SHAREPURCHASE AGREEMENT Among CABOTMICROELECTRONICS GLOBAL CORPORATION, ETERNALCHEMICAL CO., LTD., MAJORCO-SELLERS and EPOCHMATERIAL CO. LTD. December19, 2008

(1)

Cabot Microelectronics Global Corporation, a corporation organized and existing under the laws of the State of Delaware, U.S.A., with its registered office at 870 N. Commons Drive, Aurora, Illinois 60504, U.S.A (hereinafter referred to as  “Buyer");

(2)

Eternal Chemical Co., Ltd. (hereinafter referred to as "Eternal");

 

and

(4)

SECTION 1  

1.1.  

"Breach"

means any material breach of, or any material inaccuracy in, any representation or warranty or any breach of, or material failure to perform or substantially comply with, any covenant or obligation, in or of this Agreement or any other Contract, or any material event which with the passing of time or the giving of notice, or both, would constitute such a breach, inaccuracy or failure.

"CMC Group"

means Cabot Microelectronics Corporation, a corporation organized and existing under the laws of the State of Delaware, U.S.A., with its principal offices at 870 Commons Drive, Aurora, Illinois 60504, U.S.A. and its affiliates, direct and indirect, wholly owned subsidiaries, including, but not limited to the Buyer.

"Closings"

means the First Closing and the Second Closing.

means conflict with, or any violation of or default under (with or without notice or lapse of time, or both) any obligation or benefit, including, but not limited to, such conflicts, violations or defaults giving rise to a right of termination, cancellation, modification or acceleration of any obligation or benefit.

means any approval, consent, ratification, waiver or other required authorization.

means all of the transactions, including the First Transaction and the Second Transaction, contemplated by this Agreement.

means any agreement, contract, Lease, consensual obligation, promise or undertaking (whether written or oral and whether express or implied).

means any charge, claim, community or other marital property interest, condition, equitable interest, lien, option, pledge, security interest, mortgage, right of way, easement, encroachment, servitude, right of first option, right of first refusal or similar restriction, including any restriction on use, voting (in the case of any security or equity interest), transfer, receipt of income or exercise of any other attribute of ownership.

means soil, land surface or subsurface strata, surface waters (including navigable waters and ocean waters), publicly or privately owned treatment works, drains, sewer systems (including septic systems), wetlands, groundwaters, drinking water supply, stream sediments, ambient air (including indoor air) and any other environmental medium or natural resource.

means any cost, damages, expense, Liability, obligation or other responsibility arising from or under any Environmental Law or Occupational Safety and Health Law, including those consisting of or relating to:

(a)  any environmental, health or safety matter or condition (including on-site or off-site contamination, occupational safety and health and regulation of any chemical substance or product);

(b)  any fine, penalty, judgment, award, settlement, legal or administrative proceeding, damages, loss, claim, demand or response, remedial or inspection cost or expense arising under any Environmental Law or Occupational Safety and Health Law, including, but not limited to, attorney, expert and consultant fees and costs;

(c)   financial responsibility under any Environmental Law or Occupational Safety and Health Law for cleanup costs or corrective action, including any cleanup, removal, containment or other remediation or response actions ("Cleanup") required by any Environmental Law or Occupational Safety and Health Law (whether or not such Cleanup has been required or requested by any Governmental Body or any other Person) and for any natural resource damages;

(d)  any compliance, corrective, remedial or other action or liability related to or arising from Eternal’s and Epoch’s operation of the Old Plant II on Eternal’s property; or

 (e) any other compliance, corrective or remedial measure required under any Environmental Law or Occupational Safety and Health Law.

means any Legal Requirement, including but not limited to, Air Pollution Control Act, Water Pollution Control Act, Waste Clearance Act, Toxic Chemical Substance Control Act, Soil and Groundwater Pollution Remediation Act, at any time in force or effect in the ROC, relating to:

(a)  emissions, discharges, spills, Release of Hazardous Material into the Environment;

(b)  the use, treatment, storage, disposal, handling, manufacturing, transportation or shipment of Hazardous Material;

(c)  the regulation of storage tanks;

(d)  assuring that products are designed, formulated, packaged and used so that they do not present unreasonable risks to human health or the Environment when used or disposed; or

(e)  otherwise relating to pollution or the protection of human health or the Environment.

means the assets, Facilities, licenses, permits or any other Tangible Personal Property or intangible property owned or used by Epoch in the conduct of the Epoch Business as of the First Closing Date, as described under Section 6 of Schedule 2.A, except for (i) any rights related to 3D wire bond, (ii) 50% of the rights related to the patents application of 3D TSV, which has been filed by Epoch, and are to be co-owned by  Eternal and Buyer in accordance with Section 5.9, and (iii) the trademarks owned by Epoch with the word “Eternal” to be transferred to Eternal in accordance with Section 5 .10.

 

means the business as currently conducted by Epoch as of the date of this Agreement, which includes the development, production and sales of  chemical mechanical planarization (CMP) slurry products, CMP clean solutions, liquid crystal display slurry and clean products, and various other polishing products, including the resale of certain consumable products such as o-rings and filters, for use in various polishing and planarization applications for the semiconductor, flat panel display, and other industries, excluding the current business related to the wire bond in 3D applications.

Means the First Shares minus the number of shares transferred by the First Co-Sellers to Buyer in the First Closing.

Means the aggregate purchase price for the Eternal First Shares calculated based on the price per share set forth in the definition of “First Purchase Price”, subject to any Working Capital Adjustment as provided in Section 2.2(a)(ii).

Means the aggregate purchase price for the Eternal Second Shares calculated based on the price per share set forth in the definition of “First Purchase Price”.

Means the remaining shares of the issued and outstanding capital stock of Epoch held by Eternal after the First Closing.

Means the 40,516,442 shares of the issued and outstanding capital stock of Epoch owned by Eternal as of the date hereof and prior to the First Closing, which includes the one thousand (1000) shares to be transferred by Eternal to Buyer pursuant to Section 5.7.

 

Means any real property, leasehold or other interest in real property currently owned or operated by Epoch.

Notwithstanding the foregoing, for purposes of the definitions of "Hazardous Activity" and "Remedial Action" and Section 22 under the Schedule 2.A hereunder ("Environmental Matters"), "Facilities" shall mean any real property, leasehold or other interest in real property currently or formerly owned or operated by Epoch.

"First Closing"

has the meaning under Section 3.1 (a).

has the meaning under Section 3.1 (a).

means the aggregate purchase price for the First Shares of fifty-nine-million-four-hundred-thousand United States Dollars (USD$59,400,000), which equates to the price per share of USD$1.44325388, multiplied by the number of First Shares (41,157,000), to be paid in an aggregate amount of NT$ converted at the closing spot buying exchange rate between one USD and NT$ as posted by Bank of Taiwan seven business days prior to the First Closing Date, subject to the Working Capital Adjustment, if any, provided for in Section 2.2(a)(ii).

has the meaning set forth in Paragraph C of the recitals above and includes the Major Co-Sellers.

