ASSET PURCHASE AGREEMENT

Exhibit 10.1

****Certain confidential information contained in this document, marked by brackets, has been omitted and filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

ASSET PURCHASE AGREEMENT

     This Asset Purchase Agreement (the “ Agreement ”) is entered into as of February 15 , 2007, by and between Silicon Integrated Systems Corporation, a California corporation (“ Buyer ”) ESS Technology, Inc., a California corporation (“ US Seller ”) and ESS Technology International, Inc., a Cayman corporation (“ Cayman Seller ”, and collectively with US Seller, “ Seller ”).

AGREEMENT

     In consideration of the mutual agreements, representations, warranties and covenants set forth below, Buyer and Seller agree as follows:

1. Definitions .

     1.1 Definitions . As used in this Agreement, the following terms shall have the following meanings:

          (a) “ Affiliate ” means with respect to any Person, a Person directly or indirectly controlling or controlled by or under common control with such Person. For these purposes, “ control ” shall refer to (i) the possession, directly or indirectly, of the power to direct the management or policies of the subject entity, whether through the ownership of voting securities, by contract, or otherwise, or (ii) the ownership, directly or indirectly, of at least fifty percent (50%) of the voting securities or other ownership interest of the subject entity, or in the event such entity resides in a country where such level of ownership is not permitted, the maximum percentage ownership therein allowed.

          (b) “ Acquisition Proposal ” means, other than the transactions contemplated by this Agreement and the SiS-Cayman Agreement, any offer, proposal or inquiry relating to, or any Third Party indication of interest in (i) any acquisition, purchase or transfer, direct or indirect, of the Assets to be transferred and sold hereunder or of the intangible assets of Seller or of the Transferred Employees to be transferred pursuant to the terms hereof, and (ii) any transaction, including without limitation, a merger, consolidation, share exchange, business combination, sale of substantially all assets of Seller, or tender offer, the consummation of which could reasonably be expected to impede, interfere with, prevent or materially delay the transactions contemplated by this Agreement or the SiS-Cayman Agreement or dilute materially the benefits to Buyer or SiS-Cayman of the transactions contemplated hereby or by the SiS-Cayman Agreement.

          (c) “ Business ” means the business of designing, developing, modifying and enhancing, manufacturing, having manufactured, marketing and distributing Products that are designed to: (i) support all current or future video and/or audio formats for play-back from optical or other media (except for applications in the Restricted Field of Use); or (ii) principally control blue-laser based optical drives, but which may also support red-laser based optical drives

as a matter of backward compatibility, and all derivatives thereof, as well as Products designed to support any successor formats or standards, and the provision of services relating thereto.

          (d) “ Buyer Products ” means any Products designed, developed, modified, enhanced, manufactured, marketed and distributed by or on behalf of Buyer or an Affiliate that are primarily used in the Business, including all successor products and new versions thereof for use in the Business, and includes the provision of services related to such Products.

          (e) “ Closing ” means the consummation of the transactions contemplated hereby.

          (f) “ Closing Date ” means the date of the Closing.

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

          (h) “ Confidential Information ” means nonpublic information that a party to this Agreement (“ Disclosing Party ”) designates in writing as being confidential to the party that receives such information (“ Receiving Party ”). “ Confidential Information ” includes, without limitation, information in tangible or intangible form relating to and/or including released or unreleased Disclosing Party software or hardware products, the marketing or promotion of any Disclosing Party product, Disclosing Party’s business policies or practices, and information received from others that Disclosing Party is obligated to treat as confidential. Confidential Information which is disclosed in tangible form shall be marked as “confidential” or words of similar import. Confidential Information which is disclosed verbally shall be designated as “confidential” by the Disclosing Party when disclosed. Notwithstanding the foregoing, the failure by the Disclosing Party to designate any tangible or intangible information as Confidential Information shall not give the Receiving Party the right to treat such information as free from the restrictions imposed by Section 6.17 of this Agreement if the circumstances would lead a reasonable person to believe that such information is Confidential Information. Except as otherwise indicated in this Agreement, the term “ Disclosing Party ” also includes all Affiliates of the Disclosing Party and, except as otherwise indicated, the term “ Receiving Party ” also includes all Affiliates of the Receiving Party. Confidential Information shall not include any information, however designated, that: (i) is or subsequently becomes publicly available without Receiving Party’s breach of any obligation owed to Disclosing Party; (ii) became known to Receiving Party prior to Disclosing Party’s disclosure of such information to Receiving Party pursuant to the terms of this Agreement without an obligation of confidentiality prior to the Disclosing Party’s disclosure; (iii) became known to Receiving Party from a source other than Disclosing Party other than by the breach of an obligation of confidentiality owed to Disclosing Party; or (iv) is independently developed by Receiving Party.

          (i) “ GAAP ” means generally accepted accounting principles of the United States as set forth by the Financial Accounting Standards Board.

          (j) “ Governmental Authorizations ” means the permits, authorizations, consents or approvals of any Governmental Entity that are a condition to the lawful consummation of the transactions contemplated hereby listed on Schedule 1.1(i) to this Agreement.

          (k) “ Governmental Entity ” means any court, or any federal, state, municipal or other governmental authority, department, commission, board, agency or other instrumentality (domestic or foreign).

          (l) “ Knowledge ” means that which is known by a Person and that of which a Person should have constructive knowledge after conducting a reasonable examination of all matters relating thereto.

          (m) “ Lien ” means any mortgage, pledge, lien, security interest, option, covenant, condition, restriction, encumbrance, charge or other third-party claim of any kind.

          (n) “ Material Adverse Effect ” with respect to a Person means any event, change or effect that is materially adverse to the condition (financial or otherwise), properties, assets, liabilities, business, operations, results of operations, or prospects of such Person and its Affiliates, taken as a whole, or an effect which prevents or materially delays a Person’s ability to consummate the transactions contemplated by this Agreement.

          (o) “ Person ” means an individual, corporation, partnership, association, trust, government or political subdivision or agent or instrumentality thereof, or other entity or organization.

          (p) “ Products ” means semiconductor products, components, or boards or assemblies incorporating such semiconductor products.

          (q) “ Purchased Assets ” has the meaning set forth in section 2.1.

          (r) “ Restricted Field of Use ” means the business of designing, developing, modifying and enhancing, manufacturing, having manufactured and distributing standalone Products used for the sole purpose of supporting current DVD optical disc technologies that utilize red laser technology to read and write data, including desktop/portable DVD players, mini-combo DVD players, DVD home theater systems and automotive DVD players which utilize such technology.

          (s) “ SiS-Cayman Agreement ” means that certain Asset Purchase Agreement of even date herewith between Seller and Silicon Holding Limited, a company organized under the laws of the Cayman Islands and an Affiliate of Buyer (“ SiS-Cayman ”), pursuant to which SiS-Cayman is acquiring substantially all the intangible assets of the Business.

          (t) “ Taxes ” means all taxes, however denominated, including any interest, penalties or other additions to tax that may become payable in respect thereof, (i) imposed by any federal, territorial, state, local or foreign government or any agency or political subdivision of any such government, for which Buyer could become liable as successor to or transferee of the Business or the Purchased Assets or which could become a charge against or lien on any of the Purchased Assets, which taxes shall include, without limiting the generality of the foregoing, all sales and use taxes, ad valorem taxes, excise taxes, business license taxes, occupation taxes, real and personal property taxes, stamp taxes, environmental taxes, real property gains taxes, transfer taxes, payroll and employee withholding taxes, unemployment insurance contributions,

social security taxes, and other governmental charges, and other obligations of the same or of a similar nature to any of the foregoing, which are required to be paid, withheld or collected, or (ii) any liability for amounts referred to in (i) as a result of any obligations to indemnify another person.

          (u) “ Transferred Employee ” means any employee who was employed by Seller in the Business as of December 31, 2006, who received and accepted an offer of employment by Buyer or an Affiliate of Buyer, or a designated co-employer of any of the foregoing (each, a “ Buyer Party ”), to commence work for such Buyer Party effective as of 12:01 a.m. on January 1, 2007 and who transferred employment to Buyer Party pursuant to such offer. Transferred Employees shall not include any person on a disability leave of more than twenty-six (26) weeks..

          (v) “ Transition Services Agreement ” means each agreement between Seller and Buyer (or an Affiliate of Buyer) dated as of January 1, 2007, pursuant to which Seller has agreed to provide Buyer (or its indicated Affiliate) with certain transition services in accordance with the terms thereof.

2. Sale and Purchase

     2.1 Transfer of Purchased Assets . Subject to the terms and conditions of this Agreement, Seller shall sell, assign, grant, transfer, and deliver (or cause to be sold, assigned, granted, transferred and delivered) to Buyer, or to any Affiliate of Buyer designated by Buyer, and Buyer shall purchase and accept from Seller as of the Closing Date, free and clear of all Liens, all of the Seller’s rights, title and interest in and to all of the following assets, properties and business of Seller as the same shall exist on the Closing Date (the “ Purchased Assets ”):

          (a) all tangible personal property and leases of and other interests in tangible personal property exclusively related to the Business, including, without limitation, the items listed on Schedule 2.1(a) ;

          (b) all rights under contracts, agreements, leases and other interests in real and personal property, licenses, commitments, sales and purchase orders and other instruments, set forth on Schedule 2.1(b) (collectively the “ Contracts ”);

          (c) all of Seller’s rights, claims, credits, causes of action or rights of set-off against third parties relating to the Purchased Assets, including, without limitation, unliquidated rights under warranties;

          (d) all permits, authorizations, consents and approvals of any Governmental Entity exclusively related to the Business, including without limitation, the items listed on Schedule 2.1(d) (the “ Permits ”);

          (e) all personnel and employment records relating to Transferred Employees; and

          (f) all goodwill associated with the Business or the Purchased Assets, together with the right to represent to third parties that Buyer, together with its Affiliates, is the successor to the Business.

     2.2 Excluded Assets . Buyer agrees that the assets of Seller set forth on Schedule 2.2 which are not expressly covered by Section 2.1 shall be excluded from the Purchased Assets (the “ Excluded Assets ”).

     2.3 Assumed Liabilities . Effective as of the Closing, Buyer (or its designated Affiliate(s), as the case may be) in accordance with Section 3.2 shall, without any further responsibility or liability of or recourse to Seller or any of Seller’s Affiliates, subsidiaries, stockholders, officers, directors, employees, agents, successors or assigns, absolutely and irrevocably assume, pay, perform and be liable and responsible for any and all of the following liabilities (collectively, the “ Assumed Liabilities ”):

          (a) all liabilities and obligations arising after the Closing Date with respect to the Purchased Assets, provided however, that all liabilities arising prior to the Closing Date with respect to the Purchased Assets and all unperformed or unmatured obligations and covenants of Seller incurred by Seller prior to the Closing Date with respect to the Purchased Assets shall remain the sole responsibility of Seller; and provided further that any claim arising after the Closing Date that would not have occurred but for the inaccuracy of a representation or warranty of Seller hereunder shall also remain the sole responsibility of Seller.

     2.4 Excluded Liabilities . Except for the Assumed Liabilities, Buyer shall not assume and shall not be liable for, and Seller and its Affiliates shall retain and remain solely liable for and obligated to discharge, all of the debts, contracts, agreements, commitments, obligations and other liabilities of any nature whatsoever of Seller and its Affiliates, whether known or unknown, accrued or not accrued, fixed or contingent, including without limitation, the following (collectively, with the foregoing, the “ Excluded Liabilities ”):

          (a) Any liability for breaches by Seller or any of its Affiliates on or prior to the Closing Date of any contract or any other instrument, contract or purchase order or any liability for payments or amounts due under any Contract or any other instrument, contract or purchase order on or prior to the Closing Date;

          (b) Any liability or obligation for Taxes attributable to or imposed upon Seller or any of its Affiliates, or attributable to or imposed upon the Purchased Assets for any period (or portion thereof) up to but excluding the Closing Date, other than transfer taxes, sales, value-added or other similar taxes on the Purchased Assets directly attributable to or arising from the transactions contemplated by this Agreement (for purposes of determining the amount of Taxes attributable to the period up to the Closing Date, the amount of any Taxes based on or measured by income or receipts shall be determined based on a closing of the books as of the close of business on the day before the Closing Date, and the amount of other Taxes shall be deemed to be the amount of such Tax for the entire taxable period multiplied by a fraction the numerator of which is the number of days in the taxable period ending on the day before the Closing Date and the denominator of which is the number of days in such entire taxable period);

          (c) Any liability or obligation for or in respect of any loan, other indebtedness for money borrowed, or account payable of Seller or any of its Affiliates, including any such liabilities owed to Affiliates of Seller;

          (d) Any liability or obligation arising as a result of any legal or equitable action or judicial or administrative proceeding initiated at any time, to the extent relating to any action or omission on or prior to the Closing Date by or on behalf of Seller or any of Affiliates, including, without limitation, any liability for infringement of intellectual property rights, breach of product warranty, injury or death caused by products, or violations of federal or state securities or other laws;

          (e) Any liability or obligation arising on or prior to the Closing Date out of any “employee benefit plan,” as such term is defined by the Employee Retirement Income Security Act of 1974 (“ ERISA ”) or other employee benefit plans;

          (f) Any liability or obligation for making payments of any kind (including as a result of the sale of Purchased Assets or as a result of the termination of employment by Seller of employees, or other claims arising out of the terms and conditions of employment with Seller, or for vacation or severance pay or otherwise) to employees of Seller or in respect of payroll taxes for employees of Seller;

          (g) Any liability of Seller incurred in connection with the making or performance of this Agreement and the transactions contemplated hereby;

          (h) Any liability of Seller arising out of the violation of or failure to comply with any environmental laws applicable to any aspect of the Business; and

          (i) Any costs or expenses of Seller incurred in connection with shutting down, deinstalling and removing equipment not purchased by Buyer, and the costs associated with all contracts and agreements not assumed by Buyer.

     2.5 Purchase Price . Subject to the performance by Seller of all of its obligations under this Agreement (including delivering all documents required to be delivered) at the Closing, in consideration of the acquisition of the Purchased Assets under Section 2.1, Buyer agrees to deliver to Seller evidence that Buyer has cut a check in the amount of $50,000.00 (the “ Purchase Price ”) payable to Seller which check shall be delivered to Seller within seven (7) business days of the Closing Date, and Buyer agrees to assume the Assumed Liabilities.

     2.6 Allocation of Purchase Price . The Purchase Price shall be allocated [*****] to the tangible personal property acquired pursuant to this Agreement for purposes of complying with the requirements of Section 1060 of the Code and the regulations thereunder. Buyer and Seller agree to each prepare and file on a timely basis with the Internal Revenue Service (and applicable state tax authorities) substantially identical and supplemental Internal Revenue

Service Forms 8594 (and corresponding state tax forms) consistent with such allocation of the Purchase Price. If any Tax authority challenges such allocation, the party receiving notice of such challenge shall give the other prompt written notice thereof and the parties shall cooperate in order to preserve the effectiveness of such allocation. For purposes of this allocation, no value is being attributed to goodwill or going concern, covenant not to compete or contingent or assumed liabilities.

3. Closing

     3.1 Closing . Subject to the terms and conditions of this Agreement, the Closing shall take place on such date, as soon as practicable after all conditions precedent in Sections 8 and 9 have been satisfied or waived, as the parties may agree (the “ Closing Date ”), but in any case, no later than February 28, 2007, provided however that the parties may mutually agree to extend the time permitted to effect the Closing beyond February 28, 2007.

     3.2 Actions at the Closing . At the Closing, Seller shall deliver the Purchased Assets to Buyer, Buyer shall deliver the Purchase Price to Seller, and Buyer and Seller shall take such actions and execute and deliver such agreements, bills of sale, and other instruments and documents as necessary or appropriate to effect the transactions contemplated by this Agreement in accordance with its terms, including without limitation the following:

          (a) Bill of Sale; Transfer Documents . Seller shall deliver to Buyer a general Bill of Sale substantially in the form attached as Exhibit A and any other transfer documents as may be required or desirable to effect the transfer of any of the Purchased Assets to Buyer (the “ Transfer Documents ”) in each case duly executed by Seller, and in the aggregate assigning to Buyer all of Seller’s right, title and interest in and to the Purchased Assets. Buyer may designate one or more of its Affiliates as the recipient of certain of the Purchased Assets, and as the party to assume certain of the Assumed Liabilities, in which case Seller shall transfer such Purchased Assets and Assumed Liabilities to Buyer or the Affiliate(s) designated by Buyer pursuant to such Transfer Documents.

          (b) Purchase Price . Buyer shall deliver to Seller evidence that Buyer has cut a check in the amount of the Purchase Price payable to Seller, which check shall be delivered to Seller within seven (7) business days of the Closing Date.

          (c) Title . Seller shall provide reasonable evidence of valid title to such of the Purchased Assets as Buyer may reasonably request in writing prior to the Closing, in form and substance reasonably satisfactory to Buyer.

          (d) Third Party Consents and Assignments . Seller shall deliver to Buyer any assignments and the Required Consents (as defined below) to assignment, that it has obtained in respect of any Purchased Assets, duly executed by parties having the authority to so assign or consent to assign, in form and substance as Buyer shall reasonably request, as well as a written confirmation from such third parties that the Purchased Assets are in good standing.

          (e) Seller Documents . At the Closing, Seller shall deliver to Buyer any and all documents required to satisfy the conditions set forth in Section 9 of this Agreement and any other closing documents reasonably requested by Buyer.

          (f) Buyer Documents . At the Closing, Buyer shall deliver to Seller any and all documents required to satisfy the conditions set forth in Section 8 of this Agreement and any other closing documents reasonably requested by Seller.

          (g) Post-Closing Actions . Subsequent to the Closing Date, Seller shall, and shall cause any Affiliate of Seller to, from time to time execute and deliver, upon the request of Buyer, all such other and further materials and documents and instruments of conveyance, transfer or assignment as may reasonably be requested by Buyer to effect, record or verify the transfer to and vesting in Buyer of Seller’s and any of Seller’s Affiliates’ right, title and interest in and to the Purchased Assets, free and clear of all Liens in accordance with the terms of this Agreement.

4. Representations and Warranties of Seller

     Each representation and warranty set forth below is qualified by any exception or disclosures set forth in the Seller Disclosure Schedule attached hereto, which exceptions specifically reference the Section(s) to be qualified. In all other respects, each representation and warranty set out in this Section 4 is not qualified in any way whatsoever, will not merge on Closing or by reason of the execution and delivery of any agreement, document or instrument at the Closing, will remain in force on and after the Closing Date, is given with the intention that liability is not confined to breaches discovered before Closing, is separate and independent and is not limited by reference to any other representation or warranty or any other provision of this Agreement, and is made and given with the intention of inducing the Buyer to enter into this Agreement. Except as otherwise set forth in the Seller Disclosure Schedule, Seller represents and warrants to Buyer as follows:

     4.1 Organization, Standing and Power . US Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of California, and Cayman Seller is a corporation duly organized, validly existing and in good standing under the laws of the Cayman Islands. Seller has the requisite corporate power and authority and all necessary permits, authorizations, consents, and approvals of all Governmental Entities to own, lease and operate its properties and to carry on the Business as now being conducted and as proposed to be conducted, except where the failure to have such power, authority and governmental approvals would not, individually or in the aggregate, have a Material Adverse Effect. Seller is duly qualified or licensed as a foreign corporation to do business, and is in good standing, in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its business makes such qualification or licensing necessary, except for failures to be so qualified or licensed and in good standing that would not, individually or in the aggregate, have a Material Adverse Effect. US Seller has previously delivered to Buyer true and complete copies of the Articles of Incorporation and Bylaws of US Seller as presently in effect. Cayman Seller has delivered to Buyer true and complete copies of the Articles of Association and related charter documents of Cayman Seller as presently in effect.

     4.2 Authority . The execution and delivery of this Agreement (and all other agreements and instruments contemplated under this Agreement) by Seller, the performance by Seller of its obligations hereunder and thereunder, and the consummation by Seller of the transactions contemplated hereby and thereby have been duly authorized by all necessary action by the Board of Directors and shareholders of Seller, and no other act or proceeding on the part of or on behalf of Seller or its shareholders is necessary to approve the execution and delivery of this Agreement and such other agreements and instruments, the performance by Seller of its obligations hereunder and thereunder and the consummation of the transactions contemplated hereby and thereby. The signatory officers of Seller have the power and authority to execute and deliver this Agreement and all of the other agreements and instruments to be executed and delivered by Seller pursuant hereto, to consummate the transactions hereby and thereby contemplated and to take all other actions required to be taken by Seller pursuant to the provisions hereof and thereof.

     4.3 Execution and Binding Effect . This Agreement has been duly and validly executed and delivered by Seller and constitutes, and the other agreements and instruments to be executed and delivered by Seller pursuant hereto, upon their execution and delivery by Seller, will constitute (assuming, in each case, the due and valid authorization, execution and delivery thereof by Buyer), legal, valid and binding agreements of Seller, enforceable against Seller in accordance with their respective terms.

     4.4 Consents and Approvals of Governmental Entities . Other than the Governmental Authorizations there is no requirement applicable to Seller to make any filing, declaration or registration with, or to obtain any permit, authorization, consent or approval of, any Governmental Entity as a condition to the lawful consummation by Seller of the transactions contemplated by this Agreement and the other agreements and instruments to be executed and delivered by Seller pursuant hereto or the consummation by Seller of the transactions contemplated herein or therein.

     4.5 No Violation . Neither the execution, delivery and performance of this Agreement and all of the other agreements and instruments to be executed and delivered pursuant hereto, nor the consummation of the transactions contemplated hereby or thereby, will, with or without the passage of time or the delivery of notice or both, (a) conflict with, violate or result in any breach of the terms, conditions or provisions of the Articles of Incorporation or Bylaws of Seller, (b) conflict with or result in a violation or breach of, or constitute a default or require consent of any Person (or give rise to any right of termination, cancellation or acceleration) under, any of the terms, conditions or provisions of any contract, notice, bond, mortgage, indenture, license, franchise, permit, agreement, lease or other instrument or obligation to which Seller is a party or by which Seller or any of the Purchased Assets may be bound, (c) violate any statute, ordinance or law or any rule, regulation, order, writ, injunction or decree of any Governmental Entity applicable to Seller or by which any properties or assets of Seller may be bound, or (d) result in any cancellation of, or obligation to repay, any grant, loan or other financial assistance received by Seller from any Governmental Entity. No “bulk sales” legislation applies to the transactions contemplated by this Agreement.

     4.6 Consents . Schedule 4.6 sets forth each agreement, contract, license or other instrument binding upon Seller requiring a consent as a result of the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby (each a “ Required Consent ”).

     4.7 SEC Documents; Financial Information . Seller has delivered to Buyer a true and complete copy of all filings it has made with the Securities and Exchange Commission (“ SEC ”) since January 1, 2005 (the “ SEC Documents ”). The SEC Documents contain an audited consolidated balance sheet of Seller as of December 31, 2005 and the related audited consolidated statements of operations and cash flows for the year then ended and the Seller’s unaudited consolidated balance sheet as of September 30, 2006, and the related unaudited consolidated statements of operations and cash flows for the nine month period then ended. Seller has also provided its unaudited balance sheet as of September 30, 2006, a copy of which is set forth in the Seller Disclosure Schedule (the “ Last Balance Sheet ” and together with the SEC Documents, “ Seller’s Financials ”). Seller’s Financials, and the notes thereto are correct and complete in all material respects and were prepared in accordance with GAAP applied on a consistent basis throughout the periods indicated and consistent with each other. Seller’s Financials present fairly the financial condition and operating results and cash flows of Seller as of the dates and during the periods indicated therein, subject, in the case of the unaudited statements, to normal year-end adjustments, which will not be material in amount or significance. Seller’s Financials accurately record the Purchased Assets as assets of Seller on each applicable balance sheets included in the SEC Documents as well as on the Last Balance Sheet. Since the date of the Last Balance Sheet, there has been no material change in Seller’s accounting policies and as of their respective filing dates, the SEC Documents complied in all material respects with the requirements of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), and none of the SEC Documents nor the Last Balance Sheet contained any untrue statement of a material fact or omitted to state a material fact required to be state therein or necessary to make the statement made therein, in light of the circumstances in which they were made, not misleading, except to the extent corrected by a document subsequently filed with the SEC and provided to Buyer prior to the date hereof.

     4.8 No Undisclosed Liabilities . The Purchased Assets do not have any liability, Lien, indebtedness, obligation, expense, claim, deficiency, guaranty or endorsement of any type associated with them, whether accrued, absolute, contingent, matured, unmatured or other (whether or not required by GAAP to be reflected in the Seller’s Financials) which (i) have not been reflected in the Last Balance Sheet or the US Seller’s annual report on Form 10-K, or (ii) have not arisen in the ordinary course of the Seller’s business since the date of the Last Balance Sheet, and are disclosed in the Seller Disclosure Schedule.

     4.9 Assets Generally .

          (a) The Purchased Assets include all tangible properties and Contracts used by Seller in operating the Business and necessary for Buyer to operate the Business after the Closing Date. Other than the Required Consents (including without limitation required Contract assignments) and the Governmental Approvals, no licenses or other consents from, or payments

to, any other Person are or will be necessary for Buyer to operate the Business and use the Purchased Assets in the manner in which Seller has operated the same.

          (b) Seller holds good and marketable title, license to or leasehold interest in all of the Purchased Assets and has the complete and unrestricted power and the unqualified right to sell, assign and deliver the Purchased Assets to Buyer. Upon consummation of the transactions contemplated by this Agreement, Buyer will acquire good and marketable title, license or leasehold interest to the Purchased Assets free and clear of any Liens and there exists no restriction on the use or transfer of the Purchased Assets, except as may be assumed hereunder by Buyer as an Assumed Liability or as may otherwise be expressly disclosed in Schedule 4.9(b) hereto. No Person other than Seller has any right or interest in the Purchased Assets, including the right to grant interests in the Purchased Assets to third parties, except for Purchased Assets licensed or leased from third parties which are set forth in the Seller Disclosure Schedule and identified as such.

          (c) None of the Purchased Assets that constitute tangible personal property is held under any lease, security agreement, conditional sales contract, Lien, or other title retention or security arrangement.

          (d) Except as provided in this Agreement, no restrictions will exist on Buyer’s right to sell, resell, license or sublicense any of the Purchased Assets or engage in the Business, nor will any such restrictions be imposed on Buyer as a consequence of the transactions contemplated by this Agreement or by any agreement referenced in this Agreement.

          (e) All of the Purchased Assets are in operating condition and repair, as required for their use in the Business as presently conducted, and conform to all applicable laws, and no notice of any violation of any law relating to any of the Purchased Assets or Assumed Liabilities has been received by Seller.

     4.10 Intellectual Property .

          (a) The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby (including without limitation the continued conduct by Buyer after the Closing Date of the Business as presently conducted by Seller and the incorporation of any intellectual property of the Business in any product of Buyer or an affiliate of Buyer) will not breach, violate or conflict with any instrument or agreement governing any intellectual property necessary or required for, or used in, the conduct of the Business as presently conducted and will not cause the forfeiture or termination or give rise to a right of forfeiture or termination of any such intellectual property or in any material way impair the right of Buyer or any of its affiliates to use, sell, license or dispose of, or to bring any action for the infringement of, any such intellectual property or portion thereof;

          (b) Seller has not received any notice asserting that any of the Purchased Assets or the proposed use, sale, license or disposition thereof conflicts or will conflict with the rights of any other party, and to Seller’s knowledge there is no basis for any such assertion.

     4.11 Licenses and Permits . Seller holds all consents, approvals, registrations, certifications, authorizations, permits and licenses of, and has made all filings with, or notifications to, all Governmental Entities pursuant to applicable requirements of all federal, state, local and foreign laws, ordinances, governmental rules or regulations applicable to the Business, including, but not limited to, all such laws, ordinances, governmental rules or regulations relating to the Purchased Assets (at their current level of development and use). The Business is in compliance with all federal, state, local and foreign laws, ordinances, governmental rules and regulations relating to the products manufactured by the Business or otherwise related to the Business and Seller has no reason to believe that any material consents, approvals, authorizations, registrations, certifications, permits, filings or notifications that it has received or made to operate the Business are invalid or have been or are being suspended, canceled, revoked or questioned. There is no investigation or inquiry to which Seller is a party or, to Seller’s knowledge, pending or threatened, relating to the Business and its compliance with applicable foreign, state, local or foreign laws, ordinances, governmental rules or regulations. Each such consent, approval, registration, certification, authorization, permit or license is transferable and shall be transferred to Buyer in accordance with the terms of this Agreement.

