10-KT

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-K

o	ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
þ	TRANSITION REPORTING PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from July 1, 2009 to December 31, 2009

Commission File Number: 0-20784

TRIDENT MICROSYSTEMS, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	77-0156584
(State or other jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification Number)
3408 Garrett Drive, Santa Clara, California (Address of principal executive offices)	95054-2803 (Zip Code)

(408) 764-8808

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock, $0.001 par value	NASDAQ Global Select Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes o     No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes o     No þ

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ     No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes o     No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer þ Non-accelerated filer o
(Do not check if a smaller reporting company) Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o     No þ

As of June 30, 2009, the aggregate market value of shares of registrant’s Common Stock held by non-affiliates of registrant was approximately $83,596,243 (based on the closing sale price of the registrant’s common stock on that date). Shares of registrant’s common stock held by the registrant’s executive officers and directors and by each entity that owns 5% or more of registrant’s outstanding common stock have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

At February 28, 2010, the number of shares of the Registrant’s common stock outstanding was 175,152,987.

DOCUMENTS INCORPORATED BY REFERENCE

Definitive Proxy Statement for the Company’s 2010 Annual Meeting of Stockholders — Part III of this Form 10-K.

TRIDENT MICROSYSTEMS, INC.

TABLE OF CONTENTS

		Page
PART I
Item 1.	Business		3
Item 1A.	Risk Factors		12
Item 1B	Unresolved Staff Comments		26
Item 2.	Properties		26
Item 3.	Legal Proceedings		27
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		29
Item 6.	Selected Financial Data		31
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		31
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		56
Item 8.	Financial Statements and Supplementary Data		58
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		100
Item 9A.	Controls and Procedures		100
Item 9B	Other Information		100
PART III
Item 10.	Directors, Executive Officers and Corporate Governance		102
Item 11.	Executive Compensation		102
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		102
Item 13.	Certain Relationships and Related Transactions, and Director Independence		103
Item 14.	Principal Accounting Fees and Services		103
PART IV
Item 15.	Exhibits, Financial Statement Schedules		103
Signatures			107
Power of Attorney			107
EX-10.39
EX-10.42
EX-10.43
EX-10.44
EX-10.45
EX-10.46
EX-10.47
EX-21.1
EX-23.1
EX-31.1
EX-31.2
EX-32.1
EX-32.2

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FORWARD-LOOKING STATEMENTS

This Report on Form 10-K contains “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995 which provides a “safe harbor” for statements about future events, products and future financial performance that are based on the beliefs of, estimates made by and information currently available to the management of Trident Microsystems, Inc. (“we,” “our,” “Trident” or “the Company”). The outcome of the events described in these forward-looking statements is subject to risks and uncertainties. Actual results and the outcome or timing of certain events may differ significantly from those projected in these forward-looking statements due to the factors listed under “Risk Factors,” and from time to time in our other filings with the Securities and Exchange Commission, or SEC. For this purpose, statements concerning industry or market segment outlook; market acceptance of or transition to new products; revenues, earnings growth, other financial results and any statements using the terms “believe,” “expect,” “expectation,” “anticipate,” “can,” “should,” “would,” “could,” “estimate,” “appear,” “based on,” “may,” “intended,” “potential,” “are emerging” and “possible” or similar statements are forward-looking statements that involve risks and uncertainties that could cause our actual results and the outcome and timing of certain events to differ materially from those projected or management’s current expectations. By making forward-looking statements, we have not assumed any obligation to, and you should not expect us to, update or revise those statements because of new information, future events or otherwise, except as required by law.

PART I

ITEM 1.   BUSINESS

Change in Fiscal Year End

On November 16, 2009 the Board of Directors approved a change in the fiscal year end from June 30, to December 31. The change became effective at the end of the quarter ended December 31, 2009. All references to “years”, unless otherwise noted, refer to the twelve-month fiscal year, which prior to July 1, 2009, ended on June 30, and beginning with December 31, 2009, ends on December 31, of each year.

Overview

Trident Microsystems, Inc. (including our subsidiaries, referred to collectively in this Report as “Trident,” “we,” “our” and “us”) is a provider of high-performance multimedia semiconductor solutions for the digital home entertainment market. We design, develop and market integrated circuits, or ICs, and related software for processing, displaying and transmitting high quality audio, graphics and images in home consumer electronics applications such as digital TVs (DTV), PC and analog TVs, and set-top boxes. Our product line includes system-on-a-chip, or SoC, semiconductors that provide completely integrated solutions for processing and optimizing video, audio and computer graphic signals to produce high-quality and realistic images and sound. Our products also include frame rate converter, or FRC, demodulator or DRX and audio decoder products, DOCSIS^R modems, interface devices and media processors. Trident’s customers include many of the world’s leading original equipment manufacturers, or OEMs, of consumer electronics, computer display and set-top box products. Our goal is to become a leading provider for the “connected home,” with innovative semiconductor solutions that make it possible for consumers to access their entertainment and content (music, pictures, internet, data) anywhere and at anytime throughout the home.

Trident was incorporated in California in 1987 and reincorporated in Delaware in 1992. Our principal executive offices are located at 3408 Garrett Drive, Santa Clara, California 95054-2803, and our telephone number at that location is 408.764.8888. Our internet address is www.tridentmicro.com. The inclusion of our website address in this Report does not include or incorporate by reference into this Report any information on our website. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, amendments to those reports and other SEC filings are available free of charge through our website as soon as reasonably practicable after such reports are electronically filed with, or furnished to, the SEC.

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Business Structure

At June 2003, when we announced a restructuring of our business to divest our legacy graphics business, we focused our business primarily in the high definition television, or HDTV, market and related areas. In a separate transaction completed in June 2003, we merged our digital media segment with Trident Technologies, Inc., or TTI, a Taiwanese company, to strengthen and extend our DTV business. TTI, which was liquidated in September 2006, had previously operated primarily as a Taiwan-based semiconductor design house, developing video processing technologies useful for digital media applications. Starting September 1, 2006, we conducted business primarily through a Cayman Islands subsidiary, Trident Microsystems (Far East) Ltd., or TMFE. Research and development services relating to existing projects and certain new projects have been conducted principally by Trident Microsystems, Inc. and our subsidiaries, Trident Multimedia Technologies (Shanghai) Co. Ltd., or TMT, and Trident Microsystems (Beijing) Co., Ltd., or TMBJ. TMBJ was previously a privately held company known as Beijing Tiside Electronics Design Co., Ltd., or Tiside, which we acquired in March 2008 and subsequently renamed TMBJ. Operations, field application engineering support and certain sales activities have been conducted principally through our Taiwanese subsidiaries, Trident Microelectronics Co. Ltd., or TML, and Trident Microsystems (Taiwan) Ltd., or TMTW, and other affiliates. On May 14, 2009, we completed the acquisition of selected assets of certain product lines from the Consumer Division of Micronas Semiconductor Holding AG, or Micronas, a Swiss corporation. In May 2009, in connection with this acquisition, we established three new subsidiaries in Europe: Trident Microsystems (Europe) GmbH, or TMEU, Trident Microsystems Nederland B.V., or TMNM, and Trident Microsystems Holding B.V., or TMH. The purpose of these entities is primarily to provide sales liaison, marketing and engineering services in Europe. TMEU is located in Munich, Germany and TMNM and TMH are located in Nijmegen, The Netherlands. On February 8, 2010 we acquired selected assets and liabilities of the television systems and set-top box business lines of NXP B.V., a Dutch besloten vennootschap, or NXP. As a result of this acquisition, we now have subsidiaries in three new countries, the United Kingdom, Israel and India. The primary purpose of these subsidiaries is to provide sales liaison, marketing and engineering services to us. See Note 16, “Subsequent Events,” of the Notes to Consolidated Financial Statements.

In the fiscal period ended June 30, 2009, we established a new subsidiary in South Korea, Trident Microsystems Korea Limited, or TMK, primarily to provide sales liaison and marketing services in South Korea and a new subsidiary in Hong Kong, Trident Microsystems Hong Kong Ltd., or TMHK, to handle sales and inventory distribution for the entire Company. Trident Multimedia Systems, Inc., or TMS, was inactive at June 30, 2009.

Business Combination

On May 14, 2009, we completed the acquisition of selected assets of the FRC, DRX, and audio decoder product lines from the Consumer Division of Micronas Semiconductor Holding AG, or Micronas, a Swiss corporation. In May 2009, in connection with this acquisition, we established three new subsidiaries in Europe: Trident Microsystems (Europe) GmbH, or TMEU, Trident Microsystems Nederland B.V., or TMNM, and Trident Microsystems Holding B.V., or TMH. The purpose of these entities is primarily to provide sales liaison, marketing and engineering services in Europe. TMEU is located in Munich, Germany and TMNM and TMH are located in Nijmegen, The Netherlands.

On October 4, 2009, Trident and TMFE entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with NXP B.V., a Dutch besloten vennootschap, or NXP, providing for the acquisition of selected assets and liabilities of NXP’s television systems and set-top box business lines (the “Purchase”), through a pre-closing restructuring by NXP and subsequent transactions at closing (the “NXP Transaction”). We completed the NXP Transaction on February 8, 2010. Upon completion, we issued to NXP 104,204,348 newly issued shares of Trident common stock, equal to 60% of the total outstanding shares of Trident Common Stock (the “Shares”) after giving effect to the share issuance to NXP, in exchange for the contribution of selected assets and liabilities of the television systems and set-top box business lines from NXP (the “Business”) and cash proceeds in the amount of $45 million (the “Cash Payment”). See Note 16, “Subsequent Events,” of the Notes to Consolidated Financial Statements.

We operate in one reportable segment: digital media solutions. During the six months ended December 31, 2009, the digital media solutions segment accounted for all of our revenues, which totaled $63.0 million. During the

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fiscal years ended June 30, 2009, 2008, and 2007, the digital media solutions segment accounted for all of our revenues, which totaled $75.8 million, $257.9 million, and $270.8 million.

Industry Environment and Our Business Strategy

Digital Television:

A digital television, or DTV, receives digital content and processes it to display a picture which has far greater resolution and sharper, more clearly defined images than a television based on older analog technology. Standard definition televisions generally contain 480 lines with 720 pixels per line. High definition television, or (HDTV), sets contain 1280 to 1920 pixels per line and up to 1080 lines. The aspect ratio of standard definition sets is 4:3, compared to 16:9 for HDTV. The lines may be displayed using different techniques, often referred to as interlacing or alternatively progressive scan.

We have been investing in the DTV market for several years. During that time, the DTV market has continued to grow. We believe that this industry remains in a growth phase. The DTV market has continued to be driven by television picture quality, realism and connectivity in the home. We believe that consumers not only want a more visually-realistic television picture display, but also the ability to integrate their DTV, Internet and entertainment systems into one connected device that works seamlessly throughout the home.

To date, we continue to invest in developing strong relationships with top tier OEMs, in the TV area, such as Samsung, LG, Sony, Sharp, Philips, Vizio and others. We are also focused on developing strong relationships with other manufacturers in Europe and China. The TV original design manufacturers, or ODM, business has become an integrated, important part of the TV OEM business because many TV OEMs use ODMs in Taiwan and China. Accordingly, we believe that it is important to have strong relationships among customers as design and development resources. We have also been investing in integrating key technologies and intellectual property, or IP, into a single system on a chip, or SoC. We believe that the combination of critical DTV technologies and IP, our unique know-how in enhancing digital image quality, and our production experience with top-tier TV manufacturers, provides a strategic advantage for Trident in the DTV market.

Trident’s earlier market strategy relied on leveraging television display controller design wins to further supply digital decoding and other value-added portions of television systems to leading consumer electronics OEMs. Trident’s goal is to create an integrated video decoder and processor that achieves superior image quality and is attractive to the world’s leading television OEMs. Achievement of this goal will require both mixed signal semiconductor and television system knowledge as well as the ability to work with customers who are experts in these areas in an inventive learning process that involves multiple design cycles.

Successful execution of this strategy has required us to be an early mover with new technology and to achieve successful execution of complex SoC designs. We were an early developer of advanced video processing integrated with global DTV support, HDMI interfacing and advanced connectivity support.

Notably, we have developed products that include motion estimation and motion compensation technology, or MEMC, which helps to eliminate motion judder, which is most visible when a camera pans across a wide area. In addition, we have continued to focus on enhancing our highly integrated solution that adds Moving Picture Experts Group or MPEG, decoding to image processing in the form of our high definition digital television, or “HiDTV”^®, product lines. We have focused on increasing our capabilities in picture quality by implementing use of halo-free algorithms in our MEMC technology and products and developing internet software called TWIS (Trident Widget Internet Solution) to enable connected TV. TWIS allows a cost-effective Internet TV solution for OEMs and ODMs. We have achieved design wins with several ODM customers using our DTV platforms like the Pro-SA1.

Our acquisition of the FRC, DRX and audio decoder product lines from Micronas not only provided us with discrete products and an additional revenue stream, but it also gave us critical intellectual property necessary to further improve the portfolio of Trident’s SoC and discrete product offerings. The acquisition also allowed us to improve the quality of our legacy audio intellectual property, as well as providing new audio products. The DRX product line acquired from Micronas includes DVB-T, ATSC and DTMB. Together with our regionalized software stacks, these products enable customers to implement a worldwide TV solution with a short development cycle.

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Our acquisition of the televisions systems and set-top box business lines from NXP has also provided us with an additional revenue stream and critical intellectual property necessary to further improve the portfolio of Trident’s product offerings. See Note 16, “Subsequent Events,” to the Notes to Consolidated Financial Statements.

Set-top Box:

The capability to receive and process DTV signals can be contained in a set-top box, which then drives a television that is capable of displaying digital content. Alternatively, this functionality can be integrated into a DTV that does not require a set-top box. Digital content is broadcasted via satellite, cable networks or over the air (terrestrial broadcast) in multiple regions throughout the world.

Today’s set-top box market is characterized by advanced video services that drive new capabilities such as 3DTV, 3D graphics user interfaces, personalized multi-screen services, rich navigation and improved multimedia and Internet TV experiences. Service providers are competing to deliver these solutions at the highest quality level, the lowest cost and with the highest security protection in order to win new and retain existing subscribers for pay-TV services today. At the same time, this market is also experiencing a rapid transition towards a connected home where semiconductor solutions are making it possible for consumers to access their entertainment and content anywhere and at anytime throughout the home.

Through our acquisition of NXP Semiconductor’s television and set-top box lines, we are actively participating in this market. Our set-top box products include SoCs and discrete components for worldwide satellite, terrestrial, cable and IPTV networks. We plan to include in our line of set-top box products, a fully integrated 45nm set-top box SoC platform, providing an optimized system that reduces the manufacturer bill-of-materials costs and power consumption, enabling an improved home entertainment experience. Complete reference designs that help manufacturers reduce cost and speed time-to-market are available, and can be bundled with a range of operating systems, middleware, drivers and development tools.

By integrating NXP’s set-top box and digital television business lines with our legacy products, we have enhanced our ability to deliver the size and economies of scale necessary to be successful in the digital home entertainment market, with the broad product portfolio, IP expertise and operational infrastructure to support growth. Both the digital TV and set-top box markets share a significant amount of intellectual property. Through this acquisition, we believe that we can further accelerate innovation by leveraging an expanded IP portfolio, SoC design expertise, competitive cost structure and deep relationships throughout the TV and set-top box OEM customer base and ecosystem.

We expect to cooperate with NXP in the development of complementary end-to-end solutions in other selected high-growth technology areas, including NXP’s silicon tuner product lines. We will continue to be fabless and have access to the technology and manufacturing capacity from NXP’s manufacturing facilities, as well as the partner foundries and subcontractors of both companies.

We provide feature-rich, cost-effective, standards-based solutions for a broad range of digital video and audio applications.

Markets and Applications

In the six months ended December 31, 2009 and fiscal year ended June 30, 2009, we principally focused our efforts on design, development and marketing of our SoC products. Our digital media solutions products accounted for all of our total revenues for the six months ended December 31, 2009 and for each of our fiscal years ended June 30, 2009, 2008, and 2007. We plan to continue developing our next generation SoC and discrete products for the worldwide DTV market.

The extension of our product portfolio through the acquisition of the FRC, DRX and audio decoder product lines from Micronas allows us to address new markets and develop new technologies for existing markets. There is synergy between the SoC and discrete component business. It is possible that new technology, such as improved picture quality, higher frame rates and higher resolution will first be introduced in discrete products and later migrate as proven solutions into the main SoC for TV applications. A new discrete component is required when a new standard emerges. For example, in certain parts of the European Union market, (United Kingdom and Finland),

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the reception (demodulation) technology standard changed from DVB-T to DVB-T2, starting in 2010. The DRX products address the TV market either as part of a NIM (Network Interface Module) or on the main processor board. These DRX products are also used in PC TV and STB applications.

Our audio intellectual property acquired from Micronas supports the high quality requirements of TV manufacturers through integration of audio features into our SoC products. In addition, our new discrete audio products are suitable for home-audio markets. We are currently offering our discrete audio products for use in sound-projectors, surround sound, sound bars and home theater audio systems.

The DTV family’s high level of functional integration and video quality enables our customers to have flexibility and cost advantages in their advanced TV designs. The DTV video processor converts both standard and high-definition analog TV signals into a high-quality progressive-scan video signal suitable for today’s advanced digital televisions. The HiDTV^® family applies the same concept of functional integration and video quality excellence to standard-definition and high-definition digital broadcast signals. We expect that the transition to digital broadcasting will continue, and we believe our future success in large part depends on our ability to integrate new technologies and have products that support market volume opportunity on an ongoing basis.

We have plans to finalize our development of mainstream SoCs that have been designed using the 65 nanometer process. It provides significant benefits over the 90 nanometer and 130 nanometer processes by enabling lower power consumption, smaller size, higher yields and higher levels of integration. As a result of the NXP Transaction, we are currently adding the 45 nm lithographic node to our technology portfolio and we will be entering into production with highly differentiated SoCs addressing the higher and segment of the market.

Digital Television Products:

We have been developing products for digital media applications since 1999. The DTV market in particular has begun to emerge as a high volume market for these products. Our DTV products are designed to optimize and enhance video quality for various display devices, such as LCD TV and plasma display panel, or PDP TV.

HiDTV^®

The HiDTV^® Video Processor Family combines the features of advanced high-definition MPEG2 decoding, H.264 decoding, system processing and video processing to deliver exceptional video fidelity and system functionality. HiDTV^® SoC DTV processor designed especially for HDTV systems. It contains a 32-bit RISC microprocessor, a 2D graphic engine, an MPEG-2 MP@HL decoder, an optional Multi-Format Video Decoder, a programmable MPEG audio decoder which supports AC3, AAC, and MP3, and a transport stream demultiplexer which supports ATSC, DVB and ARIB standards. HiDTV integrates our industry-leading SVP family video processor with our DCRe engine to enhance all video signals.

FRC

Our family of frame rate converter technology products provide superior solutions for digital display picture quality removing disturbing film judder and eliminating motion blur as well as enhancing color and sharpness. It removes motion blur for standard and high-definition content by up-converting the picture frame rate to 100, 120, 200 or even 240Hz. It calculates and inserts additional picture frames based on motion vector estimation and compensation. This eliminates the unpleasant film judder which appears with film material displayed on a conventional 50Hz or 60Hz Flat Panel TV and provides a lively and vibrant viewing experience. They also support LED backlight dimming a new panel technology that is important for increasing contrast as well as reducing overall power consumption of the TV.

DRX

Our DTV demodulator family includes our latest solution for worldwide DTV transmission standard. It covers DVB-C (Europe and China), ATSC (North America and Korea) and DVB-T (Europe). The DRX-J (for North America) and DRX-K (for Europe) devices are a family of pin-to-pin compatible demodulators supporting the broadcast standards in Europe and North America. DRX are unique hybrid demodulators for analog and digital

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broadcast, both terrestrial and via cable. We continue to develop products for new standards like DVB-T2, ISDB and China Terrestrial.

Audio Decoder

The MAP-M / MSP-M IC families represent solutions comprised of all required building blocks to address high-quality home-audio and TV-audio applications. The MAP-M combines a powerful digital signal processing, or DSP, for decoding and post processing with digital interfaces such as S/PDIF, asynchronous I²S and Hi-resolution PWM. On-chip analog I/Os include line, phono, and microphone inputs as well as D/A converters for line and amplifier outputs. An integrated HP-amplifier completes the system. The MSP-M has the same building blocks as the MAP-M, but is additionally equipped with a demodulator/stereo decoder for all analog TV-audio standards including NIC AM and FM stereo radio. In addition to the available licensed technologies from BBE, Dolby or SRS and our own sophisticated meloD Audio Processing, MAP-M / MSP-M can be easily extended with customer specific algorithms avoiding the cost for an additional DSP.

Connected TV Solution

During fiscal year 2010, we expect to sample connected TV features in a select group of our products that will be designed to enable TV sets to accept digital media through a storage device, a home network, cable operators or the Internet. We are currently in the process of enhancing our current HiDTV software suite to enable TV connectivity using widget engines, digital living network alliance, or DLNA, certified devices, or digital rights management, or DRM^® engines.

As a result of our acquisition of NXP Semiconductor’s television and set-top box line on February 8, 2010, we plan to offer the following products:

Set-top Box (STB) Products

Trident’s set-top box line-up now features the world’s first fully integrated 45nm STB SoC platform, providing a family of solutions that deliver advanced performance, industry leading power management and support for on-line VOD services. We offer products targeted for the major markets within set-top box: Satellite, Cable & IPTV and Terrestrial STB as follows:

Satellite STB

Trident offers a full range of chip-set solutions for pay-TV operator and Free-to-air STBs including DVB-S/DVB-S2/8-PSK demodulators, highly integrated SoCs and PSTN modem interface ICs. The STB SoC portfolio covers a broad spectrum of customer needs from very low cost SD MPEG-2 SoCs to high performance HD H.264 DVR SoCs. Multiple generations of Trident SoCs have been deployed in leading operators networks worldwide and support the industry leading conditional access security systems and middleware platforms.

Cable & IPTV STB

Trident offers a full range of chip-set solutions for cable operator & IPTV STBs including DOCSIS modems and highly integrated SoCs. The STB SoC portfolio covers a broad spectrum of customer needs from very low cost SD MPEG-2 SoCs to high performance HD H.264 DVR SoCs. Multiple generations of Trident SoCs have been deployed in leading operator networks worldwide and support the industry leading conditional access security systems and middleware platforms.

Terrestrial STB

Trident offers a full range of chip-set solutions for Free-to-air & pay-TV STBs including DVB-T demodulators and highly integrated SoCs. The STB SoC portfolio covers a broad spectrum of customer needs from very low cost SD MPEG-2 SoCs to high performance HD H.264 DVR SoCs. Multiple generations of Trident SoCs have been deployed in terrestrial broadcast networks worldwide and support leading industry middleware platforms.

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Trident’s STB chip-set solutions are supported with complete system hardware reference designs and embedded system software.

Sales, Marketing and Distribution

We sell our products primarily to digital television and set-top box OEMs in South Korea, Japan, Europe and Asia Pacific, either directly or through supplier channels. We consider these OEMs to be our customers. Our products are sold through direct sales efforts, distributors and independent sales representatives. Historically, significant portions of our revenues have been generated by sales to a relatively small number of customers. All of our revenues to date have been denominated in U.S. dollars or in Euros. Sales to our largest customers have fluctuated significantly from period to period primarily due to the timing and number of design wins with each customer and will likely continue to fluctuate significantly in the future. Our DTV and STB products are marketed around the world.

Our future success depends in large part on the success of our sales to leading DTV and STB manufacturers. Accordingly, the focus of our sales and marketing efforts is to increase sales to the leading DTV and STB manufacturers and OEM channels. Competitive factors of particular importance to success in such markets include platform support, product performance and features, and the integration of functions on a single integrated circuit chip.

We service our customers primarily through our offices in the United States, Taiwan, China, Europe, South Korea and Japan. As digital media is rapidly developing in the United States, Europe, Japan, South Korea, China, and elsewhere, we expect that leadership in the digital media industry will also rapidly change. Our goal is to become a leading supplier to a broad range of manufacturers in this marketplace and to manufacturers for other markets as DTV and STB sales increase in those markets.

During the six months ended December 31, 2009 and for the fiscal years ended June 30, 2009, 2008 and 2007, nearly all of our revenues were generated through sales to customers located in Asia and Europe. A small number of customers have historically accounted for a majority of our revenues in any quarter. For the six months ended December 31, 2009, sales to top three customers represented approximately 54%, of our total revenues. For the fiscal years ended June 30, 2009, 2008, and 2007, sales to top three customers represented approximately 59%, 76%, and 66%, respectively, of our total revenues. Sales to any particular customer may fluctuate significantly from quarter to quarter and have in fact fluctuated significantly in the past. For additional segment and geographic information, see Note 14 “Segment and Geographic Information and Major Customers,” of the Notes to the Consolidated Financial Statements.

Competition

The global digital media market and related industries are highly competitive and characterized by rapid technological change. Our ability to compete depends primarily on our ability to commercialize our technology, continually improve our products and develop new products that meet constantly evolving customer requirements. We expect competition to continue to increase. We believe that the principal factors upon which competitors compete in our markets include, but are not limited to:

•  customer interface and support

•  time-to-market;

•  system cost;

•  product capabilities;

•  price;

•  product quality; and

•  intellectual property.

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We compete with a number of major domestic and international suppliers of integrated circuits and related applications in the digital media market. Our principal competitors are captive solutions from large TV OEMs as well as merchant solutions from Broadcom Corporation, MediaTek Inc., MStar Semiconductor, NEC Corporation, STMicroelectronics and Zoran Corporation. This competition has resulted and will continue to result in declining average selling prices for our products. In our target markets, we also may face competition from newly established competitors and suppliers of products based on new or emerging technologies. We also expect to encounter further consolidation in the market in which we compete.

Many of our current competitors have greater name recognition, larger customer bases and significantly greater financial, sales and marketing, manufacturing, distribution, technical and other resources than we do. Consequently, these competitors may be able to adapt more quickly to new or emerging technologies and changes in customer requirements or to devote greater resources to the promotion and sale of their products. In addition, competitors may develop technologies that more effectively address our target market with products that offer enhanced features, lower power requirements or lower costs. Increased competition could result in pricing pressures, decreased gross margins and loss of market share and may materially and adversely affect our business, financial condition and results of operations.

Research and Development

Developing products based on advanced technological concepts is essential to our ability to compete effectively in the digital media market. We maintain a team of product research and development and engineering staff responsible for product design and engineering. We have conducted substantially all of our product development in-house and, as of December 31, 2009 and June 30, 2009, 2008, and 2007, our staff of research and development personnel comprised 464, 517, 465 and 290 people, respectively. Research and development expenditures totaled approximately $33 million, $53 million, $53 million and $41 million in the six months ended December 31, 2009 and fiscal years ended June 30, 2009, 2008, and 2007, respectively.

We believe that the achievement of higher levels of SoC integration and the timely introduction of new products is essential to our growth. We have previously invested the largest component of our engineering resources in our Shanghai, China facility and have recently established our European research and development facilities in Munich and Freiburg, Germany and Nijmegen, The Netherlands following our acquisition of selected assets of Micronas consumer division product lines. We will continue to acquire or develop the necessary IPs which could put us on par with our competition while maintaining our leadership in picture quality. In addition to our facilities discussed above, we have design centers in Santa Clara and San Diego, California, Chicago, Illinois and Beijing, China.

Manufacturing

Wafer Fabrication

We have adopted a “fabless” manufacturing strategy whereby we contract-out our wafer fabricating needs to qualified contractors that we believe provide cost, technology or capacity advantages for specific products. As a result, we have generally been able to avoid the significant capital investment required for wafer fabrication facilities and to focus our resources on product design, quality assurance, marketing and customer support. Our subsidiary in Taiwan, TML, and other affiliates provide manufacturing operations for our digital media business. During the fiscal period ended December 31, 2009, United Microelectronics Corporation, or UMC, and Micronas provided all of our foundry requirements. As a result of our acquisition of NXP Semiconductor’s television and set-top box line on February 8, 2010, TSMC will also provide a portion of our foundry requirements.

Assembly and Test

We purchase product in wafer form from foundries and contract with third-party subcontractors and one related party to provide chip packaging and testing. Our wafer probe testing is conducted by our independent wafer probe test subcontractor, King Yuan Electronics Co. Ltd. in Taiwan. After the completion of the wafer probe tests, the dies are assembled into packages by our primary subcontractors, Siliconware Precision Industries Co., Ltd., in Taiwan and Micronas in Germany for testing. The availability of assembly and testing services from these

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subcontractors could be materially and adversely affected by the financial conditions of the subcontractors given the recent global economic environment. See “Risk Factors” under Item 1A of this Report for a more detailed discussion of the risks associated with our dependence on third party assembly and test subcontractors.

Quality Assurance

In order to manage the production and back-end operations, we have maintained personnel and equipment in our manufacturing and test development operations. Our goal is to increase the quality assurance of the products while reducing manufacturing cost. To ensure the integrity of our suppliers’ quality assurance procedures, we have developed and maintained test tools, detailed test procedures and test specifications for each product produced and we require the foundries and third-party contractors to follow those procedures and meet our specifications before shipping finished products. In general, we have experienced a relatively low amount of product returns from our customers; however, our future return experience may vary because our more advanced, more complex SoC products are more difficult to manufacture and test. In addition, some of our customers may subject our more advanced products to more rigid testing standards than have been applied to our prior products.

Backlog

Our sales are primarily made pursuant to standard purchase orders and not pursuant to long term agreements specifying future quantities or delivery dates. Also, we recognize product revenues on sales made to our distributor channel on a deferred revenue basis and this channel represents approximately 20% to 26% of our revenues. Backlog comprised of orders from distributors is not directly indicative of our near term revenues. Backlog is influenced by several factors including market demand, pricing and customer order patterns in reaction to product lead times. The semiconductor industry is characterized by short lead time orders and quick delivery schedules. The quantity of products purchased by our customers as well as shipment schedules are subject to revisions that reflect changes in both the customers’ requirements and in manufacturing availability. Backlog quantities and shipment schedules under outstanding purchase orders are frequently revised to reflect changes in customer needs, and agreements calling for the sale of specific quantities are either contractually subject to quantity revisions or, as a matter of industry practice, are sometimes not enforced. Therefore, a significant portion of our order backlog may be cancellable and has in fact been cancelled in the past due to changes in customer needs.

For these reasons, in light of industry practice and this experience, we do not believe that backlog as of any particular date is indicative of future results.

Seasonality

Our industry is largely focused on the consumer products market. Typically we experience seasonally slower sales in periods ending on March 31 and June 30 of each year. The impact of seasonality is not of a consistent magnitude year to year, but as a general rule it is directionally consistent.

Intellectual Property

Our success and future revenue growth depend, in part, on our ability to protect our intellectual property. We attempt to protect our trade secrets and other proprietary information primarily through agreements with customers and suppliers, proprietary information agreements with employees and consultants and other security measures. Although we intend to protect our rights vigorously, there can be no assurance that these measures will be successful. As of December 31, 2009, we had over 76 U.S. patents and 132 patents in foreign jurisdictions, and over 320 patent applications pending in different countries, including patent and patent applications acquired in connection with the recent acquisition of assets and intellectual property from Micronas. In addition, in connection with the NXP Transaction, we acquired approximately 1,600 additional patent assets including granted patents and in-process patent applications in the U.S. and foreign jurisdictions. The patents and applications cover various technologies, such as motion estimation/motion compensation, video decoding, demodulators and conditional access security, as well as advanced 45nm SoC technology. However, there can be no assurance that third parties will not independently develop similar or competing technology or design around any patents that may be issued to us.

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The semiconductor industry is characterized by frequent litigation regarding patent and other intellectual property rights. From time to time, we have received notices claiming that we or our customers have infringed third-party patents or other intellectual property rights. To date, licenses generally have been available to us where third-party technology was necessary or useful for the development or production of our products. There can be no assurance that third parties will not assert additional claims against us with respect to existing or future products or that licenses will be available on reasonable terms, or at all, with respect to any third-party technology. Any litigation to determine the validity of any third-party claims could result in significant expense to us and divert the efforts of our technical and management personnel, whether or not such litigation is determined in our favor. In the event of an adverse result in any such litigation, we could be required to expend significant resources to develop non-infringing technology or to obtain licenses to the technology that is the subject of the litigation. There can be no assurance that we will be successful in such development or that any such licenses would be available. Patent disputes in the semiconductor industry have often been settled through cross licensing arrangements. We may not be able to settle any alleged patent infringement claim through a cross-licensing arrangement. In the event any third party made a valid claim against us, or our customers, and a license was not made available to us on commercially reasonable terms, we would be adversely affected. In addition, the laws of certain countries in which our products have been or may be developed, manufactured or sold, including China, Taiwan and South Korea, may not protect our products and intellectual property rights to the same extent as the laws of the United States of America.

We may in the future initiate claims or proceedings against third parties for infringement of our proprietary rights to determine the scope and validity of our proprietary rights. Any such claims could be time-consuming, result in costly litigation and diversion of technical and management personnel or require us to develop non-infringing technology or enter into royalty or licensing agreements. Such royalty or licensing agreements, if required, may not be available on acceptable terms, if at all. In the event of a successful claim of infringement and our failure or inability to develop non-infringing technology or license the proprietary rights on a timely basis, our business, operating results and financial condition could be materially adversely affected.

Employees

As of December 31, 2009, we had 640 full-time employees, including 461 individuals engaged in research and development, 74 engaged in finance, legal, and general administration, 56 engaged in sales and marketing, and 49 engaged in manufacturing operations. As of the closing of the NXP Transaction on February 8, 2010, we had 1,626 global employees. Our future success will depend in great part on our ability to continue to attract, retain and motivate highly qualified technical, marketing, engineering and management personnel, and to successfully integrate the new employees who joined us in connection with the NXP Transaction. Outside of Europe, where certain of our employees are represented by employee works councils, our labor relations with employees are generally not subject to collective bargaining agreements. We have never experienced a work stoppage and we believe that our employee relations are good.

ITEM 1A.   RISK FACTORS

Set forth below and elsewhere in this Transition Report on Form 10-K are descriptions of the risks and uncertainties that could cause our actual results to differ materially from the results contemplated by the forward-looking statements contained herein. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we presently deem less significant may also impair our business operations. If any of the following risks actually occur, our business, operating results, and financial condition and/or liquidity could be materially adversely affected.

We may fail to realize some or all of the anticipated benefits of our acquisition of the television systems and set-top box business lines from NXP, or the frame rate converter, demodulator and audio decoder product lines from Micronas, which may adversely affect the value of our common stock.

On February 8, 2010, we completed the acquisition of the television systems and set-top box business lines from NXP (the “NXP Transaction”), and on May 14, 2009, we completed the purchase of selected assets of the frame rate converter, demodulator and audio decoder product lines of Micronas (the “Micronas Transaction”). We continue to integrate these assets, and the operations acquired with these assets, into our existing operations. The

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integration has required, and will continue to require significant efforts, including the coordination of future product development and sales and marketing efforts. These integration efforts continue to require resources and management’s time and efforts. The success of each of these acquisitions will depend, in part, on our ability to realize the anticipated benefits and cost savings from combining the acquired product lines with our legacy operations. However, to realize these anticipated benefits and cost savings, we must successfully combine the acquired business lines with our legacy operations and integrate our respective operations, technologies and personnel. If we are not able to achieve these objectives within the anticipated time frame, or at all, the anticipated benefits and cost savings of the acquisitions may not be realized fully or at all or may take longer to realize than expected and the value of our common stock may be adversely affected. It is possible that the integration process could result in the loss of key employees and other senior management, result in the disruption of our business or adversely affect our ability to maintain relationships with customers, suppliers, distributors and other third parties, or to otherwise achieve the anticipated benefits of either acquisition.

Specifically, risks in integrating the operations of the business lines acquired from NXP and Micronas into our operations in order to realize the anticipated benefits of each acquisition include, among other things:

•  failure to effectively coordinate sales and marketing efforts to communicate our product capabilities and product roadmap of our combined business lines;

•  failure to compete effectively against companies already serving the broader market opportunities that are now expected to be available to us and our expanded product offerings;

•  failure to successfully integrate and harmonize financial reporting and information technology systems required to support our larger operations following completion of each acquisition;

•  retention of customers and strategic partners of products that we have acquired with each acquisition;

•  retention of key Trident employees integration of key employees acquired from NXP or Micronas;

•  coordination of research and development activities to enhance the introduction of new products and technologies utilizing technology acquired from NXP or Micronas, especially in light of rapidly evolving markets for those products and technologies;

•  effective coordination of the diversion of management’s attention from business matters to integration issues;

•  effective combination of the business lines acquired from NXP and Micronas into our legacy product offerings, including the acquired technology and intellectual property rights effectively and quickly;

•  the transition to a common information technology environment at all facilities acquired in each acquisition;

•  combination of our business culture with the business culture previously operated by NXP or Micronas;

•  effective anticipation of the market needs and achievement of market acceptance of our products and services utilizing the technology acquired in each acquisition;

•  compliance with local laws as we take steps to integrate and rationalize operations in diverse geographic locations; and

•  difficulties in creating uniform standards, controls (including internal control over financial reporting), procedures, policies and information systems.

Integration efforts will also divert management attention and resources. An inability to realize the anticipated benefits of the acquisitions, as well as any delays encountered in the integration process, could have an adverse effect on our business and results of operations.

In addition, as we complete the integration process, we may incur additional and unforeseen expenses, and the anticipated benefits of each acquisition may not be realized. Actual cost synergies may be lower than we expect and may take longer to achieve than anticipated. If we are not able to adequately address these challenges, we may be unable to realize the anticipated benefits of either the NXP Transaction or the Micronas Transaction.

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NXP owns approximately 60% of our outstanding shares of common stock, which could cause NXP to be able to exercise significant influence over the outcome of various corporate matters and could discourage third parties from proposing transactions resulting in a change in our control.

As a result of the NXP Transaction, NXP owns approximately 60% of our issued and outstanding shares of common stock and has elected four of the nine members of our board of directors. Although the Stockholders Agreement between us and NXP imposes limits on NXP’s ability to take specified actions related to the acquisition of additional shares of our common stock and the voting of its shares of our common stock, among other restrictions, NXP is still able to exert significant influence over the outcome of a range of corporate matters, including significant corporate transactions requiring a stockholder vote, such as a merger or a sale of our company or our assets. NXP’s ownership could affect the liquidity in the market for our common stock.

Furthermore, the ownership position of NXP could discourage a third party from proposing a change of control or other strategic transaction concerning Trident. As a result, our common stock could trade at prices that do not reflect a “control premium” to the same extent as do the stocks of similarly situated companies that do not have a stockholder with an ownership interest as large as NXP’s ownership interest.

In addition, we issued 7 million shares of our common stock to Micronas and warrants to purchase an additional 3 million shares of our common stock to Micronas. The issuance of these shares to Micronas caused a reduction in the relative percentage interests of Trident stockholders in earnings, voting power, liquidation value and book and market value, and a further reduction will occur if Micronas exercises the warrants in the future.

Sales by NXP of the shares of our common stock acquired in the Transaction following the two year lock up period could cause our stock price to decrease.

The sale of shares of common stock that NXP received in the NXP Transaction are restricted and not freely tradeable, but NXP may begin to sell these shares under certain circumstances, including pursuant to a registered underwritten public offering under the Securities Act of 1933, as amended, or in accordance with Rule 144 under the Securities Act, following February 8, 2012. We have entered into a Stockholders Agreement with NXP, which includes registration rights and which gives NXP the right to require us to register all or a portion of its shares of our common stock at any time following this two year period, subject to certain limitations. The sale of a substantial number of shares of our common stock by NXP within a short period of time could cause our stock price to decrease, and make it more difficult for us to raise funds through future offerings of common stock.

We have incurred significant transaction and transaction-related costs in connection with the NXP Transaction and the Micronas Transaction.

We have incurred a number of non-recurring costs associated with the NXP Transaction and the Micronas Transaction, and expect to continue to incur costs of integrating the operations of the acquired business lines with our existing business. The substantial majority of non-recurring expenses resulting from these two transactions have been and are expected to continue to be comprised of transaction costs related to each transaction, facilities and systems consolidation costs and employment-related costs, including severance and other employee separation costs. Additional unanticipated costs may be incurred as we continue to integrate the acquired businesses. Although we expect that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the businesses, should allow us to offset incremental transaction-related costs over time, this net benefit may not be achieved in the near term, or at all. If the benefits of each transaction do not exceed the costs such transaction, our financial results may be adversely affected.

