ASSET PURCHASE AGREEMENT

Exhibit 2.4

ASSET PURCHASE AGREEMENT

BY AND BETWEEN

INTEGRATED DEVICE TECHNOLOGY, INC.

AND

NETLOGIC MICROSYSTEMS, INC.

DATED AS OF APRIL 30, 2009

TABLE OF CONTENTS

 

 

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ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (this “ Agreement ”) is made and entered into this 30 day of April, 2009, by and between Integrated Device Technology, Inc., a Delaware corporation (“ Seller ”), and NetLogic Microsystems, Inc., a Delaware corporation (“ Buyer ”).

RECITALS

A. Seller, directly and through certain of its affiliates, owns all rights in the Products (as defined below).

B. Buyer and its affiliates desire to purchase and assume from Seller, and Seller desires to sell, transfer and assign to Buyer and it affiliates, the Assets and Assumed Liabilities upon the terms and subject to the conditions specified in this Agreement (the “ Acquisition ”).

C. To the extent required, the respective Boards of Directors of Buyer and Seller have approved and declared advisable this Agreement and the transactions contemplated hereby.

AGREEMENT

NOW THEREFORE, in consideration of the respective covenants and promises contained herein and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto agree as follows:

ARTICLE I.

DEFINITIONS

1.1 Defined Terms . As used herein, the terms below shall have the following meanings. Any of such terms, unless the context otherwise requires, may be used in the singular or plural, depending upon the reference.

“ Accounts Receivable ” shall mean (a) all trade accounts receivable and other rights to payment from customers of Seller related to the Products and the full benefit of all security for such accounts or rights to payments, including all trade accounts receivable representing amounts receivable in respect of goods shipped or products sold or services rendered to customers of Seller with respect thereto, (b) all other accounts or notes receivable of Seller related to the Products and (c) any claims, remedy or other rights related to any of the foregoing.

“ Action ” shall mean any action, claim, suit, writ, litigation, proceeding, labor dispute, mediation, arbitration, governmental audit, inquiry, criminal prosecution, hearing, investigation or unfair labor practice charge or complaint commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental Authority or arbitrator.

“ affiliate ” of a Person means a Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, the first mentioned Person. For purposes of this definition, “control,” when used with respect to any specified Person, means the power to direct or cause the direction of the management and policies of such Person, directly or indirectly, whether through ownership of voting securities or by contract or otherwise, and the terms “controlling” and “controlled by” have meanings correlative to the foregoing.

“ Ancillary Agreements ” shall mean the Cross-License Agreement, the Transition Services Agreement, the Bill of Sale, the Assignment and Assumption Agreement, the Assignment of Patents, the Mutual Confidentiality Agreement, the Non-Competition Agreement, the Transitional Supply Agreement and the Note Documents.

“ Assets ” shall mean all of the right, title and interest of Seller and its affiliates in the Products, the Intellectual Property Rights specifically listed on Schedule 1.1(c) and to the following assets, exclusively related to, exclusively used in or exclusively dedicated to the Products, but not including the Excluded Assets, as of the Closing Date:

(a) all rights of Seller and its affiliates under the Contracts specifically listed on Schedule 1.1(a) (the “ Assumed Contracts ”);

(b) all Fixtures and Equipment specifically listed on Schedule 1.1(b);

(c) all Inventory;

(d) all Books and Records;

(e) all Software and other Technology specifically listed on Schedule 1.1(d);

(f) all other Technology exclusively related to, exclusively used in or exclusively dedicated to the Products;

(g) all claims, counterclaims, causes of action, choses in action, rights of recovery and rights of set-off of any kind, against any person or entity, including without limitation any liens, security interests, pledges or other rights to payment or to enforce payment in connection with Products delivered by Seller on or prior to the Closing Date; and

(h) any and all goodwill related exclusively to the Products or any of the foregoing, but not including any goodwill related to the name of Seller generally.

“ Base Inventory Value ” shall mean $10,000,000.

“ Benefit Arrangement ” shall mean any employment, consulting, severance or other similar contract, arrangement or policy and each plan, arrangement (written or oral), program, agreement or commitment providing for insurance coverage (including without limitation any self-insured arrangements), workers’ compensation, disability benefits, supplemental unemployment benefits, vacation benefits, retirement benefits, life, health,

 

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disability or accident benefits (including without limitation any “voluntary employees’ beneficiary association” as defined in Section 501(c)(9) of the Code providing for the same or other benefits) or for deferred compensation, profit-sharing bonuses, stock options, stock appreciation rights, stock purchases or other forms of incentive compensation or post-retirement insurance, compensation or benefits which:

(a) (1) is not an “employee welfare benefit plan” as defined in Section 3(1) of ERISA, an “employee pension benefit plan” as defined in Section 3(2) of ERISA, or a “multiemployer plan,” as defined in Section 3(37) or 4001(a)(3) of ERISA, (2) is entered into, maintained, contributed to or required to be contributed to, as the case may be, by Seller or an ERISA Affiliate or under which Seller or any ERISA Affiliate may incur any Liability, and (3) covers any Product Employee or former Product Employee of Seller or any ERISA Affiliate (with respect to their relationship with such entities); or

(b) any plan covering Product Employees or former Product Employees of any foreign Subsidiary (with respect to their relationship with such entities) which if maintained or administered in or otherwise subject to the laws of the United States would be described in paragraph (a).

“ Books and Records ” shall mean original or true copies of the following: (a) all product, business and marketing plans and studies, sales and advertising and promotional literature, creative materials and artwork exclusively relating to the Products, (b) all books, records (including customer, supplier and purchasing records), invoices, lists (including customer, supplier and distributor lists), documents, ledgers, financial data, files, reports, product and design manuals, plans, drawings, technical manuals, management information systems (including related computer software) and operating records of every kind exclusively relating to the Products, and (c) all telephone and fax numbers exclusively relating to the Products, in each case whether maintained as hard copy or stored in computer memory and whether owned by Seller or its affiliates; provided , however, that to the extent that any such materials relate both to or arise from or are used in connection with the Products as well as the Retained Business, or any such information is commingled with information used regarding the Retained Business, Seller will provide to Buyer a copy of the applicable portion of such materials and information as applicable to the Products and grant Buyer the right to use such materials and information (provided such use and licenses to use are not in violation of or otherwise inconsistent with the terms of the Cross-License Agreement).

“ Buyer Financial Statements ” shall mean the audited consolidated balance sheets dated December 31, 2008 and December 31, 2007, and the related audited consolidated statements of operations and cash flow for the years then ended.

“ Code ” shall mean the Internal Revenue Code of 1986, as amended, and the rules and regulations thereunder.

“ Contract ” shall mean any agreement, contract, note, loan, mortgage, evidence of indebtedness, purchase order, letter of credit, indenture, lease, sublease, security or pledge agreement, franchise agreement, covenant not to compete, license, sublicense, instrument, obligation or commitment to which Seller is a party or is bound and which exclusively relates to the Products, whether oral or written.

