Document:

exh101050709.htm

    Exhibit
10.1

    
 

    Execution
Copy

    
 

    Membership
Interest Purchase Agreement

     

    This
Membership
Interest Purchase Agreement (this “Agreement”) is made and
entered into as of May 7, 2009 by and between Synopsys, Inc., a Delaware
corporation (“Buyer”)
and MIPS Technologies, Inc., a Delaware corporation (“Seller”).

     

    Recitals

     

    A.    Seller
owns all of the issued and outstanding membership interests in MIPS Technologies
Holding LLC, a Delaware limited liability company (the “Company”).

     

    B.    Buyer
desires to purchase from Seller, and Seller desires to sell to Purchaser, all of
the issued and outstanding membership interests of the Company, all upon the
terms and conditions set forth in this Agreement.

     

    C.    The board
of directors of Seller has determined that the transactions contemplated by this
Agreement (collectively, the “Transaction”) are in the best
interests of Seller and its stockholders and have approved this Agreement, the
Ancillary Agreements and the Transaction.

     

    D.    Buyer and
Seller desire to make certain representations, warranties, covenants and
agreements in connection with the Transaction and to prescribe various
conditions to the Transaction.

     

    Now,
Therefore, in consideration of the foregoing and the mutual promises, covenants
and conditions contained herein, the parties hereby agree as
follows:

     

    ARTICLE
1

     

    Certain
Definitions

     

    As used
in this Agreement, the following terms shall have the meanings set forth
below.

     

    “3/31/09 Financial Statements” shall
have the meaning set forth in the definition of “Company Financial
Statements.”

     

    “AAA” shall have the meaning
set forth in Section
8.13.

     

    “Affiliate” means, with respect
to a specified Person, any other Person that directly or indirectly controls, is
controlled by, or is under common control with, such specified
Person.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Allocation” shall have the
meaning set forth in Section
2.5.

     

    “Alternate Property” shall have
the meaning set forth in Section
5.7(f).

     

    “Ancillary Agreements” means,
collectively, the Second Addendum, the License Agreement, the SVB Amendment No.
2, and all other agreements, documents and certificates required to be executed
pursuant to this Agreement and/or to effect the Transaction.

     

    “Anti-Bribery Laws” means
the United States Foreign Corrupt Practices Act or any other similar laws,
statue, rule or regulation of any country, including, without limitation, any
anti bribery and related prohibitions implemented under the Organization for
Economic Cooperation and Development Convention on Combating Bribery of Foreign
Public Officials in International Business Transactions, the Organization of
American States Inter-American Convention Against Corruption, Council of Europe
Criminal Law Convention on Corruption, the United Nations Convention Against
Corruption, the African Union Convention on Preventing and Combating Corruption,
applicable to the Company or any of its Subsidiaries.

     

    “Applicable Law” means with
respect to any Person, any foreign, national, federal, state, local, municipal
or other law, statute, constitution, resolution, ordinance, code, permit, rule,
regulation, ruling or requirement issued, enacted, adopted, promulgated,
implemented or otherwise put into effect by or under the authority of any
Governmental Authority and any orders, writs, injunctions, awards, judgments and
decrees applicable to such Person or its subsidiaries, their business or any of
their respective assets or properties.

     

    “Balance Sheet Date” shall have
the meaning set forth in the definition of Company Financial
Statements.

     

    “Basket Amount” shall have the
meaning set forth in Section
7.3(c).

     

    “BCP Agreement” means that
certain Contrato de Locacao Financeira Imobiliario #450001065 dated November 5,
2004, by and between MIPSABG Chipidea, Limitada and Banco Comercial Portugues,
S.A, as amended on May 4, 2007, July 26, 2007 and November 30,
2007.

     

    “BCP Lease Amendment” means
that certain amendment to the BCP Agreement in form attached hereto as Exhibit
C.

     

    “Business” means the business
of Seller, operating through the Company and its Subsidiaries, known as the
Analog Business Group of Seller, as presently conducted.

     

     

    
      
        
        

      

      
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    “Business Day” means each day
that is not a Saturday, Sunday or other day on which banking institutions
located in San Francisco, California are authorized or obligated by law or
executive order to close.

     

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

     

    “Claims Period” shall have the
meaning set forth in Section
7.4(b).

     

    “Closing” shall have the
meaning set forth in Section
2.2.

     

    “Closing Balance Sheet” shall
have the meaning set forth in the definition of “Company Financial
Statements.”

     

    “Closing Date” shall have the
meaning set forth in Section
2.2.

     

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

     

    “Company Benefit Arrangements”
shall have the meaning set forth in Section
3.15(d).

     

    “Company Closing Cash” means
the total amount of cash assets of the Company and its Subsidiaries (including
cash in the bank accounts of the Company and its Subsidiaries) as of the Closing
as set forth on the line item “cash and cash equivalents” on the Closing Balance
Sheet and as calculated in accordance with GAAP.  For the avoidance of
doubt, no amount of “restricted cash” shall constitute Company Closing
Cash.

     

    “Company Financial Statements”
means (a) the unaudited consolidated balance sheet of the Company and its
Subsidiaries as of March 31, 2009 (the “Balance Sheet Date”) and the
related unaudited consolidated profit and loss statement for the nine (9) months
ended March 31, 2009 (collectively, the “3/31/09 Financial
Statements”); and (b) the unaudited consolidated balance sheet of the
Company and its Subsidiaries as of the Closing Date (the “Closing Balance
Sheet”).

     

    “Company IP Rights” shall have
the meaning set forth in Section
3.12(a).

     

    “Company IP Rights Agreements”
shall have the meaning set forth in Section
3.12(b).

     

    “Company Licensed IP Rights”
shall have the meaning set forth in Section
3.12(a).

     

     

    
      
        
        

      

      
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    “Company Owned IP Rights” shall
have the meaning set forth in Section
3.12(a).

     

    “Company Product” shall have
the meaning set forth in Section
3.12(c).

     

    “Company Registered IP Rights”
shall have the meaning set forth in Section
3.12(h).

     

    “Company Source Code” shall
have the meaning set forth in Section
3.12(k).

     

    “Contested Claim” shall have the meaning
set forth in Section
7.7(b).

     

    “Continuing Employees” shall
have the meaning set forth in Section
5.4(b).

     

    “Contract” means any legally
binding written, oral or other agreement, contract, subcontract, lease,
understanding, instrument, note, option, warranty, purchase order, license,
sublicense, mortgage, guarantee, purchase order, insurance policy, benefit plan
or commitment or undertaking of any nature.

     

    “Damages” shall have the
meaning set forth in Section
7.2.

     

    “Delivered” means, with respect
to any statement in Article 3 of this
Agreement to the effect that any information, document or other material has
been “delivered” to Buyer or its representatives, that such information,
document or material was:  (A) available for review by Buyer or its
representatives in the virtual data room set up by Seller in connection with
this Agreement as of 5:00 p.m. Pacific Time on the date that is no later than
one (1) Business Day prior to the Closing Date; or (B) “delivered” to Buyer or
its representatives in the manner described in Section 8.8 of this
Agreement by 5:00 p.m. Pacific Time on the date that is no later than one (1)
Business Day prior to the Closing Date.

     

    “Documentation” means, collectively,
programmers’ notes or logs, source code annotations, user guides, manuals,
instructions, software architecture designs, layouts, any know-how, and any
other designs, plans, drawings, documentation, materials, supplier lists,
software source code and object code, net lists, photographs, development tools,
blueprints, media, memoranda and records that are primarily related to or
otherwise necessary for the use and exploitation of any products of the Company
or any of its Subsidiaries, whether in tangible or intangible form, whether
owned by the Company or any of its Subsidiaries or held by the Company or any of
its Subsidiaries under any licenses or sublicenses or similar grants of
rights.

     

     

    
      
        
        

      

      
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    “Encumbrance” means, with
respect to any asset, any mortgage, deed of trust, lien, pledge, hypothecation,
charge, security interest, title retention device, collateral assignment,
adverse claim, restriction, infringement, interference, option, right of first
refusal, preemptive right or other encumbrance or restriction of any kind in
respect of such asset (including any restriction on the voting of any security,
any restriction on the transfer of any security or other asset, any restriction
on the receipt of any income derived from any asset, any restriction on the use
of any asset and any restriction on the possession, exercise or transfer of any
other attribute of ownership of any asset).

     

    “End Date” shall have the
meaning set forth in Section
7.1.

     

    “Entity” means any corporation
(including any non-profit corporation), general partnership, limited
partnership, limited liability partnership, joint venture, estate, trust,
proprietorship, company (including any company limited by shares, limited
liability company or joint stock company), firm, society, enterprise,
association, organization or other entity.

     

    “Environment” shall have the
meaning set forth in Section
3.13(d).

     

    “Environmental Law” shall have
the meaning set forth in Section
3.13(d).

     

    “Exchange Act” means the U.S.
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated by the SEC thereunder.

     

    “Existing Policy” shall have
the meaning set forth in Section 5.8.

     

    “Final Company Closing Cash”
shall have the meaning set forth in Section 2.6.

     

    “Former Contractor and
Employee” means each of Annette Brazile, Sergio Kusevitzky, Joyce Chen,
Michael Dong and Peter Chang.

     

    “French Lease” means Bail
Commercial (Commercial Lease) by and between NOTAPIERRE represented by SECURINOT
and Chipidea Microelectronica, SA dated February 10, 2007.

     

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

     

    “French Subsidiary Transfer”
shall have the meaning set forth in Section
6.2(d).

     

    “GAAP” means United
States generally accepted accounting principles.

     

     

    
      
        
        

      

      
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    “Governmental Authority” means
any:  (A) nation, state, commonwealth, province, territory, county,
municipality, district or other jurisdiction of any nature; (B) national,
federal, state, local, municipal, foreign or other government; (C) governmental
authority of any nature (including any governmental division, department,
agency, commission, instrumentality, official, ministry, fund, foundation,
center, organization, unit, body or Entity and any court or other tribunal); or
(D) Entity to whom a Governmental Authority has assigned or delegated any
authority or oversight responsibilities.

     

    “Governmental Permits” shall
have the meaning set forth in Section
3.13(b).

     

    “Income Tax” means any federal,
state, local or non-U.S. tax based on or measured by reference to net income,
including any interest, penalty or addition thereto, whether disputed or
not.

     

    “Income Tax Return” means any
Tax Return relating to Income Taxes.

     

    “Indemnified Person” and “Indemnified Persons” shall
have the meanings set forth in Section
7.2.

     

    “Intellectual Property” means,
collectively, all worldwide industrial and intellectual property rights,
including patents, patent applications, patent rights, trademarks, trademark
registrations and applications therefor, trade dress rights, trade names,
service marks, service mark registrations and applications therefor, Internet
domain names, Internet and World Wide Web URLs or addresses, copyrights,
copyright registrations and applications therefor, mask work rights, mask work
registrations and applications therefor, franchises, licenses, inventions, trade
secrets, know-how, customer lists, supplier lists, proprietary processes and
formulae, technology, software source code and object code, algorithms, net
lists, architectures, structures, screen displays, photographs, images, layouts,
development tools, designs, blueprints, specifications, technical drawings (or
similar information in electronic format) and all documentation and media
constituting, describing or relating to the foregoing, including manuals,
programmers’ notes, memoranda and records.

     

    “J.A.M.S.” shall have the
meaning set forth in Section
8.13.

     

    “Knowledge”, with respect to
Seller, means the knowledge of Maury Austin, John Bourgoin, Sandy Creighton,
Brad Holtzinger, Gail Shulman Knittel, Cesar Martin-Perez and Art Swift of a
particular fact, circumstance, event or other matter in question after
reasonable inquiry of the persons employed by Seller, the Company or any of its
Subsidiaries charged with administrative or operational responsibility for the
matter in question.

     

     

    
      
        
        

      

      
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    “Liabilities” means
debts, liabilities and obligations, whether accrued or fixed, absolute or
contingent, matured or unmatured, determined or determinable, known or unknown,
including those arising under any law, action or governmental order and those
arising under any Contract.

     

    “License Agreement” means
that certain License Agreement by and between Buyer and Seller dated as of the
Closing Date, attached hereto as Exhibit
D.

     

    “Material Contract” shall have
the meaning set forth in Section
3.11.

     

    “NDA” shall have the meaning
set forth in Section
8.12.

     

    “Non-Buyer Affiliate Guarantor”
shall have the meaning set forth in Section
5.7(e).

     

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

     

    “Open Source Materials” shall
have the meaning set forth in Section
3.12(o).

     

    “Permitted Encumbrances”
means:  (A) statutory liens for Taxes that are not yet due and
payable; (B) statutory liens to secure obligations to landlords, lessors or
renters under leases or rental agreements; (C) deposits or pledges made in
connection with, or to secure payment of, workers’ compensation, unemployment
insurance or similar programs mandated by Applicable Law; (D) statutory liens in
favor of carriers, warehousemen, mechanics and materialmen, to secure claims for
labor, materials or supplies and other like liens; and (E) such imperfections of
title and encumbrances that do not materially detract from the value or
materially interfere with the use of the property subject thereto or affected
thereby.

     

    “Person” means any individual,
Entity or Governmental Authority.

     

    “Portugal Employment Litigation Matter”
means the matter described in item 3 on Schedule
5.6.

     

    “Pre-Closing Tax Period” shall
have the meaning set forth in Section
5.2(a).

     

    “Pre-Closing Tax Returns” shall
have the meaning set forth in Section 5.2(b).

     

    “Purchased Interests” shall
have the meaning set forth in Section
2.1.

     

    “Purchase Price” shall have the
meaning set forth in Section
2.1.

     

     

    
      
        
        

      

      
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    “Restricted Business” shall
have the meaning set forth in Section
5.4(a).

     

    “SEC” means the United States
Securities and Exchange Commission.

     

    “Second Addendum” means that
certain Second Addendum to the NDA by and between Seller and Buyer dated as of
the Closing Date, attached hereto as Exhibit
B.

     

    “Section 5.6 Damages” shall
have the meaning set forth in Section
5.6.

     

    “Seller Disclosure Letter”
shall have the meaning set forth in the preamble to Article
3.

     

    “Significant Customer” shall
have the meaning set forth in Section
3.19(a).

     

    “Significant Supplier” shall
have the meaning set forth in Section
3.19(b).

     

    “Specified Claim” means each of
the matters set forth on Schedule
5.6.

     

    “Specified Contracts” means
each of the following Contracts: (i) Business Alliance Agreement by and among
Seller and IIX, Inc. dated November 1, 2003, (ii) IP License and Design
Agreement by and among Seller and Kawasaki Microelectronics Inc. dated August
31, 2007, (iii) Intellectual Property License Agreement by and among Seller and
Kawasaki Microelectronics Inc. dated December 20, 2006, (iv) Single Core License
Agreement by and among Seller and NEC Electronics Corporation dated October 16,
2003, (v) IP License and Design Agreement by and among Seller and Sharp
Corporation dated December 28, 2006, (vi) Basic Development Agreement by and
among Seller and Sharp Corporation dated June 30, 2005, (vii) Design Framework
Agreement by and among Seller and Toshiba Corporation dated August 20, 2000,
(viii) IC Design Technology Partnership Agreement by and among Seller and
Toshiba Corporation dated January 25, 2001, (ix) Design Agreement by and among
Seller and IIX, Inc. (formerly Xvein) dated February 15, 2001, (x) the License
and Design Agreement by and among Seller and Yamaha Corporation dated December
17, 2004, (xi)  IP License and Design Agreement by and among Seller
and Renesas Technology Corp. dated December 11, 2007 and (xii) Master Technology
License Agreement by and between Seller and Cypress Semiconductor Corporation
dated December 16, 2008, in each case including all schedules, exhibits and
statements of work thereto.

     

    “Straddle Periods” shall have the meaning
set forth in Section
5.2(a).

     

    “Subsidiary” means, with
respect to a particular Entity (the “Parent”), a corporation or
other business Entity:  (A) in which the Parent owns (directly or
indirectly, 

     

     

    
      
        
        

      

      
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      beneficially
or of record) at least a 50% equity, beneficial or financial interest; (B) in
which the Parent owns (directly or indirectly, beneficially or of record) an
amount of voting securities of other interests in such Entity that is sufficient
to enable the Parent to elect at least a majority of the members of such
Entity’s board of directors or other governing body; or (C) that is otherwise,
directly or indirectly, controlled by the Parent.

    

     

    “Subsidiary Equity” shall have the meaning
set forth in Section
3.3(a).

     

    “SVB Amendment No. 2” shall
have the meaning set forth in the definition of SVB Loan Documents.

     

    “SVB Loan Documents” means each
of the following Contracts: (i) that certain Loan and Security Agreement by and
among Silicon Valley Bank and Seller dated as of July 3, 2008, as amended by
that certain Amendment No. 1 dated as of December 18, 2008 and as further
amended by that certain Amendment No. 2 dated the date hereof (the “SVB Amendment No. 2”), (ii)
that certain Unconditional Guaranty and Security Agreement by and among the
Company and Silicon Valley Bank dated as of July 3, 2008, and (iii) that certain
Uncertificated Security Control Agreement by and among Seller, the Company and
Silicon Valley Bank dated as of July 3, 2008.

     

    “Tax” (and, with correlative
meaning, “Taxes”) means
(A) any net income, alternative or add-on minimum tax, gross income, gross
receipts, sales, use, value added tax, ad valorem, transfer, franchise, profits,
license, withholding, payroll, employment, excise, severance, stamp, occupation,
municipal tax, municipal surcharge premium, property, environmental or windfall
profit tax, custom duty or other tax, social security contributions,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or any penalty, addition to tax or additional amount
imposed by any governmental entity responsible for the imposition of any such
tax (domestic or foreign), (B) any liability for the payment of any amounts of
the type described in clause (A) of this sentence as a result of being a member
of an affiliated, consolidated, combined, unitary or aggregate group for any
taxable period, and (C) any liability for the payment of any amounts of the type
described in clause (A) or (B) of this sentence as a result of being a
transferee of or successor to any Person or as a result of any express or
implied obligation to indemnify any other Person.

     

    “Tax Authority” means any
Governmental Authority responsible for the imposition, administration,
assessment, and/or collection of any Tax.

     

    “Tax Return” means any return,
statement, report, tax filing or form (including estimated Tax returns and
reports, withholding Tax returns and reports, any schedule or 

     

     

    
      
        
        

      

      
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      attachment,
and information returns and reports) of the Company or its Subsidiaries required
to be filed with respect to Taxes.

    

     

    “Third-Party Claim” shall have
the meaning set forth in Section
7.4(b).

     

    “Third-Party Partners” shall
have the meaning set forth in Section
3.20(c).

     

    “Third-Party Product
Technology” shall have the meaning set forth in Section
3.12(g).

     

    “Transfer Taxes” shall have the
meaning set forth in Section
2.3.

     

    “Unrelated Liability” means any
and all of the following: (i) all Liabilities of Seller and its Affiliates to
the extent such Liabilities are unrelated to the Business (including the
Business as presently proposed to be conducted); (ii) all indebtedness of Seller
and its Affiliates for borrowed money, other than indebtedness of the Company
and its Subsidiaries for borrowed money as set forth on the Closing Balance
Sheet; (iii) all Liabilities for Seller's and its Affiliates' (including
Company's and its Subsidiaries') fees and expenses in connection with the
negotiation and execution of this Agreement and the consummation of the
Transaction, including without limitation, fees and expenses of attorneys,
accountants, investment bankers and advisors and (iv) all Liabilities arising
out of or resulting from the French Subsidiary or the French Subsidiary Transfer
(provided, that, for the avoidance of doubt, all Liabilities associated with the
French Lease shall not be an Unrelated Liability).

     

    Other
capitalized terms defined elsewhere in this Agreement and not defined in this
Article 1 shall
have the meanings assigned to such terms in this Agreement.

     

    ARTICLE
2

     

    The
Transaction

     

    2.1    Purchase
and Sale of
Membership Interests and Assets.  At the Closing (as defined
below), upon the terms and subject to the conditions contained herein, (a)
Seller will sell, convey, transfer, assign and deliver to Buyer, and Buyer will
purchase and acquire from Seller, all of Seller’s right, title and interest in
and to all of the issued and outstanding membership interests in the Company
(the “Purchased
Interests”), free and clear of all Encumbrances, and (b) as full and
complete consideration for the sale and transfer of the Purchased Interests,
Buyer shall pay (or cause to be paid) to Seller cash in the amount of
$22,000,000 U.S. dollars (the “Purchase
Price”), paid by wire transfer of immediately available funds to the bank
account 

     

     

    
      
        
        

      

      
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      designated
in writing by Seller to Buyer.

