ASSET PURCHASE AGREEMENT

Exhibit 2.1

ASSET PURCHASE AGREEMENT

By and Between

SENSATA TECHNOLOGIES, INC.,

as BUYER,

and

CYPRESS SEMICONDUCTOR CORPORATION,

as SELLER

February 27, 2007

TABLE OF CONTENTS

 

EXHIBITS

 

SCHEDULES

 

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (the “ Agreement ”) is made and entered into as of February 27, 2007, by and between Sensata Technologies, Inc., a Delaware corporation (“ Buyer ”), and Cypress Semiconductor Corporation, a Delaware corporation (“ Seller ”). Buyer and Seller may hereinafter be referred to individually as a “ Party ” and collectively as the “ Parties ”.

RECITALS:

A. Seller is engaged, among other things, in the Business (as defined in Section 1.1 ).

B. Upon and subject to the terms and conditions set forth herein, Seller desires to sell to Buyer and Buyer desires to purchase from Seller, certain assets of Seller related to the Business, and Seller desires to transfer to Buyer and Buyer desires to assume from Seller certain of the liabilities related to the Business.

C. Concurrently with the closing of the transactions contemplated under this Agreement and as an inducement to Seller and Buyer to enter into this Agreement, Seller and Buyer shall enter into the Transition Services Agreement, the License Agreement and the Intellectual Property Assignment.

NOW, THEREFORE, in consideration of the foregoing premises, and the mutual representations, warranties and covenants herein contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and accepted, the Parties hereby agree as follows:

ARTICLE 1

DEFINITIONS AND INTERPRETATION

1.1 Certain Definitions . The terms defined in this Agreement shall have their respective defined meanings whenever such terms are used in this Agreement, unless the context expressly or by necessary implication otherwise requires. In addition, the following terms shall have the meanings set forth below:

(a) “ Affiliate ” of a Person shall mean any Person that controls, is controlled by, or is under common control with, the applicable Party. A Person shall be deemed to be in control of another Person if, and for so long as, it owns or controls more than 50% of the voting power in the election of directors (or, in the case of an entity that is not a corporation, for the election of the corresponding managing authority) of such other Person.

(b) “ Affiliated Group ” shall mean any affiliated group within the meaning of Section 1504(a) of the Code or any similar group defined under a similar provision of state, local, or foreign law.

 

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(c) “ Agreement ” shall have the meaning ascribed to such term in the introductory paragraph.

(d) “ Allocation Notice ” shall have the meaning ascribed to such term in Section 2.4 .

(e) “ Assigned Contracts ” means all Contracts listed on Schedule 2.2(c) .

(f) “ Assumed Liabilities ” shall mean only the following liabilities:

(i) obligations under each Assigned Contract listed on Schedule 2.2(c) that accrue or are incurred and are required to be performed after the Closing (other than obligations relating to breaches thereunder occurring on or prior to the Closing); and

(ii) obligations under the Assumed Purchase Orders that are required to be performed after the Closing.

(g) “ Assumed Purchase Orders ” shall mean the purchase orders set forth on Schedule 1.1(g) with respect to work-in-progress and the provision of services with respect thereto.

(h) “ Bill of Sale ” shall mean the bill of sale, entered into by and between Seller and Buyer as of the Closing Date, in substantially the form attached hereto as Exhibit D .

(i) “ Business ” shall mean that portion of Seller’s and its Subsidiaries’ business consisting of the automotive imaging division and the Osprey product business of Seller and its Subsidiaries located in Cambridge, Massachusetts (other than, in the case of the Osprey product business, those assets and liabilities that constitute “Excluded Assets” or “Excluded Liabilities”), as operated by Seller and its Subsidiaries as of the date of this Agreement. For the avoidance of doubt, the Business shall not include any of Seller’s Belgium-based imaging business (known as “ FillFactory ”).

(j) “ Business Records ” shall mean all books and records and other data of Seller and its Subsidiaries (including all Contracts, reports of examination, customer and supplier information and other records and information, including on discs, tapes and other data-storing media).

(k) “ Buyer ” shall have the meaning ascribed to such term in the introductory paragraph.

(l) “ Buyer Disclosure Letter ” shall have the meaning ascribed to such term in Article 4 .

(m) “ Buyer Indemnified Parties ” shall have the meaning ascribed to such term in Section 7.3(a) .

 

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(n) “ Buyer Material Adverse Effect ” shall mean any change that is materially adverse to the ability of Buyer to consummate the transactions contemplated hereby within the timeframes contemplated hereby.

(o) “ Closing ” shall have the meaning ascribed to such term in Section 2.6 .

(p) “ Closing Date ” shall have the meaning ascribed to such term in Section 2.6 .

(q) “ COBRA ” means Part 6 of Subtitle B of Title I of ERISA, Section 4980B of the Code, and any similar state law.

(r) “ Code ” shall mean the Internal Revenue Code of 1986, as amended.

(s) “ Collateral Agreements ” shall mean: (i) the Bill of Sale; (ii) the Transition Services Agreement; (iii) the License Agreement; and (iv) the Intellectual Property Assignment.

(t) “ Contract ” shall mean any legally binding agreement, commitment, lease, license, evidence of indebtedness, mortgage, indenture, security agreement or other contract (whether written or oral).

