Document:

Exhibit 4.2
                               2UOnline.com, Inc.

                        INCENTIVE STOCK OPTION AGREEMENT

Agreement dated ____________, between 2UOnline.com, Inc., a Delaware Corporation
(the "Company"), with its principal office at Suite 806-1288 Alberni Street,
Vancouver, B.C., Canada, V6E 4N5 and ______________________, residing at
____________________________________________________________ ("Optionee").

1. Grant of Option . The Company hereby grants to Optionee effective as of
________________, ("Grant Date"), the right and option ("Option") to purchase
from the Company, for a price equal to the exercise price determined as
described below ("Exercise Price"), up to _______ shares of the Company's common
stock ("Shares"), as a qualified incentive stock option ("Option"), which Option
shall be subject to the applicable terms and conditions set forth below and is
being granted pursuant to the 2UOnline.com, Inc. Incentive Stock Option Plan
("Plan").

2. Terms and Conditions of Option . The Option evidenced by this Agreement is
subject to the following terms and conditions, as well as the terms and
conditions of Section 3 hereof.

a. Exercise Price . The Exercise Price is $________ per Share, which is the fair
market value per Share on the Grant Date as determined in accordance with the
Plan.

b. Term of Option . The term of the Option over which the Option may be
exercised shall commence on the Grant Date and, subject to the provisions of
Section 3(b) below, shall terminate five years thereafter.

c. Exercisability of Option . As to the total number of Shares with respect to
which the Option is granted, the Option shall be exercisable [on and after the
first anniversary of the Grant Date] [as follows: (i) _____% of the Option in
the aggregate may be exercised on or after __________; (ii) _____% of the Option
in the aggregate may be exercised on or after __________; (iii) ]

However, the right of Optionee to exercise the Option shall be deferred to the
extent that the Option otherwise would not be treated as a qualified incentive
stock option by reason of the $100,000 annual limitation under Section 422(d) of
the Internal Revenue Code of 1986, as amended (the "Code").

3. Additional Terms and Conditions .

a. Exercise of Option; Payments for Shares . An Option may be exercised from
time to time with respect to all or any portion of the number of Shares with
respect to which the Option has become exercisable, in whole or in part, by
written notice to the Company at the Company's then principal office, to the
attention of the Administrative Committee for the 2Uonline.com, Inc. Incentive
Stock Option Plan (the "Committee"), substantially in the form of Exhibit A
attached hereto. Notwithstanding anything in this Agreement to the contrary, no
Option may be exercised prior to the date on which the Plan is approved by the
Company's shareholders. Any notice of exercise of the Option shall be
accompanied by payment of the full Exercise Price for the Shares being purchased
by certified or bank check payable to the order of 2UOnline.com, Inc. or, as may
be allowed by the Committee, by delivery to the Company of a number of Shares
already owned by Optionee having a fair market value equal to such Exercise
Price. In addition, with the consent of the Committee, the Company may cooperate
with Optionee in arranging a "cashless exercise" of the Option through a broker
approved by the Committee. The Option shall not be exercised for any fractional
Shares and no fractional Shares shall be issued or delivered. The date of actual
receipt by the Company of the notice of exercise shall be treated as the date of
exercise of the Option for the Shares being purchased.

b. Termination of Option . If Optionee's employment with the Company or any
Subsidiary terminates, the Option shall continue to be exercisable, to the
extent it is exercisable on the date such employment terminated, for three (3)
months after such termination, but in no event after the date the Option
otherwise terminates. However, if Optionee's employment terminates because of
Optionee's death or disability, the Option shall continue to be exercisable, to
the extent it is exercisable on the date such employment terminated, for twelve
(12) months after such termination, but in no event after the date the Option
otherwise terminates.

c. Continued Employment . The Option granted hereunder shall confer no right on
Optionee to continue in the employ of the Company or any Subsidiary, or limit in
any respect the right of the Company or any Subsidiary (in the absence of a
specific agreement to the contrary) to terminate Optionee's employment at any
time.

d. Issuance of Shares; Registration; Withholding Taxes . As soon as practicable
after the exercise date of the Option, the Company shall cause to be issued and
delivered to Optionee, or for the Optionee's account, a certificate or
certificates for the Option Shares purchased. The Company may postpone the
issuance or delivery of the Shares until (i) the completion of registration or
other qualification of such Shares or transaction under any state or federal
law, rule or regulation, or any listing on any securities exchange, as the
Company shall determine to be necessary or desirable; (ii) the receipt by the
Company of such written representations or other documentation as the Company
deems necessary to establish compliance with all applicable laws, rules and
regulations, including applicable federal and state securities laws and listing
requirements, if any; and (iii) the payment to the Company, upon its demand, of
any amount requested by the Company to satisfy any federal, state or other
governmental withholding tax requirements related to the exercise of the Option.
Optionee shall comply with any and all legal requirements relating to Optionee's
resale or other disposition of any Shares acquired under this Agreement. The
certificates representing the Shares acquired pursuant to the Option may bear
such legend as described in Section 6 and as counsel to the Company otherwise
deems appropriate to assure compliance with applicable law.

e. Nontransferability of Options . The Option and this Agreement shall not be
assignable or transferable by Optionee other than by will or by the laws of
descent and distribution. During Optionee's lifetime, the Option and all rights
of Optionee under this Agreement may be exercised only by Optionee (or by his
guardian or legal representative). If the Option is exercised after Optionee's
death, the Committee may require evidence reasonably satisfactory to it of the
appointment and qualification of Optionee's personal representatives and their
authority and of the right of any heir or distributee to exercise the Option.

f. Option is Incentive Stock Option . The Option granted hereunder is intended
to qualify as an "incentive stock option", as that term is defined in Section
422 of the Internal Revenue Code of 1986, as amended.

4. Changes in Capitalization; Reorganization .

a. Adjustments . The number of shares of Common Stock which may be subject to
options under the Plan, the number of Shares subject to the Option, and the
Exercise Price shall be adjusted proportionately for any increase or decrease in
the number of issued shares of Common Stock by reason of stock dividends, split-
ups, recapitalizations or other capital adjustments. Notwithstanding the
foregoing, (i) no adjustment shall be made, unless the Committee determines
otherwise, if the aggregate effect of all such increases and decreases occurring
in any fiscal year is to increase or decrease the number of issued shares by
less than five percent (5%); (ii) any right to purchase fractional shares
resulting from any such adjustment shall be eliminated; and (iii) the terms of
this Section 4(a) are subject to the terms of Section 4(b) below.

b. Corporate Transactions . Pursuant to Article 13 of the Program, in the event
of (i) a dissolution or liquidation of the Company, (ii) merger or consolidation
or reorganization of the Company in which the Company is not the surviving
corporation, (iii) merger or consolidation or reorganization in which the
Company is the surviving corporation but after which the shareholders cease to
own their shares in the Company, (iv) the sale of substantially all of the
assets of the Company, or (v) the acquisition, sale, or transfer of more than
fifty percent (50%) of the outstanding shares of the Company (herein referring
to (i) through (v) as "Corporate Transaction"), or (iv) the Board of Directors
of the Company proposes that the Company enter into a Corporate Transaction,
then the Committee may in its discretion take any or all of the following
actions: (i) by written notice to Optionee, provide that the Option shall be
terminated unless exercised within thirty (30) days (or such longer period as
the Committee shall determine its discretion) after the date of such notice; and
(ii) accelerate the dates upon which any or all outstanding Options granted to
Optionee shall be exercisable.

Whenever deemed appropriate by the Committee, any action referred to in this
Section 4(b) may be made conditional upon the consummation of the applicable
Corporate Transaction.

c. Committee Determination . Any adjustments or other action pursuant to this
Section 4 shall be made by the Committee, and the Committee's determination as
to what adjustments shall be made or actions taken, and the extent thereof,
shall be final and binding.

5. No Rights as Shareholder . Optionee shall acquire none of the rights of a
shareholder of the Company with respect to the Shares until a certificate for
the shares are issued to Optionee upon the exercise of the Option. Except as
otherwise provided in Section 4 above, no adjustments shall be made for
dividends, distributions or other rights (whether ordinary or extraordinary, and
whether in cash, securities or other property) for which the record date is
prior to the date such certificate is issued.

6. Legends . All certificates evidencing Shares purchased under this Agreement
in an unregistered transaction shall bear the following legend (and such other
restrictive legends as are required or deemed advisable under the provisions of
any applicable law):

THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1934, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED
WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF
COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS
NOT REQUIRED.

If, in the opinion of the Company and it counsel, any legend placed on a stock
certificate representing Shares sold under this Agreement is no longer required,
the holder of such certificate shall be entitled to exchange such certificate
for a certificate representing the same number of Shares but without such
legend.

7. Optionee Bound by Plan . Optionee hereby acknowledges receipt of a copy of
the Plan and acknowledges that Optionee shall be bound by its terms, regardless
of whether such terms have been set forth in the Agreement. Notwithstanding the
foregoing, if there is an inconsistency between the terms of the Plan and the
terms of this Agreement, Optionee shall be bound by the terms of the Plan.

8. Notices . Any notice or other communication made in connection with this
Agreement shall be deemed duly given when delivered in person or mailed by
certified or registered mail, return receipt requested, to Optionee at
Optionee's address listed above or such other address of which Optionee shall
have advised the Company by similar notice, or to the Company at its then
principal office, to the attention of the Committee.

9. Miscellaneous . This Agreement and the Plan set forth the parties' final and
entire agreement with respect to the subject matter hereof, may not be changed
or terminated orally and shall be governed by and shall be construed in
accordance with the laws of the State of Nevada, United States of America,
despite the fact that one or both parties may be or shall become a resident of a
different state or country. This Agreement shall bind and benefit Optionee, the
heirs, distributees and personal representative of Optionee, and the Company and
its successors and assigns.

IN WITNESS WHEREOF, the parties have duly executed this Agreement on the date
first above written.

2UOnline.com, Inc.

By: _______________________________________

Title: _______________________________________

OPTIONEE
___________________________________________________

EXHIBIT A

________________, 2003

2UOnline.com, Inc.
Attention: Administrative Committee for
2UOnline.com, Inc.
Suite 806,
1288 Alberni Street
Vancouver, B.C. Canada
V6E 4R8

Dear Sir/Madam:

Pursuant to the provisions of the 2UOnline.com, Inc. Incentive Stock Option
Agreement, dated _______________, 2003 (the "Option Agreement"), whereby you
have granted me the Option to purchase up to _____ shares of common stock of
2UOnline.com, Inc. (the "Company"), I hereby notify you that I elect to exercise
my option to purchase _____ of the shares covered by the Option at $________,
the price determined in accordance with the Option Agreement. In full payment of
such price for the shares being purchased hereby, I am delivering to you . The
undersigned hereby agrees to provide the Company, prior to the receipt of the
shares being purchased hereby, with such representations or certifications or
payments that the Company may require pursuant to the terms of the Plan and the
Option Agreement.

Sincerely,

Address:
(For notices, reports, dividend checks and communications to shareholders.)Exhibit 10.1

 

 

 

ASSET PURCHASE AGREEMENT

 

by and between

 

UTSTARCOM, INC.

 

and

 

3COM CORPORATION

 

Dated as of March 4, 2003

 

 

 

 

TABLE
OF CONTENTS

 

	
  ARTICLE I TRANSFER OF ASSETS
  AND LIABILITIES

  
	
  Section 1.1

  	
  Assets to be Sold; Assumption of
  Liabilities

  
	
  Section 1.2

  	
  Purchase Price

  
	
  Section 1.3

  	
  Closing

  
	
  Section 1.4

  	
  Deliveries by Seller

  
	
  Section 1.5

  	
  Deliveries by Buyer

  
	
  Section 1.6

  	
  Post-Closing Arrangements

  
	
  Section 1.7

  	
  Post-Closing Purchase Price Adjustment

  
	
   

  	
   

  
	
  ARTICLE II RELATED MATTERS

  
	
  Section 2.1

  	
  Books and Records of Seller Group

  
	
  Section 2.2

  	
  Mail and Check Handling

  
	
  Section 2.3

  	
  Employees and Employee Benefits

  
	
   

  	
   

  
	
  ARTICLE III
  REPRESENTATIONS AND WARRANTIES OF SELLER GROUP

  
	
  Section 3.1

  	
  Organization

  
	
  Section 3.2

  	
  Authorization

  
	
  Section 3.3

  	
  Consents and Approvals; No Violations

  
	
  Section 3.4

  	
  Financial Statements

  
	
  Section 3.5

  	
  Absence of Undisclosed Liabilities

  
	
  Section 3.6

  	
  Absence of Certain Changes

  
	
  Section 3.7

  	
  Intellectual Property

  
	
  Section 3.8

  	
  Title, Ownership and Related Matters

  
	
  Section 3.9

  	
  Subsidiaries

  
	
  Section 3.10

  	
  Litigation; Product Liability

  
	
  Section 3.11

  	
  Compliance with Applicable Law

  
	
  Section 3.12

  	
  Certain Contracts and Arrangements

  
	
  Section 3.13

  	
  Taxes

  
	
  Section 3.14

  	
  Employee Benefit Plans; ERISA; Employees

  
	
  Section 3.15

  	
  Environmental Matters

  
	
  Section 3.16

  	
  Insurance

  
	
  Section 3.17

  	
  Labor Matters

  
	
  Section 3.18

  	
  Suppliers

  
	
  Section 3.19

  	
  Customers

  
	
  Section 3.20

  	
  Assets and Permits Necessary to the
  Business; Equipment

  
	
  Section 3.21

  	
  Transactions with Affiliates

  
	
  Section 3.22

  	
  Certain Fees

  
	
   

  	
   

  
	
  ARTICLE IV REPRESENTATIONS
  AND WARRANTIES OF BUYER

  
	
  Section 4.1

  	
  Organization

  
	
  Section 4.2

  	
  Authorization

  
	
  Section 4.3

  	
  Consents and Approvals; No Violations

  
	
  Section 4.4

  	
  Certain Fees

  
	
  Section 4.5

  	
  Funding

  
	
   

  	
   

  
	
  ARTICLE V COVENANTS

  
	
  Section 5.1

  	
  Conduct of the Business

  

 

i

 

	
  Section 5.2

  	
  Access to Information

  
	
  Section 5.3

  	
  Consents and Approvals

  
	
  Section 5.4

  	
  Reasonable Efforts

  
	
  Section 5.5

  	
  Public Announcements

  
	
  Section 5.6

  	
  Covenant to Satisfy Conditions

  
	
  Section 5.7

  	
  Supplemental Disclosure

  
	
  Section 5.8

  	
  Transfers Not Effected as of Closing

  
	
  Section 5.9

  	
  Employment of Eligible Employees

  
	
  Section 5.10

  	
  Prohibition on Solicitation and Hiring

  
	
  Section 5.11

  	
  No Negotiation

  
	
  Section 5.12

  	
  Confidentiality

  
	
  Section 5.13

  	
  Agreements Related to Certain Business
  Real Property

  
	
  Section 5.14

  	
  Insurance Claims

  
	
  Section 5.15

  	
  Tax Matters

  
	
  Section 5.16

  	
  Further Actions

  
	
  Section 5.17

  	
  Compliance with Bulk Sales Laws; Payment
  of Retained Liabilities

  
	
  Section 5.18

  	
  Standards Organizations

  
	
  Section 5.19

  	
  Compilers, etc.

  
	
  Section 5.20

  	
  Buyer Acknowledgment

  
	
  Section 5.21

  	
  Conduct Relating to Receivable and
  Payables

  
	
  Section 5.22

  	
  Non-U.S. Agreements

  
	
  Section 5.23

  	
  Agreements Related to Certain Warranty and
  Service Obligations

  
	
  Section 5.24

  	
  Assistance Relating to Retained Agreements

  
	
   

  	
   

  
	
  ARTICLE VI CONDITIONS TO OBLIGATIONS
  OF THE PARTIES

  
	
  Section 6.1

  	
  Conditions to Each Party’s Obligations

  
	
  Section 6.2

  	
  Conditions to Obligations of Seller Group

  
	
  Section 6.3

  	
  Conditions to Obligations of Buyer

  
	
   

  	
   

  
	
  ARTICLE VII SURVIVAL OF
  REPRESENTATIONS; INDEMNIFICATIONS

  
	
  Section 7.1

  	
  Survival of Representations

  
	
  Section 7.2

  	
  Seller Group’s Agreement to Indemnify

  
	
  Section 7.3

  	
  Buyer’s Agreement to Indemnify

  
	
  Section 7.4

  	
  Third Party Indemnification

  
	
  Section 7.5

  	
  Sole Remedy

  
	
   

  	
   

  
	
  ARTICLE VIII
  TERMINATION, AMENDMENT AND WAIVER

  
	
  Section 8.1

  	
  Termination of Agreement

  
	
  Section 8.2

  	
  Procedure for and Effect of Termination

  
	
  Section 8.3

  	
  Amendment, Extension and Waiver

  
	
  Section 8.4

  	
  Termination Fee

  
	
   

  	
   

  
	
  ARTICLE IX MISCELLANEOUS

  
	
  Section 9.1

  	
  Fees and Expenses

  
	
  Section 9.2

  	
  Further Assurances; Guarantee

  
	
  Section 9.3

  	
  Notices

  
	
  Section 9.4

  	
  Severability

  
	
  Section 9.5

  	
  Binding Effect; Assignment

  

 

ii

 

	
  Section 9.6

  	
  No Third Party Beneficiaries

  
	
  Section 9.7

  	
  Interpretation

  
	
  Section 9.8

  	
  Jurisdiction and Consent to Service;
  Expenses Related to Legal Proceedings

  
	
  Section 9.9

  	
  Entire Agreement

  
	
  Section 9.10

  	
  Descriptive Headings

  
	
  Section 9.11

  	
  Governing Law

  
	
  Section 9.12

  	
  Counterparts

  
	
  Section 9.13

  	
  Specific Performance

  

 

iii

 

EXHIBITS:

 

	
  Exhibit A

  	
  Reference
  Balance Sheet (see Schedule 3.4(i))

  
	
  Exhibit B

  	
  Bill of Sale

  
	
  Exhibit C

  	
  Form of
  Assignment of Patent Rights

  
	
  Exhibit D

  	
  Form of
  Assignment of Copyrights

  
	
  Exhibit E

  	
  Form of
  Assignment of Trademarks

  
	
  Exhibit F

  	
  Instrument of
  Assumption

  
	
  Exhibit G

  	
  Rolling Meadows
  Lease Agreement

  
	
  Exhibit H

  	
  Multiple Site
  License Agreement

  
	
  Exhibit I

  	
  Consulting
  Services Agreement

  
	
  Exhibit J

  	
  Intellectual
  Property License Agreement

  
	
  Exhibit K

  	
  Form of Lease
  Assignment Agreement

  

 

iv

 

ASSET PURCHASE AGREEMENT

 

This ASSET PURCHASE
AGREEMENT, dated as of March 4, 2003 (the “Agreement”), is by and between UTStarcom, Inc.,
a Delaware corporation, and its designated subsidiaries or affiliates (“Buyer”),
and 3Com Corporation, a Delaware corporation (“Seller”).