"First Shares"

means a total of 41,157,000 shares of the capital stock of Epoch, constituting 90% of the issued and outstanding capital stock of Epoch, to be delivered to the Buyer at the First Closing by Eternal and the First Co-Sellers, including and together with all rights, interests, entitlement to dividends, earnings and profits of Epoch as of the First Closing Date.

means the sale and purchase of the First Shares, and the indirect ownership and interests in the Epoch Business and Epoch Assets contemplated by this Agreement and any part of that transaction.

"First Trust Account"

 

means the trust account for the First Trust Amount in accordance with Section 2.5 hereof.

"First Trust Amount"

means an amount equivalent to ten percent (10%) of the Eternal First Purchase Price plus five-hundred-thousand United States dollars (USD$500,000), to be deposited by Eternal into the First Trust Account at the First Closing, contemporaneous with Buyer’s payment of the First Purchase Price, in accordance with Section 2.5 hereof.

means generally accepted accounting principles for financial reporting in the ROC.

means with respect to any particular entity, (a) if a corporation, the articles or certificate of incorporation and the bylaws; (b) all equity holders' agreements, voting agreements, voting trust agreements, joint venture agreements, registration rights agreements or other agreements or documents relating to the organization, management or operation of any Person or relating to the rights, duties and obligations of the equity holders of any Person; and (c) any amendment or supplement to any of the foregoing.

means any Consent, license, registration or permit issued, granted, given or otherwise made available by or under the authority of any Governmental Body or pursuant to any Legal Requirement.

means any:

(a) nation, municipality, county, city, town,  village, district or other jurisdiction;

 

(b) national, local, municipal, foreign or other government;

 

(c) governmental or quasi-governmental authority of any nature (including any agency, branch, department, board, commission, court, tribunal or other entity exercising governmental or quasi-governmental powers); or,

 

(d) body exercising, or entitled or purporting to exercise, any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power,

 

in the ROC or in any other jurisdiction in which Epoch conducts business or has business conducted on its behalf.

means the distribution, generation, handling, importing, management, manufacturing, processing, production, refinement, Release, storage, transfer, transportation, treatment or use (including any withdrawal or other use of groundwater) of Hazardous Material in, on, under, about or from any of the Facilities or any part thereof into the Environment and any other act, business, operation or thing that increases the danger, or risk of danger, or poses an unreasonable risk of harm, to persons or property on or off the Facilities.

means at any time, any substance, material or waste which is regulated by any Governmental Body, including any material, substance or waste which is defined as a “hazardous substance,” “contaminant,” “pollutant,” “general waste, “ “hazardous industrial waste,” “general industrial waste,” “public nuisance”, or “toxic chemical substance” under any provision of Environmental Law, and including radon, petroleum, petroleum products, asbestos (including, but not limited to, presumed asbestos-containing material or asbestos-containing material), radioactive material, PCB-containing materials, urea formaldehyde, polychlorinated biphenyls, trichloroethylene, perchloroethylene, mineral spirits, kerosene and naptha solvents.

means the amount of Losses to be indemnified under Section 8 of this Agreement.

means all inventories of Epoch, wherever located, including all finished goods, work in process, raw materials, spare parts and all other materials and supplies to be used or consumed by Epoch in the production or sale of finished goods.

an individual will be deemed to have Knowledge of a particular fact or other matter if: (a) that individual is actually aware of that fact or matter; or (b)a prudent individual reasonably could be expected to discover or otherwise become aware of that fact or matter in the course of conducting a reasonable investigation regarding the accuracy of any representation or warranty contained in this Agreement.

A Person (other than an individual) will be deemed to have Knowledge of a particular fact or other matter if any individual who is serving as a director of that Person has, or at any time had, Knowledge of that fact or other matter (as set forth in (a) and (b) above), and any such individual (and any individual party to this Agreement) will be deemed to have conducted a reasonable investigation regarding the accuracy of the representations and warranties made herein by that Person or individual.

 

Without limiting the foregoing, Eternal will also be deemed to have Knowledge of a particular fact or other matter if any officer or director of Epoch has, or at any time had, Knowledge of that fact or other matter (as set forth in (a) and (b) above).

means any real property lease or any lease or rental agreement, license, right to use or installment and conditional sale agreement to which Epoch is a party and any other Epoch Contract pertaining to the leasing or use of any Tangible Personal Property.

means any law, code, regulation, statute or treaty, prevailing and in force in the ROC, whether national, local, foreign, international or multinational.

means with respect to any Person, any liability or obligation of such Person of any kind, character or description, whether known or unknown absolute or contingent, accrued or unaccrued, disputed or undisputed, liquidated or unliquidated, secured or unsecured, joint or several, due or to become due, 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.

means all claims, expenses (including reasonable attorneys’ fees), losses and Liabilities in accordance with Section 8.1 hereof.

means those First Co-Sellers listed on Schedule 1-2 who will sign this Agreement for the limited purpose of committing to signing, and causing their relatives to sign, the Non-Eternal Share Purchase Agreements as provided in Section 2.1(a)(ii) hereof.

means any change, event or effect that is not directly and specifically attributable to CMC Group in Buyer’s reasonable determination (to the extent necessary, as supported by the assessment of an independent third party chosen by the Parties), and is or could reasonably be expected to be materially adverse to: (a) the results of operations, financial condition, business, prospects, rights, properties, assets (including any material damage or destruction or loss of any of the assets of Epoch that could materially and adversely affect its business) or Liabilities of Epoch, including materially adverse developments in the industry in which Epoch operates, (b) Epoch’s relations with its management, employees, creditors, suppliers, customers, or others having business relationships with Epoch, in each case, taken as a whole, (c) the ability of Epoch and Eternal to consummate the Contemplated Transactions or perform their obligations hereunder; provided, that conditions resulting from the announcement of the Contemplated Transactions shall not be deemed to constitute, and shall not be taken into account in determining whether there has been, a Material Adverse Effect, (d) any borrowing or Contracts to borrow money through loans or otherwise by Epoch that could materially and adversely affect its business, (e) any distribution or payment by Epoch to Eternal or to any entity controlled, directly or indirectly, by any of them (other than dividends properly declared) that could materially and adversely affect Epoch’s business, (f) any other change which materially and adversely affects the business or prospects of Epoch, including any material excursion related to any of Epoch’s products, or (g) any event which is outside Epoch’s Ordinary Course of Business that could materially and adversely affect its business.

means the shareholders of Epoch other than Eternal.

means the 5,213,558 shares of the issued and outstanding capital stock of Epoch owned by the Non-Eternal Shareholders as of the date hereof and prior to the First Closing.

means the currency of New Taiwan dollar in  ROC.

means the plant set forth on Schedule 1-3.

means any order, injunction, judgment, decree, ruling, assessment or arbitration award of any Governmental Body or arbitrator.

an action taken by a Person will be deemed to have been taken in the Ordinary Course of Business only if that action:

(a)is consistent in nature, scope and magnitude with the past practices of such Person and is taken in the ordinary course of the normal operations of such Person; and

(b)does not require authorization by the board of directors or shareholders of such Person (or by any Person or group of Persons exercising similar authority) and does not require any other separate or special authorization of any nature;

or

(c)is similar in nature, scope and magnitude to actions customarily taken, without any separate or special authorization, in the ordinary course of the normal operations of other Persons that are in the same line of business as such Person.

means any Legal Requirement relating to the prevention of occupational accidents or protection of labor safety and health, including but not limited to, Labor Safety and Health Act, Factory Act, Environmental Agents Control Act, Labor Inspection Act, Protection for Workers Incurring Occupational Accidents Act and other applicable laws and regulations in the ROC.

