MERGER AGREEMENT

THIS AGREEMENT (this “Agreement”) is entered into this [Date] between [Name], a [State] corporation with offices at [Address] (the “Parent(Digital Circuit Patent Co.)”), [Name], a [State] corporation with offices at [Address] and a wholly owned first-tier subsidiary of the Parent(Digital Circuit Patent Co.) (the “Merger Sub(Computer Hardware Patent Co.)”), and [Name], a [State] corporation with offices at [Address] (the “Company(Electronics Patent Co.)”).

W I T N E S S E T H:

WHEREAS, the respective Boards of Directors of the Parent(Digital Circuit Patent Co.), the Merger Sub(Computer Hardware Patent Co.) and the Company(Electronics Patent Co.) have approved this Agreement, and declared advisable the merger of the Merger Sub(Computer Hardware Patent Co.) with and into the Company(Electronics Patent Co.) (the “Merger”) upon the terms and subject to the conditions of this Agreement and in accordance with the General Corporation Law of the State of [State] (“[State] Law”).

WHEREAS, for United States federal income tax purposes, the Merger is intended to qualify as a “reorganization” pursuant to the provisions of Paragraph 368 of the Internal Revenue Code of 1986, as amended (the “Code”).  For accounting purposes, the Merger is intended to be accounted for as a “purchase” under United States generally accepted accounting principles (“GAAP”).

WHEREAS, concurrently with the execution of this Agreement, and as a condition and inducement to the Parent(Digital Circuit Patent Co.)’s willingness to enter into this Agreement, a stockholder of the Company(Electronics Patent Co.) is entering into a Voting Agreement with the Parent(Digital Circuit Patent Co.) in the form of Exhibit A (the “Voting Agreement”).

WHEREAS, concurrently with the execution of this Agreement, the Parent(Digital Circuit Patent Co.) and a stockholder of the Company(Electronics Patent Co.) are entering into a Registration Rights Agreement in the form of Exhibit B (the “Registration Rights Agreement”).

NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements set forth in this Agreement, the parties agree as follows:

1.  The Merger

A. The Merger.  Upon the terms and subject to the conditions of this Agreement and the applicable provisions of [State] Law, at the Effective Time, the Merger Sub(Computer Hardware Patent Co.) shall be merged with and into the Company(Electronics Patent Co.), the separate corporate existence of the Merger Sub(Computer Hardware Patent Co.) shall cease, and the Company(Electronics Patent Co.) shall continue as the surviving corporation of the Merger (the “Surviving Corporation”).

B.  Effective Time; Closing.  Subject to the provisions of this Agreement, the Company(Electronics Patent Co.) and the Merger Sub(Computer Hardware Patent Co.) will file a certificate of merger, in such appropriate form as determined by the parties, with the Secretary of State of the State of [State] in accordance with the relevant provisions of [State] Law (the “Certificate of Merger”) (the time of such filing (or such later time as may be agreed in writing by the Company(Electronics Patent Co.) and the Parent(Digital Circuit Patent Co.) and specified in the Certificate of Merger) being the “Effective Time”) as soon as practicable on or after the Closing Date. The closing of the Merger (the “Closing”) shall take place at the offices of Law & Order, LLP, 1234 Wall Street, New York, NY, at a time and date to be specified by the parties, which shall be no later than the second business day after the satisfaction or waiver of the conditions set forth in Paragraph VI, or at such other time, date and location as the parties hereto agree in writing (the “Closing Date”).

C. Effect of the Merger.  At the Effective Time, the effect of the Merger shall be as provided in this Agreement and the applicable provisions of [State] Law.  Without limiting the generality of the foregoing, at the Effective Time, the Surviving Corporation shall possess all the property, rights, privileges, powers and franchises of the Company(Electronics Patent Co.) and the Merger Sub(Computer Hardware Patent Co.), and shall be subject to all debts, liabilities and duties of the Company(Electronics Patent Co.) and the Merger Sub(Computer Hardware Patent Co.).

D.  Certificate of Incorporation; Bylaws.

(1) At the Effective Time, the Certificate of Incorporation of the Merger Sub(Computer Hardware Patent Co.), as in effect immediately prior to the Effective Time, shall be the Certificate of Incorporation of the Surviving Corporation until thereafter amended as provided by law and such Certificate of Incorporation of the Surviving Corporation; provided, however, that at the Effective Time Article I of the Certificate of Incorporation of the Surviving Corporation shall be amended to read: “The name of the corporation is ‘Name’”.

(2) At the Effective Time, the Bylaws of the Merger Sub(Computer Hardware Patent Co.), as in effect immediately prior to the Effective Time, shall be the Bylaws of the Surviving Corporation until thereafter amended.

E.  Directors and Officers.  The initial directors of the Surviving Corporation shall be the directors of the Merger Sub(Computer Hardware Patent Co.) immediately prior to the Effective Time, until their respective successors are duly elected or appointed and qualified.  The initial officers of the Surviving Corporation shall be the officers of the Company(Electronics Patent Co.) immediately prior to the Effective Time, until their respective successors are duly appointed.

F.  Effect on Capital Stock.  Subject to the terms and conditions of this Agreement, at the Effective Time, by virtue of the Merger and without any action on the part of the Merger Sub(Computer Hardware Patent Co.), the Company(Electronics Patent Co.) or the holders of any of the following securities:

(1) Conversion of the Company(Electronics Patent Co.) Common Stock.  Each share of common stock, par value $0.001 per share, of the Company(Electronics Patent Co.) (“the Company(Electronics Patent Co.) Common Stock”) issued and outstanding immediately prior to the Effective Time, other than any shares of the Company(Electronics Patent Co.) Common Stock to be canceled pursuant to this Agreement will be canceled and extinguished and automatically converted into the right to receive [ratio] (the “Exchange Ratio”) shares of common stock, par value $0.001 per share, of the Parent(Digital Circuit Patent Co.) (“the Parent(Digital Circuit Patent Co.) Common Stock”) upon surrender of the certificate representing such share of the Company(Electronics Patent Co.) Common Stock in the manner provided for herein. No fraction of a share of the Parent(Digital Circuit Patent Co.) Common Stock will be issued by virtue of the Merger, but in lieu thereof, a cash payment shall be made pursuant to this Agreement. For the avoidance of doubt, following the two-for-one stock dividend payable on the Company(Electronics Patent Co.) Common Stock on [Date], the Exchange Ratio will be [number].

(2) Cancellation of the Company(Electronics Patent Co.)-Owned and the Parent(Digital Circuit Patent Co.)-Owned Stock.  Each share of the Company(Electronics Patent Co.) Common Stock held by the Company(Electronics Patent Co.) or owned by the Merger Sub(Computer Hardware Patent Co.), the Parent(Digital Circuit Patent Co.) or any direct or indirect wholly owned subsidiary of the Company(Electronics Patent Co.) or of the Parent(Digital Circuit Patent Co.) immediately prior to the Effective Time shall be canceled and extinguished without any conversion thereof.

(3) Stock Options; Employee Stock Purchase Plan.  At the Effective Time, all options to purchase the Company(Electronics Patent Co.) Common Stock then outstanding under the Company(Electronics Patent Co.)’s Stock Incentive Plan (the “the Company(Electronics Patent Co.) Stock Option Plan”) shall be assumed by the Parent(Digital Circuit Patent Co.) in accordance with this Agreement.  Rights outstanding under the Company(Electronics Patent Co.)’s Employee Stock Purchase Plan (the “the Company(Electronics Patent Co.) ESPP”) shall be treated as set forth herein.

(4) Capital Stock of the Merger Sub(Computer Hardware Patent Co.).  Each share of common stock, par value $0.01 per share, of the Merger Sub(Computer Hardware Patent Co.) (the “the Merger Sub(Computer Hardware Patent Co.) Common Stock”), issued and outstanding immediately prior to the Effective Time shall be converted into one validly issued, fully paid and nonassessable share of common stock, $0.01 par value per share, of the Surviving Corporation.  Following the Effective Time, each certificate evidencing ownership of shares of the Merger Sub(Computer Hardware Patent Co.) common stock shall evidence ownership of such shares of capital stock of the Surviving Corporation.

(5) Adjustments to Exchange Ratio.  The Exchange Ratio shall be adjusted to reflect appropriately the effect of any stock split, reverse stock split, stock dividend (including any dividend or distribution of securities convertible into the Parent(Digital Circuit Patent Co.) Common Stock or the Company(Electronics Patent Co.) Common Stock), reorganization, recapitalization, reclassification or other like change with respect to the Parent(Digital Circuit Patent Co.) Common Stock or the Company(Electronics Patent Co.) Common Stock occurring on or after the date hereof and prior to the Effective Time.

G.  Exchange of Certificates.

(1) Exchange Agent.  The Parent(Digital Circuit Patent Co.) shall select an institution reasonably acceptable to the Company(Electronics Patent Co.) to act as the exchange agent (the “Exchange Agent”) in the Merger.

(2) Exchange Fund.  Promptly after the Effective Time, the Parent(Digital Circuit Patent Co.) shall make available to the Exchange Agent for exchange in accordance with this Agreement, the shares of the Parent(Digital Circuit Patent Co.) Common Stock (such shares of the Parent(Digital Circuit Patent Co.) Common Stock, together with cash in lieu of fractional shares and any dividends or distributions with respect thereto, are hereinafter referred to as the “Exchange Fund”) issuable pursuant to this Paragraph in exchange for outstanding shares of the Company(Electronics Patent Co.) Common Stock.

(3) Exchange Procedures.  Promptly after the Effective Time, the Parent(Digital Circuit Patent Co.) shall instruct the Exchange Agent to mail to each holder of record of a certificate or certificates (“Certificates”) which immediately prior to the Effective Time represented outstanding shares of the Company(Electronics Patent Co.) Common Stock whose shares were converted into shares of the Parent(Digital Circuit Patent Co.) Common Stock pursuant to this section: (i) a letter of transmittal in customary form (that shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon proper delivery of the Certificates to the Exchange Agent and shall contain such other provisions as the Parent(Digital Circuit Patent Co.) may reasonably specify) and (ii) instructions for use in effecting the surrender of the Certificates in exchange for certificates representing shares of the Parent(Digital Circuit Patent Co.) Common Stock. Upon surrender of Certificates for cancellation to the Exchange Agent together with such letter of transmittal, duly completed and validly executed in accordance with the instructions thereto, the holders of such Certificates shall be entitled to receive in exchange therefore certificates representing the number of whole shares of the Parent(Digital Circuit Patent Co.) Common Stock into which their shares of the Company(Electronics Patent Co.) Common Stock were converted at the Effective Time, payment in lieu of fractional shares that such holders have the right to receive pursuant to this Agreement and any dividends or distributions payable pursuant hereto, and the Certificates so surrendered shall forthwith be canceled. Until so surrendered, outstanding Certificates will be deemed from and after the Effective Time, for all corporate purposes, to evidence only the ownership of the number of full shares of the Parent(Digital Circuit Patent Co.) Common Stock into which such shares of the Company(Electronics Patent Co.) Common Stock shall have been so converted and the right to receive an amount in cash in lieu of the issuance of any fractional shares in accordance with this Agreement and any dividends or distributions payable pursuant hereto. No interest will be paid or accrued on any cash in lieu of fractional shares of the Parent(Digital Circuit Patent Co.) Common Stock or on any unpaid dividends or distributions payable to holders of Certificates. In the event of a transfer of ownership of shares of the Company(Electronics Patent Co.) Common Stock which is not registered in the transfer records of the Company(Electronics Patent Co.), a certificate representing the proper number of shares of the Parent(Digital Circuit Patent Co.) Common Stock may be issued to a transferee if the Certificate representing such shares of the Company(Electronics Patent Co.) Common Stock is presented to the Exchange Agent, accompanied by all documents required to evidence and effect such transfer and by evidence that any applicable stock transfer taxes have been paid.

(4) Distributions With Respect to Unexchanged Shares.  No dividends or other distributions declared or made after the date of this Agreement with respect to the Parent(Digital Circuit Patent Co.) Common Stock with a record date after the Effective Time will be paid to the holders of any unsurrendered Certificates with respect to the shares of the Parent(Digital Circuit Patent Co.) Common Stock represented thereby until the holders of record of such Certificates shall surrender such Certificates.  Subject to applicable law, following surrender of any such Certificates, the Exchange Agent shall deliver to the holders of certificates representing whole shares of the Parent(Digital Circuit Patent Co.) Common Stock issued in exchange therefore, without interest, (i) promptly, the amount of any cash payable with respect to a fractional share of the Parent(Digital Circuit Patent Co.) Common Stock to which such holder is entitled pursuant to this Agreement and the amount of dividends or other distributions with a record date after the Effective Time theretofore paid with respect to such whole shares of the Parent(Digital Circuit Patent Co.) Common Stock, and (ii) at the appropriate payment date, the amount of dividends or other distributions with a record date after the Effective Time but prior to surrender and a payment date occurring after surrender, payable with respect to such whole shares of the Parent(Digital Circuit Patent Co.) Common Stock.

(5) Fractional Shares.

(i) As promptly as practicable following the Effective Time, the Exchange Agent shall determine the excess of (A) the number of full shares of the Parent(Digital Circuit Patent Co.) Common Stock delivered to the Exchange Agent pursuant to this section, over (B) the aggregate number of full shares of the Parent(Digital Circuit Patent Co.) Common Stock to be distributed to holders of the Company(Electronics Patent Co.) Common Stock pursuant hereto (such excess, the “Excess Shares”).  Following the Effective Time, the Exchange Agent, as agent for the holders of the Company(Electronics Patent Co.) Common Stock, shall sell the Excess Shares at then prevailing prices on the Nasdaq Stock Market in the manner set forth herein.

(ii) The sale of the excess shares by the Exchange Agent shall be executed on the Nasdaq Stock Market and shall be executed in round lots to the extent practicable.  The Exchange Agent shall use all commercially reasonable efforts to complete the sale of the Excess Shares as promptly following the Effective Time as, in the Exchange Agent’s reasonable judgment, is practicable consistent with obtaining the best execution of such sales in light of prevailing market conditions.  Until the net proceeds of such sales have been distributed to the holders of the Company(Electronics Patent Co.) Common Stock, the Exchange Agent will hold such proceeds in trust for the holders of the Company(Electronics Patent Co.) Common Stock.  The Exchange Agent will determine the portion of such net proceeds to which each holder of the Company(Electronics Patent Co.) Common Stock shall be entitled, if any, by multiplying the amount of the aggregate net proceeds by a fraction the numerator of which is the amount of the fractional share interest to which such holder of the Company(Electronics Patent Co.) Common Stock is entitled (after taking into account all shares of the Parent(Digital Circuit Patent Co.) Common Stock to be issued to such holder) and the denominator of which is the aggregate amount of fractional share interests to which all holders of the Company(Electronics Patent Co.) Common Stock are entitled.  As soon as practicable after the determination of the amount of cash, if any, to be paid to holders of the Company(Electronics Patent Co.) Common Stock with respect to fractional share interests, the Exchange Agent shall promptly pay such amounts to such holders of the Company(Electronics Patent Co.) Common Stock in accordance with the terms herein.

(iii)  Notwithstanding the provisions of paragraphs (i) and (ii) of this Paragraph, the Parent(Digital Circuit Patent Co.) may decide, at its option, exercised prior to the Effective Time, in lieu of the issuance and sale of Excess Shares and the making of the payments contemplated in such paragraphs, that the Parent(Digital Circuit Patent Co.) shall pay to the Exchange Agent an amount sufficient for the Exchange Agent to pay each holder of the Company(Electronics Patent Co.) Common Stock the amount such holder would have received pursuant to this Agreement assuming that the sales of the Parent(Digital Circuit Patent Co.) Common Stock were made at a price equal to the average of the closing prices of the Parent(Digital Circuit Patent Co.) Common Stock on the Nasdaq Stock Market for the ten consecutive trading days immediately following the Effective Time and, in such case, all references herein to the cash proceeds of the sale of the Excess Shares and similar references shall be deemed to mean and refer to the payments calculated as set forth in this paragraph (iii).  In such event, Excess Shares shall not be issued or otherwise transferred to the Exchange Agent pursuant to this section.

(6) Required Withholding.  Each of the Exchange Agent, the Parent(Digital Circuit Patent Co.) and the Surviving Corporation shall be entitled to deduct and withhold from any consideration payable or otherwise deliverable pursuant to this Agreement to any holder or former holder of the Company(Electronics Patent Co.) Common Stock such amounts as may be required to be deducted or withheld therefrom under the Code or under any provision of state, local or foreign tax law or under any other applicable Legal Requirement (as defined herein).  To the extent such amounts are so deducted or withheld, such amounts shall be treated for all purposes under this Agreement as having been paid to the person to whom such amounts would otherwise have been paid.

(7) Lost, Stolen or Destroyed Certificates.  In the event that any Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall issue in exchange for such lost, stolen or destroyed Certificates, upon the making of an affidavit of that fact by the holder thereof, certificates representing the shares of the Parent(Digital Circuit Patent Co.) Common Stock into which the shares of the Company(Electronics Patent Co.) Common Stock represented by such Certificates were converted pursuant hereto, cash for fractional shares, if any, as may be required pursuant to this Agreement including any dividends or distributions payable thereon; provided, however, that the Parent(Digital Circuit Patent Co.) may, in its discretion and as a condition precedent to the issuance of such certificates representing shares of the Parent(Digital Circuit Patent Co.) Common Stock, cash and other distributions, require the owner of such lost, stolen or destroyed Certificates to deliver a bond in such sum as it may reasonably direct as indemnity against any claim that may be made against the Parent(Digital Circuit Patent Co.), the Surviving Corporation or the Exchange Agent with respect to the Certificates alleged to have been lost, stolen or destroyed.

(8) No Liability.  Notwithstanding anything to the contrary in this Paragraph, neither the Exchange Agent, the Parent(Digital Circuit Patent Co.), the Surviving Corporation nor any party hereto shall be liable to a holder of shares of the Parent(Digital Circuit Patent Co.) Common Stock or the Company(Electronics Patent Co.) Common Stock for any amount properly paid to a public official pursuant to any applicable abandoned property, escheat or similar law.

 

(9) Termination of Exchange Fund.  Any portion of the Exchange Fund which remains undistributed to the holders of the Company(Electronics Patent Co.) Common Stock for six (6) months after the Effective Time shall be delivered to the Parent(Digital Circuit Patent Co.), upon demand, and any holders of the Company(Electronics Patent Co.) Common Stock who have not theretofore complied with the provisions hereof shall thereafter look only to the Parent(Digital Circuit Patent Co.) for the shares of the Parent(Digital Circuit Patent Co.) Common Stock, any cash in lieu of fractional shares of the Parent(Digital Circuit Patent Co.) Common Stock to which they are entitled pursuant hereto Paragraph and any dividends or other distributions with respect to the Parent(Digital Circuit Patent Co.) Common Stock to which they are entitled pursuant to this section, in each case, without any interest thereon.

 

H. No Further Ownership Rights in the Company(Electronics Patent Co.) Common Stock.  All shares of the Parent(Digital Circuit Patent Co.) Common Stock issued in accordance with the terms hereof shall be deemed to have been issued in full satisfaction of all rights pertaining to such shares of the Company(Electronics Patent Co.) Common Stock, and there shall be no further registration of transfers on the records of the Surviving Corporation of shares of the Company(Electronics Patent Co.) Common Stock that were outstanding immediately prior to the Effective Time.  If after the Effective Time Certificates are presented to the Surviving Corporation for any reason, they shall be canceled and exchanged as provided for herein.

 

I.  Restricted Stock.  If any shares of the Company(Electronics Patent Co.) Common Stock that are outstanding immediately prior to the Effective Time are unvested or are subject to a repurchase option, risk of forfeiture or other condition providing that such shares (“the Company(Electronics Patent Co.) Restricted Stock”) may be forfeited or repurchased by the Company(Electronics Patent Co.) upon any termination of the stockholders’ employment, directorship or other relationship with the Company(Electronics Patent Co.) (and/or any affiliate of the Company(Electronics Patent Co.)) under the terms of any restricted stock purchase agreement or other agreement with the Company(Electronics Patent Co.) that does not by its terms provide that such repurchase option, risk of forfeiture or other condition lapses upon consummation of the Merger, then the shares of the Parent(Digital Circuit Patent Co.) Common Stock issued upon the conversion of such shares of the Company(Electronics Patent Co.) Common Stock in the Merger will continue to be unvested and subject to the same repurchase options, risks of forfeiture or other conditions following the Effective Time, and the certificates representing such shares of the Parent(Digital Circuit Patent Co.) Common Stock may accordingly be marked with appropriate legends noting such repurchase options, risks of forfeiture or other conditions.  The Company(Electronics Patent Co.) shall take all actions that may be necessary to ensure that, from and after the Effective Time, the Parent(Digital Circuit Patent Co.) is entitled to exercise any such repurchase option or other right set forth in any such restricted stock purchase agreement or other agreement. A listing of the holders of the Company(Electronics Patent Co.) Restricted Stock, together with the number of shares and the vesting schedule of the Company(Electronics Patent Co.) Restricted Stock held by each, is set forth in the Company(Electronics Patent Co.) Disclosure Letter.

 

J.  Tax Consequences.  It is intended by the parties hereto that the Merger shall constitute a “reorganization” within the meaning of Paragraph 368 of the Code.  The parties hereto adopt this Agreement as a “plan of reorganization” within the meaning of Paragraphs 1.368-2(g) and 1.368-3(1) of the United States Income Tax Regulations.

 

K.  Taking of Necessary Action; Further Action.  If, at any time after the Effective Time, any further action is necessary or desirable to carry out the purposes of this Agreement and to vest the Surviving Corporation with full right, title and possession to all assets, property, rights, privileges, powers and franchises of the Company(Electronics Patent Co.) and the Merger Sub(Computer Hardware Patent Co.), the officers and directors of the Company(Electronics Patent Co.) and the Merger Sub(Computer Hardware Patent Co.) will take all such lawful and necessary action.  The Parent(Digital Circuit Patent Co.) shall cause the Merger Sub(Computer Hardware Patent Co.) to perform all of its obligations relating to this Agreement and the transactions contemplated hereby.

 

2.  Representations and Warranties of the Company(Electronics Patent Co.)
As of the date of this Agreement and as of the Closing Date, except as disclosed in (i)  The Company(Electronics Patent Co.)’s Annual Report on Form 10-K for the year ending [Date] and any the Company(Electronics Patent Co.) SEC Reports (as defined below) filed subsequent to such Form 10-K, and (ii) the disclosure letter delivered by the Company(Electronics Patent Co.) to the Parent(Digital Circuit Patent Co.) dated as of the date hereof and certified by a duly authorized officer of the Company(Electronics Patent Co.) (the “the Company(Electronics Patent Co.) Disclosure Letter”) (each Part of which qualifies the correspondingly numbered representation, warranty or covenant to the extent specified therein and such other representations, warranties or covenants to the extent a matter in such Part is disclosed in such a way as to make its relevance to such other representation, warranty or covenant readily apParent(Digital Circuit Patent Co.)), the Company(Electronics Patent Co.) represents and warrants to the Parent(Digital Circuit Patent Co.) and the Merger Sub(Computer Hardware Patent Co.) as follows:

 

A.    Organization; Subsidiaries.

(1)  The Company(Electronics Patent Co.) and each of its subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all requisite corporate power and authority, and all requisite qualifications to do business as a foreign corporation, to conduct its business in the manner in which its business is currently being conducted, except where the failure to be so organized, existing or in good standing or to have such power, authority or qualifications would not, individually or in the aggregate, have a  Material Adverse Effect (as defined herein) on the Company(Electronics Patent Co.).

 

(2) Other than as set forth in the Company(Electronics Patent Co.) Disclosure Letter, neither the Company(Electronics Patent Co.) nor any of the other corporations identified in the Company(Electronics Patent Co.) Disclosure Letter owns any capital stock of, or any equity interest of any nature in, any corporation, partnership, joint venture arrangement or other business entity, other than the entities identified in the Company(Electronics Patent Co.) Disclosure Letter, except for passive investments in equity interests of public companies as part of the cash management program of the Company(Electronics Patent Co.). Neither the Company(Electronics Patent Co.) nor any of its subsidiaries has agreed or is obligated to make, or is bound by any written, oral or other agreement, contract, subcontract, lease, binding understanding, instrument, note, option, warranty, purchase order, license, sublicense, insurance policy, benefit plan or legally binding commitment or undertaking of any nature, as in effect as of the date hereof or as may hereinafter be in effect under which it may become obligated to make any future material investment in or material capital contribution to any other entity.  Neither the Company(Electronics Patent Co.), nor any of its subsidiaries, is a general partner of any general partnership, limited partnership or other similar entity.  The Company(Electronics Patent Co.) Disclosure Letter indicates the jurisdiction of organization of each entity listed therein and the Company(Electronics Patent Co.)’s direct or indirect equity interest therein.

 

(3)  The Company(Electronics Patent Co.) has delivered or made available to the Parent(Digital Circuit Patent Co.) a true and correct copy of the Certificate of Incorporation and Bylaws of the Company(Electronics Patent Co.) and similar governing instruments of each of its subsidiaries, each as amended to date (collectively, the “the Company(Electronics Patent Co.) Charter Documents”), and each such instrument is in full force and effect.  Neither the Company(Electronics Patent Co.) nor any of its subsidiaries is in violation of any of the provisions of the Company(Electronics Patent Co.) Charter Documents.