    

     

    2.2    Closing.  Subject
to the terms and conditions of this Agreement, the closing of the Transaction
shall take place at the offices of Fenwick & West LLP, 801 California
Street, Mountain View, CA (the “Closing”)
at 10:00 a.m., local time, concurrently with the execution and delivery of this
Agreement.  The date on which the Closing takes place shall be
referred to herein as the “Closing
Date.”

     

    2.3    Transfer
Taxes.  Seller will pay all sales, transfer, stamp, income,
value added Tax, capital gains, use or other Taxes associated with the purchase,
sale or transfer of the Purchased Interests in accordance herewith (the “Transfer
Taxes”), and shall promptly reimburse Buyer for any such Transfer Taxes
imposed on Buyer and paid by Buyer.

     

    2.4    Further
Assurances.  In case at any time after the Closing Date, any
further action is reasonably necessary to carry out the purposes of this
Agreement or the Ancillary Agreements, each of the parties hereto shall, at its
own expense, execute and deliver such documents and other papers and take such
further actions as may be required to carry into effect the intents and purposes
of this Agreement (including, without limitation, vesting, perfecting,
confirming or continuing full right, title and interest in all the Purchased
Interests in Buyer).  For a period of seven (7) years after the
Closing, Seller shall have reasonable access to the books and records of the
Company and its Subsidiaries to the extent such books and records are reasonably
required and relate to Pre-Closing Tax Periods by Seller in connection with the
preparation or audit of tax returns or for other reasonable
purposes.

     

    2.5    Allocation.  As
soon as reasonably practicable following the Closing Date but in any event
within ninety (90) days following the Closing Date, Buyer shall in good faith
allocate the sum of the Purchase Price plus the Liabilities of the Company as of
the Closing Date (and all other capitalized costs) among the assets of the
Company in accordance with Section 1060 of the Code and Treasury Regulations
promulgated thereunder (and any similar provision of state, local or foreign
law, as appropriate) (the “Allocation”),
which Allocation shall be reasonably acceptable to Seller.  Seller
shall timely and properly prepare, execute, file and deliver all such documents,
forms and other information as Buyer may reasonably request to prepare the
Allocation. Any subsequent adjustments to the Purchase Price shall be
reflected in the Allocation in a manner consistent with Section 1060 of the Code
and the regulations thereunder.  Seller and Buyer and their respective
Affiliates shall report, act and file Tax Returns (including, but not limited to
Internal Revenue Service Form 8594) in all respects and for all purposes
consistent with the Allocation, and will not take any position inconsistent
therewith in any Tax Return, in any refund claim, in any litigation or
otherwise, unless required to do so by a Tax Authority.  Seller and
Buyer shall each be responsible for the preparation of its own Section

     

     

    
      
        
        

      

      
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      1060
statements and forms in accordance with applicable Tax legal requirements, and
each shall execute and deliver to each other such statements and forms as are
reasonably requested by the other party.

    

     

    2.6    Company
Closing Cash Adjustment.  Within thirty (30) days after the Closing, Buyer
and Seller shall cooperate in good faith to conclusively determine the amount of
Company Closing Cash and such determination shall be final and
binding on the parties (the amount of Company Closing Cash as determined by
Buyer and Seller pursuant to this Section 2.6(a) shall be referred to as the
“Final
Company Closing Cash”). If the Final Company Closing Cash exceeds
$1,600,000, then Buyer agrees to promptly deliver to Seller, by check or wire
transfer, the amount by which the Final Company Closing Cash exceeds
$1,600,000.  If (a) the Final Company Closing Cash is less than
$1,600,000 and (b) at any time after March 31, 2009 and prior to Closing the
Company and/or any of its Subsidiaries has distributed (by way of dividend or
otherwise) to Seller any amount of the cash assets (including cash in bank
accounts) of the Company and/or any of its Subsidiaries (such amount in the
aggregate, the “Dividend
Amount”), then Seller agrees to promptly deliver to the Company or any of
its Subsidiaries (or Buyer on behalf of the Company or any of its Subsidiaries),
by check or wire transfer, all or any portion of the Dividend Amount such that
the amount of the Final Company Closing Cash (after taking into account such
Dividend Amount) equals $1,600,000. For the avoidance of doubt, the
removal of the amount of $113,000 that was included in “cash and cash
equivalents” on the 3/31/09 Financial Statements and that is not included in the
Closing Balance Sheet shall not be deemed to constitute all or any portion of
the Dividend Amount.

     

    2.7    Tax
Consequences.  Neither party makes any representations or
warranties to the other parties regarding the Tax treatment of the Transaction,
or any of the Tax consequences to the other party or to the other party’s
stockholders, under this Agreement or the Transaction.  Each party
acknowledges that it is relying solely on its own Tax advisors in connection
with this Agreement and the Transaction.

     

     

    ARTICLE
3

     

    Representations
and Warranties of Seller

     

    Subject
to the exceptions set forth in a numbered or lettered section of the disclosure
letter delivered by Seller to Buyer, dated as of the Closing Date (the “Seller Disclosure Letter”)
referencing a representation or warranty herein (each of which exceptions, in
order to be effective, shall clearly indicate the section and, if applicable,
the subsection of this Article 3 to which it
relates (unless and to the extent the relevance to other representations and
warranties is readily apparent from the actual text of the disclosed exception),
and each of which exceptions shall also be deemed to be representations and
warranties made by Seller under this Article 3),

     

     

    
      
        
        

      

      
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      Seller
represents and warrants to Buyer as follows:

    

     

    3.1    Capital
Structure; Title to the Purchased Interests.  All of the issued
and outstanding membership interests of the Company consist solely of the
Purchased Interests.  Seller is the legal and beneficial owner of the
Purchased Interests, free and clear of all Encumbrances
whatsoever.  All of the Purchased Interests have been duly authorized
and validly issued, are fully paid and nonassessable, were not issued in
violation of and are not subject to any right of rescission, right of first
refusal or preemptive right, and have been offered, issued, sold and delivered
by the Company in compliance with all Applicable Laws and all requirements set
forth in applicable Contracts.  Other than the Purchased Interests,
there are no other equity or ownership interests in the Company, stock
appreciation rights, options, warrants, calls, rights, commitments, conversion
privileges or preemptive or other rights or agreements outstanding to purchase
or otherwise acquire any of the Purchased Interests or any securities or debt
convertible into or exchangeable for any of the Purchased Interests or
obligating the Company to grant, extend or enter into any such option, warrant,
call, right, commitment, conversion privilege or preemptive or other right or
agreement.  There is no Liability for dividends accrued and unpaid by
the Company or any of its Subsidiaries.

     

    3.2    Organization
and Good Standing.

     

    (a) Seller
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware.  Seller has the corporate power and
authority to own, operate and lease its properties and to carry on its
business.  Seller is not in violation of its Certificate of
Incorporation or Bylaws, each as amended to date.

     

    (b) Each
of the Company and its Subsidiaries is an Entity duly organized, validly
existing and in good standing, in jurisdictions that recognize the concept,
under the laws of its jurisdiction of formation.  Each of the Company
and its Subsidiaries has the requisite power and authority to own, operate and
lease its properties and to carry on its respective business.  Each of
the Company and its Subsidiaries is duly qualified or licensed to do business,
and is in good standing, in jurisdictions that recognize the concept, as a
foreign Entity in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except where the failure to be so
qualified and in good standing, individually or in the aggregate with any such
other failures, would not reasonably be expected to result in material Liability
to the Business or the Company and its Subsidiaries, taken as a
whole.  Seller has Delivered to Buyer’s legal counsel true and
complete copies of the currently effective charter documents of each of the
Company and its Subsidiaries, each as amended to date.  None of the
Company or any of its Subsidiaries is in violation of any of its charter
documents, each as amended to date.

     

     

    
      
        
        

      

      
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    3.3    Subsidiaries.  

     

    (a)    Except
as set forth in Schedule
3.3(a) of the Seller Disclosure Letter, 100% of the outstanding share
capital of each of the Company’s Subsidiaries (the “Subsidiary
Equity”) is owned, of record and beneficially, by the Company or one of
its wholly owned Subsidiaries, free and clear of all
Encumbrances.  Other than the Subsidiary Equity, there are no other
equity or ownership interests in the Company’s Subsidiaries, stock appreciation
rights, options, warrants, calls, rights, commitments, conversion privileges or
preemptive or other rights or agreements outstanding to purchase or otherwise
acquire any of the Subsidiary Equity or any securities or debt convertible into
or exchangeable for any of the Subsidiary Equity or obligating the Company to
grant, extend or enter into any such option, warrant, call, right, commitment,
conversion privilege or preemptive or other right or
agreement.  Except for the Entities set forth in Schedule 3.3(a)
of the Seller Disclosure Letter, none of the Company or any of its Subsidiaries
has any Subsidiary or any equity or ownership interest (or any interest
convertible or exchangeable or exercisable for, any equity or ownership
interest), whether direct or indirect, in any Person.  None of the
Company or any of its Subsidiaries is obligated to make nor is it bound by any
agreement or obligation to make any investment in or capital contribution in or
on behalf of any other Person.  The following former Subsidiaries of
the Company or of its Subsidiaries have been dissolved: Chipidea
Microelectronics (U.S.A.) Corporation and Chipidea UK, and, to the Knowledge of
Seller, neither the Company nor any of its Subsidiaries has any Liabilities in
respect of such previously dissolved entities.  Schedule
3.3(a) of the Seller Disclosure Letter sets forth (i) a list of the
Subsidiaries of the Company and a list of each Subsidiary of the Company’s
Subsidiaries, including the respective chain of ownership for each such
Subsidiary, the parent company of each such Subsidiary, the issued and
outstanding membership units, shares of capital stock, or other equity interests
for each such Subsidiary and the holders of such issued and outstanding
membership units, shares of capital stock, or other equity interests;
(ii) the names of the members of the board of directors (or similar body)
of each of the foregoing; and (iii) the names and titles of the officers of each
of the foregoing.

     

    (b)    Since
August 27, 2007, none of the Company and its Subsidiaries has repaid, reduced,
forfeited or redeemed in any manner its membership units, shares of capital
stock, or other equity interests and there are no agreements to do so and there
are no other arrangements that have the effect of reducing capital in the
Company or any of its Subsidiaries. Since August 27, 2007, none of the Company
and its Subsidiaries has purchased any of its membership units, shares of
capital stock, or other equity interests or made or resolved to make any issue
of membership units, shares of capital stock, or other equity interests by way
of capitalization of profits or reserves and there are no agreements to do
so.  

     

     

    
      
        
        

      

      
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    (c)    Schedule
3.3(c) of the Seller Disclosure Letter lists all of the powers of
attorney granted by the Company or any of its Subsidiaries that are currently in
force and such powers of attorney have been Delivered to
Buyer.

     

    3.4    Power,
Authorization and Validity.

     

    (a)    Power
and Authority.  Seller has all requisite corporate power and
authority to enter into, execute, deliver and perform its obligations under this
Agreement and each of the Ancillary Agreements to which it is a party and to
consummate the Transaction.  The execution, delivery and performance
by Seller of this Agreement, each of the Ancillary Agreements to which Seller is
a party and all other transactions contemplated hereby or thereby have been duly
and validly approved and authorized by all necessary action on the part of
Seller, and no other action on the part of Seller, Company or any Subsidiary is
required in connection therewith.

     

    (b)    No
Consents.  No consent, approval, order, authorization, release
or waiver of, or registration, declaration or filing with, any Governmental
Authority, or any other Person (governmental or otherwise), is necessary or
required to be made or obtained by Seller, the Company or any of its
Subsidiaries to enable Seller to execute and deliver, enter into, and perform
its obligations under this Agreement and each of the Ancillary Agreements to
which it is a party or to consummate the Transaction, except, as applicable, for
the filing by Seller of such reports and information with the SEC under the
Exchange Act as may be required in connection with this Agreement and the
Transaction.

     

    (c)    Enforceability.  This
Agreement has been duly executed and delivered by Seller.  Assuming
the due authorization, execution and delivery by Buyer, this Agreement and each
of the Ancillary Agreements to which Seller is a party are, or when executed by
the parties shall be, valid and binding obligations of Seller, enforceable
against it in accordance with their respective terms, subject to the effect of
(i) applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to rights of creditors
generally and (ii) rules of law and equity governing specific performance,
injunctive relief and other equitable remedies.

     

    3.5    No
Conflict.  Neither the execution and delivery by Seller of this
Agreement or any of the Ancillary Agreements to which Seller is a party, nor the
consummation of the Transaction by Seller, conflicts with or violates or results
in any violation of or default under (with or without notice or lapse of time,
or both) or gives rise to a right of termination, cancellation, modification or
acceleration of any obligation or loss of any benefit under:  (a) any
provision of the charter documents of Seller, the Company or any of its
Subsidiaries, each as 

     

     

    
      
        
        

      

      
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      currently
in effect; (b) any Applicable Law applicable to Seller, the Company or any of
its Subsidiaries or any of their respective assets or properties; or (c) any
Material Contract.

    

     

    3.6    Litigation.  There
is no private or governmental action, suit, arbitration, mediation, proceeding,
claim or, to the Knowledge of Seller, investigation, including but not limited
to of a labor or employment nature, pending or, to the Knowledge of Seller,
overtly threatened in writing against (a) the Company or any of its Subsidiaries
or any of their respective assets or properties, (b) Seller or any of its
Affiliates (other than the Company and its Subsidiaries) or any of their
respective assets or properties in either case relating to the Business or (c)
to the Knowledge of Seller, any officer, director, employee or agent of the
Company or any of its Subsidiaries in their capacity as such or relating to
their employment, services or relationship with the Company or any of its
Subsidiaries; provided,
however,
that this sentence shall be read without reference to the words “in writing” in
the case of any such private or governmental action, suit, arbitration,
mediation, proceeding, claim or investigation that is potentially expected to
result in material Liability to the Company or any of its
Subsidiaries.  There is no judgment, decree, injunction, rule or order
of any Governmental Authority, arbitrator or mediator outstanding against the
Company or any of its Subsidiaries, or any of their respective assets or
properties (or, to the Knowledge of Seller, against any officer, director,
employee or agent of the Company or any of its Subsidiaries in their capacity as
such or relating to their employment, services or relationship with the Company
or any of its Subsidiaries).  There is no judgment, decree,
injunction, rule or order of any Governmental Authority, arbitrator or mediator
outstanding against Seller or its Affiliates, or any of their respective assets
or properties (or, to the Knowledge of Seller, against any officer, director,
employee or agent of Seller or its Affiliates in their capacity as such or
relating to their employment, services or relationship with Seller or its
Affiliates) relating to the Business.  None of the Company or any of
its Subsidiaries has any action, suit, arbitration, mediation, proceeding, claim
or, to the Knowledge of Seller, investigation pending against any Governmental
Authority or any other Person.  None of Seller or any of its
Affiliates has any action, suit, arbitration, mediation, proceeding, claim or,
to the Knowledge of Seller, investigation pending against any Governmental
Authority or any other Person relating to the Business.

     

    3.7    Taxes.

     

    (a)    The
Company and its Subsidiaries (and any consolidated, unitary, or aggregate group
for Tax purposes of which the Company or any of its Subsidiaries is or has been
a member) (i) have timely filed all Tax Returns that they were required to file
since August 27, 2007 and, to the Knowledge of Seller, have timely filed all Tax
Returns that they were required to file prior to August 27, 2007, and (ii) have
timely paid (or accrued therefor on the Closing Balance Sheet) all Taxes due and
owing therefor whether or not shown on any Tax Return.  All

     

     

    
      
        
        

      

      
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      Tax
Returns filed since August 27, 2007, and to the Knowledge of Seller, all Tax
Returns filed prior to August 27, 2007, were complete and accurate in all
material respects and were prepared in substantial compliance with Applicable
Law.  The Company has Delivered to Buyer correct and complete copies
of all filed income, value added and sales Tax Returns on of after January 1,
2006 in the jurisdictions of Portugal, Poland, China, Macau and France,
examination reports received by the Company or any of its Subsidiaries on or
after January 1, 2006 and statements of deficiencies assessed against or agreed
to by the Company or any of its Subsidiaries for taxable periods commencing on
or after January 1, 2006 that were received by the Company or any of its
Subsidiaries.

    

     

    (b)    For
all periods through and including the Closing Date, the Company and its
Subsidiaries (i) has complied with all Applicable Law relating to the payment
and withholding of Taxes; and (ii), has, within the time and in the manner
prescribed by law, withheld from employee wages or consulting compensation and
paid over to the proper Tax Authorities (or is properly holding for such timely
payment) all amounts required to be so withheld and paid over under all
Applicable Law (including income and employment Tax withholding
laws).

     

    (c)    There
is (i) no claim for Taxes being asserted against the Company or any of its
Subsidiaries that has resulted in an outstanding lien against the property of
the Company or any of its Subsidiaries other than liens for Taxes not yet due
and payable, (ii) to the Knowledge of Seller, no unresolved audit of, or
unresolved Tax controversy associated with, any Tax Return of the Company or any
of its Subsidiaries being conducted by any Tax Authority, (iii) no extension or
waiver of any statute of limitations on the assessment of any Taxes granted by
the Company or any of its Subsidiaries with respect to a period that has not yet
expired currently in effect, and (iv) no agreement to any extension of time for
filing any Tax Return that has not been filed.  Since August 27, 2007,
no claim has been made by a Tax Authority in a jurisdiction where the Company or
any of its Subsidiaries does not file Tax Returns that the Company or any of its
Subsidiaries is or may be subject to Tax in that
jurisdiction.

     

    (d)    None
of the Company or any of its Subsidiaries is a party to or bound by any Tax
sharing, Tax indemnity or Tax allocation agreement and none of the Company or
any of its Subsidiaries has or will have any Liability or potential Liability to
another party under such agreement.  None of the Company or any of its
Subsidiaries has any liability for the Taxes of any Person (other than the
Company or any of its Subsidiaries) under Applicable Law, by Contract, as a
transferee or successor or otherwise.

     

    (e)    None
of the Company or any of its Subsidiaries will be required to include in income,
or exclude any item of deduction from, taxable income for any taxable period (or

     

     

    
      
        
        

      

      
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      portion
thereof) ending after the Closing Date as a result of any (i) change made by it
prior to the Closing Date in method of accounting for a taxable period ending on
or prior to the Closing Date; (ii) closing agreement described in Applicable Law
executed prior to the Closing Date; (iii) intercompany transactions or any
excess loss account described in Treasury Regulations §1502 under the Code (or
any corresponding or similar provision of state, local, or non-U.S. Income Tax
law); (iv) installment sale or open transaction disposition made on or prior to
the Closing Date; or (v) prepaid amount received on or prior to the Closing Date
(other than deferred revenue).

    

     

    (f)    The
Company has Delivered to Buyer all material documentation relating to any Tax
holidays or incentives for which the Company has applied.  Each of the
Company and its Subsidiaries is in compliance with the requirements for any
applicable Tax holidays or incentives and none of the Tax holidays or incentives
will be jeopardized by the Transaction.

     

    (g)    None
of the Company or any of its Subsidiaries is a U.S. real property holding
company within the meaning of Section 897(c)(2) of the Code.

     

    3.8    Financial
Statements.

     

    (a)    Schedule
3.8(a) of the Seller Disclosure Letter includes the Company Financial
Statements.  The Company Financial Statements:  (i) are
derived from and are in accordance with the books and records of the Company and
its Subsidiaries; and (ii) complied as to form in all material respects with
applicable accounting requirements with respect thereto as of their respective
dates.

     

    (b)    The
3/31/09 Financial Statements: (i) have been prepared in accordance with GAAP
(except that the 3/31/09 Financial Statements do not contain footnotes and other
presentation items that may be required by GAAP and are subject to normal and
recurring year-end adjustments); and (ii) fairly present in all material
respects the financial condition of the Company and its Subsidiaries at the
dates therein indicated and the consolidated results of operations of the
Company and its Subsidiaries for the periods therein
specified.