(u) “ Delayed Delivery Assets ” shall mean those Transferred Assets listed on Schedule 1.1(u) .

(v) “ Delayed Delivery Date ” shall mean the earlier of (i) June 14, 2007 and (ii) the date on which the lead customer sample of the Avocet test chip is delivered to Buyer.

(w) “ Disagreement Notice ” shall have the meaning ascribed to such term in Section 2.4 .

(x) “ Employees ” shall mean those employees of Seller listed on Schedule 1.1(x) .

(y) “ ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as amended.

(z) “ ERISA Affiliate ” shall mean any Person at any relevant time considered a single employer with Seller or any of its Subsidiaries (including, for the avoidance of doubt, SMaL) under Section 414 of the Code.

(aa) “ Excluded Assets ” shall mean those assets of Seller and its Subsidiaries that are identified on Schedule 1.1(aa) . For the avoidance of doubt, Buyer shall have no obligation to physically deliver to Seller any Excluded Assets.

(bb) “ Excluded Liabilities ” shall mean all of Seller’s or any of its Subsidiaries’ Liabilities, other than the Assumed Liabilities, including the following:

(i) any Liabilities in respect of Excluded Assets;

 

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(ii) any Indebtedness of SMaL or the Business arising or incurred prior to the Closing;

(iii) all accrued expenses or payables arising or incurred prior to the Closing, other than obligations under the Assumed Purchase Orders required to be performed after the Closing;

(iv) any Liabilities of SMaL; or

(v) any Liabilities relating to or arising under any “employee benefit plan” (as defined in Section 3(3) of ERISA) or any other benefit plan, program or arrangement at any time maintained, sponsored or contributed to by Seller, any of its Subsidiaries (including, for the avoidance of doubt, SMaL) or any ERISA Affiliate, or with respect to which Seller, any of its Subsidiaries (including, for the avoidance of doubt, SMaL) or any ERISA Affiliate has any current or potential liability or obligation, or pertaining to the employment or service by, or termination from employment or service with, Seller, any of its Subsidiaries (including, for the avoidance of doubt, SMaL), or any ERISA Affiliate, of any Person.

(cc) “ Finished Goods Inventory ” shall mean the finished goods inventory of the Business suitable for sale to customers.

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

(ee) “ General Purpose Software ” shall mean any computer software that is a computer operating system, a general-purpose personal computer application or utility (e.g., word processors or spreadsheets), software licensed by Seller for its business generally that is not primarily related to the Business, or software related to general and administrative business functions (e.g., payroll software or CRM software).

(ff) “ Governmental Entity ” shall mean any court, administrative agency or commission or other federal, state, county, local or foreign governmental authority, instrumentality, agency or commission.

(gg) “ Governmental Permits ” shall mean all governmental permits and licenses, certificates of inspection, approvals or other authorizations issued to Seller or any of its Subsidiaries by a Governmental Entity which are necessary for the ownership and use of the Transferred Assets in the same manner as used by Seller, SMaL or any other applicable Subsidiary of Seller prior to the Closing.

(hh) “ HSR Act ” shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

 

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(ii) “ Indebtedness ” means any Liabilities (i) in respect of borrowed money or evidenced by bonds, monies, debentures, or similar instruments, (ii) representing the balance deferred and unpaid of the purchase price of any property (including pursuant to capital leases) but excluding current trade payables, if and to the extent any of the foregoing indebtedness would appear as a liability upon a balance sheet prepared on a consolidated basis in accordance with GAAP, (iii) guaranties, direct or indirect, in any manner, of all or any part of any Indebtedness of any Person, (iv) any obligation secured by a Lien on a Person’s assets, (v) any deferred compensation, change in control or other similar obligation, (vi) all severance and other restructuring obligations for steps implemented, committed to, or notified to Employees prior to the Closing, (vii) all obligations under any hedging, swap, or similar arrangement and (viii) accrued interest, premiums, fees, and prepayment penalties for any of the foregoing. Notwithstanding the foregoing, Indebtedness does not include any operating or lease obligations (other than capital leases).

(jj) “ Indemnified Party ” shall have the meaning ascribed to such term in Section 7.4(a) .

(kk) “ Indemnifying Party ” shall have the meaning ascribed to such term in Section 7.4(a) .

(ll) “ Intellectual Property Assignment ” shall mean the intellectual property assignment, entered into by and between Seller and Buyer as of the Closing Date, in substantially the form attached hereto as Exhibit C .

(mm) “ Intellectual Property ” or “ IP” shall mean (i) Patents and inventions, invention disclosures, and any other written (including on any electronic media) memorialization of inventions, (ii) copyrights, copyright registrations and copyright applications, and mask works (“ Copyrights ”), (iii) trade and industrial secrets, confidential information and know-how, (iv) trademarks, trade names and service marks, and the good will associated with each of such marks, (including any registrations or applications for registration of any of the foregoing) (“ Marks ”), (v) internet domain names, mask works, software; (vi) rights to sue and recover for any past, present, or future infringements or misappropriations thereof; and (vii) any analogous rights to those set forth above.

(nn) “ Intellectual Property Rights ” shall mean all common law and statutory rights anywhere in the world associated with Intellectual Property.

