ASSET PURCHASE AGREEMENT

Exhibit 2.1

EXECUTION VERSION

ASSET PURCHASE AGREEMENT

BY AND AMONG

BROADCOM CORPORATION,

BROADCOM INTERNATIONAL LIMITED,

and

ADVANCED MICRO DEVICES, INC.

Dated as of August 25, 2008

[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

TABLE OF CONTENTS

 

 

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

 

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

 

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

TABLE OF EXHIBITS AND PRINCIPAL SCHEDULES

 

 

Advanced Micro Devices, Inc. agrees to furnish supplementally a copy of any of the foregoing exhibits or schedules to the SEC upon request.

 

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

ASSET PURCHASE AGREEMENT

This ASSET PURCHASE AGREEMENT (together with the Disclosure Schedules and the other schedules and exhibits hereto, the “ Agreement ”) is made and entered into as of August 25, 2008, by and among Broadcom Corporation, a California corporation (“Purchaser”), Broadcom International Limited, an exempted company organized and existing under the laws of the Cayman Islands (“ BIL ”), and Advanced Micro Devices, Inc., a Delaware corporation (“ Seller ”). Capitalized terms used and not otherwise defined herein have the meanings set forth in Article 10 .

RECITALS

A. Seller, through its Consumer Electronics Group, is engaged, directly and through certain of its Subsidiaries, in the Business.

B. Purchaser desires to purchase from Seller, and Seller desires to sell to Purchaser, certain of the assets of Seller and its Subsidiaries, on the terms and subject to the conditions set forth herein.

C. Seller and Purchaser desire to make certain representations, warranties, covenants and agreements in connection with the transactions contemplated by this Agreement, and concurrently herewith are executing and delivering Intellectual Property License Agreements in the forms annexed hereto as Exhibits K.1, K.2 and K.3 , the licenses granted therein to be subject to the consummation of the transactions contemplated by this Agreement and to be effective from and after the Effective Time.

D. A portion of the cash consideration otherwise payable by Purchaser pursuant to this Agreement will be placed into escrow by Purchaser, the release of which will be contingent upon certain events and conditions, all as set forth in Article 1 and Article 7 .

NOW, THEREFORE, in consideration of the premises, and the covenants, promises, representations and warranties set forth herein, and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged by the parties), intending to be legally bound hereby, the parties agree as follows:

ARTICLE 1.

PURCHASE AND SALE OF ASSETS; CLOSING

1.1 Purchase and Sale of Assets . At the Closing, on the terms and subject to the conditions set forth in this Agreement (and, in the case of Assets and Properties located in the People’s Republic of China, in the China Asset Purchase Agreement, in the case of Assets and Properties located in India, in the India Asset Purchase Agreement, in the case of Assets and Properties located in Korea, in the Korea Asset Purchase Agreement, and, in the case of Assets and Properties located in Japan, in the Japan Asset Purchase Agreement), BIL (and/or one or more Subsidiaries of BIL, as designated by BIL prior to the Closing) shall purchase, acquire and accept from Seller and its Subsidiaries, and Seller shall (and shall cause each applicable

 

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

Subsidiary of Seller to) sell, transfer, assign, convey and deliver to BIL (and/or one or more Subsidiaries of BIL, as designated by BIL prior to the Closing), all right, title and interest held by Seller and its Subsidiaries in, to and under all of the Assets and Properties described in Section 1.1(b) and Section 1.1(c) (or such portion thereof or such fractional interest therein as BIL shall designate prior to the Closing) and Purchaser shall (and shall cause its designated Subsidiaries to) purchase, acquire and accept from Seller and its Subsidiaries, and Seller shall (and shall cause each applicable Subsidiary of Seller to) sell, transfer, assign, convey and deliver to Purchaser and its designated Subsidiaries, all right, title and interest held by Seller and its Subsidiaries in, to and under all of the Assets and Properties (other than the Assets and Properties described in Section 1.1(b) and Section 1.1(c ), or the portion thereof or fractional interest therein, purchased by BIL or Subsidiaries of BIL), wherever situated and of whatever kind and nature (whether real or personal, tangible or intangible, and whether or not reflected on the books and records of Seller or any of its Subsidiaries or Affiliates), that, other than the Excluded Assets, are primarily related to (or are otherwise required for the operation of) the Business ( provided, however , that with respect to the categories and types of Assets and Properties set forth in Sections 1.1(a), (b), (c), (d) and (m) , only such Assets and Properties as specifically listed or described in such sections) (the “ Purchased Assets ”), free and clear of all Liens except for Permitted Exceptions, by delivery of one or more Bills of Sale in substantially the forms set forth in Exhibit E hereto, Patent assignments in substantially the forms set forth in Exhibit F hereto, trademark assignments in substantially the form set forth in Exhibit G hereto, copyright assignments in substantially the form set forth in Exhibit H hereto, an Assignment and Assumption Agreement in substantially the form of Exhibit I hereto, Real Property Transfer Agreements in substantially the form set forth in Exhibit M hereto (with such amendments, reasonably acceptable to Purchaser, BIL and Seller, as may be required to obtain applicable landlord consents thereto) and/or such other instruments of transfer and title as are contemplated by the China Asset Purchase Agreement, the India Asset Purchase Agreement, the Korea Asset Purchase Agreement and the Japan Asset Purchase Agreement or as Purchaser may otherwise reasonably request, in each case in form and substance reasonably acceptable to Purchaser, including each of the assets described in this Section 1.1 , such sales, transfers, assignments, conveyances and deliveries to be effective immediately after midnight of the day on which the last of the acts constituting the Closing shall be completed (the “ Effective Time ”):

(a) the leasehold and subleasehold interests of Seller and its Subsidiaries in the Business Real Properties listed in Schedule 1.1(a) , and all right, title and interest held by Seller and its Subsidiaries in, to and under all tenant improvements therein and thereto (the “ Assigned Leasehold and Subleasehold Interests ”);

(b) (i) the Registered Intellectual Property Rights listed in Schedule 1.1(b) (the “ Purchased Registered Intellectual Property Rights ”), and (ii) all other Intellectual Property Rights (other than Patents) exclusively related to the Business or to the extent otherwise covering the Purchased Technology (the “ Other Purchased Intellectual Property Rights ”);

(c) (i) all versions of the Technology listed in Schedule 1.1(c) (whether or not such version is included in a Current Business Product existing on the date hereof) (“ Listed Purchased Technology ”), and (ii) all versions of all other Technology owned by Seller or its Subsidiaries that is exclusively related to the Business as of the Closing Date (the “ Other Purchased Technology ”);

 

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

(d) the Contracts listed or described in Schedule 1.1(d) (but not, for the avoidance of doubt, Excluded Contracts as defined in Section 1.2 ) (the “ Assigned Contracts ”);

(e) all goods and services and all other economic benefits to be received, directly or indirectly, by the Business subsequent to the Effective Time arising out of prepayments and payments by Seller and its Subsidiaries prior to the Effective Time, including the prepayments and payments listed in Schedule 1.1(e) (the “ Assigned Prepayments ”);

(f) all Permits and Approvals (including all Environmental Permits) primarily related to or necessary for the operation of the Business or any of the Purchased Assets (to the extent such Permits and Approvals are transferable), including those listed in Schedule 1.1(f) (the “ Assigned Permits and Approvals ”);

(g) all equipment (including work stations, computers, servers, routers, hardware emulators, third-party reference designs and laboratory equipment), furniture, furnishings, fixtures, machinery, vehicles, tools and tooling and other tangible personal property primarily related to (or otherwise necessary for the operation of) the Business (including all equipment, furniture, furnishings, fixtures, machinery, vehicles, tools and tooling and other tangible personal property used or held for use in the Business and all related warranties and guarantees, if any, whether express or implied, existing for the benefit of Seller or any of its Subsidiaries in connection therewith to the extent transferable), including the items listed in Schedule 1.1(g) (the “ Purchased Furniture and Equipment ”), it being understood and agreed that, for the avoidance of doubt, the following are not intended to be covered by this Section 1.1(g) : (i) software tools which are addressed pursuant to Section 1.1(c) and Section 1.1(d) of this Agreement or the Transition Services Agreement and (ii) office equipment used by Non-transferring Employees;

(h) all inventories of raw materials, work in process, finished goods and spare parts, office supplies, maintenance supplies, packaging materials, promotional materials and other similar inventory primarily related to the Business, including all such items listed in Schedule 1.1(h) (the “ Purchased Inventory ”);

(i) to the extent such rights relate to any of the tangible Purchased Assets (but not to any Intellectual Property Rights or Technology), all rights of Seller and its Subsidiaries under or pursuant to all warranties, representations and guarantees made by suppliers, manufacturers and contractors to the extent related to any of the tangible Purchased Assets, including the rights listed in Schedule 1.1(i) (the “ Assigned Warranty Rights ”);

(j) all property and casualty insurance proceeds, and all rights to property and casualty insurance proceeds, in each case to the extent received or receivable in respect of any of the Purchased Assets, including the proceeds and rights to proceeds listed in Schedule 1.1(j) (the “ Assigned Insurance Proceeds ”);

 

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

(k) all Business Books and Records, subject to any restrictions imposed by applicable Law on the transfer of employee files, it being understood and agreed that where such Business Books and Records also relate to or are also required for the operation of the assets and businesses retained by Seller, Seller may retain the originals of any such Business Books and Records that relate primarily to other assets and businesses of Seller and may deliver copies thereof to Purchaser;

(l) all Assets and Properties to be sold, assigned, transferred, conveyed, subleased, and delivered to Purchaser or a Subsidiary of Purchaser pursuant to the China Asset Purchase Agreement, the India Asset Purchase Agreement, the Korea Asset Purchase Agreement and the Japan Asset Purchase Agreement;

(m) all Assets and Properties being transferred pursuant to the IT Separation Plan listed on Schedule 1.1(m) and the furniture, equipment and other Assets and Properties listed on Schedule 1.1(m) used by Continuing Employees who are members of Seller’s ASAT Group; and

(n) the goodwill of the Business to the extent associated with the trademarks and service marks included in the Purchased Registered Intellectual Property Rights or otherwise exclusively related to the Business.

1.2 Excluded Assets . Unless otherwise listed or described in any of the Asset Schedules, nothing herein shall be deemed to sell, transfer, assign or convey the Excluded Assets to Purchaser or any of its Subsidiaries, and Seller shall retain all right, title and interest in, to and under the Excluded Assets. “ Excluded Assets ” means each of the following assets:

(a) any and all Contracts not expressly assigned to and assumed by Purchaser or a Subsidiary of Purchaser pursuant to this Agreement or any of the Ancillary Agreements, including collective bargaining agreements (if any) and the Contracts listed in Schedule 1.2(a) (the “ Excluded Contracts ”);

(b) cash;

(c) accounts receivable for the Business Products actually shipped by Seller and its Subsidiaries prior to the Effective Time in the ordinary course of business consistent with past practice;

(d) personnel files for employees who are not Continuing Employees;

(e) all Technology and Intellectual Property Rights other than the Purchased IP Assets. For the avoidance of doubt, “Excluded Assets” include any processor core or product that (i) is able to execute the object code of any AMD Processor, (ii) substantially utilizes the instruction set of any AMD Processor, (iii) has a programmer’s model that is substantially compatible with the programmer’s model of any AMD Processor, or (iv) is a chipset (Northbridge/Southbridge) for use with any AMD Processor;

 

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

(f) Assets and Properties used primarily in the ASAT organization except the assets described in Section 1.1(b) , Section 1.1(c) , Schedule 1.1(d) , Schedule 1.1(g) and/or Schedule 1.1(m) ;

(g) Assets and Properties under any Seller Benefit Plans; and

(h) Assets and Properties listed in Schedule 1.2(h) .