"Party"

means a party to this Agreement.

means an individual, partnership, corporation, business trust, limited liability company, limited liability partnership, joint stock company, trust, unincorporated association, joint venture or other entity or any Governmental Body.

means any action, arbitration, audit, hearing, investigation, litigation or suit (whether civil, criminal, administrative, judicial or investigative, whether formal or informal, whether public or private) commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental Body or arbitrator.

means the Leases of the properties listed on Schedule 1-4.

means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.

means, in relation to the relevant Party, any other Person who, directly or indirectly, controls, is controlled by, or is under common control with such Party.

means any release, spill, emission, leaking, pumping, pouring, dumping, emptying, injection, deposit, disposal, discharge, dispersal, leaching or migration on or into the Environment or into or out of any property.

means all actions, including any capital expenditures, required or voluntarily undertaken (a) to clean up, remove, treat or in any other way address any Hazardous Material or other substance; (b) to prevent the Release or to minimize the further Release of any Hazardous Material or other substance so it does not migrate or endanger or threaten to endanger public health or welfare or the Environment; (c) to perform pre-remedial studies and investigations or post-remedial monitoring and care; or  (d) to bring all Facilities and the operations conducted thereon into compliance with Environmental Laws and environmental Governmental Authorizations.

means the representations, warranties and covenants set out in Schedules 2 or 3, as applicable.

means the Republic of China.

has the meaning under Section 3.1 (b).

has the meaning under Section 3.1 (b).

"Second Co-Sellers"

has the meaning set forth in Section 3.2(j).

means the Eternal Second Shares plus any shares sold by the Second Co-Sellers, to be delivered to the Buyer at the Second Closing by Eternal and the Second Co-Sellers, including and together with all rights, interests, entitlement to dividends, earnings and profits of Epoch as of the Second Closing Date, the aggregate of which constitutes 4,573,000 shares, which constitutes ten percent (10%) of the issued and outstanding capital stock of Epoch, minus not more than 0.5% of the total issued and outstanding capital stock of Epoch held by Non-Eternal Shareholders as of the First Closing, if any.

means the purchase price for the Second Shares calculated as follows: six-million-six-hundred-thousand United States Dollars (USD$6,600,000) (which is the price per share of USD$1.44325388, multiplied by the maximum possible number of Second Shares,   minus the following: the sum of (a) an amount equal to i) the price per share of USD$1.44325388, multiplied by the number of shares delivered at the Second Closing by the Second Co-Sellers, if any; subtracted from ii) the price per share of USD$1.44325388, multiplied by the number of remaining shares, if any, held by Non-Eternal Shareholders immediately after the First Closing; plus, b) an amount equal to any dividends paid either by Epoch to Eternal or by Buyer to any Second Co-Sellers related to their shareholding in Epoch after the date of signing this Agreement; such Second Purchase Price to be paid in an aggregate amount of NT$ converted  at the closing spot buying exchange rate between one USD and NT$ as posted by Bank of Taiwan seven business days prior to the Second Closing.

means the sale and purchase of the Second Shares.

"Second Trust Account"

means the escrow account for the Second Trust Amount in accordance with Section 2.6 hereof.

"Second Trust Amount"

 

means the Eternal Second Purchase Price, which amount shall be  deposited by the Buyer in the Second Trust Account at the First Closing in accordance with Section 2.6 hereof.

means Eternal, the First Co-Sellers and the Second Co-Sellers, if any, collectively.

means all machinery, equipment (including, but not limited to, demonstration equipment), tools, furniture, office equipment, computer hardware, supplies, materials, vehicles and other items of tangible personal property (other than Inventories) of every kind owned or leased by Epoch (wherever located and whether or not carried on Epoch’s books), together with any express or implied warranty by the manufacturers or sellers or lessors of any item or component part thereof and all maintenance records and other documents relating thereto.

means any income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, property, environmental, windfall profit, customs, vehicle, or other title or registration, capital stock, franchise, employees' income withholding, foreign or domestic withholding, unemployment, disability, real property, personal property, sales, use, transfer, value added, alternative, add-on minimum and other tax, fee, assessment, levy, tariff, charge or duty of any kind whatsoever and any interest, penalty, addition or additional amount thereon imposed, assessed or collected by or under the authority of any Governmental Body or payable under any tax-sharing agreement or any other similar Contract.

means a Person that is not a party to this Agreement.

means the sum of the First Shares and the Second Shares.

means the sum of the First Purchase Price and the Second Purchase Price, the aggregate of which shall not exceed sixty-six-million United States dollars (USD$66,000,000), subject to the Working Capital Adjustment, if any, provided for in Section 2.2(a)(ii).

means confirmatory or additional due diligence (including, but not limited to (i) detailed due diligence related to formulas, composition information and raw materials constituting any part of Epoch’s product and intellectual property portfolios (ii) appraisals of property, plant and equipment, (iii) physical inventories, (iv) additional or subsequent financial information, and (v) employee information).

means United States dollars.

means the period from signing of this Agreement by the Parties until the date three years after the First Closing Date during which the Representations, Warranties and Covenants under this Agreement with respect to environmental issues are valid and in force.

means the period from signing of this Agreement by the Parties until the date three years after the First Closing Date during which the Representations, Warranties and Covenants in this Agreement with respect to all matters other than Taxes, pension and employee benefit matters, and environmental issues shall be valid and in force.

means the period from signing of this Agreement by the Parties until the date three years after the First Closing Date during which the Representations,  Warranties and Covenants in this Agreement with respect to all employee benefit matters shall be valid and in force.

means the period from signing of this Agreement by the Parties until the later of (i) the date three years after the First Closing Date and (ii) expiration of the statute of limitations applicable to tax years through calendar year 2008 and the period of calendar year 2009 prior to the First Closing Date, during which the Representations, Warranties and Covenants with respect to Taxes under this Agreement are valid and in force.

means as defined in Section 2.2 (a)(ii) and (iii).

1.2.  

Clause and schedule headings do not affect the interpretation of this Agreement.  References to clauses, sub-clauses and schedules are to the clauses and sub-clauses of and schedules to this Agreement.

1.3.  

The schedules shall form part of this Agreement and shall have the same force and effect as if expressly set out in the body of this Agreement, and any reference to this Agreement shall include the schedules.

1.4.  

Words in the singular include the plural and in the plural include the singular.

1.5.  

A reference to one gender includes a reference to the other gender.

1.6.  

A reference to a law is a reference to it as it is in force for the time being taking account of any amendment, extension, application or re-enactment and includes any subordinate legislation for the time being in force made under it.

1.7.  

Documents in agreed form are documents in the form agreed to by the Parties.

2.1.  

a.  

b.  

2.2.  

a.  