(oo) “ Knowledge ” shall mean the actual knowledge of (i) in the case of Seller, Brad Buss, Ahmad Chatila, Cliff Drowley, Pashupathy Gopalan, Richmond Hicks and Brian Lee, and (ii) in the case of Buyer, Gary Baker, Steven Major and Tim McBride.

(pp) “ Lease ” shall mean all leases, subleases, licenses, concessions and other agreements (written or oral) pursuant to which Seller, SMaL or any other applicable Subsidiary of Seller holds a leasehold or subleasehold estate in (or is granted the right to use or occupy, any land, buildings, structures, improvements, fixtures or other interest in) the Leased Real Property.

 

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(qq) “ Leased Real Property ” shall mean all of Seller’s, SMaL’s or any other applicable Seller Subsidiary’s right, title and interest in the real property located at 10 Wilson Road, Cambridge, Massachusetts 02138.

(rr) “ Liabilities ” shall mean debts, liabilities and obligations of any nature whatsoever with respect to any event, occurrence, circumstance or condition arising or occurring prior to or through the Closing (whether such liabilities become known prior to, on or after the Closing Date), whether accrued or unaccrued, whether absolute or contingent, whether known or unknown, whether due or to become due and whether related to the Transferred Assets or otherwise, and regardless of when asserted.

(ss) “ License Agreement ” shall mean the license agreement, entered into by and between Seller and Buyer as of the Closing Date, substantially in the form attached hereto as Exhibit B .

(tt) “ Licensed IP ” shall mean the Intellectual Property Rights licensed to Buyer pursuant to the License Agreement.

(uu) “ Lien ” shall mean any lien, claim, charge, license, security interest, mortgage, pledge, easement, conditional sale or other title retention agreement, defect in title, covenant or other restrictions of any kind, other than a Permitted Lien.

(vv) “ Losses ” shall mean any and all losses, costs, obligations, liabilities, settlement payments, awards, judgments, fines, penalties, damages, expenses (including reasonable attorneys’ fees, costs and expenses incurred in connection with investigation, defense and/or settlement of any claim), deficiencies or other charges.

(ww) “ Non-Disclosure Agreement ” shall mean that agreement dated as of September 29, 2006, by and between Seller and Buyer.

(xx) “ Patent ” means any issued patent or pending patent application (including any provisional patent application), and any and all divisionals, continuations, continuations-in-part, reissues, renewals, reexaminations, and extensions thereof, any counterparts claiming priority therefrom, utility models, patents of importation/confirmation, supplementary protection certificates and certificates of invention.

(yy) “ Party ” and “ Parties ” shall have the meaning ascribed to such terms in the introductory paragraph.

(zz) “ Permitted Lien ” shall mean any or all of the following (i) liens for Taxes and other similar governmental charges and assessments which are not yet delinquent or liens for Taxes being contested in good faith by any appropriate proceedings for which adequate reserves have been established, (ii) liens of landlords and liens of carriers, warehousemen, mechanics and materialmen and other like liens arising in the ordinary course of business for sums not yet due and payable, (iii) undetermined or inchoate liens, charges and privileges existing as of the Closing Date and any statutory liens, licenses, charges, adverse claims, security

 

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interests or encumbrances of any nature whatsoever existing as of the Closing Date and claimed or held by any Governmental Entity that have not at the time been filed or registered against title to the Transferred Assets or that are related to obligations that are not due or delinquent, (iv) non-exclusive licenses or other non-exclusive rights to any Transferred IP granted by Seller or any Affiliate thereof to any Third Party in the ordinary course of business, (v) security given in the ordinary course of business as of the Closing Date to any public utility, Governmental Entity or other statutory or public authority in connection with the Transferred Assets; and/or (vi) with respect to tangible property, liens that do not materially interfere with the use or operation of the property subject thereto.

(aaa) “ Person ” shall mean an individual, a partnership, a limited liability company, a corporation, an association, a joint stock corporation, a trust, a joint venture, an unincorporated organization, or a Governmental Entity (or any department, agency or political division thereof).

(bbb) “ Post-Closing Covenant Breach ” shall mean with respect to a Party, a breach of, nonfulfillment, non-performance or failure to comply with a covenant or agreement expressly made by such Party herein that is to be performed after the Closing. “Post-Closing Covenant Breach” shall not include a breach of, nonfulfillment, non-performance or failure to comply with a covenant or agreement expressly made by Seller in Article 5 of this Agreement solely relating to the operation, ownership or use of the Delayed Delivery Assets by Seller, SMaL or Seller’s other applicable Subsidiaries at any time on or prior to the Delayed Delivery Date.

(ccc) “ Potential Contributor ” shall have the meaning ascribed to such term in Section 7.8 .

(ddd) “ Pre-Closing Covenant Breach ” shall mean (1) with respect to a Party, a breach of, nonfulfillment, non-performance or failure to comply with a covenant or agreement expressly made by such Party herein that is to be performed on or prior to the Closing or (2) a breach of, nonfulfillment, non-performance or failure to comply with a covenant or agreement expressly made by Seller in Article 5 of this Agreement solely relating to the operation, ownership or use of the Delayed Delivery Assets by Seller, SMaL or Seller’s other applicable Subsidiaries at any time on or prior to the Delayed Delivery Date.

(eee) “ Purchase Price ” shall mean Eleven Million Three Hundred and Fifty Thousand Dollars ($11,350,000).