     

    (c)    The
Closing Balance Sheet: (i) has been prepared in accordance with GAAP (except
that the Closing Balance Sheet does not contain footnotes and other presentation
items that may be required by GAAP and are subject to normal and recurring
year-end adjustments); and (ii) fairly presents in all material respects the
financial condition of the Company and its Subsidiaries at the dates therein
indicated and the consolidated results of operations of the Company and its
Subsidiaries for the periods therein specified.

     

     

    
      
        
        

      

      
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    (d)    Except
to the extent reflected or reserved against in the Closing Balance Sheet, none
of the Company or any of its Subsidiaries has any Liability (i) of the type
required to be disclosed in the liabilities column of a balance sheet prepared
in accordance with GAAP; or (ii) of which Seller has Knowledge that is of the
type that would be required to be disclosed in the liabilities column of a
balance sheet prepared in accordance with GAAP but which is not significant,
quantifiable or probable enough pursuant to applicable GAAP standards to be so
included on the Closing Balance Sheet (it being understood that Seller will be
deemed to have Knowledge of all indebtedness for borrowed money of the Company
and its Subsidiaries).

     

    (e)    None
of the Company or any of its Subsidiaries has any Liabilities to Seller or its
Affiliates (excluding the Company and its Subsidiaries).

     

    3.9    Title
to Properties.  Each of the Company and its Subsidiaries has
good and marketable title to all of its respective assets and properties that it
purports to own (including those shown on the Closing Balance Sheet), free and
clear of all Encumbrances other than Permitted Encumbrances.  The
assets and properties of the Company and its Subsidiaries constitute all assets,
properties, and rights that are necessary to enable Buyer to own, conduct,
operate and continue the Business immediately following the Closing without: (i)
the need for Buyer to acquire or license any other asset or property and (ii)
breach or violation of any Contract.  All material items of machinery,
vehicles, equipment and other tangible personal property owned or leased by the
Company or any of its Subsidiaries are in good condition and repair, normal wear
and tear excepted.  All leases of real or personal property to which
the Company or any of its Subsidiaries is a party are effective and afford the
Company and its Subsidiaries valid leasehold possession of the real or personal
property that is the subject of the lease.  None of the Company or any
of its Subsidiaries owns any real property.  Notwithstanding the
foregoing, the representations in this Section
3.9 do not apply to Intellectual Property, which is covered by the
representations in Section
3.12.

     

    3.10    Absence
of Certain Changes.  Since the Balance Sheet Date, the Company
and its Subsidiaries have operated the Business in the ordinary course
consistent with its past practices, and since such date there has not been, with
respect to the Business, the Company or any of its Subsidiaries,
any:

     

    (a)    incurrence,
creation or assumption of (i) any Encumbrance on any of its assets or properties
(other than Permitted Encumbrances), (ii) any indebtedness for borrowed money,
or (iii) any Liability as a guarantor or surety with respect to the obligations
of others;

     

    (b)    purchase,
license, sale, grant, assignment or other disposition or transfer, or any
agreement or other arrangement for the purchase, license, sale, assignment or
other 

     

     

    
      
        
        

      

      
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      disposition
or transfer, of any of its material assets (including Company IP Rights (as
defined in Section 3.12(a))),
properties or goodwill other than the sale or nonexclusive license of its
products or services to its customers in the ordinary course of its business
consistent with its past practices;

    

     

    (c)    declaration,
setting aside or payment of any dividend on, or other distribution (whether in
cash, stock or property) in respect of, any securities;

     

    (d)    damage,
destruction or loss of any material property or material asset, whether or not
covered by insurance;

     

    (e)    change
with respect to its management, supervisory or other key personnel, any
increases in or modification of the compensation or benefits payable or to
become payable to such individuals, any termination of employment of a material
number of employees, or any labor dispute or claim of unfair labor
practices;

     

    (f)    deferral
of the payment of any accounts payable other than in the ordinary course of
business, consistent with past practices, or in an amount in excess of EUR
10,000, or any discount, accommodation or other concession made other than in
the ordinary course of business, consistent with past practices, in order to
accelerate or induce the collection of any receivable;

     

    (g)    except
as required by GAAP (with respect to the Company) or applicable accounting
standards (with respect to the Company’s Subsidiaries), change in accounting
methods or practices (including any change in depreciation or amortization
policies or rates or revenue recognition policies) by the Company or any of its
Subsidiaries or revaluation by the Company of any of its or any of its
Subsidiaries’ assets; or

     

    (h)    any
entry into any Contract to do any of the things described in the preceding
clauses (a) through (g) (other than as they relate to the proposed sale of the
Purchased Interests).

     

    3.11    Contracts,
Agreements, Arrangements, Commitments and Undertakings.  Schedules 3.11(a)-(o)
of the Seller Disclosure Letter set forth a list of each of the following
Contracts to which the Company or any of its Subsidiaries is a party as of the
Closing Date or by which the Company or any of its Subsidiaries or any of their
respective assets or properties is bound as of the Closing Date (each a “Material
Contract”):

     

     

    
      
        
        

      

      
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    (a)    any
Contract providing for payments by or to it after the Closing Date in an
aggregate amount in excess of EUR 100,000 (excluding any such Contract that is
required to be disclosed pursuant to another subsection of this Section
3.11);

     

    (b)    any
dealer, distributor, OEM (original equipment manufacturer), VAR (value added
reseller), sales representative or similar Contract under which any third party
is authorized to sell, sublicense, lease, distribute, market or take orders for
any of its products, services or technology;

     

    (c)    any
Contract providing for the development of any software, content, technology or
intellectual property for (or for the benefit or use of) it, or providing for
the purchase by or license to (or for the benefit or use of) it of any software,
content, technology or intellectual property, which software, content,
technology or intellectual property is in any manner used or incorporated (or is
contemplated by it to be used or incorporated) in connection with any aspect or
element of any product, service or technology of it (other than software
generally available to the public at a per copy license fee of less than EUR
1,000 per copy);

     

    (d)    any
joint venture or partnership Contract that has involved, or is reasonably
expected to involve, a sharing of revenues, profits, cash flows, expenses or
losses with any other party or a payment of royalties to any other
party;

     

    (e)    any
Contract for or relating to the employment by it of any director, officer,
employee or consultant or any other type of Contract with any of its officers,
employees or consultants that is not immediately terminable by it without cost
or other Liability, including any contract requiring it to make a payment to any
director, officer, employee or consultant on account of the Transaction (other
than, in the case of employees outside the United States, any employment
Contract, offer letter or similar agreement that does not provide for employment
for an indefinite period or any severance or similar payment in excess of
amounts required by Applicable Law);

     

    (f)    any
indenture, mortgage, trust deed, promissory note, loan agreement, security
agreement, guarantee or other Contract for or with respect to the borrowing of
money, a line of credit, any currency exchange, commodities or other hedging
arrangement, or a leasing transaction of a type required to be capitalized in
accordance with GAAP;

     

    (g)    any
lease or other Contract under which it is lessee of real property owned by any
third party;

     

     

    
      
        
        

      

      
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    (h)    any
Contract or judgment, injunction, order or decree that (i) restricts it from
engaging in any aspect of the Business, (ii) restricts it from engaging,
participating or competing in any line of business, market or geographic area,
(iii) restricts it from freely setting prices for its products, services or
technologies (including most favored customer pricing provisions), (iv)
restricts it from soliciting potential employees, consultants, contractors or
other suppliers or customers, or (v) that grants any exclusive rights, rights of
refusal, rights of first negotiation or similar rights to any
party;

     

    (i)    any
Company IP Rights Agreement (as defined in Section
3.12(b));

     

    (j)    any
Contract with any labor union, works council or any collective bargaining
agreement or similar Contract with its employees;

     

    (k)    any
Contract of guarantee, indemnification or assumption of the Liabilities of any
other Person;

     

    (l)    any
Contract entered into after August 27, 2007 providing for indemnification by it
with respect to Company Products or services without a limitation to
liability;

     

    (m)    any
Contract (i) in which its officers, directors, employees or stockholders or any
member of their immediate families is interested (whether as a party or
otherwise), (ii) with Seller or another Subsidiary of Seller, or (iii) with any
other Person with whom it does not deal at arm’s length;

     

    (n)    any
Contract pursuant to which it has acquired a business or entity, or
substantially all of the assets of a business or entity, whether by way of
merger, consolidation, purchase of stock, purchase of assets, license or
otherwise since inception; or

     

    (o)    any
Contract with any Governmental Authority or grant with a Governmental
Authority.

     

    A
true and complete copy of each Material Contract has been Delivered to
Buyer.  All Material Contracts are in written form.  Each of
the Company and its Subsidiaries has performed all of the material obligations
required to be performed by it under each Material Contract.  Each
Material Contract is in full force and effect.  There exists no
default or event, occurrence, condition or act with respect to the Company or
any of its Subsidiaries or, to the Knowledge of Seller, with respect to any
other contracting party, which, with the giving of notice, the lapse of time or
the happening of any other event or conditions, would reasonably be expected to
(1) become a default under any Material Contract or (2) give any third party (i)
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      default
or exercise any remedy under any Material Contract, (ii) the right to a rebate,
chargeback, refund, credit, penalty or change in performance schedule under any
Material Contract, (iii) the right to accelerate the maturity or performance of
any obligation of the Company or any of its Subsidiaries under any Material
Contract, or (iv) the right to cancel, terminate or modify any Material
Contract.  None of Seller, the Company or any of its Subsidiaries has
received any written notice or other communication regarding any actual or
possible violation or breach of or default under, or intention to cancel or
modify, any Material Contract.  None of the Company or any of its
Subsidiaries is a party to any distributor, representative or similar
contract.

    

     

    3.12    Intellectual
Property.

     

    (a)    The
Company and/or its Subsidiaries (1) owns all Company Owned IP Rights and (2) has
the valid right or license to use, and, to the extent that it does any of the
following, to develop, make, have made, offer for sale, sell, import, copy,
modify, create derivative works of, distribute, license, and dispose of all
other Intellectual Property used in the conduct of the Business (such
Intellectual Property being hereinafter collectively referred to as the “Company IP
Rights”).  Such Company IP Rights are sufficient for the
conduct of the Business.  The Company has not transferred, assigned,
exclusively licensed or otherwise conveyed to any Subsidiary, Affiliate or third
party, any of the Company IP Rights necessary for the conduct of the
Business.  As used in this Agreement, “Company Owned
IP Rights” means Company IP Rights that are or are purportedly owned by
the Company or any of its Subsidiaries; and “Company
Licensed IP Rights” means Company IP Rights that are not Company Owned IP
Rights.  For the avoidance of doubt, Company IP Rights includes both
Company Licensed IP Rights and Company Owned IP Rights.

     

    (b)    Neither
the execution, Delivery and performance of this Agreement or Ancillary
Agreements to which Seller is a party nor the consummation of the Transaction by
Seller and the other transactions contemplated by the Ancillary Agreements
will:  (i) constitute a material breach of or default under any
instrument, license or other Contract governing any Company IP Right
(collectively, the “Company IP
Rights Agreements”); (ii) cause the forfeiture or termination of, or give
rise to a right of forfeiture or termination of, any Company IP Right; or (iii)
materially impair the right of the Company or any of its Subsidiaries or Buyer
to use, develop, make, have made, offer for sale, sell, import, copy, modify,
create derivative works of, distribute, license, or dispose of any Company IP
Right or portion thereof.  After the Closing, all Company Owned IP
Rights will be fully transferable, alienable or licensable by Buyer without
restriction and without payment of any kind to any third party as a result
thereof.

     

    (c)    Schedule
3.12(c) of the Seller Disclosure Letter sets forth a list (by name and
version number) of each of the products currently produced, manufactured,
marketed, 

     

     

    
      
        
        

      

      
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      licensed,
sold, or distributed by the Company or any of its Subsidiaries and each product
and service currently under development by the Company or any of its
Subsidiaries, including, without limitation, any IP cores, whether in a
synthesizable (software) format or in a non-synthesized (hardware) format (each
a “Company
Product”).  Neither the operation of the Business nor the use,
development, manufacture, marketing, licensing, sale, offering for sale,
distribution, or intended use of any Company Product (i) violates any license or
other Contract between the Company or any of its Subsidiaries, on the one hand,
and any third party, on the other hand, or (ii) infringes or misappropriates or
will infringe or misappropriate any Intellectual Property right of any other
party.  There is no claim or litigation pending, or to the Knowledge
of Seller, overtly threatened in writing, against Seller, the Company or any of
the Company’s Subsidiaries contesting the validity, ownership or right of the
Company or any of its Subsidiaries to exercise any Company IP Right, and to the
Knowledge of Seller, there is no action, condition or circumstance that would
reasonably be expected to give rise to such a claim.  Since August 27,
2007, and to the Knowledge of Seller, at any time prior to August 27, 2007, none
of the Company or any of its Subsidiaries has received any written notice from a
third party asserting that any Company IP Right or the proposed use,
development, manufacture, sale, offering for sale, licensing, or distribution
thereof conflicts with or infringes or shall conflict with or infringe the
rights of such third party, and to the Knowledge of Seller, there is no action,
condition or circumstance that would reasonably be expected to give rise to such
an assertion.  None of the Company or any of its Subsidiaries has
received any written notice or offer from any third party offering a license
under any patents related to any Company IP Right, Company Product or the
conduct of the Business.

    

     

    (d)    None
of the Company Owned IP Rights, Company Licensed IP Rights, Company Products,
the Company or any of its Subsidiaries is subject to any proceeding or
outstanding judicial order, covenant, agreement or stipulation (i) restricting
in any manner the use, distribution, transfer, or licensing by the Company of
any Company Owned IP Rights, any Company Licensed IP Rights or any Company
Product (other than non-exclusive licenses granted to end users by the Company
or granted to the Company by third parties, in each case in the ordinary course
of business), or that may affect the validity, use or enforceability of any such
Company Owned IP Rights, Company Licensed IP Rights or Company Product, or (ii)
restricting the conduct of the Business in order to accommodate Intellectual
Property rights of a third party (other than non-exclusive licenses granted to
the Company by third parties in the ordinary course of
business).

     

    (e)    To
the Knowledge of Seller, no current or former employee, consultant or
independent contractor of the Company or any of its Subsidiaries:  (i)
is in material violation of any term or covenant of any employment contract,
patent disclosure agreement, invention assignment agreement, nondisclosure
agreement, noncompetition agreement or any other 

     

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

       

       

      Contract
with any other party by virtue of being employed by, or performing services for,
the Company or any of its Subsidiaries or using trade secrets or proprietary
information of others without permission; or (ii) has developed any technology,
software or other copyrightable, patentable or otherwise proprietary work for
the Company or any of its Subsidiaries or during a period of time during which
they were working for the Company or any of its Subsidiaries that is subject to
any Contract under which such employee, consultant or independent contractor has
assigned or otherwise granted to any third party any rights (including
Intellectual Property) in or to such technology, software or other
copyrightable, patentable or otherwise proprietary work.  To the
Knowledge of Seller, neither the employment of any employee, nor the use by the
Company or any of its Subsidiaries of the services of any consultant or
independent contractor subjects the Company or any of its Subsidiaries to any
Liability to any third party for improperly soliciting such employee, consultant
or independent contractor to work for the Company or any of its Subsidiaries,
whether such Liability is based on contractual or other legal obligations to
such third party.

    

     

    (f)    The
Company and its Subsidiaries have taken reasonable steps to protect, preserve
and maintain the secrecy and confidentiality (where applicable) of Company Owned
IP Rights and to preserve and maintain the Company’s and its Subsidiaries’
interests, proprietary rights and trade secrets in Company Owned IP
Rights.  Seller has taken reasonable steps since August 27, 2007 to
have all current and former officers, employees, consultants and independent
contractors of the Company or any of its Subsidiaries having access to
proprietary information of the Company or any of its Subsidiaries, its customers
or business partners and inventions owned by the Company or any of its
Subsidiaries execute and deliver to the Company or such Subsidiary an agreement
regarding the protection of such proprietary information and the assignment of
inventions to the Company or such Subsidiary (in the case of proprietary
information of the Company’s or any of its Subsidiaries’ customers and business
partners, to the extent required by such customers and business partners); and
copies of all such agreements have been Delivered to Buyer.  The
Company and its Subsidiaries have secured valid written assignments from all of
Company’s and its Subsidiaries’ current and former consultants, independent
contractors and employees who were involved in, or who contributed to, the
creation or development of any Company Owned IP Rights.  No current or
former employee, officer, director, consultant or independent contractor of the
Company or any of its Subsidiaries has made a claim to Seller to have any right,
license, claim or interest whatsoever, including claims related to additional
compensation, in or with respect to any Company Owned IP Rights, and to the
Knowledge of the Seller, there is no action, condition or circumstance that
would reasonably be expected to give rise to such a claim.

     

    (g)    Schedule
3.12(g) of the Seller Disclosure Letter sets forth a list and description
of all Intellectual Property (including technology and software) developed or

     

     

    
      
        
        

      

      
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      otherwise
owned by a third party that is incorporated into, integrated or bundled with, or
used by the Company or any of its Subsidiaries in the development, manufacture
or compilation of any of Company Products (“Third-Party
Product Technology”).  Each Contract pursuant to which the
Company or any of its Subsidiaries licenses Third-Party Product Technology is
identified in Schedule
3.12(g).

    

     

    (h)    Schedule
3.12(h) of the Seller Disclosure Letter contains a true and complete list
of (1) all worldwide registrations made by or on behalf of the Company or any of
its Subsidiaries of any patents, copyrights, mask works, trademarks, service
marks, Internet domain names or Internet or World Wide Web URLs or addresses
with any Governmental Authority or quasi-governmental authority, including
Internet domain name registries, (2) all applications or filings made or taken
pursuant to Applicable Law by the Company or any of its Subsidiaries to secure,
perfect or protect its interest in Company Owned IP Rights, including all patent
applications, copyright applications, mask work applications and applications
for registration of trademarks and service marks, and where applicable the
jurisdiction in which each of the items of Company Owned IP Rights has been
applied for, filed, issued or registered, and (3) all inter parties and ex parte
proceedings or actions before any court or tribunal (including the United States
Patent and Trademark Office or equivalent authority anywhere else in the world)
related to any of Company Owned IP Rights (collectively, the “Company
Registered IP Rights”).  All registered patents, trademarks,
service marks, Internet domain names, copyrights and mask work rights held by
the Company or any of its Subsidiaries are valid, enforceable and subsisting,
and the Company or such Subsidiary is the record owner thereof.  Schedule
3.12(h) of the Seller Disclosure Letter sets forth a list of all actions
that are required to be taken by the Company or any of its Subsidiaries within
120 days of the Closing Date with respect to any of the Company Registered IP
Rights in order to avoid prejudice to, impairment or abandonment of such Company
Registered IP Rights.  The Company and its Subsidiaries exclusively
own all trademarks and trade names used in connection with the operation or
conduct of the Business, including the sale, licensing, distribution or
provision of any Company Products.  The Company and its Subsidiaries
own exclusively, and has good title to, all copyrighted works that are included
or incorporated into the Company Products or which the Company or any of its
Subsidiaries otherwise purports to own.

     

    (i)    The
Company and its Subsidiaries own all right, title and interest in and to all
Company Owned IP Rights, free and clear of all Encumbrances and licenses (other
than licenses and rights listed in Schedule
3.12(i) of the Seller Disclosure Letter and Permitted
Encumbrances).  There are no royalties, honoraria, fees or other
payments payable by the Company or any of its Subsidiaries to any third person
(other than patent award payments less than $1,000 and salaries payable to
employees and independent contractors not contingent on or related to use of
their work product) as a result of the use, license-in, manufacture, sale,
offering 

     

     

    
      
        
        

      

      
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      for
sale, copying, distribution, or disposition of any Company IP Rights by the
Company or any of its Subsidiaries and none shall become payable as a result of
the consummation of the Transaction.

    

     

    (j)    Schedule
3.12(j) of the Seller Disclosure Letter contains a true and complete list
of all licenses, sublicenses and other Contracts to which the Company or any of
its Subsidiaries is a party and pursuant to which any person is authorized to
use any Company Owned IP Rights.  None of the licenses or other
Contracts listed in Schedule
3.12(j) of the Seller Disclosure Letter grants any third party exclusive
rights to or under any Company Owned IP Rights or grants any third party the
right to sublicense any of such Company Owned IP Rights.  None of the
Company or any of its Subsidiaries has transferred ownership of any Intellectual
Property that is or was owned by the Company or any of its Subsidiaries to any
third party, or knowingly permitted the Company’s or any of its Subsidiaries’
rights in such Intellectual Property to lapse or enter the public domain (other
than through the expiration of registered Intellectual Property at the end of
its statutory term).

