SHARE PURCHASE AGREEMENT

SHARE PURCHASE AGREEMENT, dated as of March 11, 2007, is entered into by and between COTCO Holdings Limited, a Hong Kong company (the “ Seller ”), and Cree, Inc., a North Carolina corporation (the “ Buyer ”).

WHEREAS, the Seller owns all of the issued and outstanding shares of capital stock of COTCO Luminant Device Ltd., a Hong Kong company (the “ Company ”);

WHEREAS, the Company owns all of the issued and outstanding shares of capital stock or other equity interests in each of COTCO International Ltd., COTCO Luminant Device (Huizhou) Ltd. and COTCO Opto Technology (Shanghai) Ltd.;

WHEREAS, COTCO International Ltd. owns all of the issued and outstanding shares of capital stock in COTCO Japan Co., Ltd.;

WHEREAS, the Seller, through the Company and the other Transferred Subsidiaries (as defined herein), is engaged in Hong Kong, the PRC and Japan in the business of developing, manufacturing and selling LED lamps (the “ Business ”);

WHEREAS, prior to the Closing, the Seller will cause the Transferred Subsidiaries to transfer to the Seller or its Affiliates (other than another Transferred Subsidiary) all of the Excluded Assets (as defined herein) held by the Transferred Subsidiaries;

WHEREAS, the Seller desires to sell to the Buyer, and the Buyer desires to purchase from the Seller, 2,000,000 ordinary shares, par value ten Hong Kong Dollars (HK$10) per share, of the Company, which will constitute all of the shares of capital stock of the Company issued and outstanding on the Closing Date (the “ Transferred Shares ”), as more particularly set forth herein;

WHEREAS, in connection with the foregoing, the Seller and the Buyer or certain of their respective Affiliates desire to enter into each of the Ancillary Agreements (as defined herein); and

WHEREAS, the respective boards of directors (or similar bodies) of each of the Seller and the Buyer have approved the execution and delivery of, and performance under, this Agreement and each of the Ancillary Agreements by such party and certain of its Affiliates party thereto, in each case upon the terms and subject to the conditions set forth in this Agreement or the relevant Ancillary Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual representations, warranties, covenants and undertakings contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

Section 1.1    Certain Definitions . As used in this Agreement, the following terms have the meanings set forth below: 

“ Accountants Report ” means the report of the Company Accounting Firm, dated as of February 28, 2007, and the Audited Financial Statements.

“ Actual EBITDA ” means the actual EBITDA for the relevant twelve-month period.

“ Administrator ” means the Secretary of State of the State of North Carolina.

“ Affiliate ” means, with respect to any Person, any Person directly or indirectly controlling, controlled by, or under common control with, such other Person as of the date on which, or at any time during the period for which, the determination of affiliation is being made. For purposes of this definition, the term “control” (including the correlative meanings of the terms “controlled by” and “under common control with”), as used with respect to any Person, means (i) ownership of 35% or more of voting securities of such Person and of the single largest holding in such Person, or (ii) the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of such Person, whether through the ownership of voting securities or by contract or otherwise.

“ Aggregate Indemnity Threshold ” means $2,000,000.

“ Agreement ” means this Share Purchase Agreement, as the same may be amended or supplemented from time to time in accordance with the terms hereof.

“ Ancillary Agreements ” means, collectively, the Escrow Agreement, the Executive Agreements, the LED Chip Product Supply Agreement, the LED Lamp Product Supply Agreement, the Paul Lo Agreement, the Shareholders’ and Registration Rights Agreement, the Trademark License Agreement and the Transition Services Agreement.

“ Anti-Terrorism Order ” means Executive Order No. 13,224 of September 24, 2001, Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit or Support Terrorism, 66 U.S. Fed. Reg. 49, 079 (2001).

“ Arbitration Rules ” has the meaning set forth in Section 9.9(a).

“ Audited Financial Statements ” has the meaning set forth in Section 3.7(a).

“ Average Closing Price ” means the average of the regular session closing prices of Buyer Common Stock on the Nasdaq Global Market for the twenty consecutive trading days ending on and including the trading day immediately prior to the date hereof or the immediately preceding Result Announcement Date (or such later date as is contemplated by Section 2.10(e)), as the case may be.

“ Base Net Asset Value ” means $18,601,767 as calculated on the basis of the Current Assets and the Current Liabilities as of December 31, 2006, as set forth on Schedule 1.1(a).

“ Book Cash Value ” means the aggregate amount of the Transferred Subsidiaries’ bank cash balances, less outstanding checks, wires and other disbursements therefrom.

“ Books and Records ” means all books, ledgers, files, reports, plans, records, manuals and other materials (in any form or medium) of, or maintained for, the Business, including employee and employment records, but excluding any such items to the extent (i) they are included in or solely related to any Excluded Assets or Excluded Liabilities or (ii) any Law prohibits their transfer.

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

“ Business Day ” means any day other than a Saturday, a Sunday or a day on which banks in Hong Kong are authorized or obligated by Law or executive order to close.

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

“ Buyer Common Stock ” means the Buyer’s common stock, par value $0.00125 per share.

“ Buyer Indemnified Parties ” has the meaning set forth in Section 7.2(a).

“ Buyer Material Adverse Effect ” means any change or effect that individually or taken together with a series of related events is materially adverse to the financial condition, properties, assets, liabilities, business, operations or prospects of the Buyer, except for (i) any and all changes in general economic or political conditions, (ii) any and all matters affecting companies in the same or similar industries as the Buyer, and (iii) any adverse effect of the execution of this Agreement or the public announcement of the Transaction contemplated hereby on customers or revenues of the Buyer; provided , however , that, in the case of clauses (i) and (ii), such changes or effects thereof are only exceptions to the extent they do not have a materially disproportionate effect on the Buyer as compared with other similar companies.

“ Buyer Reports ” has the meaning set forth in Section 4.8.

“ Cash Purchase Price ” has the meaning set forth in Section 2.3.

“ Claim Notice ” has the meaning set forth in Section 7.4(a).

“ Closing ” means the closing of the purchase and sale that is the subject of this Agreement.

“ Closing Adjustment Amount ” has the meaning set forth in Section 2.4(e).

“ Closing Date ” has the meaning set forth in Section 2.5.

“ Closing Date Net Asset Value ” means (x) the total Current Assets shown on the Closing Date Working Capital Statement, minus (y) the total Current Liabilities shown on the Closing Date Working Capital Statement.

“ Closing Date Working Capital Statement ” means the net working capital statement that sets forth the Current Assets and Current Liabilities of the Business as of the Closing, prepared, or caused to be prepared, by the Buyer in accordance with Section 2.4 hereof and, in the event of a Seller’s Objection, as adjusted by either the agreement of the Buyer and the Seller, or by the CPA Firm, acting pursuant to Section 2.4.

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

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

“ Company Accounting Firm ” means Deloitte & Touche or any new independent accounting firm for the Company, as selected by the Buyer from among KPMG, PricewaterhouseCoopers and Ernst & Young.

“ Compensation Plans ” has the meaning set forth in Section 3.10(a).

“ Competing Business ” has the meaning set forth in Section 5.7(c).

“ Confidentiality Agreement ” means the Non-Disclosure Agreement, dated October 6, 2006, between the Seller and the Buyer.

“ Contingent Bonus Amount ” has the meaning set forth in Section 2.10(f).

“ Contingent Payment ” has the meaning set forth in Section 2.10(a).