(i)  

(ii)  

Working Capital Adjustment: Amount and Payment.  The "Adjustment Amount" (which may be a positive or negative number) will be equal to Eternal’s shareholding percentage in Epoch (i.e., 88.6%) multiplied by the amount (“Difference”) determined as follows:

(A)  

If Closing Working Capital is between NT$300 million (NT$300,000,000) and NT$380 million (NT$380,000,000), the Adjustment Amount will equal zero and no adjustment of the Eternal First Purchase Price based on the Closing Working Capital shall occur.

(B)  

If Closing Working Capital is less than NT$300 million (NT$300,000,000) or greater than NT$380 million (NT$380,000,000), the Eternal First Purchase Price shall be adjusted  as follows:  (i) if Closing Working Capital is greater than NT$380 million (NT$380,000,000), the Difference will equal the amount by which Closing Working Capital exceeds NT$380 million (NT$380,000,000)  and the Adjustment Amount shall be payable by Buyer by wire transfer to an account designated by Eternal within 10 days after the date that the Closing Working Capital is binding and conclusive on the parties hereto as determined pursuant to Section 2.2(a)(iii), provided that such 10-day period  shall be extended to the extent that a foreign investment application has been approved by the competent authority for the adjustment of the Eternal First Purchase Price, below and (ii) if Closing Working Capital is less than NT$300 million (NT$300,000,000) , the Difference will equal the difference between NT$300 million (NT$300,000,000) and the actual Closing Working Capital amount and the Adjustment Amount shall be payable by Eternal by wire transfer to an account designated by Buyer within 10 days after the date that the Closing Working Capital is binding and conclusive on the parties hereto as determined pursuant to Section 2.2(a)(iii) below.  By way of example and not limitation, a sample calculation of the Adjustment Amount is attached as Exhibit 2.2(ii) hereto.

(iii)  

Working Capital Adjustment Procedure.

(A)  

"Working Capital" as of a given date shall mean the amount of total current assets minus total current liabilities, each as reflected on the balance sheet of the same date.

(B)  

At least four (4) business days prior to the First Closing Date, but no more than eight (8) business days prior to the First Closing Date, Eternal shall cause Epoch to deliver to Buyer a statement setting forth in good faith the type and value of the Working Capital, estimated as of the First Closing Date (the “Preliminary Working Capital Statement”) in a form substantially similar to Exhibit 2.2(iii).  Epoch shall keep Buyer reasonably informed with respect to its preparation of the Preliminary Working Capital Statement and, upon request of Buyer, Epoch shall as promptly as practicable make available to Buyer all books, records, work papers, personnel (including their accountants and employees) and other materials and sources used by Epoch in or otherwise reasonably related to the preparation of the Preliminary Working Capital Statement.

(C)  

Within forty-five (45) days following the First Closing Date, Epoch shall prepare and deliver to Buyer and Eternal the financial statements of Epoch as of the First Closing Date and for the interim period from December 31, 2008 through the First Closing Date on a basis consistent with current accounting practices of Epoch.  Buyer and Eternal shall then audit such financial statements (as audited, the "Closing Financial Statements") and determine the Working Capital as of the First Closing Date (the "Closing Working Capital") based upon the Closing Financial Statements.  Buyer shall deliver the Closing Financial Statements and its determination of the Closing Working Capital to Eternal within thirty (30) days following its receipt of the Closing Financial Statements from Epoch.

(D)  

If, within fifteen (15) business days following delivery of the Closing Working Capital calculation to Eternal from Buyer, Eternal has not given Buyer written notice of its objection as to the Closing Working Capital calculation (which notice shall state the basis of Eternal’s objection), then the Closing Working Capital calculated by Buyer shall be binding and conclusive on the parties and be used in computing the Adjustment Amount.

(E)  

If Eternal gives Buyer such notice of objection, and if Eternal and Buyer fail to resolve the issues outstanding with respect to the Closing Financial Statements and the calculation of the Closing Working Capital within thirty (30) days of Buyer's receipt of Eternal’s objection notice, Eternal and Buyer shall submit the issues remaining in dispute to an independent public accountant as mutually agreed to (the "Independent Accountants") for resolution applying the principles, policies and practices referred to in Section 2.2(a)(ii) and this subsection 2.2(a)(iii). If issues are submitted to the Independent Accountants for resolution:  (i) Eternal and Buyer shall furnish or cause to be furnished to the Independent Accountants such work papers and other documents and information relating to the disputed issues as the Independent Accountants may request and are reasonably available to that party or its agents and shall be afforded the opportunity, together with the respective independent accountants or auditors, as applicable, of Epoch and Buyer (if different from the Independent Accountants), to present to the Independent Accountants any material relating to the disputed issues and to discuss the issues with the Independent Accountants; (ii) the determination by the Independent Accountants, as set forth in a notice to be delivered to Eternal and Buyer within sixty (60) days of the submission to the Independent Accountants of the issues remaining in dispute, shall be final, binding and conclusive on the parties and shall be used in the calculation of the Closing Working Capital; and (iii) Eternal and Buyer will each bear fifty percent (50%) of the fees and costs of the Independent Accountants for such determination.

b.  

c.  

To the extent necessary for obtaining the Governmental Authorizations and with the intent of preventing the incurrence of any additional tax liabilities to Seller, Eternal and each First Co-Seller and each Second Co-Seller, either directly or through an agent, shall sign a document to prove the receipt of the First Purchase Price and Second Purchase Price at the First and Second Closings respectively.

2.3.  

a.  

The Parties hereby agree that, as of the First Closing, immediately contemporaneous with the First Purchase Price being paid by the Buyer to Eternal and the First Co-Sellers for the First Shares, the First Trust Amount, which shall be used to secure a part of Buyer’s remedies for Eternal's indemnification obligations to the Buyer, pursuant to Sections 6.2 and 8.1 of this Agreement, shall be deposited by Eternal in the form of bank checks or by wire transfer, at Eternal’s option, into a trust account established by Buyer and Eternal for the benefit of the Buyer.

b.  

In the event of a claim for Indemnity for a Loss (as defined in Section 8.1) pursuant to Sections 6.2 and 8.1 hereof, Buyer shall first give Eternal written notice, which shall include a description of the Loss and an estimate of the amount sought for Indemnity, with substantial evidence of the foregoing.  Eternal shall have 30 days to cure or rectify such alleged Breach or Loss to Buyer’s reasonable satisfaction.  Upon the expiration of the 30 day period, Buyer shall then be entitled to give written notice to the trustee of the amount of such claim for Indemnity for a Loss (as defined in Section 8.1) with a copy to Eternal.  The written notice shall include a description of the Loss and an estimate of the amount sought for Indemnity. The trustee shall retain amount sufficient to pay all Losses in trust until such time as the trustee receives (i) a joint written instruction from Buyer and Eternal as to the disposition of the claim for indemnity, (ii) an arbitration award with respect to the claim for indemnity, or (iii) a court order with respect to the claim for indemnity.  Except with respect to outstanding claims made by Buyer for indemnity pursuant to Sections 6.2 and 8.1 hereof, if any, all funds remaining in such trust account, including any interest accrued in respect of the First Trust Amount, shall be released on the date 18 months after the First Closing to Eternal, or at such other time as may be agreed by the Parties in writing (provided, however, that prior to such release date, the interest accrued in such account shall be available for payment of indemnification pursuant to Sections 6.2 and 8.1 hereof).

c.  

