STOCK and ASSET PURCHASE AGREEMENT

Eaton Corporation
Second Quarter 2007 Report on Form 10-Q
Item 6
Exhibit 10

STOCK and ASSET PURCHASE AGREEMENT

Dated as of August 3, 2007

among

Eaton Power Solutions SAS (Buyer)

and

STOCK and ASSET PURCHASE AGREEMENT

           STOCK and ASSET PURCHASE AGREEMENT , dated as of August 3, 2007, among, Eaton Power Solutions SAS, a company organized and existing in accordance with the laws of France, having its principal place of business at Route de Grivery Zac des Delaches, 91940 Gometz Le Chatel, registered with the Commerce and Companies Registry under number 300 094 778 RCS Evry (“ Buyer ”), MGE Finances SAS, a company organized and existing in accordance with the laws of France, having its registered office at 38334, Saint Ismier Cedex, France, registered with the Commerce and Companies Registry under number 401 332 291 RCS Grenoble (“ Seller 1 ”) and SE7A SAS (to be renamed MGE UPS Systems), a company organized and existing in accordance with the laws of France, having its registered office at 38330, Monbonnot, France, registered with the Commerce and Companies Registry under number 444 643 720 RCS Grenoble (“ Seller 2 ”).

           WHEREAS , Seller 1 is, or will be as of the Closing Date, the owner of 100% of the outstanding shares of capital stock and voting rights of MGE UPS Systems (to be renamed Mango Power, or under any other name as may be proposed by Buyer no later than 30 days after the date hereof), a company organized and existing in accordance with the laws of France, having its registered office at 140, avenue Jean Kuntzmann — Zirst de Montbonnot, 38334 Saint-Ismier Cedex, registered with the Commerce and Companies Registry of Grenoble under number 302 636 303 RCS Grenoble (“ Target ”);

           WHEREAS Target owns a 50% interest in a joint venture organized under the laws of the People’s Republic of China, under the name of UPE Electronics Co Ltd , for the production of uninterruptible power systems under 3 kva (the “ Joint Venture ”);

           WHEREAS , Seller 2 owns, or will own as of the Closing Date, directly or indirectly a majority controlling interest in each of the companies listed in Schedule A (the “ International Sellers ”) ;

           WHEREAS , Target and the Joint Venture are, or will be as of the Closing Date, exclusively engaged in the business of developing, manufacturing, selling, servicing, marketing, and providing consulting services related to, 0 to 10 kva uninterruptible power systems and surge suppressors under the MGE tradename (the “ Business ”), it being understood, for the avoidance of doubt, that the Business shall also include any configuration of such products that extend above 10 Kva but remain below 20 Kva, and that the Comet range of products extend from 0 to 11 Kva;

           WHEREAS, the International Sellers are engaged, among others, in the Business;

           WHEREAS , Seller 1 desires to sell to Buyer and Buyer desires to purchase from Seller 1 all of the outstanding shares of capital stock and voting rights of Target;

           WHEREAS , Seller 2 desires to cause each International Seller to sell to Buyer and Buyer desires to purchase, or to cause the International Buyers to purchase, from each such International Seller certain assets used primarily by such International Seller in connection with

the conduct of the Business and the related liabilities, all on the terms and subject to the conditions set forth herein; and

           WHEREAS Seller 2 and certain International Sellers have entered into or shall enter into on or prior to Closing as the case may be (i) the Services Agreement(s) with Target, (ii) a 5-year, royalty free exclusive trademark license agreement for the use of the Trademark “MGE Office Protection Systems” in connection with the Business, as per the license form set forth in Exhibit 1 (the “ Trademark License Agreement ” with the Target, (iii) a patent license agreement as per the form set forth in Exhibit 2 with the Target (the “ Patent License Agreement ”), and (iv) a software license agreement as per the form set forth in Exhibit 3 with the Target (the “ Software License Agreement ”).

           WHEREAS Target has entered into or shall enter into on or prior to Closing as the case may be a patent license agreement as per the form set forth in Exhibit 4 with Seller 2 ( the “ Patent License Agreement 2 ”).

           NOW, THEREFORE , in consideration of the mutual covenants and agreements hereinafter set forth, the parties to this Agreement agree as follows:

ARTICLE I

DEFINITIONS AND INTERPRETATIONS

           1.1. Definitions . In this Agreement, the following terms have the meanings specified or referred to in this Section 1.1 and shall be equally applicable to both the singular and plural forms.

           “ Additional Accounting Firm ” means the Paris Branch of KMPG; provided , however , that if such firm is unwilling to accept the engagement contemplated by this Agreement, Additional Accounting Firm shall mean such international independent accounting firm as is appointed by the President of the Paris Commercial Court at the request of either the Buyer or Sellers acting via a “référé” proceeding.

           “ Adjustment Amount ” has the meaning specified in Section 3.2(b) .

           “ Adjustment Statement ” has the meaning specified in Section 3.3(b) .

           “ Affiliate ” means, with respect to any Person, any other Person which, at the time of determination, directly or indirectly through one or more intermediaries Controls, is Controlled by or is under Common Control with such Person.

           “ Agreed Accounting Principles ” means the International Financial Reporting Standards as in effect on the relevant date, as consistently applied using the accounting guidelines of the Schneider group of companies in preparing consolidated accounts.

           “ Agreed Adjustments ” has the meaning specified in Section 3.3(c) .

           “ Agreed Rate ” means the official rate for the Euro Repo market as published in the Financial Times, as that rate may vary from time to time , or if that rate is no longer published, a comparable rate.

           “ Agreement ” means this Stock and Asset Purchase Agreement and the Schedules, as may be amended or supplemented from time to time.

           “ Ancillary Agreements ” means the Services Agreements, the International Purchase Agreements, the Trademark License Agreement, the Patent License Agreement, the Software License Agreement, the Patent License Agreement 2, and all other agreements, instruments and documents being or to be executed and delivered by Seller 1, Seller 2 or any International Seller under this Agreement or in connection herewith.

           “ Balance Sheet ” has the meaning specified in Section 5.4(a).

           “ Balance Sheet Date ” means December 31, 2006.

           “ Baseline Working Capital” means € 35,700,000.

           “ Business ” has the meaning specified in the Recitals.