“ Contingent Payment Dispute Notice ” has the meaning set forth in Section 2.10(c).

“ Contingent Payment Period ” means each of (i) the twelve-month period ending on June 29, 2008 and (ii) the twelve-month period ending on June 28, 2009.

“ Contingent Payment Statement ” has the meaning set forth in Section 2.10(b).

“ Contingent Payment Shares ” means the additional shares of Buyer Common Stock that may be issued by the Buyer pursuant to Section 2.10(e) hereof.

“ Contracts ” means all agreements, contracts, leases and subleases, purchase orders, arrangements, commitments and licenses (other than this Agreement and the Ancillary Agreements) that are Related to the Business as of the Closing, or to which any of the Transferred Subsidiaries is subject, whether written or oral, except to the extent included in Excluded Assets.

“ Copyrights ” has the meaning set forth in the “Intellectual Property” definition.

“ CPA Firm ” means PricewaterhouseCoopers, unless PricewaterhouseCoopers is the then auditor of the Buyer, the Company or the Seller, or such other firm of independent certified public accountants of international recognition and standing, other than the then respective auditors of the Buyer, the Company or the Seller, as to which the Seller and the Buyer shall mutually agree.

“ Current Assets ” means “debtors” (also referred to as accounts receivables, trade receivables and other receivables), inventories, “prepayments” (also referred to as prepaid expenses), deposits and any other items considered current assets under Hong Kong GAAP, each as determined in accordance with Hong Kong GAAP and applying consistent principles, practices, methodologies and policies as those set forth in the Audited Financial Statements, excluding (i) cash, (ii) any current Tax assets, (iii) outstanding amounts due from Light Engine Ltd., Konwin Technology Ltd. and Cree, Inc. and (iv) any Excluded Assets.

“ Current Liabilities ” means “creditors” (also referred to as account payables, trade payables and other payables), accrued charges and any other items considered current liabilities under Hong Kong GAAP, each as determined in accordance with Hong Kong GAAP and applying consistent principles, practices, methodologies and policies as those set forth in the Audited Financial Statements, excluding (i) any current Tax Liabilities, (ii) outstanding amounts due to Light Engine Ltd., Konwin Technology Ltd. and Cree, Inc. and (iii) any Excluded Liabilities.

“ Direct Claim ” has the meaning set forth in Section 7.5(a).

“ Direct Claim Notice ” has the meaning set forth in Section 7.5(a).

“ Disclosure Schedule ” means the disclosure schedule delivered by the Seller to the Buyer concurrently with the execution and delivery of this Agreement, a copy of which is attached hereto and incorporated herein by reference.

“ Dispute ” has the meaning set forth in Section 9.9(a).

“ Disputed Contingent Payment ” has the meaning set forth in Section 2.10(d).

“ EBITDA ” means the earnings of the Company and its Subsidiaries before interest, taxes, depreciation and amortization, determined in accordance with the Company’s current accounting methods, policies, practices and procedures and in the same manner, with consistent classification and estimation methodology, as the Audited Financial Statements were prepared, calculated in accordance with Hong Kong GAAP.

“ Employees ” means the current employees (including officers) and consultants of the Business.

“ Encumbrance ” means any lien, pledge, charge, claim, encumbrance, security interest, option, mortgage, easement or other restriction or third-party right of any kind, including any right of first refusal or restriction on voting.

“ Environmental Law ” means any Law, Governmental Authorization, requirement of any Government Entity or legal standard of conduct relating to (x) the protection of the environment (including air, surface water, ground water, drinking water supply and surface or subsurface land or structures) or human health and safety, (y) the exposure to, or the use, storage, recycling, treatment, generation, transportation, processing, handling, labeling, management, release or disposal of, any Hazardous Substance or waste material or (z) noise or odor.

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

“ Escrow Agent ” means the escrow agent to be designated prior to the Closing, as mutually agreed to by the Buyer and the Seller.

“ Escrow Agreement ” means the Escrow Agreement substantially in the form attached to this Agreement as Exhibit 1.1(a).

“ Excess Number ” has the meaning set forth in Section 2.3.

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.

“ Excluded Assets ” has the meaning set forth in Section 2.2(a).

“ Excluded Business ” means (i) all of the businesses operated by the Seller and its Affiliates, other than the Business, including PCB assemblies with LEDs, LED display modules, LED lighting modules and LED light bulbs and fixtures, and (ii) the business of Light Engine Ltd. in making LED packages with driver circuitry and chip-on-board products, including all such products currently made or currently contemplated by Light Engine Ltd.

“ Excluded Liabilities ” has the meaning set forth in Section 2.2(b).

“ Executive Agreements ” means the Employee Agreement regarding Confidentiality, Intellectual Property, and Non-Competition for Hong Kong employees, the Master Stock Option Award Agreement Terms and Conditions and the Supplement thereto, and that certain letter agreement, in each case between the Buyer and Richard Y.T. Sy substantially in the forms attached to this Agreement as Exhibit 1.1(b).

“ Final Contingent Payment Date ” means the date upon which the Buyer makes the Contingent Payment for the Contingent Payment Period ending on June 28, 2009 or, if such Contingent Payment is increased pursuant to a final determination in accordance with Section 2.10(d), the date the Buyer makes payment with respect to such increase.

“ Final Determination ” has the meaning set forth in Section 7.9.

“ Governmental Authorization ” means any approval, franchise, certificate of authority, qualification, order, consent, judgment, decree, license, permit, waiver or other authorization Related to the Business issued, granted, given or otherwise made by or under the authority of any Government Entity or pursuant to applicable Law.

“ Government Entity ” means any foreign, national, state, provincial, regional, local, municipal, county or governmental, quasi-governmental, administrative, judicial, regulatory or self-regulatory authority, body, agency, court, tribunal, commission or other similar entity (including any branch, department, section or official thereof) with competent jurisdiction.

“ Hazardous Substance ” means any substance that is listed, defined, designated or classified as hazardous, toxic or otherwise regulated under applicable Laws or by a Government Entity, including petroleum products and byproducts, asbestos-containing material, polychlorinated biphenyls, lead-containing products and mold.

“ Historical Financial Statements ” has the meaning set forth in Section 3.7(a).

“ Hong Kong ” means the Hong Kong Special Administrative Region of the PRC.

“ Hong Kong GAAP ” means the generally accepted accounting principles in Hong Kong.

“ HSR Act ” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

“ ICC ” has the meaning set forth in Section 9.9(a).

“ Indebtedness ”   means (i) all liabilities for borrowed money, whether current or funded, secured or unsecured, all obligations evidenced by bonds, debentures, notes or similar instruments, and all liabilities in respect of mandatorily redeemable or purchasable shares of capital stock or securities convertible into shares of capital stock; (ii) all liabilities for the deferred purchase price of property; (iii) all liabilities in respect of any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which liabilities are required to be classified and accounted for under Hong Kong GAAP as capital leases; and (iv) all liabilities for the reimbursement of any obligor on any letter of credit, banker’s acceptance or similar credit transaction securing obligations of a type described in clauses (i), (ii) or (iii) above, to the extent of the obligation secured, and all liabilities as obligor, guarantor or otherwise, to the extent of the obligation secured.

“ Indemnified Parties ” has the meaning set forth in Section 7.2(a).

“ Indemnifying Party ” has the meaning set forth in Section 7.4(a).

“ Individual Indemnity Threshold ” means $50,000.

