EXHIBIT 10.E

Execution Copy

Confidential Materials omitted and filed separately with the

Securities and Exchange Commission. Asterisks denote omissions.

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

SKYWORKS SOLUTIONS, INC.,

SILVER BULLET ACQUISITION CORP.,

SIGE SEMICONDUCTOR, INC.

AND

SHAREHOLDER REPRESENTATIVE SERVICES LLC, AS COMPANY

STOCKHOLDER REPRESENTATIVE

Dated as of

May 17, 2011

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TABLE OF CONTENTS

 

         Page  

ARTICLE I

    

THE MERGER

     1   

1.1

  The Merger      1   

1.2

  The Closing      1   

1.3

  Actions at the Closing      1   

1.4

  Additional Action; Pre-Merger Exchange      2   

1.5

  Conversion of Company Shares; Conversion of Merger Sub Shares      2   

1.6

  Dissenting Shares      4   

1.7

  Options      5   

1.8

  Escrow Fund      6   

1.9

  Certificate of Incorporation and By-laws      8   

1.10

  No Further Rights      8   

1.11

  Closing of Transfer Books      8   

1.12

  Exchange of Shares      8   

1.13

  Working Capital Adjustments      10   

1.14

  Earn-Out      13   

1.15

  Company Stockholder Representative      18   

1.16

  Withholding Rights      21    ARTICLE II    REPRESENTATIONS AND WARRANTIES OF
THE COMPANY      21   

2.1

  Organization, Qualification and Corporate Power      21   

2.2

  Capitalization      22   

2.3

  Authorization of Transaction      23   

2.4

  Noncontravention      24   

2.5

  Subsidiaries      24   

2.6

  Financial Statements      25   

2.7

  Absence of Certain Changes      25   

2.8

  Undisclosed Liabilities      26   

2.9

  Tax Matters      26   

2.10

  Assets      29   

2.11

  Real Property      29   

2.12

  Intellectual Property      30   

2.13

  Inventory      33   

2.14

  Contracts      33   

2.15

  Accounts Receivable      35   

2.16

  Insurance      35   

2.17

  Litigation      35   

2.18

  Warranties      36   

2.19

  Employees      36   

2.20

  Employee Benefits      37   

2.21

  Environmental Matters      39   

 

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2.22

  Legal Compliance      40   

2.23

  Customers and Suppliers      41   

2.24

  Permits      41   

2.25

  Certain Business Relationships With Affiliates      41   

2.26

  Brokers’ Fees      42   

2.27

  Books and Records      42   

2.28

  Controls and Procedures      42   

2.29

  Government Contracts      42   

2.30

  Canadian Government Grants      43   

2.31

  Investment Canada Act      43   

2.32

  Disclosure      44   

2.33

  Disclaimer of Other Representations      44    ARTICLE III    REPRESENTATIONS
AND WARRANTIES OF THE BUYER AND MERGER SUB      45   

3.1

  Organization and Corporate Power      45   

3.2

  Authorization of Transaction      45   

3.3

  Noncontravention      45   

3.4

  Funding      45   

3.5

  Disclaimer of Other Representations      45    ARTICLE IV    COVENANTS      46
  

4.1

  Closing Efforts      46   

4.2

  Governmental and Third-Party Notices and Consents      47   

4.3

  Obtaining Requisite Stockholder Approval; Appraisal Rights Notice      48   

4.4

  Operation of Business      48   

4.5

  Access to Information      50   

4.6

  Notice of Breaches      51   

4.7

  Exclusivity      51   

4.8

  Expenses      53   

4.9

  Retention of Key Employees; Benefits      53   

4.10

  Termination of 401(k) Plan      54   

4.11

  280G Payments Vote      54   

4.12

  FIRPTA      55   

4.13

  Indemnification and Insurance      55    ARTICLE V    CONDITIONS TO
CONSUMMATION OF MERGER      56   

5.1

  Conditions to Obligations of the Buyer and Merger Sub      56   

5.2

  Conditions to Obligations of the Company      58    ARTICLE VI   
INDEMNIFICATION      59   

6.1

  Indemnification by the Company Stockholders      59   

6.2

  Indemnification Claims      59   

6.3

  Survival of Representations and Warranties      61   

 

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6.4

  Limitations      62   

6.5

  Right of Offset      63   

6.6

  Tax Treatment of Indemnification Payments      63    ARTICLE VII   
TERMINATION      63   

7.1

  Termination of Agreement      63   

7.2

  Effect of Termination      64    ARTICLE VIII    DEFINITIONS      64   
ARTICLE IX    MISCELLANEOUS      77   

9.1

  Press Releases and Announcements      77   

9.2

  Further Assurances; Post-Closing Cooperation      78   

9.3

  Third-Party Beneficiaries      78   

9.4

  Entire Agreement      78   

9.5

  Succession and Assignment      78   

9.6

  Counterparts and Facsimile Signature      78   

9.7

  Headings      78   

9.8

  Notices      79   

9.9

  Amendments and Waivers      80   

9.10

  Severability; Invalid Provisions      80   

9.11

  Governing Law      80   

9.12

  Submission to Jurisdiction      80   

9.13

  WAIVER OF TRIAL BY JURY      81   

9.14

  Specific Performance      81   

9.15

  Construction      81   

9.16

  Waiver of Conflict      82   

 

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AGREEMENT AND PLAN OF MERGER

This Agreement and Plan of Merger (this “Agreement”) is made and entered into as
of May 17, 2011 by and among Skyworks Solutions, Inc., a Delaware corporation
(the “Buyer”), Silver Bullet Acquisition Corp., a Delaware corporation and a
direct wholly-owned subsidiary of the Buyer (“Merger Sub”), SiGe Semiconductor,
Inc., a Delaware corporation (the “Company”), and Shareholder Representative
Services LLC, a Colorado limited liability company, solely in its capacity as
the representative and agent of the Company Stockholders (the “Company
Stockholder Representative”).

Recitals

The respective Boards of Directors of the Buyer, Merger Sub and the Company have
each determined that it is advisable to the Buyer, Merger Sub and the Company,
respectively, and their respective stockholders that the Company be acquired by
the Buyer, and, in furtherance thereof, that Merger Sub merge with and into the
Company, with the Company surviving the merger as a wholly owned subsidiary of
the Buyer. Pursuant to the Merger, the issued and outstanding shares of the
Company’s capital stock will be converted into the right to receive certain cash
amounts, a portion of which will be placed into escrow to secure the Buyer’s
indemnification rights, all as set forth in this Agreement.

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

ARTICLE I

THE MERGER

1.1 The Merger. Upon the terms and subject to the conditions set forth in this
Agreement, Merger Sub shall merge with and into the Company at the Effective
Time. From and after the Effective Time, the separate corporate existence of
Merger Sub shall cease and the Company shall continue as the Surviving
Corporation. The Merger shall have the effects set forth in Section 259 of the
Delaware General Corporation Law.

1.2 The Closing. The Closing shall take place at the offices of Wilmer Cutler
Pickering Hale and Dorr LLP, 60 State Street, Boston, Massachusetts 02109,
commencing at 9:00 a.m. local time on the Closing Date.

1.3 Actions at the Closing. At the Closing:

(a) the Company shall deliver to the Buyer and Merger Sub the various
certificates, instruments and documents referred to in Section 5.1;

(b) the Buyer and Merger Sub shall deliver to the Company the various
certificates, instruments and documents referred to in Section 5.2;

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(c) the Surviving Corporation shall file the Certificate of Merger with the
Secretary of State of the State of Delaware;

(d) the Buyer or the Surviving Corporation shall pay (by check or by wire
transfer) to the Payment Agent (as defined in Section 1.12(a)) an amount in cash
equal to the Initial Payout Amount (as defined in Section 1.5) minus the
aggregate Option Payment amount; and

(e) the Buyer, the Company Stockholder Representative and the Escrow Agent shall
execute and deliver the Escrow Agreement in the form of Exhibit A hereto, and
the Buyer or Merger Sub shall deposit with the Escrow Agent (i) twenty million
dollars ($20,000,000) (the “Escrow Amount”) in accordance with Section 1.8(a)
and the Escrow Agreement; (ii) two million dollars ($2,000,000) (the “Working
Capital Escrow Amount”) in accordance with Section 1.8(b) and the Escrow
Agreement and (iii) one million dollars ($1,000,000) (the “Company Stockholder
Representative Amount”) in accordance with Section 1.8(c) and the Escrow
Agreement.

1.4 Additional Action; Pre-Closing Exchange.

(a) The Surviving Corporation may, at any time after the Effective Time, take
any action, including executing and delivering any document, in the name and on
behalf of either the Company or Merger Sub, in order to consummate the
transactions contemplated by this Agreement.

(b) Prior to the Effective Time, all of the outstanding Class A-1 Exchangeable
Shares and Common Exchangeable Shares of SiGe Semiconductor, Inc., a Canadian
corporation (the “Canadian Subsidiary”), shall, pursuant to the Class A-1
Redemption Call Right and the Common Redemption Call Right, as such terms are
defined in Article 5 of the Articles of the Canadian Subsidiary, as amended, be
automatically exchanged for shares of Series A-1 Preferred Stock or Standard
Common Stock, respectively. The foregoing exchange is hereinafter referred to as
the “Pre-Closing Exchange.”

1.5 Conversion of Company Shares; Conversion of Merger Sub Shares.

(a) Certain Definitions. The following capitalized terms shall have the meanings
set forth below:

(i) “Aggregate Liquidation Preference Amount” means the product obtained by
multiplying the Series A-1 Liquidation Preference Amount times the number of
shares of Series A-1 Preferred Stock that are issued and outstanding immediately
prior to the Effective Time (including, for the avoidance of doubt, all shares
of Series A-1 Preferred Stock issued pursuant to the Pre-Closing Exchange).

(ii) “Common Cash Amount” means an amount in cash (if any) per Company Share
determined by dividing (i) the Initial Payout Amount minus the Aggregate
Liquidation Preference Amount, by (ii) the sum of the number of Company Shares
issued and outstanding immediately prior to the Effective Time (excluding all
shares of Special Common Voting Stock and Special A-1 Voting Stock issued and
outstanding immediately prior to the

 

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Effective Time, but including, for the avoidance of doubt, (A) the number of
Common Shares vested (after giving effect to any acceleration of vesting in
connection with the transactions contemplated by this Agreement and/or any
acceleration of vesting provided for in employment agreements which may be
triggered in connection with the transactions contemplated by this Agreement)
pursuant to Company Options that, pursuant to Section 1.7(a), are deemed
canceled and converted into the right to receive payments pursuant to
Section 1.7(a) and (B) all Company Shares issued pursuant to the Pre-Closing
Exchange).

(iii) “Initial Payout Amount” means (A) two hundred ten million dollars
($210,000,000), (B) minus the Escrow Amount, (C) minus the Working Capital
Escrow Amount, (D) minus the Company Stockholder Representative Amount,
(E) minus the Transaction Expenses and (F) plus or minus any Initial Net Working
Capital Adjustment pursuant to Section 1.13(b).

(iv) “Series A-1 Liquidation Preference Amount” means, with respect to each
share of Series A-1 Preferred Stock outstanding immediately prior to the
Effective Time (including, for the avoidance of doubt, all shares of Series A-1
Preferred Stock issued pursuant to the Pre-Closing Exchange), an amount equal to
$1.2917.

(v) “Transaction Expenses” means the aggregate third-party legal, accounting,
consulting, investment banking, financial advisory, brokerage and other third
party fees and expenses incurred prior to the Effective Time by or on behalf of
the Company and the Subsidiaries in connection with the sale of the Company, the
negotiation and execution and performance of this Agreement and the consummation
of the transactions contemplated hereby to the extent such fees and expenses
remain unpaid as of the Effective Time or become due at any time after the
Effective Time, and severance and change-in-control payments in the aggregate
amount of $500,000; provided, however, that, notwithstanding the foregoing, the
term “Transaction Expenses” shall (i) include only fifty percent (50%) of the
D&O Tail Insurance Premium Amount (as defined in Section 4.13(b)) and
(ii) exclude Contingent Banking Fees.

(b) Consideration for Company Shares. At the Effective Time, by virtue of the
Merger and without any action on the part of any Party or the holder of any of
the following securities, but subject in each case to the provisions of
Section 1.8 and Section 1.13 and adjustment for the amounts prescribed therein,
and subject further to compliance with the procedures set forth in Section 1.12:

(i) each Preferred Share issued and outstanding immediately prior to the
Effective Time, including, for the avoidance of doubt, all shares of Series A-1
Preferred Stock issued pursuant to the Pre-Closing Exchange, (other than shares
of Special A-1 Voting Stock, Preferred Shares owned beneficially by the Buyer or
Merger Sub, Dissenting Shares and Preferred Shares held in the Company’s
treasury) shall be converted into and represent the right to receive (x) the
Series A-1 Liquidation Preference Amount plus the Common Cash Amount, (y) a
portion of the Net Earn-Out Amount on the terms and subject to the conditions
set forth in Section 1.14, if any, without any interest thereon and (z) a
portion of each of the Revised Closing Net Working Capital Adjustment (if any),
the Escrow Fund (if any), the Working Capital Escrow Fund (if any) and the
Company Stockholder Representative Fund (if any), in each case, all on the terms
and subject to the conditions set forth in Sections 1.8, 1.13 and 1.15 and the
Escrow Agreement; and

 

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(ii) each Common Share issued and outstanding immediately prior to the Effective
Time, including, for the avoidance of doubt, all Common Shares issued pursuant
to the Pre-Closing Exchange, (other than shares of Special Common Voting Stock
or shares owned beneficially by the Buyer or Merger Sub, Dissenting Shares and
shares held in the Company’s treasury) shall be converted into and represent the
right to receive (x) the Common Cash Amount, (y) a portion of the Net Earn-Out
Amount on the terms and subject to the conditions set forth in Section 1.14, if
any, without any interest thereon and (z) a portion of each of the Revised
Closing Net Working Capital Adjustment (if any), the Escrow Fund (if any), the
Working Capital Escrow Fund (if any) and the Company Stockholder Representative
Fund (if any), in each case, all on the terms and subject to the conditions set
forth in Sections 1.8, 1.13 and 1.15 and the Escrow Agreement.

(c) Each share of Special A-1 Voting Stock shall be cancelled and retired
without payment of any consideration therefor.

(d) Each share of Special Common Voting Stock shall be cancelled and retired
without payment of any consideration therefor.

(e) Each Company Share held in the Company’s treasury immediately prior to the
Effective Time and each Company Share owned beneficially by the Buyer or Merger
Sub shall be cancelled and retired without payment of any consideration
therefor.

(f) Each share of common stock, $0.0001 par value per share, of Merger Sub
issued and outstanding immediately prior to the Effective Time shall be
converted into and thereafter evidence one share of common stock, $0.0001 par
value per share, of the Surviving Corporation, so that, immediately following
such conversion, all outstanding shares of capital stock of the Surviving
Corporation shall be owned by the Buyer.

1.6 Dissenting Shares.

(a) Dissenting Shares shall not be converted into or represent the right to
receive the amounts payable in respect of such Company Shares pursuant to
Article I unless the Company Stockholder holding such Dissenting Shares shall
have forfeited his, her or its right to appraisal under Section 262 of the
Delaware General Corporation Law or properly withdrawn his, her or its demand
for appraisal. If such Company Stockholder has so forfeited or withdrawn his,
her or its right to appraisal of Dissenting Shares, then, (i) as of the
occurrence of such event, such holder’s Dissenting Shares shall cease to be
Dissenting Shares and shall be converted into and represent the right to receive
the amounts payable in respect of such Company Shares pursuant to Article I, and
(ii) promptly following the occurrence of such event, the Buyer or the Surviving
Corporation shall deliver to such Company Stockholder a payment representing the
amount that such holder is entitled to receive pursuant to Article I of this
Agreement.

 

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(b) The Company shall give the Buyer (i) prompt notice of any written demands
for appraisal of any Company Shares, withdrawals of such demands, and any other
instruments that relate to such demands received by the Company and (ii) the
right, at its expense, to participate in all negotiations and proceedings with
respect to demands for appraisal under the Delaware General Corporation Law. The
Company shall not, except with the prior written consent of the Buyer, make
voluntarily any payment with respect to or offer to settle any demands for
appraisal of Company Shares for an amount that exceeds the amounts that would
have been otherwise payable for such Company Shares under this Agreement.

1.7 Options.

(a) Subject to the terms and conditions of this Agreement, each Company Option
that a holder has elected to receive a cash payment under Section 13(b) of the
Company Stock Plan and each Company Option that is otherwise outstanding
immediately prior to the Effective Time shall be, as of immediately prior to the
Effective Time, cancelled and converted into the right to receive a cash payment
equal to the product of (i) the number of Common Shares vested (after giving
effect to any acceleration of vesting in connection with the transactions
contemplated by this Agreement and/or any acceleration of vesting provided for
in employment agreements which may be triggered in connection with the
transactions contemplated by this Agreement) under and issuable upon exercise of
such Company Option as of immediately prior to the Effective Time, multiplied by
(ii) the amount by which the Common Cash Amount exceeds the per share exercise
price of such Company Option (with respect to each Company Option, the “Option
Payment”). Each Company Option that is outstanding and unvested immediately
prior to the Effective Time (after giving effect to any acceleration of vesting
in connection with the transactions contemplated by this Agreement and/or any
acceleration of vesting provided for in employment agreements which may be
triggered in connection with the transactions contemplated by this Agreement)
shall be cancelled. The Buyer or the Surviving Corporation, as the case may be,
shall pay to each holder of a Company Option in cash promptly following the
Closing Date, in accordance with its standard payroll procedures, such holder’s
aggregate Option Payment (as so reduced by the terms and conditions of this
Article I) (and the Buyer shall make such payments, or cause such payments to be
made, to such holders in connection with the first payroll payment after the
receipt of such amount).

(b) For the avoidance of doubt, the Parties hereby acknowledge and agree that
(i) with respect to a holder of a Company Option that is, pursuant to
Section 1.7(a), cancelled and converted into a right to receive payments under
Section 1.7(a), (1) such holder’s Pro Rata Portion of each of the Escrow Amount,
the Working Capital Escrow Amount and the Company Stockholder Representative
Amount has been funded, and such holder shall have a right to receive such
holder’s Pro Rata Portion of such amounts subject to and in accordance with the
applicable terms and conditions of this Agreement and the Escrow Agreement; and
(2) such holder has a right to receive such holder’s Pro Rata Portion of each of
the Initial Net Working Capital Adjustment (if any), the Revised Closing Net
Working Capital Adjustment (if any) and the Net Earn-Out Amount (if any), in
each case, subject to and in accordance with the applicable terms and conditions
of this Agreement; and (ii) with respect to any cash amounts that are withheld
by, or remitted to, the Buyer or the Surviving Corporation, in each case, which
are payable to the holders of Company Options that are cancelled and converted
into a right to receive payments under Section 1.7(a), the Buyer shall, and, if
applicable, shall cause the Surviving Corporation to, (1) hold all such amounts
for the benefit of such holders of Company Options and (2) pay to each such
holder in cash, in accordance with its standard payroll procedures (and shall
make such payments to such holders in connection with the first payroll payment
after the receipt of such amount), such holder’s Pro Rata Portion of such
amount.

 

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(c) The Company shall not terminate any Company Stock Plans in connection with
the transactions contemplated by this Agreement and the Buyer shall assume the
Company Stock Plans (but not any Company Options) effective as of the Effective
Time.

(d) The Buyer covenants and agrees that for any payments to holders of Company
Options for which an amount is subject to Tax in Canada, it will (i) elect in
prescribed form in accordance with subsection 110(1.1) of the Income Tax Act
(Canada) and (ii) not, and after the Closing will cause the Surviving
Corporation and its Subsidiaries not to, take or claim any deduction in
computing its income under the Income Tax Act (Canada) including, for the
avoidance of doubt, the Option Payment and any payment on account of the Initial
Net Working Capital Adjustment (if any), the Revised Closing Net Working Capital
Adjustment (if any) and the Net Earn-Out Amount (if any).

1.8 Escrow Fund.

(a) On the Closing Date, the Buyer or Merger Sub shall deposit the Escrow Amount
with the Escrow Agent for the purpose of securing the indemnification
obligations of the Company Stockholders set forth in this Agreement and the
Escrow Agreement and for the purpose of compensating the Buyer and the other
Indemnified Parties for any and all Losses for which they are entitled to
indemnification pursuant to this Agreement or the Escrow Agreement. Other than
in the case of fraud, any payments required to be made to any Indemnified Party
pursuant to Article VI shall be made solely from the Escrow Fund. The Escrow
Fund, together with any interest and earnings thereon, shall be held by the
Escrow Agent in accordance with the terms hereof and the Escrow Agreement. At
the close of business on the date that is nine months after the Closing Date,
fifty percent (50%) of the then-remaining Available Escrow Fund shall be
released to the Company Stockholders. At the close of business on the date that
is 18 months after the Closing Date, any then-remaining Available Escrow Fund
shall be released to the Company Stockholders. Thereafter, if at any time there
is any then-remaining Available Escrow Fund, such amount shall be promptly
released to the Company Stockholders. Upon any release of any Available Escrow
Fund to the Company Stockholders, each Company Stockholder shall be paid his,
her or its Pro Rata Portion of the amount of the Available Escrow Fund that is
released in accordance with the terms of the Escrow Agreement. The Escrow Fund
shall be held as a trust fund and shall not be subject to any lien, attachment,
trustee process or any other judicial process of any creditor of any party, and
shall be held and disbursed solely for the purposes and in accordance with the
terms set forth in this Agreement and the Escrow Agreement.

(b) On the Closing Date, the Buyer or Merger Sub shall deposit the Working
Capital Escrow Amount with the Escrow Agent for the purpose of securing the
reimbursement obligations set forth in Section 1.13(c)(iv) of this Agreement.
The Working Capital Escrow Fund, together with any interest and earnings
thereon, shall be held by the Escrow Agent in accordance with the terms hereof
and the Escrow Agreement. The payment of any Working Capital Escrow Deficit
required to be made to the Buyer pursuant to Section 1.13(c)(iv) shall be made
solely from the Working Capital Escrow Fund, provided, that, if the Working
Capital

 

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Escrow Fund is insufficient to fully satisfy any Working Capital Escrow Deficit,
then the Buyer may be reimbursed for any remaining Working Capital Escrow
Deficit solely from the Available Escrow Fund. If the Company Stockholders are
entitled to an additional payment pursuant to Section 1.13(c)(iv), then the
Buyer and the Company Stockholder Representative shall promptly take all
necessary steps to cause the Escrow Agent to release the then remaining balance
of the Working Capital Escrow Fund to the Company Stockholders within five
(5) business days after the date of determination of the Revised Closing Net
Working Capital Adjustment under Section 1.13(c). Upon any release of such
amount to the Company Stockholders, each Company Stockholder shall be paid his,
her or its Pro Rata Portion of such amount that is released in accordance with
the terms of the Escrow Agreement. The Working Capital Escrow Fund shall be held
as a trust fund and shall not be subject to any lien, attachment, trustee
process or any other judicial process of any creditor of any party, and shall be
held and disbursed solely for the purposes and in accordance with the terms set
forth in this Agreement and the Escrow Agreement.

(c) On the Closing Date, the Buyer or Merger Sub shall deposit the Company
Stockholder Representative Amount with the Escrow Agent for the purpose of
reimbursing the Company Stockholder Representative with respect to the Company
Stockholder Representative’s obligations under Section 1.15 of this Agreement.
The Company Stockholder Representative Fund, together with any interest and
earnings thereon, shall be held by the Escrow Agent in accordance with the terms
hereof and the Escrow Agreement. At any time, the Escrow Agent shall release to
the Company Stockholders all or any portion of the Company Stockholder
Representative Fund upon the receipt of written instruction of the Company
Stockholder Representative. Upon any release of such amount to the Company
Stockholders, each Company Stockholder shall be paid his, her or its Pro Rata
Portion of the amount of such amount that is so- released in accordance with the
terms of the Escrow Agreement. The Company Stockholder Representative Fund shall
be held as a trust fund and shall not be subject to any lien, attachment,
trustee process or any other judicial process of any creditor of any party, and
shall be held and disbursed solely for the purposes and in accordance with the
terms set forth in this Agreement and the Escrow Agreement.

(d) In no event shall the Escrow Amount and any interest and earnings earned
thereon under this Agreement and the Escrow Agreement paid to the Company
Stockholders exceed twenty one million dollars ($21,000,000). In addition, in no
event shall the Working Capital Escrow Amount and any interest and earnings
earned thereon under this Agreement and the Escrow Agreement paid to the Company
Stockholders exceed two million one hundred thousand dollars ($2,100,000).
Finally, in no event shall the Company Stockholder Representative Amount and any
interest and earnings earned thereon under this Agreement and the Escrow
Agreement paid to the Company Stockholders exceed one million fifty thousand
dollars ($1,050,000). The preceding language is intended to ensure that the
rights to the Escrow Amount, the Working Capital Escrow Amount and the Company
Stockholder Representative Amount (and any interest and earnings earned on such
amounts) are not treated as contingent payments without a stated maximum selling
price under Section 453 of the Code and the Treasury Regulations promulgated
thereunder.

 

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(e) The adoption of this Agreement and the approval of the Merger by the
stockholders of the Company shall constitute approval of the Escrow Agreement
and of all of the arrangements relating thereto, including the placement of the
Escrow Fund, the Working Capital Escrow Fund and the Company Stockholder
Representative Fund into escrow for the purposes set forth above and the
appointment and actions of the Company Stockholder Representative.

1.9 Certificate of Incorporation and By-laws.

(a) At the Effective Time, the certificate of incorporation of the Company will
be amended and restated in its entirety to read as set forth on Exhibit B, it
being agreed that such amended and restated certificate of incorporation shall
contain substantially similar provisions as to exculpation and indemnification
of the Company’s directors and officers as are set forth in the Company’s
certificate of incorporation.

(b) At the Effective Time, the by-laws of the Surviving Corporation shall be
amended and restated in their entirety to be the same as the by-laws of Merger
Sub in effect immediately prior to the Effective Time, except that (i) the name
of the corporation set forth therein shall be changed to the name of the Company
and (ii) such amended and restated by-laws shall contain substantially similar
provisions as to exculpation and indemnification of the Company’s directors and
officers as set forth in the Company’s by-laws.

1.10 No Further Rights. From and after the Effective Time, no Company Shares
shall be deemed to be outstanding, and holders of certificates formerly
representing Company Shares shall cease to have any rights with respect thereto
except as provided herein or by law.

1.11 Closing of Transfer Books. At the Effective Time, the stock transfer books
of the Company shall be closed and no transfer of Company Shares shall
thereafter be made. If, after the Effective Time, certificates formerly
representing Company Shares are presented to the Buyer or the Surviving
Corporation, they shall be cancelled and exchanged for the applicable amounts
payable in respect of such Company Shares pursuant to Article I, subject to the
provisions of Section 1.8, Section 1.12, Section 1.13 and Article VI and subject
further to applicable law in the case of Dissenting Shares.

1.12 Exchange of Shares.

(a) Wells Fargo Bank, National Association (the “Payment Agent”) will effect the
payment and distribution of the Initial Payout Amount, the Revised Closing Net
Working Capital Adjustment (if any) determined to be due to Company Stockholders
pursuant to Section 1.13, and the Net Earn-Out Amount (if any) in exchange for
certificates (or other documentation, reasonably satisfactory, evidencing
ownership of Company Shares) representing the Company Shares (including for the
avoidance of doubt, any Company Shares issued pursuant to the Pre- Closing
Exchange) issued and outstanding immediately prior to the Effective Time (the
“Company Certificates”).

(b) The Buyer shall deliver to the Payment Agent, in trust for the benefit of
the Company Stockholders, the following amounts: (i) on the Closing Date, the
Initial Payout Amount minus the aggregate Option Payment (as further reduced by
the applicable provisions of this Article I), (ii) promptly following the
determination of the Final Revised Closing Net Working Capital in accordance
with Section 1.13, the Revised Closing Net Working Capital Adjustment (if any)
to the extent determined to be payable to Company Stockholders pursuant to

 

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Section 1.13 less the aggregate amount payable to former holders of Company
Options based on such holders Pro Rata Portion of such payment and
(iii) promptly following the Earn-Out Determination (as defined in
Section 1.14(a)), the Net Earn-Out Amount (if any) less the aggregate amount
payable to former holders of Company Options based on such holders Pro Rata
Portion of such payment. Such funds may be invested as directed by the Buyer,
pending payment thereof by the Payment Agent to the Company Stockholders,
provided that the Buyer shall be responsible for replacing any losses of funds
resulting from such investments. Earnings from such investments will be the sole
and exclusive property of the Buyer, and no part of such earnings will accrue to
the benefit of the Company Stockholders. Promptly (and no in event more than
five (5) business days) following the Effective Time, the Buyer shall cause the
Payment Agent to send a notice and a letter of transmittal in the form attached
hereto as Exhibit C (the “Letter of Transmittal”) to each holder of a Company
Certificate whose address appears in the Company’s stock books advising such
holder of the effectiveness of the Merger and the procedure for surrendering to
the Payment Agent such Company Certificate (or other applicable documentation)
in exchange for the amount payable to such Company Stockholder pursuant to
Article I of this Agreement. Notwithstanding the foregoing, if a record holder
of Company Certificates, on an aggregate basis together with all Affiliates of
such record holder, holds at least 5,000,000 Company Shares (on an as-converted
to Common Stock basis) (such record holder, a “Major Stockholder”) and submits
to the Payment Agent at least two (2) business days prior to Closing (x) a duly
executed Letter of Transmittal (together with all necessary certifications and
attachments) and (y) the Company Certificates held by such Major Stockholder,
and such Major Stockholder is the record holder of the Company Shares
represented by such Company Certificates as of the Closing Date, then such Major
Stockholder will be paid on the Closing Date by the Payment Agent (or the day
after the Closing Date if the Closing occurs after the time by which the Payment
Agent may initiate funding under its standard operating procedures), by wire
transfer of same day funds, or if requested by such Major Stockholder, by check,
the applicable payments under Section 1.5 with respect to such Company Shares.