We must continue to retain, motivate and recruit executives and other key employees following integration of the NXP Transaction and the Micronas Transaction, and failure to do so could negatively affect our operations.

We must retain key employees acquired from Micronas and NXP. Experienced executives are in high demand and competition for their talents can be intense. To be successful, we must also retain and motivate our existing executives and other key employees. Our employees may experience uncertainty about their future role with us until, or even after, strategies with regard to our operations and product development following completion of each

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transaction is announced and executed. These potential distractions may adversely affect our ability to attract, motivate and retain executives and other key employees and keep them focused on applicable strategies and goals. A failure to retain and motivate executives and other key employees during the period after the completion of the Transactions could have a material and adverse impact on our business.

Our success depends to a significant degree upon the continued contributions of the principal members of each of our technical sales, marketing and engineering teams, many of whom perform important management functions and would be difficult to replace. During the past year, we hired several members of our current executive management team. We have reorganized our sales, marketing and engineering teams and continue to make changes. We depend upon the continued services of key management personnel at our overseas subsidiaries, especially in China, Taiwan and Europe. Our officers and key employees are not bound by employment agreements for any specific term, and may terminate their employment at any time. In order to continue to expand our product offerings both in the U.S. and abroad, we must hire and retain a number of research and development personnel. Hiring technical sales personnel in our industry is very competitive due to the limited number of people available with the necessary technical skills and understanding of our technologies. Our ability to continue to attract and retain highly skilled personnel will be a critical factor in determining whether we will be successful in the future. Competition for highly skilled personnel continues to be increasingly intense, particularly in the areas where we principally operate, specifically in China, Taiwan, Northern California and Texas. If we are not successful in attracting, assimilating or retaining qualified personnel to fulfill our current or future needs, our business may be harmed.

The operation of our business could be adversely affected by the transition of key personnel as we rebuild our executive leadership team and make additional organizational changes.

In addition to the uncertainties created among personnel as a result of the acquisitions, many of our senior management are relatively new, and our senior management has been reorganized following the NXP Transaction, including the appointment of a former NXP executive to the position of President. We have also reorganized our Board of Directors, and now have nine members of the Board of Directors, four of whom joined following completion of the NXP Transaction, and two of our former board members resigned as a result of the NXP Transaction. It is important to our success that our Chief Executive Officer continues building an effective management team and global organization. It may take some time for each of the new members of our management team to become fully integrated into our business. Our failure to manage these transitions, or to find and retain experienced management personnel, could adversely affect our ability to compete effectively and could adversely affect our operating results.

As a result of the NXP Transaction and the Micronas Transaction, we are a larger and more geographically diverse organization, and if we are unable to manage this larger organization efficiently, our operating results will suffer.

As a result of the acquisitions of assets from NXP and Micronas, we have a larger number of employees in widely dispersed operations in the United States, Europe, Asia Pacific, and other locations, which have increased the difficulty of managing our operations. Previously, we have not had a significant number of employees in Europe, particularly Germany. As a result, we now face challenges inherent in efficiently managing an increased number of employees over large geographic distances, including the need to implement appropriate systems, policies, benefits and compliance programs. The inability to manage successfully this geographically more diverse and substantially larger organization could have a material adverse effect on our operating results and, as a result, on the market price of our common stock.

Product supply and demand in the semiconductor industry is subject to cyclical variations.

The semiconductor industry is subject to cyclical variations in product supply and demand. Downturns in the industry often occur in connection with, or in anticipation of, maturing product cycles for both semiconductor companies and their customers and declines in general economic conditions. These downturns have been characterized by abrupt fluctuations in product demand and production capacity and accelerated decline of average selling prices. The emergence of a number of negative economic factors, including heightened fears of a prolonged recession, could lead to such a downturn. We cannot predict whether we will achieve timely, cost-effective access to

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that capacity when needed, or what capacity patterns may emerge in the future. A downturn in the semiconductor industry could harm our sales and revenues if demand for our products drops, or cause our gross margins to suffer if average selling prices decline.

Our reliance upon a very small number of foundries could make it difficult to maintain product flow and affect our sales.

If the demand for our products grows or decreases by material amounts, we will need to adjust the levels of our material purchases, contract manufacturing capacity and internal test and quality functions. Any disruptions in product flow could limit our ability to meet orders, impact our revenue and our ability to consummate sales, adversely affect our competitive position and reputation and result in additional costs or cancellation of orders.

We do not own or operate fabrication facilities and do not manufacture our products internally. Prior to the NXP Transaction, we have relied principally upon one independent foundry to manufacture substantially all of our SoC products and non-audio discrete products in wafer form and other contract manufacturers for assembly and testing of our products and we rely upon Micronas for the manufacture of our discrete audio products on a turnkey basis pursuant to a services agreement. Following the NXP Transaction, we expect to manufacture some of our products in wafer form at a second independent foundry. Generally, we place orders by purchase order, and the foundries are not obligated to manufacture our products on a long-term fixed-price basis, so they are not obligated to supply us with products for any specific period of time, in any specific quantity or at any specific price, except as may be provided in a particular purchase order. Our foundry and contract manufacturers could re-allocate capacity to other customers, even during periods of high demand for our products. We have limited control over delivery schedules, quality assurance, manufacturing yields, potential errors in manufacturing and production costs. We could experience an interruption in our access to certain process technologies necessary for the manufacture of our products. From time to time, there are manufacturing capacity shortages in the semiconductor industry and current global economic conditions make it more likely those disruptions in supply chain cycles could occur. If we encounter shortages and delays in obtaining components, our ability to meet customer orders would be materially adversely affected. In addition, during periods of increased demand, putting pressure on the foundries to meet orders, we may have reduced control over pricing and timely delivery of components, and if the foundries increase the cost of components or subassemblies, our margins will be adversely affected, and we may not have alternative sources of supply to manufacture such components.

Constraints or delays in the supply of our products, whether because of capacity constraints, unexpected disruptions at our independent foundries, at Micronas or at our assembly or testing houses, delays in additional production at existing foundries or in obtaining additional production from existing or new foundries, shortages of raw materials, or other reasons, could result in the loss of customers and other material adverse effects on our operating results, including effects that may result should we be forced to purchase products from higher cost foundries or pay expediting charges to obtain additional supplies. In addition, to the extent we elect to use multiple sources for certain products, our customers may be required to qualify multiple sources, which could adversely affect their desire to design-in our products and reduce our revenues.

We do not have long-term commitments from our customers, and plan purchases based upon our estimates of customer demand, which may require us to contract for the manufacturing of our products based on inaccurate estimates.

Our sales are made on the basis of purchase orders rather than long-term purchase commitments. Our customers may cancel or defer purchases at any time. This requires us to forecast demand based upon assumptions that may not be correct. If we or our customers overestimate demand, we may create inventory that we may not be able to sell or use, resulting in excess inventory, which could become obsolete or negatively affect our operating results. Conversely, if we or our customers underestimate demand, or if sufficient manufacturing capacity is not available, we may lose revenue opportunities, damage customer relationships and we may not achieve expected revenue.

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We depend on a small number of large customers for a significant portion of our sales. The loss of, a significant reduction in or cancellation of sales to any key customer would significantly reduce our revenues.

We are and will continue to be dependent on a limited number of distributors and customers for a substantial amount of our revenue. For the six months ended December 31, 2009, approximately 54% of our revenues were derived from sales to three major customers, Samsung, Sharp and Philips. In Philips’ case, our sales were principally made to three contract manufacturers that supply Philips. Our revenues to date have been denominated in U.S. dollars and Euros. Sales to our largest customers have fluctuated significantly from period to period primarily due to the timing and number of design wins with each customer and will likely continue to fluctuate significantly in the future.

Accordingly, a reduction in purchases of our products by any of these customers could cause our revenues to decline during the period and have a material adverse impact on our financial results. We may be unable to replace any such lost revenues by sales to any new customers or increased sales to existing customers. Our operating results in the foreseeable future will continue to depend on sales to a relatively small number of customers, as well as the ability of these customers to sell products that incorporate our products. In the future, these customers may decide not to purchase our products at all, purchase fewer products than they did in the past, or alter their purchasing patterns in some other way, particularly because:

•  substantially all of our sales are made on a purchase order basis, which permits our customers to cancel, change or delay product purchase commitments with little or no notice to us and without penalty;

•  our customers may purchase integrated circuits from our competitors;

•  our customers may develop and manufacture their own solutions; or

•  our customers may discontinue sales or lose market share in the markets for which they purchase our products.

If we engage in further cost-cutting or workforce reductions, we may be unable to successfully implement new products or enhancements or upgrades to our products.

We expect to continue to introduce new and enhanced products, and our future financial performance will depend on customer acceptance of our new products and any upgrades or enhancements that we may make to our products. However, if our efforts to streamline operations and reduce costs and our workforce following our recent acquisitions are insufficient to bring our structure in line with current and projected near-term demand for our products, we may be forced to make additional workforce reductions or implement further cost saving initiatives. These actions could impact our research and development and engineering activities, which may slow our development of new or enhanced products. We may be unable to successfully introduce new or enhanced products, and may not succeed in obtaining or maintaining customer satisfaction, which could negatively impact our reputation, future sales of our products and our future revenues.

A decline in revenues may have a disproportionate impact on operating results and require further reductions in our operating expense levels.

Because expense levels are relatively fixed in the near term for a given quarter and are based in part on expectations of our future revenues, any decline in our revenues to a level that is below our expectations would have a disproportionately adverse impact on our operating results for that quarter. If revenues further decline, we may be required to incur additional material restructuring charges in connection with efforts to contain and reduce costs.

The impact of changes in global economic conditions on our current and potential customers may adversely affect our revenues and results of operations.

Our operating results have been adversely affected over the past quarters by reduced levels of consumer spending and by the overall weak economic conditions affecting our current and potential customers. The economic environment that we faced in fiscal year 2009 was uncertain, and that uncertainty continued through the

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transition period ended December 31, 2009 and is expected to continue into the year ending December 31, 2010. If our end customers continue to refrain from making purchases of products from us until general economic conditions improve, this could continue to adversely affect our business and operating results for additional quarters during the year ending December 31, 2010.

As a result of our investigation into our historical stock option granting practices and the restatement of our previously filed financial statements, we are subject to civil litigation claims and regulatory investigations that could have a material adverse effect on our business, customer relationships, results of operations and financial condition.

As previously described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in Note 6 of Notes to Consolidated Financial Statements, included in Part II, Item 8 of our Annual Report on Form 10-K for the fiscal year ended June 30, 2006 filed on August 7, 2007, we conducted an investigation into our historical stock option practices and related accounting. Based upon the findings of the investigation, we restated our financial statements for each of the years ended June 30, 1993 through June 30, 2005, and restated our financial statements for the interim first three quarters of fiscal year ended June 30, 2006 as well.

Our past stock option granting practices and the restatement of our prior financial statements have exposed and may continue to expose us to greater risks associated with litigation, regulatory proceedings and government inquiries and enforcement actions, as described in Part II, Item 3, “Legal Proceedings.” Any of these actions could result in civil and/or criminal actions seeking, among other things, injunctions against us and the payment of significant fines and penalties by us. In addition, the restatements of our previous financial results and the ongoing regulatory proceedings and government inquiries could impact our relationships with customers and our ability to generate revenues.

We face risks related to SEC, DOJ, and other investigations into our historical stock option grant practices and related accounting, which could require significant management time and attention, and could require us to pay fines or other penalties.

We are subject to a formal investigation from the SEC in connection with our investigation into our stock option grant practices and related issues and have been cooperating and will continue to cooperate with any inquiries from the SEC. The DOJ commenced an investigation relating to the same issues, but we believe that the DOJ has concluded its investigation without taking any action against us. We are unable to predict what consequences, if any, that an investigation by any regulatory agency may have on us. Any regulatory investigation could result in substantial legal and accounting expenses, divert management’s attention from other business concerns and harm our business. Any action commenced against us by a regulatory agency could result in orders against us, the imposition of significant penalties and/or fines against us, and/or the imposition of civil sanctions against us or certain of our former officers, directors and/or employees. Any regulatory action could result in the filing of additional restatements of our prior financial statements or require that we take other actions. If we are subject to an adverse finding resulting from the SEC investigation, we could be required to pay damages or penalties or have other remedies imposed upon us. The period of time necessary to resolve the investigation by the SEC is uncertain, and this matter could require significant management and financial resources which could otherwise be devoted to the operation of our business.

We have been named as a party to derivative action lawsuits, and we may be named in additional litigation, all of which will require significant management time and attention and result in significant legal expenses and may result in an unfavorable outcome which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Trident has been named as a nominal defendant in several shareholder derivative lawsuits concerning the granting of stock options. The federal court cases have been consolidated as In re Trident Microsystems Inc. Derivative Litigation, Master File No. C-06-3440-JF. A case also has been filed in State court, Limke v. Lin et al., No. 1:07-CV-080390. Plaintiffs in all cases allege that certain of our current or former officers and directors caused us to grant options at less than fair market value, contrary to our public statements (including our financial statements), and that this represented a breach of their fiduciary duties to us, and as a result those officers and

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directors are liable to us. No particular amount of damages has been alleged, and by the nature of the lawsuit no damages will be alleged against us. Our Board of Directors has appointed a Special Litigation Committee, or SLC, composed solely of independent directors, to review and manage any claims that we may have relating to the stock option granting practices and related issues investigated by the SLC. The scope of the SLC’s authority includes the claims asserted in the derivative actions. In federal court, Trident has moved to stay the case pending the assessment by the SLC that was formed to consider nominal plaintiffs’ claims. In state court, we moved to stay the case in deference to the federal lawsuit, and the parties have agreed, with the court’s approval, to take that motion off the court’s calendar to await the assessment of the Special Litigation Committee. The Special Litigation Committee recommended settlements with certain of the defendants and the federal court has approved these settlements preliminarily, subject to a hearing seeking final court approval. We cannot predict whether these actions are likely to result in any material recovery by, or expense to, Trident. We expect to continue to incur legal fees in responding to these lawsuits, including expenses for the reimbursement of legal fees of present and former officers and directors under indemnification obligations. The expense of defending such litigation may be significant. The amount of time to resolve this and any additional lawsuits is unpredictable and these actions may divert management’s attention from the day-to-day operations of our business, which could adversely affect our business, results of operations and cash flows.

We are subject to the risks of additional lawsuits in connection with our historical stock option grant practices and related issues, the resulting restatements, and the remedial measures we have taken.

In addition to the possibilities that there may be additional governmental actions and shareholder lawsuits against us, we may be sued or taken to arbitration by former officers and employees in connection with their stock options, employment terminations and other matters. These lawsuits may be time consuming and expensive, and cause further distraction from the operation of our business. The adverse resolution of any specific lawsuit could have a material adverse effect on our business, financial condition and results of operations.

Intense competition exists in the market for digital media products.

The digital media market in which we compete is intensely competitive and characterized by rapid technological change and declining average unit selling prices. Competition typically occurs at the design stage, when customers evaluate alternative design approaches requiring integrated circuits. Because of short product life cycles, there are frequent design win competitions for next-generation systems.

We believe the digital media market will remain competitive, and will require us to incur substantial research and development, technical support, sales and other expenditures to stay competitive in this market. In the digital media market, our principal competitors are captive solutions from large TV OEMs as well as merchant solutions from Broadcom Corporation, MediaTek Inc., MStar Semiconductor, NEC Corporation, STMicroelectronics, and Zoran Corporation. Industry consolidation has been occurring recently as, in addition to our acquisition of certain assets from NXP and Micronas, some of our competitors have acquired or are considering acquiring other competitors or divisions of companies that provide them with the opportunity to compete against us. Many of our current competitors and many potential competitors, including these merged entities, have significantly greater technical, manufacturing, financial and marketing resources. Some of them may also have broader product lines and longer standing relationships with key customers and suppliers than we have, which makes competing more difficult. Therefore, we expect to devote significant resources to the DPTV/SVP and HiDTV market even though some of our competitors are substantially more experienced than we are in this market.

The level and intensity of competition have increased over the past year. Competitive pricing pressures have resulted in continued reductions in average selling prices of our existing products, and continued or increased competition could require us to further reduce the prices of our products, affect our ability to recover costs or result in reduced gross margins. If we are unable to timely and cost-effectively integrate more functionality onto single chip designs to help our customers reduce costs, we may lose market share, our revenues may decline and our gross margins may decrease significantly.

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Our success depends upon the digital media market and we must continue to develop new products and to enhance our existing products.

The digital media industry is characterized by rapidly changing technology, frequent new product introductions, and changes in customer requirements. Our future success depends on our ability to anticipate market needs and develop products that address those needs. As a result, our products could quickly become obsolete if we fail to predict market needs accurately or develop new products or product enhancements in a timely manner. The long-term success in the digital media business will depend on the introduction of successive generations of products in time to meet the design cycles as well as the specifications of original equipment manufacturers of televisions. The digital media industry is characterized by an increasing level of integration and incorporation of greater numbers of features on a single chip, in order to permit enhanced systems at the same or lower cost. Our failure to predict market needs accurately or to timely develop new products or product enhancements, including integrated circuits with increasing levels of integration and new features, at competitive prices may harm market acceptance and sales of our products. If the development or enhancement of these products or any other future products takes longer than we anticipate, or if we are unable to introduce these products to market, our sales could decrease. Even if we are able to develop and commercially introduce these new products, the new products may not achieve the widespread market acceptance necessary to provide an adequate return on our investment.

If we do not achieve additional design wins in the future, our ability to sell additional products could be adversely affected.

Our future success depends on manufacturers of consumer televisions, set-top boxes and other digital media products designing our products into their products. To achieve design wins with OEM customers and ODMs, we must define and deliver cost-effective, innovative and high performance integrated circuits on a timely basis, before our competitors do so. In addition, some OEM customers have begun to utilize digital video processor components produced by their own internal affiliates, which decreases our opportunity to achieve design wins. Thus, even if we achieve a design win with an ODM, their OEM customer may subsequently elect to purchase an integrated digital media solution from the ODM that does not incorporate our products. Once a supplier’s products have been designed into a system, a manufacturer may be reluctant to change components due to costs associated with qualifying a new supplier and determining performance capabilities of the component. Customers can choose at any time to discontinue using our products in their designs or product development efforts. Accordingly, we may face narrow windows of opportunity to be selected as the supplier of component parts by significant new customers. It may be difficult for us to sell to a particular customer for a significant period of time once that customer selects a competitor’s product, and we may not be successful in obtaining broader acceptance of our products. If we are unable to achieve broader market acceptance of our products, we may be unable to maintain and grow our business and our operating results and financial condition will be adversely affected.

The average selling prices of our products may decline over relatively short periods.

Average selling prices for our products may decline over relatively short time periods. This annual pace of price decline for products or technology is generally expected in the consumer electronics industry. It is also possible for the pace of average selling price declines to accelerate beyond these levels for certain products in a commoditizing market. Price declines can be exacerbated by competitive pressures at specific customers and for specific products. When our average selling prices decline, our gross profits decline unless we are able to sell more products at higher gross margin or reduce the cost to manufacture our products. We generally attempt to combat average selling price declines by designing new products for reduced costs, innovating to integrate additional functions or features and working with our manufacturing partners to reduce the costs of manufacturing existing products. We have in the past experienced and may in the future experience declining sales prices, which could negatively impact our revenues, gross profits and financial results. We therefore need to sell our higher margin products in increasing volumes to offset any decline in the average selling prices of our products, and introduce new higher margin products for sale in the future, which we may not be able to do on a timely basis.

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We may be required to record future charges to earnings if our intangible assets become impaired.

We are required under generally accepted accounting principles in the United States of America to review our goodwill and intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Goodwill is required to be tested for impairment at least annually. Factors that may be considered a change in circumstances indicating that the carrying value of our intangible assets may not be recoverable include a decline in stock price and market capitalization, slower growth rates, and changes in our financial results and outlook. We may be required to incur additional charges in our condensed consolidated financial statements during the period in which any impairment of our goodwill or intangible assets is determined. In determining the fair value of intangible assets in connection with our impairment analysis, we consider various factors including Trident’s estimates of future market growth and trends, forecasted revenue and costs, discount rates, expected periods over which our assets will be utilized and other variables. Our assumptions are based on historical data and internal estimates developed as part of our long-term planning process. We base our fair value estimates on assumptions believed to be reasonable, but which are inherently uncertain. If future conditions are different from management’s estimates at the time of an acquisition or market conditions change subsequently, we may incur future charges for impairment of our goodwill or intangible assets, which could adversely impact our results of operations.

We may face risks resulting from the failure to allow former employees to exercise stock options.

On September 21, 2007, the SLC extended, until March 31, 2008, the period during which five former employees, including our former CEO, and two former non-employee directors, could exercise certain of their vested options. After we became current in the filing of our periodic reports with the SEC and filed a registration statement on Form S-8 covering shares issuable under our 2006 Equity Incentive Plan, these five individuals requested to exercise certain of their vested options. However, the SLC initially decided that it was in the best interests of our stockholders not to allow these five individuals to exercise their vested options during the pendency of the SLC’s proceedings. During the three month period ended March 31, 2008, the SLC allowed one former employee to exercise all of his fully vested stock options and another former employee agreed to cancel that entire individual’s fully vested stock options. Also during the three month period ended March 31, 2008, the SLC entered into an agreement with our former CEO, allowing him to exercise all of his fully vested stock options and extended, until August 31, 2008, the period during which the two former non-employee directors could exercise their unexpired vested options. However, on May 29, 2008, the SLC permitted one of our former non-employee directors to exercise his fully vested stock options and entered into an agreement with the other former non-employee director on terms similar to the agreement entered into with our former CEO, allowing him to exercise all of his fully vested stock options. Because Trident’s stock price during fiscal year ended June 30, 2008 was lower than the prices at which our former CEO and each of the two former directors had desired to exercise their options, as indicated in previous written notices to the SLC, we recorded a contingent liability totaling $4.3 million, which was included in “Accrued expenses and other current liabilities” in the Consolidated Balance Sheet as of June 30, 2008 and the related expenses were included in “Selling, General, and Administrative Expenses” in the Consolidated Statement of Operations for the fiscal year ended June 30, 2008. The $4.3 million contingent liability remains in “Accrued expenses and other current liabilities” in the Condensed Consolidated Balance Sheet as of December 31, 2009. On August 11, 2009, in connection with negotiations between the SLC and our former CEO, an agreement was executed tolling the statute of limitations applicable to potential claims by our former CEO against us. On January 29, 2010, the SLC and our former CEO agreed to continue to toll the statute of limitations on these potential claims until May 10, 2010.

The demand for our products depends to a significant degree on the demand for the end products of customers of the acquired business lines into which they are incorporated.

The vast majority of our revenues are derived from sales to manufacturers in the consumer electronics industry. Demand from these customers fluctuates significantly, driven by consumer preferences, the development of new technologies and brand performance. The success of the acquired business lines depends on the success of its customers in the market place. Such customers may vary order levels significantly from period to period, request

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postponements to scheduled delivery dates, modify their orders or reduce lead times, any of which could have a material adverse effect on our business, financial condition or results of operations.

Our dependence on sales to distributors increases the risks of managing our supply chain and may result in excess inventory or inventory shortages.

Prior to the NXP Transaction, the majority of our sales through distributors were made by companies that function as purchasing conduits for each of two large Japanese OEM customers. Generally, these distributors take certain inventory positions and resell to their respective OEM customers. We have a more traditional distributor relationship with our remaining distributors that involve the distributor taking inventory positions and reselling to multiple customers. In our distributor relationships, we have recognized revenue when the distributors sell the product through to their end user customers. These distributor relationships have reduced our ability to forecast sales and increased risks to our business. Since our distributors act as intermediaries between us and the end user customers, we must rely on our distributors to accurately report inventory levels and production forecasts. This requires us to manage a more complex supply chain and monitor the financial condition and credit worthiness of our distributors and the end user customers. Our failure to manage one or more of these risks could result in excess inventory or shortages that could adversely impact our operating results and financial condition.

We have had fluctuations in quarterly results in the past and may continue to experience such fluctuations in the future.

Our quarterly revenue and operating results have varied in the past and may fluctuate in the future due to a number of factors including:

•  our ability to obtain the anticipated benefits of each of the NXP Transaction and the Micronas Transaction our ability to develop, introduce, ship and support new products and product enhancements, especially our newer SoC products, and to manage product transitions;

•  new product introductions by our competitors;

•  delayed new product introductions;

•  uncertain demand in the digital media markets in which we have limited experience;

•  our ability to achieve required product cost reductions;

•  the mix of products sold and the mix of distribution channels through which they are sold;

•  fluctuations in demand for our products, including seasonality;

•  unexpected product returns or the cancellation or rescheduling of significant orders;

•  our ability to attain and maintain production volumes and quality levels for our products;

•  unfavorable responses to new products;

•  adverse economic conditions, particularly in the United States and Asia; and

•  unexpected costs associated with our investigation of our historical stock option grant practices and related issues, and any related litigation or regulatory actions.

These factors are often difficult or impossible to forecast or predict, and these or other factors could cause our revenue and expenses to fluctuate over interim periods, increase our operating expenses, or adversely affect our results of operations or business condition.

We are vulnerable to undetected product problems.

Although we establish and implement test specifications, impose quality standards upon our suppliers and perform separate application-based compatibility and system testing, our products may contain undetected defects, which may or may not be material, and which may or may not have a feasible solution. Although we have experienced such errors in the past, significant errors have generally been detected relatively early in a product’s life

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cycle and therefore the costs associated with such errors have been immaterial. We cannot ensure that such errors will not be found from time to time in new or enhanced products after commencement of commercial shipments. These problems may materially adversely affect our business by causing us to incur significant warranty and repair costs, diverting the attention of our engineering personnel from our product development efforts and causing significant customer relations problems. Defects or other performance problems in our products could result in financial or other damages to our customers or could damage market acceptance of our products. Our customers could seek damages from us for their losses as a result of problems with our products or order less of our products, which would harm our financial results.

As a result of the difficult global macroeconomic and industry conditions, we have implemented restructuring and workforce reductions, and may be required to make additional such reductions, which may adversely affect the morale and performance of our personnel and our ability to hire new personnel.

In connection with our efforts to streamline operations, reduce costs and better align our staffing and structure with current demand for our products, we implemented a restructuring of our Company during the quarter ended December 31, 2008 and the quarter ended September 30, 2009, reducing our workforce and implementing other cost saving initiatives. We recorded restructuring charges of $0.8 million in the quarter of ended December 31, 2008 and $1.6 million in the quarter ended September 30, 2009. In connection with the NXP Transaction, we intend to implement further restructurings or work force reductions during calendar year 2010.

Our restructuring may yield unanticipated consequences, such as attrition beyond our planned reduction in workforce and loss of employee morale and decreased performance. In addition, the recent trading levels of our stock have decreased the value of our stock options granted to employees under our stock option plans. As a result of these factors, our remaining personnel may seek employment with companies that they perceive as having less volatile stock prices. Continuity of personnel can be a very important factor in the sales and implementation of our products and completion of our research and development efforts.

If we have to qualify new contract manufacturers or foundries for any of our products, we may experience delays that result in lost revenues and damaged customer relationships.

We rely on a limited number of principal suppliers to manufacture our products in wafer form. The lead time required to establish a relationship with a new foundry is long, and it takes time to adapt a product’s design to a particular manufacturer’s processes. Accordingly, there is no readily available alternative source of supply for any specific product. This could cause significant delays in shipping products if we have to change our source of supply and manufacture quickly, which could damage our relationships with current and prospective customers and harm our sales and financial results.

Our success depends in part on our ability to protect our intellectual property rights, which may be difficult.

The digital media market is a highly competitive industry in which we, and most other participants, rely on a combination of patent, copyright, trademark and trade secret laws, confidentiality procedures and licensing arrangements to establish and protect proprietary rights. The competitive nature of our industry, rapidly changing technology, frequent new product introductions, changes in customer requirements and evolving industry standards heighten the importance of protecting proprietary technology rights. Since patent applications with the United States Patent and Trademark Office may be kept confidential, our pending patent applications may attempt to protect proprietary technology claimed in a third-party patent application. Our existing and future patents may not be sufficiently broad to protect our proprietary technologies as policing unauthorized use of our products is difficult. The laws of certain foreign countries in which our products are or may be developed, manufactured or sold, including various countries in Asia, may not protect our products or intellectual property rights to the same extent as do the laws of the United States and thus make the possibility of piracy of our technology and products more likely in these countries. Our competitors may independently develop similar technology, duplicate our products or design around any of our patents or other intellectual property. If we are unable to adequately protect our proprietary technology rights, others may be able to use our proprietary technology without having to compensate us, which could reduce our revenues and negatively impact our ability to compete effectively. We have in the past, and may in

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the future, file lawsuits to enforce our intellectual property rights or to determine the validity or scope of the proprietary rights of others. As a result of any such litigation or resulting counterclaims, we could lose our proprietary rights and incur substantial unexpected operating costs. Any action we take to protect our intellectual property rights could be costly and could absorb significant management time and attention. In addition, failure to adequately protect our trademark rights could impair our brand identity and our ability to compete effectively.

The television systems and set-top box business lines that we acquired from NXP depend on patents and other intellectual property rights to protect against misappropriation by competitors or others. The patents we have acquired as part of the acquired business lines may be insufficient to provide meaningful protection. We may not be able to obtain patent protection or secure other intellectual property rights in all the countries in which the acquired business lines operate, and, under the laws of such countries, patents and other intellectual property rights may be unavailable or limited in scope. Any inability to protect adequately intellectual property of the acquired business lines may have an adverse effect on our results.

We have been involved in intellectual property infringement claims, and may be involved in other claims in the future, which can be costly.

Our industry is very competitive and is characterized by frequent litigation alleging infringement of intellectual property rights. Numerous patents in our industry have already been issued and as the market further develops and additional intellectual property protection is obtained by participants in our industry, litigation is likely to become more frequent. From time to time, third parties have asserted and are likely in the future to assert patent, copyright, trademark and other intellectual property rights to technologies or rights that are important to our business. Historically we have been involved in such disputes. In addition, we have and may in the future enter into agreements to indemnify our customers for any expenses or liabilities resulting from claimed infringements of patents, trademarks or copyrights of third parties. Litigation or other disputes or negotiations arising from claims asserting that our products infringe or may infringe the proprietary rights of third parties, whether with or without merit, has been and may in the future be, time-consuming, resulting in significant expenses and diverting the efforts of our technical and management personnel. We do not have insurance against our alleged or actual infringement of intellectual property of others. Any such claims that may be filed against us in the future, if resolved adversely to us, could cause us to stop sales of our products which incorporate the challenged intellectual property and could also result in product shipment delays or require us to redesign or modify our products or to enter into licensing agreements. These licensing agreements, if required, would increase our product costs and may not be available on terms acceptable to us, if at all. If there is a successful claim of infringement or we fail to develop non-infringing technology or license the proprietary rights on a timely and reasonable basis, our business could be harmed.

Certain intellectual property used in the television systems and set-top box business lines acquired from NXP was transferred or licensed to NXP from Philips and may not be sufficient to protect the position of the acquired business lines in the industry.

Some of the intellectual property that we acquired from NXP was originally acquired by NXP in connection with its separation from Koninklijke Philips Electronics N.V., or Philips. In connection with the separation of NXP from Philips, Philips transferred a set of patent families to NXP subject to certain limitations. These limitations give Philips the right to sublicense to third parties in certain circumstances. The strength and value of this intellectual property may be diluted if Philips licenses or otherwise transfers such intellectual property or such rights to third parties, especially if such third parties compete with the acquired business lines.

If necessary licenses of third-party technology are not available to us or are very expensive, our products could become obsolete.

From time to time, we may be required to license technology from third parties to develop new products or enhance current products. Third-party licenses may not be available on commercially reasonable terms, if at all. If we are unable to obtain any third-party license required to develop new products and enhance current products, or if our licensor’s technology is no longer available to us because it is determined to infringe another third-party’s intellectual property rights, we may have to obtain substitute technology of lower quality or performance standards or at greater cost, either of which could seriously harm the competitiveness of our products.

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Changes in, or interpretations of, tax rules and regulations may adversely affect our effective tax rates.

Unanticipated changes in our tax rates could affect our future results of operations. Our future effective tax rates could be unfavorably affected by changes in tax laws or the interpretation of tax laws, by unanticipated decreases in the amount of revenue or earnings in countries with low statutory tax rates, or by changes in the valuation of our deferred tax assets and liabilities. We are also subject to the interpretations of foreign regulatory bodies in connection with reviews conducted of our subsidiaries and their operations, including the completion of liquidation of TTI in Taiwan in fiscal year ended June 30, 2009. While we believe our tax reserves adequately provide for any tax contingencies, the ultimate outcomes of any current or future tax audits are uncertain, and we can give no assurance as to whether an adverse result from one or more of them will have a material effect on our financial position, results of operation or cash flows.

The market price of our common stock has been, and may continue to be, volatile.

The market price of our common stock has been, and may continue to be volatile. Factors such as new product announcements by us or our competitors, quarterly fluctuations in our operating results, unfavorable conditions in the digital media market, failure to obtain design wins, as well as the results of our investigation of our historical stock option grant practices and related issues, and any litigation or regulatory actions arising as a result, may have a significant impact on the market price of our common stock. These conditions, as well as factors that generally affect the market for stocks, and stocks in high-technology companies in particular, could cause the price of our stock to fluctuate from time to time.

We currently rely on certain international customers for a substantial portion of our revenue and are subject to risks inherent in conducting business outside of the United States.

As a result of our focus on digital media products, we expect to be primarily dependent on international sales and operations, particularly in Japan, South Korea, Europe, and Asia Pacific. Our revenues may continue to be highly concentrated in a small number of geographic regions in the future. There are a number of risks arising from our international business, which could adversely affect future results, including:

•  exchange rate variations, tariffs, import/export restrictions and other trade barriers;

•  potential adverse tax consequences;

•  challenges in effectively managing distributors or representatives to maximize sales;

•  difficulties in collecting accounts receivable;

•  political and economic instability, civil unrest, war or terrorist activities that impact international commerce;

•  difficulties in protecting intellectual property rights, particularly in countries where the laws and practices do not protect proprietary rights to as great an extent as do the laws and practices of the United States; and

•  unexpected changes in regulatory requirements.

Our international sales for the period ended December 31, 2009 are principally U.S. dollar-denominated. As a result, an increase in the value of the U.S. dollar relative to foreign currencies could make our products less competitive in international markets. We cannot be sure that those of our international customers who currently place orders in U.S. dollars will continue to be willing to do so. If they do not, our revenues would become subject to foreign exchange fluctuations.

Our operations are vulnerable to interruption or loss due to natural disasters, power loss, strikes and other events beyond our control, which would adversely affect our business.

We conduct a significant portion of our activities including manufacturing, administration and data processing at facilities located in the State of California, Taiwan and other seismically active areas that have experienced major earthquakes in the past, as well as other natural disasters. The insurance coverage may not be adequate or continue to be available at commercially reasonable rates and terms. A major earthquake or other disaster affecting our suppliers’ facilities and our administrative offices could significantly disrupt our operations, and delay or prevent product manufacture and shipment during the time required to repair, rebuild or replace our suppliers’

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manufacturing facilities and our administrative offices; these delays could be lengthy and result in significant expenses. In addition, our administrative offices in the State of California may be subject to a shortage of available electrical power and other energy supplies. Any shortages may increase our costs for power and energy supplies or could result in blackouts, which could disrupt the operations of our affected facilities and harm our business. In addition, our products are typically shipped from a limited number of ports, and any natural disaster, strike or other event blocking shipment from these ports could delay or prevent shipments and harm our business.

ITEM 1B.   UNRESOLVED STAFF COMMENTS

None.

ITEM 2.   PROPERTIES

Information regarding our principal properties as of December 31, 2009 is set forth below:

			Square
Location	Type	Principal Use	Footage		Ownership	Expiration
Santa Clara, CA	Office	Principal Executive Offices, Research,		30,500	Lease		7/1/2011
(Headquarters)		Engineering, Marketing, and Sales and General Administration
Chicago, IL	Office	Research and Engineering		6,126	Lease		10/31/2013
Taipei, Taiwan	Office	General and Administration, Operation,		20,436	Lease		8/31/2011
		Sales Administration, Research, and
		Engineering
Tokyo, Japan	Office	Sales Administration		2,296	Lease		7/31/2010
Seoul, Korea	Office	Sales Administration		7,401	Lease		6/30/2010
Beijing, China	Office	Research and Engineering		3,056	Lease		9/30/2012
Hong Kong, China	Office and warehouse	General and Administration, Sales		6,833	Lease		6/30/2010
		Administration, and Warehouse
Shanghai, China	Office	General and Administration, Research,		115,000	Own		—
		Engineering, and Sales Administration
Shenzhen, China	Office	Sales Administration		6,510	Lease		12/15/2010
Munich, Germany	Office	General and Administration, Research,		17,000	Lease		5/31/2012
		and Engineering
Freiburg, Germany	Office	Research and Engineering		17,803	Lease		8/31/2019
Nijmegen, The	Office	Research and Engineering		10,370	Lease		12/31/2014
Netherlands

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As of December 31, 2009, we owned or leased a total of approximately 243,331 square feet of space worldwide including the locations listed above and office space for smaller sales and service offices in several locations throughout the world. Our operating leases expire at various times through August 31, 2019. Additional information regarding these leases is incorporated herein by reference from Note 6, “Commitments and Contingencies” of the Notes to Consolidated Financial Statements. We believe our properties are adequately maintained and suitable for our intended use. Also see Note 16, “Subsequent Events,” of the Notes to Consolidated Financial Statements.

ITEM 3.   LEGAL PROCEEDINGS

Shareholder Derivative Litigation

Trident has been named as a nominal defendant in several purported shareholder derivative lawsuits concerning the granting of stock options. The federal court cases have been consolidated as In re Trident Microsystems Inc. Derivative Litigation, Master File No. C-06-3440-JF. A case also has been filed in State court, Limke v. Lin et al., No. 1:07-CV-080390. Plaintiffs in all cases allege that certain of our current or former officers and directors caused us to grant options at less than fair market value, contrary to its public statements (including its financial statements); and that as a result those officers and directors are liable to the Company. No particular amount of damages has been alleged, and by the nature of the lawsuit no damages will be alleged against the Company. The Board of Directors has appointed a Special Litigation Committee (“SLC”) composed solely of independent directors to review and manage any claims that we may have relating to the stock option grant practices investigated by the Special Committee. The scope of the SLC’s authority includes the claims asserted in the derivative actions. In federal court, Trident has moved to stay the case pending the assessment by the SLC that was formed to consider nominal plaintiffs’ claims. In state court, we moved to stay the case in deference to the federal lawsuit, and the parties have agreed, with the court’s approval, to take that motion off the court’s calendar to await the assessment of the Special Litigation Committee. The Special Litigation Committee recommended settlements with certain of the defendants and the federal court has approved these settlements preliminarily, subject to a hearing seeking final court approval. We cannot predict whether these actions are likely to result in any material recovery by, or expense to, Trident. We expect to continue to incur legal fees in responding to these lawsuits, including expenses for the reimbursement of legal fees of present and former officers and directors under indemnification obligations.

Regulatory Actions

We are also subject to a formal investigation by the Securities and Exchange Commission in connection with its investigation into its stock option granting practices and related issues and we have been cooperating and will continue to cooperate with any inquiries from the SEC. Although the Department of Justice (“DOJ”) commenced an investigation relating to the same issues, the DOJ has not requested information from us since February 20, 2009 and we believe that the DOJ has concluded its investigation without taking any action against us. In addition, we have received an inquiry from the Internal Revenue Service to which we have responded. Any regulatory investigation could result in substantial legal and accounting expenses, divert management’s attention from other business concerns and harm our business. Any action commenced against us by a regulatory agency could result in orders against us, the imposition of significant penalties and/or fines against us, and/or the imposition of civil sanctions against us or certain of our former officers, directors and/or employees. Any regulatory action could result in the filing of additional restatements of our prior financial statements or require that we take other actions. If we are subject to an adverse finding resulting from the SEC investigation, we could be required to pay damages or penalties or have other remedies imposed upon us. We are unable to predict what consequences, if any, that an investigation by any regulatory agency may have on us. The period of time necessary to resolve the investigation by the SEC is uncertain, and this matter could require significant management and financial resources which could otherwise be devoted to the operation of our business.

