EXHIBIT 10.3






Exhibit 10.3




EXECUTION COPY

CONFIDENTIAL




      




ASSET PURCHASE AGREEMENT




between:




CONEXANT SYSTEMS, Inc.,

a Delaware corporation;




and




NXP B.V.


a Dutch besloten venootshap




 






Dated as of April 29, 2008




 






 






 









 








TABLE OF CONTENTS




	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page
	1.	 	 	Sale And Purchase Of Assets; Related Transactions	 	 	2	 
	 

	 	 	1.1	 	 	Sale and Purchase of Assets
	 	 	2	 
	 

	 	 	1.2	 	 	Excluded Assets
	 	 	3	 
	 

	 	 	1.3	 	 	Purchase Price
	 	 	4	 
	 

	 	 	1.4	 	 	Adjustments
	 	 	4	 
	 

	 	 	1.5	 	 	Escrow Fund
	 	 	6	 
	 

	 	 	1.6	 	 	Contingent Payments
	 	 	7	 
	 

	 	 	1.7	 	 	Assumption of Liabilities
	 	 	8	 
	 

	 	 	1.8	 	 	Excluded Liabilities
	 	 	9	 
	 

	 	 	1.9	 	 	Sales and Transfer Taxes; VAT; Transferred Subsidiary Tax Matters
	 	 	9	 
	 

	 	 	1.10	 	 	Allocation of Purchase Price
	 	 	11	 
	 

	 	 	1.11	 	 	Ancillary Agreements
	 	 	12	 
	 

	 	 	1.12	 	 	Closing
	 	 	12	 
	 

	 	 	1.13	 	 	Deliveries by the Purchaser
	 	 	12	 
	 

	 	 	1.14	 	 	Deliveries by the Seller
	 	 	13	 
	 

	 	 	1.15	 	 	Nonassignability of Assets
	 	 	14	 
	 

	 	 	1.16	 	 	Affiliate Acquisitions
	 	 	15	 
	2.	 	 	Representations And Warranties Of the Seller	 	 	15	 
	 

	 	 	2.1	 	 	Due Organization and Qualification
	 	 	15	 
	 

	 	 	2.2	 	 	Title to Assets
	 	 	16	 
	 

	 	 	2.3	 	 	Financial Information
	 	 	16	 
	 

	 	 	2.4	 	 	Intellectual Property
	 	 	16	 
	 

	 	 	2.5	 	 	Transferred Contracts
	 	 	20	 
	 

	 	 	2.6	 	 	Transferred Subsidiary
	 	 	20	 
	 

	 	 	2.7	 	 	Compliance with Legal Requirements
	 	 	21	 
	 

	 	 	2.8	 	 	Employee Matters
	 	 	21	 
	 

	 	 	2.9	 	 	Employee Benefits; ERISA
	 	 	21	 
	 

	 	 	2.10	 	 	Legal Proceedings
	 	 	22	 
	 

	 	 	2.11	 	 	Authority
	 	 	23	 
	 

	 	 	2.12	 	 	Binding Nature of Agreements
	 	 	23	 
	 

	 	 	2.13	 	 	Non-Contravention; Consents
	 	 	23	 
	 

	 	 	2.14	 	 	Taxes
	 	 	23	 
	 

	 	 	2.15	 	 	Territorial Restrictions
	 	 	24	 
	 

	 	 	2.16	 	 	Absence of Changes
	 	 	24	 
	 

	 	 	2.17	 	 	Assets
	 	 	24	 
	 

	 	 	2.18	 	 	Customers and Suppliers
	 	 	24	 
	 

	 	 	2.19	 	 	Seller Products and Inventory
	 	 	25	 
	 

	 	 	2.20	 	 	Export Controls, Trade Sanctions and Certain Payments
	 	 	25	 
	 

	 	 	2.21	 	 	Continued Employment
	 	 	26	 
	 

	 	 	2.22	 	 	Disclosure
	 	 	26	 
	 

	 	 	2.23	 	 	Financial Advisor
	 	 	26	 






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	 	 	 	 	 	 	 	 	Page
	3.	 	 	Representations And Warranties Of the Purchaser	 	 	26	 
	 

	 	 	3.1	 	 	Due Organization
	 	 	26	 
	 

	 	 	3.2	 	 	Authority
	 	 	26	 
	 

	 	 	3.3	 	 	Binding Nature of Agreements
	 	 	27	 
	 

	 	 	3.4	 	 	Non-Contravention; Consents
	 	 	27	 
	 

	 	 	3.5	 	 	Cash Consideration
	 	 	27	 
	 

	 	 	3.6	 	 	Financial Advisor
	 	 	27	 
	4.	 	 	Pre-Closing Covenants	 	 	27	 
	 

	 	 	4.1	 	 	Access
	 	 	27	 
	 

	 	 	4.2	 	 	Conduct of Business
	 	 	28	 
	 

	 	 	4.3	 	 	Filings
	 	 	29	 
	 

	 	 	4.4	 	 	Consents; Releases
	 	 	31	 
	 

	 	 	4.5	 	 	Open Incoming POs and Open Outgoing POs Schedule
	 	 	31	 
	 

	 	 	4.6	 	 	No Shop
	 	 	31	 
	 

	 	 	4.7	 	 	Confidentiality
	 	 	32	 
	 

	 	 	4.8	 	 	Assets in India and China
	 	 	33	 
	 

	 	 	4.9	 	 	Non-Transferred Inbound IP Licenses
	 	 	33	 
	 

	 	 	4.10	 	 	Conditions
	 	 	33	 
	5.	 	 	Conditions Precedent To The Purchaser’s Obligation To Close	 	 	33	 
	 

	 	 	5.1	 	 	Accuracy of Representations
	 	 	33	 
	 

	 	 	5.2	 	 	Performance of Obligations
	 	 	34	 
	 

	 	 	5.3	 	 	Antitrust
	 	 	34	 
	 

	 	 	5.4	 	 	Instruments of Transfer
	 	 	34	 
	 

	 	 	5.5	 	 	Ancillary Agreements
	 	 	34	 
	 

	 	 	5.6	 	 	No Restraints
	 	 	34	 
	 

	 	 	5.7	 	 	No Proceedings
	 	 	34	 
	 

	 	 	5.8	 	 	Seller Required Approvals
	 	 	35	 
	 

	 	 	5.9	 	 	Seller Closing Certificate
	 	 	35	 
	 

	 	 	5.10	 	 	FIRPTA Certificate
	 	 	35	 
	 

	 	 	5.11	 	 	Transferred Employees
	 	 	35	 
	 

	 	 	5.12	 	 	Employee Agreements
	 	 	35	 
	 

	 	 	5.13	 	 	Intracompany Accounts
	 	 	35	 
	 

	 	 	5.14	 	 	Supply Agreement
	 	 	35	 
	 

	 	 	5.15	 	 	Allocation
	 	 	35	 
	6.	 	 	Conditions Precedent To The Seller’s Obligation To Close	 	 	35	 
	 

	 	 	6.1	 	 	Accuracy of Representations
	 	 	35	 
	 

	 	 	6.2	 	 	Performance of Obligations
	 	 	36	 
	 

	 	 	6.3	 	 	Antitrust
	 	 	36	 
	 

	 	 	6.4	 	 	Delivery of Consideration
	 	 	36	 
	 

	 	 	6.5	 	 	Instruments of Transfer
	 	 	36	 
	 

	 	 	6.6	 	 	Ancillary Agreements
	 	 	36	 
	 

	 	 	6.7	 	 	No Restraints
	 	 	36	 
	 

	 	 	6.8	 	 	Purchaser Closing Certificate
	 	 	36	 
	 

	 	 	6.9	 	 	Allocation
	 	 	36	 






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	 	 	 	 	 	 	 	 	Page
	7.	 	 	Termination	 	 	36	 
	 

	 	 	7.1	 	 	Right to Terminate Agreement
	 	 	36	 
	 

	 	 	7.2	 	 	Termination Procedures
	 	 	37	 
	 

	 	 	7.3	 	 	Effect of Termination
	 	 	38	 
	8.	 	 	Indemnification	 	 	38	 
	 

	 	 	8.1	 	 	Survival of Representations
	 	 	38	 
	 

	 	 	8.2	 	 	Indemnification by the Seller
	 	 	38	 
	 

	 	 	8.3	 	 	Indemnification by the Purchaser
	 	 	41	 
	 

	 	 	8.4	 	 	Third Party Claim Indemnification Procedures
	 	 	42	 
	 

	 	 	8.5	 	 	Claims Procedure
	 	 	43	 
	 

	 	 	8.6	 	 	Adjustments to Losses
	 	 	44	 
	 

	 	 	8.7	 	 	Payments
	 	 	44	 
	 

	 	 	8.8	 	 	Characterization of Indemnification Payments
	 	 	45	 
	 

	 	 	8.9	 	 	Effect of Waiver of Condition
	 	 	45	 
	9.	 	 	Employee Matters	 	 	45	 
	 

	 	 	9.1	 	 	Employment Matters
	 	 	45	 
	 

	 	 	9.2	 	 	Special Jurisdiction Employees
	 	 	46	 
	 

	 	 	9.3	 	 	Waiver of Waiting Period
	 	 	47	 
	 

	 	 	9.4	 	 	Certain Foreign National Employees
	 	 	47	 
	 

	 	 	9.5	 	 	W-2/Payroll Matters
	 	 	48	 
	 

	 	 	9.6	 	 	Accrued Amounts
	 	 	48	 
	 

	 	 	9.7	 	 	COBRA
	 	 	49	 
	 

	 	 	9.8	 	 	WARN
	 	 	49	 
	 

	 	 	9.9	 	 	No Third Party Rights
	 	 	49	 
	 

	 	 	9.10	 	 	Employee Communications
	 	 	49	 
	 

	 	 	9.11	 	 	401(k) Plan
	 	 	49	 
	10.	 	 	Miscellaneous	 	 	49	 
	 

	 	 	10.1	 	 	No Implied Representations
	 	 	49	 
	 

	 	 	10.2	 	 	Further Actions
	 	 	49	 
	 

	 	 	10.3	 	 	Governing Law; Submission to Jurisdiction; Selection of Forum;
Waiver of Trial By Jury
	 	 	50	 
	 

	 	 	10.4	 	 	Notices
	 	 	51	 
	 

	 	 	10.5	 	 	Public Announcements
	 	 	52	 
	 

	 	 	10.6	 	 	Fees and Expenses
	 	 	52	 
	 

	 	 	10.7	 	 	Books and Records
	 	 	52	 
	 

	 	 	10.8	 	 	Nonsolicitation and Non-Competition
	 	 	53	 
	 

	 	 	10.9	 	 	Assignment
	 	 	54	 
	 

	 	 	10.10	 	 	Parties in Interest
	 	 	54	 
	 

	 	 	10.11	 	 	Severability
	 	 	54	 
	 

	 	 	10.12	 	 	Entire Agreement
	 	 	54	 
	 

	 	 	10.13	 	 	Waiver
	 	 	54	 
	 

	 	 	10.14	 	 	Amendments
	 	 	55	 
	 

	 	 	10.15	 	 	Bulk Sales
	 	 	55	 
	 

	 	 	10.16	 	 	Counterparts
	 	 	55	 
	 

	 	 	10.17	 	 	Interpretation of Agreement
	 	 	55	 
	 

	 	 	10.18	 	 	Certain Definitions
	 	 	55	 






-iii-









 






TABLE OF EXHIBITS




	 	 	 
	Exhibit A

	 	Form of IP License Agreement
	Exhibit B

	 	Form of Assignment and Assumption Agreement
	Exhibit C

	 	Form of Intellectual Property Assignment Agreement
	Exhibit D

	 	Form of Escrow Agreement
	Exhibit E

	 	Supply Agreement Pricing and Warranty Terms
	Exhibit F

	 	Transition Services Agreement Terms and Conditions
	 
	 	 
	Schedule A

	 	Products for BMP Sales
	Schedule B

	 	Key Employees






-iv-









 





     This Asset Purchase Agreement is being entered into as of April 29, 2008, by and
between: Conexant Systems, Inc., a Delaware corporation (the “Seller”); and
NXP B.V., a Dutch besloten venootshap (the “Purchaser”). The Seller and the
Purchaser are referred to collectively in this Agreement as the “Parties.” Certain other
capitalized terms used in this Agreement are defined in Section 10.18.



Recitals




     WHEREAS, the Seller is engaged in the business of (i) the design, development, marketing and
distribution of STB products for worldwide satellite, terrestrial, Internet Protocol and cable
entertainment broadcasting networks, and (ii) the design and development of home networking
subsystems to distribute video throughout a home via coaxial cable (i.e., “MoCA”) (as conducted by
Seller over the period commencing on January 1, 2007 through the Closing Date, the
“Business”);



     WHEREAS, the Seller desires to sell to the Purchaser and the Purchaser desires to purchase and
assume from the Seller certain of the assets and liabilities of the Business, as more particularly
set forth herein;



     WHEREAS, concurrently with the execution and delivery of this Agreement, the Seller and the
Purchaser will enter into that certain IP License Agreement in the form of Exhibit A to
become effective as of the Closing Date (the “IP License Agreement”);



     WHEREAS, on the Closing Date, the Seller and the Purchaser will enter into (or, as applicable,
will cause one or more of their respective Affiliates to enter into) one or more Assignment and
Assumption Agreements in the form of Exhibit B (the “Assignment and Assumption
Agreements”), one or more Intellectual Property Assignment Agreements in the form of
Exhibit C (the “Intellectual Property Assignment Agreements”), the Transition
Services Agreement and the Supply Agreement;



     WHEREAS, on the Closing Date, the Seller and the Purchaser will enter into an Escrow Agreement
(as defined below), substantially in the form attached hereto as Exhibit D, pursuant to
which a portion of the Purchase Price will be deposited into and held in escrow to offset in part
potential indemnification claims of the Purchaser under this Agreement;



     WHEREAS, as a condition and an inducement to the Purchaser to enter into this Agreement, each
of those employees of the Seller listed in Schedule B has entered into an employment
agreement with the Purchaser or one of its Affiliates, to be dated the date hereof but effective on
the Closing Date and substantially in the form previously made available to the Seller
(collectively, the “Employee Agreements”), that are conditioned on the Closing
and will become effective on the Closing Date; and



     WHEREAS, certain of the purchase and sale transactions provided for in this Agreement shall be
effected through one or more Local Purchase Agreements (as defined below) which will be subject to
the terms, provisions and conditions of this Agreement.



1









 





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



1. SALE AND PURCHASE OF ASSETS; RELATED TRANSACTIONS.




     1.1 Sale and Purchase of Assets. On the terms and subject to the conditions and other
provisions set forth in this Agreement, at the Closing, the Seller will and will cause each of its
Affiliates to, sell, convey, transfer, assign and deliver to the Purchaser, and the Purchaser will
purchase from the Seller or such Affiliates, all of the rights, title and interests of the Seller
and each of its Affiliates into and under the following, free and clear of all Encumbrances, other
than Permitted Encumbrances (which, subject to Section 1.2, are referred to in this Agreement as
the “Transferred Assets”):



          (a) the Patents and patent applications identified on Schedule 1.1(a), as well as any
foreign or multinational counterparts (including Patents, statutory invention registrations, patent
registrations industrial designs and industrial models) thereof, whether or not identified on
Schedule 1.1(a), including all rights therein provided by multinational treaties or conventions and
all improvements to the inventions disclosed in each of the foregoing (collectively, the
“Transferred Patents”); and the invention disclosures identified on Schedule 1.1(a)
including all rights therein as well as all improvements to the inventions disclosed therein made
by the Purchaser;



          (b) the Intellectual Property Rights (other than Patent rights) in and to or associated with
the items identified on Schedule 1.1(b) (the “Transferred Non-Patent IP”);



          (c) the Inventory (the “Transferred Inventory”);



          (d) (i) the contracts identified on Schedule 1.1(d), (ii) any source code evaluation
license regarding the Transferred Assets that is in substantially the Seller’s standard form
previously provided by the Seller to the Purchaser, (iii) all other contracts in existence as of
the date hereof that are exclusively related to the Business and that individually and in the
aggregate are not material to the Business, and (iv) any other contract primarily related to the
Business, entered into by the Seller or any of its Affiliates after the date of this Agreement but
prior to the Closing in compliance with this Agreement, (the “Unlisted Contracts” and,
together with the contracts described in this Section 1.1(d), the “Transferred
Contracts”);



          (e) the prototypes, systems, equipment, furniture, fixtures, computer equipment, masks and
other fixed assets that are identified on Schedule 1.1(e) (the “Transferred Fixed
Assets”);



          (f) all of the shares of capital stock (the “Transferred Shares”) of Conexant Systems
Israel (1996) Ltd. (the “Transferred Subsidiary”);



2









 





          (g) all causes of action, lawsuits, judgments, claims and demands of any nature available from
time to time to or being pursued by the Seller or any of its Affiliates in each case to the extent
related to the Business, the Transferred Assets, the Assumed Liabilities or the ownership,
operation, use, function or value of any Transferred Asset, whether known or unknown, suspected or
unsuspected and whether arising by way of counterclaim or otherwise including the right of the
Seller or any of its Affiliates to pursue claims and enforce the obligations of any party to any
proprietary/confidential information agreements and non-competition agreements to which any current
or former employee, consultant, contractor and actual or potential business partner, counterparty
or investor of or in the Seller or any of its Affiliates is a party, in each case to the extent
related to the Business or any of the Transferred Assets, except in each case to the extent (i)
included in the Excluded Assets or (ii) related to Intellectual Property Rights that are not
Transferred Assets;



          (h) all credits, prepaid expenses, deferred charges, advance payments, security deposits,
prepaid items and duties to the extent exclusively related to any Transferred Asset;



          (i) all Books and Records; and



          (j) all guaranties, warranties, indemnities and similar rights in favor of the Seller or any
of its Affiliates to the extent primarily related to any Transferred Asset.



     1.2 Excluded Assets. The Seller will not be required to sell, convey, assign or transfer to
the Purchaser, and the Transferred Assets will not be deemed to include any assets other than the
Transferred Assets; notwithstanding anything to the contrary contained in Section 1.1 and, the
Seller will not be required to sell or transfer to the Purchaser, and the Transferred Assets will
not be deemed to include, any of the following or any right or interest in, to or under any of the
following (collectively, the “Excluded Assets”):



          (a) any cash, cash equivalents or Accounts Receivable;



          (b) any asset identified on Schedule 1.2(b);



          (c) all rights and interests in connection with, and assets of, any “employee benefit plan”
within the meaning of Section 3(3) of ERISA and any other employee benefit plan, program,
arrangement or agreement established, maintained, sponsored or contributed to by the Seller or any
ERISA Affiliate, including, without limitation, the Seller Plans;



          (d) all Intracompany Receivables; and



          (e) all personnel records of employees that are not Transferred Employees and personnel
records of any Transferred Employees whose consent to such transfer is required under Legal
Requirement to the extent such Transferred Employee has not consented to such transfer.



3









 





     1.3 Purchase Price.



          (a) Subject to the terms and conditions of this Agreement, in consideration for the sale of
the Transferred Assets to the Purchaser, at the Closing, in addition to the Assumed Liabilities,
the Purchaser will pay to the Seller, by wire transfer of immediately available funds, the sum of
$82,500,000 as adjusted by the Transferred Subsidiary Purchase Price Adjustment determined pursuant
to Section 1.4(b) and less any amounts being paid pursuant to the Local Purchase Agreements
(collectively, the “Cash Closing Payment”).



          (b) Subject to the terms and conditions of this Agreement, on the earlier of (i) September 30,
2008 and (ii) the date on which the Purchaser receives proceeds of more than $100,000,000 from an
Asset Disposition, in consideration for the sale of the Transferred Assets to the Purchaser, the
Purchaser will (A) pay to the Seller by wire transfer of immediately available funds, the sum of
$16,500,000 (the “Cash Deferred Payment”) and (B) pay to US Bank National Association, as
escrow agent (the “Escrow Agent”), by wire transfer of immediately available funds, the sum of
$11,000,000 (the “Escrow Amount” and collectively with the Cash Closing Payment and the Cash
Deferred Payment, the “Purchase Price”).



          (c) The Seller shall also be entitled to payment of the Contingent Payments, if any, in the
amount, and subject to the terms and conditions, set forth in Section 1.6.



          (d) To the extent that the Allocation (as defined in Section 1.10) allocates a portion of the
Purchase Price to Transferred Assets located in China or India, the Purchaser (or an Affiliate of
the Purchaser) shall pay in U.S. dollars (unless otherwise required under local Legal Requirements)
that portion of the Cash Closing Payment to the Affiliate of the Seller that is party to the Local
Purchase Agreement related to such country. Payment made under this Section 1.3(d) shall reduce
the payment required to be made by the Purchaser under Section 1.3(a) or 1.3(b)(ii)(A) above (which
will, in the case of any payment made other than in U.S. dollars, will be converted into U.S.
dollars at the applicable Noon Buying Rate).



     1.4 Adjustments.



          (a) Inventory Adjustment.



               (i) Within 45 days following the Closing Date, the Purchaser shall deliver to the Seller a
statement (the “Purchaser’s Calculation”) setting forth the Transferred Inventory, net of
reserves (“Net Inventory”) as of the Closing Date (the “Closing Inventory Value”)
determined in conformity with GAAP.



               (ii) If the Seller disagrees with the Purchaser’s Calculation, the Seller may, within 15 days
after delivery of the Purchaser’s Calculation, deliver a notice (the “Seller’s Objection”)
to the Purchaser disagreeing with the Purchaser’s Calculation



4









 







and specifying, in reasonable detail (i) the Seller’s calculation of the Closing Inventory
Value and (ii) the Purchaser’s grounds for such disagreement.



               (iii) If a Seller’s Objection is duly delivered pursuant to Section 1.4(a)(ii), the Purchaser
and the Seller shall, during the 15 days following such delivery, use their reasonable efforts to
reach agreement on the Closing Inventory Value. If they are unable to reach such agreement during
such period, the parties shall promptly engage the CPA Firm to review promptly the Net Inventory
for the purpose of calculating the Closing Inventory Value. In making such calculation, the CPA
Firm shall determine the Closing Inventory Value. The CPA Firm shall deliver to the Purchaser and
the Seller, as promptly as practicable, a report setting forth such calculation of the Closing
Inventory Valuation. Such report shall be final and binding upon the Purchaser and the Seller
(absent manifest error). The cost of the CPA Firm shall be borne equally by the Purchaser and the
Seller.



               (iv) The Purchaser and the Seller each agree to reasonably cooperate and assist in the
determination of the Closing Inventory Value under this Section 1.4(a), including by making
available to the other party and its representatives, to the extent reasonably requested,
reasonable access to books, records, work papers, personnel and representatives in connection with
such other party’s preparation and review of the closing statement.