(c) The Buyer shall cause the Payment Agent to distribute to the Company
Stockholders the consideration that any such Company Stockholder is entitled to
receive under this Agreement. Each holder of a Company Certificate, upon proper
surrender thereof to the Payment Agent in accordance with the instructions in
such notice, shall be entitled to receive in exchange therefor (subject to the
provisions of Section 1.8 and this Section 1.12 and the deduction and
withholding of all applicable taxes that the Buyer, Merger Sub, the Company or
any Subsidiary is required or entitled to deduct or withhold) the cash amount
payable pursuant to Section 1.5, Section 1.13 and Section 1.14. Until properly
surrendered, each Company Certificate shall be deemed for all purposes to
evidence only the right to receive the amounts described in the immediately
preceding sentence. Holders of Company Certificates shall not be entitled to
receive payment of any amount until such Company Certificates are properly
surrendered or other evidence of ownership, reasonably satisfactory to the
Buyer, is properly submitted to the Payment Agent.

(d) If any payment is to be made to or in the name of a Person other than the
Person in whose name the Company Certificate surrendered in exchange therefor is
registered, it shall be a condition to such payment that (i) the Company
Certificate so surrendered shall be transferable, and shall be properly
assigned, endorsed or accompanied by appropriate stock

 

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powers, (ii) such transfer shall otherwise be proper, and (iii) the Person
requesting such transfer shall pay to the Payment Agent any transfer or other
taxes payable by reason of the foregoing or establish to the satisfaction of the
Payment Agent that such taxes have been paid or are not required to be paid.
Notwithstanding the foregoing, neither the Payment Agent nor any Party shall be
liable to a holder of Company Shares for any amount payable to such holder or
pursuant to Article I of this Agreement that is delivered to a public official
pursuant to applicable abandoned property, escheat or similar Laws.

(e) In the event any Company Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Company Certificate to be lost, stolen or destroyed, the Payment Agent
will, in exchange for such lost, stolen or destroyed Company Certificate, pay
the amount payable in exchange therefor pursuant to Article I of this Agreement;
provided, however, the Buyer may, in its discretion and as a condition precedent
to the payment thereof, require the owner of such lost, stolen or destroyed
Company Certificate to agree in writing to indemnify the Buyer (or if
indemnification would not be reasonably adequate, deliver to the Buyer a bond in
such sum as the Buyer may reasonably direct as indemnity) against any claim that
may be made against the Buyer with respect to the Company Certificate alleged to
have been lost, stolen or destroyed.

(f) Any portion of the Initial Payout Amount made available to the Payment Agent
pursuant to Section 1.5 that remains unclaimed by the Person entitled to such
amount six (6) months after the Effective Time, any amount made available to the
Payment Agent pursuant to Section 1.13 that remains unclaimed by the Person
entitled to such amount six (6) months after the date on which the Final Revised
Closing Net Working Capital is determined and any amount made available to the
Payment Agent pursuant to Section 1.14 that remains unclaimed by the Person
entitled to such amount six (6) months after the date on which the Final
Earn-Out Amount is determined, shall be returned to the Buyer and any Person who
has not completed the exchange procedures set forth in this Section 1.12 shall
thereafter look only to the Buyer for delivery of the portion of the
consideration that such Person is entitled to received pursuant to this
Agreement, without any interest thereon.

1.13 Working Capital Adjustments. The Initial Payout Amount shall be subject to
adjustment pursuant to this Section 1.13 as follows.

(a) Definitions.

(i) “Closing Net Working Capital” means the current assets minus the current
liabilities of the Company and the Subsidiaries on a consolidated basis as of
the close of business on the Closing Date, in each case calculated in accordance
with GAAP applied on a basis consistent with the application of GAAP by the
Buyer; provided, however, that, notwithstanding anything to the contrary set
forth herein, (i) “current assets” shall be deemed to include the Aggregate
Option Consideration; and (ii) “current liabilities” shall be deemed to exclude
the Transaction Expenses, the aggregate Option Payment, the D&O Tail Insurance
Premium Amount and any severance and change-in-control payments that are paid or
payable in connection with the consummation of the transactions contemplated by
this Agreement.

 

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(ii) “Required Minimum Closing Net Working Capital” means seven million five
hundred thousand dollars ($7,500,000).

(b) Initial Closing Net Working Capital Adjustment. At least three (3) business
days before the Closing, the Company shall deliver to the Buyer (i) an itemized
statement setting forth the Company’s best estimate of the amount of Closing Net
Working Capital, including each component thereof (the “Estimated Closing Net
Working Capital” and the statement reporting such amount the “Estimated Closing
Net Working Capital Statement”), and (ii) a certificate of the chief executive
officer and chief financial officer of the Company certifying that the Estimated
Closing Net Working Capital Statement was prepared reasonably and in good faith
and represents the Estimated Closing Net Working Capital (the “Estimated Closing
Net Working Capital Certificate”). The Buyer and the Company shall work together
in good faith, prior to the Closing, to resolve any disagreements over the
Estimated Closing Net Working Capital, and the Estimated Closing Net Working
Capital shall for all purposes in this Agreement be equal to the amount
initially proposed by the Company and any revisions thereto that are mutually
agreed upon by the Buyer and the Company prior to the Closing. The “Initial
Closing Net Working Capital Adjustment” shall be determined immediately prior to
Closing as follows: (A) if the Estimated Closing Net Working Capital is less
than the Required Minimum Closing Net Working Capital then the difference shall
be referred to herein as the “Initial Closing Net Working Capital Shortfall” and
the Initial Payout Amount shall be reduced by the amount of such shortfall (it
being understood and agreed that Closing Net Working Capital may be less than
zero and that the downward adjustment to the Initial Payout Amount may in such
circumstances exceed seven million five hundred thousand dollars ($7,500,000))
and (B) if the Estimated Closing Net Working Capital is greater than the
Required Minimum Closing Net Working Capital then the difference shall be
referred to herein as the “Initial Closing Net Working Capital Excess” and the
Initial Payout Amount shall be increased by the amount of such excess.

(c) Revised Closing Net Working Capital Adjustment.

(i) On or before 5:00 p.m. Eastern Time on the thirtieth (30th) calendar day
after the Effective Time, the Buyer shall deliver to the Company Stockholder
Representative (i) an itemized statement setting forth the Buyer’s calculation
of the amount of Closing Net Working Capital, including each component thereof
(such amount, the “Revised Closing Net Working Capital” and the statement
reporting such amount the “Revised Closing Net Working Capital Statement”) and
(ii) a certificate of an appropriate, authorized executive officer of the Buyer
certifying that the Revised Closing Net Working Capital Statement was prepared
by Buyer reasonably and in good faith and represents the Revised Closing Net
Working Capital.

(ii) If the Company Stockholder Representative does not dispute the Revised
Closing Net Working Capital and does not deliver the statement described in
Section 1.13(c)(iii) within the 30-day period described therein, then the
Revised Closing Net Working Capital shall be deemed to be the “Final Revised
Closing Net Working Capital”, the Revised Closing Net Working Capital Statement
shall be deemed to be the “Final Revised Closing Net Working Capital Statement”
and the “Revised Closing Net Working Capital Adjustment” shall be equal to the
difference between the Final Revised Closing Net Working Capital and the

 

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Estimated Closing Net Working Capital. The Company Stockholder Representative
will have reasonable access (including electronic access, to the extent
available), during normal business hours, to the applicable books, records,
properties and personnel of the Buyer, the Company and the Surviving Corporation
for purposes of (1) verifying the information in the Revised Closing Net Working
Capital Statement and the Revised Closing Net Working Capital and (2) preparing
the statement described in Section 1.13(c)(iii) below.

(iii) If the Company Stockholder Representative in good faith disputes the
Revised Closing Net Working Capital as shown on the Revised Closing Net Working
Capital Statement, then the Company Stockholder Representative shall deliver to
the Buyer within thirty (30) days after receipt of the Revised Closing Net
Working Capital Statement a statement setting forth the Company Stockholder
Representative’s calculation of the Revised Closing Net Working Capital and
describing in reasonable detail the basis for the determination of such
different Closing Net Working Capital. The Buyer and the Company Stockholder
Representative shall use good faith and commercially reasonable efforts to
resolve such differences regarding the determination of the Revised Closing Net
Working Capital for a period of thirty (30) days after the Buyer’s receipt of
the dispute notice from the Company Stockholder Representative. Delivery by the
Company Stockholder Representative of a dispute notice shall constitute final
and binding acceptance by the Company Stockholder Representative of all portions
of the Revised Closing Net Working Capital Statement other than those
specifically identified in the dispute notice as being subject to a good faith
dispute.

(A) If the Buyer and the Company Stockholder Representative resolve such
differences during such time, then the Revised Closing Net Working Capital they
agree to shall be deemed to be the Final Revised Closing Net Working Capital,
the Revised Closing Net Working Capital Statement they agree to shall be deemed
to be the Final Revised Closing Net Working Capital Statement and the Revised
Closing Net Working Capital Adjustment shall be equal to the difference between
the Final Revised Closing Net Working Capital and the Estimated Closing Net
Working Capital.

(B) If the Buyer and the Company Stockholder Representative do not reach a final
resolution on the Revised Closing Net Working Capital within thirty (30) days
after the Buyer’s receipt of dispute notice given by the Company Stockholder
Representative, unless the Buyer and the Company Stockholder Representative
mutually agree to continue their efforts to resolve such differences, then
either the Buyer or the Company Stockholder Representative shall be entitled to
engage Huron Consulting Group Inc. or another auditing firm mutually agreeable
to the Buyer and the Company Stockholder Representative (the “Auditing Firm”) to
determine the Revised Closing Net Working Capital. The Auditing Firm shall be
instructed to resolve the items as to which disagreement between the Buyer and
the Company Stockholder Representative then exists (and only such items) and to
calculate the resulting Revised Closing Net Working Capital within twenty
(20) business days after submission. Absent manifest error, the Auditing Firm’s
determination of the Revised Closing Net Working Capital shall be deemed to be
the Final Revised Closing Net Working Capital, the Revised Closing Net Working
Capital Statement it prepares shall be deemed to be the Final Revised Closing
Net Working Capital Statement and the Revised Closing Net Working Capital
Adjustment shall be equal to the difference between the Final Revised Closing
Net Working Capital and the Estimated Closing Net Working Capital. The fees and
expenses of the Auditing

 

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Firm shall be borne by the non-prevailing party; provided that if the Company
Stockholder Representative is the non-prevailing party, then the Company
Stockholder Representative shall satisfy the payment of all such fees and
expenses solely from the Company Stockholder Representative Fund, and the
Company Stockholder Representative shall not be individually liable with respect
to all such amounts.

(C) The Parties agree that the procedure set forth in this Section 1.13 for
resolving disputes with respect to the Working Capital shall be the sole and
exclusive method for resolving any such disputes, provided that this provision
shall not prohibit any Party from instituting litigation to enforce the ruling
of the Auditing Firm.

(iv) If the Revised Closing Net Working Capital Adjustment is less than zero
(the “Working Capital Escrow Deficit”), then the Buyer shall be entitled to
receive payment of the Working Capital Escrow Deficit solely from the Working
Capital Escrow Fund pursuant to Section 1.8(b); provided, however, that if the
then-available Working Capital Escrow Fund is insufficient to satisfy in full
the Working Capital Escrow Deficit, then the Buyer shall be reimbursed for any
such shortfall from the Available Escrow Fund. If the Revised Closing Net
Working Capital Adjustment is greater than zero, then the Buyer shall promptly
pay (and in no event later than three (3) business days after the date of
determination of the Final Revised Closing Net Working Capital) (i) to the
Payment Agent, for distribution to the Company Stockholders, the amount of the
Revised Closing Net Working Capital Adjustment less the aggregate amount payable
to former holders of Company Options based on such holders’ Pro Rata Portion of
such payment, and the Buyer shall instruct the Payment Agent to release such
amount to the Company Stockholders within three (3) business days thereafter,
and (ii) the Company shall, in accordance with its standard payroll practices,
pay to each former holder of Company Options that is entitled to a payment under
Section 1.7(a) such holder’s Pro Rata Portion of such amount (and Buyer shall
make such payments, or cause such payments to be made, to such holders in
connection with the first payroll payment after the receipt of such amount).

1.14 Earn-Out. The Company Stockholders and the former holders of Company
Options shall be entitled to receive their applicable portion of the Net
Earn-Out Amount (if any).

(a) Certain Definitions.

(i) “Applicable Revenue” means the sum of (A) in the case of Company Components
sold separately (and not as part of a Combined Buyer Product), the Net Revenue
from the sale of such Company Components during the Earn-Out Period, (B) in the
case of Company Components included in their entirety as part of a Combined
Buyer Product and with respect to which the Buyer and its subsidiaries
recognized revenue during the Earn-Out Period, the list price for each such
Company Component as of the Closing Date, (C) in the case of Company Components
where a portion of such Company Component is included as part of a Combined
Buyer Product with respect to which the Buyer and its subsidiaries recognized
revenue during the Earn-Out Period, an amount for each such portion of a Company
Component that is equal to the product of (1) such recognized revenue multiplied
by (2) a fraction, the numerator of which is the list price of the Company
Component from which such portion was derived or otherwise a part of, and the
denominator of which is the total list price of the

 

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Combined Buyer Product, (D) subject to the third sentence of Section 1.14(g), in
any case where a bona fide “design win socket” has been awarded to the Company
before the Closing Date (a list of which is set forth in Section 1.14(a)(i)(1)
of the Disclosure Schedule, which may be updated prior to the Effective Time
upon the mutual agreement of the Buyer and the Company, such agreement not to be
unreasonably withheld, delayed or conditioned), if a component of the Buyer or
its subsidiaries replaces the Company Component to be sold in such “design win
socket” (other than at the bona fide unsolicited request of a customer) and the
Buyer and its subsidiaries recognize revenue during the Earn-Out Period with
respect to the sale of such component of the Buyer or its subsidiaries, then the
Net Revenue from the sale of such component of the Buyer or its subsidiaries
shall be credited to Applicable Revenue and (E) subject to the third sentence of
Section 1.14(g), in any case where a bona fide “design win socket” has been
awarded to the Company before the Closing Date (a list of which is set forth in
Section 1.14(a)(i)(2) of the Disclosure Schedule, which may be updated prior to
the Effective Time upon the mutual agreement of the Buyer and the Company, such
agreement not to be unreasonably withheld, delayed or conditioned) and the
Company or the Surviving Corporation has (either before or after the Closing
Date) bona fide built and delivered to a third party at least 5,000 components
for such “design win socket”, then if a component of the Buyer or its
subsidiaries replaces such Company Component to be sold in such “design win
socket” (other than at the bona fide unsolicited request of a customer) and the
Buyer and its subsidiaries recognize revenue during the Earn-Out Period with
respect to the sale of such component of the Buyer or its subsidiaries, then the
Net Revenue from the sale of such component of the Buyer or its subsidiaries
shall be credited to Applicable Revenue. For purposes of the definition of
Applicable Revenue, the list price for any Company Component shall mean the
effective price to the customer (after giving effect to any customer discounts,
customer rebates and other similar deductions made to such customer).

(ii) “Combined Buyer Product” means any product manufactured by the Buyer either
currently or in the future which incorporate Company Components in whole or in
part.

(iii) “Company Components” means (A) all components sold by the Company or any
of its Subsidiaries on or prior to the date hereof and listed on
Section 1.14(a)(iii)(A) of the Disclosure Schedule (which schedule may be
updated prior to the Effective Time upon the mutual agreement of the Buyer and
the Company, such agreement not to be unreasonably withheld, delayed or
conditioned), (B) all components currently under development by the Company or
any Subsidiary and listed on Section 1.14(a)(iii)(B) of the Disclosure Schedule
(which schedule may be updated prior to the Effective Time upon the mutual
agreement of the Buyer and the Company, such agreement not to be unreasonably
withheld, delayed or conditioned) and (C) any components described in clauses
(A) or (B) hereof that are modified or re-branded by the Buyer, the Surviving
Corporation or any Affiliate of any of the foregoing during the Earn-Out Period.

(iv) “Earn-Out Period” means the twelve month period following the Closing Date.

(v) “Earn-Out Amount” means the lesser of (A) the product obtained by
multiplying (x) [**] times (y) Applicable Revenue in excess of $[**] or
(B) $65,000,000.

 

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(vi) “Net Revenue” means, with respect to any sale of a component by the Buyer
or any of its subsidiaries, the gross revenue recognized by the Buyer (based on
the Buyer’s revenue recognition policies in accordance with GAAP as applied by
the Buyer) during the Earn-Out Period for that component sold to third parties
in bona fide, arm’s length transactions, less the following deductions, in each
case to the extent included in the gross invoiced sales of such component:

(A) trade, cash, promotional and quantity discounts;

(B) tariffs, duties, excises and taxes on sales (including sales or use taxes or
value added taxes) (but excluding national, state or local taxes based on
income);

(C) freight, insurance, packing costs, postage and other transportation charges;

(D) invoiced amounts that are written off as uncollectible in accordance with
Buyer’s accounting policies, consistently applied, provided that if such amounts
are subsequently collected, such amounts shall again be included in Applicable
Revenue; and

(E) amounts repaid or credits taken by reason of defects, returns, damaged goods
and allowances of goods, recalls or refunds or because of retroactive price
reductions or billing errors.

(b) Interim Reports. Within 45 days after the end of the first three 90 day
periods of the Earn-Out Period (each, a “Quarterly Earn-Out Period”), the Buyer
shall furnish to the Company Stockholder Representative (i) a statement (a
“Quarterly Earn-Out Statement”) setting forth the Buyer’s good faith
determination of the applicable Earn-Out Amount, if any, for the immediately
preceding Quarterly Earn-Out Period as well as a summary setting forth the
material information underlying the calculation thereof (each, a “Quarterly
Earn-Out Determination”) and (ii) certificate of an appropriate, authorized
executive officer of the Buyer certifying that such Quarterly Earn-Out
Determination was prepared reasonably and in good faith. After the delivery of a
Quarterly Earn-Out Statement, the Company Stockholder Representative and its
representatives shall be permitted reasonable access (including electronic
access, to the extent available), during normal business hours, to books and
records and working papers of the Buyer, the Surviving Corporation and their
respective direct and indirect subsidiaries that are substantially relevant to
the Buyer’s preparation of such Quarterly Earn-Out Statement and the data
directly supporting such Quarterly Earn-Out Determination and reasonable access
to the individuals that participated in the preparation of such Quarterly
Earn-Out Statement and the calculation of such Quarterly Earn-Out Determination;
provided, that such access shall be for the sole purpose of reviewing the
accuracy of such Quarterly Earn-Out Statement and provided further, that all
such books and records, working papers and other information so disclosed shall
be kept confidential in accordance with the provisions of Section 1.15(h).

(c) Earn-Out Statement. Within twenty (20) business days after the expiration of
the Earn-Out Period, the Buyer shall furnish to the Company Stockholder
Representative (i) a statement (the “Earn-Out Statement”) setting forth the
Buyer’s good faith determination of the applicable Earn-Out Amount, if any, for
the Earn-Out Period as well as a summary setting forth

 

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the material information underlying the calculation thereof (the “Earn-Out
Determination”) and (ii) certificate of an appropriate, authorized executive
officer of the Buyer certifying that the Earn-Out Determination was prepared
reasonably and in good faith. Unless within the thirty (30) business-day period
following the Company Stockholder Representative’s receipt of the Earn-Out
Statement, the Company Stockholder Representative delivers written notice to the
Buyer (the “Earn-Out Dispute Notice”) setting forth in reasonable detail any and
all items of disagreement related to the Earn-Out Statement (each, an “Item of
Dispute”), then the Earn-Out Statement shall be conclusive and binding upon the
Company Stockholder Representative, the Company Stockholders and the former
holders of Company Options and the Earn-Out Determination shall be the final
Earn-Out Amount (the “Final Earn-Out Amount”). After the delivery of the
Earn-Out Statement, the Company Stockholder Representative and its
representatives shall be permitted reasonable access (including electronic
access, to the extent available), during normal business hours, to books and
records and working papers of the Buyer, the Surviving Corporation and their
respective direct and indirect subsidiaries that are substantially relevant to
the Buyer’s preparation of the Earn-Out Statement and the data directly
supporting the Earn-Out Determination and reasonable access to the individuals
that participated in the preparation of the Earn-Out Statement and the
calculation of the Earn-Out Determination; provided, that such access shall be
for the sole purpose of reviewing the accuracy of the Earn- Out Statement and
provided further, that all such books and records, working papers and other
information so disclosed shall be kept confidential in accordance with the
provisions of Section 1.15(h).

(d) Dispute Resolution. If the Company Stockholder Representative delivers an
Earn-Out Dispute Notice to the Buyer within such thirty (30) business day
period, the Buyer and the Company Stockholder Representative shall use
commercially reasonable efforts to resolve their differences concerning the
Items of Dispute, and if any Item of Dispute is so resolved, the Earn-Out
Statement shall be modified as necessary to reflect such resolution. If all
Items of Dispute are so resolved, the Earn-Out Statement (as so modified) shall
be conclusive and binding upon the Buyer, the Company Stockholder Representative
and all Company Stockholders and the Earn-Out Determination as so modified shall
be the Final Earn-Out Amount. If any Item of Dispute remains unresolved for a
period of twenty (20) business days after the Buyer’s receipt of the Earn-Out
Dispute Notice with respect to the Earn-Out Statement, the Buyer and the Company
Stockholder Representative shall submit the dispute to the Auditing Firm. The
Buyer and the Company Stockholder Representative shall request that the Auditing
Firm render a determination as to each unresolved Item of Dispute within twenty
(20) business days after its retention, and the Company Stockholder
Representative and the Buyer shall cooperate fully with the Auditing Firm so as
to enable it to make such determination as quickly and as accurately as
practicable. The Auditing Firm’s determination as to each Item of Dispute
submitted to it shall be in writing and shall be conclusive and binding upon all
of the Parties, and the Earn-Out Statement shall be modified to the extent
necessary to reflect such determination. The Earn-Out Statement (as so modified)
shall be conclusive and binding upon all of the Parties and the Earn-Out
Determination as so modified shall be the Final Earn-Out Amount. The fees and
expenses of the Auditing Firm shall be borne by the non-prevailing party;
provided that if the Company Stockholder Representative is the non-prevailing
party, then the Company Stockholder Representative shall satisfy the payment of
all such fees and expenses solely from the Company Stockholder Representative
Fund, and the Company Stockholder Representative shall not be individually
liable with respect to all such amounts.

 

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(e) Payment of Final Earn-Out Amount. The Buyer shall deliver the Earn-Out
Amount, as so reduced by the amount of the Contingent Banking Fees (the Earn-Out
Amount so reduced, the “Net Earn-Out Amount”) (and after giving to such
reduction, less the aggregate amount payable to former holders of Company
Options based on such holders Pro Rata Portion of such payment) to the Payment
Agent for distribution to the Company Stockholders within five (5) business days
after the final determination thereof, and the Buyer shall instruct the Payment
Agent to pay to each Company Stockholder his, her or its Pro Rata Portion of the
Net Earn-Out Amount within two (2) business days thereafter. In addition to the
foregoing payment, the Buyer or the Surviving Corporation shall, in accordance
with its standard payroll practices, pay to each former holder of Company
Options such holder’s Pro Rata Portion of the Net Earn-Out Amount (and the Buyer
shall make such payments to such holders in connection with the first payroll
payment after the receipt of such amount).

(f) No Assignment of Earn-Out Rights. No interest in the Net Earn-Out Amount or
any portion thereof, no right to participate, in whole or in part, in the Net
Earn-Out Amount pursuant to Section 1.14, and no right to receive any
distribution of cash in connection therewith pursuant to Section 1.14 may be
assigned or transferred to any Person (whether by operation of law, or in
connection with any sale, assignment or other transfer of any Common Shares,
shares of Series A-1 Preferred Stock or otherwise), and any attempt to do so
will be void. The Net Earn-Out Amount and the provisions of Section 1.14
relating to the Net Earn-Out Amount are intended solely for the benefit of the
Company Stockholders and the holders of Company Options, and the right (if any)
to receive distributions in connection with the Net Earn- Out Amount shall be
personal to those Persons; provided, however, that any and all rights under this
Section 1.14 of any Company Stockholder or holder of a Company Option that is an
(i) individual shall be freely assignable and transferrable (by operation of law
or otherwise) in the case of the death or any such individual to such
individual’s estate, spouse, children, ancestors and/or any descendants of any
ancestors and (ii) entity shall be freely assignable and transferrable to such
entity’s successors, any transferee of all or substantially all of such entity’s
assets, or with the prior written consent of Buyer (not to be unreasonably
withheld).

(g) Diligence. During the Earn-Out Period, the Buyer and its Affiliates,
including without limitation, the Surviving Corporation, shall not, in bad
faith, take any action (or fail to take any action) with the intent or effect of
preventing the Company Stockholders and former holder of Company Options the
opportunity to achieve the maximum Earn-Out Amount. Subject to the foregoing,
the Buyer shall have absolute discretion to operate its business in its sole
best interest, without regard to how its action (or inactions) would affect the
Company Stockholders’ opportunity to achieve the Earn-Out Amount (or any portion
thereof). Without limiting the generality of the foregoing, for “socket
refreshes” listed on Section 1.14(g) of the Disclosure Schedule (as updated
prior to the Effective Time upon the mutual agreement of the Buyer and the
Company, such agreement not to be unreasonably withheld, delayed or conditioned)
the Buyer shall devote such sales, technical, marketing, operating, development,
engineering, administrative and financial resources as the Buyer believes, in
the Buyer’s sole discretion, is appropriate for the development, support and
promotion of the Company Components for such “socket refreshes.” In the event
that the Company or any Subsidiary fails to develop a part meeting the written
performance and reliability specifications as reasonably requested by a customer
for a “socket refresh” or if a customer makes a bona fide unsolicited request to
use a component of Buyer or its subsidiaries for such “socket refresh”, for any
reason,

 

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then Buyer shall have the option to utilize its own component to meet this
customer need and, for the avoidance of doubt, any related revenue resulting
from any sale of a component of Buyer or its subsidiaries under the
circumstances described in this sentence shall not count toward Applicable
Revenue.

(h) No Interest. No interest shall accrue or be paid on any portion of the Net
Earn-Out Amount or any payment or distribution pursuant to Section 1.14 relating
to the Net Earn-Out Amount.

1.15 Company Stockholder Representative. To facilitate the administration of the
transactions contemplated by this Agreement, including the resolution of any
disputes relating to, the Earn-Out Amount (if any), the Revised Closing Net
Working Capital Adjustment (if any), and claims for indemnification pursuant to
Article VI, and any other actions required or permitted to be taken by the
Company Stockholder Representative under this Agreement, the Buyer and the
Company, by their execution and delivery of this Agreement, and the stockholders
of the Company and Persons otherwise having the right to direct the voting of
the Company’s stock pursuant to the Common Voting Trust Agreement or the
Class A-1 Voting Trust Agreement, and the adoption of this Agreement by
stockholders constituting the Requisite Stockholder Consent, hereby
(x) designate the Company Stockholder Representative as the representative,
attorney-in-fact and agent of each Company Stockholder and (y) authorize the
Company Stockholder Representative to give and receive all notices required to
be given under this Agreement, and to take any and all additional action as is
necessary, convenient, appropriate or contemplated to be taken by or on their
behalf or by the Company Stockholder Representative in connection with the
Company Stockholder Representative’s rights, duties and obligations pursuant to
this Agreement and/or the Escrow Agreement.

(a) In the event that the Company Stockholder Representative becomes unwilling
or unable to perform his, her or its responsibilities hereunder or resigns from
such position, the Company Stockholders (acting by written consent by a majority
in interest of the Company Stockholders, voting together as a single class)
shall select another representative to fill the vacancy of the Company
Stockholder Representative named in this Agreement, and such substituted
representative shall succeed the former Company Stockholder Representative and
be deemed to be the Company Stockholder Representative for all purposes of this
Agreement and the Escrow Agreement and the documents delivered pursuant hereto
and thereto.