 

WHEREAS, Seller by itself
and through the entities set forth on Schedule 3.9 of the Disclosure
Schedules (collectively, the “Seller Group”)
is currently engaged in developing, manufacturing, having manufactured,
selling, marketing, supporting and providing professional services with respect
to the Products (as defined in Section 3.7(n)(iv)) (the “Business”); and

 

WHEREAS, Buyer desires to
purchase and assume from Seller, and Seller desires to, or desires to cause
other members of the Seller Group to, sell, assign, transfer, convey and
deliver to Buyer, certain specified assets and properties of the Seller Group
related to the Business together with certain specified obligations and
liabilities relating thereto, all in the manner and subject to the terms and
conditions set forth herein;

 

NOW, THEREFORE, in
consideration of the foregoing and the respective representations, warranties,
covenants, agreements and conditions hereinafter set forth, and intending to be
legally bound hereby, the parties hereto agree as follows:

 

ARTICLE I

 

TRANSFER
OF ASSETS AND LIABILITIES

 

Section
1.1    Assets to be Sold; Assumption of
Liabilities

 

(a)   Subject to the terms and conditions of this
Agreement, at the Closing (as defined in Section 1.3), Seller Group will
sell, convey, assign, transfer and deliver, or will cause to be sold, conveyed,
assigned, transferred and delivered, to Buyer, and Buyer agrees to purchase and
acquire, or will cause to be purchased and acquired, from Seller Group, free
and clear of any Liens (as defined in Section 3.8(a)), except for
Permitted Encumbrances (as defined in Section 3.8(a)), all of Seller
Group’s right, title and interest in and to the following assets
(collectively, the “Assets”):

 

(i)    the following Product-related
items:

 

(A)  all marketing, sales and promotional
literature relating primarily to the Business owned by or in the possession of
any member of the Seller Group;

 

(B)   in accordance with and to the extent not
prohibited by applicable law, all lists, files, bills and correspondence of or
related to customers and suppliers in possession or under control of a Business
Employee as of the date hereof or as of the Closing Date and (x) related
to the Business and located in the Rolling Meadows facility of Seller or
(y) primarily related to the Business and located in the locations set
forth on Schedule 1.1(a)(i)(B) of the Disclosure Schedules (the “Business Real Property”);

 

(C)   the tangible embodiments of Transferred
Intellectual Property or tangible embodiments of Intellectual Property licensed
pursuant to an Intellectual Property Contract, in both cases, related to the
Business (subject to Seller’s right to retain copies pursuant to the
Intellectual Property License Agreement);

 

 

(D)  all inventory (consisting of raw materials,
work in process and finished goods) of Products;

 

(E)   all transferable licenses, permits and
authorizations relating to governmental authorization for the manufacture and
distribution of Products (excluding any general business licenses to conduct
business in a particular jurisdiction and the like) (the “Permits”), and copies of all reports and
certifications related to the Permits or to other similar licenses, permits and
authorizations that are not transferable;

 

(F)   all specifications, schematics, designs,
drawings, blue prints, models, sketches, technical manuals, operating manuals,
flow charts and related files for the Products owned by or in possession of any
member of the Seller Group (subject to Seller’s right to retain copies pursuant
to the Intellectual Property License Agreement);

 

(G)   the following intangible assets:

 

(I)      the Transferred Intellectual Property;

 

(II)      all claims for past infringement of
Transferred Intellectual Property;

 

(III)      all goodwill of the Business; and

 

(IV)      all other intangible assets, if any,
listed on Schedule 1.1(a)(i)(G)(IV) of the Disclosure Schedules;

 

(ii)   the following balance sheet
items:

 

(A)  prepaid expenses and security deposits
reflected in the balance sheet of the Business dated as of November 29,
2002 attached hereto as Exhibit A (the “Reference
Balance Sheet”), with such changes thereto that occur in the
ordinary course of business prior to the Closing Date;

 

(B)   the furniture, fixtures, equipment, furnishings
and office supplies and other tangible personal property of the Business
reflected in the Reference Balance Sheet, including, but not limited to, the
items listed on Schedule 3.20(c) of the Disclosure Schedules and the one-time
setup equipment contemplated by the Transition Services Agreement between Buyer
and Seller dated the date hereof (subject to completion of payment of such
amounts due by Buyer thereunder), with such changes thereto that occur in the
ordinary course of business prior to the Closing Date; and

 

(C)   all other assets reflected on the Reference
Balance Sheet (other than accounts receivable, which shall be retained by the
Seller) with such changes thereto that occur in the ordinary course of business
prior to the Closing Date;

 

(iii)  the following contractual items:

 

(A)  subject to Section 5.8, the contracts for
the sale, distribution or manufacture of the Products or relating to technology
embodied in the Products, including amendments and supplements, modifications
or side letters related thereto, set forth on Schedule 1.1(a)(iii)(A) of
the Disclosure Schedules and (1) any such contracts entered into in compliance
with the terms hereof during the period commencing on the date hereof and
through the Closing Date (as defined in Section 1.3) and (2) any other
contracts that the parties mutually agree to include in the Assets prior to the
Closing Date, as evidenced by an amendment to

 

2

 

Schedule 1.1(a)(iii)(A)
to be acknowledged by the parties and delivered at the Closing (collectively,
the “Contracts”). Notwithstanding the foregoing, to
the extent Seller has not provided Buyer with executed copies of any of the
Contracts for review prior to the date hereof (each an “Unproduced Contract”), Seller shall, within
45 days of the date hereof, provide any such Unproduced Contracts to Buyer for
its review. Buyer may, in its sole discretion, refuse to accept transfer of any
such Unproduced Contracts (and such Unproduced Contracts shall immediately cease
to be Contracts for all purposes of this Agreement) if and to the extent (i)
any such Unproduced Contracts contain materially different or adverse terms as
compared to the Contracts provided to Buyer for review, or (ii) Seller fails to
produce any such Unproduced Contracts within 45 days of the date hereof. Buyer
and Seller agree to cooperate to reconcile their lists of Unproduced Contracts
within two days of the date hereof, with the objective of minimizing the number
of Unproduced Contracts; and

 

(B)   to the extent transferable, all rights of the
Seller Group under all warranties, representations and guarantees made by
suppliers, manufacturers or contractors in connection with the Business;

 

(iv)  in accordance with and to the
extent not prohibited by applicable law, all personnel and payroll records of
the Affected Employees located in the Rolling Meadows facility or in the
Business Real Property and copies of all such records located in the Seller’s
facility; and

 

(v)   copies of all other books,
records or correspondence related to the Business (excluding tax returns not
related exclusively to the Business).

 

(b)   Such sale, conveyance, assignment, transfer
and delivery of the Assets will be effected by delivery by Seller and/or other
members of the Seller Group to Buyer of (i) duly executed bills of sale
(each, a “Bill
of Sale”) in the form
attached hereto as Exhibit B, (ii) instruments of assignment
assigning each member of the Seller Group’s interest in and to the Transferred
Intellectual Property (as defined in Section 3.7(p)), including all
Registered Intellectual Property (as defined in Section 3.7(p)) relating
thereto, pursuant to the form of Assignment of Patent Rights attached hereto as
Exhibit C, Form of Assignment of Copyrights attached hereto as Exhibit D
and form of Assignment of Trademarks obtained hereto as Exhibit E (each,
an “Intellectual
Property Assignment”),
(iii) a copy of the patents and patent applications and the registrations
and pending applications included in the Transferred Intellectual Property and
(iv) such other good and sufficient instruments of sale, conveyance,
transfer and assignment  as shall be
necessary to vest in Buyer good and valid title to the other Assets free
and clear of all Liens, except for Permitted Encumbrances (collectively, the “Other
Instruments”).

 

(c)   At the Closing, Buyer will deliver to Seller
Group an instrument of assumption substantially in the form of Exhibit F
hereto (the “Instrument of Assumption”), whereby Buyer will undertake, assume and agree to perform, pay
and discharge when due, and hold Seller Group harmless from and indemnify
Seller Group against, the following debts, liabilities and obligations of
Seller Group related to the Business: (i) liabilities and obligations
associated with the Contracts, (ii) all warranty obligations relating to
the Products or services performed in connection with the Products, except for
these warranty obligations set forth on Schedule 1.1(c) hereto (the “Excluded Warranty Obligations”)  and (iii) other liabilities reflected
on the Reference Balance Sheet, with such changes thereto that occur in the
ordinary course of business prior to the Closing Date other than accounts
payable, which shall be retained by Seller (collectively, the “Assumed
Liabilities”).  Buyer expressly is not assuming any
obligations or liabilities, whether accrued, absolute, contingent, matured,
unmatured or other, of Seller Group or any other person or entity, except for
the Assumed Liabilities (the “Excluded Liabilities”).  Without limiting the foregoing, it is expressly agreed that Buyer
shall not assume or have any responsibility with respect to any of the
following liabilities or obligations, and the following liabilities and
obligations shall not constitute Assumed Liabilities: (1) any

 

3

 

liability or obligation
for Taxes (as defined in Section 3.13) for which Seller is responsible
pursuant to Section 5.15(c) hereof; (2) any liability or obligation
of Seller Group as a result of any legal or equitable action or judicial or
administrative proceeding initiated at any time in respect of anything done,
suffered to be done, or omitted to be done by the Seller Group or any of its
directors, officers, employees, or agents, except for Assumed Liabilities, or
(3) related to the employment by any member of the Seller Group of any
employee of any member of the Seller Group, including, without limitation,
Employment Liabilities (unless specifically included in the Reference Balance
Sheet and except as specifically set forth herein or to the extent related to
their activities as employees of Buyer following the Closing), and severance
payments to employees of any member of the Seller Group that are not Affected
Employees (as defined below).  For these purposes, “Employment Liabilities” means
any and all claims, debts, liabilities, commitments and obligations, whether
fixed, contingent or absolute, matured or unmatured, liquidated or
unliquidated, accrued or unaccrued, known or unknown, whenever or however arising,
including all costs and expenses relating to the satisfaction thereof, arising
under applicable federal,
state, county, local, provincial or foreign statute, law, ordinance,
regulation, rule, code, treaty or rule of common law (collectively, “Law”), permits, action or proceeding
before any governmental authority, order or consent decree or any award of any
arbitrator of any kind relating to any Seller Employee Plan, Employment
Agreement or otherwise to an Employee while employed by Seller Group.

 

(d)   Notwithstanding the foregoing, the assets
identified on Schedule 1.1(d) are expressly excluded from the Assets and
shall be retained by the Seller Group.

 

Section
1.2    Purchase Price

 

Subject to the terms and
conditions of this Agreement, in reliance on the Seller Group’s
representations, warranties and agreements contained herein and in any Non-U.S.
Agreements (as defined in Section 5.22), and in consideration of the sale,
conveyance, assignment, transfer and delivery of the Assets, Buyer will deliver
or cause to be delivered, in full payment for the sale, conveyance, assignment,
transfer and delivery of the Assets, payment at the Closing by wire transfer to
such bank account or bank accounts as shall be specified by Seller, in
immediately available funds, of an aggregate of U.S. $100,000,000 (the “Closing Cash
Purchase Price”),
which shall be subject to subsequent adjustment pursuant to
Section 1.7(d).

 

Section
1.3    Closing

 

The closing of the
transactions contemplated by this Agreement (the “Closing”) shall take place not later than
10:00 A.M., local time, at the offices of Wilson Sonsini
Goodrich & Rosati PC, 650 Page Mill Road, Palo Alto, California
94304-1050 on the second business day following the satisfaction or waiver of
all of the conditions set forth in Article VI hereof or at such other time
or place as to which the parties shall agree. 
As provided in Section 5.4, the parties shall use reasonable best
efforts to cause the Closing to occur on or prior to May 3, 2003.  The effective time of the Closing is
sometimes referred to herein as the “Closing Date.”

 

Section
1.4    Deliveries by Seller

 

At the Closing, Seller
Group will deliver or cause to be delivered to Buyer (unless previously
delivered or waived in writing by Buyer) the following:

 

(a)   duly executed Bills of Sale

 

(b)   duly executed counterparts of the
Intellectual Property Assignments;

 

4

 

(c)   the Other Instruments

 

(d)   the officer’s certificates referred to in
Section 6.3(d);

 

(e)   the consents referred to in
Section 6.3(c);

 

(f)    certificates of each member of the Seller
Group complying with the requirements of Section 1445 of the Internal
Revenue Code of 1986, as amended (the “Code”),
and the Treasury Regulations promulgated thereunder, to the effect that no
withholding of federal income tax is required (the “1445 Certificates”);

 

(g)   duly executed counterpart of the Rolling
Meadows, Illinois Lease Agreement, substantially in the form of Exhibit G
(the “Rolling Meadows Lease Agreement”);

 

(h)   duly executed counterpart of the Multiple Site License
Agreement, substantially in the form of Exhibit H, with respect to the
Business Real Property identified therein (the “Multiple Site License Agreement”);

 

(i)    duly
executed counterpart of the Consulting Services Agreement, substantially in the
form of Exhibit I (the “Consulting
Services Agreement”);

 

(j)    duly executed counterpart of the
Intellectual Property License Agreement, substantially in the form of
Exhibit J (the “Intellectual Property
License Agreement”);

 

(k)   duly executed counterparts of two separate
Lease Assignment Agreements, substantially in the form of Exhibit K, with
respect to a lease for each of the following two Business Real Properties (i)
100 Davidson Avenue, Somerset, New Jersey and (ii) 420 ST Kilda Road, Suite 3,
Level 2, Melbourne, Australia (“Lease
Assignment Agreements”);

 

(l)    all other documents, instruments,
declarations, affidavits and writings as may (in the judgment of Buyer) be
necessary or appropriate to assign, convey, transfer and deliver to Buyer good
and valid title to the Assets free and clear of all Liens except for
Permitted Encumbrances or as may be required to be delivered by Seller Group at
or prior to the Closing Date pursuant to this Agreement (the agreements referred
to in this Section 1.4, as well as similar agreements required elsewhere
in the Agreement, being referred to herein as the “Ancillary Agreements”); and

 

(m)  (i) all copies of all tangible materials
in the possession of Seller Group embodying the Transferred Intellectual
Property (subject to Seller’s right to retain copies pursuant to the
Intellectual Property License Agreement), and (ii) a copy of all tangible
materials in the possession of Seller Group embodying the Licensed Intellectual
Property, in each case including without limitation specifications,
documentation, invention disclosures, laboratory notebooks, source code
listings, technical manuals, flow charts, and files related thereto.

 

Section
1.5    Deliveries by Buyer

 

At the Closing, Buyer
will deliver or cause to be delivered to Seller, or, in the case of
clause (a) below, to the affiliates of Seller who are parties to any
Non-U.S. Agreements, if applicable (unless previously delivered), the
following:

 

(a)   the Closing Cash Purchase Price referred to
in Section 1.2; provided, that if Seller Group shall fail to
deliver the 1445 Certificates, Buyer may (but shall not be required to)
withhold from the cash payable at

 

5

 

the Closing and pay over
to the appropriate taxing authority an amount equal to ten percent (10%) of the
total “amount realized” (as defined in Internal Revenue Service Treasury
Regulation 1.1445 - 1(g)(5)) by any member of the Seller Group
for the transfer of any “U.S. real property interests” (as defined in
Section 1445 of the Code).  A
portion of the Closing Cash Purchase Price shall be paid in accordance with the
terms of the Non-U.S. Agreements, with the remainder paid to Seller;

 

(b)   duly executed counterparts of the
Intellectual Property Assignments;

 

(c)   duly executed Instruments of Assumption;

 

(d)   the officer’s certificate referred to in
Section 6.2(c);

 

(e)   duly executed counterpart of the Multiple
Site License Agreement;

 

(f)    duly executed counterpart of the Rolling
Meadows Lease Agreement;

 

(g)   duly executed counterpart of the Consulting
Services Agreement;

 

(h)   duly executed counterpart of the Intellectual
Property License Agreement;

 

(i)    duly executed counterparts of the Lease
Assignment Agreements;

 

(j)    a list of any proceedings or actions known
to any member of the Seller Group before any governmental authority (including,
without limitation, the U.S. P.T.O. or equivalent authority anywhere in the
world) related to Registered Intellectual Property included in the Transferred
Intellectual Property, and all actions that must be taken before the date sixty
(60) days after the Closing Date, including without limitation the payment of
any registration, maintenance or renewal fees or the filing of any documents,
applications or certificates, for the purposes of maintaining, perfecting or
preserving the Registered Intellectual Property included within the Transferred
Intellectual Property; and

 

(k)   all other documents, instruments and writings
required to be delivered by Buyer at or prior to the Closing Date pursuant to
this Agreement or the Ancillary Agreements.

 

Section
1.6    Post-Closing Arrangements

 

Except as set forth in
any other agreement between the parties hereto, at the Closing all data
processing, accounting, insurance, banking, personnel, legal, communications
and other products and services provided to the Business by Seller Group or its
affiliates, including any agreements or understandings (written or oral) with
respect thereto, will terminate without any further action or liability on the
part of the parties thereto.

 

Section 1.7    Post-Closing Purchase Price
Adjustment

 

(a)   On the
tenth (10th) business day following the completion and acceptance by each party
hereto of a statement (the “Final Statement”) of the Working Capital of
the Business (as defined below) as of the close of business on the Closing Date
(unless the Closing Date does not fall on the end of a monthly fiscal period of
the Seller Group, in which case the Final Statement shall be as of the last day
of Seller Group’s preceding monthly fiscal period), either (i) Buyer shall
pay to Seller the amount (together with interest as described below) by which
the Working Capital of the Business as set forth in the Final Statement is
greater than $7,771,000, which is equal to the Working Capital of the Business
as of the date of the Reference Balance

 

6

 

Sheet (the “Opening
Statement”) plus $1,000,000, or (ii) Seller shall pay to Buyer
the amount (together with interest as described below) by which the Working
Capital of the Business as set forth in the Final Statement is less than
$5,771,000, which is equal to the Opening Statement less $1,000,000.00.  In the event of a payment pursuant to the
immediately preceding sentence, such amount shall bear simple interest at an
annual rate equal to the minimum Applicable Federal Rate in effect as of the
Closing Date, accruing from the Closing Date to the date of payment.

 

(b)   The Final
Statement shall be prepared by Seller in the following manner:

 

(i)          within
seventy-five (75) days after the Closing Date, Seller shall deliver to Buyer
the Final Statement, fairly presenting the Working Capital of the Business as
of the close of business on the Closing Date. 
The Final Statement shall be accompanied by a report setting forth
(i) the Working Capital of the Business, as reflected in the Final
Statement, and (ii) the amount of any adjustment to the Closing Cash
Purchase Price to be paid and by whom pursuant to Section 1.7(a) and the
basis therefor;

 

(ii)         following the Closing, each party shall give the
other party hereto and any independent auditors and authorized representatives
of such other party full access at all reasonable times to the properties,
books, records and personnel of the Business in their possession, custody or
control relating to periods prior to the Closing Date for purposes of
preparing, reviewing and resolving any disputes concerning the Final
Statement.  Within thirty (30) days following
the delivery to Buyer of the Final Statement, Buyer shall notify Seller of any
dispute of any item contained in the Final Statement, which notice shall set
forth in reasonable detail the basis for such dispute.  If Buyer fails to notify Seller of any such
dispute within such thirty (30)-day period, the Final Statement shall be deemed
to be accepted by Buyer.  In the event
that Buyer shall so notify Seller of any dispute, Buyer and Seller shall
cooperate in good faith to resolve such dispute as promptly as possible; and

 

(iii)        if Buyer and Seller Group are unable to resolve any
such dispute within fifteen (15) days of Seller’s delivery of such notice (the
“Resolution
Period”), then all amounts remaining in dispute shall be submitted
to a “big four” independent accounting firm (the “Independent Accounting Firm”)
selected by Seller Group and Buyer within ten (10) days after the expiration of
the Resolution Period.  If Seller Group
and Buyer are unable to agree on the Independent Accounting Firm, then Buyer
and Seller Group shall each have the right to request the American Arbitration
Association to appoint the Independent Accounting Firm, which shall not have
had a material relationship with Seller Group or Buyer within the past two (2)
years.  Each party agrees to execute, if
requested by the Independent Accounting Firm, an engagement letter containing
customary terms.  All fees and expenses
relating to the work, if any, to be performed by the Independent Accounting
Firm shall be borne equally by Seller Group and Buyer.  The Independent Accounting Firm shall act as
an arbitrator to determine, based solely on presentations by Seller Group and
Buyer, and not by independent review, only those issues still in dispute and
shall be limited to those adjustments, if any, that need be made to the Final Statement
to comply with the standards referred to in Section 1.7(a).  The Independent Accounting Firm’s
determination shall be requested to be made within thirty (30) days of its
selection, shall be set forth in a written statement delivered to Seller and
Buyer and shall be final, binding and conclusive.  The Final Statement, as modified by resolution of any disputes by
Buyer and Seller Group or by the Independent Accounting Firm, shall be the “Final
Statement.”

 

(c)   The term
“Working
Capital of the Business” means the Current Assets (as reflected on
the Reference Balance Sheet) and Inventory (as reflected on the Reference
Balance Sheet) less the Accrued Liabilities and Other (as reflected on the
Reference Balance Sheet) (excluding Deferred Cost of Goods Sold, Deferred
Revenue and Employee Liabilities (as such items are reflected on the Reference
Balance Sheet)), as calculated in accordance with U.S. GAAP and prepared on a
basis consistent with the Reference Balance Sheet; provided, however,
that assets and properties (other than current assets and current liabilities
that are

 

7

 

Assumed Liabilities) that
were not reflected in the Opening Statement shall not be reflected in the Final
Statement.

 

(d)   The
amounts, if any, referred to in Section 1.7(a) shall be paid by the paying
party under Section 1.7(a) by wire transfer in immediately available funds
to an account designated by the other party.

 

ARTICLE II

 

RELATED
MATTERS

 

Section
2.1    Books and Records of Seller Group

 

Any books and records
that are related to the Business that are not delivered to Buyer hereunder will
be preserved by Seller until at least the third anniversary of the Closing Date
and will be made available (for review and copying at Buyer’s expense of those
portions of such books and records related to the Business) to Buyer and its
authorized representatives upon reasonable notice during normal business hours
to the extent reasonably required by Buyer, including, without limitation, to
the extent reasonably required in connection with audit, accounting, tax,
litigation, federal securities disclosure or other similar needs.  Any books and records that are transferred
to Buyer hereunder will be preserved by Buyer until at least the third anniversary
of the Closing Date and will be made available (for review and copying at
Seller’s expense) to Seller and its authorized representatives upon reasonable
notice during normal business hours to the extent reasonably required by
Seller, including, without limitation, to the extent reasonably required in
connection with audit, accounting, tax litigation, federal securities
disclosure or other similar needs.

 

Section
2.2    Mail and Check Handling

 

(a)   Effective as of the Closing Date, Buyer shall
have the right to open all mail and packages received by Buyer and addressed to
Seller related to the Business.  Buyer
shall promptly forward to Seller any mail or packages not related to the
Business.  Buyer and Seller agree to
promptly notify each other of any phone calls they receive that relate to the
other’s business.

 

(b)   After the Closing Date, Buyer may deliver to
Seller any checks or drafts payable to Seller or its affiliates that are
properly payable to Buyer or its affiliates, and Seller shall reimburse Buyer
on a monthly basis for the amounts collected from such checks or drafts.  Seller agrees that it will promptly transfer
or deliver or cause to be promptly transferred or delivered to Buyer or its
designee any cash or other property received directly or indirectly by it or
any of its affiliates after the Closing that are properly the property of Buyer
or its affiliates.

 

(c)   From and after the Closing Date, Seller Group
shall promptly remit to Buyer any funds that are received by Seller Group and
that are included in or that represent the Assets.  Seller Group: (i) hereby irrevocably nominates, constitutes
and appoints Buyer as the true and lawful attorney-in-fact of Seller (with full
power of substitution) effective as of the Closing Date, and hereby authorizes
Buyer, in the name of and on behalf of each member of the Seller Group, to
execute, deliver, acknowledge, certify, file and record any document, to
institute and prosecute any legal proceeding and to take any other action (on
or at any time after the Closing Date) that Buyer may deem appropriate for the
purpose of (i) collecting, asserting, enforcing or perfecting any claim,
right or interest of any kind that is included in any of the Assets,
(ii) defending or compromising any Claim or legal proceeding relating to
any of the Assets, or (iii) otherwise carrying out or facilitating any of
the transactions contemplated in this Agreement. The power of attorney referred
to in the preceding sentence is and shall be coupled with an interest and shall
be irrevocable, and shall survive the dissolution or insolvency of any member
of the Seller Group.  Seller agrees to
take all actions necessary to

 

8

 

obtain board and
stockholder approval of the transactions contemplated by this Agreement for
each member of the Seller Group, as applicable.