(fff) “ Registered IP ” shall mean any Patents (including Patent applications), registered Copyrights (including Copyright applications), registered mask works, and registered Marks (including Mark applications).

(ggg) “ Representatives ” shall mean with respect to a Party, the directors, officers, employees, agents, investment bankers, attorneys, accountants and other advisors to, or representatives of, such Party and/or its Subsidiaries and Affiliates.

 

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(hhh) “ Retained Business Records ” shall mean all Business Records of the Seller and its Subsidiaries that are not Transferred Business Records.

(iii) “ Return ” shall have the meaning ascribed to such term in Section 3.10(a) .

(jjj) “ Roadmap Designs ” shall mean the products of the Business under development identified in Schedule 1.1(jjj) .

(kkk) “ Seller ” shall have the meaning ascribed to such term in the introductory paragraph.

(lll) “ Seller Disclosure Letter ” shall have the meaning ascribed to such term in Article 3 .

(mmm) “ Seller Indemnified Parties ” shall have the meaning ascribed to such term in Section 7.2(a) .

(nnn) “ Seller Material Adverse Effect ” shall mean any change, event, state of facts, or effect (each an “ Effect ”), individually or in the aggregate, that has had, or would reasonably be expected to have, a material adverse effect on the business, assets, results of operations, financial condition or employee, supplier or customer relations of the Business; provided, however , that none of the following shall be deemed, either alone or in combination, to constitute a Seller Material Adverse Effect, nor shall any of the following be taken into account in determining whether there has been a Seller Material Adverse Effect: any Effect resulting from or arising out of (i) the announcement or pendency of this Agreement or the transactions contemplated hereby, including any loss of Employees, (ii) the performance by a Party of its obligations under this Agreement (other than those obligations set forth in Section 5.3 of this Agreement) or the Collateral Agreements or as required by applicable Laws or accounting requirements in effect as of the date hereof (or after the date hereof if such change in Law or accounting requirements does not disproportionately and adversely affect the Transferred Assets or the Business), (iii) general economic conditions in the United States or in any other country in which Seller is currently engaged in the Business or in the semiconductor industry to the extent that such conditions do not disproportionately and adversely affect the Transferred Assets or the Business, (iv) any natural disaster or any acts of terrorism, sabotage, military action or war (whether or not declared) or any escalation or worsening thereof, or (v) any failure to meet financial projections in and of itself, but this subsection (v) shall in no way exclude from the definition of Seller Material Adverse Effect or from what constitutes a Seller Material Adverse Effect any development, Effect, condition or occurrence that gave rise to, contributed to or caused such failure to meet financial projections.

(ooo) “ SMaL ” shall mean SMaL Camera Technologies, Inc., a Delaware corporation and wholly-owned subsidiary of Seller.

(ppp) “ Subsidiary ” shall mean with respect to a Party, any other corporation, limited liability company, general or limited partnership, unincorporated association or other

 

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business entity of which (a) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Party, or one or more of the other Subsidiaries of such Party or a combination thereof, or (b) if a limited liability company, partnership, association or other business entity, a majority of the partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by such Party, or one or more Subsidiaries of such Party or a combination thereof.

(qqq) “ Taxes ” shall mean any United States, state, provincial, regional, local or foreign net income, alternative or add on minimum, gross income, gross receipts, property, sales, value-added, use, transfer, gains, license, excise, employment, payroll, services, withholding or minimum tax, or any other tax custom, duty, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest or any penalty, addition to tax or additional amount imposed by any Governmental Entity.

(rrr) “ Third Party ” shall mean any Person not a party to this Agreement and not an Affiliate of the other referenced Person or Persons; provided that, as used in Sections 7.4 and 7.5 , the term “Third Party” shall be deemed to exclude all Buyer Indemnified Parties and Seller Indemnified Parties.

(sss) “ Third Party Licenses ” shall mean those licenses identified on Schedule 1.1(sss) .

(ttt) “ Transferred Assets ” shall have the meaning ascribed to such term in Section 2.1 .

(uuu) “ Transferred Business Records ” shall mean all Business Records and all other information of the type described clauses (a) through (g) of the definition of “Other Business Confidential Information” in Section 5.5(b)(ii) , in each case that primarily relates to the Business or the Transferred Assets.

(vvv) “ Transferred Employee ” shall mean each Employee that becomes an employee of Buyer (or a Subsidiary thereof) upon the Closing.

(www) Transferred IP ” shall mean (1) all Intellectual Property owned or held by SMaL; (2) those Patents and Marks identified on Schedule 1.1(www) ; (3) to the extent owned by Seller, SMaL or any other applicable Subsidiary of Seller, all copyright and trade secret rights embodied in the Transferred Business Records; (4) to the extent owned by Seller, SMaL or any other applicable Subsidiary of Seller, all mask work rights in the mask works for the product designs included in the Transferred Tangible Assets; (5) to the extent owned by Seller, SMaL or any other applicable Subsidiary of Seller, all RTL (register transfer level) descriptions, test benches, synthesis scripts, timing scripts, place and route scripts, and other design-related software files and specifications for the product designs included in the Transferred Tangible Assets, and all copyrights therein; (6) to the extent owned by Seller, SMaL or any other applicable Subsidiary of Seller, all copyrights in the computer software included in the

 

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Transferred Tangible Assets; and (7) to the extent owned by Seller, SMaL or any other applicable Subsidiary of Seller, all patent and trade secrets rights in all inventions disclosed in the invention notebooks, patent committee presentations and patent prosecution files included in the Transferred Business Records, and in all inventions (other than Licensed IP) invented by the employees of the Business while working for the Business that are embodied in the Roadmap Designs as such designs exist on the Closing Date.