“ Intellectual Property ” means (i) trademarks, service marks, brand names, certification marks, collective marks, d/b/a’s, domain names, logos, symbols, trade dress, assumed names, fictitious names, trade names, and other indicia of origin, all applications and registrations for the foregoing, and all goodwill associated therewith and symbolized thereby, including all renewals of same (collectively, “ Trademarks ”); (ii) inventions and discoveries, whether patentable or not, and all patents, registrations, invention disclosures and applications therefor, including divisions, continuations, continuations-in-part and renewal applications, and including renewals, extensions and reissues (collectively, “ Patents ”); (iii) trade secrets, confidential information and know-how, including processes, schematics, business methods, formulae, drawings, prototypes, models, designs, customer lists and supplier lists (collectively, “ Trade Secrets ”); (iv) published and unpublished works of authorship, whether copyrightable or not (including databases and other compilations of information), including mask rights and computer software, copyrights therein and thereto, registrations and applications therefor, and all renewals, extensions, restorations and reversions thereof (collectively, “ Copyrights ”); and (v) any other intellectual property or proprietary rights.

“ IP Contracts ” means all Contracts relating to Intellectual Property Related to the Business, including Contracts granting any Transferred Subsidiary rights to use the Intellectual Property of other Persons, non-assertion agreements, settlement agreements, agreements granting rights to use Transferred Intellectual Property, Trademark coexistence agreements and Trademark consent agreements.

“ IT Assets ” means computers, computer software, firmware, middleware, servers, workstations, routers, hubs, switches, data communications lines, all other information technology equipment and all associated documentation, in each case Related to the Business.

“ Knowledge ” or any similar phrase (including “awareness”) means the collective actual (and not constructive) knowledge of Richard Y.T. Sy, George S.Y. Li, H.K. Lam, Kenny Wong, Ivor Lee or Paul Lo Chung Wai for the Seller, or of Charles M. Swoboda, John Kurtzweil or Adam Broome for the Buyer, as the case may be.

“ Law ” means any law, constitution, code, statute, ordinance, rule, standard, requirement, regulation, order, judgment, injunction, decree, arbitration award, administrative ruling, agency requirement, license or permit of any Government Entity.

“ Leased Personal Property ” means all the personal tangible property that is the subject of those leases and subleases governing personal tangible property used or leased by the Business, owned by persons other than the Seller or any of its Affiliates.

“ Leased Real Property ” means all real property that is the subject of those leases and subleases governing real property used or leased by the Business, owned by persons other than the Seller or any of its Affiliates, as listed on Schedule 1.1(b).

“ LED Chip Product Supply Agreement ” means the LED Chip Product Supply Agreement substantially in the form attached to this Agreement as Exhibit 1.1(c).

“ LED Lamp Product Supply Agreement ” means the LED Lamp Product   Supply Agreement substantially in the form attached to this Agreement as Exhibit 1.1(d).

“ Liabilities ” means any and all debts, liabilities, commitments and obligations of any kind, whether fixed, contingent or absolute, matured or unmatured, liquidated or unliquidated, accrued or not accrued, asserted or not asserted, known or unknown, determined, determinable or otherwise, whenever or however arising (including, whether arising out of any contract or tort based on negligence or strict liability) and whether or not the same would be required by Hong Kong GAAP to be reflected in financial statements or disclosed in the notes thereto.

“ LIBOR ” means the six-month Interbank Official Rate with respect to deposits in U.S. Dollars that appears on the Telerate Page 3750 as of 11:00 A.M., London time, on the day that is two business days in London preceding the Closing.

“ Losses ” has the meaning set forth in Section 7.2(a).

“ Material Adverse Effect ” means any change or effect that individually or taken together with a series of related events is materially adverse to the business, assets, business relationships, prospects, financial condition or results of operations of the Business (other than the Excluded Business), except for (i) any and all changes in general economic or political conditions, (ii) any and all matters affecting companies in the same or similar industries as the Business, and (iii) any adverse effect of the execution of this Agreement or the public announcement of the Transaction contemplated hereby on customers or revenues of the Business; provided , however , that, in the case of clauses (i) and (ii), such changes or effects thereof are only exceptions to the extent they do not have a materially disproportionate effect on the Business as compared with other similar businesses.

“ Material Contracts ” has the meaning set forth in Section 3.15(a).

“ Most Recent Balance Sheet ” means the audited consolidated balance sheet of the Company and its Subsidiaries as of December 31, 2006, including the Transferred Assets and presenting the Excluded Assets and Excluded Liabilities as discontinued operations.

“ North Carolina Permit ” has the meaning set forth in Section 5.3(a).

“ Notice Period ” has the meaning set forth in Section 7.4(b).

“ Ordinary Course ” means the conduct of the relevant business in accordance with the normal day-to-day customs, practices and procedures of the relevant Person.

“ Patents ” has the meaning set forth in the “Intellectual Property” definition.

“ Paul Lo Agreement ” means the letter agreement between the Buyer and Paul Lo Chung Wai substantially in the form attached to this Agreement as Exhibit 1.1(e).

“ Permitted Encumbrances ” means (i) Encumbrances specifically reflected on the Most Recent Balance Sheets, (ii) mechanics’, materialmen’s, warehousemen’s, carriers’, workers’ or repairmen’s liens or other similar common law or statutory Encumbrances arising or incurred in the Ordinary Course and which would not impair the operation of the Business (other than the Excluded Business) and that are not material in amount or effect on the Business (other than the Excluded Business), (iii) liens for Taxes, assessments and other governmental charges not yet due and payable or due but not delinquent or being contested in good faith by appropriate proceedings, in each case in an amount that would not be material, (iv) with respect to real property, (A) easements, quasi-easements, licenses, covenants, rights-of-way, rights of re-entry or other similar restrictions, including any other agreements, conditions or restrictions that would be shown by a current title report or other similar report or listing, that are not violated by and do not impair the current use or occupancy of the property or the operation of the Business (other than the Excluded Business), (B) any conditions that may be shown by a current survey or physical inspection that are not violated by and do not impair the current use or occupancy of the property or the operation of the Business (other than the Excluded Business) and (C) zoning, building, subdivision or other similar requirements or restrictions that are not violated by and do not impair the current use or occupancy of the property or the operation of the Business (other than the Excluded Business), and (v) Encumbrances incurred in the Ordinary Course since the date of the Most Recent Balance Sheets and that are not, individually or in the aggregate, material in amount or effect on the Business (other than the Excluded Business).

“ Person ” means an individual, a corporation, a partnership, an association, a limited liability company, a Government Entity, a trust or other entity or organization.

“ PRC ” means the People’s Republic of China.

“ Product ” has the meaning set forth in Section 3.24.

“ Purchase Price ” has the meaning set forth in Section 2.3.

“ Purchase Price Shares ” has the meaning set forth in Section 2.3.

“ Registered ” means issued by, registered with, renewed by or the subject of a pending application before any Government Entity or domain name registrar.

“ Related to the Business ” means required for, related to, or used in connection with, the Business as conducted by the Transferred Subsidiaries prior to the Closing.

“ Representatives ” means any Person’s Affiliates, directors, officers, employees, agents, advisors and the Representatives of such Person’s agents and advisors.

“ Result Announcement Date ” means the date of the announcement of the Buyer’s year-end results for the fiscal year ended June 29, 2008 or June 28, 2009, as the case may be.

“ RMB ” means the legal tender of PRC.

“ SEC ” means the United States Securities and Exchange Commission.