Special Litigation Committee

Effective at the close of trading on September 25, 2006, we temporarily suspended the ability of optionees to exercise vested options to purchase shares of our common stock, until we became current in the filing of our periodic reports with the SEC and filed a Registration Statement on Form S-8 for the shares issuable under the 2006 Plan, or 2006 Plan S-8. This suspension continued in effect through August 22, 2007, the date of the filing of the

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2006 Plan S-8, which followed our filing, on August 21, 2007, of our Quarterly Reports on Form 10-Q for the periods ended September 30, 2006, December 31, 2006 and March 31, 2007. As a result, we extended the exercise period of approximately 550,000 fully vested options held by 10 employees, who were terminated during the suspension period, giving them either 30 days or 90 days after we became current in the filings of our periodic reports with the SEC and filed the 2006 Plan S-8 in order to exercise their vested options. During the three months ended September 30, 2007, eight of these ten former employees stated above exercised all of their vested options. However, on September 21, 2007, the SLC decided that it was in the best interests of our stockholders not to allow the remaining two former employees, as well as our former CEO and two former non-employee directors, to exercise their vested options during the pendency of the SLC’s proceedings, and extended, until March 31, 2008, the period during which these five former employees could exercise approximately 428,000 of their fully vested options. Moreover, the SLC allowed one former employee to exercise all of his fully vested stock options and another former employee agreed to cancel all of such individual’s fully vested stock options during the three months ended March 31, 2008.

On January 31, 2008, the SLC extended, until August 31, 2008, the period during which the two former non-employee directors could exercise their unexpired vested options. On March 31, 2008, the SLC entered into an agreement with our former CEO allowing him to exercise all of his fully vested stock options. Under this agreement, he agreed that any shares obtained through these exercises or net proceeds obtained through the sale of such shares would be placed in an identified securities brokerage account and not withdrawn, transferred or otherwise removed without either (i) a court order granting him permission to do so or (ii) the written permission of us.

On May 29, 2008, the SLC permitted one of our former non-employee directors to exercise his fully vested stock and entered into an agreement with the other former non-employee director on terms similar to the agreement entered into with our former CEO, allowing him to exercise all of his fully vested stock options. Because Trident’s stock price as of June 30, 2008 was lower than the prices at which our former CEO and each of the two former non-employee directors had desired to exercise their options, as indicated in previous written notices to the SLC, we recorded a contingent liability in accordance accounting guidance, totaling $4.3 million, which was included in “Accrued expenses and other current liabilities” in the Consolidated Balance Sheet as of June 30, 2008 and the related expenses were included in “Selling, general and administrative expenses” in the Consolidated Statement of Operations for the fiscal year then ended. As the SLC investigation is still in progress, we believe that our former CEO, two former non-employee directors and two former employees may seek compensation from us relating to the exercise of their fully vested stock options; therefore, a $4.3 million contingent liability remained in “Accrued expenses and other current liabilities” in the Consolidated Balance Sheet as of December 31, 2009. On August 11, 2009, in connection with negotiations between the SLC and our former CEO, an agreement was executed tolling the statute of limitations applicable to potential claims by our former CEO against us. On January 29, 2010, the SLC and our former CEO agreed to continue to toll the statute of limitations on these potential claims until May 10, 2010.

Indemnification Obligations

We indemnify, as permitted under Delaware law and in accordance with our Bylaws, our officers, directors and members of our senior management for certain events or occurrences, subject to certain limits, while they were serving at our request in such capacity. In this regard, we have received, or expect to receive, requests for indemnification by certain current and former officers, directors and employees in connection with our investigation of our historical stock option granting practices and related issues, and the related governmental inquiries and shareholder derivative litigation. The maximum amount of potential future indemnification is unknown and potentially unlimited; therefore, it cannot be estimated. We have directors’ and officers’ liability insurance policies that may enable us to recover a portion of such future indemnification claims paid, subject to coverage limitations of the policies, and plan to make claim for reimbursement from our insurers of any potentially covered future indemnification payments.

General

From time to time, we are involved in other legal proceedings arising in the ordinary course of our business. While we cannot be certain about the ultimate outcome of any litigation, management does not believe any pending

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legal proceeding will result in a judgment or settlement that will have a material adverse effect on our business, financial position, results of operation or cash flows.

PART II

ITEM 5.   MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information and Holders

Our common stock has been traded on the NASDAQ Global Select Market since our initial public offering on December 16, 1992 under the symbol “TRID.” The following table sets forth, for the periods indicated, the quarterly high and low sales prices for our common stock as reported by NASDAQ:

	High		Low
Six Months Ended December 31, 2009	$	3.10	$	1.60
Three Months Ended September 30, 2009	$	3.10	$	1.60
Three Months Ended December 31, 2009	$	3.09	$	1.70
For the year ended June 30, 2009
First Quarter	$	4.31	$	2.26
Second Quarter	$	2.34	$	1.30
Third Quarter	$	2.24	$	1.24
Fourth Quarter	$	2.11	$	1.34
For the year ended June 30, 2008
First Quarter	$	19.49	$	13.52
Second Quarter	$	17.05	$	5.35
Third Quarter	$	6.57	$	4.62
Fourth Quarter	$	5.37	$	3.63

Approximate Number of Stockholders

As of December 31, 2009 and June 30, 2009, there were 166 and 167 registered holders of record of our common stock, respectively. The number of beneficial stockholders of our shares is greater than the number of stockholders of record.

Dividends

Our present policy is to retain earnings, if any, to finance future growth. We have never paid cash dividends and have no present intention to pay cash dividends.

Issuer Repurchases of Equity Securities

We did not repurchase any of our equity securities during the six months ended December 31, 2009. However, from time to time we evaluate whether to repurchase our equity securities.

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Stock Performance Graphs and Cumulative Total Return

The following graph compares the cumulative 5.5 year total return attained by shareholders of our common stock relative to the cumulative total returns of the NASDAQ Composite Index and the Philadelphia Semiconductor Index for the six months ending December 31, 2009 and each of the last five fiscal years ended June 30, 2009, assuming an investment of $100 at the beginning of such period and the reinvestment of any dividends. The comparisons in the graphs below are based upon historical data and are not indicative of, nor intended to forecast, future performance of our common stock.

COMPARISON OF 5 YEARS CUMULATIVE RETURN
Among Trident Microsystems, Inc., The NASDAQ Composite Index and
The Philadelphia Semiconductor Sector Index

•  Assumes $100 invested on June 30, 2004 in stock or index-including reinvestment of dividends.

	6/04		6/05		6/06		6/07		6/08		6/09		12/09
TRID		100.00		199.82		334.15		323.06		64.26		30.63		32.75
Philadelphia Semiconductor Sector Index		100.00		86.39		91.06		103.31		75.90		54.25		74.19
NASDAQ Composite Index		100.00		100.45		106.07		127.12		111.97		89.61		110.81

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ITEM 6.   SELECTED FINANCIAL DATA

Change in Fiscal Year End

On November 16, 2009 the Board of Directors approved a change in our fiscal year end from June 30, to December 31. The change became effective at the end of the quarter ended December 31, 2009. All references to “years”, unless otherwise noted, refer to the twelve-month fiscal year, which prior to July 1, 2009, ended on June 30, and beginning with December 31, 2009, ends on December 31, of each year.

The following tables include selected consolidated summary financial data for the six months ended December 31, 2009 and each of our last five fiscal years.

TRIDENT MICROSYSTEMS, INC.
SELECTED CONSOLIDATED FINANCIAL DATA

	Six Months
	Ended
	December 31,			Fiscal Years
	2009			2009(1)			2008		2007		2006		2005
	(In millions, except per share amounts)
Summary of Operations :
Net revenues	$	63.0		$	75.8		$	257.9	$	270.8	$	171.4	$	69.0
Income (loss) from operations		(38.3	)		(62.2	)		18.8		40.1		28.4		(29.9	)
Net income (loss)		(40.5	)		(70.2	)		10.2		30.1		26.2		(30.2	)
Net income (loss) per share — Basic		(0.58	)		(1.12	)		0.17		0.52		0.48		(0.64	)
Net income (loss) per share — Diluted		(0.58	)		(1.12	)		0.16		0.48		0.42		(0.64	)
Financial Position at Period End:
Cash, cash equivalents and short-term investments	$	148.0		$	187.9		$	240.0	$	199.3	$	152.7	$	92.2
Working capital		131.0			164.9			215.9		158.3		125.3		81.6
Total assets		228.5			263.3			309.3		283.9		207.2		135.0
Stockholders’ equity		156.1			192.9			237.3		201.8		153.7		109.3

(1) On May 14, 2009, we completed the acquisition of selected assets of the FRC, DRX and audio decoder product lines of the Consumer Division of Micronas. See Note 11, “Business Combinations,” to the Notes to Consolidated Financial Statements.

ITEM 7.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This section and other parts of this Transition Report on Form 10-K contain forward-looking statements that involve risks and uncertainties. Forward-looking statements can also be identified by words such as “anticipates,” “expects,” “believes,” “plans,” “predicts,” and similar terms. Forward-looking statements are not guarantees of future performance and our actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in “Item 1A — Risk Factors” above. The following discussion should be read in conjunction with the consolidated financial statements and notes thereto included in Item 8 of this report. We assume no obligation to revise or update any forward-looking statements for any reason, except as required by law.

The following discussion and analysis should be read in conjunction with the consolidated financial statements and the notes to consolidated financial statements included elsewhere in this Form 10-K. This Transition Report on Form 10-K contains forward — looking statements that involve risks and uncertainties. See the disclosure regarding “Forward-Looking Statements” on page 3 of this Form 10-K. All references to “years”, unless otherwise noted, refer to our twelve-month fiscal year, which prior to July 1, 2009, ended on June 30 and beginning with

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December 31, 2009 ends on December 31 of each year. For example a reference to “2009” or “fiscal year 2009” means the twelve-month period that ended on June 30, 2009.

Change in Fiscal Year End

On November 16, 2009 the Board of Directors approved a change in our fiscal year end from June 30, to December 31. The change became effective at the end of the quarter ended December 31, 2009. All references to “years”, unless otherwise noted, refer to the twelve-month fiscal year, which prior to July 1, 2009, ended on June 30, and beginning with December 31, 2009, ends on December 31, of each year.

Overview

Through the period ended December 31, 2009, we designed, developed and marketed integrated circuits, or ICs, for digital media applications, such as digital television, or DTV, liquid crystal display television, or LCD TV. Our system-on-a-chip, or SoC, semiconductors provide the “intelligence” for these new types of displays by processing and optimizing video and computer graphic signals to produce high-quality and realistic images. Our products include frame rate converter, or FRC, demodulator, or DRX and audio decoder products. Many of the world’s leading manufacturers of consumer electronics and computer display products utilize our technology to enhance image quality and ease of use of their products. Our goal is to provide the best image quality enhanced digital media integrated circuits at competitive prices to our customers. Since 1987 we have designed, developed and marketed very large-scale ICs for graphics applications, historically for the personal computer, or PC, market, and since 1999 for digital TV, or DTV, in the consumer television market.

Business Structure

At June 2003, when we announced a restructuring of our business to divest our legacy graphics business, we focused our business primarily in the high definition television, or HDTV, market and related areas. In a separate transaction completed in June 2003, we merged our digital media segment with Trident Technologies, Inc., or TTI, a Taiwanese company, to strengthen and extend our DTV business. TTI, which was liquidated in September 2006, had previously operated primarily as a Taiwan-based semiconductor design house, developing video processing technologies useful for digital media applications. Starting September 1, 2006, we conducted business primarily through a Cayman Islands subsidiary, Trident Microsystems (Far East) Ltd., or TMFE. Research and development services relating to existing projects and certain new projects were conducted by Trident Microsystems, Inc. and our subsidiaries, Trident Multimedia Technologies (Shanghai) Co. Ltd., or TMT, and Trident Microsystems (Beijing) Co., Ltd., or TMBJ. TMBJ was previously a privately held company known as Beijing Tiside Electronics Design Co., Ltd., or Tiside, which we acquired in March 2008 and subsequently renamed TMBJ. Operations, field application engineering support and certain sales activities were conducted through our Taiwanese subsidiaries, Trident Microelectronics Co. Ltd., or TML, and Trident Microsystems (Taiwan) Ltd., or TMTW, and other affiliates. On May 14, 2009, we completed the acquisition of selected assets of certain product lines from the Consumer Division of Micronas Semiconductor Holding AG, or Micronas, a Swiss corporation. In May 2009, in connection with this acquisition, we established three new subsidiaries in Europe: Trident Microsystems (Europe) GmbH, or TMEU, Trident Microsystems Nederland B.V., or TMNM, and Trident Microsystems Holding B.V., or TMH. The purpose of these entities is primarily to provide sales liaison, marketing and engineering services in Europe. TMEU is located in Munich, Germany and TMNM and TMH are located in Nijmegen, the Netherlands. On February 8, 2010 we acquired selected assets and liabilities of the television systems and set-top box business lines of NXP B.V., a Dutch besloten vennootschap, or NXP. As a result of this acquisition, we now have subsidiaries in three new countries, the United Kingdom, Israel and India. The primary purpose of these subsidiaries is to provide sales liaison, marketing and engineering services to us. See Note 16, “Subsequent Events,” of the Notes to Consolidated Financial Statements.

In the fiscal year ended June 30, 2009, we established a new subsidiary in South Korea, Trident Microsystems Korea Limited, or TMK, primarily to provide sales liaison and marketing services in South Korea and a new subsidiary in Hong Kong, Trident Microsystems Hong Kong Ltd., or TMHK, to handle sales and inventory distribution for the entire Company. Trident Multimedia Systems, Inc., or TMS, was inactive at June 30, 2009.

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Business Combination

On October 4, 2009, Trident and TMFE entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with NXP B.V., a Dutch besloten vennootschap, or NXP, providing for the acquisition of selected assets and liabilities of NXP’s television systems and set-top box business lines (the “Purchase”), through a pre-closing restructuring by NXP and subsequent transactions at closing (the “NXP Transaction”). We completed the NXP Transaction on February 8, 2010. Upon completion, we issued to NXP 104,204,348 newly issued shares of Trident common stock, equal to 60% of the total outstanding shares of Trident Common Stock (the “Shares”) after giving effect to the share issuance to NXP, in exchange for the contribution of selected assets and liabilities of the television systems and set-top box business lines from NXP (the “Business”) and cash proceeds in the amount of $45 million (the “Cash Payment”). In addition, we issued to NXP four shares of a newly created Series B Preferred Stock (the “Preferred Shares”). See Note 16, “Subsequent Events,” of the Notes to Consolidated Financial Statements.

As a result of this acquisition, we now have Trident subsidiaries in three new countries, the United Kingdom, Israel and India. The primary purpose of these subsidiaries is to provide sales liaison, marketing and engineering services to us. In addition, we have expanded our research and development staff in countries where we already have been operating, particularly in the United States, The Netherlands and China.

Net Revenues

Our net revenues are generated by sales of our discrete and SoC products. We sell our products primarily to digital television original equipment manufacturers, or OEMs, in Japan, South Korea, Asia Pacific and Europe, either directly or through their supplier channels.

We consider these OEMs to be our customers and historically, significant portions of our revenues have been generated by sales to a relatively small number of customers.

The acquisition of the selected assets of the frame rate converter or FRC, demodulator or DRX, and audio decoder product lines and IP from Micronas significantly strengthened our system-on-chips or SoC capabilities and enabled us to win orders from large, strategic OEMs. For the six months ended December 31, 2009, 75% of our revenues were from FRC, DRX, and audio decoder product lines that we acquired from Micronas on May 14, 2009.

The demand for our products has been affected in the past, and may continue to be affected in the future, by various factors, including, but not limited to, the following:

•  the qualification, availability and pricing of competing products and technologies and the resulting effects on the design wins of our products;

•  our ability to specify, develop or acquire, complete, introduce, market and transition to volume production new products and technologies in a cost effective and timely manner;

•  general economic and political conditions and specific conditions in the markets we address, including the continuing volatility in the technology sector and semiconductor industry, current general economic volatility, conditions in the semiconductor industry, including seasonality in sales of consumer products into which our products are incorporated; and

•  the timing, rescheduling or cancellation of significant customer orders and our ability, as well as the ability of our customers, to manage inventory.

From time to time, our key customers may cancel purchase orders from us, thereby causing our net revenues to fluctuate significantly. We expect that these fluctuations could continue due to the uncertainty in the current economic environment. Our products have been manufactured primarily by two foundries United Microelectronics Corporation, or UMC, based in Taiwan and Micronas, based in Germany.

We continue to believe that our May 2009 acquisition of three product lines of the Consumer Division from Micronas, as well as our recent acquisition of the television systems and set-top box business lines from NXP each provides complementary features and technologies that are critical to our SoC strategy. We now have significant technology advantages in audio decoder and demodulator products in particular. With our investment in these two

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acquisitions, we also demonstrate to our customers that we are committed to the digital media market and that we can effectively integrate substantial acquisitions.

The following table shows the percentage of our revenues during the six month period ending December 31, 2009 compared to the six month period ending December 31, 2008 and the fiscal years ended June 30, 2009, 2008, and 2007 that was derived from customers who individually accounted for more than 10% of revenues in that year:

	Six Months Ended
	December 31,						Year Ended June 30,
Revenue:	2009			2008			2009			2008			2007
Midoriya (supplier to Sony)		*			40	%		38	%		28	%		25	%
LG		15	%		*			*			*			*
Philips		10	%		12	%		10	%		19	%		*
Samsung		29	%		*			*			29	%		41	%
Sharp		*			14	%		11	%		*			*

* Less than 10% revenue

The discrete and SoC markets are very concentrated. The three largest OEMs together comprised approximately 54% of our revenues during the six-month period ended December 31, 2009. Roughly 66% of our revenues in this period were attributable to five customers. See Note 14 “Segment and Geographic Information and Major Customers,” of the Notes to Consolidated Financial Statements, included in Part II, Item 8 of this Report.

Revenues as of December 31, 2009 are denominated primarily in U.S. dollars and Euros.

Gross Margin

Our gross margin has been affected in the past, and may continue to be affected in the future, by various factors, including, but not limited to, the following:

•  our product mix and volume of product sales;

•  the effects of competitive pricing programs and rebates;

•  manufacturing cost efficiencies and inefficiencies;

•  fluctuations in direct product costs such as wafer pricing and assembly, packaging and testing costs and overhead costs;

•  product warranty costs;

•  provisions for excess and obsolete inventories;

•  inventory lower of cost or market adjustments;

•  purchase price and yield variances;

•  consumer demand;

•  regulatory matters;

•  macro economic conditions; and

•  sales of previously reserved inventory.

Acquisition Strategy

An element of our business strategy involves the acquisition of businesses, assets, products or technologies that allow us to reduce the time required to develop new technologies and products and bring them to market, incorporate enhanced functionality into and complement our existing product offerings, augment our engineering workforce, and enhance our technological capabilities. We plan to continue to evaluate strategic opportunities as

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they arise, including acquisitions and other business combination transactions, strategic relationships and the purchase or sale of assets. See Note 11, “Business Combinations,” of the Notes to Consolidated Financial Statements for information related to the acquisitions made.

In the six months ended December 31, 2009 and the fiscal years ended June 30, 2009 and 2008, respectively, we completed the following three acquisitions:

•  On February 8, 2010 we completed the acquisition of the television systems and set-top box business lines from NXP. See Note 16, “Subsequent Events,” to the Notes to Consolidated Financial Statements.

•  On May 14, 2009, we completed the acquisition of selected assets of the FRC, DRX and audio decoder product lines of the Consumer Division of Micronas.

•  On March 4, 2008, we completed the acquisition of Beijing Tiside Electronics Co., Ltd, currently known as TMBJ.

Segments

We operate in one reportable operating segment, digital medial solutions. Generally accepted accounting principles in the United States of America, or GAAP, establishes standards for the way public business enterprises report information about operating segments in annual consolidated financial statements and requires that those enterprises report selected information about operating segments in interim financial reports. The accounting guidance also establishes standards for related disclosures about products and services, geographic areas and major customers. Our Chief Executive Officer, who is considered to be our chief operating decision maker, reviews financial information presented on an operating segment basis for purposes of making operating decisions and assessing financial performance.

Critical Accounting Estimates

The preparation of our financial statements and related disclosures in conformity GAAP, requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. References included in this Form 10-K to “accounting guidance” means GAAP. These estimates and assumptions are based on historical experience and on various other factors that we believe are reasonable under the circumstances. We periodically review our accounting policies and estimates and make adjustments when facts and circumstances dictate. In addition to the accounting policies that are more fully described in the Notes to the Consolidated Financial Statements included in this Transition Report on Form 10-K, we consider the critical accounting policies described below to be affected by critical accounting estimates. Our critical accounting policies that are affected by accounting estimates include revenue recognition, allowance for sales returns, stock-based compensation expense, goodwill and purchased intangible assets, valuation of equity investments in privately held companies and funds, inventories, fair value measurements, product warranty, income taxes, litigation and other loss contingencies and business combinations. Such accounting policies are impacted significantly by judgments, assumptions and estimates used in the preparation of the consolidated financial statements, and actual results could differ materially from these estimates. For a discussion of how these estimates and other factors may affect our business, also see “Risk Factors” In Item 1A.

Revenue Recognition

We recognize revenues in accordance with GAAP when persuasive evidence of an arrangement exists, delivery has occurred, the price is fixed or determinable and collectability is reasonably assured. We record estimated reductions to revenue for customer incentive offerings and sales returns allowance in the same period that the related revenue is recognized. Our customer incentive offerings primarily involve volume rebates for our products in various target markets. If market conditions were to decline, we may take actions to increase customer incentive offerings, possibly resulting in an incremental reduction of revenue at the time the incentive is offered.

A portion of our sales are made through distributors under agreements allowing for pricing protection and/or rights of return. Product revenues on sales made to distributors which contain such rights of return and price

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protection are deferred and only recognized when these rights expire or upon sale and shipment to the end user customers.

Allowance for Sales Returns

We maintain a sales returns allowance for estimated product returns based primarily on historical sales returns, analysis of credit memo data and other known factors at that time. If product returns for a particular fiscal period exceed historical return rates, we may determine that additional sales returns allowance are required to properly reflect our estimated exposure for product returns.

Stock-based Compensation Expense

We account for share-based payments, including grants of stock options and awards to employees and directors, in accordance with GAAP, which requires that share-based payments be recognized in our consolidated statements of operations based on their fair values and the estimated number of shares we ultimately expect will vest. In addition, we recognize stock-based compensation expense on a straight-line basis over the service period of all stock options and awards other than the performance-based restricted stock award with market conditions that was granted to our Chief Executive Officer under our 2006 Equity Incentive Plan. For purposes of expensing this single performance-based grant, we used the accelerated method.

We record deferred tax assets for stock-based awards that result in deductions on our income tax returns based on the amount of stock-based compensation recognized and the statutory tax rate in the jurisdiction in which we will receive the tax deduction.

We value our stock-based payment awards and warrants granted using the Black-Scholes option pricing model, except for the performance-based restricted stock award with market conditions granted under our 2006 Equity Incentive Plan during the second quarter of fiscal year ended June 30, 2008, for which we elected to use a Monte Carlo simulation to value the award. The Black-Scholes model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. The Black-Scholes model requires the input of certain assumptions. Trident’s stock options have characteristics significantly different from those of traded options. Changes in the assumptions used in Black-Scholes model can materially affect the fair value estimates. The expected term of stock options represents the weighted average period the stock options are expected to remain outstanding. The expected term is based on the observed and expected time to exercise and post-vesting cancellations of options by employees. Upon the adoption of the accounting guidance, we continued to use historical volatility in deriving our expected volatility assumption as allowed under GAAP because we believe that future volatility over the expected term of the stock options is not likely to differ materially from the past. The risk-free interest rate assumption is based upon observed interest rates appropriate for the expected term of our stock options. The expected dividend assumption is based on our history and expectation of dividend payouts.

For the six months ended December 31, 2009, stock based compensation expense was $3.5 million, and for the fiscal years ended June 30, 2009, 2008, and 2007, was $12.7 million, $28.6 million, and $15.6 million, respectively, which consisted primarily of stock-based compensation expense related to employee stock options and awards recognized under GAAP.

Goodwill impairment assessment

We assess the impairment of goodwill annually in the quarter ending June 30, or more frequently if events or changes in circumstances indicate that the carrying value of such assets exceeds their fair value in accordance with applicable accounting guidance. With respect to goodwill, factors that could trigger an impairment review include significant negative industry or economic trends, exiting an activity in conjunction with a restructuring of operations, current, historical or projected losses that demonstrate continuing losses associated with an asset or a significant decline in our market capitalization for an extended period of time, relative to net book value. Impairment evaluations involve management estimates of future cash flows. These estimates include assumptions about future conditions such as future revenues, gross margins, operating expenses, control premiums, the fair

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values of certain assets based on appraisals, and industry trends. Actual useful lives and cash flows could be different from those estimated by our management. This could have a material effect on our net income (loss).

Goodwill is initially recorded when the purchase price paid for a business acquisition exceeds the estimated fair value of the net identified tangible and intangible assets acquired. Accounting guidance requires a two-step approach to testing goodwill for impairment for each reporting unit which carries goodwill. The accounting guidance also requires that the impairment test be performed at least annually by applying a fair-value-based test. The first step measures for impairment by applying fair-value-based tests at the reporting unit level. The second step (if necessary) measures the amount of impairment by applying fair-value-based tests to the individual assets and liabilities within each reporting unit which carries goodwill.

To determine the fair values of the reporting units used in the first step, we use a discounted cash flow approach. Each step requires us to make judgments and involves the use of significant estimates and assumptions. These estimates and assumptions include long-term growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rates based on our weighted average cost of capital, future economic and market conditions. These estimates and assumptions have to be made for each reporting unit evaluated for impairment. Our estimates for market growth, our market share and costs are based on historical data, various internal estimates and certain external sources, and are based on assumptions that are consistent with the plans and estimates we are using to manage the underlying business. If future forecasts are revised, impairment charges may be required. We base our fair value estimates on assumptions we believe to be reasonable but that are unpredictable and inherently uncertain. Actual future results may differ from those estimates.

Long-lived assets impairment assessment

Management evaluates the recoverability of our identifiable intangible assets and other long-lived assets in accordance with applicable accounting guidance, which generally requires the assessment of these assets for recoverability when events or circumstances indicate a potential impairment exists. We considered certain events and circumstances in determining whether the carrying value of identifiable intangible assets and other long-lived assets may not be recoverable including, but not limited to: significant changes in performance relative to expected operating results; significant changes in the use of the assets; significant negative industry or economic trends; a significant decline in our stock price; and changes in our business strategy. In determining if an impairment exists, we estimate the undiscounted cash flows to be generated from the use and ultimate disposition of these assets. If an impairment is indicated based on a comparison of the assets’ carrying values and the undiscounted cash flows, the impairment loss is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets.

Valuation of Equity Investments in Privately Held Companies and Funds

We invest in equity instruments of privately-held companies and funds for business and strategic purposes, which we account for using the cost method. We record an investment impairment charge when we believe an investment has experienced a decline in value that is other than temporary. Future adverse changes in market conditions or poor operating results of underlying investments could result in losses or an inability to recover the carrying value of the investments, thereby possibly requiring an impairment charge in the future. The recorded value of our equity investments in privately held companies in our consolidated balance sheet as of December 31, 2009 is $1.8 million. None of the equity investments of privately-held companies require consolidation under the accounting guidance because we have no controlling financial interest in these companies.

Inventories

Inventories are computed using the lower of cost or market, which approximates actual cost on a first-in-first-out basis. Inventory components are work-in-process and finished goods. Finished goods are reported as inventories until the point of title transfer to the customer. We write down our inventory value for excess and for estimated obsolescence for the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. These factors are impacted by market and economic conditions, technology changes, new product introductions and changes in strategic direction and require estimates

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that may include uncertain elements. Actual demand may differ from forecasted demand, and such differences may have a material effect on recorded inventory values. We recorded a $2.1 million liability for ordered product with no expected demand from customers for the six months ended December 31, 2009. We also recorded a $1.3 million lower of cost or market adjustment for a portion of our SoC product for the six months ended December 31, 2009.

Income Taxes

We account for income taxes in accordance with applicable accounting guidance, which requires that deferred tax assets and liabilities be recognized by using enacted tax rates for the effect of temporary differences between the book and tax bases of recorded assets and liabilities.

We also have to assess the likelihood that we will be able to realize our deferred tax assets. If realization is not more likely than not, we are required to record a valuation allowance against the deferred tax assets that we estimate we will not ultimately realize. We believe that we will not ultimately realize a substantial amount of the deferred tax assets recorded on our consolidated balance sheets. However, should there be a change in our ability to realize our deferred tax assets, our valuation allowance will be released, resulting in a corresponding reduction in income tax expense in the period in which we determined that the realization is more likely than not.

Under GAAP, we are required to make certain estimates and judgments in determining income tax expense for financial statement purposes. The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations. We recognize liabilities for uncertain tax positions based on the two-step process prescribed within the interpretation. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation, if any. The second step requires us to estimate and measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. Because we are required to determine the probability of various possible outcomes, such estimates are inherently difficult and subjective. We reevaluate these uncertain tax positions on a quarterly basis based on factors including, but not limited to, changes in facts or circumstances and changes in tax law. A change in recognition or measurement would result either in the recognition of a tax benefit or in an additional charge to the tax provision for the period.

Business Combinations

We estimate the fair value of assets acquired and liabilities assumed in a business combination. Our assessment of the estimated fair value of each of these might have a significant effect on our reported results as intangible assets are amortized over various lives. Furthermore, a change in the estimated fair value of an asset or liability often has a direct impact on the amount to recognize as goodwill, which is an asset that is not amortized. Often determining the fair value of these assets and liabilities assumed requires an assessment of expected use of the asset, the expected cost to extinguish the liability or our expectations related to the timing and the successful completion of development of an acquired in-process technology. Such estimates are inherently difficult and subjective and can have a material impact on our financial statements.

Results of Operations

Financial Data for the Six Months Ended December 31, 2009 and Unaudited Financial Data for the Six Months Ended December 31, 2008

Net Revenues

Digital media product solutions revenues represented all of our revenues for the six months ended December 31, 2009 and December 31, 2008. Our digital media solutions products include integrated circuit chips used in digital television and liquid crystal display television, or LCD TV. Net revenues are revenues less reductions for rebates and allowances for sales returns.

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The following tables present the comparison of net revenues by regions in dollars and in percentages for the six months ended December 31, 2009 and 2008:

Net revenues comparison by dollars

	Six Months Ended December 31,
					Dollar			Percent
Revenues by region(1)	2009		2008		Variance			Variance
	(Dollars in thousands)
Japan	$	5,257	$	34,319	$	(29,062	)		(85	)%
Europe		17,557		10,159		7,398			73	%
Asia Pacific(2)		11,317		9,018		2,299			25	%
South Korea		28,353		474		27,879			5882	%
Americas		527		27		500			1852	%
Total net revenues	$	63,011	$	53,997	$	9,014			17	%

Net revenues comparison by percentage of total net revenues

	Six Months Ended December 31,
Revenues by region(1)	2009			2008
Japan		8.3	%		63.5	%
Europe		27.9	%		18.8	%
Asia Pacific(2)		18.0	%		16.7	%
South Korea		45.0	%		0.9	%
Americas		0.8	%		0.1	%
Total net revenues		100	%		100	%

(1)	Net revenues by region are classified based on the locations of the customers’ principal offices even though our customers’ revenues may be attributable to end customers that are located in a different location.
(2)	Net revenues from China, Taiwan and Singapore are included in the Asia Pacific region.

During the six months ended December 31, 2009 compared to the six months ended December 31, 2008, net revenues increased in all regions except Japan. Revenues in Japan decreased primarily due to the absence of major design wins for product at major customers and lower revenues generated from product phased out of production. The increase in all other regions, other than Japan, is primarily due to revenues resulting from the Micronas acquisition on May 14, 2009.

Digital media solution revenues increased by $9 million in the six months ended December 31, 2009 compared to the six months ended December 31, 2008, primarily due to Micronas acquisition related revenues.

In the six months ended December 31, 2009, revenues from our legacy business decreased $38 million due to decreased demand, offset primarily by an increase of $47 million of revenues related to the Micronas acquisition. Our unit sales volume of digital media solutions product increased 255% in the six months ended December 31, 2009 compared to the six months ended December 31, 2008 and period-over-period average selling prices decreased by approximately 67%.

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Gross Profit

	Six Months Ended December 31,
	2009			2008			% Change
	(Dollars in thousands)
Gross profit	$	15,746		$	18,245			(14	%)
Gross profit%		25.0	%		33.8	%

Cost of revenues includes the cost of purchasing wafers manufactured by independent foundries, costs associated with our purchase of assembly, test and quality assurance services, royalties, product warranty costs, provisions for excess and obsolete inventories, provisions related to lower of cost or market adjustments for inventories, operation support expenses that consist primarily of personnel-related expenses including payroll, stock-based compensation expenses, and manufacturing costs related principally to the mass production of our products, tester equipment rental and amortization of acquisition-related intangible assets. Gross profit is calculated as net revenues less cost of revenues.

Gross profit decreased 14.0% for the six months ended December 31, 2009 compared to the six months ended December 31, 2008, principally as a result of (i) a $2.1 million accrual for ordered product with no expected demand from customers, (ii) a $1.3 million lower of cost or market adjustment for a portion of our SoC product and (iii) $0.2 million lower margin on primarily Micronas acquisition related revenues.

The net impact on gross profit due to an increase in inventory write-downs and reserves and sales of previously reserved product is as follows:

	Six Months Ended December 31,
	2009			2008
	(Dollars in thousands)
Additions to inventory reserves	$	1,055		$	1,917
Accrual for ordered product with no demand		2,100			—
Lower of cost or market adjustment		1,300			—
Sales of previously reserved product		(1,313	)		(1,852	)
Net decrease in gross profit	$	3,142		$	65

In the six months ended December 31, 2009 and 2008, as shown in the table above, inventory write-downs and reserves and sales of previously reserved product represents 5.0% and 0.1% of total net revenues respectively. No cost of revenues was recorded with respect to sales of previously reserved product, for the six months ended December 31, 2009 and 2008.

Sales of previously reserved inventory largely depend on the timing of transitions to newer generations of similar products. We typically expect declines in demand of current products when we introduce new products that are designed to enhance or replace our older products. We provide inventory reserves on our older products based on the expected decline in customer purchases of the new product. The timing and volume of the new product introductions can be significantly affected by events outside of our control, including changes in customer product introduction schedules. Accordingly, we may sell older fully reserved product until the customer is able to execute on its changeover plan.

Research and Development

	Six Months Ended December 31,
	2009			2008			% Change
	(Dollars in thousands)
Research and development	$	32,512		$	25,780			26.1	%
As a percentage of net revenues		51.6	%		47.7	%

Research and development expenses consist primarily of personnel-related expenses including payroll expenses, stock-based compensation, engineering costs related principally to the design of our new products

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and depreciation of property and equipment. Because the number of new designs we release to our third-party foundries can fluctuate from period to period, research, development and related expenses may fluctuate significantly.

Research and development expenses as a percentage of net revenues increased in the six months ended December 31, 2009 compared to the six months ended December 31, 2008 primarily due to $4.3 million in additional headcount related costs as a result of the expansion of our workforce following the acquisition of assets from Micronas in May 2009.

Selling, General and Administrative

	2009			2008			% Change
	(Dollars in thousands)
Selling, general and administrative	$	19,980		$	18,570			7.6	%
As a percentage of net revenues		31.7	%		34.4	%

Selling, general and administrative expenses consist primarily of personnel related expenses including stock-based compensation, commissions paid to sales representatives and distributors and professional fees.

Selling, general and administrative expenses increased for the six months ended December 31, 2009, compared to the six months ended December 31, 2008, primarily due to a $7.4 million increase in acquisition related expenses off-set principally by a $5.3 million decrease in equity compensation-related professional fees which includes a Director’s Officers’ insurance reimbursement of $2.1 million received during the six month period ended December 31, 2009.

Goodwill Impairment

	Six Months Ended December 31
	2009			2008% Change
	(Dollars in thousands)
Goodwill impairment		—		$	383		(100	)%
As a percentage of net revenues		0.0	%		0.7	%

There was no goodwill impairment charge in the six months ended December 31, 2009, because no indicators of impairment existed applicable to the period. Refer to Note 4, “Goodwill and Intangible Assets,” of the Notes to Consolidated Financial Statements in Item 8 of this report for further information.

Restructuring Charges

	Six Months Ended December 31,
	2009			2008			% Change
	(Dollars in thousands)
Restructuring charges	$	1,558		$	761			104.7	%
As a percentage of net revenues		2.5	%		1.4	%

On July 27, 2009, we announced our plans to terminate approximately 70 employees, or approximately 10 percent of our worldwide workforce, which followed our announcement in October 2008 of a global workforce reduction of approximately 15 percent. We have been undertaking a number of cost reduction activities, including workforce reductions and termination of lease agreements, in an effort to lower our operating expense run rate in response to the demand environment. Under the restructuring plan, we incurred restructuring charges of approximately $1.6 million for the six months ended December 31, 2009, all of which were cash expenditures. All activities related to these previously announced restructurings are expected to be fully completed and all associated restructuring costs will be paid by March 31, 2010.

During the six months ended December 31, 2008, we implemented a global cost reduction plan that reduced the number of our employees by approximately 100 employees worldwide. The reduction plan consisted primarily

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of involuntary employee termination and benefit costs. We recorded a restructuring charge of $0.8 million for the six months ended December 31, 2008, in connection with the restructuring.

Interest Income

	Six Months Ended December 31,
	2009			2008			% Change
	(Dollars in thousands)
Interest income	$	118		$	2,392			(95	)%
As a percentage of net revenues		0.2	%		4.4	%

We invest our cash and cash equivalents in interest-bearing accounts consisting primarily of certificates of deposits and money market funds investing in U.S. Treasuries. The average interest rates earned during the six months ended December 31, 2009 and 2008 were 0.2% and 1.1%, respectively. The decrease in interest income for the six months ended December 31, 2009 compared to the same period of the prior year was primarily due to a larger percentage of our investment portfolio having been shifted to lower yielding money market funds investing in U.S. Treasuries during the six months ended December 31, 2009.

Other Income (Expense), Net

	Six Months Ended December 31,
	2009			2008			% Change
	(Dollars in thousands)
Other income (expense), net	$	(1,212	)	$	4,167			(129	)%
As a percentage of net revenues		(1.9	%)		7.7	%

The change in other income (expense), net for the six months ended December 31, 2009 compared to the six months ended December 31, 2008, was primarily attributable to a $1.5 million foreign currency re-measurement loss for the six months ended December 31, 2009 compared to a $2.6 million foreign currency re-measurement gain for the six months ended December 31, 2008 and $1.2 million of dividend income received from available-for-sale securities recognized for the six months ended December 31, 2008 and no dividend income recognized for the six months ended December 31, 2009.

Provision for Income Taxes

	Six Months Ended December 31,
	2009			2008			% Change
	(Dollars in thousands)
Income Tax Provision		1,129			2,731			(59	)%
Effective tax rate		(3	)%		(9	)%		6	%

A provision for income taxes of $1.1 million and $2.7 million was recorded for the six months ended December 31, 2009 and 2008 respectively. The change in our effective tax rate from six months ended December 31, 2008 to six months ended December 31, 2009 was primarily due to a decrease of amortization of foreign taxes associated with intercompany profit on assets remaining within Trident’s consolidated group.

Liquidity and Capital Resources

Cash and cash equivalents at December 31, 2009 and 2008 were as follows:

	December 31,		December 31,
	2009		2008
	(Dollars in thousands)
Cash and cash equivalents	$	147,995	$	160,955

At December 31, 2009, approximately $49 million or 33% of our total cash and cash equivalents was held in the United States. The remaining balance, representing approximately $99 million, or 67% of total cash and cash equivalents, was held outside the United States, primarily in Hong Kong, and could be subject to additional taxation if it were to be repatriated to the United States.