(xxx) “ Transferred Tangible Assets ” shall mean the fixed and other tangible assets owned by Seller and its Subsidiaries identified in Schedule 1.1(xxx) , which shall include the Transferred Business Records, the Finished Goods Inventory and the work-in-progress inventory under the Assumed Purchase Orders. For the avoidance of doubt, Seller shall have no obligation to physically deliver to Buyer any Finished Goods Inventory or work-in-progress inventory, in either case to the extent located at Third Party premises, under the Assumed Purchase Orders.

(yyy) “ Transfer Taxes ” shall mean all transfer, documentary, sales, registration, value-added, use and other similar Taxes, excluding, for the avoidance of doubt, any income Taxes, arising in connection with the consummation of the transactions contemplated hereby.

(zzz) “ Transition Services Agreement ” shall mean the transition services agreement, entered into by and between Seller and Buyer as of the Closing Date, substantially in the form attached hereto as Exhibit A .

(aaaa) “ USPTO ” shall mean the United States Patent and Trademark Office.

(bbbb) “ WARN Act ” shall mean the Worker’s Adjustment and Retraining Notification Act of 1988, as amended.

(cccc) “ Warranty Breach ” shall mean with respect to a Party, an inaccuracy or breach of any representation or warranty expressly made by such Party herein. For purposes of clarity, the settlement of any Third Party Claim (including a settlement without admission of fault) by an Indemnified Party shall not, of itself, create a presumption that the Indemnified Party did not pay, incur or suffer a Loss as a result of such Third Party Claim that would be indemnifiable pursuant to Article 7 of this Agreement.

1.2 Interpretation . The words “include,” “includes” and “including” when used herein shall be deemed in each case to be followed by the words “without limitation.” The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. The word “hereof” when used in this Agreement shall be deemed in each case to refer to this Agreement as a whole, not a specific paragraph, sentence, section, or similar limitation of scope. The words “ordinary course of business” when used herein shall be deemed in each case to be followed by the words “consistent with past practice and custom.”

 

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ARTICLE 2

PURCHASE AND SALE; CLOSING

2.1 Purchase and Sale of Assets .

(a) Subject to the terms and conditions set forth in this Agreement, on the Closing Date, Seller shall, or shall cause one or more of its Subsidiaries to, irrevocably sell, convey, transfer, assign and deliver to Buyer, and Buyer agrees to purchase, acquire and accept from Seller or its Subsidiaries, all of Seller’s and its Subsidiaries’ right, title and interest (whether beneficial or of record) in, to and under the Transferred Assets as the same shall exist on the Closing Date, free and clear of any Liens; provided, however , that the Transferred Assets that constitute Delayed Delivery Assets shall not be sold, conveyed, transferred, assigned or delivered to Buyer at the Closing but shall be transferred in accordance with the terms of Section 2.1(b) of this Agreement. For purposes of this Agreement, “ Transferred Assets ” shall mean all assets, properties and rights set forth or described in subsections (i) through (vii) below:

(i) the Transferred IP;

(ii) the Transferred Tangible Assets;

(iii) all of Seller’s and its Subsidiaries’ rights under all Assigned Contracts;

(iv) all present and future claims, counterclaims, causes of action, choses in action, rights of recovery, rights of set off, and rights of recoupment (excluding any such item relating to the payment of Taxes), which may be asserted against any Third Party by Seller or any of its Subsidiaries to the extent (and only to the extent) that they relate to any Transferred IP or other Transferred Assets, including Buyer’s title to any Transferred Assets and the right to receive all proceeds and damages to the extent (and only to the extent) arising therefrom;

(v) all Governmental Permits, to the extent transferable to Buyer;

(vi) all outstanding shares of capital stock of SMaL; and

(vii) all goodwill of or relating to any of the foregoing, together with the right to represent to Third Parties that Buyer is the owner of any and all of the forgoing.

(b) Subject only to the occurrence of the Closing under this Agreement, on the Delayed Delivery Date, Seller shall, or shall cause one or more of its Subsidiaries to, irrevocably sell, convey, transfer, assign and deliver to Buyer, and Buyer agrees to acquire and accept from Seller or its Subsidiaries, without the payment of any additional consideration, all of Seller’s and its Subsidiaries’ right, title and interest (whether beneficial or of record) in, to and under the Transferred Assets that constitute Delayed Delivery Assets, free and clear of any Liens.

 

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2.2 Assumption of Liabilities; Exclusion of Certain Liabilities; Assumption of Assigned Contracts .

(a) Upon the terms and subject to the conditions hereof, as of the Closing Date, Seller shall, or shall cause its Subsidiaries to, assign and transfer to Buyer, and Buyer shall assume and fully perform and discharge, on a timely basis and in accordance with their respective terms, only the Assumed Liabilities.