 

B.  The Company(Electronics Patent Co.) Capitalization.

(1) The authorized capital stock of the Company(Electronics Patent Co.) consists solely of [Number] shares of the Company(Electronics Patent Co.) Common Stock, of which there were [Number] shares issued and outstanding as of the close of business on [Date], and [Number] shares of preferred stock, par value $0.001 per share, of which no shares are issued or outstanding.  All outstanding shares of the Company(Electronics Patent Co.) Common Stock are duly authorized, validly issued, fully paid and nonassessable and are not subject to preemptive rights created by statute, the Certificate of Incorporation or Bylaws of the Company(Electronics Patent Co.) or any agreement or document to which the Company(Electronics Patent Co.) is a party or by which it is bound.  As of the date of this Agreement, there are no shares of the Company(Electronics Patent Co.) Common Stock held in treasury by the Company(Electronics Patent Co.).  From and after the Effective Time, the shares of the Parent(Digital Circuit Patent Co.) Common Stock issued in exchange for any shares of the Company(Electronics Patent Co.) Restricted Stock will, without any further act of the Parent(Digital Circuit Patent Co.), the Company(Electronics Patent Co.) or any other person, become subject to the restrictions, conditions and other provisions of such the Company(Electronics Patent Co.) Restricted Stock, and the Parent(Digital Circuit Patent Co.) will automatically succeed to and become entitled to exercise the Company(Electronics Patent Co.)’s rights and remedies under such the Company(Electronics Patent Co.) Restricted Stock.

 

(2) As of the close of business on [Date], (i) [Number] shares of the Company(Electronics Patent Co.) Common Stock are subject to issuance pursuant to outstanding options to purchase the Company(Electronics Patent Co.) Common Stock under the Company(Electronics Patent Co.) Stock Option Plan (“the Company(Electronics Patent Co.) Options”) for a weighted average aggregate exercise price of approximately [Price], (ii) [Number] shares of the Company(Electronics Patent Co.) Common Stock are reserved for future issuance under the Company(Electronics Patent Co.) ESPP, and (iii) [Number] shares of the Company(Electronics Patent Co.) Common Stock are reserved for future issuance under the Company(Electronics Patent Co.)’s 401(k) Plan.  The Company(Electronics Patent Co.) Disclosure Letter sets forth the following information with respect to each the Company(Electronics Patent Co.) Option outstanding as of the date of this Agreement: (i) the name of the optionee; (ii) the number of shares of the Company(Electronics Patent Co.) Common Stock subject to such the Company(Electronics Patent Co.) Option; (iii) the exercise price of such the Company(Electronics Patent Co.) Option; (iv) the date on which such the Company(Electronics Patent Co.) Option was granted or assumed; (v) the date on which such the Company(Electronics Patent Co.) Option expires and (vi) whether the exercisability of such option will be accelerated in any way by the transactions contemplated by this Agreement, and indicates the extent of any such acceleration.  The Company(Electronics Patent Co.) has made available to the Parent(Digital Circuit Patent Co.) an accurate and complete copy of the Company(Electronics Patent Co.) Stock Option Plan and the form of all stock option agreements evidencing the Company(Electronics Patent Co.) Options. There are no options outstanding to purchase shares of the Company(Electronics Patent Co.) Common Stock other than pursuant to the Company(Electronics Patent Co.) Stock Option Plan. All shares of the Company(Electronics Patent Co.) Common Stock subject to issuance as aforesaid, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, will be duly authorized, validly issued, fully paid and nonassessable.

 

(3) All outstanding shares of the Company(Electronics Patent Co.) Common Stock, all outstanding Company(Electronics Patent Co.) Options, and all outstanding shares of capital stock of each subsidiary of the Company(Electronics Patent Co.) have been issued and granted in compliance with (i) all applicable securities laws and other applicable material Legal Requirements and (ii) all material requirements set forth in applicable agreements or instruments.  For the purposes of this Agreement, “Legal Requirements” means any federal, state, local, municipal, foreign or other law, statute, constitution, principle of common law, resolution, ordinance, code, edict, decree, rule, regulation, ruling or requirement issued, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any Governmental Entity (as defined herein).

 

C.  Obligations With Respect to Capital Stock. Except as set forth in the Company(Electronics Patent Co.) Disclosure Letter, there are no equity securities, partnership interests or similar ownership interests of any class of the Company(Electronics Patent Co.) equity security, or any securities exchangeable or convertible into or exercisable for such equity securities, partnership interests or similar ownership interests, issued, reserved for issuance or outstanding.  The Company(Electronics Patent Co.) owns all of the securities of its subsidiaries identified in the Company(Electronics Patent Co.) Disclosure Letter, free and clear of all claims and Encumbrances, and there are no other equity securities, partnership interests or similar ownership interests of any class of equity security of any subsidiary of the Company(Electronics Patent Co.), or any security exchangeable or convertible into or exercisable for such equity securities, partnership interests or similar ownership interests, issued, reserved for issuance or outstanding. For purposes of this Agreement, “Encumbrances” means any lien, pledge, hypothecation, charge, mortgage, security interest, encumbrance, claim, infringement, interference, option, right of first refusal, preemptive right, community property interest or restriction of any nature (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). Except as set forth in the Company(Electronics Patent Co.) Disclosure Letter, there are no subscriptions, options, warrants, equity securities, partnership interests or similar ownership interests, calls, rights (including preemptive rights), commitments or agreements of any character to which the Company(Electronics Patent Co.) or any of its subsidiaries is a party or by which it is bound obligating the Company(Electronics Patent Co.) or any of its subsidiaries to issue, deliver or sell, or cause to be issued, delivered or sold, or repurchase, redeem or otherwise acquire, or cause the repurchase, redemption or acquisition of, any shares of capital stock, partnership interests or similar ownership interests of the Company(Electronics Patent Co.) or any of its subsidiaries or obligating the Company(Electronics Patent Co.) or any of its subsidiaries to grant, extend, accelerate the vesting of or enter into any such subscription, option, warrant, equity security, call, right, commitment or agreement. Except as contemplated by this Agreement, the Registration Rights Agreement, and the Registration Rights Agreement between the Company(Electronics Patent Co.) and Science Applications International Corporation, there are no registration rights with respect to any equity security of any class of the Company(Electronics Patent Co.) or with respect to any equity security, partnership interest or similar ownership interest of any class of any of its subsidiaries.

 

D.  Authority; Non-Contravention.

(1)  The Company(Electronics Patent Co.) has all requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated hereby.  The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Company(Electronics Patent Co.), subject only to the approval and adoption of this Agreement and the approval of the Merger by the Company(Electronics Patent Co.)’s stockholders (the “the Company(Electronics Patent Co.) Stockholder Approvals”) and the filing of the Certificate of Merger pursuant to [State] Law.  The affirmative vote of the holders of a majority of the outstanding shares of the Company(Electronics Patent Co.) Common Stock is sufficient for the Company(Electronics Patent Co.)’s stockholders to approve and adopt this Agreement and approve the Merger, and no other approval of any holder of any securities of the Company(Electronics Patent Co.) is required in connection with the consummation of the transactions contemplated hereby.  This Agreement has been duly executed and delivered by the Company(Electronics Patent Co.) and, assuming the due execution and delivery by the Parent(Digital Circuit Patent Co.) and the Merger Sub(Computer Hardware Patent Co.), constitutes the valid and binding obligation of the Company(Electronics Patent Co.), enforceable against the Company(Electronics Patent Co.) in accordance with its terms, except as enforceability may be limited by bankruptcy and other similar laws affecting the rights of creditors generally and general principles of equity.

 

(2) The execution and delivery of this Agreement by the Company(Electronics Patent Co.) does not, and the performance of this Agreement by the Company(Electronics Patent Co.) will not, (i) conflict with or violate the Company(Electronics Patent Co.) Charter Documents, (ii) subject to obtaining the Company(Electronics Patent Co.) Stockholder Approvals and compliance with the requirements set forth herein, conflict with or violate any law, rule, regulation, order, judgment or decree applicable to the Company(Electronics Patent Co.) or any of its subsidiaries or by which the Company(Electronics Patent Co.) or any of its subsidiaries or any of their respective properties is bound or affected, or (iii) result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or impair the Company(Electronics Patent Co.)’s rights or alter the rights or obligations of any third party under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of an Encumbrance on any of the properties or assets of the Company(Electronics Patent Co.) or any of its subsidiaries pursuant to, any note, bond, mortgage, indenture, agreement, lease, license, permit, franchise, concession, or other instrument or obligation to which the Company(Electronics Patent Co.) or any of its subsidiaries is a party or by which the Company(Electronics Patent Co.) or any of its subsidiaries or its or any of their respective assets are bound or affected, except, in the case of clauses (ii) and (iii), for such conflicts, violations, breaches, defaults, impairments, or rights which, individually or in the aggregate, would not have a Material  Adverse Effect on the Company(Electronics Patent Co.). The Company(Electronics Patent Co.) Disclosure Letter lists all consents, waivers and approvals under any of the Company(Electronics Patent Co.)’s or any of its subsidiaries’ agreements, licenses or leases required to be obtained in connection with the consummation of the transactions contemplated hereby, which, if individually or in the aggregate not obtained, would result in a material loss of benefits to the Company(Electronics Patent Co.), the Parent(Digital Circuit Patent Co.) or the Surviving Corporation as a result of the Merger.

 

(3) No consent, approval, order or authorization of, or registration, declaration or filing with any court, administrative agency or commission or other governmental authority or instrumentality, foreign or domestic (“Governmental Entity”) or other person, is required to be obtained or made by the Company(Electronics Patent Co.) in connection with the execution and delivery of this Agreement or the consummation of the Merger, except for (i) the filing of the Certificate of Merger with the Secretary of State of the State of [State] and appropriate documents with the relevant authorities of other states in which the Company(Electronics Patent Co.) is qualified to do business, (ii) the filing of the Proxy Statement/Prospectus (as defined herein) with the Securities and Exchange Commission (“SEC”) in accordance with the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the effectiveness of the Registration Statement (as defined herein), (iii) such consents, approvals, orders, authorizations, registrations, declarations and filings as may be required under applicable federal, foreign and state securities (or related) laws and the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), and the securities or antitrust laws of any foreign country, and (iv) such other consents, authorizations, filings, approvals and registrations which if not obtained or made would not be material to the Company(Electronics Patent Co.), the Parent(Digital Circuit Patent Co.) or the Surviving Corporation or have a material adverse effect on the ability of the parties hereto to consummate the Merger.

 

E.  SEC Filings; Company(Electronics Patent Co.) Financial Statements.

(1)  The Company(Electronics Patent Co.) has filed all forms, reports and documents required to be filed by the Company(Electronics Patent Co.) with the SEC since the effective date of the registration statement of the Company(Electronics Patent Co.)’s initial public offering and has made available to the Parent(Digital Circuit Patent Co.) such forms, reports and documents in the form filed with the SEC.  All such required forms, reports and documents (including those that the Company(Electronics Patent Co.) may file subsequent to the date hereof) are referred to herein as the “the Company(Electronics Patent Co.) SEC Reports.” As of their respective dates, the Company(Electronics Patent Co.) SEC Reports (i) were prepared in accordance with the requirements of the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, as the case may be, and the rules and regulations of the SEC thereunder applicable to such the Company(Electronics Patent Co.) SEC Reports and (ii) did not at the time they were filed (or if amended or superseded by a filing prior to the date of this Agreement, then on the date of such filing) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, except to the extent corrected prior to the date of this Agreement by a subsequently filed the Company(Electronics Patent Co.) SEC Report.  None of the Company(Electronics Patent Co.)’s subsidiaries is required to file any forms, reports or other documents with the SEC.

 

(2) Each of the consolidated financial statements (including, in each case, any related notes thereto) contained in the Company(Electronics Patent Co.) SEC Reports (the “the Company(Electronics Patent Co.) Financials”), including each the Company(Electronics Patent Co.) SEC Report filed after the date hereof until the Closing, (i) complied as to form in all material respects with the published rules and regulations of the SEC with respect thereto, (ii) was prepared in accordance with GAAP applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto or, in the case of unaudited interim financial statements, as may be permitted by the SEC on Form 10-Q, 8-K or any successor form under the Exchange Act) and (iii) fairly presented the consolidated financial position of the Company(Electronics Patent Co.) and its subsidiaries as at the respective dates thereof and the consolidated results of the Company(Electronics Patent Co.)’s operations and cash flows for the periods indicated, except that the unaudited interim financial statements may not contain footnotes and were or are subject to normal and recurring year-end adjustments. The balance sheet of the Company(Electronics Patent Co.) contained in the Company(Electronics Patent Co.) SEC Reports as of [date] is hereinafter referred to as the “the Company(Electronics Patent Co.) Balance Sheet.” Except as disclosed in the Company(Electronics Patent Co.) Financials, since the date of the Company(Electronics Patent Co.) Balance Sheet, neither the Company(Electronics Patent Co.) nor any of its subsidiaries has any liabilities required under GAAP to be set forth on a balance sheet (absolute, accrued, contingent or otherwise) which are, individually or in the aggregate, material to the business, results of operations or financial condition of the Company(Electronics Patent Co.) and its subsidiaries taken as a whole, except for liabilities incurred since the date of the Company(Electronics Patent Co.) Balance Sheet in the ordinary course of business consistent with past practices and liabilities incurred in connection with this Agreement.

 

(3)  The Company(Electronics Patent Co.) has heretofore furnished to the Parent(Digital Circuit Patent Co.) a complete and correct copy of any amendments or modifications, which have not yet been filed with the SEC but which are required to be filed, to agreements, documents or other instruments which previously had been filed by the Company(Electronics Patent Co.) with the SEC pursuant to the Securities Act or the Exchange Act.

 

F.  Absence of Certain Changes or Events.   Since the date of the Company(Electronics Patent Co.) Balance Sheet there has not been: (i) any Material Adverse Effect with respect to the Company(Electronics Patent Co.), (ii) any declaration, setting aside or payment of any dividend on, or other distribution (whether in cash, stock or property) in respect of, any of the Company(Electronics Patent Co.)’s or any of its subsidiaries’ capital stock, or any purchase, redemption or other acquisition by the Company(Electronics Patent Co.) of any of the Company(Electronics Patent Co.)’s capital stock or any other securities of the Company(Electronics Patent Co.) or its subsidiaries or any options, warrants, calls or rights to acquire any such shares or other securities except for repurchases which are not, individually or in the aggregate, material in amount from employees following their termination pursuant to the terms of their pre-existing stock option or purchase agreements, (iii) any split, combination or reclassification of any of the Company(Electronics Patent Co.)’s or any of its subsidiaries’ capital stock, (iv) any granting by the Company(Electronics Patent Co.) or any of its subsidiaries of any increase in compensation or fringe benefits to any of their officers or employees, or any payment by the Company(Electronics Patent Co.) or any of its subsidiaries of any bonus to any of their officers or employees, or any granting by the Company(Electronics Patent Co.) or any of its subsidiaries of any increase in severance or termination pay, other than in the ordinary course, consistent with past practice, or any entry by the Company(Electronics Patent Co.) or any of its subsidiaries into, or material modification or amendment of, any currently effective employment, severance, termination or indemnification agreement or any agreement the benefits of which are contingent or the terms of which are materially altered upon the occurrence of a transaction involving the Company(Electronics Patent Co.) of the nature contemplated hereby, (v) since [Date], any material modification, amendment or cancellation of any of the Registry Agreement, dated [Date], between the Company(Electronics Patent Co.) and the Internet Corporation for Assigned Names and Numbers, a not-for-profit corporation (“ICANN”), the Registrar Accreditation Agreement, dated [Date], between the Company(Electronics Patent Co.) and ICANN, and the Cooperative Agreement [Number], in each case, as amended, (vi) any material change by the Company(Electronics Patent Co.) in its accounting methods, principles or practices, except as required by concurrent changes in GAAP, (vii) any material revaluation by the Company(Electronics Patent Co.) of any of its material assets, including writing off notes or accounts receivable other than in the ordinary course of business, or (viii) any material change in the pricing of the registration fees the Company(Electronics Patent Co.) charges for its registration services.

 

G.  Taxes.

(1)  The Company(Electronics Patent Co.) and each of its subsidiaries have timely filed all material federal, state, local and foreign returns, estimates, information statements and reports (“Returns”) relating to Taxes required to be filed by or on behalf of the Company(Electronics Patent Co.) and each of its subsidiaries with any Tax authority, such Returns are true, correct and complete in all material respects, and the Company(Electronics Patent Co.) and each of its subsidiaries have paid all Taxes shown to be due on such Returns.

 

(2)  The Company(Electronics Patent Co.) and each of its subsidiaries have withheld with respect to its employees all federal and state income taxes, Taxes pursuant to the Federal Insurance Contribution Act (“FICA”), Taxes pursuant to the Federal Unemployment Tax Act (“FUTA”) and other Taxes required to be withheld, except such Taxes which are not material to the Company(Electronics Patent Co.).

 

(3) Other than as set forth in the Company(Electronics Patent Co.) Disclosure Letter, neither the Company(Electronics Patent Co.) nor any of its subsidiaries has been delinquent in the payment of any material Tax nor is there any material Tax deficiency outstanding, proposed or assessed against the Company(Electronics Patent Co.) or any of its subsidiaries, nor has the Company(Electronics Patent Co.) or any of its subsidiaries executed any unexpired waiver of any statute of limitations on or extending the period for the assessment or collection of any Tax.

 

(4) No audit or other examination of any Return of the Company(Electronics Patent Co.) or any of its subsidiaries by any Tax authority is presently in progress, nor has the Company(Electronics Patent Co.) or any of its subsidiaries been notified of any request for such an audit or other examination that is reasonably likely to result in any adjustment that is material to the Company(Electronics Patent Co.).

 

(5) No adjustment relating to any Returns filed by the Company(Electronics Patent Co.) or any of  its subsidiaries has been proposed in writing formally or informally by any Tax authority to the Company(Electronics Patent Co.) or any of its subsidiaries or any representative thereof that is reasonably likely to be material to the Company(Electronics Patent Co.).

 

(6) Neither the Company(Electronics Patent Co.) nor any of its subsidiaries has any liability for unpaid Taxes which has not been accrued for or reserved on the Company(Electronics Patent Co.) Balance Sheet in accordance with GAAP, whether asserted or unasserted, contingent or otherwise, which is material to the Company(Electronics Patent Co.), other than any liability for unpaid Taxes that may have accrued since the date of the Company(Electronics Patent Co.) Balance Sheet in connection with the operation of the business of the Company(Electronics Patent Co.) and its subsidiaries in the ordinary course.

 

(7) There is no agreement, plan or arrangement to which the Company(Electronics Patent Co.) or any of its subsidiaries is a party, including this Agreement and the agreements entered into in connection with this Agreement, covering any employee or former employee of the Company(Electronics Patent Co.) or any of its subsidiaries that, individually or collectively, would be reasonably likely to give rise to the payment of any amount that would not be deductible pursuant to Paragraphs 280G, 404 or 162(m) of the Code.

 

(8) Neither the Company(Electronics Patent Co.) nor any of its subsidiaries has filed any consent agreement under Paragraph 341(f) of the Code or agreed to have Paragraph 341(f)(2) of the Code apply to any disposition of a subsection (f) asset (as defined in Paragraph 341(f)(4) of the Code) owned by the Company(Electronics Patent Co.).

 

(9) Neither the Company(Electronics Patent Co.) nor any of its subsidiaries is party to or has any obligation under any tax-sharing, tax indemnity or tax allocation agreement or arrangement, other than the Tax Sharing Agreement between the Company(Electronics Patent Co.) and Technical Corporation, Inc., a [State] corporation (“TCI”).

 

(10) Except as may be required as a result of the Merger, the Company(Electronics Patent Co.) and its subsidiaries have not been and will not be required to include any adjustment in Taxable income for any Tax period (or portion thereof) pursuant to Paragraph 481 of the Code or any comparable provision under state or foreign Tax laws as a result of transactions, events or accounting methods employed prior to the Closing.

 

(11) None of the Company(Electronics Patent Co.)’s or its subsidiaries’ assets are tax-exempt use property within the meaning of Paragraph 168(h) of the Code.

 

(12)  The Company(Electronics Patent Co.) has not been distributed in a transaction qualifying under Paragraph 355 of the Code within the last two years, nor has the Company(Electronics Patent Co.) distributed any corporation in a transaction qualifying under Paragraph 355 of the Code within the last two years.

 

(13)  The Company(Electronics Patent Co.) is not aware of any fact, circumstance, plan or intention on the part of the Company(Electronics Patent Co.) that would be reasonably likely to prevent the Merger from qualifying as a “reorganization” pursuant to the provisions of Paragraph 368 of the Code.

 

For the purposes of this Agreement, “Tax” or “Taxes” refers to (i) any and all federal, state, local and foreign taxes, assessments and other governmental charges, duties, impositions and liabilities relating to taxes, including taxes based upon or measured by gross receipts, income, profits, sales, use and occupation, and value added, ad valorem, transfer, franchise, withholding, payroll, recapture, employment, excise and property taxes, together with all interest, penalties and additions imposed with respect to such amounts, (ii) any liability for payment of any amounts of the type described in clause (i) as a result of being a member of an affiliated consolidated, combined or unitary group, and (iii) any liability for amounts of the type described in clauses (i) and (ii) as a result of any express or implied obligation to indemnify another person or as a result of any obligations under any agreements or arrangements with any other person with respect to such amounts and including any liability for taxes of a predecessor entity.

 

H.  Title to Properties.

(1)  The Company(Electronics Patent Co.) owns no real property interests.  The Company(Electronics Patent Co.) Disclosure Letter list all real property leases to which the Company(Electronics Patent Co.) is a party and each amendment thereto that is in effect as of the date of this Agreement that provide for annual payments in excess of $5,000,000.  All such current leases are in full force and effect, are valid and effective in accordance with their respective terms, and there is not, under any of such leases, any existing default or event of default (or event which with notice or lapse of time, or both, would constitute a default) that would give rise to a material claim against the Company(Electronics Patent Co.).

 

(2)  The Company(Electronics Patent Co.) has good and valid title to, or, in the case of leased properties and assets, valid leasehold interests in, all of its tangible properties and assets, real, personal and mixed, used or held for use in its business, free and clear of any Encumbrances, except as reflected in the Company(Electronics Patent Co.) Financials and except for liens for Taxes not yet due and payable and such Encumbrances which are not material in character, amount or extent.

 

I.  Intellectual Property.  For the purposes of this Agreement, the following terms have the following definitions:

 

(1)  Definitions.

 

(a)  “Intellectual Property” shall mean any or all of the following and all rights in, arising out of, or associated therewith:  (i) all United States, international and foreign patents and applications therefore and all reissues, divisions, renewals, extensions, provisionals, continuations and continuations- in-part thereof; (ii) all inventions (whether patentable or not), invention disclosures, improvements, trade secrets, proprietary information, know how, technology, technical data and customer lists, and all documentation relating to any of the foregoing; (iii) all copyrights, copyrights registrations and applications therefore, and all other rights corresponding thereto throughout the world; (iv) all industrial designs and any registrations and applications therefore throughout the world; (v) all trade names, URLs, logos, common law trademarks and service marks, trademark and service mark registrations and applications therefore throughout the world; (vi) all databases and data collections and all rights therein throughout the world; (vii) all moral and economic rights of authors and inventors, however denominated, throughout the world, and (viii) any similar or equivalent rights to any of the foregoing anywhere in the world.

 

(b)  “the Company(Electronics Patent Co.) Intellectual Property” shall mean any Intellectual Property that is owned by, or exclusively licensed to, the Company(Electronics Patent Co.) or one of its subsidiaries.

 

(c)  “Registered Intellectual Property” means all United States, international and foreign:  (i) patents and patent applications (including provisional applications); (ii) registered trademarks, applications to register trademarks, intent-to-use applications, or other registrations or applications related to trademarks; (iii) registered copyrights and applications for copyright registration; and (iv) any other Intellectual Property that is the subject of an application, certificate, filing, registration or other document issued, filed with, or recorded by any Governmental Entity.

 

(d)  “the Company(Electronics Patent Co.) Registered Intellectual Property” means all of the Registered Intellectual Property owned by, or filed in the name of, the Company(Electronics Patent Co.) or one of its subsidiaries.

 

(2) No material the Company(Electronics Patent Co.) Intellectual Property or product or service of the Company(Electronics Patent Co.) is subject to any proceeding or outstanding decree, order, judgment, agreement, or stipulation restricting in any manner the use, transfer, or licensing thereof by the Company(Electronics Patent Co.), or which may affect the validity, use or enforceability of such the Company(Electronics Patent Co.) Intellectual Property.

 

(3) Each material item of the Company(Electronics Patent Co.) Registered Intellectual Property is valid and subsisting; all necessary registration, maintenance and renewal fees currently due in connection with such Registered Intellectual Property have been made; and all necessary documents, recordations and certificates in connection with such Registered Intellectual Property have been filed with the relevant patent, copyright, trademark or other authorities in the United States or foreign jurisdictions, as the case may be, for the purposes of maintaining such Registered Intellectual Property, except, in each case, as would not materially adversely affect such item of the Company(Electronics Patent Co.) Registered Intellectual Property.