(b) All decisions and actions by the Company Stockholder Representative in
connection with the transactions contemplated by this Agreement, including
(i) the determination and calculation of, and resolution of any disputes
relating to, the Earn-Out Amount (if any) or the Revised Closing Net Working
Capital Adjustment (if any), (ii) the resolution and disposition of any claims
for indemnification pursuant to Article VI, and (iii) any other actions required
or permitted to be taken by the Company Stockholder Representative under this
Agreement, shall be binding upon each Company Stockholder, and no Company
Stockholder shall have the right to object, dissent, protest or otherwise
contest the same or to revoke the agency of the Company Stockholder
Representative.

 

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(c) Any decision, act, consent, waiver or instruction of the Company Stockholder
Representative in connection with this Agreement shall constitute a decision of
all the Company Stockholders and shall be final, binding and conclusive upon
each Company Stockholder, and the Buyer shall be entitled to rely conclusively
on the decisions, acts, consents, waivers and instructions of the Company
Stockholder Representative as to any determination relating to the transactions
contemplated by this Agreement as being the decision, act, consent, waiver or
instruction of every Company Stockholder, including without limitation (i) the
determination and calculation of, and resolution of any disputes relating to,
the Earn-Out Amount (if any) or the Revised Closing Net Working Capital
Adjustment (if any), (ii) the resolution and disposition of any claims for
indemnification pursuant to Article VI, and (iii) any other actions required or
permitted to be taken by the Company Stockholder Representative under this
Agreement; no Person shall have any cause of action against the Buyer, the
Surviving Corporation, or any of their respective directors, officers,
employees, agents or affiliates for any action taken by the Buyer in reliance
upon any decision, act, consent, waiver or instruction of the Company
Stockholder Representative; and the Buyer is hereby relieved from any liability
to any Person for any acts done by it in accordance with such decision, act,
consent, waiver or instruction of the Company Stockholder Representative.

(d) All actions, omissions, decisions, consents, waivers and instructions of the
Company Stockholder Representative shall be conclusive and binding upon Company
Stockholders and neither the Buyer nor any Company Stockholder shall have any
cause of action against the Company Stockholder Representative for any action
taken, decision made or consent, waiver or instruction given by the Company
Stockholder Representative under this Agreement, except for fraud or willful
misconduct by the Company Stockholder Representative.

(e) The provisions of this Section 1.15 are independent and severable, are
irrevocable and coupled with an interest, and shall be enforceable
notwithstanding any rights or remedies that the Buyer or any Company Stockholder
may have in connection with the transactions contemplated by this Agreement.

(f) The Company Stockholder Representative shall be entitled to seek
reimbursement from the Company Stockholder Representative Escrow Fund for any
reasonable expenses incurred without gross negligence or bad faith on the part
of the Company Stockholder Representative and arising out of or in connection
with the acceptance or administration of the Company Stockholder
Representative’s duties hereunder (“Representative Reimbursable Expenses”).
Without limiting the foregoing, the Company Stockholder Representative shall
have the right to engage legal counsel and other professional advisers to assist
it in the administration of the Company Stockholder Representative’s duties
hereunder, and any and all reasonable fees and expenses of such counsel and
advisers shall be deemed Representative Reimbursable Expenses.

(g) The Company Stockholder Representative shall be indemnified by the Company
Stockholders for, and shall be held harmless against, any loss, liability or
expense incurred by the Company Stockholder Representative or any of its
Affiliates and any of their respective partners, directors, officers, employees,
agents, stockholders, consultants, attorneys, accountants, advisors, brokers,
representatives or controlling persons, in each case relating to the Company
Stockholder Representative’s conduct as the Company Stockholder Representative,
other than losses, liabilities or expenses resulting from the Company
Stockholder Representative’s gross negligence or willful misconduct in
connection with its performance

 

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under this Agreement and the Escrow Agreement. This indemnification shall
survive the termination of this Agreement. The costs of such indemnification
(including the costs and expenses of enforcing this right of indemnification)
may be paid from the Company Stockholder Representative Fund (and in no event
shall such costs be paid from either the Escrow Fund or the Working Capital
Escrow Fund prior to the time such amounts are otherwise distributable to the
Company Stockholders). In the event it is finally adjudicated that a loss,
liability or expense or any portion thereof was primarily caused by the gross
negligence or willful misconduct of the Company Stockholder Representative, the
Company Stockholder Representative will reimburse the Company Stockholders the
amount of such indemnified loss, liability or expense attributable to such gross
negligence or willful misconduct. With the prior written consent of Prism
Venture Partners IV, L.P., any such losses, liabilities or expenses may be
recovered by the Company Stockholder Representative from (i) the funds in the
Company Stockholder Representative Fund, (ii) the amounts in the Escrow Funds
otherwise distributable to the Company Stockholders pursuant to the terms hereof
and the Escrow Agreement at the time of distribution, and (iii) from any Net
Earn-Out Amounts actually payable to the Company Stockholders pursuant to
written instructions delivered by the Company Stockholder Representative to the
Buyer; provided that while this section allows the Company Stockholder
Representative to be paid from the Company Stockholder Representative Escrow
Fund, the Escrow Fund and the Earn-Out Amounts, this does not relieve the
Company Stockholders from their obligation to promptly pay such Representative
Reimbursable Expenses as such Representative Reimbursable Expenses are suffered
or incurred, nor does it prevent the Company Stockholder Representative from
seeking any remedies available to it at law or otherwise. The Company
Stockholder Representative may, in all questions arising under this Agreement
and the Escrow Agreement, rely on the advice of counsel and for anything done,
omitted or suffered in good faith by the Company Stockholder Representative in
accordance with such advice, the Company Stockholder Representative shall not be
liable to the Company Stockholders or the Escrow Agent or any other Person

(h) The Buyer shall, and cause the Surviving Corporation and their respective
direct and indirect subsidiaries to, provide the Company Stockholder
Representative with reasonable access (including electronic access, to the
extent available) to information and documents concerning any disputes relating
to the Earn-Out Amount (if any), the Revised Closing Net Working Capital
Adjustment (if any) and claims for indemnification pursuant to Article VI and
which is in the possession, custody or control of the Buyer or the Surviving
Corporation or any of their respective direct or indirect subsidiaries and the
reasonable assistance of the officers and employees of the Buyer, the Surviving
Corporation or any of their respective direct or indirect subsidiaries for
purposes of performing the Company Stockholder Representative’s duties under
this Agreement or the Escrow Agreement and exercising the Company Stockholder
Representative’s rights under this Agreement and the Escrow Agreement; provided
that the Company Stockholder Representative shall treat confidentially and not,
except in connection with enforcing its rights and otherwise performing its
responsibilities under this Agreement and the Escrow Agreement, disclose any
nonpublic information from or concerning any of the foregoing to anyone, except
that (i) the Company Stockholder Representative may disclose to its employees,
independent contractors, legal counsel, accountants, representatives, agents and
other advisors and skilled Persons (for the same limited purposes as to which
the Company Stockholder Representative may use such information set forth in
this Section 1.15(h)) any information disclosed to such Company Stockholder
Representative pursuant to this Section 1.15(h), provided that all such Persons
agree to treat such information confidentially, (ii) the

 

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Company Stockholder Representative (or such other Person to whom information is
disclosed pursuant to clause (i) above) may disclose in any proceeding relating
to a claim for indemnification under Article VI or a dispute relating to
Section 1.13 or Section 1.14 (or, in either case, discussions in preparation
therefor) any information disclosed to the Company Stockholder Representative
pursuant to this Section 1.15(h), provided that the Company Stockholder
Representative shall use commercially reasonable efforts to obtain, if
available, an appropriate protective order or other reliable assurance that
confidential treatment will be accorded such information, and (iii) the Company
Stockholder Representative may disclose to the Company Stockholders any
information disclosed to the Company Stockholder Representative pursuant to this
Section 1.15(h), provided that such Company Stockholders agree to treat such
information confidentially.

1.16 Withholding Rights. Notwithstanding anything to the contrary, each of the
Buyer, the Surviving Corporation, the Escrow Agent and any Payment Agent
designated by the foregoing will be entitled to deduct and withhold from any
consideration otherwise payable pursuant to this Agreement to any Person, such
amounts as may be required to be deducted and withheld with respect to the
making of such payment under the Internal Revenue Code or any other legal
requirement; provided, however, that in the event that the Buyer determines that
such withholding is required in respect of the payments to be made to Company
Stockholders, the Buyer shall notify the Company (if prior to the Closing), the
Escrow Agent, the Payment Agent and the Company Stockholder Representative, in
writing of the amount that it intends to withhold and the legal basis for the
requirement of such withholding, (a) with respect to the Initial Payout Amount
at least five (5) days prior to the Closing Date, (b) with respect to the
Revised Closing Net Working Capital Adjustment, at least two (2) days prior to
the date of the payment of such amount and (c) with respect to the Net Earn-Out
Amount, at least two (2) days prior to the date of payment of such amount. To
the extent that amounts are so deducted or withheld by the Buyer, the Surviving
Corporation, the Escrow Agent or Payment Agent, such deducted or withheld
amounts will be treated for all purposes of this Agreement as having been paid
to such Person in respect of which such deduction or withholding was made. The
Buyer shall, and shall cause the Payment Agent to, provide all Forms W-9, W-8
and similar tax documentation in its possession to the Escrow Agent and/or the
Company Stockholder Representative upon request of the Company Stockholder
Representative.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to the Buyer, except as set forth in the
Disclosure Schedule, as follows:

2.1 Organization, Qualification and Corporate Power. The Company is a
corporation duly organized, validly existing and in good standing under the Laws
of the State of Delaware. The Company is duly qualified to conduct business and
is in good standing under the Laws of each jurisdiction listed in Section 2.1 of
the Disclosure Schedule, which jurisdictions constitute the only jurisdictions
in which the nature of the Company’s businesses or the ownership or leasing of
its properties requires such qualification, except for such failures to be so
qualified or in good standing that have not, since the execution and delivery of
this Agreement, had, and would not reasonably be expected to result in, a
Company Material Adverse Effect. The

 

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Company has all requisite corporate power and authority to carry on the
businesses in which it is engaged and to own and use the properties owned and
used by it. The Company has furnished or made available to the Buyer complete
and accurate copies of its certificate of incorporation and by-laws. The Company
is not in default under or in violation of the provisions of its certificate of
incorporation or by-laws.

2.2 Capitalization.

(a) The authorized capital stock of the Company consists of (i) 108,000,000
Common Shares, of which (A) 104,999,999 shares have been designated as Standard
Common Stock, of which, as of the date of this Agreement, 59,646,097 shares are
issued and outstanding, (B) one (1) share has been designated as Special Common
Voting Stock, of which, as of the date of this Agreement, one (1) share is
issued and outstanding and (C) no Common Shares were held in the treasury of the
Company, (ii) 19,353,592 Preferred Shares, of which (A) 19,353,591 shares have
been designated as Series A-1 Preferred Stock, of which, as of the date of this
Agreement, 19,353,591 shares are issued and outstanding and (B) one (1) share
has been designated Special A-1 Voting Stock, of which, as of the date of this
Agreement, one (1) share is issued and outstanding.

(b) Section 2.2(b) of the Disclosure Schedule sets forth a complete and accurate
list, as of the date of the Agreement, of the registered holders of capital
stock of the Company, showing the number of shares of capital stock, and the
class or series of such shares, held by each registered holder and (for shares
other than Common Shares) the number of Common Shares (if any) into which such
shares are convertible. Section 2.2(b) of the Disclosure Schedule also indicates
all outstanding Common Shares that constitute restricted stock or that are
otherwise subject to a repurchase or redemption right, indicating the name of
the applicable registered holder, the vesting schedule (including any
acceleration provisions with respect thereto), and the repurchase price payable
by the Company. All of the issued and outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and
nonassessable. All of the issued and outstanding shares of capital stock of the
Company have been offered, issued and sold by the Company in compliance with
applicable Laws.

(c) Section 2.2(c) of the Disclosure Schedule sets forth a complete and accurate
list, as of the date of this Agreement of: (i) all Company Stock Plans,
indicating for each Company Stock Plan the number of Common Shares issued to
date under such Company Stock Plan, the number of Common Shares subject to
outstanding Company Options under such Company Stock Plan and the number of
Common Shares reserved for future issuance under such Company Stock Plan and
(ii) all holders of outstanding Company Options, indicating with respect to each
Company Option, the Company Stock Plan under which it was granted, the number of
Common Shares subject to such Company Option, the exercise price, the date of
grant, and the vesting schedule (including any acceleration provisions with
respect thereto). The Company has provided or made available to the Buyer
complete and accurate copies of all Company Stock Plans, forms of all stock
option agreements evidencing Company Options. All of the shares of capital stock
of the Company subject to Company Options will be, upon issuance pursuant to the
exercise of such instruments and in accordance with the terms thereof, duly
authorized, validly issued, fully paid and nonassessable. As of immediately
prior to the Effective Time and after giving effect to Section 1.7, there will
be no outstanding Company Options.

 

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(d) Except as set forth in this Section 2.2 or in Section 2.2 of the Disclosure
Schedule, (i) no Person has any subscription, right, warrant, option,
convertible security or other such right (contingent or otherwise) to purchase
or acquire any shares of capital stock of the Company from the Company, or to
the knowledge of the Company, from any stockholders of the Company (ii) the
Company has no obligation (contingent or otherwise) to issue any subscription,
right, warrant, option, convertible security or other such right, or to issue or
distribute to holders of any shares of its capital stock any evidences of
indebtedness or assets of the Company, (iii) the Company has no obligation
(contingent or otherwise) to purchase, redeem or otherwise acquire any shares of
its capital stock or any interest therein or to pay any dividend or to make any
other distribution in respect thereof, and (iv) there are no outstanding or
authorized stock appreciation, phantom stock or similar rights with respect to
the Company.

(e) Except as set forth in Section 2.2(e) of the Disclosure Schedule, there is
no agreement, written or oral, between the Company and any holder of its
securities, or, to the best of the Company’s knowledge, among any holders of its
securities, relating to the sale or transfer (including agreements relating to
rights of first refusal, co-sale rights or “drag-along” rights), registration
under the Securities Act, or voting, of the capital stock of the Company.

(f) To the Company’s knowledge, there is no claim against the Company by any
Person that seeks to assert: (i) ownership or rights to ownership of any shares
of Company stock; (ii) any rights of a stockholder, including any option,
preemptive rights or rights to notice or to vote; (iii) any rights under the
certificate of incorporation or by-laws of the Company, as amended to date; or
(iv) any claim that his, her or its shares have been wrongfully repurchased by
the Company.

2.3 Authorization of Transaction. Subject to obtaining the Requisite Stockholder
Approval, the Company has all requisite corporate power and authority to execute
and deliver this Agreement and to perform its obligations hereunder. The
execution and delivery by the Company of this Agreement and, subject to
obtaining the Requisite Stockholder Approval, which is the only approval
required from the Company Stockholders with respect to the transactions
contemplated hereby, the execution and delivery by the Company of this Agreement
and the consummation by the Company of the transactions contemplated hereby have
each been duly and validly authorized by all necessary corporate action on the
part of the Company. Without limiting the generality of the foregoing, the Board
of Directors of the Company, at a meeting duly called and held, by the unanimous
vote of all directors (i) determined that the Merger is advisable to the Company
and its stockholders, (ii) adopted this Agreement in accordance with the
provisions of the Delaware General Corporation Law, and (iii) directed that this
Agreement and the Merger be submitted to the stockholders of the Company for
their adoption and approval and resolved to recommend that the stockholders of
the Company vote in favor of the adoption of this Agreement and the approval of
the Merger. This Agreement has been duly and validly executed and delivered by
the Company and constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to
(x) bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar Laws of general applicability relating to or affecting creditors’ rights
and to (y) general equity principles, regardless of whether such enforceability
is considered in a proceeding at Law or in equity ((x) and (y) of this
Section 2.3, collectively, the “Bankruptcy and Equity Exception”).

 

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2.4 Noncontravention. Except as set forth on Section 2.4 of the Disclosure
Schedule, subject to compliance with the applicable requirements of the
Hart-Scott-Rodino Act, the filing of the Certificate of Merger as required by
the Delaware General Corporation Law and obtaining the Requisite Stockholder
Approval, none of the execution and delivery by the Company of this Agreement,
the performance by the Company of any of its obligations hereunder or the
consummation by the Company of the transactions contemplated hereby, will
(a) conflict with or violate any provision of the certificate of incorporation
or by-laws of the Company or the charter, by-laws or other organizational
document of any Subsidiary, (b) require on the part of the Company or any
Subsidiary any notice to or filing with, or any permit, authorization, consent
or approval of, any Governmental Entity, except where the failure to do so has
not, since the execution and delivery of this Agreement, had and would not
reasonably be expected to result in a Company Material Adverse Effect,
(c) conflict with, result in a breach of, constitute (with or without due notice
or lapse of time or both) a default under, result in the acceleration of
obligations or loss of any right or benefit under, create in any party the right
to terminate, modify or cancel, or require any notice, consent or waiver under,
any contract or instrument to which the Company or any Subsidiary is a party or
by which the Company or any Subsidiary is bound or to which any of their
respective assets is subject, other than any such conflicts, breaches, defaults,
accelerations of obligations, losses of rights or benefits, rights to modify,
terminate or cancel, notices, consents or waivers that, individually or in the
aggregate, have not, since the execution and delivery of this Agreement, had and
would not reasonably be expected to be, material to the Company and its
Subsidiaries, taken as a whole, (d) result in the imposition of any Security
Interest upon any assets of the Company or any Subsidiary or (e) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to the
Company, any Subsidiary or any of their respective properties or assets other
than any such violations that have not, since the execution and delivery of this
Agreement, had and would not reasonably be expected to result in a Company
Material Adverse Effect.

2.5 Subsidiaries.

(a) Section 2.5 of the Disclosure Schedule sets forth: (i) the name of each
Subsidiary; (ii) the number and type of outstanding equity securities of each
Subsidiary and a list of the registered holders thereof; (iii) the jurisdiction
of organization of each Subsidiary; (iv) the names of the officers and directors
of each Subsidiary; and (v) the jurisdictions in which each Subsidiary is
qualified or holds licenses to do business as a foreign corporation or other
entity.

(b) Each Subsidiary is an entity duly organized, validly existing and in good
standing under the Laws of the jurisdiction of its organization. Each Subsidiary
is duly qualified to conduct business and is in good standing under the Laws of
each jurisdiction in which the nature of its businesses or the ownership or
leasing of its properties requires such qualification, except for such failures
to be so qualified or in good standing that have not, since the execution and
delivery of this Agreement, had, and would not reasonably be expected to result
in, a Company Material Adverse Effect. Each Subsidiary has all requisite
organizational power and

 

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authority to carry on the businesses in which it is engaged and to own and use
the properties owned and used by it. The Company has delivered or made available
to the Buyer complete and accurate copies of the governing organizational
documents of each Subsidiary. No Subsidiary is in default under or in violation
of the provisions of its governing organizational documents. All of the issued
and outstanding shares of capital stock of each Subsidiary are duly authorized,
validly issued, fully paid, nonassessable and free of preemptive rights. All
shares of each Subsidiary that are held of record or owned beneficially by
either the Company or any Subsidiary are held or owned free and clear of any
restrictions on transfer (other than restrictions under the Securities Act and
state securities Laws), claims, Security Interests, options, warrants, rights,
contracts, calls, commitments, equities and demands. Except as set forth in
Section 2.5(b) of the Disclosure Schedule, there are no outstanding or
authorized options, warrants, rights, agreements or commitments to which the
Company or any Subsidiary is a party or which are binding on any of them
providing for the issuance, disposition or acquisition of any capital stock of
any Subsidiary. There are no outstanding stock appreciation, phantom stock or
similar rights with respect to any Subsidiary. Except as set forth in
Section 2.5(b) of the Disclosure Schedule, there are no voting trusts, proxies
or other agreements or understandings with respect to the voting of any capital
stock of any Subsidiary.

(c) The Company does not control directly or indirectly or have any direct or
indirect equity participation or similar interest in any corporation,
partnership, limited liability company, joint venture, trust or other business
association or entity which is not a Subsidiary.

2.6 Financial Statements.

(a) The Company has provided or made available to the Buyer the Financial
Statements. The Financial Statements (i) comply as to form in all material
respects with applicable accounting requirements in effect and applicable
thereto as of their respective dates, (ii) were prepared in accordance with GAAP
applied on a consistent basis throughout the periods covered thereby (except as
may be indicated in the notes to such financial statements) and (iii) fairly
present in all material respects the consolidated financial position of the
Company and the Subsidiaries as of the dates thereof and the consolidated
results of its operations and cash flows for the periods indicated, consistent
with the books and records of the Company and the Subsidiaries, except that the
unaudited interim financial statements are subject to normal and recurring
year-end adjustments which will not be material, taken as a whole, in amount or
effect and do not include footnotes.

(b) None of the Company or any Subsidiary has any indebtedness for borrowed
money.

(c) KPMG LLP, the Company’s current auditors, is, and has been at all times
since January 1, 2006, (x) “independent” with respect to the Company within the
meaning of Regulation S-X and (y) in compliance with subsections (g) through
(l) of Section 10A of the Exchange Act (to the extent applicable) and the
related rules of the SEC and the Public Company Accounting Oversight Board.

2.7 Absence of Certain Changes. Since the Most Recent Balance Sheet Date
(a) there has occurred no event or development which, individually or in the
aggregate, has had, or would reasonably be expected to result in, a Company
Material Adverse Effect, and (b) none of the Company or any Subsidiary has taken
any of the actions set forth in paragraphs (a) through (p) of Section 4.4.

 

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2.8 Undisclosed Liabilities. None of the Company or any of the Subsidiaries has
any liability (whether known or unknown, whether absolute or contingent, whether
liquidated or unliquidated and whether due or to become due), except for
(a) liabilities on the Most Recent Balance Sheet, (b) liabilities which have
been incurred since the Most Recent Balance Sheet Date in the Ordinary Course of
Business, whether or not reserved and accrued on the books and records of the
Company and (c) contractual and other liabilities incurred in the Ordinary
Course of Business which are not required by GAAP to be reflected on a balance
sheet and which do not result from a breach of contract of a violation of Law by
the Company or any of its Subsidiaries.

2.9 Tax Matters.

(a) Each of the Company and the Subsidiaries has properly filed on a timely
basis all income and other material Tax Returns that it was required to file,
and all such Tax Returns are correct and complete in all material respects. Each
of the Company and the Subsidiaries have paid on a timely basis all Taxes,
whether or not shown on any Tax Return, that were due and payable. The unpaid
Taxes of the Company and each Subsidiary for Tax periods through the date of the
Most Recent Balance Sheet do not exceed the accruals and reserves for Taxes
(excluding accruals and reserves for deferred Taxes established to reflect
timing differences between book and Tax income) set forth on the Most Recent
Balance Sheet, and all unpaid Taxes of the Company and each Subsidiary for all
Tax periods commencing after the date of the Most Recent Balance Sheet and
ending at the Closing arose in the ordinary course of business.

(b) All Taxes that the Company or any Subsidiary is or was required by law to
withhold or collect have been duly withheld or collected and, to the extent
required, have been properly paid to the appropriate Governmental Entity, and
each of the Company and any Subsidiary has complied, in all material respects,
with all information reporting and backup withholding requirements, including
the maintenance of required records with respect thereto, in connection with
amounts paid to any employee, independent contractor, creditor, or other third
party.

(c) None of the Company or any Subsidiary is or has ever been a member of an
affiliated group with which it has filed (or been required to file)
consolidated, combined, unitary or similar Tax Returns, other than a group of
which the common parent is the Company. None of the Company or any Subsidiary
(i) has any actual or potential liability under Treasury Regulation
Section 1.1502-6 (or any comparable or similar provision of federal, state,
local or foreign Law), as a transferee or successor, pursuant to any contractual
obligation, or otherwise for any Taxes of any Person other than the Company or
any Subsidiary, or (ii) is a party to or bound by any Tax indemnity, Tax
sharing, Tax allocation or similar agreement.

(d) The Company has delivered or made available to the Buyer (i) complete and
correct copies of all income Tax Returns and any other material Tax Return of
the Company and any Subsidiary relating to Taxes for all taxable periods for
which the applicable statute of limitations has not yet expired, (ii) complete
and correct copies of all private letter rulings, revenue agent reports,
information document requests, notices of proposed deficiencies,

 

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deficiency notices, protests, petitions, closing agreements, settlement
agreements, pending ruling requests and any similar documents, in each case with
respect to any taxing authority, submitted by, received by, or agreed to by or
on behalf of the Company or any Subsidiary relating to Taxes for all taxable
periods for which the statute of limitations has not yet expired, and
(iii) complete and correct copies of all material agreements, rulings,
settlements or other Tax documents with or from any tax authority relating to
Tax incentives claimed by the Company or any of its Subsidiaries.

(e) No examination or audit or other action of or relating to any Tax Return of
the Company or any Subsidiary by any Governmental Entity is currently in
progress, or either threatened in writing or contemplated in writing. No
deficiencies for Taxes of the Company or any Subsidiary have been claimed,
proposed or assessed by any Governmental Entity. None of the Company or any
Subsidiary has been informed in writing by any jurisdiction in which the Company
or any Subsidiary did not file a Tax Return that the jurisdiction believes that
the Company or Subsidiary was required to file any Tax Return that was not filed
or is subject to Tax in such jurisdiction. None of the Company or any Subsidiary
has (i) waived any statute of limitations with respect to Taxes or agreed to
extend the period for assessment or collection of any Taxes, which waiver or
extension is still in effect, (ii) requested any extension of time within which
to file any Tax Return, which Tax Return has not yet been filed, or
(iii) executed or filed any power of attorney with any taxing authority, which
is still in effect.

(f) None of the Company or any Subsidiary is obligated to make any payment, or
is a party to any agreement, contract, arrangement or plan that could obligate
it to make any payment that may be treated as an “excess parachute payment”
under Section 280G of the Internal Revenue Code (without regard to Sections
280G(b)(4) and 280G(b)(5) of the Internal Revenue Code).

(g) None of the assets of the Company or any Subsidiary is “tax-exempt use
property” within the meaning of Section 168(h) of the Internal Revenue Code or
directly or indirectly secures any debt the interest on which is tax exempt
under Section 103 (a) of the Internal Revenue Code.

(h) None of the Company or any Subsidiary will be required to include any item
of income in, or exclude any item of deduction from, taxable income for any
period (or any portion thereof) ending after the Closing Date as a result of
(i) any adjustments under Section 481 of the Internal Revenue Code (or any
similar adjustments under any provision of the Internal Revenue Code or the
corresponding foreign, state or local Tax Law), (ii) deferred intercompany gain
or any excess loss account described in Treasury Regulations under Section 1502
of the Internal Revenue Code (or any corresponding provision of state, local or
foreign Tax Law), (iii) closing agreement as described in Section 7121 of the
Internal Revenue Code (or any corresponding or similar provision of state, local
or foreign Tax Law) executed on or prior to the Closing Date, (iv) installment
sale or open transaction disposition made on or prior to the Closing Date,
(v) prepaid amount received on or prior to the Closing Date, or (vi) any
election made pursuant to Section 108(i) of the Internal Revenue Code on or
prior to the Closing Date.

 

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(i) None of the Company or any Subsidiary has been a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Internal
Revenue Code during the applicable period specified in Section 897(c)(l)(A)(ii)
of the Internal Revenue Code.

(j) None of the Company or any Subsidiary has distributed to its shareholders or
security holders stock or securities of a controlled corporation, nor has stock
or securities of the Company or any Subsidiary been distributed, in a
transaction to which Section 355 of the Internal Revenue Code applies (i) in the
two years prior to the date of this Agreement or (ii) in a distribution that
could otherwise constitute part of a “plan” or “series of related transactions”
(within the meaning of Section 355(e) of the Internal Revenue Code) that
includes the transactions contemplated by this Agreement.

(k) There are no liens or other encumbrances with respect to Taxes upon any of
the assets or properties of the Company or any Subsidiary, other than with
respect to Taxes not yet due and payable or for which adequate provision has
been made on the books of the Company or any Subsidiary, as applicable.

(l) Section 2.9(l) of the Disclosure Schedule sets forth each jurisdiction
(other than United States federal) in which the Company or any Subsidiary files,
is required to file or has been required to file a Tax Return or is or has been
liable for any Taxes.

(m) None of the Company or any Subsidiary has engaged in a “listed transaction”
as set forth in Treasury Regulation section 301.611 1-2(b)(2) or any analogous
provision of state or local Law. Each of the Company and its Subsidiaries has
disclosed on its federal income Tax Returns all positions taken therein that
could give rise to a substantial understatement of federal income Tax within the
meaning of Section 6662 of the Internal Revenue Code.

(n) None of the Company or any Subsidiary has incurred (or been allocated) an
“overall foreign loss” as defined in Section 904(f)(2) of the Internal Revenue
Code which has not been previously recaptured in full as provided in Sections
904(f)(1) and/or 904(f)(3) of the Internal Revenue Code.

(o) None of the Company or any Subsidiary is a party to a gain recognition
agreement under Section 367 of the Internal Revenue Code.

