Asset Contribution Agreement

ASSET CONTRIBUTION AGREEMENT


between


3COM CORPORATION,


and


U.S. ROBOTICS CORPORATION


dated as of


June 5, 2000


TABLE OF CONTENTS


PAGE
---- ARTICLE I 1


1.1 Definitions.........................................................................................1


ARTICLE II Transfer of Assets.........................................................................................5


2.1 Agreement to Transfer and Transfer of the Contributed Assets........................................5
2.2 Liabilities.........................................................................................6
2.3 Consideration for the Transfer......................................................................6
2.4 Cooperation.........................................................................................6


ARTICLE III Representations and Warranties of 3Com....................................................................6


3.1 Corporate Existence and Power.......................................................................6
3.2 Corporate Authorization.............................................................................6
3.3 Governmental Authorization..........................................................................7
3.4 Noncontravention....................................................................................7
3.5 Required Consents...................................................................................7
3.6 Absence of Certain Changes..........................................................................7
3.7 Material Contracts..................................................................................8
3.8 Licenses and Permits................................................................................9
3.9 Litigation..........................................................................................9
3.10 Properties.........................................................................................10
3.11 Taxes..............................................................................................11
3.12 Intellectual Property..............................................................................11
3.13 Labor Issues.......................................................................................12
3.14 Foreign Corrupt Practices Act......................................................................12
3.15 Product Warranties.................................................................................12
3.16 Finder's Fees......................................................................................12
3.17 ERISA Representations..............................................................................12
3.18 Financial Information..............................................................................13


ARTICLE IV Representations and Warranties of U.S. Robotics...........................................................13


4.1 Corporate Existence and Power......................................................................13
4.2 Corporate Authorization............................................................................13
4.3 Governmental Authorization.........................................................................13
4.4 Noncontravention...................................................................................14
4.5 Required Consents..................................................................................14
4.6 Financial Statements...............................................................................14
4.7 Litigation.........................................................................................14
4.8 Finders'Fees.......................................................................................14
4.9 WARN Act...........................................................................................14
4.10 Capitalization.....................................................................................14


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TABLE OF CONTENTS
(CONTINUED)


PAGE
---- ARTICLE V Covenants..................................................................................................15


5.1 Nonassignable Contracts and Permits................................................................15
5.2 Access to Information, Confidentiality.............................................................15
5.3 No Solicitation....................................................................................15
5.4 Reasonable Best Efforts; Further Assurances........................................................16
5.5 Certain Filings....................................................................................16
5.6 Public Announcements...............................................................................16
5.7 Required Consents..................................................................................16
5.8 Employees..........................................................................................16
5.9 Taxes..............................................................................................19
5.10 Incentive Program..................................................................................19
5.11 Additional Ancillary Agreements....................................................................19
5.12 General Cooperation................................................................................19
5.13 Tax Cooperation Rider..............................................................................19


ARTICLE VI 20


6.1 Master Services Agreement..........................................................................20
6.2 Assumed Liabilities................................................................................20
6.3 Cutover Date Contributed Assets....................................................................20
6.4 List of Contributed Assets.........................................................................20
6.5 Channel Inventory..................................................................................21
6.6 Additional Transition Services.....................................................................21
6.7 Effect of Cutover Date.............................................................................21


ARTICLE VII 21


7.1 Governing Law......................................................................................21
7.2 Third Party Beneficiaries..........................................................................22
7.3 Entire Agreement...................................................................................22
7.4 Successors and Assigns.............................................................................22
7.5 Further Assurances.................................................................................22
7.6 Amendment..........................................................................................22
7.7 Notices............................................................................................22
7.8 Counterparts.......................................................................................24
7.9 Representation by Counsel; Interpretation..........................................................24
7.10 Limitation of Liability............................................................................24
7.11 Consent to Jurisdiction............................................................................24


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ASSET CONTRIBUTION AGREEMENT


THIS ASSET CONTRIBUTION AGREEMENT (this "AGREEMENT") is entered into as of June 5, 2000 (the "EFFECTIVE DATE"), between 3COM CORPORATION, a Delaware corporation ("3COM"), and U.S. Robotics Corporation, a Delaware corporation ("U.S. ROBOTICS").


WHEREAS, 3Com intends to contribute certain assets to U.S. Robotics associated with 3Com's sales, marketing and engineering activities, including product testing and research and development, for analog modem products, selected mobile (modem only) PC card products and ISDN modem products identified in SCHEDULE 1.1 (s) to the Intellectual Property License Agreement (as defined herein) (the "BUSINESS") in exchange for shares of U.S. Robotics Series A Preferred Stock and other consideration provided for herein; and


WHEREAS, 3Com desires that such transfer of assets to U.S. Robotics qualify as a tax free transfer of assets under Section 351 of the Internal Revenue Code of 1986, as amended;


NOW, THEREFORE, in consideration of the mutual covenants herein contained, the parties agree as follows:


ARTICLE I


DEFINITIONS


1.1 DEFINITIONS.


(a) The following terms, as used herein, have the following meanings:


"ACCTON" means Accton Network (BVI) Co. Ltd., a company organized under the laws of British Virgin Islands, which is the owner of approximately 41% of the outstanding capital stock of U.S. Robotics as of the date hereof.