           “ Business Assets ” means the Business Contracts, the Business Trade Receivables, and any other asset owned by any of the International Sellers and primarily used in connection with the Business as of the Closing Date, including, without limitation, all assets set forth in Schedule2.2(a) hereto (including for the avoidance of doubt, all the Intellectual Property Rights primarily used in the Business, if any).

          “ Business Contracts ” means, subject to the provisions of Sections 8.6 and 8.7 , the contracts to be transferred by the International Sellers, which shall be (i) all International Sellers’ existing customer and supplier contracts, to the extent they relate to the Business, (ii) any other International Sellers’ contracts, to the extent they relate exclusively to the Business, (iii) any International Sellers’ contracts as are identified in Schedule 5.13 , and (iv) any such contract similar to the contracts referred to in (i) and (ii) above which may be entered into between the date hereof and the Closing Date and which relate to the Business.

           “ Business Day ” means any day other than a Saturday, Sunday or a day on which banks in Paris, France are authorized or obligated by law to close.

           “ Business Employees ” means the employees of the International Sellers (i) that the parties have determined should transfer to the International Buyers effective as the Closing Date or (ii) to whom the International Buyers shall offer employment effective as of the Closing Date, a full and complete list of which set forth in Schedule B.

           “ Business Liabilities ” means all obligations of the International Sellers under (i) the Business Contracts, to the extent they relate to the Business, (ii) the Business Trade Payables, and where applicable, (iii) customer deposits and payables to fixed assets suppliers in each case of the type included in the Financial Statements and to the extent included in the Final Working Capital, (iv) liabilities under employment agreements relating to Business Employees,

including accrued wages and salaries and social security charges or similar payroll taxes thereon.

           “ Business Trade Payables ” means all amounts unpaid or owing to any trade creditors by any of the International Sellers at the Closing Date in respect of goods or services related to the Business purchased by any of the International Sellers pursuant to any of the Business Contracts and which are accrued in the Final Working Capital.

           “ Business Trade Receivables ” means all amounts unpaid or owing to any International Sellers by any trade debtors at the Closing Date in respect of goods or services related to the Business, supplied by any of the International Sellers pursuant to any of the Business Contracts, and which are accrued in the Final Working Capital.

           “ Buyer ” has the meaning set forth in the Recitals.

           “ Cap ” has the meaning set forth in Section 11.1(b) .

           “ Cash ” means as of the close of business on the Closing Date the aggregate amount of cash on hand and demand deposits plus short term liquid investments in marketable listed securities and capital market instruments that are readily convertible to known amounts of cash and valued at market held by the Target and, the Joint Venture or included in the Business Assets, it being provided that the Joint Venture Cash will be included up to € 300,000 and if Joint Venture Cash is in excess of € 300,000, only 50% of such excess shall be included.

           “ Certificate ” means a certificate signed by the applicable entity’s President, Chief Financial Officer or any Vice President.

           “ Claim Notice ” has the meaning specified in Section 11.3(a) .

           “ Closing ” means the completion of (i) the transfer of all of the Target Shares from Seller 1 to Buyer and (ii) the transfer of the Business Assets and the Business Liabilities, from the relevant International Sellers to Buyer or the International Buyers, as applicable, subject to and in accordance with the terms of this Agreement and the International Purchase Agreements.

           “ Closing Date ” has the meaning specified in Section 4.1 .

          “ Commission ” means the Commission of the European Communities having its seat in Brussels.

           “ Confidentiality Agreement ” means the Confidentiality Agreement dated April 3, 2007 between Schneider Electric and Eaton Corporation.

           “ Contaminant ” means any waste, pollutant, hazardous or toxic substance or petroleum, hydrocarbon products, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls substance or waste or any constituent of any such substance or waste or more generally any other chemical substance prohibited or regulated by any Environmental Laws or Governmental Body.

           “ Control ” has the meaning set forth in Article L.233-3 paragraphs I and II of the French Commercial Code. The terms “Controlled by,” “under Common Control with” and “Controlling” shall have correlative meanings.

           “ Court Order ” means any judgment, order, award or decree of any state or local, or any supra-national, court, tribunal or other Governmental Body and any award in any arbitration proceeding.

           “ Debt ” means as of the close of business on the Closing Date, the aggregate amount of (i) all indebtedness for borrowed money, whether current, short-term, or long-term, secured or unsecured (excluding the Business Trade Payables and trade payables of Target and the Joint Venture), it being provided that the Joint Venture indebtedness will be included up to € 300,000 and if Joint Venture indebtedness is in excess of € 300,000, only 50% of such excess shall be included, (ii) any payment of obligations in respect of letters of credit, (iii) any liability with respect to interest rate swaps, collars, caps and similar hedging obligations, (iv) any lease obligations under leases that are required to be accounted for as capital leases, (v) all commitments relating to the acquisition or issuance of securities (such as a put option), (vi) liabilities related to employees severance or redundancy, (vii) all amounts payable under any defined benefit obligation and liabilities and such retirement or pension commitments less any existing outside funding of such liabilities, (viii) all bonuses triggered by the contemplated transaction, together with any related social security charges, (ix) accrued and unpaid interest on, and prepayment premiums, break-up fees, penalties, or similar charges or expenses reimbursement arising as a result of the discharge of any of the foregoing, (x) any amount owed by Target and the Joint Venture to any entity of the Schneider group (other than Target and the Joint Venture), (xi) any dividend declared by Target or the Joint Venture but not paid, to the extent, as regards the Joint Venture, that the recipient of any such dividends is not Target, and (xi) other non operating provisions, it being understood that (i) all of the aforementioned items include the associated deferred tax liabilities and are net of associated deferred tax assets and items and (ii) all amounts owed under the Services Agreements shall be excluded from the calculation of Debt to the extent such amounts have been repaid on or prior to Closing.

           “ De Minimis Threshold ” has the meaning set forth in Section 11.1(b) .

           “ Effective Time ” has the meaning set forth in Section 4.1 .

           “ Encumbrance ” means any lien (statutory or other), claim, charge, security interest, mortgage, deed of trust, pledge, hypothecation, assignment, conditional sale or other title retention agreement, preference, priority or other security agreement or preferential arrangement or a right of a third party of any kind, and any easement, encroachment, covenant, restriction, right of way, defect in title or other encumbrance of any kind.