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Our primary cash inflows and outflows for the six months ended December 31, 2009 and 2008 were as follows:

	Six Months Ended December 31,
	2009			2008
	(Dollars in thousands)
Net cash flow provided by (used in):
Operating activities	$	(31,924	)	$	(12,930	)
Investing activities		(8,256	)		10,675
Financing activities		238			1,153
Net increase (decrease) in cash and cash equivalents	$	(39,942	)	$	(1,102	)

Operating Activities

Cash used in operating activities is net income or loss adjusted for certain non-cash items and changes in current assets and current liabilities. For the six months ended December 31, 2009, cash used in operating activities was $31.9 million primarily due to a net loss of $40.5 million, a decrease in inventory of $7.7 million, a decrease in income tax payable of $10.8 million, offset primarily by an increase in accounts payable of $8 million, a decrease in accounts receivable of $4.5 million and non-cash stock compensation and depreciation and amortization charges of $10.2 million. For the six months ended December 31, 2009, accounts receivable decreased primarily due to early payment from a large customer, inventories decreased primarily due to shipment of product, accounts payable increased primarily due to the general timing of payments and income taxes payable decreased primarily due to a tax payment associated with the liquidation of TTI.

Investing Activities

For the six months ended December 31, 2009, cash used in investing activities consists primarily of capital expenditures, purchases of intellectual property and cash used for business combinations, partially offset by sales of investments. For the six months ended December 31, 2009, cash used in investing activities was $8.2 million. For the six months ended December 31, 2008, cash used in investing activities was primarily attributable to cash proceeds from the UMC capital reduction, an event which did not recur in the six months ended December 31, 2009.

Financing Activities

Cash provided by financing activities consists primarily of cash proceeds from the issuance of common stock to employees upon exercise of stock options. Cash provided by financing activities for the six months ended December 31, 2009 was $0.2 million from cash proceeds from the issuance of common stock to employees upon exercise of stock options.

Liquidity

Our liquidity is affected by many factors, some of which result from the normal ongoing operations of our business and some of which arise from uncertainties and conditions in Asia and the global economy. Although the majority of our cash and cash equivalents is held outside the United States, and, therefore, might be subjected to the factors described above, we believe our current resources are sufficient to meet our needs for at least the next twelve months. We will consider transactions to finance our activities, including debt and equity offerings and new credit facilities or other financing transactions, as needed in the future.

On February 8, 2010, we issued 104,204,348 new shares of our common stock to NXP, equal to 60% of the total outstanding shares of our Common Stock after giving effect to the share issuance to NXP, in exchange for the contribution of selected assets and liabilities of the television systems and set-top box business lines acquired from NXP and cash proceeds in the amount of $45 million. Our liquidity may also be affected if we fail to realize some or all of the anticipated benefits of our acquisitions of business lines of NXP and Micronas. See Note 16, “Subsequent Events,” and Note 11, “Business Combinations,” of the Notes to the Consolidated Financial Statements.

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Days Sales Outstanding

Trade accounts receivable days sales outstanding were 15 days as of December 31, 2009 and 3 days as of December 31, 2008. Currently, we grant credit terms to new customers of between net 30 and 45 days compared to the prepayment and net 30 days credit terms granted to new customers in prior periods.

Contractual Obligations

The following summarizes our contractual obligations as of December 31, 2009:

	Payments Due by Period
	Less Than 1						More Than
	Year		1-3 Years		3-5 Years		5 Years		Total
	(Dollars in millions)
Contractual Obligations
Operating Leases(1)	$	1.4	$	2.2	$	0.5	$	1.6	$	5.7
Purchase Obligations(2)		31.6		—		—		—		31.6
Total	$	33.0	$	2.2	$	0.5	$	1.6	$	37.3

(1)

At December 31, 2009 we leases office space and have entered into lease commitments, which expire at various dates through August 2019, in North America as well as various locations in Japan, Hong Kong, China, Taiwan, South Korea, Singapore, Germany, and The Netherlands. Operating lease obligations include future minimum lease payments under non-cancelable operating leases as of December 31, 2009 and do not include lease commitments resulting from the acquisition of selected assets and liabilities of NXP on February 8, 2010, or our corporate headquarters lease commencing April 1, 2010, or our engineering software license and maintenance agreement entered into on March 5, 2010. See Note 16, “Subsequent Events,” of the Notes to Consolidated Financial Statements.

(2)

Purchase obligations primarily represent unconditional purchase order commitments with contract manufacturers and suppliers for wafers and software licensing.

Rental expense for the six months ended December 31, 2009 and the fiscal years ended June 30, 2009, 2008, and 2007 was $1.4 million, $1.5 million, $1.5 million, and $2.0 million, respectively.

As of December 31, 2009, the long-term income taxes payable was $22.3 million. We are unable to make a reasonably reliable estimate of the timing of payments in individual years beyond twelve months due to uncertainties in the timing of tax audit outcomes.

Accordingly, we have excluded this obligation from the schedule presented above summarizing our significant obligations to make future payments under contractual obligations as of December 31, 2009.

As of December 31, 2009, we had purchase commitments in the amount of $31.6 million that were not included in the consolidated balance sheet at that date. Of this amount, $27.5 million represents purchase commitments by us to UMC and Micronas, our principal foundries, and $4.1 million represents purchase commitments by us for intellectual properties, software licensing purchases and other commitments. Among the $27.5 million inventory purchase commitments, $23.6 million and $3.9 million were to UMC and Micronas, respectively.

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Corporate Headquarters Lease and Software License and Maintenance Agreement

The following summarizes our obligations resulting from our corporate headquarters lease and software license and maintenance agreement:

	Payments Due By Period
	Less than 1						More than 5
	year		1-3 years		3-5 years		years		Total
	(Dollars in millions)
Corporate Headquarters Lease (1)	$	0.5	$	2.5	$	0.9	$	—	$	3.9
Software License and Maintenance Agreement (2)		3.1		3.1		—		—	$	6.2
Total	$	3.6	$	5.6	$	0.9	$	—	$	10.1

(1)	We have entered into a five year, 57,649 square foot lease for our corporate headquarters located in Sunnyvale, California commencing April 1, 2010 having a $3.9 million total future leases obligation. See Note 16, “Subsequent Events,” to the Notes to Consolidated Financial Statements.
(2)	We have entered into an engineering software license and maintenance agreement with NXP on March 5, 2010 having a future net cash obligation of $6.2 million. See Note 16, “Subsequent Events,” of the Notes to Consolidated Financial Statements.

NXP Acquisition Related Commitments

On February 8, 2010, as a result of the acquisition of selected assets and liabilities of the television systems and set-top box business lines acquired from NXP, we entered into a Transition Services Agreement, pursuant to which NXP will provide to us, for a limited period of time, specified transition services and support. Depending on the service provided, the term for the majority of services range from three to eighteen months, and limited services could continue into the fourth quarter of 2011. Also as a result of the acquisition of the NXP business lines, we entered into a Manufacturing Services Agreement pursuant to which NXP will provide manufacturing services to us for a limited period of time. The term of the agreement ends on the earlier of (i) June 30, 2011 or (ii) the readiness of our enterprise resource planning system. The terms of the agreements allow us to cancel either or both the Transition Services Agreement and the Manufacturing Services Agreement. See Note 16, “Subsequent Events,” of the Notes to Consolidated Financial Statements.

Contingencies

Shareholder Derivative Litigation

Trident has been named as a nominal defendant in several purported shareholder derivative lawsuits concerning the granting of stock options. The federal court cases have been consolidated as In re Trident Microsystems Inc. Derivative Litigation, Master File No. C-06-3440-JF. A case also has been filed in State court, Limke v. Lin et al., No. 1:07-CV-080390. Plaintiffs in all cases allege that certain of our current or former officers and directors caused it to grant options at less than fair market value, contrary to our public statements (including our financial statements); and that as a result those officers and directors are liable to us. No particular amount of damages has been alleged, and by the nature of the lawsuit no damages will be alleged against us. The Board of Directors has appointed a Special Litigation Committee (“SLC”), composed solely of independent directors, to review and manage any claims that we may have relating to the stock option grant practices investigated by the SLC. The scope of the SLC’s authority includes the claims asserted in the derivative actions. In federal court, Trident has moved to stay the case pending the assessment by the SLC that was formed to consider nominal plaintiffs’ claims. In State court, Trident moved to stay the case in deference to the federal lawsuit, and the parties have agreed, with the Court’s approval, to take that motion off of the Court’s calendar to await the assessment of the SLC. The Special Litigation Committee recommended settlements with certain of the defendants and the federal court has approved these settlements preliminarily, subject to a hearing seeking final court approval. We cannot predict whether these actions are likely to result in any material recovery by or expense to, Trident. We expect to continue to incur legal fees in responding to these lawsuits, including expenses for the reimbursement of legal fees of present and former officers and directors under indemnification obligations.

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Regulatory Actions

We are subject to a formal investigation by the Securities and Exchange Commission in connection with its investigation into its stock option granting practices and related issues and e have been cooperating and will continue to cooperate with any inquiries from the SEC. Although the Department of Justice (“DOJ”) commenced an investigation relating to the same issues, the DOJ has not requested information from us since February 20, 2009 and we believe that the DOJ has concluded its investigation without taking any action against us. In addition, we have received an inquiry from the Internal Revenue Service to which it has responded. Any regulatory investigation could result in substantial legal and accounting expenses, divert management’s attention from other business concerns and harm our business. Any action commenced against us by a regulatory agency could result in orders against us, the imposition of significant penalties and/or fines against us, and/or the imposition of civil sanctions against us or certain of our former officers, directors and/or employees. Any regulatory action could result in the filing of additional restatements of our prior financial statements or require that we take other actions. If we are subject to an adverse finding resulting from the SEC investigation, we could be required to pay damages or penalties or have other remedies imposed upon us. We are unable to predict what consequences, if any, that an investigation by any regulatory agency may have on us. The period of time necessary to resolve the investigation by the SEC is uncertain, and this matter could require significant management and financial resources which could otherwise be devoted to the operation of our business.

Special Litigation Committee

Effective at the close of trading on September 25, 2006, we temporarily suspended the ability of optionees to exercise vested options to purchase shares of our common stock, until we became current in the filing of our periodic reports with the SEC and filed a Registration Statement on Form S-8 for the shares issuable under the 2006 Plan, or 2006 Plan S-8. This suspension continued in effect through August 22, 2007, the date of the filing of the 2006 Plan S-8, which followed our filing, on August 21, 2007, of our Quarterly Reports on Form 10-Q for the periods ended September 30, 2006, December 31, 2006 and March 31, 2007. As a result, we extended the exercise period of approximately 550,000 fully vested options held by 10 employees, who were terminated during the suspension period, giving them either 30 days or 90 days after we became current in the filings of our periodic reports with the SEC and filed the 2006 Plan S-8 in order to exercise their vested options. During the three months ended September 30, 2007, eight of these ten former employees stated above exercised all of their vested options. However, on September 21, 2007, the SLC decided that it was in the best interests of our stockholders not to allow the remaining two former employees, as well as our former CEO and two former non-employee directors, to exercise their vested options during the pendency of the SLC’s proceedings, and extended, until March 31, 2008, the period during which these five former employees could exercise approximately 428,000 of their fully vested options. Moreover, the SLC allowed one former employee to exercise all of his fully vested stock options and another former employee agreed to cancel all of such individual’s fully vested stock options during the three months ended March 31, 2008.

On January 31, 2008, the SLC extended, until August 31, 2008, the period during which the two former non-employee directors could exercise their unexpired vested options. On March 31, 2008, the SLC entered into an agreement with our former CEO allowing him to exercise all of his fully vested stock options. Under this agreement, he agreed that any shares obtained through these exercises or net proceeds obtained through the sale of such shares would be placed in an identified securities brokerage account and not withdrawn, transferred or otherwise removed without either (i) a court order granting him permission to do so or (ii) the written permission of us.

On May 29, 2008, the SLC permitted one of our former non-employee directors to exercise his fully vested stock and entered into an agreement with the other former non-employee director on terms similar to the agreement entered into with our former CEO, allowing him to exercise all of his fully vested stock options. Because Trident’s stock price as of June 30, 2008 was lower than the prices at which our former CEO and each of the two former non-employee directors had desired to exercise their options, as indicated in previous written notices to the SLC, we recorded a contingent liability in accordance with applicable accounting guidance, totaling $4.3 million, which was included in “Accrued expenses and other current liabilities” in the Consolidated Balance Sheet as of June 30, 2008 and the related expenses were included in “Selling, general and administrative expenses” in the Consolidated Statement of Operations for the fiscal year then ended. As the SLC investigation is still in progress, we believe that

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our former CEO, two former non-employee directors and two former employees may seek compensation from us relating to the exercise of their fully vested stock options; therefore, a $4.3 million contingent liability remained in “Accrued expenses and other current liabilities” in the Condensed Consolidated Balance Sheet as of June 30, 2009. On August 11, 2009, in connection with negotiations between the SLC and our former CEO, an agreement was executed tolling the statute of limitations applicable to potential claims by our former CEO against us. On January 29, 2010, the SLC and our former CEO agreed to continue to toll the statute of limitations on these potential claims until May 10, 2010.

Indemnification Obligations

We indemnify, as permitted under Delaware law and in accordance with our Bylaws, our officers, directors and members of our senior management for certain events or occurrences, subject to certain limits, while they were serving at our request in such capacity. In this regard, we have received, or expect to receive, requests for indemnification by certain current and former officers, directors and employees in connection with our investigation of our historical stock option granting practices and related issues, and the related governmental inquiries and shareholder derivative litigation. The maximum amount of potential future indemnification is unknown and potentially unlimited; therefore, it cannot be estimated. We have directors’ and officers’ liability insurance policies that may enable us to recover a portion of such future indemnification claims paid, subject to coverage limitations of the policies, and plan to make claim for reimbursement from our insurers of any potentially covered future indemnification payments.

General

From time to time, we are involved in other legal proceedings arising in the ordinary course of our business. While we cannot be certain about the ultimate outcome of any litigation, management does not believe any pending legal proceeding will result in a judgment or settlement that will have a material adverse effect on our business, financial position, results of operation or cash flows.

Recent Accounting Pronouncements

In October 2009, new accounting guidance was issued for revenue recognition with multiple deliverables. The new guidance impacts the determination of when the individual deliverables included in a multiple-element arrangement may be treated as separate units of accounting. Additionally, the new guidance modifies the manner in which the transaction consideration is allocated across the separately identified deliverables by no longer permitting the residual method of allocating arrangement consideration. The new guidance is effective beginning in the first quarter of fiscal year 2011, however early adoption is permitted. We do not expect the new guidance to significantly our consolidated financial statements.

In October 2009, new accounting guidance was issued for the accounting for certain revenue arrangements that include software elements. This new guidance amends the scope of pre-existing software revenue guidance by removing from the guidance non-software components of tangible products and certain software components of tangible products. The new guidance is effective beginning the first quarter of fiscal year 2011, however early adoption is permitted. We do not expect the new guidance to significantly impact our consolidated financial statements.

In January 2010, new accounting guidance was issued which includes two major new disclosure requirements and clarifies two existing disclosure requirements related to fair value measurement. The guidance is effective for interim or annual reporting periods beginning after December 15, 2009. The adoption of this guidance will not significantly impact our consolidated financial statements. This guidance will be incorporated into the disclosure related to the fair value of financial instruments in the quarterly filing for the first quarter of fiscal year 2010.

In April 2009, new accounting guidance was issued amending and clarifying application issues regarding initial recognition and measurement, subsequent measurement and accounting and disclosure of assets and liabilities arising from contingencies in a business combination. The guidance is effective for assets or liabilities arising from contingencies in business combinations for which the acquisition date is on or after the beginning of the

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first annual reporting period beginning on or after December 15, 2008. We have adopted the accounting guidance and the guidance is reflected in our consolidated financial statements.

Financial Data for Fiscal Years Ended June 30, 2009, 2008, and 2007

Net Revenues

Digital media product revenues represented all of our total revenues in fiscal years ended June 30, 2009, 2008, and 2007. Our digital media products include integrated circuit chips used in digital television and liquid crystal display television, or LCD TV. Net revenues are revenues less reductions for rebates and allowances for sales returns. The following tables present the comparison of net revenues by regions in dollars and in percentages for fiscal years ended June 30, 2009, 2008, and 2007.

Net revenues comparison by dollars

	Fiscal Years Ended June 30,
					Dollar			Percent							Dollar			Percent
Revenues by Region(1)	2009		2008		Variance			Variance			2008		2007		Variance			Variance
	(Dollars in thousands)
Japan	$	41,615	$	91,306	$	(49,691	)		(54	)%	$	91,306	$	91,721	$	(415	)		(0	)%
Europe		13,841		53,801		(39,960	)		(74	)%		53,801		17,421		36,380			209	%
Asia Pacific(2)		14,061		32,618		(18,557	)		(57	)%		32,618		45,725		(13,107	)		(29	)%
South Korea		5,819		79,608		(73,789	)		(93	)%		79,608		115,513		(35,905	)		(31	)%
Americas		425		605		(180	)		(30	)%		605		415		190			46	%
Total net revenues	$	75,761	$	257,938	$	(182,177	)		(71	)%	$	257,938	$	270,795	$	(12,857	)		(5	)%

Net revenues comparison by percentage of total net revenues

	Fiscal Years Ended June 30,
Revenues by Region(1)	2009			2008			2007
Japan		54.9	%		35.4	%		33.9	%
Europe		18.2	%		20.9	%		6.4	%
Asia Pacific(2)		18.6	%		12.6	%		16.9	%
South Korea		7.7	%		30.9	%		42.6	%
Americas		0.6	%		0.2	%		0.2	%
Total net revenues		100	%		100	%		100.0	%

(1)	Net revenues by region are classified based on the locations of the customers’ principal offices even though our customers’ revenues may be attributable to end customers that are located in a different location.
(2)	Net revenues from China, Taiwan and Singapore are included in the Asia Pacific region.

Comparison of fiscal year ended June 30, 2009 to fiscal year ended June 30, 2008

Digital media product revenues decreased by $182.2 million in fiscal year ended June 30, 2009 compared to fiscal year ended June 30, 2008. In fiscal year ended June 30, 2009, total SVP revenues decreased by $188.6 million, while SoC revenues decreased by $1.5 million. These decreases were partially offset by increased revenues of $7.9 million resulting from the sale of FRC, demodulator and audio decoder products that were acquired from Micronas following the acquisition which closed on May 14, 2009. Our unit sales volume of digital media products decreased by 58% in fiscal year ended June 30, 2009 compared to fiscal year ended June 30, 2008 and the year-over-year average selling prices of these products decreased by approximately 29%.

During the fiscal year ended June 30, 2009, net revenues decreased in all regions. Revenues in South Korea decreased significantly primarily due to a major South Korean customer shifting its strategy to design and produce

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portions of its silicon products internally rather than outsourcing the design to a third-party vendor. Revenues in Japan and Europe decreased primarily due to the absence of major design wins for our SoC products at tier one customers and lower revenues generated from our existing products that are going to be phased out of production. Revenues in Asia Pacific decreased primarily due to the continued decrease in sales of SVP products and intense price competition in the market where we sell discrete image process controllers. Overall, the revenue decline in fiscal year ended June 30, 2009 was primarily due to decreased sales of our legacy SVP products, the loss of design win opportunities relating to our new SoC products, and to a lesser extent, due to the global economic downturn.

Comparison of fiscal year ended June 30, 2008 to fiscal year ended June 30, 2007

Digital media product revenues decreased $12.9 million in fiscal year ended June 30, 2008 compared to fiscal year ended June 30, 2007. In fiscal year ended June 30, 2008, total SVP revenues decreased by $28.6 million, while SoC revenues increased by $15.7 million. Our unit sales volume of digital media products increased by 0.9% in fiscal year ended June 30, 2008 compared to fiscal year ended June 30, 2007 and the year-over-year average selling prices of these products decreased by approximately 5.6%. The decrease in digital media product revenues was primarily due to (i) the delay in the introduction of our SoC products to a Korean OEM, (ii) aggressive competition in China’s DTV market, and (iii) shorter life cycles for newer SVP products compared to the older versions and (iv) the slower transition from our SVP to SoC products in the second half of fiscal year ended June 30, 2008.

During fiscal year ended June 30, 2008, net revenues decreased in most regions, particularly in South Korea and Asia Pacific, except Europe. Revenues in South Korea decreased primarily due to the delayed introduction of our SoC products. Asia Pacific revenues decreased primarily due to the decreased sales of SVP products and competition from the discrete image process controller market. However, revenues in Europe, our fastest growing region, more than doubled and increased by $36.4 million in fiscal year ended June 30, 2008 compared to fiscal year ended June 30, 2007. This increase resulted primarily from an increase in sales of certain SVP products sold to a major European OEM customer.

Gross Margin

	Fiscal Years Ended June 30,
	2009			2008			% Change			2007			% Change
	(Dollars in thousands)
Gross profit	$	23,328		$	120,026			(81	)%	$	129,107			(7	)%
Gross margin		30.8	%		46.5	%					47.7	%

Cost of revenues includes the cost of purchasing wafers manufactured by an independent foundry, costs associated with our purchase of assembly, test and quality assurance services, royalties, product warranty costs, provisions for excess and obsolete inventories, operation support expenses that consist primarily of personnel-related expenses including payroll, stock-based compensation expenses, and manufacturing costs related principally to the mass production of our products, tester equipment rental and amortization of acquisition-related intangible assets.

Gross margin is calculated as net revenues less cost of revenues as a percentage of net revenue. Gross margin has continued to be impacted by our product mix and volume of product sales, including sales to high volume customers, royalties, competitive pricing programs, product warranty costs, provisions for excess and obsolete inventories, and cost associated with operational support.

Comparison of fiscal year ended June 30, 2009 to fiscal year ended June 30, 2008

Gross margin decreased 15.7 percentage points in fiscal year ended June 30, 2009 compared to fiscal year ended June 30, 2008, principally as a result of (i) significantly lower revenues that did not offer the economies of scale needed to cover fixed manufacturing support costs, (ii) a weaker product mix of SVP and SoC products, (iii) write down of acquisition-related intangible assets, and (iv) an increase in intangible assets amortization as a percentage of decreasing revenues.

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Comparison of fiscal year ended June 30, 2008 to fiscal year ended June 30, 2007

Gross margin has continued to be impacted by our product mix and volume of product sales, including sales to high volume customers, royalties, competitive pricing programs, product warranty costs, provisions for excess and obsolete inventories, and cost associated with operational support. Gross margin decreased 1.2 percentage points in fiscal year ended June 30, 2008 compared to fiscal year ended June 30, 2007, principally as a result of (i) the blended average selling price for our SVP product line decreasing at a faster rate than our unit cost and (ii) a product shift to a more complex technology content, such as ME/MC feature, which has a higher royalty unit fee, partially offset by (iii) a decrease in amortization of intangible assets.

The net impact on gross profit of the increases in inventory write-downs and sales of previously reserved products is as follow:

	Fiscal Years Ended June 30,
	2009			2008			2007
	(Dollars in thousands)
Additions to inventory reserves	$	3,148		$	2,747		$	2,204
Sales of previously reserved products		(5,082	)		(4,676	)		(4,463	)
Net increase in gross profit	$	(1,934	)	$	(1,929	)	$	(2,259	)

In fiscal year ended June 30, 2009, as shown in the table above, revenues from the sale of previously reserved products were $5.1 million or 6.7% of total net revenues. Due to the previously recorded reserves, there was no cost of revenues reflected with respect to these product sales, which in effect, provided a benefit to the current income statement to the extent of the selling price. Concurrently, we recorded additional inventory reserves for fiscal year ended June 30, 2009 in the amount of approximately $3.1 million.

Sales of previously reserved inventory largely depend on the timing of transitions to newer generations of similar products. When we introduce new products that are designed to enhance or replace our older products, we typically provide inventory reserves on our older products based on the expected timing and volume of customer purchases of the new product. The timing and volume of the new product introductions can be significantly affected by events out of our control, including changes in customer product introduction schedules. Accordingly, we may end up selling more of our older fully reserved product until the customer is able to execute on its changeover plan.

Research and Development

	Fiscal Years Ended June 30,
	2009			% Change			2008			% Change			2007
	(Dollars in thousands)
Research and development	$	53,016			1	%	$	52,608			28	%	$	40,970
As a percentage of net revenues		70	%					20	%					15	%

Research and development expenses consist primarily of personnel-related expenses including payroll expenses, stock-based compensation, engineering costs related principally to the design of our new products and depreciation of property and equipment. Because the number of new designs we release to our third-party foundries can fluctuate from period to period, research, development and related expenses may fluctuate significantly. We anticipate that research and development expenses will increase in fiscal year ended June 30, 2010 as we are currently planning to continue the development of our next generation SoC and discrete products as well as enhancements to our existing products.

Research and development expenses as a percentage of net revenues increased significantly from fiscal year 2008 to fiscal year 2009 due primarily to the significant decrease in revenues in fiscal year 2009. The increase in research and development expenses for fiscal year ended June 30, 2009 compared to fiscal year ended June 30, 2008 was primarily due to (i) a $4.5 million increase in third-party IP licenses, (ii) a $2.8 million increase in employee-related expenses associated with increased employee headcount in connection with the acquisition in May 2009 and (iii) $1.7 million third-party IP impairment write-off due to a change in business strategy and a change in business use of assets associated with the acquisition, offset by (iv) a $4.1 million decrease in stock-based compensation

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expense principally due to certain option modifications and contingent liabilities associated with vested options of certain terminated employees that occurred only during the fiscal year ended June 30, 2008, (v) a $2.6 million decrease in new product development expenditures was attributable to a $1.4 million reversal of software license fee adjustment for prior software usage during the fiscal year ended June 30, 2009, and (vi) a $1.9 million decrease from lower mask tooling fees due to decrease in production. For the detail of the third-party IP impairment analysis and prior years’ software usage, refer to Note 4, “Goodwill and intangible assets” and Note 6, “Commitments and contingencies” of the Notes to Consolidated Financial Statements for detail, respectively.

The increase in research and development expenses for fiscal year ended June 30, 2008 compared to fiscal year ended June 30, 2007 was primarily the result of (i) a $4.0 million increase in salary and payroll-related expenses associated with increased employee headcount in fiscal year ended June 30, 2008 compared to fiscal year ended June 30, 2007, (ii) a $3.5 million increase in stock-based compensation expense recognized in accordance with accounting guidance, (iii) a $1.0 million increase in depreciation expense due to the completion of our research and development center in Shanghai, China in September 2007 and (iv) a $2.7 million increase in new product development expenditures. The $2.7 million increase in new product development expenditures was attributable to a $1.4 million software license fee adjustment for prior software usage and an additional $1.3 million representing increased engineering expenses related to the new product development.

Selling, General and Administrative

	Fiscal Years Ended June 30,
	2009			% Change			2008			% Change			2007
	(Dollars in thousands)
Selling, general and administrative	$	29,617			(39	)%	$	48,598			1	%	$	47,993
As a percentage of net revenues		39	%					19	%					18	%

Selling, general and administrative expenses consist primarily of personnel related expenses including stock-based compensation, commissions paid to sales representatives and distributors and professional fees.

Selling, general and administrative expenses as a percentage of net revenues increased significantly from fiscal year 2008 to fiscal year 2009 due primarily to the significant decrease in revenues in fiscal year 2009. The decrease in selling, general and administrative expenses for fiscal year ended June 30, 2009 compared to fiscal year ended June 30, 2008, resulted primarily from (i) a $10.9 million decrease in stock-based compensation expense primarily related to the extension of the option exercise period and contingent liabilities associated with vested options of certain terminated employees that occurred only in fiscal year ended June 30, 2008, (ii) a $5.7 million decrease in sales commission paid to distributors’ representatives due to the decreased product sales in fiscal year ended June 30, 2009 compared to fiscal year ended June 30, 2008, (iii) a $5.3 million decrease in legal and professional fees due to the completion of our investigation into our stock option granting process in September 2007, partially offset by (iv) a $1.5 million increase in salary and payroll-related expense associated with increased employee headcount in fiscal year ended June 30, 2009 compared to fiscal year ended June 30, 2008 and (v) a $1.3 million increase in consulting fees.

During the fiscal year ended June 30, 2009, we capitalized approximately $4.1 million of legal and professional fees related to due diligence in connection with the acquisition of Micronas. We anticipate that our selling, general and administrative expenses will slightly increase in fiscal year ended June 30, 2010.

The increase in selling, general and administrative expenses for fiscal year ended June 30, 2008 compared to fiscal year ended June 30, 2007, resulted principally from (i) an additional $9.6 million stock-based compensation expense primarily related to the extension of stock option exercise periods and contingent liabilities associated with vested options of certain terminated employees, (ii) a $1.2 million increase in consulting fees primarily due to the hiring of an outside consulting firm to review our operating and sales functions during the fourth quarter of fiscal year ended June 30, 2008, (iii) a $1.3 million increase in salaries associated with increased employee headcount compared to fiscal year ended June 30, 2007, partially offset by (iv) a $10.9 million decrease in professional fees and (v)a $0.8 million decrease in commissions paid to distributors’ representatives associated with decreased revenues. The primary reason for the decrease in professional fees was the September 2007 completion of our

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investigation into our stock option granting practices. The professional fees related to the cost of this investigation were $6.0 million for fiscal year ended June 30, 2008 compared to $16.8 million for fiscal year ended June 30, 2007.

Goodwill Impairment

	Fiscal Years Ended June 30,
	2009			% Change			2008			% Change			2007
	(Dollars in thousands)
Goodwill impairment	$	1,432			100	%	$	—			0	%	$	—
As a percentage of net revenues		2	%					0	%					0	%

During the fiscal year ended June 30, 2009, an impairment test was conducted resulting from redeploying our engineering resources in TMBJ and by canceling our STB efforts to better support our focus on SoC development. This factor was considered an indicator of potential impairment, and as a result, we performed an interim impairment analysis of our goodwill. Based on the results of this goodwill impairment analysis, we determined that there would be no remaining implied value attributable to goodwill at TMBJ, and accordingly, we wrote off the entire goodwill balance at TMBJ and recognized goodwill impairment charges of $1.4 million under “Goodwill impairment” in the Consolidated Statement of Operations for fiscal year ended June 30, 2009. Refer to Note 4, “Goodwill and Intangible Assets,” of the Notes to Consolidated Financial Statements in Item 8 of this report for further information.

In-Process Research and Development

	Fiscal Years Ended June 30,
	2009			% Change			2008			% Change			2007
	(Dollars in thousands)
In-process research and development	$	697			100	%	$	—		$	0	%	$	—
As a percentage of net revenues		1	%					0	%					0	%

The in-process research and development (“IPR&D”) expense was incurred in connection with the acquisition of certain product lines of Micronas in fiscal year ended June 30, 2009. The IPR&D relates to masks and tools that were completed after the announcement date but prior to the closing date of the acquisition and that have no alternative future use.

Restructuring Charges

	Fiscal Years Ended June 30,
	2009			% Change			2008			% Change			2007
	(Dollars in thousands)
Restructuring charges	$	810			100	%				$	0	%	$
As a percentage of net revenues		1	%					0	%					0	%

During fiscal year ended June 30, 2009, we implemented a global cost reduction plan that reduced the number of our employees by approximately 100 employees worldwide. The reduction plan consisted primarily of involuntary employee termination and benefit costs. We recorded a restructuring charge of $0.8 million for the fiscal year ended June 30, 2009, in connection with the restructuring.

Loss on Sale of Short-term Investments

	Fiscal Years Ended June 30,
	2009			% Change			2008			% Change			2007
	(Dollars in thousands)
Loss on sale of short-term investments	$	(8,940	)		100	%	$	—			0	%	$	—
As a percentage of net revenues		(12	%)					0	%					0	%

During the fiscal year ended June 30, 2009, we sold all of our 52.5 million shares of UMC common stock for net proceeds of $17.2 million and recorded a loss on sale of approximately $9.0 million under “Loss on sale of short-term investments” in our Consolidated Statement of Operations.

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Impairment Loss on UMC Investment

	Fiscal Years Ended June 30,
	2009			% Change			2008			% Change			2007
	(Dollars in thousands)
Impairment loss on UMC investment	$	(556	)		(91	)%	$	(6,480	)		(100	)%	$	0
As a percentage of net revenues		(1	%)					(3	%)					0	%

Impairment loss on UMC investment represents the impairment charge when the decline in the fair value of our investment below our cost basis is determined to be other-than-temporary. For fiscal years ended June 30, 2009 and 2008, we recorded impairment charges of $0.6 million and $6.5 million, respectively, to reflect the decrease in carrying value of the UMC securities we held. We have determined whether an impairment charge is other-than-temporary in nature in accordance with accounting guidance. See the discussion at Note 2 “Investments,” of Notes to the Consolidated Financial Statements in Item 8 for more detailed information on this impairment charge.

Interest Income, Net

	Fiscal Years Ended June 30,
	2009			% Change			2008			% Change			2007
	(Dollars in thousands)
Interest income, net	$	2,968			(52	)%	$	6,166			26	%	$	4,890
As a percentage of net revenues		4	%					2	%					2	%

We invest our cash and cash equivalents in interest-bearing accounts consisting primarily of certificates of deposits and U.S. Treasuries. The average interest rates earned during fiscal years ended June 30, 2009 and 2008 were 1.6% and 2.9%, respectively. The decrease in the average interest income for the fiscal year ended June 30, 2009 was primarily due to (i) the reduction of federal funds rate from 2.0% to 0.21% by the Federal Reserve Bank and (ii) a larger percentage of our investment portfolio having been shifted from money market funds to lower yielding U.S. Treasuries during the fiscal year ended June 30, 2009.

The increase in interest income for fiscal year ended June 30, 2008 compared to fiscal year ended June 30, 2007 was primarily attributable to an increase in cash and cash equivalents on hand from $147.6 million in fiscal year ended June 30, 2007 to $213.3 million in fiscal year ended June 30, 2008, partially offset by a decrease in interest rates during fiscal year ended June 30, 2008.

Other Income, Net

	Fiscal Years Ended June 30,
	2009			% Change			2008			% Change			2007
	(Dollars in thousands)
Other income, net	$	4,053			811	%	$	445			(77	)%	$	1,947
As a percentage of net revenues		5	%					0	%					1	%

Other income, net primarily represents dividend income received from our investments and the foreign currency remeasurement gain or loss. The increase in other income, net for fiscal year ended June 30, 2009, compared to fiscal year ended June 30, 2008, was primarily attributable to (i) a $2.6 million foreign currency remeasurement gain related to income taxes payable in foreign jurisdictions, which resulted from the relative strengthening of the U.S. dollar in fiscal year ended June 30 2009 compared to a $2.7 million foreign currency remeasurement loss related to income taxes payable in foreign jurisdictions, which resulted from the relative weakness of the U.S. dollar in fiscal year ended June 30, 2008, partially offset by (ii) a $1.0 million decrease in gains from the sale of available-for-sale investments and (iii) a $0.6 million decrease in dividend income from the UMC investment compared to fiscal year ended June 30, 2008.

The decrease in other income, net for fiscal year ended June 30, 2008 compared to fiscal year ended June 30, 2007, was primarily attributable to (i) a $2.7 million foreign currency remeasurement loss related to income taxes payable in foreign jurisdictions, which resulted from the relative weakness of the U.S. dollar, partially offset by (ii) a

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$0.8 million increase in dividend income received from available-for-sale securities and (iii) a $0.8 million increase in gains from the sale of available-for-sale securities.

Provision for Income Taxes

	Fiscal Years Ended June 30,
	2009			Change			2008			Change			2007
Income tax provision		5,513			(37	)%		8,799			(47	)%		16,673
Effective tax rate		(9	%)		(55	%)		46	%		11	%		35	%

A provision for income taxes of $5.5 million, $8.8 million and $16.7 million was recorded for fiscal years ended June 30, 2009, 2008, and 2007, respectively. The decrease in our effective tax rate from fiscal year ended June 30, 2008 to fiscal year ended June 30, 2009 was primarily due to a decrease in $4.4 million of amortization of foreign taxes associated with intercompany profit on assets remaining within Trident’s consolidated group. The amortization of foreign taxes associated with intercompany profit on assets remaining within Trident’s consolidated group was completed in fiscal year ended June 30, 2009 and we will not incur additional amortization of foreign taxes associated with intercompany profit on assets remaining within Trident’s consolidated group in fiscal year ended December 31, 2010 and beyond. The increase in our effective tax rate from fiscal year ended June 30, 2007 to fiscal year ended June 30, 2008 was primarily due to the amortization of foreign taxes associated with intercompany profit on assets remaining within Trident’s consolidated group and the amortization of foreign taxes as a percentage of lower income before provision of income taxes.

Liquidity and Capital Resources

Cash and cash equivalents and short-term investments at the end of each year were as follows:

	June 30,		June 30,		Increae/
	2009		2008		(Decrease)
	(Dollars in millions)
Cash, cash equivalents and short-term investments
Cash and cash equivalents	$	187.9	$	213.3	$	(25.4	)
Short-term investments		—		26.7		(26.7	)
Total	$	187.9	$	240.0	$	(52.1	)

At June 30, 2009, approximately $54.4 million or 29% of our total cash and cash equivalents was held in the United States. The remaining balance, representing approximately $133.5 million, or 71% of total cash and cash equivalents was held outside the United States, primarily in Hong Kong, and could be subject to additional taxation if it were to be repatriated to the United States. The net decrease in cash and cash equivalents was primarily driven by our loss from operations.

Our primary cash inflows and outflows for fiscal years ended June 30, 2009, 2008, and 2007 were as follows:

	Fiscal Years
	2009			2008		2007
	(Dollars In millions)
Net cash flow provided by (used in):
Operating activities	$	(31.9	)	$	57.9	$	62.1
Investing activities		5.3			1.7		(17.7	)
Financing activities		1.2			6.1		0.1
Net increase (decrease) in cash and cash equivalents	$	(25.4	)	$	65.7	$	44.5

Operating Activities

Cash provided by or used in operating activities is net income or loss adjusted for certain non-cash items and changes in current assets and current liabilities. For fiscal year ended June 30, 2009, cash used in operating activities

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was $31.9 million compared to $57.9 million cash provided by operating activities for fiscal year ended June 30, 2008. The decrease was primarily due to net loss of $70.2 million in fiscal year ended June 30, 2009 versus net income of $10.2 million in fiscal year ended June 30, 2008 which resulted from a significant decrease in revenues, reduced collections from accounts receivable, larger decreases in inventories and income taxes payable, partially offset by significantly smaller decreases in accounts payable. Stock-based compensation expenses decreased from $24.3 million in fiscal year ended June 30, 2008 compared to $12.7 million in fiscal year ended June 30, 2009.

On our consolidated balance sheet as of June 30, 2009, accounts receivable increased compared to June 30, 2008, primarily due to our granting credit terms to the new customers which were acquired as a result of the acquisition. Inventories decreased primarily due to sales demand decreases. Accounts payable decreased due to decreased manufacturing activities and inventory purchases as well as the general timing of payments. Income taxes payable decreased because of (i) the significant decrease in pre-tax income during the second half of fiscal year ended June 30, 2008 and (ii) the relative strengthening of the U.S. dollar in fiscal year ended June 30, 2009.

The decrease in cash provided by operating activities in fiscal year ended June 30, 2008 compared to fiscal year ended June 30, 2007 was primarily due to lower net income, larger decreases in accounts payable, and accrued expenses and other liabilities, largely offset by larger decreases in accounts receivable, inventories and non-cash stock-based compensation expense.

On our consolidated balance sheet as of June 30, 2008, accounts receivable decreased primarily due to sales demand decreases that also led to decreased inventories. Accounts payable decreased due to decreased manufacturing activities and inventory purchases as well as the general timing of payments. Accrued expenses significantly decreased primarily due to payment of professional fees relating to the completion of our investigation into our historical stock option granting practices and related accounting.

Investing Activities

Cash provided by investing activities consists primarily of capital expenditures, purchases of intellectual property and cash used for business combinations, partially offset by sales of short-term investments. For the fiscal year ended June 30, 2009, cash provided by investing activities was $5.3 million compared to a $1.7 million cash provided by investing activities for fiscal year ended June 30, 2008 and $17.7 million cash used in investing activities for fiscal year ended June 30, 2007. The increase in net cash provided by investing activities in fiscal year ended June 30, 2009 compared to fiscal year ended June 30, 2008 was primarily attributable to (i) a $11.2 million increase in cash from the sale of available-for-sale investments, (ii) a $3.1 million increase in cash paid for purchases of property and equipment, partially offset by (iii) a $7.8 million cash proceeds from the UMC capital reduction during the fiscal year ended June 30, 2008, which did not occur in fiscal year ended June 30, 2009, and (iv) a $1.4 million decrease in cash from the purchase of intellectual property and software licenses.