     

    (k)    None
of the Company, any of its Subsidiaries or any other party acting on their
behalf has disclosed or delivered to any party, or permitted the disclosure or
delivery to any escrow agent or other party of, any Company Source Code (as
defined below), except pursuant to the Contracts identified in Schedule
3.12(k) of the Seller Disclosure Letter.  No event has
occurred, and no circumstance or condition exists, that (with or without notice
or lapse of time, or both) requires, or would reasonably be expected to, require
or result in the disclosure or delivery of any Company Source Code to any party
by the Company, any of its Subsidiaries or any other party acting on their
behalf.  Schedule
3.12(k) of the Seller Disclosure Letter identifies each Contract pursuant
to which the Company or any of its Subsidiaries has deposited, or is or may be
required to deposit, with an escrow agent or other party, any Company Source
Code and further describes whether the execution of this Agreement or the
consummation of the Transaction, in and of itself, would reasonably be expected
to result in the release from escrow of any Company Source Code.  As
used in this Section
3.12(k), “Company Source
Code” means, collectively, any human readable software source code, or
any material portion or aspect of the software source code, or any material
proprietary information or algorithm contained in or relating to any software
source code, that constitutes Company Owned IP Rights or any other Company
Product marketed or currently proposed to be marketed by the Company or any of
its Subsidiaries.

     

    (l)    To
the Knowledge of Seller, there is no unauthorized use, disclosure, infringement
or misappropriation of any Company Owned IP Rights by any third party, including
any employee or former employee of the Company or any of its
Subsidiaries.  None of the Company or any of its Subsidiaries has
agreed to indemnify any person for any infringement 

     

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

       

       

      of
any Intellectual Property of any third party by any Company Product that has
been sold, licensed to third parties, leased to third parties, supplied,
marketed, distributed or provided by the Company or any of its Subsidiaries,
except pursuant to the Company’s or any of its Subsidiaries’ standard customer
agreement, the form of which is included in Schedule
3.12(l).

    

     

    (m)    To
the Knowledge of Seller, there is no action, condition or circumstance that
would reasonably be expected to give rise to any material Liability with respect
to Company Products provided by or through the Company or any of its
Subsidiaries to customers on or prior to the Closing Date (other than
replacement or repair of Company Products in the ordinary course) in excess of
any reserves therefor reflected on the Closing Balance Sheet.  The
Company has made available to Buyer more than fifty percent (50%) of all the
Documentation and notes relating to the testing of the Company Products and
plans and specifications for the Company Products currently under development by
the Company or any of its Subsidiaries.  The Company and its
Subsidiaries have a policy and procedure for tracking material bugs, errors and
defects of which it becomes aware in any of the Company Products, and maintains
a database covering the foregoing.  For all software used by the
Company or any of its Subsidiaries in providing the Company Products, or in
developing or making available any of the Company Products, the Company and its
Subsidiaries have implemented any and all security patches or upgrades that are
generally available for that software.

     

    (n)    No
government funding, facilities of a university, college, other educational
institution or research center, or funding from third parties was used in the
development of Company Products, computer software programs or applications
owned by the Company or any of its Subsidiaries.  Except as set forth
in Schedule
3.12(n) of the Seller Disclosure Letter, no current or former employee,
consultant or independent contractor of the Company or any of its Subsidiaries
who was involved in, or who contributed to, the creation or development of any
Company IP Rights has performed services for the government, for a university,
college or other educational institution or for a research center during a
period of time during which such employee, consultant or independent contractor
was also performing services for the Company or any of its
Subsidiaries.

     

    (o)    Schedule
3.12(o) of the Seller Disclosure Letter lists all Open Source Materials
that have been incorporated into, combined with or distributed with any Company
Products. As used in this Section
3.12(o), “Open Source
Materials” (1) means any software that (i) contains, or is derived in any
manner (in whole or in part) from, any software that is distributed as free
software, open source software (e.g., without limitation, Linux) or (ii)
requires as a condition of its use, modification or distribution that it, or
other software incorporated, distributed with, or derived from it, be disclosed
or distributed in source code form or made available at no charge and (2)
includes without limitation software licensed under the GNU’s

     

     

    
      
        
        

      

      
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      General
Public License (GPL) or Lesser/Library GPL, the Mozilla Public License, the
Netscape Public License, the Sun Community Source License, the Sun Industry
Standards License, the BSD License, a Microsoft Shared Source License, the
Common Public License, the Apache License, and any license listed at
www.opensource.org.

    

     

    (p)    None
of the Company or any of its Subsidiaries has (1) incorporated Open Source
Materials into, or combined Open Source Materials with, Company Owned IP Rights
or Company Products; (2) distributed Open Source Materials in conjunction with
any Company Owned IP Rights or Company Products; or (3) used Open Source
Materials, in such a way that, with respect to clause (1), (2), or (3), creates,
or purports to create obligations for the Company or any of its Subsidiaries
with respect to any Company Owned IP Rights or grant, or purport to grant, to
any third party, any rights or immunities under any Company Owned IP Rights
(including using any Open Source Materials that require, as a condition of use,
modification or distribution of such Open Source Materials that other software
incorporated into, derived from or distributed with such Open Source Materials
be (i) disclosed or distributed in source code form, (ii) be licensed for the
purpose of making derivative works, or (iii) be redistributable at no
charge).

     

    (q)    Except
as set forth in Section
3.12(q) of the Seller Disclosure Letter, none of the Company or any of
its Subsidiaries is now or has ever been a member or promoter of, or a
contributor to, any industry standards body or any similar organization that
could reasonably be expected to require or obligate the Company or any of its
Subsidiaries to grant or offer to any other Person any license or right to any
Company Owned IP Rights.

     

    3.13    Compliance
with Laws.

     

    (a)    Each
of the Company and its Subsidiaries has materially complied, and is now in
material compliance, with, all Applicable Law.

     

    (b)    Each
of the Company and its Subsidiaries holds all material permits, licenses and
approvals from, and has made all material filings with, government (and
quasi-governmental) agencies and authorities, that are necessary and/or legally
required to be held by it to conduct the Business without any material violation
of Applicable Law (“Governmental
Permits”), and all such Governmental Permits are valid and in full force
and effect.  None of the Company or any of its Subsidiaries has
received any written notice from any Governmental Authority regarding (i) any
actual or possible violation of Applicable Law or any Governmental Permit or any
failure to comply with any term or requirement of any Governmental Permit or
(ii) any actual or possible revocation, withdrawal, suspension, cancellation,
termination or modification of any Governmental Permit.

     

     

    
      
        
        

      

      
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    (c)    Each
of the Company and its Subsidiaries has conducted its export transactions in
accordance in all respects with applicable provisions of export control laws and
regulations.  Without limiting the foregoing:  (1) each of
the Company and its Subsidiaries has obtained all export licenses and other
approvals required for its exports of products, software and technologies; (2)
each of the Company and its Subsidiaries is in material compliance with the
terms of all applicable export licenses or other approvals; (3) there are no
pending or, to the Knowledge of Seller, threatened claims against the Company or
any of its Subsidiaries with respect to such export licenses or other approvals;
(4) to the Knowledge of Seller, there are no actions, conditions or
circumstances pertaining to the Company’s or any of its Subsidiaries’ export
transactions that would reasonably be expected to give rise to any material
future claims; and (5) no consents or approvals for the transfer of export
licenses to Buyer are required, except for such consents and approvals that can
be obtained expeditiously without material cost.

     

    (d)    None
of the Company or any of its Subsidiaries has received prior written
notification from the relevant authority of any material breach of Environmental
Law.  For the purposes of this paragraph “Environmental
Law” shall mean all laws, regulations, directives, statutes, subordinate
legislation, common law and other national and local laws, all judgments,
orders, instructions, or awards of any court or competent authority and all
codes of practice and guidance notes to the extent in force and legally binding
on the Company or any of its Subsidiaries that have as a purpose or effect the
protection of the Environment but excluding any of the above that regulate land
use under the town and planning regime.  For the purposes of this
paragraph “Environment”
shall mean any and all living organisms (including man) and the ecosystems of
which they form part and the media of air, water and land.

     

    3.14    Certain
Transactions and Agreements.  None of the officers or directors
of Seller, the Company or any of their respective Subsidiaries is a party to, or
is otherwise interested in, any Contract with the Company or any of its
Subsidiaries, except for normal compensation for services.  None of
said officers or directors has any interest in any property, real or personal,
tangible or intangible (including any Company IP Rights or any other
Intellectual Property), that is used in, or that pertains to, the
Business.

     

    3.15    Employees
and Compliance.

     

    (a)    Each
of the Company and its Subsidiaries is in compliance in all material respects
with Applicable Law and Contracts relating to employment, discrimination in
employment, terms and conditions of employment, working time regulations, annual
leave regulations, compensation matters, worker classification, wages, hours and
occupational safety and health and employment practices, and is not engaged in
any unfair labor practice.  

     

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

       

       

      Each
of the Company and its Subsidiaries has paid in full to all current and former
employees, independent contractors and consultants all wages, salaries,
commissions, bonuses, benefits, severance, and other compensation due to or on
behalf of such employees, independent contractors and
consultants.  None of the Company or any of its Subsidiaries is liable
for any payment to any trust or other fund or to any Governmental Authority,
with respect to unemployment compensation benefits, social security or other
benefits or obligations for employees (other than routine payments to be made in
the normal course of business and consistently with past
practice).  There are no pending claims against the Company or any of
its Subsidiaries under any workers compensation plan or policy or for long term
disability.  There are no controversies pending or, to the Knowledge
of Seller, threatened, between the Company or any of its Subsidiaries, on the
one hand, and any of their employees, independent contractors or consultants, on
the other hand, which controversies have or would reasonably be expected to
result in an action, suit, proceeding, claim, arbitration or investigation
before any Governmental Authority.

    

     

    (b)    A
complete list, by number, of all current employees, temporary workers, officers,
independent contractors and consultants and/or individual services providers, of
the Company and its Subsidiaries and their current title and/or job description,
compensation (base compensation and bonuses) and benefits has been Delivered to
Buyer.  All employees and temporary workers of the Company and its
Subsidiaries are legally permitted to be employed by the Company or any of its
Subsidiaries in the jurisdiction in which such employee or temporary worker is
employed in their current job capacities for the maximum period allowed under
Applicable Law. All fixed-term employees and temporary workers have been hired
and/or their contracts renewed, and perform their duties in compliance with the
Applicable Law. All independent contractors and consultants providing services
to the Company or any of its Subsidiaries have been properly contracted and
classified as independent contractors for purposes of applicable Tax laws, labor
laws, social security laws, laws applicable to employee benefits and other
Applicable Law.  As of the Closing Date, none of the Company or any of
its Subsidiaries has, and to the Knowledge of Seller, no other Person has, (1)
entered into any Contract that obligates or purports to obligate the Company,
any of its Subsidiaries or Buyer to make an offer of employment to any present
or former employee or consultant of the Company or any of its Subsidiaries
and/or (2) promised or otherwise provided any assurances (contingent or
otherwise) to any present or former employee or consultant of the Company or any
of its Subsidiaries of any terms or conditions of employment with the Company or
any of its Subsidiaries or Buyer following the Closing Date.

     

    (c)    None
of the Company or any of its Subsidiaries (1) is now, or has ever been, subject
to a union organizing effort, (2) is subject to any collective bargaining
agreement with respect to any of its employees, (3) is subject to any other
Contract with any trade or labor union, employees’ association or similar
organization, and (4) has any current labor disputes 

     

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

       

       

      relating
to the employee base of the Company or any of its Subsidiaries.  There
are no pending or, to the Knowledge of Seller, threatened efforts to certify any
Person as the collective bargaining agent of all or some of the employees of the
Company or any of its Subsidiaries.

    

     

    (d) (i)  “Company Benefit
Arrangements” means each employment, consulting or severance Contract
currently in effect to which the Company or any of its Subsidiaries is a party,
each employee benefit plan provided by the Company or any of its Subsidiaries,
each currently outstanding loan to an employee of the Company or any of its
Subsidiaries and each plan or arrangement currently in effect providing for
insurance coverage to employees (including any self-insured arrangements
that are clearly identified as such, and any stop-loss insurance policies issued
in connection with such self-insured arrangements), workers’ benefits, vacation
benefits, severance benefits, retention, disability benefits, death
benefits, hospitalization benefits, relocation benefits, cafeteria benefits,
child care benefits, sabbatical, retirement benefits, deferred compensation,
pension plan, profit-sharing, bonuses, stock options, phantom stock,
stock appreciation or other forms of incentive compensation or
post-retirement insurance, compensation or benefits for employees, consultants
or directors of the Company or any of its Subsidiaries that is currently
maintained or contributed to by the Company or any of its Subsidiaries, all
to the extent currently in effect in jurisdictions in which there are Continuing
Employees.

     

    (ii)    Seller
has Delivered to Buyer executed copies of each Company Benefit Arrangement and
each Company Benefit Arrangement has been notarized and/or recorded with the
proper Governmental Authority to the extent required by Applicable
Law.  Each Company Benefit Arrangement has been maintained in
compliance in all material respects with its terms and with the requirements
prescribed by Applicable Law that is applicable to such Company Benefit
Arrangement.  There are no unfunded Liabilities for any Company
Benefit Arrangement. Each Company Benefit Arrangement (other than employment
Contracts or similar agreements) can be amended, terminated or otherwise
discontinued after the Closing in accordance with its terms, without liability
to the Company, any of its Subsidiaries or Buyer (other than ordinary
administrative expenses typically incurred in a termination
event).  No Company Benefit Arrangement shall be subject to any
surrender fees or services fees upon termination other than the normal and
reasonable administrative fees associated with the termination of benefit
plans.  None of the Company or any of its Subsidiaries maintains any
Company Benefit Arrangement that is self-insured.

     

    (iii)    All
contributions due from the Company or any of its Subsidiaries with respect to
any of the Company Benefit Arrangements have been timely made under the terms of
the applicable Company Benefit Arrangement and any Applicable Law, or there is a
period of 

     

     

    
      
        
        

      

      
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      time
remaining for such contributions to be timely made.  No further
contributions shall be due or shall have accrued thereunder as of the Closing
Date.

    

     

    (iv)    Since
August 27, 2007, there has been no termination or partial termination of any
Company Benefit Arrangement.

     

    (v)    No
Company Benefit Arrangement (other than life insurance arrangements) provides
post-termination or retiree welfare benefits to any person for any reason,
except as may be required by Applicable Law.

     

    (e)    There
has been no amendment to, written interpretation or announcement (whether or not
written) by the Company or any of its Subsidiaries relating to, or change in
employee participation or coverage under, any Company Benefit Arrangement that
would increase materially the expense of maintaining such Company Benefit
Arrangement above the level of the expense incurred in respect thereof during
the most recent fiscal year.

     

    (f)    None
of the Company or any of its Subsidiaries is a party to any:  (1)
Contract with any Person the benefits of which are contingent, or the terms of
which will be materially altered, upon the occurrence of the Transaction; or (2)
Company Benefit Arrangement, any of the benefits of which shall be increased, or
the vesting of benefits of which shall be accelerated, by the occurrence of the
Transaction, or any event subsequent to the Transaction such as the termination
of employment of any person, or the value of any of the benefits of which shall
be calculated on the basis of the Transaction.

     

    (g)    To
the Knowledge of Seller, no employee or consultant of the Company or any of its
Subsidiaries is in material violation of (1) any Contract with the Company or
any of its Subsidiaries or (2) any restrictive covenant relating to the right of
any such employee or consultant to be employed by the Company or any of its
Subsidiaries.

     

    (h)    The
employment or engagement by the Company or any of its Subsidiaries of each of
the Former Contractors and Employees has been terminated and none of the Company
or any of its Subsidiaries has any Liability (other than payroll or employment
Tax Liability) to any of the Former Contractors and
Employees.

     

    3.16    Corporate
Documents.  Seller has Delivered to Buyer all of the following:
(a) copies of the charter documents, each as currently in effect, of the Company
and its Subsidiaries; and (b) the minute books containing all records of all
proceedings, consents, actions and meetings of the board of directors and any
committees thereof and stockholders of the Company and its Subsidiaries that
have occurred since August 27, 2007.  The minute books of the

     

     

    
      
        
        

      

      
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      Company
and its Subsidiaries provided to Buyer contain a complete and accurate summary
of all meetings of directors and stockholders or actions by written consent of
the Company and its Subsidiaries that have occurred since August 27, 2007
through the Closing Date and reflect all transactions referred to in such
minutes accurately in all material respects.  The books, records and
accounts of the Company and its Subsidiaries (w) are in all material respects
true, complete and correct, (x) have been maintained in accordance with good
business practices on a basis consistent with prior years, (y) are stated in
reasonable detail and accurately and fairly reflect the transactions and
dispositions of the assets and properties of the Company and its Subsidiaries,
and (z) accurately and fairly reflect the basis for the Company Financial
Statements.

    

     

    3.17    Insurance.  Seller
has Delivered to Buyer copies of the policies of insurance and bonds maintained
by the Company or any of its Subsidiaries, including all legally required
workers’ compensation insurance and errors and omissions, casualty, fire and
general liability insurance.  Each of the Company and its Subsidiaries
at all time submits accurate information to the insurers as to the employees’
remuneration for the purposes of workers’ compensation
insurance.  There is no material claim pending under any of such
policies or bonds as to which coverage has been questioned, denied or disputed
by the underwriters of such policies or bonds.  All premiums due and
payable under all such policies and bonds have been timely paid, and each of the
Company and its Subsidiaries is otherwise in compliance in all material respects
with the terms of such policies and bonds.  All such policies and
bonds remain in full force and effect, and Seller has no Knowledge of any
threatened termination of any of such policies or bonds.

     

    3.18    No
Brokers.  None of the Company or any of its Subsidiaries or any
affiliate of the Company or any of its Subsidiaries has any Liabilities for the
payment of any fees or expenses of any investment banker, broker, attorney,
finder or similar party in connection with the origin, negotiation or execution
of this Agreement or in connection with the Transaction.

     

    3.19    Customers
and Suppliers.

     

    (a)    Significant
Customers.  Schedule
3.19(a) of the Seller Disclosure Letter lists each customer or
distributor who, in the year ended June 30, 2008 or the period thereafter ending
on the Closing Date, was one of the 20 largest sources of revenues for the
Company and its Subsidiaries, based on amounts paid or payable (each, a “Significant
Customer”).  None of the Company or any of its Subsidiaries has
any outstanding material disputes concerning its products and/or services with
any customer or distributor for the Company and its Subsidiaries, including any
Significant Customer, and Seller has no Knowledge of any material
dissatisfaction on the part of any Significant Customer.  Since June
30, 2008, none of the Company or any of its Subsidiaries has received any
written notice from any Significant Customer that such customer shall not
continue as a customer of the Company or any of its Subsidiaries (or Buyer)
after the 

     

     

    
      
        
        

      

      
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      Closing
or that such customer intends to terminate or materially modify existing
Contracts with the Company or any of its Subsidiaries (or
Buyer).  Since August 27, 2007, none of the Company or any of its
Subsidiaries has had any of its products returned by a purchaser thereof except
for normal warranty returns consistent with past history and those returns that
would not result in a reversal of any revenue by the Company or any of its
Subsidiaries.

    

     

    (b)    Significant
Suppliers.  None of the Company or any of its Subsidiaries has
any outstanding material dispute concerning products and/or services provided by
any supplier who, in the year ended June 30, 2008 or the period thereafter
ending on the Closing Date, was one of the 20 largest suppliers of products
and/or services to the Company and its Subsidiaries, based on amounts paid or
payable (each, a “Significant
Supplier”), and Seller has no Knowledge of any material dissatisfaction
on the part of any Significant Supplier.  Each Significant Supplier is
listed on Schedule
3.19(b) of the Seller Disclosure Letter.  Since June 30, 2008,
none of the Company or any of its Subsidiaries has received any written notice
from any Significant Supplier that such supplier shall not continue as a
supplier to the Company or any of its Subsidiaries (or Buyer) after the Closing
or that such supplier intends to terminate or materially modify existing
Contracts with the Company or any of its Subsidiaries (or Buyer).  The
Company and its Subsidiaries have access, on commercially reasonable terms, to
all products and services reasonably necessary to carry on the Businesses, and
Seller has no Knowledge of any reason why it will not continue to have such
access on commercially reasonable terms.