 

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“ Court Order ” shall mean any judgment, decision, consent decree, injunction, ruling or order of any foreign, federal, state or local court or Governmental Authority that is binding on any Person or its property under applicable law.

“ CPA Firm ” shall mean PricewaterhouseCoopers LLP or such other firm of independent certified public accountants as to which Seller and Buyer shall mutually agree.

“ Default ” shall mean (a) a material breach of or material default under any Contract, (b) the occurrence of an event that with the passage of time or the giving of notice or both would constitute a material breach of or material default under any Contract, or (c) the occurrence of an event that with or without the passage of time or the giving of notice or both would give rise to a right of termination, cancellation, renegotiation or acceleration, or the modification of the terms or conditions, under any Contract.

“ Disclosure Schedules ” shall mean the Schedules of Seller and Buyer attached to this Agreement.

“ Encumbrance ” shall mean any lien, pledge, charge, encumbrance, security interest, mortgage, easement, or other similar restriction or third party right, including any right of first refusal, and other than any licenses of Intellectual Property Rights and any Permitted Encumbrances.

“ Excluded Assets ” notwithstanding any other provision of this Agreement, shall mean the assets of Seller and its affiliates other than the Assets, which assets are not to be acquired by Buyer hereunder, including but not limited to the following:

(a) all cash, bank accounts, certificates of deposit and other cash equivalents;

(b) all Accounts Receivable with third parties in connection with the Products shipped and invoiced prior to the Closing;

(c) all Permits and insurance policies and any rights, claims or choses in action under such Permits and insurance policies;

(d) all Tax refunds and credits;

(e) all Intellectual Property Rights and Technology other than the Intellectual Property Rights and Technology specifically listed on Schedules 1.1(c) or 1.1(d) or otherwise included in the Asset definition;

(f) all Fixtures and Equipment other than Fixtures and Equipment specifically listed on Schedule 1.1(b);

(g) all inventory other than the Inventory;

 

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(h) any agreement, contract, note, loan, mortgage, evidence of indebtedness, purchase order, letter of credit, indenture, lease, sublease, security or pledge agreement, franchise agreement, covenant not to compete, license, sublicense, instrument, obligation or commitment to which Seller is a party or is bound, whether oral or written, other than the Contracts;

(i) all interests in real property;

(j) Assets and Contracts relating to any Benefit Arrangement, except as expressly provided in Section 5.5 ;

(k) all assets and other rights sold or otherwise transferred or disposed of between the date of this Agreement and the Closing not in violation of the terms of this Agreement and the Ancillary Agreements;

(l) all books, records and other information prepared by Seller and its affiliates in connection with the transactions contemplated hereby;

(m) all claims, causes of action, choses in action, rights of recovery and rights of set-off of any kind against any Person to the extent arising from or related to the Excluded Liabilities; and

(n) all rights of Seller and its affiliates under this Agreement and the Ancillary Agreements.

“ Fixtures and Equipment ” shall mean all of the machinery, computer hardware, spare parts, supplies, equipment, tooling, patterns, dies and other tangible personal property owned by Seller or its affiliates and used exclusively in connection with or exclusively related to the Products, wherever located and including any such Fixtures and Equipment in the possession of any of Seller’s suppliers.

“ GAAP ” shall mean United States generally accepted accounting principles as in effect from time to time, applied consistently with the principles used in preparing Seller’s financial statements.

“ Governmental Authority ” shall mean any (a) nation, state, commonwealth, province, territory, county, municipality, district or other jurisdiction of any nature; (b) federal, state, local, municipal, foreign or other government; or (c) governmental or quasi-governmental authority of any nature (including any governmental division, department, agency, commission, instrumentality, board, bureau, official, ministry, organization, unit, body or entity and any court or other tribunal).

“ HSR Act ” shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations thereunder.

“ Indebtedness ” shall mean (a) any obligation for borrowed money, including, without limitation, any obligation for accrued and unpaid interest thereon and any prepayment or other penalties or premiums, (b) any capitalized lease obligations (as determined in accordance with GAAP), (c) any reimbursement obligations in respect of letters of credit and (d) all guarantees issued in respect of obligations of any other Person of the type described in clauses (a) through (c).

 

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“ Intellectual Property Rights ” shall mean all (a) United States and foreign patents and patent applications and disclosures relating thereto (and any patents that issue as a result of those patent applications), and any renewals, reissues, reexaminations, extensions, continuations, continuations-in-part, divisions and substitutions relating to any of the patents and patent applications, as well as all related foreign patent and patent applications that are counterparts to such patents and patent applications, (b) United States and foreign trademarks, service marks, trade dress, logos, trade names and corporate names, whether registered or unregistered, and the goodwill associated therewith, together with any registrations and applications for registration thereof, (c) United States and foreign copyrights and rights under copyrights, whether registered or unregistered, and any registrations and applications for registration thereof, (d) United States and foreign mask work rights and registrations and applications for registration thereof, (e) rights in databases and data collections (including knowledge databases, customer lists and customer databases) under the Laws of the United States or any other jurisdiction, whether registered or unregistered, and any applications for registration therefore, (f) trade secrets and other rights in know-how and confidential or proprietary information (including any business plans, designs, technical data, customer data, financial information, pricing and cost information, bills of material, or other similar information), (g) URL and domain name registrations, and (h) other proprietary or intellectual property rights now known or hereafter recognized in any jurisdiction.

“ Inventory ” shall mean all inventory of the Products held for resale and all raw materials, work in process, finished products, wrapping, supply and packaging items and substantially similar items with respect thereto, in each case wherever the same may be located, exclusively related to, exclusively used in or exclusively dedicated to the Products, in each case as of the Closing Date and in each case for which legal title and ownership resides with Seller, except to the extent included in Excluded Assets or specifically listed in Schedule 1.1(b).

“ Laws ” shall mean any constitutions, laws, statutes, ordinances, or directives, regulations, rules, notice requirements, edicts, decrees, court decisions, agency guidelines, principles of law and orders of any Governmental Authority, energy, motor vehicle safety, public utility, zoning, building and health codes, occupational safety and health and laws respecting employment practices, employee documentation, terms and conditions of employment and wages and hours.

“ Liabilities ” shall mean any direct or indirect liability, indebtedness, obligation, commitment, claim, deficiency or guaranty or endorsement of or by any Person of any type, whether known or unknown, disputed or undisputed, secured or unsecured, due or to become due, vested or unvested, liquidated or unliquidated, accrued, absolute, contingent, matured or unmatured, whether or not the same is required to be accrued on the financial statements of such Person.