(p) None of the Subsidiaries has at any time benefited from a forgiveness of
debt or entered into any transaction or arrangement (including conversion of
debt into shares of its share capital) which could have resulted in the
application of Section 80 and following of the Income Tax Act (Canada).

(q) None of the Subsidiaries has at any time entered into any transaction or
arrangement which could result in the application of Section 160 of the Income
Tax Act (Canada) to the Subsidiaries.

(r) Notwithstanding anything to the contrary, none of the Company or any
Subsidiary hereby makes any representations or warranties in respect of (i) the
existence, amount, usability or any other aspect of any Tax attributes,
including net operating losses, capital loss carryforwards, foreign tax credit
carryforwards, asset bases and depreciation periods for Tax periods (or portions
thereof) following the Closing Date or (ii) the liability of the Company or any
Subsidiary for Taxes attributable to tax periods (or portions thereof) following
the Closing Date.

 

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2.10 Assets.

(a) The Company or the applicable Subsidiary has good and valid title to all of
their respective tangible assets reflected on the Most Recent Balance Sheet or
acquired after the Most Recent Balance Sheet (other tangible assets, or
interests in tangible assets, sold or otherwise disposed of since the Most
Recent Balance Sheet Date in the Ordinary Course of Business) free and clear of
all Security Interests, other than Security Interests securing indebtedness that
is reflected on the Most Recent Balance Sheet. Each of the Company and the
Subsidiaries owns or leases all tangible assets sufficient for the conduct of
its businesses as presently conducted and as presently proposed to be conducted.
Each such tangible asset is free from material defects, has been maintained in
accordance with normal industry practice, is in good operating condition and
repair (subject to normal wear and tear) and is suitable for the purposes for
which it presently is used.

(b) Section 2.10(b) of the Disclosure Schedule lists individually (i) all fixed
assets (within the meaning of GAAP) of the Company or the Subsidiaries,
indicating the cost, and amortization schedule (or equivalent thereof) of each
such fixed asset as of the Most Recent Balance Sheet Date, and (ii) all other
assets of a tangible nature (other than inventories) of the Company or the
Subsidiaries whose book value exceeds two thousand five hundred dollars
($2,500).

(c) Each item of equipment, motor vehicle and other asset that the Company or a
Subsidiary has possession of pursuant to a lease agreement or other contractual
arrangement is in such condition that, upon its return to its lessor or owner
under the applicable lease or contract, the obligations of the Company or such
Subsidiary to such lessor or owner will have been discharged in full.

2.11 Real Property.

(a) None of the Company or any Subsidiary owns any Owned Real Property.

(b) Section 2.1 1(b) of the Disclosure Schedule lists all Leases and lists the
term of such Lease, any extension and expansion options, and the rent payable
thereunder. The Company has delivered or made available to the Buyer complete
and accurate copies of the Leases. With respect to each Lease:

(i) such Lease is binding on the Company or the applicable Subsidiary and
enforceable and in full force and effect in accordance with its terms;

(ii) none of the Company or any Subsidiary nor, to the knowledge of the Company,
any other party, is in breach or violation of, or default under, any such Lease,
and no event has occurred, or, to the knowledge of the Company, is threatened or
pending, which, after the giving of notice, with lapse of time, or otherwise,
would constitute a breach or default by the Company or any Subsidiary or, to the
knowledge of the Company, any other party under such Lease;

 

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(iii) to the Company’s knowledge there are no disputes, oral agreements or
forbearance programs in effect as to such Lease;

(iv) none of the Company or any Subsidiary has assigned, transferred, conveyed,
mortgaged, deeded in trust or encumbered any interest in the leasehold or
subleasehold; and

(v) the Company is not aware of any Security Interest, easement, covenant or
other restriction applicable to the real property subject to such Lease which
would reasonably be expected to materially impair the current uses or the
occupancy by the Company or a Subsidiary of the property subject thereto.

2.12 Intellectual Property.

(a) Company Registrations. Section 2.12(a) of the Disclosure Schedule lists all
Company Registrations, in each case enumerating specifically the applicable
filing or registration number, title, jurisdiction in which filing was made or
from which registration issued, date of filing or issuance, names of all current
applicant(s) and registered owners(s), as applicable. All assignments of Company
Registrations to the Company or any Subsidiary have been properly executed and
recorded. To the knowledge of the Company, all Company Registrations are valid
and enforceable and all issuance, renewal, maintenance and other payments that
are or have become due with respect thereto have been timely paid by or on
behalf of the Company.

(b) Prosecution Matters. There are no inventorship challenges, opposition or
nullity proceedings or interferences declared, commenced or provoked, or to the
knowledge of the Company threatened, with respect to any Patent Rights included
in the Company Registrations. The Company and the Subsidiaries have complied
with their duty of candor and disclosure to the United States Patent and
Trademark Office and any relevant foreign patent office with respect to all
patent and trademark applications filed by or on behalf of the Company or any
Subsidiary and have made no material misrepresentation in such applications. The
Company has no knowledge of any information that would preclude the Company or
any Subsidiary from having clear title to the Company Registrations or affecting
the patentability or enforceability of any Company Registrations.

(c) Ownership; Sufficiency. Each item of Company Intellectual Property will be
owned or available for use by the Buyer, the Surviving Corporation and their
respective subsidiaries immediately following the Closing on substantially
identical terms and conditions as it was immediately prior to the Closing. The
Company or a Subsidiary is the sole and exclusive owner of all Company Owned
Intellectual Property, free and clear of any Security Interests and all joint
owners of the Company Owned Intellectual Property are listed in Section 2.12(c)
of the Disclosure Schedule. The Company Intellectual Property constitutes all
Intellectual Property necessary (i) to Exploit the Customer Offerings in the
manner conducted currently and currently contemplated by the Company and the
Subsidiaries to be conducted in the future by the Company and the Subsidiaries,
(ii) to Exploit the Internal Systems as they are currently used and

 

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currently contemplated to be used in the future by the Company and the
Subsidiaries, and (iii) otherwise to conduct the Company’s business in all
material respects in the manner currently conducted and currently contemplated
by the Company and the Subsidiaries to be conducted in the future.

(d) Protection Measures. The Company or the appropriate Subsidiary has taken
reasonable measures to protect the proprietary nature of each item of Company
Owned Intellectual Property, and to maintain in confidence all trade secrets and
confidential information comprising a part thereof. No complaint relating to an
improper use or disclosure of, or a breach in the security of, any such
information has been made or, to the knowledge of the Company, threatened
against the Company or any Subsidiary. To the knowledge of the Company, there
has been no: (i) unauthorized disclosure of any third party proprietary or
confidential information in the possession, custody or control of the Company or
any Subsidiary or (ii) breach of the Company’s or any Subsidiary’s security
procedures wherein confidential information has been disclosed to a third party.
The Company takes, and has consistently taken during the three (3) years
preceding the Closing, commercially reasonable measures to actively police the
quality of all goods and services sold, distributed or marketed under each of
its Trademarks and has taken commercially reasonable measures to ensure that no
Trademarks that it has licensed to others shall be deemed to be abandoned.

(e) Infringement by Company. To the knowledge of the Company, none of the
Customer Offerings, or the past, current or contemplated Exploitation thereof by
the Company or the Subsidiaries or the past, current or contemplated
Exploitation thereof by any reseller, distributor, customer or user thereof as
permitted by the Company or any of the Subsidiaries, or any other activity of
the Company or any of the Subsidiaries, infringes or violates, or constitutes a
misappropriation of or otherwise adverse act against, any Intellectual Property
rights of any third party. To the knowledge of the Company, none of the Internal
Systems that constitute Company Owned Intellectual Property, or the Company’s or
any Subsidiary’s past, current or currently contemplated Exploitation thereof,
or any other activity undertaken by them in connection with their respective
businesses (and any past, current or currently contemplated Exploitation
thereof), or any activity undertaken by the Company or any Subsidiary in
connection with their respective businesses, infringes or violates, or
constitutes a misappropriation of, any Intellectual Property rights of any third
party. There is no written complaint, claim or notice, or threat of any of the
foregoing (including any notification that a license under any patent is or may
be required), received by the Company or any Subsidiary alleging any such
infringement, violation or misappropriation and any written request or demand
for indemnification or defense received by the Company or any Subsidiary from
any reseller, distributor, customer, user or any other third party; and the
Company has provided to the Buyer copies of all such complaints, claims,
notices, requests, demands or threats, as well as any legal opinions, studies,
market surveys and analyses relating to any alleged or potential infringement,
violation or misappropriation.

(f) Infringement of Company Rights. To the knowledge of the Company and the
Subsidiaries, no Person (including, without limitation, any current or former
employee or consultant of Company or any of its Subsidiaries) is infringing,
violating or misappropriating any of the Company Owned Intellectual Property or
any Company Licensed Intellectual Property which is exclusively licensed to the
Company or any Subsidiary. The Company has provided to the Buyer copies of all
correspondence, analyses, legal opinions, complaints, claims, notices or threats
concerning the infringement, violation or misappropriation of any Company Owned
Intellectual Property.

 

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(g) Outbound IP Agreements. Section 2.12(g) of the Disclosure Schedule
identifies each license, covenant or other agreement pursuant to which the
Company or a Subsidiary has assigned, transferred, licensed, distributed or
otherwise granted any right or access to any Person, or covenanted not to assert
any right, with respect to any past, existing or future Company Intellectual
Property. None of the Company or any Subsidiary has agreed to indemnify any
Person against any infringement, violation or misappropriation of any
Intellectual Property rights with respect to any Customer Offerings or any third
party Intellectual Property rights. Except as set forth in Section 2.12(g) of
the Disclosure Schedule, none of the Company or any Subsidiary is a member of or
party to any patent pool, industry standards body, trade association or other
organization pursuant to the rules of which it is obligated to license any
existing or future Intellectual Property to any Person.

(h) Inbound IP Agreements. Section 2.12(h) of the Disclosure Schedule identifies
(i) each item of Company Licensed Intellectual Property and the license or
agreement pursuant to which the Company or a Subsidiary Exploits it (excluding
generally available, off the shelf software programs that are part of the
Internal Systems and are licensed by the Company pursuant to “shrink wrap”
licenses, the total fees associated with which are less than $2,500) and
(ii) each agreement, contract, assignment or other instrument pursuant to which
the Company or any Subsidiary has obtained any joint or sole ownership interest
in or to each item of Company Owned Intellectual Property. None of the Customer
Offerings or Internal Systems includes “shareware,” “freeware” or other Software
or other material that was obtained by the Company from third parties other than
as listed in Section 2.12(h) of the Disclosure Schedule.

(i) No Software. The Company has not developed any and does not own any Software
that is included in the Customer Offerings or Internal Systems or is otherwise
necessary to conduct the Company’s business in all material respects in the
manner currently conducted and currently contemplated by the Company and the
Subsidiaries to be conducted in the future.

(j) Authorship. All of the Documentation comprising, incorporated in or bundled
with the Customer Offerings or Internal Systems that constitute Company Owned
Intellectual Property have been designed and authored by regular employees of
the Company or a Subsidiary within the scope of their employment or by
independent contractors of the Company or a Subsidiary who have executed valid
and binding agreements expressly assigning all right, title and interest in such
copyrightable materials to the Company or a Subsidiary, waiving their
non-assignable rights (including moral rights) in favor of the Company or a
Subsidiary and its permitted assigns and licensees, and have no residual claim
to such materials.

(k) Employee and Contractor Assignments. Each employee of the Company or any
Subsidiary and each independent contractor of the Company or any Subsidiary has
executed a valid and binding written agreement expressly assigning to the
Company or a Subsidiary all right, title and interest in any inventions and
works of authorship, whether or not patentable, invented, created, developed,
conceived and/or reduced to practice during the term of such employee’s
employment or such independent contractor’s work for the Company or the relevant
Subsidiary, and all Intellectual Property rights therein, and has waived all
moral rights therein to the extent legally permissible.

 

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(l) Quality. The Customer Offerings and the Internal Systems are free from
significant defects in design, workmanship and materials and conform in all
material respects to the written Documentation and specifications therefor. To
the knowledge of the Company, the Customer Offerings and the Internal Systems do
not contain any disabling device, virus, worm, back door, Trojan horse or other
disruptive or malicious code that may or are intended to impair their intended
performance or otherwise permit unauthorized access to, hamper, delete or damage
any computer system, software, network or data. None of the Company or any
Subsidiary has received any warranty claims, contractual terminations or
requests for settlement or refund due to the failure of the Customer Offerings
to meet their specifications or otherwise to satisfy end user needs or for harm
or damage to any third party.

(m) Support and Funding. Section 2.12(m) of the Disclosure Schedule lists all
instances in which the Company or any Subsidiary has sought, applied for or
received any support, funding, resources or assistance from any federal, state,
local or foreign governmental or quasi-governmental agency or funding source in
connection with the Exploitation of the Customer Offerings, the Internal Systems
or any facilities or equipment used in connection therewith.

2.13 Inventory. All inventory of the Company and the Subsidiaries, whether or
not reflected on the Most Recent Balance Sheet, consists of a quality and
quantity usable in the Ordinary Course of Business. All inventories not
written-off have been priced at the lower of cost or market on a first-in,
first-out basis. The quantities of each type of inventory, whether raw
materials, work-in-process or finished goods, are not excessive in the present
circumstances of the Company and the Subsidiaries.

2.14 Contracts.

(a) Section 2.14 of the Disclosure Schedule lists the following agreements
(written or oral) currently in effect (either in whole or in part, including
agreements with ongoing post-termination “tails” and ongoing post-termination
obligations) to which the Company or any Subsidiary is a party:

(i) any agreement (or group of related agreements) for the lease of real
property (regardless of amount or term), or for the lease of personal property
from or to third parties providing for lease payments in excess of fifty
thousand dollars ($50,000) per annum or having a remaining term longer than six
(6) months;

(ii) any agreement (or group of related agreements) for the purchase or sale of
products or for the furnishing or receipt of services (A) which calls for
performance over a period of more than one year, (B) which involves more than
the sum of fifty thousand dollars ($50,000), or (C) in which the Company or any
Subsidiary has granted manufacturing rights, “most favored nation” pricing
provisions or marketing or distribution rights relating to any products or
territory or has agreed to purchase a minimum quantity of goods or services or
has agreed to purchase goods or services exclusively from a certain party;

 

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(iii) any agreement concerning the establishment or operation of a partnership,
joint venture or limited liability company;

(iv) any agreement (or group of related agreements) under which it has created,
incurred, assumed or guaranteed (or may reasonably be expected to create, incur,
assume or guarantee) indebtedness (including capitalized lease obligations)
involving more than fifty thousand dollars ($50,000) or under which it has
imposed (or may impose) a Security Interest on any of its assets, tangible or
intangible;

(v) any agreement for the disposition of any significant portion of the assets
or business of the Company or any Subsidiary (other than sales of products in
the Ordinary Course of Business) or any agreement for the acquisition of the
assets or business of any other entity (other than purchases of inventory or
components in the Ordinary Course of Business);

(vi) any agreement under which the Company or any Subsidiary has, or may
reasonably be expected to have, any liability to an employee or consultant for
pay or benefits after the ending of the business relationship with such employee
or consultant;

(vii) any agreement involving any officer, director or stockholder of the
Company or a Subsidiary under which the Company or any Affiliate has or may
reasonably be expected to have any liability or obligation;

(viii) any agreement under which the consequences of a default or termination
would reasonably be expected to, be material to the Company and the
Subsidiaries, taken as a whole;

(ix) any agreement which contains any provisions requiring the Company or any
Subsidiary to indemnify any other party (excluding indemnities contained in
agreements for the purchase, sale or license of products entered into in the
Ordinary Course of Business);

(x) any agreement that purports on its face to bind any Affiliate of the Company
or any Subsidiary (other than the Company or any Subsidiary) in any way,
including, but not limited to, prohibiting such Affiliate from engaging in any
business that they would otherwise have been permitted to engage in.

(xi) any agreement under which the Company or any Subsidiary is restricted or
prohibited from selling, licensing or otherwise distributing any of its
technology or products, or providing services to, customers or potential
customers or any class of customers, or otherwise engaging in a material aspect
of the Company’s business in any geographic area, during any period of time or
with any Person, or any segment of the market or line of business;

(xii) any agreement which would entitle any third party to receive a license or
any other right to intellectual property of the Buyer or any of the Buyer’s
Affiliates following the Closing; and

(xiii) any other agreement (or group of related agreements) either involving
more than fifty thousand dollars ($50,000) or not entered into in the Ordinary
Course of Business.

 

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(b) The Company has delivered or made available to the Buyer a complete and
accurate copy of each agreement listed in Section 2.12 or Section 2.14 of the
Disclosure Schedule. The Company has also delivered or made available to the
Buyer a complete and accurate list of the offerees who are signatories to the
Company’s standard form of offer letter since January 1, 2009, and a copy of
such standard form of offer letter has heretofore been provided or made
available to the Buyer. With respect to each agreement so listed: (i) the
agreement is binding against the Company or the applicable Subsidiary and to the
knowledge of the Company, enforceable and in full force and effect subject to
the Bankruptcy and Equity Exception and (ii) none of the Company or any
Subsidiary nor, to the knowledge of the Company, any other party, is in breach
or violation of, or default under, any such agreement, and no event has occurred
or, to the knowledge of the Company, is threatened, which, after the giving of
notice, with lapse of time, or otherwise, would constitute a breach or default
by the Company or any Subsidiary or, to the knowledge of the Company, any other
party under such agreement.

2.15 Accounts Receivable. A complete and accurate list of the accounts
receivable reflected on the Most Recent Balance Sheet, showing the aging
thereof, is included in Section 2.15 of the Disclosure Schedule. None of the
Company or any Subsidiary has received any written notice from an account debtor
stating that any account receivable in an amount in excess of fifty thousand
dollars ($50,000) is subject to any contest, claim or setoff by such account
debtor.

2.16 Insurance. Section 2.16 of the Disclosure Schedule lists each insurance
policy (including fire, theft, casualty, comprehensive general liability,
workers compensation, business interruption, environmental, product liability
and automobile insurance policies and bond and surety arrangements) to which the
Company or any Subsidiary is a party, all of which, to the knowledge of the
Company, are in full force and effect. There is no material claim pending under
any such policy as to which coverage has been questioned, denied or disputed by
the underwriter of such policy. All premiums due and payable under all such
policies have been paid, none of the Company or any Subsidiary may be liable for
retroactive premiums or similar payments, and the Company and the Subsidiaries
are otherwise in compliance in all material respects with the terms of such
policies. The Company has no knowledge of any threatened termination of, or
premium increase with respect to, any such policy.

2.17 Litigation. There is no Legal Proceeding which is pending or has been
threatened in writing against the Company or any Subsidiary which (a) involves a
criminal, quasi-criminal or regulatory matter, or (b) seeks either damages in
excess of twenty-five thousand dollars ($25,000) or equitable relief (regardless
of amount) or (c) in any manner challenges or seeks to prevent, enjoin, alter or
delay the transactions contemplated by this Agreement or (d) has had or, if
determined adversely to the Company, would reasonably be expected to result in,
a Company Material Adverse Effect. There are no judgments, orders or decrees
outstanding against the Company or any Subsidiary.

 

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2.18 Warranties. No product or service manufactured, sold, leased, licensed or
delivered by the Company or any Subsidiary is subject to any guaranty, warranty,
right of return, right of credit or other indemnity other than (i) the
applicable standard terms and conditions of sale or lease of the Company or the
appropriate Subsidiary, which are set forth in Section 2.18 of the Disclosure
Schedule, (ii) manufacturers’ warranties for which none of the Company or any
Subsidiary has any liability and (iii) those imposed under Law. Section 2.18 of
the Disclosure Schedule sets forth the aggregate expenses incurred by the
Company and the Subsidiaries in fulfilling their obligations under their
guaranty, warranty, right of return and indemnity provisions during each of the
fiscal years and the interim period covered by the Financial Statements; and to
the knowledge of the Company, there is no reason why such expenses should
significantly increase as a percentage of sales in the future.

2.19 Employees.

(a) Section 2.19(a) of the Disclosure Schedule contains a list of all employees
of the Company and each of the Subsidiaries, along with the position and the
annual rate of salary of each such employee, whether such employee is full time
or part time, on leave and if so, the type of leave and expected date of return,
and any incentive payment paid or payable for 2010 (and whether such incentive
is cash or, if not, what other property is due). None of the Company or any
Subsidiary is delinquent in payments to any employees for wages, salaries,
commissions or bonuses for services performed as of the date hereof or amounts
required by applicable law to be reimbursed to such employees. The Company and
the Subsidiaries are, and at all times within applicable statutes of limitations
have been, in material compliance with all applicable Laws respecting labor,
employment, hiring and termination, fair employment practices, terms and
conditions of employment, occupational health and safety and wage and hour Laws.
The Company and the Subsidiaries are, and at all times have been, in material
compliance with the requirements of the Immigration Reform and Control Act of
1986. Except as set forth in Section 2.19(a) of the Disclosure Schedule, each
current employee of the Company or any Subsidiary has entered into a
confidentiality/assignment of inventions agreement with the Company or such
Subsidiary, a copy or form of which has previously been delivered to the Buyer.
Except as set forth in Section 2.19(a) of the Disclosure Schedule, no current
employee of the Company or any Subsidiary has excluded works or inventions from
his or her assignment of inventions pursuant to such current employee’s
confidentiality/assignment of inventions agreement with the Company or any
Subsidiary. Each former employee of the Company or any Subsidiary has entered
into a confidentiality/assignment of inventions agreement with the Company or
such Subsidiary, and has not excluded works or inventions from his or her
assignment of inventions pursuant to such former employee’s
confidentiality/assignment of inventions agreement with the Company or any
Subsidiary, except in each case in this sentence as has not, since the execution
and delivery of this Agreement, been, and would not reasonably be expected to
be, material to the Company and the Subsidiaries, taken as a whole.
Section 2.19(a) of the Disclosure Schedule contains a list of all employees of
the Company or any Subsidiary who are a party to a non-competition agreement
with the Company or any Subsidiary; copies of such agreements have previously
been delivered, or made available, to the Buyer. Section 2.19(a) of the
Disclosure Schedule contains a list of all employees of the Company or any
Subsidiary who are not citizens or lawful permanent residents of the
jurisdiction in which they are working, and for each, the basis of his or her
employment authorization in such jurisdiction and the expiration of such
authorization. To the knowledge of the Company, no Key Employee (as defined in
Section 4.9) or group of employees has any plans to terminate employment with
the Company or any Subsidiary.

 

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(b) None of the Company or any Subsidiary is a party to or bound by any
collective bargaining agreement, nor has any of them experienced any strikes,
grievances, claims of unfair labor practices or other collective bargaining
disputes. The Company has no knowledge of any organizational effort made or
threatened, either currently or within the past two years, by or on behalf of
any labor union with respect to employees of the Company or any Subsidiary.

(c) The payments set forth in Section 2.19 (c) of the Disclosure Schedule are
the only severance, stay bonuses or other bonuses or similar benefits, in each
case, with respect to the transactions contemplated hereby, owed by the Company
and the Subsidiaries to the executives named therein and that those executives
are entitled to receive pursuant to any contract or under applicable law.

2.20 Employee Benefits.

(a) Section 2.20(a) of the Disclosure Schedule contains a complete and accurate
list of all Company Plans. Complete and accurate copies of (i) all Company Plans
which have been reduced to writing, (ii) written summaries of all unwritten
Company Plans, (iii) all related trust agreements, insurance contracts and
summary plan descriptions, (iv) all annual reports filed on IRS Form 5500, 5500C
or 5500R and (for all funded plans) all plan financial statements (and any
related actuarial statements) for the last two plan years for each Company Plan,
(v) all material reports or notices with respect to any Company Plan prepared or
issued since January 1, 2009 by any governmental agencies, third-party
administrators, actuaries, investment managers, consultants or other independent
contractors (other than individual account records or participant statements),
and (vi) any employee manuals or handbooks containing personnel or employee
relations policies, have been made available.

(b) Each Company Plan, if applicable, has been administered in all material
respects in accordance with its terms and each of the Company, the Subsidiaries
and the ERISA Affiliates has in all material respects met its obligations with
respect to each Company Plan and has timely made all required contributions
thereto. The Company, each Subsidiary, each ERISA Affiliate and each Company
Plan are in compliance in all material respects with the applicable provisions
of ERISA and the Internal Revenue Code and the regulations thereunder (including
Section 4980 B of the Internal Revenue Code, Subtitle K, Chapter 100 of the
Internal Revenue Code and Sections 601 through 608 and Section 701 et seq. of
ERISA) and the applicable provisions of Patient Protection and Affordable Care
Act. All filings and reports as to each Company Plan required to have been
submitted to the Internal Revenue Service or to the United States Department of
Labor have been duly and timely submitted. No Company Plan has assets that
include securities issued by the Company or any ERISA Affiliate.

(c) There are no Legal Proceedings (except claims for benefits payable in the
normal operation of the Company Plans and proceedings with respect to qualified
domestic relations orders) against or involving any Company Plan or asserting
any rights or claims to benefits under any Company Plan that could give rise to
any material liability nor is there, to the Knowledge of the Company, any basis
for such claims that would be reasonably expected to result in or give rise to
any material liability. The Company has received no written notice of any audit
or examination of any Company Plan by any governmental agency (including the IRS
or the US Department of Labor).

 

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(d) All the Company Plans that are intended to be qualified under Section 401
(a) of the Internal Revenue Code have received determination or opinion letters
from the Internal Revenue Service to the effect that such Company Plans are
qualified and the plans and the trusts related thereto are exempt from federal
income taxes under Sections 401 (a) and 501 (a), respectively, of the Internal
Revenue Code, no such determination or opinion letter has been revoked and to
the knowledge of the Company revocation has not been threatened, and no such
Company Plan has been amended since the date of its most recent determination or
opinion letter or application therefor in any respect, and to the Company’s
knowledge, no act or omission has occurred, that would adversely affect its
qualification or materially increase its cost. All the Company Plans that are
intended to be registered pursuant to the Income Tax Act (Canada) have been so
registered by the Canada Revenue Agency.

(e) None of the Company or any Subsidiary, nor any ERISA Affiliate has ever
maintained an Employee Benefit Plan subject to Section 412 of the Internal
Revenue Code or Title IV of ERISA, or maintained any pension or retirement plan
that is subject to federal or provincial Canadian pension legislation.

(f) At no time has the Company, any Subsidiary or any ERISA Affiliate been
obligated to contribute to any “multi employer plan” (as defined in
Section 4001(a)(3) of ERISA or as defined in any Canadian federal or provincial
pension legislation).

(g) Except as set forth in Section 2.20(g) of the Disclosure Schedule, there are
no unfunded obligations under any Company Plan providing benefits after
termination of employment to any employee of the Company or any Subsidiary (or
to any beneficiary of any such employee), including but not limited to retiree
health coverage and deferred compensation, but excluding continuation of health
coverage required to be continued under Section 4980B of the Internal Revenue
Code or other applicable law and insurance conversion privileges under state
law.

(h) No act or omission has occurred and no condition exists with respect to any
Company Plan that would subject the Company, any Subsidiary or any ERISA
Affiliate to (i) any material fine, penalty, tax or liability of any kind
imposed under ERISA or the Internal Revenue Code or (ii) any material
contractual indemnification or contribution obligation protecting any fiduciary,
insurer or service provider with respect to any Company Plan.

(i) No Company Plan is funded by, associated with or related to a “voluntary
employee’s beneficiary association” within the meaning of Section 501(c)(9) of
the Internal Revenue Code.

(j) Except as disclosed in Section 2.20(j) of the Disclosure Schedule, each
Company Plan is amendable and terminable unilaterally by the Company at any time
without liability or expense to the Company or such Company Plan as a result
thereof (other than for benefits accrued through the date of termination or
amendment and reasonable administrative expenses related thereto) and no Company
Plan, plan documentation or agreement, summary

 

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plan description or other written communication distributed generally to
employees by its terms prohibits or limits the Company from amending or
terminating any such Company Plan. The investment vehicles used to fund the
Company Plans my be changed at any time without incurring a sales charge,
surrender fee or other similar expense.

(k) Section 2.20(k) of the Disclosure Schedule discloses each: (i) agreement
with any stockholder, director, executive officer or other key employee of the
Company or any Subsidiary (A) the benefits of which are contingent, or the terms
of which are altered, upon the occurrence of a transaction involving the Company
or any Subsidiary of the nature of any of the transactions contemplated by this
Agreement, (B) providing any term of employment or compensation guarantee or
(C) providing severance benefits or other benefits after the termination of
employment of such director, executive officer or key employee; (ii) agreement,
plan or arrangement under which any Person may receive payments from the Company
or any Subsidiary that may be subject to the tax imposed by Section 4999 of the
Internal Revenue Code or included in the determination of any such Person’s
“parachute payment” under Section 280G of the Internal Revenue Code; and
(iii) agreement or plan binding the Company or any Subsidiary, including any
stock option plan, stock appreciation right plan, restricted stock plan, stock
purchase plan, severance benefit, retention or incentive plan or other Company
Plan, any of the benefits of which will be increased, funded, “grossed-up”, or
the vesting of the benefits of which will be accelerated, or under which any
obligation will be forgiven by the occurrence of any of the transactions
contemplated by this Agreement (or in combination with any other event such as
employment termination) or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement.