The increase in net cash provided by investing activities in the fiscal year ended June 30, 2008 compared to the fiscal year ended June 30, 2007 was primarily attributable to (i) $11.4 million less cash paid for purchases of property and equipment due to the completion of our new research and development building in Shanghai, China in September 2007, (ii) a $6.1 million increase in cash from the sale of available-for-sale investments, (iii) a $7.8 million increase in cash proceeds from the UMC capital reduction, partially offset by (iv) $2.0 million cash paid for the acquisition of TMBJ and (v) a $4.3 million decrease in cash from the purchase of intellectual property and software licenses.

Financing Activities

Cash provided by financing activities consists of cash proceeds from the issuance of common stock to employees upon exercise of stock options and excess tax benefit from stock-based compensation. Cash provided by financing activities for the fiscal years ended June 30, 2009 and 2008 was $1.2 million and $6.1 million, respectively. The decrease in net cash provided by financing activities in fiscal year ended June 30, 2009 compared to the fiscal year ended June 30, 2008 was due to (i) an approximately $4.5 million decrease in cash proceeds from issuance of common stock to employees upon exercise of stock and (ii) a $0.4 million decrease in excess tax benefit from stock-based compensation due to the adoption of stock-based compensation accounting guidance.

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The increase in cash provided by financing activities in the fiscal year ended June 30, 2008 compared to the fiscal year ended June 30, 2007 was primarily attributable to (i) $4.7 million increase in cash proceeds from the issuance, during the fiscal year ended June 30, 2008, of common stock to employees upon exercise of stock options following the filing of our Registration Statement on Form S-8 registering shares issuable under the 2006 Equity Incentive Plan on August 22, 2007 and (ii) the absence during the fiscal year ended June 30, 2008 of $1.5 million of net cash payments to employees that was paid in the fiscal year ended June 30, 2007 in connection with the amendment of options to meet the requirements of the United States Internal Revenue Code Section 409A (“Section 409A”), offset by (iii) a $0.3 million decrease in excess tax benefit from stock-based compensation in the fiscal year ended June 30, 2008.

Days Sales Outstanding

Trade accounts receivable days sales outstanding were 58 days as of June 30, 2009 compared to 10 days as of June 30, 2008. The increase in DSO was primarily due to significantly more customers receiving credit terms when these new customers were acquired through the acquisition. Currently the credit terms of the new customers are between net 30 and 45 days compared to the prepayment and net 30 days credit terms granted to the new customers in prior years.

ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to three primary types of market risks: foreign currency exchange rate risk, interest rate risk and investment risk.

Foreign currency exchange rate risk

As of December 31, 2009, we had operations in the United States, Taiwan, China, Hong Kong, Germany, The Netherlands, Japan, Singapore and South Korea. The functional currency of all of these operations is the U.S. dollar. Approximately $99 million, or 67% of our cash and cash equivalents, were held outside the United States as of December 31, 2009, a majority of which is denominated in U.S. dollars. In addition, income tax payable in foreign jurisdictions is denominated in foreign currencies and is subject to foreign currency exchange rate risk. Although personnel and facilities-related expenses are primarily incurred in local currencies due to the location of our subsidiaries outside the United States, substantially all of our other expenses are incurred in U.S. dollars. Since we acquired certain product lines from Micronas in May 2009, we have also incurred manufacturing and related expenses in Euros, and expect to incur additional expenses in Euros in the future as a result of the NXP Transaction.

While we expect our international revenues to continue to be denominated primarily in U.S. dollars, an increasing portion of our international revenues may be denominated in foreign currencies, such as Euros. In addition, our operating results may become subject to significant fluctuations based upon changes in foreign currency exchange rates of certain currencies relative to the U.S. dollar. We analyze our exposure to foreign currency fluctuations and may engage in financial hedging techniques in the future to attempt to minimize the effect of these potential fluctuations; however, foreign currency exchange rate fluctuations may adversely affect our financial results in the future. Following the NXP Transaction, we now have research and development facilities in additional foreign locations and a large percentage of our international operational expenses are denominated in foreign currencies. As a result, foreign currency exchange rate volatility, particularly in Euros and China’s currency, Renminbi, could negatively or positively affect our operating costs in the future.

Fluctuations in foreign exchange rates may have an adverse effect on our financial results due to the NXP acquired business lines, as a substantial proportion of expenses of the acquired business lines are incurred in various denominations, while most of the revenues are denominated in U.S. dollars.

Interest rate risk

We currently maintain our cash equivalents primarily in certificates of deposit, U.S Treasuries, and other highly liquid investments. We do not have any derivative financial instruments. We place our cash investments in instruments that meet high credit quality standards, as specified in our investment policy guidelines. These guidelines also limit the amount of credit exposure to any one issue, issuer or type of instrument.

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Our cash and cash equivalents are not subject to significant interest rate risk due to the short maturities of these instruments. As of December 31, 2009, we have approximately $148 million in cash and cash equivalents, of which $86.4 million is cash and $61.6 million is money market funds invested in U.S. Treasuries. We currently intend to continue investing a significant portion of our existing cash equivalents in interest bearing, investment grade securities, with maturities of less than three months. We do not believe that our investments, in the aggregate, have significant exposure to interest rate risk. However, we will continue to monitor the health of the financial institutions with which these investments and deposits have been made due to the current global financial environment.

Investment risk

Investment in Privately Held Companies and Funds

We are exposed to changes in the value of our investments in privately-held companies and funds, including privately-held start-up companies. Long-term equity investments in technology companies are primarily carried at cost. However, the carrying values of these long-term equity investments could be impaired due to the volatility of the industries in which these companies participate and other factors such as the continuing deterioration of macroeconomic conditions. We will continue to evaluate the financial status of these investments as well as monitor the status of the investments which are held by any underlying venture capital funds. The balance of our long-term equity investments in privately-held companies which is included in “Other assets” on the Consolidated Balance Sheet at December 31, 2009, was $1.8 million.

Concentrations of Credit Risk and Other Risk

Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash and cash equivalents and trade accounts receivable. Cash and cash equivalents held with financial institutions may exceed the amount of insurance provided by the Federal Deposit Insurance Corporation on such deposits.

A majority of our trade receivables is derived from sales to large multinational OEMs who manufacture digital TVs, located throughout the world, with a majority located in Asia. Prior to May 14, 2009, the date of the acquisition of the Micronas business lines, sales to most of our customers were typically made on a prepaid or letter of credit basis while sales to a few customers were made on open accounts. We perform ongoing credit evaluations of its newly acquired customers’ financial condition and generally requires no collateral to secure accounts receivable. Historically, a relatively small number of customers have accounted for a significant portion of our revenues. Our products have been manufactured primarily by two foundries, United Microelectronics Corporation, or (UMC), based in Taiwan and Micronas, based in Germany. Effective with the February 8, 2010 closing of our acquisition of certain assets from NXP B.V., we also have products manufactured by Taiwan Semiconductor Manufacturing Company, or TSMC.

57

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

TRIDENT MICROSYSTEMS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

	Six Months
	Ended December 31,			Years Ended June 30,
	2009			2009			2008			2007
	(In thousands, except per share data)
Net revenues	$	63,011		$	75,761		$	257,938		$	270,795
Cost of revenues		47,265			52,433			137,912			141,688
Gross profit		15,746			23,328			120,026			129,107
Operating expenses:
Research and development		32,512			53,016			52,608			40,970
Selling, general and administrative		19,980			29,617			48,598			47,993
Goodwill impairment		—			1,432			—			—
In-process research and development		—			697			—			—
Restructuring charges		1,558			810			—			—
Total operating expenses		54,050			85,572			101,206			88,963
Income (loss) from operations		(38,304	)		(62,244	)		18,820			40,144
Loss on sale of short-term investments		—			(8,940	)		—			—
Impairment loss on short-term investments		—			(556	)		(6,480	)		—
Interest income		118			2,968			6,166			4,890
Other income (expense), net		(1,212	)		4,053			445			1,947
Income (loss) before provision for income taxes		(39,398	)		(64,719	)		18,951			46,981
Provision for income taxes		1,129			5,513			8,799			16,673
Income (loss) before cumulative effect of change in accounting principle		(40,527	)		(70,232	)		10,152			30,308
Cumulative effect of change in accounting principle, net of tax		—			—			—			(190	)
Net income (loss)	$	(40,527	)	$	(70,232	)	$	10,152		$	30,118
Net income (loss) per share — Basic:
Income (loss) before change in accounting principle	$	(0.58	)	$	(1.12	)	$	0.17		$	0.52
Cumulative effect of change in accounting principle		—			—			—			(0.00	)
Net income (loss) per share — Basic	$	(0.58	)	$	(1.12	)	$	0.17		$	0.52
Net income (loss) per share — Diluted: accounting Principle	$	(0.58	)	$	(1.12	)	$	0.16		$	0.48
Cumulative effect of change in accounting principle		—			—			—			(0.00	)
Net income (loss) per share — Diluted	$	(0.58	)	$	(1.12	)	$	0.16		$	0.48
Shares used in computing net income (loss) per share — Basic		69,372			62,535			59,367			57,637
Shares used in computing net income (loss) per share — Diluted		69,372			62,535			62,751			63,380

The accompanying notes are an integral part of these consolidated financial statements.

58

TRIDENT MICROSYSTEMS, INC.

CONSOLIDATED BALANCE SHEETS

	As of December 31,			As of June 30,
	2009			2009			2008
	(In thousands, except par values)
ASSETS
Current assets:
Cash and cash equivalents	$	147,995		$	187,937		$	213,296
Short-term investments		—			—			26,704
Accounts receivable, net of allowances for sales returns and allowance for doubtful accounts of $320, $56 and $300 at 12/31/09, 06/30/09 and 6/30/08 respectively		4,582			4,086			4,510
Accounts receivable from related party		335			5,289			—
Inventories		14,536			6,828			8,680
Prepaid expenses and other current assets		13,627			9,425			12,863
Total current assets		181,075			213,565			266,053
Property and equipment, net		26,168			27,587			23,425
Goodwill		7,851			7,708			1,432
Intangible assets, net		5,635			7,685			8,428
Other assets		7,764			6,767			9,977
Total assets	$	228,493		$	263,312		$	309,315
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	18,883		$	10,485		$	10,889
Accounts payable to related party		2,401			5,513			—
Accrued expenses and other current liabilities		27,068			19,546			22,910
Income taxes payable		1,696			13,107			16,309
Total current liabilities		50,048			48,651			50,108
Long-term income taxes payable		22,262			21,658			21,579
Deferred income tax liabilities		94			81			370
Total liabilities		72,404			70,390			72,057
Commitments and contingencies (Note 6)
Stockholders’ equity:
Preferred stock, $0.001 par value: 500 shares authorized; none issued and outstanding		—			—			—
Common stock, $0.001 par value; 95,000 shares authorized; and 70,586; 69,920 and 61,238 shares issued and outstanding at December 31, 2009, June 30, 2009 and 2008, respectively		71			70			61
Additional paid-in capital		237,827			234,134			208,299
Retained earnings (accumulated deficit)		(81,809	)		(41,282	)		28,950
Accumulated other comprehensive loss		—			—			(52	)
Total stockholders’ equity		156,089			192,922			237,258
Total liabilities and stockholders’ equity	$	228,493		$	263,312		$	309,315

The accompanying notes are an integral part of these consolidated financial statements.

59

TRIDENT MICROSYSTEMS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Six Months Ended
	December 31,			Years Ended June 30,
	2009			2009			2008			2007
	(In thousands)
Cash flows from operating activities:
Net income (loss)	$	(40,527	)	$	(70,232	)	$	10,152		$	30,118
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Cumulative effect of change in accounting principle		—			—			—			190
Stock-based compensation expense		3,455			12,673			24,270			15,607
Excess tax benefit from stock-based compensation		—			(96	)		(561	)		(855	)
Depreciation and amortization		6,745			9,544			5,354			1,501
In-process research and development		—			697			—			—
Amortization of acquisition-related intangible assets		2,048			3,985			5,725			6,345
Loss on disposal of property and equipment		96			83			52			59
Impairment loss on investments,		200			556			6,480			—
Impairment of goodwill		—			1,432			—			—
Impairment of intangible assets					2,689			—			—
Loss (gain) on sales of investments		(125	)		8,966			(969	)		(216	)
Deferred income taxes		306			63			(722	)		1,179
Changes in assets and liabilities, net of effect of acquisitions:
Accounts receivable		(496	)		612			4,665			(4,883	)
Accounts receivable from related party		4,954			(5,289	)		—			—
Inventories		(7,708	)		1,852			7,583			(1,622	)
Prepaid expenses and other current assets		(2,484	)		5,885			6,088			5,742
Accounts payable		8,009			(577	)		(8,902	)		384
Accounts payable to related party		(3,112	)		5,512			—			—
Accrued expenses and other liabilities		7,522			(7,309	)		(3,574	)		2,398
Income taxes payable		(10,807	)		(2,897	)		2,273			6,145
Net cash provided by (used in) operating activities		(31,924	)		(31,850	)		57,914			62,092
Cash flows from investing activities:
Purchases of property and equipment		(1,134	)		(3,189	)		(6,246	)		(17,690	)
Purchases of stock of privately held companies		—			—			—			(500	)
Proceeds from the capital reduction of UMC investment		—			—			7,829			—
Proceeds from sale of investments		223			17,234			6,079			—
Proceeds from sale of investments in private companies		—			—			1,056			1,228
Acquisition of businesses, net of cash acquired		(140	)		(2,531	)		(1,960	)		—
Other assets		(7,223	)		(6,471	)		(5,070	)		(748	)
Proceeds from sale of property, plant and equipment		18			294			48			—
Net cash provided by (used in) investing activities		(8,256	)		5,337			1,736			(17,710	)
Cash flows from financing activities:
Proceeds from issuance of common stock to employees		238			1,058			5,523			805
Excess tax benefit from stock-based compensation		—			96			561			855
Net cash settlements of stock options in connection with IRC Section 409A		—			—			—			(1,526	)
Net cash provided by financing activities		238			1,154			6,084			134
Net (decrease) increase in cash and cash equivalents		(39,942	)		(25,359	)		65,734			44,516
Cash and cash equivalents at beginning of year		187,937			213,296			147,562			103,046
Cash and cash equivalents at end of year	$	147,995		$	187,937		$	213,296		$	147,562
Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	12,296		$	1,588		$	1,219		$	2,080
Supplemental schedule of non-cash investing and financing activities:
Issuance of common stock warrants and common stock for Micronas acquisition	$	—		$	(12,087	)	$	—		$	—
Accrued expense for building	$	—		$	—		$	(208	)	$	—
Prepaid taxes in connection with intercompany profit on assets remaining within consolidated group	$	—		$	—		$	—		$	20,583

The accompanying notes are an integral part of these consolidated financial statements.

60

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
AND COMPREHENSIVE INCOME (LOSS)

					Additional						Accumulated
					Paid-in			Retained			Other
					Capital			Earnings			Comprehensive			Total
	Common Stock				(Common			(Accumulated			Income			Stockholders’
	Shares		Amount		Stock)			Deficit)			(Loss)			Equity
	(In thousands)
Balance at June 30, 2006		57,206	$	57	$	162,801		$	(11,320	)	$	2,119		$	153,657
Income before cumulative effect of change in accounting principle		—		—		—			30,308			—			30,308
Cumulative effect of change in accounting principle, net of tax		—		—		—			(190	)		—			(190	)
Unrealized gains on investments, net of tax		—		—		—			—			1,483			1,483
Comprehensive income															31,601
Shares issued pursuant to stock awards, net		542		1		804			—			—			805
Stock-based compensation expense		—		—		15,607			—			—			15,607
Tax benefit from stock-based compensation		—		—		1,704			—			—			1,704
Net cash settlement of stock options in connection with IRC Section 409A		—		—		(1,526	)		—			—			(1,526	)
Balance at June 30, 2007		57,748		58		179,390			18,798			3,602			201,848
Net income		—		—		—			10,152			—			10,152
Unrealized losses on investments, net of tax		—		—		—			—			(3,654	)		(3,654	)
Comprehensive income															6,498
Shares issued pursuant to stock awards, net		3,490		3		5,520			—			—			5,523
Stock-based compensation expense		—		—		24,270			—			—			24,270
Net cash settlement of stock options		—		—		(1,274	)		—			—			(1,274	)
Tax benefit from stock-based compensation		—		—		393			—			—			393
Balance at June 30, 2008		61,238		61		208,299			28,950			(52	)		237,258
Net loss		—		—		—			(70,232	)		—			(70,232	)
Unrealized gain on short-term investment		—		—		—			—			52			52
Comprehensive loss															(70,180	)
Shares issued pursuant to stock awards, net		1,682		2		1,056			—			—			1,058
Shares and warrant issued in connection with the acquisition of Micronas assets		7,000		7		12,080			—			—			12,087
Stock-based compensation expense		—		—		12,673			—			—			12,673
Net cash settlement for TMT’s stock options		—		—		26			—			—			26
Balance at June 30, 2009		69,920		70		234,134			(41,282	)		0			192,922
Net loss		—		—		—			(40,527	)		—			(40,527	)
Comprehensive loss															(40,527	)
Shares issued pursuant to stock awards, net		666		1		238			—			—			239
Stock-based compensation expense		—		—		3,455			—			—			3,455
Balance at December 31, 2009	$	70,586	$	71	$	237,827		$	(81,809	)	$	0		$	156,089

The accompanying notes are an integral part of these consolidated financial statements.

61

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Change in Fiscal Year End

On November 16, 2009 the Board of Directors approved a change in the fiscal year end from June 30, to December 31. The change became effective at the end of the quarter ended December 31, 2009. All references to “years”, unless otherwise noted, refer to the twelve-month fiscal year, which prior to July 1, 2009, ended on June 30, and beginning with December 31, 2009, ends on December 31, of each year.

Business and Business Combinations

Business

Trident Microsystems, Inc. (including our subsidiaries, referred to collectively in this Report as “Trident” or the “Company”) is a provider of high-performance multimedia semiconductor solutions for the digital home entertainment market. Through the period ended December 31, 2009, the Company designed, developed and marketed integrated circuits, or ICs, for digital media applications, such as digital television, or DTV, liquid crystal display television, or LCD TV. The Company’s system-on-a-chip, or SoC, semiconductors provide the “intelligence” for these new types of displays by processing and optimizing video and computer graphic signals to produce high-quality and realistic images. The Company’s products include frame rate converter, or FRC, demodulator, or DRX and audio decoder products. Many of the world’s leading manufacturers of consumer electronics and computer display products utilize the Company’s technology to enhance image quality and ease of use of their products. The Company’s goal is to provide the best image quality enhanced digital media integrated circuits at competitive prices to customers. Since 1987 the Company has designed, developed and marketed very large-scale ICs for graphics applications, historically for the personal computer, or PC, market, and since 1999 for digital TV, or DTV, in the consumer television market.

Business structure

At June 2003, when the Company announced a restructuring of the business to divest the legacy graphics business, the Company focused its business primarily in the high definition television, or HDTV, market and related areas. In a separate transaction completed in June 2003, the Company merged its digital media segment with Trident Technologies, Inc., or TTI, a Taiwanese company to strengthen and extend its DTV business. TTI, which was liquidated in September 2006, had previously operated primarily as a Taiwan-based semiconductor design house, developing video processing technologies useful for digital media applications. Starting September 1, 2006, the Company conducted business primarily through a Cayman Islands subsidiary, Trident Microsystems (Far East) Ltd., or TMFE. Research and development services relating to existing projects and certain new projects were conducted by Trident Microsystems, Inc. and its subsidiaries, Trident Multimedia Technologies (Shanghai) Co. Ltd., or TMT, and Trident Microsystems (Beijing) Co., Ltd., or TMBJ. TMBJ was previously a privately held company known as Beijing Tiside Electronics Design Co., Ltd., or (Tiside), which the Company acquired in March 2008 and subsequently renamed TMBJ. Operations, field application engineering support and certain sales activities were conducted through its Taiwanese subsidiaries, Trident Microelectronics Co. Ltd., or TML, and Trident Microsystems (Taiwan) Ltd., or TMTW, and other affiliates. On May 14, 2009, the Company completed the acquisition of selected assets of certain product lines from the Consumer Division of Micronas Semiconductor Holding AG, or Micronas, a Swiss corporation. In May 2009, in connection with this acquisition, the Company established three new subsidiaries in Europe: Trident Microsystems (Europe) GmbH, or TMEU, Trident Microsystems Nederland B.V., or TMNM, and Trident Microsystems Holding B.V., or TMH. The purpose of these entities is primarily to provide sales liaison, marketing and engineering services in Europe. TMEU is located in Munich, Germany and TMNM and TMH are located in Nijmegen. On February 8, 2010 the Company acquired selected assets and liabilities of the television systems and set-top box business lines of NXP B.V., a Dutch besloten vennootschap, or NXP. As a result of this acquisition, the Company now has subsidiaries in three new countries, the United Kingdom, Israel and India. The primary purpose of these subsidiaries is to provide sales liaison, marketing

62

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

and engineering services to the Company. See Note 16, “Subsequent Events,” of the Notes to Consolidated Financial Statements.

In the fiscal period ended June 30, 2009, the Company established a new subsidiary in South Korea, Trident Microsystems Korea Limited, or TMK, to primarily provide sales liaison and marketing services in South Korea and a new subsidiary in Hong Kong, Trident Microsystems Hong Kong Ltd., or TMHK, to handle sales and inventory distribution for the entire Company. Trident Multimedia Systems, Inc., or TMS, was inactive as of June 30, 2009.

In the fiscal period ended June 30, 2009, the Company established a new subsidiary in South Korea, Trident Microsystems Korea Limited, or (TMK), to primarily provide sales liaison and marketing services in South Korea and a new subsidiary in Hong Kong, Trident Microsystems Hong Kong Ltd., or TMHK, to handle sales and inventory distribution for the entire Company. Trident Multimedia Systems, Inc., or TMS, was inactive as of June 30, 2009.

Business Combinations

On May 14, 2009, the Company completed its acquisition of selected assets of the frame rate converter (FRC), demodulator (DRX) and audio decoder product lines from Micronas Semiconductor Holding AG (Micronas), a Swiss corporation. In connection with the acquisition, the Company issued 7.0 million shares of its common stock and warrants to acquire up to 3.0 million additional shares of its common stock, with a combined fair value of approximately $12.1 million and incurred approximately $5.2 million of acquisition-related transaction costs and liabilities, for a total purchase price of approximately $17.3 million. For details of the acquisition, please refer to Note 11, “Business Combinations,” of Notes to Consolidated Financial Statements below. In connection with the acquisition, Trident established three new subsidiaries in Europe, Trident Microsystems (Europe) GmbH, Trident Microsystems Nederland B.V., and Trident Microsystems Holding B.V. to primarily provide sales liaison, marketing and engineering services in Europe. TMEU is located in Munich, Germany and TMNM and TMH are located in Nijmegen, The Netherlands.

On February 8, 2010, Trident and its wholly-owned subsidiary Trident Microsystems (Far East), Ltd., a corporation organized under the laws of the Cayman Islands, finalized the transaction for the acquisition of the television systems and set-top box business lines from NXP B.V., a Dutch besloten vennootschap. As a result of the acquisition, the Company issued 104,204,348 newly issued shares of Trident common stock to NXP (the “Shares”), equal to 60% of our total outstanding shares of Common Stock, after giving effect to the share issuance to NXP, in exchange for the contribution of selected assets and liabilities of the television systems and set-top box business lines from NXP and cash proceeds in the amount of $45 million. In addition, the Company issued to NXP four shares of a newly created Series B Preferred Stock (the “Preferred Shares”).

Basis of Consolidation and Presentation

The accompanying Consolidated Financial Statements include the accounts and operations of the Company. All intercompany accounts and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

Foreign Currency Remeasurement

The Company uses the U.S. dollar as the functional currency for all of its foreign subsidiaries. Sales and purchase transactions are generally denominated in U.S. dollars. The Company has not engaged in hedging

63

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

transactions to reduce its foreign currency exposure to such fluctuations; however, it may take action in the future to reduce its foreign exchange risk. Gains and losses from foreign currency remeasurements are included in “Other income (expense), net” in the Consolidated Statements of Operations. The Company recorded foreign currency remeasurement gains or (losses) of $(0.6) million for the six months ended December 31, 2009 and $1.8 million, $(2.4) million, and $(0.6) million for the fiscal years ended June 30, 2009, 2008, and 2007, respectively.

Cash and Cash Equivalents

Cash equivalents consist of highly liquid investments in money market funds invested in Treasuries and certificates of deposits purchased with an original maturity of ninety days or less from the date of purchase.

As of December 31, 2009 and June 30, 2009 and 2008 the Company’s long-term investments were in privately-held companies and funds. These investments are included in “Other assets” in the Consolidated Balance Sheet and are carried at cost. As of December 31, 2009, the aggregate carrying value of all long term investments was $1.8 million. The Company monitors these investments for impairment and makes reductions to cost based investments to reflect such investments at estimated market value if the Company determines that an impairment charge is required based primarily on the financial condition and near-term prospects of these companies.

As of June 30, 2007, the Company’s investments in publicly traded equity securities were classified as available-for-sale. The Company had no publicly traded equity securities as of the reported periods subsequent to June 30, 2007. These investments were recorded at fair value with the unrealized gains and losses included as a separate component of accumulated other comprehensive loss, net of tax. The average method was used to determine the cost basis of publicly traded equity securities that were disposed of. The Company recognizes an impairment charge when a decline in the fair value of its investments below the cost basis is judged to be other-than-temporary. In making this determination, the Company reviewed several factors to determine whether the losses were other-than-temporary, including but not limited to: (i) the length of time the investment was in an unrealized loss position, (ii) the extent to which fair value was less than cost, (iii) the financial condition and near term prospects of the issuer and (iv) the Company’s intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in fair value.

Fair Value of Financial Instruments

Currently, the Company’s financial instruments consist principally of cash and cash equivalents, accounts receivable and accounts payable. Pursuant to applicable accounting guidance, the fair value of its cash equivalents is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The Company believes that the recorded values of all of its other financial instruments approximate their recorded values because of their nature and respective maturity dates or durations.

Concentrations of Credit Risk and Other Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents and trade accounts receivable. Cash and cash equivalents held with financial institutions may exceed the amount of insurance provided by the Federal Deposit Insurance Corporation on such deposits.

A majority of the Company’s trade receivables is derived from sales to large multinational OEMs who manufacture digital TVs, located throughout the world, with a majority located in Asia. Prior to May 14, 2009, the date of the acquisition of the Micronas business lines, sales to most of the Company’s customers were typically made on a prepaid or letter of credit basis while sales to a few customers were made on open accounts. The Company performs ongoing credit evaluations of its newly acquired customers’ financial condition and generally requires no collateral to secure accounts receivable. Historically, a relatively small number of customers have accounted for a significant portion of its revenues. The Company’s products have been manufactured primarily by two foundries, United Microelectronics Corporation, or UMC, based in Taiwan and Micronas, based in Germany.

64

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Effective with the February 8, 2010 closing of the Company’s acquisition of certain assets from NXP B.V., the Company also has products manufactured by Taiwan Semiconductor Manufacturing Company, or TSMC.

Foreign currency exchange rate risk

As of December 31, 2009, the Company had operations in the United States, Taiwan, China, Hong Kong, Germany, The Netherlands, Japan, Singapore and South Korea. The functional currency of all of these operations is the U.S. dollar. Approximately $99 million, or 67% of the Company’s cash and cash equivalents, were held outside the United States as of December 31, 2009, a majority of which is denominated in U.S. dollars. In addition, income tax payable in foreign jurisdictions is denominated in foreign currencies and is subject to foreign currency exchange rate risk. Although personnel and facilities-related expenses are primarily incurred in local currencies due to the location of the Company’s subsidiaries outside the United States, substantially all of the Company’s other expenses are incurred in U.S. dollars. Since the Company acquired certain product lines from Micronas in May 2009, the Company has also incurred manufacturing and related expenses in Euros, and expects to incur additional expenses in Euros in the future as a result of the NXP Transaction.

While the Company expects international revenues to continue to be denominated primarily in U.S. dollars, an increasing portion of the Company’s international revenues may be denominated in foreign currencies, such as Euros. In addition, the Company’s operating results may become subject to significant fluctuations based upon changes in foreign currency exchange rates of certain currencies relative to the U.S. dollar. The Company analyzes its exposure to foreign currency fluctuations and may engage in financial hedging techniques in the future to attempt to minimize the effect of these potential fluctuations; however, foreign currency exchange rate fluctuations may adversely affect the Company’s financial results in the future. Following the NXP Transaction, the Company now has many foreign locations, and a large percentage of the Company’s international operational expenses are denominated in foreign currencies. As a result, foreign currency exchange rate volatility, particularly in Euros and China’s currency, Renminbi, could negatively or positively affect the Company’s operating costs in the future.

Fluctuations in foreign exchange rates may have an adverse effect on the Company’s financial results due to the NXP acquired business lines, as a substantial proportion of expenses of the acquired business lines are incurred in various denominations, while most of the revenues are denominated in U.S. dollars.

Interest rate risk

The Company currently maintains its cash equivalents primarily in certificates of deposit, U.S Treasuries, and other highly liquid investments. The Company does not have any derivative financial instruments. The Company places cash investments in instruments that meet high credit quality standards, as specified in the Company’s investment policy guidelines. These guidelines also limit the amount of credit exposure to any one issue, issuer or type of instrument.

The Company’s cash and cash equivalents are not subject to significant interest rate risk due to the short maturities of these instruments. As of December 31, 2009, the Company has approximately $148 million in cash and cash equivalents, of which $86.4 million is cash and $61.6 million is money market funds invested in U.S. Treasuries. The Company currently intends to continue investing a significant portion of its existing cash equivalents in interest bearing, investment grade securities, with maturities of less than three months. The Company does not believe that investments, in the aggregate, have significant exposure to interest rate risk. However, the Company will continue to monitor the health of the financial institutions with which these investments and deposits have been made due to the global financial environment.

Inventories

Inventories are computed using the lower of cost or market, which approximates actual cost on a first-in-first-out basis. Inventory components are work-in-process and finished goods. Finished goods are reported as inventories until the point of title transfer to the customer. The Company writes down its inventory value for estimated obsolescence equal to the difference between the cost of inventory and the estimated market value based upon

65

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

assumptions about future demand and market conditions. These factors are impacted by market and economic conditions, technology changes, new product introductions and changes in strategic direction and require estimates that may include uncertain elements. Actual demand may differ from forecasted demand, and such differences may have a material effect on recorded inventory values. The Company recorded a $1.3 million lower of cost or market adjustment for a portion of its SoC products for the six months ended December 31, 2009. The Company also recorded a $2.1 million liability for ordered product with no expected demand from customers, for the six months ended December 31, 2009.

Long-lived Assets

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation and amortization. Major improvements are capitalized, while repairs and maintenance are expensed as incurred. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets. Furniture and fixtures are depreciated over five years. Machinery, equipment and software are depreciated over three years. Leasehold improvements are computed using the shorter of the estimated useful lives of the assets or the lease terms. The Company’s Shanghai office building is depreciated over a twenty year life and the office building land is subject to a customary local property right certificate. Construction in progress is not subject to depreciation until the asset is placed in service. When assets are retired or otherwise disposed of, the assets and related accumulated depreciation are removed from the accounts. Gains or losses resulting from retirements or disposals are included in “Other income, net” in the Consolidated Statements of Operations. Depreciation expense was $2.4 million, for the six months ended December 31 2009, and $3.5 million, $2.5 million, and $1.5 million for fiscal years June 30, 2009, 2008, and 2007, respectively.

Amortizable Intangible Assets

The Company has two types of intangible assets:  acquisition-related intangible assets and purchased intangible assets from third-party vendors. Intangible assets are carried at cost, net of accumulated amortization. Acquisition-related intangible assets with finite lives acquired in the purchase of Trident’s subsidiary, Trident Technologies, Inc., (“TTI”), are amortized over their estimated useful lives of approximately seven to eight years using a method that reflects the pattern in which the economic benefits of the intangible asset are consumed. The Company’s other acquisition-related intangible assets and purchased intangible assets with finite lives are amortized over their estimated useful lives of approximately three years using the straight-line method.

Management evaluates the recoverability of its identifiable intangible assets and long-lived assets in accordance with applicable accounting guidance, which requires the assessment of these assets for recoverability when events or circumstances indicate a potential impairment exists. Certain events and circumstances the Company considered in determining whether the carrying value of identifiable intangible assets and other long-lived assets may not be recoverable include, but are not limited to: significant changes in performance relative to expected operating results; significant changes in the use of the assets; significant negative industry or economic trends; a significant decline in its stock price for a sustained period of time; and changes in its business strategy. In determining if an impairment exists, the Company estimates the undiscounted cash flows to be generated from the use and ultimate disposition of these assets. If an impairment is indicated based on a comparison of the assets’ carrying values and the undiscounted cash flows, the impairment loss is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets.

During the fiscal year ended June 30, 2009, management decided to put additional efforts on its SoC development rather than on set-top-box products or STB. During the fiscal year ended June 30, 2009, the Company recognized a $1.0 million impairment loss on acquisition-related intangible assets at TMBJ, of which $0.6 million was recorded under “Cost of revenues”, and $0.4 million was recorded under “Selling, general and administrative”. In addition, the Company wrote off $1.7 million of third-party purchased IP under “Research and development” in the Consolidated Statement of Operations for the fiscal year ended June 30, 2009 due to a change in business

66

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

strategy associated with more focus on SoC development and a change in the use of certain assets due to the Micronas acquisition. There was no impairment loss recorded during the six month period ended December 31, 2009. See Note 4, “Goodwill and Intangible Assets,” of the Notes to Consolidated Financial Statements for detail.

Goodwill

The Company accounts for goodwill in accordance with applicable accounting guidance. Goodwill is recorded when the purchase price of an acquisition exceeds the fair value of the net purchased tangible and intangible assets acquired and is carried at cost. Goodwill is not amortized, but is subject to an impairment test annually. The Company will continue to perform its annual goodwill impairment analysis in the quarter ended June 30 of each year or more frequently if the Company believes indicators of impairment exist. Factors that the Company considers important which could trigger an impairment review include the following:

•  significant underperformance relative to historical or projected future operating results;

•  significant adverse change in the extent or manner in which a long-lived asset is being used or in its physical condition;

•  significant negative industry or economic trends; and

•  significant decline in the Company’s market capitalization.

The performance of the test involves a two-step process. The first step requires a comparison of the fair value of the reporting unit to its net book value, including goodwill. The fair value of the reporting unit is determined based on the present value of estimated future cash flows of the reporting unit. A potential impairment exists if the fair value of the reporting unit is lower than its net book value. The second step of the process is only performed if a potential impairment exists, and it involves determining the difference between the fair values of the reporting unit’s net assets, other than goodwill, and the fair value of the reporting unit, and, if the difference is less than the net book value of goodwill, an impairment charge is recorded. In the event that the Company determines that the value of goodwill has become impaired, the Company will record a charge for the amount of impairment during the fiscal quarter in which the determination is made. As of December 31, 2009, the Company had two reporting units within its single operating segment. One reporting unit, which carries all of the Company’s goodwill, was created as a result of the acquisition of the FRC, DRX, and audio decoder product lines from Micronas Semiconductors on May 14, 2009. The other reporting unit consists of the Company’s legacy business. No interim impairment test was performed on goodwill as of December 31, 2009 because no indicators of impairment were deemed to be present as of such date.

Revenue Recognition

The Company recognizes revenues in accordance with applicable accounting guidance, when persuasive evidence of an arrangement exists, delivery has occurred, the price is fixed or determinable and collectability is reasonably assured. The Company records estimated reductions to revenue for customer incentive offerings and sales returns allowance in the same period that the related revenue is recognized. The Company’s customer incentive offerings primarily involve volume rebates for its products in various target markets. If market conditions were to decline, the Company may take actions to increase customer incentive offerings, possibly resulting in an incremental reduction of revenue at the time the incentive is offered. A sales returns allowance, which is presented as a reduction to accounts receivable on the Company’s Consolidated Balance Sheet, is established based primarily on historical sales returns, analysis of credit memo data and other known factors at that time. Additional reductions to revenue would result if actual product returns or pricing adjustments exceed its estimates.

A significant amount of the Company’s revenue is generated through its distributors under agreements allowing for pricing protection and/or rights of return. During the six months ended December 31, 2009, approximately 20% of revenues were recognized upon sales through distributors. During the fiscal years ended June 30, 2009, 2008, and 2007, approximately 76%, 49% and 48%, respectively, of revenues were recognized upon

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

sales through distributors. Sales to distributors, which may be subject to rights of return and price protection, are deferred and only recognized when these rights expire or upon sale and shipment to the end user customers.

Up to fiscal year 2008, the Company sold product to its major customers through distributors. During the six months ended December 31, 2009, sales of product to these major customers declined and the Company began selling directly to another major customer, reducing its sales through distributors.

The Company accounts for rebates in accordance with applicable accounting guidance and, as such, the Company accrues for 100% of the potential rebates and does not apply a breakage factor to accrued expenses and other current liabilities.

Stock-based Compensation

The Company accounts for share-based payments, including grants of stock options and awards to employees and directors, in accordance with applicable accounting guidance, which requires that share-based payments be recognized in its Consolidated Statements of Operations based on their fair values and the estimated number of shares the Company ultimately expects to vest. The Company recognizes stock-based compensation expense on a straight-line basis over the service period of all stock options and awards other than the performance-based restricted stock award with market conditions that was granted to its Chief Executive Officer in October 2007. The fair value of the unvested portion of share-based payments granted prior to July 1, 2006 is recognized using the straight line expense attribution method, net of estimated forfeitures.

The Company records deferred tax assets for stock-based awards that result in deductions on its income tax returns based on the amount of stock-based compensation recognized and the statutory tax rate in the jurisdiction in which the Company will receive a tax deduction.

Shipping and Handling Costs

Shipping and handling costs are included as a component of cost of revenues.

Research and Development Costs

Research and development costs are expensed as incurred. These costs primarily include employees’ compensation, consulting fees, software licensing fees and tape-out expenses.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist primarily of personnel related expenses including stock-based compensation, commissions paid to sales representatives and distributors and professional fees.

Income Taxes

The Company accounts for income taxes in accordance with applicable accounting guidance, which requires that deferred tax assets and liabilities be recognized by using enacted tax rates for the effect of temporary differences between the book and tax bases of recorded assets and liabilities.

The Company also has to assess the likelihood that it will be able to realize its deferred tax assets. If realization is not more likely than not, the Company is required to record a valuation allowance against deferred tax assets that the Company estimates it will not ultimately realize. The Company believes that it will not ultimately realize a substantial amount of the deferred tax assets recorded on its consolidated balance sheets. However, should there be a change in the ability to realize deferred tax assets; the valuation allowance against deferred tax assets would be released, resulting in a corresponding reduction in the Company’s tax provision.

The Company is required to make certain estimates and judgments in determining income tax expense for financial statement purposes. The Company recognizes liabilities for uncertain tax positions based on the two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation, if any. The second step requires us to estimate and measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. Because the Company is required to determine the probability of various possible outcomes, such estimates are inherently difficult and subjective. The Company reevaluates these uncertain tax positions on a quarterly basis. This reevaluation is based on factors including, but not limited to, changes in facts or circumstances and changes in tax law. A change in recognition or measurement would result either in the recognition of a tax benefit or in an additional charge to the tax provision for the period.

Net Income (loss) per Share

The Company computes net income (loss) per share in accordance with applicable accounting guidance.. Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding for the reporting period. Diluted net income (loss) per share is computed by dividing net income by the combination of dilutive common share equivalents, comprised of shares issuable under the Company’s stock-based compensation plans and the weighted average number of shares of common stock outstanding during the reporting period. Dilutive common share equivalents include the dilutive effect of in-the-money options and warrants to purchase shares, which is calculated based on the average share price for each period using the treasury stock method. Under the treasury stock method, the exercise price of an option, the amount of compensation cost, if any, for future service that the Company has not yet recognized, and the amount of estimated tax benefits that would be recorded in paid-in capital, if any, when the option is exercised are assumed to be used to repurchase shares in the current period.