1.3 Assumption of Liabilities . At the Closing, on the terms and subject to the conditions set forth in this Agreement, Purchaser shall (or shall cause its designated Subsidiaries to) assume, effective as of the Closing, the following liabilities (collectively, the “ Assumed Liabilities ”) and no other liabilities, the assumption of such liabilities to be effective as of the Effective Time:

(a) Liabilities that arise out of the ownership or use by Purchaser and its Subsidiaries of, or the exercise by Purchaser and its Subsidiaries of rights under, the Purchased Assets or the operation of the Business by Purchaser and its Subsidiaries (and that relate to periods) after the Effective Time (other than Liabilities that arise out of the use by Seller or any of its Subsidiaries of, or the exercise by Seller or any of its Subsidiaries of rights under, the Intellectual Property Rights or Technology licensed to Seller pursuant to the Intellectual Property License Agreements) (but including, for the avoidance of doubt, Liabilities that arise out of a continuation or recurrence of the facts or circumstances giving rise to the matters set forth in Schedule 2.9 to the extent (but only to the extent), if any, that such facts and circumstances continue or recur (and relate to periods) after the Effective Time and arise out of the ownership or use by Purchaser and its Subsidiaries of, or the exercise by Purchaser and its Subsidiaries or rights under, the Purchased Assets or the operation of the Business by Purchaser and its Subsidiaries);

(b) Liabilities for severance (if any) payable to any Continuing Employee in the event of termination of such Continuing Employee’s employment with Purchaser and its Subsidiaries after the Effective Time, but only to the following extent and subject in each case to the following limitations: (i) if termination occurs more than thirty six (36) months after the Effective Time, Purchaser shall bear and be liable and responsible for the full amount of such severance (if any) payable to such Continuing Employee, and (ii) if termination occurs after the Effective Time and not more than thirty six (36) months after the Effective Time, Purchaser shall bear and be liable and responsible only for the portion of such severance amount that is calculated and payable based on the duration of such Continuing Employee’s post-Closing service to Purchaser and its Subsidiaries and shall not bear or be liable or responsible for the portion of such severance that is calculated or payable based on any period of pre-Closing service, such amounts to be calculated and paid, in each case, in accordance with the provisions of Section 5.7(g) ;

(c) other Liabilities in respect of the Continuing Employees for events occurring, and for employment periods, after the Effective Time (it being understood and agreed, for the avoidance of doubt, that with respect to severance liabilities, in the event of conflict between the provisions of this Section 1.3(c) and Section 1.3(b) , the provisions of Section 1.3(b) shall govern, control and prevail);

 

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

(d) Liabilities for Taxes for which Purchaser is liable pursuant to Section 5.6 ;

(e) Liabilities under the Assigned Contracts and the leases and subleases underlying the Assigned Leasehold and Subleasehold Interests that arise (and that relate to periods) after the Effective Time (it being understood and agreed, for the avoidance of doubt, that Purchaser assumes no Liability for breaches, defaults or nonperformance under any Assigned Contract or any lease or sublease underlying any of the Assigned Leasehold and Subleasehold Interests occurring prior to the Effective Time); provided , however that with respect to those premises that are occupied both by employees of Purchaser and by employees of Seller (or their respective Subsidiaries), such Liabilities shall be limited as provided under the applicable Real Property Transfer Agreement or the applicable provisions of the Transition Services Agreement or related statement of work;

(f) Liabilities that arise out of the use by Purchaser or any of its Affiliates or any of its or their sublicensees of, or the exercise by Purchaser or any of its Affiliates or any of its or their sublicensees of rights under, the Intellectual Property Rights or Technology licensed to Purchaser pursuant to the Intellectual Property License Agreements; and

(g) Liabilities in respect of any Action or Proceeding or claim to the extent arising out of, relating to, or otherwise in respect of Purchaser’s or its Subsidiaries’ operation of the Business or ownership of the Purchased Assets after the Effective Time.

1.4 Retained Liabilities . Neither Purchaser nor BIL (nor any of their respective Subsidiaries) shall assume or be liable for any Retained Liabilities. Seller shall, and shall cause its Subsidiaries to, timely perform, satisfy and discharge all Retained Liabilities related to the Business in accordance with their respective terms. “ Retained Liabilities ” means all Liabilities of Seller and its Subsidiaries other than Assumed Liabilities, including all Liabilities in the following categories:

(a) Liabilities that arise out of or relate to the ownership or use of, or the exercise of rights under, the Purchased Assets or the operation of the Business prior to the Effective Time (including, for the avoidance of doubt, Liabilities that arise out of, or relate to, the facts, claims, allegations or circumstances giving rise or related to the matters set forth on Schedule 2.9 and that relate to such period prior to the Effective Time);

(b) Liabilities arising out of, relating to, or otherwise in respect of any of the Excluded Assets (other than Liabilities that arise out of the use by Purchaser or any of its Subsidiaries of, or the exercise by Purchaser or any of its Subsidiaries of rights under, the Intellectual Property Rights or Technology licensed to Purchaser pursuant to the Intellectual Property License Agreements);

 

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

(c) Liabilities arising out of the ownership or use by Seller or any of its Subsidiaries of, or the exercise by Seller or any of its Subsidiaries of rights under, the Intellectual Property Rights or Technology covered by the Intellectual Property License Agreements;

(d) Liabilities in respect of any and all products sold and/or services performed by Seller and its Subsidiaries prior to the Effective Time;

(e) Liabilities in respect of Environmental Laws and Environmental Permits, and/or Releases of Hazardous Materials, in each case to the extent arising out of or otherwise related to (i) acts or omissions occurring prior to the Effective Time or the ownership, occupancy or operation by Seller or any of its Subsidiaries of the Business Real Property or any other real property of Seller or any of its Subsidiaries prior to the Effective Time, or any condition thereon, including (A) the Release prior to the Effective Time (or continuing Release, if existing as of the Effective Time) of any Hazardous Material, and (B) any noncompliance by Seller or any of its Subsidiaries with Environmental Laws, (ii) the Business or any of the Purchased Assets for any time period prior to the Effective Time, (iii) the Excluded Assets or any other real property formerly owned, operated, leased or otherwise used by Seller or any of its Subsidiaries, or (iv) the offsite transportation, storage disposal, treatment or recycling of Hazardous Material generated by or taken offsite by or on behalf of Seller or any of its Subsidiaries;

(f) Liabilities for severance (if any) payable to any Continuing Employee in the event of termination of such Continuing Employee’s employment with Purchaser and its Subsidiaries within thirty six (36) months after the Effective Time, to the extent that such severance amount is calculated or payable based on the duration of such Continuing Employee’s pre-Closing service to Seller and its Subsidiaries or any of their predecessors in interest (it being understood and agreed, for the avoidance of doubt, that Seller shall not bear or be liable or responsible for the portion of such severance that is calculated or payable based on any period of post-Closing service to Purchaser and its Subsidiaries), such amounts to be calculated and paid, in each case, in accordance with the provisions of Section 5.7(g) ;

(g) Liabilities arising out of, relating to or with respect to (i) the employment by Seller or any of its Subsidiaries of employees (including Liabilities for salary, wages, bonuses and other compensation) or the performance of services by such employees prior to the Effective Time, or termination of employment of any Business Employee by Seller or any of its Subsidiaries prior to the Effective Time, (ii) workers’ compensation claims against Seller or any of its Subsidiaries that relate to the Continuing Employees for the period prior to the Effective Time (or to other Business Employees for any period), regardless of whether such claims are made prior to or after the Effective Time, or (iii) any Seller Benefit Plan, including Liabilities arising under COBRA (regardless of when the Liability for such claims arise) (it being understood and agreed, for the avoidance of doubt, that with respect to severance liabilities, in the event of conflict between the provisions of Section 1.4(f) and this Section 1.4(g) , the provisions of Section 1.4(f) shall govern, control and prevail);

(h) Liabilities arising out of, under or in connection with any Contract that is not an Assigned Contract and, with respect to Assigned Contracts and the leases and subleases underlying the Assigned Leasehold and Subleasehold Interests, Liabilities in respect of a breach or nonperformance by or default of Seller or any of its Subsidiaries occurring or accruing under such Contracts or the leases or subleases underlying such Assigned Leasehold and Subleasehold Interests, or with respect to any period prior to the Effective Time;

 

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

(i) Liabilities arising out of, under or in connection with any non-current accounts payable of Seller or any of its Subsidiaries, or accounts payable related to Assets and Properties that are not included in the Purchased Assets;

(j) Liabilities for Taxes for which Seller and/or any of its Subsidiaries is liable pursuant to Section 5.6 ;

(k) Liabilities in respect of any pending or threatened Action or Proceeding or claim to the extent arising out of, relating to, or otherwise in respect of (i) the operation of the Business or the ownership of the Purchased Assets prior to the Effective Time, or (ii) any Excluded Asset;

(l) Liabilities arising out of Indebtedness of Seller or any of its Subsidiaries;

(m) Liabilities relating to amounts required to be paid by Seller hereunder;

(n) Liabilities arising out of, relating to or with respect to WARN or similar applicable state, local and foreign laws arising out of the termination of employment of any Business Employee as a result of the transactions contemplated by this Agreement; and

(o) Liabilities retained by Seller or any of its Subsidiaries pursuant to the China Asset Purchase Agreement, the India Asset Purchase Agreement, the Korea Asset Purchase Agreement or the Japan Asset Purchase Agreement, including Liabilities for customs and import duties and VAT under the Laws of the People’s Republic of China (or any Governmental or Regulatory Authority thereunder or subdivision thereof) relating to equipment and machinery currently under customs supervision and previously exempted on a bonded basis.

1.5 Consideration . The aggregate consideration for the Purchased Assets shall consist of (i) cash in the amount of one hundred ninety two million eight hundred thousand dollars ($192,800,000), minus the value of employee-related expenses calculated in accordance with Section 5.7(d)(i) and Section 5.7(d)(iii) and subject to the provisions of Section 5.16 (the “ Purchase Price ”), and (ii) the assumption of the Assumed Liabilities.

1.6 Closing .

(a) Subject to the satisfaction of the conditions set forth in Article 6 (or the waiver thereof by the Party entitled to waive that condition), the closing of the purchase and sale of the Purchased Assets and the assumption of the Assumed Liabilities provided for in Article 1 (the “ Closing ”) shall take place at the offices of Wilmer Cutler Pickering Hale and Dorr LLP, 1117 California Avenue, Palo Alto, CA 94304 (or at such other place as the parties may designate in writing) at 10:00 a.m. (local time) on the second Business Day after satisfaction or waiver of the conditions set forth in Article 6 (other than conditions that by their nature are to be

 

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

satisfied at the Closing), unless another time and/or date are agreed to in writing by the Parties. Notwithstanding the foregoing, and notwithstanding any other provision of this Agreement, if the immediately preceding sentence would require the Closing to occur (i) prior to October 15, 2008, then the Closing shall not occur prior to such date unless otherwise mutually agreed by Purchaser and Seller, (ii) after November 9, 2008 and before January 1, 2009, then the Closing shall not occur (and Purchaser and BIL shall not be required to consummate the transactions contemplated by this Agreement) until after January 1, 2009 unless Purchaser in its sole and absolute discretion agrees to an earlier date, and (iii) after January 1, 2009 and prior to January 15, 2009, then the Closing shall not occur (and Seller shall not be required to consummate the transactions contemplated by this Agreement) until January 15, 2009 unless Seller in its sole and absolute discretion agrees to an earlier date.

(b) At the Closing: (i) Purchaser and BIL shall pay, and Purchaser shall cause the other Subsidiaries of Purchaser designated in Schedule 1.6 to pay, to Seller (in one or more payments, either directly or indirectly by causing an appropriate Subsidiary of Purchaser to pay to an appropriate Subsidiary of Seller, in accordance with Schedule 1.6 ) (such schedule to be agreed by the Parties no later than two (2) Business Days prior to the Closing) the cash Purchase Price prescribed by Section 1.5 , minus the Escrow Amount and minus the Withheld Amount, if any, pursuant to Section 5.16 , by wire transfer of immediately available funds to an account or accounts designated by Seller not less than two (2) Business Days before the Closing Date; (ii) Purchaser shall deliver to the Escrow Agent the Escrow Amount for deposit into the Escrow Fund and the Withheld Amount, if any, into a separate escrow fund (such fund as mutually agreed by Seller and Purchaser); and (iv) Purchaser shall deliver to Seller the Purchaser Closing Deliverables; and (v) Seller shall sell, transfer, assign, convey and deliver to Purchaser and BIL (and such other Subsidiaries of Purchaser as may be designated in Schedule 1.6 ) the respective Purchased Assets being acquired by them (as set forth in Section 1.1 , the Foreign Asset Purchase Agreements, and the Bills of Sale) and (vi) Seller shall deliver copies of the Technology elements of the Licensed IP Assets to Purchaser, and (vii) Seller shall deliver to Purchaser the Seller Closing Deliverables, in each case, pursuant to Section 1.7 below.

(c) The date on which the Closing is actually held (and, if held on more than one day, the date on which the Closing is actually completed) is referred to in this Agreement as the “ Closing Date .” All transactions occurring at the Closing shall be deemed to occur simultaneously, and shall be effective as of the Effective Time.

1.7 Delivery of Assets; Further Conveyances and Assumptions; Consent of Third Parties .

(a) The parties hereto acknowledge and agree that all Purchased Technology and Technology elements of the Licensed IP Assets will be delivered at the Closing by electronic transmission and/or in physical form, in each case as Purchaser shall reasonably direct within five (5) calendar days prior to the Closing; provided, however , that the delivery of such Purchased Technology and of the Technology elements of the Licensed IP Assets shall be governed by the applicable provisions of the Transition Services Agreement (or related statement of work), to the extent (and only to the extent) expressly covered thereby and expressly

 

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

enumerated therein. In addition, on the Closing Date, Seller shall deliver (i) to Purchaser at the site designated by Purchaser copies or originals of all Business Books and Records, Assigned Contracts, Assigned Permits and Approvals and (ii) at the locations designated by Purchaser all other Purchased Assets. With respect to any Purchased Assets that are computer software or are otherwise determined to constitute “prewritten programs” within the meaning of the California Sales and Use Tax Regulations (collectively, the “ Purchased Software ”), Purchaser and Seller shall (and, to the extent appropriate, Seller shall cause its Affiliates to) take all steps necessary to ensure that the transfer of the Purchased Software is not subject to California sales or use Tax, including transferring the Purchased Software either (i) by remote telecommunications (where Purchaser does not obtain possession of any tangible personal property, such as storage media, in connection with the transfer) or (ii) by Seller (and, to the extent appropriate, Seller’s Affiliates) installing the Purchased Software on Purchaser’s computers without providing any storage media to Purchaser in connection with the transfer.

(b) From time to time following the Closing, Purchaser and Seller shall, and shall cause their respective Subsidiaries and Affiliates to, execute, acknowledge and deliver all such further conveyances, notices, assumptions, releases, assignments and such other instruments, and shall take such further actions, as may be reasonably necessary (i) to assure fully to Purchaser, BIL or any other Subsidiary of Purchaser acquiring Purchased Assets and their respective successors or assigns, the transfer to Purchaser and the ownership, possession and control by Purchaser of all of the Purchased Assets, (ii) to enable Purchaser, its Subsidiaries and its and their respective successors or assigns to exercise their license rights under the Intellectual Property License Agreements, including the delivery of the Technology elements of the Licensed IP Assets, (iii) otherwise to make effective the transactions contemplated by this Agreement, (iv) to assure fully to Seller the assumption by Purchaser of the Assumed Liabilities and otherwise to make effective the transactions contemplated by this Agreement, and (v) to seek to obtain for Purchaser, using commercially reasonable efforts, the benefits of the performance warranties, representations or guarantees received by Seller or any of its Subsidiaries pursuant to Contracts with third parties applicable to the Purchased Assets (including Technology); provided, however , that (x) the delivery of such Purchased Assets and of the Technology elements of the Licensed IP Assets shall be governed by the applicable provision of the Transition Services Agreement (or related statement of work), to the extent (and only to the extent) expressly covered thereby and expressly enumerated therein; (y) Seller shall deliver all the forms of the Technology elements of the Purchased Assets and of the Licensed IP Assets then in the possession of Seller, its Subsidiaries or Affiliates (including, by of example, the Source Code, object code and machine-executable forms of any Software), in accordance with Section 1.7(a) ; and (z) upon identification by either Party of any prior version of Technology included in the Purchased Assets previously undelivered, Seller shall deliver such version to Purchaser if such version then exists in Seller’s possession. In addition, Seller may retain copies of the relevant Technology elements of the Purchased IP Assets solely for purposes of enabling Seller and its Subsidiaries to exercise their license rights pursuant to the Intellectual Property License Agreements. In addition, to the extent that Purchaser received a copy, Purchaser shall, and shall cause its Subsidiaries to, take such further action as may be reasonably necessary to deliver copies of the Technology elements of the Purchased IP Assets to Seller and its Subsidiaries and Affiliates for purposes of enabling Seller and its Subsidiaries to exercise their license rights pursuant to the Intellectual Property License Agreements.

 

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

(c) Nothing in this Agreement or in the consummation of the transactions contemplated hereby shall be construed as an attempt or agreement to assign (or enter into a sublease with respect to) any Purchased Asset, Contract underlying a consent required by Section 6.3(d) , or other Contract, Permit (including any Environmental Permit), Approval, certificate, authorization or other right, which by its terms or by Law is nonassignable (or otherwise is prohibited) without the consent of a third party or a Governmental or Regulatory Authority or is cancelable by a third party in the event of an assignment (or sublease) (“ Nonassignable Assets ”) unless and until such consent shall have been obtained; provided , however that the Parties acknowledge and agree that the Real Property Transfer Agreements for Seller’s Assigned Leasehold and Subleasehold Interests in Frimley, United Kingdom and Shanghai, China shall be in the form of a real property license or similar occupancy agreement which shall not require the respective landlord’s consent, and Purchaser’s employees shall have the right to occupy such Nonassignable Assets in accordance with the terms and conditions of the Real Property Transfer Agreements applicable thereto. Seller and Purchaser shall, and shall cause each of its relevant Subsidiaries to, diligently and expeditiously take such action as is necessary or advisable to obtain such consents as promptly as reasonably practicable; provided, however, that all costs and expenses (other than costs and expenses of Seller’s legal counsel) of obtaining any such consent, including consents or renegotiations of any other Contract, Permit (including any Environmental Permit), Approval, certificate, authorization or other right constituting a consent required by Section 6.3(d) or other arrangement that the Parties mutually agree shall be delivered in connection with the transactions contemplated hereby, shall be the responsibility of Purchaser (it being understood and agreed that nothing herein shall require Purchaser, in connection with any such required consent or arrangement, (i) to pay or assume responsibility for any unreasonable cost or expense or (ii) agree to additional terms and conditions that are adverse to Purchaser in any material respect, in each case in connection with the applicable Contract, Permit, Approval, or other instrument to which such required consent relates). To the extent not prohibited by applicable Law and the terms of the Nonassignable Assets, in the event any such consents to assignment cannot be obtained, such Nonassignable Assets shall be held, from and after the Closing, by Seller and its Subsidiaries in trust for Purchaser and the covenants and obligations thereunder shall be performed by Purchaser in the name of Seller and its Subsidiaries and all benefits and obligations existing thereunder shall be for Purchaser’s account. Seller and its Subsidiaries shall take or cause to be taken at Purchaser’s expense such actions in its name or otherwise as Purchaser may reasonably request so as to provide Purchaser with the benefits of the Nonassignable Assets and to effect collection of money or other consideration that becomes due and payable under the Nonassignable Assets, and Seller and its Subsidiaries shall promptly pay over to Purchaser all money or other consideration received by any of them in respect of all Nonassignable Assets. From and after the Closing, Seller, on its own behalf and on behalf of its Subsidiaries, authorizes Purchaser, to the extent permitted by applicable Law and the terms of the Nonassignable Assets, at Purchaser’s expense, to perform all the obligations and receive all the benefits of Seller and its Subsidiaries under the Nonassignable Assets. If after the Closing any Nonassignable Asset becomes assignable (either because consent for the assignment thereof is obtained or otherwise), Seller shall promptly notify Purchaser and transfer and assign such previously Nonassignable Asset to Purchaser or a Subsidiary of Purchaser, as Purchaser shall designate.

 

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

(d) From time to time following the Closing, Seller shall, and shall cause its Subsidiaries to, make available to Purchaser such non-confidential data in personnel records of Continuing Employees, to the extent (if any) such records have not theretofore been delivered to Purchaser as part of the Purchased Assets, as is reasonably necessary for Purchaser to transition such employees into Purchaser’s records; provided, however , that Seller shall have no obligation to make available any records the disclosure of which is prohibited by Law.

(e) From time to time following the Closing, if Seller or any of its Subsidiaries receives any payment for products sold or shipped by Purchaser or any of its Subsidiaries or that is otherwise due or owing to Purchaser or any of its Subsidiaries, Seller shall as promptly as practicable (and in any event within ten (10) Business Days after discovery thereof) forward or remit such payment, or pay the amount of such payment, to Purchaser. From time to time following the Closing, if Purchaser or any of its Subsidiaries receives any payment for products sold or shipped by Seller or any of its Subsidiaries or that is otherwise due or owing to Seller or any of its Subsidiaries, Purchaser shall as promptly as practicable (and in any event within ten (10) Business Days after discovery thereof) forward or remit such payment, or pay the amount of such payment, to Seller.

1.8 Bulk Sales Laws . Seller shall indemnify and hold harmless Purchaser and its Subsidiaries from and against any Liability associated with non-compliance with or under the Bulk Sales Act (Ontario) or any other “bulk sale,” “bulk transfer” or similar Law of any other jurisdiction that may be applicable to the transactions contemplated by this Agreement and the Ancillary Agreements. Subject to such indemnification, Purchaser hereby waives compliance by Seller and its Subsidiaries with the requirements and provisions of any “bulk transfer” Laws of any jurisdiction that may otherwise be applicable with respect to the sale of any or all of the Purchased Assets to Purchaser and its designated Subsidiaries.

1.9 Purchase Price Allocation .

(a) Purchaser and BIL shall use commercially reasonable efforts to prepare and deliver to Seller, within ninety (90) calendar days after the Closing Date, copies of Form 8594 under the Internal Revenue Code (and any comparable form under any applicable Tax Law of any other jurisdiction where any of the Purchased Assets are situated, by the date required by applicable Law) and any required exhibits thereto (the “ Asset Acquisition Statement ”) allocating the Purchase Price and the Assumed Liabilities among the Purchased Assets. Seller shall provide such cooperation to Purchaser and BIL as may be required for the preparation of such forms and as Purchaser and BIL may reasonably request. Thereafter Purchaser and BIL shall prepare and deliver to Seller from time to time revised copies of the Asset Acquisition Statement (the “ Revised Statements ”) so as to report any matters in the Asset Acquisition Statement that require revision as a result of any adjustment to the Purchase Price pursuant to this Agreement. If Seller disputes any calculation in the Asset Acquisition Statement or Revised Statements (as the case may be), Seller shall deliver written notice of its objection to Purchaser within ten (10) calendar days after delivery by Purchaser and BIL of the applicable Asset Acquisition Statement

 

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

or Revised Statement to Seller, specifying in reasonable detail the items and amounts in dispute and the grounds for dispute. Seller, Purchaser and BIL shall promptly seek in good faith to resolve amicably such dispute within ten (10) calendar days, and if amicable resolution is not reached, either Party may refer the matter for determination to an Accountant, whose determination shall be final and binding. The fees and expenses of the Accountant shall be borne by the non-prevailing Party in such dispute.

(b) The final allocation of the Purchase Price shall be final and binding upon the parties for all purposes, including the filing of all Tax Returns or other returns and the preparation of all financial statements and other documents and records, and the Purchase Price for the Purchased Assets shall be allocated in accordance with the Asset Acquisition Statement or, if applicable, the last Revised Statement, provided by Purchaser or BIL (as applicable) to Seller (or, if applicable, the Accountant’s determination), and all Tax Returns and reports filed by Purchaser, BIL and Seller shall be prepared consistently with such allocation, unless otherwise required pursuant to a “determination” within the meaning of Section 1313(a) of the Internal Revenue Code. The parties shall make jointly the necessary elections and execute and file, within the prescribed delays, the prescribed election forms and any other documents required to give effect to the foregoing and shall also prepare and file all of their respective Tax Returns in a manner consistent with such elections.

(c) Notwithstanding the foregoing, to the extent that the Laws of any jurisdiction require that the portion of the Purchase Price allocated to the Purchased Assets located in such jurisdiction be fixed and determined at or prior to the Effective Time (or within any time period after the Effective Time that is shorter than the time period set forth in this Section 1.9(a) ), Purchaser, BIL and Seller shall agree to the allocation of such portion prior to the Closing and shall execute and deliver at the Closing such documentation as may be required by (or sufficient under) applicable Law to memorialize and report such allocation. Notwithstanding the foregoing, Purchaser, BIL and Seller shall use commercially reasonable efforts to agree to the allocation of that portion of the Purchase Price allocated to the Purchased Assets located in each jurisdiction other than the United States and Canada at the Closing in connection with the form of Bill of Sale or local asset purchase agreement (if any) applicable to each such jurisdiction.

ARTICLE 2.