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

“ Securities Laws ” has the meaning set forth in Section 3.27(b).

“ Seller ” has the meaning set forth in the Preamble.

“ Seller Indemnified Parties ” has the meaning set forth in Section 7.3(a).

“ Seller Intellectual Property ” means all the Intellectual Property Related to the Business owned, leased, licensed or otherwise had or used by the Seller or its Affiliates (other than the Transferred Subsidiaries), including the “COTCO” trade name and trademark and the Intellectual Property set forth on Schedule 1.1(c).

“ Seller Required Approvals ” means all consents, approvals, waivers, authorizations, notices and filings that are required to be listed and are listed on Schedules 3.4(a)(i) and 3.4(a)(ii).

“ Seller’s Objection ” has the meaning set forth in Section 2.4(b).

“ Share Consideration ” means the shares of Buyer Common Stock (i) to be issued pursuant to Section 2.3 as Purchase Price Shares and (ii) issuable pursuant to Section 2.10(e) as Contingent Payment Shares (if any).

“ Shareholders’ and Registration Rights Agreement ” means the Shareholders’ and Registration Rights Agreement to be entered into simultaneously with this Agreement.

“ Subsidiary ” means, with respect to any Person, any Person (i) whose securities or other ownership interests having by their terms the power to elect a majority of the board of directors or other persons performing similar functions are owned or controlled, directly or indirectly, by such other Person and/or its Subsidiaries, or (ii) whose business and policies such other Person and/or its Subsidiaries have the power to direct.

“ Tax Returns ” means, collectively, all returns, declarations, reports, estimates, information returns and statements required to be filed with any Government Entity under federal, state, local or any foreign Laws relating to Taxes, and any returns, forms or other documents required to be retained by the Transferred Subsidiaries in compliance with applicable Laws relating to reporting and withholding with respect to Taxes.

“ Tax” or “Taxes ” means (i) all taxes, charges, fees, levies or other governmental assessments, however denominated and whether imposed by a taxing authority within or without the United States, including all net income, gross income, gross receipts, sales, use, ad valorem, goods and services, capital, transfer, franchise, profits, license, withholding, payroll, social insurance, employment, employer health, excise, premium, estimated, severance, stamp, occupation, property or other taxes, custom duties, fees, assessments or other governmental charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts imposed by any taxing authority whether arising before, on or after the Closing Date and (ii) any liability for the payment of any amount of the type described in the immediately preceding clause (i) as a result of any Transferred Subsidiary being a member of an affiliated, consolidated or combined group with any corporation at any time prior to the Closing or being a party to any Tax sharing agreement.

“ Third-Party Claim ” has the meaning set forth in Section 7.4(a).

“ Third-Party Claim Notice ” has the meaning set forth in Section 7.4(a).

“ Top Customers ” has the meaning set forth in Section 3.29(a).

“ Top Suppliers ” has the meaning set forth in Section 3.29(b).

“ Trademark License Agreement ” means the Trademark License Agreement substantially in the form attached to this Agreement as Exhibit 1.1(f)

“ Trademarks ” has the meaning set forth in the “Intellectual Property” definition.

“ Trade Secrets ” has the meaning set forth in the “Intellectual Property” definition.

“ Transaction ” means the purchase and sale of the Transferred Shares pursuant to this Agreement.

“ Transfer Taxes ” has the meaning set forth in Section 5.4(e).

“ Transferred Assets ” means all of the assets of the Seller and its Affiliates (other than the Transferred Subsidiaries) Related to the Business, whether tangible or intangible, real, personal or mixed, including the Seller Intellectual Property, other than the Excluded Assets.

“ Transferred Employees ” means the Employees of the Seller listed on Schedule 1.1(d).

“ Transferred Intellectual Property ” means all Registered and material unregistered Intellectual Property owned by the Transferred Subsidiaries, other than that included in the Excluded Assets.

“ Transferred Shares ” has the meaning set forth in the Recitals.

“ Transferred Subsidiaries ” means the Company and its direct and indirect Subsidiaries, as more fully set forth on Schedule 3.2(a), except for Hui Hua Luminant Mfg., Shenzhen COT Luminant Device Co., Ltd. and COTCO Luminant (Shenzhen) Ltd.

“ Transition Services Agreement ” means the Transition Services Agreement substantially in the form attached to this Agreement as Exhibit 1.1(g).

“ Two-Year Forecast ” means the two year forecast for the Business mutually agreed to by the parties, and as amended by the mutual agreement of the parties from time to time.

“ Unaudited Financial Statements ” has the meaning set forth in Section 3.7(a).

“ Unresolved Differences ” has the meaning set forth in Section 2.10(d)(i).

“ U.S. Antitrust Laws ” means the Sherman Act, as amended, the Clayton Act, as amended, the HSR Act, the Federal Trade Commission Act, as amended, and all other federal and state statutes, rules, regulations, orders, decrees, administrative and judicial doctrines, and other Laws that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade.

“ U.S. GAAP ” means United States generally accepted accounting principles.

Section 1.2    Other Terms . Other terms may be defined elsewhere in the text of this Agreement and, unless otherwise indicated, shall have such meaning throughout this Agreement.

Section 1.3    Other Definitional Provisions . Unless the express context otherwise requires: 

(a)    the words “hereof,” “herein,” and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement;

(b)    the terms defined in the singular have a comparable meaning when used in the plural, and vice versa;

(c)    the terms “Dollars” and “$” mean U.S. Dollars;

(d)    references herein to a specific Section, Subsection, Schedule or Exhibit shall refer, respectively, to Sections, Subsections, Schedules or Exhibits of this Agreement;

(e)    wherever the word “include,” “includes,” or “including” is used in this Agreement, it shall be deemed to be followed by the words “without limitation”; and

(f)    references herein to any gender include each other gender.

Section 2.1    Purchase and Sale . On the terms and subject to the conditions set forth herein:

(a)    prior to the Closing, the Seller will (i) cause the Transferred Subsidiaries to transfer to the Seller or its Affiliates (other than another Transferred Subsidiary) all of the Excluded Assets held by the Transferred Subsidiaries, (ii) use commercially reasonable efforts to cause each Transferred Employee to enter into an employment agreement with the Company and (iii) cause the assignment to the Company of the Registered Intellectual Property included in the Transferred Assets to be duly registered with or filed in the relevant filing office; and

(b)    at the Closing, the Seller shall sell, convey, transfer, assign and deliver to the Buyer, and the Buyer shall purchase from the Seller, the Transferred Shares, free and clear of all Encumbrances.

Section 2.2    Excluded Assets and Liabilities . (a)  Notwithstanding anything herein to the contrary, from and after the Closing, the Seller and its Affiliates shall retain all of their existing right, title and interest in and to, and there shall be excluded from the sale, conveyance, assignment or transfer to the Buyer hereunder, (i) all of the issued and outstanding shares of capital stock or other equity interests in each of Hui Hua Luminant Mfg., Shenzhen COT Luminant Device Co., Ltd. and COTCO Luminant (Shenzhen) Ltd. and (ii) the assets listed on Schedule 2.2(a) (collectively, the “ Excluded Assets ”).

(b)    The Seller and its Affiliates (other than the Transferred Subsidiaries) shall retain and be responsible for all Liabilities associated with the Excluded Assets or the Excluded Business (the “ Excluded Liabilities ”).