     

    3.20    Anti-Bribery
Compliance.

     

    (a)    Since
August 27, 2007 and, to the Knowledge of Seller, at any time prior to August 27,
2007, none of the Company or any of its Subsidiaries or any of their directors,
officers or employees or, to the Knowledge of Seller, any other Person acting on
their behalf, has violated any Anti-Bribery Laws.  Without limiting
the foregoing, none of the Company or any of its Subsidiaries or any of their
directors, officers or employees or any other Person acting on their behalf has
engaged in, authorized or knowingly permitted (i) offer or payment of any bribe
or kickback to any official or employee of any Governmental Authority or any
relative of any such official or employee, or any other payments to such
persons, whether or not legal, for the purpose of inducing or rewarding any
favorable action by any official or employee of any Governmental Authority,
including, without limitation, in order to obtain or retain business or to
receive favorable treatment with regard to business, (ii) offer or payment of
any bribe or kickback to persons other than government officials or their
relatives, or any other payments to such persons, whether or not legal, to
obtain or retain business or to receive favorable treatment with regard to
business, (iii) offer or payment of any bribe, kickback or illegal contribution
to any political party, political candidate or holder of governmental office, or
any employee of any 

     

     

    
      
        
        

      

      
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      of
the foregoing, including, without limitation, in order to obtain or retain
business or to receive favorable treatment with regard to business, (iv) offer
or payment of fees to consultants or commercial agents which disguise offers or
payments aimed for a bribe, kickback or illegal contribution; or (v) offer or
payment of any payments or reimbursements made to personnel of the Company or
any of its Subsidiaries for the purposes of enabling them to expend time or to
make contributions or payments of the kind or for the purposes referred to in
subsections (i) through (iv) above.

    

     

    (b)    Since
August 27, 2007 and, to the Knowledge of Seller, at any time prior to August 27,
2007, none of the Company or any of its Subsidiaries or any of their directors,
officers or employees or, to the Knowledge of Seller, any other Person acting on
their behalf, has engaged in or authorized (i) the creation of any bank
accounts, funds or pools of funds created or maintained without being reflected
on the corporate books of account, or as to which the receipts and disbursements
therefrom have not been reflected on such books, or (ii) any receipts or
disbursements, the actual nature of which has been “disguised” or intentionally
misrecorded on the corporate books of account.

     

    (c)    The
Company and its Subsidiaries have implemented an appropriate legal compliance
program designed to provide reasonable assurance of compliance with Anti-Bribery
laws in accordance with the United States Sentencing Commission, Federal
Sentencing Guidelines, Chapter Eight–Sentencing Organizations, including
(i) written policies and procedures, including appropriate periodic or
event-based written certifications, (ii) training of the Company’s and its
Subsidiaries’ directors, officers or employees, and (iii) processes for
reporting, investigating, remediating and punishing violations.  The
Company and its Subsidiaries conduct, and maintain written records of,
reasonable and customary due diligence investigations of, and have written
agreements with, each of its third-party product representatives, distributors
other agents and joint-venture partners (“Third-Party
Partners”), that (i) include appropriate representations, warranties
and covenants regarding compliance with Anti-Bribery Laws, and (ii) require
each Third-Party Partner to maintain books, records and accounts that are true,
accurate and complete in all material respects.

     

    3.21    No
Further Obligations.  None of the Company or any of its
Subsidiaries has any further obligations under (a) that certain Share Purchase
Agreement by and among Atlantic Acqco, Limitada, Seller, the Selling
Shareholders (as defined therein) and Espírito Santo Ventures – Sociedade de
Capital de Risco, Sa dated as of August 24, 2007, (b) that certain Asset
Purchase Agreement between Chipidea Microelectronica S.A. and Nordic
Semiconductors ASA dated as of February 14, 2007 and (c) that certain Asset
Purchase Agreement between Chipidea Microelectronica S.A., TransDimension NH,
LLC  and TransDimension, Inc. dated as of October 1,
2005.

     

     

    
      
        
        

      

      
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    ARTICLE
4

     

    Representations
and Warranties of Buyer

     

     

    Buyer
represents and warrants to Seller as follows:

     

    4.1    Organization
and Good Standing.  Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware.  Buyer has the corporate power and authority to own, operate
and lease its properties and to carry on its business.  Buyer is not
in violation of its Certificate of Incorporation or Bylaws, each as amended to
date.

     

    4.2    Power,
Authorization and Validity.

     

    (a)    Power
and Authority.  Buyer has all requisite corporate power and
authority to enter into, execute, deliver and perform its obligations under this
Agreement and each of the Ancillary Agreements to which Buyer is a party and to
consummate the Transaction.  The execution, delivery and performance
by Buyer of this Agreement, each of the Ancillary Agreements to which Buyer is a
party and all other transactions and actions contemplated hereby or thereby have
been duly and validly approved and authorized by all necessary corporate action
on the part of Buyer and no other action on the part of Buyer is required in
connection therewith.

     

    (b)    No
Consents.  No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Authority, or any
other Person, governmental or otherwise, is necessary or required to be made or
obtained by Buyer to enable Buyer to execute and deliver, enter into, and
perform its obligations under this Agreement and each of the Ancillary
Agreements to which Buyer is a party or to consummate the Transaction, except,
as applicable, for the filing by Buyer of such reports and information with the
SEC under the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated by the SEC thereunder, as may be required in connection
with this Agreement and the Transaction.

     

    (c)    Enforceability.  This
Agreement has been duly executed and delivered by Buyer.  Assuming the
due authorization, execution and delivery by Seller, this Agreement and each of
the Ancillary Agreements to which Buyer is a party are, or when executed by
Buyer shall be, valid and binding obligations of Buyer, enforceable against
Buyer in accordance with their respective terms, subject to the effect of (i)
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to rights of creditors generally and
(ii) rules of law and equity governing specific performance, injunctive relief
and other equitable remedies.

     

     

    
      
        
        

      

      
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    4.3    No
Conflict.  Neither the execution and delivery by Buyer of this
Agreement or any of the Ancillary Agreements to which Buyer is a party, nor the
consummation of the Transaction by Buyer, conflicts with or violates or results
in any violation of or default under (with or without notice or lapse of time,
or both) or gives rise to a right of termination, cancellation, modification or
acceleration of any obligation or loss of any benefit under:  (a) any
provision of the Certificate of Incorporation or Bylaws of Buyer, each as
currently in effect; or (b) any Applicable Law applicable to Buyer, or any of
its material assets or properties, other than in the case of clause (b), such
conflicts, violations, defaults, terminations, cancellations, modifications,
accelerations or losses that would not, individually or in the aggregate, be
material to Buyer’s ability to consummate the Transaction or to perform its
obligations under this Agreement

     

    4.4    Investment
Intent.  Buyer is acquiring the Purchased Interests for its own
account and for investment and not with a view to or for sale in connection with
any distribution thereof within the meaning of the Securities
Act.

     

    ARTICLE
5

     

    Covenants

     

    5.1    Public
Announcement.  Upon the Closing Date, Buyer and Seller may
issue a press release approved by both parties announcing the
Transaction.  Thereafter, either party may issue such press releases,
and make such other disclosures regarding the Agreement and the Transaction, as
it determines are required under Applicable Law, regulatory rules or securities
exchange listing agreement or that relate solely to factual statements regarding
the Agreement or the Transaction.

     

    5.2    Taxes.

     

    (a)    Seller
shall indemnify Buyer for all Taxes of the Company and its Subsidiaries, and
shall pay any and all such Taxes of the Company and its Subsidiaries, for any
taxable period (or portion thereof) ending on or prior to the Closing Date and
the portion through the end of the Closing Date for any taxable period that
includes (but does not end on) the Closing Date (a “Pre-Closing Tax
Period”), to the extent that (i) such Taxes are in excess of the total
amount of Taxes reserved for on the Closing Balance Sheet (it being understood
that the portion of the line item “Tax Related Long Term Liabilities” on the
Closing Balance Sheet corresponding to the $3.8 million of OCI tax liability and
$2.1 million of purchased intangibles shall not constitute “reserves” for
purposes of this Section 5.2(a)), and (ii) such Taxes are not withholding Taxes
that are properly withheld by customers on sales from Seller.  All
property 

     

     

    
      
        
        

      

      
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      Taxes,
personal property Taxes and similar ad valorem obligations in respect of the
assets of the Company and its Subsidiaries that relate to any taxable period
that includes (but does not end on) the Closing Date (a “Straddle
Period”) shall be allocated between the portion of the Straddle Period
ending on the Closing Date and the remainder of the Straddle Period based on the
number of days in each such segment of the Straddle
Period.

    

     

    (b)    Buyer
shall timely prepare or cause to be prepared (in a manner consistent with the
Company’s or the Subsidiary’s, as applicable, prior practice) and timely file or
cause to be filed all Tax Returns for the Company and its Subsidiaries that
relate to or include any Pre-Closing Tax Period and are filed after the
Closing Date, other than Tax Returns with respect to periods for which a
consolidated, unitary, combined or other Tax Return of Seller will include the
operations of the Company and/or its Subsidiaries (“Pre-Closing Tax
Returns”).  Buyer shall provide to Seller a draft of each such
Pre-Closing Tax Return at least 30 days prior to the due date for filing such
Pre-Closing Tax Return.  Buyer shall permit Seller to review and
comment on each such Pre-Closing Tax Return within 15 days prior to the due date
for filing such Pre-Closing Tax Return.  Buyer shall make such
revisions to such Pre-Closing Tax Returns as are reasonably requested by
Seller.

     

    (c)    Buyer
shall pay all Taxes of or relating to the Company or its Subsidiaries for or
relating to any period that is not a Pre-Closing Tax Period (including any
Post-Closing Tax Period).

     

    (d)    Any
refunds of Taxes that are identified on Schedule
5.2(d) and that would be indemnifiable by Seller under Section
5.2(a) hereof and that are received (or credited against Tax) by Buyer,
the Company or any Affiliate thereof, shall be for the account of Seller and
Buyer shall pay over to Seller any such refund or the amount of any such credit
within 30 days after receipt thereto; provided,
however,
that (i) in no event shall Buyer, the Company or any Affiliate thereof be
required to take any action to obtain or pursue such refunds (other than
reasonable clerical actions); (ii) the amount of such refunds required to be
paid over to Seller shall not be in excess of the local currency amount received
or credited by Buyer, the Company or any Affiliate thereof; and (iii) to the
extent any such refund is paid to Seller by Buyer, Seller shall indemnify Buyer
if such refund is subsequently reduced or disallowed by any applicable Tax
Authority and shall pay over to Buyer the amount of the reduction or
disallowance within 30 days of being notified of such reduction or
disallowance.

     

    5.3    Cooperation
on Tax Matters.  Seller and Buyer shall provide reasonable
cooperation to each other, as and to the extent reasonably requested by the
other party, in connection with the filing of Tax Returns and any audit,
litigation or other proceeding with respect to Taxes, in each case relating to
the Business.  Such cooperation shall include the 

     

     

    
      
        
        

      

      
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      retention
and (upon the other party’s request) the provision of records and information
reasonably relevant to any such audit, litigation, or other proceeding and
making employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder.  Seller and
Buyer agree to retain all books and records with respect to Tax matters
pertinent to the Company and its Subsidiaries relating to any taxable period
beginning before the Closing Date until expiration of the statute of limitations
of the respective taxable periods, and to abide by all record retention
agreements entered into with any Tax Authority. 

    

     

    5.4    Non-Competition
and Non-Solicit.

     

    (a)    Non-Competition.  During
the period beginning at the Closing Date and ending on the date two (2) years
following the Closing Date, Seller covenants and agrees that Seller and Entities
controlled by Seller shall not, in any county, state, country or other
jurisdiction in which the Company or any of its Subsidiaries engages in the
Restricted Business:

     

    (i)           engage
in the Restricted Business (as defined below); or

     

    (ii)           acquire
or hold any interest in, any Person that engages in a Restricted Business,
excluding any such interest (A) that exists as of the Closing Date or (B) that
arises after the Closing Date by virtue of receiving such interest in lieu of
cash in satisfaction of Liabilities owed by such Person to Seller or Entities
controlled by Seller; provided, however, that such
interest shall be held by Seller or Entities controlled by Seller solely as a
passive investment not to exceed two percent (2%) of such Person’s outstanding
voting securities (on a fully-diluted basis).

     

    Notwithstanding
the foregoing, nothing in this Section 5.4 shall
prohibit Seller from acquiring any Entity whose primary business is not a
Restricted Business.   

     

    For
purposes of this Agreement, “Restricted Business” means
developing, marketing or distributing any analog or mixed signal Intellectual
Property products in a manner that is competitive with the
Business.

     

    (b)    Non-Solicitation
of Employees.

     

    (i)           Seller
shall not (and Seller shall ensure that no Entity controlled by it shall),
during the one-year period following the Closing Date, solicit for employment
with Seller or any of its Affiliates (other than the Company and its
Subsidiaries) (A) any employee of the Company or any of its Subsidiaries who
continues his or her employment with the Company or any such Subsidiary
following the Closing or accepts an offer of employment from Buyer in

     

     

    
      
        
        

      

      
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      connection
with the Transaction (collectively, the “Continuing
Employees”) and (B) any employee of Buyer or any of its Affiliates set
forth on Schedule
5.4(b)(i).

    

     

    (ii)           Buyer
shall not (and Buyer shall ensure that no Entity controlled by it shall), during
the one-year period following the Closing Date, solicit for employment with
Buyer or any of its Affiliates (A) any employee of the Company or any of its
Subsidiaries who is not a Continuing Employee and (B) any employee of Seller or
any of its Affiliates (other than the Continuing Employees) set forth on Schedule
5.4(b)(ii).  In addition, Buyer shall not (and Buyer shall
ensure that no Entity controlled by it shall), during the one-year period
following the Closing Date, utilize information obtained from Continuing
Employees to solicit for employment with Buyer or any of its Affiliates any
employee of Seller or its Affiliates. 

     

    Notwithstanding
the foregoing, for purposes of this Agreement, the placement of general
advertisements that may be targeted to a particular geographic or technical area
but that are not targeted towards the Continuing Employees, employees of Buyer
or any of its Affiliates set forth on Schedule
5.4(b)(i), employees of the Company or any of its Subsidiaries who are
not Continuing Employees or employees of Seller or any of its Affiliates set
forth on Schedule
5.4(b)(ii) shall not be deemed to be a solicitation under this Section 5.4(b).

     

    (c)    Savings
Clause.  It is the desire and intent of the parties that the
provisions of this Section 5.4
shall be enforced to the fullest extent permissible under applicable
law.  If any provision of this Section 5.4
or any part of any such provision is held under any circumstances to be invalid
or unenforceable by any arbitrator or court of competent jurisdiction,
then:  (i) such provision or part thereof shall, with respect to such
circumstances and in such jurisdiction, be modified by such arbitrator or court
to conform to applicable laws so as to be valid and enforceable to the fullest
possible extent; (ii) the invalidity or unenforceability of such provision or
part thereof under such circumstances and in such jurisdiction shall not affect
the validity or enforceability of such provision or part thereof under any other
circumstances or in any other jurisdiction; and (iii) the invalidity or
unenforceability of such provision or part thereof shall not affect the validity
or enforceability of the remainder of such provision or the validity or
enforceability of any other provision of this Section 5.4.  Each
provision of this Section 5.4
is separable from every other provision of this Section 5.4,
and each part of each provision of this Section 5.4
is separable from every other part of such provision.

     

    5.5    Assignment
of Specified Contracts. Promptly following the Closing, Seller shall
use commercially reasonable efforts to obtain such written consents, approvals
and authorizations necessary to effect the transfer and assignment of each of
the Specified Contracts from Seller to the Company.  The parties
further agree that during the time period between the Closing and the date that
the transfer and assignment of each Specified Contract from Seller to

     

     

    
      
        
        

      

      
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      Buyer
has become effective, Buyer shall cause the Company to perform Seller’s
obligations under each Specified Contract and any and all accounts receivable
arising during such time period in respect of each Specified Contract (including
payments received with respect to such accounts receivable) shall constitute the
sole property of the Company or Buyer (it being understood that Seller shall use
commercially reasonable efforts consistent with past practice to collect such
accounts receivable when due) and Seller agrees to promptly deliver to the
Company or Buyer any payments received by Seller with respect to such accounts
receivable.

    

     

    5.6    Specified
Claims.

     

    (a)    Seller
agrees following the Closing to use commercially reasonable efforts to pursue
the defense or settlement of each Specified Claim and pay all losses, costs,
damages, interest, penalties, and expenses (including attorneys’ fees, other
professionals’ and experts’ fees, costs of investigation, settlement, defense,
arbitration and court costs) (collectively, the “Section
5.6 Damages”)
incurred in connection with such Specified Claim; provided, however, that Buyer
agrees to pay Section 5.6 Damages up to but not in excess of $50,000 arising out
of or resulting from the Portugal Employment Litigation Matter. 
Notwithstanding the foregoing, Buyer shall have the right to receive copies of
all pleadings, notices and communications with respect to each Specified Claim
to the extent that receipt of such documents by Buyer does not affect any
privilege relating to Seller, and at Buyer’s sole cost, may participate in, but
not to determine or conduct, any defense of each such Specified Claim or
settlement negotiations with each such Specified Claim.  If Seller fails to
actively and diligently pursue the defense or settlement of any Specified Claim
and Buyer has provided Seller with 30 days’ prior written notice of such
failure, then, following the expiration of such 30-day period and provided that
such failure has not been cured by Seller prior to the expiration of such 30-day
period, Buyer may elect to assume the defense or settlement of any such
Specified Claim.    If Buyer assumes the defense or settlement of
any Specified Claim, Buyer shall not be liable for any Section 5.6 Damages
incurred in connection with the defense or settlement of any such Specified
Claim and Seller agrees to indemnify and hold harmless Buyer from and against
all Section 5.6 Damages incurred in connection with such defense or settlement,
except Buyer agrees to pay Section 5.6 Damages up to but not in excess of
$50,000 arising out of or resulting from the Portugal Employment Litigation
Matter.  At Seller’s request, Buyer shall cooperate as reasonably
necessary with Seller in pursuing the defense or settlement of the Portugal
Employment Litigation
Matter.      

     

    (b)    Seller
shall not, without the written consent of Buyer, effect the settlement or
compromise of, or consent to the entry of any judgment with respect to, any
Specified Claim unless such settlement, compromise or judgment relates solely to
monetary damages and not for injunctive, equitable or other non-monetary
relief. 

     

     

    
      
        
        

      

      
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    5.7    Certain
Post-Closing Matters.

     

    (a)    Minute
Books.  Within fifteen (15) days after Closing, Seller shall
deliver to Buyer the original minute books of the Company and its Subsidiaries
containing all records of all proceedings, consents, actions and meetings of the
board of directors and any committees thereof and stockholders of the Company
and its Subsidiaries.

     

    (b)    Transfer
of Subsidiary Equity Held by Certain Individuals.  Promptly
following the Closing, Seller shall use commercially reasonable efforts to
assist Buyer in effecting the transfer of the shares held by John Bourgoin in
MIPSABG Chipidea, Limitada and Atlantic Acqco, Limitada and the shares held by U
Seng Pan in Chipidea Microelectronica (Macau), Limitada, to
Buyer.

     

    (c)    Termination
of Tax Representatives.  Promptly following the Closing, Seller
shall, to the extent reasonably requested by Buyer and at Buyer’s sole cost, use
commercially reasonable efforts to assist Buyer in terminating and transferring
to Persons designated by Buyer the following arrangements involving the
appointment of a Tax representative:  (i) MIPSABG Chipidea, Limitada,
as Tax representative in Portugal of Gail Hilary Shulman and Cesar Martin-Perez
and (ii) Atlantic Acqco, Limitada, as Tax representative in Portugal of Sandra
Mitchell Creighton, Mark Tyndall, John Bourgoin, Stuart John Nichols and John
Derrick.