           “ Environmental Encumbrance ” means an Encumbrance in favor of any Governmental Body for (i) any liability under any Environmental Law, or (ii) damages arising from, or costs incurred by such Governmental Body in response to, a Release or threatened Release of a Contaminant into the environment.

           “ Environmental Law ” means all Requirements of Laws derived from or relating to all state and local laws or regulations relating to or addressing the environment, health or safety.

           “ Estimated Allocation Schedule ” has the meaning specified in Section 3.1 .

           “ Estimated Purchase Price ” has the meaning specified in Section 3.1 .

           “ Expenses ” means any reasonable expenses incurred in connection with, defending any claim, action, suit or proceeding incident to any matter indemnified against hereunder (including reasonable fees of legal counsel).

           “ Final Adjustment Allocation Schedule ” has the meaning specified in Section 3.3(c) .

           “ Final Cash/Debt Balance ” means the Cash less the Debt, it being provided for the avoidance of doubt that no item taken into consideration for purposes of establishing the Final Cash/Debt Balance shall be taken into account for the purposes of establishing the Final Working Capital.

           “ Final Purchase Price ” has the meaning specified in Section 3.2(b) .

           “ Final Working Capital ” means as of the close of business on the Closing Date (i) the aggregate amount of the net trade receivables (sum of gross trade receivables less impairment of doubtful debts plus notes receivables plus advances to suppliers) of Target and the Joint Venture and the Business Trade Receivables) plus (ii) the aggregate amount of the net inventories (sum of gross materials, work in progress and finished goods inventories, less related depreciation) held by Target and the Joint Venture and included within the Business Assets minus (iii) the trade payables (sum of trade and notes payables and customer deposits), the payables to fixed assets suppliers and the accrued payables of Target, and the Joint Venture and the Business Trade Payables, it being agreed that the Final Working Capital shall be calculated in accordance with IFRS and that the net book value of the inventory shall be computed based upon the quantities of inventory on hand as of the close of business on the Closing Date as determined through a physical inventory conducted by Buyer as of, or within five days of, such time, appropriately adjusted for activity between the Closing Date and the date of the physical inventory.

           “ Financial Statements ” has the meaning specified in Section 5.4(a) .

           “ Governmental Body ” means any federal, state or local, or any supra-national, government, political subdivision, governmental, regulatory or administrative authority, instrumentality, agency body or commission, self-regulatory organization, court, tribunal or judicial or arbitration body having competent jurisdiction over the relevant subject matter, or over Buyer, International Buyer, Sellers and International Sellers, Target, the Joint Venture or any of them, or the Business Assets or the Business, as applicable.

           “ Governmental Permits ” has the meaning specified in Section 5.8(a) .

           “ Relevant Contracts ” has the meaning set forth in Section 8.7 .

           “ Remedial Action ” means any reasonable actions required to (i) clean up, remove, treat or in any other way address Contaminants in the indoor or outdoor environment, or (ii) prevent the Release or threatened Release or minimize the further Release of Contaminants.

           “ Replacement Contracts ” has the meaning set forth in Section 8.6 .

           “ Requirements of Laws ” means any French and any non-French laws, statutes, regulations, rules, codes or ordinances enacted, adopted, issued or promulgated by any Governmental Body.

           “ Schedule(s) ” means the schedule(s) attached hereto.

           “ Seller 1 ” has the meaning set forth in the Recitals.

           “ Seller 2 ” has the meaning set forth in the Recitals.

           “ Sellers ” means Seller 1 and Seller 2.

           “ Services Agreement ” means the transition support services agreements, forms of which are attached hereto as Exhibit 6 , entered into, or to be entered into, among (i) Seller 2 and/or certain of the International Sellers on the one hand, and (ii) Target and/or certain of the International Buyers, as the case may be, on the other hand.

           “ Services Employees ” has the meaning set forth in Section 5.11(d) .

           “ Shared Contracts ” means the contracts which relate both to the Business and any other business conducted by Target or International Sellers.

          “ Shares ” means the Target Shares.

           “ Software ” means communication, monitoring and diagnostic computer software programs and software systems and associated source codes as listed in Schedule 5.9(a) .

           “ Software License Agreement ” shall have the meaning set forth in the Recitals.

           “ Target ” has the meaning set forth in the Recitals.

           “ Target Shares ” means [1.365.000] shares, par value [ € 15,25] each, of Target, representing 100% of the issued and outstanding share capital and voting rights of Target.

          “ Tax ” (and, with correlative meaning, “ Taxable ”) means: (i) any French or non-French, net income, gross income, gross receipts, windfall profit, severance, property, production, sales, use, license, excise, franchise, employment, payroll, withholding, alternative

           “ Tax Return ” means any return, report or similar statement required to be filed with respect to any Taxes (including any attached schedules), including any information return, claim for refund, amended return or declaration of estimated Tax.

           “ Third Person Claim ” has the meaning specified in Section 11.3(a) .

           “ Threshold ” has the meaning set forth in Section 11.1(b) .

           “ TPL ” has the meaning specified in Section 8.12.

           “ Trademarks ” means French and non-French trademarks, service marks and trade names whether registered or unregistered, and pending registrations and applications to register the foregoing, in each case primarily related to the Business, including those listed in Schedule 5.9(a) .

           “ Trademark License Agreement ” shall have the meaning set forth in the Recitals.

           “ Transferred Employees ” means (i) the employees of Target and the Joint Venture that the parties have determined should remain employed by each such entity effective as of the close of business on the Closing Date, a full and complete list of which set forth in Schedule E , (ii) the Persons who have elected to be employed by Target, the Buyer or the International Buyers pursuant to the letters or contracts attached hereto as Schedule F and (iii) the Business Employees.

           1.2. Interpretation . For purposes of this Agreement, (i) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation,” (ii) the word “or” is not exclusive and (iii) the words “herein,” “hereof,” “hereby,” “hereto” and “hereunder” refer to this Agreement as a whole. Unless the context otherwise requires, references herein: (i) to Articles, Sections, Exhibits and Schedules mean the Articles and Sections of, and the Exhibits and Schedules attached to, this Agreement; (ii) 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 by this Agreement; and (iii) to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. The 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. Titles to Articles and headings of Sections are inserted for convenience of reference only and shall not be deemed a part of or to affect the meaning or interpretation of this Agreement

ARTICLE II

PURCHASE AND SALE

           2.1. Purchase and Sale of Shares. In accordance with the terms and subject to the conditions of this Agreement, on the Closing Date, Seller 1 shall sell, transfer, assign, convey and deliver to Buyer, and Buyer shall purchase from Seller 1, free and clear of all Encumbrances, all of the Target Shares, together with all rights then attaching thereto, including the right to all dividends, together with all rights then attaching thereto, including the right to all dividends.