REPRESENTATIONS AND WARRANTIES OF SELLER

Seller hereby makes the following representations and warranties to Purchaser, except as otherwise set forth in the disclosure schedule and schedule of exceptions delivered by Seller herewith and dated as of the date hereof (the “ Seller Disclosure Schedule ”). The parties hereto agree that any reference in a particular section or subsection of the Seller Disclosure Schedule shall only be deemed to be an exception to (or, as applicable, a disclosure for purposes of) the representations and warranties contained in the corresponding section and subsection of this Agreement and shall not be deemed to be an exception to (or, as applicable, a disclosure for purposes of) any other representation and warranty contained in this Agreement, unless the

 

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

relevance of that reference as an exception to (or a disclosure for purposes of) such other representation and warranty is readily apparent from the face of such disclosure to a Person who has read only that reference and such other representation and warranty and Seller has used commercially reasonable efforts to provide express cross-references where applicable.

2.1 Organization and Qualification . Seller is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware, and has full corporate power and authority to conduct the Business as presently conducted and to own, use, license and lease the Assets and Properties of the Business. Seller is duly qualified, licensed or admitted to do business and is in good standing as a foreign corporation in each jurisdiction in which such qualification, licensing or admission is necessary for the consummation of the transactions contemplated by this Agreement and the Ancillary Agreements, and in each case where the absence of which would not be reasonably likely to materially interfere with the operation of the Business or the Purchased Assets, or otherwise subject the Business or the Purchased Assets to Liability for violation of Law. Each Subsidiary of Seller that holds any of the Purchased Assets, each of which set forth in Section 2.1 of the Seller Disclosure Schedule , is a corporation duly organized, validly existing and in good standing under the Laws of its jurisdiction of incorporation, as set forth in Section 2.1 of the Seller Disclosure Schedule , and has full corporate power and authority to conduct the Business as presently conducted and to own, use, license and lease its Assets and Properties. Each such Seller Subsidiary is duly qualified, licensed or admitted to do business and is in good standing as a foreign corporation in each jurisdiction in which the ownership, use, licensing or leasing of the Purchased Assets held by it, or the conduct of the portion of the Business conducted by it, makes such qualification, licensing or admission necessary, except for such qualifications, licenses or admissions the absence of which would not have a Business Material Adverse Effect.

2.2 Authority Relative to this Agreement . Seller has full corporate power and corporate authority to execute and deliver this Agreement and the Ancillary Agreements to which Seller is a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The board of directors of Seller (and, to the extent required by applicable Law or the organizational documents of each Subsidiary of Seller transferring any Assets and Properties pursuant to this Agreement or an Ancillary Agreement, each such Subsidiary of Seller and its shareholders) have approved this Agreement and the execution and delivery by Seller and each of its Subsidiaries of this Agreement and the Ancillary Agreements to which Seller or such Subsidiary is a party and the consummation by Seller and its Subsidiaries of the transactions contemplated hereby and thereby, and the performance by Seller and its Subsidiaries of its and their obligations hereunder and thereunder, have been duly and validly authorized by all necessary corporate action by Seller and such Subsidiary, as applicable, and no other action on the part of Seller or any of its Subsidiaries is required to authorize the execution, delivery and performance of this Agreement and the Ancillary Agreements to which Seller or any of its Subsidiaries is a party and the consummation by Seller and its Subsidiaries of the transactions contemplated hereby and thereby. This Agreement and the Ancillary Agreements to which Seller or any of its Subsidiaries is a party have been or will be, as applicable, duly and validly executed and delivered by Seller or such Subsidiary, as applicable, and, assuming the due authorization, execution and delivery hereof (and, in the case of the

 

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

Ancillary Agreements to which Purchaser or any of its Subsidiaries is a party, thereof) by Purchaser or its applicable Subsidiary, each constitutes or will constitute, as applicable, a legal, valid and binding obligation of Seller or such Subsidiary enforceable against Seller or such Subsidiary in accordance with its respective terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar Laws relating to the enforcement of creditors’ rights generally and by general principles of equity. Seller has the power and authority to cause each of its applicable Subsidiaries to comply with the obligations contemplated in this Agreement and the Ancillary Agreements and to perform the transactions contemplated to be performed by such Subsidiaries pursuant to this Agreement and the Ancillary Agreements.

2.3 Title to and Sufficiency of Purchased Assets . Seller and its Subsidiaries own, are in possession of, and have good title to each of the Purchased Assets and each of the Licensed IP Assets that they purport to own and valid leasehold interests in each of the Purchased Assets that they purport to lease, good title or valid license rights to each of the Licensed IP Assets that they purport to license, and valid rights under Contract with respect to the Purchased Assets that they purport to hold (or that arise) under Contracts, in each case free and clear of all Liens other than Permitted Exceptions and non-exclusive Licenses granted to customers and partners in the ordinary course of business consistent with past practice. The Purchased Assets, together with the Licensed IP Assets, constitute all of the material Assets and Properties used or held for use by Seller and its Subsidiaries in the Business and all of the Assets and Properties required for Purchaser to conduct the Business immediately after the Closing Date without interruption in the ordinary course of business as it has heretofore been conducted by Seller without giving effect to any changes in the conduct of the Business by Purchaser and its Subsidiaries. Purchaser acknowledges and agrees that the foregoing is not intended by either Party to address issues of infringement of third-party Intellectual Property Rights, which are addressed in Section 2.11 below. The Purchased Technology includes, in the aggregate, all material Technology that is exclusively related to the Business. Upon execution and delivery by Seller to Purchaser of the instruments of sale, assignment, transfer and conveyance referred to in Section 1.1 , Purchaser will become the true and lawful owner of, and will receive good title to, the Purchased Assets, free and clear of all Liens other than Liens (if any) arising solely on account of Purchaser’s actions or omissions and other than licenses to which any of the Purchased IP Assets may be subject, as disclosed in Section 2.11(d)(i) of the Seller Disclosure Schedule . The Asset Schedules accurately set forth, for each material Purchased Asset, the location and whether such asset is owned by Seller or a Subsidiary of Seller, and, if owned by a Subsidiary, the identity and jurisdiction of organization of such Subsidiary. Schedules 10.1(CBP), 10.1(PBP) and 10.1(RBP) , taken in the aggregate, set forth a true, correct and complete list of all of the past and present products commercialized, or products currently planned to be designed or developed for commercialization, by Seller or its Subsidiaries in the Purchaser Field.

2.4 No Conflicts . The execution and delivery by Seller of this Agreement and the Ancillary Agreements to which Seller is a party do not, and Seller’s and its Subsidiaries’ performance of (or compliance with) their obligations under this Agreement and the Ancillary Agreements and the consummation of the transactions contemplated hereby and thereby do not and will not:

 

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

(a) conflict with or result in a violation or breach of any of the terms, conditions or provisions of Seller’s certificate of incorporation, bylaws or similar governing documents;

(b) subject to (i) such filings as may be required under applicable state or federal securities Laws, and (ii) the making of such filings (if any) as may be required under the Competition Act (Canada), the Investment Canada Act, or antitrust, notification, merger control, and similar Laws of other jurisdictions, and the receipt of approvals and/or the expiration or early termination of any applicable waiting period thereunder or therefrom, conflict with or result in a violation or breach of any Law applicable to Seller or any of its Subsidiaries or any of its or their Assets or Properties;

(c) subject to obtaining the consents and Approvals, making the filings and giving the notices set forth in Section 2.4(b) , if any, conflict in any material respect with or result in a violation or breach, in any material respect, of any Law applicable to Seller or any of its Subsidiaries, the Business or any of the Purchased Assets; or

(d) (i) conflict with or result in a violation or breach of, (ii) constitute a default (or an event that, with or without notice or lapse of time or both, would constitute a default) under, (iii) require Seller or any of its Subsidiaries to obtain any consent, approval or action of, make any filing with or give any notice to any Person as a result or under the terms of, (iv) result in or give to any Person any right of termination, cancellation, acceleration or modification in or with respect to, (v) result in or give to any Person any additional right or entitlement to any increased, additional, accelerated or guaranteed payment or performance under, (vi) result in the creation or imposition of (or the obligation to create or impose) any Lien (other than Permitted Exceptions) upon Seller or any of its Subsidiaries or any of the Purchased Assets or any restriction on the Business under, or (vii) result in the loss of any material benefit under, any of the terms, conditions or provisions of any of the Assigned Contracts, any Lease Document underlying the Assigned Leasehold and Subleasehold Interests, any of the Assigned Permits and Approvals, any Contract underlying the Assigned Warranty Rights, any Contract underlying the Assigned Prepayments, any Contract underlying the Assigned Insurance Proceeds or any Contract underlying the Licensed IP Assets or affecting Seller’s ability to license the Licensed IP Assets to Purchaser as contemplated by the Intellectual Property License Agreements, in each case in any material respect.

2.5 Books and Records; Organizational Documents . The Business Books and Records transferred hereunder are accurate and complete copies or originals in all material respects.

2.6 Absence of Changes . From March 31, 2008 to the date of this Agreement, except as required by this Agreement or the Ancillary Agreements:

(a) there has not been any Business Material Adverse Effect or any occurrence or event which, individually or in the aggregate, would be reasonably expected to have any Business Material Adverse Effect;

 

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

(b) neither Seller nor any of its Subsidiaries has (i) entered into, terminated, amended in any material respect, or granted any material waiver (or agreed or made any commitment to enter into terminate, amend in any material respect or grant any material waiver) under any Contract that constitutes (or would, but for such action, constitute) an Assigned Contract or other Purchased Asset or which is material to the Business or Assumed Liabilities, or (ii) incurred any Liability in excess of two hundred fifty thousand dollars ($250,000), individually or in the aggregate, that constitutes an Assumed Liability;

(c) neither Seller nor any of its Subsidiaries has entered into, approved or resolved to enter into any Contract (other than Licenses, which are addressed in Section 2.6(f) and Section 2.6(e) ) involving (i) the sale, disposition or transfer of any of the Purchased Assets, other than the sales of finished Current Business Products in the ordinary course of the business, or (ii) any material restriction on the future conduct of the Business;

(d) neither Seller nor any of its Subsidiaries has entered into, approved or resolved to enter into any Contract that (i) contains noncompetition restrictions, including any covenants limiting or purporting to limit the freedom of Seller or any of its Subsidiaries to compete in any material line of business or with any Person or in any area or which would limit the freedom of Purchaser or any of its Subsidiaries to compete in any material line of business after the Effective Time, (ii) grants any exclusive supply or distribution right for a Business Product in any territory, (iii) grants from Seller or any of its Subsidiaries any “most favored nation” or similar preferred pricing right to any of the customers of Seller or any of its Subsidiaries regarding any of the Business Products, or (iv) grants any right of first refusal, right of first negotiation or similar right with respect to any Business Product or any Purchased IP Asset, any Exclusively Licensed IP Asset in the field exclusively licensed to Purchaser and its Subsidiaries pursuant to the Intellectual Property License Agreements, or any Listed Licensed IP Assets in any manner that would prevent the grant of the license to Purchaser and its Subsidiaries thereunder pursuant to the Intellectual Property License Agreements;

(e) there has not been any sale, disposition, transfer or grant of any Lien (not including non-exclusive Licenses granted to customers and partners in the ordinary course of business consistent with past practice) or exclusive License to any Person of any right in, to or under (i) any Purchased IP Asset, (ii) any Exclusively Licensed IP Asset in the field exclusively licensed to Purchaser and its Subsidiaries pursuant to the Intellectual Property License Agreements, (iii) any Listed Licensed IP Asset in any manner that would prevent the grant of the license to Purchaser and its Subsidiaries thereunder pursuant to the Intellectual Property License Agreements, or (iv) any other Intellectual Property Rights or Technology that, but for such sale, disposition, transfer, Lien or exclusive License, would constitute part of (A) the Purchased IP Assets, (B) the Exclusively Licensed IP Assets or (C) the Listed Licensed IP Assets;

(f) there has not been any grant of a License (i) of Purchased Assets or (ii) of Exclusively Licensed IP Assets in the field exclusively licensed to Purchaser and its Subsidiaries pursuant to the Intellectual Property License Agreements, in each case, other than non-exclusive Licenses of Software to customers and partners in the ordinary course of business consistent with past practice;

 

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

(g) neither Seller nor any of its Subsidiaries has sold, transferred, disposed of, waived any right to, or leased to any other Person, mortgaged, pledged or incurred or suffered to exist any Lien, other than Permitted Exceptions, on, or terminated, accepted for surrender or failed to renew any lease or sublease of, any Asset and Property (excluding Intellectual Property Rights and Technology) that constitutes or, but for such action, would constitute a material Purchased Asset;