(l) Section 2.20(l) of the Disclosure Schedule sets forth the policy of the
Company and any Subsidiary with respect to accrued vacation, accrued sick time
and earned time off and the amount of such liabilities as of May 16, 2011.

(m) Each Company Plan that is a “nonqualified deferred compensation plan” (as
defined in Internal Revenue Code Section 409A(d)(1)) has been operated since
January 1, 2005 in reasonable good faith compliance with then applicable
guidance under Internal Revenue Code Section 409A and has been in documentary
compliance since January 1, 2009.

(n) None of the Company or any Subsidiary has direct or indirect material
liability with respect to any misclassification of any Person as an independent
contractor or consultant rather than as an “employee.”

2.21 Environmental Matters.

(a) Each of the Company and the Subsidiaries has complied in all material
respects with all applicable Environmental Laws. There is no pending or, to the
knowledge of the Company, threatened civil or criminal litigation, written
notice of violation, formal administrative proceeding, or investigation, inquiry
or information request relating to any Environmental Law involving the Company
or any Subsidiary.

(b) None of the Company or any Subsidiary has any liabilities or obligations
arising from the release or threatened release by the Company or any Subsidiary
of any Materials of Environmental Concern into the environment.

 

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(c) None of the Company or any Subsidiary is a party to or bound by any court
order, administrative order, consent order or other agreement entered into in
connection with any legal obligation or liability arising under any
Environmental Law.

(d) Set forth in Section 2.2 1(d) of the Disclosure Schedule is a list of all
documents (whether in hard copy or electronic form) that contain any
environmental reports, investigations and audits relating to premises currently
or previously owned or operated by the Company or a Subsidiary (whether
conducted by or on behalf of the Company or a Subsidiary or a third party, and
whether done at the initiative of the Company or a Subsidiary or directed by a
Governmental Entity or other third party) which the Company has possession of,
access to or which is known by the Company to exist. A complete and accurate
copy of each such document which the Company has possession of or access to has
been provided or made available to the Buyer.

(e) The Company is not aware of any material environmental liability arising
from any solid or hazardous waste transporter or treatment, storage or disposal
facility that has been used by the Company or any Subsidiary.

2.22 Legal Compliance.

(a) Each of the Company and each Subsidiary has complied in all material
respects with each Law applicable to its respective businesses, and none of the
Company or any Subsidiary has received any written notice or written
communication from any Governmental Entity alleging noncompliance with any
applicable Law.

(b) Without limiting the generality of Section 2.22(a), the Company and the
Subsidiaries have conducted their respective businesses in compliance in all
material respects with all Export Control Laws. “Export Control Laws” shall mean
any Laws which provide standards for determining whether goods, services or
information (“Covered Items”) may be provided outside of the country of origin
of the Covered Items or to Persons within the country of origin who may not be
citizens of the country of origin. Information includes all technical data and
other data as may be defined in such Laws. Export Control Laws shall include,
but not be limited to, the export Laws of the United States, including the
Export Administration Regulations, the International Traffic in Arms
Regulations, the embargo regulations administered by the United States
Department of Treasury and their enabling Laws, any United States Government
issued lists of regulated recipients, and any regulations of other United States
Government executive agencies, and shall also include standards of any
international organization or agreement of which the United States is a member,
participant or signatory. Set forth in Section 2.22(b) of the Disclosure
Schedule is a list of the ECCN’s for all products of the Company and the
Subsidiaries exported by the Company or any of the Subsidiaries from the United
States to the People’s Republic of China. There are no pending or, to the
knowledge of the Company, threatened claims, charges, investigations,
violations, settlements, civil or criminal enforcement actions, lawsuits or
other actions against the Company or any Subsidiary with respect to any Export
Control Laws.

(c) Without limiting the generality of Section 2.22(a), the Company and the
Subsidiaries have conducted their respective businesses in compliance in all
material respects with all Import Control Laws. “Import Control Laws” shall mean
any Laws, economic sanctions

 

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or embargoes which provide standards for determining whether Covered Items may
be brought into a country where the Company or any of its Subsidiaries conducts
business, which is not the country of origin of such Covered Items, from a
foreign or external country. Information includes all technical data and other
data as may be defined in such Laws. Import Control Laws shall include, but not
be limited to the import Laws, economic sanctions and embargoes of the United
States, Canada and the United Kingdom, Directive 2002/95/EC of the European
Parliament and of the Council of 27 January 2003 on the restriction of the use
of certain hazardous substances in electrical and electronic equipment, as
amended to date, and Directive 2002/96/EC of the European Parliament and of the
Council of 27 January 2003 on waste electrical and electronic equipment. There
are no pending or, to the knowledge of the Company, threatened claims, charges,
investigations, violations, settlements, civil or criminal enforcement actions,
lawsuits or other actions against the Company or any Company Subsidiary with
respect to any Import Control Laws.

(d) Without limiting the generality of Section 2.22(a), the products
manufactured by or on behalf of the Company and its Subsidiaries and the
manufacturing processes of any Person that manufactures products on behalf of
the Company and its Subsidiaries comply in all material respects with all
applicable industry standards or operational protocols published or promulgated
by any industry self-regulatory organization or other non- Governmental Entity
industry regulatory body or any organization or group that establishes
industry-wide best practices or operating standards that are generally accepted
or widely adopted, including, but not limited to all applicable international
standards promulgated by the International Organization for Standardization, all
applicable wireless communications protocols, cellular standards and
international standards established by the Institute for Electrical and
Electronics Engineers (“IEEE”) (including IEEE Standard 802.11, IEEE Standard
802.15.1, IEEE Standard 802.15.4 and IEEE Standard 802.16).

2.23 Customers and Suppliers. Section 2.23 of the Disclosure Schedule sets forth
a list of (a) each customer that accounted for more than one percent (1%) of the
consolidated revenues of the Company during the last full fiscal year or the
interim period through the Most Recent Balance Sheet Date and the amount of
revenues accounted for by such customer during each such period and (b) each
supplier that was the sole supplier of any significant product or service to the
Company or a Subsidiary during the last full fiscal year or the interim period
through the Most Recent Balance Sheet Date.

2.24 Permits. There are no material Permits that are required for the Company
and the Subsidiaries to conduct their respective businesses as presently
conducted or as proposed to be conducted by the Company and the Subsidiaries as
of the date hereof. Each such Permit is in full force and effect; the Company or
the applicable Subsidiary is in material compliance with the terms of each such
Permit; and, to the knowledge of the Company, no suspension or cancellation of
such Permit is threatened.

2.25 Certain Business Relationships With Affiliates. No Affiliate of the Company
or of any Subsidiary (a) owns any property, tangible or intangible, which is
used in the business of the Company or any Subsidiary, (b) to the Company’s
knowledge, has any claim or cause of action against the Company or any
Subsidiary arising from commercial transactions or relationships with the
Company or a Subsidiary, or (c) owes any money to, or is owed any money by, the

 

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Company or any Subsidiary. Section 2.25 of the Disclosure Schedule describes
material commercial transactions or relationships between the Company or a
Subsidiary and any Affiliate thereof which occurred or have existed since the
beginning of the time period covered by the Financial Statements.

2.26 Brokers’ Fees. Other than the fees owed by the Company to Deutsche Bank
Securities (“DB”) and Barclays Capital (“BC”) (which shall be included in the
definition of Transaction Expenses), none of the Company or any Subsidiary has
any liability or obligation to pay any fees or commissions to any broker, finder
or agent with respect to the transactions contemplated by this Agreement. Except
for the Contingent Banking Fees, as of the Effective Time, none of the Company
or any Subsidiary owes any fees or expenses for legal, accounting, consulting,
investment banking, financial advisory, brokerage, or other similar professional
services.

2.27 Books and Records. The minute books and other similar records of the
Company and each Subsidiary contain records that accurately reflect in all
material respects the actions taken at any meetings of the Company’s or such
Subsidiary’s stockholders, Board of Directors or any committee thereof and of
all written consents executed in lieu of the holding of any such meeting. The
books and records of the Company and each Subsidiary accurately reflect in all
material respects the assets, liabilities, business, financial condition and
results of operations of the Company or such Subsidiary and have been maintained
in accordance with good business and bookkeeping practices. Section 2.27 of the
Disclosure Schedule contains a list of all bank accounts and safe deposit boxes
of the Company and the Subsidiaries and the names of Persons having signature
authority with respect thereto or access thereto.

2.28 Controls and Procedures. The Company and each of the Subsidiaries maintains
books and records that accurately reflect, in all material respects, its assets
and liabilities and maintains proper and adequate internal control over
financial reporting which provide assurance that (i) applicable transactions are
executed with management’s authorization, (ii) transactions are recorded as
necessary to permit preparation of the consolidated financial statements of the
Company and to maintain accountability for the Company’s consolidated assets,
(iii) access to assets of the Company and the Subsidiaries is permitted only in
accordance with management’s authorization, (iv) the reporting of assets of the
Company and the Subsidiaries is compared with existing assets at regular
intervals and (v) accounts, notes and other receivables and inventory were
recorded accurately, and proper and adequate procedures are implemented to
effect the collection thereof on a current and timely basis.

2.29 Government Contracts.

(a) None of the Company or any Subsidiary has been suspended or debarred from
bidding on contracts or subcontracts with any Governmental Entity; no such
suspension or debarment, to the knowledge of the Company, has been threatened or
initiated; and the consummation of the transactions contemplated by this
Agreement will not result in any such suspension or debarment of the Company,
any Subsidiary or the Buyer (assuming that no such suspension or debarment will
result solely from the identity of the Buyer). None of the Company or any
Subsidiary has been or is now being audited or investigated by or on behalf of
any

 

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Governmental Entity in respect of contracts or subcontracts with any Government
Entity, including without limitation, the United States Government Accounting
Office, the United States Department of Defense or any of its agencies, the
Defense Contract Audit Agency, the contracting or auditing function (either
internal or external) of any Governmental Entity with which it is contracting,
the United States Department of Justice, the Inspector General of the United
States Governmental Entity, or any prime contractor with a Governmental Entity;
nor, to the knowledge of the Company, has any such audit or investigation been
threatened. To the knowledge of the Company, there is no (i) suspension or
debarment of the Company or any Subsidiary from bidding on contracts or
subcontracts with any Governmental Entity or (ii) claim (including any claim for
return of funds to the Government) pursuant to an audit or investigation by any
of the entities named in the foregoing sentence. The Company has no agreements,
contracts or commitments which require it to obtain or maintain a security
clearance with any Governmental Entity.

(b) To the knowledge of the Company, with respect to any of its contracts or
subcontracts with any Governmental Entity there is no (i) Termination for
Default (as provided in 48 C.F.R. Ch.1 §52.249-8, 52.249-9 or similar sections
or contractual or legislative provisions in respect of contracts with any
Canadian or other foreign Governmental Entity), (ii) Termination for Convenience
(as provided in 48 C.F.R. Ch.1 §52.241-1, 52.249-2 or similar sections or
contractual or legislative provisions in respect of contracts with any Canadian
or other foreign Governmental Entity), or a Stop Work Order (as provided in 48
C.F.R. Ch.1 §52.212-13 or similar sections); and the Company has no reason to
believe that funding may not be provided under any contract or subcontract with
any Governmental Entity in the upcoming federal fiscal year.

2.30 Canadian Government Grants. Section 2.30 of the Disclosure Schedule
provides a complete list of all pending and outstanding grants, incentives,
qualifications and subsidies (collectively, “Grants”) from the Government of the
Canada or any agency thereof, or from any other Governmental Entity, granted to
the Company or its Subsidiaries along with the aggregate amounts of each Grant
and the aggregate outstanding obligations thereunder of the Company or any
Subsidiary. The Company has delivered or made available to the Buyer accurate
and complete copies of all documents requesting or evidencing Grants or
amendments thereto submitted by the Company or any of its Subsidiaries and of
all letters of approval, and supplements or amendments thereto, granted to the
Company or any of its Subsidiaries. The Company and its Subsidiaries are in
material compliance with all of the terms, conditions and requirements of their
respective Grants and have duly fulfilled all of the undertakings relating
thereto. Except as set forth in Section 2.30 of the Disclosure Schedule, to the
knowledge of the Company, no Governmental Entity has any intention to revoke or
materially modify any of the Grants. Neither the execution, delivery or
performance of this Agreement, nor the consummation of the Merger or any of the
other transactions contemplated hereunder, would reasonably be expected to (with
or without notice or lapse of time) give rise to any right to revoke, withdraw,
suspend, cancel, terminate or modify any Grant identified or required to be
identified in Section 2.30 of the Disclosure Schedule.

2.31 Investment Canada Act. Neither the Company nor any Subsidiary provides any
of the services, or engages in any of the activities, of a “cultural business”
within the meaning of the Investment Canada Act.

 

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2.32 Disclosure. No representation or warranty by the Company contained in this
Agreement, and no statement contained in the Disclosure Schedule, contains any
untrue statement of a material fact or omits to state any material fact
necessary, in light of the circumstances under which it was or will be made, in
order to make the statements herein or therein, when read together in their
entirety, not misleading.

2.33 Disclaimer of Other Representations.

(a) THE COMPANY HAS NOT MADE ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR
IMPLIED, OF ANY NATURE WHATSOEVER, RELATING TO THE COMPANY OR ITS SUBSIDIARIES
OR AFFILIATES OR THE BUSINESS OF THE COMPANY OR ANY OF ITS SUBSIDIARIES OR
AFFILIATES OR OTHERWISE IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY,
OTHER THAN THOSE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS
AGREEMENT.

(b) Without limiting the generality of Section 2.33(a), no statement in any of
the materials relating to the business of the Company and its Subsidiaries made
available to the Buyer, Merger Sub and their respective representatives,
including due diligence materials, or in any presentation about the business of
the Company and its Subsidiaries by management of the Company or others in
connection with the transactions contemplated hereby, shall be deemed a
representation or warranty hereunder or otherwise or be deemed to be relied upon
by the Buyer or Merger Sub in executing, delivering and performing this
Agreement and the transactions contemplated hereby, except to the extent that
any such statement is contained in any of the Company’s representations and
warranties in this Agreement. It is understood that any cost estimates,
projections or other predictions, any data, any financial information or any
memoranda or offering materials or presentations are not and shall not be deemed
to be or to include representations or warranties of the Company, and are not
and shall not be deemed to be relied upon by the Buyer or Merger Sub in
executing, delivering and performing this Agreement and the transactions
contemplated hereby, except to the extent that any such information is contained
in any of the Company’s representations and warranties in this Agreement. The
Company acknowledges that (i) neither the Buyer nor Merger Sub makes any
representation or warranty with respect to (A) any projections, estimates or
budgets delivered to or made available to the Company or (B) any other
information or documents delivered or made available to the Company or its
representatives with respect to the Buyer, its Affiliates and their respective
businesses, except as expressly set forth in this Agreement, and (ii) the
Company has not relied and will not rely upon any of the information described
in subclauses (A) and (B) of clause (i) of Section 2.33(c) or any other
information, representation or warranty, except those representations and
warranties set forth in Article III in executing, delivering and performing this
Agreement and the transactions contemplated hereby.

 

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ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE BUYER

AND MERGER SUB

Each of the Buyer and Merger Sub represents and warrants to the Company as
follows:

3.1 Organization and Corporate Power. Each of the Buyer and Merger Sub is a
corporation duly organized, validly existing and in good standing under the Laws
of the state of Delaware. The Buyer has all requisite corporate power and
authority to carry on the businesses in which it is engaged and to own and use
the properties owned and used by it. The Merger Sub is a wholly-owned subsidiary
of the Buyer.

3.2 Authorization of Transaction. Each of the Buyer and Merger Sub has all
requisite power and authority to execute and deliver this Agreement and to
perform its respective obligations hereunder, including without limitation, in
the case of the Buyer, the Escrow Agreement and the obligations under the Escrow
Agreement. The execution and delivery by the Buyer and Merger Sub of this
Agreement and (in the case of the Buyer) the Escrow Agreement and the
consummation by the Buyer and Merger Sub of the transactions contemplated hereby
and thereby have been duly and validly authorized by all necessary corporate
action on the part of the Buyer and Merger Sub, respectively. This Agreement has
been duly and validly executed and delivered by the Buyer and Merger Sub and
constitutes a valid and binding obligation of the Buyer and Merger Sub,
enforceable against them in accordance with its terms, subject to the Bankruptcy
and Equity Exception.

3.3 Noncontravention. Subject to compliance with the applicable requirements of
the Hart-Scott-Rodino Act, the filing of the Certificate of Merger as required
by the Delaware General Corporation Law and obtaining the Requisite Stockholder
Approval, neither the execution and delivery by the Buyer or Merger Sub of this
Agreement or (in the case of the Buyer) the Escrow Agreement, nor the
consummation by the Buyer or Merger Sub of the transactions contemplated hereby
or thereby, will (a) conflict with or violate any provision of the charter or
By-laws of the Buyer or Merger Sub, (b) require on the part of the Buyer or
Merger Sub any filing with, or permit, authorization, consent or approval of,
any Governmental Entity, (c) conflict with, result in breach of, constitute
(with or without due notice or lapse of time or both) a default under, result in
the acceleration of obligations under, create in any party any right to
terminate, modify or cancel, or require any notice, consent or waiver under, any
contract or instrument to which the Buyer or Merger Sub is a party or by which
either is bound or to which any of their assets are subject, except for (i) any
conflict, breach, default, acceleration, termination, modification or
cancellation which would not adversely affect the consummation of the
transactions contemplated hereby or (ii) any notice, consent or waiver the
absence of which would not adversely affect the consummation of the transactions
contemplated hereby or (d) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to the Buyer or Merger Sub or any of their
properties or assets.

3.4 Funding. The Buyer has (and will, at the Closing, have) sufficient funds on
hand to pay the Initial Payout Amount and will, at the expiration of the
Earn-Out Period have sufficient funds available to pay the Net Earn-Out Amount
(if any).

3.5 Disclaimer of Other Representations.

(a) NEITHER THE BUYER NOR MERGER SUB HAS MADE ANY REPRESENTATIONS OR WARRANTIES,
EXPRESS OR IMPLIED, OF ANY NATURE WHATSOEVER, RELATING TO THE BUYER, MERGER SUB
OR THEIR RESPECTIVE AFFILIATES OR THE BUSINESS OF THE BUYER, MERGER SUB OR ANY
OF THEIR RESPECTIVE AFFILIATES OR OTHERWISE IN CONNECTION WITH THE TRANSACTIONS
CONTEMPLATED HEREBY, OTHER THAN THOSE REPRESENTATIONS AND WARRANTIES EXPRESSLY
SET FORTH IN THIS AGREEMENT.

 

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(b) Without limiting the generality of Section 3.5(a), no statement in any of
the materials relating to the business of the Buyer or Merger Sub made available
to the Company and its representatives, including due diligence materials, or in
any presentation about the business of the Buyer or Merger Sub by management of
the Buyer or others in connection with the transactions contemplated hereby,
shall be deemed a representation or warranty hereunder or otherwise or deemed to
be relied upon by the Company in executing, delivering and performing this
Agreement and the transactions contemplated hereby, except to the extent that
any such statement is contained in any of the representations and warranties of
the Buyer and Merger Sub contained in this Agreement. It is understood that any
cost estimates, projections or other predictions, any data, any financial
information or any memoranda or offering materials or presentations are not and
shall not be deemed to be or to include representations or warranties of either
the Buyer or Merger Sub, and are not and shall not be deemed to be relied upon
by the Company in executing, delivering and performing this Agreement and the
transactions contemplated hereby, except to the extent that any such information
is contained in any of the Buyer’s and Merger Sub’s representations and
warranties in this Agreement.

(c) Each of the Buyer and Merger Sub acknowledge that (i) the Company does not
make any representation or warranty with respect to (A) any projections,
estimates or budgets delivered to or made available to the Buyer or Merger Sub
or (B) any other information or documents delivered or made available to the
Buyer or Merger Sub or their respective representatives with respect to the
Company, its Subsidiaries and Affiliates and their respective businesses, except
as expressly set forth in this Agreement, and (ii) neither the Buyer nor Merger
Sub has relied and will not rely upon any of the information described in
subclauses (A) and (B) of clause (i) of Section 3.5(c) or any other information,
representation or warranty, except those representations and warranties set
forth in Article II in executing, delivering and performing this Agreement and
the transactions contemplated hereby.

ARTICLE IV

COVENANTS

4.1 Closing Efforts. Each of the Parties (other than the Company Stockholder
Representative) shall use its commercially reasonable efforts to take all
actions and to do all things necessary, proper or advisable to consummate the
transactions contemplated by this Agreement, including using its commercially
reasonable efforts to ensure that (i) its representations and warranties remain
true and correct in all material respects through the Closing Date and (ii) the
conditions to the obligations of the other Parties to consummate the Merger are
satisfied.

 

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4.2 Governmental and Third-Party Notices and Consents.

(a) Each Party (other than the Company Stockholder Representative) shall use its
commercially reasonable efforts to obtain, at its expense (except as otherwise
provided herein), all waivers, permits, consents, approvals or other
authorizations from Governmental Entities, and to effect all registrations,
filings and notices with or to Governmental Entities, as may be required for
such Party to consummate the transactions contemplated by this Agreement
(collectively, “Antitrust Filings”) and to otherwise comply with all applicable
Laws in connection with the consummation of the transactions contemplated by
this Agreement. Without limiting the generality of the foregoing, each of the
Parties (other than the Company Stockholder Representative) shall promptly (and
no later than five (5) business days) after the signing of this Agreement file
any Antitrust Filings that it may be required to file, including any
Notification and Report Forms with the Federal Trade Commission and the
Antitrust Division of the United States Department of Justice under the
Hart-Scott-Rodino Act. The Parties (other than the Company Stockholder
Representative) shall cooperate in the timely preparation and submission of,
including furnishing to the other Party or its counsel information required for,
any necessary Antitrust Filings. The Company shall pay up to $50,000 of the
applicable filing fee required in connection with the filings made by the
Parties pursuant to the Hart-Scott-Rodino Act, and the Buyer shall pay the
balance thereof and any fees that must be paid by any of the Parties under any
other applicable Antitrust Law.

(b) Each of the Company and the Buyer hereby covenants and agrees to use
commercially reasonable efforts to secure, and not to take any action that will
have the effect of delaying, impairing or impeding, the early termination or
expiration of any waiting periods under the Hart-Scott-Rodino Act or any other
applicable Antitrust Law and the approval of any Governmental Entities related
thereto for the transactions contemplated hereby. The Parties (other than the
Company Stockholder Representative) shall each cooperate reasonably with one
another in connection with resolving any inquiry or investigation by any
Governmental Entities relating to their respective Antitrust Filings or the
transactions contemplated hereby. Without limiting the foregoing, each Party
(other than the Company Stockholder Representative) shall (i) promptly inform
the other Parties of any written or oral communication received from any
Governmental Entities relating to its Antitrust Filing or the transactions
contemplated hereby (and, if in writing, furnish the other Party with a copy of
such communication); (ii) use its commercially reasonable efforts to respond as
promptly as practicable to any request from any Governmental Entities for
information, documents or other materials in connection with the review of the
Antitrust Filings or the transactions contemplated hereby; (iii) provide to the
other Parties, and permit the other Parties to review and comment in advance of
submission, all proposed correspondence, filings, and written communications to
any Governmental Entities with respect to the transactions contemplated hereby;
and (iv) not participate in any substantive meeting or discussion with any
Governmental Entities in respect of any investigation or inquiry related to the
Antitrust Filings and concerning the transactions contemplated hereby unless it
consults with the other Party in advance and, except as prohibited by applicable
Law or Governmental Entity, gives the other Parties the opportunity to attend
and participate thereat. The Parties (other than the Company Stockholder
Representative) will consult and cooperate with each other, and consider in good
faith the views of one another, in connection with any analyses, appearances,
presentations, memoranda, briefs, arguments, opinions and proposals made or
submitted by or on behalf of any Party in connection with proceedings under or
relating to any Antitrust Law, except as may be prohibited or restricted by Law.

 

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(c) During the period from the date of this Agreement to the earlier of the
termination of this Agreement in accordance with its terms or the Effective
Time, the Company shall use its commercially reasonable efforts to obtain, at
its expense, all such waivers, consents or approvals from third parties, and to
give all such notices to third parties listed in Section 2.4 of the Disclosure
Schedule.

4.3 Obtaining Requisite Stockholder Approval; Appraisal Rights Notice.

(a) The Company shall use its commercially reasonable efforts to procure and
make effective the Requisite Stockholder Approval within twenty four (24) hours,
and in any event as promptly as possible, after the execution and delivery of
this Agreement.

(b) After the Requisite Stockholder Approval has been obtained, the Company
shall send, pursuant to Sections 228 and 262(d) of the Delaware General
Corporation Law, a written notice to all stockholders of the Company that did
not execute the written consent under which the Requisite Stockholder Approval
was obtained informing them that this Agreement and the Merger were adopted and
approved and that appraisal rights are available for their Company Shares
pursuant to Section 262 of the Delaware General Corporation Law (which notice
shall include a copy of such Section 262).

4.4 Operation of Business. Except as contemplated by this Agreement, during the
period from the date of this Agreement to the earlier of the termination of this
Agreement in accordance with its terms or the Effective Time, the Company shall
(and shall cause each Subsidiary to) conduct its operations in the Ordinary
Course of Business and in material compliance with all applicable Laws and, to
the extent consistent therewith, use its commercially reasonable efforts to
preserve intact its current business organization, keep its physical assets in
good working condition, keep available the services of its current officers and
employees and preserve its relationships with customers, suppliers and others
having business dealings with it to the end that its goodwill and ongoing
business shall not be impaired in any material respect. Without limiting the
generality of the foregoing, during the period from the date of this Agreement
to the earlier of the termination of this Agreement in accordance with its terms
or the Effective Time, the Company shall not (and shall cause each Subsidiary
not to), without the written consent of the Buyer (such consent not to be
unreasonably withheld or delayed):

(a) issue or sell any stock or other securities of the Company or any Subsidiary
or any options, warrants or rights to acquire any such stock or other securities
(except pursuant to the conversion or exercise of Preferred Shares or Company
Options outstanding on the date hereof, the conversion or exchange of securities
of any Subsidiary into Company Shares or the granting of Company Options to “new
hires” of the Company or any Subsidiary consistent with past practice) or
repurchase or redeem any stock or other securities of the Company (except from
former employees, directors or consultants in accordance with agreements
providing for the repurchase of shares at their original issuance price in
connection with any termination of employment with or services to the Company or
any Subsidiary and except for the redemption of securities of any Subsidiary in
exchange for the issuance of Company Shares);

(b) split, combine or reclassify any shares of its capital stock; or declare,
set aside or pay any dividend or other distribution (whether in cash, stock or
property or any combination thereof) in respect of its capital stock;

 

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(c) create, incur or assume any indebtedness for borrowed money (including
obligations in respect of capital leases); assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other Person; or make any loans, advances
or capital contributions to, or investments in, any other Person other than
advances for out-of-pocket expenses to employees of the Company or any
Subsidiary in the Ordinary Course of Business;

(d) other than the amendment to the Company Stock Plans described on
Section 4.4(d) of the Disclosure Schedule, enter into, adopt, amend or terminate
(other than as provided in Section 4.9) any Employee Benefit Plan or any
employment or severance agreement or arrangement of the type described in
Section 2.20(k), except as required to comply with applicable Law, increase in
any manner the compensation or fringe benefits of any of its employees whose
base salary is greater than $150,000 per year, increase in any material manner
the compensation or fringe benefits of any of its employees whose base salary is
less than $150,000 per year, materially modify the employment terms of any of
its directors, officers or employees, generally or individually, or, other than
in the Ordinary Course of Business, pay any bonus or other benefit to its
directors, officers or employees (except for existing payment obligations listed
in Section 2.20 of the Disclosure Schedule or except as otherwise provided on
Section 4.4(d) of the Disclosure Schedule) or hire any new officers or any new
employees other than at-will employees (or employees hired by the Company or any
Subsidiary on such Person’s standard form letter of hire) hired in the Ordinary
Course of Business (and the Company shall give the Buyer prompt notice of any
such hiring);

(e) acquire, sell, lease, license or dispose of any assets or property
(including any shares or other equity interests in or securities of any
Subsidiary or any corporation, partnership, association or other business
organization or division thereof) other than (i) purchases of supplies and sales
of products in the Ordinary Course of Business and (ii) the issuance of Company
Shares in exchange for Class A-1 Exchangeable Shares and Common Exchangeable
Shares of the Canadian Subsidiary in connection with the Pre-Closing Exchange;

(f) mortgage or pledge any of its property or assets or subject any such
property or assets to any Security Interest;

(g) discharge or satisfy any Security Interest or pay any obligation or
liability other than in the Ordinary Course of Business and other than the
payment of fees and expenses incurred by the Company and the Subsidiaries in
connection with this Agreement and the Merger and any stay bonus and/or
severance payments to employees of the Company and the Subsidiaries (which
payments shall be counted in all calculations of Closing Net Working Capital) in
accordance with the terms of this Agreement;

(h) amend its charter, by-laws or other organizational documents;

(i) change its accounting methods, principles or practices, except insofar as
may be required by a change in GAAP;

(j) except as required by Law, make or change any Tax election, change an annual
accounting period, file any amended Tax Return, enter into any closing
agreement, waive or extend any statute of limitations with respect to Taxes,
settle or compromise any Tax liability, claim or assessment, surrender any right
to claim a refund of Taxes;

 

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(k) enter into, amend, terminate, take or omit to take any action that would
constitute a violation of or default under, or waive any rights under, any
contract or agreement of a nature required to be listed in Section 2.11,
Section 2.12 or Section 2.14 of the Disclosure Schedule, other than any such
waivers of rights in the Ordinary Course of Business;

(l) make or commit to make capital expenditures in excess of two hundred fifty
thousand ($250,000) in the aggregate;

(m) institute or settle any Legal Proceeding;

(n) increase the list price of any Company Component other than in the Ordinary
Course of Business;

(o) modify, in any material manner, the bill of materials or other
specifications used to produce any Company Component other than in the Ordinary
Course of Business; or

(p) agree in writing or otherwise to take any of the foregoing actions.