 

(4)  The Company(Electronics Patent Co.) or one of its subsidiaries owns and has good and exclusive title to, or has license (sufficient for the conduct of its business as currently conducted) to, each material item of the Company(Electronics Patent Co.) Intellectual Property free and clear of any Encumbrance (excluding licenses and related restrictions).

 

(5) Neither the Company(Electronics Patent Co.) has nor any of its subsidiaries transferred ownership of, or granted any exclusive license with respect to, any Intellectual Property that is or was material the Company(Electronics Patent Co.) Intellectual Property, to any third party.

 

(6) The Company(Electronics Patent Co.) Disclosure Letter lists (i) all material contracts, licenses, agreements to which the Company(Electronics Patent Co.) is a party with respect to the Company(Electronics Patent Co.)’s authority as a registry and registrar for Internet general top level domains including but not limited to the .com, .net and .org domains, (ii) all Internet distribution and advertising agreements to which the Company(Electronics Patent Co.) is a party (except for any agreement which, if terminated, would not have a Material Adverse Effect on the Company(Electronics Patent Co.)), and (iii) all contracts, licenses and agreements to which the Company(Electronics Patent Co.) is a party pursuant to which a third party has licensed or transferred any material Intellectual Property to the Company(Electronics Patent Co.) (except for any contract, license and agreement which, if terminated, would not have a Material Adverse Effect on the Company(Electronics Patent Co.)).  There are no material contracts, licenses and agreements to which the Company(Electronics Patent Co.) is a party with respect to the software, hardware, network and technology infrastructure used in the Company(Electronics Patent Co.)’s business as currently conducted which, if terminated, would have a Material Adverse Effect on the Company(Electronics Patent Co.).

 

(7) To the Company(Electronics Patent Co.)’s knowledge, the operation of the business of the Company(Electronics Patent Co.) as such business currently is conducted, including the Company(Electronics Patent Co.)’s design, development, marketing and sale of the products or services of the Company(Electronics Patent Co.) (including with respect to products currently under development) has not and does not infringe or misappropriate the Intellectual Property of any third party or, to its knowledge, constitute unfair competition or trade practices under the laws of any jurisdiction.

 

(8)  The Company(Electronics Patent Co.) has not received notice from any third party that the operation of the business of the Company(Electronics Patent Co.) or any act, product or service of the Company(Electronics Patent Co.), infringes or misappropriates the Intellectual Property of any third party or constitutes unfair competition or trade practices under the laws of any jurisdiction, which allegation, if true, would have a Material Adverse Effect on the Company(Electronics Patent Co.).

 

(9) Except as set forth in the Company(Electronics Patent Co.) Disclosure Letter, to the knowledge of the Company(Electronics Patent Co.), no person has or is infringing or misappropriating any the Company(Electronics Patent Co.) Intellectual Property, which infringement or misappropriation, individually or in the aggregate, would have a Material Adverse Effect on the Company(Electronics Patent Co.).

 

(10)  The Company(Electronics Patent Co.) and its subsidiaries have taken reasonable steps to protect the Company(Electronics Patent Co.)’s and its subsidiaries’ rights in the Company(Electronics Patent Co.)’s and such subsidiaries’ confidential information and trade secrets, except where the failure to do so would have a Material Adverse Effect on the Company(Electronics Patent Co.).

 

(11) None of the Company(Electronics Patent Co.) Intellectual Property or product or service of the Company(Electronics Patent Co.) contains any defect in connection with processing data containing dates in leap years or in the year 2000 or any preceding or following years, which defects, individually or in the aggregate, would have a Material Adverse Effect on the Company(Electronics Patent Co.).

 

(12)  The Company(Electronics Patent Co.) has obtained requisite authority, governmental approvals and rights (sufficient for the conduct of its business as currently conducted) to act as the exclusive registry and a non-exclusive registrar for certain general Internet top level domains, including but not limited to the .com, .net and .org domains.  The Company(Electronics Patent Co.) Disclosure Letter lists all material contracts, licenses and agreements to which the Company(Electronics Patent Co.) is a party with respect to the Company(Electronics Patent Co.)’s authority and obligations as a registry and registrar for Internet general top level domains including but not limited to the .com, .net and .org domains.

 

(13) All material contracts, licenses and agreements relating to the Company(Electronics Patent Co.)’s authority and obligations as a registry and registrar for Internet general top level domains including but not limited to the .com, .net and .org domains, are in full force and effect.  The consummation of the transactions contemplated by this Agreement will neither violate nor result in the breach, modification, cancellation, termination, or suspension of such contracts, licenses and agreements.  The Company(Electronics Patent Co.) and each of its subsidiaries are in material compliance with, and have not materially breached any term of any of such contracts, licenses and agreements and, to the knowledge of the Company(Electronics Patent Co.) and its subsidiaries, all other parties to such contracts, licenses and agreements are in compliance in all material respects with, and have not materially breached any term of, such contracts, licenses and agreements.

 

(14) Since [date], the Company(Electronics Patent Co.) has received no notice from any United States Governmental Entity or ICANN (i) of any material complaint by a United States Governmental Entity or ICANN regarding the Company(Electronics Patent Co.)’s services or activities related to its role as a registry and registrar for Internet general top level domains including but not limited to the .com, .net and .org domains; or (ii) questioning the Company(Electronics Patent Co.)’s authority to act as the exclusive registry and a non-exclusive registrar for Internet general top level domains, including but not limited to the .com, .net and .org domains.

 

(15) To the Company(Electronics Patent Co.)’s knowledge, as of the date of this Agreement, the Company(Electronics Patent Co.)’s separation of its registrar and registry computer systems was achieved without a material failure, which, for purposes of this Paragraph, shall be defined as uptime availability of less than 99% since the date of the separation of such systems due to the separation of such systems.

 

J.  Compliance with Laws.

(1) Neither the Company(Electronics Patent Co.) nor any of its subsidiaries is in conflict with, or in default or in violation of (i) any law, rule, regulation, order, judgment or decree applicable to the Company(Electronics Patent Co.) or any of its subsidiaries or by which the Company(Electronics Patent Co.) or any of its subsidiaries or any of their respective properties is bound or affected, or (ii) any note, bond, mortgage, indenture, agreement, lease, license, permit, franchise or other instrument or obligation to which the Company(Electronics Patent Co.) or any of its subsidiaries is a party or by which the Company(Electronics Patent Co.) or any of its subsidiaries or its or any of their respective properties is bound or affected, except for conflicts, violations and defaults that, individually or in the aggregate, would not have a Material Adverse Effect on the Company(Electronics Patent Co.).  To the Company(Electronics Patent Co.)’s knowledge, no investigation or review by any Governmental Entity is pending or has been threatened in a writing delivered to the Company(Electronics Patent Co.) against the Company(Electronics Patent Co.) or any of its subsidiaries, nor, to the Company(Electronics Patent Co.)’s knowledge, has any Governmental Entity indicated an intention to conduct an investigation of the Company(Electronics Patent Co.) or any of its subsidiaries.  There is no judgment, injunction, order or decree binding upon the Company(Electronics Patent Co.) or any of its subsidiaries which has or could reasonably be expected to have the effect of prohibiting or materially impairing any material business practice of the Company(Electronics Patent Co.) or any of its subsidiaries, or any acquisition of material property by the Company(Electronics Patent Co.) or any of its subsidiaries.

 

(2) The Company(Electronics Patent Co.) and its subsidiaries hold all permits, licenses, variances, exemptions, orders and approvals from governmental authorities that are material to or required for the operation of the business of the Company(Electronics Patent Co.) as currently conducted (collectively, the “the Company(Electronics Patent Co.) Permits”), and are in compliance with the terms of the Company(Electronics Patent Co.) Permits, except where the failure to hold such the Company(Electronics Patent Co.) Permits, or be in such compliance, would not, individually or in the aggregate, have a Material Adverse Effect on the Company(Electronics Patent Co.).

 

K.  Litigation.  There are no claims, suits, actions or proceedings pending or, to the knowledge of the Company(Electronics Patent Co.), threatened against, relating to or affecting the Company(Electronics Patent Co.) or any of its subsidiaries, before any Governmental Entity or any arbitrator that seeks to restrain or enjoin the consummation of the transactions contemplated by this Agreement or which could reasonably be expected, either singularly or in the aggregate with all such claims, actions or proceedings, to have a Material Adverse Effect on the Company(Electronics Patent Co.) or on the Surviving Corporation following the Merger or have a material adverse effect on the ability of the parties hereto to consummate the Merger.  No director or executive officer of the Company(Electronics Patent Co.) has asserted a claim to seek indemnification from the Company(Electronics Patent Co.) under the Company(Electronics Patent Co.) Charter Documents or any indemnification agreement between the Company(Electronics Patent Co.) and such person.

 

L.   Employee Benefit Plans.

(1) Definitions.  With the exception of the definition of “Affiliate” set forth below, for purposes of this Agreement, the following terms shall have the meanings set forth below:

 

(a) “Affiliate” shall mean any other person or entity under common control with the Company(Electronics Patent Co.) within the meaning of Paragraph 414(2), (c), (m) or (o) of the Code and the regulations issued thereunder;

 

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

 

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

 

(d) “DOL” shall mean the Department of Labor;

 

(e) “Employee” shall mean any current, former, or retired employee, officer, or director of the Company(Electronics Patent Co.) or any subsidiary of the Company(Electronics Patent Co.);

 

(f) “Employee Agreement” shall mean each management, employment, severance, consulting, relocation, repatriation, expatriation, visas, work permit or similar agreement or contract between the Company(Electronics Patent Co.) or any subsidiary of the Company(Electronics Patent Co.), on the one hand, and any Employee or consultant of the Company(Electronics Patent Co.) or any subsidiary of the Company(Electronics Patent Co.), on the other hand;

 

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

 

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

 

(i) “International Employee Plan” shall mean each the Company(Electronics Patent Co.) Employee Plan that has been adopted or maintained by the Company(Electronics Patent Co.), whether informally or formally, for the benefit of Employees outside the United States;

 

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

 

(k) “Multi-employer Plan” shall mean any “Pension Plan” (as defined below) which is a “multi-employer plan,” as defined in Paragraph 3(37) of ERISA;

 

(l) “PBGC” shall mean the Pension Benefit Guaranty Corporation; and

 

(m)  “Pension Plan” shall mean each the Company(Electronics Patent Co.) Employee Plan which is an “employee pension benefit plan,” within the meaning of Paragraph 3(2) of ERISA.

 

(2) Schedule.  The Company(Electronics Patent Co.) Disclosure Letter contains an accurate and complete list of each Company(Electronics Patent Co.) Employee Plan and each Employee Agreement.  The Company(Electronics Patent Co.) does not have any plan or commitment to establish any new the Company(Electronics Patent Co.) Employee Plan, to modify any the Company(Electronics Patent Co.) Employee Plan or Employee Agreement (except to the extent required by law or to conform any such the Company(Electronics Patent Co.) Employee Plan or Employee Agreement to the requirements of any applicable law, in each case as previously disclosed to the Parent(Digital Circuit Patent Co.) in writing, or as required by this Agreement), or to enter into any the Company(Electronics Patent Co.) Employee Plan or Employee Agreement, nor does it have any intention or commitment to do any of the foregoing.

 

(3) Documents.  The Company(Electronics Patent Co.) has made available to the Parent(Digital Circuit Patent Co.), to the extent requested by the Parent(Digital Circuit Patent Co.):  (i) correct and complete copies of all documents embodying each the Company(Electronics Patent Co.) Employee Plan and each Employee Agreement including all amendments thereto and written interpretations thereof; (ii) the most recent annual actuarial valuations, if any, prepared for each the Company(Electronics Patent Co.) Employee Plan; (iii) the most recent annual report (Form Series 5500 and all schedules and financial statements attached thereto), if any, required under ERISA or the Code in connection with each the Company(Electronics Patent Co.) Employee Plan or related trust; (iv) if the Company(Electronics Patent Co.) Employee Plan is funded, the most recent annual and periodic accounting of the Company(Electronics Patent Co.) Employee Plan assets; (v) the most recent summary plan description together with the summary of material modifications thereto, if any, required under ERISA with respect to each the Company(Electronics Patent Co.) Employee Plan; (vi) all IRS determination, opinion, notification and advisory letters, and rulings relating to the Company(Electronics Patent Co.) Employee Plans and copies of all applications and correspondence to or from the IRS or the DOL with respect to any the Company(Electronics Patent Co.) Employee Plan; (vii) all material written agreements and contracts relating to each the Company(Electronics Patent Co.) Employee Plan, including, but not limited to, administrative service agreements, group annuity contracts and group insurance contracts; (viii) all communications material to any Employee or Employees relating to any the Company(Electronics Patent Co.) Employee Plan and any proposed the Company(Electronics Patent Co.) Employee Plans, in each case, relating to any amendments, terminations, establishments, increases or decreases in benefits, acceleration of payments or vesting schedules or other events which would result in any material liability to the Company(Electronics Patent Co.); (ix) all COBRA forms and related notices; and (x) all registration statements and prospectuses prepared in connection with each the Company(Electronics Patent Co.) Employee Plan.

 

(4) Employee Plan Compliance.  Except, in each case, as would not, individually or in the aggregate, result in a material liability to the Company(Electronics Patent Co.): (i)  The Company(Electronics Patent Co.) has performed in all material respects all obligations required to be performed by it under, is not in default or violation of, and has no knowledge of any default or violation by any other party to, each the Company(Electronics Patent Co.) Employee Plan, and each the Company(Electronics Patent Co.) Employee Plan has been established and maintained in all material respects in accordance with its terms and in compliance with all applicable laws, statutes, orders, rules and regulations, including but not limited to ERISA or the Code; (ii) each the Company(Electronics Patent Co.) Employee Plan intended to qualify under Paragraph 401(1) of the Code and each trust intended to qualify under Paragraph 501(1) of the Code has either received a favorable determination letter from the IRS with respect to each such Plan as to its qualified status under the Code or has remaining a period of time under applicable Treasury regulations or IRS pronouncements in which to apply for such a determination letter and make any amendments necessary to obtain a favorable determination and, to the knowledge of the Company(Electronics Patent Co.), no event has occurred giving rise to a material likelihood that such Plan would not be treated as qualified by the IRS; (iii) no “prohibited transaction,” within the meaning of Paragraph 4975 of the Code or Paragraphs 406 and 407 of ERISA, and not otherwise exempt under Paragraph 408 of ERISA, has occurred with respect to any the Company(Electronics Patent Co.) Employee Plan; (iv) there are no actions, suits or claims pending, or, to the knowledge of the Company(Electronics Patent Co.), threatened or reasonably anticipated (other than routine claims for benefits) against any the Company(Electronics Patent Co.) Employee Plan or against the assets of any the Company(Electronics Patent Co.) Employee Plan; (v) each the Company(Electronics Patent Co.) Employee Plan can be amended, terminated or otherwise discontinued after the Effective Time in accordance with its terms, without liability to the Parent(Digital Circuit Patent Co.), the Company(Electronics Patent Co.) or any of its Affiliates (other than ordinary administration expenses typically incurred in a termination event); (vi) there are no audits, inquiries or proceedings pending or, to the knowledge of the Company(Electronics Patent Co.), threatened by the IRS or DOL with respect to any the Company(Electronics Patent Co.) Employee Plan; (vii) neither the Company(Electronics Patent Co.) nor any Affiliate is subject to any penalty or tax with respect to any the Company(Electronics Patent Co.) Employee Plan under Paragraph 402(i) of ERISA or Paragraphs 4975 through 4980 of the Code; and (viii) all contributions due from the Company(Electronics Patent Co.) or any Affiliate with respect to any of the Company(Electronics Patent Co.) Employee Plans have been made as required under ERISA or have been accrued on the Company(Electronics Patent Co.) Balance Sheet.

 

(5) Pension Plans.  Neither the Company(Electronics Patent Co.) nor TCI has now, nor has it ever, maintained, established, sponsored, participated in, or contributed to, any Pension Plan which is subject to Title IV of ERISA or Paragraph 412 of the Code, that would result in material liability to the Company(Electronics Patent Co.).

 

(6) Multi-employer Plans.  At no time has the Company(Electronics Patent Co.) or TCI contributed to or been requested to contribute to any Multi-employer Plan, that would result in material liability to the Company(Electronics Patent Co.).

 

(7) No Post-Employment Obligations.  No the Company(Electronics Patent Co.) Employee Plan provides, or has any liability to provide, retiree life insurance, retiree health or other retiree employee welfare benefits to any person for any reason, except as may be required by COBRA or other applicable statute, and the Company(Electronics Patent Co.) has never represented, promised or contracted (whether in oral or written form) to any Employee (either individually or to Employees as a group) or any other person that such Employee(s) or other person would be provided with retiree life insurance, retiree health or other retiree employee welfare benefit, except to the extent required by statute.

 

(8) Effect of Transaction.  Except as expressly contemplated by this Agreement, the execution of this Agreement and the consummation of the transactions contemplated hereby will not (either alone or upon the occurrence of any additional or subsequent events) constitute an event under any the Company(Electronics Patent Co.) Employee Plan, Employee Agreement, trust or loan that will or may result in any payment (whether of severance pay or otherwise), acceleration, forgiveness of indebtedness, vesting, distribution, increase in benefits or obligation to fund benefits with respect to any Employee.

 

(9) Employment Matters.  Except, in each case, as would not, individually or in the aggregate, have a Material Adverse Effect on the Company(Electronics Patent Co.), the Company(Electronics Patent Co.) and each of its subsidiaries:  (i) is in compliance in all material respects with all applicable foreign, federal, state and local laws, rules and regulations respecting employment, employment practices, terms and conditions of employment and wages and hours, in each case, with respect to Employees; (ii) has withheld all amounts required by law or by agreement to be withheld from the wages, salaries and other payments to Employees; (iii) has properly classified independent contractors for purposes of federal and applicable state tax laws, laws applicable to employee benefits and other applicable laws; (iv) is not liable for any arrears of wages or any taxes or any penalty for failure to comply with any of the foregoing; and (v) is not liable for any material payment to any trust or other fund or to any governmental or administrative 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 consistent with past practice).  There are no pending, or, to the Company(Electronics Patent Co.)’s knowledge, threatened material claims or actions against the Company(Electronics Patent Co.) under any worker’s compensation policy or long-term disability policy.  To the Company(Electronics Patent Co.)’s knowledge, no Employee of the Company(Electronics Patent Co.) has materially violated any employment contract, nondisclosure agreement or non-competition agreement by which such Employee is bound due to such Employee being employed by the Company(Electronics Patent Co.) and disclosing to the Company(Electronics Patent Co.) or using trade secrets or proprietary information of any other person or entity.

 

(10) Labor.  No work stoppage or labor strike against the Company(Electronics Patent Co.) is pending, threatened or reasonably anticipated.  The Company(Electronics Patent Co.) does not know of any activities or proceedings of any labor union to organize any Employees.  There are no actions, suits, claims, labor disputes or grievances pending, or, to the knowledge of the Company(Electronics Patent Co.), threatened relating to any labor, safety or discrimination matters involving any Employee, including charges of unfair labor practices or discrimination complaints, which, if adversely determined, would, individually or in the aggregate, result in any material liability to the Company(Electronics Patent Co.).  Neither the Company(Electronics Patent Co.) nor any of its subsidiaries has engaged in any unfair labor practices within the meaning of the National Labor Relations Act.  The Company(Electronics Patent Co.) is not presently, nor has it been in the past, a party to, or bound by, any collective bargaining agreement or union contract with respect to Employees and no collective bargaining agreement is being negotiated by the Company(Electronics Patent Co.).

 

(11) International Employee Plan.  Each International Employee Plan has been established, maintained and administered in material compliance with its terms and conditions and with the requirements prescribed by any and all statutory or regulatory laws that are applicable to such International Employee Plan.  Furthermore, no International Employee Plan has unfunded liabilities, that as of the Effective Time, will not be offset by insurance or fully accrued. Except as required by law, no condition exists that would prevent the Company(Electronics Patent Co.) or the Parent(Digital Circuit Patent Co.) from terminating or amending any International Employee Plan at any time for any reason.

 

M.  Environmental Matters.

(1) Hazardous Material.  Except as would not have a Material Adverse Effect on the Company(Electronics Patent Co.), no underground storage tanks and no amount of any substance that has been designated by any Governmental Entity or by applicable federal, state or local law to be radioactive, toxic, hazardous or otherwise a danger to health or the environment, including, without limitation, PCBs, asbestos, petroleum, urea-formaldehyde and all substances listed as hazardous substances pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, or defined as a hazardous waste pursuant to the United States Resource Conservation and Recovery Act of 1976, as amended, and the regulations promulgated pursuant to said laws, but excluding office and janitorial supplies (a “Hazardous Material”) are present, as a result of the actions of the Company(Electronics Patent Co.) or any of its subsidiaries or any affiliate of the Company(Electronics Patent Co.), or, to the Company(Electronics Patent Co.)’s knowledge, as a result of any actions of any third party or otherwise, in, on or under any property, including the land and the improvements, ground water and surface water thereof that the Company(Electronics Patent Co.) or any of its subsidiaries has at any time owned, operated, occupied or leased.

 

(2) Hazardous Materials Activities.  Except as would not have a Material Adverse Effect on the Company(Electronics Patent Co.) (in any individual case or in the aggregate) (i) neither the Company(Electronics Patent Co.) nor any of its subsidiaries has transported, stored, used, manufactured, disposed of released or exposed its employees or others to Hazardous Materials in violation of any law in effect on or before the Closing Date, and (ii) neither the Company(Electronics Patent Co.) nor any of its subsidiaries has disposed of, transported, sold, used, released, exposed its employees or others to or manufactured any product containing a Hazardous Material (collectively “Hazardous Materials Activities”) in violation of any rule, regulation, treaty or statute promulgated by any Governmental Entity in effect prior to or as of the date hereof to prohibit, regulate or control Hazardous Materials or any Hazardous Material Activity.

 

(3) Permits.  The Company(Electronics Patent Co.) and its subsidiaries currently hold all environmental approvals, permits, licenses, clearances and consents (“Environmental Permits”) material to and necessary for the conduct of the Company(Electronics Patent Co.)’s and its subsidiaries’ Hazardous Material Activities and other businesses of the Company(Electronics Patent Co.) and its subsidiaries as such activities and businesses are currently being conducted.

 

(4) Environmental Liabilities.  No material action, proceeding, revocation proceeding, amendment procedure, writ or injunction is pending, and to the Company(Electronics Patent Co.)’s knowledge, no material action, proceeding, revocation proceeding, amendment procedure, writ or injunction has been threatened by any Governmental Entity against the Company(Electronics Patent Co.) or any of its subsidiaries in a writing delivered to the Company(Electronics Patent Co.) concerning any Environmental Permit of the Company(Electronics Patent Co.), Hazardous Material or any Hazardous Materials Activity of the Company(Electronics Patent Co.) or any of its subsidiaries.  The Company(Electronics Patent Co.) is not aware of any fact or circumstance which reasonably could be expected to involve the Company(Electronics Patent Co.) or any of its subsidiaries in any environmental litigation or impose upon the Company(Electronics Patent Co.) any environmental liability, with such exceptions as would not have a Material Adverse Effect on the Company(Electronics Patent Co.).

 

N.  Certain Agreements.  Except as set forth in the Company(Electronics Patent Co.) Disclosure Letter, neither the Company(Electronics Patent Co.) nor any of its subsidiaries is a party to or is bound by:

 

(1) any employment or consulting agreement or commitment with any employee or member of the Company(Electronics Patent Co.)’s Board of Directors, that, individually or in the aggregate, is material to the Company(Electronics Patent Co.), other than those that are terminable by the Company(Electronics Patent Co.) or any of its subsidiaries on no more than thirty days notice without liability or financial obligation, except to the extent  general principles of wrongful termination law may limit the Company(Electronics Patent Co.)’s or any of its subsidiaries’ ability to terminate employees at will;

 

(2) any agreement or plan, including any stock option plan, stock appreciation right plan or stock purchase plan, any of the benefits of which will be increased, or the vesting of benefits of which will be accelerated, by the occurrence of any of the transactions contemplated by this Agreement or the value of any of the benefits of which will be calculated on the basis of any of the transactions contemplated by this Agreement;

 

(3) any material guaranty or any instrument evidencing indebtedness for borrowed money by way of direct loan or sale of debt securities;

 

(4) any agreement, obligation or commitment containing covenants purporting to limit or which effectively limit the Company(Electronics Patent Co.)’s or any of its subsidiaries’ freedom to compete in any line of business or in any geographic area or which would so limit the Company(Electronics Patent Co.) or Surviving Corporation or any of its subsidiaries after the Effective Time that would have a Material Adverse Effect on the Company(Electronics Patent Co.);

 

(5) any agreement or commitment currently in force relating to the disposition or acquisition by the Company(Electronics Patent Co.) or any of its subsidiaries after the date of this Agreement of a material amount of assets not in the ordinary course of business, or pursuant to which the Company(Electronics Patent Co.) has any material ownership or participation interest in any corporation, partnership, joint venture, strategic alliance or other business enterprise other than the Company(Electronics Patent Co.)’s subsidiaries;

 

(6) any material agreement or commitment with TCI other than the Corporate Services Agreement between the Company(Electronics Patent Co.) and TCI; or

 

(7) any agreement or commitment currently in force providing for capital expenditures by the Company(Electronics Patent Co.) or its subsidiaries in excess of $5,000,000.  The agreements required to be disclosed in the Company(Electronics Patent Co.) Disclosure Letter pursuant to clauses (1) through (g) above or pursuant to Paragraph 2.9 or are required to be filed with any the Parent(Digital Circuit Patent Co.) SEC Report (“the Company(Electronics Patent Co.) Contracts”) are valid and in full force and effect, except to the extent that such invalidity would not have a Material Adverse Effect on the Company(Electronics Patent Co.).  Neither the Company(Electronics Patent Co.) nor any of its subsidiaries, nor to the Company(Electronics Patent Co.)’s knowledge, any other party thereto, is in breach, violation or default under, and neither the Company(Electronics Patent Co.) nor any of its subsidiaries has received written notice that it has breached, violated or defaulted, any of the terms or conditions of any the Company(Electronics Patent Co.) Contract in such a manner as would have a Material Adverse Effect on the Company(Electronics Patent Co.).

