the transactions
contemplated hereby.

     SECTION 10.13. Interpretation.

          (a) In this Agreement, unless the context otherwise requires, references:

               (i) to the Preamble or to the Recitals, Sections, Annexes, Exhibits or Schedules are to the
Preamble or a Recital or Section of, or Annex, Exhibit or Schedule to, this Agreement;

               (ii) to any agreement (including this Agreement), contract, statute or regulation are to the
agreement, contract, statute or regulation as amended, modified, supplemented or replaced from time
to time, and to any section of any statute or regulation are to any successor to the section;

               (iii) to any Governmental Entity include any successor to that Governmental Entity; and

               (iv) to this Agreement are to this Agreement and the Annexes, Exhibits and Schedules hereto,
taken as a whole.

          (b) The table of contents and headings contained herein are for reference purposes only and do
not limit or otherwise affect any of the provisions of this Agreement.

          (c) Whenever the words “include,” “includes” or “including” are used in this Agreement, they
will be deemed to be followed by the words “without limitation.”

          (d) Whenever the words “herein” or “hereunder” are used in this Agreement, they will be deemed
to refer to this Agreement as a whole and not to any specific Section.

          (e) Any reference in this Agreement to gender shall include all genders, and words imparting
the singular number only shall include the plural and vice versa.

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     SECTION 10.14. Shareholder Representative.

          (a) In order to efficiently administer the defense and/or settlement of any claims for
indemnity by an Acquiror Indemnified Party pursuant to Article IX, Mark Fleischauer, is
hereby irrevocably appointed to serve as the sole and exclusive representative of the Shareholders
(the “Shareholder Representative”) as the Shareholders’ sole, exclusive, true and lawful
agent, representative and attorney-in-fact to act for and on behalf of the Shareholders. The
Shareholder Representative shall have full and exclusive power and authority to make all decisions
relating to the defense and/or settlement of any claims for which any Acquiror Indemnified Party
may claim to be entitled to indemnity pursuant to Article IX, all decisions and actions
relating to any adjustment to the Merger Consideration or any modification of, settlement with
respect to or timing of the payment of the Additional Consideration pursuant to Article II,
to approve any modifications to the 2010 Plan and otherwise act on behalf of the Shareholders with
respect to matters relating to the conduct of the business of the Company during the Earn-Out
Period pursuant to Section 2.3, and otherwise to act on behalf of the Shareholders in all
respects with respect to this Agreement, including, without limitation, the amendment or
termination of such agreements. All decisions and actions by the Shareholder Representative shall
be binding upon all of the Shareholders, and no Shareholder shall have the right to object to,
dissent from, protest or otherwise contest the same. In the event of the death, incapacity or
resignation of the Shareholder Representative, the Shareholders holding a majority of the Common
Stock (excluding the holders of any Dissenting Shares) immediately prior to the Effective Time (the
“Majority Shareholders”) shall promptly appoint a substitute Shareholder Representative
which shall be reasonably acceptable to Acquiror; provided, however, in no event shall the
Shareholder Representative resign without the Majority Shareholders having first appointed a
substitute Shareholder Representative who shall assume such duties immediately upon the resignation
of such Shareholder Representative.

              (b) Neither Acquiror, Acquiror Sub nor the Surviving Company shall have the right to object
to, protest or otherwise contest any matter related to the procedures for action being taken by the
Shareholder Representative as between the Shareholder Representative and the Shareholders.
Acquiror, Acquiror Sub and the Surviving Company waive any claims they may have or assert,
including those that may arise in the future, against the Shareholder Representative or any of his
Affiliates that relate to the Shareholder Representative’s role as such, including any claims for
any action or inaction taken or not taken by the Shareholder Representative in connection herewith.

          (c) Each Shareholder that accepts payment of consideration in respect of the Merger as
contemplated herein shall be deemed, by such acceptance of payment, or by his, her or its execution
of the Letter of Transmittal, as the case may be, to have agreed that (i) the provisions of this
Section 10.14 are independent and severable, are irrevocable and coupled with an interest
and shall be enforceable notwithstanding any rights or remedies such Shareholder may have in
connection with the transactions contemplated by this Agreement, (ii) the remedy at law for any
breach of the provisions of this Section 10.14 would be inadequate, (iii) such Shareholder
shall be entitled to temporary and permanent injunctive relief without the necessity of proving
damages if such Shareholder brings an action to enforce the

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provisions of this Section 10.14 and (iv) the provisions of this Section 10.14
shall be binding upon such Shareholders and the successors and assigns of such Shareholders.

          (d) In addition, each Shareholder that accepts payment of consideration in respect of the
Merger as contemplated herein shall be deemed, by such acceptance of payment, or by his, her or its
execution of the Letter of Transmittal, as the case may be, to:

          (i) have waived any claims he, she or it may have or assert, including those that may arise in
the future, against the Shareholder Representative and any of his Affiliates, for any action or
inaction taken or not taken by the Shareholder Representative in connection therewith; and

          (ii) have accepted such Shareholder’s obligations with respect to such Shareholder’s liability
for amounts to be reimbursed to the Acquiror pursuant to Article IX.

          (e) Acquiror and Acquiror Sub acknowledge and agree that the Shareholder Representative shall
not incur any liability with respect to any action taken or suffered by him or omitted while acting
as the Shareholder Representative pursuant to the terms and conditions of this Agreement, except
for the gross negligence or willful misconduct the Shareholder Representative. The Shareholder
Representative may, in all questions arising hereunder, rely on the advice of counsel and other
professionals. The Shareholder Representative undertakes to perform such duties and only such
duties as are specifically set forth in this Agreement and no other covenants or obligations shall
be implied under this Agreement against the Shareholder Representative; provided, however, that the
foregoing shall not act as a limitation on the powers of the Shareholder Representative determined
by him to be reasonably necessary to carry out the purposes of his obligations hereunder. The
Shareholder Representative shall be, and hereby is, indemnified and held harmless, jointly and
severally, by the Shareholders from all losses, costs and expenses (including attorneys’ fees) that
may be incurred by the Shareholder Representative as a result of the Shareholder Representative’s
performance of his duties under this Agreement, provided that the Shareholder Representative shall
not be entitled to indemnification for losses, costs or expenses that result from any action taken
or omitted by the Shareholder Representative as a result of his willful misconduct or gross
negligence.

          (f) Any notice or communication delivered by Acquiror, Acquiror Sub or the Surviving Company
to the Shareholder Representative shall, as between Acquiror, Acquiror Sub and the Surviving
Company, on the one hand, and the Shareholders, on the other hand, be deemed to have been delivered
to all Shareholders. Acquiror, Acquiror Sub and the Surviving Company shall be entitled to rely
exclusively upon any communication or writings given or executed by the Shareholder Representative
in connection with any claims for indemnity and shall not be liable in any manner whatsoever for
any action taken or not taken in reliance upon the actions taken or not taken or communications or
writings given or executed by the Shareholder Representative. Acquiror, Acquiror Sub and the
Surviving Company shall be entitled to disregard any notices or communications given or made by the
Shareholders in

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connection with any claims for indemnity unless given or made through the Shareholder
Representative.

     SECTION 10.15. Disclosure Schedules. Any matter that is listed or described
on any Disclosure Schedule shall be deemed to have been disclosed for purposes of the
representations and warranties contained in the related section of the Agreement, as well as for
any other representations and warranties in the Agreement with respect to which such disclosure is
responsive and is apparent from the disclosure contained therein. Disclosure of any information or
document in any Disclosure Schedule is not a statement or admission that it is material or outside
the Ordinary Course of Business or required to be disclosed herein. The information contained in
the Disclosure Schedules is disclosed solely for the purposes of this Agreement, and no information
contained herein shall be deemed to be an admission by any party hereto to any third party of any
matter whatsoever, including of any violation of law or breach of any agreement.

ARTICLE XI

DEFINITIONS

          For purposes of this Agreement, the following terms, and the singular and plural thereof,
shall have the meanings set forth below:

          “2010 Plan” means the schedule delivered by the Company to the Acquiror dated March
10, 2010 and attached as Schedule 3.28 hereto.

          “Accredited Investor Questionnaire” is defined in Section 6.2(i).

          “Acquiror” is defined in the Preamble.

          “Acquiror Board” is defined in Section 2.3(f).

          “Acquiror 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 the Acquiror or (ii)
the Acquiror (A) consolidates with or merges into any other corporation or any other corporation
merges into the Acquiror, and in the case of any such transaction, the outstanding Acquiror Common
Shares are changed or exchanged into other assets or securities as a result, unless the
stockholders of the Acquiror 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 of the Acquiror immediately before such
transaction, or (B) conveys, transfers or leases all or substantially all of its assets to any
Person (other than a wholly-owned Subsidiary as a result of which the Acquiror becomes a holding
company).

          “Acquiror Common Shares” is defined in Section 2.1.

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          “Acquiror Decision” is defined in Section 2.3(b).

          “Acquiror Objection” is defined in Section 2.3(b).

          “Acquiror Documents” is defined in Section 4.3.

          “Acquiror Indemnified Parties” is defined in Section 9.2.

          “Acquiror Material Adverse Effect” means any change, occurrence, circumstance or
development that has or would reasonably be expected to result in a material adverse effect,
individually or in the aggregate, on (i) the business, assets, properties, results of operations,
condition (financial or otherwise) or liabilities of the Acquiror or Acquiror Sub or (ii) the
ability of the Acquiror or Acquiror Sub to consummate the transactions contemplated by this
Agreement or perform its obligations under this Agreement or the Acquiror Documents.

          “Acquiror Objection” is defined in Section 2.3(g).

          “Acquiror Sub” is defined in the Preamble.

          “Acquisition Transaction” is defined in Section 5.6.

          “Additional Consideration” is defined in Section 2.1(c).

          “Additional Consideration Pro Rata Percentage” is defined in Section 2.11(a).

          “Affiliate” means, with respect to any Person, (i) any other Person directly or
indirectly controlling, controlled by or under common control with such other Person and (ii) in
the case of a Person who is a natural Person, also such Person’s spouse or child. For the purposes
of this definition, “control” when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have
meanings correlative to the foregoing.

          “Aggregate Merger Consideration Payable at Closing” is defined in Section
2.1(b).

          “Agreement” is defined in the Preamble.

          “Arbiter” means a national or regional accounting firm that (together with its
Affiliates) has not, in the two-year period prior to the date of this Agreement or at the
applicable time of selection of the Arbiter, been engaged by the Company or the Acquiror, and has
not been promised to be engaged by the Company or the Acquiror, and that is reasonably acceptable
to the Acquiror and the Shareholder Representative.

          “Articles of Merger” is defined in Section 1.2.

          “Audited Financial Statements” is defined in Section 3.7(a).

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          “Balance Sheet” is defined in Section 3.7(a).

          “Balance Sheet Date” is defined in Section 3.7(a).

          “Base Number” means the total number of issued and outstanding Common Shares after
giving effect to the conversion of all issued and outstanding Preferred Shares into Common Shares
immediately prior to the Closing pursuant to Article IV of the Company’s Articles of Incorporation
and the number of Common Shares issued upon exercise of all outstanding Company Options and Company
Warrants exercised prior to Closing, all as set forth in the Closing Statement.