(h) neither Seller nor any of its Subsidiaries has made or agreed to make any write-off or write-down, any determination to write-off or write-down, or revalue, any material Purchased Asset or any material portion of the Purchased Assets, or change any reserves or liabilities associated therewith;

(i) neither Seller nor any of its Subsidiaries has failed to pay or otherwise satisfy any material Liability presently due and payable that is an Assumed Liability, except such Liabilities which are being contested in good faith by appropriate means or procedures and which, both individually and in the aggregate, are immaterial in amount;

(j) neither Seller nor any of its Subsidiaries has granted, paid or made any commitment to grant or pay to any Business Employee any bonus, stay-put, severance, or termination payment or any other payment other than normal employee compensation in amounts established in the ordinary course of business;

(k) neither Seller nor any of its Subsidiaries has granted or approved any increase of greater than five percent (5%) in salary, rate of commissions, rate of consulting fees or any other compensation of any Business Employee or any consultant providing services to the Business;

(l) neither Seller nor any of its Subsidiaries has established or modified any target, goal, pool or similar provision under, or any salary range, increased guideline or similar provision in respect of, any Seller Benefit Plan, employment Contract or other employee compensation arrangement or independent contractor Contract or other compensation arrangement applicable to any Business Employee;

(m) neither Seller nor any of its Subsidiaries has adopted, entered into, amended or modified in any material respect, or terminated (whether partially or completely), any Seller Benefit Plan affecting any Business Employee;

(n) neither Seller nor any of its Subsidiaries has (i) made, changed or rescinded any material election in respect of any Tax relating to the Business or any of the Purchased Assets, adopted or changed any accounting or reporting method, policy or principle in respect of any material Tax relating to the Business or any of the Purchased Assets, (ii) entered into any Tax allocation agreement, Tax sharing agreement, Tax indemnity agreement or closing agreement, settlement or compromise of any claim or assessment in respect of any material Tax relating to the Business or any of the Purchased Assets, (iii) consented to any extension or waiver of the limitation period applicable to any claim or assessment in respect of any material Tax relating to the Business or any of the Purchased Assets with any Taxing Authority or otherwise, or (iv) failed to pay and discharge any material Tax relating to the Business or any of the Purchased Assets, except such Taxes which are being contested in good faith by appropriate means or procedures;

 

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

(o) neither Seller nor any of its Subsidiaries has made any change in accounting policies, principles, methods, practices or procedures relating to any of the Purchased Assets or Assumed Liabilities (including for bad debts, contingent liabilities or otherwise, respecting capitalization or expense of research and development expenditures, depreciation or amortization rates or timing of recognition of income and expense), except for any such change required by reason of a concurrent change in GAAP;

(p) neither Seller nor any of its Subsidiaries has commenced or terminated, or made any material change in, any line of business included in the Business;

(q) neither Seller nor any of its Subsidiaries has failed to renew any material insurance policy covering the Business or any of the Purchased Assets; no material insurance policy of Seller or any of its Subsidiaries covering the Business or any of the Purchased Assets has been cancelled or materially amended;

(r) there has been no non-renewal or material amendment of any of the Assigned Permits and Approvals or any of the leases or subleases underlying the Assigned Leasehold and Subleasehold Interests;

(s) Seller and its Subsidiaries have taken all action reasonably necessary or appropriate (i) to procure, maintain, renew, extend or enforce any Seller Registered Intellectual Property Right that is (or, but for the failure to take such action, would be) included in the Purchased Registered Intellectual Property Rights, including submission of required documents or fees during the prosecution of patent, trademark or other applications for such Registered Intellectual Property Right, and (ii) to reasonably protect, maintain or enforce each other Seller IP Asset that is (or, but for the failure to take such action, would be) included in the Other Purchased Intellectual Property Rights or the Purchased Technology;

(t) neither Seller nor any of its Subsidiaries has taken any action with respect to the Business not in the ordinary course of business consistent with past practice (other than actions already addressed by other lettered subsections of this Section 2.6 and disclosed in Section 2.6 of the Seller Disclosure Schedule );

(u) there has been no physical damage, destruction or other casualty loss (whether or not covered by insurance) affecting any of the Purchased Assets or any Assets and Properties that, but for such occurrence, would constitute Purchased Assets, except ordinary wear and tear; and

(v) neither Seller nor any of its Subsidiaries has entered into or approved any agreement, commitment, arrangement or understanding, to do, permit, engage in or cause or having the effect of any of the foregoing.

 

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

2.7 Business Financials; Asset Schedules; No Undisclosed Liabilities .

(a) Attached to Section 2.7(a) of the Seller Disclosure Schedule is a correct and complete copy of the Unaudited Business Financials. The Unaudited Business Financials were prepared in all material respects in accordance with the books and records of Seller and its Subsidiaries and in accordance with GAAP applied on a basis consistent throughout the periods indicated and consistent with each other (except as may be indicated in the notes thereto as delivered to Purchaser prior to the date hereof) and fairly present, on a carve-out basis and incorporating certain additionally allocated costs for the respective periods presented, in all material respects the results of operations of the Business for the periods indicated, subject to normal year-end adjustments and the omission of footnotes. The Audited Business Financials will be prepared in all material respects in accordance with the books and records of Seller and its Subsidiaries and in accordance with GAAP applied on a basis consistent throughout the periods indicated and consistent with each other, and fairly present, on a carve-out basis, in all material respects, as applicable, either (i) the assets acquired and liabilities assumed and the net revenues and direct expenses or (ii) the assets and liabilities, results of operations and cash flows, of the Business as of the dates and for the periods indicated, in each case on the basis described therein, subject, in the case of the Audited 2008 Business Financials, to normal year-end adjustments.

(b) Attached to Section 2.7(b) of the Seller Disclosure Schedule is a correct and complete copy of the schedule of tangible Assets and Properties (including inventory) of the Business as of the date hereof. Such tangible asset schedule fairly reflects in all material respects the correct acquisition value, depreciation amount, and book value of the Assets and Properties (including inventory) listed therein.

(c) Seller and its Subsidiaries make and keep books, records and accounts, which, in reasonable detail, accurately and fairly reflect the acquisitions and dispositions of assets by Seller and its Subsidiaries. Neither Seller nor any of its Subsidiaries has any Liability or Indebtedness related to the Business, the Purchased Assets or the Assumed Liabilities other than (i) Retained Liabilities, (ii) Liabilities that are fully reflected in, reserved against or otherwise detailed in the Unaudited Business Financials, and (iii) Liabilities incurred in the ordinary course of business of the Business since December 31, 2007 that are not material, either individually or in the aggregate, in amount.

2.8 Taxes . Seller has filed all material Tax Returns required by Law to be filed and paid all material Taxes due (whether or not shown as due on such returns) in respect of the Business, the Purchased Assets and the employment of the Business Employees by Seller and its Subsidiaries, and shall transfer such Purchased Assets to Purchaser free and clear of all Liens relating to Taxes, except for Permitted Exceptions. The transactions contemplated by this Agreement do not involve a disposition of “taxable Canadian property” by a Person not resident in Canada for purposes of the Income Tax Act (Canada).

2.9 Legal Proceedings . There is no Action or Proceeding pending or, to Seller’s knowledge, threatened against, relating to or affecting the Business or any of the Purchased Assets or Assumed Liabilities or which in any manner challenges or seeks to prevent, enjoin,

 

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

alter or materially delay the transactions contemplated by this Agreement or any of the Ancillary Agreements. There is no fact or circumstance known to Seller that, either alone or together with other facts and circumstances, could reasonably be expected to give rise to any material Action or Proceeding against, relating to or affecting the Business or any of the Purchased Assets or Assumed Liabilities and Seller and its Subsidiaries have not received any written notice and otherwise do not have knowledge of any Order relating to or affecting, in any material respect, the Business or any of the Purchased Assets or Assumed Liabilities.

2.10 Compliance with Laws and Orders .

(a) Neither Seller nor any of its Subsidiaries, nor to Seller’s knowledge any of its or their respective directors, officers, agents or employees in his, her or its capacity as such, has violated in any material respect, or is currently in default or violation in any material respect under, any Law or Permit applicable to the Business or any of the Purchased Assets or Assumed Liabilities, and Seller has no knowledge of a written claim for such a violation. Seller and its Subsidiaries possess all material Permits and Approvals required by Law for the ownership and operation of the Purchased Assets and for the ownership and operation of the Business as currently conducted; and all such material Permits and Approvals are in full force and effect.

(b) Without limiting the generality of the foregoing, neither Seller nor any of its Subsidiaries that are engaged in the Business, nor, to Seller’s knowledge, any agent, employee or other Person associated with or acting on behalf of the Business, has, directly or indirectly, used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity, made any unlawful payment to any foreign or domestic government official or employee or to any foreign or domestic political party or campaign from corporate funds, violated any provision of the Foreign Corrupt Practices Act of 1977, as amended or Money Laundering Laws, or similar legislation in applicable jurisdictions or made any bribe, rebate, payoff, influence payment, kickback or other similar unlawful payment.

2.11 Intellectual Property .

(a) Purchased Registered Intellectual Property Rights . Section 2.11(a) of the Seller Disclosure Schedule lists all proceedings or actions pending as of the date hereof before any court or tribunal (including the PTO or equivalent authority anywhere in the world) related to any of the Purchased Registered Intellectual Property Rights. To Seller’s knowledge, there are no inventorship challenges, opposition or nullity proceedings or interferences declared, commenced or threatened with respect to any patents or patent applications included in the Purchased Registered Intellectual Property Rights and neither Seller nor any of its Subsidiaries nor any of its patent counsel has received from any Person any written notice of an inventorship challenge, opposition or nullity proceeding or interference declared or commenced with respect to any patents or patent applications included in the Purchased Registered Intellectual Property Rights. Seller and its Subsidiaries and their respective patent and trademark counsel have complied with their duty of candor and disclosure to the PTO and any relevant foreign patent or trademark office with respect to all patent and trademark applications included in the Purchased Registered Intellectual Property Rights and have made no material misrepresentation in such applications; provided that the foregoing does not guarantee that (i) any patents will issue from

 

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

such applications or (ii) if any patents do issue from such applications, that the scope of the claims granted will be the same as the claims set forth in such applications. Seller and its Subsidiaries have no knowledge of any information that would preclude them from having clear title to the Purchased Registered Intellectual Property Rights or affect in any material respect the patentability or enforceability of any Purchased Registered Intellectual Property Rights.

(b) Title; License Rights . Seller and its Subsidiaries have all right, title and interest in, to and under (or valid and enforceable rights under Licenses to grant the rights to Purchaser in accordance with the Intellectual Property License Agreements) all Purchased IP Assets and all Licensed IP Assets. Each item of Purchased IP Assets (i) is owned exclusively by Seller and its Subsidiaries, (ii) is free and clear of all Liens (other than Permitted Exceptions and non-exclusive Licenses granted to customers and partners in the ordinary course of business consistent with past practice), and (iii) will be owned or available for use by Purchaser immediately following the Closing on substantially identical terms and conditions as it was owned or available for use by Seller and its Subsidiaries immediately prior to the Closing. To Seller’s knowledge, no Person is infringing, violating or otherwise misappropriating or misusing any Purchased IP Asset listed on Schedules 1.1(b) or 1.1(c ), and neither Seller nor any of its Subsidiaries has made any written claim of such infringement, violation, misappropriation or misuse against any Person. Each item of Exclusively Licensed IP Assets (A) is owned exclusively by Seller and its Subsidiaries, and (B) is free and clear of all Liens (other than Permitted Exceptions and non-exclusive Licenses to customers and partners granted in the ordinary course of business consistent with past practice) in the field exclusively licensed to Purchaser and its Subsidiaries pursuant to the Intellectual Property License Agreements.

(c) Sufficiency . The Purchased Technology listed on Schedule 1.1(c ) in the aggregate includes substantially all Technology that is both material to the operation of the Business and exclusively related to the Business. The Purchased Registered Intellectual Property Rights and the Purchased Technology listed on Schedule 1.1(c ) and the Licensed IP Assets listed in the schedules to the Intellectual Property License Agreements in the aggregate include substantially all material Intellectual Property Rights and Technology that is both necessary to the operation of the Business and exclusively or primarily related to the Business. All of the Seller Registered Intellectual Property Rights that Seller or its Subsidiaries (or any Person acquired by Seller or any of its Subsidiaries that is comprised in or relates to the Business) acquired from Terayon Communication Systems, Inc. or any of its Affiliates are included in the Purchased Registered Intellectual Property Rights.