 

O.  Brokers’ and Finders’ Fees.   Except for fees payable to [name] and [name] pursuant to engagement letters which have been provided to the Parent(Digital Circuit Patent Co.), the Company(Electronics Patent Co.) has not incurred, nor will it incur, directly or indirectly, any liability for brokerage or finders’ fees or agents’ commissions or any similar charges in connection with this Agreement or any transaction contemplated hereby.

 

P.    Insurance.  The Company(Electronics Patent Co.) and each of its subsidiaries have policies of insurance and bonds of the type and in amounts customarily carried by persons conducting business or owning assets similar to those of the Company(Electronics Patent Co.) and its subsidiaries.  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 have been paid and the Company(Electronics Patent Co.) and its subsidiaries are otherwise in compliance in all material respects with the terms of such policies and bonds.  To the knowledge of the Company(Electronics Patent Co.), there has been no threatened termination of, or material premium increase with respect to, any of such policies.

 

Q.  Disclosure.  The information supplied by the Company(Electronics Patent Co.) for inclusion in the Form S-4 (or any similar successor form thereto) Registration Statement to be filed by the Parent(Digital Circuit Patent Co.) with the SEC in connection with the issuance of the Parent(Digital Circuit Patent Co.) Common Stock in the Merger (the “Registration Statement”) shall not at the time the Registration Statement is filed with the SEC and at the time it becomes effective under the Securities Act contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading.  The information supplied by the Company(Electronics Patent Co.) for inclusion or incorporation by reference in the proxy statement/prospectus to be filed with the SEC as part of the Registration Statement (the “Proxy Statement/Prospectus”) shall not, on the date the Proxy Statement/Prospectus is mailed to the Company(Electronics Patent Co.)’s stockholders or to the Parent(Digital Circuit Patent Co.)’s stockholders, at the time of the meeting of the Company(Electronics Patent Co.)’s stockholders (the “the Company(Electronics Patent Co.) Stockholders’ Meeting”) to consider the Company(Electronics Patent Co.) Stockholder Approvals, at the time of the meeting of the Parent(Digital Circuit Patent Co.)’s stockholders (the “the Parent(Digital Circuit Patent Co.) Stockholders’ Meeting”) to consider (1) the issuance of shares of the Parent(Digital Circuit Patent Co.) Common Stock pursuant to the Merger, (2) an amendment to the Parent(Digital Circuit Patent Co.)’s Certificate of Incorporation to increase the authorized number of shares of the Parent(Digital Circuit Patent Co.) Common Stock in order to permit the issuance of shares of the Parent(Digital Circuit Patent Co.) Common Stock pursuant to the Merger, and (3) an amendment to the Parent(Digital Circuit Patent Co.)’s Bylaws to increase the authorized number of directors of the Parent(Digital Circuit Patent Co.) (collectively, the “the Parent(Digital Circuit Patent Co.) Stockholder Approvals”) or as of the Effective Time, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not false or misleading; or omit to state any material fact necessary to correct any statement in any earlier communication with respect to the solicitation of proxies for the Company(Electronics Patent Co.) Stockholders’ Meeting or the Parent(Digital Circuit Patent Co.) Stockholders’ Meeting which has become false or misleading.  The Proxy Statement/Prospectus will comply as to form in all material respects with the provisions of the Securities Act, the Exchange Act and the rules and regulations thereunder.  If at any time prior to the Effective Time any event relating to the Company(Electronics Patent Co.) or any of its affiliates, officers or directors should be discovered by the Company(Electronics Patent Co.) which is required to be set forth in an amendment to the Registration Statement or a supplement to the Proxy Statement/Prospectus, the Company(Electronics Patent Co.) shall promptly inform the Parent(Digital Circuit Patent Co.).  Notwithstanding the foregoing, the Company(Electronics Patent Co.) makes no representation or warranty with respect to any information supplied by the Parent(Digital Circuit Patent Co.) or the Merger Sub(Computer Hardware Patent Co.) which is contained in any of the foregoing documents.

 

R.  Board Approval.  The Board of Directors of the Company(Electronics Patent Co.) has, as of the date of this Agreement, (i) determined that the Merger is fair to, and in the best interests of the Company(Electronics Patent Co.) and its stockholders, and has approved this Agreement and (ii) declared the advisability of the Merger and recommends that the stockholders of the Company(Electronics Patent Co.) approve and adopt this Agreement and approve the Merger.

 

S.  Fairness Opinion.  The Company(Electronics Patent Co.)’s Board of Directors has received opinions from [name] and [name], dated as of the date hereof, to the effect that, as of the date hereof, the consideration to be received by the Company(Electronics Patent Co.)’s stockholders in the Merger is fair to the Company(Electronics Patent Co.)’s stockholders from a financial point of view, and will promptly deliver to the Parent(Digital Circuit Patent Co.) copies of such opinions.

 

T.  DGCL Paragraph 203 and Rights Agreement Not Applicable.  The restrictions contained in Paragraph 203 of the [State] Law applicable to a “business combination” (as defined therein) are not applicable to the execution, delivery or performance of this Agreement or to the consummation of the Merger by express provision of the Company(Electronics Patent Co.)’s Certificate of Incorporation, duly adopted pursuant to the provisions of Paragraph 203(2)(3) of the [State] Law.  To the Company(Electronics Patent Co.)’s knowledge, no other anti-takeover, control share acquisition, fair price, moratorium or other similar statute or regulation (each, a “Takeover Statute”) applies or purports to apply to this Agreement, the Merger or the other transactions contemplated hereby.  The Company(Electronics Patent Co.) is not a party to, and the Company(Electronics Patent Co.)’s equity securities will not be affected by, any rights agreement, “poison pill” or similar plan, agreement or arrangement which would have an adverse effect on the ability of the Parent(Digital Circuit Patent Co.) to consummate the Merger or the other transactions contemplated hereby.

 

U. Affiliates.  The Company(Electronics Patent Co.) Disclosure Letter is a complete list of those persons who may be deemed to be, in the Company(Electronics Patent Co.)’s reasonable judgment, affiliates of the Company(Electronics Patent Co.) within the meaning of Rule 145 promulgated under the Securities Act.  Except as set forth in the Company(Electronics Patent Co.) SEC Reports, since the date of the Company(Electronics Patent Co.)’s last proxy statement filed with the SEC, no event has occurred as of the date of this Agreement that would be required to be reported by the Company(Electronics Patent Co.) pursuant to Item 404 of Regulation S-K promulgated by the SEC.

 

 

3.  Representations and Warranties of the Parent(Digital Circuit Patent Co.) and the Merger Sub(Computer Hardware Patent Co.)
As of the date of this Agreement and as of the Closing Date, except as disclosed in (i) the Parent(Digital Circuit Patent Co.)’s Annual Report on Form 10-K for the year ending [date] and any the Parent(Digital Circuit Patent Co.) SEC Reports (as defined below) filed subsequent to such Form 10-K, and (ii) the disclosure letter delivered by the Parent(Digital Circuit Patent Co.) to the Company(Electronics Patent Co.) dated as of the date hereof and certified by a duly authorized officer of the Parent(Digital Circuit Patent Co.) (the “the Parent(Digital Circuit Patent Co.) Disclosure Letter”) (each Part of which qualifies the correspondingly numbered representation, warranty or covenant to the extent specified therein and such other representations, warranties or covenants to the extent a matter in such Part is disclosed in such a way as to make its relevance to such other representation, warranty or covenant readily apParent(Digital Circuit Patent Co.), the Parent(Digital Circuit Patent Co.) and the Merger Sub(Computer Hardware Patent Co.) represent and warrant as follows:

 

A.  Organization of the Parent(Digital Circuit Patent Co.) and the Merger Sub(Computer Hardware Patent Co.).

(1) Each of the Parent(Digital Circuit Patent Co.) and the Merger Sub(Computer Hardware Patent Co.) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all requisite corporate power and authority, and all requisite qualifications to do business as a foreign corporation, to conduct its business in the manner in which its business is currently being conducted, except where the failure to be so organized, existing or in good standing or to have such power, authority or qualifications would not, individually or in the aggregate, have a Material Adverse Effect on the Parent(Digital Circuit Patent Co.).

 

(2) the Parent(Digital Circuit Patent Co.) has delivered or made available to the Company(Electronics Patent Co.) a true and correct copy of the Certificate of Incorporation and Bylaws of the Parent(Digital Circuit Patent Co.) and the Merger Sub(Computer Hardware Patent Co.), each as amended to date (collectively, the “the Parent(Digital Circuit Patent Co.) Charter Documents”), and each such instrument is in full force and effect.  Neither the Parent(Digital Circuit Patent Co.) nor the Merger Sub(Computer Hardware Patent Co.) is in violation of any of the provisions of the Parent(Digital Circuit Patent Co.) Charter Documents.

 

B.  The Parent(Digital Circuit Patent Co.) and the Merger Sub(Computer Hardware Patent Co.) Capitalization.

(1) The authorized capital stock of the Parent(Digital Circuit Patent Co.) consists solely of [Number] shares of the Parent(Digital Circuit Patent Co.) Common Stock, of which there were [Number] shares issued and outstanding as of the close of business on [Date], and [Number] shares of Preferred Stock, par value $0.001 per share, of which no shares are issued or outstanding.  All outstanding shares of the Parent(Digital Circuit Patent Co.) Common Stock are duly authorized, validly issued, fully paid and nonassessable and are not subject to preemptive rights created by statute, the Certificate of Incorporation or Bylaws of the Parent(Digital Circuit Patent Co.) or any agreement or document to which the Parent(Digital Circuit Patent Co.) is a party or by which it is bound. As of the close of business on [Date], (i) [Number] shares of the Parent(Digital Circuit Patent Co.) Common Stock are subject to issuance pursuant to outstanding options to purchase the Parent(Digital Circuit Patent Co.) Common Stock, and (ii) [Number] shares of the Parent(Digital Circuit Patent Co.) Common Stock are reserved for future issuance under the Parent(Digital Circuit Patent Co.)’s Equity Employee Stock Purchase Plan.  All shares of the Parent(Digital Circuit Patent Co.) Common Stock subject to issuance as aforesaid, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, would be duly authorized, validly issued, fully paid and nonassessable.

 

(2) The authorized capital stock of the Merger Sub(Computer Hardware Patent Co.) consists of [number] shares of common stock, $0.01 par value, all of which, as of the date hereof, are issued and outstanding and are held by the Parent(Digital Circuit Patent Co.).  All of the outstanding shares of the Merger Sub(Computer Hardware Patent Co.)’s common stock have been duly authorized and validly issued, and are fully paid and nonassessable.  The Merger Sub(Computer Hardware Patent Co.) was formed for the purpose of consummating the Merger and has no material assets or liabilities except as necessary for such purpose.

 

(3) All outstanding shares of the Company(Electronics Patent Co.) Common Stock, all outstanding the Company(Electronics Patent Co.) Options, and all outstanding shares of capital stock of each subsidiary of the Company(Electronics Patent Co.) have been issued and granted in compliance with (i) all applicable securities laws and other applicable material Legal Requirements and (ii) all material requirements set forth in applicable agreements or instruments.

 

(4)  The Parent(Digital Circuit Patent Co.) Common Stock to be issued in the Merger, when issued in accordance with the provisions of this Agreement, will be validly issued, fully paid and non-assessable.

 

C.  Obligations With Respect to Capital Stock. Except as set forth in the Parent(Digital Circuit Patent Co.) Disclosure Letter, there are no equity securities, partnership interests or similar ownership interests of any class of the Parent(Digital Circuit Patent Co.) equity security, or any securities exchangeable or convertible into or exercisable for such equity securities, partnership interests or similar ownership interests, issued, reserved for issuance or outstanding. Except for securities the Parent(Digital Circuit Patent Co.) owns free and clear of all claims and Encumbrances, directly or indirectly through one or more subsidiaries, and except for shares of capital stock or other similar ownership interests of certain subsidiaries of the Parent(Digital Circuit Patent Co.) that are owned by certain nominee equity holders as required by the applicable law of the jurisdiction of organization of such subsidiaries, as of the date of this Agreement, there are no equity securities, partnership interests or similar ownership interests of any class of equity security of any subsidiary of the Parent(Digital Circuit Patent Co.), or any security exchangeable or convertible into or exercisable for such equity securities, partnership interests or similar ownership interests, issued, reserved for issuance or outstanding. Except as set forth in the Parent(Digital Circuit Patent Co.) Disclosure Letter, there are no subscriptions, options, warrants, equity securities, partnership interests or similar ownership interests, calls, rights (including preemptive rights), commitments or agreements of any character to which the Parent(Digital Circuit Patent Co.) or any of its subsidiaries is a party or by which it is bound obligating the Parent(Digital Circuit Patent Co.) or any of its subsidiaries to issue, deliver or sell, or cause to be issued, delivered or sold, or repurchase, redeem or otherwise acquire, or cause the repurchase, redemption or acquisition if, any shares of capital stock, partnership interests or similar ownership interests of the Parent(Digital Circuit Patent Co.) or any of its subsidiaries or obligating the Parent(Digital Circuit Patent Co.) or any of its subsidiaries to grant, extend, accelerate the vesting of or enter into any such subscription, option, warrant, equity security, call, right, commitment or agreement.

 

D.  Authority; Non-Contravention.

(1) Each of the Parent(Digital Circuit Patent Co.) and the Merger Sub(Computer Hardware Patent Co.) has all requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated hereby.  The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Parent(Digital Circuit Patent Co.) and the Merger Sub(Computer Hardware Patent Co.), subject only to the Parent(Digital Circuit Patent Co.) Stockholder Approvals and the filing of the Certificate of Merger pursuant to [State] Law.  The affirmative vote of (i) the holders of a majority in interest of the stock present or represented by proxy at the Parent(Digital Circuit Patent Co.) Stockholders’ Meeting is sufficient for the Parent(Digital Circuit Patent Co.)’s stockholders to approve the issuance of shares of the Parent(Digital Circuit Patent Co.) Common Stock pursuant to the Merger, (ii) the holders of a majority of the outstanding shares of the Parent(Digital Circuit Patent Co.) Common Stock is sufficient for the Parent(Digital Circuit Patent Co.)’s stockholders to amend the Parent(Digital Circuit Patent Co.)’s Certificate of Incorporation to increased the authorized number of shares of the Parent(Digital Circuit Patent Co.) Common Stock in order to permit the issuance of shares of the Parent(Digital Circuit Patent Co.) Common Stock pursuant to the Merger, and (iii) the holders of at least a majority of the voting power of all of then outstanding shares of the Parent(Digital Circuit Patent Co.) Common Stock is sufficient to amend the Parent(Digital Circuit Patent Co.)’s Bylaws to increase the authorized number of directors of the Parent(Digital Circuit Patent Co.), and no other approval of any holder of any securities of the Company(Electronics Patent Co.) is required in connection with the consummation of the transactions contemplated hereby.  This Agreement has been duly executed and delivered by each of the Parent(Digital Circuit Patent Co.) and the Merger Sub(Computer Hardware Patent Co.) and, assuming the due authorization, execution and delivery by the Company(Electronics Patent Co.), constitute the valid and binding obligations of the Parent(Digital Circuit Patent Co.) and the Merger Sub(Computer Hardware Patent Co.), respectively, enforceable against the Parent(Digital Circuit Patent Co.) and the Merger Sub(Computer Hardware Patent Co.) in accordance with their terms, except as enforceability may be limited by bankruptcy and other similar laws affecting the rights of creditors generally and general principles of equity.

 

(2) The execution and delivery of this Agreement by each of the Parent(Digital Circuit Patent Co.) and the Merger Sub(Computer Hardware Patent Co.) does not, and the performance of this Agreement by the Parent(Digital Circuit Patent Co.) and the Merger Sub(Computer Hardware Patent Co.) will not, (i) subject to obtaining the Parent(Digital Circuit Patent Co.) Stockholder Approvals, conflict with or violate the Certificate of Incorporation or Bylaws of the Parent(Digital Circuit Patent Co.) or the Merger Sub(Computer Hardware Patent Co.), (ii) subject to obtaining the Parent(Digital Circuit Patent Co.) Stockholder Approvals and compliance with the requirements set forth herein, conflict with or violate any law, rule, regulation, order, judgment or decree applicable to the Parent(Digital Circuit Patent Co.) or the Merger Sub(Computer Hardware Patent Co.) or by which any of their respective properties is bound or affected, or (iii) result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or impair the Parent(Digital Circuit Patent Co.)’s rights or alter the rights or obligations of any third party under, or give to others any rights of termination, amendment, acceleration or cancellation of; or result in the creation of an Encumbrance on any of the properties or assets of the Parent(Digital Circuit Patent Co.) or the Merger Sub(Computer Hardware Patent Co.) pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which the Parent(Digital Circuit Patent Co.) or the Merger Sub(Computer Hardware Patent Co.) is a party or by which the Parent(Digital Circuit Patent Co.) or the Merger Sub(Computer Hardware Patent Co.) or any of their respective properties are bound or affected, except, in the case of clauses (ii) and (iii), for such conflicts, violations, breaches, defaults, impairments, or rights which, individually or in the aggregate, would not have a Material Adverse Effect on the Parent(Digital Circuit Patent Co.).  The Parent(Digital Circuit Patent Co.) Disclosure Letter list all consents, waivers and approvals under any of the Parent(Digital Circuit Patent Co.)’s or any of its subsidiaries’ agreements, contracts, licenses or leases required to be obtained in connection with the consummation of the transactions contemplated hereby, which, if individually or in the aggregate not obtained, would result in a material loss of benefits to the Parent(Digital Circuit Patent Co.) or the Surviving Corporation as a result of the Merger.

 

(3) No consent, approval, order or authorization of, or registration, declaration or filing with any Governmental Entity or other person is required to be obtained or made by the Parent(Digital Circuit Patent Co.) or the Merger Sub(Computer Hardware Patent Co.) in connection with the execution and delivery of this Agreement or the consummation of the Merger, except for (i) the filing of the Certificate of Merger with the Secretary of State of the State of [State], (ii) the filing of the Proxy Statement/Prospectus and the Registration Statement with the SEC and a Schedule 13D with regard to the Voting Agreement in accordance with the Securities Act and the Exchange Act, and the effectiveness of the Registration Statement, (iii) such consents, approvals, orders, authorizations, registrations, declarations and filings as may be required under applicable federal, foreign and state securities (or related) laws and the HSR Act and the securities or antitrust laws of any foreign country, and (v) such other consents, authorizations, filings, approvals and registrations which if not obtained or made would not be material to the Parent(Digital Circuit Patent Co.) or the Surviving Corporation or have a material adverse effect on the ability of the parties hereto to consummate the Merger.

 

E.  SEC Filings; the Parent(Digital Circuit Patent Co.) Financial Statements.

(1) the Parent(Digital Circuit Patent Co.) has filed all forms, reports and documents required to be filed by the Parent(Digital Circuit Patent Co.) with the SEC since the effective date of the registration statement of the Parent(Digital Circuit Patent Co.)’s initial public offering, and has made available to the Company(Electronics Patent Co.) such forms, reports and documents in the form filed with the SEC.  All such required forms, reports and documents (including those that the Parent(Digital Circuit Patent Co.) may file subsequent to the date hereof) are referred to herein as the “the Parent(Digital Circuit Patent Co.) SEC Reports.” As of their respective dates, the Parent(Digital Circuit Patent Co.) SEC Reports (i) were prepared in accordance with the requirements of the Securities Act or the Exchange Act, as the case may be, and the rules and regulations of the SEC thereunder applicable to such the Parent(Digital Circuit Patent Co.) SEC Reports, and (ii) did not at the time they were filed (or if amended or superseded by a filing prior to the date of this Agreement, then on the date of such filing) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, except to the extent corrected prior to the date of this Agreement by a subsequently filed the Parent(Digital Circuit Patent Co.) SEC Report. None of the Parent(Digital Circuit Patent Co.)’s subsidiaries is required to file any forms, reports or other documents with the SEC.

 

(2) Each of the consolidated financial statements (including, in each case, any related notes thereto) contained in the Parent(Digital Circuit Patent Co.) SEC Reports (the “the Parent(Digital Circuit Patent Co.) Financials”), including any the Parent(Digital Circuit Patent Co.) SEC Reports filed after the date hereof until the Closing, (i) complied as to form in all material respects with the published rules and regulations of the SEC with respect thereto, (ii) was prepared in accordance with GAAP applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto or, in the case of unaudited interim financial statements, as may be permitted by the SEC on Form 1O-Q, 8-K or any successor form under the Exchange Act) and (iii) fairly presented the consolidated financial position of the Parent(Digital Circuit Patent Co.) and its subsidiaries as at the respective dates thereof and the consolidated results of the Parent(Digital Circuit Patent Co.)’s operations and cash flows for the periods indicated, except that the unaudited interim financial statements may not contain footnotes and were or are subject to normal and recurring year-end adjustments.  The balance sheet of the Parent(Digital Circuit Patent Co.) contained in the Parent(Digital Circuit Patent Co.) SEC Reports as of [date] is hereinafter referred to as the “the Parent(Digital Circuit Patent Co.) Balance Sheet.”  Except as disclosed in the Parent(Digital Circuit Patent Co.) Financials, since the date of the Parent(Digital Circuit Patent Co.) Balance Sheet neither the Parent(Digital Circuit Patent Co.) nor any of its subsidiaries has any liabilities required under GAAP to be set forth on a balance sheet (absolute, accrued, contingent or otherwise) which are, individually or in the aggregate, material to the business, results of operations or financial condition of the Parent(Digital Circuit Patent Co.) and its subsidiaries taken as a whole, except for liabilities incurred since the date of the Parent(Digital Circuit Patent Co.) Balance Sheet in the ordinary course of business consistent with past practices and liabilities incurred in connection with this Agreement.

 

(3) the Parent(Digital Circuit Patent Co.) has heretofore furnished to the Company(Electronics Patent Co.) a complete and correct copy of any amendments or modifications, which have not yet been filed with the SEC but which are required to be filed, to agreements, documents or other instruments which previously had been filed by the Parent(Digital Circuit Patent Co.) with the SEC pursuant to the Securities Act or the Exchange Act.

 

F.  Absence of Certain Changes or Events.  Since the date of the Parent(Digital Circuit Patent Co.) Balance Sheet there has not been (i) any Material Adverse Effect with respect to the Parent(Digital Circuit Patent Co.), (ii) any declaration, setting aside or payment of any dividend on, or other distribution (whether in cash, stock or property) in respect of, any of the Parent(Digital Circuit Patent Co.)’s or any of its subsidiaries’ capital stock, or any purchase, redemption or other acquisition by the Parent(Digital Circuit Patent Co.) of any of the Parent(Digital Circuit Patent Co.)’s capital stock or any other securities of the Parent(Digital Circuit Patent Co.) or its subsidiaries or any options, warrants, calls or rights to acquire any such shares or other securities except for repurchases which are not, individually or in the aggregate, material in amount from employees following their termination pursuant to the terms of their pre-existing stock option or purchase agreements, (iii) any split, combination or reclassification of any of the Parent(Digital Circuit Patent Co.)’s or any of its subsidiaries’ capital stock, (iv) any material change by the Parent(Digital Circuit Patent Co.) in its accounting methods, principles or practices, except as required by concurrent changes in GAAP, or (v) any material revaluation by the Parent(Digital Circuit Patent Co.) of any of its material assets, including writing off notes or accounts receivable other than in the ordinary course of business.

 

G.  Taxes.

(1) the Parent(Digital Circuit Patent Co.) and each of its subsidiaries have timely filed all material Returns relating to Taxes required to be filed by or on behalf of the Parent(Digital Circuit Patent Co.) and each of its subsidiaries with any Tax authority, such Returns are true, correct and complete in all material respects, and the Parent(Digital Circuit Patent Co.) and each of its subsidiaries have paid all Taxes shown to be due on such Returns.

 

(2) the Parent(Digital Circuit Patent Co.) and each of its subsidiaries have withheld with respect to its employees all federal and state income taxes, Taxes pursuant to FICA, Taxes pursuant to FUTA and other Taxes required to be withheld, except such Taxes which are not material to the Parent(Digital Circuit Patent Co.).

 

(3) Neither the Parent(Digital Circuit Patent Co.) nor any of its subsidiaries has been delinquent in the payment of any material Tax nor is there any material Tax deficiency outstanding, proposed or assessed against the Parent(Digital Circuit Patent Co.) or any of its subsidiaries, nor has the Parent(Digital Circuit Patent Co.) or any of its subsidiaries executed any unexpired waiver of any statute of limitations on or extending the period for the assessment or collection of any Tax.