 

Section
2.3    Employees and Employee Benefits

 

(a)   Prior to the Closing, Buyer may, in its sole
discretion, offer to employ any Business Employee (as defined in
Section 3.14(b)) on an at-will basis and pursuant to the terms of the
offer presented by Buyer, which may vary from the terms of employment with
Seller.  If requested by Seller, Buyer
shall provide Seller with such information relating to the terms of Buyer’s
offer of employment to the Eligible Employees as is reasonably necessary to
allow Seller to determine whether or not the Eligible Employees may be entitled
to severance benefits from Seller. 
Buyer shall communicate in writing to Seller as soon as practicable the
names of those Business Employees to whom Buyer determines it will not make
offers of employment.  Buyer shall
finalize its list of Business Employees to which it will make offers of
employment (the “Eligible Employees”)
and communicate that list to Seller no later than the earlier to occur of:
(i) Closing or (ii) the forty-fifth day after the date of this
Agreement.  When the Buyer communicates
to Seller in writing that it will not offer employment to an Eligible Employee,
such person shall cease to be an Eligible Employee but shall continue to be a
Business Employee.  Buyer shall make
good faith offers of employment to at least 300 Business Employees.  Such Eligible Employees who become employees
of Buyer following the Closing are referred to herein as the “Affected
Employees.”  Prior to
Closing, Seller Group shall provide Buyer with a list of all independent
contractors currently providing services primarily related to the
Business.  Seller Group shall be
responsible, except as otherwise specifically provided herein, for all
obligations and Employment Liabilities of Business Employees up to and
including the Closing Date, including any severance payments of such employees
arising in connection with the termination of their employment with the Seller
Group, the Ancillary Agreements and any Employment Liabilities.  Seller Group shall be responsible for all
obligations to and Employment Liabilities of all Business Employees up to and
following the Closing, except for Affected Employees, with respect to whom
Seller Group shall be responsible for all obligations and Employment
Liabilities up to the Closing. 
Following the Closing, the Affected Employees shall become participants
in the employee benefit plans of Buyer as the Affected Employees become
eligible to participate in such plans pursuant to their terms.  For purposes of this Agreement, Buyer’s
employee benefit plans include, but are not limited to, all “employee benefit
plans” within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”), and employee fringe benefit programs of Buyer.  Seller Group shall use commercially
reasonable efforts, upon Buyer’s request, and at Buyer’s expense to assist in
the transition of Affected Employees to Buyer. 
From and after the Closing, Seller Group shall (i) sponsor,
(ii) assume or (iii) retain, as the case may be, and be solely
responsible for all Employment Liabilities whether incurred before, on or after
the Closing.

 

As soon as practicable
following the Closing Date, Seller Group shall provide Buyer with such
documents as Buyer shall reasonably request to assure itself that the accounts
of the Affected Employees under the 3Com Corporation 401(k) Plan (“Seller
Savings Plan”) if
distributed to such Affected Employees, would be eligible rollover
distributions and with such documents and other information as Buyer shall
reasonably request to assure itself that the Seller Savings Plan and the trust
established pursuant thereto are qualified and tax-exempt under
Sections 401(a) and 501(a) of the Code. 
Effective as of the Closing Date, each Affected Employee who was a
participant in the Seller Savings Plan shall cease to have any contributions
made on his or her behalf, except for contributions attributable to
compensation earned on or before such date under such Seller Savings Plan.  Each Affected Employee who is a participant
in a Seller Savings Plan shall be given the opportunity to “roll over” such
account balance by way of an eligible rollover distribution to the UTStarcom,
Inc. 401(k) Plan (the “Buyer
401(k) Plan”), subject to the approval of the administrator of
the Buyer 401(k) Plan and in accordance with the provisions of such Plan
and applicable Law.  Notwithstanding
anything in this Agreement to the contrary, each Affected Employee who was
eligible

 

9

 

to participate in
a Seller Savings Plan will first become eligible to participate in the Buyer
401(k) Plan as soon as reasonably practicable after the Closing Date and
pursuant to the terms of such plan.

 

(b)   Seller Group agrees and acknowledges that the
selling group (as defined in Treasury Regulation Section 54.4980B-9,
Q&A-3(a)) of which it is a part (the “Selling
Group”) will continue to offer a group health plan to its employees after
the Closing Date to the extent required by Law and, accordingly, that Seller
and the Selling Group shall be solely responsible for providing continuation
coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended (“COBRA”) to those
individuals who are M&A qualified beneficiaries (as defined in Treasury
Regulation Section 54.4980B-9, Q&A-4(a)) with respect to the
transactions contemplated by this Agreement (collectively, the “M&A Qualified Beneficiaries”).  The members of the Seller Group shall be
responsible for all COBRA obligations, liabilities and claims related to
M&A Qualified Beneficiaries and all other qualified beneficiaries (as
defined in Code Section 4980B(g)(1)) with respect to Seller Group’s health
plans.

 

(c)   Buyer shall provide each Affected Employee
credit, for purposes of any service requirements for participation or vesting
(and not for benefit accrual purposes), under each employee benefit plan,
program, or arrangement of the Buyer or its affiliates in which such employee
is eligible to participate, for his or her periods of service with the Seller
or any Subsidiary, as appropriate, credited under a similar plan, program or
arrangement prior to the Closing Date or as reflected in Seller’s or any
Subsidiary’s records, as applicable, which method of crediting service shall be
at Buyer’s discretion, subject to appropriate break-in-service rules (or other
applicable legal restrictions) and the applicable provisions of the Buyer’s
employee benefit plan, program or arrangement and applicable tax qualification
requirements.  Notwithstanding any of
the foregoing to the contrary, none of the provisions contained herein shall
operate to duplicate any benefit provided to any Affected Employee or the
funding of any such benefit.

 

(d)   Nothing contained herein, expressed or
implied, is intended to confer upon any Affected Employee any right to
continued employment for any period by reason of this Agreement.  Nothing contained herein is intended to
confer upon any Affected Employee any particular term or condition of
employment other than with respect to the particular employee benefit plans or
severance plans, policies or arrangements expressly referred to in this
Agreement.

 

(e)   Buyer shall neither assume nor substitute for
any outstanding options to purchase Seller common stock or any other equity-based
compensation award held by Affected Employees. 
Affected Employees shall only be eligible to participate in the Buyer’s
equity plans (including the Buyer’s Employee Stock Purchase Plan) pursuant to
the terms and conditions of such plans.

 

(f)    Seller agrees to use commercially reasonable
efforts to encourage the Eligible Employees to accept any offers of employment
extended by Buyer pursuant to Buyer’s standard form of employment offer
letter.  Buyer shall have the right,
within forty-five (45) days of the date of this Agreement, to designate twenty
(20) Business Employees with expertise related to “voice over Internet
protocol” technology, products and services as “Designated Employees.” 
In the event any Designated Employee rejects Buyer’s offer of
employment, such Designated Employee shall become an “Ineligible Employee.”  Seller may elect to retain or hire up to six
Ineligible Employees without any obligation to Buyer.  However, to the extent Seller retains or hires more than six
Ineligible Employees at any time through the one-year anniversary of the
Closing Date, Seller shall be obligated to pay to Buyer a sum equal to twelve
(12) months of salary then paid by Seller of each such retained or hired
employee (in excess of six).

 

10

 

ARTICLE III

 

REPRESENTATIONS
AND WARRANTIES OF SELLER GROUP

 

The Seller, on behalf of
itself and each member of the Seller Group, represents and warrants to Buyer as
follows subject to such exceptions as are disclosed in a disclosure schedule
supplied by Seller to Buyer (the “Disclosure Schedules”):

 

Section
3.1    Organization

 

Each member of the Seller
Group is a corporation duly organized, validly existing and in good standing
under the Laws of its jurisdiction of incorporation.  Each member of the Seller Group is duly qualified or licensed to
do business in each jurisdiction in which the ownership or leasing of property,
the operation of the Business, the nature of the Business or the conduct of
Seller Group’s employees makes such qualification necessary.  The members of the Seller Group are all of
the entities of Seller that are engaged in the Business or that hold title to
the Assets.

 

Section
3.2    Authorization

 

(a)   Seller has the corporate power and authority
to execute and deliver this Agreement and the Ancillary Agreements (to which it
is a party) and consummate or cause to be consummated the transactions
contemplated hereby and thereby.  The
execution and delivery of this Agreement and the Ancillary Agreements (to which
Seller is a party) by Seller and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by the
Board of Directors of Seller and no other corporate proceedings including,
without limitation, a vote of Seller’s stockholders, on the part of Seller is
necessary to authorize the execution, delivery and performance of this
Agreement, the Ancillary Agreements (to which it is a party) or the consummation
of the transactions contemplated hereby and thereby.  This Agreement and the Ancillary Agreements (to which Seller is a
party) have been duly executed and delivered by Seller and constitute, and when
executed and delivered, each of the other agreements, documents and instruments
to be executed and delivered by Seller pursuant hereto will constitute, a valid
and binding agreement of Seller enforceable against Seller in accordance with
their respective terms.

 

(b)   Each other member of the Seller Group has, or
will have prior to the Closing, the corporate power and authority to execute
and deliver the Ancillary Agreements and/or other documents and instruments
required to be delivered by such party at the Closing pursuant to the terms of
this Agreement (the “Required Documents”)
and consummate or cause to be consummated the transactions contemplated hereby
and thereby.  The execution and delivery
of the Required Documents by each member of the Seller Group (other than
Seller) has been, or will be prior to the Closing, duly and validly authorized
by the Board of Directors of such member and has been, or will be prior to the
Closing, approved by requisite votes of the stockholders of such member, as
necessary, and no other corporate proceedings on the part of the members of the
Seller Group (other than Seller) will be necessary as of the Closing to
authorize the execution, delivery and performance of any of the Required
Documents or the consummation of the transactions contemplated hereby and
thereby. The Required Documents will be duly executed and delivered at the
Closing by each member of the Seller Group, and when executed and delivered,
will constitute, valid and binding agreements or obligations of such member
enforceable against such member, as applicable, in accordance with their
respective terms.

 

11

 

Section
3.3    Consents and Approvals; No Violations

 

(a)   Except for applicable requirements of the
Hart-Scott-Rodino Act Antitrust Improvements Act of 1976, as amended (the “HSR Act”), or antitrust or other
competition Law of other jurisdictions, there are no governmental approvals or
consents required for the execution, delivery or performance of this Agreement
or the consummation by each member of the Seller Group of the transactions
contemplated hereby or by the Ancillary Agreements.

 

(b)   Except as set forth on Schedule 3.3 of
the Disclosure Schedules, the execution, delivery and performance of this
Agreement and the Ancillary Agreements and the consummation by each member of
the Seller Group of the transactions contemplated hereby and thereby will not
(i) conflict with or result in any breach or violation of any provision of
the certificate of incorporation, bylaws or other comparable charter documents of
any member of the Seller Group; (ii) require any member of the Seller
Group to file or register with, or give notice to, or obtain the authorization,
consent or approval of any person (other than a governmental entity
contemplated in clause (a) above) whether within or outside the United
States; (iii) violate, conflict with or result in a default (or any event
that, with notice or lapse of time or both, would constitute a default) under,
or result in any termination, cancellation, modification or acceleration or
give rise to any such right of termination, cancellation, modification or
acceleration under, any of the terms, conditions or provisions of any note,
mortgage, other evidence of indebtedness, guarantee, license, agreement, lease
or other contract or instrument or obligation to which any member of the Seller
Group is a party or by which any member of the Seller Group or any of their
Assets are subject or by which any member of the Seller Group may be bound (the
“Seller
Conflicting Agreements”); (iv) violate any order, injunction,
decree, statute, rule or regulation applicable to any member of the Seller
Group or any of their assets or properties, or (v) result in the creation
or imposition of any Lien upon any properties, assets or business of the Business.
As used in this Section 3.3, references to members of the Seller Group
shall refer only to members of the Seller Group in connection with the conduct
of the Business.

 

Section
3.4    Financial Statements

 

Attached as
Schedule 3.4 of the Disclosure Schedules are (i) the Reference
Balance Sheet, (ii) the unaudited balance sheet of the Business as of the
end of its fiscal year on or about May 31, 2002, (iii) the related
unaudited statements of income of the Business for the six months ended
November 29, 2002, and (iv) the related unaudited statements of
income of the Business for the fiscal year ended on or about May 31,
2002  (the financial statements referred
to in clauses (i) through (iv) above and the accompanying notes thereto,
if any, are referred to herein collectively as the “Financial Statements”), which have been extracted from the
books and records of Seller Group, which books and records are the basis for
Seller’s audited consolidated financial statements. Except as disclosed in the
Financial Statements or on Schedule 3.4 of the Disclosure Schedules, the
Financial Statements have been prepared in accordance with U.S. generally
accepted accounting principles (“GAAP”),
consistently applied, and the rules and regulations of the Securities and
Exchange Commission and fairly present in all material respects the financial
condition of the Business as of such date and the results of operations of the
Business for such periods.

 

Section
3.5    Absence of Undisclosed Liabilities

 

Except for liabilities
and contingent claims (i) incurred in the ordinary course of business and
(ii) as otherwise disclosed herein or on Schedule 3.5 of the
Disclosure Schedules or any other schedule of the Disclosure Schedules or the
Financial Statements (or Notes thereto), the Business does not have any
liabilities or contingent claims (whether direct, indirect, accrued or
contingent).

 

12

 

Section
3.6    Absence of Certain Changes

 

Except as set forth on
Schedule 3.6 of the Disclosure Schedules or as otherwise contemplated by
this Agreement, since November 29, 2002:

 

(a)   Each member of the Seller Group has carried
on the Business in the ordinary course consistent with past practice and there
has not been any Material Adverse Effect (as defined below); and

 

(b)   No member of the Seller Group has:

 

(i)                             sold,
assigned, licensed, transferred, conveyed or otherwise disposed of any of the
Assets with a fair market value in the aggregate in excess of $100,000, except
in connection with the sale or license of Products to customers in the ordinary
course of business;

 

(ii)                          made any
loans, advances (other than advances in the ordinary course of business) or
capital contributions to, or investments in, any other person on behalf of the
Business;

 

(iii)                       terminated,
modified, transferred or amended any of the Permits (including Environmental
Permits) or Contracts, except in the ordinary course of business;

 

(iv)                      entered into
any new agreement related to the Business other than renewals of existing
agreements or otherwise in the ordinary course of business;

 

(v)                         increased
in any manner the compensation (cash, equity or otherwise) of, or paid any
bonus to or increased any bonus level of, any of the Eligible Employees, except
for such increases as are granted in the ordinary course of business consistent
with past practice in accordance with the terms of any employment contract or
collective bargaining agreement as currently in effect;

 

(vi)                      adopted,
granted, extended or increased in any material manner the rate or terms of any
insurance, pension or other employee benefit plan, payment or arrangement made
to, for or with any Eligible Employees, except increases required by any
applicable Law;

 

(vii)                   terminated the
employment of any Eligible Employee, except for cause;

 

(viii)                made any change in
any of the Business’ present accounting methods and practices;

 

(ix)                        licensed
any intellectual property rights of the Business to or from any third party
pursuant to an arrangement other than in the ordinary course of business;

 

(x)                           made or
authorized any capital expenditures on behalf of the Business other than in
accordance with the Business’ annual plan or other than capital expenditures
not exceeding $50,000 individually or $200,000 in the aggregate;

 

(xi)                        incurred
any indebtedness for borrowed money, issued any debt securities or assumed,
guaranteed or endorsed the obligations of any other persons on behalf of the
Business or subjected any of the Assets to any Liens;

 

(xii)                     canceled or
compromised any material debt or claim or waived or released any material
rights of the Business; or

 

13

 

(xiii)                  entered into any
agreement on behalf of the Business to do any of the foregoing.

 

(c)   Other than claims made in the ordinary course
of business, there are no claims against any member of the Seller Group to
return Products by reason of alleged overshipments, defective Products or
otherwise.  There are no Products of the
Business in the hands of customers under an understanding that such Products
would be returnable other than in the ordinary course of business or pursuant
to written contractual provisions which have been made available to Buyer.

 

As used in this
Agreement, “Material Adverse Effect”
shall mean any change, circumstance or effect which, individually or in the
aggregate, has had or would reasonably be expected to have a material adverse
change in, or effect on the Assets taken as a whole or the business, financial
condition or results of operations of the Business taken as a whole or on the
ability of any member of the Seller Group to consummate the transactions
contemplated hereby or by the Ancillary Agreements; provided, however,
that none of the following shall be a Material Adverse Effect: (i) changes
in industry or markets in which the Business operates, (ii) changes
resulting from the permitted disclosure of this Agreement or the transactions
contemplated hereby, (iii) changes in the U.S. or world economy or
business condition or (iv) not satisfying any estimated or projected results of
the Business.

 

Section 3.7    Intellectual Property

 

(a)   Schedule 3.7(a) of the Disclosure
Schedules lists all Registered Intellectual Property within the Transferred
Intellectual Property.  To the Knowledge
of Seller, each such item of the Registered Intellectual Property is valid, all
necessary registration, maintenance and renewal fees due prior to the date of
this Agreement in connection with such Registered Intellectual Property have
been paid, and all necessary documents and certificates required to be filed
prior to the date of this Agreement in connection with such Registered
Intellectual Property have been filed with the relevant authorities in the
United States or other foreign jurisdictions for the purposes of maintaining
such Registered Intellectual Property.

 

(b)   Except as set forth on Schedule 3.7(b)
of the Disclosure Schedules, Seller or another member of the Seller Group is
the exclusive owner of each item of Transferred Intellectual Property, and no
Transferred Intellectual Property is jointly owned.

 

(c)   Except as set forth on Schedule 3.7(c)
of the Disclosure Schedules, (i) each item of Transferred Intellectual
Property, including without limitation all Registered Intellectual Property
which is listed on Schedule 3.7(a) of the Disclosure Schedules, is free
and clear of any Liens and (ii) there are no agreements between any person
and Seller or any member of the Seller Group encumbering or restricting the
transfer or sale of the Transferred Intellectual Property to Buyer in the
manner contemplated by this Agreement.

 

(d)   Except as set forth on Schedule 3.7(d)
of the Disclosure Schedules, no Transferred Intellectual Property is subject to
any proceeding (other than prosecution by Seller of applications and
registrations before the U.S.P.T.O. and relevant authorities of foreign
jurisdictions) or other outstanding decree, order, judgment, agreement or
stipulation that restricts in any manner the transfer thereof by any member of
the Seller Group at the Closing or that affects the validity, use or
enforceability of the Transferred Intellectual Property.

 

(e)   Except as set forth on Schedule 3.7(e)
of the Disclosure Schedules and except for (i) potential license grant
obligations resulting from participation in standards organizations (whether
official or de facto), and (ii) implied licenses to manufacturers, service
providers and customers, no member of the Seller Group has granted any license
or right, that is still in effect, in or to any Transferred Intellectual
Property to any other person and no member of the Seller Group has transferred
or licensed any Intellectual Property prior to the Closing in contemplation of
this transaction.

 

14

 

(f)    Except as set forth on Schedule 3.7(f) of
the Disclosure Schedules, off-the-shelf packaged software, internal software
tools and potential licenses pursuant to participation in standards
organizations (whether official or de facto): (i) to the Knowledge of
Seller, the Transferred Intellectual Property and the Licensed Intellectual
Property, along with the rights in Third Party Intellectual Property granted to
Seller under the Intellectual Property Contracts transferred to Buyer hereunder
and the rights licensed under the Intellectual Property License Agreement,
constitute all Intellectual Property that is used in or necessary for the
Business; and (ii) the use and exploitation of the Assets in the manner
such Assets are used prior to the Closing, including without limitation the
operation of the Business, including the manufacture, use and sale of the
Products, by Buyer following the Closing will not infringe any Intellectual
Property owned by the Seller Group and not otherwise licensed to Buyer under
the Intellectual Property License Agreement.

 

(g)   Except as set forth on Schedule 3.7(g)
of the Disclosure Schedules, to the Knowledge of Seller, the operation of the
Business, including the manufacture, use and sale of the Products, does not
infringe or misappropriate the Intellectual Property of any person, or
constitute unfair competition or trade practices under the Laws of any
jurisdiction; and (ii) the Seller Group has not received written notice
claiming that the operation of the Business, including the manufacture, use and
sale of the Products, or the use or sale of any Assets, infringes or
misappropriates the Intellectual Property of any person or constitutes unfair
competition or trade practices under the Laws of any jurisdiction.

 

(h)   Schedule 3.7(h) of the Disclosure
Schedules includes all contracts related to the Business, to which any member
of the Seller Group is a party with respect to any Third Party Intellectual
Property and that are being transferred to Buyer under this Agreement.  Except as disclosed on Section 3.7(h)
of the Disclosure Schedules, no person other than Seller has by virtue of any
agreement which a member of the Seller Group is a party, ownership rights to
improvements in Transferred Intellectual Property, which improvements are made
by any member of the Seller Group.

 

(i)    Except as disclosed on Schedule 3.7(i)
of the Disclosure Schedules, to the Knowledge of Seller, no person is
infringing or misappropriating any of the Transferred Intellectual
Property.  Each member of the Seller
Group has taken such reasonable steps as are required to protect rights in
confidential information and Trade Secrets constituting the Transferred
Intellectual Property, Licensed Intellectual Property and Third Party
Intellectual Property.