Section 2.3    Purchase Price . On the terms and subject to the conditions set forth herein, in consideration of the sale of the Transferred Shares, at the Closing, the Buyer shall (a) pay to the Seller an amount in cash equal to $70,000,000, subject to adjustment to the extent of the Closing Adjustment Amount as provided in Section 2.4 and any further adjustment pursuant to the proviso below (as so adjusted, the “ Cash Purchase Price ”), and (b) issue to the Seller such aggregate number of shares of Buyer Common Stock equal to (i) $130,000,000 divided by (ii) the Average Closing Price, subject to adjustment pursuant to the proviso below (as so adjusted, the “ Purchase Price Shares ” and, together with the Cash Purchase Price, the “ Purchase Price ”); provided , however , that, in no event, shall the number of shares of Buyer Common Stock to be issued by the Buyer pursuant to this Section 2.3 exceed 9.99% of the outstanding Buyer Common Stock at the close of the Nasdaq Global Market’s trading day immediately preceding the date of this Agreement (taking into account the Purchase Price Shares to be issued at the Closing as if already issued and outstanding) and, to the extent that such number of shares would exceed 9.99% of the outstanding Buyer Common Stock on such trading day (taking into account the Purchase Price Shares to be issued at the Closing as if already issued and outstanding), the Cash Purchase Price shall be increased by an amount determined by multiplying (y) the number of shares of Buyer Common Stock by which the number of shares otherwise to be issued exceeds 9.99% of the outstanding Buyer Common Stock on such trading day (taking into account the Purchase Price Shares to be issued at the Closing as if already issued and outstanding) (the “ Excess Number ”) by (z) the Average Closing Price, and the number of shares to be issued by the Buyer pursuant to this Section 2.3 shall be reduced by such Excess Number; provided , further , that, in no event, shall the number of shares of the Buyer Common Stock to be issued by the Buyer pursuant to this Section 2.3 exceed 19.99% of the outstanding Buyer Common Stock at any time between the date of this Agreement and the Closing Date.

Section 2.4    Working Capital Adjustment . (a)  As soon as practicable, but in no event more than 60 days, following the Closing, the Buyer shall prepare, or cause to be prepared, and deliver to the Seller the Closing Date Working Capital Statement, which shall set forth the Current Assets, the Current Liabilities, and the cash balance of the Business as of the Closing, which shall be prepared in accordance with the Company’s current accounting methods, policies, practices and procedures under Hong Kong GAAP and in the same manner, with consistent classification and estimation methodology, as the Audited Financial Statements were prepared. The Closing Date Working Capital Statement shall be accompanied by a report of the Company Accounting Firm to the effect that the Closing Date Working Capital Statement has been prepared in accordance with Hong Kong GAAP and in the manner required by this Section 2.4(a). Upon completion of the Closing Date Working Capital Statement, the Buyer shall derive the Closing Date Net Asset Value from the Closing Date Working Capital Statement, and deliver such calculation and the Closing Date Working Capital Statement to the Seller.

(b)    The Seller shall complete its review of the Closing Date Working Capital Statement and the Buyer’s calculation of the Closing Date Net Asset Value within 30 days after delivery thereof to the Seller by the Buyer. If the Seller disputes all, any part or basis of the Closing Date Working Capital Statement, the Seller shall, on or before the last day of such 30-day period, so inform the Buyer in writing (the “ Seller’s Objection ”), setting forth a description of the basis of the Seller’s determination and proposed adjustments to the Closing Date Working Capital Statement and the corresponding adjustments to the Closing Date Net Asset Value that the Seller believes should be made. If no Seller’s Objection is received by the Buyer on or before the last day of such 30-day period, then the Closing Date Net Asset Value set forth on the Closing Date Working Capital Statement delivered by the Buyer shall be final, conclusive and binding upon the parties hereto. The Buyer shall have 30 days from its receipt of the Seller’s Objection to review and respond to the Seller’s Objection.

(c)    If the Buyer and the Seller are unable to resolve all of their disagreements with respect to the proposed adjustments set forth in the Seller’s Objection within 45 days following the Buyer’s receipt of the Seller’s Objection, they shall refer any remaining disagreements to the CPA Firm, which, acting as experts and not as arbitrators, shall determine, on the basis set forth in and in accordance with Section 2.4(a), and only with respect to the remaining differences so submitted, whether and to what extent, if any, the Closing Date Working Capital Statement and the Closing Date Net Asset Value require adjustment. The Buyer and the Seller shall instruct the CPA Firm to deliver its written determination to the Buyer and the Seller no later than 30 days after the remaining differences underlying the Seller’s Objection are referred to the CPA Firm. The CPA Firm’s determination shall be final, conclusive and binding upon the Buyer and the Seller and its Affiliates. The fees and disbursements of the CPA Firm shall be borne equally by the Buyer and the Seller. The Buyer and the Seller shall make readily available to the CPA Firm all relevant books and records and any work papers (including those of the parties’ respective accountants, to the extent permitted by such accountants) relating to the Closing Date Working Capital Statement and the Seller’s Objection and all other items reasonably requested by the CPA Firm in connection therewith.

(d)    The Seller shall have full access to all information used by the Buyer in preparing the Closing Date Working Capital Statement, including the work papers of its accountants (to the extent permitted by such accountants).

(e)    The Cash Purchase Price shall be adjusted by an amount (the “ Closing Adjustment Amount ”) equal to (i) the Base Net Asset Value, less (ii) the cash balance of the Business as of the Closing, less (iii) the Closing Date Net Asset Value, expressed as a positive, if positive, or as a negative, if negative. If the Closing Adjustment Amount is a negative number, then the Cash Purchase Price shall be increased by the Closing Adjustment Amount and the Buyer shall promptly (and in any event within five Business Days) after the final determination thereof pay to the Seller the Closing Adjustment Amount, plus interest from the Closing Date to, but not including, the date of payment at LIBOR calculated on a 365-day basis, in U.S. Dollars by wire transfer of immediately available funds to an account designated by the Seller. If the Closing Adjustment Amount is a positive number, then the Cash Purchase Price shall be decreased by the Closing Adjustment Amount and the Seller shall promptly (and in any event within five Business Days) after the final determination thereof pay to the Buyer the Closing Adjustment Amount, plus interest from the Closing Date to, but not including, the date of payment at LIBOR calculated on a 365-day basis, in U.S. Dollars by wire transfer of immediately available funds to an account designated by the Buyer. If the Closing Adjustment Amount is equal to zero, then no payment will be made by either the Buyer or the Seller.

(f)    Notwithstanding anything herein to the contrary, if the amount that would otherwise constitute the Closing Adjustment Amount falls within the range from and including negative $100,000 to and including positive $100,000, no adjustment to the Cash Purchase Price shall be made and no Closing Adjustment Amount shall be payable.

Section 2.5    Closing . The Closing shall take place at the offices of Sullivan & Cromwell LLP, 28th Floor, Nine Queen’s Road Central, Hong Kong at 10:00 A.M., Hong Kong time, as promptly as practicable, and in any event within three Business Days, following the date on which the conditions set forth in Article VI (other than those conditions that by their nature are to be satisfied at the Closing but subject to the fulfillment or waiver of those conditions) have been satisfied or waived ( provided , however , that, in no event, shall the Closing occur prior to March 26, 2007), or at such other time and place as the parties hereto may mutually agree. The date on which the Closing occurs is called the “ Closing Date .”