 

(4) No audit or other examination of any Return of the Parent(Digital Circuit Patent Co.) or any of its subsidiaries by any Tax authority is presently in progress, nor has the Parent(Digital Circuit Patent Co.) or any of its subsidiaries been notified of any request for such an audit or other examination that is reasonably likely to result in any adjustment that is material to the Parent(Digital Circuit Patent Co.).

 

(5) No adjustment relating to any Returns filed by the Parent(Digital Circuit Patent Co.) or any of its subsidiaries has been proposed in writing formally or informally by any Tax authority to the Company(Electronics Patent Co.) or any of its subsidiaries or any representative thereof that is reasonably likely to be material to the Parent(Digital Circuit Patent Co.).

 

(6) Neither the Parent(Digital Circuit Patent Co.) nor any of its subsidiaries has any liability for unpaid Taxes which has not been accrued for or reserved on the Parent(Digital Circuit Patent Co.) Balance Sheet in accordance with GAAP, whether asserted or unasserted, contingent or otherwise, which is material to the Parent(Digital Circuit Patent Co.), other than any liability for unpaid Taxes that may have accrued since the date of the Parent(Digital Circuit Patent Co.) Balance Sheet in connection with the operation of the business of the Parent(Digital Circuit Patent Co.) and its subsidiaries in the ordinary course.

 

(7) There is no agreement, plan or arrangement to which the Parent(Digital Circuit Patent Co.) or any of its subsidiaries is a party, including this Agreement and the agreements entered into in connection with this Agreement, covering any employee or former employee of the Parent(Digital Circuit Patent Co.) or any of its subsidiaries that, individually or collectively, would be reasonably likely to give rise to the payment of any amount that would not be deductible pursuant to Paragraphs 280G, 404 or 162(m) of the Code.  There is no contract, agreement, plan or arrangement to which the Parent(Digital Circuit Patent Co.) is a party or by which it is bound to compensate any individual for excise taxes paid pursuant to Paragraph 4999 of the Code.

 

(8) Neither the Parent(Digital Circuit Patent Co.) nor any of its subsidiaries has filed any consent agreement under Paragraph 341(f) of the Code or agreed to have Paragraph 341(f)(2) of the Code apply to any disposition of a subsection (f) asset (as defined in Paragraph 341(f)(4) of the Code) owned by the Parent(Digital Circuit Patent Co.).

 

(9) Neither the Parent(Digital Circuit Patent Co.) nor any of its subsidiaries is party to or has any obligation under any tax-sharing, tax indemnity or tax allocation agreement or arrangement.

 

(10) Except as may be required as a result of the Merger, the Parent(Digital Circuit Patent Co.) and its subsidiaries have not been and will not be required to include any adjustment in Taxable income for any Tax period (or portion thereof) pursuant to Paragraph 481 of the Code or any comparable provision under state or foreign Tax laws as a result of transactions, events or accounting methods employed prior to the Closing.

 

(11) None of the Parent(Digital Circuit Patent Co.)’s or its subsidiaries’ assets are tax exempt use property within the meaning of Paragraph 168(h) of the Code.

 

(12) the Parent(Digital Circuit Patent Co.) has not been distributed in a transaction qualifying under Paragraph 355 of the Code within the last two years, nor has the Parent(Digital Circuit Patent Co.) distributed any corporation in a transaction qualifying under Paragraph 355 of the Code within the last two years.

 

(13) the Parent(Digital Circuit Patent Co.) is not aware of any fact, circumstance, plan or intention on the part of the Parent(Digital Circuit Patent Co.) that would be reasonably likely to prevent the Merger from qualifying as a “reorganization” pursuant to the provisions of Paragraph 368 of the Code.

 

H.  Title to Properties.  The Parent(Digital Circuit Patent Co.) has good and valid title to, or, in the case of leased properties and assets, valid leasehold interests in, all of its tangible properties and assets, real, personal and mixed, used or held for use in its business, free and clear of any Encumbrances, except as reflected in the Parent(Digital Circuit Patent Co.) Financials and except for liens for Taxes not yet due and payable and such Encumbrances which are not material in character, amount or extent.

 

I.  Intellectual Property.

 

(1) For the purposes of this Agreement, the following terms have the following definitions:

 

(a)  “the Parent(Digital Circuit Patent Co.) Intellectual Property” shall mean any Intellectual Property that is owned by, or exclusively licensed to, the Parent(Digital Circuit Patent Co.) or one of its subsidiaries.

 

(b)  “the Parent(Digital Circuit Patent Co.) Registered Intellectual Property” means all of the Registered Intellectual Property owned by, or filed in the name of, the Parent(Digital Circuit Patent Co.) or one of its subsidiaries.

 

(2) No material the Parent(Digital Circuit Patent Co.) Intellectual Property or product or service of the Parent(Digital Circuit Patent Co.) is subject to any proceeding or outstanding decree, order, judgment, agreement, or stipulation restricting in any manner the use, transfer, or licensing thereof by the Parent(Digital Circuit Patent Co.), or which may affect the validity, use or enforceability of such the Parent(Digital Circuit Patent Co.) Intellectual Property.

 

(3) Each material item of the Parent(Digital Circuit Patent Co.) Registered Intellectual Property is valid and subsisting, all necessary registration, maintenance and renewal fees currently due in connection with such Registered Intellectual Property have been made and all necessary documents, recordations and certificates in connection with such Registered Intellectual Property have been filed with the relevant patent, copyright, trademark or other authorities in the United States or foreign jurisdictions, as the case may be, for the purposes of maintaining such Registered Intellectual Property except, in each case, as would not materially adversely affect such item of the Parent(Digital Circuit Patent Co.) Registered Intellectual Property.

 

(4) the Parent(Digital Circuit Patent Co.) or one of its subsidiaries owns and has good and exclusive title to, or has license (sufficient for the conduct of its business as currently conducted and as proposed to be conducted) to, each material item of the Parent(Digital Circuit Patent Co.) Intellectual Property free and clear of any Encumbrance (excluding licenses and related restrictions).

 

(5) Neither the Parent(Digital Circuit Patent Co.) nor any of its subsidiaries have transferred ownership of, or granted any exclusive license with respect to, any Intellectual Property that is or was material the Parent(Digital Circuit Patent Co.) Intellectual Property, to any third party.

 

(6) To the Parent(Digital Circuit Patent Co.)’s knowledge, the operation of the business of the Parent(Digital Circuit Patent Co.) as such business currently is conducted, including the Parent(Digital Circuit Patent Co.)’s design, development, marketing and sale of the products or services of the Parent(Digital Circuit Patent Co.) (including with respect to products currently under development) has not, does not and will not infringe or misappropriate the Intellectual Property of any third party or, to its knowledge, constitute unfair competition or trade practices under the laws of any jurisdiction.

 

(7) the Parent(Digital Circuit Patent Co.) has not received notice from any third party that the operation of the business of the Parent(Digital Circuit Patent Co.) or any act, product or service of the Parent(Digital Circuit Patent Co.), infringes or misappropriates the Intellectual Property of any third party or constitutes unfair competition or trade practices under the laws of any jurisdiction, which allegation, if true, would have a Material Adverse Effect on the Parent(Digital Circuit Patent Co.).

 

(8) To the knowledge of the Parent(Digital Circuit Patent Co.), no person has or is infringing or misappropriating any material the Parent(Digital Circuit Patent Co.) Intellectual Property, which infringement or misappropriation, individually or in the aggregate, would have a Material Adverse Effect on the Parent(Digital Circuit Patent Co.).

 

(9) the Parent(Digital Circuit Patent Co.) and its subsidiaries have taken reasonable steps to protect the Parent(Digital Circuit Patent Co.)’s and its subsidiaries’ rights in the Parent(Digital Circuit Patent Co.)’s and such subsidiaries’ confidential information and trade secrets, except where the failure to do so would have a Material Adverse Effect on the Parent(Digital Circuit Patent Co.).

 

(10) None of the Parent(Digital Circuit Patent Co.) Intellectual Property or product or service of the Parent(Digital Circuit Patent Co.) contains any significant defect in connection with processing data containing dates in leap years or in the year 2000 or any preceding or following years, which defects, individually or in the aggregate, would have a Material Adverse Effect on the Parent(Digital Circuit Patent Co.).

 

J.  Compliance with Laws.

(1) Neither the Parent(Digital Circuit Patent Co.) nor any of its subsidiaries is in conflict with, or in default or in violation of (i) any law, rule, regulation, order, judgment or decree applicable to the Parent(Digital Circuit Patent Co.) or any of its subsidiaries or by which the Parent(Digital Circuit Patent Co.) or any of its subsidiaries or any of their respective properties is bound or affected, or (ii) any note, bond, mortgage, indenture, agreement, lease, license, permit, franchise or other instrument or obligation to which the Parent(Digital Circuit Patent Co.) or any of its subsidiaries is a party or by which the Parent(Digital Circuit Patent Co.) or any of its subsidiaries or its or any of their respective properties is bound or affected, except for conflicts, violations and defaults that, individually or in the aggregate, would not have a Material Adverse Effect on the Parent(Digital Circuit Patent Co.). No investigation or review by any Governmental Entity is pending or, to the Parent(Digital Circuit Patent Co.)’s knowledge, has been threatened in a writing delivered to the Parent(Digital Circuit Patent Co.) against the Parent(Digital Circuit Patent Co.) or any of its subsidiaries, nor, to the Parent(Digital Circuit Patent Co.)’s knowledge, has any Governmental Entity indicated an intention to conduct an investigation of the Parent(Digital Circuit Patent Co.) or any of its subsidiaries. There is no judgment, injunction, order or decree binding upon the Parent(Digital Circuit Patent Co.) or any of its subsidiaries which has or could reasonably be expected to have the effect of prohibiting or materially impairing any material business practice of the Parent(Digital Circuit Patent Co.) or any of its subsidiaries, or any acquisition of material property by the Parent(Digital Circuit Patent Co.) or any of its subsidiaries.

 

(2) the Parent(Digital Circuit Patent Co.) and its subsidiaries hold all permits, licenses, variances, exemptions, orders and approvals from governmental authorities that are material to or required for the operation of the business of the Parent(Digital Circuit Patent Co.) as currently conducted (collectively, the “the Parent(Digital Circuit Patent Co.) Permits”), and are in compliance with the terms of the Parent(Digital Circuit Patent Co.) Permits, except where the failure to hold such the Parent(Digital Circuit Patent Co.) Permits, or be in such compliance, would not, individually or in the aggregate, have a Material Adverse Effect on the Parent(Digital Circuit Patent Co.).

 

K. Litigation.  There are no claims, suits, actions or proceedings pending or, to the knowledge of the Parent(Digital Circuit Patent Co.), threatened against, relating to or affecting the Parent(Digital Circuit Patent Co.) or any of its subsidiaries, before any Governmental Entity or any arbitrator that seeks to restrain or enjoin the consummation of the transactions contemplated by this Agreement or which could reasonably be expected, either singularly or in the aggregate with all such claims, actions or proceedings, to have a Material Adverse Effect on the Parent(Digital Circuit Patent Co.) or have a material adverse effect on the ability of the parties hereto to consummate the Merger. No director or executive officer of the Parent(Digital Circuit Patent Co.) has asserted a claim to seek indemnification from the Parent(Digital Circuit Patent Co.) under the Parent(Digital Circuit Patent Co.) Charter Documents or any indemnification agreements between the Parent(Digital Circuit Patent Co.) and such person.

 

L.  Employee Benefit Plans.

(1) Definitions.  With the exception of the definition of “Affiliate” set forth below, for purposes of this Agreement, the following terms shall have the meanings set forth below:

 

(a) “Affiliate” shall mean any other person or entity under common control with the Parent(Digital Circuit Patent Co.) within the meaning of Paragraph 414(2), (c), (m) or (o) of the Code and the regulations issued thereunder;

 

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

 

(c) “the Parent(Digital Circuit Patent Co.) Employees” shall mean any current, former or retired employee, officer or director or any subsidiary of the Parent(Digital Circuit Patent Co.);

 

(d) “International the Parent(Digital Circuit Patent Co.) Employee Plan” shall mean each the Parent(Digital Circuit Patent Co.) Employee Plan that has been adopted or maintained by the Parent(Digital Circuit Patent Co.), whether informally or formally, for the benefit of Employees outside the United States;

 

(e) “Multi-employer Plan” shall mean any “Pension Plan” (as defined below) which is a “multi-employer plan,” as defined in Paragraph 3(37) of ERISA;

 

(f) “Pension Plan” shall mean each the Parent(Digital Circuit Patent Co.) Employee Plan which is an “employee pension benefit plan,” within the meaning of Paragraph 3(2) of ERISA.

 

(2)  Schedule.  The Parent(Digital Circuit Patent Co.) Disclosure Letter contains an accurate and complete list of each the Parent(Digital Circuit Patent Co.) Employee Plan.  The Parent(Digital Circuit Patent Co.) does not have any plan or commitment to establish any new the Parent(Digital Circuit Patent Co.) Employee Plan, to modify any the Parent(Digital Circuit Patent Co.) Employee Plan (except to the extent required by law or to conform any such the Parent(Digital Circuit Patent Co.) Employee Plan to the requirements of any applicable law, in each case as previously disclosed to the Parent(Digital Circuit Patent Co.) in writing, or as required by this Agreement), or to enter into any the Parent(Digital Circuit Patent Co.) Employee Plan, nor does it have any intention or commitment to do any of the foregoing.

 

(3) Documents.  The Parent(Digital Circuit Patent Co.) has made available to the Company(Electronics Patent Co.), to the extent requested by the Company(Electronics Patent Co.):  (i) correct and complete copies of all documents embodying each the Parent(Digital Circuit Patent Co.) Employee Plan including all amendments thereto and written interpretations thereof; (ii) the most recent annual actuarial valuations, if any, prepared for each the Parent(Digital Circuit Patent Co.) Employee Plan; (iii) the most recent annual report (Form Series 5500 and all schedules and financial statements attached thereto), if any, required under ERISA or the Code in connection with each the Parent(Digital Circuit Patent Co.) Employee Plan or related trust; (iv) if the Parent(Digital Circuit Patent Co.) Employee Plan is funded, the most recent annual and periodic accounting of the Parent(Digital Circuit Patent Co.) Employee Plan assets; (v) the most recent summary plan description together with the summary of material modifications thereto, if any, required under ERISA with respect to each the Parent(Digital Circuit Patent Co.) Employee Plan; (vi) all IRS determination, opinion, notification and advisory letters, and rulings relating to the Parent(Digital Circuit Patent Co.) Employee Plans and copies of all applications and correspondence to or from the IRS or the DOL with respect to any the Parent(Digital Circuit Patent Co.) Employee Plan; and (vii) all registration statements and prospectuses prepared in connection with each the Parent(Digital Circuit Patent Co.) Employee Plan.

 

(4) Employee Plan Compliance.  Except, in each case, as would not, individually or in the aggregate, result in a material liability to the Parent(Digital Circuit Patent Co.), (i) the Parent(Digital Circuit Patent Co.) has performed in all material respects all obligations required to be performed by it under, is not in default or violation of, and has no knowledge of any default or violation by any other party to, each the Parent(Digital Circuit Patent Co.) Employee Plan, and each the Parent(Digital Circuit Patent Co.) Employee Plan has been established and maintained in all material respects in accordance with its terms and in compliance with all applicable laws, statutes, orders, rules and regulations, including but not limited to ERISA or the Code; (ii) each the Parent(Digital Circuit Patent Co.) Employee Plan intended to qualify under Paragraph 401(1) of the Code and each trust intended to qualify under Paragraph 501(1) of the Code has either received a favorable determination letter from the IRS with respect to each such Plan as to its qualified status under the Code or has remaining a period of time under applicable Treasury regulations or IRS pronouncements in which to apply for such a determination letter and make any amendments necessary to obtain a favorable determination and, to the knowledge of the Parent(Digital Circuit Patent Co.), no event has occurred giving rise to a material likelihood that such Plan would not be treated as qualified by the IRS; (iii) no “prohibited transaction,” within the meaning of Paragraph 4975 of the Code or Paragraphs 406 and 407 of ERISA, and not otherwise exempt under Paragraph 408 of ERISA, has occurred with respect to any the Parent(Digital Circuit Patent Co.) Employee Plan; (iv) there are no actions, suits or claims pending, or, to the knowledge of the Parent(Digital Circuit Patent Co.), threatened or reasonably anticipated (other than routine claims for benefits) against any the Parent(Digital Circuit Patent Co.) Employee Plan or against the assets of any the Parent(Digital Circuit Patent Co.) Employee Plan; (v) each the Parent(Digital Circuit Patent Co.) Employee Plan can be amended, terminated or otherwise discontinued after the Effective Time in accordance with its terms, without liability to the Parent(Digital Circuit Patent Co.) or any of its Affiliates (other than ordinary administration expenses typically incurred in a termination event); (vi) neither the Parent(Digital Circuit Patent Co.) nor any Affiliate is subject to any penalty or tax with respect to any the Parent(Digital Circuit Patent Co.) Employee Plan under Paragraph 402(i) of ERISA or Paragraphs 4975 through 4980 of the Code.

 

(5) Pension Plans.  The Parent(Digital Circuit Patent Co.) does not now, nor has it ever, maintained, established, sponsored, participated in, or contributed to, any Pension Plan which is subject to Title IV of ERISA or Paragraph 412 of the Code, that would result in material liability to the Parent(Digital Circuit Patent Co.).

 

(6) Multi-employer Plans.  At no time has the Parent(Digital Circuit Patent Co.) contributed to or been requested to contribute to any Multi-employer Plan that would result in material liability to the Parent(Digital Circuit Patent Co.).

 

(7) No Post-Employment Obligations.  No Parent(Digital Circuit Patent Co.) Employee Plan provides, or has any liability to provide, retiree life insurance, retiree health or other retiree employee welfare benefits to any person for any reason, except as may be required by COBRA or other applicable statute, and the Parent(Digital Circuit Patent Co.) has never represented, promised or contracted (whether in oral or written form) to any Parent(Digital Circuit Patent Co.) Employee (either individually or to the Parent(Digital Circuit Patent Co.) Employees as a group) or any other person that such the Parent(Digital Circuit Patent Co.) Employee(s) or other person would be provided with retiree life insurance, retiree health or other retiree employee welfare benefit, except to the extent required by statute.

 

(8) Effect of Transaction.  Except as expressly contemplated by this Agreement, the execution of this Agreement and the consummation of the transactions contemplated hereby will not (either alone or upon the occurrence of any additional or subsequent events) constitute an event under any Parent(Digital Circuit Patent Co.) Employee Plan, trust or loan that will or may result in any payment (whether of severance pay or otherwise), acceleration, forgiveness of indebtedness, vesting, distribution, increase in benefits or obligation to fund benefits with respect to any Parent(Digital Circuit Patent Co.) Employee.

 

(9) Employment Matters.  Except, in each case, as would not, individually or in the aggregate, have a Material Adverse Effect on the Parent(Digital Circuit Patent Co.), the Parent(Digital Circuit Patent Co.) and each of its subsidiaries is in compliance in all material respects with all applicable foreign, federal, state and local laws, rules and regulations respecting employment, employment practices, terms and conditions of employment and wages and hours, in each case, with respect to Employees.

 

(10) Labor.  No work stoppage or labor strike against the Parent(Digital Circuit Patent Co.) is pending, threatened or reasonably anticipated.  The Parent(Digital Circuit Patent Co.) does not know of any activities or proceedings of any labor union to organize any Parent(Digital Circuit Patent Co.) Employees. There are no actions, suits, claims, labor disputes or grievances pending, or, to the knowledge of the Parent(Digital Circuit Patent Co.), threatened relating to any labor, safety or discrimination matters involving any Parent(Digital Circuit Patent Co.) Employee, including charges of unfair labor practices or discrimination complaints, which, if adversely determined, would, individually or in the aggregate, result in any material liability to the Parent(Digital Circuit Patent Co.).  Neither the Parent(Digital Circuit Patent Co.) nor any of its subsidiaries has engaged in any unfair labor practices within the meaning of the National Labor Relations Act.  The Parent(Digital Circuit Patent Co.) is not presently, nor has it been in the past, a party to, or bound by, any collective bargaining agreement or union contract with respect to the Parent(Digital Circuit Patent Co.) Employees and no collective bargaining agreement is being negotiated by the Parent(Digital Circuit Patent Co.).

 

(11) International Parent(Digital Circuit Patent Co.) Employee Plan.  No International Parent(Digital Circuit Patent Co.) Employee Plan has unfunded liabilities, that as of the Effective Time, will not be offset by insurance or fully accrued.

 

M.  Environmental Matters.

(1) Hazardous Material.  Except as would not have a Material Adverse Effect on the Parent(Digital Circuit Patent Co.), no underground storage tanks and no amount of any Hazardous Materials are present, as a result of the actions of the Parent(Digital Circuit Patent Co.) or any of its subsidiaries or any affiliate of the Parent(Digital Circuit Patent Co.), or, to the Parent(Digital Circuit Patent Co.)’s knowledge, as a result of any actions of any third party or otherwise, in, on or under any property, including the land and the improvements, ground water and surface water thereof that the Parent(Digital Circuit Patent Co.) or any of its subsidiaries has at any time owned, operated, occupied or leased.

 

(2) Hazardous Materials Activities.  Except as would not have a Material Adverse Effect in the Parent(Digital Circuit Patent Co.) (in any individual case or in the aggregate (i) neither the Parent(Digital Circuit Patent Co.) nor any of its subsidiaries has transported, stored, used, manufactured, disposed of released or exposed its employees or others to Hazardous Materials in violation of any law in effect on or before the Closing Date, and (ii) neither the Parent(Digital Circuit Patent Co.) nor any of its subsidiaries has disposed of; transported, sold, used, released, exposed its employees or others to or manufactured any product containing a Hazardous Material in violation of any rule, regulation, treaty or statute promulgated by any Governmental Entity in effect prior to or as of the date hereof to prohibit, regulate or control Hazardous Materials or any Hazardous Material Activity.

 

(3) Permits.  The Parent(Digital Circuit Patent Co.) and its subsidiaries currently hold all Environmental Permits material to and necessary for the conduct of the Parent(Digital Circuit Patent Co.)’s and its subsidiaries’ Hazardous Material Activities and other businesses of the Parent(Digital Circuit Patent Co.) and its subsidiaries as such activities and businesses are currently being conducted.

 

(4) Environmental Liabilities.  No material action, proceeding, revocation proceeding, amendment procedure, writ or injunction is pending, and to the Parent(Digital Circuit Patent Co.)’s knowledge, no material action, proceeding, revocation proceeding, amendment procedure, writ or injunction has been threatened by any Governmental Entity against the Parent(Digital Circuit Patent Co.) or any of its subsidiaries in a writing delivered to the Parent(Digital Circuit Patent Co.) concerning any Environmental Permit of the Parent(Digital Circuit Patent Co.), Hazardous Material or any Hazardous Materials Activity of the Parent(Digital Circuit Patent Co.) or any of its subsidiaries.  The Parent(Digital Circuit Patent Co.) is not aware of any fact or circumstance which reasonably could be expected to involve the Parent(Digital Circuit Patent Co.) or any subsidiaries in any environmental litigation or impose upon the Parent(Digital Circuit Patent Co.) any material environmental liability, with such exceptions as would not have a Material Adverse Effect on the Parent(Digital Circuit Patent Co.).

 

N.  Certain Agreements.  Except as set forth in the Parent(Digital Circuit Patent Co.) Disclosure Letter, neither the Parent(Digital Circuit Patent Co.) nor any of its subsidiaries is a party to or is bound by:

 

(1) any agreement, obligation or commitment containing covenants purporting to limit or which effectively limit the Parent(Digital Circuit Patent Co.)’s or any of its subsidiaries’ freedom to compete in any line of business or in any geographic area or granting any exclusive distribution or other exclusive rights; or

 

(2) any agreement or commitment currently in force relating to the disposition or acquisition by the Parent(Digital Circuit Patent Co.) or any of its subsidiaries after the date of this Agreement of a material amount of assets not in the ordinary course of business, or pursuant to which the Parent(Digital Circuit Patent Co.) has any material ownership or participation interest in any corporation, partnership, joint venture, strategic alliance or other business enterprise other than the Parent(Digital Circuit Patent Co.)’s subsidiaries.

 

The agreements required to be disclosed in the Parent(Digital Circuit Patent Co.) Disclosure Letter pursuant to clauses (1) and (2) above or otherwise pursuant to this Agreement or are required to be filed with any the Parent(Digital Circuit Patent Co.) SEC Report (“the Parent(Digital Circuit Patent Co.) Contracts”) are valid and in full force and effect, except to the extent that such invalidity would not have a Material Adverse Effect on the Parent(Digital Circuit Patent Co.).  Neither the Parent(Digital Circuit Patent Co.) nor any of its subsidiaries, nor to the Parent(Digital Circuit Patent Co.)’s knowledge, any other party thereto, is in breach, violation or default under, and neither the Parent(Digital Circuit Patent Co.) nor any of its subsidiaries has received written notice that it has breached, violated or defaulted, any of the terms or conditions of any the Parent(Digital Circuit Patent Co.) Contract in such a manner as would have a Material Adverse Effect on the Parent(Digital Circuit Patent Co.).