     

    (d)    Termination
of Powers of Attorney.  Promptly following the Closing, Seller
shall, to the extent reasonably requested by Buyer and at Buyer’s sole cost, use
commercially reasonable efforts to assist Buyer in terminating all powers of
attorney granted by the Company or any of its Subsidiaries that are in effect as
of the Closing Date as determined by Buyer.

     

    (e)    Removal
of Guarantors.  As soon as reasonably practicable following the
Closing Date, Buyer shall take all necessary action to remove as guarantor under
any and all indebtedness for borrowed money of the Company and its Subsidiaries
listed on Schedule
5.7(e) in which there is a guarantor other than Buyer, the Company or any
of the Company’s Subsidiaries (a “Non-Buyer
Affiliated Guarantor”) each such Non-Buyer Affiliated Guarantor and
replace each such Non-Buyer Affiliated Guarantor with Buyer, any of its
Affiliates or any other Person designated by Buyer.

     

    (f)    BCP
Lease Amendment.  As promptly as reasonably practicable following
the Closing, Buyer shall use commercially reasonable efforts to arrange for
execution of the BCP Lease Amendment or a similar or comparable agreement;
provided, however, that in the event 

     

     

    
      
        
        

      

      
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      the
BCP Lease Amendment or a similar or comparable agreement is not executed within
a reasonable period of time following the Closing Date (not to be sooner than
the date that is two (2) months following the Closing Date), Buyer shall use
commercially reasonable efforts to secure alternate space that is reasonably
comparable or similar to the premises governed by the BCP Lease Amendment or a
similar or comparable agreement (“Alternate
Property”) at reasonably comparable costs; provided, further, that any
and all losses, costs, damages, interest, penalties, and expenses incurred by
Buyer in connection with (i) the failure of the BCP Lease Amendment to be
executed by the parties thereto and Buyer having to secure the Alternate
Property or (ii) notwithstanding Buyer's commercially reasonable efforts, the
execution of the BCP Lease Amendment or a similar or comparable agreement on
terms less favorable to Buyer, shall be indemnifiable by Seller pursuant to
Section
7.2(d); provided, further, that with respect to rental costs for the
Alternate Property, Seller shall indemnify Buyer only for the amount of rental
costs in excess of the rental costs set forth on the rent schedule attached to
the BCP Lease Amendment but this shall not limit indemnification for other
losses, costs, damages and expenses described above.

    

     

    5.8    Directors
and Officers Insurance.  Buyer agrees to cause the current
insurance policy covering directors and officers liability engaged by MIPSABG
Chipidea, Limitada with AIG Europe, S.A., with number 23071042 (the “Existing
Policy”) to be kept in full force and effect until August 27, 2009;
provided, however, to the extent any additional premiums or other costs need to
be paid by Buyer in order to keep the Existing Policy in full force and effect
until August 27, 2009, such additional premiums or costs shall be borne solely
by Seller.   

     

    ARTICLE
6

     

    Closing
Deliverables

     

    6.1    Closing
Deliveries of Buyer.  Buyer shall execute and deliver to Seller
counterparts of each of the Ancillary Agreements to which Buyer is a party and
provide all deliverables and perform all obligations required to be completed by
Buyer prior to or at the Closing under all of the Ancillary Agreements to which
Buyer is a party, including effecting payment of the Purchase Price pursuant to
Section
2.1.

     

    6.2    Closing
Deliveries of Seller.  Seller shall satisfy or deliver to Buyer
the following at the Closing:

     

    (a)    Ancillary
Agreements.  Seller shall execute and deliver to Buyer
counterparts of each of the Ancillary Agreements to which Seller is a party and
provide all 

     

     

    
      
        
        

      

      
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      deliverables
and perform all obligations required to be completed by Seller prior to or at
the Closing under all of the Ancillary Agreements to which Seller is a
party.

    

     

    (b)    Third-Party
Consents. Seller shall deliver to Buyer duly executed copies of the
consent, approval or waiver of any Person whose consent, approval or waiver, as
the case may be, may be required in connection with the Transaction under the
Contracts listed on Exhibit
A hereto.

     

    (c)    Resignations
of Directors and Officers.  Seller shall deliver to Buyer
written resignations of each of the persons holding the positions of a director
or officer of the Company and its Subsidiaries in office immediately prior to
the Closing, other than each such director or officer who is an employee of the
Company or any of its Subsidiaries, in each case effective as of the
Closing.

     

    (d)    French
Subsidiary.  Seller shall deliver to Buyer evidence in form and
substance reasonably satisfactory to Buyer of the transfer of ownership of
Chipidea Microelectronica (France) SARL (the “French
Subsidiary”) such that is no longer a Subsidiary of the Company or any of
its other Subsidiaries (the “French
Subsidiary Transfer”).

     

    (e)    Power
of Attorney.  Seller shall deliver to Buyer the power of
attorney in the form attached hereto as Exhibit
E.

     

     

    ARTICLE
7

     

    Survival
of Representations, Indemnification

    and
Remedies; Continuing Covenants

     

    7.1    Survival.  The
representations and warranties of Seller contained in this Agreement shall
survive the Closing and remain in full force and effect, regardless of any
investigation or disclosure made by or on behalf of any of the parties to this
Agreement, until 11:59 p.m., Pacific Time on the date that is twelve (12) months
following the Closing Date (the “End
Date”), at which time all rights and remedies of all Indemnified Persons
in respect of such representations and warranties (and any breach thereof) shall
terminate; provided,
however,
that no right to indemnification pursuant to Article
7 in respect of any Claim based upon any breach of a representation or
warranty that is set forth in a Notice of Claim (as defined below) delivered
prior to the End Date shall be affected by the expiration of such representation
or warranty; provided further,
that the representations and warranties of Seller contained in Section
3.7 (Taxes) shall survive the Closing and remain in full force and
effect, regardless of any investigation or disclosure made by or on behalf of
any of the parties to this Agreement, until 11:59 p.m., Pacific Time on the date
that is twenty-four (24) months following the Closing Date; 

     

     

    
      
        
        

      

      
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      provided further,
that such expiration shall not affect the rights of any Indemnified Person under
Article
7 or otherwise to seek recovery of Damages arising out of any fraud or
intentional misrepresentation by Seller until the expiration of the applicable
statute of limitations.  The representations and warranties of Buyer
contained in this Agreement shall expire and be of no further force or effect as
of the Closing.  All covenants of the parties shall survive the
Closing in accordance with their respective terms.  Seller’s
obligations under Sections
7.2(b) (except with respect to Section
5.7(f)) or 7.2(c)
shall not expire.  Seller’s obligations under Section
5.7(f) and Section
7.2(d) shall expire on the End Date.

    

     

    7.2    Agreement
to Indemnify.  Seller shall indemnify and hold harmless Buyer
and its officers, directors, agents, representatives, stockholders and
employees, and each Person, if any, who controls or may control Buyer (each
hereinafter referred to individually as an “Indemnified
Person” and collectively as “Indemnified
Persons”) from and against any and all losses, costs, damages, interest,
penalties, and expenses (including reasonable attorneys’ fees, other
professionals’ and experts’ fees, costs of investigation, settlement, defense,
arbitration and court costs) (collectively, “Damages”),
whether or not due to a Third-Party Claim (as defined below), arising out of or
resulting from:  (a) any breach of any representation or warranty made
by Seller in this Agreement (as qualified by the Seller Disclosure Letter); (b)
any breach of any of the covenants or agreements made by Seller in this
Agreement; (c) any Unrelated Liability; or (d) (i) the failure of MIPSABG
Chipidea, Limitada, Seller or any of their respective Affiliates to make any
payments that became due and payable under the BCP Agreement prior to the
Closing Date, or (ii) the failure of the BCP Lease Amendment to be executed on
the same or substantially similar terms by the parties thereto and Buyer
incurring Damages including without limitation in connection with having to
secure Alternate Property pursuant to Section
5.7(f).

     

    7.3    Limitations.

     

    (a)    The
maximum liability of Seller for the matters described in Section
7.2(a) shall be $2,200,000, except in the case of fraud or intentional
misrepresentation or the matters described in the next
sentence.  Notwithstanding the foregoing, (i) the maximum liability of
Seller for the matters listed in Section
7.2(a) with respect to (A) any breach of the representations and
warranties set forth in Section
3.13(a) (Compliance with Laws) or Section
3.20 (Anti-Bribery Compliance) shall be $5,000,000; and (B) any breach of
the representations and warranties set forth in Section
3.1 (Capital Structure; Title to the Purchased Interests), Section
3.2 (Organization and Good Standing), Section
3.7 (Taxes) or  Sections
3.8(c), (d) or (e) (Financial Statements) shall be the Purchase Price,
(ii) the maximum liability of Seller under Sections 5.7(f)
or 7.2(d)
shall be $5,000,000 (provided, that, with respect to rental costs for the
Alternate Property, Seller shall indemnify Buyer only for the amount of rental
costs in excess of the rental costs set forth on the rent schedule attached to
the BCP Lease Amendment, not to 

     

     

    
      
        
        

      

      
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      exceed
$5,000,000), and (iii) there is no maximum liability of Seller under Sections
7.2(b) (except with respect to Section
5.7(f)) or 7.2(c).

    

     

    (b)    In
determining the amount of any Damages in respect of the failure of any
representation or warranty to be true and correct as of any particular date, any
materiality standard or qualification contained in such representation or
warranty shall be disregarded; provided,
however,
that such materiality standard or qualification shall not be disregarded for the
purposes of the initial determination of whether there was a failure of such
representation or warranty to be true and correct as
aforesaid.

     

    (c)    Notwithstanding
anything contained herein to the contrary, no Indemnified Person shall be
entitled to Damages for any matter described in Section
7.2(a) (except with respect to fraud or intentional misrepresentation by
Seller) unless and until the total amount of Damages to which such Indemnified
Person seeks to be indemnified pursuant to any of the matters described in Section
7.2(a) exceed $200,000 in the aggregate (the “Basket
Amount”), after which point such Indemnified Person may make claims for
indemnification for all Damages, including the Basket
Amount.

     

    7.4    Notice
of Claim. As used herein, the term “Claim”
means a claim for indemnification by Buyer or any other Indemnified Person for
Damages under this Article
7.  Buyer may give notice of a Claim under this Agreement,
whether for its own Damages or for Damages incurred by any other Indemnified
Person, and Buyer shall give written notice of a Claim executed by an officer of
Buyer (a “Notice of
Claim”) to Seller reasonably promptly after Buyer becomes aware of the
existence of any potential claim by an Indemnified Person for indemnification
under this Article
7, arising from or relating to:

     

    (a)    Any
matter specified in Section
7.2; or

     

    (b)    the
assertion, whether orally or in writing, against Buyer or any other Indemnified
Person of a claim, demand, suit, action, arbitration, investigation, inquiry or
proceeding brought by a third party against Buyer or such other Indemnified
Person (in each such case, a “Third-Party
Claim”) with respect to which Seller may become obligated to hold
harmless any Indemnified Person pursuant to this Article
7.

     

    The
period during which claims may be initiated (the “Claims Period”) for
indemnification (including the matters set forth in Section 5.7(f) and Section 7.2(d)) shall
commence at the Closing and terminate at 11:59 p.m., Pacific Time on the End
Date.  Notwithstanding the foregoing, (i) the Claims Period for
indemnification from and against Damages arising out of or resulting from any
breach of the representations and warranties made in Section 3.7 (Taxes)
shall 

     

     

    
      
        
        

      

      
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    commence
at the Closing and terminate at 11:59 p.m., Pacific Time on the date that is
twenty-four (24) months following the Closing Date and (ii) the Claims Period
for indemnification from and against Damages arising out of or resulting from
fraud or intentional misrepresentation by Seller or for indemnification by
Seller for the matters set forth in Sections 7.2(b)
(except with respect to Section 5.7(f)) or
7.2(c) shall
commence at the Closing and terminate upon the expiration of the applicable
statute of limitations.  Notwithstanding anything contained herein to
the contrary, any Claims for Damages specified in any Notice of Claim delivered
by Buyer to Seller prior to expiration of the applicable Claims Period with
respect to facts and circumstances existing prior to expiration of the
applicable Claims Period (in each case to the extent such claims are the proper
subject of indemnification hereunder) shall remain outstanding until such Claims
for Damages have been resolved or satisfied, notwithstanding the expiration of
such Claims Period.  Until the expiration of the applicable Claims
Period, no delay on the part of Buyer in giving Seller a Notice of Claim shall
relieve Seller from any of its obligations under this Article 7 unless (and
then only to the extent that) Seller is materially prejudiced
thereby.

     

    7.5    Contents
of Notice of Claim.  Each Notice of Claim by Buyer given
pursuant to Section
7.4 shall contain the following information:

     

    (a)           that
Buyer or another Indemnified Person has incurred, paid, accrued, reserved or, in
good faith, believes it will have to incur, pay, accrue or reserve, Damages in
an aggregate stated amount arising from such Claim (which amount may be the
amount of damages claimed by a third party in an action brought against any
Indemnified Person based on alleged facts, which if true, would give rise to
liability for Damages to such Indemnified Person under this Article
7); and

     

    (b)           a
description, in reasonable detail, of the facts, circumstances or events giving
rise to the alleged Damages based on Buyer’s good faith belief thereof,
including the identity and address of any third-party claimant (to the extent
reasonably available to Buyer) and copies of any formal demand or complaint, the
amount of Damages, the date each such item was incurred, paid or properly
accrued, or the basis for such anticipated liability, and the specific nature of
the breach to which such item is related.

     

    7.6    Defense
of Third-Party Claims.  Except with respect to the Specified
Claims, which is covered by Section
5.6:

     

    (a)    Buyer
shall determine and conduct the defense or settlement of any Third-Party Claim,
and, except as otherwise provided in this Agreement, the reasonable costs and
expenses incurred by Buyer in connection with such defense or settlement
(including reasonable attorneys’ fees, other professionals’ and experts’ fees
and court or arbitration costs) shall be 

     

     

    
      
        
        

      

      
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      included
in the Damages for which Buyer may seek indemnification pursuant to a Claim made
by any Indemnified Person hereunder.

    

     

    (b)    Seller
shall have the right to receive copies of all pleadings, notices and
communications with respect to the Third-Party Claim to the extent that receipt
of such documents by Seller does not affect any privilege relating to the
Indemnified Person and may participate in, but not to determine or conduct, any
defense of the Third-Party Claim or settlement negotiations with respect to the
Third-Party Claim.

     

    (c)    Buyer
shall not settle any such Third-Party Claim with any third party without the
prior written consent of Seller, which consent shall not be unreasonably
withheld, conditioned or delayed and which shall be deemed to have been given
unless Seller shall have objected within fifteen (15) Business Days after a
written request for such consent by Buyer.  In the event that Seller
has consented to any such settlement or such consent shall have been
unreasonably withheld, conditioned or delayed, Seller shall not have any power
or authority to object under any provision of this Article
7 to the amount of any claim by or on behalf of any Indemnified Person
against Seller for indemnity with respect to such
settlement.

     

    7.7    Resolution
of Notice of Claim.  Each Notice of Claim given by Buyer shall
be resolved as follows:

     

    (a)    Uncontested
Claims.  If, within thirty (30) Business Days after a Notice of
Claim is received by Seller, Seller does not contest such Notice of Claim in
writing to Buyer as provided in Section
7.7(b), then, to the extent of the limitations set forth in this Article
7, Seller shall be conclusively deemed to have consented to the recovery
by the Indemnified Person of the full amount of Damages specified in the Notice
of Claim in accordance with this Article
7, and, without further notice, to have stipulated to the entry of a
final judgment for damages against Seller for such amount in any court having
jurisdiction over the matter where venue is proper.

     

    (b)    Contested
Claims.  If Seller gives Buyer written notice contesting all or
any portion of a Notice of Claim (a “Contested
Claim”) within the thirty (30) Business Day period specified in Section
7.7(a), then such Contested Claim shall be resolved by either (i) a
written settlement agreement executed by Buyer and Seller or (ii) in the absence
of such a written settlement agreement within thirty (30) Business Days
following receipt by Buyer of the written notice from Seller, by binding
arbitration between Buyer and Seller in accordance with the terms and provisions
of Section
7.7(c).

     

    (c)    Arbitration
of Contested Claims.  Either Buyer or Seller may make a demand
for arbitration as set forth in Section
8.13 to resolve the Contested Claim.  The decision

     

     

    
      
        
        

      

      
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      of
the arbitrator as to the validity and amount of any claim in such Notice of
Claim shall be nonappealable, binding and conclusive upon the parties to this
Agreement.

    

     

    7.8    Exclusive
Remedy.  Except in the case of a Claim for fraud or intentional
misrepresentation or a suit for specific performance, the rights and remedies of
the Indemnified Persons as provided in this Article
7 shall be the sole and exclusive remedy of Buyer and any other
Indemnified Person for any breach of this Agreement or otherwise in connection
with the Transaction and no other remedy shall be had in contract, tort or
otherwise against Seller, all such remedies being expressly
waived.

     

     

    ARTICLE
8

     

    Miscellaneous

     

    8.1    Governing
Law.  The internal law, without regard for conflicts of laws
principles, of the State of California shall govern the validity of this
Agreement, the construction of its terms, and the interpretation and enforcement
of the rights and duties of the parties hereto.

     

    8.2    Assignment;
Binding Upon Successors and Assigns.   Neither this
Agreement nor any of the rights, interests or obligations under this Agreement
may be assigned or delegated, in whole or in part, by operation of law or
otherwise by any of the parties hereto without the prior written consent of the
other parties hereto, and any such assignment without such prior written consent
shall be null and void, except that Buyer may assign this Agreement to any
direct or indirect wholly owned subsidiary of Buyer without the prior consent of
Seller; provided,
however,
that Buyer shall remain liable for all of its obligations under this
Agreement.  Subject to the preceding sentence, this Agreement shall be
binding upon, inure to the benefit of, and be enforceable by, the parties hereto
and their respective successors and assigns.

     

    8.3    Severability.  If
any provision of this Agreement, or the application thereof, shall for any
reason and to any extent be invalid or unenforceable, then the remainder of this
Agreement and the application of such provision to other persons or
circumstances shall be interpreted so as reasonably to effect the intent of the
parties hereto.  The parties further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable provision
that shall achieve, to the extent possible, the economic, business and other
purposes of the void or unenforceable provision.

     

    8.4    Counterparts.  This
Agreement may be executed in any number of counterparts, each of which shall be
an original as regards any party whose signature appears thereon and all of
which together shall constitute one and the same instrument.  This
Agreement shall become 

     

     

    
      
        
        

      

      
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      binding
when one or more counterparts hereof, individually or taken together, shall bear
the signatures of all parties reflected hereon as
signatories.

    

     

    8.5    Other
Remedies.  Except as otherwise expressly provided herein, any
and all remedies herein expressly conferred upon a party hereunder shall be
deemed cumulative with and not exclusive of any other remedy conferred hereby or
by law on such party, and the exercise of any one remedy shall not preclude the
exercise of any other.  The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached.  It is accordingly agreed that the parties shall be entitled
to seek an injunction or injunctions to prevent breaches of this Agreement and
to enforce specifically the terms and provisions hereof in any court having
jurisdiction.

     

    8.6    Amendments
and Waivers.  Any term or provision of this Agreement may be
amended, and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only by a writing signed by the party to be bound
thereby.  The waiver by a party of any breach hereof or default in the
performance hereof shall not be deemed to constitute a waiver of any other
default or any succeeding breach or default.  The failure of any party
to enforce any of the provisions hereof shall not be construed to be a waiver of
the right of such party thereafter to enforce such
provisions.

     

    8.7    Expenses.  Each
party shall bear its respective legal, auditors’, investment bankers’ and
financial advisors’ fees and other expenses incurred with respect to this
Agreement and the Transaction.

     

    8.8    Notices.  All
notices and other communications required or permitted under this Agreement
shall be in writing and shall be either hand delivered in person, sent by
facsimile, sent by certified or registered first-class mail, postage pre-paid,
or sent by internationally recognized express courier service.  Such
notices and other communications shall be effective upon receipt if hand
delivered or sent by facsimile, three days after mailing if sent by mail, and
one day after dispatch if sent by express courier, to the following addresses,
or such other addresses as any party may notify the other parties in accordance
with this Section
8.8:

     

    If to
Buyer:

     

    Synopsys,
Inc.