(d) Contracts . Section 2.11(d)(i) of the Seller Disclosure Schedule lists, as of the date hereof, all Contracts and Licenses relating to Intellectual Property Rights or Technology (including all inbound Licenses, other than to Non-Critical Software, and all outbound Licenses) to which Seller or any of its Subsidiaries is a party that relate to the Purchased IP Assets or Exclusively Licensed IP Assets, including any agreement, assignment or License pursuant to which any Purchased IP Asset was developed or created by any Person other than Seller and its Subsidiaries. Except pursuant to agreements listed in Section 2.11(d)(i) of the Seller Disclosure Schedule , neither Seller nor any of its Subsidiaries has transferred ownership of, or granted (whether expressly or by implication) (and are not obligated to grant) any License of or other

 

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

right under, any Purchased IP Asset or, in the field exclusively licensed to Purchaser and its Affiliates pursuant to the Intellectual Property License Agreements, any Exclusively Licensed IP Asset to any other Person. None of the Purchased IP Assets or, in the field exclusively licensed to Purchaser and its Affiliates pursuant to the Intellectual Property License Agreements, the Exclusively Licensed IP Assets is required to be licensed under any forum, consortium or other standards body agreement. None of the Purchased IP Assets or Exclusively Licensed IP Assets has been submitted to any licensing entity, standards body or representative thereof for a determination of essentiality to or inclusion in an industry standard, nor has any request been made therefor. Section 2.11(d)(ii) of the Seller Disclosure Schedule lists all forums, consortiums, standards bodies or similar organizations in which Seller or any of its Subsidiaries currently, or have in the past, participated in connection with the Business, or been a member or to which Seller or any of its Subsidiaries has made any disclosure of any Purchased IP Assets or Exclusively Licensed IP Assets.

(e) Non-Infringement . The operation of the Business as presently conducted and as conducted within the one (1) year period prior to the date hereof, and the design, development, distribution, marketing, manufacture, use, import, license, or sale of the Current Business Products and functional and discrete components that have been reviewed, verified and integrated into the product database of the Business on or before the Closing Date, do not (and did not at any time within the one (1) year period prior to the date hereof) (i) infringe or misappropriate the Intellectual Property Rights of any Person, (ii) violate any material term or provision of any License or Contract concerning the Intellectual Property Rights or Technology of any Person, (iii) violate any other term or provision of any License or Contract concerning such Intellectual Property Rights or Technology which violation could result in the termination, or any material alteration or limitation of, such License or Contract or the right to use or exercise rights under such Intellectual Property Rights or Technology, (iv) violate any moral right, right of privacy or right of publicity of any Person, (v) disclose any material confidential information of Seller or any of its Subsidiaries that is not pursuant to a confidentiality agreement, other than such disclosures made to the PTO, other patent offices, standard-setting organizations or otherwise, which disclosures were consistent with the exercise of reasonable business judgment, (vi) disclose any material third-party confidential information that is protected by a confidentiality agreement, unless such disclosure was authorized by the relevant third party with the right to permit such disclosure, or (vii) constitute unfair competition or an unfair trade practice under any Law. Neither Seller nor any of its Subsidiaries nor any of its or their respective employees or Representatives has (x) received from any Person any written notice claiming that any Business Product or the operation of the Business infringes or misappropriates the Intellectual Property Rights of any Person or constitutes unfair competition or trade practices under any Law or (y) in the three (3) year period prior to the date hereof, received from any Person and brought to the attention of the legal department of Seller or any of its Subsidiaries any written notice of third-party Patent or other Intellectual Property Rights relating to the operation of the Business or any Current Business Product from a putative or potential licensor of such rights. Neither Seller nor any of its Subsidiaries has, within the one (1) year period prior to the date hereof, brought or resolved any Action or Proceeding for infringement of Purchased IP Assets or Exclusively Licensed IP Assets or breach of any License or Contract involving Purchased IP Assets or Exclusively Licensed IP Assets against any Person. Notwithstanding the foregoing, in no event does Seller represent that operation of the Business or any Business Product or Purchased Asset does not infringe any Patents which would necessarily be infringed by an implementation of a required element of a Standard.

 

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

(f) Disputes . There is no Contract or License between Seller or any of its Subsidiaries, on the one hand, and any other Person, on the other hand, with respect to Purchased IP Assets or Exclusively Licensed IP Assets under which there is any material dispute (and, to Seller’s knowledge, there are no facts or circumstances that may reasonably be expected to lead to a material dispute) regarding the scope of such Contract or License, or performance under such Contract or License, including with respect to any payment to be made or received by Seller or any of its Subsidiaries thereunder.

(g) IP Protection Measures . Seller and its Subsidiaries have taken all steps reasonably necessary or appropriate (i) consistent with reasonable business judgment to protect and preserve ownership of all Purchased IP Assets and Exclusively Licensed IP Assets claimed or purported to be owned by Seller and its Subsidiaries, (ii) to protect their rights in confidential information and trade secrets of Seller and its Subsidiaries included in Purchased IP Assets or Exclusively Licensed IP Assets, other than such disclosures made to the PTO, other patent offices, standard-setting organizations or otherwise, which disclosures were consistent with the exercise of reasonable business judgment, and (iii) to protect confidential information and trade secrets provided by any other Person to Seller or any of its Subsidiaries subject to a duty of confidentiality or a limitation on use, which confidential information and trade secrets are included in Purchased IP Assets or Exclusively Licensed IP Assets. Without limiting the generality of the foregoing, Seller and its Subsidiaries have, and enforce, a policy requiring each employee, consultant and independent contractor (including consultants and employees who contributed to the creation or development of all Purchased IP Assets, and all Listed Licensed IP Assets and Exclusively Licensed IP Assets owned or purported to be owned by Seller and its Subsidiaries) to execute proprietary information, confidentiality and invention and copyright assignment agreements substantially in the form made available to Purchaser, which agreements, by their terms, irrevocably transfer to Seller and its Subsidiaries all rights in such Intellectual Property Rights and Technology (subject only to a copyright owner’s right, pursuant to the Copyright Act of 1976 or the foreign equivalent thereof, to terminate a copyright transfer), and, to Seller’s knowledge, all current and former employees, consultants and independent contractors of Seller and its Subsidiaries since October 25, 2006 have executed such an agreement; and copies of all such agreements have heretofore been provided or made available to Purchaser.

(h) Restrictions on Use . No Purchased IP Asset, the Technology in the Licensed IP Asset or Current Business Product is subject to any Order, Action or Proceeding, settlement, compulsory license, U.S. or Canadian government “march in” right, or, to Seller’s knowledge, any other Governmental Authority or Regulatory “march in” right, that restricts in any manner the use, transfer or licensing of such Purchased IP Asset, the Technology in the Licensed IP Asset or Current Business Product by Seller or any of its Subsidiaries. For purposes hereof, a “march-in” right is a right retained by a Governmental Authority equivalent to the rights retained by the U.S. Government pursuant to 35 U.S.C. Section 203. No Purchased IP

 

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

Asset, Technology in the Licensed IP Asset, or Current Business Product is subject to (i) requirements under 35 U.S.C. §§200-212 that products be manufactured substantially in the United States, (ii) requirements imposed by Canadian federal or provincial government that products be manufactured substantially in Canada or in a Canadian province, or (iii) to Seller’s knowledge, requirements imposed by any other Government or Regulatory Authority that products be manufactured substantially in any jurisdiction. No Purchased IP Asset, Exclusively Licensed IP Asset or Current Business Product was created or developed by or for any Governmental or Regulatory Authority, university or academic institution, and neither Seller nor any of its Subsidiaries has received any funding from any such entity or otherwise has any obligation to any such entity with respect to any Purchased IP Asset, Exclusively Licensed IP Asset or Current Business Product. There are no restrictions, either pursuant to any Contract or under any Law, on the transferability or ownership of any Purchased IP Assets, and the transferability of the Purchased IP Assets is not, other than in regard to compliance with applicable export control and embargo regulations, restricted under any Law. Schedule 1.1(b) sets forth each Purchased Registered Intellectual Property Rights by jurisdiction.

(i) No Changes Caused by the Transaction . Neither the execution or the consummation of this Agreement nor the Ancillary Agreements, nor any transaction contemplated by this Agreement or any of the Ancillary Agreements, will result in the grant of any right or license with respect to the Purchased IP Assets or the Exclusively Licensed IP Assets to any Person (other than Purchaser).

(j) Software List . Section 2.11(j) of the Seller Disclosure Schedule sets forth a list of all Software which Seller or any of its Subsidiaries has licensed from any third party which is used in the Business (other than Non-Critical Software).

(k) Failure Analysis Reports . Seller has provided to Purchaser its failure analysis reports, return material authorizations and errata with respect to the Business (including its percentage error rates for each Business Product) from January 1, 2007 until the date hereof and such records are accurate and materially complete.

(l) Open Source . Except as specifically set forth in Section 2.11(l) of the Seller Disclosure Schedule , (i) no Open Source Software is incorporated (either directly or indirectly, by incorporation of third-party Software that itself incorporates Open Source Software) into any Current Business Products; (ii) no Current Business Product (A) is intermingled or bundled by Seller or its Subsidiaries with or (B) is otherwise derived from or contains part of, or uses or links to, any Open Source Software or any libraries or routines that constitute Open Source Software or contains elements that previously used or were linked to Open Source Software or any libraries or routines that constitute Open Source Software; and (iii) the Purchased IP Assets are not Open Source Software.

(m) Source Code Protection . Neither Seller nor any of its Subsidiaries has licensed, distributed or disclosed, and neither Seller nor any of its Subsidiaries has any knowledge of any distribution or disclosure by any other Person (including employees and contractors) of, any Source Code for any Software within the Purchased IP Assets or included in any Current Business Product or other confidential information constituting, embodied in or

 

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

pertaining to such Software (“ Business Source Code ”) to any Person, except pursuant to the agreements listed in Section 2.11(m) of the Seller Disclosure Schedule , and Seller and its Subsidiaries have taken reasonable physical and electronic security measures to prevent unauthorized disclosure of such Business Source Code. No event has occurred, and no circumstance or condition exists, that (with or without notice or lapse of time, or both) will, or would reasonably be expected to, and the consummation of the transactions contemplated by this Agreement and the Ancillary Agreements will not, result in the disclosure or release of any such Business Source Code by (i) Seller or any of its Subsidiaries to any escrow agent or any other third party; or (ii) any escrow agent or other Person to any third party either (A) pursuant to any Contract entered into by Seller or its Subsidiaries or (B) to Seller’s knowledge, for any other reason.

2.12 Contracts .

(a) Section 2.12(a) of the Seller Disclosure Schedule contains, as of the date of this Agreement, a true and complete list of:

(i) each Assigned Contract involving payments in excess of one hundred fifty thousand dollars ($150,000) over the life of the Assigned Contract that is not terminable by Seller or its Subsidiaries upon thirty (30) calendar days (or less) notice by Seller or its Subsidiaries without penalty or obligation to make any payment based on such termination;

(ii) each Contract or License primarily or exclusively related to the Business, Purchased Assets or Assumed Liabilities that contains, constitutes or provides for:

(A) material continuing design or other services (including engineering and research and development services) by Seller or any of its Subsidiaries, other than in the ordinary course of business;

(B) any covenant or other provision which limits Seller’s or any of its Subsidiaries’ ability to compete with any Person or in any area or territory;

(C) any strategic alliance, joint development or joint marketing Contract regarding the Business, the Purchased Assets or the Assumed Liabilities;

(D) material manufacturing, marketing, distribution, license or similar Contract of any type or scope granted to a third party with respect to any Purchased Asset or Current Business Product;

(E) any Contract for employment or compensation with Business Employees or independent contractors (including agreements with respect to bonus, stay-put, severance, termination payments or other payments to any Business Employee or independent contractors and any agreement with any Canadian Business Consultant) other than normal employee compensation, performance bonuses and other fringe benefits, in each case on the terms and in amounts established in the ordinary course of business; and/or

 

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

(iii) each other material Contract relating to the Business or any of the Purchased Assets or Assumed Liabilities, including each of the Lease Documents underlying the Assigned Leasehold and Subleasehold Interests.

(b) True and complete copies of all such Contracts or, if not reduced to writing, reasonably complete and accurate written descriptions of which, together with all amendments and supplements thereto and all waivers of any terms thereof, have been provided or made available to Purchaser prior to the execution of this Agreement. Each Assigned Contract and Contract listed or required to be listed in Section 2.12(a) of the Seller Disclosure Schedule is in full force and effect and constitutes a legal, valid and binding agreement, enforceable against Seller, and to Seller’s knowledge, each other party thereto, in accordance with its terms. To Seller’s knowledge, no other party to any such Contract is, or has received any claim or notice that it is, in violation or breach of or default under any such Contract (or with notice or lapse of time or both, would be in violation or breach of or default under any such Contract). Neither Seller nor any of its Subsidiaries is a party to or bound by any Assigned Contract set forth in Section 2.12(a)(ii)(E) of the Seller Disclosure Schedule that automatically terminates or allows termination by the other party thereto upon consummation of any of the transactions contemplated by this Agreement or any of the Ancillary Agreements.

2.13 Insurance .

(a) Each insurance policy to which Seller or any of its Subsidiaries is a party covering the Business or any of the Purchased Assets is valid and binding and in full force and effect, all premiums due thereunder have been paid when due, and neither Seller nor the Person to whom such policy has been issued has received any notice of cancellation or termination in respect of any such policy or is in default thereunder.

(b) Section 2.13(b) of the Seller Disclosure Schedule contains a list of all claims in excess of fifty thousand dollars ($50,000) made under any insurance policies covering the Business or any of the Purchased Assets in the two years immediately preceding the date of this Agreement. Seller has not received notice that any insurer under any policy is denying, disputing or questioning liability with respect to a claim thereunder or defending under a reservation of rights clause.

2.14 Affiliate Transactions . No Assumed Liability arises out of any Contract or Liability between Seller or any of its Subsidiaries, on the one hand, and any current or former officer or director of Seller, or (to Seller’s knowledge) any company in which such officer or director holds a material interest, or any stockholder or Affiliate of Seller, on the other hand. No current or former officer, director or stockholder of Seller or any of its Subsidiaries or any Affiliate of Seller (other than Subsidiaries of Seller) provides or causes to be provided any assets (including any of the Purchased Assets), services (other than services performed by employees, officers or directors of Seller or its Subsidiaries in their capacity as such) or facilities to the Business.

 

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

2.15 Employees; Labor Relations .

(a) Seller has heretofore delivered to Purchaser a complete and accurate list of all (i) employees of Seller or any of its Subsidiaries engaged in or otherwise supporting the conduct of the Business by Seller and its Subsidiaries who are employed by Seller or any of its Subsidiaries as of the date hereof (and, with respect to the employees with the titles of manager or above, at any time during the six (6) month period ending on the date hereof), including layout, test, product engineering and general and administrative employees, with a description of each individual’s respective position and responsibilities (to the extent requested by Purchaser) and cash and non-cash compensation (with a breakdown by type and amount), and, in the case of current employees, each individual’s (A) employee number, (B) status (i.e., full time, part time, temporary, casual, seasonal, co-op student), (C) employment authorization or work visa status, to the extent required for employment authorization and/or verification purposes in the applicable jurisdiction, (D) date of hire and service dates, (E) current wages, salaries or hourly rate of pay, benefits, vacation entitlement, commissions and bonus (whether monetary or otherwise), (F) other material compensation paid or payable since the beginning of the most recently completed fiscal year, (G) for any benefit that takes into account length of service to the employer, the date upon which each such term of employment with Seller or any of its Subsidiaries became effective, (H) jurisdiction of current employment, and (I) unless prohibited by applicable Law, age (such current employees of Seller or any of its Subsidiaries hereinafter referred to as the “ Business Employees ”). Section 2.15(a) of the Seller Disclosure Schedule sets forth a complete and accurate list of the names of all Canadian Business Consultants of Seller and any of its Subsidiaries, whether the Canadian Business Consultant is providing services pursuant to a written consulting Contract, the term of any Contract, the notice, if any, required for Seller or any of its Subsidiaries to terminate the consulting relationship without cause, the date the Canadian Business Consultant first commenced providing services to Seller or any of its Subsidiaries, the hourly fee of the Canadian Business Consultant and the annual fees paid to the consultant for the preceding calendar year.

(b) Neither Seller nor any of its Subsidiaries in any of the jurisdictions affected by the transactions contemplated by this Agreement is a party (or is otherwise subject) to any collective bargaining agreement, trade union agreement, or works council, employee representative or information or consulting agreement or requirement covering any Business Employee, and there are no unfair labor practice or arbitration proceeds pending or ongoing, or to Seller’s knowledge, threatened with respect to the Business. To Seller’s knowledge, there is presently (and during the three (3) years immediately preceding the date of this Agreement there has been) no organizational effort underway or threatened involving any of the Business Employees, and there has never been any work stoppage, strike or other concerted action by employees engaged in the conduct of the Business. As of the Closing Date, Seller and its Subsidiaries shall have complied in all material respects with their respective obligations to inform, consult with and/or seek consent from any Business Employee (or such Business Employee’s representatives) concerning the transactions contemplated by this Agreement.

(c) Each Business Employee resident in the United States is employed at will and each Business Employee resident outside of the United States is employed pursuant to applicable Laws, and no Business Employee is represented by a union. The UK Employees and the French EU Business Employee are the only Business Employees who are employed in any

 

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

Member State of the European Union. No Canadian Business Employee is on short-term or long-term disability leave, parental leave, extended absence or receiving benefits pursuant to the Workplace Safety and Insurance Act, 1997 (Ontario) or similar workers’ compensation legislation in other jurisdictions.

(d) The completion of the transactions contemplated by this Agreement will not result in any payment or increased payment becoming due to any Business Employee, and, to Seller’s knowledge, as of the date of this Agreement, no Business Employee has made any threat, or otherwise revealed an intent, to terminate his or her relationship with Seller or any of its Subsidiaries, for any reason, including because of the consummation of the transactions contemplated by this Agreement. No Business Employee is employed by any outside agency.

(e) During the three (3) years immediately preceding the date of this Agreement there has been no governmental or private individual complaint or claim based on sex, sexual or other harassment, age, disability, race or other form of discrimination prohibited by Law, and no complaint or claim, including any claim of wrongful termination, by any Business Employee or by any individual performing work for the Business but provided by an outside employment agency, and to Seller’s knowledge, no such complaints or claims are threatened or pending. Seller and its Subsidiaries have complied in all material respects with all Laws related to the employment of the Business Employees and the payment of all required wages and benefits to them or on their behalf, and neither Seller nor any of its Subsidiaries has received any notice during the three (3) years immediately preceding the date of this Agreement of any claim that it has not complied in any material respect with any Law relating to the employment of any of the Business Employees, including any provisions thereof relating to wages, hours, collective bargaining, the payment of social security and similar Taxes, payment to pension plans or other required benefits under applicable Law, equal employment opportunity, employment discrimination, WARN, employee safety, or that it is liable for any arrearage of wages or any Tax or penalty for failure to comply with any of the foregoing.

(f) To Seller’s knowledge, no Business Employee is bound by, subject to or obligated under any Contract or subject to any Law that would prevent him or her from working for Purchaser or any of its Subsidiaries or interfere with the conduct of the Business as presently conducted or as presently proposed to be conducted. To Seller’s knowledge, neither the execution nor delivery of this Agreement, nor the carrying on of the Business as presently conducted or as presently proposed to be conducted, nor any activity of such Business Employees in connection with the carrying on of the Business as presently conducted or as presently proposed to be conducted, will conflict with or result in a breach of the terms, conditions or provisions of, constitute a default under, or trigger a condition precedent to any right under any Contract or other agreement under which any such Business Employee is now bound. To Seller’s knowledge, no Business Employee has, either directly or indirectly, been solicited, induced, recruited or encouraged by Seller or any of its Subsidiaries or any of its or their respective Representatives to leave his or her former employer and accept employment with Seller or any of its Subsidiaries in violation of an obligation to a former employer.

 

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

(g) All amounts that Seller or any of its Subsidiaries is legally or contractually required either (i) to deduct from the salaries of the Business Employees or to transfer to such employees’ pension, life insurance, disability, or other similar fund or (ii) to withhold from Business Employees’ salaries and pay to any Governmental or Regulatory Authority, have, in each case, been duly deducted, transferred, withheld and paid, and Seller and its Subsidiaries do not have any outstanding obligation to make such deduction, transfer, withholding or payment.

(h) Seller has furnished Purchaser with true, correct and complete copies of all material written employee policies, employee handbooks and employee manuals applicable to the Business Employees.

2.16 Employee Benefit Plans .

(a) Neither Seller nor any of its ERISA Affiliates maintains or sponsors (or ever maintained or sponsored), or makes or is required to make contributions to, any Seller Benefit Plan. None of the Seller Benefit Plans is or was a “multiemployer plan,” as defined in Section 3(37) of ERISA and none of the Seller Benefit Plans is or was a “defined benefit pension plan” within the meaning of Section 3(35) of ERISA. None of the Seller Benefit Plans is or was adopted or maintained by Seller or any ERISA Affiliate for the benefit of individuals who perform services outside the United States. Seller has delivered to Purchaser true and complete copies of: (i) each of the Seller Benefit Plans and any related funding agreements thereto (including insurance contracts) including all amendments and (ii) the currently effective Summary Plan Description pertaining to each of the Seller Benefit Plans.

(b) With respect to each Seller Benefit Plan that is maintained outside the jurisdiction of the United States or Canada or primarily covers Business Employees residing or working outside the United States or Canada, (i) such Seller Benefit Plan has been established, maintained and administered in all material respects in compliance with its terms and all applicable Laws; (ii) all contributions and expenses that are required to be made have been made or will be made in a timely manner prior to or immediately following the Closing; and (iii) with respect to any such Seller Benefit Plan that is intended to be eligible to receive favorable Tax treatment under the Laws applying to such Plan, all requirements necessary to obtain such favorable Tax treatment have been satisfied.

(c) Section 2.16(c) of the Seller Disclosure Schedule contains a complete and accurate list of all Canadian Seller Benefit Plans. Except as set forth in Section 2.16(c) of the Seller Disclosure Schedule , (i) Seller has heretofore made available to Purchaser a current copy of each Canadian Seller Benefit Plan and the funding agreements and summary descriptions of each such plan; (ii) all Canadian Seller Benefit Plans are registered and have been administered in all material respects in accordance with the terms of such plans, including the terms of the material documents that support such plans, and in accordance in all material respects with all applicable Laws; (iii) none of the Canadian Seller Benefit Plans provide for benefit increases that are contingent upon, or will be triggered by the completion of the transactions contemplated herein; and (iv) none of the Canadian Seller Benefit Plans provides benefits beyond retirement or other termination of service to employees or former employees or to the beneficiaries or dependants of such employees.

 

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

2.17 Tangible Assets . All of the tangible assets included in the Purchased Assets are in good working order and condition in all material respects, ordinary wear and tear excepted.

2.18 Real Property and Facilities .

(a) Section 2.18(a) of the Seller Disclosure Schedule contains a correct list of each facility and the correct address for each location where the Business is regularly conducted (or where any of the Purchased Assets are located or any of the Business Employees is regularly employed) (the “ Business Real Properties ”). Seller and its Subsidiaries have the right to lease, assign or sublease to Purchaser the Assigned Leasehold and Subleasehold Interests, and to allow Purchaser to occupy the applicable facilities to be occupied by Purchaser and its Subsidiaries pursuant to the Transition Services Agreement. At the Effective Time, the premises to be conveyed or leased to Purchaser pursuant to the Assigned Leasehold and Subleasehold Interests shall be free and clear of all occupants other than Business Employees. Seller has not granted to any Person any options or encumbrances on the Business Real Properties, which would allow such Person to interfere with or limit Seller’s rights in the Assigned Leasehold and Subleasehold Interests during the term thereof. No real property where the Business is regularly conducted or any of the Purchased Assets is located or any of the Business Employees are regularly employed is owned by Seller or any of its Subsidiaries.

(b) Subject to the terms of applicable Lease Documents, Seller and its Subsidiaries have a valid and subsisting leasehold estate in and the right to quiet enjoyment of each of the leased Business Real Properties related to each Assigned Leasehold and Subleasehold Interest for the full term of the applicable leases (including renewal periods) relating thereto. Each Lease Document related to each Assigned Leasehold and Subleasehold Interest is a legal, valid and binding agreement, enforceable in accordance with its terms, of Seller (or a Subsidiary of Seller, as the case may be) and, to Seller’s knowledge, of each other Person that is a party thereto, and there is no, and neither Seller nor any of its Subsidiaries have received notice of any, default (or any condition or event which, after notice or lapse of time or both, would constitute a default) thereunder; provided that, to Seller’s knowledge, neither Seller nor any of its Subsidiaries is in breach or default under any such Lease Document, and no event has occurred or circumstance exists which, with the delivery of notice, the passage of time or both, would constitute such a breach or default, or permit the termination, modification or acceleration of rent under any such Lease Document.

(c) All improvements on each Business Real Property related to each Assigned Leasehold and Subleasehold Interest (i) comply with, and the operation of the Business therein is operated in accordance with, the applicable Lease Documents and all with applicable Laws in all material respects and all applicable Liens, Approvals, Contracts, covenants and restrictions, and (ii) are in all material respects in good operating condition and in a state of good maintenance and repair, ordinary wear and tear excepted, and to Seller’s knowledge, there is no condemnation, expropriation or appropriation proceeding pending or threatened against any of such real property or any of the improvements thereon.

(d) True and correct copies of the documents under which the applicable Business Real Property is leased or subleased to or utilized and/or operated by Seller and its Subsidiaries (the “ Lease Documents ”) have heretofore been delivered or made available to Purchaser. The Lease Documents are unmodified and in full force and effect.

 

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

2.19 Environmental Matters .

(a) Seller and its Subsidiaries possess all Environmental Permits necessary to operate the Business.

(b) Seller and its Subsidiaries are in compliance in all material respects with (i) all terms, conditions and provisions of all Environmental Permits related to the Business or any of the Purchased Assets and (ii) all Environmental Laws applicable to the Business or any of the Purchased Assets.

(c) Neither Seller nor any of its Subsidiaries, nor, to Seller’s knowledge, any of its or their respective predecessors or any entity previously owned by any of the foregoing, has received any notice of alleged, actual or potential responsibility for, any Order, or any inquiry regarding, (i) any material Release or presence or threatened or suspected Release or presence of any Hazardous Material involving the Business or any of the Purchased Assets, or (ii) any material violation of Environmental Law involving the Business or any of the Purchased Assets.

(d) Regarding the Business and the Purchased Assets, neither Seller nor any of its Subsidiaries, nor, to Seller’s knowledge, any of its or their respective predecessors or any entity previously owned by any of the foregoing, has any obligation or Liability with respect to any Hazardous Material, including any Release or threatened or suspected Release of any Hazardous Material, that could give rise to a Liability of (or claim against) Purchaser, and there has been no event, fact or circumstance which, either alone or in combination, would reasonably be expected to form the basis of any such obligation or Liability.

(e) To Seller’s knowledge, no Release of Hazardous Material(s) has occurred at, from, in, to, on, or under any Site related to the Business or any of the Purchased Assets and no Hazardous Material is present in, on, about or migrating to or from any such Site, in each case in a manner or in quantities reasonably likely to materially interfere with the operation of the Business or the Purchased Assets, or otherwise subject the Business or the Purchased Assets to Liability for violation of Environmental Law.

(f) Neither Seller nor any of its Subsidiaries, nor, to Seller’s knowledge, any of its or their respective predecessors or any entity previously owned by any of the foregoing, has transported or arranged for the treatment, storage, handling, disposal or transportation of any Hazardous Material at or to any location relating to the Business or any of the Purchased Assets, except in each case in compliance with applicable Environmental Laws.

(g) No Site related to the Business or any of the Purchased Assets is a current or proposed Environmental Clean-up Site.

 

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

(h) There is no Lien under or pursuant to any Environmental Law on any Site related to the Business or any of the Purchased Assets.

(i) To Seller’s knowledge, there is no (i) underground storage tank, active or abandoned, (ii) polychlorinated biphenyl containing equipment, (iii) asbestos-containing material, (iv) radon, (v) lead-based paint or (vi) urea formaldehyde at any Site related to the Business or any of the Purchased Assets.

(j) There has been no environmental investigation, sampling data, study, audit, test, review or other analysis conducted or commissioned by Seller or in the control, possession or custody of Seller or any of its Subsidiaries with respect to any Site which has not been delivered to Purchaser prior to execution of this Agreement.

(k) Neither Seller nor any of its Subsidiaries is a party, whether as a direct signatory or as successor, assign, third-party beneficiary, guarantor or otherwise, to, and neither Seller nor any of its Subsidiaries is otherwise bound by, any lease, sublease or other Contract related to the Business or any of the Purchased Assets under which it is obligated or may be obligated by any representation, warranty, covenant, restriction, indemnification or other undertaking respecting Hazardous Materials or under which any other Person is or has been released respecting Hazardous Materials.

(l) Seller and its Subsidiaries, and, to Seller’s knowledge, its and their respective predecessors and each entity previously owned by any of the foregoing, have provided all notifications and warnings, made all registrations and pre-registrations, made all reports, and kept and maintained all records required pursuant to all Environmental Laws applicable to the Business or any of the Purchased Assets.

2.20 No Brokers . Other than Lehman Brothers, Inc., whose fees shall be paid by Seller, no broker, investment banker, financial advisor or other Person is entitled to any broker’s, finder’s, financial advisor’s or similar fee or commission in connection with this Agreement or any of the Ancillary Agreements or any of the transactions contemplated hereby or thereby based on arrangements made by or on behalf of Seller or any of its Subsidiaries.

2.21 No Breach of Exclusivity Agreement . Since May 8, 2008, neither Seller nor any of its Subsidiaries has taken or permitted any of its or their respective Representatives to take, either directly or indirectly, any action that is a breach of the Exclusivity Agreement.

2.22 Financial Projections . Seller has provided to Purchaser a true, correct and complete copy of Seller’s (i) working written budget dated as of August 6, 2008 for the Business for the balance of 2008 (the “ Operating Plan ”) and (ii) Project Butterfly DTV Division Revenue Forecast dated August 6, 2008. Such plan and forecast were adopted by Seller in the ordinary course of business consistent with past practice and there have been no amendments or updates to such plan or forecast so adopted between the applicable dates thereof and the date of this Agreement. From August 6, 2008 to the date of this Agreement, Seller and its Subsidiaries have operated the Business in accordance with the Operating Plan.

 

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

2.23 Customers and Suppliers . Section 2.23 of the Seller Disclosure Schedule sets forth a list of (a) (i) the top ten (10) customers, by consolidated revenue, of the Business, and (ii) each customer that accounted for more than five percent (5%) of the revenues of the Business, in each case during Seller’s last full fiscal year and the five-month period ended May 31, 2008 and the amount of revenues accounted for by such customer during each such period, and (b) each supplier that is the sole supplier of any significant Current Business Product. To Seller’s knowledge, no such customer has indicated to Seller that it intends to terminate or materially adversely change its relationship with Seller or any of its Subsidiaries (except, in the case of indications first made after the date hereof, where such termination or change would not reasonably be expected to have a Business Material Adverse Effect).

2.24 Inventory . The Purchased Inventory consists of a quality usable and salable in the ordinary course of business as currently conducted. All Purchased Inventory is and immediately prior to the Effective Time shall be the property of Seller and its Subsidiaries free and clear of any Lien other than Permitted Exceptions, and is not and shall not be pledged as collateral and is not and shall not at any time prior to the Effective Time be held by Seller and its Subsidiaries on consignment from others.

2.25 Warranties . Section 2.25 of the Seller Disclosure Schedule sets forth a description of the standard warranties currently offered or still in effect with respect to the Business as of the date of this Agreement (other than warranties under applicable Law), and the aggregate expenses incurred by the Business in fulfilling warranty obligations since January 1, 2007. Except for return material authorizations, errata and failure analysis reports, to the knowledge of Seller, Seller has not received any written notice that the Current Business Products in current production have any material defects in construction and design and do not satisfy any and all Contract or other specifications related thereto to the extent stated in writing in such Contracts or specifications.

2.26 Disclosure . Seller has heretofore provided or made available to Purchaser all of the Contracts, Licenses, Permits, Approvals, and Books and Records heretofore requested on behalf of Purchaser in writing, and all other material information concerning the Business, the Purchased Assets and the Assumed Liabilities in the possession, custody or control of Seller or any of its Subsidiaries.

ARTICLE 3.

REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser hereby makes the following representations and warranties to Seller, except as otherwise set forth in the disclosure schedule and schedule of exceptions delivered by Purchaser herewith and dated as of the date hereof (the “ Purchaser Disclosure Schedule ”). The parties hereto agree that any reference in a particular section or subsection of the Purchaser Disclosure Schedule shall only be deemed to be an exception to (or, as applicable, a disclosure for purposes of) the representations and warranties contained in the corresponding section and subsection of this Agreement and shall not be deemed to be an exception to (or, as applicable, a disclosure for purposes of) any other representation and warranty contained in this Agreement, unless the relevance of that reference as an exception to (or a disclosure for purposes of) such other

 

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

representation and warranty is readily apparent from the face of such disclosure to a Person who has read only that reference and such other representation and warranty and Purchaser has used commercially reasonable efforts to provide express cross-references where applicable.

3.1 Organization and Qualification . Purchaser is a corporation duly organized, validly existing and in good standing under the Laws of the State of California. Purchaser has full corporate power and corporate authority to conduct its business as presently conducted and as presently proposed to be conducted and to own, use and lease its Assets and Properties. Purchaser is duly qualified, licensed or admitted to do business and is in good standing in each jurisdiction in which the ownership, use, licensing or leasing of its Assets and Properties, or the conduct or nature of its business, makes such qualification, licensing or admission necessary, except for such failures to be so duly qualified, licensed or admitted and in good standing that would not have a Purchaser Material Adverse Effect. The transactions contemplated by this Agreement do not involve the acquisition of intangible Assets and Properties by a Person resident in Canada or registered pursuant to subdivision (d) of Division V under Part IX of the Excise Tax Act (Canada).

3.2 Authority Relative to this Agreement . Purchaser has full corporate power and corporate authority to execute and deliver this Agreement and the Ancillary Agreements to which it is a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by Purchaser of this Agreement and the Ancillary Agreements to which it is a party and the consummation by Purchaser of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary action by the board of directors of Purchaser, and no other action on the part of the board of directors of Purchaser is required to authorize the execution, delivery and performance of this Agreement and the Ancillary Agreements to which it is a party and the consummation by Purchaser of the transactions contemplated hereby and thereby. This Agreement and the Ancillary Agreements to which Purchaser is a party have been or will be, as applicable, duly and validly executed and delivered by Purchaser and, assuming the due authorization, execution and delivery hereof by Seller and/or the other parties thereto, constitutes or will constitute, as applicable, a legal, valid and binding obligation of Purchaser enforceable against Purchaser in accordance with their respective terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar Laws relating to the enforcement of creditors’ rights generally and by general principles of equity.

3.3 No Conflicts . The execution and delivery by Purchaser of this Agreement and the Ancillary Agreements to which it is a party do not, and the performance by Purchaser of its obligations under this Agreement and the Ancillary Agreements to which it is a party and the consummation of the transactions contemplated hereby and thereby will not:

(a) conflict with or result in a violation or breach of any of the terms, conditions or provisions of the articles of incorporation or bylaws of Purchaser;

 

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

(b) subject to (i) such filings as may be required under applicable state or federal securities Laws, and (ii) the making of such filings (if any) as may be required under the Competition Act (Canada), the Investment Canada Act, or antitrust, notification, merger control, and similar Laws of other jurisdictions, and the receipt of approvals and/or the expiration or early termination of any applicable waiting period thereunder or therefrom, conflict with or result in a violation or breach of any Law applicable to Purchaser or its Assets or Properties; or

(c) except as would not have a Purchaser Material Adverse Effect, (i) conflict with or result in a material violation or breach of, (ii) constitute a material default (or an event that, with or without notice or lapse of time or both, would constitute a material default) under, or (iii) require Purchaser to obtain any material consent, approval or action of, make any material filing with or give any material notice to any Person as a result of the terms of, any material Contract or material License to which Purchaser is a party or by which any of its Assets and Properties are bound.

3.4 Litigation . There is no Order, Action or Proceeding pending or, to Purchaser’s knowledge, threatened against or affecting, Purchaser as of the date hereof before any Governmental or Regulatory Authority which in any manner challenge or seeks to prevent enjoin, alter or materially delay the transactions contemplated by this Agreement.

3.5 No Brokers . No broker, investment banker, financial advisor or other Person is entitled to any broker’s, finder’s, financial advisor’s or similar fee or commission in connection with this Agreement or any of the Ancillary Agreements or any of the transactions contemplated hereby or thereby based on arrangements made by or on behalf of Purchaser.

3.6 Funds . Purchaser has sufficient funds on hand to pay the Purchase Price at the Closing.

ARTICLE 4.

CONDUCT PRIOR TO THE CLOSING

4.1 Conduct of the Business . During the period from the execution