 

O.  Brokers’ and Finders’ Fees.  Except for fees payable to Dollars & Cents, Incorporated, the Parent(Digital Circuit Patent Co.) has not incurred, nor will it incur, directly or indirectly, any liability for brokerage or finders’ fees or agents’ commissions or any similar charges in connection with this Agreement or any transaction contemplated hereby.

 

P.  Disclosure.  The information supplied by the Parent(Digital Circuit Patent Co.) for inclusion in the Registration Statement shall not at the time the Registration Statement is filed with the SEC and at the time it becomes effective under the Securities Act contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading.  The information supplied by the Parent(Digital Circuit Patent Co.) for inclusion in the Proxy Statement/Prospectus shall not, on the date the Proxy Statement/Prospectus is mailed to the Company(Electronics Patent Co.)’s stockholders or to the Parent(Digital Circuit Patent Co.)’s stockholders, at the time of the Company(Electronics Patent Co.) Stockholders’ Meeting, at the time of the Parent(Digital Circuit Patent Co.) Stockholders’ Meeting or as of the Effective Time, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not false or misleading, or omit to state any material fact necessary to correct any statement in any earlier communication with respect to the solicitation of proxies for the Company(Electronics Patent Co.) Stockholders’ Meeting or the Parent(Digital Circuit Patent Co.) Stockholders’ Meeting which has become false or misleading. The Registration Statement and Proxy Statement/Prospectus will comply as to form in all material respects with the provisions of the Securities Act and the rules and regulations thereunder. If at any time prior to the Effective Time, any event relating to the Parent(Digital Circuit Patent Co.) or any of its affiliates, officers or directors should be discovered by the Parent(Digital Circuit Patent Co.) which is required to be set forth in an amendment to the Registration Statement or a supplement to the Proxy Statement/Prospectus, the Parent(Digital Circuit Patent Co.) shall promptly inform the Company(Electronics Patent Co.). Notwithstanding the foregoing, the Parent(Digital Circuit Patent Co.) makes no representation or warranty with respect to any information supplied by the Company(Electronics Patent Co.) which is contained in any of the foregoing documents.

 

Q.  Board Approval.  The Board of Directors of the Parent(Digital Circuit Patent Co.) has, as of the date of this Agreement, (i) determined that the Merger is fair to, and in the best interests of the Parent(Digital Circuit Patent Co.) and its stockholders, and has approved this Agreement and (ii) recommends that the stockholders of the Parent(Digital Circuit Patent Co.) approve each of the Parent(Digital Circuit Patent Co.) Stockholder Approvals.

 

R.  Fairness Opinion.  The Parent(Digital Circuit Patent Co.)’s Board of Directors has received a written opinion from Dollar & Cents. Incorporated, dated as of the date hereof, to the effect that, as of the date hereof, the Exchange Ratio is fair to the Parent(Digital Circuit Patent Co.) from a financial point of view, and has delivered to the Company(Electronics Patent Co.) a copy of such opinion.

 

4.  Conduct Prior to the Effective Time
A.  Conduct of Business by the Company(Electronics Patent Co.).  During the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement pursuant to its terms or the Effective Time, the Company(Electronics Patent Co.) and each of its subsidiaries shall, except to the extent that the Parent(Digital Circuit Patent Co.) shall otherwise consent in writing, carry on its business in the usual, regular and ordinary course, in substantially the same manner as heretofore conducted and in compliance in all material respects with all applicable laws and regulations, pay its debts and taxes when due subject to good faith disputes over such debts or Taxes, pay or perform other material obligations when due, and use its commercially reasonable efforts consistent with past practices and policies to (i) preserve intact its present business organization, (ii) keep available the services of its present officers and employees and (iii) preserve its relationships with customers, suppliers, licensors, licensees, and others with which it has business dealings. In addition, during that period the Company(Electronics Patent Co.) will promptly notify the Parent(Digital Circuit Patent Co.) of any material event involving its business or operations consistent with the agreements contained herein.

 

In addition, except as permitted by the terms of this Agreement, and except as contemplated by this Agreement or provided in Schedule 4.1 of the Company(Electronics Patent Co.) Disclosure Letter, without the prior written consent of the Parent(Digital Circuit Patent Co.), during the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement pursuant to its terms or the Effective Time, the Company(Electronics Patent Co.) shall not do any of the following and shall not permit its subsidiaries to do any of the following:

 

(1) Waive any stock repurchase rights, accelerate, amend or change the period of exercisability of options or restricted stock, or reprice options granted under any employee, consultant, director or other stock plans or authorize cash payments in exchange for any options granted under any of such plans;

 

(2) Grant any severance or termination pay to any officer or employee except (i) pursuant to written agreements in effect, or policies existing, on the date hereof and as previously disclosed in writing to the Parent(Digital Circuit Patent Co.), (ii) in an amount not to exceed four months base pay of the terminated person or (iii) as consented to by the Parent(Digital Circuit Patent Co.), whose consent shall not be unreasonably withheld or delayed, or adopt any new severance plan;

 

(3) Transfer or license to any person or entity or otherwise extend, amend or modify in any material respect any rights to the material the Company(Electronics Patent Co.) Intellectual Property, other than non-exclusive licenses in the ordinary course of business and consistent with past practice;

 

(4) Except for the two-for-one stock dividend payable on the Company(Electronics Patent Co.) Common Stock on [Date], declare, set aside or pay any dividends on or make any other distributions (whether in cash, stock, equity securities or property) in respect of any capital stock of the Company(Electronics Patent Co.) or split, combine or reclassify any capital stock of the Company(Electronics Patent Co.) or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for any capital stock of the Company(Electronics Patent Co.);

 

(5) Purchase, redeem or otherwise acquire, directly or indirectly, any shares of capital stock of the Company(Electronics Patent Co.) or its subsidiaries, except repurchases or unvested shares at cost in connection with the termination of the employment relationship with any employee pursuant to stock option or purchase agreements in effect on the date hereof;

 

(6) Issue, deliver, sell, authorize, pledge or otherwise encumber any shares of capital stock or any securities convertible into shares of capital stock, or subscriptions, rights, warrants or options to acquire any shares of capital stock or any securities convertible into shares of capital stock, or enter into other agreements or commitments of any character obligating it to issue any such shares or convertible securities, other than the issuance delivery and/or sale of (i) shares of the Company(Electronics Patent Co.) Common Stock pursuant to the exercise of the Company(Electronics Patent Co.) Options, (ii) shares of the Company(Electronics Patent Co.) Common Stock issuable to participants in the Company(Electronics Patent Co.) ESPP, (iii) shares of the Company(Electronics Patent Co.) Common Stock issuable to participants in the Company(Electronics Patent Co.)’s 401(k) Plan, in the case of (i), (ii) and (iii), consistent with the terms thereof, and (iv) pursuant to grants of the Company(Electronics Patent Co.) Options to newly hired employees, upon promotions of existing employees, or as part of the Company(Electronics Patent Co.)’s annual option grant program, in each case, in the ordinary course of business, consistent with past practice, and not to exceed in the aggregate pursuant to this clause (iv), [Number] shares of the Company(Electronics Patent Co.) Common Stock;

 

(7) Cause, permit or propose any amendments to its Certificate of Incorporation, Bylaws or other charter documents (or similar governing instruments of any of its subsidiaries);

 

(8) Acquire or agree to acquire by merging or consolidating with, or by purchasing any equity interest in or a portion of the assets of, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof; or otherwise acquire or agree to acquire any assets which are material, individually or in the aggregate, to the business of the Company(Electronics Patent Co.) or enter into any material joint ventures, strategic relationships or alliances; provided, that the Company(Electronics Patent Co.) shall not be prohibited under this clause (h) from (i) making or agreeing to make debt or equity investments which do not exceed (1) the lesser of (x) [percent] of the fully diluted ownership of the entity or (y) $[Number], individually, or (B) $[Number[, in the aggregate, or (ii) making or agreeing to make acquisitions which do not (1) exceed [Number] per acquisition, (B) exceed $[Number] in the aggregate (which valuations shall be determined upon the signing of agreements regarding such transactions), or (C) which could reasonably be expected to delay the Merger or the other transactions contemplated hereby; provided, further, that the Company(Electronics Patent Co.) shall provide written notice to the Parent(Digital Circuit Patent Co.) prior to signing any agreement regarding any such acquisition;

 

(9) Sell, lease, license, encumber or otherwise dispose of any properties or assets which are material, individually or in the aggregate, to the business of the Company(Electronics Patent Co.);

 

(10) Incur any indebtedness for borrowed money or guarantee any such indebtedness of another person, issue or sell any debt securities or options, warrants, calls or other rights to acquire any debt securities of the Company(Electronics Patent Co.), enter into any “keep well” or other agreement to maintain any financial statement condition or enter into any arrangement having the economic effect of any of the foregoing other than (i) in the ordinary course of business, consistent with past practice or (ii) pursuant to existing credit facilities, in the ordinary course of business;

 

(11) Except as required to comply with any Legal Requirement, adopt or amend any employee benefit plan or employee stock purchase or employee stock option plan, or enter into any employment contract (other than offer letters and letter agreements entered into in the ordinary course of business consistent with past practice providing for compensation and other benefits generally commensurate with similarly situated employees) or collective bargaining agreement, pay any special bonus or special remuneration to any director or employee, or increase the salaries or wage rates or fringe benefits (including rights to severance or indemnification) of its directors, officers, employees or consultants other than in the ordinary course of business, consistent with past practice, or change in any material respect any management policies or procedures that are material to the business of the Company(Electronics Patent Co.); provided, that any unilateral amendment by TCI of any employee benefit plan in which the Company(Electronics Patent Co.) participates shall not be a violation of this Paragraph;

 

(12) Make any material capital expenditures other than capital expenditures contained in the capital budget of the Company(Electronics Patent Co.) approved by the Company(Electronics Patent Co.) prior to the date of this Agreement;

 

(13) Modify, amend or terminate any the Company(Electronics Patent Co.) Contract to which the Company(Electronics Patent Co.) or any subsidiary thereof is a party or waive, release or assign any material rights or claims thereunder, in each case, in a manner that could reasonably be expected to materially adversely affect the Company(Electronics Patent Co.);

 

(14) Enter into any licensing or other agreement with regard to the acquisition, distribution or licensing of any material Intellectual Property other than licenses, distribution or other similar agreements entered into in the ordinary course of business consistent with past practice;

 

(15) Materially revalue any of its assets or, except as required by GAAP, make any change in accounting methods, principles or practices;

 

(16) Materially change the pricing of the registration fees the Company(Electronics Patent Co.) charges for its registration services; or

 

(17) Agree in writing or otherwise to take any of the actions described herein.

 

B.  Conduct of Business by the Parent(Digital Circuit Patent Co.).  During the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement pursuant to its terms or the Effective Time, the Parent(Digital Circuit Patent Co.) and each of its subsidiaries shall, except to the extent that the Company(Electronics Patent Co.) shall otherwise consent in writing, carry on its business in the usual, regular and ordinary course, in substantially the same manner as heretofore conducted and in compliance in all material respects with all applicable laws and regulations, pay its debts and Taxes when due subject to good faith disputes over such debts or Taxes, pay or perform other material obligations when due, and use its commercially reasonable efforts consistent with past practices and policies to (i) preserve intact its present business organization, (ii) keep available the services of its present officers and employees and (iii) preserve its relationships with customers, suppliers, licensors, licensees, and others with which it has business dealings. In addition, during that period the Parent(Digital Circuit Patent Co.) will promptly notify the Company(Electronics Patent Co.) of any material event involving its business or operations consistent with the agreements contained herein.

 

In addition, except as permitted by the terms of this Agreement, and except as contemplated by this Agreement or provided in the Parent(Digital Circuit Patent Co.) Disclosure Letter, without the prior written consent of the Company(Electronics Patent Co.), during the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement pursuant to its terms or the Effective Time, the Parent(Digital Circuit Patent Co.) shall not do any of the following and shall not permit its subsidiaries to do any of the following:

 

(1) Declare, set aside or pay any dividends on or make any other distributions (whether in cash, stock, equity securities or property) in respect of any capital stock of the Parent(Digital Circuit Patent Co.) or split, combine or reclassify any capital stock of the Parent(Digital Circuit Patent Co.) or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for any capital stock of the Parent(Digital Circuit Patent Co.);

 

(2) Purchase, redeem or otherwise acquire, directly or indirectly, any shares of capital stock of the Parent(Digital Circuit Patent Co.) or its subsidiaries, except repurchases of unvested shares at cost in connection with the termination of the employment relationship with any employee pursuant to stock option or purchase agreements in effect on the date hereof;

 

(3) Cause, permit or propose any amendments to its Certificate of Incorporation, Bylaws or other charter documents (or similar governing instruments of any of its subsidiaries);

 

(4) Acquire or agree to acquire by merging or consolidating with, or by purchasing any equity interest in or a portion of the assets of, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof; or otherwise acquire or agree to acquire any assets which are material, individually or in the aggregate, to the business of the Parent(Digital Circuit Patent Co.) or enter into any material joint ventures, strategic relationships or alliances; provided, that the Parent(Digital Circuit Patent Co.) shall not be prohibited under this clause (h) from (i) making or agreeing to make debt or equity investments which do not exceed (1) the lesser of (x) % of the fully diluted ownership of the entity or (y) $[amount], individually, or (B) $[amount], in the aggregate, or (ii) making or agreeing to make acquisitions which do not (1) exceed $[amount] per acquisition, (B) exceed $[amount] in the aggregate (which valuations shall be determined upon the signing of agreements regarding such transactions), or (C) which could reasonably be expected to delay the Merger or the other transactions contemplated hereby; provided, further, that the Parent(Digital Circuit Patent Co.) shall provide written notice to the Company(Electronics Patent Co.) prior to signing any agreement regarding any such acquisition;

 

(5) Enter into any licensing or other agreement with regard to the acquisition, distribution or licensing of any material Intellectual Property other than licenses, distribution or other similar agreements entered into in the ordinary course of business consistent with past practice;

 

(6) Except as required by GAAP, make any change in accounting methods, principles or practices; or

 

(7) Agree in writing or otherwise to take any of the actions described above.

 

5.  Additional Agreements
A.  Proxy Statement/Prospectus; Registration Statement; Antitrust and Other

Filings.

(1) As promptly as practicable after the execution of this Agreement, the Company(Electronics Patent Co.) and the Parent(Digital Circuit Patent Co.) will prepare and file with the SEC, the Proxy Statement/Prospectus and the Parent(Digital Circuit Patent Co.) will prepare and file with the SEC the Registration Statement in which the Proxy Statement/Prospectus will be included as a prospectus.  Each of the Company(Electronics Patent Co.) and the Parent(Digital Circuit Patent Co.) will respond to any comments of the SEC, will use its respective commercially reasonable efforts to have the Registration Statement declared effective under the Securities Act as promptly as practicable after such filing and each of the Company(Electronics Patent Co.) and the Parent(Digital Circuit Patent Co.) will cause the Proxy Statement/Prospectus to be mailed to its respective stockholders at the earliest practicable time after the Registration Statement is declared effective by the SEC. Promptly after the date of this Agreement, each of the Company(Electronics Patent Co.) and the Parent(Digital Circuit Patent Co.) will prepare and file (i) with the United States Federal Trade Commission and the Antitrust Division of the United States Department of Justice Notification and Report Forms relating to the transactions contemplated herein as required by the HSR Act, as well as comparable pre-merger notification forms required by the merger notification or control laws and regulations of any applicable jurisdiction, as agreed to by the parties (the “Antitrust Filings”) and (ii) any other filings required to be filed by it under the Exchange Act, the Securities Act or any other federal, state or foreign laws relating to the Merger and the transactions contemplated by this Agreement (the “Other Filings”). The Company(Electronics Patent Co.) and the Parent(Digital Circuit Patent Co.) each shall promptly supply the other with any information which may be required in order to effectuate any filings pursuant to this Paragraph.

 

(2) The Company(Electronics Patent Co.) and the Parent(Digital Circuit Patent Co.) will each notify the other promptly upon the receipt of any comments from the SEC or its staff or any other government officials in connection with any filing made pursuant hereto and of any request by the SEC or its staff or any other government officials for amendments or supplements to the Registration Statement, the Proxy Statement/Prospectus or any Antitrust Filings or Other Filings or for additional information and will supply the other with copies of all correspondence between such party or any of its representatives, on the one hand, and the SEC, or its staff or any other government officials, on the other hand, with respect to the Registration Statement, the Proxy Statement/Prospectus, the Merger or any Antitrust Filing or Other Filing.  Each of the Company(Electronics Patent Co.) and the Parent(Digital Circuit Patent Co.) will cause all documents that it is responsible for filing with the SEC or other regulatory authorities under this Paragraph to comply in all material respects with all applicable requirements of law and the rules and regulations promulgated thereunder.  Whenever any event occurs which is required to be set forth in an amendment or supplement to the Proxy Statement/Prospectus, the Registration Statement or any Antitrust Filing or Other Filing, the Company(Electronics Patent Co.) or the Parent(Digital Circuit Patent Co.), as the case may be, will promptly inform the other of such occurrence and cooperate in filing with the SEC or its staff or any other government officials, and/or mailing to stockholders of the Company(Electronics Patent Co.) and/or the Parent(Digital Circuit Patent Co.), such amendment or supplement.

 

B. Meeting of the Company(Electronics Patent Co.) Stockholders.

(1) Promptly after the date hereof, the Company(Electronics Patent Co.) will take all action necessary in accordance with the [State] Law and its Certificate of Incorporation and Bylaws to convene the Company(Electronics Patent Co.) Stockholders’ Meeting to be held as promptly as practicable, and in any event (to the extent permissible under applicable law) within 45 days after the declaration of effectiveness of the Registration Statement, for the purpose of voting upon approval and adoption of this Agreement and approval of the Merger.  Subject to this Agreement, the Company(Electronics Patent Co.) will use its commercially reasonable efforts to solicit from its stockholders proxies in favor of the adoption and approval of this Agreement and the approval of the Merger and will take all other action necessary to secure the vote or consent of its stockholders required by the rules of the Nasdaq Stock Market or [State] Law to obtain such approvals.  Notwithstanding anything to the contrary contained in this Agreement, the Company(Electronics Patent Co.) may adjourn or postpone the Company(Electronics Patent Co.) Stockholders’ Meeting to the extent necessary to ensure that any necessary supplement or amendment to the Proxy Statement/Prospectus is provided to the Company(Electronics Patent Co.)’s stockholders in advance of a vote on the Merger and this Agreement or, if as of the time for which the Company(Electronics Patent Co.) Stockholders’ Meeting is originally scheduled (as set forth in the Proxy Statement/Prospectus) there are insufficient shares of the Company(Electronics Patent Co.) Common Stock represented (either in person or by proxy) to constitute a quorum necessary to conduct the business of the Company(Electronics Patent Co.) Stockholders’ Meeting. The Company(Electronics Patent Co.) shall ensure that the Company(Electronics Patent Co.) Stockholders’ Meeting is called, noticed, convened, held and conducted, and that all proxies solicited by the Company(Electronics Patent Co.) in connection with the Company(Electronics Patent Co.) Stockholders’ Meeting are solicited, in compliance with the [State] Law, its Certificate of Incorporation and Bylaws, the rules of the Nasdaq Stock Market and all other applicable legal requirements.  The Company(Electronics Patent Co.)’s obligation to call, give notice of, convene and hold the Company(Electronics Patent Co.) Stockholders’ Meeting in accordance with this Paragraph shall not be limited to or otherwise affected by the commencement, disclosure, announcement or submission to the Company(Electronics Patent Co.) of any Acquisition Proposal or Superior Offer, or by any withdrawal, amendment or modification of the recommendation of the Board of Directors of the Company(Electronics Patent Co.) with respect to this Agreement or the Merger.

 

(2) Subject to this Paragraph:  (i) the Board of Directors of the Company(Electronics Patent Co.) shall recommend that the Company(Electronics Patent Co.)’s stockholders vote in favor of and adopt and approve this Agreement and approve the Merger at the Company(Electronics Patent Co.) Stockholders’ Meeting; (ii) the Proxy Statement/Prospectus shall include a statement to the effect that the Board of Directors of the Company(Electronics Patent Co.) has  recommended that the Company(Electronics Patent Co.)’s stockholders vote in favor of and adopt and approve this Agreement and the Merger at the Company(Electronics Patent Co.) Stockholders’ Meeting; and (iii) neither the Board of Directors of the Company(Electronics Patent Co.) nor any committee thereof shall withdraw, amend or modify, or propose or resolve to withdraw, amend or modify in a manner adverse to the Parent(Digital Circuit Patent Co.), the recommendation of the Board of Directors of the Company(Electronics Patent Co.) that the Company(Electronics Patent Co.)’s stockholders vote in favor of and adopt and approve this Agreement and the Merger.

 

(3) Nothing in this Agreement shall prevent the Board of Directors of the Company(Electronics Patent Co.) from withholding, withdrawing, amending or modifying its recommendation in favor of the Merger if (i) a Superior Offer (as defined below) is made to the Company(Electronics Patent Co.) and is not withdrawn, (ii) The Company(Electronics Patent Co.) shall have provided written notice to the Parent(Digital Circuit Patent Co.) (a “Notice of Superior Offer”) advising the Parent(Digital Circuit Patent Co.) that the Company(Electronics Patent Co.) has received a Superior Offer, specifying all of the material terms and conditions of such Superior Offer and identifying the person or entity making such Superior Offer, (iii) the Parent(Digital Circuit Patent Co.) shall not have, within three business days of the Parent(Digital Circuit Patent Co.)’s receipt of the Notice of Superior Offer, made an offer that the Company(Electronics Patent Co.)’s Board of Directors by a majority vote determines in its good faith judgment (based on the written advice of a financial advisor of national standing) to be at least as favorable to the Company(Electronics Patent Co.)’s stockholders as such Superior Offer (it being agreed that the Board of Directors of the Company(Electronics Patent Co.) shall convene a meeting to consider any such offer by the Parent(Digital Circuit Patent Co.) promptly following the receipt thereof), (iv) the Board of Directors of the Company(Electronics Patent Co.) concludes in good faith, after consultation with its outside counsel, that, in light of such Superior Offer, the withholding, withdrawal, amendment or modification of such recommendation is required in order for the Board of Directors of the Company(Electronics Patent Co.) to comply with its fiduciary obligations to the Company(Electronics Patent Co.)’s stockholders under applicable law and (v) The Company(Electronics Patent Co.) shall not have violated any of the restrictions set forth in this Agreement.  The Company(Electronics Patent Co.) shall provide the Parent(Digital Circuit Patent Co.) with at least two business days prior notice (or such lesser prior notice as provided to the members of the Company(Electronics Patent Co.)’s Board of Directors but in no event less than twenty-four hours) of any meeting of the Company(Electronics Patent Co.)’s Board of Directors at which the Company(Electronics Patent Co.)’s Board of Directors is reasonably expected to consider any Acquisition Proposal (as defined herein) to determine whether such Acquisition Proposal is a Superior Offer. Nothing contained in this Paragraph shall limit the Company(Electronics Patent Co.)’s obligation to hold and convene the Company(Electronics Patent Co.) Stockholders’ Meeting (regardless of whether the recommendation of the Board of Directors of the Company(Electronics Patent Co.) shall have been withdrawn, amended or modified). For purposes of this Agreement, “Superior Offer” shall mean an unsolicited, bona fide written offer made by a third party to consummate any of the following transactions: (i) a merger or consolidation involving the Company(Electronics Patent Co.) pursuant to which the stockholders of the Company(Electronics Patent Co.) immediately preceding such transaction hold less than 50% of the equity interest in the surviving or resulting entity of such transaction or (ii) the acquisition by any person or group (including by way of a tender offer or an exchange offer or a two step transaction involving a tender offer followed with reasonable promptness by a merger involving the Company(Electronics Patent Co.)), directly or indirectly, of ownership of 100% of the then outstanding shares of capital stock of the Company(Electronics Patent Co.), on terms that the Board of Directors of the Company(Electronics Patent Co.) determines, in its reasonable judgment (based on the written advice of a financial advisor of national standing) to be more favorable to the Company(Electronics Patent Co.) stockholders than the terms of the Merger; provided, however, that any such offer shall not be deemed to be a “Superior Offer” if any financing required to consummate the transaction contemplated by such offer is not committed and is not likely in the reasonable judgment of the Company(Electronics Patent Co.)’s Board of Directors (based on the advice of its financial advisor) to be obtained by such third party on a timely basis.

 

(4) Nothing contained in this Agreement shall prohibit the Company(Electronics Patent Co.) or its Board of Directors from taking and disclosing to its stockholders a position contemplated by Rules 14d-9 and 14e-2(1) promulgated under the Exchange Act.