               (v) If the Final Inventory Value (as defined below) is less than the Base Inventory Value, the
Seller shall pay to the Purchaser, as an adjustment to the Purchase Price, the amount by which the
Final Inventory Value is less than the Base Inventory Value. If the Final Inventory Value is
greater than the Base Inventory Value, the Purchaser shall pay to the Seller, as an adjustment to
the Purchase Price, the amount by which the Final Inventory Value is greater than the Base
Inventory Value; provided that any such payment by the Purchaser to the Seller shall not exceed
$3,900,000. “Final Inventory Value” means the Closing Inventory Value (i) as shown in the
Purchaser’s Calculation if no Seller’s Objection is duly delivered to the Purchaser in compliance
with Section 1.4(a)(ii); or (ii) if such a notice of disagreement is delivered, (A) as agreed by
the Purchaser and the Seller pursuant to Section 1.4(a)(iii) or (B) in the absence of such
agreement, as shown in the CPA Firm’s calculation delivered pursuant to Section 1.4(a)(iii).



               (vi) Any payment pursuant to this Section 1.4 shall be made at a mutually convenient time and
place within 10 days after the determination of Final Inventory Value by the delivery by the Seller
or the Purchaser, as the case may be, by wire transfer of immediately available funds to such
account or accounts as may be designated by the Seller or the Purchaser, as the case may be.



5









 





          (b) The Purchase Price shall be adjusted (the “Transferred Subsidiary Purchase Price
Adjustment”) to reflect the Transferred Subsidiary Closing Assets and the Transferred
Subsidiary Closing Liabilities as follows: (i) to the extent that the Transferred Subsidiary
Closing Assets exceeds the Transferred Subsidiary Closing Liabilities, the Purchase Price shall be
increased by the amount by which the Transferred Subsidiary Closing Assets exceeds the Transferred
Subsidiary Closing Liabilities and (ii) to the extent that the Transferred Subsidiary Closing
Liabilities exceeds the Transferred Subsidiary Closing Assets, the Purchase Price shall be reduced
by the amount by which the Transferred Subsidiary Closing Liabilities exceeds the Transferred
Subsidiary Closing Assets. Initial Payment of the Transferred Subsidiary Purchase Price Adjustment
shall be made at Closing based upon the estimated Transferred Subsidiary Closing Balance Sheet
prepared in good faith by the Seller and delivered to the Purchaser pursuant to Section 1.14(i)
(provided that the Seller shall deliver a draft of such estimated Transferred Subsidiary Closing
Balance Sheet at least four (4) Business Days but not more than seven (7) Business Days prior to
the Closing Date). Final settlement of the Transferred Subsidiary Purchase Price Adjustment shall
be made on the basis of a Transferred Subsidiary Closing Balance Sheet delivered by the Transferred
Subsidiary to the Parties not more than 20 Business Days following the Closing. If either Party
disagrees with the Transferred Subsidiary Closing Balance Sheet, such Party may deliver a notice
disagreeing therewith. In such case, the dispute resolution provisions under Section
1.4(a)(ii)-(a)(iii) will be applied to resolve such disagreement.



     1.5 Escrow Fund. On or prior to the Closing, the Seller and the Purchaser shall enter into an
escrow agreement, in substantially the form attached hereto as Exhibit D (the “Escrow
Agreement”), with the Escrow Agent. Pursuant to the terms of the Escrow Agreement, the
Purchaser will create the escrow fund (the “Escrow Fund”) on the date specified in Section
1.3(b) above (the “Escrow Creation Date”) by depositing the Escrow Amount with the Escrow Agent on
the Escrow Creation Date. The Escrow Agent shall hold the Escrow Fund in an escrow account and
invest the Escrow Fund in a money market fund mutually agreed upon by the Seller and the Purchaser
(“Investment Fund”). In addition, the Escrow Agent will not transfer any interest in such
Escrow Fund except pursuant to the terms of the Escrow Agreement. Subject to the terms of the
Escrow Agreement, the Escrow Amount still held in escrow (including accrued interest to the extent
provided in the Escrow Agreement) and not subject to pending, unresolved claims thereunder shall be
released from the Escrow Fund to the Purchaser ten (10) Business Days following the end of the
General Survival Period. Any distributions from the Escrow Fund shall be governed pursuant to and
in accordance with the terms and conditions of the Escrow Agreement. The parties agree that,
consistent with Proposed Treasury Regulation Section 1.468B-8, for Tax reporting purposes, the
Seller shall be deemed the owner of the Escrow Amount and all interest or other income earned from
the investment of the Escrow Amount or any portion thereof in any Tax year shall be reported as
allocated to the Seller until the distribution of the Escrow Amount (or portions thereof) is
determined and thereafter to the Seller and the Purchaser in accordance with their respective
interests in the Escrow Amount consistent with Proposed Treasury Regulation Section 1.468B-8.



6









 





     1.6 Contingent Payments.



          (a) Subject to the terms and conditions of this Section 1.6, (i) if BMP Sales during the
period of six calendar quarters commencing on July 1, 2008 and ending on December 31, 2009 (such
period, the “Contingent Payment Period”) exceed $330,000,000, the Purchaser shall pay to
the Seller an amount (such amount, the “Initial Contingent Payment”), if any, equal to the
product of (x) 0.1 times (y) the amount by which BMP Sales during the Contingent Payment Period
exceeds $330,000,000, up to a maximum Initial Contingent Payment of $5,000,000; and (ii) if BMP
Sales during the Contingent Payment Period exceed $380,000,000, the Purchaser shall pay to the
Seller, in addition to the Initial Contingent Payment, an additional amount equal to the product of
(x) 0.4 times (y) the amount by which BMP Sales during the Contingent Payment Period exceeds
$380,000,000, up to a maximum payment of $30,000,000 (the sum of the amount in this clause “(ii)”
and the Initial Contingent Payment, the “Contingent Payment”).



          (b) The Seller acknowledges, understands and agrees that, after the Closing, the Purchaser
shall exercise operational control of the Business and the Transferred Assets without interference
by the Seller. The Seller understands that, except as expressly provided herein, the future
design, creation, manufacturing, marketing, sales and distribution of the Business and its products
and projects shall be exercised by the Purchaser in accordance with its own business judgment and
in its sole and absolute discretion. The Seller further acknowledges, understands and agrees that:
(i) the Purchaser will have complete control and sole and absolute discretion with respect to
decisions concerning the Business after the Closing, (ii) such control and discretion by the
Purchaser could have a material adverse effect upon any Contingent Payment that may otherwise be
payable under Section 1.6(a), (iii) such control and discretion by the Purchaser could result in
the Seller receiving no Contingent Payment whatsoever under Section 1.6(a) and (iv) the Purchaser
has no duty to the Seller to commercially exploit the products or projects of the Business or to
exert any level of effort in marketing the products or projects of the Business. In addition, the
Seller acknowledges, understands and agrees that whether or not the Purchaser makes any BMP Sales
after the Closing, the Purchaser shall not be prohibited pursuant to this Section 1.6 from
researching, developing, manufacturing, marketing or selling other products that may compete with
the Business or reduce the BMP Sales. The Seller also acknowledges, understands and agrees that
personnel of the Purchaser shall take actions in connection with the commercial exploitation of the
Business and its products and projects that such personnel believe to be in the best interests of
the Purchaser, and that they are not required to take into account, nor will they take into
account, the interests of the Seller in determining whether to take any such actions. Accordingly,
with respect to this Section 1.6, except as hereinafter expressly provided, the Seller agrees not
to challenge, in any subsequent claim or action, any decision regarding such commercial
exploitation of the Business and its products and projects made by any director, officer, employee
or agent of the Purchaser, unless such action (x) constitutes a breach by the Purchaser of any of
its express obligations under this Agreement or (y) was taken in bad faith for the principal
purpose of avoiding payment of the Contingent Payment or frustrating the provisions of this Section
1.6.



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          (c) In the event that prior to the end of the Contingent Payment Period a Person (other than a
Permitted Holder) (an “NXP Acquiring Person”) acquires (i) a majority of the outstanding
capital stock of or other equity interests in the Purchaser, (ii) all or substantially all of the
assets of the Purchaser or (iii) a portion of the assets of one or more business units or other
operating units of the Purchaser of which the Business or all or substantially all of the
Transferred Assets is a part, then within 30 days of the occurrence of any such event, such NXP
Acquiring Person shall elect, to either (x) pay to the Seller the amount of any Contingent Payment
that remains capable of being earned by the Seller as of and after such date, or (y) assume all of
the Purchaser’s remaining obligations under the terms of Section 1.6(a). For the avoidance of
doubt, the Seller shall not be entitled to receive nor shall such NXP Acquiring Person be required
to assume any obligations to pay any portion of the Contingent Payment pursuant to Section 1.6(a)
to the extent the Contingent Payment Period has ended prior to the date of the event described
under (i), (ii) or (iii) above and the applicable conditions to the payment of the Contingent
Payment had not been satisfied.



     1.7 Assumption of Liabilities.



          (a) On the terms and subject to the conditions set forth herein, at the Closing, the Purchaser
shall assume the following obligations and liabilities of the Seller (the “Assumed
Liabilities”): (i) all Liabilities arising on or after the Closing under the Transferred
Contracts (but excluding any Liability for any breach arising in whole or in part on or prior to
the Closing Date); (ii) all Liabilities with respect to Taxes arising out of or related to the
operation of the Business or the Transferred Assets after the Closing Date; (iii) all Liabilities
with respect to Open Incoming POs entered into (A) on or before the date hereof or (B) otherwise in
compliance with this Agreement (but not including any Liability for any breach arising in whole or
in part on or prior to the Closing Date); (iv) all Liabilities with respect to Open Outgoing POs
entered into (A) on or before the date hereof or (B) otherwise in compliance with this Agreement
(but not including any Liability for any breach arising in whole or in part on or prior to the
Closing Date); (v) all Liabilities for product warranty claims and product liability claims with
respect to Seller Products manufactured and sold after the Closing Date; and (vi) all Liabilities
to the extent arising out of, relating to or in connection with the ownership or operation of the
Business or the Transferred Assets after the Closing Date. For the avoidance of doubt, Assumed
Liabilities shall not include (x) any Liabilities, including Liabilities for refunds, rebates,
rights of return or similar obligations, with respect to any Seller Products sold prior to the
Closing Date; (y) any Liabilities of Seller as an employer related to the employee rights,
compensation and benefits arising up to and including the Closing Date; and (z) any Liabilities for
Intellectual Property infringements or unpaid royalty payments with respect to activities conducted
by Seller prior to the Closing Date, including any Seller Products sold prior to the Closing Date.



          (b) At the Closing, the Purchaser shall deliver to the Seller the Assignment and Assumption
Agreements. For the avoidance of doubt it is hereby clarified that the Purchaser’s assumption of
liabilities under this Section 1.7 shall be



8









 







considered part of the consideration paid for the Transferred Assets. Taxes shall only be an
Assumed Liability to the extent provided for in this Section 1.7.



     1.8 Excluded Liabilities. The Seller and its Affiliates shall retain and be responsible for
all Excluded Liabilities.



     1.9 Sales and Transfer Taxes; VAT; Transferred Subsidiary Tax Matters.



          (a) Any sales taxes, use taxes, transfer taxes, documentary charges, recording fees, Import
Duties up to an aggregate maximum local currency equivalent of $1,500,000 (the “Import Duty
Cap”), filing fees or similar taxes, charges, fees or expenses (other than Taxes attributable
to Seller’s gain or income from the sale of the Transferred Assets or Seller’s ownership, use and
operation of the Business or any Transferred Assets or expenses associated with a failure by the
Seller to appropriately remit Taxes or timely file the appropriate Tax Returns) that may become
payable in connection with the sale of the Transferred Assets to the Purchaser and the assumption
by the Purchaser of the Assumed Liabilities or any of the other transactions contemplated by the
Transactional Agreements shall be split evenly such that one-half of such amounts shall be borne
and paid by the Seller and one-half shall be borne and paid by the Purchaser; provided that the
Purchaser shall bear any incremental such Taxes incurred as a result of the Purchaser’s allocation
of a portion of the Purchase Price to the customer base of the Business. Any Import Duties that are
in excess of the Import Duty Cap shall be borne and paid by the Seller.



          (b) The Purchase Price under this Agreement in respect of the sale of the Transferred Assets
and the assumption of the Assumed Liabilities is exclusive of any VAT in respect of which the
provisions of this Section 1.9(b) shall apply. To the extent that any relevant jurisdiction
provides for relief or exemption from VAT on the transfer of a business or a company or treats such
a transaction as being non-taxable for VAT purposes, including as a result of it being a transfer
of a going concern, the Seller and the Purchaser shall each use all reasonable efforts to secure
such treatment as regards the sale of the Transferred Assets and the assumption of the Assumed
Liabilities (insofar as the Business is carried on in the relevant jurisdiction) under this
Agreement. Such efforts shall, for the avoidance of doubt, include the making of an election or
application in respect of VAT in any such jurisdiction or entering into a written agreement. The
Purchaser agrees that it will use the Transferred Assets acquired in carrying on the same kind of
business, whether or not as part of its existing business, as the Seller, unless otherwise
explicitly stated in this Agreement.



          The Seller shall have the right to obtain a ruling in the relevant jurisdiction as to whether
the sale of the Transferred Assets and the assumption of the Assumed Liabilities is eligible for a
relief or exemption or are otherwise non-taxable for the purposes of the Legal Requirement
governing VAT in that jurisdiction and to charge (or not to charge) VAT to the Purchaser(s) in
accordance with that ruling. The Seller shall not be obliged to challenge that ruling. If the
Purchaser wishes to challenge any ruling, it may do so.



9









 





          If, notwithstanding the foregoing, any Governmental Entity with responsibility for Taxes
determines that any sale carried out pursuant to this Agreement will be treated as a supply of
goods or a supply of services for VAT purposes, or does not qualify for relief or exemption from
VAT or is otherwise chargeable to VAT, the Seller shall hold harmless and indemnify the Purchaser
and each of its Affiliates, and their respective directors, officers, shareholders, partners,
members, attorneys, accountants, agents, representatives and employees (other than the Transferred
Employees) and their heirs, successors and permitted assigns, each in their capacity as such
against any and all costs, charges, VAT and penalties arising except to the extent that the
Purchaser is (acting reasonably) able to recover such amounts from the applicable authorities and
(i) where the Purchaser has overpaid any amount, the Seller will repay this amount to the Purchaser
plus interest and any related costs and shall also provide the Purchaser with a correcting invoice
or credit note for an amount equal to the overpayment made by the Purchaser, and (ii) where the
Purchaser has paid less than the correct amount, the Purchaser shall pay the outstanding amount to
the Seller upon the receipt of a valid VAT invoice.



          If VAT is chargeable, the Seller shall provide the Purchaser with a valid VAT invoice that
meets all requirements imposed by the relevant Governmental Entity with responsibility for Taxes
and which specifically states the VAT (or equivalent, if any) and meets further conditions
necessary to allow the Purchaser to obtain relief from such VAT to the extent such relief is
available. Provided the Purchaser is in receipt of a valid VAT invoice, the Purchaser will,
subject to the provision of the preceding paragraph, pay to the Seller such VAT in addition to any
amounts expressed in this Agreement.



          The Purchaser reserves the right to withhold payment of any VAT (or equivalent, if any) to the
Seller until the Seller has provided the Purchaser with a valid VAT invoice and such other further
information as the Purchaser may reasonably request.



          The VAT amounts shall be paid in the currency in which the VAT in question must be accounted
for in the relevant jurisdiction.



          (c) Following the Closing, the Purchaser shall have responsibility for preparing and filing
the Tax Returns of the Transferred Subsidiary that include any period after the Closing Date. The
Tax Returns of the Transferred Subsidiary which include any period prior to the Closing Date shall
be prepared in a manner substantially consistent with Seller’s prior practices except to the extent
that such practices are, in the Purchaser’s reasonable judgment, inconsistent with applicable Legal
Requirements or otherwise likely to subject the Purchaser to a penalty imposed by an applicable Tax
authority. The Seller shall promptly provide the Purchaser with all information that the Purchaser
may from time to time reasonably request to permit the Purchaser to prepare and file (or cause to
be prepared and filed) any Tax Returns of the Transferred Subsidiary that the Purchaser, under this
Section 1.9(c), has responsibility for preparing and filing. The Purchaser shall give the Seller
notice of any audit adjustments that are proposed that could impact any periods prior to the
Closing. The Purchaser shall at its own expense have the option to elect to assume the defense of
such adjustments.



10









 





          In the case of Taxes (other than income Taxes ) payable by the Transferred Subsidiary and
attributable to taxable periods beginning on or before, and ending after, the Closing Date
(“Straddle Periods”), if any, the amount of such Taxes for the pre closing period to be
borne and paid by the Seller, on the one hand, and the amount of Taxes for the post-closing period
to be borne and paid by the Purchaser, on the other hand, shall be determined such that (i) the
Seller bears and pays an amount of such Taxes equal to the total amount of such Taxes multiplied by
a fraction the numerator of which is the number of days in such Straddle Period up to and including
the Closing Date and the denominator of which is the total number of days in such Straddle Period
and (ii) the Purchaser bears and pays an amount of such Taxes equal to the total amount of such
Taxes multiplied by a fraction the numerator of which is the total number of days in such Straddle
Period following the Closing Date and the denominator of which is the total number of days in such
Straddle Period.



          (d) At Closing, the Purchaser shall withhold Tax at source, at the prevailing rates under
Israeli Tax Legal Requirements, with respect to the portion of the Purchase Price allocated to the
Transferred Shares pursuant to Section 1.10 (or otherwise determined by the Israeli Tax
authorities), unless the Seller shall deliver on or before the Closing Date to the Purchaser an
exemption certificate from the Israeli Tax authorities in connection with the sale and transfer of
the Transferred Shares.



     1.10 Allocation of Purchase Price. The Seller and the Purchaser recognize their mutual
obligations pursuant to Section 1060 of the Code (and any comparable provisions of any other Tax
law) to allocate the Purchase Price and all other items properly included in “consideration”, if
any, consistent with the principles set forth therein, and to timely file IRS Form 8594 (or
comparable form) and subsequent Forms 8594 (or comparable forms), if any are required, with each of
their respective Tax Returns (the “Asset Allocation Statements”). Accordingly, the Seller and the
Purchaser agree to cooperate in the preparation of any Asset Allocation Statements. Within 5
Business Days after the date of this Agreement, the Purchaser shall deliver to the Seller a
statement of allocation of the Purchase Price and all other items properly included in
“consideration”, if any, among the Transferred Assets, which shall be prepared in a manner
consistent with the principles set forth in Section 1060 of the Code and which shall specify in
reasonable detail the amount (supported by an appraisal to be obtained by the Purchaser) to be
allocated to inventory, customer base, work force, intellectual property and other intangible
assets (i.e. goodwill) located both inside and outside the United States (the “Allocation”). The
Purchaser and the Seller will endeavor in good faith to resolve any differences with respect to the
Allocation within 10 days following the Seller’s receipt of the Allocation from the Purchaser. If
the Seller withholds its consent to the Allocation after such 10-day period, then any remaining
disputed matters will be finally and conclusively determined by an independent accounting firm of
recognized national standing (the “Allocation Arbiter”) jointly selected by the Purchaser and the
Seller. Promptly, but not later than 20 days after its acceptance of appointment hereunder; the
Allocation Arbiter will determine (based solely on presentations by the Seller and the Purchaser
and not by independent review) only those matters in dispute and will render a written report as to
the disputed matters and the resulting allocation of



11









 







Purchase Price (together with any assumed liabilities), which report shall be conclusive and
binding upon the parties. Each of the Seller and the Purchaser shall (i) be bound by the
Allocation for purposes of determining any Taxes, (ii) prepare and file, and cause its Affiliates
to prepare and file, its Tax Returns on a basis consistent with the Allocation, and (iii) take not
position, and cause its Affiliates to take no position, inconsistent with the Allocation on any
applicable Tax Return or in any proceeding before any taxing authority or otherwise. In the event
that the Allocation is disputed by any taxing authority, the Party receiving notice of the dispute
shall promptly notify the other Party hereto concerning resolution of the dispute. Seller and
Purchaser acknowledge that the Allocation was made in accordance with the provisions of Section
1060 of the Code and Treasury Regulation thereunder.



     1.11 Ancillary Agreements. At the Closing, the Seller and the Purchaser, or their respective
Affiliates, as applicable, will enter into the following additional agreements to the extent not
entered into previously (the “Ancillary Agreements”):



          (a) the IP License Agreement;



          (b) the Assignment and Assumption Agreements;



          (c) the Transition Services Agreement;



          (d) the Escrow Agreement;



          (e) the Local Purchase Agreements; and



          (f) the Intellectual Property Assignment Agreements.



     1.12 Closing. The closing of the purchase of the Transferred Assets by the Purchaser (the
“Closing”) will take place at the offices of Sullivan & Cromwell LLP, 1870 Embarcadero
Road, Palo Alto, California 94303-3308 at 8:00 A.M. California time, on the third Business Day
after the satisfaction or waiver of the last to be satisfied or waived of the conditions set forth
in Sections 5 and 6 (other than those conditions that by their nature are to be satisfied at the
Closing but subject to the fulfillment or waiver of those conditions). For purposes of this
Agreement, “Closing Date” means the date on which the Closing actually takes place.



     1.13 Deliveries by the Purchaser. At the Closing, the Purchaser or an Affiliate of the
Purchaser shall deliver, or cause to be delivered:



          (a) to the Seller the following (except to the extent actually delivered to the Seller or an
Affiliate of the Seller at or prior to the Closing pursuant to a Local Purchase Agreement):



               (i) the Cash Closing Payment in immediately available funds by wire transfer to an account or
accounts which have been designated by the Seller at least four (4) Business Days prior to the
Closing Date;



12









 





               (ii) a duly executed counterpart of each Assignment and Assumption Agreement and other
instruments of assumption or other documents in form and substance reasonably acceptable to the
Purchaser and the Seller, as may be necessary to effect Purchaser’s assumption of the Assumed
Liabilities and the effective assignment of any Transferred Contracts or other Transferred Assets;



               (iii) a duly executed counterpart of each of the other Ancillary Agreements;



               (iv) a duly executed counterpart of the Supply Agreement;



               (v) the certificate to be delivered pursuant to Section 6.8; and



               (vi) such other customary instruments of transfer, assumptions, filings or documents, in form
and substance reasonably satisfactory to the Seller, as may be required to give effect to this
Agreement.