“ Material Adverse Change ” or “ Material Adverse Effect ” shall mean any event, effect, circumstances or change that, individually or together with other events, effects, circumstances or changes, is or would reasonably be expected to be materially adverse to the

 

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condition of the Assets; provided , however, that “ Material Adverse Change ” and “ Material Adverse Effect ” shall not be deemed to include the impact of any events, effects, circumstances or changes that (A) affect the general economic conditions in the United States, which do not disproportionately affect the Assets in any material respect; (B) affect generally the semiconductor industry but that do not have a disproportionate effect on the Assets in any material respect; (C) result from the announcement of the Acquisition or the pendency of the transactions contemplated hereby; (D) result from the performance by Seller of its obligations under this Agreement and the Ancillary Agreements; or (E) result from changes in applicable Law or in GAAP effected after the date of this Agreement.

“ Mutual Confidentiality Agreement ” shall mean that certain Mutual Confidentiality Agreement, dated April 14, 2009, by and between Buyer and Seller.

“ Note Documents ” shall mean the Senior Secured Promissory Note (the “ Promissory Note ”) and the Security Agreement (the “ Security Agreement ”) each in the forms mutually agreed by Buyer and Seller and delivered by Seller to Buyer as of the date hereof.

“ Permits ” shall mean all licenses, permits, franchises, approvals, authorizations, registrations, waivers, exemptions, qualifications, consents or orders of, or filings with, any Governmental Authority, whether foreign, federal, state or local, or any other Person, necessary for the past or present conduct of, or relating to the Assets.

“ Permitted Encumbrances ” shall mean (i) the mechanics’, workmen’s, repairmen’s, warehousemen’s, carriers’ or other similar liens, including all statutory liens, arising or incurred in the ordinary course of business, (ii) liens for Taxes, assessments and other governmental charges which are not due and payable or, if due, either (A) not delinquent or (B) being contested in good faith, (iii) protective filings related to operating leases with third parties entered into in the ordinary course of business, and (iv) liens that do not materially affect the ownership, value or use of the underlying Asset for the purpose it is being utilized by Seller or its affiliates on the Closing Date.

“ Person ” shall mean an individual, partnership, limited liability company, corporation, association, joint stock company, trust, joint venture, unincorporated organization or other entity or organization of any kind or Governmental Authority.

“ Post-Closing Tax Period ” shall mean any Tax period beginning after the Closing Date and that portion of a Straddle Period beginning after the Closing Date.

“ Pre-Closing Tax Period ” shall mean any Tax period ending on or before the Closing Date and the portion of any Straddle Period ending on the Closing Date.

“ Product Employees ” shall mean those employees of Seller or its affiliates whose employment exclusively relates to the Products.

“ Products ” shall mean Seller’s network search engines, search accelerators, route accelerators, and proprietary Cisco search engines as specifically listed on Schedule 1.1(e).

 

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“ Property Taxes ” shall mean all real property Taxes, personal property Taxes and similar ad valorem Taxes.

“ Representative ” shall mean any officer, director, principal, attorney, agent, employee, accountant, advisor or other representative.

“ Retained Business ” shall mean any and all business conducted by Seller and its affiliates that is not exclusively related to the Products or the Assets.

“ Software ” shall mean computer software, programs and databases in any form, including web content, source code, executable code, tools, developers kits, utilities, graphical user interfaces, menus, images, icons, and forms, and all versions, updates, corrections, enhancements and modifications thereof, and all related documentation, developer notes, comments and annotations related thereto.

“ Straddle Period ” shall mean any Tax period beginning before or on and ending after the Closing Date.

“ Subsidiary ” shall mean (a) any corporation in an unbroken chain of corporations beginning with Seller if each of the corporations other than the last corporation in the unbroken chain then owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain, (b) any partnership in which Seller is a general partner, or (c) any partnership in which Seller possesses a 50% or greater interest in the total capital or total income of such partnership.

“ Tax ” shall mean any federal, state, local or foreign tax, levy, impost, fee, assessment or other government charge, including without limitation income, estimated income, business, occupation, franchise, property, payroll, personal property, sales, transfer, use, employment, commercial rent, occupancy, franchise or withholding taxes, and any interest, penalties and additions imposed by a Governmental Authority in connection therewith.

“ Tax Return ” shall mean any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any Schedule or attachment thereto, and including any amendment thereof.

“ Technology ” shall mean tangible embodiments of Intellectual Property Rights, whether in electronic, written or other media, including Software, technical documentation, specifications, designs, bills of material, build instructions, test reports, schematics, algorithms, application programming interfaces, user interfaces, test vectors, netlists, databases, processes, prototypes, samples, studies, or other know-how and other works of authorship.

“ Transfer Taxes ” shall mean all transfer, stamp, documentary, sales, use, registration, value-added and other similar Taxes incurred in connection with this Agreement and the transactions contemplated hereby.

1.2 Other Defined Terms . Capitalized terms not defined in Section 1.1 above shall have the meanings set forth in the applicable Sections of the Agreement.

 

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ARTICLE II.

PURCHASE AND SALE OF ASSETS

2.1 Closing . The closing (the “ Closing ”) of the transactions contemplated by this Agreement and the Ancillary Agreements shall take place at the offices of Latham & Watkins LLP, 140 Scott Drive, Menlo Park, California 94025, or at such other place as shall be mutually agreeable to the parties hereto, as soon as practicable thereafter, but in any event within two (2) business days, upon the satisfaction or (to the extent permitted) waiver of the latest to occur of the conditions to the Closing set forth in Articles VI and VII hereof (other than the conditions to be satisfied at the Closing) or such other date as shall be mutually agreeable to the parties hereto (the “ Closing Date ”).

2.2 Transfer of Assets . Upon the terms and subject to the conditions contained herein, at the Closing, Seller and its affiliates will sell, convey, transfer, assign and deliver to Buyer and its affiliates, and Buyer and its affiliates will acquire from Seller and its affiliates, the Assets, free and clear of all Encumbrances other than Permitted Encumbrances. Notwithstanding anything to the contrary contained herein, the Excluded Assets are not part of the sale and purchase contemplated hereunder and shall remain the property of Seller.

2.3 Assumption of Liabilities . Upon the terms and subject to the conditions contained herein, at the Closing, Buyer shall assume and agree to pay, perform and discharge the following, and only the following, Liabilities of Seller (the “ Assumed Liabilities ”):

(a) All Liabilities arising after the Closing Date under the Assumed Contracts (but not including any Liability for any Default under any Assumed Contract occurring on or prior to the Closing Date); provided that, as of the date such Assumed Contract is assigned to Buyer, Seller is not in Default under such Assumed Contract, or any such Default has been cured, and Seller has paid or adequately provided for payment of all obligations under such Assumed Contract that are due and payable as of the Closing Date;

(b) Liabilities for Product warranty claims other than Liabilities for Product warranty claims (i) set forth on Schedule 2.3(b) and (ii) made in writing for Products shipped before Closing which, individually or in the aggregate, exceed $500,000, in which case Seller shall be responsible for the entire amount of such claims;

(c) Liabilities that are to be assumed by Buyer in respect of any Transferred Employees pursuant to Section 5.5 ; and

(d) Liabilities in respect of Taxes that are specifically allocated to Buyer pursuant to Section 2.10 and Section 5.7(b) .