(b) Notwithstanding anything herein to the contrary, neither Seller nor SMaL nor any of Seller’s other applicable Subsidiaries shall assign and transfer to Buyer, and Buyer shall not assume or be responsible or liable for or otherwise be obligated to pay, perform or discharge, and Seller and its Subsidiaries will retain and remain responsible for and fully perform and discharge, on a timely basis and in accordance with their respective terms, all Excluded Liabilities.

(c) At the Closing, Seller shall assign to Buyer all of Seller’s and its Subsidiaries’ rights, and Buyer shall agree to assume all of the Assumed Liabilities, under each of the Assigned Contracts. On Schedule 2.2(c) , each Assigned Contract is identified by the date of the Assigned Contract and the other Person(s) party to such Assigned Contract(s).

2.3 Transaction Consideration . In consideration for the Transferred Assets, Buyer shall deliver to Seller on the Closing Date (payable by wire transfer of immediately available funds to an account designated in writing by Seller not less than two (2) business days prior to the Closing) an amount equal to the Purchase Price.

2.4 Allocation of Purchase Price . Within ninety (90) days following the Closing, Seller shall submit to Buyer in writing the allocation of the Purchase Price (plus any Assumed Liabilities to the extent properly taken into account for United States federal income Tax purposes) among all of the Transferred Assets, in accordance with applicable law, including Section 1060 of the Code (the “ Allocation Notice ”); provided that the parties may agree to amend or adjust such methodology to the extent that the parties mutually determine necessary to properly reflect the fair market value of the Transferred Assets. Buyer shall have the right to consent to such allocation, provided that such consent may not be unreasonably withheld. Buyer shall be deemed to have accepted the Allocation Notice, and it shall be deemed final, unless Buyer provides written notice of disagreement setting forth the reasons for such disagreement to Seller within five (5) days of receipt of the Allocation Notice (the “ Disagreement Notice ”). If Buyer provides a Disagreement Notice, the Parties shall negotiate in good faith to resolve the differences. Each Party will report the transaction consistently with the Allocation Notice, including reporting on IRS Form 8594, for all Tax purposes. To the extent required by applicable law, the Allocation Notice or Accounting Report, as appropriate, will be revised to reflect any adjustment of the Purchase Price.

2.5 Transfer Taxes . Except as otherwise specifically provided for in the Collateral Agreements, all Transfer Taxes and related fees incurred in connection with this Agreement and the Collateral Agreements, and the transactions contemplated hereby, shall be borne equally by Buyer and Seller and paid at the Closing. To the extent reasonable and legally able to do so, Buyer and Seller shall cooperate with each other to minimize such Taxes. Seller shall file a Return with respect to such Transfer Taxes within the time period prescribed by law.

 

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2.6 Closing . The closing of the transactions contemplated by this Agreement (the “ Closing ”) will take place at the offices of Wilson Sonsini Goodrich & Rosati, Professional Corporation, in Palo Alto, California commencing at 10:00 a.m., local time, three (3) business days following the satisfaction or written waiver of the last of the conditions of Closing as set forth in Article 6 (other than those conditions which, by their nature, are to be satisfied at the Closing, but subject to the satisfaction or waiver thereof), or on such other date the Parties may mutually determine (the “ Closing Date ”).

2.7 Further Assurances; Post-Closing Cooperation; Nonassignable Assets On the Closing Date or as soon thereafter as is reasonably practicable, Seller shall, in the manner and form reasonably specified by Buyer, deliver to Buyer all of the Transferred Assets, except to the extent that such Transferred Assets constitute Delayed Delivery Assets, in which event such obligation of Seller to deliver such assets to Buyer shall not become effective until the Delayed Delivery Date. Seller shall be entitled to retain copies of the Transferred Business Records, to the extent that any such records relate to the Seller (after consummation of the transactions set forth herein), except to the extent the disclosure of such documents or materials would violate any confidentiality agreement; provided, however , that Seller and its Subsidiaries shall continue to comply with the provisions of Section 5.5 with respect to such Transferred Business Records and any copies thereof.

(b) At any time after the Closing and prior to the fifth (5 ^th ) anniversary of the Closing Date, at Buyer’s request, Seller shall execute and deliver to Buyer such other instruments of sale, transfer, conveyance, license, assignment and confirmation, and provide such materials and information as Buyer may reasonably request to transfer, convey and assign to Buyer, and to confirm Buyer’s title to, all of the Transferred Assets, and, to the full extent permitted by law or contract, and to put Buyer in actual possession and operating control of the Transferred Assets, and otherwise to cause Seller to fulfill its obligations under this Agreement and the Collateral Agreements; provided, however that, to the extent that such Transferred Assets constitute Delayed Delivery Assets, the obligations of Seller to Buyer set forth in this Section 2.7(b) shall not become effective for such Delayed Delivery Assets until the Delayed Delivery Date . Any payments of fees and expenses for the preparation, recordation and filing of any such documents and any other out-of-pocket expenses incurred by Seller in connection with the foregoing shall be borne equally by Buyer and Seller and paid as such expenses are incurred by Seller.