     1.14 Deliveries by the Seller. At the Closing, the Seller or an Affiliate of the Seller shall
deliver, or cause to be delivered, to the Purchaser or an Affiliate of the Purchaser the following
(except to the extent actually delivered to the Purchaser or one of its Affiliates at or prior to
the Closing pursuant to a Local Purchase Agreement):



          (a) a duly executed counterpart of each Assignment and Assumption Agreement, bill of sale and
any other appropriate document of transfer in form and substance reasonably acceptable to the
Purchaser and the Seller, transferring the tangible personal property included in the Transferred
Assets to the Purchaser and assigning to the Purchaser all rights of the Seller and its Affiliates
in and to all of the Transferred Contracts;



          (b) a duly executed counterpart of each of the other Ancillary Agreements;



          (c) a duly executed counterpart of the Supply Agreement;



          (d) assignments, in form and substance reasonably acceptable to the Purchaser and, if
applicable, as required by any Governmental Entity with which the Seller’s or any of its
Affiliates’ rights to any Transferred Intellectual Property have been filed, assigning to the
Purchaser the Transferred Intellectual Property;



          (e) a duly executed certification that the Seller is not a foreign Person within the meaning
set forth in Treasury Regulation Section 1.1445-2(b)(2)(iii)(A); it being understood that
notwithstanding anything to the contrary contained herein, if the Seller fails to provide the
Purchaser with such certification, the Purchaser shall be entitled to withhold the requisite amount
from the Purchase Price in accordance with Section 1445 of the Code and the applicable Treasury
Regulations;



          (f) evidence of the obtaining of each Seller Required Approval that is a condition to the
Purchaser’s obligations under Section 5.8;



13









 





          (g) the certificate to be delivered pursuant to Section 5.9;



          (h) such other customary instruments of transfer, assumptions, filings or documents, in form
and substance reasonably satisfactory to the Purchaser, as may reasonably be deemed necessary or
appropriate by the Purchaser to give effect to this Agreement; and



          (i) an estimated Transferred Subsidiary Closing Balance Sheet.



     1.15 Nonassignability of Assets. Notwithstanding anything to the contrary contained in this
Agreement, to the extent that the sale, assignment, sublease, transfer, conveyance or delivery or
attempted sale, sublease, assignment, transfer, conveyance or delivery to the Purchaser of any
asset that would be a Transferred Asset or any claim or right or any benefit arising thereunder or
resulting therefrom is prohibited by any Legal Requirement or would require any Governmental
Authorizations or third party authorizations, approvals, consents or waivers, and such
authorizations, approvals, consents or waivers shall not have been obtained prior to the Closing,
the Closing shall proceed without the sale, assignment, sublease, transfer, conveyance or delivery
of such asset unless such failure causes a failure of any of the conditions to Closing set forth in
Section 5, in which event the Closing shall proceed only if the failed condition is waived by the
party or parties entitled to the benefit thereof. In the event that the failed condition is waived
and the Closing proceeds without the transfer, sublease or assignment of any such asset, then
following the Closing, the parties shall use their reasonable efforts, and cooperate with each
other, to obtain promptly such authorizations, approvals, consents or waivers; provided, however,
that none of the Seller or the Purchaser or any of their respective Affiliates shall be required to
pay any consideration to obtain any contractual consent or waiver, other than (a) any de minimis
fees, expenses or other consideration or (ii) any such fees, expenses or other consideration
required to be paid pursuant to the express provisions of the contract requiring such consent,
which consideration, fees or expenses shall be paid by the party obligated to seek such consent,
nor shall any such party be required to pay any amounts in respect of any Governmental
Authorization other than filing, recordation or similar fees which shall be shared equally by the
Seller and the Purchaser. Pending such authorization, approval, consent or waiver, the parties
shall cooperate with each other in any mutually agreeable, reasonable and lawful arrangements
designed to provide to the Purchaser the benefits of use of such asset and to the Seller or its
Affiliates the benefits, including any indemnities, that they would have obtained had the asset
been conveyed to the Purchaser at the Closing. Once authorization, approval, consent or waiver for
the sale, assignment, sublease, transfer, conveyance or delivery of any such asset not sold,
assigned, subleased, transferred, conveyed or delivered at the Closing is obtained, the Seller
shall or shall cause the relevant Affiliates to, assign, transfer, convey and deliver such asset to
the Purchaser at no additional cost. To the extent that any such asset cannot be transferred or
the full benefits of use of any such asset cannot be provided to the Purchaser following the
Closing pursuant to this Section 1.15, then the Purchaser and the Seller shall enter into such
arrangements (including subleasing, sublicensing or subcontracting) to provide to the parties
hereto the economic (taking into account Tax costs and benefits) and operational equivalent, to the



14









 







extent permitted, of obtaining such authorization, approval, consent or waiver and the
performance by the Purchaser of the obligations thereunder. The Seller shall hold in trust for and
pay to the Purchaser promptly upon receipt thereof, all income, proceeds and other monies received
by the Seller or any of its Affiliates in connection with its use of any asset (net of any Taxes
and any other costs imposed upon the Seller or any of its Affiliates) in connection with the
arrangements under this Section 1.15.



     1.16 Affiliate Acquisitions. Notwithstanding anything to the contrary contained in this
Agreement, the Purchaser may elect to have any or all of the Transferred Assets conveyed or
transferred to, or any of the Assumed Liabilities assumed by, one or more of its Affiliates so long
as no such election results in any greater cost or obligation than the Seller would otherwise have
had; provided, however, that no such election shall relieve the Purchaser or the Seller of any of
its obligations to the other Party and such Party’s Affiliates hereunder with respect to the
Assumed Liabilities or otherwise. The Purchase Price shall be allocated among those Transferred
Assets to be conveyed to the Purchaser and those Transferred Assets to be conveyed to the
respective Affiliates of the Purchaser, but in no event shall the amount of the Purchase Price or
any other items to be paid for the Transferred Assets, the nature of the Assumed Liabilities to be
assumed, the obligation to pay Taxes or transfer taxes or the allocation of risk and responsibility
between the Seller and the Purchaser be modified to the detriment of the Seller and/or the
Purchaser and their Affiliates as a result of the delivery of separate bills of sale, assignments
and other closing documents.



2. REPRESENTATIONS AND WARRANTIES OF THE SELLER.




     The Seller represents and warrants to the Purchaser, as of the date hereof and as of the
Closing, as follows, subject in each case to such exceptions as are specifically set forth in the
attached disclosure schedules of the Seller (the “Seller Disclosure Schedules”), it being
understood that each exception set forth in a section or subsection of the Seller Disclosure
Schedules shall qualify only the corresponding representation and warranty set forth in this
Agreement and shall qualify other representations and warranties in this Agreement to the extent
(but only to the extent) that it is readily apparent on its face from a reading of the Seller
Disclosure Schedules that such disclosure is intended to be applicable to such other
representations and warranties:



     2.1 Due Organization and Qualification. The Seller (and in the case of any Local Purchase
Agreement, the relevant Seller Affiliate) is a legal entity duly organized, validly existing and
(to the extent such concept is applicable in such jurisdiction) is in good standing under the laws
of its respective jurisdiction of organization and has all requisite power and authority to own,
lease and operate its assets (including any Transferred Assets) and to carry on the Business as
currently conducted. The Seller (and in the case of any Local Purchase Agreement, the relevant
Seller Affiliate) is duly qualified to do business and is in good standing as a foreign corporation
in each jurisdiction where the ownership or the operation of the Transferred Assets or the conduct
of the Business requires such qualification.



15









 





     2.2 Title to Assets. As of the Closing Date, the Seller (or in the case of any Local Purchase
Agreement, the relevant Seller Affiliate) will have good and valid title to the Transferred
Inventory and the Transferred Fixed Assets, free and clear of any Encumbrances, except for
Permitted Encumbrances



     2.3 Financial Information. (a) The quarterly statements of product line contribution for the
year ended December 28, 2007 set forth in Section 2.3(a) of the Seller Disclosure Schedule
(the “Financial Information”), have been prepared from the books and records of the Seller
and present fairly in all material respects the revenues and direct expenses of the Business for
such period. The revenues and direct expenses set forth in the Financial Information were
recognized in accordance with the Seller’s historical revenue recognition and expense policies and
practices all of which are consistent with GAAP. Any allocations made by Seller and applicable to
the expenses recorded on the statements of revenue and expenses have been made and recorded on a
systematic and rational basis. The Seller maintains a system of internal accounting controls
applicable to the Business sufficient to provide reasonable assurances, with respect to the Seller
and its Subsidiaries, that (i) all transactions are executed in accordance with management’s
general or specific authorization and (ii) all transactions are recorded as necessary to permit the
preparation of financial statements in conformity with GAAP and to maintain proper accountability
for items. The Seller’s enterprise-wide system of internal accounting controls is sufficient as
applicable to the Seller and its Subsidiaries taken as a whole to provide reasonable assurances
that (i) access to their properties and assets is permitted only in accordance with management’s
general or specific authorization and (ii) the recorded accountability for items is compared with
the actual levels at reasonable intervals and appropriate action is taken with respect to any
differences.



          (b) Section 2.3(b) of the Seller Disclosure Schedules sets forth the amounts, as of
March 31, 2008, by category of the Transferred Subsidiary Closing Assets. There are no credits,
prepaid expenses, deferred charges, advance payments, security deposits, prepaid items or duties
that are primarily, but not exclusively, related to any Transferred Assets that are individually or
in the aggregate material to the Business.



     2.4 Intellectual Property.



          (a) Section 2.4(a) of the Seller Disclosure Schedules sets forth a complete and
accurate list of any and all contracts pursuant to which the Seller or any of its Subsidiaries has
granted to any Person any express right to use, exercise, or otherwise practice any right under any
Transferred IP, indicating for each such contract the title, the parties, the date executed, and
whether or not it is exclusive, other than (i) contracts pursuant to which a customer purchasing or
licensing a Seller Product from the Seller in the ordinary course of business acquires only a
nonexclusive right to use such product , and (ii) contracts entered into after the date of this
Agreement by the Seller without violation of Section 4.2 (the “Outbound IP Licenses”).



          (b) Section 2.4(b)(i) of the Seller Disclosure Schedules sets forth a complete and
accurate list of any and all written contracts pursuant to which the Seller or



16









 







any of its Subsidiaries is a party and has been granted any express right by the other party
to use, exercise, or otherwise practice any right under any Intellectual Property of such other
party used in or necessary to the conduct of the Business as currently conducted by the Seller, and
which are being transferred to the Purchaser, indicating for each such contract the title, the
parties, the date executed, and whether or not it is exclusive (the “Transferred Inbound IP
Licenses” and together with the Outbound IP Licenses, the “IP Contracts”). Section
2.4(b)(ii) of the Seller Disclosure Schedules sets forth a complete and accurate list of any
and all written contracts pursuant to which the Seller or any of its Subsidiaries has been granted
any express right to use, exercise, or otherwise practice any right under any Intellectual Property
of such other party that is related to any Seller Product and either (x) is incorporated into any
Seller Product (or any component thereof) or any item of Transferred Non-Patent IP, or (y)
comprises a software tool necessary for the development, design, support, or maintenance of any
Seller Product, but which in each case, are not being transferred to the Purchaser, indicating for
each such contract or arrangement the title, the parties, the date executed, and whether or not it
is exclusive (the “Non-Transferred Inbound IP Licenses”).



          (c) The Transferred Non-Patent IP, the Transferred Patents, the Intellectual Property that is
the subject of the Transferred Inbound IP Licenses or the Non-Transferred Inbound IP Licenses, the
Licensed Non-Patent IP, and the Licensed Patents collectively include all of the Intellectual
Property owned by or licensed to the Seller that (i) is incorporated into any Seller Product (or
any component thereof) or any item of Transferred Non-Patent IP, or (ii) comprises a software tool
necessary for the development, design, support, or maintenance of any Seller Product or any item of
Transferred Non-Patent IP.



          (d) Each IP Contract that is transferred to the Purchaser is valid, subsisting and enforceable
against the other party, and is in full force and effect, subject to applicable bankruptcy and
insolvency laws and general principles of equity, and will continue to be so immediately following
the consummation of the transactions contemplated by this Agreement. The Seller is not subject to
any outstanding order, judgment or decree materially adversely affecting the Seller’s or its
Subsidiaries’ rights under the IP Contracts that are transferred to the Purchaser. To the Seller’s
Knowledge, no claim has been threatened or asserted in writing that the Seller or its Subsidiaries,
or (to the Seller’s Knowledge) another Person, has materially breached any IP Contract that is
transferred to the Purchaser. To the Seller’s Knowledge, there exists no event, condition or
occurrence that, with the giving of notice or lapse of time, or both, would constitute a material
breach or default by the Seller or its Subsidiaries, or to the Seller’s Knowledge another Person,
under any IP Contract. No party to any IP Contract that is transferred to the Purchaser has given
notice of its intention to cancel, terminate, change the scope of rights under, or fail to renew
such contract. Neither the Seller nor its Subsidiaries, nor to the Seller’s Knowledge any other
party to any IP Contract, has repudiated in writing any IP Contract that is transferred to the
Purchaser. Consummation of the transactions contemplated by this Agreement will not place the
Seller or its Subsidiaries in breach or default of any IP Contract that is transferred to the
Purchaser, or trigger any modification, termination or acceleration thereunder, or create any
license



17









 







under or lien on Transferred IP (except for licenses or liens granted or created by, or
imposed on, the Purchaser or its assets independently of the transactions contemplated by this
Agreement).



          (e) Except as set forth in Section 2.4(e) of the Seller Disclosure Schedules,
immediately prior to the Closing, the Seller (or in the case of any Local Purchase Agreement, the
relevant Seller Affiliate) will exclusively own (beneficially and in the case of Patents or
otherwise as applicable, of record), and will assign, transfer and convey to the Purchaser all
right, title, and interest to and in all Transferred IP free and clear of any liens or other
material encumbrances (other than encumbrances arising under the Transferred Contracts).



          (f) The Seller and its Subsidiaries have taken commercially reasonable steps to preserve the
confidential nature of the Transferred IP that they, in their reasonable business judgment,
determine should be held as confidential or proprietary (including, without limitation, any trade
secrets). Without limiting the foregoing, the Seller and its Subsidiaries have enforced a policy
of requiring each employee, consultant, contractor, and potential business partner or investor
receiving access to such Transferred IP to execute confidentiality agreements substantially
consistent with the Seller’s standard forms thereof (complete and current forms of which have been
delivered or made available to the Purchaser). To the Seller’s Knowledge, except under valid and
binding confidentiality obligations, there has been no material disclosure by the Seller of any
information related to the Transferred IP that Seller, in its reasonable business judgment,
determined should be held as confidential information or a trade secret. To the Seller’s
Knowledge, the Seller’s and its Subsidiaries’ employees’ performance of their employment activities
does not violate any Person’s Intellectual Property Rights or any such employee’s contractual
obligation to any Person regarding a noncompetition restriction or misuse of such Person’s trade
secrets.



          (g) To the Seller’s Knowledge, all Registered IP (other than pending applications for
Registered IP) is valid, subsisting, and enforceable. The Seller is not subject to any outstanding
order, judgment, decree issued by a court of competent jurisdiction adversely affecting the
Seller’s or its Subsidiaries’ use of, or rights to, such Registered IP. All filings, payments, and
other actions required to be made or taken to maintain each item of Registered IP in full force and
effect have been made by the applicable deadline. Section 2.4(g) of the Seller Disclosure
Schedules is a complete and accurate list of all actions (including payment of fees) necessary
within the 120 day-period following the Closing Date, to maintain or otherwise to keep in full
force and effect the Registered IP. As of the date of this Agreement, no interference, opposition,
reissue, reexamination, or other legal proceeding is pending or, to the Seller’s Knowledge,
threatened, in which the scope, validity, ownership, right to use, or enforceability of any
Registered IP is being contested or challenged.



          (h) Neither the conduct of Business as conducted in the past or as currently conducted, any
Transferred Non-Patent IP, nor any Seller Product has or does infringe upon, misappropriate,
dilute, violate or constitute the unauthorized use of any Intellectual Property Rights of any
Person. Except as set forth in Section 2.4(h) of the



18









 







Seller Disclosure Schedules, neither the Seller nor any of its Subsidiaries has been notified
of any allegation that any Seller Product or the conduct of the Business infringes upon,
misappropriates, dilutes or violates the Intellectual Property Rights of any Person. To the
Seller’s Knowledge, no valid basis for any such claim exists. Since January 1, 2002, no Person has
notified the Seller or any of its Subsidiaries that (i) any of such Person’s Intellectual Property
Rights are infringed, misappropriated, diluted, violated, or used without authorization by Seller
or any of its Affiliates in the conduct of the Business, or (ii) the Seller or any of its
Subsidiaries requires a license to any of such Person’s Intellectual Property Rights in order to
conduct the Business as currently conducted. Further, neither the Seller nor any of its
Subsidiaries has received a written offer from any Person to license any of such Person’s
Intellectual Property Rights in connection with its conduct of the Business by the Seller and its
Affiliates.



          (i) Except to the extent disclosed in Section 2.4(h) of the Seller Disclosure
Schedules, there is no litigation, opposition, cancellation, proceeding, objection, or claim
pending, asserted or, to the Seller’s Knowledge, threatened against the Seller or its Subsidiaries
concerning the ownership, validity, registerability, enforceability, infringement or use of, or
licensed right to use, any Intellectual Property used in the conduct of the Business.



          (j) To the Seller’s Knowledge, no Person is misappropriating, infringing, diluting or
violating any Transferred IP and no such claims have been brought or threatened against any Person
by or on behalf of the Seller or any of its Subsidiaries.



          (k) To the Seller’s Knowledge, all Transferred IP comprising software (except that designated
as currently under development) owned by or licensed to the Seller or any of its Subsidiaries is
free from (i) any major defect that cannot reasonably be remedied by the application of a patch,
bugfix, error correction, or workaround of a commercially-reasonable scope and character; or (ii)
any other defect that renders such software, when used by Seller’s intended customers within normal
operating parameters, substantially incapable of performing its critical core functions as
described in the related documentation and specifications, which defect cannot reasonably be
remedied by the application of a patch, bugfix, error correction, or workaround of a
commercially-reasonable scope and character. With respect to software owned by the Seller and its
Subsidiaries, the applications thereof can be compiled from the associated source code using
commercially reasonable means of compilation. Except as disclosed in Section 2.4(k) of the
Seller Disclosure Schedules, the Transferred IP comprising software owned by the Seller and its
Subsidiaries is not the subject of any escrow or similar agreement or arrangement giving any third
party rights in such software upon the occurrence of certain events.



          (l) Section 2.4(l) of the Seller Disclosure Schedules sets forth a complete and
accurate list of the Seller Products, including any Transferred Non-Patent IP and any Licensed
Non-Patent IP, that are, in whole or in part, subject to any open source or other type of license
agreement or distribution model that: (i) requires the distribution or making available of the
source code for the Seller Products, (ii) prohibits or limits the Seller or any of its Subsidiaries
from charging a fee or receiving



19









 







consideration in connection with licensing, sublicensing, or distributing any Seller Product,
(iii) except as specifically permitted by law, grants any right to any Person (other than the
Seller and its Subsidiaries) or otherwise allows any such Person to decompile, disassemble, or
otherwise reverse-engineer any Seller Product, or (iv) requires the licensing of any Seller Product
for the purpose of making derivative works (any such open source or other type of license agreement
or distribution model described in clause (i), (ii), (iii), or (iv) above, a “Limited
License”). By way of clarification, but not limitation, the term “Limited License”
shall include: (A) GNU’s General Public License (GPL) or Lesser/Library GPL (LGPL); (B) the
Artistic License (e.g., PERL); (C) the Mozilla Public License; (D) the Netscape Public License; (E)
the Sun Community Source License (SCSL); and (F) the Sun Industry Standards License (SISL). Except
as set forth in Section 2.4(l) of the Seller Disclosure Schedules, the Seller does not
incorporate or distribute any of the Seller Products with any software that is subject to a Limited
License, nor does any Seller Product constitute a derivative work of, statically link with, or
otherwise interact with any such software. To the Seller’s Knowledge, Seller’s use of the software
identified in Section 2.4(l) of the Seller Disclosure Schedules in the Transferred
Non-Patent IP does not result in the grant of a Limited License of any proprietary software of the
Seller or a third party.



          (m) Except as set forth in Section 2.4(m) of the Seller Disclosure Schedules, no
government funding, facilities of a university, college, other educational institution, or research
center, or funding from any Person was used in the creation or development of the Transferred IP in
a manner that would give such government, university, college, educational institution, or research
center any rights in the Transferred IP as a result. Except as set forth in Section 2.4(m)
of the Seller Disclosure Schedules, neither the Seller nor any of its Subsidiaries is party to any
contract, license, or agreement with any Governmental Entity that grants to such Governmental
Entity any right or license with respect to the Transferred IP.



          (n) Since January 1, 2006, Seller has not sold, assigned or otherwise disposed of any Patent
used in or necessary for the Business to any third party (including through any exclusive license
or other arrangement that transfers the economic rights or management of any such Patent).



     2.5 Transferred Contracts. Each Transferred Contract identified on Schedule 1.1(d) is
valid, is in full force and effect and is enforceable against each party thereto in accordance with
the express terms thereof. With respect to each Transferred Contract: (a) the Seller has not (and
to the Seller’s Knowledge no other Person has) breached or violated such Transferred Contract and
(b) there has not been an event of default, or any event or condition that, after notice or lapse
of time or both, would constitute a violation, breach or event of default thereunder on the part of
the Seller, or to the Seller’s Knowledge, any other party thereto. There are no material disputes
pending or to the Seller’s Knowledge threatened under any Transferred Contract.



     2.6 Transferred Subsidiary. There are no outstanding shares of capital stock or other
securities of the Transferred Subsidiary other than the Transferred Shares. The Seller (or a
wholly-owned Subsidiary of the Seller) is the sole record and beneficial



20









 







owner of and has good and marketable title to the Transferred Shares, free and clear of any
lien, charge or encumbrance.



     2.7 Compliance with Legal Requirements. (a) The Seller and each of its Affiliates has at all
relevant times and currently is conducting the Business and operating the Transferred Assets in
compliance in all material respects with all Legal Requirements relevant to the ownership,
operation or use of the Business or the Transferred Assets; (b) neither the Seller nor any of its
Affiliates has received any notice alleging any failure to comply with any Legal Requirement
relating to the ownership, operation or use of the Business or the Transferred Assets; (c) the
Seller and each of its Affiliates possess all Governmental Authorizations necessary for the
ownership, operation or use of the Business or the Transferred Assets as currently operated or used
each of which is valid and in full force and effect and (d) no Governmental Authorizations or
Non-Governmental Authorizations or applications therefor are required to be held by the Seller or
any of its Affiliates that are specific to the design, manufacture, sale and distribution of any
Seller Products (as opposed to other goods, products or services).



     2.8 Employee Matters.



          (a) Section 2.8(a) of the Seller Disclosure Schedules specifies, with respect to each
Specified Employee and Special Jurisdiction Employee as of the date of this Agreement: (i) the
original date of employment of such employee; (ii) the position held by such employee as of the
date of this Agreement; (iii) whether such employee is not available to perform work as of the date
of this Agreement because of disability or other leave; (iv) location of such employee; and (v)
total annual remuneration, including a breakdown of salary, bonus, commissions or other incentive
compensation.



          (b) With respect to the Specified Employees and Special Jurisdiction Employees: (i) no
collective bargaining or other agreement exists between the Seller and any labor organization,
trade union or works counsel; (ii) the Seller has not received written notice that any labor
representation question presently exists, and, to the Seller’s Knowledge, no petition concerning
representation under the National Labor Relations Act, as amended, or similar law is pending or
threatened; (iii) no unfair labor practice charge or complaint is pending or, to the Seller’s
Knowledge, threatened, before the National Labor Relations Board or similar agency or entity; and
(iv) no labor dispute, strike, picketing, work slowdown, work stoppage or handbilling is pending
or, to the Seller’s Knowledge, threatened.