Comprehensive Income (Loss)

Comprehensive income (loss) is defined as the change in the equity of a company during a period from transactions and other events and circumstances excluding transactions resulting from investments by owners and distributions to owners. Unrealized gains and losses on investments are comprehensive income (loss) items applicable to the Company and are reported as a separate component of equity as “Accumulated other comprehensive income (loss).”

Product Warranty

The Company’s products are generally subject to warranty, which provides for the estimated future costs of repair, replacement or customer accommodation upon revenue recognition in the accompanying statements of operations. The Company warrants its products against material defects for a period of time usually between 90 days and one year.

Advertising Expense

Advertising costs are expensed when incurred.

Cumulative Effect of Change in Accounting Principle

During the year ended June 30, 2007, the Company recorded a cumulative effect of a change in accounting principle of $0.2 million, net of tax, in connection with the adoption of accounting guidance regarding employee benefit arrangements.

Recent Accounting Pronouncements

In October 2009, new accounting guidance was issued for revenue recognition with multiple deliverables. The new guidance impacts the determination of when the individual deliverables included in a multiple-element arrangement may be treated as separate units of accounting. Additionally, the new guidance modifies the manner in which the transaction consideration is allocated across the separately identified deliverables by no longer permitting

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

the residual method of allocating arrangement consideration. The new guidance is effective for the Company beginning in the first quarter of fiscal year 2011, however early adoption is permitted. The Company does not expect the new guidance to significantly impact its consolidated financial statements.

In October 2009, new accounting guidance was issued for the accounting for certain revenue arrangements that include software elements. This new guidance amends the scope of pre-existing software revenue guidance by removing from the guidance non-software components of tangible products and certain software components of tangible products. The new guidance is effective for the Company beginning in the first quarter of fiscal year 2011, however early adoption is permitted. The Company does not expect the new guidance to significantly impact its consolidated financial statements.

In January 2010, new accounting guidance was issued which includes two major new disclosure requirements and clarifies two existing disclosure requirements related to fair value measurement. The guidance is effective for interim or annual reporting periods beginning after December 15, 2009. The adoption of this guidance will not significantly impact the Company’s consolidated financial statements. This guidance will be incorporated into the disclosure related to the fair value of financial instruments in the quarterly filing for the first quarter of fiscal year 2010.

In April 2009, new accounting guidance was issued amending and clarifying application issues regarding initial recognition and measurement, subsequent measurement and accounting and disclosure of assets and liabilities arising from contingencies in a business combination. The guidance is effective for assets or liabilities arising from contingencies in business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company has adopted the accounting guidance and the guidance is reflected in its consolidated financial statements.

2.   INVESTMENTS

The Company had no available-for-sale or marketable equity securities as of December 31, 2009 and June 30, 2009. The following table summarizes the Company’s marketable equity securities as of June 30, 2008:

			Gross		Gross
			Unrealized		Unrealized			Estimated Fair
	Historical Cost		Gains		Losses			Value
			(Dollars in thousands)
Short-term investments:
Marketable equity securities — as of June 30, 2008	$	26,756	$	—	$	(52	)	$	26,704

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

3.   BALANCE SHEET COMPONENTS

	December 31,			June 30,
	2009			2009			2008
	(Dollars in thousands)
Cash and cash equivalents:
Cash	$	86,382		$	48,712		$	37,295
Money market funds invested in U.S. Treasuries		61,613			111,773			—
Certificates of deposit		—			27,452			43,582
Money market funds		—			—			132,419
Total cash and cash equivalents	$	147,995		$	187,937		$	213,296
Inventories:
Work in process	$	12,539		$	4,935		$	4,170
Finished goods		1,997			1,893			4,510
Total inventories	$	14,536		$	6,828		$	8,680
Property and equipment, net:
Building and leasehold improvements	$	19,522		$	19,467		$	18,738
Machinery and equipment		15,427			15,454			8,773
Software		4,096			3,925			3,319
Furniture and fixtures		2,296			2,277			1,465
Construction in progress		—			—			103
		41,341			41,123			32,398
Accumulated depreciation and amortization		(15,173	)		(13,536	)		(8,973	)
Total property and equipment, net	$	26,168		$	27,587		$	23,425
Accrued expenses and other current liabilities:
Price rebates	$	5,913		$	—		$	—
Wafer and substrate fees		2,226			—			—
VAT Tax payable		1,256			—			—
Compensation and benefits		4,482			4,449			5,927
Contingent liabilities on certain option modifications(1)		4,336			4,336			4,336
Professional fees		2,912			2,687			1,572
Production related accrual		2,401			—			—
Royalties		939			796			1,014
Deferred revenues less cost of revenues		329			344			1,274
Prior software usage(2)		—			—			1,387
Other		4,676			6,934			7,400
Total accrued expenses and other current liabilities	$	29,469		$	19,546		$	22,910

(1)	See Note 8, “Employee Benefit Plans,” of the Notes to Consolidated Financial Statements
(2)	See Note 6, “Commitments and Contingencies,” of the Notes to Consolidated Financial Statements

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

4.   GOODWILL AND INTANGIBLE ASSETS

Goodwill and impairment

The following table presents goodwill balances as of December 31, 2009 and June 30, 2009, 2008 and 2007:

	(In thousands)
Balance as of June 30, 2007	$	—
Goodwill acquired		1,432
Impairment charge		—
Balance as of June 30, 2008		1,432
Goodwill acquired		7,708
Impairment charge		(1,432	)
Balance as of June 30, 2009		7,708
Goodwill acquired		—
Impairment Charge / Other		143
Balance as of December 31, 2009	$	7,851

Goodwill acquired during the fiscal year ended June 30, 2009 represents the goodwill of $7.7 million related to the acquisition of selected assets from Micronas, refer to Note 11, “Business Combinations” of the Notes to Consolidated Financial Statements for details.

During the fiscal year ended June 30, 2009, the Company evaluated the viability of its set-top-box, or STB, business in China, including STB products under development by TMBJ, and determined that continuing this business would not be consistent with the Company’s current DTV market strategy. The Company’s decision to no longer allocate resources to the Chinese STB business was made concurrently with the decision to acquire certain product lines from Micronas. It was determined that these resources would instead be utilized to further penetrate the system-on-a-chip, or SoC market. As a result, no future revenues were expected to be generated from the Chinese “STB” business being developed by TMBJ. The Company considered this change as a triggering event and performed an interim impairment test of goodwill in accordance with applicable accounting guidance as of March 31, 2009. Based on the results of the first step of the goodwill analysis, it was determined that TMBJ’s net book value exceeded its estimated fair value as there will be no future revenues generated from the Chinese STB business. As a result, the Company performed the second step of the impairment test to determine the implied fair value of goodwill. The results of step two of the goodwill analysis indicated that there would be no remaining implied value attributable to goodwill and, accordingly, the Company wrote off the entire goodwill balance at TMBJ and recognized a goodwill impairment charge of $1.4 million under “Goodwill impairment” in the Consolidated Statements of Operations for the fiscal year ended June 30, 2009.

The Company has determined its reporting units based on the guidance in applicable accounting literature. The business lines acquired from Micronas are not yet fully integrated; therefore, as of December 31, 2009, the Company has two reporting units, the legacy business and the second reporting unit, which carries all of the Company’s goodwill balance and was created as a result of the acquisition of the FRC, DRX, and audio decoder product lines from Micronas on May 14, 2009. In accordance with applicable accounting guidance, the Company is required to assign the goodwill to one or more reporting units that are expected to benefit from the synergies of the combination even though other assets or liabilities of the acquired entity may not be assigned to that reporting unit. As a result, the Company assigned the entire amount of the goodwill to the reporting unit consisting of the product lines acquired from Micronas and will perform its next annual goodwill impairment test during the quarter ending June 30, 2010. When the integration the Micronas business is complete, the Company may change its reporting structure which may impact the future impairment analysis and the allocation of goodwill.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Intangible assets and impairment

The Company has two types of intangible assets: acquisition-related intangible assets and purchased intangible assets from third-party vendors. Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable in accordance with applicable accounting guidance. No indicators of impairment were deemed to be present, therefore for the six months ended December 31, 2009 no impairment test was performed on intangible assets.

Acquisition-related intangible assets

During the fiscal year ended June 30, 2009, the Company’s financial results and outlook continued to be challenged and constrained by the evolving market for its products and by its customers’ shifting market strategies, combined with a difficult macroeconomic environment. The Company performed an impairment analysis of the acquisition-related intangible assets at TMBJ and determined that the carrying amount of those intangible assets, primarily existing core technology and tradename, exceeded fair value by $0.4 million. In addition, in order to better support its focus on SoC development, the Company redeployed its TMBJ engineering resources and canceled its Chinese STB efforts. The Company performed the impairment analysis of the acquisition-related intangible assets by using the undiscounted projected future operating cash flows and determined that the remaining acquisition-related intangible assets associated with the acquisition of TMBJ were below the assets’ carrying value and recognized a $0.6 million impairment loss on acquisition-related intangible assets during the fiscal year ended June 30, 2009.

During the fiscal year ended June 30, 2009, the Company recognized a $1.0 million impairment loss on acquisition-related intangible assets at TMBJ, of which approximately $0.1 and $0.7 million related to acquisition-related developed and core technology and was recorded as “Cost of revenues” in the Consolidated Statement of Operations. The remaining amount was related to tradenames and was included as Selling, general and administrative expenses in the Consolidated Statement of Operations. The Company will continue to monitor the acquisition-related intangible assets for impairment and make appropriate reductions in carrying value when called for based on an impairment analysis.

Third-party purchased intangible assets

During the fiscal year ended June 30, 2009, the Company had two key impairment indicators, which included a change in business strategy associated with more focus on SoC development and a change in the use of assets due to the acquisition of the FRC, DRX, and audio decoder product lines from Micronas. The Company performed an impairment analysis of its intangible assets and determined that its existing IP licenses which utilized demodulator technology were obsolete due to the acquisition of the demodulator technology from Micronas. Consequently, the Company wrote off $1.2 million related to the obsolete demodulator licenses under “Research and development” for the fiscal year ended June 30, 2009. Additionally, as stated above, the Company determined that continuing the Chinese STB business would not be consistent with the Company’s then current DTV market strategy. The Company’s decision to no longer allocate resources to the Chinese STB business was made concurrently with the decision to acquire certain product lines from Micronas. It was determined that these resources would instead be utilized to further penetrate the SoC market, and accordingly, the Company wrote off $0.5 million of the IP related to the Chinese STB business under Research and development for the fiscal period ended June 30, 2009. In total, the Company wrote off $1.7 million of purchased intangible assets related to the Chinese STB and the obsolete demodulator technology as a component of Research and development in the Consolidated Statement of Operations for the fiscal period ended June 30, 2009.

73

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The carrying values of the Company’s amortized acquired intangible assets as of December 31, 2009 are as follows:

	Six Months Ended December 31, 2009
			Accumulated
			Amortization
	Gross		and Write-off			Net
	(Dollars in thousands)
Core and developed technologies	$	28,645	$	(23,260	)	$	5,385
Customer relationships		2,535		(2,359	)		176
Backlog		166		(92	)		74
Tradename		—		—			—
Total	$	31,346	$	(25,711	)	$	5,635

The carrying values of the Company’s amortized acquired intangible assets as of June 30, 2009 and 2008 are as follows:

	Year Ended June 30, 2009							Year Ended June 30, 2008
			Accumulated							Accumulated
			Amortization							Amortization
	Gross		and Write-off			Net		Gross		and Write-off			Net
	(Dollars in thousands)
Core and developed technologies	$	28,646	$	(21,382	)	$	7,264	$	24,587	$	(17,129	)	$	7,458
Customer relationships		2,521		(2,247	)		274		2,521		(1,561	)		960
Backlog		180		(33	)		147		—		—			—
Tradename		—		—			—		14		(4	)		10
Total	$	31,347	$	(23,662	)	$	7,685	$	27,122	$	(18,694	)	$	8,428

Total amortization expense consists primarily of the amortization of core and developed technologies recorded in “Cost of revenues” in the Consolidated Statement of Operations. A small portion of total amortization expense consists of the amortization of customer relationships recorded in selling, general and administrative expenses, and the amortization of backlog recorded in net revenues. As of December 31, 2009, the Company estimates the future amortization expense of acquired intangible assets for fiscal years ended December 31, 2010, and 2011, to be as follows: $3.9 million, and $1.7 million, respectively. These amounts do not include amortization related to the NXP transaction that closed February 8, 2010. See Note 16, “Subsequent Events,” of the Notes to Consolidated Financial Statements.

5.   GUARANTEES

The Company replaces defective products that are expected to be returned by its customers under its warranty program and includes such estimated product returns in its “Allowance for sales returns” analysis. There were no significant known product warranty claims as of December 31, 2009. The following table reflects the changes in the Company’s accrued product warranty for expected customer claims related to known product warranty issues for the fiscal years ended June 30, 2009, 2008 and 2007:

	Years Ended
	2009			2008			2007
	(Dollars in thousands)
Accrued product warranty, beginning of period	$	256		$	800		$	1,082
Charged to (reversal of) cost of revenues		(256	)		(372	)		1,171
Actual product warranty expenses		—			(172	)		(1,453	)
Accrued product warranty, end of period	$	—		$	256		$	800

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

6.   COMMITMENTS AND CONTINGENCIES

Lease and Purchase Commitments

The following summarizes the Company’s contractual obligations as of December 31, 2009:

	Payments Due by Period
	Less Than						More Than
	1 Year		1-3 Years		3-5 Years		5 Years		Total
	(Dollars in millions)
Contractual Obligations
Operating Leases 1)	$	1.4	$	2.2	$	0.5	$	1.6	$	5.7
Purchase Obligations 2)		31.6		—		—		—		31.6
Total	$	33.0	$	2.2	$	0.5	$	1.6	$	37.3

1)

At December 31, 2009 the Company leases office space and has entered into lease commitments, which expire at various dates through August 2019, in North America as well as various locations in Japan, Hong Kong, China, Taiwan, South Korea, Singapore, Germany, and The Netherlands. Operating lease obligations include future minimum lease payments under non-cancelable operating leases as of December 31, 2009 and do not include lease commitments resulting from the acquisition of selected assets and liabilities of NXP on February 8, 2010 or the Company’s corporate headquarters lease commencing April 1, 2010 or the engineering software license and maintenance agreement entered into on March 5, 2010. See Note 16, “Subsequent Events,” to the Notes to Consolidated Financial Statements.

2)

Purchase obligations primarily represent unconditional purchase order commitments with contract manufacturers and suppliers for wafers and software licensing.

Rental expense for the six months ended December 31, 2009 and the fiscal years ended June 30, 2009, 2008, and 2007 was $1.4 million, $1.5 million, $1.5 million, and $2.0 million, respectively.

As of December 31, 2009, the Company had purchase commitments in the amount of $31.6 million that were not included in the consolidated balance sheet at that date. Of this amount, $27.5 million represents purchase commitments by the Company to UMC and Micronas, its principal foundries, and $4.1 million represents purchase commitments the Company for intellectual properties, software licensing purchases and other commitments. Among the $27.5 million of inventory purchase commitments, $23.6 million and $3.9 million were to UMC and Micronas, respectively.

NXP Acquisition Related Commitments

On February 8, 2010, as a result of the acquisition of selected assets and liabilities of the television systems and set-top box business lines acquired of NXP, the Company entered into a Transition Services Agreement, pursuant to which NXP will provide to the Company, for a limited period of time, specified transition services and support. Depending on the service provided, the term for the majority of services range from three to eighteen months, and limited services could continue into the fourth quarter of 2011. Also as a result of the acquisition of the NXP business lines, the Company entered into a Manufacturing Services Agreement pursuant to which NXP will provide manufacturing services to the Company for a limited period of time. The term of the agreement ends on the earlier of (i) June 30, 2011 or (ii) the readiness of the Company’s enterprise resource planning system. The terms of the agreements allow the Company to cancel either or both the Transition Services Agreement and the Manufacturing Services Agreement. See Note 16, “Subsequent Events,” to the Notes to Consolidated Financial Statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Corporate Headquarters Lease and Software License and Maintenance Agreement

The following summarizes the Company’s obligations resulting from its corporate headquarters lease and software license and maintenance agreement:

	Payments Due By Period
	Less than						More than
	1 year		1-3 years		3-5 years		5 years		Total
			(Dollars in millions)
Corporate Headquarters Lease 1)	$	0.5	$	2.5	$	0.9	$	—	$	3.9
Software License and Maintenance Agreement 2)		3.1		3.1		—		—	$	6.2
Total	$	3.6	$	5.6	$	0.9	$	—	$	10.1

1)	The Company has entered into a five year, 57,649 square foot lease for its corporate headquarters located in Sunnyvale, California commencing April 1, 2010 having a $3.9 million total future leases obligation. See Note 16, “Subsequent Events,” of the Notes to Consolidated Financial Statements.
2)	The Company has entered into an engineering software license and maintenance agreement with NXP on March 5, 2010 having a future net cash obligation of $6.2 million. See Note 16, “Subsequent Events,” of the Notes to Consolidated Financial Statements.

Contingencies

Shareholder Derivative Litigation

Trident has been named as a nominal defendant in several purported shareholder derivative lawsuits concerning the granting of stock options. The federal court cases have been consolidated as In re Trident Microsystems Inc. Derivative Litigation, Master File No. C-06-3440-JF. A case also has been filed in State court, Limke v. Lin et al., No. 1:07-CV-080390. Plaintiffs in all cases allege that certain of the Company’s current or former officers and directors caused it to grant options at less than fair market value, contrary to its public statements (including its financial statements); and that as a result those officers and directors are liable to the Company. No particular amount of damages has been alleged, and by the nature of the lawsuit no damages will be alleged against the Company. The Board of Directors has appointed a Special Litigation Committee (“SLC”) composed solely of independent directors to review and manage any claims that the Company may have relating to the stock option grant practices investigated by the Special Committee. The scope of the SLC’s authority includes the claims asserted in the derivative actions. In federal court, Trident has moved to stay the case pending the assessment by the SLC that was formed to consider nominal plaintiffs’ claims. In State court, Trident moved to stay the case in deference to the federal lawsuit, and the parties have agreed, with the Court’s approval, to take that motion off of the Court’s calendar to await the assessment of the SLC. The Special Litigation Committee recommended settlements with certain of the defendants and the federal court has approved these settlements preliminarily, subject to a hearing seeking final court approval. The Company cannot predict whether these actions are likely to result in any material recovery by or expense to, Trident. The Company expects to continue to incur legal fees in responding to these lawsuits, including expenses for the reimbursement of legal fees of present and former officers and directors under indemnification obligations.

Regulatory Actions

The Company is also subject to a formal investigation by the Securities and Exchange Commission in connection with its investigation into its stock option granting practices and related issues and we have been cooperating and will continue to cooperate with any inquiries from the SEC. Although the Department of Justice (“DOJ”) commenced an investigation relating to the same issues, the DOJ has not requested information from the Company since February 20, 2009 and we believe that the DOJ has concluded its investigation without taking any action against us. In addition, the Company has received an inquiry from the Internal Revenue Service to which it has responded. Any regulatory investigation could result in substantial legal and accounting expenses, divert management’s attention from other business concerns and harm our business. Any action commenced against us by

76

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

a regulatory agency could result in orders against us, the imposition of significant penalties and/or fines against us, and/or the imposition of civil sanctions against us or certain of our former officers, directors and/or employees. Any regulatory action could result in the filing of additional restatements of our prior financial statements or require that it take other actions. If the Company is subject to an adverse finding resulting from the SEC investigation, it could be required to pay damages or penalties or have other remedies imposed upon it. The Company is unable to predict what consequences, if any, that an investigation by any regulatory agency may have on it. The period of time necessary to resolve the investigation by the SEC is uncertain, and this matter could require significant management and financial resources which could otherwise be devoted to the operation of the Company’s business.

Indemnification Obligations

The Company indemnifies, as permitted under Delaware law and in accordance with its Bylaws, its officers, directors and members of its senior management for certain events or occurrences, subject to certain limits, while they were serving at the Company’s request in such capacity. In this regard, the Company has received, or expects to receive, requests for indemnification by certain current and former officers, directors and employees in connection with the Company’s investigation of its historical stock option grant practices and related issues, and the related governmental inquiries and shareholder derivative litigation. The maximum amount of potential future indemnification is unknown and potentially unlimited; therefore, it cannot be estimated. The Company has directors’ and officers’ liability insurance policies that may enable it to recover a portion of such future indemnification claims paid, subject to coverage limitations of the policies, and plans to make claims for reimbursement from its insurers of any potentially covered future indemnification payments.

General

From time to time, the Company is involved in other legal proceedings arising in the ordinary course of its business. While the Company cannot be certain about the ultimate outcome of any litigation, management does not believe any pending legal proceeding will result in a judgment or settlement that will have a material adverse effect on the Company’s business, financial position, results of operation or cash flows.

7.   STOCKHOLDERS’ EQUITY

Preferred Shares Rights

On July 24, 1998, the Company’s Board of Directors adopted a Preferred Shares Rights Agreement (the “Original Rights Agreement”). Pursuant to the Agreement, the Company’s Board of Directors authorized and declared a dividend of one preferred share purchase right (“Right”) for each outstanding share of the Company’s common stock, par value $0.001 (“Common Shares”) of the Company as of August 14, 1998. The Rights are designed to protect and maximize the value of the outstanding equity interests in Trident in the event of an unsolicited attempt by an acquirer to take over Trident, in a manner or terms not approved by the Board of Directors.

On July 23, 2008, the Board approved an amendment to the Original Rights Agreement pursuant to an Amended and Restated Rights Agreement dated as of July 23, 2008 (the “Amended and Restated Rights Agreement”). The Amended and Restated Rights Agreement (i) extended the Final Expiration Date, as defined in the Original Rights Agreement, through July 23, 2018; (ii) adjusted the number of shares of Series A Preferred Stock (“Preferred Shares”) issuable upon exercise of each Right from one one-hundredth to one one-thousandth; (iii) changed the purchase price (the “Purchase Price”) of each Right to $38.00; and (iv) added a provision requiring periodic evaluation (at least every three years after July 23, 2008) of the Amended and Restated Rights Agreement by a committee of independent directors to determine if maintenance of the Amended and Restated Rights Agreement continues to be in the best interests of the Company and its stockholders. The Company subsequently amended the Amended and Restated Rights Agreement to provide that the issuance of shares of Trident common stock to Micronas and to NXP, respectively, does not trigger the Rights under the Amended and Restated Rights Agreement.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Comprehensive Income (Loss)

Under applicable accounting guidance, any unrealized gains or losses on investments which are classified as available-for-sale equity securities are to be reported as a separate adjustment to equity. Accumulated other comprehensive income (loss), as presented in the accompanying Consolidated Balance Sheet, consists of the unrealized gains and losses on available-for-sale investments.

8.   EMPLOYEE BENEFIT PLANS

Equity Incentive Plans

The Company grants nonstatutory and incentive stock options, restricted stock awards, and restricted stock units to attract and retain officers, directors, employees and consultants. As of December 31, 2009, the Company made awards under two equity incentive plans: the 2006 Equity Incentive Plan (the “2006 Plan”), the 2002 Stock Option Plan (the “2002 Plan”). The Company has also adopted the 2001 Employee Stock Purchase Plan; however purchases under this plan have been suspended. Options to purchase Trident’s common stock remain outstanding under three incentive plans which have expired or been terminated: the 1992 Stock Option Plan, the 1994 Outside Directors Stock Option Plan and the 1996 Nonstatutory Stock Option Plan. In addition, options to purchase Trident’s common stock are outstanding as a result of the assumption by the Company of options granted to “TTI”’s officers, employees and consultants under the “TTI” 2003 Employee Option Plan (“TTI Plan”). The options granted under the “TTI” option Plan were assumed in connection with the acquisition of the minority interest in “TTI” on March 31, 2005 and converted into options to purchase Trident’s common stock. Except for the 1996 Plan, all of the Company’s equity incentive plans, as well as the assumption and conversion of options granted under the “TTI” Plan, have been approved by the Company’s stockholders.

In May 2006, Trident’s stockholders approved the 2006 Plan, which provides for the grant of equity incentive awards, including stock options, stock appreciation rights, restricted stock purchase rights, restricted stock bonuses, restricted stock units, performance shares, performance units, deferred compensation awards, cash-based and other stock-based awards and nonemployee director awards of up to 4,350,000 shares. On March 31, 2008, Tridents’ Board of Directors approved an amendment to the 2006 Plan to increase the number of shares available for issuance from 4,350,000 shares to 8,350,000 shares, which was subsequently approved in a special stockholders’ meeting on May 16, 2008. For purposes of the total number of shares available for grant under the 2006 Plan, any shares that are subject to awards of stock options, stock appreciation rights, deferred compensation award or other award that requires the option holder to purchase shares for monetary consideration equal to their fair market value determined at the time of grant shall be counted against the available-for-grant limit as one share for every one share issued, and any shares issued in connection with awards other than stock options, stock appreciation rights, deferred compensation award or other award that requires the option holder to purchase shares for monetary consideration equal to their fair market value determined at the time of grant shall be counted against the available-for-grant limit as 1.38 shares for every one share issued. Stock options granted under the 2006 Plan must have an exercise price equal to the closing market price of the underlying stock on the grant date and generally expire no later than ten years from the grant date. Options generally become exercisable beginning one year after the date of grant and vest as to a percentage of shares annually over a period of three to four years following the date of grant. In February, 2010, the stockholders of the Company approved the adoption of the 2010 Equity Incentive Plan, which supersedes the 2006 Plan and the 2002 Plan. The 2006 Plan and 2002 Plan were terminated on January 26, 2010. See Note 16 “Subsequent Events” of the Notes to Consolidated Financial Statements.

Stock options granted under the “TTI” Plan expire no later than ten years from the grant date. Options granted under the “TTI” Plan were generally exercisable one or two years after date of grant and vest over a requisite service period of generally two or four years following the date of grant. No further awards may be made under the “TTI” Plan.

In December 2002, Trident adopted the stockholder-approved 2002 Plan under which shares of common stock could be issued to officers, directors, employees and consultants. Stock options granted under the 2002 Plan must have an exercise price equal to at least 85% of the closing market price of the underlying stock on the grant date and

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

expire no later than ten years from the grant date. Options granted under the 2002 Plan were generally exercisable in cumulative installments of one-third or one-fourth each year, commencing one year following the date of grant.

The Company accounts for share-based payments, including grants of stock options and awards to employees and directors, in accordance with applicable accounting guidance, which requires that share-based payments be recognized in its consolidated statements of operations based on their fair values and the estimated number of shares the Company ultimately expects will vest. Stock-based compensation expense recognized in the Consolidated Statements of Operations for the six month period ended December 31, 2009 and the fiscal years ended June 30, 2009, 2008, and 2007 include compensation expense for stock-based payment awards granted prior to, but not yet vested as of, June 30, 2005 based on the grant date fair value estimated in accordance with the pro forma provisions of previous accounting guidance, and compensation expense for the stock-based payment awards granted subsequent to June 30, 2005 based on the grant date fair value estimated in accordance with the provisions accounting guidance applicable since then. In accordance with applicable accounting guidance, the Company recognizes stock-based compensation expense on a straight-line basis over the service period of all stock options and awards other than the performance-based restricted stock award with market conditions that was granted to its Chief Executive Officer under the 2006 Plan. For purposes of expensing this single performance-based grant, the Company elected to use the accelerated method. Also see Note 16 “Subsequent Events” of the Notes to Consolidated Financial Statements.

Valuation Assumptions

The Company values its stock-based payment awards granted using the Black-Scholes model, except for the performance-based restricted stock award with a market condition granted under the 2006 Plan during the fiscal year ended June 30, 2008, for which the Company elected to use a Monte Carlo simulation to value the award.

The Black-Scholes model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. The Black-Scholes model requires the input of certain assumptions. The Company’s stock options have characteristics significantly different from those of traded options, and changes in the assumptions can materially affect the fair value estimates.

For the six months ended December 31, 2009 and the fiscal years ended June 30, 2009, 2008, and 2007, respectively, the fair value of options granted were estimated at the date of grant using the Black-Scholes model with the following weighted average assumptions:

	Six Months Ended			Equity Incentive Plans For Years
	December 31,			Ended June 30,
	2009			2009			2008			2007
Expected terms (in years)		4.74			3.94			4.20			4.25
Volatility		68.58	%		62.68	%		52.25	%		61.92	%
Risk-free interest rate		2.41	%		2.83	%		3.97	%		4.77	%
Expected dividend rate		—			—			—			—
Weighted average fair value	$	1.13		$	1.27		$	5.04		$	10.65

The expected term of stock options represents the weighted average period the stock options are expected to remain outstanding. The expected term is based on the observed and expected time to exercise and post-vesting cancellations of options by employees. The Company uses historical volatility in deriving its expected volatility assumption as allowed under applicable accounting guidance because it believes that future volatility over the expected term of the stock options is not likely to differ from the past. The risk-free interest rate assumption is based upon observed interest rates appropriate for the expected term of options to purchase Trident common stock. The expected dividend assumption is based on the Company’s history and expectation of dividend payouts.

As stock-based compensation expense recognized in the Consolidated Statements of Operations for the six months ended December 31, 2009 and the fiscal years ended June 30, 2009, 2008, and 2007 is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. Accounting guidance requires forfeitures

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures were estimated based on historical experience. The Company adjusts stock-based compensation expense based on its actual forfeitures on an annual basis, if necessary.

Stock-Based Compensation Expense

The following table summarizes the impact of recording stock-based compensation expense under applicable accounting guidance for the six months ended December 31, 2009 and the fiscal years ended June 30, 2009, 2008, and 2007. The Company has not capitalized any stock-based compensation expense in inventory for the six months ended December 31, 2009 or the fiscal years ended June 30, 2009, 2008, and 2007 as such amounts were immaterial.

	Six Months Ended December 31,				Year Ended June 30,
	2009		2009		2008		2007
	(Dollars in thousands)
Cost of revenues	$	124	$	587	$	763	$	896
Research and development		1,665		7,539		12,418		8,901
Selling, general and administrative		1,666		4,547		15,424		5,810
Total stock-based compensation expense	$	3,455	$	12,673	$	28,605	$	15,607

During the six months ended December 31, 2009, total stock-based compensation expense recognized in loss before taxes was $3.5 million and there was no recognized tax benefit. During fiscal year ended June 30, 2009, total stock-based compensation expense recognized in loss before taxes was $12.7 million and there was no recognized tax benefit. During the fiscal years ended June 30, 2008 and 2007, total stock-based compensation expense recognized in income before taxes were $28.6 million and $15.6 million, respectively, and there was no recognized tax benefit for fiscal year ended June 30, 2008, and the related recognized tax benefit was $1.7 million for the fiscal year ended June 30, 2007. Among the $15.4 million selling, general and administrative expenses for the fiscal year ended June 30, 2008, $4.3 million was related to the contingent liability as discussed below in “Modification of Certain Options.”

The following table summarizes the Company’s stock option activities for the six months ended December 31, 2009 and for fiscal years ended June 30, 2007, 2008, and 2009:

	Shares			Options Outstanding
	Available for			Number of			Weighted Average
	Grant			Shares			Exercise Price
	(Shares in thousands, except per share amounts)
Balance at June 30, 2006		5,335			9,594		$	4.49
Plan shares expired		(622	)		—			—
Restricted stock granted(1)		(380	)		—			—
Options granted		(1,553	)		1,553			20.17
Options exercised		—			(541	)		1.49
Options canceled		804			(804	)		8.34
Balance at June 30, 2007		3,584			9,802		$	6.82
Options increase under 2006 Plan		4,000
Plan shares expired		(594	)		—			—
Restricted stock granted(1)		(1,273	)		—			—
Restricted stock cancellation(1)		192			—			—
Options granted		(1,870	)		1,870			10.60
Options exercised		—			(2,778	)		2.01
Options cancelled, forfeited or expired		1,369			(1,369	)		10.58

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	Shares			Options Outstanding
	Available for			Number of			Weighted Average
	Grant			Shares			Exercise Price
	(Shares in thousands, except per share amounts)
Balance at June 30, 2008		5,408			7,525		$	8.94
Plan shares expired		(594	)		—			—
Restricted stock granted(1)		(1,512	)		—			—
Restricted stock cancellation(1)		424			—			—
Options granted		(1,859	)		1,859			2.57
Options exercised		—			(1,062	)		1.23
Options cancelled, forfeited or expired		1,454			(1,454	)		9.90
Balance at June 30, 2009		3,321			6,868		$	8.21
Plan shares expired		(314	)		—			—
Restricted stock granted(1)		(1,486	)		—			—
Restricted stock cancellation(1)		304			—			—
Options granted		(891	)		891			1.98
Options exercised		—			(321	)		1.18
Options cancelled, forfeited or expired		749			(749	)		10.78
Balance at December 31, 2009		1,683			6,690		$	7.48
Vested and expected to vest at December 31, 2009					6,496		$	7.60

(1) Restricted stock is deducted from shares available for grant under the 2006 Plan at a 1 to 1.38 ratio.

As of December 31, 2009 the total number of stock options exercisable was approximately 3,531,000 with a weighted average exercise price of $8.72. At June 30, 2009, 2008, and 2007, the total number of stock options exercisable was approximately 3,412,000, 3,817,000 and 4,879,000, respectively. At June 30, 2009, 2008 and 2007, the aggregate outstanding exercisable stock options had a weighted average exercise price of $8.22, $5.65 and $3.20, respectively.

During the six months ended December 31, 2009 and the fiscal years ended June 30, 2009, 2008, and 2007, the total pre-tax intrinsic value of stock options exercised was $0.3 million, $2.2 million, $6.1 million, and $11.2 million, respectively.

The following table summarizes information about the Company’s stock options outstanding and exercisable as of December 31, 2009 (in thousands except per share data):

	Options Outstanding						Options Exercisable
			Weighted
			Average
			Remaining		Weighted				Weighted
			Contractual		Average				Average
	Number of		Term		Exercise		Number of		Exercise
Range of Exercise Prices	Shares		(in Years)		Price		Shares		Price
$0.78 — $2.02		2,365		6.6	$	1.54		1,208	$	1.25
$2.06 — $5.34		1,766		7.6	$	3.40		560	$	3.78
$5.35 — $20.22		1,819		6.6	$	13.58		1,325	$	13.44
$20.36 — $26.40		740		6.8	$	21.17		438	$	21.39
Total		6,690		6.9	$	7.48		3,531	$	8.72

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The aggregate intrinsic value of options outstanding as of December 31, 2009 was $0.9 million. The aggregate intrinsic value represents the total pre-tax intrinsic value, which is computed based on the difference between the exercise price and the $1.86 per share closing price of Trident’s common stock on December 31, 2009, which would have been received by the option holders had all option holders exercised and sold their options on that date.

The aggregate intrinsic value and weighted average remaining contractual term of options vested and expected to vest at December 31, 2009 was $0.9 million and 6.8 years, respectively. The aggregate intrinsic value and weighted average remaining contractual term of options exercisable at December 31, 2009 was $0.7 million and 5.6 years, respectively. The aggregate intrinsic value is calculated based on the closing price of Trident’s common stock for all in-the-money options on December 31, 2009.

As of December 31, 2009, there was $7.3 million of total unrecognized compensation cost related to stock options granted under all Employee Benefit Plans. This unrecognized compensation cost is expected to be recognized over a weighted average period of 2.2 years.

Restricted Stock Awards and Restricted Stock Units

The following table summarizes the activity for Trident’s restricted stock awards, or RSAs, and restricted stock units, or RSUs, for the six months ended December 31, 2009 and the fiscal years ended June 30, 2007, 2008, and 2009, respectively:

				Weighted Average
				Grant-Date Fair
	Shares			Value per Share
	(Shares in thousands, except per share amounts)
Nonvested balance at June 30, 2006		—		$	—
Granted		275			19.98
Vested		—			—
Forfeited		—			—
Nonvested balance at June 30, 2007		275		$	19.98
Granted		923			12.20
Vested		(50	)		19.64
Forfeited		(140	)		13.92
Nonvested balance at June 30, 2008		1,008		$	13.71
Granted		1,096			3.33
Vested		(247	)		3.85
Forfeited		(307	)		10.86
Nonvested balance at June 30, 2009		1,551		$	7.02
Granted		1,076			1.92
Vested		(379	)		7.55
Forfeited		(220	)		5.94
Nonvested balance at December 31, 2009		2,028		$	4.44

Both RSAs and RSUs typically vest over a three year period or a four year period. The fair value of the RSAs and RSUs was based on the closing market price of the Company’s common stock on the date of award. The table above includes an RSA award of 110,000 performance-based shares with vesting subject to achievement of specific market conditions granted under the 2006 Plan during fiscal year ended June 30, 2008. This RSA was issued to the Company’s Chief Executive Officer on October 23, 2007 as part of her initial new hire award. The award will vest in four equal tranches, with the vesting of each tranche requiring that Trident’s common stock price target, established by the Compensation Committee, be achieved on or after one of the first four anniversaries of her employment start

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

date. The CEO needs to be employed with the Company as of each anniversary date in order for vesting to occur. The table above also includes RSU awards of 67,000 and 35,000 performance-based units under the 2006 Plan, granted on October 4, 2009, to the Company’s Chief Executive Officer and Senior Vice President of Engineering, respectively. The units vest subject to achievement of specific Company earnings during the year ending December 31, 2011. The units vest only if the performance goal has been met in full. The RSU awards granted to the Vice President of Engineering were cancelled during January 2010.

The fair value of the restricted performance shares with market and service conditions was estimated at the grant date using a Monte Carlo simulation with the following weighted-average assumptions: volatility of Trident’s common stock of 62%; internal rate of return of 25%; and risk-free interest rate of 4.41%. The weighted-average grant-date fair value of the restricted performance shares was $9.32. During the six months ended December 31, 2009 stock compensation expense of $0.1 million was recorded for these restricted performance shares because of service conditions being met. During each of the fiscal years ended June 30, 2009 and 2008, stock-based compensation expense of $0.4 million and $0.3 million, respectively, was recorded for these restricted performance shares because of service conditions being met. As of December 31, 2009 and June 30, 2009, none of these performance-based RSAs were vested.

As of December 31, 2009 and June 30, 2009, there was $5.4 million and $10.4 million respectively, of total unrecognized compensation cost related to RSAs and RSUs granted under the Employee Stock Plans. This unrecognized compensation cost is expected to be recognized over a weighted average period of 2.0 years.

Employee 401(k) Plan

The Company sponsors the Trident Microsystems, Inc. 401(k) Retirement Plan (the “Retirement Plan”) — a defined contribution plan that is available to substantially all of its employees in the United States. Under Section 401(k) of the Internal Revenue Code, the Retirement Plan allows for tax-deferred salary contributions by eligible employees. Participants can contribute from 1% to 25% of their annual compensation to the Plan on a pretax and after-tax basis. Employee contributions are limited to a maximum annual amount as set periodically by the Internal Revenue Code. The Company matches eligible participant contributions at 25% of the first 5% of eligible base compensation (for those employees with one or more years of service with the Company). The Retirement Plan allows employees who meet the age requirements and reach the Plan contribution limits to make a catch-up contribution not exceed the lesser of 50% of their eligible compensation or the limit set forth in the Internal Revenue Code. The catch-up contributions are not eligible for matching contributions. All matching contributions vest immediately. The Company’s matching contributions to the Plan totaled $0.05 million for the six months ended December 31, 2009 and each of the fiscal years ended June 30, 2009, 2008 and 2007. During January 2010, the Company changed the fiscal year of the Retirement Plan from June 30 to December 31.

Employee Stock Purchase Plan

In December 2001, the Company’s stockholders approved the 2001 Employee Stock Purchase Plan (the “ESPP Plan”), under which 750,000 shares of the Company’s common stock can be issued to all Trident employees. The ESPP Plan replaced the 1998 Employee Stock Purchase Plan. The participants’ purchase price for Trident’s common stock under the ESPP Plan is the lower of 85% of the closing market price on the first trading day of each six-month period in the fiscal year or the last trading day of the same six-month period. As of April 30, 2005, an aggregate of 299,000 shares have been issued under the ESPP Plan. Beginning on May 2, 2005, the ESPP Plan was suspended. If the Company resumes the ESPP Plan in the future, approximately 902,000 shares will be available for issuance under the ESPP Plan.