To effect the Trust Amount being held by a trustee for the benefits of Buyer as above mentioned, Eternal and Buyer shall jointly appoint a trustee which shall be a bank duly licensed to engage in trust business and shall enter into a trust agreement with the appointed trustee.

d.  

For the purpose of the application of the foreign investment approvals under the Statute of Investment by Foreign Nationals (“FIA”), Epoch and/or Eternal, as the case may be, shall provide necessary assistance to the Buyer for the FIA application, and Eternal shall issue the documentation as may be required by the Administration Bureau of Southern Taiwan Science Park to prove the receipt of the First Purchase Price by Eternal as of the First Closing Date.

3.1.  

a.  

b.  

3.2.  

a.  

Eternal shall deliver, and cause the First Co-Sellers to deliver, to Buyer the share certificates representing the First Shares of Epoch less the 1,000 shares transferred to Buyer pursuant to Section 5.7, duly endorsed and shall provide Buyer with the documents in Schedule 5 attached to this Agreement.  Notwithstanding the foregoing, it is understood by the Parties that one or more Non-Eternal Shareholders, holding in the aggregate no more than 0.5% of the total issued and outstanding capital stock of Epoch, may fail to be located by Eternal or may fail to execute  Non-Eternal Share Purchase Agreements with Buyer and therefore may fail to deliver their shares as First Shares at the First Closing. In that event, Eternal shall sell such additional shares as First Shares to Buyer as may be necessary to transfer 90% of the issued and outstanding shares of Epoch to Buyer at the First Closing.

b.  

Eternal shall cooperate with and help Buyer to record the name and address of Buyer in the roster of shareholders of Epoch to effect the transfer of ownership of the First Shares from the First Co-Sellers and Eternal to Buyer.

c.  

Eternal shall provide or cause to be provided and deliver to Buyer the resignation letters from each of the directors and supervisors of Epoch, to take effect on the First Closing Date.  In addition, Eternal shall provide or cause to be provided and deliver to Buyer, from each executive officer listed on Schedule 4 hereof, a certificate of such officers acknowledging that they have no outstanding claims, whether for compensation for loss of office or otherwise howsoever, against Epoch.

d.  

Eternal shall provide or cause to be provided and deliver to Buyer Epoch's corporate seals, permits, licenses, books, check books of Epoch as necessary for or in relation to the operations of Epoch as provided in Schedule 5, and cause appropriate changes to the authorized signatories of Epoch in any bank account or banking relationship as directed by Buyer.

e.  

Buyer shall pay to Eternal, and each of the First Co-Sellers, either directly to any First Co-Seller or through the agent agreed upon by both parties, the First Purchase Price excluding the applicable security transaction tax to be withheld by Buyer.

f.  

Buyer shall pay the applicable security transaction tax, solely from the withholding described above, to the ROC tax authority and provide the tax receipt to Eternal and each of the First Co-Sellers, as required.

g.  

Epoch shall enter into two (2) year mandate or employment agreements, including a three (3) year non-competition obligation following any termination of employment in favor of the CMC Group and intellectual property assignment and protection terms, as set forth in Attachment B for respective each key personnel or employees identified on Schedule 7.

h.  

Buyer shall deliver a corporate guarantee issued by Cabot Microelectronics Corporation guaranteeing Buyer’s payment of the Total Purchase Price in the form and substance reasonably satisfactory to Eternal and Buyer, which guarantee shall provide that (i) upon payment or satisfaction of the First Purchase Price, the guaranteed amount shall automatically be reduced to, and limited to, the Second Purchase Price amount and (ii) upon payment or satisfaction of the Second Purchase Price, the guarantee shall automatically terminate and be of no further force or effect.

i.  

In accordance with Section 2.6 hereof, Eternal shall deposit the Eternal Second Shares in the escrow account with the same the appointed trustee pursuant to Sections 2.5 and 2.6, in favor of Buyer to secure its contractual undertaking on sales of the Eternal Second Shares under Section 2.1(b) of this Agreement.  Eternal shall pre-endorse on the reverse sides of the share certificates of Eternal Second Shares for the share transfer, with the date of the share transfer in blank, and shall authorize Buyer to effectuate and register the share transfer to Buyer as of the Second Closing.  Eternal shall further deliver a waiver to Buyer waiving its rights to any dividend distributions made on the Second Shares after the First Closing.

j.  

Notwithstanding the foregoing, any Non-Eternal Shareholders who fail to deliver their shares at the First Closing as contemplated in Section 3.2 (a) above may deliver their shares at the Second Closing as provided in Section 4.2(c) below, provided, however, that such Non-Eternal Shareholders will hold in the aggregate no more than 0.5% of the total issued and outstanding capital stock of Epoch. Such Non-Eternal Shareholders shall be referred to herein as "Second Co-Sellers".

3.3.  

a.  

Eternal shall authorize Buyer to effect the share transfer of the Second Shares subject to Section 3.2 (i) and cause the Second Co-Sellers, if any, to deliver to Buyer the share certificates representing the Second Shares duly endorsed by the Second Co-Sellers and shall provide Buyer with the documents as listed in Schedule 5 attached to this Agreement.

b.  

Buyer shall pay to Eternal (solely through release of the Second Trust Amount from escrow as set forth in Section 2.6) and, if any, each of the Second Co-Sellers, either directly to any Second Co-Seller or through the agent agreed upon by both parties, the Second Purchase Price excluding the applicable security transaction tax to be withheld by Buyer.

c.  

Buyer shall pay the applicable security transaction tax, solely from the withholding described above, to the ROC tax authority and provide the tax receipt to Eternal and each of the Second Co-Sellers, if any.

4.1.  

a.  

The representations and warranties made by Eternal and Epoch as specified in Schedule 2.A shall be true and correct as of the date hereof in all material respects, and on and as of the First Closing Date as if such representations and warranties were made on and as of such date, and Eternal, the Major Co-Sellers and Epoch shall have materially satisfied all conditions and performed all duties, covenants and agreements which Eternal and Epoch are required hereunder to satisfy and to perform as of the First Closing Date;

b.  

Buyer, however, reserves the right to waive any of the Representations and Warranties of Eternal and Epoch and to consummate the Contemplated Transaction under this Agreement. At or prior to the First Closing, there shall have been delivered to Buyer (1) a certificate of Eternal and Epoch, in form and substance reasonably satisfactory to Buyer, as to the matters set forth in clause (a) above, (2) a certificate of the chief executive officer of Epoch and the chief financial officer of Epoch, in form and substance satisfactory to Buyer, as to the matters set forth in Schedule 9, and (3) an opinion of Epoch’s counsel, in form and substance reasonable satisfactory to Buyer, with regard to the matters set forth in Schedule 10;

c.  

At or prior to the First Closing, there shall have been delivered to Buyer a statement of opinion of the independent auditor of Epoch and (ii) audited financial statements as of December 31, 2008 to the extent practicable, and to the extent that the audited financial statements as of December 31, 2008 are not available at or prior to the First Closing, unaudited financial statements as of December 31, 2008 (with audited financial statements for such period provided as soon as reasonably practicable), both in form reasonably satisfactory to Buyer;

d.  