          (c) On or before May 15, 2008, the Seller shall deliver a schedule setting forth a good faith
calculation of the estimated accrued vacation and other paid time off, as of July 1, 2008, with
respect to all Transferred Employees.



     2.9 Employee Benefits; ERISA.



          (a) Section 2.9(a) of the Seller Disclosure Schedules sets forth a true and complete
list of: (i) all “employee benefit plans” (within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”)) and



21









 







any other employee benefit or compensation plans, policies, trust funds or arrangements
(whether written or unwritten, insured or self-insured, domestic or foreign) maintained or
contributed to (or with respect to which an obligation to contribute has been undertaken) by the
Seller or any Affiliate of the Seller on behalf of any employee of the Business or their
dependents, spouses, or beneficiaries and (ii) other than individual employment agreements or offer
letters executed in substantially the Seller’s (or its applicable Affiliate’s) form of employment
agreement or offer letter, copies of which have been made available to the Purchaser, all contracts
with any employee of the Business, including any employment, termination, severance, retention,
non-competition, compensation or change in control arrangements or any arrangement relating to a
sale of the Business (each a “Seller Plan”). True and complete copies of each of the Seller
Plans, amendments thereto and all related service agreements, summaries and summary plan
descriptions have been made available to the Purchaser.



          (b) None of the Seller, any entity that would be deemed a “single employer” with the Seller
under Section 414(b), (c), (m) or (o) of the Code or Section 4001 of ERISA (an “ERISA
Affiliate”) or any of their respective predecessors has contributed to, contributes to, has
been required to contribute to, or otherwise participated in or participates in or in any way has
any liability, directly or indirectly with respect to (i) any plan subject to Section 412 of the
Code, Section 302 of ERISA or Title IV of ERISA, including any “multiemployer plan” (within the
meaning of Sections 3(37)or 4001(a)(3) of ERISA or Section 414(f) of the Code) or any single
employer pension plan (within the meaning of Section 4001(a)(15) of ERISA) that is subject to
Sections 4063, 4064 or 4069 of ERISA or Section 413(c) of the Code that covered or has covered any
employee or former employee of the Business; or (ii) any plan or arrangement that provides for
post-employment medical, life insurance or other welfare-type benefits (other than health
continuation coverage required by Section 4980B of the Code and Title I, Subtitle B, Part 6 of
ERISA (“COBRA”)). The Seller has no liability under, and is not subject to any lien
relating to, any plan or any liability under Title IV of ERISA or Section 412 of the Code that
would (x) affect in any manner whatsoever the Purchaser’s right, title and interest in, or the
Purchaser’s right to use or enjoy (free and clear of any lien or encumbrance) any of the
Transferred Assets, or (y) result in the assumption by or imposition on the Purchaser or any of its
Affiliates of any liability.



          (c) Except as set forth on Section 2.9(c) of the Seller Disclosure Schedules, (i) none
of the Seller Plans obligates the Seller or any Affiliate of Seller to pay any separation,
severance, termination or similar benefit solely as a result of the transactions contemplated by
this Agreement and (ii) no employee of the Business is eligible for short-term or long-term
disability insurance benefits as of the Closing Date.



     2.10 Legal Proceedings.



          (a) Except as set forth on Section 2.10 of the Seller Disclosure Schedules, there is
no civil, criminal or administrative action, suit, demand, claim, hearing, proceeding or
investigation pending or, to the Seller’s Knowledge, threatened against the Seller as of the date
of this Agreement that is against, relates to or involves the Transferred Assets, the Business or
the transaction contemplated hereby.



22









 





          (b) None of the Transferred Assets is subject to any order, writ, judgment, award, injunction
or decree of any court or Governmental Entity of competent jurisdiction or any arbitrator or
arbitrators.



     2.11 Authority. The Seller (and in the case of any Local Purchase Agreement, the relevant
Seller Affiliate) has full corporate power and authority to execute and deliver each Transactional
Agreement and to perform its obligations under the Transactional Agreements; and the execution,
delivery and performance by the Seller (and in the case of any Local Purchase Agreement, the
relevant Seller Affiliate) of the Transactional Agreements have been duly and validly authorized
and no additional authorization or consent is required in connection with the performance of the
Transactional Agreements. In particular, the Seller does not require an affirmative vote of its
stockholders, whether under Section 271 of the DGCL or otherwise, to enter into, perform its
obligations under or consummate the transactions contemplated by this Agreement or any of the other
Transactional Agreements.



     2.12 Binding Nature of Agreements. This Agreement constitutes, and, upon execution and
delivery thereof, each of the other Transactional Agreements will constitute, the valid and legally
binding obligation of the Seller, enforceable against the Seller in accordance with its terms,
subject to: (a) laws of general application relating to bankruptcy, insolvency and the relief of
debtors; and (b) rules of law governing specific performance, injunctive relief and other equitable
remedies.



     2.13 Non-Contravention; Consents. The execution, delivery and performance by the Seller of
this Agreement and the other Transactional Agreements and the consummation of the transactions
contemplated hereby and thereby do not and will not: (a) conflict with or result in any violation
of any provision of the certificate of incorporation, bylaws or other charter or organizational
documents of the Seller or any of its Affiliates; (b) assuming the receipt of all consents,
approvals, waivers and authorizations and the making of the notices and filings set forth on
Section 2.13 of the Seller Disclosure Schedules (collectively, the “Seller Required
Approvals”), (i) conflict with, contravene or result in a violation or breach of, or constitute
a default under, or result in the termination, modification or acceleration (whether after the
filing of notice or the lapse of time or both) of any right or obligation of the Seller or any of
its Affiliates under, or result in a loss of any material benefit to which the Seller or any of its
Affiliates is entitled under, any Transferred Contract, or (ii) violate or result in a breach of or
constitute a default under any Legal Requirement applicable to the Seller or any of its Affiliates;
or (c) result in the creation of any Encumbrance upon any of the Transferred Assets.



     2.14 Taxes. Except as provided in Section 2.14 of the Seller Disclosure Schedules,
all of the Tax Returns required to be filed by the Seller or any of its Affiliates (including the
Transferred Subsidiary) on or before the date hereof that relate to the Business or the Transferred
Assets have been filed and all such Tax Returns required to be filed on or before the Closing Date
will have been filed on or before the date on which they are required to be filed and all such Tax
Returns were when filed, and are, true, complete and correct in all material respects. All
material Taxes required to be paid by



23









 







the Seller prior to the Closing that relate to the Business or the Transferred Assets have
been (or with respect to those not required to be paid as of the date hereof will prior to the
Closing be) paid in full. No statute of limitations has been extended or waived by any Tax
authority with respect to any Taxes or Tax Returns referred to in the two preceding sentences. No
issues that have been raised by the relevant taxing authority in connection with any examination of
the Tax Returns referred to in this Section 2.14 are currently pending, and all deficiencies
asserted or assessments made, if any, as a result of such examinations have been paid in full.
There are no Encumbrances for Taxes upon any of the Transferred Assets nor, to the Seller’s
Knowledge, is any taxing authority in the process of or otherwise contemplating imposing any
Encumbrances for Taxes on any of the Transferred Assets.



     2.15 Territorial Restrictions. None of the Seller or any of its Affiliates is restricted by
any agreement with any Person from carrying on the Business anywhere in the world or from expanding
the Business in any way or entering into any new businesses, except for such restrictions that do
not apply to any of the Business, the Transferred Assets or the Purchaser following the Closing.



     2.16 Absence of Changes. Since October 1, 2007, (a) the Seller and its Affiliates have owned
and operated the Transferred Assets and conducted the Business only in the ordinary course of
business, (b) no event or condition has occurred or exists, and to the Seller’s Knowledge no event
or condition is threatened, that, individually or in the aggregate, has had or is reasonably likely
to have, a Seller Material Adverse Effect and (c) none of the actions or events prohibited or
circumscribed by Section 4.2 have been taken or have occurred, except as disclosed in Section
2.16 of the Seller Disclosure Schedules or permitted by this Agreement.



     2.17 Assets.



          (a) Other than the material tangible assets and material services (i) used or provided by
Seller’s internal business support and general and administrative functions, such as, but not
limited to, legal, sales, finance, human resources, information technology, manufacturing, process
engineering and back end operations, (ii) used or provided by Seller under the Transition Services
Agreement, or (iii) included in the Excluded Assets, the Transferred Assets, when taken together
with Purchaser’s rights under the other Ancillary Agreements, constitute all of the material
tangible assets and material services of the Seller and its Affiliates necessary to conduct the
Business as currently conducted.



          (b) No Transferred Asset is owned by any entity other than the Seller (or in the case of any
Local Purchase Agreement, the relevant Seller Affiliate).



     2.18 Customers and Suppliers. No customer or supplier material to the Business as currently
conducted or as proposed to be conducted by the Seller, has canceled or otherwise terminated any
contract with the Seller relevant to the Business prior to the expiration of such Transferred
Contract’s term, or, to the Seller’s Knowledge, has threatened to cancel or otherwise terminate its
relationship with the Seller or to



24









 







substantially reduce its sales to or purchases from the Seller of any products, equipment,
goods or services.



     2.19 Seller Products and Inventory.



          (a) (i) Neither the Seller nor any of its Affiliates has made or provided a warranty, express
or implied, written or oral, with respect to the Seller Products other than pursuant to the
Seller’s standard terms and conditions as identified in Section 2.19(a) of the Seller
Disclosure Schedules and which have been made available to the Purchaser; (ii) as of the date
hereof there are no pending or, to the Seller’s Knowledge, threatened claims with respect to any
such warranty; (iii) there are no statements, citations or decisions by any Governmental Entity
declaring any of the Seller Products defective or unsafe; (iv) there have been no recalls,
including any recalls ordered by any Governmental Entity, with respect to any Seller Product; and
(v) there are no material pending, or, to the Seller’s Knowledge, threatened, product liability
claims against or involving the Seller or any the Seller Product and no such claims have been
settled or adjudicated. All of the Seller Products comply in all material respects with applicable
authorizations, permits or licenses of any Governmental Entity and all applicable Legal
Requirements.



          (b) All of the Transferred Inventory has been created or acquired in the ordinary course of
business, and, as of the date of this Agreement, is fit for the purpose for which it was procured
or manufactured and such Transferred Inventory (i) is not obsolete, damaged or defective, and (ii)
is of a good quality usable or saleable in the ordinary course of business, subject in the case of
clauses (i) and (ii) to reserves therefor recorded in accordance with GAAP and reflected in the
Financial Information. Section 2.19(b) of the Seller Disclosure Schedules sets forth the
Transferred Inventory as if the Closing Date were March 31, 2008.



     2.20 Export Controls, Trade Sanctions and Certain Payments.



          (a) The Seller has in the conduct of the Business and the ownership and operation of the
Transferred Assets complied in all material respects with all statutory and regulatory requirements
relating to export controls and trade sanctions under all applicable Legal Requirements of each
jurisdiction in which the Seller conducts the Business or holds any Transferred Assets, including,
without limitation, the International Traffic in Arms Regulations, the Export Administration
Regulations, antiboycott provisions, regulations administered by the Office of Foreign Assets
Control, and provisions under the Foreign Corrupt Practices Act.



          (b) The Seller does not maintain or conduct, and has not maintained or conducted, any
business, investment, operation or other activity in the conduct of the Business and the ownership,
operation or use of the Transferred Assets in or with: (i) any country or person targeted by any of
the economic sanctions of the United States of America administered by the United States Treasury
Department’s Office of Foreign Assets Control; (ii) any person appearing on the list of Specially
Designated Nationals and Blocked Persons issued by the United States Treasury Department’s Office
of



25









 







Foreign Assets Control; or (iii) any country or person designated by the United States
Secretary of the Treasury pursuant to the USA PATRIOT Act as being of “primary money laundering
concern.”



          (c) No director, officer, agent, or employee of the Seller, or any other Person associated
with or acting for or on behalf of the Seller, has in the conduct of the Business and the ownership
operation, or use of the Transferred Assets directly or indirectly (i) made any contribution, gift,
bribe, rebate, payoff, influence payment, kickback, or other payment to any Person, private or
public, regardless of form, whether in money, property, or services in violation of any Legal
Requirements or of the Seller’s code of business conduct or other written policy of the Seller or
any of its Affiliates; or (ii) established or maintained any fund or asset that has not been
properly recorded in the books and records of the Seller.



     2.21 Continued Employment. As of the date of this Agreement, none of the Key Employees have
given notice to the Seller to resign from his or her employment or have terminated his or her
employment nor is the Seller actually aware of any such individual’s intention to resign from his
or her employment.



     2.22 Disclosure. To Seller’s Knowledge, no representation or warranty by the Seller contained
in this Agreement, and no statement contained in the Seller Disclosure Schedules or any other
document, certificate or other instrument delivered or to be delivered by or on behalf of the
Seller pursuant to this Agreement, contains or will contain any untrue statement of a material fact
or omits or will omit 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 not misleading.



     2.23 Financial Advisor. Except for Credit Suisse, the fees and expenses of which are payable
by the Seller, no broker, finder or investment banker is entitled to any brokerage, finder’s or
other fee or commission in connection with the Transactions based upon arrangements made by or on
behalf of the Seller.



3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.




     The Purchaser represents and warrants to the Seller as follows, subject in each case to such
exceptions as are specifically set forth in the attached disclosure schedules of the Purchaser (the
“Purchaser Disclosure Schedules”), it being understood that each exception set forth in a
section or subsection of the Purchaser Disclosure Schedules shall qualify only the corresponding
representation and warranty set forth in this Agreement:



     3.1 Due Organization. The Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of The Netherlands. The Purchaser has all requisite corporate power
and authority to own and operate its respective properties and assets and to carry on its
respective business as currently conducted.



     3.2 Authority. The Purchaser has full corporate power and authority to execute and deliver
each Transactional Agreement to which it is or may become a party




26











 




and to perform its obligations under each Transactional Agreement to which it is or may become
a party; and the execution and delivery by the Purchaser of each Transactional Agreement to which
the Purchaser is or may become a party have been duly authorized by all necessary action on the
part of the Purchaser, and no additional corporate or stockholder authorization or consent is
required in connection with the performance of the Transactional Agreements. No vote of the
shareholders of the Purchaser is required to authorize the transactions contemplated by this
Agreement.




     3.3 Binding Nature of Agreements. This Agreement constitutes, and, upon execution and
delivery thereof, each of the other Transactional Agreements will constitute, the valid and legally
binding obligation of the Purchaser, enforceable against the Purchaser in accordance with its
terms, subject to: (a) laws of general application relating to bankruptcy, insolvency and the
relief of debtors; and (b) rules of law governing specific performance, injunctive relief and other
equitable remedies.



     3.4 Non-Contravention; Consents. The execution, delivery and performance by the Purchaser of
this Agreement and the other Transactional Agreements, and the consummation of the transactions
contemplated hereby and thereby do not and will not: (a) conflict with or result in any violation
of any provision of the charter or organizational documents of the Purchaser; (b) result in a
breach or default by the Purchaser under any material contract to which the Purchaser is a party;
or (c) violate or result in a breach of or constitute a default under any Legal Requirement or
order to which the Purchaser is subject. The Purchaser is not and will not be required to obtain
any Consent from any Person in connection with the execution, delivery or performance of any of the
Transactional Agreements or the consummation of any of the transactions contemplated hereby or
thereby.



     3.5 Cash Consideration. On the Closing Date, the Purchaser will have sufficient funds to
enable it to pay the Purchase Price and perform its obligations under this Agreement and any other
Transactional Agreements.



     3.6 Financial Advisor. No broker, finder or investment banker is entitled to any brokerage,
finder’s or other fee or commission in connection with the Transactions based upon arrangements
made by or on behalf of the Purchaser.



4. PRE-CLOSING COVENANTS




     4.1 Access. Subject to compliance by the Purchaser with the terms of the Confidentiality
Agreement and subject to applicable Legal Requirements regarding confidentiality of employee
information, during the period from the date of this Agreement through the Closing Date (the
“Pre-Closing Period”), the Seller will, after receiving reasonable advance notice from the
Purchaser, give the Purchaser reasonable access (during normal business hours) to those of its
books and records relating to the Business or the Transferred Assets, and will provide the
Purchaser with such information regarding the Business and the Transferred Assets as the Purchaser
may reasonably request, for the sole purposes of enabling the Purchaser (a) to further investigate,
at the Purchaser’s sole expense, the Transferred Assets and the Transferred Employees; and (b)



27









 







to verify the accuracy of the representations and warranties set forth in Section 2; provided,
however, that such access shall not interfere with the normal business and operations of the
Seller.



     4.2 Conduct of Business. Except (i) as contemplated or permitted by (x) this Agreement, (y)
any of the Ancillary Agreements, or (z) Section 4.2 of the Seller Disclosure Schedules or
(ii) as approved in writing by the Purchaser during the Pre-Closing Period:



          (a) the Seller will (i) conduct the Business and own, operate and use the Transferred Assets
in the ordinary course and consistent with its past practices; and (ii) use reasonable efforts to
preserve intact the Business and the Transferred Assets and maintain good relations with the
Transferred Employees, the parties to the Transferred Contracts and any other customer, supplier or
creditor of the Business;




          (b) the Seller will not:




               (i) sell, lease, license, transfer or dispose of any Transferred Assets (other than with
respect to the sale of Inventory in the ordinary course of business);



               (ii) incur, create or assume any Encumbrance on any of the Transferred Assets other than a
Permitted Encumbrance



               (iii) terminate or extend or modify any Transferred Contract except with the prior consent of
the Purchaser (which consent shall not be unreasonably withheld or delayed);



               (iv) enter into any contract, arrangement or commitment with respect to the Business or the
Transferred Assets other than in the ordinary course of business;



               (v) dispose of or permit to lapse any rights in, to or for the use of any Transferred IP
(except that the Seller may allow its national/regional phase filing rights to lapse in foreign
counterparts to such Transferred IP if the Purchaser, after reasonable notice from the Seller,
elects not to reimburse the Seller for all costs incurred in connection with such filings); or
disclose to any Person not an employee any information related to the Transferred IP that the
Seller, in its reasonable business judgment, determines should be held as confidential or
proprietary, except pursuant to binding confidentiality obligations in the ordinary course of
business, or pursuant to judicial or administrative process;



               (vi) (1) increase the compensation of any of the Specified Employees or Special Jurisdiction
Employees, except for periodic merit increases in the ordinary course of business or pursuant to
the terms of agreements or plans currently in effect and listed on Section 4.2(b) of the
Seller Disclosure Schedules, (2) except as required by applicable Legal Requirements, pay or agree
to pay or increase or agree to



28









 




increase any pension, retirement allowance, severance or other employee benefit not already
required or provided for under any existing Seller Plan or arrangement to any Specified Employee or
Special Jurisdiction Employee, or (3) hire any employee or individual independent contractor with
annual compensation in excess of $150,000 , other than to fill vacancies arising in the ordinary
course of business at compensation levels not in excess of those prevailing in the market and in
any event not at an annual compensation level that exceeds 125% of the annual compensation of the
departed employee, or enter into any new employment or severance agreements that would result in
post-termination payments becoming due or payable upon termination of such employment or
independent contractor arrangement; provided, however, notwithstanding the foregoing, the Seller
may pay retention bonuses to any employee listed on Schedule B, which would be subject to repayment
to Seller if such employee voluntarily terminates employment with the Purchaser (or an affiliate of
Purchaser) prior to the date three months following the Closing Date, up to 25% of such employee’s
annual salary.




               (vii) assume or enter into any labor or collective bargaining agreement relating to the
Business;



               (viii) settle any claims, actions, arbitrations, disputes or other proceedings that would
restrict the Seller or any of its Affiliates in any respect material to the Transaction, the
Transferred Assets or the Business or (2) for any amount that would not by its terms be an Excluded
Liability,



               (ix) accelerate the delivery or sale of any Seller Products or the recognition of revenue from
any such sale or the incurrence of capital expenditures, or offer discounts on sale of any Seller
Products or premiums on purchase of raw materials, except in the ordinary course of business
consistent with historical practice in the Seller’s conduct of the Business;



               (x) knowingly take any other act that is reasonably likely to (A) cause any representation or
warranty of the Seller in this Agreement to be or become untrue in any material respect or (B)
result in the failure of any condition precedent to be satisfied; or



               (xi) authorize or enter into any agreement or commitment with respect to any of the foregoing.



     4.3 Filings.



          (a) Each Party shall use commercially reasonable efforts to file as soon as practicable after
the date of this Agreement, but in no event later than fifteen (15) days following the date hereof,
all notices, reports and other documents required to be filed by such Party with any Governmental
Entity with respect to the Transactions, and to submit promptly any additional information
requested by any such Governmental Entity. Without limiting the generality of the foregoing, the
Purchaser shall promptly (and, subject to compliance by the Parties with the first sentence of
Section 4.3(b), in any event within 15 days) after the date of this Agreement file the
notifications required under




29









 




applicable antitrust, competition or fair trade laws or regulations (collectively, the
“Antitrust Laws”) in connection with the Transactions, including filing with the Federal
Trade Commission and the Antitrust Division of the Department of Justice of Notification and Report
Forms relating to the Transactions as required by the HSR Act. The Parties shall respond as
promptly as practicable to any inquiries or requests received from any Governmental Entity and
promptly inform the other Parties of any communication to or from any Governmental Entity, in each
case regarding the Transactions.




          (b) Subject to the confidentiality provisions of the Confidentiality Agreement, each Party
shall promptly supply the other Party with any information which may be required in order to
effectuate any filings (including applications) pursuant to (and to otherwise comply with its
obligations set forth in) Section 4.3(a). Except where prohibited by applicable Legal Requirements
or any Governmental Entity, and subject to the confidentiality provisions of the Confidentiality
Agreement, each of the Parties shall: (i) consult with the other Party prior to making any such
filing and taking a position with respect to any such filing; (ii) permit the other to review and
discuss in advance, and consider in good faith the views of the other Party in connection with, any
analyses, appearances, presentations, memoranda, briefs, white papers, arguments, opinions and
proposals before making or submitting any of the foregoing to any Governmental Entity by or on
behalf of any Party in connection with any legal proceeding related solely to the Transactional
Agreements and the Transactions (including any such legal proceeding relating to any Antitrust
Law); (iii) coordinate with the other Party in preparing and exchanging such information; and (iv)
promptly provide the other Party (and their counsel) with copies of all filings, notices, analyses,
presentations, memoranda, briefs, white papers, opinions, proposals and other submissions (and a
summary of any oral presentations) made or submitted by such Party with or to any Governmental
Entity related solely to this Agreement or the Transactions. Notwithstanding anything to the
contrary above, to the extent that any such notice, filing, analysis, presentation, memorandum,
brief, white paper, opinion, proposal or other submission contains information that a party
reasonably deems it to be sensitive for its business, such party may designate relevant portions of
such notice, filing, analysis, presentation, memorandum, brief, white paper, opinion, proposal or
other submission as “Outside Counsel Eyes Only,” in which case review of those designated portions
shall be limited to the outside counsel representing the other party, and such other party agrees
not to obey by such arrangement.




          (c) The Parties shall use commercially reasonable efforts to: (i) take all other actions
necessary to cause the expiration or termination of the applicable waiting periods under the
Antitrust Laws as soon as practicable; (ii) resolve any objections which may be asserted by any
Governmental Entity with respect to the Transactions under the Antitrust Laws; and (iii) take, or
cause to be taken, all actions necessary to obtain each Consent (if any) required to be obtained
(pursuant to any applicable Legal Requirement or contract, or otherwise) by such Party in
connection with any of the Transactions and to make effective the Transactions. If any
Governmental Entity, including any competition authority, shall impose amendments to the
Transactions or commitments to be undertaken




30









 




by any Party as a condition to release of such Governmental Entity’s Consent with respect to
the Transactions, the Parties shall commence and conduct good faith negotiations with each other
for no less than 15 days and use their commercially reasonable efforts in order to agree upon
amendments to the Transactional Agreements which are necessary in order to meet the requirements
imposed by such Governmental Entity. If, however, after such 15-day period, the Parties cannot
agree upon such amendments to the Transactional Agreements, either Party may terminate the
Agreement. Notwithstanding anything to the contrary herein, the Purchaser shall not be required to
agree to any divestiture, sale, license or Encumbrance of any properties, assets or businesses by
the Purchaser, the Seller or any of their respective Affiliates of any business, assets or property
of the Purchaser, the Seller or any of their respective Affiliates, or the imposition of any
limitation on the ability of any of the foregoing to conduct their respective businesses or to own
or exercise control of their respective assets and properties.




     4.4 Consents; Releases. The Seller will use reasonable efforts during the Pre-Closing Period
to obtain the Seller Required Approvals; provided, however, that none of the Seller or the
Purchaser nor any of their respective Affiliates shall be required to pay any consideration to
obtain any Seller Required Approvals other than, in the case of any Seller Required Approval that
is a consent relating to a contract, any de minimis fees, expenses or other consideration or other
fees or expenses required to be paid pursuant to the express provisions of such contract, which
consideration, fees or expenses shall be paid by the Seller, or, in the case of any Seller Required
Approval that is a Governmental Authorization, any filing, recordation or similar fees which shall
be shared equally by the Seller and the Purchaser. The Purchaser will cooperate fully with the
Seller, and will provide the Seller with such assistance as the Seller may reasonably request, for
the purpose of (a) attempting to obtain the Seller Required Approvals; and (b) arranging for the
Seller to be released and discharged from its obligations and other liabilities under the
Transferred Contracts.



     4.5 Open Incoming POs and Open Outgoing POs Schedule. On the seventh day prior to the
Closing, the Seller shall deliver to the Purchaser a schedule listing each of the Open Incoming POs
and Open Outgoing POs as of that date.



     4.6 No Shop.



          (a) Until the earlier of the termination of this Agreement and the Closing Date, the Seller
shall not and shall cause its Affiliates and its and their respective officers, directors,
employees, agents and representatives not to, directly or indirectly, (i) solicit any inquiries or
proposals, or enter into any discussions, negotiations, understandings, arrangements or agreements,
relating to the direct or indirect disposition, whether by sale, merger or otherwise, of all or any
material portion of the Business to any Person other than the Purchaser or its Affiliates (a
“Prohibited Transaction”) or (ii) knowingly disclose, directly or indirectly, to any Person
any confidential information concerning the Business except as necessary to conduct the business in
the ordinary course. In the event that the Seller or any of its Affiliates receives an inquiry
related to such a transaction, the Seller will provide the Purchaser with notice thereof as soon as




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practicable after receipt thereof, which notice shall include the identity of the prospective
purchaser or soliciting party and the material terms of the proposal or solicitation except to the
extent that such disclosure by the Seller would violate or breach a binding non-disclosure
agreement in effect prior to the date of this Agreement to which the Seller is a party.
Notwithstanding anything to the contrary contained in this Section 4.6 or elsewhere in this
Agreement, if the Seller receives a bona fide written Takeover Proposal not solicited by the Seller
in violation of this Section 4.6 and the Board of Directors of the Seller determines in good faith,
after consulting with independent legal counsel of recognized standing, that the following actions
are required to comply with its fiduciary duties under applicable law, then the Seller may, in
response to such Takeover Proposal: (A) furnish information concerning the Business to the Person
making such Takeover Proposal (and to such Person’s representatives); and (B) participate in
discussions and negotiations with such Person (and with such Person’s representatives) regarding
such Takeover Proposal; provided that, in that circumstance, the Purchaser may provide to the
Person making such Takeover Proposal access to no more information regarding the Business and the
Transferred Assets than that received by the Purchaser prior to execution of this Agreement and for
a period of no more than twenty (20) Business Days, and/or engage in discussions with the Person
making such Takeover Proposal and its representatives subject to the requirement that the Seller
shall have first received an executed confidentiality agreement that is no more favorable to such
person than the confidentiality agreement to which the Purchaser was subject prior to entering into
this Agreement and, in the case of a Person that is a party to an existing non-disclosure agreement
with the Seller prohibiting the Seller from identifying such Person to the Purchaser, the Seller
shall have received an executed amendment to such non-disclosure agreement authorizing the Seller
to provide to the Purchaser the notice and information described in the second sentence of this
Section 4.6(a).




          (b) The parties acknowledge that there may be no adequate remedy at law for a breach of
Section 4.6(a) and that money damages may not be an appropriate remedy for breach of such Section
in addition to any rights it may have for damages. Therefore, the parties agree that the Purchaser
has the right to injunctive relief and specific performance of Section 4.6(a) in the event of any
breach of such Section. The remedies set forth in this Section 4.6(b) are cumulative and shall in
no way limit any other remedy any party hereto has at law, in equity or pursuant hereto.




     4.7 Confidentiality.



          (a) During the Pre-Closing Period, except as expressly permitted in this Agreement, the Seller
shall treat as confidential and shall safeguard any and all confidential information, knowledge and
data applicable to the Business or otherwise included in the Transferred Assets, in each case by
using the same degree of care, but no less than a reasonable standard of care, to prevent the
unauthorized use, dissemination or disclosure of such information, knowledge and data as the Seller
and its Affiliates use with respect to similar confidential or proprietary information, knowledge
or data prior to the execution of this Agreement.




32









 








          (b) The Purchaser and the Seller acknowledge that the confidentiality obligations set forth
herein shall not extend to information, knowledge and data that is publicly available or becomes
publicly available through no act or omission of the party owing a duty of confidentiality, or
becomes available on a non-confidential basis from a source other than the party owing a duty of
confidentiality so long as such source is not known by such party to be bound by a confidentiality
agreement with or other obligations of secrecy to the other party.




          (c) In the event of a breach of the obligations hereunder by a party hereto, the other party,
in addition to all other available remedies, will be entitled to injunctive relief to enforce the
provisions of this Section 4.7 in any court of competent jurisdiction.




     4.8 Assets in India and China. The Purchaser shall use its reasonable efforts to arrange to
take title to, and hold, any Transferred Assets located in India and China in a manner that is
intended to minimize Import Duties to the extent practicable (such as, in substantially the same
manner as the Seller as communicated to the Purchaser prior to the date hereof (i.e., bonded
warehouse, etc.))



     4.9 Non-Transferred Inbound IP Licenses. The Seller agrees that with respect to any
Non-Transferred Inbound IP License that includes a provision permitting the Seller or any of its
Affiliates to grant a sublicense therein, the Seller (or such Affiliate) shall, upon the
Purchaser’s request and at the Purchaser’s cost and expense, grant such a sublicense therein to the
Purchaser for use in the Business, and, to the extent that such a sublicense may be granted only
with the consent of the licensor, the Seller will, at the Purchaser’s request, provide reasonable
assistance to the Purchaser in connection with the Purchaser’s efforts to obtaining such consent.



     4.10 Conditions. During the Pre-Closing Period, the Parties will each use reasonable efforts
to cause the conditions set forth in Sections 5 and 6 to be satisfied on a timely basis. In
particular, the Parties will each use all commercially reasonable efforts to retain the services of
the employees of the Business, including those employees the continued employment of whom is a
condition to the Purchaser’s obligation pursuant to Section 5.11 of this Agreement.



5. CONDITIONS PRECEDENT TO THE PURCHASER’S OBLIGATION TO CLOSE.




     The Purchaser’s obligation to purchase the Transferred Assets and to take the other actions
required to be taken by the Purchaser at the Closing is subject to the satisfaction, at or prior to
the Closing, of each of the following conditions (any of which may be waived by the Purchaser, in
whole or in part, in writing):



     5.1 Accuracy of Representations.



          (a) Each of the Seller’s representations and warranties (other than the Seller Extended
Representations) in this Agreement (each considered without regard to




33









 




materiality qualifiers such as “material”, “in all material respects”, and “Material Adverse
Effect” set forth therein) shall be true and correct as of the date of this Agreement and shall be
true and correct as of the Closing Date as if made on or as of the Closing Date, except (i) for
representations and warranties made that address matters only as of a particular date, which need
only have been true and correct as of such date, and (ii) where the failure of such representation
and warranty to be so true and correct has not had and would not reasonably be expected to have a
Seller Material Adverse Effect.




          (b) Each of the Seller Extended Representations shall be true and correct as of the date of
this Agreement and shall be true and correct as of the Closing Date in all material respects except
for Seller Extended Representations made that address matters only as of a particular date, which
need only have been true and correct as of such date.




     5.2 Performance of Obligations. The Seller shall have performed, in all material respects,
all obligations required by this Agreement to be performed by the Seller on or before the Closing
Date.



     5.3 Antitrust. Any waiting periods applicable to the consummation of the Transactions under
the Antitrust Laws shall have expired or been terminated.



     5.4 Instruments of Transfer. Each Assignment and Assumption Agreement, bill of sale and any
other appropriate document of transfer in form and substance reasonably acceptable to the Purchaser
and the Seller, transferring the tangible personal property included in the Transferred Assets to
the Purchaser and assigning to the Purchaser all rights of the Seller and its Affiliates in and to
all of the Transferred Contracts, shall have been executed on behalf of the Seller (or the relevant
Seller Affiliate) and delivered to the Purchaser.



     5.5 Ancillary Agreements. Each of the other Ancillary Agreements shall have been executed on
behalf of the Seller (or the relevant Seller Affiliate) and delivered to the Purchaser.



     5.6 No Restraints. No injunction or other order preventing the consummation of the
transactions contemplated by this Agreement and the Ancillary Agreements shall have been issued by
any court of competent jurisdiction and shall remain in effect; and no Legal Requirement that makes
consummation of the transactions contemplated by this Agreement and the Ancillary Agreements
illegal shall be in effect.



     5.7 No Proceedings. There shall not be pending any suit, action or proceeding (a) challenging
or seeking to restrain, limit or prohibit any transactions contemplated by this Agreement or (b)
brought by a Governmental Entity seeking to obtain from the Purchaser in connection with the
transactions contemplated by this Agreement any material commitments or seeking to prohibit or
limit the ownership, operation or control by the Purchaser or any of its Affiliates of any material
portion of the business or assets of the Purchaser (including the Business) or any of its
Affiliates.



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     5.8 Seller Required Approvals. The Seller shall have obtained (a) all Seller Required
Approvals with respect to contracts designated on Schedule 2.13 as “Reassignment Required for
Closure” and (b) at least 25 out of the remaining 32 Seller Required Approvals, all of which shall
remain in full force and effect.



     5.9 Seller Closing Certificate. The Purchaser shall have received a certificate, signed by a
duly authorized officer of the Seller and dated the Closing Date, to the effect that the conditions
set forth in Sections 5.1, 5.2 and 5.8 have been satisfied (the “Seller Closing
Certificate”).



     5.10 FIRPTA Certificate. The Purchaser shall have received the certificate referenced in
Section 1.14(e) dated as of the Closing Date.



     5.11 Transferred Employees. Not less than 80% of the employees of the Business listed on
Schedule 2.8(a) shall have accepted employment with the Purchaser effective as of the
Closing Date on terms reasonably satisfactory to the Purchaser and shall not have given notice of
their intention to terminate employment.



     5.12 Employee Agreements. Each of the Employee Agreements shall remain in full force and
effect on the Closing Date, and each of the individuals party to such Employee Agreements shall
remain employed and none of them shall have given written (including via email) notice of his or
her intention to terminate employment.



     5.13 Intracompany Accounts. All intracompany accounts with respect to the Transferred
Subsidiary shall have been settled.



     5.14 Supply Agreement. The Supply Agreement shall have been executed on behalf of the Seller
and delivered to the Purchaser.



     5.15 Allocation. The Allocation shall have been finalized pursuant to Section 1.10.



6. CONDITIONS PRECEDENT TO THE SELLER’S OBLIGATION TO CLOSE.




     The Seller’s obligation to sell and transfer the Transferred Assets to the Purchaser and to
take the other actions required to be taken by the Seller at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions (any of which may be
waived by the Seller, in whole or in part, in writing):



     6.1 Accuracy of Representations.



          (a) Each of the Purchaser’s representations and warranties (other than the Purchaser Extended
Representations) in this Agreement (each considered without regard to materiality qualifiers such
as “material”, “in all material respects”, and “Material Adverse Effect” set forth therein) shall
be true and correct as of the date of this Agreement and shall be true and correct as of the
Closing Date as if made on or as of the Closing Date, except (i) for representations and warranties
made that address matters




35









 




only as of a particular date, which need only have been true and correct as of such date, and
(ii) where the failure of such representation and warranty to be so true and correct has not had
and would not reasonably be expected to have a Purchaser Material Adverse Effect.




          (b) Each of the Purchaser Extended Representations shall be true and correct as of the date of
this Agreement and shall be true and correct as of the Closing Date in all material respects except
for Purchaser Extended Representations made that address matters only as of a particular date,
which need only have been true and correct as of such date




     6.2 Performance of Obligations. The Purchaser shall have performed, in all material respects,
all obligations required by this Agreement to be performed by the Purchaser on or before the
Closing Date.



     6.3 Antitrust. Any waiting periods applicable to the consummation of the Transactions under
the Antitrust Laws shall have expired or been terminated.



     6.4 Delivery of Consideration. The Seller shall have received the Cash Closing Payment
referred to in Section 1.3(a).



     6.5 Instruments of Transfer. The Purchaser shall have delivered the documents and instruments
referred to in Section 1.13(a)(ii).



     6.6 Ancillary Agreements. Each of the other Ancillary Agreements shall have been executed on
behalf of the Purchaser (or the relevant Purchaser Affiliate) and delivered to the Seller.



     6.7 No Restraints. No injunction or other order preventing the consummation of the
transactions contemplated by this Agreement and the Ancillary Agreements shall have been issued by
any court of competent jurisdiction and shall remain in effect; and no Legal Requirement preventing
consummation of the transactions contemplated by this Agreement and the Ancillary Agreements shall
be in effect.



     6.8 Purchaser Closing Certificate. The Seller shall have received a certificate, signed by a
duly authorized officer of the Purchaser and dated the Closing Date, to the effect that the
conditions set forth in Sections 6.1 and 6.2 have been satisfied (the “Purchaser Closing
Certificate”)



     6.9 Allocation. The Allocation shall have been finalized pursuant to Section 1.10.



7. TERMINATION.




     7.1 Right to Terminate Agreement. This Agreement may be terminated prior to the Closing:



          (a) by the mutual written consent of the Parties;




36









 








          (b) by either Party after October 31, 2008 (the “Termination Date”) if the Closing
has not taken place by the Termination Date, unless the failure of the Closing to take place on or
before such date is attributable to a breach by such Party of any of its obligations set forth in
this Agreement;




          (c) by either party if a court of competent jurisdiction or other Governmental Entity shall
have issued a final and nonappealable order, decree or ruling, or shall have taken any other
action, having the effect of permanently restraining, enjoining or otherwise prohibiting any of the
Transactions;




          (d) by either Party pursuant to Section 4.3(c);




          (e) by the Purchaser if there has been a material breach of any representation, warranty,
covenant or agreement made by the Seller in this Agreement, or any such representation or warranty
shall have become untrue after the date of this Agreement, in either case such that the conditions
in Section 5 would not be satisfied; provided, however, that if such breach is curable by the
Seller through the exercise of its reasonable efforts, then provided that the Seller continues to
exercise such reasonable efforts, the Purchaser may not terminate this Agreement under this Section
7.1(e) prior to the Termination Date unless such breach is not cured within 30 days of notice
thereof;




          (f) by the Seller if there has been a material breach of any representation, warranty,
covenant or agreement made by the Purchaser in this Agreement, or if any such representation or
warranty shall have become untrue after the date of this Agreement, in either case such that the
conditions in Section 6 would not be satisfied; provided, however, that if such breach is curable
by the Purchaser through the exercise of its reasonable efforts, then provided that the Purchaser
continues to exercise such reasonable efforts, the Seller may not terminate this Agreement under
this Section 7.1(f) prior to the Termination Date unless such breach is not cured within 30 days of
notice thereof; or




          (g) by the Seller following receipt of a Takeover Proposal which the Board of Directors of the
Seller determines (after consultation with its financial advisor and independent legal counsel) to
be a Superior Proposal; provided, however, that: (A) prior to such termination, the Seller has
provided the Purchaser a written notice that describes the Takeover Proposal and the parties
thereto; (B) within two Business Days following the delivery of the notice referred to in clause
(A) of this sentence, the Purchaser does not propose adjustments in the terms and conditions of
this Agreement the result of which is that the Seller’s Board of Directors reasonably determines
(after consultation with its financial advisor and independent legal counsel) that such Takeover
Proposal is no longer a Superior Proposal and (C) as a condition of such termination by the Seller
pursuant to this Section 7.1(g), the Seller shall pay to the Purchaser a fee of $10,000,000 in
cash. Such payment shall be made by wire transfer of immediately available funds to an account to
be designated by the Purchaser.




     7.2 Termination Procedures. If either Party wishes to terminate this Agreement pursuant to
Section 7.1, such Party will deliver to the other Party a written



37









 







notice stating that such Party is terminating this Agreement and setting forth a brief
statement of the basis on which such Party is terminating this Agreement.




     7.3 Effect of Termination. Upon the termination of this Agreement pursuant to Section 7.1,
neither Party will have any obligation or other liability to the other Party, except that (a) the
Parties will remain bound by the provisions of this Section 7.3 and Sections 10.3, 10.4, 10.5,
10.6, 10.11, 10.12 and 10.16, and by the provisions of the Confidentiality Agreement, and (b)
neither Party will be relieved of any liability for any breach, prior to such termination, of its
obligation to consummate the transactions contemplated by this Agreement or its obligation to take
any other action required to be taken by such Party at or before the Closing.



8. INDEMNIFICATION.




     8.1 Survival of Representations. Subject to the provisions of this Section 8, each of the
representations, warranties, covenants and obligations set forth in this Agreement and in any other
Transactional Agreement shall continue in full force and effect notwithstanding the occurrence of
the Closing and the consummation of the Transactions. Each General Representation, covenant and
obligation contained in this Agreement or any other Transactional Agreement shall survive the
Closing Date and will terminate and expire, and will cease to be of any force or effect, at 11:59
p.m. (California time) on the first anniversary of the Closing Date (the “General Survival
Period”), and all liability with respect thereto will thereupon be extinguished (except with
respect to any breach as to which notice was given prior thereto). The IP Representations shall
survive the Closing Date and will terminate and expire, and will cease to be of any force or
effect, at 11:59 p.m. (California time) on the eighteen months following the Closing Date (the
“IP Survival Period”), and all liability with respect to thereto will thereupon be
extinguished (except with respect to any breach as to which notice was given prior thereto). The
Purchaser Extended Representations and the Seller Extended Representations shall survive the
Closing Date and will terminate and expire, and will cease to be of any force or effect, at 11:59
p.m. (California time) on the date that is 90 days following the expiration of the applicable
statute of limitations, giving effect to any extensions thereof. If written notice of a claim has
been given prior to the expiration of the applicable representations, warranties, covenants and
obligations by a party hereto to another party hereto or with respect to any claim based on actual
fraud or willful breach, then the relevant representations and warranties shall survive as to such
claim until such claim has been finally resolved.



     8.2 Indemnification by the Seller.



          (a) The Seller hereby agrees that from and after the Closing it shall indemnify, defend and
hold harmless the Purchaser, its Affiliates, and their respective directors, officers,
shareholders, partners, members, attorneys, accountants, agents, representatives and employees
(other than the Transferred Employees) and their heirs, successors and permitted assigns, each in
their capacity as such (the “Purchaser Indemnified Parties”, and collectively with the
Seller Indemnified Parties, the “Indemnified Parties”) from, against and in respect of any
Losses imposed on, sustained,




38









 




incurred or suffered by, or asserted against, any of the Purchaser Indemnified Parties,
whether in respect of third party claims, claims between the parties hereto, or otherwise, directly
or indirectly relating to or arising out of:




               (i) any breach or inaccuracy of any representation or warranty made by the Seller contained in
this Agreement, the Seller Closing Certificate or any other Transactional Agreement (it being
understood that, for purposes of this Section 8.2(a), any qualifications relating to materiality,
including the term “Material Adverse Effect”, or relating to knowledge contained in such
representation or warranty shall be disregarded for purposes of determining the amount of Losses
incurred);



               (ii) any breach of any covenant or agreement of the Seller or any of its Affiliates contained
in this Agreement or any Ancillary Agreement, other than Section 4.2(b)(x);



               (iii) any failure to timely fulfill or discharge any of the Excluded Liabilities;



               (iv) except as provided for in Section 8.2(a)(v), (x) Taxes (but not including any such Taxes
paid by the Seller prior to the Closing Date or to the extent that the Seller maintained a specific
reserve or provision for such Taxes in the Financial Information) imposed on the Seller (including,
without limitation, any obligation to contribute to the payment of a Tax determined on a
consolidated, combined or unitary basis with respect to a group of corporations that includes or
included the Seller) with respect to taxable periods of the Seller ending on or before the Closing
Date; and (y) with respect to taxable periods beginning before the Closing Date and ending after
the Closing Date, Taxes (but not including any such Taxes paid by the Seller prior to the Closing
Date to the extent the Seller maintained a specific reserve or provision for such Taxes or in the
Financial Information) imposed on the Seller which are allocable pursuant to the next sentence, to
the portion of such period ending on the Closing Date. In the case of Taxes that are payable with
respect to a taxable period that begins before the Closing Date and ends after the Closing Date,
the portion of any such Tax that is allocable to the portion of the period ending on the Closing
Date shall be in the case of Taxes that are either (A) based upon or related to income or receipts,
or (B) imposed in connection with any sale or other transfer or assignment of property (real or
personal, tangible or intangible) (other than conveyances pursuant to this Agreement), deemed equal
to the amount which would be payable if the taxable year ended with the Closing Date (except that,
solely for purposes of determining the marginal tax rate applicable to income or receipts during
such period in a jurisdiction in which such tax rate depends upon the level of income or receipts,
annualized income or receipts may be taken into account if appropriate for an equitable sharing of
such Taxes); and in the case of Taxes not described in clause (x) that are imposed on a periodic
basis and measured by the level of any item, deemed to be the amount of such Taxes for the entire
period (or, in the case of such Taxes determined on an arrears basis, the amount of such Taxes for
the immediately preceding period) multiplied by a fraction the numerator of which is the number of
calendar days in the period ending on the Closing Date and the denominator of which is the number
of calendar days in the entire period;



39









 





               (v) Taxes payable by the Transferred Subsidiary to the extent attributable to any period prior
to the Closing Date, as determined under Section 8.2(a)(iv), except to the extent liability for
such taxes is accrued on the Transferred Subsidiary Closing Balance Sheet. Notwithstanding any
other section of this Agreement, the indemnification under this Section 8.2(a)(v) shall survive
until sixty days after the statute of limitations for assessments closes for the Transferred
Subsidiary under the laws under which such Taxes may become payable; and



               (vi) any inaccuracy in the amount of the Transferred Subsidiary Closing Assets or the
Transferred Subsidiary Closing Liabilities as reflected on the Transferred Subsidiary Closing
Balance Sheet.