"ACQUIRED BUSINESS" means the Business, including the Contributed Assets and the Assumed Liabilities.


"AFFILIATE" means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with such Person. For purposes of this definition, "control" when used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise; the terms "controlling" and "controlled" have meanings correlative to the foregoing.


"ANCILLARY AGREEMENTS" means the Intellectual Property License Agreement, the Master Services Agreement, the Transition Services Agreement, the Real Property License, the Real Property Assignment, the Consulting Agreement, the bill of sale attached as EXHIBIT D and the


assumption agreement attached as EXHIBIT E, and each other document or agreement delivered by 3Com or U.S. Robotics in connection with this Agreement.


"ASSUMED CONTRACTS" means those contracts, agreements, leases, commitments and sales and purchase orders of 3Com relating to the Acquired Business listed on SCHEDULE 1.1-D to this Agreement.


"ASSUMED LIABILITIES" means those debts, obligations, contracts and liabilities of 3Com related to or arising out of the conduct of the Acquired Business listed on SCHEDULE 1.1-D to this Agreement. The Assumed Liabilities include the Assumed Contracts.


"BUSINESS" has the meaning set forth in the Recitals to this Agreement.


"CLOSING DATE" means the date of the Closing.


"CODE" means the Internal Revenue Code of 1986, as amended from time to time.


"COMPENSATION AND BENEFITS PLANS" means, collectively, each bonus, deferred compensation, pension, retirement, profit-sharing, thrift, savings, employee stock ownership, stock bonus, stock purchase, restricted stock, stock option, employment, termination, severance, compensation, medical, health, or other plan, agreement, policy or arrangement established, maintained or contributed to by 3Com, its affiliates or any deemed affiliate or controlled group as may be applicable under ERISA or the Code.


"CONTRIBUTED ASSETS" means the following assets as they may exist on the Closing Date:


(i) tangible assets presently located at the Premises or at 3Com's Boulder, Colorado location that was formerly the site for the Euphonics business and generally being used for or necessary to the Acquired Business, consisting of lab equipment and supplies, office furniture and office equipment and supplies and computer hardware;


(ii) governmental permits, licenses, registrations, orders and approvals solely related to the Acquired Business, to the extent such permits, licenses, registrations, orders and approvals are separately transferable to U.S. Robotics;


(iii) all rights under the Assumed Contracts;


(iv) the Transferred Intellectual Property; and


(v) all Additional Assets.


Notwithstanding anything in clauses (i) through (v) above, neither the Excluded Assets listed on SCHEDULE 1.1-C to this Agreement nor any Intellectual Property that is the subject of the Intellectual Property License Agreement shall be considered Contributed Assets.


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"CONSULTING AGREEMENT" means the consulting services agreement between 3Com and U.S. Robotics pursuant to which 3Com will develop a global information system for U.S. Robotics.


"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.


"EXCLUDED ASSETS" means those items listed on SCHEDULE 1.1-C to this Agreement.


"CUTOVER DATE CONTRIBUTED ASSETS" means all of 3Com's right title and interest in those assets listed in SCHEDULE 1.1-E to this Agreement.


"INTELLECTUAL PROPERTY" means, generally, (i) patents and utility models and applications therefor and all reissues, re-examinations, divisions, renewals, extensions, provisionals, continuations and continuations-in-part thereof; (ii) inventions (whether patentable or not), invention disclosures, improvements, trade secrets, proprietary information, know how, technology, technical data and customer lists, and all documentation embodying or evidencing any of the foregoing; (iii) copyrights, copyright registrations and applications therefor and all other rights corresponding thereto; (iv) mask works, mask work registrations and applications therefor; (v) industrial designs and any registrations and applications therefor; (vi) trade names, trade dress, logos, domain names, common law trademarks and service marks, trademark and service mark registrations and applications therefor and all goodwill associated therewith; (vii) databases and data collections and all rights therein; and (viii) computer software including all source code, object code, firmware, development tools, files, records and data, all media on which any of the foregoing is recorded.


"INTELLECTUAL PROPERTY LICENSE AGREEMENT" means, collectively, the intellectual property licensing agreement substantially in the form attached hereto as EXHIBIT A-1 with respect to the Intellectual Property described therein and the license agreement substantially in the form attached hereto as EXHIBIT A-2 with respect to the trademarks described therein.