4.5 Access to Information.

(a) From and after the date of this Agreement until the earlier of the Effective
Time or the termination of this Agreement in accordance with its terms, the
Company shall (and shall cause each Subsidiary to) permit representatives of the
Buyer to have full access (at all reasonable times, and in a manner so as not to
interfere with the normal business operations of the Company and the
Subsidiaries) to all premises, properties, financial, tax and accounting records
(including the work papers of the Company’s independent accountants), contracts,
other records and documents, and personnel, of or pertaining to the Company and
each Subsidiary; provided, however, that the Company will not provide pricing or
bid information in any circumstance where the Company and the Buyer are
competing for a sale.

(b) Within twenty five (25) days after the end of each month ending prior to the
Closing, beginning with May 2011, the Company shall furnish to the Buyer (with a
copy to the Company Stockholder Representative) an unaudited income statement
for such month and a balance sheet as of the end of such month, prepared on a
basis consistent with the financial statements described in clause (b) of the
definition of Financial Statements. The Company shall use commercially
reasonable efforts to prepare such financial statements such that they present
fairly the financial condition and results of operations of the Company and the
Subsidiaries on a consolidated basis as of the dates thereof and for the periods
covered thereby, and shall be consistent with the books and records of the
Company and the Subsidiaries provided that such financial statements will be
subject to normal recurring year-end adjustments consistent with past practice.

(c) Any information obtained by the Buyer under this Agreement shall be subject,
to the extent applicable, to the terms and conditions of the Confidentiality
Agreement.

 

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4.6 Notice of Breaches. From and after the date of this Agreement until the
earlier of the Effective Time or the termination of this Agreement in accordance
with its terms, the Company shall promptly deliver to the Buyer supplemental
information concerning events or circumstances occurring subsequent to the
execution and delivery of this Agreement which would render any representation,
warranty or statement in this Agreement or the Disclosure Schedule inaccurate or
incomplete in any respect or that would, if uncured, cause any of the conditions
to Closing set forth in Article V not to be satisfied. No such supplemental
information shall be deemed to alter the Company’s representations and
warranties or its statements and disclosures in the Disclosure Schedule, or to
avoid or cure any misrepresentation or breach of warranty by the Company or to
constitute an amendment of any of the Company’s representations or warranties in
this Agreement or any of the Company’s statements and disclosures in the
Disclosure Schedule.

4.7 Exclusivity.

(a) From and after the date of this Agreement until the earlier of the Effective
Time or the termination of this Agreement in accordance with its terms, the
Company shall not, and the Company shall require each of its officers,
directors, employees, representatives and agents (collectively,
“Representatives”) not to, directly or indirectly, (i) initiate, solicit,
encourage or otherwise facilitate any inquiry, proposal, offer or discussion
with any party (other than the Buyer) concerning any merger, reorganization,
consolidation, recapitalization, business combination, liquidation, dissolution,
share exchange, sale of all or any material portion of stock, sale of all or any
material portion of assets or similar business transaction involving the
Company, any Subsidiary or any division of the Company (any such transaction, an
“Alternative Transaction”), (ii) license all or any material portion of the
Company Intellectual Property outside the Ordinary Course of Business,
(iii) furnish any non-public information concerning the business, properties or
assets of the Company, any Subsidiary or any division of the Company to any
party (other than the Buyer), in each case, in connection with an Alternative
Transaction or (iv) engage in discussions or negotiations with any party (other
than the Buyer) concerning any Alternative Transaction; provided, however, that
prior to receipt of the Requisite Stockholder Approval, the Company may, in
response to a bona fide, written Proposal (as defined in Section 4.7(e)) that is
made by a Person the Board of Directors of the Company determines, in good
faith, is reasonably capable of making a Superior Proposal (as defined in
Section 4.7(e)) and that the Board of Directors of the Company determines, in
good faith, after consultation with the Company’s financial advisor and outside
counsel, is reasonably likely to lead to a Superior Proposal that was not
solicited by the Company or any of its Representatives and that did not
otherwise result from a breach or a deemed breach of this Section 4.7, and
subject to compliance with Section 4.7(c) below, (x) furnish information with
respect to the Company to the person making such Proposal pursuant to a
confidentiality agreement not less restrictive of the other party than the
Confidentiality Agreement and (y) participate in discussions or negotiations
(including solicitation of a revised Proposal) with such Person and its
officers, directors, employees, Affiliates, investment bankers, advisors,
representatives or agents regarding any Proposal.

 

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(b) The Board of Directors of the Company shall not approve or recommend any
Proposal by a third party, or withdraw or modify in a manner adverse to the
Buyer its approval or recommendation of this Agreement or the transactions
contemplated hereby, including the Merger, or fail to solicit the vote of its
stockholders as required by this Agreement or enter into a definitive agreement
with respect to a Superior Proposal or publicly resolve to do any of the
foregoing. Notwithstanding the foregoing, the Board of Directors of the Company
may withdraw or modify its approval or recommendation of the Requisite
Stockholder Approval; provided that each of the following shall have been true
and complied with, as applicable, prior to the Board of Directors of the Company
or the Company, as the case may be, taking any such action: (i) the Requisite
Stockholder Approval shall not have been previously obtained, (ii) the Board of
Directors of the Company has received a Superior Proposal, (iii) in light of
such Superior Proposal the Board of Directors of the Company shall have
determined in good faith, after consultation with outside counsel, that the
failure to withdraw or modify its approval or recommendation of the Requisite
Stockholder Approval is reasonably likely to result in a breach of its fiduciary
duty under applicable Law, (iv) Company has notified the Buyer in writing of the
determinations described in clause (iii) of this Section 4.7(b), (v) at least
three business days following receipt by the Buyer of the notice referred to in
clause (iv) of this Section 4.7(b), and taking into account any revised proposal
made by the Buyer since receipt of the notice referred to in clause (iv) above,
such Superior Proposal remains a Superior Proposal and the Board of Directors of
the Company has again made the determinations referred to in clause (iii) of
this Section 4.7(b), and (vi) the Company is in compliance with this
Section 4.7.

(c) The Company shall promptly advise the Buyer orally and in writing of (A) the
receipt by it or by any of its Representatives after the date hereof of any
Proposal, or any inquiry which could reasonably be expected to lead to a
Proposal, or any request for nonpublic information in connection with such a
Proposal and (B) the terms and conditions of any such Proposal or inquiry. Such
notice to the Buyer will indicate in reasonable detail the identity of the
person making, and the terms of, the Proposal or inquiry. The Company shall
(i) keep the Buyer fully informed of the status including any change to the
material terms or details of any Proposal or inquiry and (ii) provide to the
Buyer as soon as practicable after receipt or delivery thereof with copies of
all correspondence and other written material sent or provided to the Company
from any third party in connection with any Proposal or sent or provided by the
Company to any third party in connection with any Proposal.

(d) Nothing contained in this Section 4.7 shall prohibit the Company from taking
and disclosing to its stockholders a position contemplated by Rule 14e-2(a)
promulgated under the Exchange Act or from making any required disclosure to the
Company Stockholders if, in the good faith judgment of the Board of Directors of
the Company, after consultation with outside counsel, failure so to disclose
would be inconsistent with its obligations under applicable law. Notwithstanding
anything in this Section 4.7, the Board of Directors of the Company may not take
any action that would result in the Company Stockholders no longer being legally
capable under Delaware General Corporation Law of validly approving the Merger.

(e) For purposes of this Agreement:

(i) “Proposal” means any inquiries, proposals, offers or bids with respect to an
Alternative Transaction; and

 

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(ii) “Superior Proposal” means any Proposal made by a third party (other than
the Buyer, Merger Sub or any Affiliate thereof) that (1) contains terms that the
Board of Directors of the Company determines in good faith to be superior from a
financial point of view to the holders of Company Shares than the transactions
contemplated by this Agreement (based on the advice of a nationally recognized
independent financial advisor), taking into account all the terms and conditions
of such proposal and this Agreement (including any proposal by the Buyer to
amend the terms of the this Agreement and the transactions contemplated hereby)
and (2) is reasonably likely to be consummated, taking into account all
financial, regulatory, legal and other aspects of such proposal, and assuming
this Agreement has been terminated.

4.8 Expenses. Except as set forth in Sections 4.2 and 4.13(b), Article VI and
the Escrow Agreement, each of the Parties shall bear its own costs and expenses
(including investment banking, legal and accounting fees and expenses) incurred
in connection with this Agreement and the transactions contemplated hereby.

4.9 Retention of Key Employees; Benefits.

(a) Prior to the Closing, the Company shall use reasonable efforts to support
the Buyer in retaining in the employ of the Surviving Corporation after the
Closing the employees of the Company identified in Section 4.9(a) of the
Disclosure Schedule (the “Key Employees”) and shall use reasonable efforts to
support the Buyer in causing the employees identified in Section 4.9(b) of the
Disclosure Schedule (the “Designated Employees”) to enter into the Buyer’s
standard form of confidentiality, non-solicitation and assignment of inventions
agreement (the “Buyer Form NDA”). In connection therewith, the Company shall use
reasonable efforts to support the Buyer in the following ways: (i) prior to the
Closing, delivering copies of the Buyer Form NDA to the Designated Employees,
and (ii) prior to the Closing, delivering copies of such employment agreements
for Key Employees as Buyer may reasonably request. In addition, prior to the
Closing, the Company shall use reasonable efforts to facilitate meetings between
the Buyer and the Key Employees and the Designated Employees. Notwithstanding
anything to the contrary set forth in this Section 4.9(a), in no event shall the
Company be required to dispose of assets or make any changes to its business,
terminate any employee (or threaten to do the same), expend any funds (or agree
to do the same) or incur any other burden, liability or obligation in connection
with complying with its obligations in this Section 4.9(a).

(b) Subject to Section 4.9(c), the Company and the Company Stockholder
Representative acknowledge and agree that it is the intent of Buyer to offer, or
to cause the Surviving Corporation to offer, continued employment or a
consulting relationship with the Buyer, on terms satisfactory to the Buyer, to
the Key Employees and the Designated Employees and, in the sole discretion of
the Buyer, continue the employment of the other Company employees (collectively,
the “Hired Company Employees”). Buyer shall, and shall cause the Surviving
Corporation to, treat, and cause the applicable benefit plans to treat, the
service of the Hired Company Employees with the Company or any of its
Subsidiaries attributable to any period before the Effective Time as service
rendered to the Buyer or the Surviving Corporation for purposes of eligibility
to participate, vesting and for levels of benefits other than for defined
benefits plans and only to the extent taken in account under the Company’s
comparable benefit plans. Without limiting the foregoing, the Buyer shall cause
any pre-existing conditions or limitations, eligibility waiting periods or
required physical examinations under any health or

 

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similar plan of the Buyer to be waived with respect to the Hired Company
Employees and their eligible dependents, to the extent waived under the
corresponding plan in which the Hired Company Employees participated immediately
prior to the Closing Date, and any deductibles paid by the Hired Company
Employees under any of the Company’s or its Subsidiaries’ health plans in the
plan year in which the Closing Date occurs shall be credited towards deductibles
under the health plans of the Buyer or any direct or indirect subsidiary of the
Buyer. The Buyer shall, and shall cause the Surviving Corporation to, use
commercially reasonable efforts and subject to applicable Law to make
appropriate arrangements with its insurance carrier(s) to ensure such result and
only to the extent that Hired Company Employees become subject to or eligible to
participate in employee benefits plans of the Buyer or the Surviving Corporation
during the current plan year.

(c) No provision of this Section 4.9 shall create any third-party beneficiary
rights in any employee or former employee (including any beneficiary or
dependent thereof) of the Company or any Subsidiary in respect of continued
employment (or resumed employment) with the Buyer, the Surviving Corporation or
any of the Buyer’s direct or indirect subsidiaries, and no provision of this
Section 4.9 shall create such rights in any such Persons in respect of any
benefits that may be provided, directly or indirectly, under any employee
program or any plan or arrangement that may be established by the Buyer or any
of its direct or indirect subsidiaries. No provision of this Agreement shall
constitute a limitation on the rights to amend, modify or terminate after the
Effective Time any such plans or arrangements of the Buyer or any of its direct
or indirect subsidiaries.

4.10 Termination of 401 (k) Plan.

(a) The Company’s Board of Directors or, if appropriate, any committee
administering the Company’s 401(k) plan (the “401(k) Plan”), shall adopt such
resolutions or take such other actions as are required to terminate the 401(k)
Plan no later than the day before the Closing Date, on terms satisfactory to
Buyer.

(b) The Buyer shall (or shall cause the Surviving Corporation to) take such
actions as are necessary to cause a retirement plan maintained by it or one of
its ERISA Affiliates that is qualified under Section 401 (a) of the Internal
Revenue Code to accept direct and indirect rollover distributions of the
Company’s employees’ balances under the Company’s 401(k) Plan, including
promissory notes evidencing outstanding plan loans (if any), but only to the
extent that the Buyer’s applicable retirement plan provides for participant plan
loans and subject to the outside administrator of the Buyer’s applicable
retirement plan accepting such plan loan (and the Buyer shall use reasonable
best efforts to cause such administrator to accept such loan).

4.11 280G Payments Vote. To the extent the Company (in consultation with the
Buyer) reasonably determines that such a vote is required, prior, to the
Effective Time, the Company shall submit to a stockholder vote, in a manner that
satisfies the stockholder approval requirements under Section 280G(b)(5)(B) of
the Internal Revenue Code and regulations promulgated thereunder, the right of
any “disqualified individual” (as defined in Section 280G(c) of the Internal
Revenue Code) to receive any and all payments (or other benefits) contingent on
the consummation of the transactions contemplated by this Agreement (within the
meaning of

 

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Section 280G(b)(2)(A)(i) of the Internal Revenue Code) to the extent necessary
so that, no payment received by such “disqualified individual” shall be a
“parachute payment” under Section 280G(b) of the Internal Revenue Code
(determined without regard to Section 280G(b)(4) of the Internal Revenue Code).
Such vote shall establish the disqualified individual’s right to the payment or
other compensation and the Company shall obtain any required waivers or consents
from the disqualified individual prior to the vote. In connection with such
vote, the Company shall provide adequate disclosure to the Company Stockholders
of all material facts concerning all payments to any such disqualified
individual that, but for such vote, could be deemed “parachute payments” under
Section 280G of the Internal Revenue Code in a manner that satisfies
Section 280G(b)(5)(B)(ii) of the Internal Revenue Code and regulations
promulgated thereunder. The Buyer and its counsel shall have the right to review
and comment on all documents required to be delivered to the Company
Stockholders in connection with such vote (including the disclosure described
above) and any required disqualified individual waivers or consents and Buyer
and its counsel shall be provided copies of all vote documents executed by the
stockholders and disqualified individuals.

4.12 FIRPTA. Prior to the Closing, the Company shall deliver or cause to be
delivered to the Buyer a certification that the Company Shares are not United
States real property interests as defined in Section 897(c) of the Internal
Revenue Code, together with a notice to the Internal Revenue Service, in
accordance with the Treasury Regulations under Sections 897 and 1445 of the
Internal Revenue Code. If the Company has not provided such certification and
notice to the Buyer on or before the Closing Date, the Buyer shall be permitted
to withhold from the payments to be made pursuant to this Agreement any required
withholding Tax under Section 1445 of the Internal Revenue Code.

4.13 Indemnification and Insurance.

(a) Buyer and Merger Sub agree that all rights to indemnification or exculpation
now existing in favor of, and all limitations on the personal liability of, each
present and former director, officer, employee, fiduciary and agent of the
Company and its Subsidiaries provided for in their respective certificates of
incorporation, charters, by-laws or otherwise in effect as of the date hereof
shall continue in full force and effect for a period of six (6) years from the
Effective Time. During such period, Buyer shall not, nor shall it permit the
Surviving Corporation or any of its Subsidiaries to, amend, repeal or otherwise
modify such provisions for indemnification in any manner that would materially
and adversely affect the rights thereunder of any individual who at any time on
or prior to the Effective Time was a director, officer, employee, fiduciary or
agent of the Company or its Subsidiaries in respect of actions or omissions
occurring at or prior to the Effective Time (including, without limitation, the
transactions contemplated by this Agreement), unless such modification is
required by applicable Law; provided, however, that all rights to
indemnification in respect of any claims asserted or made within such period
shall continue until the disposition of such claim. From and after the Effective
Time, the Buyer and the Surviving Corporation also agree to indemnify and hold
harmless the present and former officers and directors of the Company or any
Subsidiary in respect of acts or omissions occurring prior to the Effective Time
to the extent provided in any written indemnification agreements with the
Company or any Subsidiary except with respect to matters for which the Buyer is
indemnified under Article VI. Notwithstanding any other rights to
indemnification any such director, officer, employee, fiduciary and agent may
have, including without limitation from any private equity or venture capital
fund or management company with which such Person was or is affiliated or
associated, the obligations specified herein are to be the primary source of
indemnification for such Person.

 

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(b) Prior to the Effective Time, the Company shall purchase an extension (the
“D&O Tail Insurance”) of its directors’ and officers’ liability insurance
covering those persons who are currently covered by the current Company
directors’ and officers’ liability insurance policy (the “Company Insured
Parties”) on terms not substantially less favorable to the Company Insured
Parties than those of Company’s current directors’ and officers’ liability
insurance policy a copy of which has been made available to the Buyer. The D&O
Tail Insurance shall provide coverage for a period of six (6) years from the
Effective Time for losses to which the Company Insured Parties may be subject
based on pre-Closing occurrences. The premium for the six years of coverage of
D&O Tail Insurance shall be determined prior to the Effective Time, and is
referred to herein as the “D&O Tail Insurance Premium Amount.” The Company shall
pay fifty percent (50%) of the D&O Tail Insurance Premium Amount and such
payment will be deemed to be a Transaction Expense, the Buyer shall pay the
remainder of the D&O Tail Insurance Premium Amount and such payment will not be
deemed to be a Transaction Expense. The Buyer shall, and shall cause the
Surviving Corporation to, maintain in full force and effect the D&O Tail
Insurance for a period of six (6) years from the Effective Time, and continue to
honor the obligations thereunder.

(c) In the event Buyer or the Surviving Corporation or any of their respective
successors or assigns (i) consolidates with or merges into any other Person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers or conveys all or substantially all of
its properties and assets to any Person, then, and in each such case, to the
extent necessary proper provision shall be made so that the successors and
assigns of the Buyer or the Surviving Corporation, as the case may be, assume
the obligations set forth in this Section 4.13.

(d) The obligations under this Section 4.13 shall not be terminated or modified
in such a manner as to adversely affect any Company Insured Party to whom this
Section 4.13 applies without the consent of such affected Company Insured Party
(it being expressly agreed that the Company Insured Parties to whom this
Section 4.13 applies shall be third party beneficiaries of this Section 4.13 and
shall be entitled to enforce the covenants contained herein).

ARTICLE V

CONDITIONS TO CONSUMMATION OF MERGER

5.1 Conditions to Obligations of the Buyer and Merger Sub. The obligation of
each of the Buyer and Merger Sub to consummate the Merger is subject to the
satisfaction (or waiver by the Buyer) of the following additional conditions:

(a) this Agreement and the Merger shall have received the Requisite Stockholder
Approval, and no more than five percent (5%) of the Company Shares issued and
outstanding immediately prior to the Effective Time (including for the avoidance
of doubt, any Company Shares issued pursuant to the Pre-Closing Exchange) shall
be Dissenting Shares;

 

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(b) the Company and the Subsidiaries shall have obtained at their own expense
(and shall have provided copies thereof to the Buyer) all of the waivers,
permits, consents, approvals or other authorizations, and effected all of the
registrations, filings and notices, referred to or incorporated by reference in
Section 5.1(b) of the Disclosure Schedule;

(c) (i) the representations and warranties of the Company set forth in this
Agreement (other than those representations and warranties set forth in Sections
2.1, 2.3, 2.6(b) and 2.26 and in clauses (a), (b), (c), (d) and (f) of
Section 2.2) shall be true and correct as of the Closing Date as though made on
and as of the Closing Date (except (i) to the extent such representations and
warranties are specifically made as of a particular date, in which case such
representations and warranties shall be true and correct as of such date, and
(ii) where the failure to be true and correct (without regard to any materiality
or Company Material Adverse Effect qualifications contained therein) has not
had, or would not reasonably be expected to result in, a Company Material
Adverse Effect), and (ii) the representations and warranties set forth in
Sections 2.1, 2.3, 2.6(b) and 2.26 and in clauses (a), (b), (c), (d) and (f) of
Section 2.2 shall be true and correct in all material respects as of the Closing
Date as though made on and as of the Closing Date (except to the extent such
representations and warranties are specifically made as of a particular date, in
which case such representations and warranties shall be true and correct as of
such date), and the Buyer shall have received a certificate signed on behalf of
the Company by the chief executive officer or the chief financial officer of the
Company to such effect;

(d) the Company shall have performed or complied with in all material respects
its agreements and covenants required to be performed or complied with under
this Agreement as of or prior to the Closing;

(e) no Legal Proceeding shall be pending or threatened in writing wherein an
unfavorable judgment, order, decree, stipulation or injunction could reasonably
be expected to (i) prevent consummation of the transactions contemplated by this
Agreement, (ii) cause the transactions contemplated by this Agreement to be
rescinded following consummation or (iii) have, individually or in the
aggregate, a Company Material Adverse Effect, and no such judgment, order,
decree, stipulation or injunction shall be in effect;

(f) the Company shall have delivered to the Buyer and Merger Sub the Company
Closing Certificate;

(g) the Buyer shall have received copies of the resignations, effective as of
the Closing, of each director and officer of the Company and the Subsidiaries
from such positions as a director or officer, as applicable (other than any such
resignations which the Buyer designates, by written notice to the Company, as
unnecessary);

(h) all applicable waiting periods (and any extensions thereof) under the
Hart-Scott-Rodino Act shall have expired or otherwise been terminated; and

(i) the Buyer shall have received such other certificates and instruments
(including certificates of good standing of the Company and the Subsidiaries in
their jurisdiction of organization and the various foreign jurisdictions in
which they are qualified, certified charter documents, certificates as to the
incumbency of officers and the adoption of authorizing resolutions) as it shall
reasonably request in connection with the Closing.

 

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5.2 Conditions to Obligations of the Company. The obligation of the Company to
consummate the Merger is subject to the satisfaction of the following additional
conditions:

(a) The representations and warranties of the Buyer and Merger Sub set forth in
this Agreement shall be true and correct as of the Closing Date as though made
on and as of the Closing Date (except (i) to the extent such representations and
warranties are specifically made as of a particular date, in which case such
representations and warranties shall be true and correct as of such date and
(ii) where the failure to be true and correct (without regard to any materiality
qualifications contained therein), individually or in the aggregate, has not
resulted in any material adverse effect on the ability of the Buyer or Merger
Sub to consummate, including any material delay in the Buyer’s ability to
consummate, the transactions contemplated by this Agreement).

(b) each of the Buyer and Merger Sub shall have performed or complied with in
all material respects its agreements and covenants required to be performed or
complied with under this Agreement as of or prior to the Closing;

(c) no Legal Proceeding shall be pending or threatened in writing wherein an
unfavorable judgment, order, decree, stipulation or injunction would (i) prevent
consummation of the transactions contemplated by this Agreement or (ii) cause
the transactions contemplated by this Agreement to be rescinded following
consummation, and no such judgment, order, decree, stipulation or injunction
shall be in effect;

(d) the Buyer shall have delivered to the Company the Buyer Closing Certificate;

(e) the Buyer shall have delivered to the Company the Escrow Agreement executed
by the Buyer, the Company Stockholder Representative and the Escrow Agent;

(f) this Agreement and the Merger shall have received the Requisite Stockholder
Approval;

(g) all applicable waiting periods (and any extensions thereof) under the Hart-
Scott-Rodino Act shall have expired or otherwise been terminated; and

(h) the Company shall have received such other certificates and instruments
(including certificates of good standing of the Buyer and Merger Sub in their
jurisdiction of organization, certified charter documents, certificates as to
the incumbency of officers and the adoption of authorizing resolutions) as it
shall reasonably request in connection with the Closing.

 

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ARTICLE VI

INDEMNIFICATION

6.1 Indemnification. Subject to the terms and conditions of this Agreement and
the Escrow Agreement, from and after the Closing, the Buyer or any Affiliate
thereof shall be indemnified in respect of, and held harmless against, in each
case, solely from the Escrow Fund, any and all Losses incurred or suffered by
the Surviving Corporation or the Buyer or any Affiliate thereof resulting from,
relating to or constituting:

(a) any inaccuracy in any representation or breach of any warranty of the
Company contained in this Agreement or any other agreement or instrument
executed by the Company and furnished by the Company to the Buyer pursuant to
this Agreement, whether as of the date of this Agreement or as of the Closing
Date (except to the extent such representations or warranties are specifically
made as of a particular date, in which case, as of such date);

(b) any breach or nonperformance of (or noncompliance with) any covenant or
agreement of the Company contained in this Agreement or any agreement or
instrument furnished by the Company to the Buyer pursuant to this Agreement;

(c) any amount by which the Working Capital Escrow Fund is insufficient to
satisfy in full the Working Capital Escrow Deficit as determined in accordance
with Section 1.8(b) and Section 1.13; or

(d) any claim made by holders of Dissenting Shares to the extent Losses exceed
the amount the holders of such Dissenting Shares would have otherwise received
under this Agreement; provided, that (i) the Buyer and the Surviving Corporation
will have given the Company Stockholder Representative (A) written notice of any
written demand for appraisal, withdrawal of a demand for appraisal and any other
instrument served pursuant to Section 262 of the Delaware General Corporation
Law received by the Buyer, the Surviving Corporation or any Affiliate thereof
and (B) an opportunity to participate in the negotiations and proceedings with
respect to such Dissenting Shares; (ii) the Buyer and the Surviving Corporation
will have used commercially reasonable efforts to resolve the dispute regarding
such Dissenting Shares; and (iii) such payments are made pursuant to either a
(X) written settlement agreement that is approved by the Company Stockholder
Representative (not to be unreasonably withheld, delayed or conditioned) or
(Y) final, non-appealable judgment of a court of competent jurisdiction.

6.2 Indemnification Claims.

(a) Third Party Claims. All claims for indemnification made under this Agreement
resulting from, related to or arising out of a third-party claim against an
Indemnified Party shall be made in accordance with the following procedures. A
Person entitled to indemnification under this Article VI (an “Indemnified
Party”) shall give prompt written notification to the Company Stockholder
Representative (a “Third Party Claim Notice”) of the commencement of any action,
suit or proceeding relating to a third party claim for which indemnification may
be sought or, if earlier, upon the assertion of any such claim by a third party;
provided, that a failure to notify or delay in notifying the Company Stockholder
Representative will not relieve the Company Stockholder Representative of its
obligations pursuant to this Article VI, except to the extent that such claim is
actually prejudiced as a result thereof. Such Third Party Claim Notice shall
include a description in reasonable detail (to the extent known by the
Indemnified Party) of the facts constituting the basis for such third party
claim and the amount of the Losses claimed (the “Third Party Claim Amount”).
Within 30 days after delivery of such Third Party Claim Notice, the Company
Stockholder Representative may, upon written notice thereof to the Indemnified
Party, assume control of the defense of any such action, suit, proceeding or
claim in which (i) the third-party claimant seeks only the recovery of monetary
damages and (ii) the Company Stockholder Representative agrees that, subject to
the

 

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limitations set forth in this Article VI, the Indemnified Party shall be
entitled to indemnification for any Losses incurred or suffered by it resulting
from such claim, with counsel reasonably satisfactory to the Indemnified Party.
If the Company Stockholder Representative does not assume control of such
defense, the Indemnified Party shall control such defense. The party not
controlling such defense may participate therein at its own expense (provided
that if the non-controlling participating party is the Company Stockholder
Representative, the obligation to pay such expenses shall be solely on behalf of
the Company Stockholders and in its capacity as the Company Stockholder
Representative, not in its individual capacity); provided that if the Company
Stockholder Representative assumes control of such defense and the Indemnified
Party reasonably concludes, based on advice from counsel, that the Company
Stockholder Representative and the Indemnified Party have conflicting interests
with respect to such action, suit, proceeding or claim, the reasonable fees and
expenses of counsel to the Indemnified Party solely in connection therewith
shall be considered Losses for purposes of this Agreement; provided, however,
that in no event shall the Indemnified Parties be entitled to be indemnified for
the fees and expenses of more than one (1) counsel for all Indemnified Parties.
The party controlling such defense shall keep the other party advised of the
status of such action, suit, proceeding or claim and the defense thereof and
shall consider recommendations made by the other party with respect thereto. If
the Company Stockholder Representative does not assume the defense, the
Indemnified Party may not agree to any settlement of such action, suit,
proceeding or claim without the prior written consent of the Company Stockholder
Representative (such consent not to be unreasonably withheld or delayed). The
Company Stockholder Representative shall not agree to any settlement of such
action, suit, proceeding or claim that (A) does not include a complete release
of the Indemnified Party from all liability with respect thereto, (B) imposes
any liability, injunction, equitable relief or other obligation on the
Indemnified Party, (C) results in Losses in excess of the then Available Escrow
Funds or (D) results in a material increase in Taxes of the Surviving
Corporation or its Subsidiaries in a tax period ending after the Closing Date,
without the prior written consent of the Indemnified Party (such consent not to
be unreasonably withheld or delayed). Notwithstanding anything to the contrary
in this Section 6.2(a), the Company Stockholder Representative shall not be
entitled to control, and the Buyer shall instead control, the defense of any
action, suit, proceeding or claim with respect to Taxes of the Company or any of
its Subsidiaries attributable to any period ending after the Closing Date.

(b) Procedure for Claims Not Involving Third Parties. An Indemnified Party
wishing to assert a claim for indemnification under this Article VI that does
not involve a third- party claim shall deliver to the Company Stockholder
Representative a Claim Notice. Within 30 days after delivery of a Claim Notice,
the Company Stockholder Representative shall deliver to the Indemnified Party a
written response in which the Company Stockholder Representative shall (A) agree
that the Indemnified Party is entitled to receive all of the Claim Amount (in
which case the Company Stockholder Representative shall take such actions as are
required pursuant to the Escrow Agreement to cause the Claimed Amount to be
released to the Buyer from the Escrow Fund), (B) agree that the Indemnified
Party is entitled to receive part, but not all, of the Claim Amount (the “Agreed
Amount”) (in which case the Company Stockholder Representative shall take such
actions as are required pursuant to the Escrow Agreement to cause the Agreed
Amount to be released to the Buyer from the Escrow Fund) or (C) contest that the
Indemnified Party is entitled to receive any of the Claim Amount. If the Company
Stockholder Representative in such response contests the payment of all or part
of the Claim Amount, the Company Stockholder Representative and the Indemnified
Party shall use good faith and commercially reasonable

 

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efforts to resolve such dispute. If such dispute is not resolved within 60 days
following the delivery by the Company Stockholder Representative of such
response, the Company Stockholder Representative and the Indemnified Party shall
each have the right to submit such dispute to a court of competent jurisdiction
in accordance with the provisions of Section 9.12.

(c) Authority of Company Stockholder Representative. The Company Stockholder
Representative shall have full power and authority on behalf of each Company
Stockholder to take any and all actions on behalf of, execute any and all
instruments on behalf of, and execute or waive any and all rights of, the
Company Stockholders under this Article VI. The Company Stockholder
Representative shall have no liability to any Company Stockholder for any action
taken or omitted on behalf of the Company Stockholders pursuant to this Article
VI.

6.3 Survival of Representations and Warranties. Each Party’s representations and
warranties in this Agreement shall survive the Closing and shall expire on the
date that is eighteen (18) months following the Effective Time. If an
Indemnified Party delivers to Company Stockholder Representative, before the
expiration of a representation or warranty, either a Claim Notice based upon a
breach of such representation or warranty, or an Expected Claim Notice based
upon a breach of such representation or warranty, then the applicable
representation or warranty shall survive until, but only for purposes of, the
resolution of any claims arising from or related to the matter covered by such
notice. If the legal proceeding or written claim with respect to which an
Expected Claim Notice has been given is definitively withdrawn or resolved in
favor of the Indemnified Party, the Indemnified Party shall promptly (and in no
event later than three (3) days after the date of such withdrawal or resolution)
so notify the Company Stockholder Representative; and if the Indemnified Party
has delivered a copy of the Expected Claim Notice to the Escrow Agent and funds
have been retained in escrow after the Termination Dates (as defined in the
Escrow Agreement) with respect to such Expected Claim Notice, the Company
Stockholder Representative and the Indemnified Party shall promptly (and in no
event later than three (3) days after the date of such withdrawal or resolution)
deliver to the Escrow Agent a written notice executed by both parties
instructing the Escrow Agent to disburse such retained funds to the Company
Stockholders in accordance with the terms of the Escrow Agreement. The rights to
indemnification set forth in this Article VI shall not be affected by (i) any
investigation conducted by or on behalf of the Indemnified Party or any
knowledge acquired (or capable of being acquired) by the Indemnified Party,
whether before or after the date of this Agreement or the Closing Date, with
respect to the inaccuracy or noncompliance with any representation, warranty,
covenant or obligation which is the subject of indemnification hereunder or
(ii) any waiver by the Buyer or Merger Sub of any closing condition relating to
the accuracy of representations and warranties or the performance of or
compliance with agreements and covenants. Nothing in this Section 6.3 shall be
construed to limit the survival of covenants, agreements and obligations that by
their terms are to be performed or observed after the Effective Time or for
which another time period is specified in this Agreement.

 

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6.4 Limitations.

(a) Notwithstanding anything to the contrary herein or in the Escrow Agreement,
other than for claims involving fraud, and subject to the provisions of
Section 9.14, the Indemnified Parties shall not be able to seek indemnification
from the Escrow Fund under this Article VI and the Escrow Agreement unless and
until the aggregate Losses for which they or it would otherwise be entitled
under this Article VI exceed five hundred thousand dollars ($500,000) (the
“Threshold”), at which point the Indemnified Parties shall be entitled to
recover from the Escrow Fund all Losses indemnified under this Article VI and
not just those Losses in excess of the Threshold. Notwithstanding anything to
the contrary herein or the Escrow Agreement, other than for claims involving
fraud, and subject to the provisions of Section 9.14, the Indemnified Parties
shall not be able to seek indemnification pursuant to this Article VI or the
Escrow Agreement for any amount of indemnifiable Losses in excess of the Escrow
Fund and the right of the Indemnified Parties to recover for any indemnifiable
Losses under this Article VI shall be limited solely and exclusively to the
Escrow Fund.

(b) Notwithstanding anything to the contrary herein or in the Escrow Agreement,
other than for claims involving fraud, and subject to the provisions of
Section 9.14, claims pursuant to this Article VI and/or the Escrow Agreement
shall be the sole and exclusive remedy of the Indemnified Parties for
(x) indemnifiable Losses under this Article VI and the Escrow Agreement or
(y) inaccuracies in or breaches of or failure to perform the representations,
warranties, covenants, agreements and obligations of the Company under or in
connection with this Agreement or any agreement, document, certificate or
instrument executed by the Company and furnished by the Company to the Buyer
pursuant to this Agreement, or otherwise in connection with the transactions
contemplated by this Agreement. Except for claims for indemnification involving
fraud, the Available Escrow Fund shall be the sole and exclusive source of
recovery for indemnifiable Losses under this Article VI. In the case of claims
for indemnification of Losses resulting from fraud, each Company Stockholder
shall be liable only for such holder’s respective Pro Rata Portion of the
indemnifiable Losses, and in no event shall any holder’s liability for such
Losses exceed the aggregate amount paid to such holder pursuant to Article I of
this Agreement.

(c) Nothing in this Section 6.4 shall be construed to limit the Buyer’s rights
under Section 9.14. No Company Stockholder shall have any right of contribution
or subrogation against the Company or the Surviving Corporation with respect to
any breach by the Company of any of its representations, warranties, covenants
or agreements.

(d) Notwithstanding anything to the contrary herein or in the Escrow Agreement,
no breach of any representation, warranty, covenant or agreement contained
herein shall give rise to any right on the part of the Buyer, the Surviving
Corporation or any Indemnified Party, after the consummation of the transactions
contemplated hereby, to rescind this Agreement or any of the transactions
contemplated hereby.

(e) Notwithstanding anything to the contrary herein or in the Escrow Agreement,
any Loss for which any Indemnified Party is entitled to indemnification under
this Article VI shall be determined without duplication of recovery by reason of
the state of facts giving rise to such Loss constituting a breach of more than
one representation, warranty, covenant or agreement.

 

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(f) Notwithstanding anything to the contrary herein or in the Escrow Agreement,
no Indemnified Party shall be entitled to indemnification pursuant to this
Article VI for any Losses to the extent such Losses are included as current
liabilities in the Final Revised Closing Net Working Capital.

(g) Notwithstanding anything to the contrary herein or in the Escrow Agreement,
the amount of any Losses subject to indemnification under this Article VI shall
be calculated net of (i) any insurance proceeds received by any Indemnified
Party on account of such Losses and/or (ii) any indemnification payments
received by the Indemnified Party from any third party with respect to such
Losses. Furthermore, notwithstanding anything to the contrary herein or in the
Escrow Agreement, no Indemnified Party shall be entitled to any indemnification
under this Article VI or the Escrow Agreement for any Losses to the extent any
Indemnified Party could have, with reasonable efforts, mitigated or prevented
the Loss.

(h) Notwithstanding anything to the contrary herein or in the Escrow Agreement,
any indemnification with respect to Taxes shall be limited to Taxes of the
Company or any Subsidiary for taxable periods (or portions thereof) ending on or
before the Closing Date.

6.5 Right of Offset. If the Buyer recovers a portion of the Working Capital
Escrow Deficit from the Escrow Fund pursuant to Section 6.1(c) (such amount so
recovered by the Buyer is referred to as the “Make Whole Amount”), then the
Buyer shall be entitled to offset the Make Whole Amount against the Net Earn-Out
Amount, if any.

6.6 Tax Treatment of Indemnification Payments. All amounts paid under this
Article VI shall be treated as adjustments to the purchase price for all Tax
purposes unless otherwise required by Law.

ARTICLE VII

TERMINATION

7.1 Termination of Agreement. The Parties may terminate this Agreement prior to
the Closing (whether before or after Requisite Stockholder Approval), as
provided below:

(a) the Buyer and the Company may terminate this Agreement by mutual written
consent;

(b) the Buyer may terminate this Agreement by giving written notice to the
Company in the event the Company is in breach of any representation, warranty or
covenant contained in this Agreement, and such breach (i) individually or in
combination with any other such breach, would cause the conditions set forth in
Section 5.1(c) or Section 5.1(d) not to be satisfied and (ii) is not cured
within twenty (20) days following delivery by the Buyer to the Company of
written notice of such breach;

(c) the Company may terminate this Agreement by giving written notice to the
Buyer in the event the Buyer or Merger Sub is in breach of any representation,
warranty or covenant contained in this Agreement, and such breach
(i) individually or in combination with any other such breach, would cause the
conditions set forth in Section 5.2(a) or Section 5.2(b) not to be satisfied and
(ii) is not cured within twenty (20) days following delivery by the Company to
the Buyer of written notice of such breach;

 

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(d) the Buyer may terminate this Agreement by giving written notice to the
Company in the event that the Requisite Stockholder Approval has not been
obtained within the time period specified in Section 4.3(a) provided that if
after the expiration of such time period and prior to the time the Buyer
terminates this Agreement pursuant to this Section 7.1 (d), the Requisite
Stockholder Approval is obtained, then the right to terminate this Agreement
pursuant to this Section 7.1(d) shall be unavailable to the Buyer;

(e) the Buyer may terminate this Agreement by giving written notice to the
Company if the Closing shall not have occurred on or before July 31, 2011 by
reason of the non- satisfaction of any condition precedent under Section 5.1
(unless the non-occurrence of the Closing results primarily from a breach or
nonperformance by the Buyer or Merger Sub of any representation, warranty,
covenant or agreement contained in this Agreement); or

(f) the Company may terminate this Agreement by giving written notice to the
Buyer if the Closing shall not have occurred on or before July 31, 2011 by
reason of the non- satisfaction of any condition precedent under Section 5.2
(unless the non-occurrence of the Closing results primarily from a breach by the
Company of any representation, warranty, covenant or agreement contained in this
Agreement).

7.2 Effect of Termination. If any Party terminates this Agreement pursuant to
Section 7.1, all obligations of the Parties hereunder shall terminate without
any liability of any Party to any other Party (except for any liability of any
Party (other than the Company Stockholder Representative) for intentional
breaches of this Agreement prior to such termination and obligations under the
Confidentiality Agreement).

ARTICLE VIII

DEFINITIONS

For purposes of this Agreement, each of the following terms shall have the
meaning set forth below.

“401(k) Plan” shall have the meaning given to it in Section 4.10(a).

“AAA” shall mean the American Arbitration Association.

“Affiliate” shall mean any affiliate, as defined in Rule 12b-2 under the
Exchange Act.

“Aggregate Liquidation Preference Amount” shall have the meaning given to it in
Section 1.5(a)(i).

“Aggregate Option Consideration” shall mean the aggregate exercise price of all
Company Options that are cancelled and converted into the right to receive a
payment pursuant to Section 1.7(a).

 

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“Agreed Amount” shall have the meaning given to it in Section 6.2(b).

“Alternative Transaction” shall have the meaning given to it in Section 4.7(a).

“Antitrust Filings” shall have the meaning given to it in Section 4.2(a).

“Antitrust Law” shall mean any federal, state, provincial or foreign Law
designed to prohibit, restrict or regulate actions for the purpose or effect of
monopolization or restraint of trade.

“Applicable Revenue” shall have the meaning given to it in Section 1.14(a)(i).

“Arbitrator” shall have the meaning set forth in Section 6.2(f).

“Available Escrow Fund” shall mean, at any time, the amount then remaining in
the Escrow Fund less the amount of any Losses or potential Losses identified in
any unresolved Claim Notice or Expected Claim Notice.

“Auditing Firm” shall have the meaning given to it in Section 1.13(c)(iii)(B).

“Bankruptcy and Equity Exception” shall have the meaning given to it in
Section 2.3.

“BC” shall have the meaning given to it in Section 2.26.

“best efforts” shall have the meaning given to it in Section 4.9(a).

“business day” (whether such term is capitalized or not) means any day other
than Saturday, Sunday or a legal holiday that banks located in Boston,
Massachusetts are closed for business.

“Buyer” shall have the meaning set forth in the first paragraph of this
Agreement.

“Buyer Closing Certificate” shall mean a certificate to the effect that each of
the conditions specified in Section 5.2 is satisfied in all respects.

“Buyer Form NDA” shall have the meaning given to it in Section 4.9(a).

“Canadian Subsidiary” shall have the meaning given to it in Section 1.4(b).

“CERCLA” shall mean the federal Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended.

“Certificate of Merger” shall mean the certificate of merger attached hereto as
Exhibit D and executed in accordance with Section 251(c) of the Delaware General
Corporation Law.

“Claim Notice” shall mean written notification which contains (i) a description
of the Claimed Amount, (ii) a statement that the Indemnified Party is entitled
to indemnification under Article VI with respect to such Claimed Amount and a
reasonable explanation of the basis therefor, and (iii) a demand for payment in
the amount of such Claimed Amount.

 

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“Claimed Amount” shall mean the amount of any Losses incurred or reasonably
expected to be incurred by the Indemnified Party.

“Class A-1 Exchangeable Shares” shall mean the Class A-1 Exchangeable Shares in
the capital of the Canadian Subsidiary.

“Closing” shall mean the closing of the transactions contemplated by this
Agreement.

“Closing Date” shall mean the date two (2) business days after the satisfaction
or waiver of all of the conditions to the obligations of the Parties to
consummate the transactions contemplated hereby (excluding the delivery at the
Closing of any of the documents set forth in Article V), or such other date as
may be mutually agreeable to the Buyer and the Company.

“Closing Net Working Capital” shall have the meaning given to it in
Section 1.13(a).

“Combined Buyer Product” shall have the meaning given to it in
Section 1.14(a)(ii).

“Commercial Rules” shall mean the Commercial Arbitration Rules of the AAA.

“Common Cash Amount” shall have the meaning given to it in Section 1.5(a)(ii).

“Common Exchangeable Shares” shall mean the Common Exchangeable Shares in the
capital of the Canadian Subsidiary.

“Common Shares” shall mean the shares of Standard Common Stock and the shares of
Special Common Voting Stock.

“Company” shall have the meaning set forth in the first paragraph of this
Agreement.

“Company Certificates” shall have the meaning given to it in Section 1.12(a).

“Company Closing Certificate” shall mean a certificate to the effect that each
of the conditions specified in Section 5.1 is satisfied in all respects.

“Company Components” shall have the meaning given to it in Section 1.14(a)(iii).

“Company Insured Parties” shall have the meaning given to it in Section 4.13(b).

“Company Intellectual Property” shall mean the Company Owned Intellectual
Property and the Company Licensed Intellectual Property.

“Company Licensed Intellectual Property” shall mean all Intellectual Property
that is licensed to the Company or a Subsidiary by any third party.

 

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“Company Material Adverse Effect” shall mean any change, event, circumstance,
occurrence, state of facts or development that, individually or in the aggregate
with all other adverse changes, events, circumstances, occurrences, states of
facts or developments occurring prior to the determination of a Company Material
Adverse Effect, has a material adverse effect on (i) the business, assets and
liabilities (taken together), financial condition or results of operations of
the Company and its Subsidiaries, taken as a whole, or (ii) the ability of the
Company to consummate the transactions contemplated hereby; provided, however,
that none of the following constitute, or will be considered in determining
whether there has occurred, a Company Material Adverse Effect: (a) changes that
are the result of factors generally affecting the industries or markets in which
the Company and its Subsidiaries operate; (b) any adverse change, event,
circumstance, occurrence, state of facts or development arising out of or
resulting from actions contemplated by the Parties in connection with this
Agreement or the pendency or announcement of the transactions contemplated by
this Agreement, including actions of competitors or any delays or cancellations
for products and/or services or losses of employees, business partners or
customers; (c) changes in applicable Laws, GAAP or the interpretation of any of
the foregoing; (d) any action taken at the written request of Buyer or Merger
Sub; (e) any legal or investment banking fees or expenses, or severance, bonus,
benefit or other change in control payments under specified executive benefits
or employment agreement of the Company or any Subsidiary thereof incurred or
made in connection with the transactions contemplated by this Agreement; (f) any
failure of the Company or any Subsidiary thereof to meet any projection or
forecast prior to the Closing; (g) changes that are the result of economic
factors affecting the national, regional or world economy, (h) acts of God,
hostilities or acts of war, sabotage or terrorism; and (i) changes in general
political or geopolitical conditions; provided that the exceptions in clauses
(a), (c), (g), (h) and (i) shall not apply to any change, event, circumstance,
occurrence, state of facts or development which disproportionately affects the
Company and its Subsidiaries, taken as a whole, when compared to other
businesses operating in the industry in which the Company and its Subsidiaries
operate.

“Company Option” shall mean each option (other than the conversion right of the
Preferred Shares) to purchase or acquire Common Shares.

“Company Owned Intellectual Property” shall mean all Intellectual Property owned
or purported to be owned by the Company or a Subsidiary, in whole or in part.

“Company Plan” shall mean any Employee Benefit Plan maintained, or contributed
to, by the Company, any Subsidiary or any ERISA Affiliate.

“Company Registrations” shall mean Intellectual Property Registrations that are
registered or filed in the name of the Company or any Subsidiary, alone or
jointly with others.

“Company Shares” shall mean the Common Shares and the Preferred Shares together.

“Company Source Code” shall mean the source code for any Software included in
the Customer Offerings or Internal Systems or other confidential information
constituting, embodied in or pertaining to such Software.

“Company Stock Plan” shall mean any stock option plan or other stock or
equity-related plan of the Company.

 

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“Company Stockholder Representative” shall have the meaning set forth in the
first paragraph of this Agreement.

“Company Stockholder Representative Amount” shall have the meaning set forth in
Section 1.3(e).

“Company Stockholder Representative Fund” shall mean the fund established
pursuant to Section 1.8(c) and the Escrow Agreement, including the Company
Stockholder Representative Amount.

“Company Stockholders” shall mean the holders of record of the Common Shares and
Preferred Shares outstanding immediately prior to the Effective Time (including,
for the avoidance of doubt, all Common Shares and Preferred Shares issued in
connection with the Pre-Closing Exchange) and for all purposes hereof other than
Section 1.12, Section 1.13 and Section 1.14, the holders of Company Options that
are converted and canceled pursuant to Section 1.7(a).

“Contingent Banking Fees” shall mean the aggregate amounts owed to DB and BC,
pursuant to their respective written agreements with the Company in effect on
the date hereof (and without regard to any amendment, modification or change to
such agreements occurring after the date hereof unless the same has been
expressly agreed to by the Company Stockholder Representative in writing), as a
result of the payment of the Earn-Out Amount.

“Covered Items” shall have the meaning given to it in Section 2.22(b).

“Customer Offerings” shall mean (a) the products (including Software and
Documentation) that the Company or any Subsidiary (i) currently develops,
manufactures, markets, distributes, makes available, sells or licenses to third
parties, or (ii) has developed, manufactured, marketed, distributed, made
available, sold or licensed to third parties within the previous six (6) years,
or (iii) currently plans to develop, manufacture, market, distribute, make
available, sell or license to third parties in the future and (b) the services
that the Company or any Subsidiary (i) currently provides or makes available to
third parties, or (ii) has provided or made available to third parties within
the previous six (6) years, or (iii) currently plans to provide or make
available to third parties in the future. A true and complete list of all
Customer Offerings is set forth in Section 2.12(c) of the Disclosure Schedule.

“D&O Tail Insurance” shall have the meaning given to it in Section 4.13(b).

“D&O Tail Insurance Premium Amount” shall have the meaning given to it in
Section 4.13(b).

“DB” shall have the meaning given to it in Section 2.26.

“Designated Employees” shall have the meaning given to it in Section 4.9(a).

“Disclosure Schedule” shall mean the disclosure schedule provided by the Company
to the Buyer on the date hereof, arranged in sections and subsections
corresponding to the numbered and lettered sections and subsections contained in
Article II that may contain disclosures in such sections or subsections that
shall qualify only the corresponding section or

 

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subsection in Article II; provided, however, that any exception to or disclosure
in one section shall be deemed to have been disclosed in other sections to the
extent that the applicability of such disclosure to such other sections or such
other representations and warranties is reasonably apparent from the face of
such disclosure to a reader unfamiliar with the Company’s business.

“Dispute” shall mean the dispute resulting if the Company Stockholder
Representative in a Response disputes the Company Stockholders’ liability for
all or part of the Claimed Amount.

“Dissenting Shares” shall mean Company Shares held as of the Effective Time by a
Company Stockholder who has not voted such Company Shares in favor of the
adoption of this Agreement and with respect to which appraisal shall have been
duly demanded and perfected in accordance with Section 262 of the Delaware
General Corporation Law and not effectively withdrawn or forfeited prior to the
Effective Time.

“Documentation” shall mean printed, visual or electronic materials, reports,
white papers, documentation, specifications, designs, flow charts, code
listings, instructions, user manuals, frequently asked questions, release notes,
recall notices, error logs, diagnostic reports, marketing materials, packaging,
labeling, service manuals and other information describing the use, operation,
installation, configuration, features, functionality, pricing, marketing or
correction of a product, whether or not provided to end user.

“Earn-Out Amount” shall have the meaning given to it in Section 1.14(a).

“Earn-Out Determination” shall have the meaning given to it in Section 1.14(b).

“Earn-Out Dispute Notice” shall have the meaning given to it in Section 1.14(b).

“Earn-Out Period” shall have the meaning given to it in Section 1.14(a)(iv).

“Earn-Out Statement” shall have the meaning given to it in Section 1.14(b).

“Effective Time” shall mean the time at which the Surviving Corporation files
the Certificate of Merger with the Secretary of State of the State of Delaware.

“Employee Benefit Plan” shall mean any “employee pension benefit plan” (as
defined in Section 3(2) of ERISA), any “employee welfare benefit plan” (as
defined in Section 3(1) of ERISA), and any other written or oral plan, agreement
or arrangement involving direct or indirect compensation, including insurance
coverage, severance benefits, fringe benefits, disability benefits, deferred
compensation, bonuses, stock options, stock purchase, phantom stock, stock
appreciation or other forms of incentive compensation or post-employment
compensation.

“Environmental Law” shall mean any federal, state, local or foreign law,
statute, rule, order, directive, judgment, Permit or regulation or the common
law relating to the environment, occupational health and safety, or exposure of
Persons or property to Materials of Environmental Concern, including any
statute, regulation, administrative decision or order pertaining to: (i) the
presence of or the treatment, storage, disposal, generation, transportation,
handling, distribution, manufacture, processing, use, import, export, labeling,
recycling, registration, investigation or

 

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remediation of Materials of Environmental Concern or documentation related to
the foregoing; (ii) air, water or noise pollution; (iii) surface water,
groundwater or soil contamination; (iv) the release, threatened release, or
accidental release of Materials of Environmental Concern, including emissions,
discharges, injections, spills, escapes or dumping of Materials of Environmental
Concern; (v) transfer of interests in or control of real property which may be
contaminated; (vi) community or worker right-to-know disclosures with respect to
Materials of Environmental Concern; (vii) the protection of wild life, marine
life and wetlands, and endangered and threatened species; (viii) storage tanks,
vessels, containers, abandoned or discarded barrels and other closed
receptacles; and (ix) health and safety of employees and other Persons. As used
above, the term “release” shall have the meaning set forth in CERCLA.

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

“ERISA Affiliate” shall mean any entity which is, or at any applicable time was
(but only with respect to such time), a member of (1) a controlled group of
corporations (as defined in Section 414(b) of the Internal Revenue Code), (2) a
group of trades or businesses under common control (as defined in Section 414(c)
of the Internal Revenue Code), or (3) an affiliated service group (as defined
under Section 414(m) of the Internal Revenue Code or the regulations under
Section 414(o) of the Internal Revenue Code), any of which includes or included
the Company or a Subsidiary.

“Escrow Agreement” shall have the meaning given to it in Section 1.3(e).

“Escrow Agent” shall mean Wells Fargo Bank, National Association, a national
banking association.

“Escrow Amount” shall have the meaning given to it in Section 1.3(e).

“Escrow Fund” shall mean the fund established pursuant to Section 1.8(a) and the
Escrow Agreement, including the Escrow Amount.

“Estimated Closing Net Working Capital” shall have the meaning given to it in
Section

“Estimated Closing Net Working Capital Certificate” shall have the meaning given
to it in Section 1.13(b).

“Estimated Closing Net Working Capital Statement” shall have the meaning given
to it in Section 1.13(b).

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

“Exchangeable Shares” shall have the meaning given to it in Section 1.4(b).

“Expected Claim Notice” shall mean a notice that, as a result of a legal
proceeding instituted by or written claim made by a third party, the Indemnified
Party reasonably expects to incur Losses for which it is entitled to
indemnification under Article VI.

 

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“Exploit” shall mean develop, design, test, modify, make, use, sell, have made,
used and sold, import, reproduce, market, distribute, commercialize, support,
maintain, correct and create derivative works of.

“Export Control Laws” shall have the meaning given to it in Section 2.22(b).

“Final Earn-Out Amount” shall have the meaning given to it in Section 1.14(b).

“Final Revised Closing Net Working Capital” shall have the meaning given to it
in Section 1.13(c)(ii).

“Final Revised Closing Net Working Capital Statement” shall have the meaning
given to it in Section 1.13(c)(ii).

“Financial Statements” shall mean: (a) the audited consolidated balance sheets
as of December 31, 2008, 2009 and 2010 and statements of income, changes in
stockholders’ equity and cash flows of the Company for the fiscal years ending
December 31, 2008, 2009 and 2010 and (b) the Most Recent Balance Sheet and the
unaudited consolidated statements of income, changes in stockholders’ equity and
cash flows for the 3 months ending on the Most Recent Balance Sheet Date, in
each case, including any footnotes thereto.

“Firm” shall have the meaning given to in Section 9.16.

“GAAP” shall mean United States generally accepted accounting principles.

“Governmental Entity” shall mean United States, Canadian or supranational,
foreign, domestic, federal, territorial, provincial, state, municipal or local
governmental authority, quasi-governmental authority, government or
self-regulatory organization, or any political or other subdivision, department
or branch of any of the foregoing, or any court, arbitrational tribunal,
administrative agency or commission or other governmental or regulatory
authority or agency.

“Grants” shall have the meaning given to it in Section 2.30.