 

(j)    Schedule 3.7(j) of the Disclosure
Schedules lists all Trademark applications and registrations, including intent
to use applications, that are used by any member of the Seller Group in
connection with the Business.

 

(k)   Schedule 3.7(k) of the Disclosure
Schedules lists all Products.

 

(l)    Neither this Agreement nor the transactions
contemplated by this Agreement, including the assignment to Buyer, by operation
of Law or otherwise, of any contracts or agreements to which the Seller or its
subsidiaries is a party, will result in (i) any third party being granted
rights or access to, or the placement in or release from escrow, of any
software source code or other technology included in the Transferred
Intellectual Property, (ii) to Seller’s Knowledge, Buyer granting to any
third party any right in any Intellectual Property other than those granted by
Seller or its subsidiaries prior to the Closing, (iii) Buyer being bound
by, or subject to, any non-compete or other restriction on the operation
or scope of its businesses, other than those imposed on Seller or its subsidiaries
prior to the Closing, or (iv) Buyer being obligated to pay any royalties
or other amounts to any third party with respect to the Business in excess of
those payable by the Seller or its subsidiaries prior to the Closing under any
Contracts other than pursuant to any agreement that Buyer may need to execute
after the Closing Date in connection with the consummation of the transactions
contemplated hereby.

 

15

 

(m)  Schedule 3.7(m) of the Disclosure Schedule
lists all material compilers, development tools, library functions and files,
and the like that, to the Knowledge of Seller, are currently in use by the
Seller Group in connection with the Transferred Intellectual Property or
Licensed Intellectual Property, and that are not included in the Transferred
Intellectual Property or Licensed Intellectual Property, other than generally
commercially available products.  Except
as set forth on Schedule 3.7(m) of the Disclosure Schedules, to the Knowledge
of Seller, no open source or public library software, including any version of
any software licensed pursuant to any GNU public license, is, in whole or in
part, embodied or incorporated into any Product.  Schedule 3.7(m) of the Disclosure Schedules lists all
licenses of Products in source code format of software incorporated into
Products (other than Products that are written in non-compiled
programming languages).  Each
Product conforms in all material respects to the specifications and
documentation therefor and is otherwise in compliance with applicable Law.  Without limiting the foregoing, (1) the
Products (i) will record, store, process, calculate and present calendar
dates falling on and after (and if applicable, spans of time including)
January 1, 2000, and will calculate any information dependent on or
relating to such dates in the same manner, and with the same functionality,
data integrity and performance, as the products record, store, process,
calculate and present calendar dates on or before December 31, 1999, or
calculate any information dependent on or relating to such dates, and
(ii) lose no functionality with respect to the introduction of records
containing dates falling on or after January 1, 2000; (2) the Seller
has secured any export licenses that were necessary for the distribution by
Seller or its subsidiaries of the Products outside the United States; and
(3) the Products do not contain any virus, Trojan horse, worm, or other
software routines or hardware components designed to permit unauthorized
access, or to disable, erase, or otherwise harm software, hardware or data in
an unauthorized manner.

 

(n)   For purposes of this Agreement:

 

(i)    “Intellectual Property” means any and all rights in, arising
out of, or associated with: (A) all United States and foreign patents and
utility models and applications therefor and all reissues, divisions, renewals,
extensions, provisionals, continuations and continuations-in-part thereof, and
equivalent or similar rights anywhere in the world in inventions and
discoveries (“Patents“);
(B) all inventions (whether patentable or not), invention disclosures,
improvements, trade secrets, proprietary information, know how, technology,
technical data and customer lists which have not been publicly disclosed, and
all documentation embodying or evidencing any of the foregoing (“Trade
Secrets”);
(C) all copyrights, copyrights registrations and applications therefor and
all other rights corresponding thereto throughout the world (“Copyrights”); (D) all mask works, mask work
registrations and applications therefor, and any equivalent or similar rights
in semiconductor masks, layouts, architectures or topology (“Maskworks”); (E) all industrial designs
and any registrations and applications therefor throughout the world; (F) all
trade names, logos, common law trademarks and service marks, trademark and
service mark registrations and applications therefor and all goodwill
associated therewith throughout the world (“Trademarks”); (G) all World Wide Web
addresses, Uniform Resource Locators, and domain names; and (H) any
similar, corresponding or equivalent rights to any of the foregoing anywhere in
the world.

 

(ii)   “Intellectual Property Contract” means any and all Contracts to which
any member of the Seller Group is a party, pursuant to which a member of the
Seller Group obtained any right to use or otherwise exploit any Third Party
Intellectual Property.

 

(iii)  “Licensed Intellectual Property” has the meaning set forth in the
Intellectual Property License Agreement.

 

(iv)  “Products” means (A) any existing product or product in development
listed in Schedule 3.7(n)(iv) of the Disclosure Schedules.

 

16

 

(v)   “Registered Intellectual Property” means all United States,
international and foreign: (A) Patents and applications therefor,
(B) Trademark registrations and applications, intent-to-use applications;
(C) Copyright registrations and applications; (D) any registrations
and applications to register Maskworks; (E) registrations for Uniform
Resource Locators, worldwide web site addresses and domain names; and
(F) any other application, certificate, filing, registration or other
document issued by, filed with, or recorded by, any state, government or other
public legal authority claiming, evidencing, or recording any Intellectual
Property.

 

(vi)  “Third Party Intellectual Property” means any Intellectual Property used
by the Seller Group in the Business not owned by any member of the Seller
Group, but to which a member of the Seller Group has a right to use or
otherwise exploit pursuant to a written agreement.

 

(vii) “Transferred Intellectual Property” means the Intellectual Property
owned, in whole or in part, by any member of the Seller Group and is:
(a) used in the Business; and (b) not used by any member of the
Seller Group other than related to the Business.  Notwithstanding the foregoing, “Transferred Intellectual
Property” shall also include all Intellectual Property embodied in the Products
and all Registered Intellectual Property, in each case that is set forth on
Schedule 3.7(n)(vii)(A) of the Disclosure Schedules.

 

(o)           The Products include all products
currently sold under the COMMWORKS trademark.

 

(p)           Schedule 3.7(p) of the
Disclosure Schedules sets forth a list of all standards agreements and
organizations which any member of the Seller Group or any of their officers,
directors or employees are members and which may by virtue of such membership
have rights in, or the other members of which may have rights in, the
Transferred Intellectual Property, provided that Seller shall have the right to
update such Schedule 3.7(p) of the Disclosure Schedule prior to the
Closing Date pursuant to Section 5.18 hereof.

 

Section
3.8    Title, Ownership and Related Matters

 

(a)   As used in this Agreement, the term “Liens” shall mean any pledge, mortgage,
charge, claim, title defect, security interest, conditional and installment
sales agreement, encumbrance or other lien. 
As used herein, the term “Permitted Encumbrances” shall mean (i) Liens for
current Taxes not yet due or Taxes being contested in good faith,
(ii) mechanics’, materialmen’s, warehousemen’s, contractors’, workmens’,
repairmens’, carriers’ and similar Liens attaching by operation of law,
incurred in the ordinary course of business and securing payments not
delinquent or payments which are being contested in good faith, which are not,
individually or in the aggregate, material, (iii) the rights, if any, of
third-party suppliers or other vendors having possession of equipment of
the Business, (iv) imperfections of title, easements and zoning
restrictions on real property, if any, which do not materially impair the use
of such real property or the operations of the Business thereon and
(v) those items listed on Schedule 3.8(a) of the Disclosure
Schedules.

 

(b)   Schedule 3.8(b) of the Disclosure
Schedules contains a complete and correct list, as of the date hereof, of all
Business Real Property subject to a lease or sublease (the “Leased Real Property”).  Schedule 3.8(b) sets forth, for each of the
Leased Real Property, the address, landlord and tenant for each such lease or
sublease (the “Leases”).  A member of the Seller Group holds a valid
leasehold interest in the Leased Real Property, in each case, subject only to
the terms, covenants and conditions of the applicable Lease or any Liens or
other encumbrances created by the landlord or predecessors to the
landlord.  Seller has delivered true,
correct and complete copies of all Leases with respect to the Leased Real
Property, including all amendments, assignments and agreements relating thereto
to Buyer.  As of the date hereof, all
Leases relating to the Leased Real Property are in full force and effect and
constitute legal, valid and binding obligations of Seller or other members of
the Seller Group.  There exist no
defaults or conditions which with the giving of notice or the passage of time,
or both, would constitute a default by any member of the Seller Group, or to
the

 

17

 

Knowledge of Seller, the
other party or parties thereto with respect to the Leases for the Leased Real
Property.  No member of the Seller Group
(i) has transferred any portion of its leasehold interest in any of the
Leases (including, without limitation, by sublease, assignment or otherwise);
nor (ii) is permitting any unrelated third parties to occupy any premises
subject to any of the Leases other than pursuant to the written terms of such
Leases.

 

(c)   (i) To the Knowledge of Seller, the use
and operation by Seller Group of the Business Real Property does not violate
any instrument of record or agreement affecting the Business Real Property;
(ii) to the Knowledge of Seller, there is no violation of any covenant,
condition, restriction, or easement relating to the Business Real Property;
(iii) no member of the Seller Group has received notice of violations of
any applicable building, zoning, subdivision, land use and other similar
applicable Laws affecting the Business Real Property (“Real Property Laws”); (iv) to the Knowledge of
Seller, none of the Business Real Property is subject to any pending or
threatened suit for condemnation or other taking by any governmental authority;
and (v) all utilities (including, without limitation, electricity, water,
heat, ventilation and air conditioning) necessary for the use of the Business
Real Property for its current use by the Business are available to the Business
Real Property.

 

(d)   To the Knowledge of Seller, all Inventory of
the Business, whether reflected on the Reference Balance Sheet or subsequently
acquired or manufactured, consists of a quality and quantity expected to be
usable and/or salable in the ordinary course of business, except for inventory
that is considered by the Seller to be excess or obsolete and which has been
written down in accordance with Seller’s normal accounting practices and in
accordance with GAAP applied consistent with the Reference Balance Sheet.

 

(e)   Except as set forth on Schedule 3.8(e)
of the Disclosure Schedules, Seller Group has, and at the Closing Seller Group
will deliver to Buyer, good and valid title to the Assets (other than such real
property subject to leases, which is addressed in subsection (b)), free
and clear of all Liens except for Permitted Encumbrances.

 

Section
3.9    Subsidiaries

 

Set forth on
Schedule 3.9 of the Disclosure Schedules is an organizational chart and a
complete and accurate list of all of the subsidiaries of Seller that hold any
of the Assets, specifying opposite each such subsidiary (i) the
jurisdiction in which such entity is incorporated or organized, (ii) the
jurisdictions in which such entity is required to be registered for the
Business to be conducted as conducted immediately prior to the Closing,
(iii) a description of the Assets held or the operations related to the Business
conducted by such entity and (iv) the number of Eligible Employees
employed by such subsidiary.  Except as
set forth on Schedule 3.9, no subsidiary of Seller holds any right in an
asset or property, tangible or intangible, related to the Business or conducts
any operations related to the Business.

 

Section
3.10 Litigation; Product Liability

 

(a)   Except as set forth on Schedule 3.10(a)
of the Disclosure Schedules, there are no claims, actions, suits,
administrative, arbitration or other inquiries, investigations or proceedings
(collectively, “Cases”)
pending, or, to the Knowledge of Seller, threatened, against any member of the
Seller Group or any of its properties, assets and business operations, as of
the date hereof, by or before any court, governmental or regulatory authority
or by any third party, in each case related to the Business.  No member of the Seller Group is subject to
any judgments, orders or decrees entered in any lawsuits or proceedings related
to the Business.

 

18

 

(b)   Except as set forth on Schedule 3.10(b)
of the Disclosure Schedules, as of the date hereof, there are no pending, or,
to the Knowledge of Seller, threatened civil, criminal or administrative
actions, suits, demands, claims, notices of violation, investigations,
proceedings or demand letters against any member of the Seller Group relating
to any alleged hazard or alleged defect in design, manufacture, materials or
workmanship, including any failure to warn or alleged breach of express or
implied warranty or representation, relating to any product manufactured,
distributed or sold by or on behalf of any member of the Seller Group with
respect to the Business.  Seller has
provided Buyer with true and complete copies of (or forms of) all written
warranties, indemnifications or guarantees with respect to Products that Seller
Group has extended to any of its customers.

 

Section
3.11 Compliance with Applicable Law

 

(a)   Except as set forth on Schedule 3.11(a)
of the Disclosure Schedules, each member of the Seller Group has conducted and
conducts the Business in compliance in all material respects with all
applicable Laws, orders, ordinances, rules and regulations of any federal,
state, local or foreign governmental authority applicable to the Business
(other than Environmental Laws, which are governed by Section 3.15).

 

(b)   Except as disclosed on Schedule 3.11(b)
of the Disclosure Schedules:

 

(i)          the members of the Seller Group hold
all governmental licenses necessary for the operation of the Business as
presently conducted by Seller Group (the “Licenses”) (as used in this Agreement, the term “Licenses” shall not be
deemed to include any Environmental Permits or Environmental Laws, referred to
in Section 3.15);

 

(ii)         to the Knowledge of Seller each License
is valid, binding and in full force and effect; and

 

(iii)        no member of the Seller Group is, nor
has it received any written or, to the Knowledge of Seller, oral notice that it
is, in default (or with the giving of notice or lapse of time or both, would be
in default) under any License.

 

Section
3.12 Certain Contracts and Arrangements

 

Except as set forth on
Schedule 3.12 of the Disclosure Schedules, as of the date hereof and as
related to the Business, no member of the Seller Group is a party to contracts
in any of the following categories that remain executory:

 

(a)   collective bargaining agreement covering
Business Employees;

 

(b)   employment or consulting agreement (for an
individual consultant) related to the Business providing for total annual
payments in excess of $200,000;

 

(c)   indenture, mortgage, note, installment
obligation, agreement or other instrument related to the Business, in each case
relating to the borrowing of money (other than intercompany accounts, which
shall be governed by Section 1.9 hereof), or the guaranty of any
obligation for the borrowing of money, except any such agreement with an
aggregate outstanding principal amount not exceeding $200,000;

 

(d)   partnership, joint venture or other similar
agreement or arrangement related to the Business requiring the commitment of
capital in excess of $200,000;

 

19

 

(e)   material license or other similar agreement
related to the Business (other than (i) governmental permits or licenses
used in connection with the operation of the Business and
(ii) off-the-shelf software licenses) not already disclosed pursuant to
Section 3.7;

 

(f)    agency, sales representation, distribution
or other similar agreement related to the Business under which the Seller Group
paid sales fees or commissions in excess of $200,000 for the 12 months ended
November 29, 2002 (each, a “Distribution
Agreement”);

 

(g)   agreement for the purchase of supplies or
materials related to the Business other than in the ordinary course of business
providing for annual payments in excess of $200,000;

 

(h)   agreement for the sale of goods or services
related to the Business other than in the ordinary course of business providing
for annual payments in excess of $200,000;

 

(i)    agreement (non-compete or otherwise) or
commitment that is binding upon any member of the Seller Group or any of its
officers, directors or employees which has or may have the effect of
prohibiting or impairing any material business practice, any acquisition of
material property (tangible or intangible) or the conduct of the Business as
presently conducted by Seller Group or, to the Knowledge of Seller, by Buyer;

 

(j)    agreement under which any member of the
Seller Group or, in each case, its officer, director, or employee is restricted
from selling, licensing or otherwise distributing any Products or services
related to the Products to, customers or potential customers or any class of
customers in any geographic area, during any period of time or in any segment
of the market;

 

(k)   any agreement included in the Assets which is
not terminable without penalty on three (3) months’ or fewer days’ notice,
providing for payments individually or in the aggregate in excess of $200,000;

 

(l)    other than this Agreement, any agreement for
the acquisition or disposition of assets related to the Business entered into
in the last three (3) years, other than in the ordinary course of business; and

 

(m)  agreement (except as otherwise set forth in
(a) through (l) above), other than in the ordinary course of business that is
material to the Business.

 

Except as set
forth on Schedule 3.12 of the Disclosure Schedules, all such agreements
are valid, binding and enforceable in accordance with their terms and Seller
Group is not in default under any of the aforesaid agreements (to the extent
any such default could reasonably be expected to have a material effect on the
Seller Groups’ rights, obligations or remedies pursuant to such agreement),
and, to the Knowledge of Seller, no other party is in default under any of the
aforesaid agreements.  Seller Group has
provided Buyer with access to true and complete copies of each agreement,
contract and commitment identified on Schedule 3.12 of the Disclosure
Schedules that is not subject to a confidentiality agreement limiting its
disclosure.

 

Section
3.13 Taxes

 

Except as set forth on
Schedule 3.13:

 

(a)   The members of the Seller Group have duly
filed all Tax Returns related to the Business that are required to be filed and
have duly paid or caused to be duly paid in full or made provision in
accordance with GAAP (or there has been paid or provision has been made on
their behalf) for the payment of all Taxes (as hereinafter defined) related to
the Business that are owed (whether or not shown on any Tax Returns) for all

 

20

 

periods or portions
thereof ending on or prior to the Closing Date.  All such Tax Returns are correct and complete in all material
respects and accurately reflect all liability for Taxes for the periods covered
thereby.

 

(b)   There are no Liens for Taxes on the Assets or
the Business other than Permitted Encumbrances.  To the Knowledge of Seller, there is no basis for the assertion
of any claim relating to or attributable to the Taxes which, if adversely
determined, would result in any lien upon any of the Assets or the Business.

 

(c)   Since the date of the Reference Balance
Sheet, the members of the Seller Group have not made any change in accounting
methods, received a ruling from any taxing authority or signed an agreement
with respect thereto or signed any closing agreement with respect to any Taxes
that are related to the Business for any period ending on or before the Closing
that could have any effect upon Buyer, the Assets or the Business after the
Closing.

 

(d)   The members of the Seller Group have complied
in all material respects with all applicable Laws, rules and regulations
relating to the payment and withholding of Taxes related to the Business within
the time and the manner prescribed by Law, and have withheld and paid over to
the proper taxing authorities all amounts required to be so withheld and paid
over under applicable Laws.

 

(e)   No federal, state, local or foreign audits,
examinations, investigations or other administrative proceedings or court
proceedings are presently pending with regard to any Taxes or Tax Returns of
the members of the Seller Group that are related to the Business.

 

(f)    All deficiencies for Tax related to the
Business that have been claimed, proposed or asserted have been fully paid or
finally settled, and no issue has been raised in any examination by any taxing
authority that, by application of similar principles, could reasonably be
expected to result in the proposal or assertion of such a Tax deficiency for
another year not so examined and have any effect upon Buyer, the Assets or the
Business after the Closing.

 

(g)   There are no outstanding requests,
agreements, consents or waivers to extend the statutory period of limitations
applicable to the assessment of any Taxes or deficiencies for Taxes related to
the Business against any member of the Seller Group.

 

(h)   Other than any Tax Returns that have not yet
been required to be filed (taking into account all proper extensions), the
Seller Group has made available to Buyer true, correct and complete copies of
all Tax Returns or portions thereof related to the Business.

 

(i)    Schedule 3.13(i) of the Disclosure
Schedules sets forth all material elections with respect to Taxes related to
the Business made by each member of the Seller Group to the extent such
elections would be binding upon the Buyer after the Closing.

 

(j)    No member of the Seller Group has received
written notice of any claim made by an authority in a jurisdiction where such
member of the Seller Group does not file Tax Returns, that the Seller Group is
or may be subject to taxation by that jurisdiction in respect of the Assets or
the Business.

 

(k)   “Tax”
or, collectively, “Taxes,” shall mean (i) any and all
federal, state, local and foreign taxes, assessments and other governmental
charges, duties, impositions and liabilities, including taxes based upon or
measured by gross receipts, income, profits, sales, use and occupation, and
value added, ad valorem, transfer, franchise, withholding, payroll, recapture,
employment, excise and property taxes, together with all interest, penalties
and additions imposed with respect to such amounts; (ii) any liability for
the payment of any amounts of the type described in clause (i) as a result
of being or ceasing to be a member of an affiliated,

 

21

 

consolidated, combined or
unitary group for any period (including, without limitation, any liability
under Treas. Reg. Section 1.1502-6 or any comparable provision of
applicable Law); and (iii) any liability for the payment of any amounts of
the type described in clause (i) or (ii) as a result of any express
or implied obligation to indemnify any other person or as a result of any
obligations under any agreements or arrangements with any other person with
respect to such amounts and including any liability for taxes of a predecessor
entity.

 

(l)    “Tax Return” shall mean any report, return (including any information
return), statement or other document with respect to Taxes including, without
limitation, any amendments thereto.