    700 East
Middlefield Road

    Mountain
View, CA 94043

     

     

    
      
        
        

      

      
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    Attention:  General
Counsel

    Facsimile
Number:  (650) 584-1184

     

    with a
copy to:

     

    Fenwick
& West LLP

                    Silicon
Valley Center

                    801 California
Street

                    Mountain View,
CA 94041

                    Attention:  Mark
A. Leahy

                                Douglas
N. Cogen

                    Facsimile Number:
(650) 988-8500

     

    If to
Seller:

     

    If on or
prior to June 1, 2009, then to:

    

    MIPS
Technologies, Inc.

    1225
Charleston Road

    Mountain
View, CA 94043

    Attention:  General
Counsel

                    Facsimile Number:
(650) 567-5154

     

    If after
June 1, 2009, then to:

    

    MIPS
Technologies, Inc.

    955 East
Arques Avenue

    Sunnyvale,
CA 94085

    Attention:  General
Counsel

                    Facsimile Number:
(650) 567-5154

     

    with a
copy to:

     

    Cooley
Godward Kronish LLP

                    3175 Hanover
Street

                    Palo Alto,
CA 94304

                    Attention:  Keith
A. Flaum

                    Facsimile
Number:  (650) 849-7400

     

     

    
      
        
        

      

      
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    8.9    Interpretation;
Rules of Construction.  When a reference is made in this
Agreement to Exhibits, such reference shall be to an Exhibit to this Agreement
unless otherwise indicated.  When a reference is made in this
Agreement to Sections, such reference shall be to a Section of this Agreement
unless otherwise indicated.  When a reference is made in this
Agreement to Articles, such reference shall be to an Article of this Agreement
unless otherwise indicated.  The words “include”, “include” and
“including” when used herein shall be deemed in each case to be followed by the
words “without limitation”.  The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.  Reference to the subsidiaries of an
entity shall be deemed to include all direct and indirect subsidiaries of such
entity.  The parties hereto agree that they have been represented by
legal counsel during the negotiation and execution of this Agreement and,
therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document shall
be construed against the party drafting such agreement or
document.

     

    8.10    No
Joint Venture.  Nothing contained in this Agreement shall be
deemed or construed as creating a joint venture or partnership between any of
the parties hereto.  No party is by virtue of this Agreement
authorized as an agent, employee or legal representative of any other
party.  No party shall have the power to control the activities and
operations of any other and their status is, and at all times shall continue to
be, that of independent contractors with respect to each other.  No
party shall have any power or authority to bind or commit any other
party.  No party shall hold itself out as having any authority or
relationship in contravention of this Section 8.10.

     

    8.11    Third
Party Beneficiary Rights.  No provisions of this Agreement are
intended, nor shall be interpreted, to provide or create any third party
beneficiary rights or any other rights of any kind in any client, customer,
employee, affiliate, stockholder, partner or any party hereto or any other
Person unless specifically provided otherwise herein and, except as so provided,
all provisions hereof shall be personal solely between the parties to this
Agreement; except
that Article
7 is intended to benefit the Indemnified Persons.

     

    8.12    Confidentiality.  Seller
and Buyer each confirm that they have entered into that certain Confidentiality
Agreement dated March 20, 2009 (the “NDA”),
as amended by the First Addendum dated April 23, 2009 (the “First
Addendum”), and as further amended by the Second Addendum dated May 7,
2009 (the “Second
Addendum”), and each of Seller and Buyer confirm that it is bound by, and
shall abide by, the provisions of such NDA, as amended by the First Addendum and
the Second Addendum.

     

     

    
      
        
        

      

      
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    8.13    Arbitration.  Any
dispute arising out of, relating to, or in connection with this Agreement shall
be submitted to mandatory, final and binding arbitration before J.A.M.S. or its
successor (“J.A.M.S.”)
pursuant to the United States Arbitration Act, 9 U.S.C., Section 1 et seq., and
any such arbitration shall be conducted in Santa Clara, California.  If
J.A.M.S. ceases to provide arbitration service, then the term “J.A.M.S.” shall
thereafter mean and refer to the American Arbitration Association (“AAA”). 
Either Buyer or Seller may commence the arbitration process called for by this
Agreement by filing a written demand for arbitration with J.A.M.S. and
delivering a copy of such demand to the other party to this Agreement in
accordance with Section
8.8.  The arbitration shall be conducted in accordance with the
provisions of J.A.M.S.’ Streamlined Arbitration Rules and Procedures in effect
at the time of filing of the demand for arbitration (or, if J.A.M.S. then means
the AAA, the commercial arbitration rules of the AAA then in effect), subject to
the provisions of this Section
8.13.  Other than as expressly set forth in Article
7, the applicable statutes of limitation and/or other time-based defenses
shall be available to the parties, and applicable to disputes between the
parties, as if this were an action filed in a court of competent
jurisdiction.  The parties shall cooperate with J.A.M.S. and with each
other in promptly selecting an arbitrator from J.A.M.S.’ panel of neutrals and
in scheduling the arbitration proceedings in order to fulfill the provisions,
purposes and intent of this Agreement.  Notwithstanding anything to the
contrary herein, either party may seek injunctive relief in a court of competent
jurisdiction to prevent irreparable harm from occurring prior to the selection
of the arbitrator.  The parties covenant that they shall participate in the
arbitration in good faith.  The arbitrator may award the prevailing party
its costs, fees and expenses, including attorneys’ fees incurred in connection
with the arbitration, provided that in any proceeding under Article
7 for Damages, Buyer shall be deemed to be the prevailing party if the
arbitrator awards Buyer one-half or more of the amount in dispute; otherwise,
Seller shall be deemed to be the prevailing party.  The provisions of this
Section
8.13 and judgment upon the award rendered by the arbitrator may be
enforced by any court of competent jurisdiction.

     

    8.14    Non-Reliance.  Buyer
acknowledges and agrees that: (a) Seller has not made and is not making any
representations or warranties whatsoever regarding the subject matter of this
Agreement, express or implied, except as provided in Article
3; (b) it is not relying and has not relied on any representations or
warranties whatsoever regarding the subject matter of this Agreement, express or
implied, except as provided in Article
3; and (c) no employee, agent, advisor or other representative of Seller
or any of its Affiliates (including the Company and its Subsidiaries) has made
or is making any representations or warranties whatsoever regarding the subject
matter of this Agreement, express or implied, except as provided in Article
3.

     

    8.15    Entire
Agreement.  This Agreement, the exhibits and schedules hereto,
and the Ancillary Agreements constitute the entire understanding and agreement
of the parties hereto with respect to the subject matter hereof and supersede
all prior and contemporaneous 

     

     

    
      
        
        

      

      
        54

        
          

        

      

      
        
        

      

       

       

      agreements
or understandings, inducements or conditions, express or implied, written or
oral, between the parties with respect hereto other than the NDA.  The
express terms hereof control and supersede any course of performance or usage of
the trade inconsistent with any of the terms hereof.

    

     

    

     

    [Signature
Page Next]

     

    
      
        
        

      

      
        55

        
          

        

      

      
        
        

      

    

    

     

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

     

    
    

     

    
      	 Synopsys,
      Inc.     	 MIPS
      Technologies, Inc.
	 	 
	 	 
	 	 
	 By: /s/ RANDY TINSLEY        	 By: 
      /s/ JOHN BOURGOIN        
	 	 
	 Name: 
      Randy Tinsley          	 Name: 
      John Bourgoin          
	 	 
	 Title: 
      VP, Strategic & Corp. Bus.
      Dev. 	 Title: 
      President and CEO         
	 	 

    

     

     

    

     

     

    [Signature
Page to Membership Interest Purchase Agreement]

     

     

     

    
      
        
        

      

      
        56

        
          

        

      

      
        
        

      

    

    
 

    List
of Exhibits and Schedules

     

    

    EXHIBITS

    

    Exhibit
A                               Third
Party Consents

    Exhibit
B                                Second
Addendum

    Exhibit
C                                BCP
Lease Amendment

    Exhibit
D                                License
Agreement

    Exhibit
E                                Power
of Attorney

    

    SCHEDULES

    

    Schedule
5.2(d)                    List
of Tax Refunds

    Schedule
5.4(b)(i)                List
of Buyer Employees

    Schedule
5.4(b)(ii)               List
of Seller Employees

    Schedule
5.6                         List
of Specified Claims

    Schedule
5.7(e)                    List
of Company Debt With Non-Buyer Affiliated GuarantorExhibit 10.71

 

EMPLOYMENT
AGREEMENT

 

THIS
EMPLOYMENT AGREEMENT (“Agreement”) is made on this 26th day of January, 2009,
by and between AVI BioPharma, Inc.,
an Oregon corporation, with its principal office at 4575 SW Research Way, Suite 200,
Corvallis, Oregon, (“Company”), and Stephen Bevan Shrewsbury MD, 1100
Lincoln Village Circle, Apartment 248, Larkspur, CA  94939 (“Employee”).

 

RECITALS:

 

The
Company desires to hire the Employee as Senior Vice President — Preclinical,
Clinical and Regulatory Affairs and the Employee desires to accept such
position under the terms and conditions stated herein.

 

NOW,
THEREFORE, in consideration of the mutual benefits contained herein, the
sufficiency of which the parties acknowledge, the parties hereby agree as
follows:

 

AGREEMENT:

 

1.             Employment Term.  The term of employment (“Term”) shall
commence on the Effective Date and shall continue until the first anniversary
of the Effective Date, unless extended or terminated in accordance with Section 12.  This Agreement establishes an “at will”
employment relationship, as such term is defined and used under Oregon law,
between the Company and the Employee.  
Employee shall commence employment not later than January 26, 2009  (the “Effective Date”).  Failure to do so shall be grounds for
immediate termination for Cause, as such term is defined in Section 12
hereof.

 

2.             Duties.  Employee shall be employed as Senior Vice
President- Preclinical, Clinical and Regulatory Affairs and shall have such
duties as are customarily associated with that position, including overall
responsibility for pre-clinical, clinical and regulatory activities and
initiatives that will enable the Company to develop candidates for further
clinical activities, and such other duties as may be assigned to him from time
to time by the Company’s Chief Executive Officer (“CEO”) and the Board
of Directors of the Company (“Board”). Employee shall be a direct report
of the Company’s Chief Executive Officer. Employee shall devote substantially
all of his business time to the service of the Company throughout the
Term.  Employee and Company acknowledge
and agree that (i) Employee may hold certain offices within certain
entities as set forth on Exhibit A to this Agreement, (ii) Employee’s
devotion of reasonable amounts of time in such capacities, so long as it does
not interfere with his performance of services hereunder, shall not conflict
with the terms of this Agreement, and (iii) Exhibit A may be
amended from time to time by agreement of the parties.

 

 

3.             Compensation.

 

(a)           Base Compensation.  During the Term the Company shall compensate
the Employee at an initial annual salary of Three Hundred Ten Thousand Dollars
($310,000.00), payable in accordance with the Company’s payroll practices in
effect from time to time, and less amounts required to be withheld under
applicable law and requested to be withheld by the Employee (as increased from
time to time, “Base Compensation”). The Employee’s Base Compensation
shall be subject to review for potential increase on an annual basis. Except as
otherwise provided in this Agreement, the Base Compensation shall be prorated
for any period of service less than a full month.

 

(b)           Bonus.  The Employee shall be eligible for an annual
bonus of up to 25% of Employee’s Base Compensation, which bonus shall be paid
in the normal cycle of payment of executive bonuses and upon achievement and
satisfaction of goals and objectives (“Goals and Objectives”)
established upon mutual agreement of the CEO, Employee and the Compensation
Committee of the Company’s Board.  Such
goals shall be established concurrently with the goals and objectives of the
Company’s other senior executives. 
Employee shall be eligible for consideration for an award of a full
12-month bonus based on achievement of 2009 Goals and Objectives.

 

(c)           Equity Compensation.

 

(i)                                     On the
Effective Date, the Employee will be granted options to purchase Four Hundred
Fifty Thousand (450,000) shares of the Company’s common stock (the “Options”)
under the Company’s 2002 Equity Incentive Plan (the “Plan”) (a copy of
which is attached as Exhibit B, with an exercise price at the fair
market value of the Company common stock on the date Effective Date;

 

(ii)                                  In addition, Employee will
be issued 60,000 shares of restricted stock under the Plan (the “Restricted
Shares”).  In the event Employee
remains employed on the 181st day following the Effective
Date, vesting shall commence with respect to such Restricted Shares as of the
Effective Date; and

 

(iii)                               The exercise price of the
Options and the issuance price of the Restricted Shares and all other terms and
conditions associated with the Options and Restricted Shares be determined in
accordance with the Plan. To the maximum extent possible, the Options shall be
Incentive Stock Options. Subject to accelerated vesting or termination as set
forth herein, the Standard Options and Restricted Shares shall vest in equal
annual installments over three (3) years

 

 

4.             Expenses.  The Company will reimburse Employee for all
expenses reasonably incurred by him in discharging his duties for the Company,
conditioned upon Employee’s submission of written documentation in support of
claimed reimbursement of such expenses, and consistent with the Company’s
expense reimbursement policies in effect from time to time. The Company will
reimburse the Employee up to One Hundred Thousand Dollars ($100,000) for
reasonable expenses incurred in 2009 to relocate Employee and parts of Employee’s
household in a manner compatible with Employee’s duties hereunder to the city
where the Company’s headquarters are located (“Facility Location”),
including the shipment of personal effects to the Facility Location, and the
customary closing costs associated with the purchase of a residence in the
Facility Location.  In addition, Company
shall reimburse Employee (or pay on Employee’s behalf) rent and related living
expenses, not to exceed $2,500 per month in the aggregate and up to six (6) months
in duration for temporary living arrangements. 
In addition, the Company shall reimburse Employee for reasonable
attorneys fees incurred in connection with the review and negotiation of this
Agreement in an amount not to exceed $3,000.

 

5.             Benefits.  Subject to eligibility requirements, Employee
shall be entitled to participate in such benefits plans and programs as adopted
by the Company from time to time and shall be eligible for paid vacation of
four (4) business weeks (20 business days) annually; provided,
however, if Employee does not use all available vacation in any
given year, Employee may roll-over up to one business week (5 business days) to
the following year, the parties intending that Employee shall have a maximum of
five (5) business weeks (25 business days) of paid vacation in any year
following 2009.

 

6.             Confidentiality.

 

(a)           In the course of his
employment with the Company, it is anticipated that Employee may acquire
knowledge (both orally and in writing) regarding confidential affairs of the
Company and confidential or proprietary information including: (i) matters
of a technical nature, such as know-how, inventions, processes, products,
designs, chemicals, compounds, materials, drawings, concepts, formulas, trade
secrets, secret processes or machines, inventions or research projects; (ii) matters
of a business nature, such as information about costs, profits and pricing
policies; (iii)  markets, sales, suppliers, customers, plans for future
development, plans for future products, marketing plans or strategies; and (iv) other
information of a similar nature which is not generally disclosed by the Company
to the public, referred to collectively hereafter as “Confidential Information.”
“Confidential Information” shall not include information generally available to
the public. Employee agrees that during the term of this Agreement and
thereafter, he (1) will keep secret and retain in the strictest confidence
all Confidential Information, (2) not disclose Confidential Information to
anyone except employees of the Company authorized to receive it and third
parties to whom such disclosure is specifically authorized, and (3) not
use any Confidential Information for any purpose other than performance of
services under this Agreement without prior written permission from the
Company.

 

(b)           If Employee is served with
any subpoena or other compulsory judicial or administrative process calling for
production or disclosure of Confidential Information or if Employee is
otherwise required by law or regulation to disclose Confidential Information,
Employee will immediately, and prior to production or disclosure, notify the
Company and 

 

 

provide
it with such information as may be necessary in order that the Company may take
such action as it deems necessary to protect its interest.

 

(c)           The provisions of this Section 6
shall survive termination of this Agreement.

 

7.             Non-competition and
Non-solicitation.

 

(a)           For a period of one (1) year
in the case of the payment of severance equal to 12 months Base Compensation
and for a period of two (2) years in the case of the payment of severance
equal to 24 months Base Compensation, in both instances as provided in Section 13(c) below,
Employee shall not directly or indirectly engage in or have any ownership
interest in, or participate in the financing, operation, management or control
of, any person, firm, corporation or business that engages in any activity
customarily associated with the Company’s ordinary course of business at the
time of such termination anywhere in the world; provided, however, that
this provision shall not prohibit Employee from owning up to five percent (5%)
of any class of outstanding bonds, preferred stock or shares of common stock of
any such entity or from employment with any institute of higher learning.

 

(b)           For a period of two (2) years
following termination of employment with the Company for any reason, except
with the express written consent of the Company, Employee agrees to refrain
from directly or indirectly recruiting, hiring or assisting anyone else to
hire, or otherwise counseling to discontinue employment with the Company, any
person then employed by the Company or its subsidiaries or affiliates.

 

(c)           In the event that the
provisions of this Section 7 should ever be deemed to exceed the
duration or geographic limitations or scope permitted by applicable law, then
such provisions shall be reformed to the maximum time or geographic limitations
or scope, as the case may be, permitted by applicable laws.

 

(d)           The provisions of this Section 7
shall survive termination of this Agreement and the term of employment.

 

8.             Covered Work.

 

(a)           All rights, title and
interest to any Covered Work that Employee makes or conceives (whether alone or
with others) while employed by the Company, belong to the Company. This
Agreement operates as an actual assignment of all rights in Covered Work to the
Company. “Covered Work” means products and Inventions that relate to the
actual or anticipated business of the Company or any of its subsidiaries or
affiliates, or that result from or are suggested by a task assigned to Employee
or work performed by Employee on behalf of the Company or any of its
subsidiaries or affiliates, or that were developed in whole or in part on the
Company time or using the Company’s equipment, supplies or facilities. “Inventions”
mean ideas, improvements, designs, computer software, technologies, techniques,
processes, products, chemicals, compounds, materials, concepts, drawings,
authored works or discoveries, whether or not patentable or copyrightable, as
well as other newly discovered or newly applied information or concepts.
Attached hereto as Exhibit D is a description of any product or
Invention in which 

 

 

Employee
had or has any right, title or interest, which is not included within the
definition of Covered Work or which is otherwise excluded from the restrictions
set forth in this Section 8.

 

(b)           Employee shall promptly
reveal all information relating to Covered Work and Confidential Information to
an appropriate officer of the Company and shall cooperate with the Company, and
execute such documents as may be necessary, in the event that the Company
desires to seek copyright, patent or trademark protection thereafter relating
to same.

 

(c)           In the event that the
Company requests that Employee assist in efforts to defend any legal claims to
patents or other right, the Company agrees to reimburse Employee for any
reasonable expenses Employee may incur in connection with such assistance. This
obligation to reimburse shall survive termination of this Agreement and the
term of employment.

 

(d)           The provisions of this Section 8
shall survive termination of this Agreement and the term of employment.

 

9.             Return of Inventions,
Products and Documents.  Employee acknowledges and agrees that all
Inventions, all products of the Company and all originals and copies of
records, reports, documents, lists, drawings, memoranda, notes, proposals,
contracts and other documentation related to the business of the Company or
containing any information described in this Section 9  shall be the sole and exclusive property of
the Company and shall be returned to the Company immediately upon termination
of Employee’s employment with the Company or upon the written request of the
Company. The provisions of this Section 9 shall survive termination
of this Agreement and the term of employment

 

10.          Injunction.  Employee agrees that it would be difficult to
measure damages to the Company from any breach by Employee of Sections 6, 7,
8 and/or 9 of this Agreement, and that monetary damages would be an
inadequate remedy for any such breach. Accordingly, Employee agrees that if
Employee shall breach Sections 6, 7, 8 and/or 9 of this
Agreement, the Company shall be entitled, in addition to all other remedies it
may have at law or in equity, to an injunction or other appropriate orders to
restrain any demonstrated breach without showing or proving any actual damage
sustained by the Company. The provisions of this Section 10 shall
survive termination of this Agreement and the term of employment.