 

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2.4 Excluded Liabilities . Notwithstanding any other provisions of this Agreement and the Ancillary Agreements, except for the Assumed Liabilities expressly specified in Section 2.3 , Buyer shall not assume, or otherwise be responsible for, any Liabilities of Seller or its affiliates, whether liquidated or unliquidated, or known or unknown, whether arising out of occurrences prior to, at or after the date hereof (“ Excluded Liabilities ”), which Excluded Liabilities include, without limitation:

(a) except as specifically provided in Section 5.5, any Liability to or in respect of any employees or former employees of Seller or its affiliates, including, (i) any claim or demand of a current or former employee relating to or arising as a result of employment, termination thereof, or an employment agreement, whether or not written, between Seller or its affiliates and any Person, including, for this purpose, with respect to any Person claiming entitlements or benefits on the basis of a claimed employer-employee relationship between Seller and such Person, (ii) any Liability under any Benefit Arrangement at any time maintained, contributed to or required to be contributed to by or with respect to Seller or its affiliates or under which Seller or its affiliates may incur Liability, or any contributions, benefits or Liabilities therefor, or any Liabilities with respect to Seller’s or its affiliates’ withdrawal or partial withdrawal from or termination of any Benefit Arrangement, (iii) any Liability under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“ COBRA ”), (iv) any Liability of Seller or its affiliates under the WARN Act, and any similar state, local U.S. or non-U.S. law or regulation, (v) except as set forth in Section 2.3 , any Liability of Seller or its affiliates for payroll obligations and/or severance and/or paid time and/or mandatory or customary payment and/or expense accounts and/or benefit and/or entitlement for employees of Seller or its affiliates, and (vi) any claim of an unfair labor practice, or any claim under any state unemployment compensation or worker’s compensation law or regulation or under any federal, state or non-U.S. employment discrimination law or regulation, which shall have been asserted on or prior to the Closing Date or is based on acts or omissions which occurred on or prior to the Closing Date;

(b) any Liability for Taxes of Seller (including Seller’s Liability for Taxes of another Person under Treasury Regulations Section 1.1502-6 or any corresponding provision of state, local or foreign tax law), other than Transfer Taxes and Property Taxes that are specifically allocated to Buyer pursuant to Section 2.10 and Section 5.7(b) ;

(c) any Liability of Seller arising out of or related to any Action asserted on or prior to the Closing Date against Seller, or against or in respect of any Asset, or the basis of which shall have arisen on or prior to the Closing Date;

(d) any Liability of any Subsidiary owed to Seller;

(e) any Liability of Seller arising out of or relating to the ownership, operation or possession of the Assets prior to Closing, including without limitation any claims, obligations, rebates or litigation arising out of or relating to events or conditions occurring prior to Closing or Products sold by Seller prior to Closing;

(f) any Liability of Seller that arises out of or relates to any Excluded Asset;

(g) any Liability to the extent arising from or as a result of the conduct of the Retained Business by Seller or any of its Subsidiaries or affiliates;

(h) any Indebtedness of Seller, or any of its Subsidiaries and affiliates; and

(i) any Liabilities of Seller under or with respect to any Contract of Seller other than an Assumed Contracts.

 

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2.5 Assumption of Assumed Contracts . Effective upon the Closing, the Assumed Contracts shall be assigned by Seller to Buyer on the following terms and conditions:

(a) At the Closing, Seller shall assign to Buyer all of Seller’s rights, and Buyer shall agree to assume all of the Assumed Liabilities (which have not been waived or excused prior to the Closing Date), under each of the Assumed Contracts. On Schedule 1.1(a), each Assumed Contract is identified by the date of the Assumed Contract and the other Person(s) party to such Assumed Contract(s). To the extent any such information set forth on Schedule 1.1(a) is later determined by Seller to be inaccurate in any material respect, Seller shall promptly notify Buyer of any such inaccuracy.

(b) If there exists on the Closing Date any Default under any Assumed Contract, Seller shall be responsible for the payment of any and all amounts necessary to cure such Default as a condition to the Closing.

2.6 Purchase Price . The purchase price in respect of the purchase and sale transactions hereunder (the “ Purchase Price ”) shall be (a) the sum of (i) an amount in cash equal to Ninety Million Dollars ($90,000,000) plus (ii) the Base Inventory Value, and (b) the assumption of the Assumed Liabilities; provided that the Base Inventory Value shall be subject to adjustment pursuant to Section 2.8 .

2.7 Closing Date Payment . Upon the terms and subject to the conditions contained herein, on the Closing Date, at Buyer’s sole option (a) (i) Buyer shall pay or cause to be paid to Seller, by wire transfer of immediately available funds to the account designated by Seller, cash in U.S. dollars in an aggregate amount equal to the sum of Sixty Million Dollars ($60,000,000) plus the Base Inventory Value, and (ii) Buyer shall execute and deliver to Seller the Promissory Note in the principal amount of Thirty Million Dollars ($30,000,000); provided , however , to the extent Buyer receives any gross proceeds from any financing, whether debt, equity or similar arrangement, then the amount available to be paid by any Promissory Note provided for in (a)(ii) shall be reduced dollar for dollar by the aggregate proceeds from such financing such that the Buyer shall pay the reduced amount in cash in U.S. dollars, or (b) Buyer shall pay or cause to be paid to Seller, by wire transfer of immediately available funds to the account designated by Seller, cash in U.S. dollars in an aggregate amount equal to Ninety Million Dollars ($90,000,000) plus the Base Inventory Value. The aggregate payment by Buyer in the event of either of clause (a) (i) or (b) shall be referred to herein as the “ Cash Closing Payment .”

2.8 Inventory Purchase Price Adjustment .

(a) Within 45 days following the Closing Date, Seller shall deliver to Buyer a statement (the “ Seller’s Calculation ”) setting forth the value of the Inventory, as of the Closing Date (the “ Closing Inventory Value ”) determined in conformity with GAAP on a standard cost basis, using ending fiscal year 2009 standard costs of Seller, and in conformity with the valuation standard set forth in Section 3.13 . Notwithstanding the foregoing, (i) the certain TCAM4 parts that are affected by the “read-after-lookup” issue, specifically the TCAM4 parts with the part number 75H652BSxxxAT, will not be included in the Closing Inventory Value; (ii) the certain modified TCAM4 part that is not affected by the “read-after-lookup” issue, specifically part number 75H652CSxxxAT, shall be included in the Closing Inventory Value in an amount not to exceed $600,000; and (iii) the certain TCAM3CR part, part number 75H7B0A1SxxxRN, shall be included in the Closing Inventory Value in an amount not to exceed $600,000.

 

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(b) If Buyer disagrees with the Seller’s Calculation, Buyer may, within 15 days after delivery of the Seller’s Calculation, deliver a notice (the “ Buyer’s Objection ”) to Seller disagreeing with the Seller’s Calculation and specifying, in reasonable detail (i) Buyer’s calculation of the Closing Inventory Value and (ii) Buyer’s grounds for such disagreement.