Section 2.6    Deliveries by the Buyer . At the Closing, the Buyer shall deliver to the Seller the following:

(a)    $70,000,000, as adjusted pursuant to Section 2.3, if applicable, in immediately available funds by wire transfer to an account or accounts, which have been designated in writing by the Seller at least two Business Days prior to the Closing Date;

(b)    a certificate or certificates representing the Purchase Price Shares in definitive form, registered in the name of the Seller, bearing the legends set forth in Section 3.27(e);

(c)    a duly executed counterpart of each of the Ancillary Agreements (other than the Shareholders’ and Registration Rights Agreement);

(d)    the certificate to be delivered pursuant to Section 6.3(d);

(e)    a copy of the approval to be delivered pursuant to Section 6.3(e);

(f)    an opinion of counsel to the Buyer pursuant to Section 6.3(f); and

(g)    such other customary instruments of transfer, assumptions, filings or documents, in form and substance reasonably satisfactory to the Seller, as may be required to give effect to this Agreement.

Section 2.7    Deliveries by the Seller . At the Closing, the Seller shall deliver, or cause to be delivered, to the Buyer the following: 

(a)    duly executed instruments of transfer and sold notes (in a form complying with the Stamp Duty Ordinance (Chapter 117, as amended, of the Laws of Hong Kong)) in respect of the Transferred Shares in favor of the Buyer and/or its nominee(s);

(b)    such other documents (including any power of attorney) as may be required to give good title to the Transferred Shares or which may be necessary to enable the Buyer or its nominee(s) to procure the registration of the same in the name of the Buyer or its nominee(s);

(c)    a duly executed counterpart of each of the Ancillary Agreements (other than the Shareholders’ and Registration Rights Agreement);

(d)    evidence of the obtaining of, or the filing with respect to, the Seller Required Approvals;

(e)    the certificate to be delivered pursuant to Section 6.2(e);

(f)    an opinion of counsel to the Seller pursuant to Section 6.2(h);

(g)    in respect of each Transferred Subsidiary, share certificates (where applicable) in respect of all issued shares and declarations of trust, if any, in respect of any shares that are held by nominees and an indemnity in the agreed form for any lost share certificates;

(h)    in respect of each Transferred Subsidiary, the statutory and minutes books (which shall be written up to but not including the Closing Date), share certificate books, common seal, certificate of incorporation, business registration certificate, together with copies of the Memorandum and Articles of Association, check books, books of account (all complete and written up to the Closing Date); and

(i)    such other customary instruments of transfer, assumptions, filings or documents, in form and substance reasonably satisfactory to the Buyer, as may be required to give effect to this Agreement.

Section 2.8    Delivery by the Seller to the Escrow Agent . At the Closing, the Seller shall deliver to the Escrow Agent a certificate or certificates representing such aggregate number of the Purchase Price Shares equal to (a) $20,000,000, divided by (b) the relevant Average Closing Price, to be held in escrow pursuant to the Escrow Agreement.

Section 2.9    Buyer Affiliate Acquisitions . Notwithstanding anything to the contrary contained in this Agreement, the Buyer may elect to have any or all of the Transferred Shares conveyed or transferred to one or more of its Affiliates; provided , however , that no such election shall relieve the Buyer of any of its obligations to the Seller and its Affiliates hereunder and the Buyer shall bear any and all additional costs, expenses and Liabilities arising out of or in connection with such election.

Section 2.10    Contingent Payments . (a)  On the terms and subject to the conditions set forth herein, as additional consideration for the Transferred Shares, the Buyer shall pay to the Seller certain additional amounts, up to a maximum aggregate amount of $125,000,000, in two contingent payments, subject to the achievement of certain financial milestones and calculated as follows (collectively, the “ Contingent Payments ”):

(i)    With respect to each Contingent Payment Period, the Buyer shall pay to the Seller a Contingent Payment, if any, calculated with respect to Actual EBITDA in accordance with Exhibit 2.10.

(ii)    For the purpose of calculating Actual EBITDA hereunder, such calculation shall exclude (A) any non-recurring expense incurred other than in the Ordinary Course related to any claim, litigation, settlement or non-compliance with Law arising out of any event or circumstance occurring before the Closing; provided , however , that the Seller shall have reimbursed the relevant Transferred Subsidiary therefor in full and (B) any expense in connection with the payment to employees under Section 2.10(f).

(iii)    For the purpose of calculating Actual EBITDA hereunder, the exchange rate shall be fixed at seven point seven six Hong Kong Dollars (HK$7.76) to one U.S. Dollar ($1).

(b)    On each Result Announcement Date immediately succeeding June 29, 2008 and June 28, 2009, as the case may be, the Buyer shall prepare, or cause to be prepared, and deliver to the Seller (A) a statement setting forth Actual EBITDA for such Contingent Payment Period, each component used in the calculation thereof, and the amount of the Contingent Payment for such Contingent Payment Period determined in accordance with the relevant formula as set forth in Section 2.10(a) (the “ Contingent Payment Statement ”), which shall be prepared in accordance with Hong Kong GAAP, at the Buyer’s cost and expense, and (B) such documentation, if any, as may be reasonably necessary to enable the Seller to determine such amount. Concurrently with the delivery of the Contingent Payment Statement, the Buyer shall pay to the Seller the amount of the Contingent Payment specified therein, if any, in accordance with Section 2.10(e).

(c)    After receipt from the Buyer of the Contingent Payment Statement and, if applicable, the Contingent Payment, the Seller shall have the right, at its cost and expense, and upon not less than five Business Days’ prior written notice to the Buyer, to (i) meet with the Buyer and the Company Accounting Firm to discuss the Buyer’s calculation of Actual EBITDA and the Contingent Payment set forth in the Contingent Payment Statement and (ii) have reasonable access during normal business hours to inspect the Books and Records and working papers (including those prepared by advisors and other third parties, to the extent permitted thereby) relating to such calculation. If the Seller fails to challenge the Buyer’s determination of Actual EBITDA and the Contingent Payment by the delivery of a written notice to the Buyer (the “ Contingent Payment Dispute Notice ”) within 60 days after receipt by the Seller of the Contingent Payment Statement, such determination by the Buyer shall be final, conclusive and binding for all purposes of this Agreement.

(d)    In the event that the Seller disputes the Buyer’s determination of Actual EBITDA and the Contingent Payment for any Contingent Payment Period, the Seller shall so notify the Buyer by delivering a Contingent Payment Dispute Notice to the Buyer within the period set forth in Section 2.10(c) (the amount of any disputed Contingent Payment being referred to herein as the “ Disputed Contingent Payment ”). In the event of such a dispute, the Seller and the Buyer shall first use diligent, good faith efforts to resolve such dispute between them. If they are unable to resolve the dispute within 30 days after the delivery of the Contingent Payment Dispute Notice, then the dispute shall be submitted to the CPA Firm for determination in accordance with the following provisions:

(i)    The Buyer and the Seller shall submit to the CPA Firm, within 10 days after the date of the engagement of the CPA Firm (as evidenced by the date of the engagement letter), copies of (A) the Contingent Payment Statement for the applicable Contingent Payment Period, (B) the Contingent Payment Dispute Notice and (C) a list of all unresolved differences between the Buyer and the Seller with respect to the calculation of the Contingent Payment for such Contingent Payment Period (the “ Unresolved Differences ”). Each of the Buyer and the Seller shall submit to the CPA Firm (with a copy delivered to the other party on the same day), within 30 days after the date of the engagement of the CPA Firm, a memorandum (which may include supporting exhibits) setting forth their respective positions on the Unresolved Differences. Each of the Buyer and the Seller may (but shall not be required to) submit to the CPA Firm (with a copy delivered to the other party on the same day), within 60 days after the date of the engagement of the CPA Firm, a memorandum responding to the initial memorandum submitted to the CPA Firm by the other party. Unless requested by the CPA Firm in writing, neither the Buyer nor the Seller may present any additional information or arguments to the CPA Firm, either orally or in writing; provided , however , that each party shall have the right to respond to the CPA Firm’s requests directed to the other party.