"LICENSED INTELLECTUAL PROPERTY" means the Intellectual Property that is the subject of the Intellectual Property License Agreement.


"LIEN" means, with respect to any property or asset, any mortgage, lien, pledge, charge, security interest or other encumbrance in respect of such property or asset.


"MASTER SERVICES AGREEMENT" means the master services agreement substantially in the form attached as EXHIBIT B with respect to certain consulting services to be provided by 3Com to U.S. Robotics until the Cutover Date.


"MATERIAL ADVERSE EFFECT" means (i) as to 3Com, a material adverse effect on the business, liabilities, assets or condition (financial or otherwise) of the Acquired Business, taken as whole, except any such effect resulting from or arising as a result of the transactions contemplated hereby (ii) as to U.S. Robotics, a material adverse effect on the business, liabilities, assets or condition (financial or otherwise) of U.S. Robotics, NEL or Accton except any such effect resulting from or arising as a result of the transactions contemplated hereby.


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"NEL" means NEL (U.S.) Holdings, Inc., a Delaware corporation, which is the owner of approximately 41% of the outstanding capital stock of U.S. Robotics as of the date hereof.


"PERSON" means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.


"PREMISES" means the real property and premises located in Rolling Meadows, Illinois from which the Business is presently conducted, as more particularly described in the Real Property License.


"REAL PROPERTY ASSIGNMENT" means the Assignment of Lease with respect to 3Com's premises used in connection with the Acquired Business in Boulder, Colorado, substantially in the form attached as EXHIBIT G, pursuant to which 3Com assigns to U.S. Robotics, as of the Cutover Date, the existing lease with respect to such premises, together with all necessary consents with respect thereto including the consent attached hereto as EXHIBIT G.


"REAL PROPERTY LICENSE" means, collectively, the Rolling Meadows License and the Multi-Site License substantially in the form attached as EXHIBITS F-1 and F-2, respectively, pursuant to which 3Com grants U.S. Robotics the right to use the Premises and the other locations described therein.


"REAL PROPERTY RIGHTS" means all rights of U.S. Robotics under the Real Property Assignment and the Real Property License.


"REQUIRED CONSENTS" means, collectively, the 3Com Required Consents and the U.S. Robotics Required Consents.


"SEC" means the U.S. Securities and Exchange Commission or any successor agency.


"SECURITIES ACT" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.


"3COM'S KNOWLEDGE" means the knowledge, after reasonable inquiry, of (i) 3Com's "Executive Committee (Execom)" and "Operations Committee (Opcom)" members, but excluding any Person who is or has been an employee of the Business, (ii) John Hrudicka, (iii) Najib Khouri-Haddad, (iv) John Kuo and (v) Steven Borsand. In no event shall any individual included within the definition of "3Com's Knowledge" have personal liability for any representation or warranty made by 3Com under this Agreement.


"STOCK PURCHASE AGREEMENT" means the Series A Preferred Stock Purchase Agreement of even date herewith among U.S. Robotics, Accton and NEL.


"TRANSACTION AGREEMENTS" means this Agreement and the Ancillary Agreements.


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"TRANSFERRED INTELLECTUAL PROPERTY" means the Intellectual Property listed on SCHEDULE 1.1-B to this Agreement.


"TRANSITION SERVICES AGREEMENT" means the transition services agreement substantially in the form attached hereto as EXHIBIT C with respect to specified services to be performed by 3Com for U.S. Robotics.


"WARN ACT" means the Worker Adjustment and Retraining Notification Act of 1988, as amended.


(b) Each of the following terms is defined in the Section set forth opposite such term:


Term Section
---- -------
Additional Assets 6.4
Business Recitals
Closing Common Stock 2.1
Cutover Date 2.3
Employees 5.8(a)
Employees on Leave 5.8(b)
Permits 3.8
Permitted Liens 3.10(a)
Service Credit 5.8(f)
Taxes 3.11
3Com Disclosure Schedule 3.3
3Com Required Consents 3.5


ARTICLE II


TRANSFER OF ASSETS


2.1 AGREEMENT TO TRANSFER AND TRANSFER OF THE CONTRIBUTED ASSETS. The closing (the "CLOSING") of the contribution of the Contributed Assets and the assumption of the Assumed Liabilities hereunder shall take place at the offices of Wilson Sonsini Goodrich & Rosati, 650 Page Mill Road, Palo Alto, California, concurrent with satisfaction of the conditions set forth in this Agreement, or at such other time or place as 3Com and U.S. Robotics may agree. Upon and subject to the terms and conditions of this Agreement, as of the Closing Date, 3Com hereby assigns, agrees to assign, transfers, conveys and delivers to U.S. Robotics all of its right, title, and interest in the Contributed Assets; provided that effective date of the assignment, transfer, conveyance and delivery of (a) those assets identified on SCHEDULE 1.1-E shall be the Cutover Date rather than the Closing Date, as provided in Section 6.3 and (b) the Additional Assets shall be the date such Additional Assets are added to SCHEDULE 1.1-E in accordance with Section 6.4.