(c) If a Buyer’s Objection is duly delivered pursuant to Section 2.8(b) , Buyer and Seller shall, during the 15 days following such delivery, use their reasonable efforts to reach agreement on the Closing Inventory Value. If they are unable to reach such agreement during such period, the parties shall promptly engage the CPA Firm to review promptly the Inventory for the purpose of calculating the Closing Inventory Value. In making such calculation, the CPA Firm shall determine the Closing Inventory Value. The CPA Firm shall deliver to Buyer and Seller, as promptly as practicable, a report setting forth such calculation of the Closing Inventory Valuation. Such report shall be final and binding upon Buyer and Seller (absent manifest error). The cost of the CPA Firm shall be borne equally by Buyer and Seller.

(d) Buyer and Seller each agree to reasonably cooperate and assist in the determination of the Closing Inventory Value under this Section 2.8 , including by making available to the other party and its representatives, to the extent reasonably requested, reasonable access to books, records, work papers, personnel and representatives in connection with such other party’s preparation and review of the closing statement.

(e) If the Final Inventory Value (as defined below) is less than the Base Inventory Value, the parties shall reduce, as an adjustment to the Purchase Price, the principal amount of the Promissory Note by the amount by which the Final Inventory Value is less than the Base Inventory Value, such reduction to be effective as of the date of the determination of the Final Inventory Value, and in accordance with Section 2.4 of the Promissory Note. If the Final Inventory Value is greater than the Base Inventory Value, Buyer shall pay to Seller, as an adjustment to the Purchase Price, the amount by which the Final Inventory Value is greater than the Base Inventory Value; provided , however, that if the amount by which the Final Inventory Value exceeds the Base Inventory Value is greater than Two Million Dollars ($2,000,000), Inventory with a value exceeding such $2,000,000 shall be purchased by Buyer from Seller in Buyer’s ordinary course of business and the value of such Inventory amount that exceeds such $2,000,000 shall not otherwise be payable by Buyer pursuant to Section 2.8(f) . “ Final Inventory Value ” means the Closing Inventory Value (i) as shown in the Seller’s Calculation if no Buyer’s Objection is duly delivered to Seller in compliance with Section 2.8(b) ; or (ii) if such a notice of disagreement is delivered, (A) as agreed by Buyer and Seller pursuant to Section 2.8(c) or (B) in the absence of such agreement, as shown in the CPA Firm’s calculation delivered pursuant to Section 2.8(c) .

(f) Subject to Section 2.8(e) , any payment obligation of Buyer pursuant to this Section 2.8 shall be made at a mutually convenient time and place, within five (5) business days after the determination of the Final Inventory Value, by Buyer’s delivery by wire transfer of immediately available funds to such account or accounts as may be designated by Seller.

 

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2.9 Purchase Price Allocation .

(a) The Purchase Price (including Assumed Liabilities to the extent properly taken into account under applicable Tax Law), shall be allocated among the Assets in a reasonable manner consistent with Section 1060 of the Code and the IRS regulations thereunder (and any similar provision of state, local or foreign law, as appropriate) (the “ Allocation ”); provided that $1,000 of the Purchase Price shall be allocated to the reasonable value of tangible property used to transfer intangible property included in the Assets from Seller to Buyer in accordance with California Revenue and Taxation Code Section 6012(c)(10); provided further that, in the event Seller and Buyer are unable to mutually agree upon a Purchase Price allocation prior to the Closing, Buyer’s proposed allocation of the Purchase Price shall be conclusive and shall constitute the Allocation.

(b) Buyer and Seller agree to file all Tax Returns consistent with the Allocation (including filing IRS Form 8594 with their United States federal income Tax Return for the taxable year that includes the Closing Date).

2.10 Closing Costs; Transfer Taxes and Fees . Buyer shall be responsible for any Transfer Taxes. Seller shall pay the fees and costs of recording or filing all applicable conveyancing instruments. Buyer shall pay all costs of applying for new Permits.

ARTICLE III.

REPRESENTATIONS AND WARRANTIES OF SELLER

Seller hereby represents and warrants to Buyer as follows, except as set forth on the Disclosure Schedules, which exceptions shall be deemed to be exceptions to the representations and warranties hereunder.

3.1 Organization of Seller . Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware with requisite corporate power and authority to own, license, lease and operate the Assets.

3.2 Authorization . Seller has all requisite corporate power and authority, and has taken all corporate action necessary, to execute and deliver this Agreement and the Ancillary Agreements, to consummate the transactions contemplated hereby and thereby and to perform its obligations hereunder and thereunder. The execution and delivery of this Agreement and the Ancillary Agreements by Seller and the consummation by Seller of the transactions contemplated hereby and thereby have been duly approved by the board of directors of Seller. No other corporate proceedings on the part of Seller are necessary to authorize this Agreement, the Ancillary Agreements and the transactions contemplated hereby and thereby. This Agreement has been duly executed and delivered by Seller and is, and upon execution and delivery of the Ancillary Agreements the Ancillary Agreements will be, legal, valid and binding obligations of Seller enforceable against Seller in accordance with their respective terms, except as enforceability may be affected by bankruptcy, insolvency, fraudulent conveyance,

 

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reorganization, moratorium and other similar Laws relating to or affecting creditors’ rights generally, and general equitable principles (whether considered in a proceeding in equity or at law). No vote or approval of the stockholders of Seller is required to approve this Agreement or the consummation of the transactions contemplated by this Agreement or the Ancillary Agreements.

3.3 Assets . Seller has and will transfer good and transferable title to the Assets and upon the consummation of the transactions contemplated hereby, Buyer will acquire good and marketable title to all of the Assets, free and clear of any Encumbrances, except for Permitted Encumbrances. All tangible assets and properties which are part of the Assets are in good operating condition and repair, ordinary wear and tear excepted, and have been maintained in accordance with normal industry practice.

3.4 Contracts and Commitments . Each Assumed Contract identified on Schedule 1.1(a) is in full force and effect and to Seller’s Knowledge is enforceable against each party thereto in accordance with the express terms thereof. With respect to each Assumed Contract, Seller has not (and to the Seller’s Knowledge no other Person has) materially breached or materially violated or Defaulted under such Assumed Contract and there has not been any event or condition that, after notice or lapse of time or both, would constitute a material violation, material breach or Default thereunder on the part of Seller, or to the Seller’s Knowledge, any other party thereto. There are no material disputes pending or to the Seller’s Knowledge threatened under any Assumed Contract. Except as set forth in Schedule 3.4, the Assumed Contracts identified on Schedule 1.1(a) are all the material contracts exclusively related to the Products. Seller has made available to Buyer true and complete copies of all Assumed Contracts.