(c) At any time on or following the Closing and prior to the fifth (5 ^th ) anniversary of the Closing Date, Seller will provide Buyer, upon Buyer’s reasonable prior written request, with copies and extracts from any Retained Business Records in its possession with respect to periods prior to the Closing, to the extent that such access may be reasonably required by the requesting Party in connection with (i) the preparation of Returns, (ii) the determination or enforcement of rights and obligations under this Agreement, including by any Indemnified Party (as defined below), (iii) compliance with the requirements of any

 

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Governmental Entity, (iv) in connection with any actual or threatened action or proceeding or (v) for any legitimate business purpose in connection with the Business (in which event Buyer shall be obligated to reimburse Seller for all reasonable out-of-pocket fees and expenses incurred by Seller in connection with making and delivering to Buyer such copies and extracts pursuant to this Section 2.7(c)(v) ); provided, however , that Seller shall not be required to provide such copies and extracts where doing so would violate any material law, statute, ordinance, rule, regulation, order, judgment, decree or Contract, or waive any attorney-client or other similar privilege, and Seller may redact information regarding itself or its Subsidiaries or otherwise in each case that is not relating to the Transferred Assets, Assumed Liabilities and/or the Business, and, in the event such provision of information would reasonably be expected to violate any material law, statute, ordinance, rule, regulation, order, judgment, decree or Contract or waive any attorney-client or other similar privilege, the parties shall take all reasonable measures to permit the compliance with such obligations in a manner that avoids any such harm or consequence.

(d) Except as otherwise contemplated for the Delayed Delivery Assets in Section 2.1(b) , to the extent that Buyer notifies Seller that it cannot be granted physical possession of any Transferred Tangible Asset as of the Closing Date, such Transferred Tangible Asset shall be held by Seller for and on behalf of Buyer until such time as Buyer is able to take possession thereof, and during such period, Buyer shall bear all risk of loss, liability and cost (as applicable) to operate, maintain and repair such Transferred Tangible Assets (other than as caused by Seller’s or its Subsidiaries’ gross negligence or willful misconduct).

(e) Nothing in this Agreement shall be construed as an attempt or agreement to assign any Transferred Asset which by its terms or by law is nonassignable, or is nonassignable without the consent of any Third Party, unless and until a consent shall be given from the party whose consent would be required (“ Nonassignable Assets ”). Seller agrees, and shall cause SMaL and any other applicable Subsidiary of Seller, to cooperate with Buyer at its request and use all reasonable efforts to promptly obtain each such consent; provided , that neither Buyer nor Seller nor any of their respective Affiliates shall be required to make any payment or concession or otherwise incur any liability in consideration for procuring such consent. As of and from the Closing Date, Seller will promptly arrange for the transfer of title to Buyer of each of the Nonassignable Assets, as soon as possible by, among other steps, paying in full all amounts due to be paid by Seller or its Subsidiaries under any Contracts to which any of the Nonassignable Assets is subject. Until title to all of the Nonassignable Assets is transferred to Buyer, Seller authorizes Buyer, to the extent permitted by applicable law and the terms of the applicable Nonassignable Asset(s), at Buyer’s option, to perform all the obligations and receive all the benefits of Seller under the applicable Nonassignable Asset(s).

2.8 Closing Deliveries Deliveries by Seller. At the Closing, Seller will deliver or cause to be delivered to Buyer the following:

(i) a certificate registered in the name of Buyer representing all of the shares of capital stock of SMaL;

(ii) the certificate referred to in Section 6.2(e) hereunder;

 

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(iii) the Bill of Sale, duly executed by Seller;

(iv) a certificate from the Secretary of State of Delaware, dated within five (5) business days of the Closing Date, as to the good standing of SMaL;

(v) the Transition Services Agreement, duly executed by Seller;

(vi) the License Agreement, duly executed by Seller;

(vii) the Intellectual Property Assignment, duly executed by Seller; and

(viii) such other documents and instruments as Buyer reasonably requests prior to the Closing Date.

(b) Deliveries by Buyer. At the Closing, Buyer will deliver or cause to be delivered to Seller the following:

(i) the Purchase Price;

(ii) the certificate referred to in Section 6.3(e) hereunder;

(iii) the Bill of Sale, duly executed by Buyer;

(iv) the Transition Services Agreement, duly executed by Buyer;

(v) the License Agreement, duly executed by Buyer;

(vi) the Intellectual Property Assignment, duly executed by Buyer; and

(vii) such other documents and instruments as Seller reasonably requests prior to the Closing Date.

2.9 Delayed Delivery Date Deliveries . On the Delayed Delivery Date, Seller and Buyer shall deliver to each other executed copies of a Bill of Sale for the Transferred Assets that constitute Delayed Delivery Assets.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF SELLER

Except as disclosed in the Seller disclosure schedule attached hereto (the “ Seller Disclosure Letter ”) (each such disclosure of which shall reference the appropriate section and, if applicable, subsection of this Article 3 to which it relates, and each such disclosure of which shall be deemed to be incorporated by reference into the applicable representations and warranties made in this Article 3 ; provided , that any information disclosed under any paragraph of the Seller Disclosure Letter shall be deemed disclosed and incorporated into any other section,

 

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subsection, paragraph and clause hereof where it is reasonably apparent that such disclosure is relevant to such other section, subsection, paragraph or clause), Seller hereby represents and warrants to Buyer, as of the date of this Agreement and as of the Closing Date, as follows:

3.1 Organization and Qualification . Seller is a corporation duly organized, validly existing and in good standing under the laws of Delaware. Seller has all necessary corporate powers to own its properties and to carry on its business (including the Business) as currently owned and operated, and is duly qualified to transact business in all jurisdictions in which the nature of its business (including the Business) or of its properties makes such qualification necessary.