 

Section 3.14 Employee Benefit Plans; ERISA; Employees

 

(a)   With the exception of the definition of
“Affiliate” set forth in Section 3.14(a)(i) below (which definition shall
apply only to this Section 3.14) for purposes of this Agreement, the
following terms shall have the meanings set forth below:

 

(i)          “Affiliate” shall mean any other person or
entity under common control with the Seller within the meaning of
Section 414(b), (c), (m) or (o) of the Code and the regulations issued
thereunder;

 

(ii)         “COBRA” shall mean the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended;

 

(iii)        “Code” shall mean the Internal Revenue Code
of 1986, as amended;

 

(iv)       “Employee” shall mean any current or former
or retired employee, consultant or director of the Seller or any Affiliate;

 

(v)        “Employment Agreement” shall mean each
management, employment, severance, consulting, relocation, repatriation,
expatriation, visas, work permit or other agreement, contract or understanding
between the Seller Group and any Affected Employee;

 

(vi)       “ERISA” shall mean the Employee Retirement
Income Security Act of 1974, as amended;

 

(vii)      “FMLA” shall mean the Family Medical Leave
Act of 1993, as amended;

 

(viii)     “International Employee Plan” shall mean
each Seller Employee Plan that has been adopted or maintained by the Seller or
any Affiliate, whether informally or formally, or with respect to which the
Seller or any Affiliate will or may have any liability, for the benefit of
Employees who perform services outside the United States;

 

(ix)        “IRS” shall mean the Internal Revenue
Service;

 

(x)         “Pension Plan” shall mean each Seller
Employee Plan which is an “employee pension benefit plan,” within the meaning
of Section 3(2) of ERISA;

 

(xi)        “Qualified Beneficiary” shall mean an
individual that is identified in Section 4980B(g)(1) of the Code; and

 

22

 

(xii)       “Seller Employee Plan” shall mean any plan,
program, policy, practice, contract, agreement or other arrangement providing
for compensation, severance, termination pay, deferred compensation,
performance awards, stock or stock-related awards, fringe benefits or other
employee benefits or remuneration of any kind, whether written or unwritten or
otherwise, funded or unfunded, including without limitation, each “employee
benefit plan,” within the meaning of Section 3(3) of ERISA which is or has
been maintained, contributed to, or required to be contributed to, by the Seller
or any Affiliate for the benefit of any Affected Employee.

 

(b)   Schedule 3.14(b) of the Disclosure
Schedules (i) contains an accurate and complete list of each Seller
Employee Plan, International Employee Plan and Employment Agreement related to
the Business or any current Business Employee. 
Schedule 3.14(b) of the Disclosure Schedules contains a complete
and accurate list of all the names of the full-time employees of the Business
(the “Business Employees”), each
Business Employee’s position and the entity that employs such Business
Employee.

 

(c)   Seller and each of its Affiliates has
performed in all material respects all obligations required to be performed by
them under, are not in default or violation of, and have no knowledge of any
default or violation by any other party to each Seller Employee Plan, and each
Seller Employee Plan has been established and maintained in all material
respects in accordance with its terms and in compliance with all applicable
Laws, including but not limited to ERISA or the Code.

 

(d)   Neither the Seller nor any of its Affiliates
has ever maintained, established, sponsored, participated in, contributed to,
or has been required to contribute to any Pension Plan that is subject to
Title IV of ERISA or Section 412 or 413 of the Code related to
the Business or Business Employees.

 

(e)   No Seller Employee Plan provides, or reflects
or represents any liability to provide retiree benefits (including health, life
insurance or otherwise) to any person for any reason, except as may be required
by COBRA or other applicable statute, and no member of the Seller Group has
represented, promised or contracted (whether in oral or written form) to any
Eligible Employee (either individually or to Business Employees as a group)
that such Employee(s) would be provided with retiree health, except to the
extent required by statute.

 

(f)    Neither the Seller nor any of its Affiliates
has, prior to the Closing Date and in any material respect, violated any of the
health care continuation requirements of COBRA, the requirements of FMLA, the
requirements of the Health Insurance Portability and Accountability Act of
1996, the requirements of the Women’s Health and Cancer Rights Act of 1998, the
requirements of the Newborns’ and Mothers’ Health Protection Act of 1996, or
any amendment to each such act, or any similar provisions of state Law
applicable to Eligible Employees.

 

(g)   Each member of the Seller Group (i) is
in compliance in all material respects with all applicable Law respecting
employment, employment practices, terms and conditions of employment and wages
and hours, in each case, with respect to Eligible Employees, (ii) has
withheld and reported all amounts required by applicable Law or by contract to
be withheld and reported with respect to wages, salaries and other payments to
Eligible Employees, (iii) is not liable for any arrears of wages or any
taxes or any penalty for failure to comply with any of the foregoing, and
(iv) is not liable for any payment to any trust or other fund governed by
or maintained by or on behalf of any governmental authority, with respect to
unemployment compensation benefits, social security or other benefits or
obligations for Eligible Employees (other than routine payments to be made in
the normal course of business and consistent with past practice).  There are no pending, or to the Knowledge of
Seller, threatened claims or actions against any member of the Seller Group
under any worker’s compensation policy or long-term disability policy, or
similar policies in foreign jurisdictions.

 

23

 

(h)   No work stoppage or labor strike by the
Eligible Employees is pending, or, to the Knowledge of Seller, threatened.  To the Knowledge of Seller there are no
activities or proceedings of any labor union to organize any Eligible
Employees.  Except as set forth on
Schedule 3.14(h) of the Disclosure Schedules, there are no actions, suits,
claims, labor disputes or grievances pending, or, to the Knowledge of Seller,
threatened relating to any labor, safety or discrimination matters involving
any Eligible Employee, including, without limitation, charges of unfair labor
practices or discrimination complaints, which, if adversely determined, would,
individually or in the aggregate, result in any material liability to the
Seller Group.  The Seller Group has not
engaged in any unfair labor practices within the meaning of the National Labor
Relations Act with respect to Eligible Employees.  No member of the Seller Group is presently, nor has any such
member been in the past, a party to, or bound by, any collective bargaining
agreement or union contract with respect to Eligible Employees and no
collective bargaining agreement is being negotiated by any member of the Seller
Group with respect to Eligible Employees.

 

(i)    No member of the Seller Group is, nor has
any such member ever had the obligation to, maintain, establish, sponsor,
participate in, or contribute to any Seller Employee Plan, whether a Seller
Employee Plan by adoption of a member of the Seller Group or by imposition or
application pursuant to applicable Law, with respect to which any member of the
Seller Group will or may have any liability or Employment Liabilities for the
benefit of Eligible Employees who perform services outside the United States.

 

Section
3.15 Environmental Matters

 

(a)   For purposes of this Agreement, the following
terms shall have the meanings ascribed to them below:

 

(i)    “Business
Facility” is any Business Real Property and any other property
including the land, the improvements thereon, the groundwater thereunder and
the surface water thereon, that is or at any time has been owned, operated,
occupied, controlled or leased by any member of the Seller Group in connection
with the operation of the Business.

 

(ii)   “Disposal
Site” is a landfill, disposal site, disposal agent, waste hauler or
recycler of Hazardous Substances, or any real property other than a Business
Facility receiving Hazardous Substances used or generated by the Business.

 

(iii)  “Environmental
Laws” are all applicable Laws, directives, guidance having the force
of Laws, or orders promulgated by any governmental authority which prohibit,
regulate or control any Hazardous Substance or any Hazardous Substance
Activity, including, without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, the Resource Recovery and
Conservation Act of 1976, the Federal Water Pollution Control Act, the Clean
Air Act, the Hazardous Substances Transportation Act, the Occupational Safety and
Health Act, the Toxic Substances Control Act and the Clean Water Act, all as
amended at any time.

 

(iv)  “Environmental
Permit” is any approval, permit, registration, certification,
license, clearance or consent required to be obtained from any private person
or any governmental authority with respect to a Hazardous Substances Activity
which is or was conducted by any member of the Seller Group in connection with
the Business.

 

(v)   “Hazardous
Substance” is any material or substance, whether gaseous, liquid,
solid or in other form that has been designated by any governmental authority
to be radioactive, toxic, hazardous or otherwise a danger to health,
reproduction or the environment.

 

24

 

(vi)  “Hazardous
Substances Activity” is the transportation, transfer, recycling,
storage, use, treatment, manufacture, removal, remediation, release, exposure
of others to, sale, or distribution of any Hazardous Substances or any product
or waste containing a Hazardous Substance, or regulated manufacture of a
product with ozone depleting substances, in each case relating to the Business.

 

(b)   Except as set forth on Schedule 3.15(b)
of the Disclosure Schedule:

 

(i)                             Except
in compliance with Environmental Laws, no Hazardous Substances are present as
of the Closing on any Business Facility currently owned, operated, occupied,
controlled or leased by any member of the Seller Group or were present on any
other Business Facility at the time it ceased to be owned, operated, occupied,
controlled or leased by any member of the Seller Group.  To the Knowledge of Seller, there are no
underground storage tanks, asbestos which is friable (other than asbestos that
has been encapsulated in accordance with Environmental Laws) or likely to become
friable or PCBs present on any Business Facility currently owned, operated,
occupied, controlled or leased by any member of the Seller Group.

 

(ii)                          Each
member of the Seller Group has conducted all Hazardous Substances Activities
related to the Business in compliance in all material respects with all
applicable Environmental Laws.  To the
Knowledge of Seller, the Hazardous Substances Activities of the members of the
Seller Group prior to the Closing have not resulted in the exposure of any
person to a Hazardous Substance in a manner which has caused or could
reasonably be expected to cause an adverse health effect to any such person.

 

(iii)                       No
Environmental Permits are required for the operation of the Business as
presently conducted.

 

(iv)                      No member of
the Seller Group has received written notice of any action, proceeding,
revocation proceeding, amendment procedure, writ, injunction or claim is
pending, or threatened, concerning or relating to any Hazardous Substances
Activity of any member of the Seller Group related to the Business.

 

(v)                         No member
of the Seller Group has received written notice of any action, proceeding,
liability or claim exists or is threatened against any Disposal Site or against
any member of the Seller Group with respect to any transfer or release of
Hazardous Substances related to the Business to a Disposal Site which could
reasonably be expected to subject any member of the Seller Group to liability.

 

(vi)                      To the
Knowledge of Seller, there is no fact or circumstance that could result in any
environmental liability that could reasonably be expected to result in a
Material Adverse Effect on the Business.

 

(vii)                   Each member of
the Seller Group has delivered to Buyer or made available for inspection by
Buyer all environmental audits and environmental assessments conducted within
the last five years of any Business Facility conducted at the request of, or
otherwise in the possession of any member of the Seller Group.  Each member of the Seller Group has complied
with all environmental disclosure obligations imposed by applicable Law with
respect to this transaction.

 

Section
3.16 Insurance

 

(a)   All insurance policies related to the
Business currently maintained by any member of the Seller Group on which any
member of the Seller Group is a named insured or beneficiary, as are current,
are in full force and effect, all premiums due thereon have been paid, and each
member of the Seller Group has complied in all material respects with the
provisions of such policies, and all such policies either specifically

 

25

 

include Seller or one of
the other members of the Seller Group as a named insured or include omnibus
named insured language which generally includes Seller or one of the other
members of the Seller Group.

 

(b)   No Proceeding is pending or, to the Knowledge
of Seller, threatened, to revoke, cancel or limit such policies and no notice
of cancellation of any policies related to the Business has been received by
any member of the Seller Group.

 

(c)   Except as set forth on Schedule 3.16(c)
of the Disclosure Schedules, the members of the Seller Group are in compliance
with all warranties contained in all insurance policies related to the
Business.

 

(d)   No member of the Seller Group has taken or failed
to take any action that would enable the insurers under policies related to the
Business to avoid liability for claims arising out of occurrences prior to the
Closing Date.

 

Section
3.17 Labor Matters

 

Except as set forth on
Schedule 3.17 of the Disclosure Schedules, (i) no member of the
Seller Group is a party to any labor agreement with any labor organization,
group or association with respect to Eligible Employees; (ii) there is no
labor strike, dispute, slowdown, stoppage or lockout actually pending (for
which notice has been provided), or to the Knowledge of Seller, threatened
against the Business; (iii) there is no unfair labor practice charge or
complaint against any member of the Seller Group related to the Business
pending (for which notice has been provided) or, to the Knowledge of Seller,
threatened before the National Labor Relations Board or any similar foreign
agency; (iv) there is no pending grievance nor any pending arbitration
proceeding arising out of or under any collective bargaining agreements related
to the Business; (v) no material charges with respect to or relating to
any member of the Seller Group are pending before the Equal Employment
Opportunity Commission or any state, local or foreign agency responsible for
the prevention of unlawful employment practices; and (vi) no member of the
Seller Group has received notice of the intent of any federal, state or foreign
governmental authority responsible for the enforcement of labor or employment
laws to conduct an investigation with respect to or related to the Business and
no such investigation is in progress. A copy of the material written personnel
policies of the Business currently in effect has been delivered to Buyer.

 

Section
3.18 Suppliers

 

Schedule 3.18 of the
Disclosure Schedules sets forth a list of all the Business’ 20 most significant
suppliers (in terms of anticipated significance for manufacturing in the next
12 months) for Products or any component or service necessary or significant
for the Products and all suppliers who are the only available source for
Products or any component or service necessary or significant for the Products
(collectively, the “Key Suppliers”), showing the approximate total purchases by or on behalf of the
Business from each such Key Supplier during such period and all open
commitments to such Key Suppliers as of the date hereof.  Since November 29, 2002, no Key Supplier has
declined to renew any contract with any member of the Seller Group related to
the Business or notified any member of the Seller Group in writing or, to the
Knowledge of the Seller, orally that such Key Supplier will no longer provide
any component or service necessary for the Products or for which such Key
Supplier is the only available source for Products or any component or service
necessary for the Products.  To the
Knowledge of Seller, since November 29, 2002, no Key Supplier has (i) been
abnormally late in the delivery of any component or service necessary for the
Products or for which such Key Supplier is the only available source for
Products or any component or service necessary for the Products,
(ii) suffered a material adverse change in its financial condition or
business operations likely to affect its ability to continue to provide the
services or products it supplies for the Business, including the consummation
or contemplation of any bankruptcy filing, or (iii) suffered any
threatened or actual material

 

26

 

labor dispute that
is ongoing as of the date of this Agreement and is likely to impact its ability
to deliver products or services for the Business.

 

Section
3.19 Customers

 

Schedule 3.19 of the
Disclosure Schedules sets forth a true and complete list of the customers
accounting for at least 75% of the Business’ revenue during calendar year 2002
(the “Significant Customers”),
showing the approximate total sales by or on behalf of the Business to each
such customer during such period.  Since
November 29, 2002, no Significant Customer has declined to renew any contract with
any member of the Seller Group in connection with the Business or notified any
member of the Seller Group in writing or, to the Knowledge of the Seller,
orally that such Significant Customer will no longer purchase Products or
services relating to Products from the Seller Group.  To the Knowledge of Seller, since November 29, 2002, no
Significant Customer has (i) been abnormally late in making any payments to the
Seller Group, (ii) suffered a material adverse change in its financial
condition or business operations likely to affect its ability to continue to
purchase Products or services from the Seller Group, including the consummation
or contemplation of any bankruptcy filing, or (iii) suffered any threatened or
actual material labor dispute that is ongoing as of the date of this Agreement
and is likely to impact its ability to purchase Products or services from the
Seller Group.

 

Section
3.20 Assets and Permits Necessary to the
Business; Equipment

 

(a)   Except as set forth on Schedule 3.20(a)
of the Disclosure Schedules, following the Closing, the Assets will represent
all assets reasonably necessary to carry on the Business in substantially the
same manner as presently conducted.

 

(b)   Schedule 3.20(b) of the Disclosure
Schedules lists all material Permits. 
Except as set forth on Schedule 3.20(b), all Permits are in full
force and effect and are transferable to Buyer (except for any Permit the
failure of which to be in a full force and effect or to be transferable to
Buyer would not prevent Buyer from operating the Business after the Closing in
the same manner as operated by Seller prior to the Closing).

 

(c)   Schedule 3.20(c) of the Disclosure
Schedules lists all items of equipment (the “Equipment”) owned or leased by any member of
the Seller Group used primarily in the Business or reflected in the Reference
Balance Sheet (except for Equipment which individually has a net book value not
exceeding $5,000). The Reference Balance Sheet includes sufficient personal
computers for each Affected Employee that has a personal computer as of the
date hereof for use related to the Business to have a personal computer for use
related to the Business following the Closing.

 

Section
3.21 Transactions with Affiliates

 

Except as set forth on
Schedule 3.21 of the Disclosure Schedules, neither Seller nor any of its
subsidiaries is a Key Supplier, Significant Customer or distributor under any
Distribution Agreement.  There are no
Contracts with any member of the Seller Group that survive the Closing.

 

Section
3.22 Certain Fees

 

Except for any broker,
finder or investment banker, whose fee and commission is the sole
responsibility of Seller Group, there is no broker, finder or investment banker
entitled to any brokerage, finder’s or other fee or commission, or to the
reimbursement of any of its expenses, in connection with the transactions
contemplated hereby based upon arrangements made by Seller Group or on Seller
Group’s behalf.

 

27

 

ARTICLE IV

 

REPRESENTATIONS
AND WARRANTIES OF BUYER

 

Buyer hereby represents
and warrants to Seller Group as follows:

 

Section
4.1           Organization

 

Buyer is a corporation
duly organized, validly existing and in good standing under the laws of its
state of incorporation.

 

Section
4.2           Authorization

 

Buyer has the corporate
power and authority to execute and deliver this Agreement and the Ancillary
Agreements and consummate the transactions contemplated hereby and
thereby.  The execution and delivery of
this Agreement and the Ancillary Agreements by Buyer and the consummation of
the transactions contemplated hereby has been approved by the Board of
Directors of Buyer, and no other corporate proceedings on the part of Buyer are
necessary to authorize the execution, delivery and performance of this
Agreement and the Ancillary Agreements or the consummation of the transactions
contemplated hereby or thereby.  This
Agreement and the Ancillary Agreements have been duly executed and delivered by
Buyer and constitute, and when executed and delivered, other agreements,
documents and instruments to be executed and delivered by Buyer, as applicable,
pursuant hereto will constitute, a valid and binding agreement of Buyer,
enforceable against Buyer in accordance with their respective terms.

 

Section
4.3    Consents and Approvals; No Violations

 

Except for applicable
requirements of the HSR Act or antitrust or other competition Law of other
jurisdictions, neither the execution, delivery or performance of this Agreement
nor the consummation by Buyer of the transactions contemplated hereby will
(a) conflict with or result in any breach or violation of any provision of
the articles of association of Buyer or the certificate of incorporation or
bylaws of Buyer; (b) require any filing or registration with, or notice or
declaration to, or the obtaining of any permit, license, authorization, consent
or approval of, any governmental or regulatory authority whether within or
outside the United States; (c) violate, conflict with or result in a
default (or any event which, with notice or lapse of time or both, would
constitute a default) under, or result in any termination, cancellation or
acceleration, or give rise to any such right of termination, cancellation or
acceleration under, any of the terms, conditions or provisions of any note, mortgage,
other evidence of indebtedness, guarantee, license, agreement, lease or other
instrument or obligation to which Buyer is a party or by which Buyer or any of
its assets is subject or by which any of them may be bound; (d) violate
any order, injunction, decree, statute, rule or regulation applicable to Buyer;
or excluding from the foregoing clauses (b), (c) and (d) such
requirements, conflicts, defaults, rights or violations that would not
adversely affect the ability of Buyer to consummate the transactions
contemplated by this Agreement or that become applicable as a result of any
acts or omissions by, or the status of or any facts pertaining to, the Business
or Seller Group.

 

Section
4.4    Certain Fees

 

Except for any broker,
finder or investment banker, whose fee and commission is the sole
responsibility of Buyer, there is no broker, finder or investment banker
entitled to any brokerage, finder’s or other fee or commission, or to the
reimbursement of any of its expenses, in connection with the transactions
contemplated hereby based upon arrangements made by Buyer or on Buyer’s behalf.

 

28

 

Section
4.5    Funding

 

The Buyer has adequate
funds on hand and will have adequate funds at Closing to fund the entire
Purchase Price.

 

ARTICLE V

 

COVENANTS

 

Section
5.1    Conduct of the Business

 

Seller agrees that,
during the period from the date of this Agreement to the Closing Date, except
(i) as otherwise expressly contemplated by this Agreement or the
transactions contemplated hereby, or (ii) as consented to by Buyer in
writing, it shall (and Seller shall cause the other members of the Seller Group
to):

 

(a)   conduct the Business in the ordinary course
consistent with past practice; use commercially reasonable efforts to preserve
intact the Business’ organization; use commercially reasonable efforts to keep
available the services of the Business’ current officers and employees, and
preserve relationships with those persons having business dealings with the
Business to the end that its goodwill and ongoing business shall be unimpaired
at the time of the Closing, including the payment of any necessary
registration, maintenance and renewal fees due prior to the Closing Date in
connection with the Registered Intellectual Property included within the
Transferred Intellectual Property; and

 

(b)   not:

 

(i)          sell, assign, sublease, license,
transfer, convey or otherwise dispose of any of the Assets other than in
connection with sales of Products to customers in the ordinary course of
business;

 

(ii)         make any loans, advances (other than
advances in the ordinary course of business) or capital contributions to, or
investments in, any other person on behalf of the Business;

 

(iii)        terminate, modify, transfer or amend any
of the Permits (including Environmental Permits) or Contracts or except in the
ordinary course of business;

 

(iv)       enter into any new agreement related to
the Business other than renewals of existing agreements or otherwise in the
ordinary course of business;

 

(v)        increase in any manner the compensation
(cash, equity or otherwise) of any of the Eligible Employees, except for such
increases as are granted in the ordinary course of business consistent with
past practice in accordance with the terms of any employment contract or
collective bargaining agreement as currently in effect;

 

(vi)       grant any severance or termination pay
(cash, equity or otherwise) to any Eligible Employee, except pursuant to
written agreements outstanding, or policies existing, on the date hereof or pay
any special bonus or remuneration (cash, equity or otherwise) to any Eligible
Employee;

 

(vii)      adopt, grant, extend or increase the rate
or terms of any bonus, insurance pension or other employee benefit plan,
payment or arrangement made to, for or with any Eligible Employee, except
increases required by any applicable Law;

 

29

 

(viii)     terminate the employment of any Eligible
Employee, except for cause, provided Seller provides notice to Buyer
prior to any such termination;

 

(ix)        make or change any material Tax election
or method or practice of Tax accounting, settle or compromise any claim for
Taxes, or consent to the extension or waiver of the statutory period of
limitations applicable to any claim for Taxes, in each case, related to the
Business that could have any effect upon Buyer, the Assets or the Business
after the Closing;

 

(x)         license any intellectual property
rights of the Business to or from any third party pursuant to an arrangement
other than in the ordinary course of business consistent with past practice;

 

(xi)        make or authorize any capital
expenditures on behalf of the Business other than in accordance with the
Business’ annual plan or other than capital expenditures not exceeding $50,000
individually or $200,000 in the aggregate;

 

(xii)       incur any indebtedness for borrowed money
other than from Buyer or any affiliate of Buyer, issue any debt securities or
assume, guarantee or endorse the obligations of any other persons or subject
any of the Assets to any Liens;

 

(xiii)      cancel or compromise any material debt or
claim or waive or release any material rights of the Business; or

 

(xiv)      enter into any agreement on behalf of the
Business to do any of the foregoing.

 

Section
5.2    Access to Information

 

(a)   Between the date of this Agreement and the
Closing Date, Seller Group shall, subject to any restrictions as to
confidentiality applicable to Seller Group whether by Law, agreement or
contract, (i) give Buyer and its authorized representatives reasonable
access to all books, records, work papers, personnel, offices and other
facilities and properties of the Business and its accountants; (ii) permit
Buyer and its authorized representatives to make such copies and inspections
thereof as any of them may reasonably request; (iii) permit Buyer and its
authorized representatives to conduct an environmental inspection of the
Business Real Property (including a “Phase I” site assessment which may
also include interior wipe sampling), provided that Buyer and its representatives
shall have no right to undertake any soil or groundwater investigation; and
(iv) cause the officers of Seller Group to furnish Buyer and its
authorized representatives with such financial and operating data and other
information with respect to the business and properties of the Business as any
of them may from time to time reasonably request; provided, however,
that any such access shall be conducted during normal business hours under the
supervision of Seller Group’s personnel and in such a manner as to maintain the
confidentiality of this Agreement and the transactions contemplated hereby and
not interfere unreasonably with the normal operations of the Business, except
as otherwise contemplated by this Agreement.

 

(b)   From and after the date of this Agreement and
continuing until the Buyer Survival Date, all Seller Group Confidential
Information (as hereinafter defined) shall (i) be held by Buyer with the
same degree of skill and care that it would exercise in similar circumstances in
carrying out its own business to prevent the disclosure or accessibility to
others of such information and (ii) shall not be revealed, reported,
published, disclosed or transferred to any person or entity (other than the
Seller Group).  For purposes of this Agreement,
“Seller Group Confidential Information” means any non-public information
related to the Business furnished or provided by Seller Group or its affiliates
to Buyer; provided, however, that Seller Group Confidential
Information shall not be deemed to include (A) information related to the
Business that was already publicly

 

30

 

known and in the public
domain prior to the time of its initial disclosure to Buyer or (B) any
information related to the Seller Group that is or becomes available to Buyer
or its affiliates after the Closing from a source that Buyer reasonably
believes not to be under an obligation of confidentiality with respect to such
information; provided, further, Buyer may reveal, report, disclose
or transfer any Seller Group Confidential Information pursuant to a subpoena or
order issued by a court of competent jurisdiction or by a judicial or
administrative or legislative bodies or committee.  For purposes of this Agreement, the “Buyer Survival Date” means
(x) the Closing Date in respect of all Seller Group Confidential
Information relating to Transferred Intellectual Property; (y) two (2) years
following the Closing Date in respect of all other Seller Group Confidential
Information other than Seller Group Confidential Information relating to
Intellectual Property; and (z) five (5) years following the Closing Date
for Seller Group Confidential Information relating to Intellectual Property
other than Transferred Intellectual Property; or in any case, the date on which
such Seller Group Confidential Information becomes publicly known through no
action or inaction of Buyer or any of its Affiliates.

 

(c)   On the Closing Date, Seller Group shall
assign to Buyer all of its rights under any confidentiality agreement entered
into by Seller Group with any person in connection with a potential sale of the
Business (a “Confidentiality Agreement”), to the extent such Confidentiality Agreement is assignable
pursuant to its terms.

 

Section
5.3    Consents and Approvals

 

(a)   As soon as practicable after the execution of
this Agreement, each of Seller and Buyer (or each of their ultimate parent
entities as defined in the rules promulgated under the HSR Act) will file, or
cause to be filed, with the Federal Trade Commission and the Antitrust Division
of the United States Department of Justice pursuant to the HSR Act, the
notification and documentary material required in connection with the
consummation of the transactions contemplated by this Agreement.  In addition, each of Seller Group and Buyer
shall promptly take all action necessary to make any filings reasonably
determined in good faith to be required by the Buyer under any other antitrust
or competition Law.

 

(b)   Seller Group and Buyer shall promptly file
any additional information requested as soon as practicable after receipt of
any request for additional information. 
Buyer and Seller Group shall use their commercially reasonable efforts
to obtain early termination of the applicable waiting period, to the extent
required, with the applicable regulatory authorities, including under the HSR
Act.  The parties hereto will coordinate
and cooperate with one another in exchanging such information and providing
such reasonable assistance as may be requested in connection with such filings.

 

(c)   Seller shall obtain, prior to Closing, all
consents required in conjunction with the Real Estate Agreements at no cost to
Buyer or shall deliver the benefit of the Real Estate Agreements to Buyer at
the Closing and remain responsible for such consents (and any risks associated
with the failure to obtain such consents) post-Closing (and shall indemnify
Buyer therefrom).

 

Section
5.4    Reasonable Efforts

 

(a)   Each member of the Seller Group and Buyer
shall cooperate, and use its reasonable commercial efforts to take, or cause to
be taken, all actions, and to do, or cause to be done, all things necessary,
proper or advisable under applicable Law to consummate the transactions
contemplated by this Agreement.

 

(b)   As soon as practicable after the date hereof,
Seller shall, at its expense (except as set forth below), cause to be prepared
all financial information of the Business required by the United States
Securities and Exchange Commission (the “SEC”)
to be filed by Buyer following the Closing as part of a Current Report on

 

31

 

Form 8-K (the “Form 8-K”) (including the preparation of
audited financial statements, if necessary) and the pro forma financial
information of the Business with respect to the transactions contemplated by
this Agreement (the “Audited and Other
Required Financial Information”). 
The cost of preparation of any required audited financial statements
shall be borne by the Seller; provided, however, that to the extent the cost of
preparation of such audited financial statements exceeds $500,000, Seller and
Buyer shall split any such excess costs up to $1,500,000, such that Buyer shall
be responsible for up to a maximum of $500,000 in costs associated with such
audit.  Any costs beyond $1,500,000
shall be borne by Seller.  Seller hereby
represents that all the information necessary to permit Buyer to comply with
its obligations pursuant to Form 8-K will be made available in a timely
manner to enable Buyer to satisfy its public reporting obligations under
applicable law.

 

(c)   Buyer and Seller shall cooperate and use good
faith efforts to promptly obtain a waiver from the SEC limiting the time period
and scope of the audit set forth in subsection (b) above. Buyer and Seller shall
agree upon the form of request to be submitted to the SEC.

 

(d)   Buyer and its advisors will apprise Seller of
any concerns regarding the conduct, scope or outcome of the audit required
pursuant to subsection (b) above that they have as of the date hereof within
five business days of the date hereof.

 

Section
5.5    Public Announcements

 

Following the execution
hereof, each of Buyer and Seller will consult with each other regarding the
language of and issue a press release or press releases disclosing such action.  Thereafter, prior to the Closing, except as
otherwise agreed to by the parties, no party shall issue any report, statement
or press release or otherwise make any public statements with respect to this
Agreement and the transactions contemplated hereby, except (i) to the
extent reasonably required in connection with the operation of the Business or
(ii) as in the reasonable judgment of Buyer or Seller may be required by
Law or in connection with the obligations of a publicly-held company, in
which case Seller and Buyer will use their commercially reasonable efforts to
reach mutual agreement as to the language of any such report, statement or
press release.  Each party shall give
the other party a reasonable opportunity to review and comment on any proposed
press release before issuing any such press release.

 

Section
5.6    Covenant to Satisfy Conditions

 

Seller Group will use its
reasonable commercial efforts to ensure that the conditions set forth in
Article VI hereof are satisfied, insofar as such matters are within the
control of Seller Group, and Buyer will use its reasonable commercial efforts
to ensure that the conditions set forth in Article VI hereof are
satisfied, insofar as such matters are within the control of either of them.

 

Section
5.7    Supplemental Disclosure

 

Seller Group, on the one
hand, and Buyer, on the other hand, shall supplement or amend its Disclosure
Schedules prior to the Closing Date as required to make the representations and
warranties true and correct.  Any such
supplemental or amended disclosure will not be deemed to have cured any breach
made in this Agreement and to have been disclosed as of the date of this
Agreement for purposes of Articles VI and VII hereof.

 

32

 

Section
5.8    Transfers Not Effected as of Closing

 

Nothing herein shall be
deemed to require the conveyance, assignment or transfer of any Asset that by
its terms or by operation of Law cannot be freely conveyed, assigned,
transferred or assumed.  To the extent
the parties hereto have been unable to obtain any governmental or any third
party consents or approvals required for the transfer of any Asset and to the
extent not otherwise prohibited by the terms of any Asset, Seller Group shall
continue to be bound by the terms of such applicable Asset and Buyer shall pay,
perform and discharge fully all of the obligations of Seller Group or any of
its affiliates thereunder from and after the Closing.  Seller Group shall, without consideration therefor, promptly pay,
assign and remit to Buyer all monies, rights and other consideration received
in respect of such performance, and Buyer shall promptly pay and/or remit to
Seller expenses reasonably incurred by Seller Group related thereto.  Seller Group shall exercise or exploit its
rights in respect of such Assets only as reasonably directed by Buyer and at
Buyer’s expense.  Subject to and in
accordance with Section 5.3, for not more than a hundred and eighty (180)
days following the Closing Date, the parties hereto shall continue to use their
commercially reasonable efforts to obtain all such consents or approvals that
have not been obtained at the earliest practicable date.  If and when any such consents or approvals
shall be obtained, then Seller Group shall promptly assign its rights and
obligations thereunder to Buyer without payment of consideration and Buyer
shall, without the payment of any consideration therefor, assume such rights
and obligations.  The parties shall
execute such good and sufficient instruments as may be necessary to evidence
such assignment and assumption.  If any
such consent shall not be obtained, Seller Group shall cooperate with Buyer in
any reasonable arrangement designed to provide for Buyer the benefits intended
to be assigned to Buyer from the Assets, including enforcement at the cost and
for the account of Buyer of any and all rights of Seller Group against the
other party thereto arising out of the breach or cancellation thereof by such
other party or otherwise.  If and to the
extent such arrangement cannot be made, (i) Seller shall retain any such
Assets, (ii) such Assets shall be deemed to be “Rejected Assets,” and (iii) Buyer shall have no obligation
pursuant to Section 1.1(c) or otherwise with respect to any Assumed
Liabilities or other obligations attributable to any such Rejected Assets.  The provisions of this Section 5.8
shall not affect the right of Buyer not to consummate the transactions
contemplated by this Agreement if the conditions to its obligations hereunder
contained in Article VI have not been fulfilled.

 

Section
5.9    Employment of Eligible Employees

 

The Seller Group shall,
and shall cause its representatives to, cooperate with Buyer in connection with
Buyer’s commercially reasonable efforts contemplated in Section 2.3 for
Eligible Employees, and, in furtherance thereof, shall permit, and shall cause
their representatives to permit, the representatives of Buyer to meet with
Eligible Employees of the Seller Group and to distribute to such Eligible
Employees such forms and other documents relating to their employment with
Buyer as Buyer may reasonably determine; provided, however, that
any such access shall be conducted in such a manner as not to interfere
unreasonably with the normal operations of the Business.

 

Section
5.10 Prohibition on Solicitation and Hiring

 

During the period prior
to the Closing, no member of the Seller Group shall hire or retain as an
employee or consultant, or offer to hire or retain as an employee or
consultant, or solicit the services of, any Eligible Employee for any position
unrelated to the Business unless and until an Eligible Employee has rejected
the offer of employment by Buyer. 
During the two (2)-year period immediately following the Closing Date,
no member of the Seller Group shall hire or retain as an employee or
consultant, or offer to hire or retain as an employee or consultant, or solicit
the services of, any Affected Employee; provided, however, that
nothing in this Section 5.10 shall prevent the Seller Group after the
Closing Date from publishing any general advertisement or similar notice in any
newspaper or other publication of general circulation and hiring

 

33

 

or retaining as a
consultant any Affected Employee who responds to such general advertisement
without any solicitation by any member of the Seller Group or any of its
respective directors or officers; provided, further, however,
that after the one-year anniversary of the Closing Date, the foregoing
restrictions shall not apply with respect to any Affected Employee beginning 90
days after such Affected Employee’s employment terminates with Buyer.

 

Section
5.11 No Negotiation

 

Seller shall ensure that,
during the period prior to the Closing, neither it nor any member of Seller
Group nor any of its or their representatives, directly or indirectly:
(a) solicits or encourages the initiation of any inquiry, proposal or
offer from any person (other than Buyer) relating to any Acquisition
Transaction (as defined below); or (b) participates in any discussions or
negotiations with, or provides any non-public information to, any person (other
than Buyer) relating to any proposed Acquisition Transaction.  Seller Group shall provide notice to Buyer
within two (2) business days of the receipt of any proposed Acquisition
Transaction.  For purposes of this
Section 5.11, “Acquisition Transaction” shall mean any transaction
involving the sale or other disposition of all or any portion of the Business
or Assets (other than as permitted pursuant to Section 5.1); provided,
however, that nothing in this Section 5.11 shall prohibit any
transaction, discussions, negotiations or sharing of information (including
with respect to the Assets or the Business) regarding (i) the acquisition
of ownership or control of all or any portion of the capital stock or other
securities of Seller, (ii) the acquisition of all or substantially all of
the assets of Seller, or (iii) any merger, consolidation, business
combination, share exchange, reorganization or similar transaction involving
Seller as long as in connection with any such transaction the buyer or
acquiring person agrees in writing to (in the case of an asset transaction), or
agrees in writing to cause the members of the Seller Group so acquired to,
comply with their obligations hereunder.

 

Section
5.12 Confidentiality

 

From and after the date
of this Agreement (including from and after the Closing Date) and continuing
until the Seller Survival Date (as hereinafter defined), the Seller Group shall
hold all Confidential Information with the same degree of skill and care that
it would exercise in similar circumstances in carrying out its own business to
prevent the disclosure or accessibility to others (including to any entity that
controls Seller Group) of the Confidential Information and agree not to reveal,
report, publish, disclose or transfer any Confidential Information to any
person or entity (other than Buyer) except prior to Closing in the ordinary
course of business consistent with past practice and further agrees that,
except as otherwise permitted under the Intellectual Property License
Agreement, Seller will not, and it will ensure that none of the other members
of the Seller Group will, at any time use any Confidential Information that
relates exclusively to the Business or that will be transferred to Buyer
pursuant to this Agreement for any purpose other than for purposes of carrying
out the Business prior to the Closing. For the purposes of this Agreement, “Confidential
Information” means
any non-public information related to the Business or any of the Assets; provided,
however, that Confidential Information shall not be deemed to include
(i) information related to the Business that was already publicly known
and in the public domain prior to the time of its initial disclosure to any
member of the Seller Group or (ii) information related to the Business
that is or becomes available to any member of the Seller Group after the
Closing from a source which, to the Knowledge of Seller, is not under an
obligation of confidentiality with respect to such information; provided,
further, the members of the Seller Group may reveal, report, publish,
disclose or transfer any Confidential Information pursuant to a subpoena or
order issued by a court of competent jurisdiction or by a judicial or
administrative or legislative body or committee. For purposes of this
Agreement, the “Seller Survival Date”
means (x) two (2) years following the Closing Date in respect of all
Confidential Information other than Confidential Information relating to
Transferred Intellectual Property; and (y) in respect of Confidential
Information relating to Intellectual Property, five (5) years following the
Closing Date, or in either case, the date on which such Confidential

 

34

 

Information
becomes publicly known through no action or inaction of the Seller Group or any
of its affiliates. Buyer shall notify all Affected Employees not to retain,
disclose or use improperly any confidential information of the Seller Group
other than that transferred or licensed to Buyer hereunder.

 

Section
5.13 Agreements Related to Certain Business
Real Property

 

Buyer and Seller
acknowledge that between the date hereof and the Closing Buyer shall, in
accordance with Section 2.3(a) hereof, be making offers to certain Business
Employees and evaluating the need for certain of the Business Real Property
listed on Exhibit A to the Multiple Site License Agreement. Buyer, no later
than thirty (30) days following the date hereof, shall have the right to
eliminate any or all of the Business Real Properties listed on Exhibit A to the
Multiple Site License by written notice to Seller.  Buyer and Seller also acknowledge that leases for two properties
currently occupied by Business Employees, those located in Tokyo, Japan and
Vienna, Virginia listed on Schedule 1.1(a)(i)(B) of the Disclosure Schedules,
may terminate prior to the Closing. 
Buyer and Seller agree to cooperate with respect to the disposition of
those Business Real Properties and the Business Employees located therein,
which disposition may include the relocation of such employees to other
premises in the immediate vicinity or elsewhere, or the extension of such
leases on terms mutually agreeable to Buyer and Seller.

 

Section
5.14 Insurance Claims

 

Following the Closing, and with respect only to Assets
not transferred at the Closing and Assumed Liabilities, Seller Group will use
commercially reasonable efforts to pursue claims under its insurance policies
related to the Business which have been made prior to the Closing or, if
occurrence type policies, even if made after the Closing, and will remit
amounts recovered to Buyer to the extent of Buyer’s interests, if any.  In the event of damage to or destruction of
any property constituting the Assets prior to the Closing, Buyer, with the
assistance of Seller Group, at Seller Group’s expense, shall pursue any claims
available under Seller Group’s insurance policies and Seller Group will remit
amounts recovered to Buyer to the extent of Buyer’s interests, if any.  In addition, in the event that any property
employed in the Business is condemned by a governmental authority prior to
Closing, Seller Group (effective as of the Closing) shall appoint Buyer, as its
agent, to pursue any claims it may have against such governmental authority
with respect to such property.

 

Section 5.15 Tax Matters

 

(a)   Allocation of Purchase Price.  As soon as practicable following the
Closing, the Closing Cash Purchase Price and the value of the Assumed
Liabilities, each to the extent properly taken into account under
Section 1060 of the Code and the regulations promulgated thereunder, (the
“Section 1060 Purchase Price”) shall be allocated as determined jointly by
Buyer and Seller among the Assets being sold hereunder (the “Allocation”). 
Such Allocation shall be subject to appropriate adjustment in the event
of an adjustment to the purchase price pursuant to Section 1.7 hereof or if
Buyer successfully asserts a claim for indemnification pursuant to
Section 7.2 hereof.  Seller Group
and Buyer (i) shall be bound by the Allocation, and any amendments
thereto, (ii) shall prepare and file all Tax Returns (including, without
limitation, Federal Form 8883) and financial statements in a manner
consistent with the Allocation, and any amendments thereto, and
(iii) shall take no position, and shall cause its subsidiaries to take no
position, inconsistent with the Allocation, or any amendment thereto, on any
Tax Return, in any proceeding before any taxing authority or otherwise. In the
event that the Allocation, or any amendment thereto, is disputed by any taxing
authority, the party receiving notice of such dispute shall promptly notify and
consult with the other party concerning resolution of such dispute.  If Buyer and Seller are unable to agree upon
the Allocation within sixty (60) days following the Closing Date, each of Buyer
and the Seller Group may file IRS Form 8594 and any other Tax Returns
allocating the Section 1060 Purchase Price among the Assets in the manner
each believes appropriate,

 

35

 

provided such allocations
are reasonable and in accordance with Section 1060 of the Code and the
regulations thereunder.

 

(b)   Transfer Taxes.  The Seller and Buyer shall be equally responsible
for and shall each pay one half of all sales, use, transfer, stamp duty,
recording, value added, and other similar taxes and fees, including, without
limitation, all bulk sales taxes, in each case including interest, penalties or
additions attributable thereto (“Transfer
Taxes”), arising out
of or in connection with the transactions contemplated by this Agreement.  The parties shall cooperate with each other
to the extent reasonably requested and legally permitted to minimize any
Transfer Taxes, including reasonable cooperation with respect to the place and
method of transfer and delivery of the Assets.

 

(c)   Responsibility for Tax Returns and Taxes.

 

(i)          Subject to Section 5.15(c)(iii)
below, Seller will be responsible for the preparation and filing of all Tax
Returns of Seller (including Tax Returns required to be filed after the Closing
Date) to the extent such Tax Returns include or relate to the Seller’s
operation of the Business or Seller’s use or ownership of the Assets.  Seller’s Tax Returns to the extent they
relate to the Business or Assets shall be true, complete and correct and
prepared in accordance with applicable Law in all respects.  Seller will be responsible for and make all
payments of Taxes shown to be due on such Tax Returns to the extent they relate
to the Assets or the Business.

 

(ii)         Buyer will be responsible for the
preparation and filing of all Tax Returns it is required to file with respect
to Buyer’s ownership or use of the Assets or its operation of the Business
attributable to taxable periods (or portions thereof) commencing after the
Closing Date.  Buyer’s Tax Returns, to
the extent they relate to the Assets or the Business, shall be true, complete
and correct and prepared in accordance with applicable Law in all respects.  Buyer will make all payments of Taxes shown
to be due on such Tax Returns to the extent they relate to the Assets or the
Business.

 

(iii)        In the case of any real or personal
property taxes (or other similar Taxes) attributable to the Assets for which
Tax Returns cover a taxable period commencing before the Closing Date and
ending thereafter, Buyer shall, in consultation with Seller, prepare such
returns and make all payments required with respect to any such Tax Return; provided, however, that Seller will promptly reimburse Buyer upon
receipt of a copy of the filed Tax Return to the extent any payment made by
Buyer relates to that portion of the taxable period ending on or before the
Closing Date, which amount shall be determined and prorated on a per diem
basis.

 

(d)   Cooperation.  To the extent relevant to the Business or the Assets, each party
shall (i) provide the other with such assistance as may reasonably be
required in connection with the preparation of any Tax Return and the conduct
of any audit or other examination by any taxing authority or in connection with
judicial or administrative proceedings relating to any liability for Taxes and
(ii) retain and provide the other with all records or other information
that may be relevant to the preparation of any Tax Returns, or the conduct of
any audit or examination, or other proceeding relating to Taxes.  Seller shall retain all documents, including
prior years’ Tax Returns, supporting work schedules and other records or
information with respect to all sales, use and employment Tax Returns and,
absent the receipt by Seller of the relevant Tax clearance certificates, shall
not destroy or otherwise dispose of any such records for seven (7) years after
the Closing Date without the prior written consent of Buyer.

 

(e)   Employee Withholding.  Buyer shall prepare and furnish to
continuing employees of the Business who were employees of the Business prior
to the Closing Date (“continuing employees”) Form W-2 which shall reflect
all wages and compensation paid to continuing employees for that portion of the
calendar year in

 

36

 

which the Closing Date
occurs during which the continuing employees were employed by the Seller Group
and were employed in connection with the operation of the Business.  The Seller Group shall furnish to Buyer the
Forms W-4 and W-5 of each continuing employee.  Buyer shall send to the appropriate Social Security
Administration office a duly completed Form W-3 and accompanying copies of
the duly completed Forms W-2.  It
is the intent of the parties hereunder that the obligations of Buyer and the
Seller Group under this Section 5.15 shall be carried out in accordance
with Section 5 of Revenue Procedure 96-60.

 

Section
5.16 Further Actions

 

(a)   From and after the Closing Date, each party
shall cooperate with the other party and their representatives, and shall
execute and deliver such documents and take such other actions as the other
party may reasonably request, for the purpose of evidencing the transactions
contemplated by this Agreement.

 

(b)   From and after the Closing Date, Buyer shall
cooperate with Seller and its representatives, and shall execute and deliver
such documents and take such other actions as Seller may reasonably request,
for the purposes of evidencing the transactions contemplated by this Agreement
and having Buyer assume the Assumed Liabilities.

 

Section
5.17 Compliance with Bulk Sales Laws; Payment
of Retained Liabilities

 

The parties hereby waive
compliance with the bulk sales act or comparable statutory provisions of each
applicable jurisdiction in respect of the transactions contemplated by this
Agreement, provided, that Seller
Group agrees to indemnify Buyer with respect to any noncompliance with such
laws and Buyer’s waiver with respect thereto.

 

Section
5.18 Standards Organizations

 

Buyer and Seller
acknowledge that Schedule 3.7(p) is incomplete and agree that Seller may
update Schedule 3.7(p) prior to the Closing.  The exclusion of any items on Schedule 3.7(p) as of the date of
this Agreement which are subsequently added shall not be deemed a breach of the
representation in Section 3.7(p).

 

Section
5.19 Compilers, etc.

 

Seller agrees to
cooperate with Buyer in good faith to help identify prior to Closing any
additional compilers, development tools, library functions and files and the
like that should be listed on Schedule 3.7(m) or that the Buyer may otherwise
need after the Closing for operation of the Business.  The exclusion of any items on Schedule 3.7(m) as of the date of
this Agreement which are subsequently added shall not be deemed a breach of the
representation in Section 3.7(m).

 

Section
5.20 Buyer Acknowledgment

 

Buyer acknowledges that
it will have to purchase licenses for the third party software installed on the
personal computers included in the Assets and other off-the-shelf third-party
software used in connection with the Business, unless the Buyer already has
licenses in place that cover such software.

 

Section
5.21 Conduct Relating to Receivable and
Payables

 

At all times after the
date hereof, the Seller Group shall collect any receivables and satisfy any
payables relating to the Business to which Seller Group is entitled or
obligated in the ordinary course of

 

37

 

business,
consistent with past practice.  In
connection therewith, the Seller Group shall use commercially reasonable
efforts to preserve relationship with those persons having business dealings
with the Business to the end that its goodwill and ongoing relationship with
the Business shall not be impaired as a result of Seller Group’s actions.  Seller shall notify Buyer of any problems or
changes from historic practices that arise relating to Seller’s collections and
payments efforts involving Key Suppliers and Significant Customers.

 

Section
5.22 Non-U.S. Agreements

 

The Seller Group and
Buyer and their respective affiliates, as appropriate, may enter documentation
as mutually agreed upon (any such agreement, a “Non-U.S. Agreement”) in order to effect the transfer of
certain Assets.

 

Section 5.23 Agreements Related to
Certain Warranty and Service Obligations

 

If Seller shall have any
warranty or service obligation pursuant to an Excluded Warranty Obligation or
pursuant to any Rejected Asset pursuant to Section 5.8 hereof, then (a) Buyer
shall perform such warranty or service obligation and (b) Seller and Buyer
shall agree upon reasonable compensation to Buyer for performing such warranty
or service obligation.

 

Section 5.24 Assistance Relating
to Retained Agreements

 

Prior to the Closing, Seller agrees to use its
commercially reasonable efforts to replicate and transfer to Buyer at the
Closing such portions of agreements set forth on Schedule 1.1(d) of the
Disclosure Schedules and other agreements to which a member of the Seller Group
is a party (a) that are used in the Business but not included in Schedule
1.1(a)(iii)(A) of the Disclosure Schedules and (b) that Buyer notifies Seller
it desires to be replicated (the “Retained
Agreements”), on the same terms and conditions as are enjoyed by
Seller or as close thereto as practicable; provided that Seller shall be under
no obligation to pay any fees to such third parties in order to have such
contracts replicated.  After the
Closing, Seller agrees to cooperate and use its commercially reasonable efforts
to assist Buyer in obtaining, at Buyer’s cost, agreements from the third
parties who are parties to the Retained Agreements to the extent not obtained
prior to Closing and to the extent requested by Buyer. Notwithstanding the
foregoing, Buyer and Seller agree that the Seller shall have no obligation to
attempt to obtain replication of any of the agreements listed on Schedule
1.1(d) under the header “Retained Patent Licenses” or the cross-licenses or
covenants not to sue listed on Schedule 3.7(f) of the Disclosure Schedules
under the header “Cross-License and Covenant Not to Sue Agreements.”

 

Section
5.25 Agreements Related to Certain Liabilities

 

As to any of the
Assumed Liabilities specifically set forth on the Reference Balance Sheet that
relate to employee benefits, the parties will work cooperatively to provide for
the assumption by Buyer of such liabilities, and if any such Assumed
Liabilities can not be formally assumed by Buyer and Seller is obligated to and
makes payment to satisfy such Assumed Liabilities, Seller shall so advise
Buyer, and Buyer shall reimburse Seller for any such payments made.

 

38

 

ARTICLE VI

 

CONDITIONS
TO OBLIGATIONS OF THE PARTIES

 

Section
6.1    Conditions to Each Party’s
Obligations

 

The respective obligation
of each party to consummate the transactions contemplated herein is subject to
the satisfaction at or prior to the Closing of the following conditions
precedent:

 

(a)   No statute, rule or regulation shall have
been enacted, entered, promulgated or enforced by any court or governmental
authority that prohibits or restricts in a material manner the consummation of
the transactions contemplated hereby;

 

(b)   There shall not be in effect any judgment,
order, injunction or decree of any court of competent jurisdiction enjoining
the consummation of the transactions contemplated hereby; and

 

(c)   Any waiting periods, including any extension
thereof, applicable to the transactions contemplated by this Agreement under
the HSR Act and the applicable antitrust or trade regulation Law of the other
jurisdictions listed on Schedule 6.1(c) of the Disclosure Schedules (to
the extent that Buyer determines in good faith that a filing in any such jurisdiction
is necessary or advisable), shall have expired or been terminated and all
governmental authorizations or approvals required in connection with the
transactions contemplated by this Agreement, shall have been obtained or given.

 

Section
6.2    Conditions to Obligations of Seller
Group

 

The obligations of Seller
Group to consummate the transactions contemplated hereby are further subject to
the satisfaction (or waiver) at or prior to the Closing of the following
conditions:

 

(a)   The representations and warranties of Buyer
contained herein that are qualified as to materiality shall be true in all
respects on and as of the Closing Date (except for the representations and
warranties made as of a specific date which shall be true in all material
respects as of such date) with the same force and effect as though made on and
as of such date, and each of the representations and warranties of Buyer that
are not so qualified shall be true in all material respects;

 

(b)   Buyer shall have performed and complied with
in all material respects their agreements, obligations and covenants under this
Agreement required to be performed or complied with by them at or prior to the
Closing pursuant to the terms hereof;

 

(c)   Buyer shall have delivered to Seller a
certificate as to the satisfaction of the conditions set forth in
Sections 6.2(a) and 6.2(b), dated as of the Closing and executed by an
officer of each entity;

 

(d)   Buyer shall have delivered to Seller those
items set forth in Section 1.5; and

 

(e)   Each of the documents referred to in
Section 1.5 shall have been executed by Buyer and delivered to Seller.

 

39

 

Section
6.3    Conditions to Obligations of Buyer

 

The obligations of Buyer
to consummate the transactions contemplated hereby are further subject to the
satisfaction (or waiver) at or prior to the Closing of the following
conditions:

 

(a)   The representations and warranties of Seller
Group contained herein that are qualified as to materiality shall be true in
all respects on and as of the Closing Date (except for the representations and
warranties made as of a specific date which shall be true in all material
respects as of such date) with the same force and effect as though made on and
as of such date, and each of the representations and warranties of Seller that
are not so qualified shall be true in all material respects;

 

(b)   Seller Group shall have performed and
complied with in all material respects its agreements, obligations and
covenants under this Agreement required to be performed or complied with by it
at or prior to the Closing pursuant to the terms hereof;

 

(c)   The requisite consents and approvals listed
on Schedule 6.3(c) of the Disclosure Schedules shall have been obtained,
and a copy of each such consent or approval shall have been provided to Buyer,
at or prior to Closing;

 

(d)   Seller shall have delivered to Buyer a
certificate as to the satisfaction of the conditions contained in
Sections 6.3(a) and 6.3(b), dated as of the Closing and executed by an
officer of Seller or such Selling Subsidiary, as the case may be;

 

(e)   Each of the documents referred to in
Section 1.4 shall have been executed by the appropriate member(s) of the
Seller Group and delivered to Buyer;

 

(f)    Provision satisfactory to Buyer shall have
been made for the release of any security interests which encumber any of the
Assets other than Permitted Encumbrances;

 

(g)   There shall not be any suit, action, or other
proceeding pending or overtly threatened by any governmental authority or
administrative agency or commission that seeks to enjoin or otherwise prevent
consummation of the transactions contemplated hereby or that would have a
Material Adverse Effect, other than suits, actions or proceedings that, in the
reasonable opinion of Buyer’s counsel, are unlikely to prevail;

 

(h)   Seller Group shall have provided to Buyer all Audited and Other
Required Financial Information of the Business required by the SEC to be filed
by Buyer following the Closing as part of the Form 8-K with respect to the
transactions contemplated by this Agreement; and

 

(i)    No event shall have occurred since the date
of this Agreement and no condition or circumstance shall exist that would
reasonably be expected to give rise to any Material Adverse Effect.

 

ARTICLE VII

 

SURVIVAL
OF REPRESENTATIONS; INDEMNIFICATIONS

 

Section
7.1    Survival of Representations

 

All representations and
warranties made in this Agreement shall survive the Closing for a period of
twelve (12) months, but, except as provided in Section 8.2, shall not
survive any termination of this Agreement; provided, however,
that notwithstanding the foregoing, (i) the representations and warranties

 

40

 

contained in
Sections 3.2 and 4.2 shall survive the Closing indefinitely (subject to
any applicable statutes of limitations) and (ii) the representations and
warranties contained in Sections 3.13 and 3.15 shall survive until sixty
(60) days after the expiration of the applicable statute of limitations (as the
same may be extended).  The applicable
time periods specified in the preceding provisions of this Section 7.1 are
each referred to as an “Indemnity Period.”  This Section 7.1 shall not limit any
covenant or agreement of the parties that contemplates performance after the
Closing.

 

Section
7.2    Seller Group’s Agreement to Indemnify

 

(a)   Subject to the terms and conditions set forth
herein, from and after the Closing, Seller Group shall indemnify and hold
harmless Buyer and its respective directors, officers, employees, affiliates,
controlling persons, agents and representatives and their successors and
assigns (collectively, “Buyer Indemnitees“) from and against all liability, demands, claims actions or
causes of action, assessments, losses, damages, costs and expenses (including, without
limitation, attorneys’ fees and expenses reasonably incurred) asserted against
or incurred by any Buyer Indemnitee as a result of or arising out of (i) a
breach of any representation or warranty contained in Article III,
(ii) Excluded Liabilities, or (iii) a breach of any agreement or
covenant of Seller in this Agreement (collectively, “Buyer Damages”). 
Notwithstanding anything to the contrary, if a representation or
warranty is breached in accordance with its terms (including any materiality
standard contained therein), Buyer Damages for such a breach shall be
determined without giving effect to any materiality standard contained therein.

 

(b)   Seller Group’s obligations to indemnify Buyer
Indemnitees pursuant to Section 7.2(a) hereof with respect to a breach of
a representation or warranty contained in this Agreement are subject to the
following limitations:

 

(i)          The amount of any Buyer Damages shall
be reduced by any amount actually received by a Buyer Indemnitee with respect
thereto under any insurance coverage (other than self insurance) or from any
other party alleged to be responsible therefor.  Buyer Indemnitees shall use commercially reasonable efforts to
collect any amounts available under such insurance coverage and from such other
party alleged to have responsibility. 
If a Buyer Indemnitee receives an amount under insurance coverage or
from such other party with respect to Buyer Damages at any time subsequent to
any indemnification provided by Seller Group pursuant to this Section 7.2,
then such Buyer Indemnitee shall promptly reimburse Seller, as the case may be,
for any payment made or expense incurred by Seller in connection with providing
such indemnification up to such amount received by Buyer Indemnitee, but net of
any expenses incurred by such Buyer Indemnitee in collecting such amount;

 

(ii)         Seller Group shall be obligated to
indemnify Buyer Indemnitees only for those claims with respect to a breach of a
representation or warranty giving rise to Buyer Damages as to which Buyer
Indemnitees have given Seller written notice thereof prior to the end of any
applicable Indemnity Period; and

 

(iii)        In the absence of fraud or willful
misconduct, and except with respect to Excluded Liabilities, Seller Group shall
not be obligated to indemnify Buyer Indemnitees with respect to claims for
indemnification pursuant to this Section 7.2 with respect to a breach of a
representation or warranty until such claims exceed $1,000,000 in the
aggregate, at which point Seller Group shall indemnify Buyer Indemnitees for
all claims in excess of such amount. 
Notwithstanding the foregoing, in no event shall the obligation of the
Seller to indemnify the Buyer Indemnitees hereunder with respect to a breach a
representation or warranty exceed $16.0 million (the “Seller Indemnity Cap”) (less the amount of
any payments made pursuant to the Additional Agreement between Buyer and Seller
dated the date hereof (the “Additional
Agreement”), other than in connection with (A) fraud or willful
misconduct, (B) Excluded Liabilities, or (C) the breach of the
representations and warranties contained in Sections 3.13 or 3.15, in each
case for which Seller shall be

 

41

 

obligated to indemnify
Buyer Indemnitees for the full extent of Buyer Damages. Payments made by Seller
Group in respect of Excluded Liabilities shall not be counted against the
Seller Indemnity Cap.

 

Section
7.3    Buyer’s Agreement to Indemnify

 

(a)   Subject to the terms and conditions set forth
herein, from and after the Closing, Buyer shall indemnify and hold harmless
Seller and its directors, officers, employees, affiliates, controlling persons,
agents and representatives and their successors and assigns (collectively, the
“Seller
Indemnitees”) from
and against all liability, demands, claims, actions or causes of action,
assessments, losses, damages, costs and expenses (including, without
limitation, attorneys’ fees and expenses reasonably incurred) (collectively, “Seller
Damages”) asserted
against or incurred by any Seller Indemnitee as a result of or arising out of
(i) the Assumed Liabilities, (ii) a breach of any representation or
warranty contained in Article IV of this Agreement or (iii) a breach
of any agreement or covenant of Buyer in this Agreement or otherwise.

 

(b)   Buyer’s obligations to indemnify Seller
Indemnitees pursuant to clause (ii) of Section 7.3(a) hereof with
respect to a breach of a representation or warranty contained in this Agreement
are subject to the following limitations:

 

(i)          In the absence of fraud or willful
misconduct, no indemnification pursuant to this Section 7.3 shall be made
by Buyer with respect to any claim for indemnification with respect to a breach
of a representation or warranty until the aggregate amount of Seller Damages
under such claims exceeds an amount equal to $1,000,000 in the aggregate and,
in such event, indemnification shall be made by Buyer for all claims in excess
of such amount, up to a maximum of $16.0 million;

 

(ii)         The amount of any Seller Damages shall
be reduced by any amount actually received by a Seller Indemnitee with respect
thereto under any insurance coverage (other than self insurance) or from any
other party alleged to be responsible therefor.  Seller Indemnitees shall use commercially reasonable efforts to
collect any amounts available under such insurance coverage and from such other
party alleged to have responsibility. 
If a Seller Indemnitee receives an amount under insurance coverage or
from such other party with respect to Seller Damages at any time subsequent to
any indemnification provided by Buyer pursuant to this Section 7.3, then
such Seller Indemnitee shall promptly reimburse Buyer for any payment made or
expense incurred by Buyer in connection with providing such indemnification up
to such amount received by the Seller Indemnitee, but net of any expenses
incurred by such Seller Indemnitee in collecting such amount; and

 

(iii)        Buyer shall be obligated to indemnify
the Seller Indemnitees only for those claims with respect to a breach of a
representation or warranty giving rise to Seller Damages and to which the
Seller Indemnitees have given Buyer written notice thereof prior to the end of
any applicable Indemnity Period.

 

Section
7.4    Third Party Indemnification

 

The obligations of any
indemnifying party to indemnify any indemnified party under this
Article VII with respect to Buyer Damages or Seller Damages, as the case
may be, resulting from the assertion of liability by third parties (a “Claim”), will be subject to the following
terms and conditions:

 

(a)   Any party against whom any Claim is asserted
will give the party required to provide indemnity hereunder written notice of,
and copies of correspondence and documentation relating to, any such Claim
promptly after learning of such Claim, and the indemnifying party may at its
option undertake the defense thereof by representatives of its own
choosing.  Notwithstanding the
foregoing, to the extent that any party seeks equitable relief against Buyer
with respect to any Claim, Buyer shall have the option to undertake the 

 

42

 

defense thereof by
representatives of its own choosing and at its own expense, and the parties
shall agree upon an arrangement to protect the rights of Buyer, with respect to
the equitable relief claim, and Seller with respect to the remaining claims,
provided that if after good faith negotiations the parties are unable to reach
such an arrangement, Buyer may elect to either (i) tender the defense of all
claims by such third party to Seller, or (ii) assume the defense of all claims
by such third party, in which case Seller shall have no further obligation with
respect to the Claim or indemnity therefore. 
Failure to give prompt notice of, or copies of correspondence and
documentation relating to, a Claim hereunder shall not affect the indemnifying
party’s obligations under this Section 7.4, except to the extent that the
indemnifying party is materially prejudiced by such failure to give prompt
notice or copies of such correspondence and documentation.  If the indemnifying party, within thirty
(30) days after notice of any such Claim, fails to assume the defense of such
Claim, the indemnified party against whom such claim has been made will (upon
further notice to the indemnifying party) have the right to undertake the
defense, compromise or settlement of such claim on behalf of and for the
account and risk, and at the expense, of the indemnifying party, subject to the
right of the indemnifying party to assume the defense of such Claim at any time
prior to settlement, compromise or final determination thereof.

 

(b)   Notwithstanding anything in this
Section 7.4 to the contrary, (i) the indemnified party shall not
settle a claim for which it is indemnified without the prior written consent of
the indemnifying party, and (ii) the indemnifying party shall not enter
into any settlement or compromise of any action, suit or proceeding or consent
to the entry of any judgment to be borne by the indemnifying party without the
prior written consent of the indemnified party, which consent shall not be
unreasonably withheld.

 

Section 7.5    Sole Remedy

 

After
the Closing, (a) the indemnification provisions set forth in this
Article VII, (b) the specific performance provisions of
Section 9.13 and (c) the provisions set forth in Sections 2.3(b),
2.3(f), 5.3(c), 5.4(b), 5.8, 5.17, 9.1 and 9.8 are the sole and exclusive
remedy of the Buyer Indemnitees and the Seller Indemnitees with respect to any
of the matters described in Section 7.2(a) or Section 7.3(a).