3.5 Consents and Approvals . Other than in connection with or in compliance with the provisions of the HSR Act, no notice to, declaration, filing or registration with, or Permit from, any Government Authority is required to be made or obtained by Seller in connection with the execution, delivery or performance of this Agreement and the consummation of the transactions contemplated hereby.

3.6 No Conflict or Violation . Except as set forth in Schedule 3.6, neither the execution, delivery or performance of this Agreement nor the consummation of the transactions contemplated hereby, nor compliance by Seller with any of the provisions hereof, will (a) violate or conflict with any provision of the Certificate of Incorporation or Bylaws of Seller, (b) violate, conflict with, or result in or constitute a default under, or result in the termination of, or accelerate the performance required by, or result in a right of termination, cancellation, modification or acceleration of any obligation or in a loss of a benefit under, or result in the creation of any Encumbrance upon any of the Assets under, any of the terms, conditions or provisions of any Contract, (i) to which Seller is a party or (ii) by which the Assets are bound, (c) violate any Law or Court Order, (d) impose any Encumbrance on the Assets, except in the case of each of clauses (a), (b), (c) and (d) above, for such violations, defaults, terminations, accelerations or creations of Encumbrances which in the aggregate would not have a Material Adverse Effect.

 

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3.7 Litigation . Except as set forth on Schedule 3.7, during the three year period prior to the date of this Agreement there has not been, and presently there is no Action pending, or to the Knowledge of Seller, threatened or anticipated (a) against, related to or affecting any of the Assets or (b) seeking to delay, limit or enjoin the transactions contemplated by this Agreement, except in the case of clauses (a) and (b) above, for such Actions which in the aggregate would not have a Material Adverse Effect. Seller is not in Default with respect to or subject to any Court Order applicable to any Asset, and there are no unsatisfied judgments against Seller with respect to any Asset.

3.8 Compliance with Law . Seller has not violated, and has complied in all material respects with all Laws and Court Orders relating to the ownership of the Assets, except where the violation or failure to comply, individually or in the aggregate, would not have a Material Adverse Effect. Seller has not received any notice to the effect that, or otherwise been advised that, it is not in compliance with any such Laws or Court Orders, and Seller is not aware of any existing circumstances which would result in violations of any of the foregoing.

3.9 No Brokers . Neither Seller nor any of its respective officers, directors, employees, shareholders or affiliates has employed or made any agreement with any broker, finder or similar agent or any person or firm which will result in the obligation of Buyer or any of its affiliates to pay any finder’s fee, brokerage fees or commission or similar payment in connection with the transactions contemplated hereby.

3.10 Intellectual Property Rights .

(a) General . Schedule 3.10(a) sets forth with respect to the Intellectual Property Rights owned by Seller which are exclusively related to the Products and specifically listed in Schedule 1.1(c): (i) for each patent and patent application, the patent number or application serial number for each jurisdiction in which the patent or application has been filed, the date filed or issued, and the present status thereof; (ii) for each registered trademark, trade name or service mark, the application serial number or registration number, for each country, province and state, and the class of goods covered; (iii) for any URL or domain name, the registration date, any renewal date and name of registry; (iv) for each registered mask work, the registration number and date of registration, for each among country, province and state; and (v) for each registered copyrighted work, the number and date of registration for each by country, province and state in which a copyright application has been registered (collectively, the “ Registered Seller IP ”). True and correct copies of all applications filed and registrations (including all pending applications and application related documents) related to the Registered Seller IP have been provided or made available to Buyer. In addition, Schedule 3.10(a) includes a list of all Software, except for standard off-the-shelf Software commercially available on standard terms from third party vendors, incorporated in, provided with or otherwise necessary to use, support and maintain the Products, including all Software that Seller provides or makes available to its customers of the Products. Schedule 3.10(a) also lists all of Seller’s in-licenses of Technology or Intellectual Property Rights incorporated or embodied in the Products.

(b) Sufficiency . The Intellectual Property Rights and Technology (i) which are owned or licensed in by Seller and which are being acquired by Buyer pursuant to this Agreement and the transactions contemplated hereby or (ii) which are being licensed to Buyer

 

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from Seller under the Cross-License Agreement (collectively (i) and (ii), the “ Product IP ”) constitute all Intellectual Property Rights and Technology exclusively related to the Products or necessary for the production, use, offer for sale or sale of the Products. Seller has not assigned, sold or otherwise transferred ownership of or the right to use any of its Intellectual Property Rights or Technology used in the Products.

(c) Ownership . Seller (i) owns all right, title and interest in and to the Product IP purported to be owned by Seller, free and clear of any liens, claims or encumbrances other than Permitted Encumbrances; or (ii) has the right or license to use, without future payment to any other Person, all other Product IP to be provided to Buyer and such Intellectual Property Rights and rights to use Technology will not cease to be valid and enforceable rights of Seller by reason of the execution, delivery and performance of this Agreement and the Ancillary Agreements or the consummation of the transactions contemplated hereby or thereby. Without limiting the foregoing, the Product IP owned by Seller has been: (A) developed by employees of Seller within the scope of their employment; (B) developed by independent contractors who have assigned their rights to Seller pursuant to enforceable written agreements; or (C) otherwise acquired by Seller from a third party who has assigned all its Intellectual Property Rights and ownership of all such Technology to Seller. Neither Seller nor any of its current or former officers or employees, agents, consultants or contractors has any patents, trademarks, trade names, service marks or copyrights issued or patent, trademark, trade name, service mark or copyrights applications pending for any invention of any kind now used or needed by Seller for the Products as presently constituted, in each case which have not been assigned to Seller with such assignment duly recorded in the applicable Governmental Authority.

(d) Absence of Claims; Non-infringement . No Actions have been instituted or are pending against Seller, or, to the Knowledge of Seller, are threatened, that challenge the right of Seller with respect to the use or ownership of the Product IP owned by Seller. Without limiting the foregoing, no interference, opposition, reissue, reexamination, or other proceeding is or has been pending or, to the Knowledge of Seller, threatened, in which the scope, validity, or enforceability of any of the Registered Seller IP is being or has been contested or challenged. To the Knowledge of Seller, Seller’s present use of Product IP owned by Seller does not infringe upon or misappropriate, breach or otherwise conflict with the rights of any other Person anywhere in the world. Seller has not received any notice alleging, and otherwise has no Knowledge of (i) the invalidity of or any limitation on Seller’s right to use any of the Product IP owned by Seller or (ii) the alleged infringement or misappropriation of any Intellectual Property Rights of others by Seller in connection with the Products. Except as set forth in Schedule 3.10(d), the Product IP owned by Seller is not subject to any outstanding judgment, decree, order, writ, award, injunction or determination of an arbitrator or court or other governmental authority affecting the rights of Seller with respect thereto.