           2.2. Purchase and Sale of Business Assets and Assumption of Business Liabilities.

          (a) In accordance with the terms and subject to the conditions of this Agreement and the International Purchase Agreements, on the Closing Date, Seller 2 shall cause the International Sellers to sell, transfer, assign, convey and deliver to Buyer and/or where so directed by Buyer, to the International Buyers, and Buyer shall purchase and/or cause the International Buyers to purchase from the relevant International Sellers, free and clear of all Encumbrances (except for Permitted Encumbrances), the Business Assets as the same shall exist on the Closing Date.

          (b) On the Closing Date, pursuant to the terms and subject to the conditions set forth herein and in the International Purchase Agreements, Buyer and/or International Buyers, as the case may be, shall assume and agree to discharge, pursuant to their terms, the Business Liabilities of International Sellers with effect as of the Effective Time.

          (c) Each International Purchase Agreement executed in connection herewith shall be consistent with the terms of this Agreement, except to the extent modifications are required by local law, in which case, the parties thereto covenant and agree to give effect to the intent and terms of this Agreement, notwithstanding any such modifications made to any International Purchase Agreement under local law. To the extent the terms of any International Purchase Agreement conflict with those of this Agreement, the terms of this Agreement shall govern.

          Neither the Buyer nor as the case may be, any of the International Buyers, have the obligation to complete the purchase of any of the Shares or the Business Assets unless the transfer of all the Business Assets, other than those relating to an International Seller operating in a non-material jurisdiction, and the Shares, is completed simultaneously. Should Business Assets relating to an International Seller operating in a non-material jurisdiction not be transferred at Closing, the parties shall endeavor to transfer them as soon as reasonably practicable after the Closing Date.

ARTICLE III

PURCHASE PRICE

           3.1. Estimated Purchase Price .

          (a) The estimated purchase price for the Shares and the Business Assets (the “ Estimated Purchase Price ”) shall be equal to 425.000.000 (four hundred twenty five million) Euros.

          (b) Upon payment, the Estimated Purchase Price shall be allocated among the Target Shares and the Business Assets as set shown in Schedule 3.1 hereto (the “ Estimated Allocation Schedule ”).

           3.2. Final Purchase Price and Adjustment Amount .

          (a) Subsequent to the Closing, the Estimated Purchase Price shall be increased by the Adjustment Amount (or decreased by the Adjustment Amount, if such amount is negative).

          (b) The “ Adjustment Amount ” shall be equal to:

          (i) the Final Cash/Debt Balance;

      plus

     (ii) the positive or negative amount obtained by subtracting the Baseline Working Capital from the Final Working Capital,

it being agreed that, for illustrative purposes, the accounting items that would be included in the calculation of the Final Cash/Debt Balance and the Final Working Capital as of the date hereof are identified in Schedule 3.2 .

The Estimated Purchase Price, as adjusted by the Adjustment Amount pursuant to this Section 3.2 , is the “ Final Purchase Price ”. The Adjustment Amount shall be determined in accordance with Section 3.3 and paid or settled, as applicable, pursuant to Section 3.4 .

           3.3. Determination of the Preliminary Adjustment Statement and Allocation Schedule .

          (a) As promptly as practicable following the Closing Date (but not later than 45 days after the Closing Date), the Sellers shall

     (i) prepare a statement (the “ Preliminary Adjustment Statement ”) setting forth Sellers’ calculation of the Final Cash/Debt Balance, the Final Working Capital and the resulting Adjustment Amount; and

     (ii) prepare a schedule (the “ Preliminary Adjustment Allocation Schedule ”) allocating the Adjustment Amount, as calculated in the Preliminary Adjustment Statement, among the Target Shares and the Business Assets; and

     (iii) deliver to Buyer the Preliminary Adjustment Statement and the Preliminary Adjustment Allocation Schedule (the “ Preliminary Accounting Report ”).

          (b) Promptly following receipt of the Preliminary Accounting Report, Buyer may review the same and, within 45 days after the date of such receipt, may deliver to Sellers a Certificate setting forth its objections to the Preliminary Adjustment Statement and the Preliminary Adjustment Allocation Schedule as set forth in the Preliminary Accounting Report, together with a summary of the reasons therefore and calculations which, in its view, are necessary to eliminate such objections. If Buyer fails to deliver such certificate within such 45-day period, (i) the adjustment amount set forth on the Preliminary Adjustment Statement shall be final and binding as the “ Adjustment Amount ”, and (ii) the Preliminary Adjustment Allocation Schedule shall be final and binding as the “ Final Adjustment Allocation Schedule, ” for purposes of this Agreement.

          (c) If Buyer delivers a certificate of objection pursuant to Section 3.3(b) within such 45

          -day period, Buyer and Sellers shall use their reasonable efforts to resolve by written agreement (the “ Agreed Adjustments ”), no later than 15 days following Sellers receipt of such certificate, the disputed items or amounts identified in such certificate. If Buyer and Sellers so resolve such disputed items or amounts, (i) the adjustment amount set forth in the Preliminary Adjustment Statement, as adjusted by the Agreed Adjustments, shall be final and binding as the “ Adjustment Amount ”, and (ii) the Preliminary Adjustment Allocation Schedule, as adjusted by the Agreed Adjustments, shall be final and binding as the “ Final Adjustment Allocation Schedule ”, for purposes of this Agreement.

          (d) If any objections raised by Buyer in its certificate of objection delivered pursuant to Section 3.3(b) are not resolved by the Agreed Adjustments, if any, within the 15-day period referred to in Section 3.3(c) , then Buyer and Sellers shall promptly submit the objections that are then unresolved to the Additional Accounting Firm , which shall be directed by Buyer and Sellers to resolve the unresolved objections (it being agreed that the Additional Accounting Firm’s authority shall be limited to resolving the objections as presented by Buyer and the Sellers and that the Additional Accounting Firm cannot award an amount greater than the highest amount claimed by a party) as promptly as reasonably practicable (and, in any event, within 45 days after its receipt of the request to review such objections) and to deliver written notice to each of Buyer and Sellers setting forth its resolution of the disputed items or amounts. The Additional Accounting Firm shall act as an expert pursuant to the provisions of Article 1592 of the French Civil Code and its decision shall be final and binding on the parties (absent any gross mistake) and shall not be subject to any recourse before a court or arbitration tribunal except as necessary to enforce such decision. The Adjustment Amount set forth in the Preliminary Adjustment Statement, and the Preliminary Adjustment Allocation Schedule, after giving effect to any Agreed Adjustments and to the resolution of disputed items or amounts by the Additional Accounting Firm, shall be final and binding as the “ Adjustment Amount ”, and the “ Final Adjustment Allocation Schedule ”, respectively, for purposes of this Agreement.

          (e) The parties hereto shall make available to Buyer and Sellers (and such other parties working on their respective behalves) and, if applicable, the Additional Accounting Firm, such books, records and other reasonable information (including work papers) as any of the foregoing may reasonably request to prepare or review the Preliminary Accounting Report or any matters submitted to the Additional Accounting Firm. The fees and expenses of the Additional

Accounting Firm shall be borne by the parties in such proportions as shall be decided by the Additional Accounting Firm, who shall base its decision upon the relative extent to which the parties’ respective positions are upheld in the final determination of the Additional Accounting Firm.

           3.4. Payment of the Adjustment Amount . Promptly (but not later than five Business Days) after the determination of the Adjustment Amount and the Final Purchase Price pursuant to Section 3.3 and Section 3.2 :

     (i) if the Final Purchase Price exceeds the Estimated Purchase Price, Buyer shall pay to Seller 2 (for further credit to Sellers and the International Sellers consistent with the Final Adjustment Allocation Schedule), by wire transfer of immediately available funds to such bank account as Seller 2 shall designate in writing to Buyer, the Adjustment Amount determined in accordance with Section 3.3 , plus interest on such excess from the Closing Date to the date of payment thereof at the Agreed Rate; or

     (ii) if the Estimated Purchase Price exceeds the Final Purchase Price, Seller 2 shall pay or cause to be paid to Buyer (for further credit to Buyer and International Buyers consistent with the Final Adjustment Allocation Schedule), by wire transfer of immediately available funds to such bank account of Buyer as Buyer shall designate in writing to Seller 2, the Adjustment Amount determined in accordance with Section 3.3 , plus interest on such excess from the Closing Date to the date of payment thereof at the Agreed Rate.

           3.5. Allocation of Purchase Price . The Estimated Allocation Schedule, as adjusted on the basis of the Final Adjustment Allocation Schedule, shall be used by the parties for all Tax reporting purposes.

           3.6 Currency Conversion. Where any payment to be made to an International Seller under Article 3.4 or Article 4.2 of the Agreement is required pursuant to the laws applicable to the relevant International Purchase Agreement to be made in a currency other then Euros, the rate of exchange to be used shall be the closing mid-point rate for exchange between Euros and such other currency as quoted in the Financial Times London edition five (5) London, United Kingdom Business Days prior to the intended currency payment date.

ARTICLE IV

CLOSING

4.1. Closing Date . The Closing shall be consummated after all the conditions set forth in Articles IX and X shall have been satisfied or waived (by the party entitled to waive the condition), but not earlier than September 30, 2007, provided, however, that if at that time the Buyer is not reasonably satisfied that information technology systems are in place that will be capable of consistent operation of the Business for the Target and the International Buyers, the Buyer will have the right to postpone the Closing to the last Business Day of the next calendar month end, by sending a notice to that effect to the Sellers with no less than five Business Days

prior notice. The closing steps shall be commenced at 10:00 a.m., local time, on the Closing Date and the Closing shall be completed by the close of business on such date, but, in any event, for the avoidance of doubt, by no later than the close of business on October 31, 2007.

          The Closing shall be held at the offices of Bredin Prat or at such other place as shall be agreed upon by Buyer and Sellers. The Closing shall be effective as of the close of business (the “Effective Time”) on the date on which Closing occurs (the “ Closing Date ”).

           4.2. Payment on the Closing Date . Subject to fulfillment or waiver of the conditions set forth in Articles IX and X , at Closing, Buyer shall pay Seller 2 (for further credit by Seller 2 to Seller 1 and the International Sellers consistent with the Estimated Allocation Schedule) an amount equal to the Estimated Purchase Price, by wire transfer of immediately available funds to the account details of which will be provided by Sellers no later than five Business Days before the Closing, provided, however, that the portion of the Estimated Purchase Price owed to any International Sellers (consistent with the Estimated Allocation Schedule) shall be paid directly by the relevant International Buyer to such International Seller if so required by the laws governing the relevant International Purchase Agreement.

           4.3. Buyer’s Additional Deliveries . Subject to fulfillment or waiver of the conditions set forth in Article IX and X , at Closing, the Buyer shall deliver, or cause to be delivered, to the Sellers all the following :

     (i) each of the relevant Services Agreement(s), duly executed by the relevant International Buyers;

     (ii) each of the International Purchase Agreements duly executed by Buyer or any International Buyer which is a party thereto, together with any agreements, certificates or other documents contemplated by such International Purchase Agreement to be delivered at Closing;

     (iii) the Trademark License Agreement duly executed by Buyer on behalf of Target if not already signed by Target;

     (iv) the Patent License Agreement and the Software License Agreement duly executed by Buyer on behalf of Target if not already signed by Target;

     (v) the Patent License Agreement 2 duly executed by Buyer on behalf of Target if not already signed by Target; and

     (vi) the comfort letter referred to in Section 11.10 .

           4.4. Sellers’ Deliveries . Subject to fulfillment or waiver of the conditions set forth in Article IX and X , at Closing, Sellers shall deliver, or cause to be delivered, to Buyer all the following:

          (a) the updated share transfer register of Target;

          (b) a duly completed and signed transfer order ( ordre de mouvement ) providing for the transfer of the ownership of Target Shares;

          (c) a tax transfer form ( formulaire cerfa n°2759 DGI ) with respect to the transfer of the Target Shares;

          (d) for each of Target and the Joint Venture, written evidence confirming that a general shareholders’ meeting of Target and a board meeting of the Joint Venture have been regularly convened and will be held on the Closing Date in order to (i) acknowledge the resignation of the persons listed in Schedule 4.4(d) , and to appoint the persons whose names will be provided by the Buyer to the Sellers as soon as reasonably practicable, and in any event no later than fifteen (15) days, after the date hereof, and (ii) to approve revised bylaws of Target in the form to be provided by the Buyer as soon as reasonably practicable, and in any event no later than fifteen (15) days, after the date hereof;

          (e) resignation letters from the persons referred to in (d) above resigning from their offices as Directors / President of Target and/or the Joint Venture, as the case may be, with effect as from the Closing Date, such resignation letters to include an irrevocable waiver of any claim against Target or the Joint Venture;

          (f) each of the Services Agreement(s), duly executed by Seller 2 and by Target;

          (g) an executed copy of the “ convention de sortie de l’ancien groupe d’intégration fiscale constitué par MGE Finances SAS ” (tax consolidated group exit agreement) entered into between Seller 1 and Target as of the Closing Date and dealing with the consequences of the exit as from December 31, 2006 of the Target from the tax consolidated group headed by Seller 1 to which it belonged until such date, in the form attached as Schedule 4.4 (g) ;

          (h) each of the International Purchase Agreements duly executed by Seller 2 or any International Seller which is a party thereto, together with any agreements, certificates or other documents contemplated by such International Purchase Agreement to be delivered at Closing;

          (i) the Trademark License Agreement duly executed by Seller 2 and Target;

          (j) the Patent License Agreement and the Software License Agreement duly executed by Seller 2 and Target;

          (k) the Patent License Agreement 2 duly executed by Seller 2 and Target;

          (l) the comfort letter referred to in Section 11.10 .

On the Closing Date, all of the actions required for Closing, including the actions listed above shall be carried out by the relevant parties. Each action will be conditional upon the occurrence of all of the others, so that if one of these actions to be carried out by one party does not occur for whatever reason, including through no fault of the party concerned, the other party shall be

entitled to refuse to proceed with the Closing and shall incur no liability vis-à-vis the other parties in connection with such refusal, without prejudice to its right to seek and obtain from the defaulting party any other remedy that may be available under applicable Requirements of Laws. Such party may also require the defaulting party to complete the contemplated transaction notwithstanding the fact that one or several of such actions have not been carried out on the Closing Date.

In addition to the above deliveries, the parties agree that on the Closing Date, each of them shall take all steps and actions as may be necessary to put Buyer or International Buyers, as the case may be, in actual possession or control of the Target Shares and the Business Assets.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF SELLERS

          The Sellers hereby make the representations and warranties set forth below for the benefit of the Buyer as of the date hereof and as of the Closing Date as though made on such date (or as such other date as may be expressly provided for in any given representations and warranties); it being agreed, however, that for purposes of the representations and warranties made as of the date hereof under Sections 5.8, 5.10, 5.11, 5.12, 5.13, 5.14, 5.15, 5.16, 5.17, 5.19 and 5.20, and relating to Target, the pre-closing restructuring referred to in Section 7.6 shall be deemed to have been completed.

           5.1. Organization of Sellers/Ownership of Target Shares and Business Assets .

          (a) Each of Seller 1, Seller 2 and the International Sellers is a corporation duly organized and validly existing and in good standing under the laws of its jurisdiction of incorporation and has all requisite corporate power and authority to own its assets and conduct its business as it has been and is now being conducted.

          (b) None of Seller 1, Seller 2 and the International Sellers are or have been insolvent ( en état de cessation de paiements ) or subject to any safeguard, bankruptcy or insolvency or equivalent proceedings under any applicable Requirements of Laws, nor to any other proceedings with regard to the prevention or resolution of business difficulties (or any similar actions) nor in any situation likely to result in such proceedings.

          (b) Seller 1 owns, or will own as of the Closing Date, all the Target Shares, free and clear of all Encumbrances. As of the Closing Date, the Target Shares will be all of the issued shares of Target and will be validly issued, fully paid and freely transferable.

          (d) Each of the International Sellers validly owns or leases, or will own or lease as of the Closing Date, the Business Assets owned or leased by it.

           5.2. Target and Joint Venture .

          (a) Target is a corporation duly organized, validly existing and in good standing under the laws of France and has full power and authority to own or lease and to operate and use its properties and assets and to carry on the Business as conducted by it.

          (b) The management bodies of each of Target and the Joint Venture have taken all decisions in accordance with applicable Requirements of Laws. More generally, all corporate decisions made by the management bodies of each of Target and the Joint Venture have been made in compliance with applicable Requirements of Laws or their respective by-laws and with any agreements to which Target and the Joint Venture is a party.

          (c) All registers, minutes, books and other accounting and corporate documents of each of Target and the Joint Venture have been properly and regularly maintained, are in the possession of the Target or the Joint Venture, as applicable, and are complete and up-to-date pursuant to the Requirements of Laws.

          (d) Target owns 50% of the issued and outstanding share capital and voting rights of the Joint Venture, controls the Joint Venture in such a way that the results of operation of the Joint Venture have validly been consolidated in the consolidated financial statements of the Sellers’ group, and has no other subsidiary undertaking. The Joint Venture is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation. The Joint Venture has full power and authority to own or lease and to operate and use its properties and assets and to carry on the Business as conducted by it.

          (e) Schedule 5.2(c) sets forth (i) the authorized capital stock of each of Target and the Joint Venture and (ii) indicates the number of issued and outstanding shares of capital stock of each of Target and the Joint Venture. Except as set forth in Schedule 5.2(c) , there are no agreements, arrangements, options, warrants, calls, rights or commitments of any character relating to the issuance, sale, purchase or redemption of any shares of capital stock of any of Target or the Joint Venture. All of the outstanding shares of capital stock of Target and the shares held by Target in the Joint Venture are validly issued and fully paid.

          (f) None of the Target, the Joint Venture or the International Sellers are or have been insolvent ( en état de cessation de paiements ) or subject to any safeguard, bankruptcy or insolvency or equivalent proceedings under any applicable Requirements of Laws nor to any proceedings with regard to the prevention or resolution of business difficulties (or any similar actions) nor in any situation likely to result in such proceedings.