Modification of Certain Options

Extended Exercise

Effective at the close of trading on September 25, 2006, the Company temporarily suspended the ability of optionees to exercise vested options to purchase shares of the Company’s common stock until the Company became

83

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

current in the filing of its periodic reports with the SEC and filed a Registration Statement on Form S-8 for the shares issuable under the 2006 Plan (“2006 Plan S-8”). This suspension continued in effect through August 22, 2007, the date of the filing of the registration statement on Form S-8 covering issuances under the 2006 Plan, which followed the Company’s filing, on August 21, 2007, of its Quarterly Reports on Form 10-Q for the periods ended September 30, 2006, December 31, 2006, and March 31, 2007. As a result, the Company extended the exercise period of approximately 550,000 fully vested options held by 10 employees, who were terminated during the suspension period, giving them either 30 days or 90 days after the Company became current in the filings of its periodic reports with the SEC and filed the 2006 Plan S-8 in order to exercise their vested options. During the three months ended September 30, 2007, eight of these ten former employees stated above exercised all of their vested options. However, on September 21, 2007, the Special Litigation Committee of the Board of Directors (“SLC”) decided that it was in the best interests of the Company’s stockholders not to allow the remaining two former employees, as well as the Company’s former CEO and two former non-employee directors, to exercise their vested options during the pendency of the SLC’s proceedings, and extended, until March 31, 2008, the period during which these five former employees could exercise approximately 428,000 of their fully vested options. Moreover, the SLC allowed one former employee to exercise all of his fully vested stock options and another former employee agreed to cancel all of such individual’s fully vested stock options during the second quarter of fiscal year ended June 30, 2008. On January 31, 2008, the SLC extended, until August 31, 2008, the period during which the two former non-employee directors could exercise their unexpired vested options. For the fiscal year ended June 30, 2008, the Company recorded aggregate incremental stock-based compensation expense totaling approximately $5.4 million related to the modifications of option exercise rights of the five former employees as described above, and the related expenses were included in “Selling, General and Administrative Expenses” in the Consolidated Statement of Operations as of that date.

Contingent Liabilities

As stated in the “Extended Exercise” section above, on September 21, 2007, the SLC decided not to allow the Company’s former CEO and two former non-employee directors to exercise their vested options until March 31, 2008. Moreover, on January 30, 2008, the SLC extended, until August 1, 2008, the period during which the two former non-employee directors could exercise their vested options. On March 31, 2008, the SLC entered into an agreement with the Company’s former CEO allowing him to exercise all of his fully vested stock options. Under this agreement, he agreed that any shares obtained through these exercises or net proceeds obtained through the sale of such shares would be placed in an identified securities brokerage account and not withdrawn, transferred or otherwise removed without either (i) a court order granting him permission to do so or (ii) the written permission of the Company. On May 29, 2008, the SLC permitted one of the Company’s former non-employee directors to exercise his fully vested stock options without seeking the authorization of the SLC and entered into an agreement with the other former non-employee director on terms similar to the agreement entered into with the Company’s former CEO, allowing him to exercise all of his fully vested stock options without seeking the authorization from the SLC. Because Trident’s stock price was lower than the prices at which the Company’s former CEO and each of the two former directors had desired to exercise their options, as indicated in previous written notices to the SLC, the Company recorded a contingent liability totaling $4.3 million, which was included in “Accrued expenses and other current liabilities” in the Consolidated Balance Sheets as of December 31, 2009 and June 30, 2008 and the related expenses were included in “Selling, General and Administrative Expenses” in the Consolidated Statement of Operations for the year ended June 30, 2008. On August 11, 2009, in connection with negotiations between the SLC and the Company’s former CEO, an agreement was executed tolling the statute of limitations applicable to potential claims by the Company’s former CEO against the Company. On January 29, 2010, the SLC and the Company’s former CEO agreed to continue to toll the statute of limitations on these potential claims until May 10, 2010.

9.   INCOME TAXES

The Company changed the manner in which it accounts for uncertain tax positions in fiscal 2008. The Company is required to recognize and measure all uncertain tax positions taken that may not be sustained, or may only be partially sustained, upon examination by the relevant taxing authorities.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company’s unrecognized tax benefits as of December 31, 2009 relate to various domestic and foreign jurisdictions. A reconciliation of the July 1, 2009 through December 31, 2009 and the years ended June 30, 2009 and 2008 reflect the amount of unrecognized tax benefits as follows:

	Six Months
	Ended
	December 31,		Years Ended June 30,
	2009		2009			2008
	(Dollars in thousands)
Balance at beginning of period	$	42,366	$	42,987		$	40,708
Increases related to current year tax positions		739		4,486			3,093
(Decreases) increases related to prior year tax positions		466		(4,767	)		1,515
Expiration of the statute of limitations for the assessment of taxes				(340	)		(2,329	)
Balance at end of period	$	43,571	$	42,366		$	42,987

Included in the unrecognized tax benefits of $43.6 million as of December 31, 2009 was $23.1 million of tax benefits that, if recognized, would reduce the Company’s annual effective tax rate. In addition to the unrecognized tax benefits noted above, the Company accrued a minor amount of interest expense and penalties for the six months ended December 31, 2009. In addition, the amounts associated with the interest and penalties for fiscal years ended June 30, 2008 and 2009 are immaterial.

The Company has substantially concluded all U.S. federal and material state income tax matters for years through fiscal year ended June 30, 1998 and fiscal year ended June 30, 2000, respectively. Substantially all material foreign income tax matters have been concluded through calendar year 2002. It is reasonably possible that our unrecognized tax benefits could decrease between zero and $0.8 million within the next twelve months depending on the outcome of certain tax audits or statutes of limitations in foreign jurisdictions.

The Company has provided for U.S. federal and foreign withholding taxes on non-U.S. subsidiaries undistributed earnings of approximately $34 million as of December 31, 2009. No provision has been made for taxes that might be payable upon remittance of the Company’s non U.S. subsidiaries undistributed earnings of approximately $113 million as of December 31, 2009, which are indefinitely reinvested in foreign operation.

On September 3, 2009, one of the foreign jurisdictions in which the Company operates published new legislation that could change the computation of income attributable to that jurisdiction. The Company has evaluated the impact of this new legislation on its consolidated financial position, results of operations and cash flows and believes there is no material impact.

Income before provision for income taxes and cumulative effect of change in accounting principle is as follows:

	Six Months Ended
	December 31,			Years Ended June 30,
	2009			2009			2008			2007
	(Dollars in thousands)
United States	$	(11,316	)	$	(20,374	)	$	(34,419	)	$	(20,358	)
Foreign		(28,082	)		(44,345	)		53,370			67,339
	$	(39,398	)	$	(64,719	)	$	18,951		$	46,981

85

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The provision (benefit) for income taxes is comprised of the following:

	Six Months Ended
	December 31,			Years Ended June 30,
	2009			2009		2008			2007
	(Dollars in thousands)
Current:
Federal	$	(3	)	$	181	$	311		$	180
State		1			1		1			2
Foreign		825			5,268		9,209			15,312
	$	823		$	5,450	$	9,521		$	15,494
Deferred:
Federal		—			—		—			—
State		—			—		—			—
Foreign		306			63		(722	)		1,179
		306			63		(722	)		1,179
	$	1,129		$	5,513	$	8,799		$	16,673

The deferred tax assets (liabilities) are comprised of the following:

	Six Months Ended
	December 31,			Years Ended June 30,
	2009			2009			2008
	(Dollars in thousands)
Deferred income tax assets:
Research and development credits	$	13,861		$	13,557		$	12,709
Net operating losses		7,962			5,665			2,743
Capital loss		9,424			9,424			—
Reserves and accruals		865			733			2,945
Other		4,484			5,091			5,435
Deferred income tax assets		36,596			34,470			23,832
Valuation allowance		(32,443	)		(30,010	)		(20,820	)
Deferred income tax assets, net		4,153			4,460			3,012
Total deferred income tax liabilities:
Amortization		—			—			(198	)
Unremitted earnings of foreign subsidiaries		(3,981	)		(3,981	)		(2,220	)
Total deferred income tax liabilities		(3,981	)		(3,981	)		(2,418	)
Net deferred income tax assets	$	172		$	479		$	594

As of December 31, 2009, the Company’s federal and state net operating loss carry forwards for income tax purposes were approximately $142 million and $120 million, respectively, which will begin to expire in fiscal years ending 2015 and 2013, respectively. Federal and state tax credit carry forwards were $12 million and $10 million, respectively. Federal tax credits will begin to expire in fiscal year ending 2017. The Company’s ability to use its federal and state net operating loss and credit carry forwards to offset future taxable income and future taxes, respectively is subject to restrictions attributable to equity transactions that result from changes in ownership as defined by Internal Revenue Code (“IRC”) Sections 382 and 383. As discussed in Note 16, on February 8, 2010, Trident issued 104,204,348 newly issued shares of Trident common stock to NXP, equal to 60% of the total outstanding shares of Trident common stock. The impact of this subsequent event is expected to reduce loss carry

86

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

forwards from $142 million and $120 million for federal and state income tax purposes, respectively, to a range between $20 million and $25 million for each federal and state income tax purposes.

Recognition is prohibited of a deferred tax asset for excess tax benefits due to stock-based compensation deductions that have not yet been realized through a reduction in income taxes payable. As of December 31, 2009, the Company’s non-recognized deferred tax asset and the offsetting valuation allowance relating to excess tax benefits for stock-based compensation deductions was $33 million. Such unrecognized deferred tax benefits will be accounted for as a credit to additional paid-in capital, if and when realized through a reduction in income taxes payable.

The reconciliation of the income tax provisions computed at the United States federal statutory rate to the effective tax rate for the recorded provision for income taxes is as follows:

	Six Months Ended
	December 31,			Years Ended June 30,
	2009			2009			2008			2007
Federal statutory rate		35.0	%		35.0	%		35.0	%		35.0	%
State taxes, net of federal tax benefit		5.7			7.0			11.7			5.8
Research and development credit		0.7			1.2			(3.5	)		1.4
Foreign rate differential		(27.8	)		(32.2	)		(53.8	)		(15.1	)
Valuation allowance		(15.4	)		(28.7	)		19.7			8.0
Permanent Differences		0.0			7.4			35.7			0.2
Other		(1.1	)		1.8			1.6			0.2
Effective income tax rate		(2.9	)%		(8.5	)%		46.4	%		35.5	%

10.   NET INCOME (LOSS) PER SHARE

The following table sets forth the computation of basic and diluted net income (loss) per share:

	Six Months Ended
	December 31,			Year Ended June 30,
	2009			2009			2008		2007
	(Dollars in thousands, except per share data)
Net income (loss)	$	(40,527	)	$	(70,232	)	$	10,152	$	30,118
Shares used in computing basic per share amounts		69,372			62,535			59,367		57,637
Dilutive potential common shares		—			—			3,384		5,743
Shares used in computing diluted per share amounts		69,372			62,535			62,751		63,380
Net income (loss) per share:
Basic	$	(0.58	)	$	(1.12	)	$	0.17	$	0.52
Diluted	$	(0.58	)	$	(1.12	)	$	0.16	$	0.48
Potentially dilutive securities(1)		6,690			6,868			4,916		751

(1) Dilutive potential common shares consist of stock options. Warrants, restricted stock awards, and restricted stock units are excluded because their effect would have been anti-dilutive. The potentially dilutive common shares are excluded from the computation of diluted net income (loss) per share for the above periods because their effect would have been anti-dilutive.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

11.   BUSINESS COMBINATIONS

Selected Assets and Liabilities of NXP B.V.,

On October 4, 2009, Trident and its wholly-owned subsidiary Trident Microsystems (Far East), Ltd., (“TMFE”), a corporation organized under the laws of the Cayman Islands, entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with NXP B.V., a Dutch besloten vennootschap (NXP), providing for the acquisition of selected assets and liabilities of NXP’s television systems and set-top box business lines (the “Purchase”), through a pre-closing restructuring by NXP and subsequent transactions at closing (the “NXP Transaction”). The Company completed the NXP Transaction on February 8, 2010. Upon completion, the Company issued to NXP 104,204,348 newly issued shares of Trident common stock, equal to 60% of the total outstanding shares of Trident Common Stock (the “Shares”) after giving effect to the share issuance to NXP, in exchange for the contribution of selected assets and liabilities of the television systems and set-top box business lines from NXP (the “Business”) and cash proceeds in the amount of $45 million (the “Cash Payment”). See Note 16, “Subsequent Events,” of the Notes to Consolidated Financial Statements.

Frame Rate Converter, Demodulator and Audio Decoder product lines of the Consumer Division of Micronas Semiconductor Holding AG

On May 14, 2009, the Company completed its acquisition of the selected assets of the FRC, DRX, and audio product lines of Micronas (the “Micronas Assets”). In connection with the acquisition, the Company issued 7.0 million shares of its common stock, representing approximately 10% of its outstanding common stock, and warrants to acquire up to 3.0 million additional shares of its common stock, with a fair value of approximately $12.1 million and incurred approximately $5.2 million of acquisition-related costs and liabilities, for a total purchase price of approximately $17.3 million. The acquisition was accounted for using the purchase method of accounting in accordance with applicable accounting guidance. Under the purchase method of accounting, the total estimated purchase price, discussed below, is allocated to the net tangible and identifiable intangible assets of the Micronas Assets acquired in connection with the acquisition based on their estimated fair value as of the closing of the acquisition.

The total estimated purchase price for the acquisition is as follows (in thousands):

Fair value of common stock	$	10,668
Estimated acquisition-related costs		4,136
Fair value of common stock warrants		1,419
In-process research and development		697
Value added taxes		336
Cash paid in exchange for outstanding shares of Micronas Netherlands B.V		10
Total estimated purchase price	$	17,266

The fair value of common stock issued in the acquisition was valued at $1.524 per share using an average of Trident’s closing share prices beginning two trading days before and ending two trading days after the acquisition was announced, which was March 31, 2009. The warrants were valued using the Black-Scholes option pricing model with the following inputs: volatility factor 68%, expected life of 5 years, risk-free interest rate of 1.98%, and a market value for Trident common stock of $1.43 per share at the acquisition date, May 14, 2009.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Purchase Price Allocation

The allocation of the purchase price of the tangible and identifiable intangible assets acquired and liabilities assumed in the acquisition was based on their estimated fair values. The valuation of these tangible and identifiable intangible assets and liabilities is subject to further management review and may change from the preliminary valuation. The excess of the purchase price over the tangible and identifiable intangible assets acquired and liabilities assumed has been allocated to goodwill. Under the purchase method of accounting, the total purchase price was allocated to net tangible and identifiable intangible assets acquired based on their estimated fair values as of the date of the completion of the acquisition as follows (in thousands):

Tangible assets acquired:
Cash and cash equivalents		$	142
Accounts receivable			259
Other current assets			97
Property and equipment, net			4,818
Deferred tax assets			175
Liabilities assumed:
Accounts payable			(133	)
Accrued liabilities			(366	)
Above market lease liability			(356	)
Net tangible assets acquired			4,636
Amortizable intangible assets acquired:	Estimated useful life
Core technology	3 years		4,059
Backlog	13 months		166
Goodwill	Indefinite		7,708
In-process research and development			697
Total purchase price allocation		$	17,266

Assets acquired and liabilities assumed in the acquisition as of May 14, 2009 were reviewed and adjusted, if required, to their estimated fair value. Existing technology consists of products that have reached technological feasibility. The Company valued the core technology utilizing a discounted cash flow (“DCF”) model, which uses forecasts of future revenues and expenses related to the products that use the technology. Backlog valued at $0.2 million represents the value of the standing orders for the products acquired in the acquisition as of the close of the acquisition. Backlog was valued using a DCF model. Of the total purchase price, $0.7 million has been allocated to in-process research and development (“IPR&D”) and was expensed during the fiscal year ended June 30, 2009. IPR&D relates to expense spent on masks and tools, which has no alternative future use and was completed after the announcement date but prior to the closing date.

Of the total purchase price, $7.7 million has been allocated to goodwill. Goodwill represents the excess of the purchase price over the fair value of the underlying net tangible and identifiable intangible assets acquired and is not deductible for tax purposes. The technology acquired in the acquisition will provide a greater diversity of products and enhanced research and development capabilities, which will allow the Company to pursue expanded market opportunities. These opportunities, along with the ability to leverage the existing workforce acquired in the acquisition, were the significant contributing factors to the establishment of the purchase price, resulting in the recognition of a significant amount of goodwill. In accordance with applicable guidance, goodwill is not amortized but will be reviewed at least annually for impairment or more frequently if certain triggering events occur. In the event that management determines the value of goodwill has become impaired, the Company will incur an expense in the amount of the impairment during the fiscal quarter in which the determination is made. See Note 4, “Goodwill and Intangible Assets,” of the Notes to the Consolidated Financial Statements for additional details.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Goodwill and amortization of intangibles are not tax deductible. The estimated future amortization expense of the Company’s purchased finite-lived intangible assets acquired is as follows (amounts in thousands):

Years Ended December 31,	Amount
2010	$	1,427
2011	$	1,860

Unaudited Pro Forma Financial Information

The following table summarizes unaudited pro forma financial information for the fiscal years ended June 30, 2009 and 2008 assuming the business combination had been consummated at the beginning of the periods presented. This pro forma financial information is for informational purposes only and does not reflect any operating efficiencies or inefficiencies which may result from the business combination and therefore is not necessarily indicative of results that would have been achieved had the businesses been combined during the periods presented (amounts in thousands, except per share date):

	Years Ended June 30,
	2009			2008
Pro forma net revenues	$	197,604		$	430,998
Pro forma net income (loss)		(91,928	)		(12,402	)
Pro forma net income (loss) per share
— basic and diluted		(1.32	)		(0.19	)

Beijing Tiside Electronics Design Co., Ltd.,

On March 4, 2008, the Company acquired a 100% ownership interest in Tiside, which had been a privately held software company located in Beijing, China, for $1.9 million in cash. Following the acquisition, Tiside was renamed as Trident Microsystems (Beijing) Co. Ltd. (“TMBJ”). Total acquisition-related costs incurred were approximately $0.1 million. TMBJ designed cross-platform software that allows multimedia applications to run on devices in the digital living room such as set top boxes or DTV sets. Pro forma results of operations have not been presented because the acquisition was not material to the prior period consolidated financial statements. Of the total purchase price, approximately $1.4 million was allocated to goodwill, and approximately $1.3 million and $(0.7) million were allocated to identifiable intangible assets and net liabilities, respectively. The valuation method used by the Company was the income approach which established the fair value of the assets based on the value of the cash flows that the assets can be expected to generate in the future using the discounted cash flow method. The purchase price of the acquisition was allocated to the acquired assets and liabilities based on their estimated fair values as of the date of acquisition, including identifiable intangible assets, with the remaining amount being classified as goodwill.

All of the Company’s identifiable intangible assets from its acquisitions, including backlog, core and developed technology acquired and customer relationships are subject to amortization and have approximate original estimated weighted average useful lives of one to eight years. The weighted average useful lives of acquired intangibles are approximately 5-6 years for core technology, 7-8 years for customer relationships, and approximately 1.0 year for backlog. See Note 4, “Goodwill and Intangible Assets,” of Notes to the Consolidated Financial Statements for additional details.

12.   FAIR VALUE MEASUREMENTS

Effective July 1, 2008, the Company adopted new fair value accounting guidance. The adoption of the guidance was limited to financial assets and liabilities and did not have a material effect on the Company’s financial condition or results of operations.

The guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact business and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance.

The guidance establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The guidance establishes three levels of inputs that may be used to measure fair value:

Level 1 — Quoted prices in active markets for identical assets or liabilities.

Level 2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 — Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.

All of the Company’s available-for-sale investments and non-marketable equity securities are subject to a periodic impairment review. Investments are considered to be impaired when a decline in fair value is judged to be other-than-temporary. This determination requires significant judgment. For publicly traded investments, impairment is determined based upon the specific facts and circumstances present at the time, including a review of the closing price over the previous six months, general market conditions and the Company’s intent and ability to hold the investment for a period of time sufficient to allow for recovery. For non-marketable equity securities, the impairment analysis requires the identification of events or circumstances that would likely have a significant adverse effect on the fair value of the investment, including revenue and earnings trends, overall business prospects and general market conditions in the investees’ industry or geographic area. Investments identified as having an indicator of impairment are subject to further analysis to determine if the investment is other-than-temporarily impaired, in which case the investment is written down to its impaired value.

Cost-based investment are subject to periodic impairment review. In determining that a decline in value of one of our investments has occurred during the period ended December 31, 2009 and is other than temporary, an assessment was made by considering available evidence, including the general market conditions, the Company’s financial condition, near-term prospects, market comparables and subsequent rounds of financing. The valuation also takes into account the capital structure, liquidation preferences for its capital and other economic variables. The valuation methodology for determining the decline in value of non-marketable equity securities is based on inputs that require management judgment.

Assets Measured at Fair Value on a Recurring Basis

The following table presents the Company’s financial assets and liabilities that are measured at fair value on a recurring basis which were comprised of the following types of instruments as of December 31, 2009 and June 30, 2009:

	Total		Level 1		Level 2		Level 3
	(Dollars in thousands)
Money market funds invested in U.S. Treasuries	$	61,613	$	61,613		—		—
Total cash equivalents as of December 31, 2009	$	61,613	$	61,613	$	—	$	—
U.S. Treasuries		111,773		111,773		—		—
Certificates of deposit		27,452		27,452		—		—
Total cash equivalents as of June 30, 2009	$	139,225	$	139,225	$	—	$	—

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

13.   RESTRUCTURING

On July 27, 2009, the Company announced its plans to terminate approximately 70 employees, or approximately 10 percent of the Company’s worldwide workforce, which followed the announcement in October 2008 of a global workforce reduction of approximately 15 percent. The Company has been undertaking a number of cost reduction activities, including workforce reductions and termination of lease agreements, in an effort to lower the Company’s operating expense run rate in response to the demand environment. Under the restructuring plan, the Company incurred restructuring charges of approximately $1.6 million for the six months ended December 31, 2009, all of which were cash expenditures. All activities related to these previously announced restructurings are expected to be fully completed and all associated restructuring costs will be paid by March 31, 2010.

On October 27, 2008, the Company announced a restructuring plan designed to improve operational efficiency and financial results. These restructuring activities have resulted in charges primarily related to employee severance and benefit arrangements. Under the restructuring plan, the Company incurred restructuring charges of approximately $0.8 million, which were recorded under “Restructuring charges” in its Consolidated Statement of Operations for fiscal year ended June 30, 2009, and all of which were cash expenditures. Under the restructuring plan, all restructuring activities were fully completed and associated restructuring costs have been paid as of June 30, 2009.

14.   SEGMENT AND GEOGRAPHIC INFORMATION AND MAJOR CUSTOMERS

Segment and Geographic Information

The Company operates in one reportable segment called digital media solutions. The digital media solutions business segment designs, develops and markets integrated circuits for digital media applications, such as digital television and liquid crystal display, or LCD, television. Generally accepted accounting principles in the United States of America establish standards for the way public business enterprises report information about operating segments in annual consolidated financial statements and requires that those enterprises report selected information about operating segments in interim financial reports. The accounting guidance also establishes standards for related disclosures about products and services, geographic areas and major customers. The Company’s Chief Executive Officer, who is considered to be the chief operating decision maker, reviews financial information presented on an operating segment basis for purposes of making operating decisions and assessing financial performance.

Revenues by region are classified based on the locations of the customer’s principal offices even though customers’ revenues are attributable to end customers that are located in a different location. The following is a summary of the Company’s net revenues by geographic operations:

	Six Months
	Ended
	December 31,		Years Ended June 30,
	2009		2009		2008		2007
	(Dollars in thousands)
Revenues:
Japan	$	5,257	$	41,615	$	91,306	$	91,721
Europe		17,557		13,841		53,801		17,421
Asia Pacific		11,317		14,061		32,618		45,725
South Korea		28,353		5,819		79,608		115,513
Americas		527		425		605		415
Total revenues	$	63,011	$	75,761	$	257,938	$	270,795

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company’s long-lived assets are located in the following countries:

	Six Months
	Ended
	December 31,		Years Ended June 30,
	2009		2009		2008
	(Dollars in thousands)
China	$	21,277	$	21,733	$	21,265
Europe		3,361		3,881		—
Americas		1,050		1,399		1,749
Taiwan		465		519		411
Asia Pacific		15		55		—
Total	$	26,168	$	27,587	$	23,425

Major Customers

The following table shows the percentage of the Company’s revenues during the six months ended December 31, 2009 and the years ended June 30, 2009, 2008, and 2007 that was derived from customers who individually accounted for more than 10% of revenues in that period.

	Six Months Ended
	December 31,						Year Ended June 30,
Revenue:	2009			2008			2009			2008			2007
Midoriya (supplier to Sony)		*			40	%		38	%		28	%		25	%
LG		15	%		*			*			*			*
Philips		10	%		12	%		10	%		19	%		*
Samsung		29	%		*			*			29	%		41	%
Sharp		*			14	%		11	%		*			*

* Less than 10% of net revenues

As of December 31, 2009, the Company had a high concentration of accounts receivable with Philips and Loewe, which accounted for 52% of gross accounts receivable.

15.   RELATED PARTY TRANSACTIONS

Also see Note 16, “Subsequent Events,” of Notes to the Consolidated Financial Statements for a description of agreements with NXP. As discussed in Note 11, “Business Combination” above, due to the acquisition of the FRC, DRX, and Audio Decoder product lines from Micronas, the Company issued 7.0 million shares of common stock and warrants to purchase up to an additional 3.0 million shares of common stock to Micronas. At the completion of the acquisition, the Company entered into the following agreements with Micronas.

On May 14, 2009, the Company entered into a Service Level Agreement or SLA, with Micronas. Under the SLA, Micronas agreed to provide to the Company specified transition services and support, including intellectual property transitional services for a limited period of time to assist the Company in achieving a smooth transition of the acquired products and product lines. The transition services include certain manufacturing design, maintenance and support services, sales of inventory and newly-manufactured products and certain finance and administration, IT, infrastructure, warehousing and similar services, to be provided pursuant to specified service level agreements. Moreover, on May 14, 2009, the Company entered into an exclusive Distributor Agreement with Micronas. Under the Distributor Agreement, Micronas served as the exclusive supplier and OEM to the Company on the FRC, DRX, and Audio Decoder product lines from May 15, 2009 to June 15, 2009. As of December 31, 2009, the outstanding accounts payable to Micronas was $2.4 million, and the outstanding accounts receivable from Micronas was $0.3 million. Total purchases from Micronas for the six months ended December 31, 2009 were $16.2 million.

93

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

On May 14, 2009, the Company entered into a Cross License Agreement (the “Cross License”) with Micronas, pursuant to which Micronas has granted to the Company a royalty-free, perpetual, irrevocable, fully assignable and transferable worldwide license, including the right to sublicense, to patents that are relevant to, but not exclusive to, the FRC line of frame-rate converters, the DRX line of demodulators and all of the audio processing product lines acquired in the acquisition. Ownership of these patents remains with Micronas following completion of the acquisition. The license is exclusive for the first three years, subject to certain exceptions, and is non-exclusive thereafter. The Company has granted to Micronas a royalty-free, perpetual, irrevocable, non-exclusive, fully assignable and transferable worldwide license, including the right to sublicense, to patents exclusively relevant to the FRC line of frame rate converters, the DRX line of demodulators and all of the audio processing product lines acquired in the acquisition. During the first three years, the license granted by the Company to Micronas is limited to use for products that are not a DRX, Audio or FRC Product. Following this three year period, Micronas may use the licensed rights on any product.

On May 14, 2009, the Company entered into a Stockholder Agreement (the “Stockholder Agreement”) with Micronas, setting forth specified registration rights associated with the shares, including demand and piggyback registration rights, restrictions on transfer of the Shares and provides Micronas certain pre-emptive rights to acquire additional shares of its Common Stock. Under the Stockholders Agreement, Micronas has agreed to vote the Shares in support of acquisition proposals approved by the disinterested members of its Board of Directors, and together with the recommendation of the disinterested members of the Board of Directors on other stockholder proposals, and Micronas ability to engage in certain solicitations and activities encouraging support for or against proposals inconsistent with its voting agreements is restricted.

On May 14, 2009, the Company and Micronas entered into a lease agreement. Micronas agreed to sublease 17,000 square footage of the office spaces located in Munich, Germany to the Company. The Company is currently using the office spaces for general and administration, research and engineering services. The lease expires on May 31, 2012.

16.   SUBSEQUENT EVENTS

Voluntary stock option exchange program

On February 10, 2010, the Company commenced a voluntary stock option exchange program (the “Exchange Program”), previously approved by stockholders at the Company’s annual stockholder meeting on January 25, 2010. The Exchange Program offer period commenced on February 10, 2010 and concluded at 9:00 p.m., Pacific Standard Time, on March 10, 2010.

Under the Exchange Program, eligible employees were able to exchange certain outstanding options to purchase shares of the Company’s common stock having a per share exercise price equal to or greater than $4.69 for a lesser number of shares of restricted stock or restricted stock units. Eligible employees participating in the offer who were subject to U.S. income taxation receive shares of restricted stock, while all other eligible employees participating in the offer received restricted stock units. Members of the Company’s Board of Directors and the Company’s executive officers and “named executive officers,” as identified in the Company’s definitive proxy statement filed on December 18, 2009, were not eligible to participate in the Exchange Program.

Pursuant to the terms and conditions of the Exchange Program, the Company accepted for exchange eligible options to purchase shares of the Company’s common stock, representing more than 80% of the total number of options originally eligible for exchange. These surrendered options were cancelled on March 11, 2010 and in exchange therefor the Company granted new shares of restricted stock and new restricted stock units under the Trident Microsystems, Inc. 2010 Equity Incentive Plan, in accordance with the applicable Exchange Program conversion ratios.

94

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Corporate Headquarters Lease and Software License and Maintenance Agreement

The following summarizes the Company’s obligations resulting from its corporate headquarters lease and software license and maintenance agreement:

	Payments Due By Period
	Less than
	1 year		1-3 years		3-5 years		More than 5 years		Total
	(Dollars in millions)
Corporate Headquarters Lease (1)	$	0.5	$	2.5	$	0.9	$	—	$	3.9
Software License and Maintenance Agreement (2)		3.1		3.1		—		—	$	6.2
Total	$	3.6	$	5.6	$	0.9	$	—	$	10.1

(1)	The Company has entered into a five year, 57,649 square foot lease for its corporate headquarters located in Sunnyvale California commencing April 1, 2010 having a $3.9 million total future leases obligation. See Note 16, “Subsequent Events,” to the Notes to Consolidated Financial Statements.
(2)	The Company has entered into an engineering software license and maintenance agreement with NXP on March 5, 2010 having a future net cash obligation of $6.2 million. See Note 16, “Subsequent Events,” to the Notes to Consolidated Financial Statements.

Acquisition of the television systems and set-top box business lines from NXP B.V.

On February 8, 2010,Trident and TMFE consummated the acquisition of the television systems and set-top box business lines of NXP. Trident issued 104,204,348 newly issued shares of Trident common stock to NXP, equal to 60% of the total outstanding shares of Trident common stock, after giving effect to the share issuance to NXP, in exchange for the contribution of selected assets and liabilities of the acquired business lines and cash proceeds in the amount of $45 million. In addition, the Company issued to NXP four shares of a newly created Series B preferred stock.

As a result of the NXP acquisition, the Company entered into a Transition Services Agreement, pursuant to which NXP will provide to the Company, for a limited period of time, specified transition services and support. Depending on the service provided, the term for the majority of services range from three to eighteen months, and limited services could continue into the fourth quarter of 2011. Also as a result of the NXP acquisition, the Company entered into a Manufacturing Services Agreement pursuant to which NXP will provide manufacturing services to the Company for a limited period of time. The term of the agreement ends on the earlier of (i) June 30, 2011 or (ii) the readiness of the Company’s enterprise resource planning system.

Selected Unaudited Pro Forma Combined Financial Data and Preliminary Purchase Price Allocation

It is impracticable for the Company to disclose selected unaudited pro forma combined financial data and preliminary purchase price allocation because the financial information necessary to complete these disclosures has not been provided to the Company given the short period of time between the acquisition date and the filing date of this report.

NXP Acquisition Related Commitments

On February 8, 2010, as a result of the acquisition of selected assets and liabilities of the television systems and set-top box business lines acquired of NXP, the Company entered into a Transition Services Agreement, pursuant to which NXP will provide to the Company, for a limited period of time, specified transition services and support. Depending on the service provided, the term for the majority of services range from three to eighteen months, and limited services could continue into the fourth quarter of 2011. Also as a result of the acquisition of the NXP business lines, the Company entered into a Manufacturing Services Agreement pursuant to which NXP will provide

95

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

manufacturing services to the Company for a limited period of time. The term of the agreement ends on the earlier of (i) June 30, 2011 or (ii) the readiness of the Company’s enterprise resource planning system. The terms of the agreements allow the Company to cancel either or both the Transition Services Agreement and the Manufacturing Services Agreement.

Selected Unaudited Pro Forma Combined Financial Data

It is impracticable for the Company to disclose selected unaudited pro forma combined financial data because financial information for the applicable periods has not been provided to the Company given the short period of time between the acquisition date and the filing date of this report.

17.   QUARTERLY FINANCIAL DATA (UNAUDITED)

The following is a summary of the Company’s quarterly consolidated results of operations (unaudited) for the six months ended December 31, 2009 and fiscal years ended June 30, 2009 and 2008. The sum of quarterly net income (loss) per share, basic and diluted, may not equal total fiscal net income (loss) per share, basic and diluted, due to variation in shares outstanding.

TRIDENT MICROSYSTEMS, INC.

	Six Months Ended December 31, 2009
	Quarter Ended			Quarter Ended
	September			December			Total
	(Dollars in thousands, except per share amounts)
Net revenues	$	31,093		$	31,918		$	63,011
Gross profit	$	10,501		$	5,245		$	15,746
Net loss	$	(17,156	)	$	(23,371	)	$	(40,527	)
Net loss per share — Basic and Diluted:	$	(0.25	)	$	(0.34	)	$	(0.58	)
Shares used in computing net loss per share		69,237			69,506			69,372
Shares used in computing net loss per share — Diluted		69,237			69,506			69,372

96

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

TRIDENT MICROSYSTEMS, INC.

	Fiscal 2009
	Quarter			Quarter			Quarter
	Ended			Ended			Ended			Quarter
	September			December			March			Ended June			Total
	(1)			(2)						(3)
	(Dollars in thousands,
	except per share amounts)
Net revenues	$	34,782		$	19,215		$	6,852		$	14,912		$	75,761
Gross profit	$	12,075		$	6,170		$	461		$	4,622		$	23,328
Net loss	$	(17,969	)	$	(14,584	)	$	(16,604	)	$	(21,075	)	$	(70,232	)
Net loss per share — Basic:	$	(0.29	)	$	(0.24	)	$	(0.27	)	$	(0.32	)	$	(1.12	)
Net loss per share — Diluted:	$	(0.29	)	$	(0.24	)	$	(0.27	)	$	(0.32	)	$	(1.12	)
Shares used in computing net loss per share — Basic		61,152			61,612			61,829			65,565			62,535
Shares used in computing net loss per share — Diluted		61,152			61,612			61,829			65,565			62,535

(1)	Includes $9.0 million loss on sale of UMC investment that was recorded in the quarter ended September 30, 2008.
(2)	Includes $1.4 million goodwill impairment that was recorded in the quarter ended March 31, 2009. See “Goodwill and impairment” under Note 4, “Goodwill and Intangible Assets,” of the Notes to Consolidated Financial Statements.
(3)	Includes $1.7 million third-party purchased intangible assets that were recorded in the quarter ended June 30, 2009. See “Third-party purchased intangible assets” under Note 4, “Goodwill and Intangible Assets,” of the Notes to Consolidated Financial Statements.

TRIDENT MICROSYSTEMS, INC.

	Fiscal 2008
					Quarter
	Quarter Ended		Quarter Ended		Ended			Quarter
	September		December		March			Ended June			Total
	(1)		(2)					(3)
	(Dollars in thousands, except per share amounts)
Net revenues	$	88,174	$	74,984	$	55,284		$	39,496		$	257,938
Gross profit	$	42,166	$	35,788	$	25,312		$	16,760		$	120,026
Net income (loss)	$	10,059	$	7,250	$	(227	)	$	(6,930	)	$	10,152
Net income (loss) per share — Basic:	$	0.17	$	0.12	$	(0.00	)	$	(0.11	)	$	0.17
Net income (loss) per share — Diluted:	$	0.16	$	0.12	$	(0.00	)	$	(0.11	)	$	0.16
Shares used in computing net income (loss) per share — Basic		58,851		59,269		59,369			60,390			59,367
Shares used in computing net income (loss) per share — Diluted		63,605		62,747		59,369			60,390			62,751

97

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(1)	Includes $4.9 million of stock-based compensation expense recorded in the quarter ended September 30, 2007 related to certain stock option modifications. See “Modification of Certain Options” under Note 8, “Employee Benefit Plans,” of the Notes to Consolidated Financial Statements.
(2)	Includes $3.7 million of stock-based compensation expense recorded in the quarter ended December 31, 2007 related to the decision of the Company’s Special Litigation Committee not to allow the Company’s former CEO and two former non-employee directors to exercise their vested options until March 31, 2008. See “Modification of Certain Options” under Note 8, “Employee Benefit Plans,” of the Notes to Consolidated Financial Statements.
(3)	Includes a $6.5 million impairment charge for loss on UMC investment that was recorded in the quarter ended June 30, 2008.

18.   TRANSITION PERIOD COMPARATIVE DATA

The following table presents certain financial information for the six months ended December 31, 2009 and 2008 respectively.

	Six Months Ended
	December, 31
	2009			2008
				(Unaudited)
	(Dollars in thousands except per share amounts)
Revenues	$	63,011		$	53,997
Gross profit	$	15,746		$	18,245
Loss before income taxes	$	(39,398	)	$	(29,822	)
Income taxes	$	1,129		$	2,731
Net loss	$	(40,527	)	$	(32,553	)
Loss per common share (basic and diluted)	$	(0.58	)	$	(0.53	)
Weighted average common shares outstanding		69,372			61,382

98

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of Trident Microsystems, Inc.

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, cash flows and stockholders’ equity and comprehensive income present fairly, in all material respects, the financial position of Trident Microsystems, Inc. and its subsidiaries at December 31, 2009, June 30, 2009 and June 30, 2008, and the results of their operations and their cash flows for the six months in the period ended December 31, 2009 and for each of the three years in the period ended June 30, 2009 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 15(a)(2), presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

As discussed in Note 9 to the consolidated financial statements, the Company changed the manner in which it accounts for uncertain tax positions in fiscal 2008.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/  PricewaterhouseCoopers LLP

San Jose, California

March 12, 2010

99

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A.   CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Transition Report on Form 10-K, we carried out an evaluation under the supervision and with the participation of our Disclosure Committee and our management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rules 13a-15(e) and 15d-15(e). Disclosure controls and procedures are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act, such as this Transition Report on Form 10-K, is recorded, processed, summarized and reported within the time periods specified by the U.S. Securities and Exchange Commission. Disclosure controls and procedures are also designed to ensure that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2009, the end of the period covered by this Transition Report on Form 10-K.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2009 based on the guidelines established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Our internal control over financial reporting includes policies and procedures that provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles.

Based on the results of our evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2009.

The effectiveness of our internal control over financial reporting as of December 31, 2009 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which is included in Part II, Item 8 of this Transition Report on Form 10-K.

Changes in Internal Control over Financial Reporting

In May 2009, we acquired three product lines from Micronas Semiconductor Holding AG, a Swiss Corporation. During the period ended December 31, 2009, we completed the incorporation of processes previously separately operated by Micronas into our own systems and control environment. There were no other changes in our internal control over financial reporting that occurred during the six months ended December 31, 2009 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B.   OTHER INFORMATION

SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS.