          “Business Day” means any day other than a Saturday, a Sunday or a day on which banks
located in the City of Denver, Colorado generally are authorized or required by law or executive
order to close.

          “Cash Consideration” is defined in Section 2.1(a).

          “Certificate” is defined in Section 2.7(a).

          “Change in Recommendation” is defined in Section 5.10.

          “Claimant” is defined in Section 9.4(a).

          “Closing” is defined in Section 7.1.

          “Closing Date” is defined in Section 7.1.

          “Closing Date Indebtedness” means all Indebtedness as of the Closing Date.

          “Closing Share Consideration” is defined in Section 2.1(b).

          “Closing Statement” is defined in Section 2.11(a).

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

          “Commercial
Gross Revenue” is defined in Section 2.3(a).

          “Commercial Inverter Products” means the Company’s commercial inverter product line
comprised of all versions of 30kW or above inverters shippable for revenue to customers for
commercial, and not residential, use or application.

          “Common Shares” is defined in Section 2.4.

          “Company” is defined in the Preamble.

          “Company Benefit Plan” means any plan, program, policy, agreement or arrangement,
whether or not written, that is or was an “employee benefit plan” as such term is defined in
Section 3(3) of ERISA and any severance, bonus, stock option, stock purchase,

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restricted stock, incentive, deferred compensation, retiree medical or life insurance,
supplemental retirement, termination, employment, and fringe benefit plan, program, policy,
agreement or arrangement and (a) which was or is established by, participated in, or maintained by
the Company or any ERISA Affiliate; (b) to which the Company or any ERISA Affiliate contributed or
was obligated to contribute or to fund or provide benefits; or (c) which provides or promises
benefits to any person who performs or who has performed services for the Company or any ERISA
Affiliate and because of those services is or has been (i) a participant therein or (ii) entitled
to benefits thereunder.

          “Company Customer Contracts” means any Contract entered into by and between a Company
customer and the Company for the acquisition of Commercial Inverter Products in excess of $20,000
per annum.

          “Company Documents” is defined in Section 3.5.

          “Company Intellectual Property” is defined in Section 3.20(a).

          “Company Licensed Software” is defined in Section 3.20(c).

          “Company Material Adverse Effect” means any change, occurrence, circumstance or
development that has or would reasonably be expected to result in a material adverse effect,
individually or in the aggregate, on (i) the business, assets, properties, results of operations,
condition (financial or otherwise) or liabilities of the Company or (ii) the ability of the Company
to consummate the transactions contemplated by this Agreement or perform its obligations under this
Agreement or the Company Documents.

          “Company Option” means an option or right to purchase shares of the capital stock of
the Company, as amended.

          “Company Option Plans” means the PV Powered, Inc. 2009 Stock Option, Restricted Stock,
Bonus and Retention Plan and the PV Powered, Inc. 2006 Incentive Stock Option Plan.

          “Company Pension Plan” means any Company Benefit Plan that is an “employee pension
benefit plan,” as that term is defined in Section 3(2) of ERISA.

          “Company Proprietary Software” is defined in Section 3.20(c).

          “Company Shares” is defined in Section 2.4.

          “Company Warrant” means a warrant or right to purchase shares of the capital stock of
the Company.

          “Contract” means any contract, agreement, indenture, note, bond, mortgage, loan,
instrument, lease, license, commitment or other arrangement, understanding, undertaking, commitment
or obligation, whether written or oral.

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          “Deductible” is defined in Section 9.5(a).

          “Dispute Notice” is defined in Section 2.3(e).

          “Dissenting Shares” is defined in Section 2.5.

          “Earn-Out Period” is defined in Section 2.3(b).

          “Earn-Out Statement” is defined in Section 2.4(a).

          “Effective Time” is defined in Section 1.2.

          “Encumbrance” means any mortgage, lien, pledge, encumbrance, security interest, deed
of trust, option, encroachment, reservation, order, decree, judgment, condition, restriction,
charge, Contract, lease, right of first refusal, easement, servitude, proxy, voting trust or
agreement, transfer restriction under any shareholder or similar agreement, encumbrance or any
other restriction or limitation whatsoever.

          “Enforceability Exceptions” means except as such enforcement may be limited by
applicable bankruptcy, insolvency, moratorium, or similar laws from time to time in effect which
affect creditors’ rights generally, and by legal and equitable limitations on the enforceability of
specific remedies.

          “Environmental Laws” is defined in Section 3.19.

          “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and all
Laws promulgated pursuant thereto or in connection therewith.

          “ERISA Affiliate” means any entity that is required to be aggregated with the Company
as a single employer under Code Section 414.

          “Evans Advance” means an amount equal to $1.7 million as of the date of this Agreement
and which shall not exceed $1.7 million as of the Closing Date without Acquiror’s prior written
consent (which amount shall not bear any interest), that has been funded by Evans Renewable
Holdings II, LLC to the Company for working capital purposes for the period from January 1, 2010 to
the Closing Date pursuant to those certain Demand Promissory Notes issued by the Company to Evans
Renewable Holdings II, LLC dated the date of the respective advances.

          “Exchange Agent” means an independent third party exchange agent to be identified by
the Acquiror prior to the Closing, which person is reasonably satisfactory to the Company, the
costs, fees and expenses of which are borne by the Acquiror.

          “Exchange Act” is defined in Section 4.6.

          “Excluded Representations” is defined in Section 9.1.

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          “Financial Statements” is defined in Section 3.7(a).

          “GAAP” means United States generally accepted accounting principles as of the date
hereof, consistently applied.

          “General Manager” means an officer of the Surviving Company serving as General Manager
and Vice President of the Surviving Company as of the Closing, and who shall initially be Gregg
Patterson.

          “Governmental Entity” means any government or governmental or regulatory body thereof,
or political subdivision thereof, whether federal, state, local or foreign, or any agency,
instrumentality or authority thereof, or any court or arbitrator (public or private).

          “Gross Margin” means gross margin calculated in accordance with GAAP (consistently
applied and as shown on the Company’s financial statements for the fiscal year ended December 31,
2009 and in the 2010 Plan).

          “Hazardous Materials” means any wastes, substances, radiation, or materials (whether
solids, liquids or gases): (i) which are hazardous, toxic, infectious, explosive, radioactive,
carcinogenic, or mutagenic; (ii) which are or become defined as “pollutants,” “contaminants,”
“hazardous materials,” “hazardous wastes,” “hazardous substances,” “chemical substances,”
“radioactive materials,” “solid wastes,” or other similar designations in, or otherwise subject to
regulation under, any Environmental Laws; (iii) the presence of which on the real property leased
by the Company cause or threaten to cause a nuisance pursuant to applicable statutory or common law
upon such real property or to adjacent properties; (iv) which contain without limitation
polychlorinated biphenyls (PCBs), mold, methyl-tertiary butyl ether (MTBE), asbestos or
asbestos-containing materials, lead-based paints, urea-formaldehyde foam insulation, or petroleum
or petroleum products (including, without limitation, crude oil or any fraction thereof); or (v)
which pose a hazard to human health, safety, natural resources, employees, or the environment.

          “HSR Act” is defined in Section 5.3(b).

          “Indebtedness” means, without duplication, (i) all principal, interest, fees, expenses
and other amounts (including any and all prepayment premiums and breakage fees) in respect of
(A) borrowed money incurred by the Company, whether from third parties or the Shareholders, and
outstanding immediately prior to the Closing and (B) indebtedness evidenced by notes, debentures,
bonds or other similar instruments for the payment of which such Person is responsible or liable;
(ii) all obligations of such Person issued or assumed as the deferred purchase price of property,
all conditional sale obligations of such Person and all obligations of such Person under any title
retention agreement (but excluding trade accounts payable and other accrued current liabilities);
(iii) all obligations of such Person for reimbursement of any obligation or on any letter of
credit, banker’s acceptance or similar credit transaction; (iv) all obligations of the type
referred to in clauses (i) through (iii) of any other Persons for the payment of which such Person
is responsible or liable, directly or indirectly, as obligor, guarantor, surety or otherwise, (v)
all obligations of the type referred to in clauses (i) through (iii) of other Persons

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secured by any Encumbrance on any property or asset of such Person (whether or not such
obligation is assumed by such Person) and (vi) the Transaction Expenses.

          “Indemnifiable Claim” is defined in Section 9.4(a).

          “Indemnifying Party” is defined in Section 9.4(a).

          “Interim CEO” means Interim CEO, Inc.

          “Interim CEO Payment” means an amount payable by the Shareholders to Interim CEO out
of the Additional Consideration, if any, equal to one percent (1%) of the aggregate Additional
Consideration payable pursuant to Section 2.3.

          “Interim Financial Statements” is defined in Section 3.7(a).

          “Inverter IP” is defined in Section 3.20(e).

          “IRS” means the Internal Revenue Service.

          “Knowledge” means (i) with respect to the Company, the actual knowledge of Gregg
Patterson, Roger Laubacher, Erick Petersen and Steve Hummel (for purposes of Sections 3.11,
3.20, 3.25 and 3.26), after due inquiry of such Person’s directors and
executive officers and all other officers and managers having direct responsibility relating to the
applicable matter or, in the case of an individual, knowledge after due inquiry of such Persons,
and (ii) with respect to the Acquiror or Acquiror Sub, the actual knowledge of Lawrence Firestone,
Thomas McGimpsey and Charlie Loarridge, after due inquiry of such Person’s directors and executive
officers and all other officers and managers having responsibility relating to the applicable
matter.

          “Laws” means all applicable foreign, federal, state and local statutes, laws,
ordinances, regulations, rules, resolutions, orders, tariffs, determinations, writs, injunctions,
awards (including, without limitation, awards of any arbitrator), judgments and decrees applicable
to the specified Person and to the businesses and assets thereof (including, without limitation,
Laws relating to the protection of classified information; the sale, leasing, ownership or
management of real property; employment practices, terms and conditions, and wages and hours;
building standards, land use and zoning; safety, health and fire prevention and environmental
protection, including Environmental Laws) as of the applicable date.

          “Legal Proceeding” means any judicial, administrative or arbitral actions, suits,
mediation, investigation, inquiry, proceedings or claims (including counterclaims) by or before a
Governmental Entity in which the applicable Person is a party.

          “Letter of Transmittal” is defined in Section 2.7(a).

          “Losses” means any and all losses, liabilities, claims, obligations, deficiencies,
demands, judgments, damages (excluding incidental, consequential and punitive damages), interest,
fines, penalties, claims, suits, actions, causes of action, assessments, awards, costs and expenses
(including third party attorneys’ and other professionals’ fees), whether or not

71

 

involving third-Person claims. Notwithstanding the foregoing, Losses shall specifically
exclude unplanned internal costs and expenses and diminution in value.

          “MAE Exceptions” means an Acquiror Material Adverse Effect or a Company Material
Adverse Effect, as the case may be, however excluding any such effects arising out of or resulting
from (a) changes in general economic, financial market or geopolitical conditions (except to the
extent that such change, occurrence, circumstance or development has a significantly
disproportionate adverse effect on the Company or Acquiror as the case may be as compared to other
businesses), (b) general changes or developments in the industry in which the Company is engaged
(except to the extent that such change, occurrence, circumstance or development has a significantly
disproportionate adverse effect on the Company or Acquiror as the case may be as compared to other
similarly situated businesses), (c) any outbreak or escalation of hostilities or war or any act of
terrorism or other force majeure events, (d) any actions taken, or failure to take action, or such
other changes or conditions, in each case, that Acquiror and Company have approved, consented to or
requested in writing, or (e) the announcement of this Agreement and the transactions contemplated
hereby, including any termination of, or reduction in revenue from, Contracts with any customers,
suppliers, distributors, partners or employees of the Company or Acquiror, as the case may be, and
its Subsidiaries to the extent due to the announcement and performance of this Agreement or the
identity of Acquiror or Company, as the case may be, or the performance of this Agreement and the
transactions contemplated hereby, including compliance with the covenants set forth herein.

          “Majority Shareholders” is defined in Section 10.14(a).

          “Material Contract” is defined in Section 3.14(a).

          “Merger” is defined in the Recitals.

          “Merger Consideration” is defined in Section 2.1(c).

          “Multiemployer Plan” means any “multiemployer plan” within the meaning of Section
4001(a)(3) of ERISA to which the Company or any ERISA Affiliate contribute, have an obligation to
contribute, or have at any time since September 2, 1974, contributed or been obligated to
contribute.

          “Operating Guidelines” is defined in Section 2.3(b).

          “Order” means any order, injunction, judgment, doctrine, decree, ruling, writ,
assessment or arbitration award of a Governmental Entity.

          “Ordinary Course of Business” means ordinary course of business consistent with past
practices and reasonable business operations.

          “Oregon Law” is defined in the Recitals.

          “Outside Date” is defined in Section 8.1(e).

72

 

          “Party” and “Parties” is defined in the Preamble.

          “Per Share Additional Consideration” is defined in Section 2.4(a).

          “Per Share Closing Cash Consideration” is defined in Section 2.4(a).

          “Per Share Closing Share Consideration” is defined in Section 2.4(a).

          “Permits” means any approvals, authorizations, consents, licenses, permits or
certificates of a Governmental Entity.

          “Permitted Encumbrance” means (i) any Encumbrance for Taxes not yet due or delinquent
or being contested in good faith by appropriate proceedings for which adequate reserves have been
established consistent with the Company’s past practices, (ii) any statutory Encumbrance arising in
the Ordinary Course of Business by operation of Law with respect to a liability that is not yet due
or delinquent, (iii) any minor imperfection of title or similar Encumbrance which individually or
in the aggregate with other such Encumbrances does not materially impair the value or interfere
with the present use of any of the assets of the property subject to such Encumbrance, or (iv) any
Encumbrance as set forth in Schedule 3.13.

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

          "Pre-Closing Period” is defined in Section 3.18(r).

          “Pre-closing Taxes” is defined in Section 5.9(b).

          “Pre-Closing Tax Period” is defined in Section 5.9(b).

          “Preferred Shares” is defined in Section 2.4.

          “Proprietary Rights” means all intellectual property rights, including patents,
trademarks, service marks, copyrights, trade names, trade dress, designs, domain names, proprietary
processes, proprietary knowledge (including trade secrets and know-how) and all registrations and
applications and renewals for any of the foregoing and all goodwill associated therewith.

          “Pro Rata Share” means, as to each Shareholder, (i) the total number of issued and
outstanding Common Shares held by such Shareholder, after giving effect to the conversion (or
deemed conversion) of all issued and outstanding Preferred Shares into Common Shares immediately
prior to the Closing in accordance with Section IV of the Articles of Incorporation of the Company
and the exercise of all Company Options and Company Warrants to be exercised immediately prior to
the Closing divided by (ii) the Base Number.

          “Proxy Statement” is defined in Section 5.10.

73

 

          “PV Commercial Revenue” means revenue recognized in accordance with the revenue
recognition policies of the Company and of the Acquiror under U.S. GAAP (consistently applied and
as shown on the Company’s income statement for the fiscal year ended December 31, 2009 and in the
2010 Plan) during the fiscal year ending December 31, 2010 from the sale of Commercial Inverter
Products manufactured in and shipped from the United States.

          “Real Property Leases” is defined in Section 3.12.

          “Related Persons” is defined in Section 3.22.

          “Release” means any presence, emission, spill, seepage, leak, escape, leaching,
discharge, injection, pumping, pouring, emptying, dumping, disposal, migration, or release of
Hazardous Materials into or upon the environment, including the air, soil, improvements, surface
water, groundwater, the sewer, septic system, storm drain, publicly owned treatment works, or waste
treatment, storage, or disposal systems.

          “Releases” is defined in Section 6.2(h).

          “Shareholder” or “Shareholders” means a holder or the holders of the Common
Shares and/or the Preferred Shares immediately prior to the Effective Time.

          “Shareholder Indemnified Parties” is defined in Section 9.3.

          “Shareholder Representative” is defined in Section 10.14.

          “Shareholder Representative Confidentiality Agreement” is defined in Section
2.3(f).

          “Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

          “Special Meeting” is defined in Section 5.10.

          “Straddle Period” is defined in Section 5.9(b).

          “Subsidiary” means a corporation, partnership, joint venture or other entity of which
a Person owns, directly or indirectly, at least fifty percent (50%) of the outstanding securities
or other interests the holders of which are generally entitled to vote for the election of the
board of directors or other governing body or otherwise exercise control of such entity.

          “Superior Competing Transaction” means any bona fide written proposal for an
Acquisition Transaction which the Board of Directors of the Company determines in its good faith
judgment (based on the opinion of outside counsel or another financial advisor of nationally
recognized reputation, and after taking into account the likelihood of consummation of such
transaction on the terms set forth therein (as compared to, and with due regard for, the terms
herein) and all appropriate legal (with the advice of outside counsel), financial (including the
financing terms of any such proposal), regulatory and other aspects of such proposal and any

74

 

other relevant factors permitted under applicable law), to be more favorable to the
Shareholders from a financial point of view than the Merger and the other transactions contemplated
hereby.

          “Surviving Company” is defined in Section 1.1.

          “Targets” is defined in Section 2.3(a).

          “Taxes” mean (i) any and all taxes, fees, levies, duties, tariffs, imposts and other
charges of any kind, imposed by any Governmental Entity or taxing authority, including taxes or
other charges on, measured by, or with respect to income, franchise, windfall or other profits,
gross receipts, property, sales, use, capital stock, payroll, employment, social security, workers’
compensation, unemployment compensation or net worth; taxes or other charges in the nature of
excise, withholding, ad valorem, stamp, transfer, value-added or gains taxes; license, registration
and documentation fees; and custom’s duties, tariffs and similar charges; (ii) any liability for
the payment of any amounts of the type described in (i) as a result of being a member of an
affiliated, combined, consolidated or unitary group for any taxable period; (iii) any liability for
the payment of any amounts of the type described in (i) as a result of being a person required by
law to withhold or collect taxes imposed on another person; (iv) any liability for the payment of
amounts of the type described in (i), (ii) or (iii) as a result of being a transferee of, or a
successor in interest to, any person or as a result of an express or implied obligation to
indemnify any person; and (v) any and all interest, penalties, additions to tax and additional
amounts imposed in connection with or with respect to any amounts described in (i), (ii), (iii) or
(iv).

          “Tax Proceeding” is defined in Section 5.9(d).

          “Tax Returns” means any return, statement, declaration, form, report, claim for refund
or credit, or information return or other documentation (including any additional or supporting
material and any amendments or supplements) filed or maintained, or required to be filed or
maintained, with respect to or in connection with the calculation, determination, assessment or
collection of any Taxes.

          “Tax Statement” is defined in Section 5.9(b).

          “Terminating Agreement” is defined in Schedule 3.20(e).

          “Transaction Expenses” means (i) the aggregate amount of all out-of-pocket fees and
expenses incurred on or before the Closing Date and payable by the Shareholders and the Company in
connection with the transactions contemplated by this Agreement, including out-of-pocket expenses
incurred by the Shareholders and the Company in connection with the sale or attempted sale of the
Company plus, (ii) the fees payable to Interim CEO at the Closing pursuant to the terms and
conditions of the Agreement dated August 15, 2008 between the Company and Interim CEO.

          “Transfer Taxes” is defined in Section 5.9(d).

          “Transitioned Employee” is defined in Section 5.15.

75

 

          “Unsatisfied Transaction Costs” means any costs incurred by the Company or any
shareholder of the Company in connection with the transactions contemplated hereby, which costs may
be attributable to the Company and have not been paid as of the Effective Time.

          “WARN” is defined in Section 3.15.

          “Withdrawal Liability” means liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as those terms are defined in Part I
of Subtitle E of Title IV of ERISA.

[This Page Intentionally Left Blank; Signature Page Follows.]

76

 

     IN WITNESS WHEREOF, the Acquiror, the Acquiror Sub and the Company have executed and
delivered, or have caused this Agreement to be duly executed and delivered, as of the date first
set forth hereinabove.

	 	 	 	 	 	 	 
	ACQUIROR:	 	ADVANCED ENERGY INDUSTRIES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Dr. Hans Betz	 	 
	 

	 	Name:
	 	 

Dr. Hans G. Betz,
	 	 
	 

	 	Title:
	 	Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	ACQUIROR SUB:	 	NEPTUNE ACQUISITION SUB, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Thomas O. McGimpsey	 	 
	 

	 	Name:
	 	 

Thomas O. McGimpsey
	 	 
	 	 	Title:	 	Vice President & Corporate Secretary
	 
	 	 	 	 	 	 
	THE COMPANY:	 	PV POWERED, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Mark Fleischaurer	 	 
	 

	 	Name:
	 	 

Mark Fleischauer
	 	 
	 

	 	Title:
	 	Chairman of the Boardexv10w1

Exhibit 10.1

(Multicurrency — Cross Border)

MASTER AGREEMENT

Dated as of

April 4, 2002

Goldman Sachs Capital Markets, L.P. and Commercial Metals Company

have entered and/or anticipate entering into one or more transactions (each a “Transaction”) that
are or will be governed by this Master Agreement, which includes the schedule (the “Schedule”), and
the documents and other confirming evidence (each a “Confirmation”) exchanged between the parties
confirming those Transactions.

Accordingly, the parties agree as follows:-

1. Interpretation

(a) Definitions. The terms defined in Section 14 and in the Schedule will have the meanings
therein specified for the purpose of this Master Agreement.

(b) Inconsistency. In the event of any inconsistency between the provisions of the Schedule and the
other provisions of this Master Agreement, the Schedule will prevail. In the event of any
inconsistency between the provisions of any Confirmation and this Master Agreement (including the
Schedule), such Confirmation will prevail for the purpose of the relevant Transaction.

(c) Single Agreement. All Transactions are entered into in reliance on the fact that this Master
Agreement and all Confirmations form a single agreement between the parties (collectively referred
to as this “Agreement”), and the parties would not otherwise enter into any Transactions.

2. Obligations

(a) General Conditions.

(i) Each party will make each payment or delivery specified in each Confirmation to be made by
it, subject to the other provisions of this Agreement.

(ii) Payments under this Agreement will be made on the due date for value on that date in the
place of the account specified in the relevant Confirmation or otherwise pursuant to this
Agreement, in freely transferable funds and in the manner customary for payments in the
required currency. Where settlement is by delivery (that is, other than by payment), such
delivery will be made for receipt on the due date in the manner customary for the relevant
obligation unless otherwise specified in the relevant Confirmation or elsewhere in this
Agreement.

(iii) Each obligation of each party under Section 2(a)(i) is subject to (1) the condition
precedent that no Event of Default or Potential Event of Default with respect to the other
party has occurred and is continuing, (2) the condition precedent that no Early Termination
Date in respect of the relevant Transaction has occurred or been effectively designated and
(3) each other applicable condition precedent specified in this Agreement.

Copyright © 1992 by International Swap Dealers Association, Inc.

 

 

(b) Change of Account. Either party may change its account for receiving a payment or delivery by
giving notice to the other party at least five Local Business Days prior to the scheduled date for
the payment or delivery to which such change applies unless such other party gives timely notice of
a reasonable objection to such change.

(c) Netting. If on any date amounts would otherwise be payable:-

(i) in the same currency; and

(ii) in respect of the same Transaction,

by each party to the other, then, on such date, each party’s obligation to make payment of any such
amount will be automatically satisfied and discharged and, if the aggregate amount that would
otherwise have been payable by one party exceeds the aggregate amount that would otherwise have
been payable by the other party, replaced by an obligation upon the party by whom the larger
aggregate amount would have been payable to pay to the other party the excess of the larger
aggregate amount over the smaller aggregate amount.

The parties may elect in respect of two or more Transactions that a net amount will be determined
in respect of all amounts payable on the same date in the same currency in respect of such
Transactions, regardless of whether such amounts are payable in respect of the same Transaction.
The election may be made in the Schedule or a Confirmation by specifying that subparagraph (ii)
above will not apply to the Transactions identified as being subject to the election, together with
the starting date (in which case subparagraph (ii) above will not, or will cease to, apply to such
Transactions from such date). This election may be made separately for different groups of
Transactions and will apply separately to each pairing of Offices through which the parties make
and receive payments or deliveries.

(d) Deduction or Withholding for Tax.

(i) Gross-Up. All payments under this Agreement will be made without any deduction or
withholding for or on account of any Tax unless such deduction or withholding is required by
any applicable law, as modified by the practice of any relevant governmental revenue
authority, then in effect. If a party is so required to deduct or withhold, then that party
(“X”) will:-

(1) promptly notify the other party (“Y”) of such requirement;

(2) pay to the relevant authorities the full amount required to be deducted or withheld
(including the full amount required to be deducted or withheld from any additional
amount paid by X to Y under this Section 2(d)) promptly upon the earlier of determining
that such deduction or withholding is required or receiving notice that such amount has
been assessed against Y;

(3) promptly forward to Y an official receipt (or a certified copy), or other
documentation reasonably acceptable to Y, evidencing such payment to such authorities;
and

(4) if such Tax is an Indemnifiable Tax, pay to Y, in addition to the payment to which Y
is otherwise entitled under this Agreement, such additional amount as is necessary to
ensure that the net amount actually received by Y (free and clear of Indemnifiable
Taxes, whether assessed against X or Y) will equal the full amount Y would have received
had no such deduction or withholding been required. However, X will not be required to
pay any additional amount to Y to the extent that it would not be required to be paid
but for:-

(A) the failure by Y to comply with or perform any agreement contained in Section
4(a)(i), 4(a)(iii) or 4(d); or

(B) the failure of a representation made by Y pursuant to Section 3(f) to be
accurate and true unless such failure would not have occurred but for (I) any
action taken by a taxing authority, or brought in a court of competent
jurisdiction, on or after the date on which a Transaction is entered into
(regardless of whether such action is taken or brought with respect to a party to
this Agreement) or (II) a Change in Tax Law.

ISDA ® 1992

2

 

(ii) Liability. If:-

(1) X is required by any applicable law, as modified by the practice of any relevant
governmental revenue authority, to make any deduction or withholding in respect of which
X would not be required to pay an additional amount to Y under Section 2(d)(i)(4);

(2) X does not so deduct or withhold; and

(3) a liability resulting from such Tax is assessed directly against X,

then, except to the extent Y has satisfied or then satisfies the liability resulting from such
Tax, Y will promptly pay to X the amount of such liability (including any related liability
for interest, but including any related liability for penalties only if Y has failed to comply
with or perform any agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d)).

(e) Default Interest; Other Amounts. Prior to the occurrence or effective designation of an Early
Termination Date in respect of the relevant Transaction, a party that defaults in the performance
of any payment obligation will, to the extent permitted by law and subject to Section 6(c), be
required to pay interest (before as well as after judgment) on the overdue amount to the other
party on demand in the same currency as such overdue amount, for the period from (and including)
the original due date for payment to (but excluding) the date of actual payment, at the Default
Rate. Such interest will be calculated on the basis of daily compounding and the actual number of
days elapsed. If, prior to the occurrence or effective designation of an Early Termination Date in
respect of the relevant Transaction, a party defaults in the performance of any obligation required
to be settled by delivery, it will compensate the other party on demand if and to the extent
provided for in the relevant Confirmation or elsewhere in this Agreement.

3. Representations

Each party represents to the other party (which representations will be deemed to be repeated by
each party on each date on which a Transaction is entered into and, in the case of the
representations in Section 3(f), at all times until the termination of this Agreement) that:-

(a) Basic Representations.

(i) Status. it is duly organised and validly existing under the laws of the jurisdiction of
its organisation or incorporation and, if relevant under such laws, in good standing;

(ii) Powers. It has the power to execute this Agreement and any other documentation relating
to this Agreement to which it is a party, to deliver this Agreement and any other
documentation relating to this Agreement that it is required by this Agreement to deliver and
to perform its obligations under this Agreement and any obligations it has under any Credit
Support Document to which it is a party and has taken all necessary action to authorise such
execution, delivery and performance;

(iii) No Violation or Conflict. Such execution, delivery and performance do not violate or
conflict with any law applicable to it, any provision of its constitutional documents, any
order or judgment of any court or other agency of government applicable to it or any of its
assets or any contractual restriction binding on or affecting it or any of its assets;

(iv) Consents. All governmental and other consents that are required to have been obtained by
it with respect to this Agreement or any Credit Support Document to which it is a party have
been obtained and are in full force and effect and all conditions of any such consents have
been complied with; and

(v) Obligations Binding. Its obligations under this Agreement and any Credit Support Document
to which it is a party constitute its legal, valid and binding obligations, enforceable in
accordance with their respective terms (subject to applicable bankruptcy, reorganisation,
insolvency, moratorium or similar laws affecting creditors’ rights generally and subject, as
to enforceability, to equitable principles of general application (regardless of whether
enforcement is sought in a proceeding in equity or at law)).

ISDA ® 1992

3

 

(b) Absence of Certain Events. No Event of Default or Potential Event of Default or, to its
knowledge, Termination Event with respect to it has occurred and is continuing and no such event or
circumstance would occur as a result of its entering into or performing its obligations under this
Agreement or any Credit Support Document to which it is a party.

(c) Absence of Litigation. There is not pending or, to its knowledge, threatened against it or any
of its Affiliates any action, suit or proceeding at law or in equity or before any court, tribunal,
governmental body, agency or official or any arbitrator that is likely to affect the legality,
validity or enforceability against it of this Agreement or any Credit Support Document to which it
is a party or its ability to perform its obligations under this Agreement or such Credit Support
Document.

(d) Accuracy of Specified Information. All applicable information that is furnished in writing by
or on behalf of it to the other party and is identified for the purpose of this Section 3(d) in the
Schedule is, as of the date of the information, true, accurate and complete in every material
respect.

(e) Payer Tax Representation. Each representation specified in the Schedule as being made by it for
the purpose of this Section 3(e) is accurate and true.

(f) Payee Tax Representations. Each representation specified in the Schedule as being made by it
for the purpose of this Section 3(f) is accurate and true.

4. Agreements

Each party agrees with the other that, so long as either party has or may have any obligation under
this Agreement or under any Credit Support Document to which it is a party:-

(a) Furnish Specified Information. It will deliver to the other party or, in certain cases under
subparagraph (iii) below, to such government or taxing authority as the other party reasonably
directs:-

(i) any forms, documents or certificates relating to taxation specified in the Schedule or any
Confirmation;

(ii) any other documents specified in the Schedule or any Confirmation; and

(iii) upon reasonable demand by such other party, any form or document that may be required or
reasonably requested in writing in order to allow such other party or its Credit Support
Provider to make a payment under this Agreement or any applicable Credit Support Document
without any deduction or withholding for or on account of any Tax or with such deduction or
withholding at a reduced rate (so long as the completion, execution or submission of such form
or document would not materially prejudice the legal or commercial position of the party in
receipt of such demand), with any such form or document to be accurate and completed in a
manner reasonably satisfactory to such other party and to be executed and to be delivered with
any reasonably required certification,

in each case by the date specified in the Schedule or such Confirmation or, if none is specified,
as soon as reasonably practicable.

(b) Maintain Authorisations. It will use all reasonable efforts to maintain in full force and
effect all consents of any governmental or other authority that are required to be obtained by it
with respect to this Agreement or any Credit Support Document to which it is a party and will use
all reasonable efforts to obtain any that may become necessary in the future.

(c) Comply with Laws. It will comply in all material respects with all applicable laws and orders
to which it may be subject if failure so to comply would materially impair its ability to perform
its obligations under this Agreement or any Credit Support Document to which it is a party.

(d) Tax Agreement. It will give notice of any failure of a representation made by it under Section
3(f) to be accurate and true promptly upon learning of such failure.

(e) Payment of Stamp Tax. Subject to Section 11, it will pay any Stamp Tax levied or imposed upon
it or in respect of its execution or performance of this Agreement by a jurisdiction in which it is
incorporated,

ISDA ® 1992

4

 

organised, managed and controlled, or considered to have its seat, or in which a
branch or office through which it is acting for the purpose of this Agreement is located (“Stamp
Tax Jurisdiction”) and will indemnify the other party against any Stamp Tax levied or imposed upon
the other party or in respect of the other party’s execution or performance of this Agreement by
any such Stamp Tax Jurisdiction which is not also a Stamp Tax Jurisdiction with respect to the
other party.

5. Events of Default and Termination Events

(a) Events of Default. The occurrence at any time with respect to a party or, if applicable,
any Credit Support Provider of such party or any Specified Entity of such party of any of the
following events constitutes an event of default (an “Event of Default”) with respect to such
party:-

(i) Failure to Pay or Deliver. Failure by the party to make, when due, any payment under this
Agreement or delivery under Section 2(a)(i) or 2(e) required to be made by it if such failure
is not remedied on or before the third Local Business Day after notice of such failure is
given to the party;

(ii) Breach of Agreement. Failure by the party to comply with or perform any agreement or
obligation (other than an obligation to make any payment under this Agreement or delivery
under Section 2(a)(i) or 2(e) or to give notice of a Termination Event or any agreement or
obligation under Section 4(a)(i), 4(a)(iii) or 4(d)) to be complied with or performed by the
party in accordance with this Agreement if such failure is not remedied on or before the
thirtieth day after notice of such failure is given to the party;

(iii) Credit Support Default.

(1) Failure by the party or any Credit Support Provider of such party to comply with or
perform any agreement or obligation to be complied with or performed by it in accordance
with any Credit Support Document if such failure is continuing after any applicable
grace period has elapsed;

(2) the expiration or termination of such Credit Support Document or the failing or
ceasing of such Credit Support Document to be in full force and effect for the purpose
of this Agreement (in either case other than in accordance with its terms) prior to the
satisfaction of all obligations of such party under each Transaction to which such
Credit Support Document relates without the written consent of the other party; or

(3) the party or such Credit Support Provider disaffirms, disclaims, repudiates or
rejects, in whole or in part, or challenges the validity of, such Credit Support
Document;

(iv) Misrepresentation. A representation (other than a representation under Section 3(e) or
(f)) made or repeated or deemed to have been made or repeated by the party or any Credit
Support Provider of such party in this Agreement or any Credit Support Document proves to have
been incorrect or misleading in any material respect when made or repeated or deemed to have
been made or repeated;

(v) Default under Specified Transaction. The party, any Credit Support Provider of such party
or any applicable Specified Entity of such party (1) defaults under a Specified Transaction
and, after giving effect to any applicable notice requirement or grace period, there occurs a
liquidation of, an acceleration of obligations under, or an early termination of, that
Specified Transaction, (2) defaults, after giving effect to any applicable notice requirement
or grace period, in making any payment or delivery due on the last payment, delivery or
exchange date of, or any payment on early termination of, a Specified Transaction (or such
default continues for at least three Local Business Days if there is no applicable notice
requirement or grace period) or (3) disaffirms, disclaims, repudiates or rejects, in whole or
in part, a Specified Transaction (or such action is taken by any person or entity appointed or
empowered to operate it or act on its behalf);

(vi) Cross Default. If “Cross Default” is specified in the Schedule as applying to the party,
the occurrence or existence of (1) a default, event of default or other similar condition or
event (however

ISDA ® 1992

5

 

described) in respect of such party, any Credit Support Provider of such party or any
applicable Specified Entity of such party under one or more agreements or instruments relating
to Specified Indebtedness of any of them (individually or collectively) in an aggregate amount
of not less than the applicable Threshold Amount (as specified in the Schedule) which has
resulted in such Specified Indebtedness becoming, or becoming capable at such time of being
declared, due and payable under such agreements or instruments, before it would otherwise have
been due and payable or (2) a default by such party, such Credit Support Provider or such
Specified Entity (individually or collectively) in making one or more payments on the due date
thereof in an aggregate amount of not less than the applicable Threshold Amount under such
agreements or instruments (after giving effect to any applicable notice requirement or grace
period);

(vii) Bankruptcy. The party, any Credit Support Provider of such party or any applicable
Specified Entity of such party:-

(1) is dissolved (other than pursuant to a consolidation, amalgamation or merger); (2)
becomes insolvent or is unable to pay its debts or fails or admits in writing its
inability generally to pay its debts as they become due; (3) makes a general assignment,
arrangement or composition with or for the benefit of its creditors; (4) institutes or
has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or
any other relief under any bankruptcy or insolvency law or other similar law affecting
creditors’ rights, or a petition is presented for its winding-up or liquidation, and, in
the case of any such proceeding or petition instituted or presented against it, such
proceeding or petition (A) results in a judgment of insolvency or bankruptcy or the
entry of an order for relief or the making of an order for its winding-up or liquidation
or (B) is not dismissed, discharged, stayed or restrained in each case within 30 days of
the institution or presentation thereof; (5) has a resolution passed for its winding-up,
official management or liquidation (other than pursuant to a consolidation, amalgamation
or merger); (6) seeks or becomes subject to the appointment of an administrator,
provisional liquidator, conservator, receiver, trustee, custodian or other similar
official for it or for all or substantially all its assets; (7) has a secured party take
possession of all or substantially all its assets or has a distress, execution,
attachment, sequestration or other legal process levied, enforced or sued on or against
all or substantially all its assets and such secured party maintains possession, or any
such process is not dismissed, discharged, stayed or restrained, in each case within 30
days thereafter; (8) causes or is subject to any event with respect to it which, under
the applicable laws of any jurisdiction, has an analogous effect to any of the events
specified in clauses (1) to (7) (inclusive); or (9) takes any action in furtherance of,
or indicating its consent to, approval of, or acquiescence in, any of the foregoing
acts; or

(viii) Merger Without Assumption. The party or any Credit Support Provider of such party
consolidates or amalgamates with, or merges with or into, or transfers all or substantially
all its assets to, another entity and, at the time of such consolidation, amalgamation, merger
or transfer:-

(1) the resulting, surviving or transferee entity fails to assume all the obligations of
such party or such Credit Support Provider under this Agreement or any Credit Support
Document to which it or its predecessor was a party by operation of law or pursuant to
an agreement reasonably satisfactory to the other party to this Agreement; or

(2) the benefits of any Credit Support Document fail to extend (without the consent of
the other party) to the performance by such resulting, surviving or transferee entity of
its obligations under this Agreement.

(b) Termination Events. The occurrence at any time with respect to a party or, if applicable, any
Credit Support Provider of such party or any Specified Entity of such party of any event specified
below
constitutes an Illegality if the event is specified in (i) below, a Tax Event if the event is
specified in (ii) below or a Tax Event upon Merger if the event is specified in (iii) below, and,
if specified to be applicable, a Credit Event

ISDA ® 1992

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Upon Merger if the event is specified pursuant to
(iv) below or an Additional Termination Event if the event is specified pursuant to (v) below:-

(i) Illegality. Due to the adoption of, or any change in, any applicable law after the date on
which a Transaction is entered into, or due to the promulgation of, or any change in, the
interpretation by any court, tribunal or regulatory authority with competent jurisdiction of
any applicable law after such date, it becomes unlawful (other than as a result of a breach by
the party of Section 4(b)) for such party (which will be the Affected Party):-

(1) to perform any absolute or contingent obligation to make a payment or delivery or to
receive a payment or delivery in respect of such Transaction or to comply with any other
material provision of this Agreement relating to such Transaction; or

(2) to perform, or for any Credit Support Provider of such party to perform, any
contingent or other obligation which the party (or such Credit Support Provider) has
under any Credit Support Document relating to such Transaction;

(ii) Tax Event. Due to (x) any action taken by a taxing authority, or brought in a court of
competent jurisdiction, on or after the date on which a Transaction is entered into
(regardless of whether such action is taken or brought with respect to a party to this
Agreement) or (y) a Change in Tax Law, the party (which will be the Affected Party) will, or
there is a substantial likelihood that it will, on the next succeeding Scheduled Payment Date
(1) be required to pay to the other party an additional amount in respect of an Indemnifiable
Tax under Section 2(d)(i)(4) (except in respect of interest under Section 2(e), 6(d)(ii) or
6(e)) or (2) receive a payment from which an amount is required to be deducted or withheld for
or on account of a Tax (except in respect of interest under Section 2(e), 6(d)(ii) or 6(e))
and no additional amount is required to be paid in respect of such Tax under Section
2(d)(i)(4) (other than by reason of Section 2(d)(i)(4)(A) or (B));

(iii) Tax Event Upon Merger. The party (the “Burdened Party”) on the next succeeding Scheduled
Payment Date will either (1) be required to pay an additional amount in respect of an
Indemnifiable Tax under Section 2(d)(i)(4) (except in respect of interest under Section 2(e),
6(d)(ii) or 6(e)) or (2) receive a payment from which an amount has been deducted or withheld
for or on account of any Indemnifiable Tax in respect of which the other party is not required
to pay an additional amount (other than by reason of Section 2(d)(i)(4)(A) or (B)), in either
case as a result of a party consolidating or amalgamating with, or merging with or into, or
transferring all or substantially all its assets to, another entity (which will be the
Affected Party) where such action does not constitute an event described in Section
5(a)(viii);

(iv) Credit Event Upon Merger. If “Credit Event Upon Merger” is specified in the Schedule as
applying to the party, such party (“X”), any Credit Support Provider of X or any applicable
Specified Entity of X consolidates or amalgamates with, or merges with or into, or transfers
all or substantially all its assets to, another entity and such action does not constitute an
event described in Section 5(a)(viii) but the creditworthiness of the resulting, surviving or
transferee entity is materially weaker than that of X, such Credit Support Provider or such
Specified Entity, as the case may be, immediately prior to such action (and, in such event, X
or its successor or transferee, as appropriate, will be the Affected Party); or

(v) Additional Termination Event. If any “Additional Termination Event” is specified in the
Schedule or any Confirmation as applying, the occurrence of such event (and, in such event,
the Affected Party or Affected Parties shall be as specified for such Additional Termination
Event in the Schedule or such Confirmation).

(c) Event of Default and Illegality. If an event or circumstance which would otherwise constitute
or give rise to an Event of Default also constitutes an Illegality, it will be treated as an
Illegality and will not constitute an Event of Default.

ISDA ® 1992

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6. Early Termination

(a) Right to Terminate Following Event of Default. If at any time an Event of Default with
respect to a party (the “Defaulting Party”) has occurred and is then continuing, the other party
(the “Non-defaulting Party”) may, by not more than 20 days notice to the Defaulting Party
specifying the relevant Event of Default, designate a day not earlier than the day such notice is
effective as an Early Termination Date in respect of all outstanding

Transactions. If, however, “Automatic Early Termination” is specified in the Schedule as applying
to a party, then an Early Termination Date in respect of all outstanding Transactions will occur
immediately upon the occurrence with respect to such party of an Event of Default specified in
Section 5(a)(vii)(1), (3), (5), (6) or, to the extent analogous thereto, (8), and as of the time
immediately preceding the institution of the relevant proceeding or the presentation of the
relevant petition upon the occurrence with respect to such party of an Event of Default specified
in Section 5(a)(vii)(4) or, to the extent analogous thereto, (8).

(b) Right to Terminate Following Termination Event.

(i) Notice. If a Termination Event occurs, an Affected Party will, promptly upon becoming
aware of it, notify the other party, specifying the nature of that Termination Event and each
Affected Transaction and will also give such other information about that Termination Event as
the other party may reasonably require.

(ii) Transfer to Avoid Termination Event. If either an Illegality under Section 5(b)(i)(1) or
a Tax Event occurs and there is only one Affected Party, or if a Tax Event Upon Merger occurs
and the Burdened Party is the Affected Party, the Affected Party will, as a condition to its
right to designate an Early Termination Date under Section 6(b)(iv), use all reasonable
efforts (which will not require such party to incur a loss, excluding immaterial, incidental
expenses) to transfer within 20 days after it gives notice under Section 6(b)(i) all its
rights and obligations under this Agreement in respect of the Affected Transactions to another
of its Offices or Affiliates so that such Termination Event ceases to exist.

If the Affected Party is not able to make such a transfer it will give notice to the other
party to that effect within such 20 day period, whereupon the other party may effect such a
transfer within 30 days after  notice is given under Section 6(b)(i).

Any such transfer by a party under this Section 6(b)(ii) will be subject to and conditional
upon the prior written consent of the other party, which consent will not be withheld if such
other party’s policies in effect at such time would permit it to enter into transactions with
the transferee on the terms proposed.

(iii) Two Affected Parties. If an Illegality under Section 5(b)(i)(1) or a Tax Event occurs
and there are two Affected Parties, each party will use all reasonable efforts to reach
agreement within 30 days after notice thereof is given under Section 6(b)(i) on action to
avoid that Termination Event.

(iv) Right to Terminate. If:-

(1) a transfer under Section 6(b)(ii) or an agreement under Section 6(b)(iii), as the
case may be, has not been effected with respect to all Affected Transactions within 30
days after an Affected Party gives notice under Section 6(b)(i); or

(2) an Illegality under Section 5(b)(i)(2), a Credit Event Upon Merger or an Additional
Termination Event occurs, or a Tax Event Upon Merger occurs and the Burdened Party is
not the Affected Party,

either party in the case of an Illegality, the Burdened Party in the case of a Tax Event Upon
Merger, any Affected Party in the case of a Tax Event or an Additional Termination Event if
there is more than one Affected Party, or the party which is not the Affected Party in the
case of a Credit Event Upon Merger or an Additional Termination Event if there is only one
Affected Party may, by not more than 20 days notice to the other party and provided that the
relevant Termination Event is then

ISDA ® 1992

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continuing, designate a day not earlier than the day such
notice is effective as an Early Termination Date in respect of all Affected Transactions.

(c) Effect of Designation.

(i) If notice designating an Early Termination Date is given under Section 6(a) or (b), the
Early Termination Date will occur on the date so designated, whether or not the relevant Event
of Default or Termination Event is then continuing.

(ii) Upon the occurrence or effective designation of an Early Termination Date, no further
payments or deliveries under Section 2(a)(i) or 2(e) in respect of the Terminated Transactions
will be required to be made, but without prejudice to the other provisions of this Agreement.
The amount, if any, payable in respect of an Early Termination Date shall be determined
pursuant to Section 6(e).

(d) Calculations.

(i) Statement. On or as soon as reasonably practicable following the occurrence of an Early
Termination Date, each party will make the calculations on its part, if any, contemplated by
Section 6(e) and will provide to the other party a statement (1) showing, in reasonable
detail, such calculations (including all relevant quotations and specifying any amount payable
under Section 6(e)) and (2) giving details of the relevant account to which any amount payable
to it is to be paid. In the absence of written confirmation from the source of a quotation
obtained in determining a Market Quotation, the records of the party obtaining such quotation
will be conclusive evidence of the existence and accuracy of such quotation.

(ii) Payment Date. An amount calculated as being due in respect of any Early Termination Date
under Section 6(e) will be payable on the day that notice of the amount payable is effective
(in the case of an Early Termination Date which is designated or occurs as a result of an
Event of Default) and on the day which is two Local Business Days after the day on which
notice of the amount payable is effective (in the case of an Early Termination Date which is
designated as a result of a Termination Event). Such amount will be paid together with (to the
extent permitted under applicable law) interest thereon (before as well as after judgment) in
the Termination Currency, from (and including) the relevant Early Termination Date to (but
excluding) the date such amount is paid, at the Applicable Rate. Such interest will be
calculated on the basis of daily compounding and the actual number of days elapsed.

(e) Payments on Early Termination. If an Early Termination Date occurs, the following provisions
shall apply based on the parties’ election in the Schedule of a payment measure, either “Market
Quotation” or “Loss”, and a payment method, either the “First Method” or the “Second Method”. If
the parties fail to designate a payment measure or payment method in the Schedule, it will be
deemed that “Market Quotation” or the “Second Method”, as the case may be, shall apply. The amount,
if any, payable in respect of an Early Termination Date and determined pursuant to this Section
will be subject to any Set-off.

(i) Events of Default. If the Early Termination Date results from an Event of Default:-

(1) First Method and Market Quotation. If the First Method and Market Quotation apply,
the Defaulting Party will pay to the Non-defaulting Party the excess, if a positive
number, of (A) the sum of the Settlement Amount (determined by the Non-defaulting Party)
in respect of the Terminated Transactions and the Termination Currency Equivalent of the
Unpaid Amounts owing to the Non-defaulting Party over (B) the Termination Currency
Equivalent of the Unpaid Amounts owing to the Defaulting Party.

(2) First Method and Loss. If the First Method and Loss apply, the Defaulting Party will
pay to the Non-defaulting Party, if a positive number, the Non-defaulting Party’s Loss
in respect of this Agreement.

(3) Second Method and Market Quotation. If the Second Method and Market Quotation apply,
an amount will be payable equal to (A) the sum of the Settlement Amount (determined by
the

ISDA ® 1992

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Non-defaulting Party) in respect of the Terminated Transactions and the Termination
Currency Equivalent of the Unpaid Amounts owing to the Non-defaulting Party less (B) the
Termination Currency Equivalent of the Unpaid Amounts owing to the Defaulting Party. If
that amount is a positive number, the Defaulting Party will pay it to the Non-defaulting
Party; if it is a negative number, the Non-defaulting Party will pay the absolute value
of that amount to the Defaulting Party.

(4) Second Method and Loss. If the Second Method and Loss apply, an amount will be
payable equal to the Non-defaulting Party’s Loss in respect of this Agreement. If that
amount is a positive number, the Defaulting Party will pay it to the Non-defaulting
Party; if it is a negative number, the Non-defaulting Party will pay the absolute value
of that amount to the Defaulting Party.

(ii) Termination Events. If the Early Termination Date results from a Termination Event:-

(1) One Affected Party. If there is one Affected Party, the amount payable will be
determined in accordance with Section 6(e)(i)(3), if Market Quotation applies, or
Section 6(e)(i)(4), if Loss applies, except that, in either case, references to the
Defaulting Party and to the Non-defaulting Party will be deemed to be references to the
Affected Party and the party which is not the Affected Party, respectively, and, if Loss
applies and fewer than all the Transactions are being terminated, Loss shall be
calculated in respect of all Terminated Transactions.

(2) Two Affected Parties. If there are two Affected Parties:-

(A) if Market Quotation applies, each party will determine a Settlement Amount in
respect of the Terminated Transactions, and an amount will be payable equal to
(I) the sum of (a) one-half of the difference between the Settlement Amount of
the party with the higher Settlement Amount (“X”) and the Settlement Amount of
the party with the lower Settlement Amount (“Y”) and (b) the Termination Currency
Equivalent of the Unpaid Amounts owing to X less (II) the Termination Currency
Equivalent of the Unpaid Amounts owing to Y; and

(B) if Loss applies, each party will determine its Loss in respect of this
Agreement (or, if fewer than all the Transactions are being terminated, in
respect of all Terminated Transactions) and an amount will be payable equal to
one-half of the difference between the Loss of the party with the higher Loss
(“X”) and the Loss of the party with the lower Loss (“Y”).

If the amount payable is a positive number, Y will pay it to X; if it is a negative
number, X will pay the absolute value of that amount to Y.

(iii) Adjustment for Bankruptcy. In circumstances where an Early Termination Date occurs
because “Automatic Early Termination” applies in respect of a party, the amount determined
under this Section 6(e) will be subject to such adjustments as are appropriate and permitted
by law to reflect any payments or deliveries made by one party to the other under this
Agreement (and retained by such other party) during the period from the relevant Early
Termination Date to the date for payment determined under Section 6(d)(ii).

(iv) Pre-Estimate. The parties agree that if Market Quotation applies an amount recoverable
under this Section 6(e) is a reasonable pre-estimate of loss and not a penalty. Such amount is
payable for the loss of bargain and the loss of protection against future risks and except as
otherwise provided in
this Agreement neither party will be entitled to recover any additional damages as a
consequence of such losses.

ISDA ® 1992

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7. Transfer

Subject to Section 6(b)(ii), neither this Agreement nor any interest or obligation in or under this
Agreement may be transferred (whether by way of security or otherwise) by either party without the
prior written consent of the other party, except that:-

(a) a party may make such a transfer of this Agreement pursuant to a consolidation or amalgamation
with, or merger with or into, or transfer of all or substantially all its assets to, another entity
(but without prejudice to any other right or remedy under this Agreement); and

(b) a party may make such a transfer of all or any part of its interest in any amount payable to it
from a Defaulting Party under Section 6(e).

Any purported transfer that is not in compliance with this Section will be void.

8. Contractual Currency

(a) Payment in the Contractual Currency. Each payment under this Agreement will be made in the
relevant currency specified in this Agreement for that payment (the “Contractual Currency”). To the
extent permitted by applicable law, any obligation to make payments under this Agreement in the
Contractual Currency will not be discharged or satisfied by any tender in any currency other than
the Contractual Currency, except to the extent such tender results in the actual receipt by the
party to which payment is owed, acting in a reasonable manner and in good faith in converting the
currency so tendered into the Contractual Currency, of the full amount in the Contractual Currency
of all amounts payable in respect of this Agreement. If for any reason the amount in the
Contractual Currency so received falls short of the amount in the Contractual Currency payable in
respect of this Agreement, the party required to make the payment will, to the extent permitted by
applicable law, immediately pay such additional amount in the Contractual Currency as may be
necessary to compensate for the shortfall. If for any reason the amount in the Contractual Currency
so received exceeds the amount in the Contractual Currency payable in respect of this Agreement,
the party receiving the payment will refund promptly the amount of such excess.

(b) Judgments. To the extent permitted by applicable law, if any judgment or order expressed in a
currency other than the Contractual Currency is rendered (i) for the payment of any amount owing in
respect of this Agreement, (ii) for the payment of any amount relating to any early termination in
respect of this Agreement or (iii) in respect of a judgment or order of another court for the
payment of any amount described in (i) or (ii) above, the party seeking recovery, after recovery in
full of the aggregate amount to which such party is entitled pursuant to the judgment or order,
will be entitled to receive immediately from the other party the amount of any shortfall of the
Contractual Currency received by such party as a consequence of sums paid in such other currency
and will refund promptly to the other party any excess of the Contractual Currency received by such
party as a consequence of sums paid in such other currency if such shortfall or such excess arises
or results from any variation between the rate of exchange at which the Contractual Currency is
converted into the currency of the judgment or order for the purposes of such judgment or order and
the rate of exchange at which such party is able, acting in a reasonable manner and in good faith
in converting the currency received into the Contractual Currency, to purchase the Contractual
Currency with the amount of the currency of the judgment or order actually received by such party.
The term “rate of exchange” includes, without limitation, any premiums and costs of exchange
payable in connection with the purchase of or conversion into the Contractual Currency.

(c) Separate Indemnities. To the extent permitted by applicable law, these indemnities constitute
separate and independent obligations from the other obligations in this Agreement, will be
enforceable as separate and independent causes of action, will apply notwithstanding any indulgence
granted by the party to which
any payment is owed and will not be affected by judgment being obtained or claim or proof being
made for any other sums payable in respect of this Agreement.

(d) Evidence of Loss. For the purpose of this Section 8, it will be sufficient for a party to
demonstrate that it would have suffered a loss had an actual exchange or purchase been made.

ISDA ® 1992

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9. Miscellaneous

(a) Entire Agreement. This Agreement constitutes the entire agreement and understanding of the
parties with respect to its subject matter and supersedes all oral communication and prior writings
with respect thereto.

(b) Amendments. No amendment, modification or waiver in respect of this Agreement will be effective
unless in writing (including a writing evidenced by a facsimile transmission) and executed by each
of the parties or confirmed by an exchange of telexes or electronic messages on an electronic
messaging system.

(c) Survival of Obligations. Without prejudice to Sections 2(a)(iii) and 6(c)(ii), the obligations
of the parties under this Agreement will survive the termination of any Transaction.

(d) Remedies Cumulative. Except as provided in this Agreement, the rights, powers, remedies and
privileges provided in this Agreement are cumulative and not exclusive of any rights, powers,
remedies and privileges provided by law.

(e) Counterparts and Confirmations.

(i) This Agreement (and each amendment, modification and waiver in respect of it) may be
executed and delivered in counterparts (including by facsimile transmission), each of which
will be deemed an original.

(ii) The parties intend that they are legally bound by the terms of each Transaction from the
moment they agree to those terms (whether orally or otherwise). A Confirmation shall be
entered into as soon as practicable and may be executed and delivered in counterparts
(including by facsimile transmission) or be created by an exchange of telexes or by an
exchange of electronic messages on an electronic messaging system, which in each case will be
sufficient for all purposes to evidence a binding supplement to this Agreement. The parties
will specify therein or through another effective means that any such counterpart, telex or
electronic message constitutes a Confirmation.

(f) No Waiver of Rights. A failure or delay in exercising any right, power or privilege in respect
of this Agreement will not be presumed to operate as a waiver, and a single or partial exercise of
any right, power or privilege will not be presumed to preclude any subsequent or further exercise,
of that right, power or privilege or the exercise of any other right, power or privilege.

(g) Headings. The headings used in this Agreement are for convenience of reference only and are not
to affect the construction of or to be taken into consideration in interpreting this Agreement.

10. Offices; Multibranch Parties

(a) If Section 10(a) is specified in the Schedule as applying, each party that enters into a
Transaction through an Office other than its head or home office represents to the other party
that, notwithstanding the place of booking office or jurisdiction of incorporation or organisation
of such party, the obligations of such party are the same as if it had entered into the Transaction
through its head or home office. This representation will be deemed to be repeated by such party on
each date on which a Transaction is entered into.

(b) Neither party may change the Office through which it makes and receives payments or deliveries
for the purpose of a Transaction without the prior written consent of the other party.

(c) If a party is specified as a Multibranch Party in the Schedule, such Multibranch Party may make
and receive payments or deliveries under any Transaction through any Office listed in the Schedule,
and the Office through which it makes and receives payments or deliveries with respect to a
Transaction will be specified in the relevant Confirmation.

11. Expenses

A Defaulting Party will, on demand, indemnify and hold harmless the other party for and against all
reasonable out-of-pocket expenses, including legal fees and Stamp Tax, incurred by such other party
by reason of the enforcement and protection of its rights under this Agreement or any Credit
Support Document

ISDA ® 1992

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to which the Defaulting Party is a party or by reason of the early termination of
any Transaction, including, but not limited to, costs of collection.

12. Notices

(a) Effectiveness. Any notice or other communication in respect of this Agreement may be given
in any manner set forth below (except that a notice or other communication under Section 5 or 6 may
not be given by facsimile transmission or electronic messaging system) to the address or number or
in accordance with the electronic messaging system details provided (see the Schedule) and will be
deemed effective as indicated:-

(i) if in writing and delivered in person or by courier, on the date it is delivered;

(ii) if sent by telex, on the date the recipient’s answerback is received;

(iii) if sent by facsimile transmission, on the date that transmission is received by a
responsible employee of the recipient in legible form (it being agreed that the burden of
proving receipt will be on the sender and will not be met by a transmission report generated
by the sender’s facsimile machine);

(iv) if sent by certified or registered mail (airmail, if overseas) or the equivalent (return
receipt requested), on the date that mail is delivered or its delivery is attempted; or

(v) if sent by electronic messaging system, on the date that electronic message is received,

unless the date of that delivery (or attempted delivery) or that receipt, as applicable, is not a
Local Business Day or that communication is delivered (or attempted) or received, as applicable,
after the close of business on a Local Business Day, in which case that communication shall be
deemed given and effective on the first following day that is a Local Business Day.

(b) Change of Addresses. Either party may by notice to the other change the address, telex or
facsimile number or electronic messaging system details at which notices or other communications
are to be given to it.

13. Governing Law and Jurisdiction

(a) Governing Law. This Agreement will be governed by and construed in accordance with the law
specified in the Schedule.

(b) Jurisdiction. With respect to any suit, action or proceedings relating to this Agreement
(“Proceedings”), each party irrevocably:-

(i) submits to the jurisdiction of the English courts, if this Agreement is expressed to be
governed by English law, or to the non-exclusive jurisdiction of the courts of the State of
New York and the
United States District Court located in the Borough of Manhattan in New York City, if this
Agreement is expressed to be governed by the laws of the State of New York; and

(ii) waives any objection which it may have at any time to the laying of venue of any
Proceedings brought in any such court, waives any claim that such Proceedings have been
brought in an inconvenient forum and further waives the right to object, with respect to such
Proceedings, that such court does not have any jurisdiction over such party.

Nothing in this Agreement precludes either party from bringing Proceedings in any other
jurisdiction (outside, if this Agreement is expressed to be governed by English law, the
Contracting States, as defined in Section 1(3) of the Civil Jurisdiction and Judgments Act 1982 or
any modification, extension or re-enactment thereof for the time being in force) nor will the
bringing of Proceedings in any one or more jurisdictions preclude the bringing of Proceedings in
any other jurisdiction

(c) Service of Process. Each party irrevocably appoints the Process Agent (if any) specified
opposite its name in the Schedule to receive, for it and on its behalf, service of process in any
Proceedings. If for any

ISDA ® 1992

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reason any party’s Process Agent is unable to act as such, such party will
promptly notify the other party and within 30 days appoint a substitute process agent acceptable to
the other party. The parties irrevocably consent to service of process given in the manner provided
for notices in Section 12. Nothing in this Agreement will affect the right of either party to serve
process in any other manner permitted by law.

(d) Waiver of Immunities. Each party irrevocably waives, to the fullest extent permitted by
applicable law, with respect to itself and its revenues and assets (irrespective of their use or
intended use), all immunity on the grounds of sovereignty or other similar grounds from (i) suit,
(ii) jurisdiction of any court, (iii) relief by way of injunction, order for specific performance
or for recovery of property, (iv) attachment of its assets (whether before or after judgment) and
(v) execution or enforcement of any judgment to which it or its revenues or assets might otherwise
be entitled in any Proceedings in the courts of any jurisdiction and irrevocably agrees, to the
extent permitted by applicable law, that it will not claim any such immunity in any Proceedings.

14. Definitions

As used in this Agreement:-

“Additional Termination Event” has the meaning specified in Section 5(b).

“Affected Party” has the meaning specified in Section 5(b).

“Affected Transactions” means (a) with respect to any Termination Event consisting of an
Illegality, Tax Event or Tax Event Upon Merger, all Transactions affected by the occurrence of such
Termination Event and (b) with respect to any other Termination Event, all Transactions.

“Affiliate” means, subject to the Schedule, in relation to any person, any entity controlled,
directly or indirectly, by the person, any entity that controls, directly or indirectly, the person
or any entity directly or indirectly under common control with the person. For this purpose,
“control” of any entity or person means ownership of a majority of the voting power of the entity
or person.

“Applicable Rate” means:-

(a) in respect of obligations payable or deliverable (or which would have been but for Section
2(a)(iii)) by a Defaulting Party, the Default Rate;

(b) in respect of an obligation to pay an amount under Section 6(e) of either party from and after
the date (determined in accordance with Section 6(d)(ii)) on which that amount is payable, the
Default Rate;

(c) in respect of all other obligations payable or deliverable (or which would have been but for
Section 2(a)(iii)) by a Non-defaulting Party, the Non-default Rate; and

(d) in all other cases, the Termination Rate.

“Burdened Party” has the meaning specified in Section 5(b).

“Change in Tax Law” means the enactment, promulgation, execution or ratification of, or any change
in or amendment to, any law (or in the application or official interpretation of any law) that
occurs on or after the date on which the relevant Transaction is entered into.

“consent” includes a consent, approval, action, authorisation, exemption, notice, filing,
registration or exchange control consent.

“Credit Event Upon Merger” has the meaning specified in Section 5(b).

“Credit Support Document” means any agreement or instrument that is specified as such in this
Agreement.

“Credit Support Provider” has the meaning specified in the Schedule.

“Default Rate” means a rate per annum equal to the cost (without proof or evidence of any actual
cost) to the relevant payee (as certified by it) if it were to fund or of funding the relevant
amount plus 1% per annum.

ISDA ® 1992

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“Defaulting Party” has the meaning specified in Section 6(a).

“Early Termination Date” means the date determined in accordance with Section 6(a) or 6(b)(iv).

“Event of Default” has the meaning specified in Section 5(a) and, if applicable, in the Schedule.

“Illegality” has the meaning specified in Section 5(b).

“Indemnifiable Tax” means any Tax other than a Tax that would not be imposed in respect of a
payment under this Agreement but for a present or former connection between the jurisdiction of the
government or taxation authority imposing such Tax and the recipient of such payment or a person
related to such recipient (including, without limitation, a connection arising from such recipient
or related person being or having been a citizen or resident of such jurisdiction, or being or
having been organised, present or engaged in a trade or business in such jurisdiction, or having or
having had a permanent establishment or fixed place of business in such jurisdiction, but excluding
a connection arising solely from such recipient or related person having executed, delivered,
performed its obligations or received a payment under, or enforced, this Agreement or a Credit
Support Document).

“law” includes any treaty, law, rule or regulation (as modified, in the case of tax matters, by the
practice of any relevant governmental revenue authority) and “lawful” and “unlawful” will be
construed accordingly.

“Local Business Day” means, subject to the Schedule, a day on which commercial banks are open for
business (including dealings in foreign exchange and foreign currency deposits) (a) in relation to
any obligation under Section 2(a)(i), in the place(s) specified in the relevant Confirmation or, if
not so specified, as otherwise agreed by the parties in writing or determined pursuant to
provisions contained, or incorporated by reference, in this Agreement, (b) in relation to any other
payment, in the place where the relevant account is located and, if different, in the principal
financial centre, if any, of the currency of such payment, (c) in relation to any notice or other
communication, including notice contemplated under Section 5(a)(i), in the city specified in the
address for notice provided by the recipient and, in the case of a notice contemplated by Section
2(b), in the place where the relevant new account is to be located and (d) in
relation to Section 5(a)(v)(2), in the relevant locations for performance with respect to such
Specified Transaction.

“Loss” means, with respect to this Agreement or one or more Terminated Transactions, as the case
may be, and a party, the Termination Currency Equivalent of an amount that party reasonably
determines in good faith to be its total losses and costs (or gain, in which case expressed as a
negative number) in connection with this Agreement or that Terminated Transaction or group of
Terminated Transactions, as the case may be, including any loss of bargain, cost of funding or, at
the election of such party but without duplication, loss or cost incurred as a result of its
terminating, liquidating, obtaining or reestablishing any hedge or related trading position (or any
gain resulting from any of them). Loss includes losses and costs (or gains) in respect of any
payment or delivery required to have been made (assuming satisfaction of each applicable condition
precedent) on or before the relevant Early Termination Date and not made, except, so as to avoid
duplication, if Section 6(e)(i)(l) or (3) or 6(e)(ii)(2)(A) applies. Loss does not include a
party’s legal fees and out-of-pocket expenses referred to under Section 11. A party will determine
its Loss as of the relevant Early Termination Date, or, if that is not reasonably practicable, as
of the earliest date thereafter as is reasonably practicable. A party may (but need not) determine
its Loss by reference to quotations of relevant rates or prices from one or more leading dealers in
the relevant markets.

“Market Quotation” means, with respect to one or more Terminated Transactions and a party making
the determination, an amount determined on the basis of quotations from Reference Market-makers.
Each quotation will be for an amount, if any, that would be paid to such party (expressed as a
negative number) or by such party (expressed as a positive number) in consideration of an agreement
between such party (taking into account any existing Credit Support Document with respect to the
obligations of such party) and the quoting Reference Market-maker to enter into a transaction (the
“Replacement Transaction”) that would have the effect of preserving for such party the economic
equivalent of any payment or delivery (whether the underlying obligation was absolute or contingent
and assuming the satisfaction of each applicable condition precedent) by the parties under Section
2(a)(i) in respect of such Terminated Transaction or group of Terminated Transactions that would,
but for the occurrence of the relevant Early Termination Date, have

ISDA ® 1992

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been required after that date.
For this purpose, Unpaid Amounts in respect of the Terminated Transaction or group of Terminated
Transactions are to be excluded but, without limitation, any payment or delivery that would, but
for the relevant Early Termination Date, have been required (assuming satisfaction of each
applicable condition precedent) after that Early Termination Date is to be included. The
Replacement Transaction would be subject to such documentation as such party and the Reference
Market-maker may, in good faith, agree. The party making the determination (or its agent) will
request each Reference Market-maker to provide its quotation to the extent reasonably practicable
as of the same day and time (without regard to different time zones) on or as soon as reasonably
practicable after the relevant Early Termination Date. The day and time as of which those
quotations are to be obtained will be selected in good faith by the party obliged to make a
determination under Section 6(e), and, if each party is so obliged, after consultation with the
other. If more than three quotations are provided, the Market Quotation will be the arithmetic mean
of the quotations, without regard to the quotations having the highest and lowest values. If
exactly three such quotations are provided, the Market Quotation will be the quotation remaining
after disregarding the highest and lowest quotations. For this purpose, if more than one quotation
has the same highest value or lowest value, then one of such quotations shall be disregarded. If
fewer than three quotations are provided, it will be deemed that the Market Quotation in respect of
such Terminated Transaction or group of Terminated Transactions cannot be determined.

“Non-default Rate” means a rate per annum, equal to the cost (without proof or evidence of any
actual cost) to the Non-defaulting Party (as certified by it) if it were to fund the relevant
amount.

“Non-defaulting Party” has the meaning specified in Section 6(a).

“Office” means a branch or office of a party, which may be such party’s head or home office.

“Potential Event of Default” means any event which, with the giving of notice or the lapse of time
or both, would constitute an Event of Default.

“Reference Market-makers” means four leading dealers in the relevant market selected by the party
determining a Market Quotation in good faith (a) from among dealers of the highest credit standing
which satisfy all the criteria that such party applies generally at the time in deciding whether to
offer or to make an extension of credit and (b) to the extent practicable, from among such dealers
having an office in the same city.

“Relevant Jurisdiction” means, with respect to a party, the jurisdictions (a) in which the party is
incorporated, organised, managed and controlled or considered to have its seat, (b) where an Office
through which the party is acting for purposes of this Agreement is located, (c) in which the party
executes this Agreement and (d) in relation to any payment, from or through which such payment is
made.

“Scheduled Payment Date” means a date on which a payment or delivery is to be made under Section
2(a)(i) with respect to a Transaction.

“Set-off” means set-off, offset, combination of accounts, right of retention or withholding or
similar right or requirement to which the payer of an amount under Section 6 is entitled or subject
(whether arising under this Agreement, another contract, applicable law or otherwise) that is
exercised by, or imposed on, such payer.

“Settlement Amount” means, with respect to a party and any Early Termination Date, the sum of:-

(a) the Termination Currency Equivalent of the Market Quotations (whether positive or negative) for
each Terminated Transaction or group of Terminated Transactions for which a Market Quotation is
determined; and

(b) such party’s Loss (whether positive or negative and without reference to any Unpaid Amounts)
for each Terminated Transaction or group of Terminated Transactions for which a Market Quotation
cannot be determined or would not (in the reasonable belief of the party making the determination)
produce a commercially reasonable result.

“Specified Entity” has the meaning specified in the Schedule.

ISDA ® 1992

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“Specified Indebtedness” means, subject to the Schedule, any obligation (whether present or future,
contingent or otherwise, as principal or surety or otherwise) in respect of borrowed money.

“Specified Transaction” means, subject to the Schedule, (a) any transaction (including an agreement
with respect thereto) now existing or hereafter entered into between one party to this Agreement
(or any Credit Support Provider of such party or any applicable Specified Entity of such party) and
the other party to this Agreement (or any Credit Support Provider of such other party or any
applicable Specified Entity of such other party) which is a rate swap transaction, basis swap,
forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or
equity index option, bond option, interest rate option, foreign exchange transaction, cap
transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate
swap transaction, currency option or any other similar transaction (including any option with
respect to any of these transactions), (b) any combination of these transactions and (c) any other
transaction identified as a Specified Transaction in this Agreement or the relevant confirmation.

“Stamp Tax” means any stamp, registration, documentation or similar tax.

“Tax” means any present or future tax, levy, impost, duty, charge, assessment or fee of any nature
(including interest, penalties and additions thereto) that is imposed by any government or other
taxing authority in respect of any payment under this Agreement other than a stamp, registration,
documentation or similar tax.

“Tax Event” has the meaning specified in Section 5(b).

“Tax Event Upon Merger” has the meaning specified in Section 5(b).

“Terminated Transactions” means with respect to any Early Termination Date (a) if resulting from a
Termination Event, all Affected Transactions and (b) if resulting from an Event of Default, all
Transactions (in either case) in effect immediately before the effectiveness of the notice
designating that Early Termination Date (or, if “Automatic Early Termination” applies, immediately
before that Early Termination Date).

“Termination Currency” has the meaning specified in the Schedule.

“Termination Currency Equivalent” means, in respect of any amount denominated in the Termination
Currency, such Termination Currency amount and, in respect of any amount denominated in a currency
other than the Termination Currency (the “Other Currency”), the amount in the Termination Currency
determined by the party making the relevant determination as being required to purchase such amount
of such Other Currency as at the relevant Early Termination Date, or, if the relevant Market
Quotation or Loss (as the case may be), is determined as of a later date, that later date, with the
Termination Currency at the rate equal to the spot exchange rate of the foreign exchange agent
(selected as provided below) for the purchase of such Other Currency with the Termination Currency
at or about 11:00 a.m. (in the city in which such foreign exchange agent is located) on such date
as would be customary for the determination of such a rate for the purchase of such Other Currency
for value on the relevant Early Termination Date or that later date. The foreign exchange agent
will, if only one party is obliged to make a determination under Section 6(e), be selected in good
faith by that party and otherwise will be agreed by the parties.

“Termination Event” means an Illegality, a Tax Event or a Tax Event Upon Merger or, if specified to
be applicable, a Credit Event Upon Merger or an Additional Termination Event.

“Termination Rate” means a rate per annum equal to the arithmetic mean of the cost (without proof
or evidence of any actual cost) to each party (as certified by such party) if it were to fund or of
funding such amounts.

“Unpaid Amounts” owing to any party means, with respect to an Early Termination Date, the aggregate
of (a) in respect of all Terminated Transactions, the amounts that became payable (or that would
have become payable but for Section 2(a)(iii)) to such party under Section 2(a)(i) on or prior to
such Early Termination Date and which remain unpaid as at such Early Termination Date and (b) in
respect of each Terminated Transaction, for each obligation under Section 2(a)(i) which was (or
would have been but for Section 2(a)(iii)) required to be settled by delivery to such party on or
prior to such Early Termination Date and which has not been so settled as at such Early Termination
Date, an amount equal to the fair market

ISDA ® 1992

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value of that which was (or would have been) required to
be delivered as of the originally scheduled date for delivery, in each case together with (to the
extent permitted under applicable law) interest, in the currency of such amounts, from (and
including) the date such amounts or obligations were or would have been required to have been paid
or performed to (but excluding) such Early Termination Date, at the Applicable Rate. Such amounts
of interest will be calculated on the basis of daily compounding and the actual number of days
elapsed. The fair market value of any obligation referred to in clause (b) above shall be
reasonably determined by the party obliged to make the determination under Section 6(e) or, if each
party is so obliged, it shall be the average of the Termination Currency Equivalents of the fair
market values reasonably determined by both parties.

IN WITNESS WHEREOF the parties have executed this document on the respective dates specified below
with effect from the date specified on the first page of this document.

	 	 	 	 	 	 	 	 	 	 	 
	Goldman Sachs Capital Markets, L.P.	 	 	 	Commercial Metals Company	 	 
	By: Goldman Sachs Capital Markets, L.L.C.	 	 	 	 	 	 	 	 
	General Partner	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ John Eisenberg
 

Name: John Eisenberg
	 	 	 	By:
	 	/s/ William B. Larson
 

Name: William B. Larson
	 	 
	 

	 	Title: Managing Director
	 	 	 	 	 	Title: VP & CFO	 	 
	 

	 	Date: 4/4/02
	 	 	 	 	 	Date: 4/4/02	 	 

ISDA ® 1992

18

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