     4.12 Employees .

          (a) Schedule 4.12 sets forth the names, compensation levels and job titles of all of the employees of Seller currently engaged in the Business. All employees, consultants, officers, directors and shareholders of Seller or any Seller Subsidiary that have had access to the Purchased Assets are parties to a written agreement in Seller’s standard forms (copies of which have been provided to Buyer)(each, a “ Confidentiality Agreement ”), under which each such person or entity (i) is obligated to disclose and transfer to Seller, without the receipt by such person of any additional value therefor (other than normal salary or fees for consulting services), all inventions, developments and discoveries which, during the period of employment with or performance of services for Seller, he or she makes or conceives of either solely or jointly with others, that relate to any subject matter with which his or her work for Seller may be concerned, or relate to or are connected with the Business, products or projects of Seller, or involve the use of the time, material or facilities of Seller, and (ii) is obligated to maintain the confidentiality of proprietary information of Seller. None of Seller’s employees, consultants, officers or directors is obligated under any contract (including licenses, covenants or commitments of any nature) or other agreement, or subject to any judgment, decree or order of any court or administrative agency, that would conflict with their obligation to promote the interests of Seller with regard to the Business or the Purchased Assets or that would conflict with the Business or the Purchased Assets. Neither the execution nor the delivery of this Agreement, nor the carrying on of the Business by its employees and consultants, will conflict with or result in a breach of the terms, conditions or provisions of, or constitute a default under, any contract, covenant or instrument under which any of such persons or entities are now obligated. It is currently not necessary nor will it be necessary for Seller to utilize in the Business any inventions of any of such persons or entities (or people it currently intends to hire) made or owned prior to their employment by or affiliation with Seller, nor is it or will it be necessary to utilize any other assets or rights of any such persons or entities (or people it currently intends to hire) made or owned prior to their employment with or engagement by Seller, in violation of any registered patents, trade names, trademarks or copyrights or any other limitations or restrictions to which any such persons or

entity is a party or to which any of such assets or rights may be subject. To the Seller’s knowledge, none of Seller’s employees, consultants, officers, directors or shareholders that has had knowledge or access to information relating to the Purchased Assets has taken, removed or made use of any proprietary documentation, manuals, products, materials, or any other tangible item from his or her previous employer relating to the Purchased Assets by such previous employer which has resulted in Seller’s access to or use of such proprietary items included in the Purchased Assets, and pursuant to the transaction hereunder, Buyer will not gain access to or inadvertently make use of any such proprietary items.

          (b) Except for the Confidentiality Agreements, there are no written or oral contracts of employment between Seller and any Employee.

          (c) Seller is not a party to a collective bargaining agreement with any trade union, Seller’s employees are not members of a trade union certified as a bargaining agent with the Seller and no proceedings to implement any such collective bargaining agreement or certifications are pending.

     4.13 Employee Benefit and Compensation Plans . Buyer will incur no liability with respect to, or on account of, and Seller will retain any liability for, and on account of, any employee benefit plan of Seller, any of its Affiliates or any predecessor employer of any employee, including, but not limited to, liabilities Seller may have to such employees under all employee benefit schemes, incentive compensation plans, bonus plans, pension and retirement plans, vacation, profit-sharing plans (including any profit-sharing plan with a cash-or-deferred arrangement) share purchase and option plans, savings and similar plans, medical, dental, travel, accident, life, disability and other insurance and other plans or arrangements, whether written or oral and whether “qualified” or “non-qualified,” or to any employee as a result of termination of employment by Seller as contemplated by this Agreement. Seller has not, with respect to any employee, maintained or contributed to, or been obligated or required