(ii)    The CPA Firm shall prepare and distribute to the parties hereto a writing setting forth the CPA Firm’s determination, only with respect to the Unresolved Differences, whether and to what extent, if any, the Contingent Payment for such Contingent Payment Period requires adjustment and the CPA Firm’s reasons therefor. Any decision rendered by the CPA Firm shall be final, conclusive and binding upon the parties hereto, and judgment thereon may be entered and enforced in any court of competent jurisdiction.

(iii)    The fees and expenses of the CPA Firm in connection with the resolution of disputes pursuant to this paragraph (d) shall be shared equally by the Buyer and the Seller; provided , however , that if the CPA Firm determines that one party has adopted a position or positions that is or are frivolous or clearly without merit, the CPA Firm may, in its discretion, assign a greater portion of such fees and expenses to such party.

(e)    Subject to Section 2.10(f), the Buyer shall pay the net amount of the Contingent Payment specified in the Contingent Payment Statement (exclusive of any Tax, fees or other expenses of any kind), if any, to the Seller on the Result Announcement Date immediately succeeding June 29, 2008 or June 28, 2009, as the case may be, or, with respect to any increase in such Contingent Payment finally determined in accordance with Section 2.10(d), within five Business Days after the date of such final determination, in each case in cash or Buyer Common Stock or any combination thereof, in the Buyer’s sole discretion; provided , however , that, in no event, shall the number of shares of Buyer Common Stock to be issued by the Buyer pursuant to this Section 2.10(e), when combined with the Purchase Price Shares and any other Contingent Payment Shares previously issued, exceed 9.99% of the outstanding Buyer Common Stock at the close of the Nasdaq Global Market’s trading day immediately preceding the issuance date of the relevant Contingent Payment Shares (taking into account such Contingent Payment Shares as if already issued and outstanding); provided , further , that, in no event, shall the number of shares of Buyer Common Stock to be issued by the Buyer pursuant to this Section 2.10(e) exceed 19.99% of the outstanding Buyer Common Stock at any time between the date of this Agreement and the Final Contingent Payment Date. If the Buyer determines that any Contingent Payment or portion thereof will be made in cash, the Buyer shall pay to the Seller such cash amount on the relevant Result Announcement Date (or such later date as is contemplated by this Section 2.10(e)) in U.S. dollars by wire transfer of immediately available funds to an account designated by the Seller. If the Buyer determines any Contingent Payment or portion thereof will be made in Buyer Common Stock, the Buyer shall issue to the Seller on the relevant Result Announcement Date (or such later date as is contemplated by this Section 2.10(e)) such aggregate number of shares of Buyer Common Stock equal to (A) the amount of such Contingent Payment or portion thereof divided by (B) the relevant Average Closing Price. With respect to any decrease in a Contingent Payment specified in the Contingent Payment Statement finally determined in accordance with Section 2.10(d), the Seller shall, within five Business Days after the date of such final determination, refund such amount to the Buyer in cash in U.S. dollars by wire transfer of immediately available funds to an account designated by the Buyer.

(f)    Not less than 10 Business Days prior to the Result Announcement Date, the Seller shall deliver to the Buyer a written notice setting forth the names of then-current employees of the Business selected to share in an amount in cash equal to 5% of the Contingent Payment specified in the Contingent Payment Statement, if any (the “ Contingent Bonus Amount ”), and the portion of such Contingent Bonus Amount (expressed as a percentage) to which each such employee should be allocated. The Buyer shall have the right to approve the employees selected and their proposed allocations, which approval will not be unreasonably withheld. Notwithstanding anything to the contrary in this Agreement, the Buyer shall withhold from any payment to be made to the Seller pursuant to Section 2.10(e) the Contingent Bonus Amount and shall cause the Company to pay an amount in cash equal to such Contingent Bonus Amount, less any Taxes required to be paid or withheld by the Company and other required withholdings, on the Result Announcement Date to such employees and in such amounts as are specified in the written notice from the Seller and approved by the Buyer or otherwise agreed to by the Buyer and the Seller. To the extent that the Buyer and the Seller are unable to reach agreement prior to the Result Announcement Date on the employees selected and their proposed allocations for purposes of payment of the Contingent Bonus Amount, the Buyer shall pay the Contingent Bonus Amount (or the relevant portion thereof) to the Seller, in cash or Buyer Common Stock or any combination thereof, in the Buyer’s sole discretion, in accordance with Section 2.10(e).

(g)    From the Closing Date through June 28, 2009, except as otherwise contemplated by this Agreement and the Ancillary Agreements, the Buyer shall use commercially reasonable efforts to operate the Business in a manner consistent with maximizing the Contingent Payments and shall cause the business of the Company and its Subsidiaries to be limited to the Business; notwithstanding the foregoing, the Buyer shall be permitted to take any action that is: (i) consented to in writing by the Seller, which consent shall not be unreasonably withheld, (ii) required by Law, or (iii) in the best interests of the Business (including all Subsidiaries) as determined in good faith by the Buyer (but excluding for purposes of such determination the possible benefit of a reduction in the Contingent Payments). The Buyer will provide the financial support contemplated by the Two-Year Forecast to the extent that the Business is achieving the financial performance contemplated in the Two-Year Forecast; however, to the extent that the Buyer determines in good faith that a material deviation in the financial performance contemplated in the Two-Year Forecast is in the best interests of the Business (including all its Subsidiaries) and to the extent that such deviation would not maximize the Contingent Payments, then the Buyer shall not implement any such planned deviation unless it is consented to in writing by the Seller, which consent shall not be unreasonably withheld. The parties agree that their post-Closing obligations under this Agreement and the Ancillary Agreements are essential to the operation and performance of the Business. From the Closing Date through June 28, 2009, the parties shall timely comply with all provisions of this Agreement and the Ancillary Agreements. In the case of any breach of this Section 2.10(g), the non-breaching party may seek damages for such breach, but shall be required to prove its damages for such breach and the Contingent Payment shall not be deemed to be liquidated damages.

Except as set forth in the Disclosure Schedule, the Seller represents and warrants to the Buyer that all statements contained in this Article III are true as of the date hereof and as of the Closing Date. The inclusion of any information in any section of the Disclosure Schedule or other documents made available or delivered by the Seller pursuant to this Agreement shall be not be deemed to be an admission or evidence of the materiality of such item, nor shall it establish a standard of materiality for any purpose whatsoever:

Section 3.1    Organization and Qualification . The Seller is a company incorporated with limited liability, duly organized and validly existing under the laws of Hong Kong and is not in administration, receivership or liquidation, and no petition has been presented for its winding-up and there are no grounds on which any petition or application could be based for its winding-up or the appointment of an administrator or receiver over its assets. The Seller has all requisite corporate or similar power and authority to own, lease and operate its assets, and to carry on the Business as currently conducted. The Seller is duly qualified to do business as a foreign corporation or other entity in each jurisdiction where the ownership or operation of its assets or the conduct of its business requires such qualification.