The Non-Eternal Share Purchase Agreement(s) in the form and substance as attached in Attachment C shall have been signed by the First Co-Sellers three business days prior to the First Closing Date, wherein the number of shares to be transferred by such shareholders in the First Closing, along with Eternal, will in the aggregate constitute the First Shares and the closing of the transaction under the Non-Eternal Share Purchase Agreement(s) has been completed prior to, or occurs simultaneously, as of the Closing of the First Transaction hereunder. Notwithstanding the foregoing, it is understood by the Parties that one or more Non-Eternal Shareholders, holding in the aggregate no more than 0.5% of the total issued and outstanding capital stock of Epoch, may fail to be located by Eternal or may fail to execute share purchase agreements with Buyer and therefore may fail to deliver their shares as First Shares at the First Closing. In that event, Eternal shall sell such additional shares as First Shares to Buyer as may be necessary to transfer 90% of the issued and outstanding shares of Epoch to Buyer at the First Closing.

e.  

On and as of the date of the First Closing, neither Eternal nor Epoch shall be a party or subject to any, Contract, law, statute, ordinance, Order, rule, regulation, Consent or other requirement which would prevent Eternal from selling the Eternal First Shares and Eternal Second Shares, or prevent the control, ownership or operation by Buyer and/or its affiliates of the business or substantially all of the properties and assets of Epoch, the Epoch Assets and the Epoch Business.

f.  

During the period between the execution of this Agreement and through the First Closing Date, there shall not have occurred or arisen any Material Adverse Effect; provided, however, that such Material Adverse Effect does not include a Material Adverse Effect that arises directly from matters arising under Section 5.1(c) for which Buyer had provided written consent pursuant thereto.

g.  

On or prior to the First Closing Date, this Agreement, and each other material instrument and document set forth on Schedule 5, shall have been executed and delivered to Buyer by Eternal and Epoch, as the case may be, and each such agreement shall be in full force and effect as of the First Closing, and Eternal and Epoch, as the case may be, shall be in material compliance with all of the respective material provisions hereof and thereof.

h.  

All Governmental Authorizations, of all applicable Governmental Bodies, including foreign investment approvals under the Statute of Investment by Foreign Nationals, Fair Trade Act of the ROC for the combination, and other related laws and regulations of the ROC, as well as the relevant Governmental Authorizations under the anti-trust laws and regulations in other jurisdictions required to be obtained in order to permit the consummation of the First Transaction contemplated by this Agreement (including securities laws and regulations affecting the sale of the First Shares from Eternal to Buyer), and to permit the business presently carried on by Epoch to continue unimpaired immediately following the First Closing, shall have been obtained and be in full force and effect, and all other Legal Requirements for the valid consummation by the Parties hereto of the Contemplated Transaction hall have been satisfied.

i.  

No action or Proceeding shall have been instituted, or substantially likely to the Knowledge of Eternal or Epoch to be instituted, and, at the time of the First Closing, be pending before any Governmental Body which would restrain or prohibit, withhold any authorization for, or seek damages with respect to, any Contemplated Transaction, nor shall any Governmental Body have notified any Party to this Agreement that the consummation of the Contemplated Transaction shall constitute a Conflict, a violation of any applicable laws, or any agency or political subdivision thereof, or that it intends to commence proceedings to restrain the consummation of any Contemplated Transaction, or to force divestiture, unless such Governmental Body shall have withdrawn such notice prior to the time of the First Closing.

j.  

Two (2) year mandate or employment agreements with the Persons identified on Schedule 7 substantially in the form and substance as provided in Attachment B shall have been mutually agreed between Epoch and each Person who is a party to such agreements, and executed concurrently with the First Closing.  Such agreements shall include intellectual property assignment and protection and non-competition obligations in favor of the CMC Group during the applicable period of employment term plus three (3) years after employment.

k.  

At or prior to the First Closing, Eternal shall deliver to Buyer: (i) the audited report for Epoch for the year[s] ended December 31, 2007, and to the extent practicable, December 31, 2008; and, (ii), to the extent the audited report for the year ended December 31, 2008 is not available, interim unaudited financial statements as at and for the nine month period ended September 30, 2008, including a balance sheet, an income statement, and a statement of sources and uses of cash, as well as monthly financial statements for October, November, and December, 2008 (with audited financial statements for such period provided as soon as reasonably practicable).

l.  

To the extent owned by Eternal, Eternal shall have entered into a license agreement (not including any technical services/support) with Epoch and Buyer with commercially reasonable terms solely for the unlimited internal use by Buyer (solely for assisting Epoch’s operations) and Epoch within Taiwan with respect to Epoch’s EIS/MIS system applications currently used by Epoch that are necessary to operate the Epoch Assets or Epoch Business, including but not limited to source code for Epoch’s EIS/MIS system with such license to be fully paid up, irrevocable and perpetual.

m.  

Subject to Section 5.10, Eternal shall have entered into a license agreement with Epoch and Buyer in form and substance reasonably satisfactory to Buyer and Eternal with respect to the use of any trade name or trademark currently used by Epoch that contains the name or mark of “Eternal” and is owned by Eternal, only through the period of six months following the Second Closing, with an exception for any Eternal trade names or marks that would cause disruption to or non-qualification by Epoch’s customers, for which license to such will continue through the time at which Epoch is able to reasonably and without cost effect a change to such name or mark.  Such license shall be fully paid up and irrevocable.

n.  

To the extent required and except for [  ***  ], Epoch shall have obtained all Consents necessary to maintain material Contracts to which Epoch is a party that may be required by the Contemplated Transactions.

o.  

During the period between the execution of this Agreement and at least five (5) business days prior to the First Closing Date, Epoch shall have fully funded (but not distributed) any and all underfunded pension obligations, so that Epoch will have no obligation for unfunded or underfunded pension obligations to employees incurred prior to the First Closing, and shall have provided written evidence of such funding to Buyer at or prior to the First Closing.

p.  

During the period between the execution of this Agreement and the First Closing Date, Epoch shall have disposed of all assets related to Old Plant II and fully paid for their disposal, at fair value in an arm’s length transaction, and appropriately accounted for any associated impairment and disposition so that Epoch will have no outstanding or unaccounted for obligations, impairments or accruals related to Old Plant II as of the First Closing.

q.  

Subject to Section 5.7 and Buyer’s agreement to pay Eternal the purchase price for the 1,000 shares at the First Closing, Eternal shall transfer one thousand shares to the Buyer and cause Epoch to register the Buyer as a shareholder of Epoch at any day before 16 days of the First Closing Date; Eternal shall further cause Epoch to convene a special shareholders meeting to elect Buyer's representatives as new directors and supervisor of Epoch prior to the First Closing.

r.  

Subject to Section 5.1(d), each of Eternal and Epoch shall waive its rights under the Consent Letters (as hereinafter defined).

s.  

The First Shares and the Eternal Second Shares shall together constitute not less than 99.5% of the shares of the issued and outstanding capital stack of Epoch.

4.2.  

a.  