 

ARTICLE VIII

 

TERMINATION,
AMENDMENT AND WAIVER

 

Section
8.1    Termination of Agreement

 

This Agreement may be
terminated and the transactions contemplated hereby may be abandoned at any
time prior to the Closing Date:

 

(a)   by mutual written consent of Seller and Buyer;

 

(b)   by any party hereto if the Closing shall not
have occurred on or before 120 days after date of this Agreement, July 2,
2003; provided, however, that the right to terminate this
Agreement pursuant to this Section 8.1(b) shall not be available to (i) Seller
Group, if any member of the Seller Group has breached any of its
representations, warranties or covenants hereunder in any material respect and
such breach has been the cause or resulted in the failure of the Closing to
occur on or before July 2, 2003 or (ii) Buyer, if Buyer has breached
any of its representations, warranties or covenants hereunder in any material
respect and such breach has been the cause of or resulted in the failure of the
Closing to occur on or before July 2, 2003; and

 

(c)   by Seller or Buyer if any court of competent
jurisdiction or other competent governmental authority shall have issued a
statute, rule, regulation, order, decree or injunction or taken any other
action

 

43

 

permanently restraining,
enjoining or otherwise prohibit the transactions contemplated by this Agreement
and (i) such statute, rule, regulation, order, decree or injunction or
other action shall have become final and nonappealable or (ii) in the case
of an injunction, either Seller or Buyer reasonably believes that the time
required to resolve the suit and the related uncertainty is reasonably likely
to have a Material Adverse Effect, or (in the case of termination by Buyer) a
material adverse effect on the business of Buyer.

 

Section
8.2    Procedure for and Effect of
Termination

 

(a)   In the event of termination of this Agreement
and abandonment of the transactions contemplated hereby by the parties hereto
pursuant to Section 8.1 hereof, written notice thereof shall be given by a
party so terminating to the other party and this Agreement shall forthwith
terminate and be of no further effect, and the transactions contemplated hereby
shall be abandoned without further action by Seller Group or Buyer.

 

(b)   In the event of termination of this Agreement
by Buyer or Seller Group as provided above in Section 8.1(b), this
Agreement shall forthwith become void and, subject to Section 8.4, there shall
be no liability on the part of Buyer or Seller Group (or their respective officers
or directors), except based upon obligations set forth in Section 9.1
hereof and in the immediately preceding sentence, and except that Buyer shall
thereupon promptly return or destroy (and cause its agents and representatives
to return or destroy) to Seller all documents (and copies thereof) furnished to
Buyer by Seller Group and all excerpts therefrom and notes related thereto, and
Buyer shall continue to adhere to the confidentiality obligations set forth in
Section 5.2 hereof.  Notwithstanding the
foregoing, termination of this Agreement and abandonment of the transactions
contemplated hereby by the parties pursuant to Section 8.1(b) shall not in
any way limit or restrict the rights and remedies of any party hereto against
any other party hereto that has violated or breached any of the
representations, warranties, agreements or other provisions of this Agreement
prior to termination hereof.

 

Section
8.3    Amendment, Extension and Waiver

 

At any time prior to the
Closing Date, the parties hereto may (a) amend this Agreement,
(b) extend the time for the performance of any of the obligations or other
acts of the parties hereto, (c) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (d) waive compliance with any of the agreements or
conditions contained herein.  Except as
provided in Section 5.8, this Agreement may not be amended except by an
instrument in writing signed on behalf of all of the parties hereto.  Any agreement on the part of a party hereto
to any extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.

 

Section
8.4    Termination Fee

 

In the event all
conditions set forth in Sections 6.1 and 6.3 of this Agreement have been
satisfied prior to July 2, 2003 and Buyer does not or cannot consummate the
transactions contemplated by this Agreement by July 2, 2003, then Buyer shall
pay to Seller a one-time termination fee of $10,000,000. Buyer and Seller agree
that the payment of such fee shall not be a cap on the damages that Seller
Group may have based upon Buyer’s failure to close and Seller Group is not
waiving any other rights or remedies they may have in connection therewith.

 

44

 

ARTICLE IX

 

MISCELLANEOUS

 

Section
9.1    Fees and Expenses

 

Whether or not the
transactions contemplated herein are consummated pursuant hereto, except as
otherwise provided herein, each of Seller and Buyer shall pay its own fees and
expenses in connection with, or in anticipation of, this Agreement and the
consummation of the transactions contemplated hereby.  Notwithstanding the foregoing, the parties shall share equally
the filing fee required pursuant to the HSR Act and other comparable regulatory
fees of other jurisdictions.  Each of
Seller Group, on the one hand, and Buyer, on the other hand, shall indemnify
and hold harmless the other party from and against any and all claims or
liabilities for financial advisory and finders’ fees incurred by reason of any
action taken by such party or otherwise arising out of the transactions
contemplated by this Agreement by any person claiming to have been engaged by
such party.

 

Section
9.2    Further Assurances; Guarantee

 

(a)   From time to time after the Closing Date, at
the request of either party hereto and at the expense of the party so
requesting, each of the parties hereto shall execute and deliver to such
requesting party such documents and take such other action as such requesting
party may reasonably request in order to consummate more effectively the
transactions contemplated hereby.

 

(b)   Each of Seller and Buyer hereby guarantees
the timely performance by any subsidiary of Seller and Buyer, respectively, of
all obligations of Seller Group and Buyer hereunder, respectively, including
without limitation, the execution and performance of their respective
obligations under this Agreement and the Ancillary Agreements.

 

Section
9.3    Notices

 

All notices, requests,
demands, waivers and other communications required or permitted to be given
under this Agreement shall be in writing and may be given by any of the
following methods: (a) personal delivery; (b) facsimile transmission
with telephone confirmation of receipt; (c) registered or certified mail,
postage prepaid, return receipt requested; or (d) overnight delivery
service with receipt confirmed by signature. 
Notices shall be sent to the appropriate party at its address or
facsimile number given below (or at such other address or facsimile number for
such party as shall be specified by notice given hereunder):

 

(a)   If to Buyer to:

 

UTStarcom, Inc.

1275 Harbor
Bay Parkway

Alameda,
California 94502

Fax: (510)
864-8802

Attention: General
Counsel

 

45

 

with a copy to:

 

Wilson Sonsini
Goodrich & Rosati, P.C.

650 Page Mill Road

Palo Alto,
California 94304-1050

Fax No.: (650)
493-6811

Attention: Carmen
Chang

 

(b)   If to Seller Group to:

 

3Com Corporation

5400 Bayfront
Plaza

Santa Clara,
California 95052

Fax: (408) 326-5001

Attention: General
Counsel

 

with a copy to:

 

Gray Cary
Ware & Freidenrich LLP

153 Townsend
Street, Suite 800

San Francisco,
California 94107

Fax:  (415) 836-2501

Attention: Howard
Clowes

 

All such notices,
requests, demands, waivers and communications shall be deemed received
(i) in the case of personal delivery, upon actual receipt thereof by the
addressee, (ii) in the case of overnight delivery, on the day following
delivery to the overnight delivery service, (iii) in the case of mail,
upon receipt of the return receipt, or (iv) in the case of a facsimile
transmission, upon transmission thereof by the sender and issuance by the
transmitting machine of a confirmation slip that the number of pages
constituting the notice have been transmitted without error. In the case of
notices sent by facsimile transmission, the sender shall contemporaneously mail
a copy of the notice to the addressee at the address provided for above.  However, such mailing shall in no way alter
the time at which the facsimile notice is deemed received.

 

Section
9.4    Severability

 

Should any provision of
this Agreement for any reason be declared invalid or unenforceable, such
decision shall not affect the validity or enforceability of any of the other
provisions of this Agreement, which remaining provisions shall remain in full
force and effect and the application of such invalid or unenforceable provision
to persons or circumstances other than those as to which it is held invalid or
unenforceable shall be valid and enforced to the fullest extent permitted by
Law.

 

Section
9.5    Binding Effect; Assignment

 

This Agreement and all of
the provisions hereof shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and permitted assigns.  Prior to the Closing, neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned,
directly or indirectly, including, without limitation, by operation of Law, by
any party hereto without the prior written consent of the other parties hereto.

 

46

 

Section
9.6    No Third Party Beneficiaries

 

Except as provided in
Section 9.5, this Agreement is solely for the benefit of Seller Group, and
its successors and permitted assigns, with respect to the obligations of Buyer
under this Agreement, and for the benefit of Buyer, and their respective
successors and permitted assigns, with respect to the obligations of Seller
Group under this Agreement, and this Agreement shall not be deemed to confer
upon or give to any other third party any remedy, claim liability,
reimbursement, cause of action or other right.

 

Section
9.7    Interpretation

 

(a)   The article and Section headings contained in
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement.

 

(b)   As used in this Agreement, a “governmental
authority” shall mean
any governmental or regulatory authority, domestic or foreign.

 

(c)   As used in this Agreement, the term “person” shall mean and include an
individual, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department or agency
thereof.

 

(d)   As used in this Agreement, the term “subsidiary” shall mean with respect to the
referenced entity, any other entity (i) of which fifty (50) percent or
more of either the equity interests in, or the voting control of, such entity
is, directly or indirectly, beneficially owned by the referenced entity, or
(ii) of which the referenced entity has the ability to (A) elect
fifty (50) percent or more of the directors or members of the governing board
of such entity or (B) appoint either the general partner of a general
partnership or limited partnership or the managing member of a limited
liability company.

 

Section
9.8    Jurisdiction and Consent to Service;
Expenses Related to Legal Proceedings

 

Each of Seller and Buyer
(a) agrees that any suit, action or proceeding arising out of or relating
to this Agreement shall be brought solely in the state or federal courts of
California; (b) consents to the exclusive jurisdiction of each such court
in any suit, action or proceeding relating to or arising out of this Agreement,
the Ancillary Agreements or the Additional Agreement; (c) waives any
objection that it may have to the laying of venue in any such suit, action or
proceeding in any such court; (d) agrees that service of any court paper
may be made in such manner as may be provided under applicable Law or court
rules governing service of process; and (e) agrees that the losing party in any
suit, action or proceeding between the parties relating to or arising out of
this Agreement, the Ancillary Agreements or the Additional Agreement shall indemnify
and hold harmless the prevailing party for all costs incurred by such party in
connection with such suit, action or proceeding.

 

Section
9.9    Entire Agreement

 

This Agreement, the
Disclosure Schedules, the Ancillary Agreements, the Additional Agreement, the
Transition Services Agreement between Buyer and Seller dated the date hereof
and the exhibits and other writings referred to herein or therein or delivered
pursuant hereto or thereto that form a part hereof or thereof constitute the
entire agreement among the parties with respect to their subject matter and
supersede all other prior agreements and understandings, both written and oral,
between the parties or any of them with respect to their subject matter
(including the memorandum of understanding).

 

47

 

Section
9.10 Descriptive Headings

 

The descriptive headings
herein are inserted for convenience of reference only and shall in no way be
construed to define, limit, describe, explain, modify, amplify, or add to the
interpretation, construction or meaning of any provision of, or scope or intent
of, this Agreement nor in any way affect this Agreement.

 

Section
9.11 Governing Law

 

This Agreement will be
governed by, and construed and enforced in accordance with, the laws of the
State of California (regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws thereof) as to all matters,
including but not limited to matters of validity, construction, effect,
performance and remedies.

 

Section
9.12 Counterparts

 

This Agreement may be
executed simultaneously in counterparts, each of which will be deemed an
original but all of which together will constitute one and the same instrument.

 

Section
9.13 Specific Performance

 

The parties hereto agree
that if any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached, irreparable
damage would occur, no adequate remedy at law would exist and damages would be
difficult to determine, and that the parties shall be entitled to specific
performance of the terms hereof and immediate injunctive relief, without the
necessity of proving the inadequacy of money damages as a remedy and without
the necessity of posting any bond or other security, in addition to any other
remedy at law or equity.

 

48

 

IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be executed as of the date first
above written.

 

	
   

  	
  BUYER:

  
	
   

  	
   

  
	
   

  	
  UTSTARCOM, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Hong Liang Lu

  
	
   

  	
   

  	
  Name: 

  	
  Hong Liang Lu

  
	
   

  	
   

  	
  Title:

  	
  President and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
  SELLER:

  
	
   

  	
   

  
	
   

  	
  3COM CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Bruce L. Clafin

  
	
   

  	
   

  	
  Name:

  	
  Bruce L. Clafin

  
	
   

  	
   

  	
  Title:

  	
  President and Chief Executive Officer

  

 

49

 

Glossary

 

“1445 Certificates” shall have the meaning
set forth in Section 1.4(f).

 

 “Additional
Agreement” shall have the meaning set forth in
Section 7.2(b)(iii).

 

“Affected
Employees” shall have the meaning set forth in Section 2.3(a).

 

“Affiliate”
shall have the meaning set forth in Section 3.14(a)(i) for purposes of
Section 3.14.

 

“Agreement”
shall have the meaning set forth in the opening paragraph hereto.

 

“Allocation”
shall have the meaning set forth in Section 5.15(a).

 

“Ancillary
Agreements” shall have the meaning set forth in Section 1.4(n).

 

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

 

“Assignment
of Leases” shall have the meaning set forth in Section 1.1(b).

 

“Assumed
Liabilities” shall have the meaning set forth in
Section 1.1(c).

 

“Bill of Sale”
shall have the meaning set forth in Section 1.1(b).

 

“Books and
Records” shall have the meaning set forth in
Section 1.1(a)(iii).

 

“Business”
shall have the meaning set forth in the first recital of this Agreement.

 

“Business
Employees” shall have the meaning set forth in Section 3.14(b).

 

“Business Facility” shall have the meaning
set forth in Section 3.15(a)(i).

 

“Business Real Property” shall have the
meaning set forth in Section 1.1(a)(i)(B).

 

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

 

“Buyer 401(k)
Plan” shall have the meaning set forth in Section 2.3(a).

 

“Buyer Audit Expense” shall have the meaning
set forth in Section 5.4(b).

 

“Buyer Damages”
shall have the meaning set forth in Section 7.2(a).

 

“Buyer
Indemnitees” shall have the meaning set forth in
Section 7.2(a).

 

“Cases”
shall have the meaning set forth in Section 3.10(a).

 

“Claim”
shall have the meaning set forth in Section 7.4.

 

“Closing”
shall have the meaning set forth in Section 1.3.

 

 

“Closing Cash
Purchase Price” shall have the meaning set forth in
Section 1.2.

 

“Closing Date”
shall have the meaning set forth in Section 1.3.

 

“COBRA”
shall have the meaning set forth in Section 2.3(b)).

 

“Code”
shall have the meaning set forth in Section 1.4(f).

 

“Confidential
Information” shall have the meaning set forth in Section 5.12.

 

“Confidentiality
Agreement” shall have the meaning set forth in Section 5.2(c).

 

“Consulting Services Agreement” shall have
the meaning set forth in Section 1.4(j).

 

“Contracts”
shall have the meaning set forth in Section 1.1(a)(iii)(A).

 

“Copyrights”
shall have the meaning set forth in Section 3.7(n)(i).

 

“Disclosure
Schedules” shall have the meaning set forth in the first paragraph
of Article III.

 

“Disposal Site” shall have the meaning set
forth in Section 3.15(a)(ii).

 

“Distribution Agreement” shall have the
meaning set forth in Section 3.12(f).

 

“Eligible Employees” shall have the meaning
set forth in Section 2.3(a).

 

“Employee”
shall have the meaning set forth in Section 3.14(a)(iv).

 

“Employee
Agreement” shall have the meaning set forth in
Section 3.14(a)(v).

 

“Employment Liabilities” shall have the
meaning set forth in Section 1.1(c).

 

“Environmental
Laws” shall have the meaning set forth in Section 3.15(a)(iii).

 

“Environmental Permit” shall have the
meaning set forth in Section 3.15(a)(iv).

 

“Equipment”
shall have the meaning set forth in Section 3.20(c).

 

“ERISA”
shall have the meaning set forth in Section 2.3(a).

 

“Excluded
Liabilities” shall have the meaning set forth in
Section 1.1(c).

 

“Final Statement” shall have the meaning set
forth in Section 1.7(a).

 

“Financial
Statements” shall have the meaning set forth in Section 3.4.

 

“FMLA”
shall have the meaning set forth in Section 3.14(a)(vii).

 

“Form 8-K” shall have the meaning set
forth in Section 5.4(b).

 

“GAAP”
shall have the meaning set forth in Section 3.4.

 

2

 

“Governmental
authority” shall have the meaning set forth in Section 9.7(b).

 

“Hazardous
Substance” shall have the meaning set forth in
Section 3.15(a)(v).

 

“Hazardous Substance Activity” shall have
the meaning set forth in Section 3.15(a)(vi).

 

 “HSR Act”
shall have the meaning set forth in Section 3.3(a).

 

“Indemnity
Period” shall have the meaning set forth in Section 7.1.

 

“Independent Accounting Firm” shall have the
meaning set forth in Section 1.7(b)(iii).

 

“Instrument
of Assumption” shall have the meaning set forth in
Section 1.1(c).

 

“Intellectual
Property” shall have the meaning set forth in
Section 3.7(n)(i).

 

“Intellectual
Property Assignment” shall have the meaning set forth in
Section 1.1(b).

 

“Intellectual
Property Contract” shall have the meaning set forth in
Section 3.7(n)(ii).

 

“Intellectual Property License Agreement”
shall have the meaning set forth in Section 1.4(k).

 

“International
Employee Plan” shall have the meaning set forth in
Section 3.14(a)(viii).

 

“IRS”
shall have the meaning set forth in Section 3.14(a)(ix).

 

“Key Suppliers”
shall have the meaning set forth in Section 3.18.

 

“Knowledge of
Seller” shall mean the actual knowledge of the persons listed in
Schedule I of the Disclosure Schedules.

 

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

 

“Leased Real
Property” shall have the meaning set forth in Section 3.8(b).

 

“Leases”
shall have the meaning set forth in Section 3.8(b).

 

“Lease Assignment Agreements” shall have the
meaning set forth in Section 1.4(l).

 

“Licensed
Intellectual Property” shall have the meaning set forth in
Section 3.7(n)(iii).

 

“Licenses”
shall have the meaning set forth in Section 3.11(b)(i).

 

“Liens”
shall have the meaning set forth in Section 3.8(a).

 

“M&A Qualified Beneficiaries” shall have
the meaning set forth in Section 2.3(b).

 

“Maskworks”
shall have the meaning set forth in Section 3.7(n)(i).

 

“Material
Adverse Effect” shall have the meaning set forth in
Section 3.6(c).

 

3

 

“Multiple Site License Agreement” shall have
the meaning set forth in Section 1.4(h).

 

“Non-U.S. Agreements” shall have the meaning
set forth in Section 5.22.

 

“Opening Statement” shall have the meaning
set forth in Section 1.7(a).

 

“Other
Instruments” shall have the meaning set forth in
Section 1.1(b).

 

“Patents”
shall have the meaning set forth in Section 3.7(n)(i).

 

“Pension Plan” shall have the meaning set
forth in Section 3.14(a)(x).

 

“Permits”
shall have the meaning set forth in Section 1.1(a)(i)(G).

 

“Permitted
Encumbrances” shall have the meaning set forth in Section 3.8(a).

 

“Person”
shall have the meaning set forth in Section 9.7(c).

 

“Product” shall have the meaning set forth
in Section 3.7(n)(iv).

 

“Qualified
Beneficiary” shall have the meaning set forth in
Section 3.14(a)(xi).

 

“Real Estate Agreements” shall mean the
Rolling Meadows Lease Agreement, the Multiple Site License Agreement and the
Lease Assignment Agreements.

 

“Real
Property Laws” shall have the meaning set forth in
Section 3.8(c).

 

“Reference
Balance Sheet” shall have the meaning set forth in Section 1.1(a)(ii)(A).

 

“Registered
Intellectual Property” shall have the meaning set forth in
Section 3.7(n)(v).

 

“Resolution Period” shall have the meaning
set forth in Section 1.7(b)(iii).

 

 “Required
Documents” shall have the meaning set forth in Section 3.2(b).

 

“Required Financial Information” shall have
the meaning set forth in Section 5.4(b).

 

“Rolling Meadows Lease Agreement” shall have
the meaning set forth in Section 1.4(g).

 

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

 

“Seller
Conflicting Agreements” shall have the meaning set forth in
Section 3.3(b).

 

“Seller
Damages” shall have the meaning set forth in Section 7.3(a).

 

“Seller
Employee Plan” shall have the meaning set forth in
Section 3.14(a)(xii).

 

“Seller Group”
shall have the meaning set forth in the first recital of this Agreement.

 

“Seller
Indemnitees” shall have the meaning set forth in
Section 7.3(a).

 

4

 

“Seller Indemnity Cap” shall have the
meaning set forth in Section 7.2(b)(iii).

 

“Seller
Savings Plan” shall have the meaning set forth in
Section 2.3(a).

 

“Seller
Survival Date” shall have the meaning set forth in
Section 5.13.

 

“Selling Group” shall have the meaning set
forth in Section 2.3(b).

 

“Significant Customers” shall have the
meaning set forth in Section 3.19.

 

“Subsidiary”
shall have the meaning set forth in Section 9.7(d).

 

“Tax Return”
shall have the meaning set forth in Section 3.13(l).

 

“Tax”
or collectively “Taxes” shall have the meaning set forth in
Section 3.13(k).

 

“Third Party
Intellectual Property” shall have the meaning set forth in
Section 3.7(n)(vi).

 

“Trade
Secrets” shall have the meaning set forth in Section 3.7(n)(i).

 

“Trademarks”
shall have the meaning set forth in Section 3.7(n)(i).

 

“Transfer
Taxes” shall have the meaning set forth in Section 5.15(b).

 

“Transferred
Intellectual Property” shall have the meaning set forth in
Section 3.7(n)(vii).

 

 “Working
Capital of the Business” shall have the meaning set forth in
Section 1.7(c).

 

5

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