          (b) Notwithstanding anything to the contrary contained in this Agreement;




               (i) Except with respect to claims based on (w) fraud, (x) willful breach of a covenant, (y)
breach of any post-closing covenant or (z) any matter contemplated by clauses (a)(iii), (a)(iv) or
(a)(v) of Section 8.2, the indemnification provided in this Section 8 shall be the sole and
exclusive post-Closing monetary remedy available to the Purchaser, as against the Seller or any of
its Affiliates, for any Losses arising under or related to this Agreement or any other
Transactional Agreement, it being understood that nothing in this Section 8.2(b)(i) or elsewhere in
this Agreement shall affect any party’s rights to specific performance or other equitable remedies
with respect to the covenants referred to in this Agreement.



               (ii) Except with respect to claims based on (v) fraud, (w) willful breach of a covenant, (x)
breach of any post-closing covenant, (y) breach of the IP Representations or Seller Extended
Representations or (z) indemnification pursuant to clauses (a)(iii), (a)(iv) or (a)(v) of Section
8.2, the maximum aggregate amount of indemnifiable Losses that may be recovered from the Seller
under this Agreement or any other Transactional Agreement shall not exceed $12.5 million plus the
amount of any Contingent Payment. Except with respect to claims based on fraud, the maximum
aggregate amount of indemnifiable Losses that may be recovered from the Seller with respect to IP
Representations shall not exceed $31.25 million plus the amount of any Contingent Payment;
provided, however, except with respect to claims based on (v) fraud, (w) willful breach of a
covenant, (x) breach of any post-closing covenant, (y) breach of the Seller Extended
Representations or (z) indemnification pursuant to clauses (a)(iii), (a)(iv) or (a)(v) of Section
8.2, the maximum aggregate amount of indemnifiable Losses, that may be recovered from the Seller
under this Agreement or any other Transactional Agreement, including those with respect to the IP
Representations, shall not exceed $31.25 million plus the amount of any Contingent Payment. Except
with respect to claims based on (x) fraud, (y) breach of any post-closing covenant or
(z) indemnification pursuant to clauses (a)(iii), (a)(iv) or (a)(v) of Section 8.2, the maximum
aggregate amount of indemnifiable Losses that may be recovered from the Seller under this Agreement
shall be equal to the Purchase Price plus the amount of any Contingent Payment.



40









 





               (iii) Except with respect to claims based on (v) fraud, (w) willful breach of a covenant, (x)
breach of any post-closing covenant, (y) breach of the Seller Extended Representations or (z)
indemnification pursuant to clauses (a)(iii), (a)(iv) or (a)(v) of Section 8.2 (such clauses (v),
(w), (x), (y) and (z), collectively “Non-Basketed Losses”), no indemnification payment by
the Seller with respect to any indemnifiable Losses otherwise payable under Section 8.2(a) or any
other Transactional Agreement shall be payable until such time as all such indemnifiable Losses
made or paid under Section 8.2(a) shall aggregate to more than $375,000 (the “Deductible”),
after which time the Seller shall be liable for all indemnifiable Losses exceeding the Deductible.
In addition, except with respect to any Non-Basketed Losses, no indemnification payment by the
Seller with respect to any indemnifiable Losses otherwise payable under Section 8.2(a) or any other
Transactional Agreement shall be payable in respect of any indemnification claim or series of
indemnification claims arising from the same or similar underlying event or circumstance unless
such claim is for Losses in an amount of at least $10,000.



          (c) The Purchaser may set off any amounts due to the Purchaser under the terms of this Section
8 against the Contingent Payment that may be owed to the Seller pursuant to Section 1.6(a) and
shall not be obligated to make any such Contingent Payment to the extent of a bona fide claim for
indemnification made under this Section 8 pending final resolution of such claim.




     8.3 Indemnification by the Purchaser.



          (a) The Purchaser hereby agrees that from and after the Closing it shall indemnify, defend and
hold harmless the Seller, its Affiliates, and their respective directors, officers, stockholders,
partners, members, attorneys, accountants, agents, representatives and employees and their heirs,
successors and permitted assigns, each in their capacity as such (the “Seller Indemnified
Parties”) from, against and in respect of any Losses imposed on, sustained, incurred or
suffered by, or asserted against, any of the Seller Indemnified Parties, whether in respect of
third party claims, claims between the parties hereto, or otherwise, directly or indirectly
relating to, arising out of or resulting from, (i) any breach of any representation or warranty
made by the Purchaser contained in this Agreement, any Ancillary Agreement or any document
delivered pursuant to this Agreement for the period such representation or warranty survives,
(ii) any failure to timely discharge or fulfill any of the Assumed Liabilities, (iii) any failure
of the Transferred Subsidiary to timely discharge or fulfill any Transferred Subsidiary Closing
Liabilities to the extent such Liabilities are accrued on the Transferred Subsidiary Closing
Balance Sheet, and (iv) any breach of a covenant or agreement of the Purchaser contained in this
Agreement, any Ancillary Agreement or any document delivered pursuant to this Agreement.




          (b) Notwithstanding anything to the contrary contained in this Agreement, except with respect
to claims based on (x) fraud, or (y) willful breach of a covenant or breach of a post-closing
covenant or (z) indemnification pursuant to Section 8.3(a)(ii) or (iii), no indemnification payment
by the Purchaser with respect to any indemnifiable Losses otherwise payable under Section 8.3(a)
shall be payable until such




41









 




time as all such indemnifiable Losses made or paid under Section 8.3(a) shall aggregate to
more than $375,000, after which time the Purchaser shall be liable in full for all indemnifiable
Losses exceeding such amount. In addition, no indemnification payment by the Purchaser with
respect to any indemnifiable Losses otherwise payable under Section 8.3(a)(i) or any other
Transactional Agreement shall be payable in respect of any indemnification claim or series of
indemnification claims arising from the same or similar underlying event or circumstance unless
such claim is for Losses in an amount of at least $10,000.




     8.4 Third Party Claim Indemnification Procedures.



          (a) In the event that any written claim or demand for which an indemnifying party (an
“Indemnifying Party”) may have liability to any Indemnified Party hereunder, other than
those relating to Taxes (which are the subject of Section 2.14) is asserted against or sought to be
collected from any Indemnified Party by a third party (a “Third Party Claim”), such
Indemnified Party shall promptly, but in no event more than ten days following such Indemnified
Party’s receipt of a Third Party Claim, notify the Indemnifying Party in writing of such Third
Party Claim, the amount or the estimated amount of damages sought thereunder to the extent then
ascertainable (which estimate shall not be conclusive of the final amount of such Third Party
Claim), any other remedy sought thereunder, any relevant time constraints relating thereto and, to
the extent practicable, any other material details pertaining thereto (a “Claim Notice”);
provided, however, that the failure timely to give a Claim Notice shall affect the rights of an
Indemnified Party hereunder only to the extent that such failure has a prejudicial effect on the
defenses or other rights available to the Indemnifying Party with respect to such Third Party
Claim. The Indemnifying Party shall have 30 days after receipt of the Claim Notice (the “Notice
Period”) to notify the Indemnified Party that it desires to defend the Indemnified Party
against such Third Party Claim unless the Indemnified Party has notified the Indemnifying Party in
the Claim Notice that it has determined in good faith that there is a reasonable probability that
such Third Party Claim may adversely affect it or its Affiliates other than as a result of monetary
damages; it being understood that by assuming the defense of a Third Party Claim, the Indemnifying
Party shall conclusively acknowledge that it has an indemnity obligation with respect to such Third
Party Claim.




          (b) In the event that the Indemnifying Party notifies the Indemnified Party within the Notice
Period that it desires to defend the Indemnified Party against a Third Party Claim, the
Indemnifying Party shall have the right to defend the Indemnified Party by appropriate proceedings
and shall have the sole power to direct and control such defense, with counsel reasonably
satisfactory to the Indemnified Party at its expense. Once the Indemnifying Party has duly assumed
the defense of a Third Party Claim, the Indemnified Party shall have the right, but not the
obligation, to participate in any such defense and to employ separate counsel of its choosing. The
Indemnified Party shall participate in any such defense at its expense unless (i) the Indemnifying
Party and the Indemnified Party are both named parties to the proceedings and the Indemnified Party
shall have reasonably concluded that representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them, or (ii)





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the Indemnified Party assumes the defense of a Third Party Claim after the Indemnifying Party has
failed to diligently pursue a Third Party Claim it has assumed, as provided in the first sentence
of Section 8.4(c). The Indemnifying Party shall not, without the prior written consent of the
Indemnified Party, settle, compromise or offer to settle or compromise any Third Party Claim on a
basis that would result in (i) the imposition of a consent order, injunction or decree that would
restrict the future activity or conduct of the Indemnified Party or any of its Affiliates, (ii) a
finding or admission of a violation of a Legal Requirement or violation of the rights of any Person
by the Indemnified Party or any of its Affiliates, (iii) a finding or admission that would have an
adverse effect on other claims made or threatened against the Indemnified Party or any of its
Affiliates, or (iv) any monetary liability of the Indemnified Party that will not be promptly paid
or reimbursed by the Indemnifying Party.




          (c) If the Indemnifying Party (i) elects not to defend the Indemnified Party against a Third
Party Claim, whether by not giving the Indemnified Party timely notice of its desire to so defend
or otherwise, (ii) is not entitled to defend the Third Party Claim as a result of the Indemnified
Party’s election to defend the Third Party Claim as provided in Section 8.4(a), or (iii) after
assuming the defense of a Third Party Claim, fails to take reasonable steps necessary to defend
diligently such Third Party Claim within ten days after receiving written notice from the
Indemnified Party to the effect that the Indemnifying Party has so failed, the Indemnified Party
shall have the right but not the obligation to assume its own defense; it being understood that the
Indemnified Party’s right to indemnification for a Third Party Claim shall not be adversely
affected by assuming the defense of such Third Party Claim. The Indemnified Party shall not settle
a Third Party Claim without the consent of the Indemnifying Party, which consent shall not be
unreasonably withheld.




          (d) The Indemnified Party and the Indemnifying Party shall cooperate in order to ensure the
proper and adequate defense of a Third Party Claim, including by providing access to each other’s
relevant business records and other documents, and employees; it being understood that the costs
and expenses of the Indemnified Party relating thereto shall be Losses.




          (e) The Indemnified Party and the Indemnifying Party shall use reasonable efforts to avoid
production of confidential information (consistent with applicable Legal Requirements), and to
cause all communications among employees, counsel and others representing any party to a Third
Party Claim to be made so as to preserve any applicable attorney-client or work-product privileges.




     8.5 Claims Procedure. If an Indemnified Party wishes to make a claim for indemnification
hereunder for a Loss that does not result from a Third Party Claim (a “Direct Claim”), the
Indemnified Party shall notify the Indemnifying Party in writing of such Direct Claim, the amount
or the estimated amount of damages sought thereunder to the extent then ascertainable (which
estimate shall not be conclusive of the final amount of such Direct Claim), any other remedy sought
thereunder, any relevant time constraints relating thereto and, to the extent practicable, any
other material details pertaining thereto. The Indemnifying Party shall have a period of 30 days
within which to respond



43









 







to any Direct Claim or any Claim Notice relating to a Third Party Claim. If the Indemnifying
Party does not respond within such 30-day period, the Indemnifying Party will be deemed to have
accepted such Claim. If the Indemnifying Party rejects all or any part of such Claim, the Seller
and the Purchaser shall attempt in good faith for 30 days to resolve such claim. If no such
agreement can be reached through good faith negotiation within 30 days, either the Purchaser or the
Seller may commence an action in accordance with Section 10.3.



     8.6 Adjustments to Losses.



          (a) Insurance. In calculating the amount of any Loss, the proceeds actually received by the
Indemnified Party or any of its Affiliates under any insurance policy or pursuant to any claim,
recovery, settlement or payment by or against any other Person in each case relating to the Third
Party Claim or the Direct Claim, net of any actual costs, expenses or premiums incurred in
connection with securing or obtaining such proceeds, shall be deducted, except to the extent that
the adjustment itself would excuse, exclude or limit the coverage of all or part of such Loss. In
the event that an Indemnified Party has any rights against a third party with respect to any
occurrence, claim or loss that results in a payment by an Indemnifying Party under this Section 8,
such Indemnifying Party shall be subrogated to such rights to the extent of such payment; provided
that until the Indemnified Party recovers full payment of the Loss related to any such Direct
Claim, any and all claims of the Indemnifying Party against any such third party on account of said
indemnity payment is hereby expressly made subordinate and subject in right of payment to the
Indemnified Party’s rights against such third party. Without limiting the generality or effect of
any other provision hereof, each Indemnified Party and Indemnifying Party shall duly execute upon
request all instruments reasonably necessary to evidence and perfect the subrogation and
subordination rights detailed herein, and otherwise cooperate in the prosecution of such claims.




          (b) Reimbursement. If an Indemnified Party recovers an amount from a third party in respect
of a Loss that is the subject of indemnification hereunder after all or a portion of such Loss has
been paid by an Indemnifying Party pursuant to this Section 8, the Indemnified Party shall promptly
remit to the Indemnifying Party the excess (if any) of (i) the amount paid by the Indemnifying
Party in respect of such Loss, plus the amount received from the third party in respect thereof,
less (ii) the full amount of Loss.




     8.7 Payments. The Indemnifying Party shall pay all amounts payable pursuant to this Section
8, by wire transfer of immediately available funds, promptly following receipt from an Indemnified
Party of a bill, together with all accompanying reasonably detailed back-up documentation, for a
Loss that is the subject of indemnification hereunder, unless the Indemnifying Party in good faith
disputes the Loss, in which event it shall so notify the Indemnified Party. In any event, the
Indemnifying Party shall pay to the Indemnified Party, by wire transfer of immediately available
funds, the amount of any Loss for which it is liable hereunder no later than three days following
any final determination of such Loss and the Indemnifying Party’s liability therefor. A “final
determination” shall exist when (a) the parties to the
dispute have reached an



44









 







agreement in writing, (b) a court of competent jurisdiction shall have entered a final and
nonappealable order or judgment, or (c) an arbitration or like panel shall have rendered a final
nonappealable determination with respect to disputes the parties have agreed to submit thereto.



     8.8 Characterization of Indemnification Payments. All payments made by an Indemnifying Party
to an Indemnified Party in respect of any claim pursuant to Section 8.2 or 8.3 hereof shall be
treated as adjustments to the Purchase Price for Tax purposes.



     8.9 Effect of Waiver of Condition. Neither the Purchaser’s nor the Seller’s right to
indemnity pursuant to this Section 8 shall be adversely affected by its waiver of a condition to
closing set forth in Section 8 unless the express terms of such waiver also include a specific and
unambiguous waiver of the right to indemnity with respect to the matter that is the subject of the
waiver.



9. EMPLOYEE MATTERS.




     9.1 Employment Matters.



          (a) Immediately prior to the Closing, the Purchaser shall, or shall cause its applicable
Affiliate to, extend, to each Specified Employee, an offer of employment (the “Offer
Letter”) that, if accepted, would: (i) provide such Specified Employee with compensation,
benefits and terms of employment (including job title) that are substantially comparable in the
aggregate to the compensation, benefits and terms of employment provided by the Seller (or any
applicable Affiliate of the Seller) to such Specified Employee immediately prior to the Closing
(excluding equity based plans, defined benefit pension plans, retiree medical programs and
severance plans and practices); and (ii) include a consent by each Specified Employee to disclosure
of the Specified Employee’s personnel file and transfer of such personnel file and other employment
records pertaining to such Specified Employee, to the Purchaser. Effective on the Closing Date,
the Seller (or the applicable Affiliate of the Seller) shall accept the resignation of, and
effective as of the Closing Date, the Purchaser will hire each such Specified Employee who accepts
and executes the Offer Letter (such employees who commence working for the Purchaser (or an
Affiliate of the Purchaser) immediately following the Closing, collectively the “Hired
Employees”). The Seller consents to the Purchaser (or an Affiliate of the Purchaser)
contacting such Specified Employees with respect to the desire of such employees to enter the
employ of the Purchaser (or an Affiliate of the Purchaser) and the Seller shall cooperate with the
efforts of the Purchaser (or an Affiliate of the Purchaser) to cause such Specified Employees to
accept any offers of employment by the Purchaser (or an Affiliate of the Purchaser) and to execute
Offer Letters. Notwithstanding the foregoing, nothing herein shall be construed as to prevent the
Purchaser (or an Affiliate of the Purchaser) from terminating the employment of any Hired Employee
at any time after the Closing Date for any reason (or no reason), except as set forth in the Offer
Letter of such Specified Employee executed by the Purchaser (or an Affiliate of the Purchaser)
pursuant to this Section 9.1. The Seller shall deliver to the Purchaser on or before the Closing
Date (or as soon as reasonably practicable after the


45









 







Closing Date) all personnel files and employment records relating to the Hired Employees.
Hired Employees will receive credit for such employees’ period of employment with the Seller (or an
Affiliate of the Seller) for purposes of calculating severance benefits required under any Legal
Requirements and benefits under any vacation, entitled leave or severance plan (excluding, for the
avoidance of doubt, any 401(k) plan) and the Purchaser’s Offer Letter to Hired Employees in the
United States will include a provision that the Purchaser will assume the Seller’s obligation with
respect to accrued but untaken vacation entitlements existing as of the Closing Date up to a
maximum of 40 hours for any Hired Employee (collectively, the “Assumed Accrued Vacation”)
and the Hired Employee would consent to this in lieu of payment from the Seller for that portion of
any accrued vacation entitlement; provided, however, that if a Hired Employee received severance
payment in connection with this Transaction or the transfer of such employee’s employment from the
Seller (or an Affiliate of the Seller) to the Purchaser (or an Affiliate of the Purchaser) such
Hired Employee shall not receive credit from the Purchaser for such employee’s employment with the
Seller (or any of its Affiliates) for purposes of severance benefits; provided, further, that a
Hired Employee shall only be entitled to receive credit from the Purchaser for such employee’s
employment with the Seller (or any of its Affiliates) to the extent recognized by the Seller (or
its Affiliates) under the applicable similar Seller Plan, provided that such crediting of service
does not result in any duplication of benefits. Effective as of the Closing, the Purchaser shall
assume the Seller’s obligations with respect to the Assumed Accrued Vacation.




          (b) If any inactive employee of the Seller listed on Schedule 9.1(b) who would
otherwise have received an offer of employment from the Purchaser in accordance with
Section 9.1(a), becomes eligible to return from an approved leave of absence to active work status
after the Closing Date during the 6-month period following the commencement of that leave (or such
shorter period following the commencement of that leave during which he would be entitled to
reemployment under either applicable Legal Requirements or the Seller’s policies and procedures in
existence immediately prior to the Closing Date), the Purchaser shall, or shall cause its
applicable Affiliate to, extend an offer of employment to such person and any such person who
accepts such an offer and commences working for the Purchaser(or an Affiliate of the Purchaser)
shall be treated as a Hired Employee as of the date of hire by the Purchaser; provided, however,
that no such employee of the Seller shall be guaranteed reinstatement to active service if he is
incapable of working in accordance with the policies, practices and procedures of the Purchaser (or
an Affiliate of the Purchaser) or if his return to employment is contrary to the terms of his
leave.




     9.2 Special Jurisdiction Employees.



          (a) Effective as of immediately after the Closing, the Purchaser agrees to (or to cause its
applicable Affiliates to) employ the Special Jurisdiction Employees at least to the extent required
by applicable Legal Requirements (other than those who are inactive as of the Closing Date to the
extent permitted by applicable Legal Requirements). For the avoidance of doubt, the Purchaser
shall provide each Special


46









 







Jurisdiction Employee with compensation, benefits and terms of employment (including job
title) that are substantially comparable in the aggregate to the compensation, benefits and terms
of employment provided by the Seller (or any applicable Affiliate of the Seller) to such Special
Jurisdiction Employee immediately prior to the Closing (excluding equity based plans, defined
benefit pension plans, retiree medical programs and severance plans and packages), and the
Purchaser shall provide each Special Jurisdiction Employee credit for such employees’ period of
employment with the Seller (or an Affiliate of the Seller) for purposes of calculating severance
benefits required under any Legal Requirement and benefits under any vacation, entitled leave or
severance plan. The Parties shall cooperate with each other to comply with all applicable
provisions of the European Union Acquired Rights Directive or other country-specific legal
standards or applicable laws in connection with the termination of the Special Jurisdiction
Employees. The Seller shall pay to the Purchaser an amount equal to the accrued liabilities
recorded by the Seller for vacation or other paid time off as of the Closing Date.




          (b) If any inactive employee of the Seller (or any Affiliate of the Seller) listed on
Schedule 9.2(b) who would otherwise have received an offer of employment from the Purchaser
in accordance with Section 9.2(a), becomes eligible to return from an approved leave of absence to
active work status after the Closing Date during the 6-month period following the commencement of
that leave (or such shorter period following the commencement of that leave during which he would
be entitled to reemployment under either applicable Legal Requirements or the Seller’s policies and
procedures in existence immediately prior to the Closing Date), the Purchaser shall, or shall cause
its applicable Affiliate to, extend an offer of employment to such person and any such person who
accepts such an offer as of the date of hire by the Purchaser (each such person a “Special
Jurisdiction Transferred Employee”); provided, however, that no such employee of the Seller
shall be guaranteed reinstatement to active service if he is incapable of working in accordance
with the policies, practices and procedures of the Purchaser (or an Affiliate of the Purchaser) or
if his return to employment is contrary to the terms of his leave.




          (c) To the extent any notification or consultation requirements are imposed by applicable
Legal Requirements with regard to the Transactions as regards Special Jurisdiction Employees, the
Purchaser and the Seller agree to cooperate to ensure that such notification or consultation
requirements are completed.




     9.3 Waiver of Waiting Period. With respect to each Hired Employee and Special Jurisdiction
Transferred Employee, the Purchaser shall use commercially reasonable efforts to waive all waiting
periods and pre-existing condition exclusions for group health and dental coverage and shall give
appropriate credit for all co-payments and deductibles paid or accrued under the Seller’s employee
benefit plans for the plan year in which the Closing occurs.