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2.2 LIABILITIES. Upon the terms and subject to the conditions of this Agreement and effective at the time of the Closing, U.S. Robotics shall unconditionally assume and agree to pay, satisfy and discharge when due in accordance with their terms, and U.S. Robotics shall fully and forever hold 3Com and its Affiliates harmless against, any and all Assumed Liabilities, by delivery of an assumption agreement substantially in the form attached as EXHIBIT E, duly executed by U.S. Robotics and 3Com; provided that the effective date of the assumption of certain of such Assumed Liabilities shall be the Cutover Date rather than the Closing Date, as provided in Section 6.2 of this Agreement.


2.3 CONSIDERATION FOR THE TRANSFER. As consideration for the transfer described in Sections 2.1 above, U.S. Robotics agrees to issue to 3Com (a) 2,952,000 shares of Series A Preferred Stock as set forth in the Subscription Offer between U.S. Robotics, par value $0.0001 per share and of 3Com, of even date herewith, (b) a warrant to purchase an aggregate of 15,181,333 shares of Series A Preferred Stock of U.S. Robotics and/or Series B Preferred Stock of U.S. Robotics, at an exercise price of $0.0001 per share, pursuant to a Warrant in the form attached as EXHIBIT H, and subject to the limitations and conditions set forth therein, and (c) one share of common stock of U.S. Robotics, par value $0.0001 per share (the "COMMON STOCK").


2.4 COOPERATION. 3Com shall take all actions necessary to execute any and all documents as may be reasonably requested by U.S. Robotics from time to time to (a) transfer the Contributed Assets and otherwise fully vest or perfect in U.S. Robotics all right, title and interest in and to the Contributed Assets or (b) deliver the Real Property Rights to U.S. Robotics or grant U.S. Robotics the benefits thereunder.


ARTICLE III


REPRESENTATIONS AND WARRANTIES OF 3COM


3Com represents and warrants to U.S. Robotics as of the date hereof that:


3.1 CORPORATE EXISTENCE AND POWER. 3Com is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware.


3.2 CORPORATE AUTHORIZATION. 3Com has the requisite corporate power and authority to enter into this Agreement and the other Transaction Agreements to which it is a party and to perform its obligations hereunder and thereunder. 3Com has the requisite corporate power and authority to carry on the Acquired Business as now being conducted and to own and operate the properties and assets now owned and operated by it in connection with the Acquired Business. 3Com is duly qualified or licensed to do business and is in good standing as a foreign corporation in the jurisdiction in which the material portion of the Contributed Assets is located. The execution and delivery of this Agreement and the other Transaction Agreements to which it is a party, and performance by 3Com of its obligations hereunder and thereunder, have been duly authorized by all necessary corporate action on the part of 3Com. This Agreement constitutes, and the Ancillary Agreements to which it is a party, when executed and delivered by 3Com, will constitute, valid and


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legally binding obligations of 3Com, enforceable against 3Com in accordance with their respective terms, except (i) as may be limited by (x) applicable bankruptcy, insolvency, reorganization or others laws of general application relating to or affecting the enforcement of creditors' rights generally and (y) the effect of rules of law governing the availability of equitable remedies and (ii) as rights to indemnity or contribution may be limited under federal or state securities laws or by principles of public policy thereunder.


3.3 GOVERNMENTAL AUTHORIZATION. Except as set forth on SCHEDULE 3.3 of the disclosure schedule (the "3COM DISCLOSURE SCHEDULE") dated the date hereof and delivered by 3Com to U.S. Robotics in connection with this Agreement, no consent, approval, order or authorization of, or registration qualification, designation, declaration or filing with, any federal, state or local governmental authority on the part of 3Com is required in connection with the consummation of the transactions contemplated by this Agreement.


3.4 NONCONTRAVENTION. Except as set forth on SCHEDULE 3.4 of the 3Com Disclosure Schedule, the execution, delivery and performance by 3Com of each Transaction Agreement to which it is a party and the consummation of the transactions contemplated thereby do not and will not (i) violate the Certificate of Incorporation or Bylaws of 3Com, (ii) assuming compliance with the governmental matters referred to in Section 3.3, violate any applicable law, rule, regulation, judgment, injunction, order or decree, (iii) assuming the obtaining of all Required Consents, to 3Com's Knowledge, constitute a default under, or give rise to any right of termination, cancellation or acceleration of any right or obligation of 3Com or to a loss of any benefit to which 3Com is entitled under any provision of any agre ...