The representations and warranties made by Eternal as specified in Schedule 2.B shall be true and correct in all material respects as of the date hereof, and on and as of the Second Closing Date as if such representations and warranties were made on and as of such date, and Eternal shall have satisfied all conditions and performed all duties, covenants and agreements which Eternal is required hereunder to satisfy and to perform as of the Second Closing Date.

b.  

On and as of the Second Closing Date, Eternal shall not be a party or subject to any, Contract, law, statute, ordinance, Order, rule, regulation, Consent or other Legal Requirement which would prevent Eternal from selling the Eternal Second Shares.

c.  

On or prior to the Second Closing Date, this Agreement, and each other material instrument and document contemplated hereby, shall have been executed and delivered to Buyer by Eternal or Epoch, as the case may be, and each such agreement shall be in full force and effect as of the Second Closing, and Eternal or Epoch, as the case may be, shall be in material compliance with all of the respective material provisions hereof and thereof.

d.  

Eternal shall have caused the signing of the Non-Eternal Share Purchase Agreement(s) substantially in the form and substance as attached in Attachment C by the Second Co-Sellers, if any, before the Second Closing Date.

e.  

All Governmental Authorizations of all applicable Governmental Bodies, including foreign investment approvals under the Statute of Investment by Foreign Nationals, and other related laws and regulations of the ROC, as well as the relevant Governmental Authorizations under the anti-trust laws and regulations in other jurisdictions required to be obtained in order to permit the consummation of the Second Transaction contemplated by this Agreement (including securities laws and regulations affecting the sale of the Second Shares from Eternal to Buyer), shall have been obtained and be in full force and effect, and all other  Legal Requirements for the valid consummation by the Parties hereto of the Contemplated Transaction shall have been satisfied.

f.  

No action or Proceeding shall have been instituted and, at the time of the Second Closing, be pending before any Governmental Body which would restrain or prohibit, withhold any authorization for, or seek damages with respect to, any Contemplated Transaction, nor shall there be any substantial likelihood that any such action or proceeding shall be instituted, nor shall any Governmental Body have notified any Party to this Agreement that the consummation of the Contemplated Transaction shall constitute a Conflict, a violation of any applicable laws, or any agency or political subdivision thereof, or that it intends to commence proceedings to restrain the consummation of any Contemplated Transaction, or to force divestiture, unless such Governmental Body shall have withdrawn such notice prior to the time of the Second Closing.

4.3.  

a.  

The representations and warranties made by Buyer herein shall be true and correct in all material respects as of the date hereof, and on and as of any dates of the Closings as if such representations and warranties were made on and as of such dates, and Buyer shall have satisfied all conditions and performed all duties and covenants and agreements which Buyer is required hereunder to satisfy and to perform as of any dates of the Closings.

b.  

All corporate and other procedures to be undertaken by Buyer in connection with the Contemplated Transaction, and all documents and instruments incident thereto shall be in form and substance satisfactory to Eternal and Eternal’s counsel, and Eternal and Eternal's counsel shall have received all such counterpart originals or certificates or other copies of such documents as they may reasonably request.

c.  

All Governmental Authorizations, of all applicable Governmental Bodies, including foreign investment approvals under the Statute of Investment by Foreign Nationals, Fair Trade Act of the ROC for the combination, if applicable and other related laws and regulations of the ROC, as well as the relevant Governmental Authorizations under the anti-trust laws and regulations in other jurisdictions required to be obtained in order to permit the consummation of the Contemplated Transactions (including securities laws and regulations affecting the sale of the respective First Shares and Second Shares from Eternal to Buyer), and shall have been obtained and be in full force and effect, and all other Legal Requirements for the valid consummation by the Parties hereto of the Contemplated Transaction shall have been satisfied.

d.  

No action or Proceeding shall have been instituted and, at the time of the respective Closing, be pending before any Governmental Body which would restrain or prohibit, withhold any authorization for, or seek damages with respect to, any Contemplated Transaction, nor shall any Governmental Body have notified any Party to this Agreement that the consummation of the Contemplated Transaction shall constitute a Conflict, a violation of any applicable laws, or any agency or political subdivision thereof, or that it intends to commence proceedings to restrain the consummation of any Contemplated Transaction, or to force divestiture, unless such Governmental Body shall have withdrawn such notice prior to the time of the respective Closing.

e.  

Buyer shall have obtained a corporate guarantee issued by Cabot Microelectronics Corporation in favor of Eternal guaranteeing Buyer’s payment of the Total Purchase Price in a form and substance reasonably  satisfactory to Eternal and Buyer, which guarantee shall provide that (i) upon payment or satisfaction of the First Purchase Price, the guaranteed amount shall automatically be reduced to, and limited to, the Second Purchase Price amount and (ii) upon payment or satisfaction of the Second Purchase Price, the guarantee shall automatically terminate and be of no further force or effect.

5.1.  

a.  

Buyer and each of its accounting and legal representatives and agents shall be granted reasonable access to all premises and books and records of Epoch, provided that Buyer gives Epoch at least 48 hours written notice, and Epoch and Eternal shall cause the officers of Epoch to promptly furnish Buyer with such financial and operating data and other information with respect to Epoch, as Buyer may from time to time reasonably request; provided, however, that any such investigation shall be conducted in such a manner so as not to interfere unreasonably with the business operations of Epoch.  In addition, the Parties hereto will take all such other steps as are necessary to protect the confidentiality of such material as provided in Section 5.4 hereof.

b.  

Except for the transfer of those employees or officers that Buyer has decided not to retain after the First Closing, Epoch and Eternal shall use best efforts to preserve substantially intact the business organization of Epoch and to keep available the services of the present officers and employees of Epoch, and preserve the present relationships of Epoch, with principal customers, suppliers and other commercial counterparties.   Lists of the present officers of Epoch and the present principal customers, suppliers and other commercial counterparties of Epoch are attached hereto as Schedule 6.

c.  

Except for those matters specified in this Agreement, including but not limited to,  the disposal of the assets of an Old Plant II, any profit sharing (cash)  in accordance with Schedule 2-4, any distribution of any retained undistributed earnings, the full funding of the underfunded pension obligation, and any matter specifically consented to in writing by Buyer,  Epoch and Eternal have caused and shall cause Epoch to be operated as a company only in the Ordinary Course of Business.  Without limiting the generality of the foregoing, Epoch and Eternal shall not, without obtaining the prior written Consent of Buyer, which shall be timely given in light of the applicable circumstances and shall not be unreasonably withheld, (except for those matters specified in this Agreement, including but not limited to, any profit sharing (cash) in accordance with Schedule 2-4, any distribution of any retained undistributed profits, the full funding of the underfunded pension obligation, and any matter specifically consented to in writing by Buyer) cause or permit Epoch to:

(1)  

Issue or agree to issue any additional equity securities or debt securities; or

(2)  

Grant or agree to grant any option, warrant or other right to subscribe for or purchase or otherwise acquire any equity securities, or issue or agree to issue any securities convertible into or exchangeable for any equity securities; or

(3)  

Directly or indirectly redeem, purchase or otherwise acquire or agree to acquire any equity securities, other than as contemplated by this Agreement; or

(4)  