 

C.  Meeting of the Parent(Digital Circuit Patent Co.) Stockholders.

(1) Promptly after the date hereof, the Parent(Digital Circuit Patent Co.) will take all action necessary in accordance with the [State] Law and its Certificate of Incorporation and Bylaws to convene the Parent(Digital Circuit Patent Co.) Stockholders’ Meeting to be held as promptly as practicable, and in any event (to the extent permissible under applicable law) within 45 days after the declaration of effectiveness of the Registration Statement, for the purpose of voting upon the Parent(Digital Circuit Patent Co.) Stockholder Approvals.  The Parent(Digital Circuit Patent Co.) will use its commercially reasonable efforts to solicit from its stockholders proxies in favor of the approval of the Parent(Digital Circuit Patent Co.) Stockholder Approvals and will take all other action necessary to secure the vote or consent of its stockholders required by the rules of the Nasdaq Stock Market or [State] Law to obtain such approvals.  Notwithstanding anything to the contrary contained in this Agreement, the Parent(Digital Circuit Patent Co.) may adjourn or postpone the Parent(Digital Circuit Patent Co.) Stockholders’ Meeting to the extent necessary to ensure that any necessary supplement or amendment to the Proxy Statement/Prospectus is provided to the Parent(Digital Circuit Patent Co.)’s stockholders in advance of a vote on the Parent(Digital Circuit Patent Co.) Stockholder Approvals or, if as of the time for which the Parent(Digital Circuit Patent Co.) Stockholders’ Meeting is originally scheduled (as set forth in the Proxy Statement/Prospectus) there are insufficient shares of the Parent(Digital Circuit Patent Co.) Common Stock represented (either in person or by proxy) to constitute a quorum necessary to conduct the business of the Parent(Digital Circuit Patent Co.) Stockholders’ Meeting.  The Parent(Digital Circuit Patent Co.) shall ensure that the Parent(Digital Circuit Patent Co.) Stockholders’ Meeting is called, noticed, convened, held and conducted, and that all proxies solicited by the Parent(Digital Circuit Patent Co.) in connection with the Parent(Digital Circuit Patent Co.) Stockholders’ Meeting are solicited, in compliance with the [State] Law, its Certificate of Incorporation and Bylaws, the rules of the Nasdaq Stock Market and all other applicable legal requirements.

 

(2) (i) The Board of Directors of the Parent(Digital Circuit Patent Co.) shall recommend that the Parent(Digital Circuit Patent Co.)’s stockholders approve the Parent(Digital Circuit Patent Co.) Stockholder Approvals at the Parent(Digital Circuit Patent Co.) Stockholders’ Meeting; (ii) the Proxy Statement/Prospectus shall include a statement to the effect that the Board of Directors of the Parent(Digital Circuit Patent Co.) has recommended that the Parent(Digital Circuit Patent Co.)’s stockholders approve the Parent(Digital Circuit Patent Co.) Stockholder Approvals at the Company(Electronics Patent Co.) Stockholders’ Meeting; and (iii) neither the Board of Directors of the Parent(Digital Circuit Patent Co.) nor any committee thereof shall withdraw, amend or modify, or propose or resolve to withdraw, amend or modify in a manner adverse to the Company(Electronics Patent Co.), the recommendation of the Board of Directors of the Parent(Digital Circuit Patent Co.) that the Parent(Digital Circuit Patent Co.)’s stockholders approve the Parent(Digital Circuit Patent Co.) Stockholder Approvals.

 

(3) Nothing contained in this Agreement shall prohibit the Parent(Digital Circuit Patent Co.) or its Board of Directors from taking and disclosing to its stockholders a position contemplated by Rules 14d-9 and 14e-2(1) promulgated under the Exchange Act.

 

D.  No Solicitation.

(1) From and after the date of this Agreement until the Effective Time or termination of this Agreement pursuant to Article VII, the Company(Electronics Patent Co.) and its subsidiaries will not, nor will they authorize or permit any of their respective officers, directors, affiliates or employees or any investment banker, attorney or other advisor or representative retained by any of them to, directly or indirectly, (i) solicit, initiate, encourage or induce the making, submission or announcement of any Acquisition Proposal (as hereinafter defined), (ii) participate in any discussions or negotiations regarding, or furnish to any person any non-public information with respect to, or take any other action to facilitate any inquiries or the making of any Acquisition Proposal, (iii) engage in discussions with any person with respect to any Acquisition Proposal, except as to the existence of these provisions, (iv) approve, endorse or recommend any Acquisition Proposal or (v) enter into any letter of intent or similar document or any contract, agreement or commitment contemplating or otherwise relating to any Acquisition Proposal; provided, however, that notwithstanding the foregoing, prior to the approval of this Agreement and the Merger at the Company(Electronics Patent Co.) Stockholders’ Meeting, this Paragraph shall not prohibit the Company(Electronics Patent Co.) from furnishing nonpublic information regarding the Company(Electronics Patent Co.) and its subsidiaries to, or entering into discussions or negotiations with, any person or group who has submitted (and not withdrawn) to the Company(Electronics Patent Co.) an unsolicited, written, bona fide Acquisition Proposal that the Board of Directors of the Company(Electronics Patent Co.) reasonably concludes (based on the written advice of a financial advisor of national standing) may constitute a Superior Offer if (1) neither the Company(Electronics Patent Co.) nor any representative of the Company(Electronics Patent Co.) and its subsidiaries shall have violated any of the restrictions set forth in this Paragraph, (2) the Board of Directors of the Company(Electronics Patent Co.) concludes in good faith, after consultation with its outside legal counsel, that such action is required in order for the Board of Directors of the Company(Electronics Patent Co.) to comply with its fiduciary obligations to the Company(Electronics Patent Co.)’s stockholders under applicable law, (3) prior to furnishing any such nonpublic information to, or entering into any such discussions with, such person or group, the Company(Electronics Patent Co.) gives the Parent(Digital Circuit Patent Co.) written notice of the identity of such person or group and all of the material terms and conditions of such Acquisition Proposal and of the Company(Electronics Patent Co.)’s intention to furnish nonpublic information to, or enter into discussions with, such person or group, and the Company(Electronics Patent Co.) receives from such person or group an executed confidentiality agreement containing terms at least as restrictive with regard to the Company(Electronics Patent Co.)’s confidential information as the Confidentiality Agreement, (4)  The Company(Electronics Patent Co.) gives the Parent(Digital Circuit Patent Co.) at least two business days advance notice of its intent to furnish such nonpublic information or enter into such discussions, and (5) contemporaneously with furnishing any such nonpublic information to such person or group, the Company(Electronics Patent Co.) furnishes such nonpublic information to the Parent(Digital Circuit Patent Co.) (to the extent such nonpublic information has not been previously furnished by the Company(Electronics Patent Co.) to the Parent(Digital Circuit Patent Co.)).  The Company(Electronics Patent Co.) and its subsidiaries will immediately cease any and all existing activities, discussions or negotiations with any parties conducted heretofore with respect to any Acquisition Proposal. Without limiting the foregoing, it is understood that any violation of the restrictions set forth in the preceding two sentences by any officer, director or employee of the Company(Electronics Patent Co.) or any of its subsidiaries or any investment banker, attorney or other advisor or representative of the Company(Electronics Patent Co.) or any of its subsidiaries shall be deemed to be a breach of this Paragraph by the Company(Electronics Patent Co.).

 

For purposes of this Agreement, “Acquisition Proposal” shall mean any offer or proposal by a third party relating to:  (1) any acquisition or purchase from the Company(Electronics Patent Co.) by any person or “group” (as defined under Paragraph 13(d) of the Exchange Act and the rules and regulations thereunder) of more than a 20% interest in the total outstanding voting securities of the Company(Electronics Patent Co.) or any of its subsidiaries or any tender offer or exchange offer that if consummated would result in any person or “group” (as defined under Paragraph 13(d) of the Exchange Act and the rules and regulations thereunder) beneficially owning 20% or more of the total outstanding voting securities of the Company(Electronics Patent Co.) or any of its subsidiaries or any merger, consolidation, business combination or similar transaction involving the Company(Electronics Patent Co.) pursuant to which the stockholders of the Company(Electronics Patent Co.) immediately preceding such transaction hold less than 80% of the equity interests in the surviving or resulting entity of such transaction; (B) any sale, lease (other than in the ordinary course of business), exchange, transfer, license (other than in the ordinary course of business), acquisition, or disposition of more than 50% of the assets of the Company(Electronics Patent Co.); (C) any sale, lease, exchange, transfer, license or disposition to a third party of either of the “registry” or “registrar” businesses of the Company(Electronics Patent Co.); or (D) any liquidation or dissolution of the Company(Electronics Patent Co.).

 

(2) In addition to the obligations of the Company(Electronics Patent Co.) set forth in paragraph (1) of this Paragraph, the Company(Electronics Patent Co.) as promptly as reasonably practicable shall advise the Parent(Digital Circuit Patent Co.) orally and in writing of any request for non-public information which the Company(Electronics Patent Co.) reasonably believes would lead to an Acquisition Proposal or of any Acquisition Proposal, or any inquiry with respect to or which the Company(Electronics Patent Co.) reasonably should believe would lead to any Acquisition Proposal, the material terms and conditions of such request, Acquisition Proposal or inquiry, and the identity of the person or group making any such request, Acquisition Proposal or inquiry.  The Company(Electronics Patent Co.) will keep the Parent(Digital Circuit Patent Co.) informed as promptly as reasonably practicable in all material respects of the status and details (including material amendments or proposed amendments) of any such request, Acquisition Proposal or inquiry.

 

E.  Confidentiality; Access to Information.

 

(1) The parties acknowledge that the Company(Electronics Patent Co.) and the Parent(Digital Circuit Patent Co.) have previously executed a mutual confidentiality agreement, dated [date] (the “Confidentiality Agreement”), which Confidentiality Agreement will continue in full force and effect in accordance with its terms.

 

(2) Access to Information.  The Company(Electronics Patent Co.) will afford the Parent(Digital Circuit Patent Co.) and its accountants, counsel and other representatives reasonable access during normal business hours to the properties, books, records and personnel of the Company(Electronics Patent Co.) during the period prior to the Effective Time to obtain all information concerning the business, including the status of product development efforts, properties, results of operations and personnel of the Company(Electronics Patent Co.), as the Parent(Digital Circuit Patent Co.) may reasonably request.  The Parent(Digital Circuit Patent Co.) will afford the Company(Electronics Patent Co.) and its accountants, counsel and other representatives reasonable access during normal business hours to the properties, books, records and personnel of the Parent(Digital Circuit Patent Co.) during the period prior to the Effective Time to obtain all information concerning the business, including the status of product development efforts, properties, results of operations and personnel of the Parent(Digital Circuit Patent Co.), as the Company(Electronics Patent Co.) may reasonably request.  No information or knowledge obtained in any investigation pursuant to this Paragraph will affect or be deemed to modify any representation or warranty contained herein or the conditions to the obligations of the parties to consummate the Merger.

 

F.  Public Disclosure.  The Parent(Digital Circuit Patent Co.) and the Company(Electronics Patent Co.) will consult with each other, and to the extent practicable, agree, before issuing any press release or otherwise making any public statement with respect to the Merger, this Agreement or an Acquisition Proposal and will not issue any such press release or make any such public statement prior to such consultation, except as may be required by law or any listing agreement with a national securities exchange. The parties have agreed to the text of the joint press release announcing the signing of this Agreement.

 

G. Reasonable Efforts; Notification.

(1) Upon the terms and subject to the conditions set forth in this Agreement, each of the parties agrees to use all reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable, the Merger and the other transactions contemplated by this Agreement, including using reasonable efforts to accomplish the following:  (i) the taking of all reasonable acts necessary to cause the conditions precedent set forth in Article VI to be satisfied, (ii) the obtaining of all necessary actions or non-actions, waivers, consents, approvals, orders and authorizations from Governmental Entities and the making of all necessary registrations, declarations and filings (including registrations, declarations and filings with Governmental Entities, if any) and the taking of all reasonable steps as may be necessary to avoid any suit, claim, action, investigation or proceeding by any Governmental Entity, (iii) the obtaining of all necessary consents, approvals or waivers from third parties, (iv) the defending of any suits, claims, actions, investigations or proceedings, whether judicial or administrative, challenging this Agreement or the consummation of the transactions contemplated hereby, including seeking to have any stay or temporary restraining order entered by any court or other Governmental Entity vacated or reversed and (v) the execution or delivery of any additional instruments necessary to consummate the transactions contemplated by, and to fully carry out the purposes of, this Agreement. Notwithstanding anything in this Agreement to the contrary, neither the Parent(Digital Circuit Patent Co.) nor any of its affiliates shall be under any obligation to make proposals, execute or carry out agreements or submit to orders providing for the sale or other disposition or holding separate (through the establishment of a trust or otherwise) of any assets or categories of assets of the Parent(Digital Circuit Patent Co.), any of its affiliates or the Company(Electronics Patent Co.) or the holding separate of the shares of the Company(Electronics Patent Co.) Common Stock (or shares of stock of the Surviving Corporation) or imposing or seeking to impose any limitation on the ability of the Parent(Digital Circuit Patent Co.) or any of its subsidiaries or affiliates to conduct their business or own such assets or to acquire, hold or exercise full rights of ownership of the shares of the Company(Electronics Patent Co.) Common Stock (or shares of stock of the Surviving Corporation).

 

(2) Each of the Company(Electronics Patent Co.) and the Parent(Digital Circuit Patent Co.) will give prompt notice to the other of (i) any notice or other communication from any person alleging that the consent of such person is or may be required in connection with the Merger, (ii) any notice or other communication from any Governmental Entity in connection with the Merger, (iii) any litigation relating to, involving or otherwise affecting the Company(Electronics Patent Co.), the Parent(Digital Circuit Patent Co.) or their respective subsidiaries that relates to the consummation of the Merger.  The Company(Electronics Patent Co.) shall give prompt notice to the Parent(Digital Circuit Patent Co.) of any representation or warranty made by it contained in this Agreement becoming untrue or inaccurate, or any failure of the Company(Electronics Patent Co.) to comply with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied by it under this Agreement, in each case, such that the conditions set forth herein would not be satisfied, provided, however, that no such notification shall affect the representations, warranties, covenants or agreements of the parties or the conditions to the obligations of the parties under this Agreement.  The Parent(Digital Circuit Patent Co.) shall give prompt notice to the Company(Electronics Patent Co.) of any representation or warranty made by it or the Merger Sub(Computer Hardware Patent Co.) contained in this Agreement becoming untrue or inaccurate, or any failure of the Parent(Digital Circuit Patent Co.) or the Merger Sub(Computer Hardware Patent Co.) to comply with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied by it under this Agreement, in each case, such that the conditions set forth herein would not be satisfied, provided, however, that no such notification shall affect the representations, warranties, covenants or agreements of the parties or the conditions to the obligations of the parties under this Agreement.

 

H. Third Party Consents. As soon as practicable following the date hereof, the Parent(Digital Circuit Patent Co.) and the Company(Electronics Patent Co.) will each use its commercially reasonable efforts to obtain any material consents, waivers and approvals under any of its or its subsidiaries’ respective agreements, contracts, licenses or leases required to be obtained in connection with the consummation of the transactions contemplated hereby.

 

I.  Stock Options and ESPP.

(1) At the Effective Time, each outstanding the Company(Electronics Patent Co.) Option, whether or not then exercisable, will be assumed by the Parent(Digital Circuit Patent Co.).  Each the Company(Electronics Patent Co.) Option so assumed by the Parent(Digital Circuit Patent Co.) under this Agreement will continue to have, and be subject to, the same terms and conditions set forth in the Company(Electronics Patent Co.) Stock Option Plan immediately prior to the Effective Time (including, without limitation, any repurchase rights or vesting provisions), except that (i) each the Company(Electronics Patent Co.) Stock Option will be exercisable (or will become exercisable in accordance with its terms) for that number of whole shares of the Parent(Digital Circuit Patent Co.) Common Stock equal to the product of the number of shares of the Company(Electronics Patent Co.) Common Stock that were issuable upon exercise of such the Company(Electronics Patent Co.) Option immediately prior to the Effective Time multiplied by the Exchange Ratio, rounded down to the nearest whole number of shares of the Parent(Digital Circuit Patent Co.) Common Stock and (ii) the per share exercise price for the shares of the Parent(Digital Circuit Patent Co.) Common Stock issuable upon exercise of such assumed the Company(Electronics Patent Co.) Option will be equal to the quotient determined by dividing the exercise price per share of the Company(Electronics Patent Co.) Common Stock at which such the Company(Electronics Patent Co.) Option was exercisable immediately prior to the Effective Time by the Exchange Ratio, rounded up to the nearest whole cent. Continuous employment with the Company(Electronics Patent Co.) or its subsidiaries shall be credited to the optionee for purposes of determining the vesting of all assumed the Company(Electronics Patent Co.) Options after the Effective Time.

 

(2) It is intended that the Company(Electronics Patent Co.) Options assumed by the Parent(Digital Circuit Patent Co.) shall qualify following the Effective Time as incentive stock options as defined in Paragraph 422 of the Code to the extent the Company(Electronics Patent Co.) Options qualified as incentive stock options immediately prior to the Effective Time and the provisions of this Paragraph shall be applied consistent with such intent.

 

(3)  The Company(Electronics Patent Co.) shall take all actions necessary pursuant to the terms of the Company(Electronics Patent Co.) ESPP in order to shorten the Participation Period(s) under such plan which includes the Effective Time (the “Current Offerings”) such that a new purchase date for each such Participation Period shall occur prior to the Effective Time and shares shall be purchased by the Company(Electronics Patent Co.) ESPP participants prior to the Effective Time.  The Current Offerings shall expire immediately following such new purchase date, and the Company(Electronics Patent Co.) ESPP shall terminate immediately prior to the Effective Time.  Subsequent to such new purchase date, the Company(Electronics Patent Co.) shall take no action, pursuant to the terms of the Company(Electronics Patent Co.) ESPP, to commence any new offering period.

 

J.  Form S-8.  The Parent(Digital Circuit Patent Co.) agrees to file a registration statement on Form S-8 for the shares of the Parent(Digital Circuit Patent Co.) Common Stock issuable with respect to assumed Company(Electronics Patent Co.) Options as soon as is reasonably practicable, but in no event more than five business days, after the Effective Time and shall maintain the effectiveness of such registration statement thereafter for so long as any of such options or other rights remain outstanding.

 

K.  Indemnification.

(1) From and after the Effective Time, the Parent(Digital Circuit Patent Co.) will cause the Surviving Corporation to fulfill and honor in all respects the obligations of the Company(Electronics Patent Co.) pursuant to any indemnification agreements between the Company(Electronics Patent Co.) and its directors and officers as of the Effective Time (the “Indemnified Parties”) and any indemnification provisions under the Company(Electronics Patent Co.)’s Certificate of Incorporation or Bylaws as in effect on the date hereof. The Certificate of Incorporation and Bylaws of the Surviving Corporation will contain provisions with respect to exculpation and indemnification that are at least as favorable to the Indemnified Parties as those contained in the Certificate of Incorporation and Bylaws of the Company(Electronics Patent Co.) as in effect on the date hereof, which provisions will not be amended, repealed or otherwise modified for a period of six years from the Effective Time in any manner that would adversely affect the rights thereunder of individuals who, immediately prior to the Effective Time, were directors, officers, employees or agents of the Company(Electronics Patent Co.), unless such modification is required by law.

 

(2) For a period of [number] years after the Effective Time, the Parent(Digital Circuit Patent Co.) will cause the Surviving Corporation to maintain in effect, if available, directors’ and officers’ liability insurance covering those persons who are currently covered by the Company(Electronics Patent Co.)’s directors’ and officers’ liability insurance policy on terms comparable to those applicable to the current directors and officers of the Company(Electronics Patent Co.); provided, however, that in no event will the Parent(Digital Circuit Patent Co.) or the Surviving Corporation be required to expend in excess of 200% of the annual premium currently paid by the Company(Electronics Patent Co.) for such coverage (or such coverage as is available for such 200% of such annual premium).

 

(3) This Paragraph shall survive the consummation of the Merger, is intended to benefit the Company(Electronics Patent Co.), the Surviving Corporation and each Indemnified Party, shall be binding on all successors and assigns of the Surviving Corporation and the Parent(Digital Circuit Patent Co.), and shall be enforceable by the Indemnified Parties.

 

L.  The Parent(Digital Circuit Patent Co.) Board of Directors.  The Parent(Digital Circuit Patent Co.) will submit to its stockholders for consideration at the Parent(Digital Circuit Patent Co.) Stockholders’ Meeting an amendment to the Parent(Digital Circuit Patent Co.)’s Bylaws to increase the authorized number of members of the Parent(Digital Circuit Patent Co.) Board of Directors to a number to be determined by the Parent(Digital Circuit Patent Co.) Board of Directors from time to time, provided, that for three years following the Effective Time, any increase in the actual number of directors to a total of more than nine will require the affirmative vote of 80% of the directors then in office. The Board of Directors of the Parent(Digital Circuit Patent Co.) will take all actions reasonably necessary such that, effective upon the Effective Time, three persons mutually agreed upon by the Parent(Digital Circuit Patent Co.)’s Board of Directors and the Company(Electronics Patent Co.)’s Board of Directors (the “New Directors”) shall be appointed to the Parent(Digital Circuit Patent Co.)’s Board of Directors, one of each of whom shall be appointed to Class I, Class II and Class III of the Parent(Digital Circuit Patent Co.)’s Board of Directors, such designation to be made by mutual agreement of the Parent(Digital Circuit Patent Co.)’s Board of Directors and the Company(Electronics Patent Co.)’s Board of Directors.  The Parent(Digital Circuit Patent Co.) will use its best efforts to fulfill the conditions set forth herein.

 

M. Nasdaq Listing.  The Parent(Digital Circuit Patent Co.) agrees to authorize for listing on the Nasdaq Stock Market the shares of the Parent(Digital Circuit Patent Co.) Common Stock issuable, and those required to be reserved for issuance, in connection with the Merger, effective upon official notice of issuance.

 

N.  Letters of Accountants.  The Company(Electronics Patent Co.) and the Parent(Digital Circuit Patent Co.) shall use their respective reasonable efforts to cause to be delivered to the Parent(Digital Circuit Patent Co.) letters of the Company(Electronics Patent Co.)’s and the Parent(Digital Circuit Patent Co.)’s independent accountants, respectively, dated no more than two business days before the date on which the Registration Statement becomes effective (and satisfactory in form and substance to the Parent(Digital Circuit Patent Co.)), that is customary in scope and substance for letters delivered by independent public accountants in connection with registration statements similar to the Registration Statement.

 

O.  Takeover Statutes.  If any Takeover Statute is or may become applicable to the Merger or the other transactions contemplated by this Agreement, each of the Parent(Digital Circuit Patent Co.) and the Company(Electronics Patent Co.) and their respective Boards of Directors shall grant such approvals and take such lawful actions as are necessary to ensure that such transactions may be consummated as promptly as practicable on the terms contemplated by this Agreement and otherwise act to eliminate or minimize the effects of such statute and any regulations promulgated thereunder on such transactions.

 

P.  Certain Employee Benefits.

(1) As soon as practicable after the execution of this Agreement, the Company(Electronics Patent Co.) and the Parent(Digital Circuit Patent Co.) shall confer and work together in good faith to agree upon mutually acceptable employee benefit and compensation arrangements (and terminate the Company(Electronics Patent Co.) Employee Plans immediately prior to the Effective Time if appropriate).  In addition, the Company(Electronics Patent Co.) agrees that it and its subsidiaries shall terminate any and all severance, separation, retention and salary continuation plans, programs or arrangements (other than contractual agreements disclosed on the Company(Electronics Patent Co.) Disclosure Letter) prior to the Effective Time.

 

(2) Employees of the Company(Electronics Patent Co.) and its subsidiaries will be granted credit for all service with the Company(Electronics Patent Co.), its subsidiaries and with TCI and its Affiliates under each the Company(Electronics Patent Co.) employee benefit plan, program or arrangement of the Parent(Digital Circuit Patent Co.) or its Affiliates in which such Employees are eligible to participate for all purposes, except for purposes of benefit accrual under a defined benefit pension plan.   If Employees become eligible to participate in a medical, dental or health plan of the Parent(Digital Circuit Patent Co.) or its Affiliates, the Parent(Digital Circuit Patent Co.) will cause such plan to (i) waive any preexisting condition exclusions and waiting period limitations for conditions covered under the applicable medical, dental or health plans maintained or contributed to by the Company(Electronics Patent Co.) (but only to the extent corresponding exclusions and limitations were satisfied by such Employees under the applicable medical, dental or health plans maintained or contributed to by the Company(Electronics Patent Co.)); and (ii) credit any deductible or out of pocket expenses incurred by the Employees and their beneficiaries under such plans during the portion of the calendar year prior to such participation.

 

(3)  The Company(Electronics Patent Co.) and the Parent(Digital Circuit Patent Co.) agree to work diligently and cooperate to separate the benefit plans of TCI and the Company(Electronics Patent Co.).

 

Q.  Tax Matters.  Each of the Parent(Digital Circuit Patent Co.), the Merger Sub(Computer Hardware Patent Co.) and the Company(Electronics Patent Co.) agrees that it will not take any action, or fail to take any action, which action or failure to act would be reasonably likely to cause the Merger to fail to qualify as a “reorganization” pursuant to the provisions of Paragraph 368 of the Code.

 

6.  Conditions to the Merger
A.  Conditions to Obligations of Each Party to Effect the Merger.  The respective obligations of each party to this Agreement to effect the Merger shall be subject to the satisfaction at or prior to the Closing Date of the

following conditions:

 

(1)  The Company(Electronics Patent Co.) Stockholder Approval.  This Agreement shall have been approved and adopted, and the Merger shall have been approved, by the requisite vote of the stockholders of the Company(Electronics Patent Co.) under applicable law and the Company(Electronics Patent Co.) Charter Documents.