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

“Hired Company Employees” shall have the meaning given to it in Section 4.9(b).

“IEEE” shall have the meaning given to it in Section 2.22(d).

“Import Control Laws” shall have the meaning given to it in Section 2.22(c).

“Indemnified Party” shall have the meaning given to it in Section 6.2(a).

“Initial Closing Net Working Capital Adjustment” shall have the meaning given to
it in Section 1.13(b).

“Initial Closing Net Working Capital Excess” shall have the meaning given to it
in Section 1.13(b).

 

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“Initial Closing Net Working Capital Shortfall” shall have the meaning given to
it in Section 1.13(b).

“Initial Payout Amount” shall have the meaning given to it in
Section 1.5(a)(iii).

“Intellectual Property” shall mean the following subsisting throughout the
world: (a) Patent Rights; (b) Trademarks and all goodwill in the Trademarks;
(c) copyrights, designs, data and database rights and registrations and
applications for registration thereof, including moral rights of authors;
(d) mask works and registrations and applications for registration thereof and
any other rights in semiconductor topologies under the Laws of any jurisdiction;
(e) inventions, invention disclosures, statutory invention registrations, trade
secrets and confidential business information, know-how, manufacturing and
product processes and techniques, research and development information,
financial, marketing and business data, pricing and cost information, business
and marketing plans and customer and supplier lists and information, whether
patentable or nonpatentable, whether copyrightable or noncopyrightable and
whether or not reduced to practice; and (f) other proprietary rights relating to
any of the foregoing (including remedies against infringement thereof and rights
of protection of interest therein under the Laws of all jurisdictions).

“Intellectual Property Registrations” means Patent Rights, registered
Trademarks, registered copyrights and designs, mask work registrations and
applications for each of the foregoing.

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

“Internal Systems” shall mean the Software and Documentation and the computer,
communications and network systems (both desktop and enterprise-wide),
laboratory equipment, reagents, materials and test, calibration and measurement
apparatus used by the Company or any Subsidiary in their business or operations
or to develop, manufacture, fabricate, assemble, provide, distribute, support,
maintain or test the Customer Offerings, whether located on the premises of the
Company or a Subsidiary or hosted at a third party site. All Internal Systems
that are material to the business of the Company or any of the Subsidiaries are
listed and described in Section 2.12 (c) of the Disclosure Schedule.

“Investment Canada Act” shall mean the Investment Canada Act, as amended, and
the applicable regulations thereunder.

“Item of Dispute” shall have the meaning given to it in Section 1.14(b).

“Key Employees” shall have the meaning given to it in Section 4.9(a).

“Knowledge,” in the context of phrases such as “to the knowledge of the Company”
or any phrase of similar import (including, without limitation, phrases
including the term “aware”), shall be deemed to refer to the actual knowledge of
Sohail Kahn, William Burke, Peter Gammel and Stephen Kovacic.

“Laws” shall mean any statute, law (including common law), rule, code, Order,
ordinance, treaty or regulation issued or promulgated by any Governmental
Entity.

 

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“Lease” shall mean any lease or sublease pursuant to which the Company or a
Subsidiary leases or subleases from another party any real property.

“Legal Proceeding” shall mean any action, suit, proceeding, claim, arbitration
or investigation before any Governmental Entity or before any arbitrator.

“Letter of Transmittal” shall have the meaning given to it in Section 1.12(b).

“Losses” shall mean, without duplication, any and all debts, obligations and
other liabilities (whether absolute, accrued, contingent, fixed or otherwise,
known or unknown, or due or to become due, or otherwise), judgments, monetary
damages, fines, fees, penalties, interest obligations and expenses (including
amounts paid in settlement, interest, court costs, costs of investigators, fees
and reasonable expenses of attorneys, accountants, financial advisors and other
experts, and other reasonable expenses of litigation, arbitration or other
dispute resolution proceedings relating to a Third-Party Action or an
indemnification claim under Article VI); provided, however, that,
notwithstanding the foregoing, “Losses” shall not include any incidental,
special, punitive, consequential or exemplary damages except (i) to the extent
constituting lost profits or (ii) where such damages are awarded (either
pursuant to a final, non-appealable judicial award or pursuant to written
settlement agreement executed in conformity with Section 6.2(b)) in connection
with a Third Party Action.

“Major Stockholder” shall have the meaning given to it in Section 1.12(b).

“Make Whole Amount” shall have the meaning given to it in Section 6.5.

“Materials of Environmental Concern” shall mean any: pollutants or contaminants
(as such terms are defined under the Clean Water Act 33 U.S.C. Section 401 et
seq), hazardous substances (as such terms are defined under CERCLA), pesticides
(as such term is defined under the Federal Insecticide, Fungicide and
Rodenticide Act), solid wastes and hazardous wastes (as such terms are defined
under the Resource Conservation and Recovery Act), chemicals, other hazardous,
radioactive or toxic materials, oil, petroleum and petroleum products (and
fractions thereof), or any other material (or article containing such material)
listed or subject to regulation under any law, statute, rule, regulation, order,
Permit, or directive due to its potential, directly or indirectly, to harm the
environment or the health of humans or other living beings.

“Merger” shall mean the merger of Merger Sub with and into the Company in
accordance with the terms of this Agreement.

“Merger Sub” shall have the meaning set forth in the first paragraph of this
Agreement.

“Most Recent Balance Sheet” shall mean the unaudited consolidated balance sheet
of the Company as of the Most Recent Balance Sheet Date and including any
footnotes thereto.

“Most Recent Balance Sheet Date” shall mean March 31, 2011.

“Net Earn-Out Amount” shall have the meaning given to it in Section 1.14(e).

“Net Revenue” shall have the meaning given to it in Section 1.14(a)(vi).

 

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“Open Source Materials” means all Software, Documentation or other material that
is distributed as “free software,” “open source software” or under a similar
licensing or distribution model, including, but not limited to, the GNU General
Public License (GPL), GNU Lesser General Public License (LGPL), Mozilla Public
License (MPL), or any other license described by the Open Source Initiative as
set forth on www.opensource.org.

“Option Payment” shall have the meaning given to it in Section 1.7(a).

“Ordinary Course of Business” shall mean the ordinary course of business
consistent with past custom and practice (including with respect to frequency
and amount).

“Orders” shall mean any judgment, order, ruling, injunction, assessment, award,
stay, writ or decree of any Governmental Entity.

“Owned Real Property” shall mean each item of real property owned by the Company
or a Subsidiary.

“Parties” shall mean the Buyer, Merger Sub, the Company and the Company
Stockholder Representative.

“Patent Rights” shall mean all patents, patent applications, utility models,
design registrations and certificates of invention and other governmental grants
for the protection of inventions or industrial designs (including all related
continuations, continuations-in-part, divisionals, reissues and reexaminations).

“Payment Agent” shall have the meaning given to it in Section 1.12(a).

“Permits” shall mean all permits, licenses, registrations, certificates, orders,
approvals, franchises, variances, waivers and similar rights issued by or
obtained from any Governmental Entity (including those issued or required under
Environmental Laws and those relating to the occupancy or use of owned or leased
real property).

“Person” shall mean a natural person, partnership (general or limited),
corporation, limited liability company, business trust, joint stock company,
trust, unincorporated association, joint venture, Governmental Entity or other
entity or organization.

“Pre-Closing Exchange” shall have the meaning given to it in Section 1.4(b).

“Preferred Shares” shall mean the shares of Series A-1 Preferred Stock of the
Company and the Special A-1 Voting Stock.

“Proposal” shall have the meaning given to it in Section 4.7(e)(i).

“Pro Rata Portion” shall mean, with respect to any Company Stockholder or any
holder of a Company Option, the percentage set forth across from the name of
such Company Stockholder or holder of a Company Option on Appendix I, which the
Company shall have the right to update prior to the Effective Time, but which
percentages in any event shall sum to 100% in the aggregate without any of such
percentages being attributable to the Buyer, the Merger Sub, the Company or any
Subsidiary in their respective capacities as holders of Company Shares or
Company Options prior to the Effective Time.

 

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“Quarterly Earn-Out Determination” shall have the meaning given to it in Section
1.14(b).

“Quarterly Earn-Out Period” shall have the meaning given to it in
Section 1.14(b).

“Quarterly Earn-Out Statement” shall have the meaning given to it in
Section 1.14(b).

“Representative Reimbursable Expenses” shall have the meaning given to it in
Section 1.15(f).

“Representatives” shall have the meaning given to it in Section 4.7(a).

“Required Minimum Closing Net Working Capital” shall have the meaning given to
it in Section 1.13(a)(ii).

“Requisite Stockholder Approval” shall mean the adoption of this Agreement and
the approval of the Merger by (i) a majority in voting power of the outstanding
Company Shares and Special A-1 Voting Stock entitled to vote on this Agreement
and the Merger and (ii) a majority in interest (as determined by the aggregate
number of votes) of the outstanding shares of Series A-1 Preferred Stock and
Special A-1 Voting Stock voting together as a single class.

“Response” shall mean a written response containing the information provided for
in Section 6.2(d).

“Revised Closing Net Working Capital Adjustment” shall have the meaning given to
it in Section 1.13(c)(ii).

“Revised Closing Net Working Capital” shall have the meaning given to it in
Section

“Revised Closing Net Working Capital Statement” shall have the meaning given to
it in Section 1.13(c)(i).

“Securities Act” shall mean the Securities Act of 1933, as amended.

“Security Interest” shall mean any mortgage, pledge, security interest,
encumbrance, charge or other lien (whether arising by contract or by operation
of law), other than (i) mechanic’s, materialmen’s, and similar liens, (ii) liens
arising under worker’s compensation, unemployment insurance, social security,
retirement, and similar legislation and (iii) liens on goods in transit incurred
pursuant to documentary letters of credit, in each case arising in the Ordinary
Course of Business of the Company and not material to the Company.

“Seller Group” shall have the meaning given to in Section 9.16.

 

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“Series A-1 Liquidation Preference Amount” shall have the meaning given to it in
Section 1.5(a)(iv).

“Series A-1 Preferred Stock” shall mean the shares of the Company’s Series A-1
Preferred Stock par value $0.0001 per share.

“Software” shall mean computer software code, applications, utilities,
development tools, diagnostics, databases and embedded systems, whether in
source code, interpreted code or object code form.

“Special A-1 Voting Stock” shall mean the shares of the Company’s Special A-1
Voting Stock par value $0.0001 per share.

“Special Common Voting Stock” shall mean the shares of the Company’s Special
Common Voting Stock par value $0.0001 per share.

“Standard Common Stock” shall mean the shares of the Company’s Standard Common
Stock par value $0.0001 per share.

“Subsidiary” shall mean any corporation, partnership, trust, limited liability
company or other non-corporate business enterprise in which the Company (or
another Subsidiary) holds stock or other ownership interests representing
(a) more than 50% of the voting power of all outstanding stock or ownership
interests of such entity or (b) the right to receive more than 50% of the net
assets of such entity available for distribution to the holders of outstanding
stock or ownership interests upon a liquidation or dissolution of such entity.

“Superior Proposal” shall have the meaning given to it in Section 4.7(e)(ii).

“Surviving Corporation” shall mean the Company, as the surviving corporation in
the Merger.

“Taxes” shall mean any and all taxes, charges, fees, duties, contributions,
levies or other similar assessments or liabilities in the nature of a tax,
including, without limitation, income, gross receipts, corporation, ad valorem,
premium, value-added, net worth, capital stock, capital gains, documentary,
recapture, alternative or add-on minimum, disability, registration, recording,
excise, real property, personal property, sales, use, license, lease, service,
service use, transfer, withholding, employment, unemployment, insurance, social
security, national insurance, business license, business organization,
environmental, workers compensation, payroll, profits, severance, stamp,
occupation, escheat, windfall profits, customs duties, franchise, estimated and
other taxes of any kind whatsoever imposed by the United States of America or
any state, local or foreign government, or any agency or political subdivision
thereof, and any interest, fines, penalties, assessments or additions to tax
imposed with respect to such items.

“Tax Returns” shall mean any and all reports, returns (including information
returns), declarations, or statements relating to Taxes including any amendments
thereof or attachments thereto required to be filed with or submitted to any
Governmental Entity in connection with the determination, assessment, collection
or payment of Taxes or in connection with the administration, implementation or
enforcement of or compliance with any legal requirement relating to any Tax, and
including, for the avoidance of doubt, U.S. Department of the Treasury Form TD F
90-22.1.

 

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“Third Party Action” shall mean any lawsuit or legal proceeding by a Person
other than a Person for which indemnification may be sought by such Person under
Article VI.

“Third Party Claim Notice” shall have the meaning given to it in Section 6.2(a).

“Third Party Claim Amount” shall have the meaning given to it in Section 6.2(a).

“Threshold” shall have the meaning given to it in Section 6.4(a).

“Trademarks” shall mean all registered trademarks and service marks, logos,
Internet domain names, corporate names and doing business designations and all
registrations and applications for registration of the foregoing, common law
trademarks and service marks and trade dress.

“Transaction Expenses” shall have the meaning given to it in Section 1.5(a)(v).

“Treasury Regulations” shall mean the Treasury regulations promulgated under the
Internal Revenue Code.

“Working Capital Escrow Amount” shall have the meaning given to it in
Section 1.3(e).

“Working Capital Escrow Deficit” shall have the meaning given to it in Section
1.13(c)(iv).

“Working Capital Escrow Fund” shall mean the fund established pursuant to
Section 1.8(b) and the Escrow Agreement, including the Working Capital Escrow
Amount.

ARTICLE IX

MISCELLANEOUS

9.1 Press Releases and Announcements. No Party shall issue any press release or
public announcement relating to the subject matter of this Agreement without the
prior written approval of the other Parties; provided, however, that any Party
may make any public disclosure it believes in good faith is required by
applicable law, regulation or stock market rule (in which case the disclosing
Party shall use commercially reasonable efforts to advise the other Parties and
provide them with a copy of the proposed disclosure prior to making the
disclosure); and provided, further, that following Closing and the previous
public announcement of the Merger, the Company Stockholder Representative shall
be permitted to publicly announce that it has been engaged to serve as the
Company Stockholder Representative in connection with the Merger as long as such
announcement does not disclose any of the other terms of the Merger or the other
transactions contemplated herein.

 

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9.2 Further Assurances; Post-Closing Cooperation. At any time or from time to
time after the Closing, at the request of any Party, the other Parties (other
than the Company Stockholder Representative) shall execute and deliver to the
requesting Party such other documents and instruments, provide such materials
and information and take such other actions as the requesting Party may
reasonably request to consummate the transactions contemplated by this Agreement
and otherwise to cause the other Party or Parties (other than the Company
Stockholder Representative) to fulfill its or their respective obligations under
this Agreement and the transactions contemplated hereby.

9.3 Third-Party Beneficiaries. The terms and provisions of this Agreement are
intended solely for the benefit of the Buyer, Merger Sub, the Company, the
Company Stockholder Representative and their respective successors or permitted
assigns, and it is not the intention of the Parties to confer third-party
beneficiary rights, and this Agreement does not confer any such rights, upon any
other Person except, (a) prior to the Effective Time, for the right of Company
Stockholders to pursue claims for damages (including damages, as may be
determined by a court of competent jurisdiction, based on the consideration
payable to the Company Stockholders pursuant to this Agreement) and other relief
(including equitable relief) for any breach by the Buyer or the Merger Sub of
their obligations to consummate the Merger pursuant to this Agreement, (b) from
and after the Effective Time, the rights of Company Stockholders to receive the
consideration set forth in Article I and (c) from and after the Effective Time,
the rights of the Company Insured Parties to enforce their respective rights
under Section 4.13 hereof. The rights granted pursuant to clause (a) of this
Section 9.3 shall only be enforceable on behalf of the Company Stockholders by
the Company in its sole and absolute discretion, as agent for the Company
Stockholders and, consequently, any damages, settlements or other amounts
recovered or received by the Company with respect to such claims (net of
expenses incurred by the Company in connection therewith) may, in the Company’s
sole and absolute discretion, be (i) distributed, in whole or in part, by the
Company to the Company Stockholders or (ii) retained by the Company for the use
and benefit of the Company on behalf of the Company Stockholders in any manner
the Company deems fit.

9.4 Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement among the Parties and supersedes any
prior understandings, agreements or representations by or among the Parties,
written or oral, with respect to the subject matter hereof; provided that the
Confidentiality Agreement dated April 7, 2011, between the Buyer and the Company
shall remain in effect in accordance with its terms as against the Company and,
until the Effective Time, as against the Buyer.

9.5 Succession and Assignment. This Agreement shall be binding upon and inure to
the benefit of the Parties named herein and their respective successors and
permitted assigns. No Party may assign any of its rights or delegate any of its
performance obligations hereunder without the prior written approval of the
other Parties. Any purported assignment of rights or delegation of performance
obligations in violation of this Section 9.5 is void.

9.6 Counterparts and Facsimile Signature. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. This Agreement may be
executed by facsimile signature.

9.7 Headings. The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation
of this Agreement.

 

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9.8 Notices. All notices, requests, demands, claims, and other communications
hereunder shall be in writing. Any notice, request, demand, claim or other
communication hereunder shall be deemed duly delivered four (4) business days
after it is sent by registered or certified mail, return receipt requested,
postage prepaid, or one (1) business day after it is sent for next business day
delivery via a reputable nationwide overnight courier service, or on the same
business day (if sent before 2 p.m. local time in the time zone of the
recipient’s physical address (as specified below) and otherwise on the next
business day) if sent by e-mail or fax with electronic or telephonic
confirmation of receipt, in each case to the intended recipient as set forth
below:

 

If to the Company:

   Copy to: (which shall not constitute notice):

SiGe Semiconductor, Inc.

   Goodwin Procter LLP

200 Brickstone Square

   Exchange Place

Suite 203

   Boston, MA 02109

Andover, MA 01810

   Attn: Jocelyn M. Arel and James R. Kasinger

Attn: Sohail Khan

   jarel@goodwinprocter.com

sohail.khan@sige.com

   jkasinger@goodwinprocter.com

Telephone: 978-327-6850

   Telephone: 617-570-1000

Fax: 978-475-0859

   Fax: 617-523-1231

If to the Buyer or Merger Sub:

   Copy to: (which shall not constitute notice):

Skyworks Solutions, Inc.

   Wilmer Cutler Pickering Hale and Dorr LLP

20 Sylvan Road

   60 State Street

Woburn, MA 01801

   Boston, Massachusetts 02109

Attn: Mark V.B. Tremallo, General

   Attn: Mark G. Borden and Graham Robinson

Counsel, and Robert Terry, Assistant

   mark.borden@wilmerhale.com

General Counsel

   graham.robinson@wilmerhale.com

mark.tremallo@skyworksinc.com

   Telephone: 617-526-6000

robert.terry@skyworksinc.com

   Fax: 617-526-5000

Telephone: 781-376-3000

  

Fax: 781-376-3310

  

If to the Company Stockholder

   Copy to: (which shall not constitute notice):

Representative:

  

Shareholder Representative Services

   Goodwin Procter LLP

LLC

   Exchange Place

601 Montgomery Street, Suite 2020

   Boston, MA 02109

San Francisco, CA 94111

   Attn: Jocelyn M. Arel and James R. Kasinger

Attn: Managing Director

   jarel@goodwinprocter.com

deal s@ sharehol derrep.com

   jkasinger@goodwinprocter.com

Telephone: 415-367-9400

   Telephone: 617-570-1000

Fax: 415-962-4147

   Fax: 617-523-1231

 

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Any Party may give any notice, request, demand, claim or other communication
hereunder using any other means (including personal delivery, expedited courier,
messenger service, or ordinary mail), but no such notice, request, demand, claim
or other communication that is given by such other means shall be deemed to have
been duly given unless and until it actually is received by the party for whom
it is intended. Any Party may change the address to which notices, requests,
demands, claims, and other communications hereunder are to be delivered by
giving the other Parties a minimum of five (5) business days’ prior written
notice in the manner herein set forth.

9.9 Amendments and Waivers. The Parties may mutually amend any provision of this
Agreement at any time prior to the Closing; provided, however, that any
amendment effected subsequent to the Requisite Stockholder Approval shall be
subject to any restrictions contained in the Delaware General Corporation Law.
No amendment of any provision of this Agreement shall be valid unless the same
shall be in writing and signed by all of the Parties or, after the Effective
Time, by the Buyer, the Surviving Corporation and the Company Stockholder
Representative. No waiver of any right or remedy hereunder shall be valid unless
the same shall be in writing and signed by the Party giving such waiver. No
waiver by any Party with respect to any default, misrepresentation or breach of
warranty or covenant hereunder shall be deemed to extend to any prior or
subsequent default, misrepresentation or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.

9.10 Severability; Invalid Provisions. If any provision of this Agreement is
finally judicially determined to be illegal, invalid or unenforceable under any
present or future law, and if the rights or obligations of any Party under this
Agreement will not be materially and adversely affected thereby, (a) such
provision shall be fully severable, (b) this Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part hereof, (c) the remaining provisions of this Agreement shall
remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance herefrom, and (d) in lieu
of such illegal, invalid or unenforceable provision, there shall be added
automatically as a part of this Agreement a legal, valid and enforceable
provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible.

9.11 Governing Law. All matters arising out of or relating to this Agreement and
the transactions contemplated hereby (including without limitation its
interpretation, construction, performance and enforcement) shall be governed by
and construed in accordance with the internal Laws of the State of Delaware
without giving effect to any choice or conflict of law provision or rule
(whether of the State of Delaware or any other jurisdiction) that would cause
the application of Laws of any jurisdictions other than those of the State of
Delaware.

9.12 Submission to Jurisdiction. Each Party (a) submits to the jurisdiction of
any state or federal court sitting in the City of Dover or Wilmington in the
State of Delaware in any action or proceeding arising out of or relating to this
Agreement (including any action or proceeding for the enforcement of any
arbitral award made in connection with any arbitration of a Dispute hereunder),
(b) agrees that all claims in respect of such action or proceeding may be heard
and determined in any such court, (c) waives any claim of inconvenient forum or
other challenge to venue in such court, (d) agrees not to bring any action or
proceeding arising out of or relating to

 

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this Agreement in any other court; provided in each case that, solely with
respect to any arbitration of a Dispute, the Arbitrator shall resolve all
threshold issues relating to the validity and applicability of the arbitration
provisions of this Agreement, contract validity, applicability of statutes of
limitations and issue preclusion, and such threshold issues shall not be heard
or determined by such court. Each Party agrees to accept service of any summons,
complaint or other initial pleading made in the manner provided for the giving
of notices in Section 9.8, provided that nothing in this Section 9.12 shall
affect the right of any Party to serve such summons, complaint or other initial
pleading in any other manner permitted by law.

9.13 WAIVER OF TRIAL BY JURY. TO THE EXTENT PERMITTED BY APPLICABLE LAW, IN ANY
ACTION OR PROCEEDING ARISING HEREFROM, THE PARTIES HERETO CONSENT TO TRIAL
WITHOUT A JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY
HERETO OR ITS SUCCESSORS AGAINST ANY OTHER PARTY HERETO OR ITS SUCCESSORS IN
RESPECT OF ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT,
REGARDLESS OF THE FORM OF ACTION OR PROCEEDING.

9.14 Specific Performance. The Parties acknowledge and agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with its specific terms or were otherwise
breached. It is agreed by the Parties that each Party shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the United States
or any state having jurisdiction without the requirement of posting a bond or
other security, this being in addition to any other remedy to which such Party
is entitled at Law or in equity.

9.15 Construction.

(a) The language used in this Agreement shall be deemed to be the language
chosen by the Parties to express their mutual intent, and no rule of strict
construction shall be applied against any Party.

(b) Any reference to any Law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise.

(c) Any reference to any Article, Section or paragraph shall be deemed to refer
to an Article, Section or paragraph of this Agreement, unless the context
clearly indicates otherwise.

(d) The Parties hereto agree that this Agreement is the product of negotiation
between sophisticated parties and individuals, all of whom were or had the
opportunity to be represented by counsel, and each of whom had an opportunity to
participate in or did participate in the drafting of each provision hereof.
Accordingly, ambiguities in this Agreement, if any, shall not be construed
strictly or in favor of or against any Party but rather shall be given a fair
and reasonable construction without regard to the rule of contra proferentem.

(e) Unless the context of this Agreement otherwise requires, (i) words of either
gender or the neuter include the other gender and the neuter, (ii) words using
the singular number also include the plural number and words using the plural
number also include the

 

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singular number, (iii) the terms “hereof,” “herein,” “hereby” and derivative or
similar words refer to this entire Agreement as a whole and not to any
particular Article, Section or other subdivision, (iv) the terms “Article” or
“Section” or other subdivision refer to the specified Article, Section or other
subdivision of the body of this Agreement, (v) the words “include,” “includes,”
“including” and other similar words shall be deemed to be followed by the phrase
“but not limited to,” (vi) when a reference is made in this Agreement to
Exhibits, such reference shall be to an Exhibit to this Agreement unless
otherwise indicated and (vii) for any document or other item to have been “made
available” heretofore or prior to the execution or date of this Agreement such
document or other item must be deposited at least six (6) hours prior to the
time that this Agreement was executed by the Parties (or if deposited more
recently, provided such notice of such deposit and a copy of thereof was give to
the Buyer) into the data room heretofore established by the Company with written
notice of such deposit and a copy of such deposit was made to the Buyer and
(x) all references to “dollars” or “$” shall refer to the lawful currency of the
United States. All accounting terms used herein and not expressly defined herein
shall have the meanings given to them under GAAP, unless otherwise expressly
stated. The terms “third party,” “third-party” or “third parties” refers to
Persons other than the Buyer and Merger Sub, on the one hand, and the Company
and the Company Stockholder Representative, on the other hand. The drafting and
negotiation of the representations, warranties, covenants and conditions to the
obligations of the Company, the Buyer and Merger Sub herein reflect compromises,
and certain provisions may overlap with other provisions or may address the same
or similar subject matters in different ways or for different purposes. It is
the intention of the parties that, to the extent possible, unless provisions are
by their terms mutually exclusive and effect cannot be given to both or all such
provisions, (i) the representations, warranties, covenants and closing
conditions in this Agreement shall be construed to be cumulative, (ii) each
representation, warranty, covenant and closing condition in this Agreement shall
be given full separate and independent effect, and (iii) except as otherwise
provided in this Agreement, no limitation in or exception to any representation,
warranty, covenant or closing condition shall be construed to limit or apply to
any other representation, warranty, covenant or closing condition unless such
limitation or exception is expressly made applicable to such other
representation, warranty, covenant or closing condition. All remedies, either
under this Agreement or by Law or otherwise afforded, shall be cumulative and
not alternative.

9.16 Waiver of Conflict. Each of the Parties acknowledges and agrees, on its own
behalf and on behalf of its directors, members, partners, officers, employees
and Affiliates that the Company is the client of Goodwin Procter LLP (“Firm”),
and not any of the Company Stockholders. After the Closing, it is possible that
Firm will represent the Company Stockholders, the Company Stockholder
Representative and their respective Affiliates (individually or collectively,
the “Seller Group”) in connection with the transactions contemplated herein, or
in the Escrow Agreement, the escrowed funds described in Section 1.8 hereof, any
claims made thereunder pursuant to this Agreement or the Escrow Agreement. The
Buyer, Merger Sub and the Company hereby agree that Firm (or any successor) may
represent the Seller Group in the future in connection with issues that may
arise under this Agreement, the Escrow Agreement, the administration of the
escrowed funds described in Section 1.8 hereof and any claims that may be made
thereunder pursuant to this Agreement or the Escrow Agreement. Firm (or any
successor) may serve as counsel to all or a portion of the Seller Group or any
director, member, partner, officer, employee, representative, or Affiliate of
the Seller Group, in connection with any litigation, claim or obligation arising
out of or relating to this Agreement,

 

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the Escrow Agreement, or the transactions contemplated by this Agreement or the
Escrow Agreement. Each of the Buyer, Merger Sub and the Company consents
thereto, and waives any conflict of interest arising therefrom, and each such
party shall cause any Affiliate thereof to consent to waive any conflict of
interest arising from such representations. Each of the Buyer, the Merger Sub
and the Company acknowledges that such consent and waiver is voluntary, that it
has been carefully considered, and that the parties have consulted with counsel
or have been advised they should do so in this connection. Communications
between the Company and Firm will become the property of the Company Stockholder
Representative and the Company Stockholders following the Closing and will not
be disclosed to the Buyer or Merger Sub without the prior written consent of the
Company Stockholder Representative.

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written.

 

SKYWORKS SOLUTIONS, INC. By:   /s/ David Aldrich Name:   David Aldrich Title:  
President and CEO SILVER BULLET ACQUISITION CORP. By:   /s/ Mark Tremallo Name:
  Mark Tremallo Title:   Secretary SIGE SEMICONDUCTOR, INC. By:   /s/ Sohail
Khan Name:   Sohail Khan Title:   President and CEO

SHAREHOLDER REPRESENTATIVE

SERVICES LLC, solely in its capacity as the

Company Stockholder Representative

By:   /s/ Mark B. Vogel Name:   Mark B. Vogel Title:   Managing Director