(e) Licenses to Third Parties . Schedule 3.10(e) lists all Contracts pursuant to which Seller has granted any third Person a license under or interest in any Product IP owned by Seller, including, but not limited to, any cross-license agreement under which Seller has agreed not to sue such third Person for infringement of any Seller patent included in the Registered Seller IP. Except as set forth in Schedule 3.10(e), Seller is not bound by, and no Registered Seller IP are subject to, any Contract containing any covenant or other provision that in any way limits or restricts the ability of Seller to use, exploit, assert or enforce any of such Registered Seller IP anywhere in the world where those Intellectual Property Rights have been secured or are recognized. Without limiting the foregoing, Seller has not granted any exclusive licenses to the Product IP owned by Seller.

 

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(f) Protection of Intellectual Property Rights .

(i) All of the registrations and pending applications to governmental or regulatory authorities with respect to the Registered Seller IP have been timely and duly filed, prosecution for such applications has been attended to, all maintenance and related fees have been paid, and Seller has taken reasonable commercial actions to maintain their validity and effectiveness. Schedule 3.10(f)(i) lists all actions that must be taken by Seller within sixty (60) days from the date hereof, including the payment of any registration, maintenance, renewal fees, annuity fees and taxes or the filing of any documents, applications or certificates for the purposes of maintaining, perfecting or preserving or renewing any Registered Seller IP. In each case in which Seller has acquired ownership of any Intellectual Property Rights, which are being acquired by Buyer pursuant to this Agreement and the transactions contemplated hereby, from any third Person, Seller has to the Knowledge of Seller obtained a valid and enforceable assignment sufficient to transfer all rights in such Intellectual Property Rights. To the Knowledge of Seller, Seller has not misrepresented, or failed to disclose, and is not aware of any misrepresentation or failure to disclose, any fact or circumstances in any currently pending or granted application for any Registered Seller IP that would constitute fraud or a material misrepresentation with respect to such application or that would otherwise materially, adversely affect the validity or enforceability of any such Registered Seller IP.

(ii) Seller has taken all steps reasonably necessary or appropriate (including, entering into written confidentiality and non-disclosure agreements with officers, directors, subcontractors, employees, licensees and customers) to safeguard and maintain the secrecy and confidentiality of trade secrets that are material to Seller and primarily or exclusively related to the Products. Without limiting the foregoing, except as set forth in Schedule 3.10(f)(ii), (A) there has been no misappropriation of any material trade secrets used exclusively in connection with the Products by any Person, (B) to the Knowledge of Seller, no employee or independent contractor of Seller has misappropriated any trade secrets of any other Person in the course of performance as an employee, independent contractor or agent in connection with the Products; and (C) to the Knowledge of Seller, no employee or independent contractor of Seller is in material default or breach of any term of any employment agreement, non-disclosure agreement, assignment of invention agreement or similar agreement or contract relating in any way to the protection, ownership, development, use or transfer of the Product IP owned by Seller and being acquired by Buyer pursuant to this Agreement and the transactions contemplated hereby. No funding, facilities, or personnel of any governmental entity or educational institution were used, directly or indirectly, to develop or create, in whole or in part, any of the Product IP owned by Seller being acquired by Buyer pursuant to this Agreement and the transactions contemplated hereby.

(g) Participation in Standards Bodies . Seller has not made any submission, and is not subject to any agreement with, any standards bodies or other entities that would obligate Seller to grant licenses to any Product IP owned by Seller.

 

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(h) Software; Escrow . To Seller’s Knowledge, any Software incorporated in Seller’s Products substantially performs in all material respects free of any viruses, worms, trojan horses, errors or programming errors substantially affecting its functionality. Seller has not entered into any agreement requiring Seller to place the aforementioned Software source code or any other Product IP owned by Seller in escrow so that a licensee might obtain access to it upon the occurrence of any release condition.

(i) Export Control . Seller has obtained all approvals necessary for any exports by Seller of the Products, including Software associated therewith, outside the United States in accordance with all applicable United States export control regulations, and importing such Products and Software into any country in which those Products and Software have been or are now sold or licensed for use, and all such export and import approvals in the United States and throughout the world are valid, current, outstanding and in full force and effect as it relates to such Products and Software exported by Seller.

3.11 Employee Benefits; ERISA .

(a) Schedule 3.11(a) sets forth a true and complete list of: (i) all “employee benefit plans” (within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”)) and Benefit Arrangements maintained or contributed to (or with respect to which an obligation to contribute has been undertaken) by Seller or any affiliate of Seller on behalf of any Transferred Employee or their dependents, spouses, or beneficiaries and (ii) other than individual employment agreements or offer letters executed in substantially Seller’s (or its applicable affiliate’s) form of employment agreement or offer letter, all contracts with any Transferred Employee, including any employment, termination, severance, retention, non-competition, compensation or change in control arrangements or any arrangement relating to a sale of the Products (each a “ Seller Plan ”).

(b) None of Seller, any entity that would be deemed a “single employer” with Seller under Section 414(b), (c), (m) or (o) of the Code or Section 4001 of ERISA (an “ ERISA Affiliate ”) or any of their respective predecessors has contributed to, contributes to, has been required to contribute to, or otherwise participated in or participates in or in any way has any liability, directly or indirectly with respect to (i) any plan subject to Section 412 or 430 of the Code, Section 302 of ERISA or Title IV of ERISA, including any “multiemployer plan” (within the meaning of Sections 3(37) or 4001(a)(3) of ERISA or Section 414(f) of the Code) or any single employer pension plan (within the meaning of Section 4001(a)(15) of ERISA) that is subject to Sections 4063, 4064 or 4069 of ERISA or Section 413(c) of the Code that covered or has covered any Product Employee or former Product Employee; or (ii) any plan or arrangement that provides for post-employment medical, life insurance or other welfare-type benefits (other than health continuation coverage required by Section 4980B of the Code and Title I, Subtitle B, Part 6 of ERISA). Seller has no Liability under, is not subject to any lien relating to, and has never maintained, contributed to or been required to contribute to, any plan under Title IV of ERISA or Section 412 or 430 of the Code.

(c) Except as set forth on Schedule 3.11(c), (i) none of the Seller Plans obligates Seller or any of its affiliates to pay any separation, severance, termination or similar benefit or will result in any increased payment becoming due to any Product Employee solely as a result of the transactions contemplated by this Agreement and (ii) no Product Employee is eligible for short-term or long-term disability insurance benefits as of the Closing Date.

 

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(d) All Product Employees have the legal right to perform services for Seller and its affiliates without condition in accordance with local immigration, work permit and similar applicable Laws.

3.12 Tax Matters . All Taxes imposed on the Assets have been timely paid. There are no Encumbrances for Taxes upon the Assets. There are no Actions relating to Taxes pending or threatened in writing against Seller which would reasonably be expected to give rise to an Encumbrance upon any Asset.

3.13 Inventory . The Inventory was acquired and has been maintained in accordance with the regular business practices of Seller, consists of new and unused items of a quality and quantity usable or saleable in the ordinary course of business, and is valued at reasonable amounts based on the normal valuation policy of Seller at prices equal to the lower of cost or market value on a first-in-first-out basis. Except as set forth on Schedule 3.13, none of such Inventory is obsolete, unusable, damaged, defective, non-conforming with published specifications or unsalable in the ordinary course of business.