     9.4 Certain Foreign National Employees. The parties recognize that the Specified Employees
listed on Schedule 9.4 are in nonimmigrant visa status or have applications for lawful
permanent residence pending with the relevant Governmental Entities (the “Affected Foreign
National Employees”). The parties further recognize that



47









 







new or amended petitions with respect to such Affected Foreign National Employees may be
required in certain of these cases identified on Schedule 9.4, unless the Purchaser (or any
of the Purchaser’s Affiliates, as the case may be), is deemed the “successor-in- interest” to the
Seller (as such term is used in pronouncements by the U.S. Citizenship and Immigration Service
(“USCIS”)) with respect to such Affected Foreign National Employees. Accordingly, the
Purchaser hereby agrees to assume, the Seller’s obligations to the USCIS as “successor-in-interest
under such pending applications with respect to the related Affected Foreign National Employees
(including any obligations arising from or under attestations made in each certified and still
effective Labor Condition Application (“LCA”) filed by the Seller with respect to any such
Affected Foreign National Employees); provided that such assumption shall not grant to any such
Affected Foreign National Employee any rights enforceable by such employee against the Purchaser.
Each party agrees to use commercially reasonable efforts to take such actions as may reasonably be
requested at and following the Closing Date to document to the USCIS or such other Governmental
Entity, as the case may be, as may be necessary to memorialize the “successor-in-interest”
relationship with respect to any Affected Foreign National Employees. The Seller shall provide the
Purchaser with true and complete copies of all applications, petitions and other documentation
related to the Affected Foreign National Employees’ immigration status on or before the Closing
Date.



     9.5 W-2/Payroll Matters. The Seller and the Purchaser shall adopt the “standard procedure”
for preparing and filing IRS Forms W-2 (Wage and Tax Statements), as described in Revenue Procedure
2004-53. Under this procedure, the Purchaser, as the successor employer, shall provide, as
applicable, all required Forms W-2 to all Hired Employees reflecting all wages paid and Taxes
withheld by the Purchaser as the successor employer for the portion of the calendar year beginning
on the day after the Closing Date. Sellers as the predecessor employer shall provide Forms W-2 to
all Hired Employees reflecting all wages paid and taxes withheld by Sellers or its Affiliate for
the portion of the calendar year beginning January 1, 2008 and ending on the Closing Date. In
addition, the Seller and the Purchaser shall adopt the “standard procedure” of Revenue Procedure
2004-53 for purposes of filing IRS Forms W-4 (Employee’s Withholding Allowance Certificate) and W-5
(Earned Income Credit Advance Payment Certificate). Under this procedure, the Seller shall keep on
file all IRS Forms W-4 and W-5 provided by the Hired Employees for the period required by
applicable law concerning record retention and the Purchaser will obtain new IRS Forms W-4 and W-5
with respect to each Hired Employee.



     9.6 Accrued Amounts. The Seller shall pay (a) to each Hired Employee employed as of the
Closing Date an amount equal to such employee’s accrued vacation or other paid time off as of the
Closing Date, excluding any Assumed Accrued Vacation, and (b) other than as mandated by Legal
Requirement, which shall be set forth on Section 9.6(b) of the Seller Disclosure Schedules,
to each Special Jurisdiction Transferred Employee an amount equal to such employee’s accrued
vacation or other paid time off as of the Closing Date.



48









 





     9.7 COBRA. The Seller shall be responsible for all liabilities relating to or arising under
COBRA and any similar state law for employees of the Business and their beneficiaries who
experience a “qualifying event” (as defined under COBRA) at any time on or prior to the Closing
Date. The Seller agrees that it shall be the Seller’s sole responsibility to provide the required
notices under COBRA to all M&A Qualified Beneficiaries (as defined in Treas. Reg. Section
54.4980B-9, Q&A 4), and to provide coverage under COBRA to such individuals.



     9.8 WARN. The Seller shall be responsible for providing or discharging any and all
notifications, benefits and liabilities to, as applicable, Specified Employees and Governmental
Entities required by the WARN Act due to Employment Loss occurring to Specified Employees as a
result of the transactions contemplated by this Agreement; provided, however, that the Purchaser
shall be responsible for any obligation with respect to the Hired Employees under the WARN Act
arising solely as a result of action taken by the Purchaser on or after the Closing Date.



     9.9 No Third Party Rights. Notwithstanding the foregoing, nothing contained herein shall (i)
be treated as an amendment of any particular employee benefit plan, (ii) give any third party any
right to enforce the provisions of this Section 9 or (iii) obligate the Purchaser (or any Affiliate
of the Purchaser) to (x) maintain any particular employee benefit plan or (y) retain the employment
of any particular employee.



     9.10 Employee Communications. Prior to making any written or oral communications to the
Specified Employees and the Special Jurisdiction Employees pertaining to compensation or benefit
matters that are affected by the transactions contemplated by this Agreement, the Seller shall
provide the Purchaser with a copy of the intended communication, the Purchaser shall have a
reasonable period of time to review and comment on the communication, and the Purchaser and the
Seller shall cooperate in providing any such mutually agreeable communication.



     9.11 401(k) Plan. The account balances of the Hired Employees who participate in the
retirement plan maintained by Seller or its Affiliate that is intended to qualify under Section
401(a) of the Code and that contains a cash or deferred arrangement under Section 401(k) of the
Code (“Seller 401(k) Plan”) shall be fully vested as of the Closing Date and the Seller
shall take any actions necessary to ensure that such account balances are distributable from the
Seller 401(k) Plan on and after the Closing Date.



10. MISCELLANEOUS.




     10.1 No Implied Representations. The Parties acknowledge that, except as expressly set forth
in Sections 2 and 3 and in the Ancillary Agreements, neither Party has made or is making any
representations or warranties whatsoever to the other, implied or otherwise.



     10.2 Further Actions.



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          (a) From and after the Closing Date, each party hereto shall cooperate (and shall cause its
Affiliates to cooperate) with the other party, and shall cause to be executed and delivered such
documents and cause such other actions to be taken as the other party may reasonably request, for
the purpose of evidencing and consummating the Transactions.




          (b) The Purchaser: (i) acknowledges that certain of the Transferred Assets may inadvertently
include or have incorporated into them certain other assets that are not part of the Transferred
Assets (such as, by way of example only, information or software retained on a computer hard
drive); (ii) agrees to promptly convey such other assets to the Seller, or dispose of such other
assets, each in the manner reasonably requested by the Seller (provided that the Purchaser and the
Seller shall jointly share any out-of-pocket cost or expense associated with the foregoing); and
(iii) agrees that, without the prior written consent of the Seller, neither it nor any of its
Affiliates will use any of such other assets in any way whatsoever or disclose any information
contained in such other assets or use such other assets for the benefit of the Purchaser or its
Affiliates or any other third party (other than the Seller and its Affiliates).




          (c) The Seller: (i) acknowledges that certain Transferred Assets may inadvertently not be
transferred and delivered as of the Closing Date; (ii) agrees to promptly convey such assets to the
Purchaser in the manner reasonably requested by the Purchaser (provided that the Purchaser and the
Seller shall jointly share any out-of-pocket cost or expense associated with the foregoing); and
(iii) agrees that, without the prior written consent of the Purchaser, neither it nor any of its
Affiliates will use any of such assets in any way whatsoever or disclose any information contained
in such assets or use such assets for the benefit of the Seller or its Affiliates or any other
third party (other than the Purchaser and its Affiliates).




          (d) The Seller shall use its reasonable efforts to obtain all Seller Required Approvals not
obtained on or before the Closing Date as promptly as practicable after the Closing Date; provided,
however, that none of the Seller or the Purchaser nor any of their respective Affiliates shall be
required to pay any consideration to obtain any Seller Required Approvals other than, in the case
of any Seller Required Approval that is a consent relating to a contract, any de minimis fees,
expenses or other consideration or other fees or expenses required to be paid pursuant to the
express provisions of such contract, which consideration, fees or expenses shall be paid by the
Seller.




     10.3 Governing Law; Submission to Jurisdiction; Selection of Forum; Waiver of Trial By Jury.
THIS AGREEMENT WILL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED IN ALL RESPECTS BY, THE LAWS OF
THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW). Each party hereto
agrees that it shall bring any action or proceeding in respect of any claim arising out of or
related to this Agreement or the transactions contained in or contemplated by this Agreement and
the Ancillary Agreements, exclusively in the United States District Court for the Southern District
of New York or any New York State court sitting in New York City (the “Chosen Courts”),



50









 







and solely in connection with claims arising under this Agreement or the transactions that are
the subject of this Agreement or any of the Ancillary Agreements (a) irrevocably submits to the
exclusive jurisdiction of the Chosen Courts, (b) waives any objection to laying venue in any such
action or proceeding in the Chosen Courts, (c) waives any objection that the Chosen Courts are an
inconvenient forum or do not have jurisdiction over any party hereto and (d) agrees that service of
process upon such party in any such action or proceeding shall be effective if notice is given in
accordance with Section 10.4. Each party hereto irrevocably waives any and all right to trial by
jury in any legal proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby. Notwithstanding anything to the contrary herein, neither Party may commence
any action or proceedings (other than temporary injunction) in respect of any claim arising out of
or related to this Agreement or the transactions contained in or contemplated by this Agreement and
the Ancillary Agreements unless such Party has used reasonable commercial efforts to negotiate and
resolve the dispute with the other party for 30 days. Each party agrees that it will negotiate in
good faith with the other party through officers ranked Vice President or higher during such 30-day
period in an effort to resolve any such dispute.



     10.4 Notices. Any notice or other communication required or permitted to be delivered to
either Party under this Agreement must be in writing and will be deemed properly delivered, given
and received when delivered (by hand, certified mail, return receipt requested, by courier or
express delivery service or by facsimile) to the Person at the address, or facsimile telephone
number set forth beneath the name of such Party below (or to such other address or facsimile
telephone number as such Party shall have specified in a written notice given to the other Party):


if to Purchaser:



NXP B.V.

High Tech Campus 60

5656 AG Eindhoven

The Netherlands

Attention: Guido R.C. Dierick

Facsimile: +31-40-27-29658



with copies to:



NXP Semiconductors USA, Inc.

1109 McKay Drive

San Jose, California 95131

Attention: James N. Casey

Facsimile: +1-408-474-7100




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and



Sullivan & Cromwell LLP

1870 Embarcadero Road

Palo Alto, CA 94303-3308

Attention: Scott D. Miller

Facsimile: (650) 461-5700



if to the Seller:



Conexant Systems, Inc.

4000 MacArthur Blvd.

Newport Beach, CA., 92660

Attention: Jean Hu

Facsimile: (949) 483-3971



with a copy to:



Cooley Godward Kronish LLP

4401 Eastgate Mall

San Diego, CA 92121-1909

Attention: Steven M. Przesmicki

Facsimile: (858) 550-6420




     10.5 Public Announcements. Notwithstanding anything to the contrary contained herein, except
as may be required by any Legal Requirement, each Party shall provide each other with a reasonable
opportunity to review and to comment upon, and each party shall specifically approve in advance,
any press release or other public statement or filing relating to this Agreement or any of the
Transactions.



     10.6 Fees and Expenses. Except to the extent specifically provided otherwise herein, each
Party hereto shall bear and pay all fees, costs and expenses that have been incurred or that will
be incurred in the future by such party in connection with: (i) the negotiation, preparation and
review of the Transactional Agreements and any other document and certificate related thereto; (ii)
the preparation and submission of any filing or notice required be made or given by such party in
connection with any of the Transactions; and (iii) the consummation and performance of the
Transactions.



     10.7 Books and Records. To the extent that any portion of the Books and Records is, at the
Closing Date held by the Seller but physical possession of such Books and Records is not
transferred on the Closing Date, the Seller shall be obligated to deliver that portion of the Books
and Records only upon the request of the Purchaser, provided that the Seller will cooperate
reasonably with the Purchaser at the Purchaser’s request to



52









 







identify any such Books and Records held by the Seller. The Seller shall be entitled to
retain copies of the Books and Records in its possession in accordance with its existing document
retention policy for administrative, non-business purposes only; provided that such Books and
Records shall be used solely for such purposes and shall be kept strictly confidential and not
disclosed to any other person, except as may be required by Legal Requirement. The Seller shall
not be obligated to retain such Books and Records beyond the period specified in the Seller’s
existing document retention policies. Each party agrees that it will cooperate with and make
available to the other party, during normal business hours, all Books and Records, information and
employees (without substantial disruption of employment) retained and remaining in existence after
the Closing which are necessary or useful in connection with any Tax inquiry, audit, investigation
or dispute, any litigation or investigation or any other matter requiring any such Books and
Records, information or employees for any reasonable business purpose. The party requesting any
such Books and Records, information or employees shall bear all of the out-of-pocket costs and
expenses (including attorneys’ fees, but excluding reimbursement for salaries and employee
benefits) reasonably incurred in connection with providing such Books and Records, information or
employees.



     10.8 Nonsolicitation and Non-Competition.



          (a) During the period beginning upon the Closing and ending on the third anniversary of the
Closing (the “No-Hire Period”) the Parties shall not, and shall ensure that their
respective Affiliates do not, without the prior written consent of the other Party, directly or
indirectly hire (including by contracting through an independent contractor, consultant or other
third party) any Restricted Employee. During the period beginning upon the Closing and ending on
the third anniversary of the Closing (the “Non-Solicitation Period”) the Parties shall not,
and shall ensure that their respective Affiliates do not, without the prior written consent of the
other Party, directly or indirectly solicit for employment (including by contracting through an
independent contractor, consultant or other third party) any Restricted Employee of the other
Party. “Restricted Employee” shall mean, in the case of the employees of the Purchaser,
any Hired Employee or Special Jurisdiction Transferred Employee, and, in the case of the employees
of the Seller, any person who is an employee of the Seller immediately prior to the Closing Date
and who has been actively involved in the Transactions or any individual that is identified on
Schedule 10.8(a). Notwithstanding the foregoing provisions of this Section 10.8, such
provisions will not prevent either Party from (i) causing to be placed any general advertisement or
similar notice that is not targeted specifically at employees of the other Party or its Affiliates,
or (ii) engaging any recruiting firm or similar organization to identify or solicit persons for
employment on behalf of such Party, which firm or organization may solicit employees of the other
Party, as long as such recruiting firm or organization is not instructed to target any employees of
the other Party or its Affiliates.




          (b) The Seller agrees that for the period commencing on the Closing Date and expiring on the
third anniversary of the Closing Date neither it nor any of its Affiliates shall, directly or
indirectly, alone or with others, as stockholders or otherwise, invest in, contribute capital to,
raise capital for or participate in the business or




53









 







management of any business that (i) engages in the design, development, marketing, sale, offer
for sale, use, importation or distribution of products or methods in the STB or the DTV fields or
(ii) competes with the Business.




     10.9 Assignment. Neither Party may assign any of its rights or delegate any of its
obligations under this Agreement (whether voluntarily, involuntarily, by way of merger or
otherwise) to any other Person without the prior written consent of the other Party; provided,
however, that the Seller may, prior to the Closing, assign to any Person its right to receive all
or any portion of the cash payment to be made by the Purchaser at the Closing, and that, subject to
Section 1.16, the Purchaser may assign any and all of its rights under this Agreement or any other
Transaction Agreement to one or more of its wholly owned subsidiaries (but no such assignment shall
relieve the Purchaser of any of its obligations hereunder).



     10.10 Parties in Interest. Nothing in this Agreement express or implied is intended to
provide any rights or remedies to any employee of the Seller or to any other Person other than the
Parties, Indemnified Parties and their respective successors, legal representatives and permitted
assigns.



     10.11 Severability. In the event that any provision of this Agreement, or the application of
such provision to any Person or set of circumstances, shall be determined to be invalid, unlawful,
void or unenforceable to any extent, (a) a suitable and equitable provision shall be substituted
therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of
such invalid or unenforceable provision and (b) the remainder of this Agreement and the application
of such provision to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, will not be affected and will continue to be valid and
enforceable to the fullest extent permitted by law.



     10.12 Entire Agreement. This Agreement (including all Schedules and Exhibits hereto), the
Confidentiality Agreement (which remains in full force and effect) and the Ancillary Agreements set
forth the entire understanding of the Parties and supersede all prior agreements and
understandings, oral or written, between the Parties relating to the subject matter hereof and
thereof. In the event of any conflict or inconsistency between the terms of this Agreement and any
Ancillary Agreement, the terms of this Agreement shall govern.



     10.13 Waiver. Any provision of this Agreement may be waived if, and only if, such waiver is
in writing and signed by the party against whom the waiver is to be effective. No failure on the
part of either Party to exercise any power, right, privilege or remedy under this Agreement, and no
delay on the part of either Party in exercising any power, right, privilege or remedy under this
Agreement, will operate as a waiver thereof; and no single or partial exercise of any such power,
right, privilege or remedy will preclude any other or further exercise thereof or of any other
power, right, privilege or remedy.



54









 





     10.14 Amendments. This Agreement may not be amended, modified, altered or supplemented except
by means of a written instrument executed on behalf of both Parties.



     10.15 Bulk Sales. The Seller and the Purchaser agree to waive compliance with Article 6 of
the Uniform Commercial Code as adopted in each of the jurisdictions in which any of the Transferred
Assets are located to the extent that such Article is applicable to the transactions contemplated
hereby.



     10.16 Counterparts. This Agreement may be executed in several counterparts, each of which
will constitute an original and all of which, when taken together, will constitute one and the same
Agreement.



     10.17 Interpretation of Agreement.



          (a) Each Party acknowledges that it has participated in the drafting of this Agreement, and
any applicable rule of construction to the effect that ambiguities are to be resolved against the
drafting party will not be applied in connection with the construction or interpretation of this
Agreement.




          (b) Whenever required by the context hereof, the singular number will include the plural, and
vice versa; the masculine gender will include the feminine and neuter genders; and the neuter
gender will include the masculine and feminine genders.




          (c) As used in this Agreement, the words “include” and “including,” and variations thereof,
will not be deemed to be terms of limitation, and will be deemed to be followed by the words
“without limitation.”




          (d) Unless the context otherwise requires, references in this Agreement to “Sections,”
“Schedules” and “Exhibits” are intended to refer to Sections of and Schedules and Exhibits to this
Agreement.




          (e) The table of contents of this Agreement and the bold-faced headings contained in this
Agreement are for convenience of reference only, will not be deemed to be a part of this Agreement
and will not be referred to in connection with the construction or interpretation of this
Agreement.




     10.18 Certain Definitions.



          For purposes of this Agreement, the term




          “Accounts Receivable” shall mean all trade accounts and notes receivable and other
miscellaneous receivables of the Business as of the Closing Date arising out of the sale or other
disposition of goods or services of the Business.




          “Affected Foreign National Employees” shall have the meaning set forth in Section 9.4.




55









 








          “Affiliate” shall mean, with respect to any Person, any other Person that as of the date of
the Agreement or as of any subsequent date, directly or indirectly, through one or more
intermediaries, controls, is controlled by or is under common control with, such specified Person.




          “Agreement” shall mean this Asset Purchase Agreement, including the Schedules, the Seller
Disclosure Schedules and the Purchaser Disclosure Schedules.




          “Allocation” shall have the meaning set forth in Section 1.10.




          “Allocation Arbiter” shall have the meaning set forth in Section 1.10.




          “Ancillary Agreements” shall have the meaning set forth in Section 1.11.




          “Antitrust Laws” shall have the meaning set forth in Section 4.3(a).




          “Asset Allocation Statement” shall have the meaning set forth in Section 1.10.




          “Asset Disposition” shall have the meaning assigned thereto under the Senior Secured
Indenture, dated as of October 12, 2006, of NXP BV and NXP Funding LLC.




          “Assignment and Assumption Agreements” shall have the meaning set forth in the Recitals.




          “Assumed Accrued Vacation” shall have the meaning set forth in Section 9.1(a).




          “Assumed Liabilities” shall have the meaning set forth in Section 1.7(a).




          “Assignment and Assumption Agreements” shall have the meaning set forth in the Recitals.




          “Base Inventory Value” shall mean $16,100,000.




          “BMP Sales” shall mean with respect to any period, revenues recognized in accordance with the
GAAP from sales of the products listed on Schedule A or licensing of Intellectual Property
Rights related to those items listed under the heading “Amphion IP” on Schedule A during such
period.




          “Books and Records” shall mean all (i) books, records (including customer, supplier, and
purchasing records), lists (including customer, supplier and distributor lists), financial data,
files, reports, plans, records and manuals exclusively related to the Seller Products or used
exclusively in the Business, (ii) product, business and marketing plans and promotional literature
exclusively related to the Seller Products and (iii) all product and design manuals, plans,
drawings, technical manuals, operating records and all other work product (in any media)
exclusively for the Seller Products but




56









 




excluding (A) any information or records relating to Seller employees, and (B) any such items
to the extent (x) they are included in or primarily related to any Excluded Assets or Excluded
Liabilities or (y) any Legal Requirement prohibits their transfer.




          “Business” shall have the meaning set forth in the Recitals.




          “Business Day” shall mean any day other than a Saturday, a Sunday or a day on which banks in
San Francisco are authorized or obligated by Legal Requirement or executive order to close.




          “Cash Closing Payment” shall have the meaning set forth in Section 1.3(a).




          “Cash Deferred Payment” shall have the meaning set forth in Section 1.3(b).




          “Chosen Courts” shall have the meaning set forth in Section 10.3.




          “Claim” shall mean all past, present and future disputes, claims, controversies, demands,
rights, obligations, liabilities, actions and causes of action of every kind and nature, including:
(i) any unknown, unsuspected or undisclosed claim; and (ii) any claim, right or cause of action
based upon any breach of any express, implied, oral or written contract or agreement.




          “Claim Notice” shall have the meaning set forth in Section 8.4(a).




          “Closing” shall have the meaning set forth in Section 1.12.




          “Closing Date” shall have the meaning set forth in Section 1.12.




          “Closing Inventory Value” shall have the meaning set forth in Section 1.4(a)(i).




          “COBRA” shall have the meaning set forth in Section 2.9(b).




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




          “Confidentiality Agreement” shall mean the Mutual Confidentiality Agreement between the
Parties dated as of September 17, 2007.




          “Consent” shall mean any consent, approval or waiver.




          “Contingent Payment” shall have the meaning set forth in Section 1.6(a).




          “Contingent Payment Period” shall have the meaning set forth in Section 1.6(a).




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          “Copyrights” shall have the meaning set forth in the definition of “Intellectual Property”.




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




          “Deductible” shall have the meaning set forth in Section 8.2(b).




          “DGCL” shall mean the Delaware General Corporation Law




          “Digital Video Recorder” shall mean a device that records video in a digital format to a disk
drive or other medium.




          “Direct Claim” shall have the meaning set forth in Section 8.5.




          “DTV” shall mean digital television.




          “Employee Agreements” shall have the meaning set forth in the Recitals to this Agreement.




          “Employment Loss” shall mean “employment loss” as defined in the WARN Act.




          “Encumbrances” shall mean lien, pledge, charge, encumbrance, security interest, option,
mortgage, easement, or other restriction or third party right of any kind, including any right of
first refusal.




          “ERISA” shall have the meaning set forth in Section 2.9(a).