 

(2) The Parent(Digital Circuit Patent Co.) Stockholder Approval.  The issuance of shares of the Parent(Digital Circuit Patent Co.) Common Stock pursuant to the Merger, and the amendment to the Parent(Digital Circuit Patent Co.)’s Certificate of Incorporation to increase the authorized number of shares of the Parent(Digital Circuit Patent Co.) Common Stock in order to permit the issuance of shares of the Parent(Digital Circuit Patent Co.) Common Stock pursuant to the Merger, shall have been approved by the requisite vote of the stockholders of the Parent(Digital Circuit Patent Co.) under applicable law and the Parent(Digital Circuit Patent Co.) Charter Documents.

 

(3) Registration Statement Effective; Proxy Statement.  The SEC shall have declared the Registration Statement effective.  No stop order suspending the effectiveness of the Registration Statement or any part thereof shall have been issued and no proceeding for that purpose, and no similar proceeding in respect of the Proxy Statement/Prospectus, shall have been initiated or threatened in writing by the SEC.

 

(4) No Order; HSR Act.  No Governmental Entity shall have enacted, issued, promulgated, enforced or entered any statute, rule, regulation, executive order, decree, injunction or other order (whether temporary, preliminary or permanent) which is in effect and which has the effect of making the Merger illegal or otherwise prohibiting consummation of the Merger.  All waiting periods, if any, under the HSR Act relating to the transactions contemplated hereby will have expired or been terminated.

 

(5) Nasdaq Listing.  The shares of the Parent(Digital Circuit Patent Co.) Common Stock to be issued in the Merger shall have been approved for listing on the Nasdaq Stock Market, subject to official notice of issuance.

 

(6) Consents.  (i) All required approvals or consents of any Governmental Entity or other person in connection with the Merger and the consummation of the other transactions contemplated hereby shall have been obtained (and all relevant statutory, regulatory or other governmental waiting periods, shall have expired) unless the failure to receive any such approval or consent would not be reasonably likely, directly or indirectly, to result in a Material Adverse Effect on the Parent(Digital Circuit Patent Co.) and its subsidiaries (including, for the purposes of this condition, the Company(Electronics Patent Co.) and its subsidiaries), taken as a whole, and (ii) all such approvals and consents which have been obtained shall be on terms that are not reasonably likely, directly or indirectly, to result in a Material Adverse Effect on the Parent(Digital Circuit Patent Co.) and its subsidiaries (including, for the purposes of this condition, the Company(Electronics Patent Co.) and its subsidiaries), taken as a whole.

 

B.  Additional Conditions to Obligations of the Company(Electronics Patent Co.).  The obligation of the Company(Electronics Patent Co.) to consummate and effect the Merger shall be subject to the satisfaction at or prior to the Closing Date of each of the following conditions, any of which may be waived, in writing, exclusively by the Company(Electronics Patent Co.):

 

(1) Representations and Warranties. The representations and warranties of the Parent(Digital Circuit Patent Co.) and the Merger Sub(Computer Hardware Patent Co.) contained in this Agreement, disregarding all qualifications and exceptions contained therein relating to materiality or Material Adverse Effect or any similar standard or qualification, shall be true and correct at and as of the Closing Date as if made at and as of the Closing Date (other than representations and warranties that address matters only as of a certain date, which shall be true and correct as of such date), except where the failure of such representations or warranties to be true or correct would not have, individually or in the aggregate, a Material Adverse Effect on the Parent(Digital Circuit Patent Co.). It is understood that, for purposes of determining the accuracy of such representations and warranties, any update of or modification to the Parent(Digital Circuit Patent Co.) Disclosure Letter made or purported to have been made after the execution of this Agreement shall be disregarded.  The Company(Electronics Patent Co.) shall have received a certificate with respect to the foregoing signed on behalf of the Parent(Digital Circuit Patent Co.) by the Chief Executive Officer or Chief Financial Officer of the Parent(Digital Circuit Patent Co.).

 

(2) Agreements and Covenants.  The Parent(Digital Circuit Patent Co.) and the Merger Sub(Computer Hardware Patent Co.) shall have performed or complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by them on or prior to the Closing Date, and the Company(Electronics Patent Co.) shall have received a certificate to such effect signed on behalf of the Parent(Digital Circuit Patent Co.) by the Chief Executive Officer or Chief Financial Officer of the Parent(Digital Circuit Patent Co.).

 

(3) Material Adverse Effect.  No Material Adverse Effect with respect to the Parent(Digital Circuit Patent Co.) shall have occurred since the date of this Agreement and be continuing.

 

(4) Tax Opinion.  The Company(Electronics Patent Co.) shall have received an opinion of Crash & Davis, LLP dated as of the Closing Date, in form and substance reasonably satisfactory to it, on the basis of the facts, representations and assumptions set forth or referred to in such opinion, that the Merger will constitute a reorganization within the meaning of Paragraph 368(1) of the Code and that each of the Parent(Digital Circuit Patent Co.) and the Company(Electronics Patent Co.) will be a party to the reorganization within the meaning of Paragraph 368(1) of the Code.  The parties to this Agreement agree to make such reasonable representations as requested by such counsel for the purpose of rendering such opinions.

 

(5) the Parent(Digital Circuit Patent Co.) Board of Directors.  All actions necessary in order for the New Directors to become members of the Parent(Digital Circuit Patent Co.) Board of Directors upon the Effective Time shall have occurred, and, if such actions included an amendment to the Parent(Digital Circuit Patent Co.)’s Bylaws, such amendment shall have been approved at the Parent(Digital Circuit Patent Co.) Stockholders’ Meeting and shall be substantially as described herein.

 

C.  Additional Conditions to the Obligations of the Parent(Digital Circuit Patent Co.) and the Merger Sub(Computer Hardware Patent Co.). The obligations of the Parent(Digital Circuit Patent Co.) and the Merger Sub(Computer Hardware Patent Co.) to consummate and effect the Merger shall be subject to the satisfaction at or prior to the Closing Date of each of the following conditions, any of which may be waived, in writing, exclusively by the Parent(Digital Circuit Patent Co.):

 

(1) Representations and Warranties.  The representations and warranties of the Company(Electronics Patent Co.) contained in this Agreement, disregarding all qualifications and exceptions contained therein relating to materiality or Material Adverse Effect or any similar standard or qualification, shall be true and correct at and as of the Closing Date as if made at and as of the Closing Date (other than representations and warranties that address matters only as of a certain date, which shall be true and correct as of such date), except where the failure of such representations or warranties to be true or correct would not have, individually or in the aggregate, a Material Adverse Effect on the Company(Electronics Patent Co.).  It is understood that, for purposes of determining the accuracy of such representations and warranties, any update of or modification to the Company(Electronics Patent Co.) Disclosure Letter made or purported to have been made after the execution of this Agreement shall be disregarded.  The Parent(Digital Circuit Patent Co.) shall have received a certificate with respect to the foregoing signed on behalf of the Company(Electronics Patent Co.) by the Chief Executive Officer or Chief Financial Officer of the Company(Electronics Patent Co.).

 

(2) Agreements and Covenants.  The Company(Electronics Patent Co.) shall have performed or complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by it at or prior to the Closing Date, and the Parent(Digital Circuit Patent Co.) shall have received a certificate to such effect signed on behalf of the Company(Electronics Patent Co.) by the Chief Executive Officer or Chief Financial Officer of the Company(Electronics Patent Co.).

 

(3) Material Adverse Effect.  No Material Adverse Effect with respect to the Company(Electronics Patent Co.) shall have occurred since the date of this Agreement and be continuing.

 

(4) Tax Opinion.  The Parent(Digital Circuit Patent Co.) shall have received an opinion of Jones & Smith, LLP, dated as of the Closing Date, in form and substance reasonably satisfactory to it, on the basis of the facts, representations and assumptions set forth or referred to in such opinion, that the Merger will constitute a reorganization within the meaning of Paragraph 368(1) of the Code and that each of the Parent(Digital Circuit Patent Co.) and the Company(Electronics Patent Co.) will be a party to the reorganization within the meaning of Paragraph 368(1) of the Code.  The parties to this Agreement agree to make such reasonable representations as requested by such counsel for the purpose of rendering such opinions.

 

(5) No Restraints.  There shall not be instituted or pending any action or proceeding by any Governmental Entity (i) seeking to restrain, prohibit or otherwise interfere with the ownership or operation by the Parent(Digital Circuit Patent Co.) or any of its subsidiaries of all or any portion of the business of the Company(Electronics Patent Co.) or any of its subsidiaries or of the Parent(Digital Circuit Patent Co.) or any of its subsidiaries or to compel the Parent(Digital Circuit Patent Co.) or any of its subsidiaries to dispose of or hold separate all or any portion of the business or assets of the Company(Electronics Patent Co.) or any of its subsidiaries or of the Parent(Digital Circuit Patent Co.) or any of its subsidiaries, (ii) seeking to impose or confirm limitations on the ability of the Parent(Digital Circuit Patent Co.) or any of its subsidiaries effectively to exercise full rights of ownership of the shares of the Company(Electronics Patent Co.) Common Stock (or shares of stock of the Surviving Corporation) including the right to vote any such shares on any matters properly presented to stockholders or (iii) seeking to require divestiture by the Parent(Digital Circuit Patent Co.) or any of its subsidiaries of any such shares.

 

7.  Termination, Amendment and Waiver
A.  Termination.  This Agreement may be terminated at any time prior to the Effective Time, whether before or after the requisite approvals of the stockholders of the Company(Electronics Patent Co.) or the Parent(Digital Circuit Patent Co.):

 

(1) by mutual written consent duly authorized by the Boards of Directors of the Parent(Digital Circuit Patent Co.) and the Company(Electronics Patent Co.);

 

(2) by either the Company(Electronics Patent Co.) or the Parent(Digital Circuit Patent Co.) if the Merger shall not have been consummated by [date] for any reason; provided, however, that the right to terminate this Agreement under this Paragraph 7.1(2) shall not be available to any party whose action or failure to act has been a principal cause of or resulted in the failure of the Merger to occur on or before such date and such action or failure to act constitutes a breach of this Agreement;

 

(3) by either the Company(Electronics Patent Co.) or the Parent(Digital Circuit Patent Co.) if a Governmental Entity shall have issued an order, decree or ruling or taken any other action, in any case having the effect of permanently restraining, enjoining or otherwise prohibiting the Merger, which order, decree, ruling or other action is final and nonappealable;

 

(4) by either the Company(Electronics Patent Co.) or the Parent(Digital Circuit Patent Co.), if the approval and adoption of this Agreement, and the approval of the Merger, by the stockholders of the Company(Electronics Patent Co.) shall not have been obtained by reason of the failure to obtain the required vote at a meeting of the Company(Electronics Patent Co.) stockholders duly convened therefore or at any adjournment thereof; provided, however, that the right to terminate this Agreement under this Paragraph shall not be available to the Company(Electronics Patent Co.) where the failure to obtain the Company(Electronics Patent Co.) stockholder approval shall have been caused by (i) the action or failure to act of the Company(Electronics Patent Co.) and such action or failure to act constitutes a material breach by the Company(Electronics Patent Co.) of this Agreement or (ii) a breach of the Voting Agreement by any party thereto other than the Parent(Digital Circuit Patent Co.);

 

(5) by either the Company(Electronics Patent Co.) or the Parent(Digital Circuit Patent Co.), if the approval of the issuance of shares of the Parent(Digital Circuit Patent Co.) Common Stock pursuant to the Merger, and the amendment to the Parent(Digital Circuit Patent Co.)’s Certificate of Incorporation to increase the authorized number of shares of the Parent(Digital Circuit Patent Co.) Common Stock in order to permit the issuance of shares of the Parent(Digital Circuit Patent Co.) Common Stock pursuant to the Merger by the stockholders of the Parent(Digital Circuit Patent Co.) shall not have been obtained by reason of the failure to obtain the respective required votes at a meeting of the Parent(Digital Circuit Patent Co.) stockholders duly convened therefore or at any adjournment thereof; provided, however, that the right to terminate this Agreement under this Paragraph shall not be available to the Parent(Digital Circuit Patent Co.) where the failure to obtain the Parent(Digital Circuit Patent Co.) stockholder approvals shall have been caused by the action or failure to act of the Parent(Digital Circuit Patent Co.) and such action or failure to act constitutes a material breach by the Parent(Digital Circuit Patent Co.) of this Agreement;

 

(6) by the Parent(Digital Circuit Patent Co.) (at any time prior to the adoption and approval of this Agreement and the Merger by the required vote of the stockholders of the Company(Electronics Patent Co.)) if a Triggering Event (as defined below) shall have occurred;

 

(7) by the Company(Electronics Patent Co.), upon a breach of any representation, warranty, covenant or agreement on the part of the Parent(Digital Circuit Patent Co.) set forth in this Agreement, or if any representation or warranty of the Parent(Digital Circuit Patent Co.) shall have become untrue, in either case such that the conditions set forth herein would not be satisfied as of the time of such breach or as of the time such representation or warranty shall have become untrue, provided that if such inaccuracy in the Parent(Digital Circuit Patent Co.)’s representations and warranties or breach by the Parent(Digital Circuit Patent Co.) is curable by the Parent(Digital Circuit Patent Co.) through the exercise of its commercially reasonable efforts, then the Company(Electronics Patent Co.) may not terminate this Agreement under this Paragraph for thirty (30) days after delivery of written notice from the Company(Electronics Patent Co.) to the Parent(Digital Circuit Patent Co.) of such breach, provided the Parent(Digital Circuit Patent Co.) continues to exercise commercially reasonable efforts to cure such breach (it being understood that the Company(Electronics Patent Co.) may not terminate this Agreement pursuant to this paragraph if such breach by the Parent(Digital Circuit Patent Co.) is cured during such 30-day period, or if the Company(Electronics Patent Co.) shall have materially breached this Agreement); or

 

(8) by the Parent(Digital Circuit Patent Co.), upon a breach of any representation, warranty, covenant or agreement on the part of the Company(Electronics Patent Co.) set forth in this Agreement, or if any representation or warranty of the Company(Electronics Patent Co.) shall have become untrue, in either case such that the conditions set forth herein would not be satisfied as of the time of such breach or as of the time such representation or warranty shall have become untrue, provided that if such inaccuracy in the Company(Electronics Patent Co.)’s representations and warranties or breach by the Company(Electronics Patent Co.) is curable by the Company(Electronics Patent Co.) through the exercise of its commercially reasonable efforts, then the Parent(Digital Circuit Patent Co.) may not terminate this Agreement under this Paragraph for thirty (30) days after delivery of written notice from the Parent(Digital Circuit Patent Co.) to the Company(Electronics Patent Co.) of such breach, provided the Company(Electronics Patent Co.) continues to exercise commercially reasonable efforts to cure such breach (it being understood that the Parent(Digital Circuit Patent Co.) may not terminate this Agreement pursuant to this paragraph (h) if such breach by the Company(Electronics Patent Co.) is cured during such 30-day period, or if the Parent(Digital Circuit Patent Co.) shall have materially breached this Agreement).

 

For the purposes of this Agreement, a “Triggering Event” shall be deemed to have occurred if:  (i) the Board of Directors of the Company(Electronics Patent Co.) or any committee thereof shall for any reason have withdrawn or shall have amended or modified in a manner adverse to the Parent(Digital Circuit Patent Co.) its recommendation in favor of the adoption and approval of the Agreement or the approval of the Merger; (ii) The Company(Electronics Patent Co.) shall have failed to include in the Proxy Statement/Prospectus the recommendation of the Board of Directors of the Company(Electronics Patent Co.) in favor of the adoption and approval of the Agreement and the approval of the Merger; (iii) the Board of Directors of the Company(Electronics Patent Co.) fails to reaffirm its recommendation in favor of the adoption and approval of the Agreement and the approval of the Merger within ten (10) business days after the Parent(Digital Circuit Patent Co.) requests in writing that such recommendation be reaffirmed at any time following the public announcement of an Acquisition Proposal; (iv) the Board of Directors of the Company(Electronics Patent Co.) or any committee thereof shall have approved or publicly recommended any Acquisition Proposal; (v)  The Company(Electronics Patent Co.) shall have entered into any letter of intent of similar document or any agreement, contract or commitment accepting any Acquisition Proposal; (vi)  The Company(Electronics Patent Co.) shall have materially breached any of the provisions herein; or (vii) a tender or exchange offer relating to securities of the Company(Electronics Patent Co.) shall have been commenced by a person unaffiliated with the Parent(Digital Circuit Patent Co.), and the Company(Electronics Patent Co.) shall not have sent to its security holders pursuant to Rule 14e-2 promulgated under the Securities Act, within ten (10) business days after such tender or exchange offer is first published sent or given, a statement disclosing that the Company(Electronics Patent Co.) recommends rejection of such tender or exchange offer.

 

B.  Notice of Termination; Effect of Termination.

Any proper termination of this Agreement under this Paragraph will be effective immediately upon the delivery of written notice of the terminating party to the other parties hereto.  In the event of the termination of this Agreement as provided for herein, this Agreement shall be of no further force or effect, except (i) as set forth paragraph 7 and 8, each of which shall survive the termination of this Agreement, and (ii) nothing herein shall relieve any party from liability for any willful breach of this Agreement. No termination of this Agreement shall affect the obligations of the parties contained in the Confidentiality Agreement, all of which obligations shall survive termination of this Agreement in accordance with their terms.

 

C.  Fees and Expenses.

(1) General.  Except as set forth in this Paragraph, all fees and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such expenses whether or not the Merger is consummated; provided, however, that the Parent(Digital Circuit Patent Co.) and the Company(Electronics Patent Co.) shall share equally all fees and expenses, other than attorneys’ and accountants fees and expenses, incurred in relation to the printing and filing with the SEC of the Proxy Statement/Prospectus (including any preliminary materials related thereto) and the Registration Statement (including financial statements and exhibits) and any amendments or supplements thereto.

 

(2) The Company(Electronics Patent Co.) Payments.  In the event that this Agreement is terminated by the Parent(Digital Circuit Patent Co.) or the Company(Electronics Patent Co.), as applicable, pursuant to this Agreement, the Company(Electronics Patent Co.) shall promptly, but in no event later than two (2) days after the date of such termination, pay the Parent(Digital Circuit Patent Co.) a fee equal to $[amount] million in immediately available funds (the “Termination Fee”); provided, that in the case of a termination under this Paragraph prior to which no Triggering Event has occurred, (i) such payment shall be made only if (1) following the date of this Agreement and prior to the termination of this Agreement, a person has publicly announced an Acquisition Proposal and (B) within nine months following the termination of this Agreement, either a the Company(Electronics Patent Co.) Acquisition (as defined below) is consummated, or the Company(Electronics Patent Co.) enters into an agreement providing for a the Company(Electronics Patent Co.) Acquisition and such the Company(Electronics Patent Co.) Acquisition is later consummated with the person (or another person controlling, controlled by, or under common control with, such person) with whom such agreement was entered into (regardless of when such consummation occurs if the Company(Electronics Patent Co.) has entered into such an agreement within such nine-month period), and (ii) such payment shall be made promptly, but in no event later than two days after the consummation of such the Company(Electronics Patent Co.) Acquisition (regardless of when such consummation occurs if the Company(Electronics Patent Co.) has entered into such an agreement within such nine-month period).  The Company(Electronics Patent Co.) acknowledges that the agreements contained in this Paragraph are an integral part of the transactions contemplated by this Agreement, and that, without these agreements, the Parent(Digital Circuit Patent Co.) would not enter into this Agreement. Accordingly, if the Company(Electronics Patent Co.) fails to pay in a timely manner the amounts due pursuant to this Paragraph, and, in order to obtain such payment, the Parent(Digital Circuit Patent Co.) makes a claim that results in a judgment against the Company(Electronics Patent Co.) for the amounts set forth in this Paragraph, the Company(Electronics Patent Co.) shall pay to the Parent(Digital Circuit Patent Co.) its reasonable costs and expenses (including reasonable attorneys’ fees and expenses) in connection with such suit, together with interest on the amounts set forth in this Paragraph at the prime rate of The Chase Manhattan Bank in effect on the date such payment was required to be made.  Payment of the fees described in this Paragraph shall not be in lieu of damages incurred in the event of breach of this Agreement.

 

For the purposes of this Agreement, “the Company(Electronics Patent Co.) Acquisition” shall mean any of the following transactions (other than the transactions contemplated by this Agreement); (i) a merger, consolidation, business combination, recapitalization, liquidation, dissolution or similar transaction involving the Company(Electronics Patent Co.) pursuant to which the stockholders of the Company(Electronics Patent Co.) immediately preceding such transaction hold less than 50% of the aggregate equity interests in the surviving or resulting entity of such transaction, (ii) a sale or other disposition by the Company(Electronics Patent Co.) of assets representing in excess of 50% of the aggregate fair market value of the Company(Electronics Patent Co.)’s business immediately prior to such sale, or of either of the “registry” or “registrar” businesses of the Company(Electronics Patent Co.), or (iii) the acquisition by any person or group (including by way of a tender offer or an exchange offer or issuance by the Company(Electronics Patent Co.)), directly or indirectly, of beneficial ownership or a right to acquire beneficial ownership of shares representing in excess of 50% of the voting power of the then outstanding shares of capital stock of the Company(Electronics Patent Co.); provided, that, notwithstanding the foregoing, a the Company(Electronics Patent Co.) Acquisition shall not include a spin-off or other distribution of either the “registry” or “registrar” businesses of the Company(Electronics Patent Co.) to the Company(Electronics Patent Co.)’s stockholders.

 

8. CONFIDENTIALITY AND PUBLIC RELATIONS.

Each party will not without the consent of the other, disclose the provisions contained herein to any third parties (other than as may be required by law, in connection with legal or administrative proceedings, or to attorneys, accountants, and consultants they may have retained to represent them in connection herewith), and this provision shall survive the Closing. There will be no public announcement of this Agreement except as provided below.

 

9.  NOTICES.

A.  Any notices required or permitted to be given hereunder by either party to the other shall be given in writing: (a) by personal delivery; (b) by electronic facsimile with confirmation sent by United States first class registered or certified mail, postage prepaid return receipt requested; (c) by bonded courier or by a nationally recognized overnight delivery Company(Electronics Patent Co.); or (d) by United States first class registered or certified mail, postage prepaid, return receipt requested, in each case, addressed to the parties to the address stated above (or to such other addresses as the parties may request in writing by notice given pursuant to this section).

 

B. Notices shall be deemed received on the earliest of personal delivery, upon delivery by electronic facsimile with confirmation from the transmitting machine that the transmission was completed, twenty-four (24) hours following deposit with a bonded courier or overnight delivery Company(Electronics Patent Co.); or seventy-two (72) hours following deposit in the U.S. Mail as required herein.

 

10.  INDEMNITY

Each party agrees to defend, indemnify and hold the other party, its officers, directors, agents and employees, harmless against all costs, expenses and losses (including reasonable attorneys’ fees and costs) incurred through claims of third parties against such party based on the actions or inactions of the indemnifying party or any breach of any representation or warranty by said party.

 

11.  JURISDICTION & DISPUTES

A.  This Agreement shall be governed by the laws of the state of [state].

 

B. All disputes hereunder shall be resolved in the applicable state or federal courts of [state].  The parties consent to the jurisdiction of such courts, agree to accept service of process by mail, and waive any jurisdictional or venue defenses otherwise available.

 

C.  In the event either party files suit to enforce any of the terms hereof, the prevailing party shall be entitled to an award of all reasonable attorney’s fees and court costs.

 

12. AGREEMENT BINDING ON SUCCESSORS

This Agreement shall be binding upon and shall inure to the benefit of the parties hereto, their heirs, administrators, successors and assigns.

 

13.  WAIVER

No waiver by either party of any default shall be deemed as a waiver of any prior or subsequent default of the same or other provisions of this Agreement.

 

14.  SEVERABILITY

If any provision hereof is held invalid or unenforceable by a court of competent jurisdiction, such invalidity shall not affect the validity or operation of any other provision and such invalid provision shall be deemed to be severed from the Agreement.

 

15.  ASSIGNABILITY

The license granted hereunder is personal to the Company(Electronics Patent Co.) and may not be assigned by any act of the Company(Electronics Patent Co.) or by operation of law unless in connection with a transfer of substantially all the assets of the Company(Electronics Patent Co.) or with the consent of the Parent(Digital Circuit Patent Co.).

 

16.  AGREEMENT DRAFTED BY ALL PARTIES.

This Agreement is the result of arm’s length negotiations between the parties and shall be construed to have been drafted by all parties such that any ambiguities in this Agreement shall not be construed against either party.

 

17.  SECTION HEADINGS.

The section headings contained herein are for convenience in reference and are not intended to define or limit the scope of any provision of this Agreement.

 

18.  COUNTERPARTS.

This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and will become effective and binding upon the parties as of the execution date at such time as all the signatories hereto have signed a counterpart of this Agreement.

 

19.  INTEGRATION

This Agreement constitutes the entire understanding of the parties, and revokes and supersedes all prior agreements between the parties and is intended as a final expression of their Agreement.  It shall not be modified or amended except in writing signed by the parties hereto and specifically referring to this Agreement.  This Agreement shall take precedence over any other documents which may be in conflict therewith.

 

IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, have each caused to be affixed hereto its or his/her hand and seal the day indicated.

 

[Parent(Digital Circuit Patent Co.)]                                                                                    [Merger Sub(Computer Hardware Patent Co.)]

 

By:__________________________                                    By:____________________

Title:  President                                                             Title:

Date:                                                                            Date:

 

 

[Company(Electronics Patent Co.)]

 

By:__________________________

Title:

Date: