Dated as of

March 27, 2012

ARTICLE I
DEFINITIONS

“Closing” has the meaning set forth in Section 3.01(a).

“Closing Adjustment” has the meaning set forth in Section 2.06(c).

“Closing Date” has the meaning set forth in Section 3.01(a).

“Closing Purchase Price” means the Purchase Price, less the sum of the Preliminary Inventory Value of the LEO Assets and the Preliminary Tangible Personal Property Value of the LEO Assets.

“COBRA” means the requirements of Part 6 of Subtitle B of Title I of ERISA and Code §4980B and of any similar state law.

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

“Confidentiality Agreement” means the confidentiality agreement, dated November 14, 2011, between Seller Parent and Buyer Parent.

“Contracts” means all contracts, leases, deeds, mortgages, licenses, instruments, notes, commitments, undertakings, indentures, joint ventures and all other agreements, commitments and legally binding arrangements, whether written or oral.

“Direct Claim” has the meaning set forth in Section 8.05(c).

“Disclosure Schedules” means the Disclosure Schedules delivered by Seller concurrently with the execution and delivery of this Agreement.

“Dispute” has the meaning set forth in Section 10.11.

“Dollars or $” means the lawful currency of the United States.

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

“Encumbrance” means any charge, claim, community property interest, pledge, condition, equitable interest, lien (statutory or other), option, security interest, mortgage, easement, encroachment, right of way, right of first refusal, or restriction of any kind, including any restriction on use, voting, transfer, receipt of income or exercise of any other attribute of ownership.

“Environmental Claim” means any Action, Governmental Order, lien, fine, penalty, or, as to each, any settlement or judgment arising therefrom, by or from any Person alleging liability of whatever kind or nature (including without limitation liability or responsibility for the costs of enforcement proceedings, investigations, cleanup, governmental response, removal or remediation, natural resources damages, property damages, personal injuries, medical monitoring, penalties, contribution, indemnification and injunctive relief) arising out of, based on or resulting from: (a) the presence, Release of, or exposure to, any Hazardous Materials; or (b) any actual or alleged non-compliance with or liability under any Environmental Law or term or condition of any Environmental Permit.

“Environmental Investigation” has the meaning set forth in Section 7.02(n).

“Environmental Law” means any applicable Law, and any Governmental Order or binding agreement with any Governmental Authority: (a) relating to pollution (or the investigation, cleanup, removal, or remediation thereof) or the protection of natural resources, endangered or threatened species, human health or safety, or the environment (including ambient air, soil, surface water or groundwater, or subsurface strata); or (b) concerning the presence of, exposure to, or the management, manufacture, use, containment, storage, recycling, reclamation, reuse, treatment, generation, discharge, transportation, processing, production, disposal or remediation of any Hazardous Materials. The term “Environmental Law” includes, without limitation, the following (including their implementing regulations and any state analogs): the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et seq.; the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976, as amended by the Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. §§ 6901 et seq.; the Federal Water Pollution Control Act of 1972, as amended by the Clean Water Act of 1977, 33 U.S.C. §§ 1251 et seq.; the Toxic Substances Control Act of 1976, as amended, 15 U.S.C. §§ 2601 et seq.; the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §§ 11001 et seq.; the Clean Air Act of 1966, as amended by the Clean Air Act Amendments of 1990, 42 U.S.C. §§ 7401 et seq.; and the Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. §§ 651 et seq.

“Environmental Notice” means any written directive, notice of violation or infraction, or notice respecting any Environmental Claim relating to actual or alleged non-compliance with any Environmental Law or any term or condition of any Environmental Permit.

“Environmental Permit” means any Permit required under or issued, granted, given, authorized by or made pursuant to Environmental Law.

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

“ERISA Affiliate” means, with respect to any Person, any other Person that, together with such first Person, would be treated as a single employer within the meaning of Section 414(b), (c), (m) or (o) of the Code.

“Escrow Account” has the meaning set forth in Section 2.05(b).

“Escrow Agent” means the entity designated to serve as escrow agent under the Escrow Agreement.

“Escrow Agreement” means the Escrow Agreement among Buyer, Seller and the Escrow Agent, to be executed and delivered at the Closing in the form attached hereto as Exhibit A.

“Escrow Amount” means the sum of Two Million Five Hundred Fifty Thousand Dollars ($2,550,000) to be deposited with the Escrow Agent and held in escrow pursuant to the Escrow Agreement, together with any interest earned thereon.

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

“Excluded Assets” has the meaning set forth in Section 2.02.

“Excluded Contracts” has the meaning set forth in Section 2.02(c).

“Excluded Liabilities” has the meaning set forth in Section 2.04.

“Excluded Patents” means patents owned by Seller, but does not include the Retained Patents or the Acquired Patents.

“Facility Lease” has the meaning set forth in Section 3.02(a)(iii).

“FCPA” means the U.S. Foreign Corrupt Practices Act of 1977, as amended.

“Final Claim Amount” has the meaning set forth in Section 8.09(b).

“Final Closing Purchase Price” has the meaning set forth in Section 2.06(h).

“Final Inventory Value” has the meaning set forth in Section 2.06(f).

“Final Tangible Personal Property Value” has the meaning set forth in Section 2.06(f).

“Financial Statements” has the meaning set forth in Section 4.04.

“FINSA” means the U.S. Foreign Investment and National Security Act of 2007, which amends Section 721 of the Defense Production Act of 1950, 50 U.S.C. App. 2170 et seq., and the regulations issued pursuant to such law at 31 C.F.R. Part 800 et seq.

“FIRPTA Certificate” has the meaning set forth in Section 7.02(k).

“GAAP” means United States generally accepted accounting principles in effect from time to time.

“Governmental Authority” means any federal, state, local or foreign government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority (to the extent that the rules, regulations or orders of such organization or authority have the force of Law), or any arbitrator, court or tribunal of competent jurisdiction.

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

“Hazardous Materials” means: (a) any material, substance, chemical, waste, product, derivative, compound, mixture, solid, liquid, mineral or gas, in each case, whether naturally occurring or manmade, that is considered a pollutant, a contaminant, hazardous, acutely hazardous, toxic, or words of similar import or regulatory effect, or is otherwise regulated, under any Environmental Law; and (b) any petroleum or petroleum-derived products, radon, radioactive materials or wastes, asbestos in any form, lead or lead-containing materials, urea formaldehyde foam insulation and polychlorinated biphenyls.

“High Value” has the meaning set forth in Section 2.06(g).

“ICC” means the International Chamber of Commerce.

“Indemnified Party” has the meaning set forth in Section 8.05.

“Indemnifying Party” has the meaning set forth in Section 8.05.

“Independent Accountants” has the meaning set forth in Section 2.06(f).

“Insolvent” means a financial condition such that the sum of such Person’s debts is greater than all of such Person’s property, at a fair valuation, exclusive of (a) property transferred, concealed, or removed with intent to hinder, delay or defraud such Person’s creditors and (b) property that may be exempted from property of a bankruptcy estate under Section 522 of the United States Bankruptcy Code.

“Insurance Policies” has the meaning set forth in Section 4.14.

“[*] Agreement” has the meaning set forth in Section 6.22.

“Intellectual Property” means all of the following and similar intangible property and related proprietary rights, interests and protections, however arising, pursuant to the Laws of any jurisdiction throughout the world: (a) trademarks, service marks, trade names, brand names, logos, trade dress and other proprietary indicia of goods and services, whether registered, unregistered or arising by Law, and all registrations and applications for registration of such trademarks, including intent-to-use applications, and all issuances, extensions and renewals of such registrations and applications; (b) original works of authorship in any medium of expression, whether or not published, all copyrights (whether registered, unregistered or arising by Law), all registrations and applications for registration of such copyrights, and all issuances, extensions and renewals of such registrations and applications; (c) confidential information, formulas, designs, devices, technology, know-how, research and development, inventions, methods, processes, compositions and other trade secrets, whether or not patentable; and (d) patented and patentable designs and inventions, all design, plant and utility patents, letters patent, utility models, pending patent applications and provisional applications and all issuances, divisions, continuations, continuations-in-part, reissues, extensions, reexaminations and renewals of such patents and applications.

“Intellectual Property Assets” means all Intellectual Property that is owned by Seller and used in or necessary for the conduct of the Business as currently conducted, but does not include the Excluded Patents or the Retained Patents.

“Intellectual Property Licenses” means all licenses, sublicenses and other agreements by or through which other Persons, including Seller’s Affiliates, grant Seller exclusive or non-exclusive rights or interests in or to any Intellectual Property that is used in or necessary for the conduct of the Business as currently conducted.

“Intellectual Property Registrations” means all Intellectual Property Assets that are subject to any issuance, registration, application or other filing by, to or with any Governmental Authority or authorized private registrar in any jurisdiction, including registered trademarks, domain names and copyrights, issued and reissued patents and pending applications for any of the foregoing.

“Interim Balance Sheet” has the meaning set forth in Section 4.04.

“Interim Balance Sheet Date” has the meaning set forth in Section 4.04.

“Interim Financial Statements” has the meaning set forth in Section 4.04.

“Inventory” has the meaning set forth in Section 2.01(a).

“Knowledge of Seller Parent or Seller Parent’s Knowledge” or any other similar knowledge qualification, means the actual knowledge of any director, officer or senior manager of Seller Parent, after reasonable inquiry.

“LEO Agreement” means a Local Agreement governing the LEO Asset Sale.

“LEO Asset Sale” has the meaning set forth in Section 3.01(b).

“LEO Assets” has the meaning set forth in Section 2.07.

“LEO Closing” has the meaning set forth in Section 3.01(b).

“LEO Purchase Price” means the Sum of the Final Inventory Value of the LEO Assets and the Final Tangible Personal Property Value of the LEO Assets, as determined pursuant to Section 2.06(f).

“Law” means any statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment, decree, other requirement or rule of law of any Governmental Authority.

“Leased Real Property” has the meaning set forth in Section 4.10(b).

“Leases” has the meaning set forth in Section 4.10(b).

“Legacy Products” means the Xenpak and X2 10 gigabit Ethernet modules with SR, LR, ER, CX4 and LX4 specifications; XFP CX4 transceivers; SFP transceivers; any products with VCSEL apertures greater than eight (8) micron, as listed on Schedule II.

“Liabilities” means with respect to any Person, liabilities, obligations or commitments of such Person of any nature whatsoever, asserted or unasserted, known or unknown, absolute or contingent, accrued or unaccrued, matured or unmatured, disputed or undisputed, liquidated or unliquidated, secured or unsecured, joint or several, vested or unvested, executory, determined, determinable or otherwise and whether or not the same is required to be accrued on the financial statements of such Person.

“License Agreement” has the meaning set forth in Section 3.02(a)(vi).

“Lien” means any mortgage, pledge, lien, encumbrance, charge or other security interest of any kind or nature.

“Local Agreements” means agreements in the form mutually agreed to by Buyer Parent and Seller Parent, which, subject to the terms and conditions of this Agreement, are to be signed at or prior to the Closing, pursuant to which, among other things, for the consideration stated herein, certain Sellers shall grant, sell, transfer, convey, assign and deliver to certain Buyers, and such Buyers shall purchase and accept from such Sellers, all right, title, and interest of such Sellers in and to the specific items of the Purchased Assets owned by such Sellers, and such Buyers agree to assume certain Assumed Liabilities of such Sellers, all in accordance with and pursuant to the terms and conditions therein and in accordance with the governing Law set forth in such Local Agreements, including all exhibits and attachments thereto, as contemplated by this Agreement.

“Low Value” has the meaning set forth in Section 2.06(g).

“Losses” means losses, damages, liabilities, deficiencies, Actions, judgments, interest, awards, penalties, fines, costs or expenses of whatever kind, including reasonable attorneys’ fees and the cost of enforcing any right to indemnification hereunder and the cost of pursuing any insurance providers, but for purposes of Article VIII, excluding any consequential, indirect, special, punitive or similar damages.

“Manufacturing Agreement” has the meaning set forth in Section 3.02(a)(v).

“Material Adverse Effect” means any event, occurrence, fact, condition or change that is, or could reasonably be expected to become, individually or in the aggregate, materially adverse to (a) the business, results of operations, condition (financial or otherwise) or assets of the Business, (b) the value of the Purchased Assets, or (c) the ability of Seller to consummate the transactions contemplated hereby on a timely basis, except any adverse effect related to or resulting from (i) general business or economic conditions affecting the industry in which the Seller operates the Business or, (ii) national or international political or social conditions, including the engagement by the United States in hostilities or the escalation thereof, whether or not pursuant to the declaration of a national emergency or war, or the occurrence or the escalation of any military or terrorist attack upon the United States, or any of its territories, possessions, or diplomatic or consular offices or upon any military installation, equipment or personnel of the United States.

“Material Contracts” has the meaning set forth in Section 4.07(a).

“Material Customers” has the meaning set forth in Section 4.13(a).

“Material Suppliers” has the meaning set forth in Section 4.13(b).

“Negotiation Period” has the meaning set forth in Section 9.01(d)(iii).

“Owned Real Property” has the meaning set forth in Section 4.10(a).

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

“Permitted Encumbrances” has the meaning set forth in Section 4.08.

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

“Post-Closing Adjustment” has the meaning set forth in Section 2.06(h).

“Post-Closing Tax Period” means any taxable period beginning after the Closing Date and, with respect to any taxable period beginning before and ending after the Closing Date, the portion of such taxable period beginning after the Closing Date.

“Preliminary Closing Purchase Price” has the meaning set forth in Section 2.06(c).

“Preliminary Inventory Value” has the meaning set forth in Section 2.06(b).

“Preliminary Tangible Personal Property Value” has the meaning set forth in Section 2.06(b).

“Products” means EMCORE Connects Cables (ECC), Parallel Optical Devices (POD) and Devices and Components (DAC) and SFP⁺, excluding the Legacy Products, and are listed on Schedule III.

“Proposed Final Inventory Value” has the meaning set forth in Section 2.06(d).

“Proposed Final Tangible Personal Property Value” has the meaning set forth in Section 2.06(d).

“PTO Liabilities” has the meaning set forth in Section 2.03(b).

“Purchase Price” has the meaning set forth in Section 2.05.

“Purchased Assets” has the meaning set forth in Section 2.01.

“Real Property” means, collectively, the Owned Real Property and the Leased Real Property.

“Release” means any actual or threatened release, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, abandonment, disposing or allowing to escape or migrate into or through the environment (including, without limitation, ambient air (indoor or outdoor), surface water, groundwater, land surface or subsurface strata or within any building, structure, facility or fixture).

“Relocation Cost Estimate” has the meaning set forth in Section 6.17(b).

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

“Restricted Period” has the meaning set forth in Section 6.07(a).

“Retained Marks” has the meaning set forth in Section 6.20.

“Retained Patents” means patents listed on Schedule IV.

“Section 9.01(d) Termination Notice” has the meaning set forth in Section 9.01(d)(ii).

“Seller” and “Sellers” has the meaning set forth in the preamble.

“Seller Basket Exclusions” has the meaning set forth in Section 8.04(b).

“Seller Closing Certificate” has the meaning set forth in Section 7.02(h).

“Seller Indemnitees” has the meaning set forth in Section 8.03.

“Seller Parent” has the meaning set forth in the preamble.

“Seller Parent’s Notice” has the meaning set forth in Section 6.03(c).

“Subsidiary” means, with respect to any Person, (a) any corporation, limited liability company or other similar organization as to which more than 50% of the outstanding capital stock or other securities having voting rights or power is owned or controlled, directly or indirectly, by such Person and/or by one or more of such Person’s direct or indirect subsidiaries and (b) any partnership, joint venture or other similar relationship between such Persons and any other Person.

“Superior Proposal” means an unsolicited, bona fide written offer made by a third party to consummate an Acquisition Proposal on terms that the board of directors of the Seller Parent determines, in its reasonable judgment, to be more favorable to Seller Parent and its stockholders than the terms of the transactions contemplated under this Agreement (after taking into account all relevant factors, including all conditions to the offer, the timing of the transaction contemplated by the offer, the risk of non-consummation thereof and the need for any required governmental or other consents, filings or approvals).

“Superior Proposal Period” has the meaning set forth in Section 6.03(c).

“Tangible Personal Property” has the meaning set forth in Section 2.01(d).

“Tax Clearance Certificate” has the meaning set forth in Section 6.14.

“Taxes” means all federal, state, local, foreign and other income, gross receipts, sales, use, production, ad valorem, transfer, documentary, franchise, registration, profits, license, lease, service, service use, withholding, payroll, employment, unemployment, estimated, excise, severance, environmental, stamp, occupation, premium, property (real or personal), real property gains, windfall profits, customs, duties or other taxes, fees, assessments or charges of any kind whatsoever, together with any interest, additions or penalties with respect thereto and any interest in respect of such additions or penalties and including any Liability to indemnify or otherwise assume or succeed to the Liability of any other Person with respect to any Tax.

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

“Termination Time” has the meaning set forth in Section 9.01(d)(iv).

“Territory” has the meaning set forth in Section 6.07(a).

“Third Party Claim” has the meaning set forth in Section 8.05(a).

“Transaction Documents” means this Agreement, the Local Agreements, the Escrow Agreement, the Facility Leases, the Transition Services Agreement, the Shared Services Agreement, the Fabrication Services Agreement, the Product Services Agreement, the Intellectual Property License Agreement and the other agreements, instruments and documents required to be delivered at the Closing.

“Transfer Taxes” has the meaning set forth in Section 6.13.

“Transferred Employees” means employees of the Business who accepted and executed Buyer’s written offer of employment effective as of the Closing.

“Transition Services Agreement” has the meaning set forth in Section 3.02(a)(iv).

“Union” has the meaning set forth in Section 4.19(b).

“Value Determination Time” means the time at which the Business opens on the Closing Date.

“VCSEL Fab” has the meaning set forth in Section 6.17(a).

“WARN Act” means the U.S. Worker Adjustment and Retraining Notification Act of 1988, as amended, and any similar foreign, state or local law, regulation or ordinance.

“Yearly Financial Statements” has the meaning set forth in Section 4.04.

ARTICLE II    
PURCHASE AND SALE

Section 2.01    Purchase and Sale of Assets. Subject to the terms and conditions set forth herein and in the Local Agreements, at the Closing, Sellers shall sell, assign, transfer, convey and deliver to Buyers, and Buyers shall purchase from Sellers, free and clear of any Encumbrances other than the Permitted Encumbrances, all of Sellers right, title and interest in, to and under all of the assets, properties and rights of every kind and nature, whether real, personal or mixed, tangible or intangible (including goodwill), wherever located and whether now existing or hereafter acquired (other than the Excluded Assets), which solely relate to, or are used or held for use in connection with, the Business (collectively, the “Purchased Assets”), consisting of the following:

(a)    all inventory, finished goods, raw materials, work in progress, packaging, supplies, parts and other inventories, as set forth on Section 2.01(a) of the Disclosure Schedules (“Inventory”);

(b)    all Contracts, including Intellectual Property Licenses, as set forth on Section 2.01(b) of the Disclosure Schedules (the “Assigned Contracts”);

(d)    all furniture, fixtures, equipment, machinery, tools, office equipment, supplies, computers, telephones and other tangible personal property, as set forth on Section 2.01(d) of the Disclosure Schedules (the “Tangible Personal Property”);

(h)    originals, or where not available, copies, of all books and records relating solely to the Business, including, but not limited to, books of account, ledgers and general, financial and accounting records, machinery and equipment maintenance files, customer lists, customer purchasing histories, price lists, distribution lists, supplier lists, production data, quality control records and procedures, customer complaints and inquiry files, research and development files, records and data (including all correspondence with Customs or any other Governmental Authority), sales material and records (including pricing history, total sales, terms and conditions of sale, sales and pricing policies and practices), strategic plans, internal financial statements, marketing and promotional surveys, material and research and intellectual property files relating to the Intellectual Property Assets and the Intellectual Property Licenses (“Books and Records”); and

Each Disclosure Schedule referred to in this Section 2.01 (collectively, the “Asset Lists”) indicates Purchased Assets on a country-by-country basis with applicable Seller thereof. Seller Parent and Buyer Parent shall review and finalize the Asset Lists at least five (5) Business Days prior to the Closing and the final Asset Lists agreed upon by the parties shall be prepared in writing and certified by an officer of Seller Parent.

Section 2.02    Excluded Assets. Notwithstanding the foregoing, the Purchased Assets shall not include the following assets (collectively, the “Excluded Assets”):

(b)    all accounts or notes receivable held by Seller, and any security, claim, remedy or other right related to any of the foregoing (“Accounts Receivable”);

(c)    Contracts, including Intellectual Property Licenses, that are not Assigned Contracts (the “Excluded Contracts”);

Section 2.03    Assumed Liabilities. Subject to the terms and conditions set forth herein, Buyers shall assume and agree to pay, perform and discharge only the following Liabilities of Seller (collectively, the “Assumed Liabilities”), and no other Liabilities:

(b)    any Liabilities associated with accrued and unused paid time off of Transferred Employees to the extent assumable under applicable Law (the “PTO Liabilities”).

Section 2.04    Excluded Liabilities. Notwithstanding the provisions of Section 2.03 or any other provision in this Agreement to the contrary, Buyers shall not assume and shall not be responsible to pay, perform or discharge any Liabilities of Sellers or any of their Affiliates of any kind or nature whatsoever other than the Assumed Liabilities (the “Excluded Liabilities”). Seller Parent shall, and shall cause each of its Affiliates to, pay and satisfy in due course all Excluded Liabilities which they are obligated to pay and satisfy. Without limiting the generality of the foregoing, the Excluded Liabilities shall include, but not be limited to, the following:

(n)    any Liabilities for actual or alleged infringement of Intellectual Property that relates to (i) the Products sold or shipped by Sellers prior to the Closing Date, (ii) the Legacy Products; including any Liabilities to indemnify Business’ customers pursuant to a Contract, arising out of or in connection with “In re Matter of Certain Optoelectronic Devices, Components Thereof, and Products Containing Same, Investigation No. 337-TA-669” or Avago Technologies Fiber IP (Singapore) Pte Ltd. v. EMCORE Corporation, No. 3:08-cv-05394 (N.D. Cal. filed December 1, 2008) or (iii) U.S. Patent No. 5,359,447, regardless of whether such Liability accrues before or after the Closing and under an Assigned Contract or an Excluded Contract;

Section 2.05    Purchase Price. The aggregate purchase price for the Purchased Assets shall be Seventeen Million Dollars ($17,000,000) subject to adjustment pursuant to Section 2.06 hereof (the “Purchase Price”). The Purchase Price shall be paid as follows:

(b)    The Escrow Amount shall be deposited by wire transfer of immediately available funds into an account designated by the Escrow Agent and shall be held in a separate interest bearing account (the “Escrow Account”) and distributed in accordance with the terms of the Escrow Agreement to satisfy any and all claims made by Buyer Parent or any other Buyer Indemnitee against Seller Parent pursuant to ARTICLE VIII. The funds held in the Escrow Account are intended to be held and disbursed solely for the purposes and in accordance with the terms of this Agreement and the Escrow Agreement. In no event, shall the Escrow Account or the funds held therein be released or used to pay any amounts other than as permitted by this Agreement and the Escrow Agreement. Seller Parent shall not have any right, title, or interest in and to the Escrow Account or the funds held therein until such time as all of the necessary conditions for release of funds from the Escrow Account to Seller Parent under this Agreement and the Escrow Agreement have occurred, and only to the extent of the amount of funds permitted to be released at such time to Seller Parent, and

Section 2.06    Purchase Price Adjustment.

(b)    At least five (5) Business Days prior to an anticipated Closing Date, Seller Parent shall prepare and deliver to Buyer Parent a good faith and reasonable estimate by Seller Parent of the Inventory Value as of the Value Determination Time and the Tangible Personal Property Value as of the Value Determination Time, respectively, presented in the form and manner, and calculated in accordance with the rules and procedures, set forth in Schedule 2.06 (such amount, the “Preliminary Inventory Value” and the “Preliminary Tangible Personal Property Value,” respectively).

(c)    The “Preliminary Closing Purchase Price” shall be the Closing Purchase Price as adjusted by the Closing Adjustment. As used herein, the “Closing Adjustment” shall be an amount equal to the Preliminary Inventory Value, less $7,722,759 (the value of the Inventory as shown in the balance sheet of the Business as of the Balance Sheet Date, a copy of which is attached hereto as Appendix 1), plus the Preliminary Tangible Personal Property Value, and less $1,462,934 (the value of the inventories and the value of the property, plant & equipment, respectively, as shown in the balance sheet of the Business as of the Balance Sheet Date, a copy of which is attached hereto as Appendix 1); provided, however, that any excess of the difference between $1,462,934 and the Preliminary Tangible Personal Property Value over $2,000,000 shall be disregarded. If the Closing Adjustment is a positive number, the Closing Purchase Price shall be increased by an amount of such excess. If the Closing Adjustment is a negative number, the Closing Purchase Price shall be decreased by an amount of such deficiency.

(d)    Within thirty (30) days following the Closing Date, Buyer Parent shall prepare and deliver to Seller Parent a good faith and reasonable calculation by Buyer Parent of the actual Inventory value as of the Value Determination Time and the actual Tangible Personal Property value as of the Value Determination Time, each presented in the form and manner, and calculated in accordance with the rules and procedures, set forth in Schedule 2.06 (such amount, the “Proposed Final Inventory Value” and the “Proposed Final Tangible Personal Property Value,” respectively).

(f)    Seller Parent shall have thirty (30) days after receipt of the Proposed Final Inventory Value and the Proposed Final Tangible Personal Property Value to notify Buyer Parent of any disputes, which notice shall set forth in reasonable detail the basis for any such disputes. If Seller Parent fails to notify Buyer Parent of any such disputes within such thirty (30) day period, then the Proposed Final Inventory Value and the Proposed Final Tangible Personal Property Value shall be the “Final Inventory Value” and the “Final Tangible Personal Property Value”, respectively. If Seller Parent notifies Buyer Parent of any such disputes within such thirty (30) day period, then Buyer Parent and Seller Parent and their respective accountants shall cooperate in good faith to resolve such disputes as promptly as possible. If Buyer Parent and Seller Parent do not resolve such disputes within thirty (30) days after Seller Parent notifies Buyer Parent of any such disputes, then Buyer Parent and Seller Parent shall engage an accounting firm that is mutually acceptable to Buyer Parent and Seller Parent (the “Independent Accountants”) to resolve any remaining disputes. Buyer Parent and Seller Parent shall instruct the Independent Accountants not to assign a value to any item greater than the greatest value for such item assigned to it by Buyer Parent, on the one hand, or Seller Parent, on the other hand, or less than the smallest value for such item assigned to it by Buyer Parent, on the one hand, or Seller Parent, on the other hand. Buyer Parent and Seller Parent shall each furnish to the Independent Accountants such documents and information relating to the disputed items as such Independent Accountants may reasonably request. The determination of the Independent Accountants shall be set forth in writing and shall be conclusive and binding upon Buyer Parent and Seller Parent absent fraud or manifest error. Seller Parent shall revise the Proposed Final Inventory Value or the Proposed Final Tangible Personal Property Value, as the case may be, to reflect the resolution of any and all disputes thereto pursuant to this Section 2.06(f) and promptly distribute such revised calculations to Buyer Parent, and the Proposed Final Inventory Value and the Proposed Final Tangible Personal Property Value, as each so revised, as applicable, shall be the “Final Inventory Value” and the “Final Tangible Personal Property Value” respectively.

(g)    If Buyer Parent and Seller Parent engage Independent Accountants as contemplated by Section 2.06(f), then Buyer Parent and Seller Parent shall share responsibility for the fees and expenses of the Independent Accountants as follows: (a) if the Independent Accountants resolves all of the remaining disputes in favor of Buyer Parent (the sum of the Final Inventory Value and the Final Tangible Personal Property Value so determined is referred to herein as the “Low Value”), then Seller Parent shall be responsible for all of the fees and expenses of the Independent Accountants; (b) if the Independent Accountants resolves all of the remaining disputes in favor of Seller Parent (the sum of the Final Inventory Value and the Final Tangible Personal Property Value so determined is referred to herein as the “High Value”), then Buyer Parent shall be responsible for all of the fees and expenses of the Independent Accountants; and (c) if the Independent Accountants resolves some of the remaining disputes in favor of Buyer Parent and some of the remaining disputes in favor of Seller Parent (the sum of the Final Inventory Value and the Final Tangible Personal Property Value so determined is referred to herein as the “Actual Value”), then Seller Parent shall be responsible for that fraction of the fees and expenses of the Independent Accountants equal to (1) the difference between the High Value and the Actual Value over (2) the difference between the High Value and the Low Value, and Buyer Parent shall be responsible for the remainder of the fees and expenses of the Independent Accountants.

(h)    The “Final Closing Purchase Price” shall be the Purchase Price as adjusted by the Post-Closing Adjustment, less the LEO Purchase Price. As used herein, the “Post-Closing Adjustment” shall be an amount equal to the Final Inventory Value, less $7,722,759 (the value of the Inventory as shown in the balance sheet of the Business as of the Balance Sheet Date, a copy of which is attached hereto as Appendix 1), plus the Final Tangible Personal Property Value, less $1,462,934 (the value of the inventories and the value of the property, plant & equipment, respectively, as shown in the balance sheet of the Business as of the Balance Sheet Date, a copy of which is attached hereto as Appendix 1); provided, however, that any excess of the difference between $1,462,934 and the Final Tangible Personal Property Value over $2,000,000 shall be disregarded. If the Post-Closing Adjustment is a positive number, the Final Closing Purchase Price shall be increased by an amount of such excess. If the Post-Closing Adjustment is a negative number, the Final Closing Purchase Price shall be decreased by an amount of such deficiency.

(l)    Payment of PTO Liabilities. Within five (5) Business Days after the Closing, Seller Parent shall prepare and deliver to Buyer Parent a written report listing Transferred Employees whose accrued and unused paid time off is assumed by Buyer Parent pursuant to Section 2.03(b) above and their respective accrued and unused paid time off as of the Closing. Within ten (10) Business Days after the Closing, Seller Parent shall pay Buyer Parent or its designee an amount equal to the PTO Liabilities by delivery of cash, payable by wire transfer or delivery of other immediately available funds.

(m)    Adjustments for Tax Purposes. Any payments made pursuant to Section 2.06 and 2.05(c) shall be treated as an adjustment to the Purchase Price by the parties for Tax purposes, unless otherwise required by Law.

Section 2.07    LEO Assets. Subject to the terms and conditions set forth herein and in the Local Agreements, at the LEO Closing, Sellers shall sell, assign, transfer, convey and deliver to Buyers, and Buyers shall purchase from Sellers, free and clear of any Encumbrances other than the Permitted Encumbrances, all of Sellers right, title and interest in, to and under all of the Inventory and Tangible Personal Property which solely relate to, or are used or held for use in connection with, the Business and located at Seller’s facility in Langfang City, Hebei Province, P.R. China (collectively, the “LEO Assets”). The LEO Purchase Price less rental or other fees for the LEO Assets already paid prior thereto shall be paid by Buyer Parent at the LEO Closing by wire transfer of immediately available funds to an account designated in writing by Seller Parent to Buyer Parent no later than two (2) Business Days prior to the LEO Closing Date. Sellers shall deliver, or cause to be delivered, to Buyers a bill of sale duly executed by Seller Parent and the applicable asset selling entities.

Section 2.08    Allocation of Purchase Price.

(a)    Seller Parent and Buyer Parent agree that the Purchase Price and the Assumed Liabilities (plus other relevant items, as determined in accordance with Section 1060 of the Code) shall be allocated among the Purchased Assets and the non-competition agreement under Section 6.07 for all purposes (including Tax and financial accounting) as shown on the allocation schedule (the “Allocation Schedule”), which allocation shall be made in accordance with Section 1060 of the Code. A draft of the Allocation Schedule shall be prepared by Buyer Parent and delivered to Seller Parent within 60 days following the Closing Date. If Seller Parent notifies Buyer Parent in writing that Seller Parent objects to one or more items reflected in the Allocation Schedule, Seller Parent and Buyer Parent shall negotiate in good faith to resolve such dispute; provided, however, that if Seller Parent and Buyer Parent are unable to resolve any dispute with respect to the Allocation Schedule within 60 days following the Closing Date, such dispute shall be resolved by the Independent Accountants. The Independent Account’s review shall be limited to whether a disputed item is materially inconsistent with Section 1060 of the Code and the regulations promulgated thereunder, and shall be final and binding on all parties. The fees and expenses of such accounting firm shall be borne equally by Seller Parent and Buyer Parent. Buyer Parent and Seller Parent shall file all Tax Returns (including amended returns and claims for refund) and information reports in a manner consistent with the Allocation Schedule. Any adjustments to the Purchase Price pursuant to Section 2.06, Section 8.06 or otherwise under this Agreement shall be allocated in a manner consistent with the Allocation Schedule.

Section 2.09    Withholding Tax. With the prior written notice to Seller Parent, Buyer Parent shall be entitled to deduct and withhold from the Purchase Price all Taxes that any Buyer is required to deduct and withhold under any provision of Tax Law. All such withheld amounts shall be treated as delivered to Seller Parent hereunder.

Section 2.10    Third Party Consents. To the extent that a Seller’s rights under any Contract or Permit constituting a Purchased Asset, or any other Purchased Asset, may not be assigned to the applicable Buyer without the consent of another Person which has not been obtained, this Agreement shall not constitute an agreement to assign the same if an attempted assignment would constitute a breach thereof or be unlawful, and such Seller, at its expense, shall use its reasonable efforts to obtain any such required consent(s) as promptly as possible. If any such consent shall not be obtained or if any attempted assignment would be ineffective or would impair such Buyer’s rights under the Purchased Asset in question so that such Buyer would not in effect acquire the benefit of all such rights, such Seller, to the maximum extent permitted by law and the Purchased Asset, shall act after the Closing as such Buyer’s agent in order to obtain for it the benefits thereunder and shall cooperate with such Buyer in any other reasonable arrangement designed to provide such benefits to such Buyer. Notwithstanding any provision in this Section 2.09 to the contrary, such Buyer shall not be deemed to have waived its rights under Section 7.02(d) hereof unless and until such Buyer either provides written waivers thereof or elects to proceed to consummate the transactions contemplated by this Agreement at Closing.

ARTICLE III    
CLOSING

Section 3.01    Closing.

(a)    Subject to the terms and conditions of this Agreement, the consummation of the transactions contemplated by this Agreement (the “Closing”) shall take place at the offices of Squire Sanders (US) LLP, 275 Battery Street, Suite 2600, San Francisco, CA 94111, at 10:00 a.m., Pacific daylight time, on the first Business Day after all of the conditions to Closing set forth in Article VII are either satisfied or waived (other than conditions which, by their nature, are to be satisfied on the Closing Date), or at such other time, date or place as Seller Parent and Buyer Parent may mutually agree upon in writing; The date on which the Closing is to occur is herein referred to as the “Closing Date.”

(b)    Notwithstanding the foregoing, the closing (the “LEO Closing”) of the sale and purchase of the LEO Assets (the “LEO Asset Sale”) shall take place after the Closing as set forth in the LEO Agreement. The parties hereby confirm that whenever the term “Closing” is used herein, unless the context otherwise requires, it means “LEO Closing” to the extent it relates to the LEO Asset Sale.

(iii)    the facility lease in the form reasonably agreed upon by the parties (the “Facility Lease”) and duly executed by Seller Parent;

(iv)    the transition services agreement in the form reasonably agreed upon by the parties (the “Transition Services Agreement”) and duly executed by Seller Parent;

(v)    the manufacturing agreement in the form reasonably agreed upon by the parties (the “Manufacturing Agreement”) and duly executed by Seller Parent;

(vi)    the license agreement in the form reasonably agreed upon by the parties (the “License Agreement”) and duly executed by Seller Parent;

ARTICLE IV    
REPRESENTATIONS AND WARRANTIES OF SELLERS

Section 4.01    Organization and Qualification of Seller. Each Seller is a corporation duly organized, validly existing and in good standing under the Laws of its jurisdiction of incorporation or formation and has full corporate power and authority to own, operate or lease the properties and assets now owned, operated or leased by it and to carry on the Business as currently conducted. Section 4.01 of the Disclosure Schedules sets forth each jurisdiction in which each Seller is licensed or qualified to do business, and each Seller is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the ownership of the Purchased Assets or the operation of the Business as currently conducted makes such licensing or qualification necessary, except where the failure to be so licensed or qualified would not have a Material Adverse Effect.

Section 4.02    Authority of Seller.

Section 4.03    No Conflicts; Consents; Filings. The execution, delivery and performance of this Agreement and the other Transaction Documents by Sellers, as applicable, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (a) conflict with or result in a violation or breach of, or default under, any provision of the certificate of incorporation, by-laws or other organizational documents of any Seller; (b) conflict with or result in a violation or breach of any provision of any Law or Governmental Order applicable to any Seller, the Business or the Purchased Assets; (c) except as set forth in Section 4.03 of the Disclosure Schedules, require the consent, notice or other action by any Person under, conflict with, result in a violation or breach of, constitute a default or an event that, with or without notice or lapse of time or both, would constitute a default under, result in the acceleration of or create in any party the right to accelerate, terminate, modify or cancel any Contract or Permit to which Seller is a party or by which Seller or the Business is bound or to which any of the Purchased Assets are subject (including any Assigned Contract); or (d) result in the creation or imposition of any Encumbrance other than the Permitted Encumbrances on the Purchased Assets. Except for clearance from CFIUS, no other consent, approval, Permit, Government Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to Sellers in connection with the execution and delivery of this Agreement or any of the other Transaction Documents and the consummation of the transaction contemplated hereby and thereby.

Section 4.04    Financial Statements. Complete copies of the unaudited financial statements consisting of the balance sheet of the Business as at September 30 in each of the years 2009, 2010 and 2011 and the related statements of income, for the years then ended (the “Yearly Financial Statements”), and unaudited financial statements consisting of the balance sheet of the Business as at December 31, 2011 and the related statements of income for the three-month period then ended (the “Interim Financial Statements” and together with the Yearly Financial Statements, the “Financial Statements”) have been delivered to Buyer Parent. The Financial Statements have been prepared in accordance with GAAP applied on a consistent basis throughout the period involved, subject, in the case of the Interim Financial Statements, to normal and recurring year-end adjustments (the effect of which will not be materially adverse) and the absence of notes (that, if presented, would not differ materially from those presented in the Yearly Financial Statements). The Financial Statements are based on the books and records of the Business, and fairly present the financial condition of the Business as of the respective dates they were prepared and the results of the operations of the Business for the periods indicated. The balance sheet of the Business as of September 30, 2011 is referred to herein as the “Balance Sheet” and the date thereof as the “Balance Sheet Date” and the balance sheet of the Business as of December 31, 2011 is referred to herein as the “Interim Balance Sheet” and the date thereof as the “Interim Balance Sheet Date.” Seller Parent maintains a standard system of accounting for the Business established and administered in accordance with GAAP.

Section 4.05    Undisclosed Liabilities. Sellers have no Liabilities with respect to the Business of a type required to be set forth on a consolidated balance sheet of the Sellers in accordance with GAAP, except (a) those which are adequately reflected or reserved against in the Balance Sheet as of the Balance Sheet Date, and (b) those which have been incurred in the ordinary course of business consistent with past practice since the Balance Sheet Date and which are not, individually or in the aggregate, material in amount.

Section 4.06    Absence of Certain Changes, Events and Conditions. Since the Balance Sheet Date and except as disclosed in Section 4.06 of the Disclosure Schedules, and other than in the ordinary course of business consistent with past practice, there has not been any:

Section 4.07    Material Contracts.

(a)    Section 4.07(a) of the Disclosure Schedules lists each of the following Contracts (x) by which any of the Purchased Assets are bound or affected or (y) to which a Seller is a party and by which it is bound in connection with the Business or the Purchased Assets (such Contracts, together with all Contracts concerning the occupancy, management or operation of any Real Property (including without limitation, brokerage contracts) listed or otherwise disclosed in Section 4.10(a) of the Disclosure Schedules and all Contracts relating to Intellectual Property set forth in Section 4.11(c) and Section 4.11(e) of the Disclosure Schedules, being “Material Contracts”):

(ii)    all Contracts that require a Seller to purchase or sell a stated portion of the requirements or outputs of the Business or that contain “take or pay” provisions;

Section 4.08    Title to Purchased Assets. Sellers have good and valid title to, or a valid leasehold interest in, all of the Purchased Assets. All such Purchased Assets (including leasehold interests) are free and clear of Encumbrances except for the following (collectively referred to as “Permitted Encumbrances”):

Section 4.09    Condition and Sufficiency of Assets. The furniture, fixtures, machinery, equipment, vehicles and other items of tangible personal property included in the Purchased Assets and Leased Real Property are structurally sound, are in good operating condition and repair, and are adequate for the uses to which they are being put, and none of such furniture, fixtures, machinery, equipment, vehicles and other items of tangible personal property is in need of maintenance or repairs except for ordinary, routine maintenance and repairs that, to Seller Parent’s Knowledge, are not material in nature or cost. The Purchased Assets, including the VCSEL Fab, and the Leased Real Property, after giving effect and consideration to the Transaction Documents, are sufficient for the continued conduct of the Business after the Closing in substantially the same manner as conducted prior to the Closing and constitute all of the rights, property and assets necessary to conduct the Business as currently conducted.

Section 4.10    Real Property.

(a)    Section 4.10(a) of the Disclosure Schedules sets forth each parcel of real property owned by each Seller and used in or necessary for the conduct of the Business as currently conducted (together with all buildings, fixtures, structures and improvements situated thereon and all easements, rights-of-way and other rights and privileges appurtenant thereto, collectively, the “Owned Real Property”), including with respect to each property, the address location and use. Seller Parent has delivered to Buyer Parent copies of the deeds and other instruments (as recorded) by which any Seller acquired such parcel of Owned Real Property, and copies of all title insurance policies, opinions, abstracts and surveys in the possession of such Seller with respect to such parcel. With respect to each parcel of Real Property:

(b)    Section 4.10(b) of the Disclosure Schedules sets forth each parcel of real property leased by each Seller and used in or necessary for the conduct of the Business as currently conducted (together with all rights, title and interest of such Seller in and to leasehold improvements relating thereto, including, but not limited to, security deposits, reserves or prepaid rents paid in connection therewith, collectively, the “Leased Real Property”), and a true and complete list of all leases, subleases, licenses, concessions and other agreements (whether written or oral), including all amendments, extensions renewals, guaranties and other agreements with respect thereto, pursuant to which such Seller holds any Leased Real Property (collectively, the “Leases”). Seller Parent has delivered to Buyer Parent a true and complete copy of each Lease. With respect to each Lease:

Section 4.11    Intellectual Property.

Section 4.12    Inventory. All Inventory reflected in the Balance Sheet and in Sellers’ books are determined and valued in accordance with GAAP at the lower of cost or market using the “first in first out” method of accounting, and no reserve or other adjustment with respect to the Inventory or supplies is required or desirable other than adjustments reflected in the Financial Statements. Each type of Inventory (whether raw materials, work-in-process, finished goods or other inventory) consist of items that are good and merchantable, are of a quality and quantity presently usable or saleable in the ordinary course of business, are of a quantity sufficient for the conduct of the Business in the ordinary course of business and are not excessive (but are reasonable, adequate and appropriate) in the present circumstances of Sellers. To Seller Parent’s Knowledge, no previously sold Inventory is subject to returns materially in excess of that historically experienced by Sellers. All of the Sellers’ Inventory included in the Financial Statements valued for purposes of thereof at the lower of cost or market. Outside of the ordinary course of business, since September 30, 2011, no Seller has experienced any significant difficulties in obtaining Inventory necessary to the operation of the Business. All Inventory is owned by Sellers free and clear of all Encumbrances other than the Permitted Encumbrances, and no Inventory is held on a consignment basis.

Section 4.13    Customers and Suppliers.

(a)    Section 4.13(a) of the Disclosure Schedules sets forth with respect to the Business (i) each customer who has paid aggregate consideration to Sellers for goods or services rendered in an amount greater than or equal to $300,000 for each of the two most recent fiscal years (collectively, the “Material Customers”); and (ii) the amount of consideration paid by each Material Customer during such periods. No Seller has received any notice, and has reason to believe, that any of the Material Customers has ceased, or intends to cease after the Closing, to use the goods or services of the Business or to otherwise terminate or materially reduce its relationship with the Business except as disclosed in Section 4.13(a) of the Disclosure Schedule.

(b)    Section 4.13(b) of the Disclosure Schedules sets forth with respect to the Business (i) each supplier to whom Sellers have paid consideration for goods or services rendered in an amount greater than or equal to $150,000 for each of the two most recent fiscal years (collectively, the “Material Suppliers”); and (ii) the amount of purchases from each Material Supplier during such periods. No Seller has received any notice, and, except as set forth in Section 4.13(b) of the Disclosure Schedules, has reason to believe, that any of the Material Suppliers has ceased, or intends to cease, to supply goods or services to the Business or to otherwise terminate or materially reduce its relationship with the Business.

Section 4.14    Insurance. There are no claims related to the Purchased Assets or the Assumed Liabilities pending under any current policies or binders of fire, liability, product liability, umbrella liability, real and personal property, workers’ compensation, vehicular, fiduciary liability and other casualty and property insurance maintained by Seller or its Affiliates and relating to the Business, the Purchased Assets or the Assumed Liabilities (collectively, the “Insurance Policies”) as to which coverage has been questioned, denied or disputed or in respect of which there is an outstanding reservation of rights.

Section 4.15    Legal Proceedings; Governmental Orders.

Section 4.16    Compliance With Laws; Permits.

Section 4.17    Environmental Matters.

Section 4.18    Employee Benefit Matters.

Section 4.19    Employment Matters.

(b)    Seller Parent and all ERISA Affiliates are not, and have not been for the past five (5) years, a party to, bound by, or negotiating any collective bargaining agreement or other Contract with a union, works council or labor organization (collectively, “Union”), and there is not, and has not been for the past five (5) years, any Union representing or purporting to represent any employee of any Seller, and to Seller Parent’s Knowledge, no Union or group of employees is seeking or has sought to organize employees for the purpose of collective bargaining. There has never been, nor has, to Seller Parent’s Knowledge there been any threat of, any strike, slowdown, work stoppage, lockout, concerted refusal to work overtime or other similar labor disruption or dispute affecting Seller Parent, any ERISA Affiliate, or any employees of the Business. Neither Seller Parent nor any ERISA Affiliate has any duty to bargain with any Union.

Section 4.20    Taxes. Except as set forth in Section 4.20 of the Disclosure Schedules:

(g)    Neither Seller Parent nor any of its U.S. Subsidiaries is a “foreign person” as that term is used in Treasury Regulations Section 1.1445-2.

(h)    No Seller is, or has been, a party to, or a promoter of, a “reportable transaction” within the meaning of Section 6707A(c)(1) of the Code and Treasury Regulations Section 1.6011-4(b).

Section 4.21    Product Warranties. A copy of Sellers’ product warranties currently in effect with respect to the Products as set forth in the forms used for the Products is set forth on Section 4.21 of the Disclosure Schedules. To the Knowledge of Seller, there are no material outstanding claims with respect to product warranties relating to the Products.

Section 4.22    Solvency.

Section 4.23    Trade Practices. None of Sellers and their respective Representatives have during operation of Business (a) used any funds for unlawful contributions, unlawful gifts, unlawful entertainment or other unlawful expenses relating to political activity, (b) made any unlawful payment to foreign or domestic government officials or employees or to foreign or domestic political parties or campaigns or violated any provisions of the FCPA or any similar Law, (c) taken any action that would constitute a violation of the FCPA or any similar Law or (d) violated any applicable antitrust and trade regulation Laws.

Section 4.24    Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement or any other Transaction Document based upon arrangements made by or on behalf of Sellers.

Section 4.25    Disclaimer. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT, NONE OF THE SELLER OR AFFILIATE OF SELLER PARENT, OR ANY OF THEIR RESPECTIVE REPRESENTATIVES MAKES ANY EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY, AND ANY SUCH REPRESENTATION OR WARRANTY WITH RESPECT TO THE SELLER, THE PURCHASED ASSETS, THE BUSINESS, THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HERBY ARE HEREBY DISCLAIMED.

ARTICLE V    
REPRESENTATIONS AND WARRANTIES OF BUYER PARENT

Section 5.01    Organization of Buyer. Buyer Parent is a corporation duly organized, validly existing and in good standing under the Laws of Japan.

Section 5.02    Authority of Buyer.

Section 5.03    No Conflicts; Consents; Filings. The execution, delivery and performance of this Agreement and the other Transaction Documents by Buyers, as applicable, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (a) conflict with or result in a violation or breach of, or default under, any provision of the certificate of incorporation, by-laws or other organizational documents of Buyer Parent; (b) conflict with or result in a violation or breach of any provision of any Law or Governmental Order applicable to Buyer Parent; or (c) require the consent, notice or other action by any Person under any Contract to which Buyer Parent is a party. Except for clearance from CFIUS, no other consent, approval, Permit, Government Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to Buyer Parent in connection with the execution and delivery of this Agreement or any of the other Transaction Documents and the consummation of the transaction contemplated hereby and thereby.

Section 5.04    Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement or any other Transaction Document based upon arrangements made by or on behalf of Buyers.

Section 5.05    Sufficiency of Funds. Buyer Parent has sufficient cash on hand or other sources of immediately available funds to enable it to make payment of the Purchase Price and consummate the transactions contemplated by this Agreement.

Section 5.06    Legal Proceedings. There are no Actions pending or, to Buyer Parent’s knowledge, threatened against or by Buyer Parent or any Affiliate of Buyer that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement. No event has occurred or circumstances exist that may give rise or serve as a basis for any such Action.

ARTICLE VI    
COVENANTS

Section 6.01    Conduct of Business Prior to the Closing. From the date hereof until the Closing, except as otherwise provided in this Agreement or consented to in writing by Buyer Parent (which consent shall not be unreasonably withheld or delayed), Seller Parent shall (x) conduct the Business in the ordinary course of business consistent with past practice; and (y) use reasonable best efforts to maintain and preserve intact its current Business organization, operations and franchise and to preserve the rights, franchises, goodwill and relationships of its employees, customers, lenders, suppliers, regulators and others having relationships with the Business. Without limiting the foregoing, from the date hereof until the Closing Date, Seller Parent shall:

Section 6.02    Access to Information. From the date hereof until the Closing, Seller Parent shall (a) afford Buyer Parent and its Representatives reasonable access to and the right to inspect all of the Real Property, properties, assets, premises, Books and Records, Contracts and other documents and data related to the Business; (b) furnish Buyer Parent and its Representatives with such financial, operating and other data and information related to the Business as Buyer Parent or any of its Representatives may reasonably request; and (c) instruct the Representatives of Seller Parent to cooperate with Buyer Parent in its investigation of the Business. Without limiting the foregoing, Seller Parent shall permit Buyer Parent and its Representatives to conduct environmental due diligence of the Real Property, including the collecting and analysis of samples of indoor or outdoor air, surface water, groundwater or surface or subsurface land on, at, in, under or from the Real Property. Any investigation pursuant to this Section 6.02 shall be conducted in such manner as not to interfere unreasonably with the conduct of the Business or any other businesses of Sellers. No investigation by Buyer Parent or other information received by Buyer Parent shall operate as a waiver or otherwise affect any representation, warranty or agreement given or made by Sellers in this Agreement.

Section 6.03    No Solicitation of Other Bids.

(a)    From the date hereof until the Closing or the termination of this Agreement pursuant to Article IX below, Seller Parent shall not, and shall not authorize or permit any of its Affiliates or any of its or their Representatives to, directly or indirectly, (i) encourage, solicit, initiate, facilitate or continue inquiries regarding an Acquisition Proposal; (ii) enter into discussions or negotiations with, or provide any information to, any Person concerning a possible Acquisition Proposal; or (iii) enter into any agreements or other instruments (whether or not binding) regarding an Acquisition Proposal. Seller Parent shall immediately cease and cause to be terminated, and shall cause its Affiliates and all of its and their Representatives to immediately cease and cause to be terminated, all existing discussions or negotiations with any Persons conducted heretofore with respect to, or that could lead to, an Acquisition Proposal. For purposes hereof, “Acquisition Proposal” means any inquiry, proposal or offer from any Person (other than Buyer Parent or any of its Affiliates) relating to the direct or indirect disposition, whether by sale, merger or otherwise, of all or any portion of the Business or the Purchased Assets, except for the sale of Inventory in the ordinary course of business.

(b)    In the event that the Seller Parent or any its Affiliates or Representatives shall receive any written Acquisition Proposal, or any written inquiry, indication of interest, or any request for nonpublic information that might reasonably be expected to lead to an Acquisition Proposal (an “Acquisition Request”), the Seller Parent shall notify Buyer Parent in writing thereof (including the pricing, terms, conditions and other material provisions of such proposed transaction and the identity of the proposed party or parties to such proposed transaction). The Seller Parent shall keep Buyer Parent reasonably informed with respect to the status of any such Acquisition Request.

(c)    Nothing set forth in this Section 6.03 or otherwise in this Agreement shall prohibit the Seller Parent or any of its Affiliates or any of its Representatives from furnishing nonpublic information regarding the Seller Parent to, entering into a confidentiality agreement with or entering into discussions for a period not to exceed fifteen (15) Business Days from the receipt of a Superior Proposal (the “Superior Proposal Period”) with any Person or group in response to a Superior Proposal (and not withdrawn), if (A) neither the Seller Parent nor any Affiliates or Representatives shall have violated any of the restrictions set forth in Section 6.03, (B) the Board of Directors of the Seller Parent concludes in good faith, after consultation with its outside legal counsel, that such action is required in order for the Board of Directors of the Seller Parent to comply with its fiduciary obligations to the Seller Parent’s stockholders under applicable Law, (C) prior to furnishing any such nonpublic information to, or entering into discussions with, such Person or group, the Seller Parent gives Buyer Parent forty-eight (48) hours prior written notice of the Seller Parent’s intention to furnish nonpublic information to, or enter into discussions with, a Person or group, identifying the person making the proposal and all the material terms or conditions of such proposal (the “Seller Parent’s Notice”) and the Seller Parent receives from such Person or group an executed confidentiality agreement containing customary limitations on the use and disclosure of all nonpublic written and oral information furnished to such Person or group by or on behalf of the Seller Parent, and (D) contemporaneously with furnishing any such nonpublic information to such Person or group, the Seller Parent furnishes such nonpublic information to Buyer Parent (to the extent such nonpublic information has not been previously furnished by Seller Parent to Buyer Parent); provided, further, however, that Seller Parent shall not consummate any transaction(s) contemplated by any Superior Proposal unless and until Seller Parent has first terminated this Agreement pursuant to Section 9.01(d).

Section 6.04    Notice of Certain Events.

Section 6.05    Employees and Employee Benefits.

(a)    Commencing on the Closing Date, Sellers shall terminate all employees of the Business who are actively at work on the Closing Date, and, a Buyer shall offer employment, on an “at will” basis, to any or all of such employees.

Section 6.06    Confidentiality. All confidential information furnished to a Buyer, its Representatives, a Seller or its Representatives by a Buyer, its Representative, a Seller or its Representative in connection with the transactions contemplated hereby shall be subject to, and the recipient of such information shall hold all such information in confidence in accordance with, the provisions of the Confidentiality Agreement.

Section 6.07    Non-competition; Non-solicitation.

(a)    For a period of three (3) years commencing on the Closing Date (the “Restricted Period”), Seller Parent shall not, and shall not permit any of its Affiliates to, directly or indirectly, (i) engage in the Business anywhere in the world (the “Territory”); (ii) have an interest in any Person that engages directly or indirectly in the Business in the Territory in any capacity, including as a partner, shareholder, member, employee, principal, agent, trustee or consultant; or (iii) cause, induce or encourage any material actual or prospective client, customer, supplier or licensor of the Business (including any existing or former client or customer of a Seller and any Person that becomes a client or customer of the Business after the Closing), or any other Person who has a material business relationship with the Business, to terminate or modify any such actual or prospective relationship. Notwithstanding the foregoing, Seller Parent may own, directly or indirectly, solely as an investment, securities of any Person traded on any national securities exchange if Seller Parent is not a controlling Person of, or a member of a group which controls, such Person and does not, directly or indirectly, own 5% or more of any class of securities of such Person; provided, however, that this Section 6.07 shall not apply in connection with, and following, Seller Parent’s Change of Control.

Section 6.08    Governmental Approvals and Consents.

Section 6.09    Books and Records.

Section 6.10    Closing Conditions. From the date hereof until the Closing, each party hereto shall use reasonable best efforts to take such actions as are necessary to expeditiously satisfy the closing conditions set forth in Article VII hereof.

Section 6.11    Public Announcements. Unless otherwise required by applicable Law or stock exchange requirements (based upon the reasonable advice of counsel), no party to this Agreement shall make any public announcements in respect of this Agreement or the transactions contemplated hereby or otherwise communicate with any news media without the prior written consent of the other party (which consent shall not be unreasonably withheld or delayed), and the parties shall cooperate as to the timing and contents of any such announcement.

Section 6.12    Bulk Sales Laws. The parties hereby waive compliance with the provisions of any bulk sales, bulk transfer or similar Laws of any jurisdiction that may otherwise be applicable with respect to the sale of any or all of the Purchased Assets to Buyers; it being understood that any Liabilities arising out of the failure of Sellers to comply with the requirements and provisions of any bulk sales, bulk transfer or similar Laws of any jurisdiction which would not otherwise constitute Assumed Liabilities shall be treated as Excluded Liabilities.

Section 6.13    Transfer Taxes. All transfer, documentary, sales, use, stamp, registration, value added, customs, duties and other such Taxes and fees (including any penalties and interest) (collectively, the “Transfer Taxes”) incurred under Chinese Law in connection with this Agreement and the other Transaction Documents (including any real property transfer Tax and any other similar Tax) shall be borne and timely paid by each Seller when due, and any other Transfer Taxes incurred in connection with this Agreement and the other Transaction Documents shall be borne and timely paid by each Buyer. A party responsible for payment of such Transfer Taxes shall at such party’s expense timely file any Tax Return or other document with respect to such Transfer Taxes, and upon such filing party’s request, the other party shall cooperate with respect thereto as necessary.

Section 6.14    Tax Clearance Certificates. If reasonably requested by Buyer Parent, Seller Parent shall notify all of the taxing authorities in the jurisdictions that impose Taxes on any Seller or where any Seller has a duty to file Tax Returns of the transactions contemplated by this Agreement in the form and manner required by such taxing authorities, if the failure to make such notifications or receive any available tax clearance certificate (a “Tax Clearance Certificate”) could reasonably be expected to subject any Buyer to Liability for any Taxes of any Seller. If any taxing authority asserts that any Seller is liable for any Tax, and the Seller does not dispute the assessment of such Tax, then such Seller shall promptly pay any and all such amounts and shall provide evidence to Buyer Parent that such liabilities have been paid in full or otherwise satisfied.

Section 6.15    Apportionment of Taxes. All real property Taxes, personal property Taxes, other similar ad valorem Taxes and any other Taxes levied with respect to the Purchased Assets for any taxable period that includes (but does not end on) the Closing Date shall be apportioned between Seller and Buyer as of the Closing Date based upon the number of days of such taxable period included in the Pre-Closing Tax Period and the number of days of such taxable period included in the Post-Closing Tax Period. Each Seller shall be liable for the proportionate amount of such Taxes that is attributable to the Pre-Closing Tax Period, and each Buyer shall be liable for the proportionate amount of such Taxes that is attributable to the Post-Closing Period. In the event that bills for such Taxes have not been issued as of the Closing Date, and, if the amount of such Taxes for the taxable period including the Closing Date is not then known, the apportionment of such Taxes shall be made at Closing on the basis of the prior taxable period’s Taxes. After the Closing, upon receipt of bills for the taxable period including the Closing Date, adjustments to the apportionment shall be made by the parties, so that if either party has paid more than its proper share of such Taxes at the Closing, the other party shall promptly reimburse the first party for the excess amount paid by the first party.

Section 6.16    Cooperation on Tax Matters. Buyer Parent and Seller Parent shall cooperate fully with one another, as and to the extent reasonably requested by either party, in connection with the filing of Tax Returns, the making of any Tax election and the defense or prosecution of any audit, litigation or other Action with respect to Taxes. Such cooperation shall include the provision of records and information that are reasonably relevant to the Business, the Purchased Assets or the Assumed Liabilities and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder.

Section 6.17    VCSEL Fab Relocation.

(a)    The VCSEL Fabrication Plant currently housed in Building No. 1 of Seller Parent’s facility at 10420 Research Road SE, Albuquerque, NM 87123 (the “VCSEL Fab”) shall be relocated to Building No. 2 of Seller Parent’s facility at 1600 Eubank Blvd. SE, Albuquerque, NM 87123 pursuant to the schedule and procedures set forth in Appendix 2.

(b)    The parties agree that the costs to relocate the VCSEL Fab to be paid by Buyer Parent is estimated at Two Million Dollars ($2,000,000) (the “Relocation Cost Estimate”); provided that the Relocation Cost Estimate is calculated by the parties based on the information provided by Seller Parent to Buyer Parent on December 14, 2011 (copy of which is attached hereto as Appendix 3); and provided, further, that Seller Parent shall be responsible for the relocation costs (i) not attributable to the Business or (ii) incurred in connection with the structure or reinforcement of Building No. 2. In the event that (i) actual relocation costs incurred by Buyer Parent in aggregate exceeds the Relocation Cost Estimate, Seller shall reimburse Buyer for half of such excess costs, and (ii) actual relocation costs incurred by Buyer Parent in aggregate is below the Relocation Cost Estimate, Buyer Parent shall reward Seller Parent for half of such saved costs. The procedure for adjusting the parties’ sharing of the costs as described in the foregoing shall be agreed upon by the parties in writing prior to the Closing.

Section 6.18    Employee and Customer Contacts. Notwithstanding anything in this Agreement to the contrary, prior to the Closing, Buyer Parent and its officers, directors, employees or other representatives shall not, without the prior written consent of Seller Parent: (a) contact any of a Seller’s employees (other than those employees expressly designated by Seller Parent to Buyer Parent as members of its transaction team with respect to the Transaction Documents) for any purpose or Sellers’ customers for the purpose of discussing the Business, the Purchased Assets or the transactions contemplated by this Agreement or any of the other Transaction Documents; or (b) discuss the Business, the Purchased Assets or the transaction contemplated by this Agreement or any of the other Transaction Documents in any way whatsoever in the event of any contact with such customer or employee (other than those employees expressly designated by Seller Parent to Buyer Parent as members of its transaction team with respect to the Transaction Documents) not in violation of subsection (i) above.

Section 6.19    Relocation or Consolidation of R&D or Manufacturing Facilities; R&D Roadmap.

Section 6.20    Use of Marks. Notwithstanding any other provision of this Agreement, no interest in or right to use the name “EMCORE” or any derivation thereof or any other trademarks, service marks or tradenames of any Seller other than the Intellectual Property Assets, if any (the “Retained Marks”), is being transferred or otherwise licensed to any Buyer pursuant to the transactions contemplated by this Agreement. Buyer Parent agrees not to use any materials bearing Retained Marks or sell, transfer or ship any products or related materials bearing Retained Marks (a) unless requested to do so by a Seller, (b) except to the extent displayed on the hardcopy (non-electronic) form or the softcopy (electronic) form of such materials delivered to a Buyer at the Closing or (c) except as required under Assigned Contracts with customers until (i) such time as such Buyer shall have qualified the use of its logo, trademarks or tradenames with each such customer or (ii) the end of life of the applicable Product. The foregoing rights are subject to Sellers’ standard Trademark usage guidelines, a copy of which has been provided to Buyer Parent. Upon the expiration of the foregoing license, all materials bearing any Retained Mark in the possession of Buyer Parent, any of its Subsidiaries or any of their respective agents shall be promptly destroyed.

Section 6.21    Environmental Permits. Seller Parent shall cooperate with Buyer in its efforts to transfer, or have issued in the applicable Buyer’s (or its designated Affiliate’s) name, upon Closing, all Environmental Permits necessary to conduct the Business.

Section 6.22    Acquired Patents. Buyer Parent acknowledges that certain of the Acquired Patents are subject to the terms of that certain [*] dated as of [*] by and between Seller Parent and [*] (the “[*] Agreement”) and that during the term of the [*] Agreement neither Buyer Parent nor any of its Affiliates shall take any actions in contravention of the provisions of [*] of the [*] Agreement with respect to such Acquired Patents.

Section 6.23    Further Assurances. Following the Closing, each of the parties hereto shall, and shall cause their respective Affiliates to, execute and deliver such additional documents, instruments, conveyances and assurances and take such further actions as may be reasonably required to carry out the provisions hereof and give effect to the transactions contemplated by this Agreement and the other Transaction Documents.

ARTICLE VII    
CONDITIONS TO CLOSING

Section 7.01    Conditions to Obligations of All Parties. The obligations of each party to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment, at or prior to the Closing, of each of the following conditions:

Section 7.02    Conditions to Obligations of Buyers. The obligations of Buyers to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or Buyer Parent’s waiver, at or prior to the Closing, of each of the following conditions:

(h)    Buyer Parent shall have received a certificate, dated the Closing Date and signed by a duly authorized officer of Seller Parent, that each of the conditions set forth in Section 7.02(a) and Section 7.02(b) has been satisfied (the “Seller Parent Closing Certificate”).

(k)    Buyer Parent shall have received a certification of non-foreign status, duly executed by a Seller that is transferring a “US Real Property Interest” as defined in Section 897(c) of the Code, in form and substance reasonably acceptable to Buyer Parent and meeting the requirements of Treasury Regulations Section 1.1445-2(b) (the “FIRPTA Certificate”).

(n)    Buyer Parent shall have received the results of a Phase I Environmental Site Assessment and environmental regulatory compliance audit (collectively, “Environmental Investigation”) of the Business, Purchased Assets and real property currently owned, leased or operated by Seller Parent or a Subsidiary, and of any environmental sampling results deemed appropriate based on the Environmental Investigation, such results being satisfactory to Buyer Parent in its sole discretion, and Buyer Parent shall have been reasonably satisfied with the feasibility of obtaining Environmental Permits necessary for the operation of the VCSEL Fab in Building No. 2.

Section 7.03    Conditions to Obligations of Sellers. The obligations of Sellers to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or Seller Parent’s waiver, at or prior to the Closing, of each of the following conditions:

(f)    Seller Parent shall have received a certificate, dated the Closing Date and signed by a duly authorized officer of Buyer Parent, that each of the conditions set forth in Section 7.03(a) and Section 7.03(b) has been satisfied (the “Buyer Parent Closing Certificate”).

ARTICLE VIII    
INDEMNIFICATION

Section 8.01    Survival. Subject to the limitations and other provisions of this Agreement, the representations and warranties contained herein shall survive the Closing and shall remain in full force and effect until the date that is two (2) years from the Closing Date; provided, that the representations and warranties in Section 4.01, Section 4.02, Section 4.08, Section 4.09, Section 4.17, Section 5.01 and Section 5.02 shall survive indefinitely and the representations and warranties in, Section 4.18, Section 4.20 and Section 4.23 shall survive for the full period of all applicable statutes of limitations (giving effect to any waiver, mitigation or extension thereof) plus 60 days. All covenants and agreements of the parties contained herein shall survive the Closing indefinitely or for the period explicitly specified therein. Notwithstanding the foregoing, any claims asserted in good faith with reasonable specificity (to the extent known at such time) and in writing by notice from the non-breaching party to the breaching party prior to the expiration date of the applicable survival period shall not thereafter be barred by the expiration of the relevant representation or warranty and such claims shall survive until finally resolved.

Section 8.02    Indemnification By Seller Parent. Subject to the other terms and conditions of this Article VIII, Seller Parent shall indemnify and defend each of Buyers and their Affiliates and their respective Representatives (collectively, the “Buyer Indemnitees”) against, and shall hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, the Buyer Indemnitees based upon, arising out of, with respect to or by reason of:

Section 8.03    Indemnification By Buyer Parent. Subject to the other terms and conditions of this Article VIII, Buyer Parent shall indemnify and defend each of Sellers and their Affiliates and their respective Representatives (collectively, the “Seller Indemnitees”) against, and shall hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, the Seller Indemnitees based upon, arising out of, with respect to or by reason of:

Certain Limitations. The indemnification provided for in Section 8.02 and Section 8.03 shall be subject to the following limitations:

(a)    Seller Parent shall not be liable to the Buyer Indemnitees for indemnification under Section 8.02(a) (other than with respect to a claim for indemnification based upon, arising out of, with respect to or by reason of (i) any inaccuracy in or breach of any representation or warranty in Section 4.01, Section 4.02, Section 4.08, Section 4.09, Section 4.17, Section 4.18, Section 4.20 and Section 4.23 or (ii) any breach of any Seller’s representation or warranty made with the intent to mislead or defraud any Buyer (items (i) and (ii) are collectively referred to herein as the “Buyer Basket Exclusions”), until the aggregate amount of all Losses in respect of indemnification under Section 8.02(a) (other than those based upon, arising out of, with respect to or by reason of the Buyer Basket Exclusions) exceeds [*], in which event Seller Parent shall only be required to pay or be liable for such Losses in excess of such amount.

(b)    Buyer Parent shall not be liable to the Seller Indemnitees for indemnification under Section 8.03(a) (other than with respect to a claim for indemnification based upon, arising out of, with respect to or by reason of (i) any inaccuracy in or breach of any representation or warranty in Section 5.01 and Section 5.02 or (ii) any breach of any Buyer’s representation or warranty made with the intent to mislead or defraud any Seller (items (i) and (ii) are collectively referred to herein as the “Seller Basket Exclusions”) until the aggregate amount of all Losses in respect of indemnification under Section 8.03(a) (other than those based upon, arising out of, with respect to or by reason of the Seller Basket Exclusions) exceeds [*], in which event Buyer Parent shall be only required to pay or be liable for such Losses in excess of such amount.

Section 8.05    Indemnification Procedures. The party making a claim under this Article VIII is referred to as the “Indemnified Party,” and the party against whom such claims are asserted under this Article VIII is referred to as the “Indemnifying Party.”

(a)    Third Party Claims. If any Indemnified Party receives notice of the assertion or commencement of any Action made or brought by any Person who is not a party to this Agreement or an Affiliate of a party to this Agreement or a Representative of the foregoing (a “Third Party Claim”) against such Indemnified Party with respect to which the Indemnifying Party is obligated to provide indemnification under this Agreement, the Indemnified Party shall give the Indemnifying Party reasonably prompt written notice thereof, but in any event not later than 30 calendar days after receipt of such notice of such Third Party Claim. The failure to give such prompt written notice shall not, however, relieve the Indemnifying Party of its indemnification obligations, except and only to the extent that the Indemnifying Party forfeits rights or defenses by reason of such failure, or Indemnifying Party’s ability to defend and/or provide indemnification with respect to such Third Party Claim is otherwise adversely affected. Such notice by the Indemnified Party shall describe the Third Party Claim in reasonable detail, shall include copies of all material written evidence thereof and shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or may be sustained by the Indemnified Party. The Indemnifying Party shall have the right to participate in, or by giving written notice to the Indemnified Party, to assume the defense of any Third Party Claim at the Indemnifying Party’s expense and by the Indemnifying Party’s own counsel, and the Indemnified Party shall cooperate in good faith in such defense. In the event that the Indemnifying Party assumes the defense of any Third Party Claim, subject to Section 8.05(b), it shall have the right to take such action as it deems necessary to avoid, dispute, defend, appeal or make counterclaims pertaining to any such Third Party Claim in the name and on behalf of the Indemnified Party. The Indemnified Party shall have the right to participate in the defense of any Third Party Claim with counsel selected by it subject to the Indemnifying Party’s right to control the defense thereof. The fees and disbursements of such counsel shall be at the expense of the Indemnified Party, provided, that if in the reasonable opinion of counsel to the Indemnified Party, (A) there are legal defenses available to an Indemnified Party that are different from or additional to those available to the Indemnifying Party; or (B) there exists a conflict of interest between the Indemnifying Party and the Indemnified Party that cannot be waived, the Indemnifying Party shall be liable for the reasonable fees and expenses of counsel to the Indemnified Party in each jurisdiction for which the Indemnified Party determines counsel is required. If the Indemnifying Party elects not to compromise or defend such Third Party Claim, or fails to notify the Indemnified Party in writing of its election to defend as provided in this Agreement, the Indemnified Party may, subject to Section 8.05(b), pay, compromise, defend such Third Party Claim and seek indemnification for any and all Losses based upon, arising from or relating to such Third Party Claim. Seller and Buyer shall cooperate with each other in all reasonable respects in connection with the defense of any Third Party Claim, including making available (subject to the provisions of Section 6.06) records relating to such Third Party Claim and furnishing, without expense (other than reimbursement of actual out-of-pocket expenses) to the defending party, management employees of the non-defending party as may be reasonably necessary for the preparation of the defense of such Third Party Claim.

(b)    Settlement of Third Party Claims. Notwithstanding any other provision of this Agreement, the Indemnifying Party shall not enter into settlement of any Third Party Claim without the prior written consent of the Indemnified Party, except as provided in this Section 8.05(b). If a firm offer is made to settle a Third Party Claim without leading to liability or the creation of a financial or other obligation on the part of the Indemnified Party and provides, in customary form, for the unconditional release of each Indemnified Party from all liabilities and obligations in connection with such Third Party Claim and the Indemnifying Party desires to accept and agree to such offer, the Indemnifying Party shall give written notice to that effect to the Indemnified Party. If the Indemnified Party fails to consent to such firm offer within ten days after its receipt of such notice, the Indemnified Party may continue to contest or defend such Third Party Claim and in such event, the maximum liability of the Indemnifying Party as to such Third Party Claim shall not exceed the amount of such settlement offer. If the Indemnified Party fails to consent to such firm offer and also fails to assume defense of such Third Party Claim, the Indemnifying Party may settle the Third Party Claim upon the terms set forth in such firm offer to settle such Third Party Claim. If the Indemnified Party has assumed the defense pursuant to Section 8.05(a), it shall not agree to any settlement without the written consent of the Indemnifying Party (which consent shall not be unreasonably withheld or delayed).

(c)    Direct Claims. Any Action by an Indemnified Party on account of a Loss which does not result from a Third Party Claim (a “Direct Claim”) shall be asserted by the Indemnified Party giving the Indemnifying Party reasonably prompt written notice thereof, but in any event not later than 30 days after the Indemnified Party becomes aware of such Direct Claim. The failure to give such prompt written notice shall not, however, relieve the Indemnifying Party of its indemnification obligations, except and only to the extent that the Indemnifying Party forfeits rights or defenses by reason of such failure or Indemnifying Party’s ability to defend and/or provide indemnification with respect to such Direct Claim is otherwise adversely affected. Such notice by the Indemnified Party shall describe the Direct Claim in reasonable detail, shall include copies of all material written evidence thereof and shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or may be sustained by the Indemnified Party. The Indemnifying Party shall have 30 days after its receipt of such notice to respond in writing to such Direct Claim (which notice shall also indicate whether or not the Indemnifying Party intends to investigate the matter or circumstance alleged to give rise to the Direct Claim). Following the receipt of such notice, the Indemnified Party shall allow the Indemnifying Party and its professional advisors to investigate the matter or circumstance alleged to give rise to the Direct Claim, and whether and to what extent any amount is payable in respect of the Direct Claim and the Indemnified Party shall assist the Indemnifying Party’s investigation by giving such information and assistance (including access to the Indemnified Party’s premises and personnel and the right to examine and copy any accounts, documents or records) as the Indemnifying Party or any of its professional advisors may reasonably request. If the Indemnifying Party does not so respond within such 30 day period, the Indemnifying Party shall be deemed to have rejected such claim, in which case the Indemnified Party shall be free to pursue such remedies as may be available to the Indemnified Party on the terms and subject to the provisions of this Agreement.

Section 8.06    Tax Treatment of Indemnification Payments. All indemnification payments made under this Agreement shall be treated by the parties as an adjustment to the Purchase Price for Tax purposes, unless otherwise required by Law.

Section 8.07    Effect of Investigation. The representations, warranties and covenants of the Indemnifying Party, and the Indemnified Party’s right to indemnification with respect thereto, shall not be affected or deemed waived by reason of any investigation made by or on behalf of the Indemnified Party (including by any of its Representatives) or by reason of the fact that the Indemnified Party or any of its Representatives knew or should have known that any such representation or warranty is, was or might be inaccurate or by reason of the Indemnified Party’s waiver of any condition set forth in Section 7.02 or Section 7.03, as the case may be.