          (g) For the avoidance of doubt, the representations and warranties included in this Section 5 shall not cover East Electric System Technology, which is not part of the contemplated transaction; it being however provided, for the avoidance of doubt, that East Electric System Technology, as an Affiliate of the Sellers, shall be bound by any provision of the Agreement that are applicable to any such Affiliates, including in particular the provisions of Sections 8.1 and 8.4 hereafter.

           5.3. Authority; No Conflict .

          (a) Each of Seller 1 and Seller 2 has full power and authority to execute, deliver and perform this Agreement and each Ancillary Agreement to which it is a party. Each International Seller has full power and authority to execute, deliver and perform each Ancillary Agreement to which it is or may be a party. The execution, delivery and performance of this Agreement by each of Seller 1 and Seller 2, and the execution, delivery and performance by Seller 1, Seller 2 and each International Seller, as the case may be, of each Ancillary Agreement to which it is or may be a party, have been duly authorized and approved by all necessary corporate or other action on the part of Seller 1, Seller 2 and each International Seller. The Agreement, the Ancillary Agreements constitute (or will constitute upon execution and delivery) the legal, valid and binding obligations of such Seller or International Seller as the case may be, enforceable against it in accordance with their terms.

          (b) Except as set forth in Schedule 5.3(b) , neither the execution and delivery or the performance by each of Sellers of this Agreement or by each of Sellers, International Seller, or Target of any of the Ancillary Agreements will:

     (i) conflict with or result in a breach of any provisions of the charter or by-laws or equivalent constitutional documents of such Seller, International Seller, Target, or Joint Venture;

     (ii) other than as contemplated in this Agreement, require any authorization from any Governmental Body to be obtained by any Seller, any International Seller, Target or the Joint Venture;

     (iii) result in a breach of, or constitute a default, event of default or event creating rights of acceleration, termination or cancellation or a loss of rights under any other instrument or agreement, to which such Seller or International Seller is a party or by which such Seller, International Seller, Target, or Joint Venture is bound;

     (v) cause any loss or reduction of a financial advantage benefiting to any Seller, International Seller (with respect to the Business), Target or Joint Venture (including subsidies, subventions and aids from any Governmental Body);

     (vi) result in a breach of Court Order to which such Seller, International Seller, Target or Joint Venture is subject or by which such Seller, International Seller, Target or Joint Venture is bound; or

     (vii) result in a breach of any Requirements of Laws affecting the Sellers, the International Sellers, the Target or the Joint Venture.

           5.4. Financial Statements .

          (a) Schedule 5.4(a) contains (i) unaudited proforma consolidated balance sheet items of the Business as conducted by Target, the Joint Venture and International Sellers as of December 31, 2006 (the “ Balance Sheet ”) and the related proforma consolidated statements of income, together with the appropriate notes to such financial statements, for the one year period

then ended (together, the “ Financial Statements ”), and (ii) the unaudited proforma consolidated balance sheet items of the Business as conducted by Target, the Joint Venture, and International Sellers as of December 31, 2005, and the related consolidated statements of income for the one year period then ended (together, the “ 2005 Financial Statements ”). Except as set forth in the notes thereto, the Financial Statements and the 2005 Financial Statements have been prepared in conformity with the Agreed Accounting Principles and the allocation criteria and conventions described in Schedule 5.4(a) hereto, and present fairly, in all material respects, the consolidated financial position and results of operations of the Business, as of their respective dates and for the respective periods covered thereby.

          (b) Schedule 5.4(b) contains unaudited proforma sales and contribution margin for the 4-month period ended as of April 30, 2007 (the “ Interim Management Accounts ”). Except as set forth in the notes thereto, the Interim Management Accounts have been prepared in conformity with MGE group internal procedures for closing monthly accounts and, in all material respects, with the Agreed Accounting Principles.

          (c) All liabilities of the Business as of December 31, 2006, whether contingent or not, are duly reflected, in all material respects, in the Financial Statements and are provided for or reserved against in the Financial Statements in conformity with the Agreed Accounting Principles and allocation criteria and conventions described in Schedule 5.4(a) .

          (d) Except as set forth in Schedule 5.4(d) , as of December 31, 2006, none of Target and the Joint Venture have any off balance sheet commitments ( engagements hors-bilan ) outside the normal course of the business.

           5.5. Operations Since Balance Sheet Date .

          (a) Except as set forth in Schedule 5.5(a) , since the Balance Sheet Date until the date hereof, there has been no event, circumstance, damage, destruction, loss or claim, whether or not covered by insurance, or condemnation or other event having a Material Adverse Effect.

          (b) Except as set forth in Schedule 5.5(b) , since the Balance Sheet Date, the Business has been conducted, in all material respects, in the ordinary course and in conformity with past practice. Without limiting the generality of the foregoing, since the Balance Sheet Date, except as set forth in Schedule 5.5(b) , Target, the Joint Venture and the International Sellers, when applicable, in respect of the Business, have not:

     (i) in respect of Target and the Joint Venture only, increased, redeemed or decreased their share capital, issued any other shares of or made any other amendment to their by-laws;

     (ii) approved a winding-up, merger, split-up, contribution or sale of their respective business as a whole, or of any of their respective divisions (“ branche d’activité ”);

     (iii) substantially modified or terminated or suffered any substantial modification or termination of any significant business relationships or material agreements relating to the Business other than in the ordinary course of business;

     (iv) sold, leased (as lessor), transferred or otherwise disposed of (including any transfers to any of their Affiliates other than Target, the Joint Venture or the International Sellers), or mortgaged or pledged, or imposed or suffered to be imposed any Encumbrance on, any assets reflected in the Balance Sheet, except for Permitted Encumbrances;

     (v) cancelled any debts owed to or claims held by the Target, the Joint Venture or any of the International Sellers and relating exclusively to the Business (including the settlement of any claims or litigation) other than in the ordinary course of business;

     (vi) created, incurred or assumed, or agreed to create, incur or assume, any indebtedness for borrowed money in respect of the Business (other than money borrowed or advances from any of their Affiliates in the ordinary course of business consistent with past practice);

     (vii) in respect of Target and the Joint Venture only, made, or agreed to make, any payment of cash or distribution of assets to any of their other Affiliates or made or agreed to make any dividends or similar distribution;