Section 3.2    Subsidiaries . (a) Schedule 3.2(a) sets forth a complete and accurate list of each Transferred Subsidiary, together with its jurisdiction of organization and its authorized and outstanding shares of capital stock or other equity interests as of the date hereof. Each Transferred Subsidiary (i) is duly organized, validly existing and, in the case of any Transferred Subsidiary organized in the PRC, has passed the annual statutory examination of its business license, and is not in administration, receivership or liquidation, and no petition has been presented for its winding-up and there are no grounds on which any petition or application could be based for its winding-up or the appointment of an administrator or receiver over its assets, (ii) has all requisite corporate or similar power and authority to own, lease and operate its assets and to carry on its portion of the Business as currently conducted, (iii) has complied with its Memorandum and Articles of Association, Certificate of Incorporation, Bylaws or other similar organizational documents in all respects and none of its activities, agreements, commitments or rights is ultra vires or unauthorized, and (iv) is duly qualified to do business as a foreign corporation or other entity in each jurisdiction where the ownership or operation of its assets or the conduct of its business requires such qualification.

(b)    The Seller has heretofore delivered to the Buyer complete and accurate copies of the Memorandum and Articles of Association, Certificate of Incorporation, Bylaws or other similar organizational documents of each of the Transferred Subsidiaries as presently in effect, and attached thereto are copies of all resolutions and agreements that are required to be so attached.

(c)    There are no preemptive or other outstanding rights, options, warrants, conversion rights, stock appreciation rights, redemption rights, repurchase rights, agreements, arrangements or commitments or rights of any kind or rights that call for the sale, transfer, issue, allotment, conversion, redemption or repurchase of, or accord to any Person other than the Seller the right (whether exercisable now or in the future and whether contingent or not) to call for the sale, transfer, issue, allotment, conversion, redemption or repurchase of, any shares, loan stock or other securities in the capital of any Transferred Subsidiary.

(d)    The Company does not have outstanding any bonds, debentures, notes or other obligations the holders of which have the right to vote (or convertible into or exercisable for securities having the right to vote) with the stockholders of the Company on any matter.

(e)    The Seller is the legal and beneficial owner of the Transferred Shares, free and clear of all Encumbrances, and upon delivery by the Seller of the Transferred Shares at Closing, legal and beneficial ownership of the Transferred Shares, free and clear of all Encumbrances, other than those resulting from the Buyer’s ownership, will pass to the Buyer. The Transferred Shares constitute or will constitute all of the outstanding shares of capital stock of the Company as of the date hereof and as of the Closing. The Company is the legal and beneficial owner of all of the outstanding shares of capital stock or other equity interests of COTCO International Ltd., COTCO Luminant Device (Huizhou) Ltd. and COTCO Opto Technology (Shanghai) Ltd., free and clear (upon payment of the Indebtedness listed on Schedule 3.23(b)) of all Encumbrances. COTCO International Ltd. is the legal and beneficial owner of all the outstanding shares of capital stock of COTCO Japan Co., Ltd., free and clear (upon payment of the Indebtedness listed on Schedule 3.23(b)) of all Encumbrances. All of the outstanding shares of capital stock or other equity interests of the Transferred Subsidiaries have been duly authorized, and are validly issued, fully paid and non-assessable. The registered capital of each Transferred Subsidiary incorporated or organized in the PRC has been fully contributed in accordance with applicable Laws and there is no obligation to make further contributions to any of such Transferred Subsidiary by way of debt or equity.

(f)    No Transferred Subsidiary owns, directly or indirectly, any shares of capital stock or other equity interests of any Person (other than, in the case of the Company, the shares of capital stock or other equity interests it holds in the other Transferred Subsidiaries and, prior to the Closing, Hui Hua Luminant Mfg., Shenzhen COT Luminant Device Co., Ltd. and COTCO Luminant (Shenzhen) Ltd.).

(g)    The representative offices of the Transferred Subsidiaries are not independent legal entities and have only engaged in business and operating activities permitted for representative offices by applicable Law.

Section 3.3    Corporate Authorization . The Seller has full power and authority to execute and deliver this Agreement and each of the Ancillary Agreements to which it is a party, and to perform its obligations hereunder and thereunder. The execution, delivery and performance by the Seller of this Agreement and each of the Ancillary Agreements to which it is a party has been duly and validly authorized and no additional corporate, shareholder or similar authorization or consent is required in connection with the execution, delivery and performance by the Seller of this Agreement or each of the Ancillary Agreements to which it is a party. Each Affiliate of the Seller has or prior to the Closing will have full power and authority to execute and deliver each Ancillary Agreement or Closing document to which it is a party or signatory, and to perform its obligations thereunder. The execution, delivery and performance by each Affiliate of the Seller of each Ancillary Agreement or Closing document to which it is a party or signatory has been or prior to the Closing will have been duly and validly authorized, and no additional corporate, shareholder or similar authorization or consent is required in connection with the execution, delivery and performance by any Affiliate of the Seller of the Ancillary Agreements or Closing documents to which it is a party or signatory. 

Section 3.4    Consents and Approvals . (a)  Except as set forth on Schedule 3.4(a)(i), no consent, approval, waiver, authorization, notice or filing is required to be obtained by the Seller or any of its Affiliates from, or to be given by the Seller or any of its Affiliates to, or made by the Seller or any of its Affiliates with, any Government Entity, in connection with the execution, delivery and performance by the Seller or any of its Affiliates of this Agreement and the Ancillary Agreements. Except as set forth on Schedule 3.4(a)(ii), no consent, approval, waiver, authorization, notice or filing is required to be obtained by the Seller or any of its Affiliates from, or to be given by the Seller or any of its Affiliates to, or made by the Seller or any of its Affiliates with, any Person that is not a Government Entity in connection with the execution, delivery and performance by the Seller or any of its Affiliates of this Agreement and the Ancillary Agreements.

(b)    Without limiting the foregoing (i) with respect to the HSR Act, (A) the Seller is not incorporated in the United States, is not organized under the laws of the United States and does not have its principal offices within the United States and (B) the Seller, including all entities controlled by the Seller within the meaning of the HSR Act (I) does not hold assets located in the United States (other than investment assets, voting or nonvoting securities of another Person and assets included pursuant to 16 C.F.R. 801.40(d)(2)) having an aggregate total value in excess of $59,800,000 and (II) did not make aggregate sales in or into the United States of over $59,800,000 in its most recent fiscal year, and (ii) with respect to PRC competition Laws, (A) neither the Seller nor the Company owns more than RMB 3,000,000,000 of assets inside the PRC, (B) neither the Seller’s nor the Company’s business volume in the PRC market is more than RMB 1,500,000,000 in the current year, (C) neither the Seller’s and its affiliated enterprises’ nor the Company’s and its affiliated enterprises’ market share in the PRC has reached 20% or will reach 25% as a result of the transactions contemplated hereby, and (D) neither the Seller nor the Company will directly or indirectly hold shares in more than 15 foreign-funded enterprises in the relevant domestic industries as a result of the transactions contemplated hereby.

Section 3.5    Non-Contravention . The execution, delivery and performance by the Seller and its Affiliates of this Agreement and the Ancillary Agreements to which they are a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not (i) violate any provision of the Memorandum and Articles of Association, Certificate of Incorporation, Bylaws or other similar organizational documents of the Seller or any of its Affiliates, (ii) assuming the receipt of all consents, approvals, waivers and authorizations