Section 8.08    Exclusive Remedies. Subject to Section 6.07 and Section 10.12, the parties acknowledge and agree that their sole and exclusive remedy with respect to any and all claims (other than claims arising from fraud, criminal activity or willful misconduct on the part of a party hereto in connection with the transactions contemplated by this Agreement) for any breach of any representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating to the subject matter of this Agreement, shall be pursuant to the indemnification provisions set forth in this Article VIII. In furtherance of the foregoing, each party hereby waives, to the fullest extent permitted under Law, any and all rights, claims and causes of action for any breach of any representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating to the subject matter of this Agreement it may have against the other parties hereto and their Affiliates and each of their respective Representatives arising under or based upon any Law, except pursuant to the indemnification provisions set forth in this Article VIII. Nothing in this Section 8.08 shall limit any Person’s right to seek and obtain any equitable relief to which any Person shall be entitled or to seek any remedy on account of any Person’s fraudulent, criminal or intentional misconduct.

Section 8.09    Escrow Claims.

(b)    In the event Seller Parent does not dispute a claim for indemnification made by any of the Buyer Indemnitee that pursuant to this Article VIII is to be satisfied from the Escrow Amount, Seller Parent and Buyer Parent shall provide joint written instructions to the Escrow Agent to disburse to the applicable Buyer Indemnitee the amount of the undisputed claim. Upon final non-appealable determination of Liabilities (or a settlement between the parties) with respect to any claim for indemnification made by any of the Buyer Indemnitee that pursuant to this Article VIII is to be satisfied from the Escrow Fund, (a “Final Claim Amount”) either (i) Seller Parent and Buyer Parent shall provide joint written instructions to Escrow Agent to disburse to the applicable Buyer Indemnitee such Final Claim Amount, or (ii) Seller or Buyer may present the final non-appealable determination of Liabilities to the Escrow Agent for distribution of such Final Claim Amount which shall be distributed pursuant to the Escrow Agreement.

Section 8.10    Setoff and Recoupment.

ARTICLE IX    
TERMINATION

Section 9.01    Termination. This Agreement may be terminated at any time prior to the Closing:

(ii)    Seller Parent shall provide written notice to Buyer Parent of Seller Parent’s Board of Directors’ determination to terminate this Agreement pursuant to this Section 9.01(d) by no later than one (1) Business Day after the last day of the Superior Proposal Period for such Superior Proposal (the “Section 9.01(d) Termination Notice”);

(iii)    During the period of five (5) Business Days following Buyer Parent’s receipt of the Section 9.01(d) Termination Notice (the “Negotiation Period”), Buyer Parent has the right, but not the obligation, to elect to negotiate in good faith with Seller Parent with respect to proposed modifications of the terms and conditions of this Agreement so as to enable Buyer Parent to proceed with the transactions contemplated herein on such proposed modified terms and conditions, and if Buyer Parent so elects Seller Parent shall negotiate in good faith with Buyer Parent with respect to such proposed modifications; and

(iv)    Unless Buyer Parent and Seller Parent agree in writing otherwise, this Agreement shall be terminated effective at 5:00 p.m. (Pacific Time) on the last day of the Negotiation Period (the “Termination Time”), provided that prior to or concurrently with the Termination Time, Seller Parent has paid to Buyer Parent by wire transfer in immediately available funds and Buyer Parent has received the termination fee amount specified in Section 9.03 of this Agreement.

Section 9.02    Effect of Termination. In the event of the termination of this Agreement in accordance with this Article, this Agreement shall forthwith become void and there shall be no liability on the part of any party hereto except:

Section 9.03    Termination Fee. If the Seller Parent intends to terminate this Agreement pursuant to Section 9.1(d) hereof, the Seller Parent shall pay to Buyer Parent a termination fee of $800,000 by wire transfer of same day immediately available funds on the date of termination, and the termination pursuant to Section 9.01(d) shall become effective only upon receipt of such termination fee by Buyer Parent. Seller Parent and Buyer Parent agree that the agreement contained in this Section 9.03 is an integral part of the transactions contemplated by this Agreement and constitutes liquidated damages and not a penalty.

ARTICLE X    
MISCELLANEOUS

Section 10.01    Expenses. Except as otherwise expressly provided herein, all costs and expenses, including, without limitation, fees and disbursements of counsel, financial advisors and accountants, incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses, whether or not the Closing shall have occurred; provided, however, Buyer Parent and Seller Parent shall be equally responsible for all filing and other similar fees payable in connection with a joint voluntary notice to CFIUS pursuant to FINSA.

Section 10.02    Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 10.02):

Section 10.03    Interpretation. For purposes of this Agreement, (a) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”; (b) the word “or” is not exclusive; and (c) the words “herein,” “hereof,” “hereby,” “hereto” and “hereunder” refer to this Agreement as a whole. Unless the context otherwise requires, references herein: (x) to Articles, Sections, Disclosure Schedules and Exhibits mean the Articles and Sections of, and Disclosure Schedules and Exhibits attached to, this Agreement; (y) to an agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and (z) to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted. The Disclosure Schedules and Exhibits referred to herein shall be construed with, and as an integral part of, this Agreement to the same extent as if they were set forth verbatim herein.

Section 10.04    Performance of Obligations by Subsidiaries. Any obligation of a Seller under or pursuant to this Agreement may be satisfied, met or fulfilled, in whole or in part, at Seller Parent’s sole and exclusive option, either by Seller Parent directly or by any Subsidiary or designee of Seller Parent that Seller Parent causes to satisfy, meet or fulfill such obligation, in whole or in part. Any obligation of Buyer Parent under or pursuant to this Agreement may be satisfied, met or fulfilled, in whole or in part, at Buyer Parent’s sole and exclusive option, either by Buyer Parent directly or by any Subsidiary or designee of Buyer Parent that Buyer Parent causes to satisfy, meet or fulfill such obligation, in whole or in part. With respect to any particular action, the use of the words “Seller Parent shall,” “Seller Parent agrees to,” “Sellers shall,” a “Seller shall,” and any similar variation with respect to any action, also means “Seller Parent shall cause” the particular action to be performed, and the use of the words “Buyer Parent shall,” “Buyer Parent agrees to,” “Buyers shall,” a “Buyer shall,” and any similar variation with respect to any action, also means “Buyer Parent shall cause” the particular action to be performed, because Seller Parent and Buyer Parent each understand, agree and acknowledge that they are entering into this Agreement on behalf of themselves and certain of their respective Subsidiaries. Seller Parent guarantees the performance of all actions, agreements and obligations to be performed by any Subsidiaries of Seller Parent under the terms and conditions of this Agreement and any applicable Transaction Document, and Buyer Parent guarantees the performance of all actions, agreements and obligations to be performed by any Subsidiary of Buyer Parent under the terms and conditions of this Agreement and any applicable Transaction Document, regardless of whether or not Buyer Parent and/or Seller Parent are a party thereto.

Section 10.05    Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.

Section 10.06    Severability. If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Except as provided in Section 6.07(d), upon such determination that any term or other provision is invalid, illegal or unenforceable, 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 a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.

Section 10.07    Entire Agreement. This Agreement the other Transaction Documents, and the Confidentiality Agreement constitute the sole and entire agreement of the parties to this Agreement with respect to the subject matter contained herein and therein, and supersede all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. For the avoidance of doubt, the parties hereto confirm that Section 10 of the Letter of Intent between Buyer Parent and Seller Parent dated as of December 23, 2011, as amended, shall remain in effect pursuant to the terms thereof. In the event of any inconsistency between the statements in the body of this Agreement and those in the other Transaction Documents, the Exhibits and Disclosure Schedules (other than an exception expressly set forth as such in the Disclosure Schedules), the statements in the body of this Agreement will control.

Section 10.08    Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. Neither party may assign its rights or obligations hereunder without the prior written consent of the other party, which consent shall not be unreasonably withheld or delayed; provided, however, that prior to the Closing Date, Buyer Parent may, without the prior written consent of Seller Parent, assign all or any portion of its rights under this Agreement or delegate any of its obligations under this Agreement to an Affiliate, which is a wholly-owned indirect or direct subsidiary of Buyer Parent. No assignment shall relieve the assigning party of any of its obligations hereunder.

Section 10.09    No Third-party Beneficiaries. Except as provided in Article VIII, this Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns and, to the extent set forth herein, the parties’ respective Subsidiaries and nothing herein, express or implied, is intended to or shall confer upon any other Person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

Section 10.10    Amendment and Modification; Waiver. This Agreement may only be amended, modified or supplemented by an agreement in writing signed by each party hereto. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

Section 10.11    Governing Law; Dispute Resolution. The formation, construction, and performance of this Agreement, including the rights and duties of the parties hereunder, shall be construed, interpreted, governed, applied and enforced in accordance with the laws of the State of California applicable to agreements entered into and performed entirely in the State of California by residents thereof, without regard to any provisions thereof relating to conflicts of laws among different jurisdictions; provided, however, that this Section 10.11 shall be governed by and interpreted in accordance with the Federal Arbitration Act of the United States, 9 U.S.C. §§ 1 et seq. Any dispute, claim, controversy or difference regarding the interpretation or validity or performance of, or otherwise arising out of or relating to, this Agreement, the other Transaction Documents or the transactions contemplated hereby or thereby (“Dispute”), shall be finally and conclusively decided by binding arbitration in accordance with the Rules of Arbitration of the ICC by an Arbitral Tribunal consisting of three arbitrators appointed in accordance with those Rules. The language of the arbitration shall be English. The venue for the hearings of the arbitration shall be San Francisco, California. The parties shall bear in equal shares any fees and expenses of the Arbitral Tribunal and of the ICC; provided that the Arbitral Tribunal shall have the authority to award, as part of the Arbitral Tribunal’s decision, to the prevailing party its costs and expenses of the arbitration proceeding, including reasonable attorneys’ and experts’ fees. The Arbitral Tribunal shall render its award based on the explicit terms of this Agreement or any of the other Transaction Documents, as applicable; and in instances where it is silent, on the basis of strict principles consistent with the terms of this Agreement or any of the other Transaction Documents. The Arbitral Tribunal shall be bound by strict rules of law in making its decision, and may not pronounce judgment on equitable principles or the basis of ex aequo et bono. The Arbitral Tribunal shall have the authority to include in its award a decision binding upon the parties enjoining them to take or refrain from taking specific action with respect to the Dispute or declaring their rights, responsibilities and liabilities as to the Dispute. The Arbitral Tribunal shall state the reasons for its decision in writing in the award it issues. Judgment on the award rendered by the Arbitral Tribunal may be entered by any court having jurisdiction. Each of the parties hereby irrevocably submits to the personal jurisdiction of, and irrevocably waives objection to the laying of venue (including a waiver of any argument of forum non convenience or other principles of like effect) in, the state and federal courts located in San Francisco, California, USA for the purposes of any action commenced in aid of an arbitration hereunder, or for entry of judgment upon the Arbitral Tribunal’s award. Each of the parties consents that all service of process may be made by delivery of the summons and complaint by certified or registered mail, return receipt requested, or by messenger, directed to it at its address for notices set forth in Section 10.02 hereof, and that service so made shall be deemed to have been made as of the date of the receipt indicated in the certification, signed and returned postal receipt, or other proof of service applicable to the method of service employed.

Section 10.12    Specific Performance. The parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy to which they are entitled at law or in equity.

Section 10.13    Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.