          “ERISA Affiliate” shall have the meaning set forth in Section 2.9(b).




          “Escrow Agent” shall have the meaning set forth in Section 1.3(b).




          “Escrow Agreement” shall have the meaning set forth in Section 1.5.




          “Escrow Amount” shall have the meaning set forth in Section 1.3(b).




          “Escrow Fund” shall have the meaning set forth in Section 1.5.




          “Excluded Assets” shall have the meaning set forth in Section 1.2.




          “Excluded Liabilities” shall mean all Liabilities of the Seller or any of its Affiliates other
than the Assumed Liabilities.




          “Final Inventory Value” shall have the meaning set forth in Section 1.4(a)(v).




          “Financial Information” shall have the meaning forth in Section 2.3.




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




          “General Representation” shall mean any representation or warranty made by the Seller or the
Purchaser in this Agreement, in the Seller Closing Certificate or the Purchaser Closing Certificate
other than the IP Representations, the Purchaser Extended Representations and the Seller Extended
Representations.




          “General Survival Period” shall have the meaning set forth in Section 8.1.




          “Governmental Authorizations” means all licenses, permits, certificates and other
authorizations and approvals related to the Business and issued by or obtained from a Governmental
Entity.




          “Governmental Entity” shall mean any United States (federal, state or local) or foreign
government, or Governmental Entity.




          “Hired Employees” shall have the meaning set forth in Section 9.1(a).




          “HSR Act” shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the rules
promulgated thereunder.




          “Import Duties” shall mean any import duties imposed by a Chinese or Indian Tax authority on
the sale of the Transferred Assets in the relevant jurisdiction from the Seller to the Purchaser.




          “Import Duty Cap” shall have the meaning set forth in Section 1.9(a).




          “Indemnified Parties” shall have the meaning set forth in Section 8.2(a).




          “Indemnifying Party” shall have the meaning set forth in Section 8.4(a)




          “Intellectual Property” shall mean (i) trademarks, service marks, brand names, certification
marks, collective marks, d/b/a’s, domain names, logos, symbols, trade dress, assumed names,
fictitious names, trade names, and other indicia of origin, all applications and registrations for
the foregoing, and all goodwill associated therewith and symbolized thereby, including all renewals
of same (collectively, “Trademarks”); (ii) all patents, registrations and patent
applications therefor, including divisions, continuations, continuations-in-part and renewal
applications, and including renewals, extensions and reissues (collectively, “Patents”);
(iii) trade secrets, confidential information and know-how, including inventions and discoveries
(as well as invention disclosures therefor), whether patentable or not, processes, schematics,
business methods, formulae, drawings, prototypes, models, designs, customer lists and supplier
lists (collectively, “Trade Secrets”); (iv) published and unpublished works of authorship,
whether copyrightable or not (including without limitation databases and other compilations of
information), including mask rights and computer software, copyrights therein and thereto,
registrations



59









 






and applications therefor, and all renewals, extensions, restorations and reversions thereof
(collectively, “Copyrights”); and (v) any other intellectual property or proprietary
rights.




          “Intellectual Property Assignment Agreements” shall have the meaning set forth in the
Recitals.




          “Intellectual Property Rights” shall mean all rights of the following types, which exist under
the laws of any jurisdiction in the world: (i) rights associated with works of authorship,
including exclusive exploitation rights, Copyrights, moral rights, and mask works; (ii) Trademark
and trade name rights and similar rights; (iii) trade secret rights; (iv) Patents and industrial
property rights; (v) other proprietary rights in intellectual property of every kind and nature;
and (vi) all registrations, renewals, extensions, continuations, divisions, or reissues of, and
applications for, any of the rights referred to in clauses “(i)” through “(vi)” above.




          “Intracompany Receivables” shall mean all account, note or loan receivables recorded on the
books of the Seller for goods or services sold or provided by the Business to the Seller or
advances (cash or otherwise) or any other extensions of credit made by the Business to the Seller
or any Subsidiary.




          “Inventory” shall mean all inventory exclusively used in connection with the Business,
wherever located, including all finished goods whether held at any location or facility of the
Seller or any of its Affiliates or in transit to the Seller or any of its Affiliates, in each case
as of the Closing Date, except to the extent included in Excluded Assets.




          “Investment Fund” shall have the meaning set forth in Section 1.5.




          “IP Contracts” shall have the meaning set forth in Section 2.4(b).




          “IP License Agreement” shall have the meaning set forth in the Recitals.




          “IP Representations” shall mean the representations and warranties set forth in Section 2.4.




          “IP Survival Period” shall have the meaning set forth in Section 8.1.




          “Key Employees” shall mean the individuals listed on Schedule B.




          “LCA” shall have the meaning set forth in Section 9.4.




          “Legal Requirement” shall mean any law, rule or regulation of any Governmental Entity.




          “Liabilities” shall mean any and all debts, liabilities, commitments and obligations of any
kind, whether fixed, contingent or absolute, matured or unmatured, liquidated or unliquidated,
accrued or not accrued, asserted or not asserted, known or unknown, determined, determinable or
otherwise, whenever or however arising




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(including, whether arising out of any contract or tort based on negligence or strict
liability) and whether or not the same would be required by GAAP to be reflected in financial
statements or disclosed in the notes thereto.




          “Licensed Non-Patent IP” shall have the meaning set forth in Exhibit A of the IP License
Agreement.




          “Limited License” shall have the meaning set forth in Section 2.4(l).




          “Local Purchase Agreements” shall mean one or more agreements in the forms mutually agreed by
the Parties, each acting in good faith, each of which will be between the Seller or a Seller
Affiliate on the one hand and the Purchaser or an Affiliate of the Purchaser on the other hand, for
the purchase and sale of a portion of the Transferred Assets under the laws and practice of a local
jurisdiction, to the extent reasonably requested by the Purchaser or the Seller, which shall be
subject to the terms and conditions of this Agreement.




          “Loss” or “Losses” shall mean Liabilities, costs, expenses, damages, diminutions in value,
claims, interest and penalties (including, without limitation, reasonable attorneys’ and
consultants’ fees and expenses and other costs of defending, investigating or settling claims)
suffered or incurred by any Person (including, without limitation, in connection with any action
brought or otherwise initiated by any Indemnified Party).




          “Net Inventory” shall have the meaning set forth in Section 1.4(a)(i).




          “Networked Video Recorder” shall mean a device that records video in a digital format in
conjunction with networked cameras that capture images, and simultaneously provides recording and
remote access of live video streams over an IP network.




          “No-Hire Period” shall have the meaning set forth in Section 10.8(a).




          “Non-Basketed Losses” shall have the meaning set forth in Section 8.2(b).




          “Non-Governmental Authorizations” means all licenses, permits, certificates and other
authorizations and approvals other than Governmental Authorizations that are (i) held by the Seller
or any of its Affiliates and (ii) related to the Business.




          “Non-Solicitation Period” shall have the meaning set forth in Section 10.8(a).




          “Non-Transferred Inbound IP Licenses” shall have the meaning set forth in Section 2.4(b).




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          “Noon Buying Rate” with respect to any currency other than U.S. dollars shall mean the noon
buying rate for cable transfers in the City of New York as certified for customs purposes by the
Federal Reserve Bank of New York for that currency.




          “Notice Period” shall have the meaning set forth in Section 8.4(a).




          “NXP Acquiring Person” shall have the meaning set forth in Section 1.1(c).




          “Offer Letter” shall have the meaning set forth in Section 9.1(a).




          “Open Incoming POs” shall mean all purchase orders, invoices, release orders and similar
agreements regarding Seller products from customers and distributors, governed by the Seller’s
standard terms and conditions as made available to the Purchaser on or before the date hereof, to
the extent that the Seller Products have not been shipped to such customers or distributors on or
prior to the Closing Date.




          “Open Outgoing POs” shall mean all purchase orders, invoices, release orders and similar
agreements with Seller’s manufacturers, suppliers and other vendors with respect to the Business,
governed by the Seller’s standard terms and conditions as made available to the Purchaser on or
before the date hereof, to the extent that the applicable product or service has not been delivered
or rendered to the Seller on or prior to the Closing Date.




          “Outbound IP Licenses” shall have the meaning set forth in Section 2.4(a).




          “Parties” shall have the meaning set forth in the Preamble.




          “Patents” shall have the meaning set forth in the definition of “Intellectual Property”.




          “Permitted Encumbrances” shall mean (i) Encumbrances specifically described in Section
10.18(a) of the Seller Disclosure Schedules, (ii) mechanics’, materialmen’s, warehousemen’s,
carriers’, workers’, or repairmen’s liens or other similar common law or statutory Encumbrances
arising or incurred in the ordinary course of Business and which would not impair the operation of
the Business, (iii) liens for Taxes, assessments and other governmental charges not yet due and
payable or due but not delinquent or being contested in good faith by appropriate proceedings, (iv)
Encumbrances arising under the Transferred Contracts, (v) with respect to real property, (A)
easements, quasi-easements, licenses, covenants, rights-of-way, rights of re-entry or other similar
restrictions, including any other agreements, conditions or restrictions that would be shown by a
current title report or other similar report or listing, (B) any conditions that may be shown by a
current survey or physical inspection and (C) zoning, building, subdivision or other similar
requirements or restrictions, (vi) Encumbrances incurred in the ordinary course of business since
October 1, 2007, and




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(vii) Encumbrances that would not materially impair the conduct of the Business, or the use or
value of the relevant Transferred Asset.




          “Permitted Holder” shall mean Apax, AlpInvest Partners, Bain Capital, Kohlberg Kravis Roberts
& Co. and Silver Lake Partners and in each case any of their affiliated investment funds, and NXP
and any of its Subsidiaries.




          “Person” shall mean any individual, corporation, general partnership, limited partnership,
limited liability company, trust, association, firm, organization, company, business, entity,
union, society or Governmental Entity.




          “Pre-Closing Period” shall have the meaning set forth in Section 4.1.




          “Prohibited Transaction” shall have the meaning set forth in Section 4.5(a).




          “Purchase Price” shall have the meaning set forth in Section 1.3(b).




          “Purchaser” shall have the meaning set forth in the Preamble.




          “Purchaser Closing Certificate” shall have the meaning set forth in Section 6.7.




          “Purchaser Disclosure Schedules” shall have the meaning set forth in Section 3.




          “Purchaser Extended Representations” shall mean the Purchaser’s representations and warranties
set forth in Sections 3.1, 3.2 and 3.3.




          “Purchaser Indemnified Parties” shall have the meaning set forth in Section 8.2(a).




          “Purchaser Material Adverse Effect” means any event, change or effect that, when taken
individually or together with all other adverse changes and effects, would reasonably be expected
to prevent or materially delay the ability of the Purchaser to consummate the transactions
contemplated hereby or perform any of its obligations under this Agreement




          “Purchaser’s Calculation” shall have the meaning set forth in Section 1.4(a)(i).




          “Realized” shall mean the difference between the amount stated on the Transferred Subsidiary
Closing Balance Sheet and the amount that is the correct amount for such item under GAAP as of the
date of Closing.




          “Registered IP” shall mean all of the following rights included within the Transferred IP: (i)
all issued patents and filed patent applications; (ii) all registered copyrights; and (iii) all
registered trademarks.




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          “Restricted Cash” shall mean that portion of the Transferred Subsidiary Closing Balance Sheet
“cash and cash equivalents” in excess of $857,000 that (i) would be prevented from being
distributed to the Purchaser whether as a result of exchange controls or other applicable legal,
regulatory or other governmental impediment or (ii) would be payable as Taxes or other fees by the
Transferred Subsidiary or any other Affiliate in connection with the distribution of such
Transferred Subsidiary Closing Balance Sheet “cash and cash equivalents” to the Purchaser (provided
that the amount of withholding tax shall not exceed the rate provided for in the applicable tax
treaty between Israel and The Netherlands, and provided further that the holder of the Transferred
Shares immediately following the Closing shall be a Dutch resident company under such applicable
treaty).




          “Restricted Employee” shall have the meaning set forth in Section 10.8(a).




          “Seller” shall have the meaning set forth in the Preamble.




          “Seller Closing Certificate” shall have the meaning set forth in Section 5.9.




          “Seller Disclosure Schedules” shall have the meaning set forth in Section 2.




          “Seller Extended Representations” shall mean the Seller’s representations and warranties set
forth in Sections 2.1, 2.2, 2.6, 2.11, 2.12 and 2.23.




          “Seller Indemnified Parties” shall have the meaning set forth in Section 8.3(a).




          “Seller’s Knowledge” or any similar phrase means the collective knowledge, after due and
reasonable investigation, of the officers of the Seller and those other individuals listed on
Schedule 10.18(b).




          “Seller Material Adverse Effect” shall mean any result, occurrence, change, event,
circumstance, fact or effect (each, an “Effect”) that, individually or in the aggregate with any
such other Effects (regardless of whether or not such Effect constitutes a breach of the
representations and warranties made by the Seller in this Agreement), is or is reasonably likely to
be materially adverse to the business, operations, assets, liabilities, condition (financial or
otherwise), or results of operations of the Business, provided, that in determining whether a the
Seller Material Adverse Effect has occurred, there shall be excluded any Effect on the Business
relating to or arising in connection with (a) changes in law or the adoption or amendment of
financial accounting standards by the Financial Accounting Standards Board, (b) the declaration by
the United States of a national emergency or war, or the occurrence of any other calamity or crisis
(including any act of terrorism), (c) general business or economic conditions, (d) conditions
generally affecting the industry in which the Business competes (provided in each such case that
such changes do not have a unique or materially disproportionate



64









 






impact on the Transferred Assets or Business) and (e) the announcement or pendency of the
transactions contemplated by any of the Transactional Agreements.




          “Seller 401(k) Plan” shall have the meaning set forth in Section 9.11.




          “Seller Plan” shall have the meaning set forth in Section 2.9(a).




          “Seller Product” shall mean any product, including the packaging and advertising related
thereto, designed, formulated, manufactured, processed, sold or placed in the stream of commerce by
the Business or any services provided by the Business.




          “Seller Required Approvals” shall have the meaning set forth in Section 2.13.




          “Seller’s Objection” shall have the meaning set forth in Section 1.4(a)(ii).




          “Special Jurisdiction” shall mean England and Northern Ireland.




          “Special Jurisdiction Employees” shall mean: (i) the employees of the Seller (or an Affiliate
of the Seller) identified on Schedule 10.18(c) who remain employees of the Seller (or an
Affiliate of the Seller) immediately prior to the Closing; and (ii) each additional employee hired
by the Seller (or an Affiliate of the Seller) after the date of this Agreement either (A) to
replace an employee identified on Schedule 10.18(c); or (B) in the ordinary course of
business consistent with past practices to exclusively serve the Business in any Special
Jurisdiction. The Seller shall provide the Purchaser, at least two business days prior to Closing,
with an updated list of the Special Jurisdiction Employees.




          “Special Jurisdiction Transferred Employee” shall have the meaning set forth in Section
9.2(b).




          “Specified Employees” shall mean: (i) the employees of the Seller (or an Affiliate of the
Seller) identified on Schedule 10.18(d) who serve the Business and who remain employees of
the Seller (or an Affiliate of the Seller) immediately prior to the Closing; and (ii) each
additional employee hired by the Seller (or an Affiliate of the Seller) after the date of this
Agreement either (A) to replace an employee identified on Schedule 10.18(d); or (B) in the
ordinary course of business consistent with past practices to exclusively serve the Business in any
place other than a Special Jurisdiction. The Seller shall provide the Purchaser, at least two
business days prior to Closing, with an updated list of the Specified Employees.




          “STB” shall mean a video/audio subsystem that: (i) receives and decodes digital/analog video
broadcasts distributed via satellite, terrestrial and cable entertainment broadcasting networks to
a television; (ii) through a broadband communication link (i.e., DSL, cable, Internet Protocol,
etc.), receives and decodes digital video broadcasts, allows Internet access and additional
functionality through a television; or (iii) distributes video throughout a home via coaxial cable
(i.e., “MoCa”). For the avoidance of doubt, “STB”



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shall not include applications or products (1) that distribute content via satellite,
terrestrial and cable solely for desktop or laptop personal computers or Internet Protocol and (2)
for the Video Surveillance market.




          “Straddle Periods” shall have the meaning set forth in Section 1.9(c).




          “Subsidiary” means any Person (i) whose securities or other ownership interests having by
their terms the power to elect a majority of the board of directors or other persons performing
similar functions are owned or controlled, directly or indirectly, by the Seller and/or one or more
Subsidiaries, or (ii) whose business and policies the Seller and/or one or more Subsidiaries have
the power to direct.




          “Superior Proposal” means an unsolicited bona fide Takeover Proposal that the Board of
Directors of the Seller has determined in its good faith judgment, after taking into account all
legal, financial and regulatory aspects of such Takeover Proposal (including the likelihood of
consummation) and the Person making such Takeover Proposal, would result in a transaction more
favorable to the Seller’s shareholders from a financial point of view than the transaction
contemplated by this Agreement.




          “Supply Agreement” shall mean an agreement by and between the Seller and the Purchaser in form
and substance reasonably acceptable to the Purchaser and the Seller incorporating the pricing and
warranty terms set forth on Exhibit E and the Seller’s standard terms and conditions as previously
provided to the Purchaser.




          “Takeover Proposal” means any proposal or offer from any Person (other than the Purchaser)
providing for any: (A) acquisition (whether in a single transaction or a series of related
transactions) of all or substantially all of the assets of the Seller; (B) direct or indirect
acquisition (whether in a single transaction or a series of related transactions) of more than 50%
of the voting power of the Seller; (C) tender offer or exchange offer that if consummated would
result in any Person beneficially owning at least 50% of the voting power of the Seller; or (D)
merger, consolidation, share exchange, business combination, recapitalization or similar
transaction involving the Seller; in each case, which is contingent on the termination of this
Agreement.




          “Tax Returns” means all reports and returns required to be filed with respect to Taxes,
including elections, declarations, disclosures, schedules, estimates and information returns.




          “Taxes” means all federal, state or local and all foreign taxes and fees, including income,
gross receipts, windfall profits, value added, severance, property, production, sales, use, duty,
license, registration, excise, franchise, employment, withholding or similar taxes, together with
any interest, additions or penalties with respect thereto or with respect to failure to duly file,
when due, any Tax Return, and any interest in respect of such additions or penalties.




          “Termination Date” shall have the meaning set forth in Section 7.1(b).




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          “Third Party Claim” shall have the meaning set forth in Section 8.4(a).




          “Trademarks” shall have the meaning set forth in the definition of “Intellectual Property”.




          “Trade Secrets” shall have the meaning set forth in the definition of “Intellectual Property”.




          “Transactional Agreements” shall mean: (i) the Agreement; (ii) each of the Ancillary
Agreements; and (iii) all bills of sale, assignments, business transfer agreements and other
agreements delivered or to be delivered in connection with the transactions contemplated by the
Agreement.




          “Transactions” shall mean: (i) the execution and delivery of the respective Transactional
Agreements; and (ii) all of the transactions contemplated by the respective Transactional
Agreements, including: (A) the sale of the Transferred Assets by the Seller to the Purchaser in
accordance with the Agreement; (B) the assumption of the Assumed Liabilities by the Purchaser in
accordance with the Agreement; and (C) the performance by the Seller and the Purchaser of their
respective obligations under the Transactional Agreements, and the exercise by the Seller and the
Purchaser of their respective rights under the Transactional Agreements.




          “Transferred Assets” shall have the meaning set forth in Section 1.1.




          “Transferred Contracts” shall have the meaning set forth in Section 1.1(d).




          “Transferred Employees” shall mean the Hired Employees and the Special Jurisdiction
Transferred Employees, collectively.




          “Transferred Fixed Assets” shall have the meaning set forth in Section 1.1(e).




          “Transferred Inbound IP Licenses” shall have the meaning set forth in Section 2.4(b).




          “Transferred Inventory” shall have the meaning set forth in Section 1.1(c).




          “Transferred IP” or “Transferred Intellectual Property” shall mean, collectively, the
Transferred Patents and the Transferred Non-Patent IP.




          “Transferred Non-Patent IP” shall have the meaning set forth in Section 1.1(b).




          “Transferred Patents” shall have the meaning set forth in Section 1.1(a).




          “Transferred Shares” shall have the meaning set forth in Section 1.1(f).




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          “Transferred Subsidiary” shall have the meaning set forth in Section 1.1(f).




          “Transferred Subsidiary Closing Assets” means (i) “cash and cash equivalents”, net of any
Restricted Cash, and (ii) “income taxes receivable”, of the Transferred Subsidiary, as reflected
on the Transferred Subsidiary Closing Balance Sheet determined in accordance with GAAP.




          “Transferred Subsidiary Closing Balance Sheet” shall mean a statement, prepared by Seller and
delivered to Purchaser at Closing, of the assets, liabilities and equity of the Transferred
Subsidiary as of the Closing Date prepared in accordance with GAAP and in a manner consistent with
the Seller’s practices prior to Closing, except that all intercompany accounts shall be settled
prior to the Closing.




          “Transferred Subsidiary Closing Liabilities” shall mean any and all debts, Liabilities,
commitments and obligations of the Transferred Subsidiary of any kind, whether fixed, contingent or
absolute, matured or unmatured, liquidated or unliquidated, accrued or not accrued, asserted or not
asserted, known or unknown, determined, determinable or otherwise, whenever or however arising
(including, whether arising out of any contract or tort based on negligence or strict liability)
and whether or not the same would be required by GAAP to be reflected in financial statements or
disclosed in the notes thereto; provided that for purposes of Section 1.4(b), the Transferred
Subsidiary Closing Liabilities will be determined as the amount required to be accrued on the
Transferred Subsidiary Balance Sheet as of the Closing Date; further provided that “Transferred
Subsidiary Closing Liabilities” shall not include any employee-related Liabilities.




          “Transferred Subsidiary Purchase Price Adjustment” shall have the meaning set forth in Section
1.4(a)(vi).




          “Transition Services Agreement” shall mean an agreement by and between the Seller and the
Purchaser in form and substance reasonably acceptable to the Purchaser and the Seller incorporating
the terms and conditions set forth on Exhibit D.




          “Unlisted Contracts” shall have the meaning set forth in Section 1.1(d).




          “USCIS” shall have the meaning set forth in Section 9.4.




          “VAT” shall mean Value Added Tax or any analogous tax in any relevant jurisdiction including
but not limited to use, sales and local sales taxes of any kind.




          “Video Surveillance” shall mean a video/audio system or subsystem (i) employed in a desktop or
laptop personal computer employing a general purpose microprocessor (i.e., Intel or AMD); or (ii)
connected to a Networked Video Recorder and Digital Video Recorder and configured to support
multiple office, productivity, and entertainment applications, and to display images transmitted
from a surveillance camera for security purposes.




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          “WARN Act” shall mean the Worker Adjustment and Retraining Notification Act, 29 U.S.C.
Section 2101 et seq. (1988), as amended, and any similar Legal Requirement under state or local
law.




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          The Parties have caused this Agreement to be executed as of the date first written above.



	 	 	 	 	 
	 	 	NXP B.V.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	CONEXANT SYSTEMS, INC.
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 







70