 

11.          Obligations
to Others.  Except for
items fully disclosed in writing to the Company, Employee represents and
warrants to the Company that (i) Employee’s employment by the Company does
not violate any agreement with any prior employer or other person or entity,
and (ii) Employee is not subject to any existing confidentiality or
non-competition agreement or obligation, or any agreement relating to the
assignment of Inventions except as has been fully disclosed in writing to the
Company.

 

12.          Termination.

 

(a)           Employee may voluntarily
terminate his employment with the Company upon giving the Company sixty (60)  days written notice.

 

 

(b)           The Company may terminate
Employee’s employment without Cause (as defined below) upon giving Employee
thirty (30) days written notice of termination.

 

(c)           Employee’s employment with
the Company shall terminate upon the occurrence of any one of the following:

 

(i)            Employee’s death;

 

(ii)           The effective date of a
notice sent to Employee stating the Board’s determination made in good faith
and after consultation with a qualified physician selected by the Board, that
Employee is incapable of performing his duties under this Agreement, with
reasonable accommodation, because of a physical or mental incapacity that has
prevented Employee from performing such full-time duties for a period of ninety
(90) consecutive calendar days and the determination that such incapacity is
likely to continue for at least another ninety (90) days; or

 

(iii)          The effective date of a
notice sent to Employee terminating Employee’s employment for Cause.

 

(d)           “Cause” means the
occurrence of one or more of the following events:

 

(i)            Employee’s willful and
repeated failure or refusal to comply in any material respect with the
reasonable lawful policies, standards or regulations from time to time
established by the Company, or to perform his duties in accordance with this
Agreement after notice to Employee of such failure and after Employee has been
given a reasonable period of time to cure such failure to comply; or

 

(ii)           Employee engages in criminal
conduct or demonstrably engages in misconduct that is materially detrimental to
the reputation, character or standing of the Company.

 

(e)                                  Notwithstanding anything to
the contrary herein, unless sooner terminated in accordance with the terms
hereof, this Agreement shall automatically renew for an additional one-year
term unless one party notifies the other party in accordance with Section 14
hereof of its intention not to renew, such notice to be delivered not less than
90 days before the term ends.

 

13.          Termination
Compensation.

 

(a)           Upon Employee’s voluntary
termination of employment, other than voluntary termination with Good Reason
(as defined below), the Company shall pay to Employee all compensation due to
the date of termination, but shall have no further obligation to Employee
hereunder in respect of any period following termination.

 

(b)           Upon the death of Employee,
the Company shall pay to Employee’s estate or such other party who shall be
legally entitled thereto, all compensation due at the date of death, and an 

 

 

additional
amount equal to compensation at the rate set forth in this Agreement or then
current annual salary rate, whichever is greater, from the date of death to the
final day of the month following the month in which the death occurs.

 

(c)           (i)  Upon termination
of Employee’s employment by the Company other than for Cause and other than in
connection with a Change in Control, the Company shall pay to Employee twelve
(12) months of Base Compensation. In addition, all nonvested Options shall
immediately vest and be exercisable for a period of 180-days following the
effective date of termination.

 

(ii) 
Upon termination by the Company other than for Cause in connection with a
Change in Control or upon Employee’s voluntary termination of employment for
Good Reason in connection with a Change of Control, the Company shall pay to
Employee twenty-four (24) months of Base Compensation.  In addition, all nonvested Options shall
immediately vest and be exercisable for a period of 180-days following the
effective date of termination.

 

(d)           Amounts payable under this Section 13
shall be net of amounts required to be withheld under applicable law and
amounts requested to be withheld by Employee.

 

(e)           As used herein, “Good Reason” shall mean,
following a Change of Control (as such term is defined below), the termination
by Employee upon the occurrence of any of the below described events. The
Employee must provide notice to the Company of the existence of such event
within ninety (90) days of the first occurrence of such event, and the Company will
have thirty (30) days to remedy the condition, in which case no Good Reason
shall exist.  If the Company fails to
remedy the condition within such thirty (30) day period, the Employee must
terminate employment within two (2) years of the first occurrence of such
event.  The events which constitute a
Good Reason termination are:

 

(i)                    The assignment
of a different title or change that results in a material reduction in
Employees duties or responsibilities;

 

(ii)                   A reduction by
the Company in Employee’s Base Compensation, other than a salary reduction that
is part of a general salary reduction affecting employees generally and
provided the reduction is not greater, percentage-wise, than the reduction
affecting other employees generally or failure to provide an annual increase in
Base Compensation commensurate with other Employees; provided,
however, in determining whether to provide an annual increase in
Base Compensation commensurate with an annual increase provided to other
Employees, the Company may take into
account factors such as market levels of compensation, Employee’s overall
performance, and other factors reasonably considered by the Company’s
compensation committee and/or Board of Directors, so long as such determination
is not made in bad faith with the intent to discriminate against Employee;
or

 

(iii)                  Relocation of
Employee’s principal place of business of greater than seventy-five (75) miles
from its then location; provided, however,
the first such 

 

 

relocation in connection with the concurrent relocation of the Company’s
headquarters shall not constitute Good Reason hereunder.

 

(f)            As a condition of payment of
the amounts set forth in this Section 13, if requested by Company
Employee agrees to enter into a Separation and Release Agreement substantially
in the form attached hereto as Exhibit D.

 

(g)           As
used herein, “Change of Control” means the occurrence of any one of the
following events:  (i) any person
becomes the beneficial owner of twenty-five percent (25%) or more of the total
number of voting shares of the Company; (ii) any person (other than the
persons named as proxies solicited on behalf of the Board of Directors of the
Company) holds revocable or irrevocable proxies representing twenty-five
percent (25%) or more of the total number of voting shares of the Company; (iii) any
person has commenced a tender or exchange offer, or entered into an agreement
or received an option, to acquire beneficial ownership of twenty-five percent
(25%) or more of the total number of voting shares of the Company; and (iv) as
the result of, or in connection with, any cash tender or exchange offer,
merger, or other business combination, sale of assets, or any combination of
the foregoing transactions, the persons who were directors of the Company
before such transactions shall cease to constitute at least two-thirds (2/3) of
the Board of Directors of the Company or any successor entity.

 

14.          Notice.  Unless otherwise provided herein, any notice,
request, certificate or instrument required or permitted under this Agreement
shall be in writing and shall be deemed “given” upon personal delivery to the
party to be notified or three business days after deposit with the United
States Service, by registered or certified mail, addressed to the party to
receive notice at the address set forth above, postage prepaid. Either party
may change its address by notice to the other party given in the manner set
forth in this Section.

 

15.          Entire
Agreement.  This
Agreement constitutes the entire agreement between the parties and contains all
the agreements between them with respect to the subject matter hereof. It also
supersedes any and all other agreements or contracts, either oral or written,
between the parties with respect to the subject matter hereof;  provided, however,
in the event any of Sections 6, 7, 8, 9, or 10 of this Agreement
is found enforceable in any way, then such section shall be amended to the
extent necessary to conform to applicable law.

 

16.          Modification.  Except as otherwise specifically provided,
the terms and conditions of this Agreement may be amended at any time by mutual
agreement of the parties, provided that before any amendment shall be valid or
effective, it shall have been reduced to writing and signed by an authorized
representative of the Company and Employee.

 

17.          No Waiver.  The failure of any party hereto to exercise
any right, power or remedy provided under this Agreement or otherwise available
in respect hereof at law or in equity, or to insist upon compliance by any
other party hereto with its obligations, shall not be a waiver by such party of
its right to exercise any such or other right, power or remedy or to demand
compliance.

 

 

18.          Severability.  In the event that any
section or provision of this Agreement shall be held to be illegal or
unenforceable, such section or provision shall be severed from this Agreement
and the entire Agreement shall not fail as a result, but shall otherwise remain
in full force and effect.

 

19.          Assignment.  This Agreement shall be binding upon and
inure to the benefit of the Company and its successors and assigns, and shall
be binding upon Employee, his administrators, executors, legatees, and heirs. In
that this Agreement is a personal services contract, it shall not be assigned
by Employee.

 

20.          Dispute
Resolution.  Except as
otherwise provided in Section 10, the Company and Employee agree
that any dispute between Employee and the Company or its officers, directors,
employees, or agents in their individual or Company capacity of this Agreement,
shall be submitted to a mediator for nonbinding, confidential mediation. If the
matter cannot be resolved with the aid of the mediator, the Company and Employee
mutually agree to arbitration of the dispute. The arbitration shall be in
accordance with the then-current Employment Dispute Resolution Rules of
the Arbitration Service of Portland (“ASP”) before an arbitrator who is
licensed to practice law in the State of Oregon. The arbitration shall take
place in or near Portland, Oregon. Employee and the Company will share bear the
cost of the arbitration equally, but each party will bear their own costs and
legal fees associated with the arbitration; provided, however,
if any party prevails on a statutory claim, which affords the prevailing party
attorneys’ fees, or if there is a written agreement providing for attorneys’
fees, the arbitrator may award reasonable attorneys’ fees.  The Company and Employee agree that the
procedures outlined in this provision are the exclusive method of dispute
resolution.

 

21.          Attorneys’
Fees.  In the event suit or action is
instituted pursuant to Section 10 or Section 20 of this
Agreement, the prevailing party in such proceeding, including any appeals
thereon, shall be awarded reasonable attorneys’ fees and costs.

 

22.          Applicable
Law.  This Agreement shall be
construed and enforced under and in accordance with the laws of the State of
Oregon.

 

23.          Section 409A;
Section 280G.

 

(a)       It is the intention of the
parties to this Agreement that no payment or entitlement pursuant to this
Agreement will give rise to any adverse tax consequences to Employee or the
Company with regard to Section 409A of the Internal Revenue Code of 1986 (“Section 409A”).
This Agreement shall be interpreted to that end and consistent with that
objective. The Company and the Employee shall, to the extent necessary to
comply with Section 409A and permitted thereunder, agree to act reasonably
and in good faith to mutually reform the provisions of this Agreement to avoid
the application of the additional tax and interest under Section 409A(a)(1)(B),
provided that any such reformation shall not negatively impact the economics of
the Company or the Employee hereunder. Notwithstanding any other provision
herein, if Employee is a “specified employee,” as defined in, and pursuant to,
Treasury Regulation Section 1.409A-1(i) or any successor regulation,
on the date of termination, no payment of any “deferred compensation”, as defined
under Treasury Regulation Section 1.409A or any successor regulation,
shall be made to 

 

 

Employee during the period lasting until the earlier of six (6) months
from the date of termination or upon Employee’s death.  If any payment to Employee is delayed
pursuant to the foregoing sentence, such payment instead shall be made on the
first business day following the expiration of the six (6) month period
referred to in the prior sentence or, if in the case of Employee’s death,
promptly thereafter.

 

(b)      Except as otherwise
specifically provided in this Agreement, if any reimbursement to which the
Employee is entitled under this Agreement would constitute deferred
compensation subject to Section 409A of the Code, the following additional
rules shall apply:  (i) the
reimbursable expense must have been incurred, except as otherwise expressly
provided in this Agreement, during the term of this Agreement; (ii) the
amount of expenses eligible for reimbursement during any calendar year will not
affect the amount of expenses eligible for reimbursement in any other calendar
year; (iii) the reimbursement shall be made not later than December 31
of the calendar year following the calendar year in which the expense was
incurred; and (iv) the Employee’s entitlement to reimbursement shall not
be subject to liquidation or exchange for another benefit.

 

(c)       With regard to any
installment payment, each installment thereof shall be deemed a separate
payment for purposes of Section 409A of the Code.

 

(d)      Section 280G

 

(i)                    Except as
provided below, the payments or benefits to which Employee will be entitled
under Section 13 of the Agreement will be reduced to the extent
necessary so that Employee will not be liable for the federal excise tax levied
on certain “excess parachute payments” under section 4999 of the Internal
Revenue Code of 1986, as amended (“Code”).

 

(ii)                   The limitation
above will not apply if:

 

1.               the difference between

 

(A) the present value of all payments to which Employee is
entitled under Section 13 of the Agreement determined without regard to
the limitation above, less

 

(B) the present value of all federal, state, and other income and
excise taxes for which Employee is liable as a result of such payments; exceeds

 

 

2.               the difference between

 

(A) the present value of all payments to which Employee is
entitled under Section 13 of the Agreement calculated as if the
limitation above applies, less

 

(B) the present value of all federal, state, and other income and
excise taxes for which Employee is liable as a result of such reduced payments.

 

(iii)                  Present values
will be determined using the interest rate specified in section 280G of the
Code and will be the present values as of the date on which Employee’s
employment terminates (unless it is necessary to use a different date in order
to avoid adverse consequences under section 280G).

 

24.          Counterparts.  This Agreement may be signed in two
counterparts, each of which shall be deemed an original and both of which shall
together constitute one agreement.

 

 

IN
WITNESS WHEREOF, AVI BioPharma, Inc. has caused this Agreement to be
signed by its duly authorized representative, and Employee has hereunder set
his name as of the date of this Agreement.

 

 

	
   

  	
  COMPANY: AVI BioPharma, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/
  Leslie Hudson, PhD

  
	
   

  	
  Leslie
  Hudson, PhD, Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EMPLOYEE:

  
	
   

  	
   

  
	
   

  	
  /s/
  Stephen Bevan Shrewsbury

  
	
   

  	
  Stephen
  Bevan Shrewsbury, MD

  

 

 

Exhibit A

 

List of
Offices Held

 

Shrewsbury Clinical Consulting: Founder -
providing limited, or ad hoc consulting advice to previous employer:

 

·                                          MAP Pharmaceuticals Inc., 2400 Bayshore Parkway, Mountain View, CA

 

and

·                                          Nektar Therapeutics, San Carlos, CA

 

provided:

 

1)  no
conflict of interest arises

 

2) total consulting hours not to exceed one
day per month

 

3) such consulting work does not interfere
with the full performance of duties for AVI.

 

 

Exhibit B

 

2002 Equity
Incentive Plan

 

 

Exhibit C

Inventions
Excluded from Covered Works

 

 

Exhibit D

 

SEPARATION
AND RELEASE AGREEMENT

 

THIS SEPARATION AND RELEASE AGREEMENT (“Agreement”) is between Stephen
Bevan Shrewsbury (“Employee”) and AVI BioPharma, Inc. (“Employer”),
and is effective eight (8) days after Employee signs this Agreement (“Effective
Date”).

 

The parties agree as follows:

 

1.             Resignation.
Employee resigned his position as Employer’s [Title] effective
[effective date of termination] (the “Resignation Date”).  Employee has been paid his salary and other
compensation through the Resignation Date, less all lawful or required
deductions.

 

2.             Consideration.   In consideration of  Employee’s agreements hereunder, Employer shall pay to
Employee the amounts set forth and described in Section              of
that certain Employment Agreement dated effective the      day
of            , 2009.

 

3.             Return
of Employer Property. Employee represents that he has returned all
Employer property in his possession or under his control, including but not
limited to keys, credit cards, files, laptop computer and any and all Employer
documents.

 

4.             Confidentiality.
The parties will use reasonable efforts to keep the terms of this
Agreement confidential.  Employee may
disclose the terms of this Agreement to his immediate family.  Employer may disclose the terms of this
Agreement to its officers and managers. 
Either party may disclose the terms of this Agreement to their
respective attorneys, accountants, financial advisers, auditors, or similar
advisors, or in response to government requests.  Third persons informed of the terms of this
Agreement shall in turn be advised of this confidentiality provision and requested
to maintain such confidentiality.

 

5.             Release.

 

5.1           In exchange for the
consideration paid to Employee as set forth in this Agreement, Employee forever
releases and discharges Employer, any of Employer-sponsored employee benefit
plans in which Employee participates, or was participating in, (collectively
the “Plans”) and all of their respective officers, members, managers,
partners, directors, trustees, agents, employees, and all of their successors
and assigns (collectively “Releasees”) from any and all claims, actions,
causes of action, rights, or damages, including costs and attorneys’ fees
(collectively “Claims”) which Employee may have arising out of his
employment (including Claims that may arise out of Employee’s employment
agreement), on behalf of himself, known, unknown, or later discovered which
arose prior to the date Employee signs this Agreement.  This release includes but is not limited to,
any Claims under any local, state, or federal laws prohibiting discrimination
in employment, including without limitation the federal civil rights acts,
Oregon Revised Statutes Chapter 659A, the Americans with Disabilities Act, the
Age Discrimination in Employment Act, or Claims under the Employee Retirement
Income Security Act, or Claims alleging any legal restriction on Employer’s
right to terminate its employees, any Claims Employee has relating to his
rights to or against any of the Plans, or personal injury Claims, including
without limitation 

 

 

wrongful discharge, breach of
contract, defamation, tortious interference with business expectancy,
constructive discharge, or infliction of emotional distress.  Employee represents that he has not filed any
Claim against Employer or its Releasees, he has no knowledge of any facts that
would support any Claim by Employee against Employer or by a third party
against Employer, and that he will not file a Claim at any time in the future
concerning Claims released in this Agreement; provided, however, that this will
not limit Employee from filing a Claim to enforce the terms of this
Agreement.  Notwithstanding the
foregoing, nothing herein shall constitute release of any of Employee’s rights
relating to vested options, vested benefits or vested entitlements under the
Company’s employee benefits plans, including equity incentive and retirement
plans.

 

5.2           In consideration of
the promises of Employee as set forth herein, Employer does hereby, and for its
successors and assigns, release, acquit and forever discharge Employee from any
and all actions, causes of action, obligations, costs, expenses, damages,
losses, claims, liabilities, suits, debts, and demands (including attorneys’
fees and costs actually incurred), of whatever character in law or in equity
known or unknown, suspected or unsuspected, from the beginning of time to the
date of execution hereof.

 

6.             Non-disparagement. Employee and Employer
each agree not to make disparaging statements about each other, except in the
case of Employer statements that are required under applicable federal or state
securities laws or applicable rules and regulations of any exchange on
which Employer’s stock is traded.

 

7.             Consideration
and Revocation Periods. Employee understands and acknowledges the
significance and consequences of this Agreement, that it is voluntary, that it
has not been given as a result of any coercion, and expressly confirms that it
is to be given full force and effect according to all of its terms, including
those relating to unknown Claims. 
Employee was hereby advised of his right to seek the advice of an
attorney prior to signing this Agreement. 
Employee acknowledges that he has signed this Agreement only after full
reflection and analysis. Although he is free to sign this Agreement before
then, Employee acknowledges he was given at least 21 days after receipt of this
document in which to consider it (the “Consideration Period”).  If Employee executes this Agreement prior to
the end of the Consideration Period, Employee hereby waives any rights
associated therewith. Employee may revoke this Agreement seven (7) days
after signing it and forfeit all benefits described in Section 13(c) of
the Employment Agreement. Employee and Employer agree that any changes made to
this Agreement during the Consideration Period as a result of negotiations
between the parties do not restart the running of the Consideration Period.

 

8.             No
Liability. This Agreement shall not be construed as an
admission by either party that it acted wrongfully with respect to the other.

 

9.             Severability. If any of the
provisions of this Agreement are held to be invalid or unenforceable, the
remaining provisions will nevertheless continue to be valid and enforceable.

 

10.           Entire
Agreement. This Agreement represents and contains the entire
understanding between the parties in connection with its subject matter.  All other prior written or oral agreements or
understandings are merged into and superseded by this Agreement.  Employee 

 

 

acknowledges
that in signing this Agreement, he has not relied upon any representation or
statement not set forth in this Agreement made by Employer or any of its
representatives.

 

11.           Attorney Fees.
If any suit or action is filed by either party to enforce this Agreement
or otherwise with respect to the subject matter hereof, the prevailing party
shall be entitled to recover reasonable attorney fees incurred in preparation
or in prosecution or defense of such suit or action as fixed by the trial
court, and if any appeal is taken from the decision of the trial court,
reasonable attorney fees as fixed by the appellate court.

 

12.           Choice of Law. This Agreement is
made and shall be construed and performed under the laws of the State of
Oregon.

 

PLEASE READ CAREFULLY.  THIS AGREEMENT INCLUDES A RELEASE OF CERTAIN
KNOWN OR UNKNOWN CLAIMS.

 

 

	
  DATED
  this     day of       ,
  20XX.

  	
   

  	
  DATED
  this     day of       ,
  20XX.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  AVI
  BioPharma, Inc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:
  

  	
   

  	
   

  	
   

  
	
  Name:
  

  	
   

  	
  Stephen
  Bevan Shrewsbury, MD

  
	
  Title:

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