Effect a split, combination or reclassification of any equity securities of or a recapitalization; or change, amend or modify the Articles of Incorporation or other governing instruments (except as contemplated hereby); or

(5)  

Borrow or agree to borrow any funds through loans or otherwise, or guaranty or agree to guaranty the obligations of others or incur any material obligations, but Buyer's prior written Consent shall not be unreasonably withheld with respect to such borrowing as are necessary in the Ordinary Course of Business; or

(6)  

Make any distribution of dividends or payment to Eternal or any entity controlled by Eternal or make any distribution of dividends to any other Party; or

(7)  

Sell, Lease, dispose or Encumber its assets or property except in the Ordinary Course of Business; or

(8)  

Retain or increase the compensation of any employee or agent whose aggregate compensation (except for those specified in Schedule 2-4 reasonably agreed to by Buyer) would exceed NT$ 500,000 per annum; or

(9)  

Enter into any employment Contract with a term of more than six-months or without a term; or

(10)  

Enter into any consulting Contract, except in the Ordinary Course of Business; or

(11)  

License or transfer or enter into any Contract to license or transfer trademarks, copyrights or any other intellectual property, other than purchases and licensing of commercial software in the Ordinary Course of Business; or

(12)  

Change of the corporate name; or

(13)  

Enter into voluntary winding-up process; or

(14)  

Reduce share capital; or

(15)  

Fail to maintain the existing insurance coverage; or

(16)  

Pass any shareholders resolutions; or

(17)  

Incur any capital commitment or create any security interest over assets, other than the planned capital commitments listed in Schedule 8; or

(18)  

Declare dividends or any other benefits or earnings from the retained earnings of Epoch as of the end of 2008; or

(19)  

Commit to any other material contractual or contingent obligation over NT$500,000; or

(20)  

Fail to maintain a level of working capital consistent with the Ordinary Course of Business.

d.  

Prior to the First Closing, for the purpose of Buyer's share purchase hereunder, Eternal shall waive any and all of its rights, including purchase rights and/or rights of first refusal, as the case may be, to purchase any shares held by the First Co-Sellers and Second Co-Sellers during or after the lock-up period pursuant to the Consent Letter of Custody of Share Certificates and Consent Letter of Share Sale and Purchase, which were executed by the First Co-Sellers and Second Co-Sellers ("Consent Letters").   Eternal shall further cause Epoch to waive any and all of its rights under the Consent Letters and agree that the First Co-Sellers and Second Co-Sellers who executed the Consent Letters are free to sell his/her shares to Buyer as of the First Closing Date.

5.2.  

(a)  

Prepare and file, or cause to be prepared and filed, all necessary applications for Governmental Authorization  to the Contemplated Transaction (and other materials in connection therewith required to be filed by Buyer, Eternal and Epoch), as the case may be, by any and all applicable Governmental Bodies having jurisdiction under the circumstances, including any antitrust filings to be filed by Buyer in the ROC, if applicable;

(b)  

Prosecute, or cause to be prosecuted, such applications with diligence;

(c)  

Diligently oppose, or cause to be diligently opposed, any objections to, appeals from, or petitions to reconsider any such Consent;

(d)  

Take all such further action as may reasonably be necessary to obtain the appropriate orders approving such transactions; and

(e)  

All Parties shall cooperate with each other for obtaining such Governmental Authorization and Consent.

5.3.  

(a)  

Each Party hereto shall give prompt written notice to each other Party of the occurrence or nonoccurrence of any event, the occurrence or nonoccurrence of which would cause any representation or warranty of the notifying Party to be untrue if such representation were to be made at the time of the occurrence or nonoccurrence of such event, and the notifying Party shall use its best efforts to remedy the same.

(b)  

Eternal and Epoch shall give prompt written notice to Buyer of all suits, actions, governmental investigations and legal, administrative, arbitration and other Proceedings, and all other controversies, which arise or are commenced by or against Epoch, or are threatened by or, to the best of its Knowledge, against Epoch after the date of this Agreement.

5.4.  

5.5.  

5.6.  

5.7.  

6.1.  

Except as otherwise set forth in the schedules, or as otherwise approved in writing by Buyer, Eternal and Epoch hereby represent, warrant and covenant to Buyer as follows:

6.2.  

Subject to Section 2.5 hereof, Buyer may use the Trust Amount to offset any claims (or parts of any claims) that Buyer may have against Eternal under this Agreement, the amount of any such Liability shall not be limited to the Trust Amount.

8.1.  

8.2.  

8.3.  

8.4.  

8.5.  

8.6.  

8.7.  

8.8.  

9.1.  

a.  

By mutual written Consent of the Parties hereto, upon no liability by one Party to another;

b.  

By Buyer, without liability to Eternal, Epoch or the Major Co-Sellers, if there has been a material misrepresentation or a material Breach of covenant or warranty by Eternal or Epoch of its representations and warranties as set forth herein or as set forth in any schedules hereto; including a Breach by Eternal of its indemnification obligations when due in accordance with Section 8.1 with respect to any Loss related to any Taxes payable by Epoch, and Eternal have not cured such Breach within the earlier of (i) the First Closing Date, or (ii) the date which is ten (10) days after the date of receipt by Eternal of written notice of such Breach from Buyer; provided, however, that if the notice of a Breach is provided less than ten (10) days prior to the First Closing, the First Closing Date shall automatically be extended to the 11th date following Eternal’s receipt of the notice;

c.  

By Eternal, without liability to Buyer, if there has been a material misrepresentation or a material Breach of covenant or warranty by Buyer of its representations and warranties as set forth herein or as set forth in any Schedule hereto, and Buyer has not cured such Breach within the earlier of (i) the date of the First Closing, or (ii) the date which is ten (10) days after the date of receipt by Buyer of written notice of such Breach from Buyer; or

d.  

By Eternal or Buyer by written notice, upon no payment by one Party to any other Party, if the First Closing has not taken place on or before June 30, 2009 (such date to be automatically extended until September 30, 2009 if the necessary, foreign investment approval, anti-trust approvals or any other Government Authorization  have not been obtained by Buyer on or prior to such date), or such other date as the Parties may agree upon in writing due to the fault of neither Eternal nor Buyer (e.g., Buyer's good faith failure to obtain Government Authorization, Epoch's and Eternal’s good faith failure to satisfy the conditions of First Closing).

9.2.  

a.  

all further obligations of the Parties hereto under this Agreement shall terminate, except for the obligations of each Party under this Section 9.2 and Section 5.4.

b.  

In the event that the Agreement is terminated under Section 9.1 prior to the First Closing, the Buyer shall transfer the one thousand shares back to the shareholder who transferred the shares to the Buyer under Section 4.1 (q) and cause the directors that are representatives of Buyer to resign from Epoch on or prior to the termination date. Buyer shall bear the costs and fees associated with transferring back the one thousand shares to the shareholder who transferred to Buyer under Section 4.1 (k) and the resignation of its representative.

11.1.  

11.2.  

11.3.  

11.4.  

11.5  

Buyer:

 

Cabot Microelectronics Global Corporations

 

 

By: /s/

 

Title:

 

 

 

 

Eternal Chemical Co., Ltd.

 

 

 

By:__/s/_________________

Title: Legal Representative