3.14 Purchase Commitments . As of the date of this Agreement, there are no claims against Seller to return Products by reason of alleged overshipments, defective merchandise or otherwise, or of merchandise in the hands of customers under an understanding that such merchandise would be returnable. No outstanding purchase or outstanding lease commitment of Seller presently is in excess of the normal, ordinary and usual requirements of the business.

3.15 Customers, Distributors, Suppliers and Vendors . No customer, distributor, supplier or vendor material to the Assets, has canceled or otherwise terminated any Contract with Seller relevant to the Assets prior to the expiration of such Contract’s term, or, to the Knowledge of Seller, has threatened to cancel or otherwise terminate its relationship with Seller or to substantially reduce its sales to or purchases from Seller of any products, equipment, goods or services exclusively related to the Assets.

3.16 No Other Representations or Warranties . EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS ARTICLE III OR IN THE OTHER ANCILLARY AGREEMENTS (OR ANY CERTIFICATES DELIVERED BY SELLER TO BUYER IN ACCORDANCE WITH THIS AGREEMENT), BUYER ACKNOWLEDGES AND AGREES THAT NONE OF SELLER OR ANY OTHER PERSON MAKES ANY OTHER EXPRESS, IMPLIED OR STATUTORY REPRESENTATION OR WARRANTY WITH RESPECT TO THE PRODUCTS, THE ASSETS, THE ASSUMED LIABILITIES OR OTHERWISE, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, ENFORCEABILITY OR NON INFRINGEMENT, INCLUDING AS TO (A) THE PHYSICAL CONDITION OR USEFULNESS FOR A PARTICULAR PURPOSE OF THE REAL OR TANGIBLE PERSONAL PROPERTY INCLUDED IN THE ASSETS, (B) THE USE OF THE ASSETS BY BUYER AFTER THE CLOSING, IN ANY MANNER OTHER THAN AS USED BY SELLER, OR (C) THE PROBABLE SUCCESS OR PROFITABILITY OF THE

 

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OWNERSHIP, USE OR OPERATION OF THE ASSETS BY BUYER AFTER THE CLOSING, AND SELLER HEREBY EXPRESSLY DISCLAIMS ANY AND ALL SUCH WARRANTIES, WHETHER EXPRESS, IMPLIED OR STATUTORY. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS ARTICLE III (INCLUDING THE DISCLOSURE SCHEDULES) OR IN THE OTHER ANCILLARY AGREEMENTS (OR ANY CERTIFICATE DELIVERED BY SELLER TO BUYER IN ACCORDANCE WITH THIS AGREEMENT), ALL ASSETS ARE CONVEYED ON AN “AS IS” AND “WHERE IS” BASIS. EXCEPT FOR LIABILITIES IN RESPECT OF THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS ARTICLE III (INCLUDING THE DISCLOSURE SCHEDULES) OR IN THE OTHER ANCILLARY AGREEMENTS (OR ANY CERTIFICATES DELIVERED BY SELLER TO BUYER IN ACCORDANCE WITH THIS AGREEMENT), NEITHER SELLER NOR ANY OTHER PERSON WILL HAVE OR BE SUBJECT TO ANY LIABILITY TO BUYER OR ANY OTHER PERSON FOR ANY INFORMATION PROVIDED TO BUYER OR ITS REPRESENTATIVES RELATING TO THE PRODUCTS, THE ASSETS, THE ASSUMED LIABILITIES OR OTHERWISE IN EXPECTATION OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND ANY INFORMATION, DOCUMENT, OR MATERIAL MADE AVAILABLE TO BUYER OR ITS COUNSEL OR OTHER REPRESENTATIVES IN BUYER’S DUE DILIGENCE REVIEW, INCLUDING IN CERTAIN “DATA ROOMS” (ELECTRONIC OR OTHERWISE) OR MANAGEMENT PRESENTATIONS. THE REPRESENTATIONS, WARRANTIES, COVENANTS AND OBLIGATIONS OF BUYER, AND THE RIGHTS AND REMEDIES THAT MAY BE EXERCISED BY BUYER SHALL NOT BE LIMITED OR OTHERWISE AFFECTED BY OR AS A RESULT OF ANY INFORMATION FURNISHED TO, OR ANY INVESTIGATION MADE BY OR KNOWLEDGE OF, BUYER OR ANY OF ITS REPRESENTATIVES.

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer hereby represents and warrants to the Seller as follows, except as set forth on the Disclosure Schedule, which exceptions shall be deemed to be exceptions to the representations and warranties hereunder:

4.1 Organization of Buyer . Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware.

4.2 Authorization . Buyer has all requisite corporate power and authority, and has taken all corporate action necessary, to execute and deliver this Agreement and the Ancillary Agreements, to consummate the transactions contemplated hereby and thereby and to perform its obligations hereunder and thereunder. The execution and delivery of this Agreement and the Ancillary Agreements by Buyer and the consummation by Buyer of the transactions contemplated hereby and thereby have been duly approved by the board of directors of Buyer. No other corporate proceedings on the part of Buyer are necessary to authorize this Agreement, the Ancillary Agreements and the transactions contemplated hereby and thereby. This Agreement has been duly executed and delivered by Buyer and is, and upon execution and delivery of the Ancillary Agreements the Ancillary Agreements will be, legal, valid and binding

 

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obligations of Buyer, enforceable against Buyer in accordance with their terms, except as enforceability may be affected by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar Laws relating to or affecting creditors’ rights generally, and general equitable principles (whether considered in a proceeding in equity or at law). No vote or approval of the stockholders of Buyer is required to approve this Agreement or the consummation of the transactions contemplated by this Agreement or the Ancillary Agreements.

4.3 No Conflict or Violation . Neither the execution, delivery or performance of this Agreement nor the consummation of the transactions contemplated hereby, nor compliance by Buyer with any of the provisions hereof, will (a) violate or conflict with any provision of the Certificate of Incorporation or Bylaws of Buyer, (b) violate, conflict with, or result in or constitute a default under, or result in the termination of, or accelerate the performance required by, or result in a right of termination, cancellation, modification or acceleration of any obligation or in a loss of a benefit under, or result in the creation of any Encumbrance upon any of Buyer’s assets under, any of the terms, conditions or provisions of any contract, indebtedness, note, bond, indenture, security or pledge agreement, commitment, license, lease, franchise, permit, agreement, authorization, concession, or other instrument or obligation to which Buyer is a party, (c) violate any Law or Court Order, except, in the case of each of clauses (a), (b) and (c) above, for such violations, defaults, terminations, accelerations or creations of Encumbrances which, in the aggregate, would not have a material adverse effect on the business of Buyer or its ability to consummate the transactions contemplated hereby.

4.4 Litig