     (viii) in respect of Target and the Joint Venture only, prepared or filed any Tax Return inconsistent, in any material respect, with past practice or, on any such Tax Return, taken any position, made any election, or adopted any method that is inconsistent, in any material respect, with positions taken, elections made or methods used in preparing or filing similar Tax Returns in prior periods;

     (ix) made any material change in the accounting principles and practices used by Target or the Joint Venture from those applied in the preparation of the Financial Statements for the period then ended;

     (x) instituted any increase in any profit-sharing, bonus, incentive, deferred compensation, insurance, pension, retirement, medical, hospital, disability, welfare or other employee benefit plan with respect to employees of the Business, other than in the ordinary course of business;

     (xi) made any capital expenditure with respect to the Business or enter into any contract or commitment therefor, other than capital expenditures or commitments for capital expenditures not exceeding 1.9 million euros; or

     (xii) made any change in the compensation of the employees of the Business, other than changes made in accordance with normal compensation practices and consistent with past compensation practices.

           5.6. Taxes .

          Except as set forth in Schedule 5.6 ,

          (i) Each of Target and the Joint Venture has respectively filed all Tax Returns which are required to be filed on or prior to the Closing Date, within the prescribed period for filing such Tax Returns and has duly and timely paid all Taxes which have become due pursuant to such Tax Returns or pursuant to any assessment which has become payable. Target and the Joint Venture have kept all their documents within the required time limit and as required by applicable Requirements of Laws in order to justify the assessment and payment of any Taxes or right or advantage relating to Taxes;

          (ii) All such Tax Returns are complete, true and accurate and have been prepared in compliance with applicable Requirements of Laws and disclose all Taxes required to be paid by Target or the Joint Venture, as applicable. Target and the Joint Venture have kept all necessary documents to justify any amounts declared in such Tax Returns;

          (iii) None of Target or the Joint Venture is currently the beneficiary of any extension of time within which to file any Tax Return;

          (iv) There is no request for information, action, suit, audit, claim, assessment or proceeding pending or proposed or to the Knowledge of the Sellers threatened with respect to Taxes of Target or the Joint Venture, and, to the Knowledge of the Sellers, no basis exists therefor;

          (v) None of Target or the Joint Venture has waived or been requested to waive any statute of limitations in respect of Taxes;

          (vi) All monies required to be withheld by Target or the Joint Venture (including from employees of the Business for income taxes and social security and other payroll Taxes) have been collected or withheld, and either paid to the respective taxing authorities, set aside in accounts for such purpose, or accrued, reserved against and entered upon the books of Target or the Joint Venture;

          (vii) None of the Business Assets is properly treated as owned by persons other than International Sellers, for income tax purposes;

          (viii) Neither Target, nor the Joint Venture benefits or has benefited from any Tax advantage (including a carry forward or a deferment) or favorable Tax regime in exchange for existing undertakings, obligations or representations by which it is still bound or against an additional Tax burden. Any representation made by the Joint Venture for purpose of benefiting from a favorable Tax regime in China are true and accurate, all formalities related to the benefit of such favorable Tax regime have been duly fulfilled and the activity performed by the Joint Venture qualifies for purpose of such favorable Tax regime;

          (ix) Target shall not incur any Tax or other costs or charges as a result of its exit, further to the transactions contemplated hereby, from the tax sharing agreement to which it belongs, a copy of which is attached hereto as Schedule 5.6(ix) ;

          (x) None of Buyer, the International Buyers, Target or the Joint Venture will be liable to pay any Tax, lose any Tax advantage or incur any Tax burden as a result of any reorganizations (including those described in Section 7.6 ) implemented prior to the Closing Date involving the Target, the Joint Venture and the Business Assets.

           5.7. Availability of Business Assets/Real Property .

          (a) Except as set forth in Schedule 5.7(a) , the Business Assets and the assets owned or leased by Target and the Joint Venture are free and clear of any Encumbrances (other than Permitted Encumbrances) and constitute all the assets used primarily in the Business, are in good condition (subject to normal wear and tear) and serviceable condition, and are suitable for the uses for which they are intended and, together with the rights and benefits received by Buyer or the International Buyers under the Services Agreements, the Patent License Agreement, the Software License Agreement, and the Trademark License Agreement, constitute all the assets, properties and services necessary to conduct the Business as currently conducted by Target, the Joint Venture and the International Sellers (including for the avoidance of doubt, customer and supplier lists, pricing and cost information, business and marketing plans and proposals, and bills of materials and drawings associated with communication cards related to the Business). No Affiliate of Schneider Electric other than Target, the Joint Venture and International Sellers has been involved in the past two (2) years or is currently involved in the operation of the Business except, for the avoidance of doubt, in connection with the sales of “packages”, which may include Products sold under the MGE trademark.

          (b) Neither Target, nor the Joint Venture owns, or has entered into any agreement the purpose or the effect of which is the acquisition of, any real property. The Joint Venture has a valid lease agreement a copy of which is attached as Schedule 5.7 (b) and there are no disputes in connection therewith.

          (c) The lease identified in Schedule 5.7(b) gives the Joint Venture valid occupational rights on the real property in accordance with its terms.

          (d) There are no circumstances which may result in any liability to Target and the Joint Venture in connection with any real property currently or formerly owned, used, or occupied by it.

           5.8. Governmental Permits .

          (a) Target and the Joint Venture own, hold or possess all licenses, franchises, permits, privileges, immunities, approvals and other authorizations from a Governmental Body which are necessary to entitle each of them to own or lease, operate the Business and use their respective assets substantially as currently conducted (collectively, the “ Governmental Permits ”).

          (b) Except as set forth in Schedule 5.8 , (i) Target, the Joint Venture, and the International Sellers with respect to the Business Assets, have fulfilled and performed their obligations under each of the Governmental Permits, and no event has occurred or condition or state of facts exists which constitutes or, after notice or lapse of time or both, would constitute a breach or default under any such Governmental Permit or which permits or, after notice or lapse of time or both, would permit revocation or termination of any such Governmental Permit, (ii) no

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notice of cancellation, of default or of any dispute concerning any Governmental Permit, or of any event, condition or state of facts described in the preceding clause, has been received by Target, the Joint Venture or the International Sellers with res