3.2 Authority; No Violations Seller has all requisite corporate power and authority to enter into, deliver and perform its obligations under this Agreement and each of the Collateral Agreements, subject to satisfaction of Seller’s conditions set forth herein, and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the Collateral Agreements and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of Seller, SMaL or any other applicable Subsidiary of Seller or their respective shareholders. This Agreement has been duly executed and delivered by Seller and constitutes the legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms, subject to the effect of applicable bankruptcy, insolvency, reorganization or other similar laws affecting the rights of creditors and the effect or availability of rules of law governing specific performance, injunctive relief or other equitable remedies. The Collateral Agreements, when executed and delivered by Seller, will constitute the legal, valid and binding obligation of Seller, enforceable against Seller in accordance with their respective terms, subject to the effect of applicable bankruptcy, insolvency, reorganization or other similar laws affecting the rights of creditors and the effect or availability of rules of law governing specific performance, injunctive relief or other equitable remedies.

(b) The execution, delivery and performance of this Agreement and the Collateral Agreements by Seller do not and will not, and the consummation by Seller of the transactions contemplated hereby and thereby do not and will not, conflict with, or result in any violation or breach of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation, modification or acceleration of any obligation under (1) any provision of the certificate of incorporation or the bylaws of Seller, SMaL or any other applicable Subsidiary of Seller, (2) any material statute, law, ordinance, rule, regulation, order, judgment or decree applicable to Seller or the Transferred Assets, or (3) any Assigned Contract (other than as may be cured pursuant to the consents described in Schedule 3.3 ).

3.3 Consents . Except for the applicable requirements of the HSR Act and other similar anti-trust requirements of foreign Governmental Entities, if any, no consent, waiver, approval, order or authorization of, or registration, declaration or filing with, any Person is required to be obtained or made by or with respect to Seller, SMaL or any other applicable Subsidiary of Seller in connection with the execution and delivery of this Agreement or the Collateral Agreements by Seller or the consummation by Seller of the transactions contemplated

 

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hereby or thereby, except for consents of Third Parties (as listed in Schedule 3.3 ) which are required to transfer or assign to Buyer any Transferred Assets or assign the benefits of or delegate performance with regard to any Transferred Assets.

3.4 Affiliate Transactions . Except as set forth on Schedule 3.4 and except in any such individual’s capacity as an officer, director or employee of Seller or a Subsidiary of Seller, no officer, director, employee, shareholder or Affiliate of Seller or any individual related by blood, marriage or adoption to any such individual or any entity in which any such Person or individual owns any beneficial interest (i) is a party to any agreement, Contract, commitment or transaction with Seller or its Subsidiaries that pertains to the Business, (ii) has any interest in any property, real or personal or mixed, tangible or intangible, used in or pertaining to the Business or (iii) provides any services to Seller or its Subsidiaries in respect of the Business. With respect to all arrangements required to be described on Schedule 3.4 , the pricing and other terms of such arrangements are no less favorable than those which Seller would reasonably be expected to obtain in an arms-length transaction with an unaffiliated Third Party.

3.5 Business Changes . Since October 1, 2006 and through the date hereof, except as otherwise required by this Agreement, Seller, SMaL and any other applicable Subsidiary of Seller have held and used the Transferred Assets and conducted the Business only in the ordinary course of business and, without limiting the generality of the foregoing:

(a) There have been no changes with respect to any Transferred Assets that, in the aggregate, have had or would be reasonably expected to have a Seller Material Adverse Effect;

(b) Other than Permitted Liens, neither Seller, SMaL nor any other applicable Subsidiary of Seller has mortgaged, pledged, or otherwise encumbered any of the Transferred Assets;

(c) Other than Permitted Liens, neither Seller, SMaL nor any other applicable Subsidiary of Seller has sold, assigned, licensed, leased, transferred or conveyed, or committed itself to sell, assign, license, lease, transfer or convey, any (i) assets of Seller or of any applicable Subsidiaries of Seller that, if still owned by Seller or any of its applicable Subsidiaries, would constitute Transferred Assets, except sales of inventory in the ordinary course of business, or (ii) any Intellectual Property originally owned or developed by SMaL, other than in connection with sales of inventory in the ordinary course of business, regardless of whether such Intellectual Property was transferred to Seller, its Subsidiaries or a Third Party;

(d) There has not been any cancellation or other termination, or any notice in writing or other written communication of any intent to cancel or terminate, a material business relationship with Seller or SMaL (or, to the extent related to the Business, any other applicable Subsidiary of Seller) by or from any distributor, customer, supplier or vendor listed on Schedule 3.17(a) or 3.17(b) ;

 

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(e) There has not been any entry by Seller, SMaL or any of Seller’s other applicable Subsidiaries into, or material modification, amendment or cancellation of any Material Contract;

(f) There has not been any material revaluation by Seller or any of its Subsidiaries of any of the Transferred Assets, taken as a whole, or incident of damage, destruction, theft or casualty loss of the Transferred Assets, whether or not covered b