On January 25, 2010, our annual meeting of stockholders was held pursuant to the Notice of Annual Meeting of Stockholders mailed to all stockholders of the Company as of December 10, 2009. There were 70,552,260 shares of common stock outstanding and entitled to vote at the Annual Meeting, of which 62,332,269, or 88% were present in

100

person or represented by proxy at the annual meeting, representing a quorum. At the meeting, stockholders approved the following proposals, as described in the Proxy Statement:

1. To approve the issuance of newly issued shares of Trident common stock to NXP in connection with the NXP Transaction, equal to 60% of the total outstanding shares of Trident common stock after giving effect to the share issuance to NXP.

	Shares		Percent
For		46,588,006		74.75	%
Against		894,416		1.44	%
Abstain		50,717		0.08	%
Broker non-votes		14,789,130

2. To approve the Amendment to the Certificate of Incorporation of Trident, as amended, to increase the number of authorized shares of common stock from 95 million to 250 million.

	Shares		Percent
For		45,994,837		65.19	%
Against		1,491,905		2.11	%
Abstain		46,397		0.07	%
Broker non-votes		14,789,130

3. To approve the Trident Microsystems, Inc. 2010 Equity Incentive Plan.

	Shares		Percent
For		42,422,309		68.07	%
Against		5,503,524		8.11	%
Abstain		57,306		0.09	%
Broker non-votes		14,789,130

4. To approve a voluntary program that will permit eligible employees to exchange certain outstanding stock options that are “underwater” for a lesser number of shares of restricted stock or restricted stock units to be granted under the 2010 Plan.

	Shares		Percent
For		37,337,040		59.91	%
Against		10,132,549		16.26	%
Abstain		62,950		0.10	%
Broker non-votes		14,789,130

5. To elect the following two (2) directors to Class II of the Board of Directors, each to hold office for a three year term and until the earliest of our annual meeting of stockholders to be held following our fiscal year ending December 31, 2011, his removal, or his or her resignation.

	Votes Cast For		Votes Withheld
Brian R. Bachman		44,047,466		3,485,673
J. Carl Hsu		44,062,516		3,470,623

6. To ratify the appointment of PricewaterhouseCoopers LLP as Trident’s independent registered public accounting firm for the fiscal year ending December 31, 2009.

	Shares		Percent
For		61,362,917		98.46	%
Against		782,753		1.26	%
Abstain		176,599		0.28	%
Broker non-votes		0

7. The proposal to approve the adjournment of the annual meeting, if necessary, to solicit additional proxies was approved, but was moot.

Each of the proposals set forth above was approved.

101

PART III

ITEM 10.   DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this item is included in the Trident Microsystems Inc. Notice of Annual Meeting of Shareholders and Proxy Statement to be filed within 120 days of Trident’s fiscal year ended December 31, 2009 (the “Proxy Statement”) and is incorporated herein by reference.

ITEM 11.   EXECUTIVE COMPENSATION

The information required by this item is included in the Proxy Statement and is incorporated herein by reference.

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this item is included in the Proxy Statement and is incorporated herein by reference.

Equity Compensation Plan Information

We currently maintain the 2010 Equity Incentive Plan (the “2010 Plan”), a plan approved by our stockholders at the 2010 Annual Meeting of Stockholders on January 25, 2010. The 2010 Plan provides for the issuance of our common stock to officers, directors, employees and consultants. In addition, we have adopted our 2001 Employee Stock Purchase Plan, which is currently suspended. Options to purchase our common stock remain outstanding under five equity incentive plans which have expired or been terminated: the 2006 Equity Incentive Plan (the “2006 Plan”), the 2002 Stock Option Plan (the “2002 Plan”), the 1992 Stock Option Plan (the “1992 Plan”), the 1994 Outside Directors Stock Option Plan (the “1994 Plan”) and the 1996 Nonstatutory Stock Option Plan (the “1996 Plan”). In addition, options to purchase Trident’s common stock are outstanding as a result of the assumption by the Company of options granted to “TTI”’s officers, employees and consultants under the “TTI” 2003 Employee Option Plan (“TTI Plan”). The options granted under the “TTI” option Plan were assumed in connection with the acquisition of the minority interest in “TTI” on March 31, 2005 and converted into options to purchase Trident’s common stock. Except for the 1996 Plan, all of the Company’s equity incentive plans, as well as the assumption and conversion of options granted under the “TTI” Plan, have been approved by the Company’s stockholders.

The following table sets forth information regarding outstanding options and shares reserved for future issuance under the foregoing plans as of December 31, 2009:

	A			B		B
						Securities
	Number of					Remaining
	Securities to			Weighted		Available for
	be Issued			Average		Future Issuance
	upon			Exercise		Under Equity
	Exercise of			Price of		Compensation
	Outstanding			Outstanding		Plans (Excluding
	Options,			Options,		Securities
	Warrants and			Warrants and		Reflected in
Plan Category	Rights			Rights		Column A)
Equity compensation plans approved by security holders		5,573,323	(1)	$	7.65		1,682,309	(2)
Equity compensation plans not approved by security holders		1,116,768	(3)	$	6.62		—
Total		6,690,091		$	7.48		1,682,309

(1) Includes 40,000 shares that are reserved and issuable upon exercise of options outstanding under the 1994 Plan, which expired on January 13, 2004, 1,045,400 shares that are reserved and issuable upon exercise of options outstanding under the 2002 Plan and 988,655 shares that are reserved and issuable upon exercise of options

102

	outstanding under the “TTI” Plan, and 3,342,003 shares that are reserved and issuable upon exercise of options outstanding under the 2006 Plan.
(2)	Includes 861,266 shares reserved for future issuance under the 2002 Stock Option Plan, and 2,459,769 shares reserved for future issuance under the 2006 Stock Option Plan, which has already included the 1.38 ratio for restricted stock.
(3)	Consists of shares subject to options that are outstanding pursuant to the 1996 Plan, which plan was terminated on June 19, 2007.

Material Features of the 1996 Nonstatutory Stock Option Plan

As of June 30, 2009, we had reserved an aggregate of 1,452,000 shares of common stock for issuance under the 1996 Plan, which was terminated on June 19, 2007. The 1996 Plan provides for the granting of nonstatutory stock options to employees and consultants who are not our officers or directors, with exercise prices per share equal to no less than 85% of the fair market value of our Common Stock on the date of grant. Options granted under the 1996 Plan generally have a 10-year term and vest at the rate of 25% of the shares subject to the option on each of the first four anniversaries of the date of grant. The vesting of options granted under the 1996 Plan will be accelerated in full in the event of a merger of us with or into another corporation in which the outstanding options are neither assumed nor replaced by equivalent options granted by the successor corporation or a parent or subsidiary of the successor corporation. The 1996 Plan was not required to be and has not been approved by our stockholders.

ITEM 13.   CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

The information required by this item is included in the Proxy Statement and is incorporated herein by reference.

ITEM 14.   PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by this item is included in the Proxy Statement and is incorporated herein by reference.

PART IV

ITEM 15.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a) The following documents are filed as part of this report:

	Page
	Number
1.  Financial Statements:
Consolidated Statements of Operations — for the six months ended December 31, 2009 and for each of the three years ended June 30, 2009, 2008 and 2007		58
Consolidated Balance Sheets — at December 31, 2009, June 30, 2009 and June 30, 2008		59
Consolidated Statements of Cash Flows — for the six months ended December 31, 2009 and for each of the three years ended June 30, 2009, 2008 and 2007		60
Consolidated Statements of Stockholders’ Equity and Comprehensive Income (Loss) — for the six months ended December 31, 2009, and for each of the three years ended June 30, 2009 and June 30, 2008 and 2007		61
Trident Microsystems Inc. Notes to Consolidated Financial Statements		62
Report of Independent Registered Public Accounting Firm		99

103

3.   Exhibits:

Exhibit			Description
	2	.1	Purchase Agreement dated March 31, 2009 among Micronas Semiconductor Holding AG, Trident Microsystems, Inc. and Trident Microsystems (Far East) Ltd.(1)
	2	.2	Share Exchange Agreement dated October 4, 2009 among Trident Microsystems, Inc., Trident Microsystems (Far East) Ltd., and NXP B.V.(2)
	3	.1	Restated Certificate of Incorporation.(3)
	3	.3	Amended and Restated Bylaws.(4)
	3	.4	Amendment to Article VIII of the Bylaws.(5)
	3	.5	Amendments to Article I, Section 2 and Article I, Section 7 of the bylaws.(6)
	3	.6	Certificate of Amendment of Restated Certificate of Incorporation of Trident Microsystems, Inc. filed on January 27, 2010.(7)
	3	.7	Amended and Restated Certificate of Designation of Series B Preferred Stock (par value $0.001) of Trident Microsystems, Inc., as filed with the Delaware Secretary of State on February 5, 2010.(8)
	4	.1	Reference is made to Exhibits 3.1, 3.3, 3.4, 3.5 and 3.6.
	4	.2	Specimen Common Stock Certificate.(9)
	4	.3	Amended and Restated Rights Agreement between the Company and Mellon Investor Services, LLC, as Rights Agent dated as of July 23, 2008 (including as Exhibit A the Form of Certificate of Amendment of Certificate of Designation, Preferences and Rights of the Terms of the Series A Preferred Stock, as Exhibit B the Form of Right Certificate, and as Exhibit C the Summary of Terms of Rights Agreement).(10)
	4	.4	First Amendment to Amended and Restated Rights Agreement, dated May 14, 2009.(11)
	4	.5	Second Amendment to Amended and Restated Rights Agreement, dated December 11, 2009.(12)
	10	.5(*)	1990 Stock Option Plan, together with forms of Incentive Stock Option Agreement and Non-statutory Stock Option Agreement.(13)
	10	.6(*)	Form of the Company’s Employee Stock Purchase Plan.(13)
	10	.9(*)	Summary description of the Company’s 401(k) plan.(13)
	10	.10(*)	Form of Indemnity Agreement for officers, directors and agents.(13)
	10	.13(*)	Form of 1992 Stock Option Plan amending and restating the 1990 Stock Option Plan included as Exhibit 10.5.(13)
	10	.16	Foundry Venture Agreement dated August 18, 1995 by and between the Company and United Microelectronics Corporation.(14)
	10	.18 (*)	Form of Nonstatutory Stock Option Agreement for non-plan grants to directors.(15)
	10	.19 (+)	Form of 1996 Nonstatutory Stock Option Plan.(15)
	10	.20	Lease agreement dated April 11, 2006 between the Company and Cooperage Rose Properties for the Company’s principal offices located at 3408-3410 Garrett Drive., Santa Clara, CA(16)
	10	.22(*)	2006 Equity Incentive Plan.(17)
	10	.23(*)	Form of Agreements under the 2006 Equity Incentive Plan.(18)
	10	.24(*)	Offer Letter of Sylvia D. Summers, Chief Executive Officer.(19)
	10	.25(*)	Offer Letter of Peter J. Mangan, Vice President, Finance.(20)
	10	.28(*)	First Amendment to Trident Microsystems, Inc. 2006 Equity Incentive Plan.(21)
	10	.29(*)	Resignation and Consulting Agreement and General Release of Claims dated February 28, 2008 between Jung-Herng Chang and Trident Microsystems, Inc.(22)
	10	.30(*)	2009 Executive Bonus Plan(23)
	10	.31(*)	Amended Form of Indemnity Agreement for officers and directors(23)
	10	.34	Form of Warrant for the Purchase of Shares of Common Stock of Trident Microsystems, Inc. to Micronas Semiconductor Holding AG.(11)

104

Exhibit			Description
	10	.35(**)	Cross License Agreement dated May 14, 2009, between Trident Microsystems (Far East) Ltd. and Micronas Semiconductor Holding AG.(11)
	10	.36	Stockholder Agreement dated May 14, 2009, between Trident Microsystems, Inc. and Micronas Semiconductor Holding AG.(11)
	10	.37	Services Agreement dated May 15, 2009, between Trident Microsystems (Far East) Ltd. and Micronas Semiconductor Holding AG.(11)
	10	.38(*)	Trident Microsystems, Inc. Executive Retention and Severance Plan.(24)
	10	.39	Stockholder Agreement between Trident Microsystems, Inc. and NXP B.V. dated February 8, 2010.(26)
	10	.40(*)	Letter Agreement with Christos Lagomichos dated February 2, 2010.(12)
	10	.41(*)	Trident Microsystems, Inc. 2010 Equity Incentive Plan(25)
	10	.42(**)	Intellectual Property Transfer and License Agreement between Trident Microsystems (Far East) Ltd. and NXP B.V. dated February 8, 2010.(26)
	10	.43(**)	Transition Services Agreement between Trident Microsystems, Inc. and NXP B.V. dated February 8, 2010.(26)
	10	.44(**)	Manufacturing Services Agreement between Trident Microsystems, Inc. and NXP B.V. dated February 8, 2010.(26)
	10	.45(*)	Forms of Agreements under 2010 Equity Incentive Plan.(26)
	10	.46(*)	Confidential Retirement Agreement and General Release of Claims between Trident Microsystems, Inc. and Dr. Donna Hamlin effective January 14, 2010.(26)
	10	.47	Lease Agreement by and between Kifer Tech Investors LLC and Trident Microsystems, Inc. dated March 5, 2010.(26)
	21	.1	Subsidiaries of Registrant(26)
	23	.1	Consent of Independent Registered Public Accounting Firm(26)
	24	.1	Power of Attorney (Included on signature page)
	31	.1	Rule 13a — 14(a) Certification of Chief Executive Officer.(26)
	31	.2	Rule 13a — 14(a) Certification of Chief Financial Officer.(26)
	32	.1	Section 1350 Certification of Chief Executive Officer.(26)
	32	.2	Section 1350 Certification of Chief Financial Officer.(26)

(1)	Incorporated by reference to exhibit of the same number to the Company’s Current Report on Form 8-K filed on April 1, 2009.
(2)	Incorporated by reference to exhibit of the same number to the Company’s Current Report on Form 8-K filed on October 5, 2009.
(3)	Incorporated by reference to exhibit of the same number to the Company’s Annual Report on Form 10-K for the year ended June 30, 1993.
(4)	Incorporated by reference to Exhibit 3.2 to the Company’s Form 10-Q dated December 31, 2003, and as further amended by Exhibit 3.3 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 6, 2009, incorporated by reference hereto..
(5)	Incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 30, 2007.
(6)	Incorporated by reference to Exhibit 3.3 to the Company’s Current Report on Form 8-K filed on March 6, 2009.
(7)	Incorporated by reference to exhibit of the same number to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 27, 2010.
(8)	Incorporated by reference to Exhibit 3.6 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 8, 2010.

105

(9)	Incorporated by reference to exhibit of the same number to the Company’s Registration Statement on Form S-1 (File No. 33-53768).
(10)	Incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 28, 2008.
(11)	Incorporated by reference to exhibit of the same number to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 15, 2009.
(12)	Incorporated by reference to exhibit of the same number to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 8, 2010.
(13)	Incorporated by reference to exhibit of the same number to the Company’s Registration Statement on Form S-1 (File No. 33-53768).
(14)	Incorporated by reference to exhibit of the same number to the Company’s Annual Report on Form 10-K for the year ended June 30, 1995. Confidential treatment has been requested for a portion of this document.
(15)	Incorporated by reference to exhibit of same number to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2002.
(16)	Incorporated by reference to exhibit of same number to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2006.
(17)	Incorporated by reference to the Company’s Proxy Statement filed with the Securities and Exchange Commission on April 26, 2006.
(18)	Incorporated by reference to exhibit of the same number to the Company’s Annual Report on Form 10-K/A filed with the Securities and Exchange Commission on August 22, 2007.
(19)	Incorporated by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 1, 2007.
(20)	Incorporated by reference to exhibit of the same number to the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2007
(21)	Incorporated by reference to exhibit of the same number to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 19, 2008.
(22)	Incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 5, 2008.
(23)	Incorporated by reference to exhibit of the same number to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2008.
(24)	Incorporated by reference to exhibit of the same number to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2009.
(25)	Incorporated by reference to exhibit 99.1 to Registration Statement on Form S-8 (No. 333-164532) filed with the Securities and Exchange Commission on January 26, 2010.
(26)	Filed herewith.
(*)	Management contracts or compensatory plans or arrangements covering executive officers or directors of the Company.
(+)	Compensatory plans, contracts or arrangements adopted without the approval of security holders pursuant to which equity may be awarded.
(**)	Confidential treatment has been granted or requested for portions of this agreement.

106

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

TRIDENT MICROSYSTEMS, INC.

By:  /s/  Sylvia Summers Couder

     Sylvia Summers Couder

Chief Executive Officer

Dated: March 12, 2010

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Sylvia Summers Couder, Pete J. Mangan and David L. Teichmann, each of them acting individually, as his attorney-in-fact, with the full power of substitution, for him or her in any and all capacities, to sign any and all amendments to this Transition Report on Form 10-K, and to file same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission granting unto said attorneys-in-fact, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming our signatures as they may be signed by our said attorney-in-fact and any and all amendments to this Transition Report on Form 10-K.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Capacity	Date
/s/  Sylvia Summers Couder Sylvia Summers Couder	Chief Executive Officer and Director (Principal Executive Officer)	March 12, 2010
/s/  Pete J. Mangan Pete J. Mangan	Executive Vice President and Chief Financial Officer (Principal Financial Officer)	March 12, 2010
/s/  Richard H. Janney Richard H. Janney	Vice President and Corporate Controller (Principal Accounting Officer)	March 12, 2010
/s/  Brian R. Bachman Brian R. Bachman	Director	March 11, 2010
/s/  Richard L. Clemmer Richard L. Clemmer	Director	March 11, 2010
/s/   David H. Courtney David H. Courtney	Chairman of the Board	March 11, 2010

107

Signature	Capacity	Date
/s/  A. C. D’Augustine A. C. D’Augustine	Director	March 11, 2010
Philippe Geyres	Director
/s/  J. Carl Hsu J. Carl Hsu	Director	March 11, 2010
/s/  David M. Kerko David M. Kerko	Director	March 11, 2010
/s/  Raymond K. Ostby Raymond K. Ostby	Director	March 10, 2010

108

Schedule II

TRIDENT MICROSYSTEMS, INC.

VALUATION AND QUALIFYING ACCOUNTS

				Charged as a
				Reduction			Write-offs or
		Balance at		(Credit)			Adjustments
		Beginning of		to			Charged to		Balance at
Fiscal Year	Description	Period		Revenue			Allowance		End of Period
		(In thousands)
12/31/09	Allowance for sales returns and allowance for doubtful accounts	$	56	$	264		$	—	$	320
2009	Allowance for sales returns and allowance for doubtful accounts	$	300	$	(244	)	$	—	$	56
2008	Allowance for sales returns and allowance for doubtful accounts	$	1,101	$	(801	)	$	—	$	300
2007	Allowance for sales returns and allowance for doubtful accounts	$	1,475	$	(374	)	$	—	$	1,101

		Balance at
		Beginning of		Increase			Balance at End
Fiscal Year	Description	Period		(decrease)			of Period
	(In thousands)
12/31/09	Valuation allowance for deferred tax assets	$	30,010	$	2,433		$	32,443
2009	Valuation allowance for deferred tax assets	$	20,820	$	9,190		$	30,010
2008	Valuation allowance for deferred tax assets	$	23,641	$	(2,821	)	$	20,820
2007	Valuation allowance for deferred tax assets	$	24,151	$	(510	)	$	23,641

109

EXHIBIT INDEX

Exhibit			Description
	2	.1	Purchase Agreement dated March 31, 2009 among Micronas Semiconductor Holding AG, Trident Microsystems, Inc. and Trident Microsystems (Far East) Ltd.(1)
	2	.2	Share Exchange Agreement dated October 4, 2009 among Trident Microsystems, Inc., Trident Microsystems (Far East) Ltd., and NXP B.V.(2)
	3	.1	Restated Certificate of Incorporation.(3)
	3	.3	Amended and Restated Bylaws.(4)
	3	.4	Amendment to Article VIII of the Bylaws.(5)
	3	.5	Amendments to Article I, Section 2 and Article I, Section 7 of the bylaws.(6)
	3	.6	Certificate of Amendment of Restated Certificate of Incorporation of Trident Microsystems, Inc. filed on January 27, 2010.(7)
	3	.7	Amended and Restated Certificate of Designation of Series B Preferred Stock (par value $0.001) of Trident Microsystems, Inc., as filed with the Delaware Secretary of State on February 5, 2010.(8)
	4	.1	Reference is made to Exhibits 3.1, 3.3, 3.4, 3.5 and 3.6.
	4	.2	Specimen Common Stock Certificate.(9)
	4	.3	Amended and Restated Rights Agreement between the Company and Mellon Investor Services, LLC, as Rights Agent dated as of July 23, 2008 (including as Exhibit A the Form of Certificate of Amendment of Certificate of Designation, Preferences and Rights of the Terms of the Series A Preferred Stock, as Exhibit B the Form of Right Certificate, and as Exhibit C the Summary of Terms of Rights Agreement).(10)
	4	.4	First Amendment to Amended and Restated Rights Agreement, dated May 14, 2009.(11)
	4	.5	Second Amendment to Amended and Restated Rights Agreement, dated December 11, 2009.(12)
	10	.5(*)	1990 Stock Option Plan, together with forms of Incentive Stock Option Agreement and Non-statutory Stock Option Agreement.(13)
	10	.6(*)	Form of the Company’s Employee Stock Purchase Plan.(13)
	10	.9(*)	Summary description of the Company’s 401(k) plan.(13)
	10	.10(*)	Form of Indemnity Agreement for officers, directors and agents.(13)
	10	.13(*)	Form of 1992 Stock Option Plan amending and restating the 1990 Stock Option Plan included as Exhibit 10.5.(13)
	10	.16	Foundry Venture Agreement dated August 18, 1995 by and between the Company and United Microelectronics Corporation.(14)
	10	.18 (*)	Form of Nonstatutory Stock Option Agreement for non-plan grants to directors.(15)
	10	.19 (+)	Form of 1996 Nonstatutory Stock Option Plan.(15)
	10	.20	Lease agreement dated April 11, 2006 between the Company and Cooperage Rose Properties for the Company’s principal offices located at 3408-3410 Garrett Drive., Santa Clara, CA(16)
	10	.22(*)	2006 Equity Incentive Plan.(17)
	10	.23(*)	Form of Agreements under the 2006 Equity Incentive Plan.(18)
	10	.24(*)	Offer Letter of Sylvia D. Summers, Chief Executive Officer.(19)
	10	.25(*)	Offer Letter of Peter J. Mangan, Vice President, Finance.(20)
	10	.28(*)	First Amendment to Trident Microsystems, Inc. 2006 Equity Incentive Plan.(21)
	10	.29(*)	Resignation and Consulting Agreement and General Release of Claims dated February 28, 2008 between Jung-Herng Chang and Trident Microsystems, Inc.(22)
	10	.30(*)	2009 Executive Bonus Plan(23)
	10	.31(*)	Amended Form of Indemnity Agreement for officers and directors(23)
	10	.34	Form of Warrant for the Purchase of Shares of Common Stock of Trident Microsystems, Inc. to Micronas Semiconductor Holding AG.(11)
	10	.35(**)	Cross License Agreement dated May 14, 2009, between Trident Microsystems (Far East) Ltd. and Micronas Semiconductor Holding AG.(11)

Exhibit			Description
	10	.36	Stockholder Agreement dated May 14, 2009, between Trident Microsystems, Inc. and Micronas Semiconductor Holding AG.(11)
	10	.37	Services Agreement dated May 15, 2009, between Trident Microsystems (Far East) Ltd. and Micronas Semiconductor Holding AG.(11)
	10	.38(*)	Trident Microsystems, Inc. Executive Retention and Severance Plan.(24)
	10	.39	Stockholder Agreement between Trident Microsystems, Inc. and NXP B.V. dated February 8, 2010.(26)
	10	.40(*)	Letter Agreement with Christos Lagomichos dated February 2, 2010.(12)
	10	.41(*)	Trident Microsystems, Inc. 2010 Equity Incentive Plan(25)
	10	.42(**)	Intellectual Property Transfer and License Agreement between Trident Microsystems (Far East) Ltd. and NXP B.V. dated February 8, 2010.(26)
	10	.43(**)	Transition Services Agreement between Trident Microsystems, Inc. and NXP B.V. dated February 8, 2010.(26)
	10	.44(**)	Manufacturing Services Agreement between Trident Microsystems, Inc. and NXP B.V. dated February 8, 2010.(26)
	10	.45(*)	Forms of Agreements under 2010 Equity Incentive Plan.(26)
	10	.46(*)	Confidential Retirement Agreement and General Release of Claims between Trident Microsystems, Inc. and Dr. Donna Hamlin effective January 14, 2010.(26)
	10	.47	Lease Agreement by and between Kifer Tech Investors LLC and Trident Microsystems, Inc. dated March 5, 2010.(26)
	21	.1	Subsidiaries of Registrant(26)
	23	.1	Consent of Independent Registered Public Accounting Firm(26)
	24	.1	Power of Attorney (Included on signature page)
	31	.1	Rule 13a — 14(a) Certification of Chief Executive Officer.(26)
	31	.2	Rule 13a — 14(a) Certification of Chief Financial Officer.(26)
	32	.1	Section 1350 Certification of Chief Executive Officer.(26)
	32	.2	Section 1350 Certification of Chief Financial Officer.(26)

(1)	Incorporated by reference to exhibit of the same number to the Company’s Current Report on Form 8-K filed on April 1, 2009.
(2)	Incorporated by reference to exhibit of the same number to the Company’s Current Report on Form 8-K filed on October 5, 2009.
(3)	Incorporated by reference to exhibit of the same number to the Company’s Annual Report on Form 10-K for the year ended June 30, 1993.
(4)	Incorporated by reference to Exhibit 3.2 to the Company’s Form 10-Q dated December 31, 2003, and as further amended by Exhibit 3.3 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 6, 2009, incorporated by reference hereto..
(5)	Incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 30, 2007.
(6)	Incorporated by reference to Exhibit 3.3 to the Company’s Current Report on Form 8-K filed on March 6, 2009.
(7)	Incorporated by reference to exhibit of the same number to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 27, 2010.
(8)	Incorporated by reference to Exhibit 3.6 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 8, 2010.
(9)	Incorporated by reference to Exhibit of the same number to the Company’s Registration Statement on Form S-1 (File No. 33-53768).
(10)	Incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 28, 2008.

(11)	Incorporated by reference to exhibit of the same number to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 15, 2009.
(12)	Incorporated by reference to exhibit of the same number to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 8, 2010.
(13)	Incorporated by reference to exhibit of the same number to the Company’s Registration Statement on Form S-1 (File No. 33-53768).
(14)	Incorporated by reference to exhibit of the same number to the Company’s Annual Report on Form 10-K for the year ended June 30, 1995. Confidential treatment has been requested for a portion of this document.
(15)	Incorporated by reference to exhibit of same number to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2002.
(16)	Incorporated by reference to exhibit of same number to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2006.
(17)	Incorporated by reference to the Company’s Proxy Statement filed with the Securities and Exchange Commission on April 26, 2006.
(18)	Incorporated by reference to exhibit of the same number to the Company’s Annual Report on Form 10-K/A filed with the Securities and Exchange Commission on August 22, 2007.
(19)	Incorporated by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 1, 2007.
(20)	Incorporated by reference to exhibit of the same number to the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2007
(21)	Incorporated by reference to exhibit of the same number to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 19, 2008.
(22)	Incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 5, 2008.
(23)	Incorporated by reference to exhibit of the same number to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2008.
(24)	Incorporated by reference to exhibit of the same number to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2009.
(25)	Incorporated by reference to exhibit 99.1 to Registration Statement on Form S-8 (No. 333-164532) filed with the Securities and Exchange Commission on January 26, 2010.
(26)	Filed herewith.
(*)	Management contracts or compensatory plans or arrangements covering executive officers or directors of the Company.
(+)	Compensatory plans, contracts or arrangements adopted without the approval of security holders pursuant to which equity may be awarded.
(**)	Confidential treatment has been granted or requested for portions of this agreement.

EX-10.39

EXHIBIT 10.39

Execution Copy

STOCKHOLDER AGREEMENT

by and between

TRIDENT MICROSYSTEMS, INC.

and

NXP B.V.

Dated as of February 8, 2010

STOCKHOLDER AGREEMENT

     THIS STOCKHOLDER AGREEMENT (this “Agreement”) is entered into as of February 8, 2010, (the “Agreement Date”) by and between Trident Microsystems, Inc., a Delaware corporation (the “Company”) and NXP B.V., a Dutch besloten venootshap (the “Investor”). Capitalized terms used but not defined herein shall have the meanings ascribed to them in Exhibit A.

RECITALS

     WHEREAS, the Company, Trident Microsystems (Far East) Ltd. and the Investor entered into a Share Exchange Agreement, dated as of October 4, 2009 (the “Share Exchange Agreement”), pursuant to which (1) Trident Microsystems (Far East) Ltd. has agreed to acquire (directly or through one (1) or more of its Subsidiaries) the outstanding equity securities of the Companies and the Transferred Newcos (as defined in the Share Exchange Agreement) and certain assets from the Investor, (2) the Company has agreed to issue and Trident Microsystems (Far East) Ltd. has agreed to transfer and sell in consideration therefor, and the Investor has agreed to acquire, shares of the Company’s common stock, $0.001 par value per share, (3) the Company has agreed to issue and sell, and the Investor has agreed to purchase for cash, additional shares of such Common Stock, and (4) pursuant to the transactions contemplated by clauses (2) and (3), the Company will issue an aggregate of One Hundred Four Million, Two Hundred Four Thousand, Three Hundred Forty-Eight (104, 204, 348) shares of such Common Stock (the “Common Shares”) and four (4) shares of the Company’s Series B Preferred Stock, par value $0.001 per share (the “Series B Shares”);

     WHEREAS, the parties desire to enter into this Agreement to provide for certain arrangements relating to the Company, the Common Shares and the Series B Shares; and

     WHEREAS, it is a condition to the Closing (as defined in the Share Exchange Agreement) that, among other things, this Agreement has been executed and delivered and that the parties have complied with their obligations hereunder.

     NOW, THEREFORE, in consideration of the foregoing recitals and of the mutual promises hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE 1
CORPORATE GOVERNANCE AND INFORMATION RIGHTS

     Section 1.1 Board and Committee Representation.

          (a) Board Composition.

               (i) Immediately following the Closing, the Board shall consist of nine (9) Directors, and, for so long as the Persons who Own the Series B Shares (the “Series B Holders”) shall be entitled to nominate and elect at least one (1) Director pursuant to the

Certificate of Designation, the Board shall consist of nine (9) Directors. The Board shall at all times consist of at least a majority of Directors who are Independent Directors.

               (ii) Pursuant to and on the terms and conditions set forth in the Certificate of Designation, the Series B Holders (by majority vote of the Series B Shares) shall initially be entitled to nominate and elect up to four (4) Directors (each, a “Series B Director”). The number of Series B Directors shall be reduced from time to time as provided in the Certificate of Designations. One (1) Director (the “Ninth Director”) shall be mutually agreed to between the Company Nominated Directors (as defined below) and the Series B Directors, recommended by the Nominating and Corporate Governance Committee, nominated by the Board and submitted to the Company’s stockholders for election in accordance with the Company’s Certificate of Incorporation and Bylaws. The Ninth Director shall be the Company’s Chief Executive Officer unless all other Directors otherwise agree, in which case the Ninth Director shall be a Person independent of each of the Company, the Investor, each Series B Holder, each other stockholder of the Company owning five percent (5%) or more of the outstanding Voting Stock of the Company and each Affiliate of any of the foregoing. The remaining Directors (the “Company Nominated Directors” and together with the Ninth Director, the “At-Large Directors”) shall be recommended by the Nominating and Corporate Governance Committee, nominated by the Board and from time to time shall be submitted to the Company’s stockholders for election in accordance with the Company’s Certificate of Incorporation and Bylaws.

               (iii) Immediately following the Closing, the Series B Holders (by majority vote of the Series B Shares) shall be entitled to designate a total of four (4) Series B Directors, one (1) of whom shall be a member of the class of Directors whose term expires at the first annual meeting of the Company’s stockholders following the Closing, one (1) of whom shall be a member of the class of Directors whose term expires at the second annual meeting of the Company’s stockholders following the Closing, and two (2) of whom shall be members of the class of Directors whose term expires at the third annual meeting of the Company’s stockholders following the Closing. Immediately following the Closing, the Board shall have four (4) Company Nominated Directors, one (1) of whom shall be a member of the class of Directors whose term expires at the first annual meeting of the Company’s stockholders following the Closing, two (2) of whom shall be members of the class of Directors whose term expires at the second annual meeting of the Company’s stockholders following the Closing, and one (1) of whom shall be a member of the class of Directors whose term expires at the third annual meeting of the Company’s stockholders following the Closing. Immediately following the Closing, the Ninth Director shall be the Company’s CEO, and shall be elected to the class of Directors whose term expires at the first annual meeting of the Company’s stockholders following the Closing.

          (b) Notifications Regarding Directors.

               (i) The Series B Holders will notify the Company in writing promptly, and in any event within five (5) Business Days, of any action by the Series B Holders or any of their Affiliates (other than the Company) that results in a reduction in the number of shares of Common Stock that are Beneficially Owned by the Series B Holders representing, individually or together with all such reductions since the date of the filing of the Certificate of Designation

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with the Secretary of State of the State of Delaware or the date of any previous such notice, as applicable, one percent (1%) or more of the outstanding Common Stock as of the date of such filing or such previous notice, which notice will set forth the number of shares of Common Stock Beneficially Owned by the Series B Holders immediately following the occurrence of such reduction; provided, that for purposes of this provision, in determining the shares of Common Stock outstanding the Series B Holders may rely upon the Company’s most recent periodic report filed with the SEC, or any update thereof, or any notice provided by the Company pursuant to Section 1.1(b)(iii) below. In the event that the number of Directors that the Series B Holders are entitled to nominate and elect to the Board is reduced pursuant to Section 4(a) of the Certificate of Designation, the Series B Holders shall promptly cause one (1) or more of the Series B Directors to immediately resign, such that the number of remaining Series B Directors serving on the Board shall equal the number of Directors that the Series B Holders are then entitled to elect to the Board pursuant to such Section 4(a) of the Certificate of Designation. In the event that the number of Series B Directors required to resign are unwilling to resign, the Series B Holders will take all such actions as are necessary to cause the removal of such number of such Series B Directors. If such number of Series B Directors shall not have resigned or been removed within thirty (30) days after the date on which such resignation was required, the At-Large Directors, by majority vote, may remove the Series B Director(s) selected by the Series B Holders for removal, or if no such Series B Directors have been so selected by the Series B Holders within ten (10) Business Days of a request from the Company, the At-Large Directors, by majority vote, may remove one or more Series B Directors selected by them, such that, in the aggregate, the number of Series B Directors required to resign under this Section 1.1(b)(i) have been removed. Any vacancies created as a result of a reduction in the number of Series B Directors that the Series B Holders are entitled to elect pursuant to Section 4(a) of the Certificate of Designation shall be filled by nominees (A) who satisfy the requirements of Section 1.1(c), and (B) are recommended by the Nominating and Corporate Governance Committee and approved by the Board. The Director(s) appointed to fill such vacancy shall stand for re-election at the next annual meeting of the Company’s stockholders and shall, if elected, serve for the remaining term of the Series B Director(s) that such Director(s) replaced.

               (ii) The Series B Holders shall notify the Company in writing at least ten (10) days in advance of the anticipated date of the mailing of the Company’s proxy statement in connection with its annual meeting of stockholders (as advised by the Company in writing to the Series B Holders not less than twenty (20) nor more than sixty (60) days prior to such anticipated mailing date) of the nominees to be elected as Series B Directors in the class of Directors to be elected at such annual meeting. The Series B Holders shall, to the extent practicable, notify the Company in writing a reasonable time in advance of any other nomination of any person to serve as Series B Director, including for the purpose of electing or appointing a Series B Director to fill a vacancy that the Series B Holders are entitled to fill, together, in each case, with all information concerning such nominee that may be reasonably requested by the Company, or that may be required for the Company to comply with its reporting obligations under the Exchange Act or Exchange listing requirements; provided that in the absence of such notice, the Series B Holders shall be deemed to have nominated and elected the person(s) then serving as Series B Director(s).

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               (iii) The Company shall notify the Series B Holders promptly, and in any event within five (5) Business Days, of any issuance of Common Stock representing, individually or together with all issuances of Common Stock since the date of the filing of the Certificate of Designation with the Secretary of State of the State of Delaware or the date of any previous such notice, as applicable, one percent (1%) or more of the outstanding Common Stock as of the date of such filing or such previous notice together with the aggregate number of shares of Common Stock outstanding following such issuance.

          (c) Limitations on Directors. Each Director shall, at all times during which such Person serves as a Director, not have been during the last five (5) years convicted in a criminal proceeding (excluding traffic violations or other misdemeanors not involving moral turpitude or deliberate dishonesty) or a party to a civil proceeding brought by a Governmental Authority in which such Director has been finally determined to have committed a violation of federal, state or foreign law (excluding traffic violations or similar misdemeanors not involving moral turpitude or deliberate dishonesty). The Series B Holders shall not nominate or elect any such Series B Director who does not meet the requirements set forth in this Section 1.1(c) and shall cause any such Series B Director who fails to meet the requirements set forth above to resign promptly. If any such Series B Director is unwilling to resign, the Series B Holders will take such actions as are necessary to cause the removal of the Series B Director as promptly as reasonably practicable.

          (d) Limitations on Series B Directors. At least two (2) of the Series B Directors shall have substantial operating or industry experience, and no more than two (2) Series B Directors may be Persons who are not Independent Directors. The Series B Holders shall consult with the Nominating and Corporate Governance Committee (which may delegate such consultation to the Committee Chairperson and/or the Chief Executive Officer of the Company) regarding the names, backgrounds and qualifications of the persons to be nominated as Series B Directors after considering the Company’s Corporate Governance Guidelines (as made publicly available from time to time). However, the Nominating and Corporate Governance Committee shall not have any right nor shall it have any duty to approve or disapprove any person meeting the requirements of Section 1.1(c) selected as a Series B Director by the Series B Holders.

          (e) Limitations on Company Nominated Directors. No more than one (1) Company Nominated Director may be a Person who is not an Independent Director. At least two (2) of the Company Nominated Directors shall have substantial operating or industry experience.

     Section 1.2 Board Committees.

          (a) Subject to the requirements of applicable law and Committee Qualification Requirements applicable to all Directors, for as long as there is at least one (1) Series B Director on the Board, the Company shall maintain an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. Subject to the terms set forth in this Section 1.2, the power and authority of each such committee shall be as set forth in the charter of such committee, and (except as otherwise provided in the charter of such committee or as required by applicable law or any applicable Exchange rules) the exercise

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of such power and authority will be at all times subject to the power and authority of the entire Board.

               (i) Audit Committee. The Audit Committee shall be comprised of three (3) Directors, each of whom shall be an Independent Director and satisfy the requirements of applicable law and any applicable Exchange rules. One (1) member of the Audit Committee shall be a Series B Director who is not an employee of the Investor or any of its Subsidiaries and two (2) members of the Audit Committee shall be At-Large Directors.

               (ii) Compensation Committee. The Compensation Committee shall be comprised of three (3) Directors, each of whom shall be an Independent Director and satisfy the requirements of applicable law and any applicable Exchange rules. One (1) member of the Compensation Committee shall be a Series B Director who is not an employee of the Investor or any of its Subsidiaries and two (2) members of the Compensation Committee shall be At-Large Directors.

               (iii) Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee shall be comprised of three (3) Directors, each of whom shall be an Independent Director and satisfy the requirements of applicable law and any applicable Exchange rules. One (1) member of the Nominating and Corporate Governance Committee shall be a Series B Director and two (2) members of the Nominating and Corporate Governance Committee shall be At-Large Directors.

               (iv) Other Committees. With respect to each other committee or subcommittee of the Board, the Board shall appoint to each such committee or subcommittee a number of Series B Directors as is proportional to the representation of the Series B Directors on the Board as a whole, rounded to the nearest whole number.

          (b) Any Directors appointed to a committee or subcommittee of the Board who are not Series B Directors shall be recommended by the Nominating and Corporate Governance Committee and appointed by the Board. If the members of the Nominating and Corporate Governance Committee are unable to agree on any committee or subcommittee assignment, the Chairman of the Board shall act as a temporary member of the Nominating and Corporate Governance Committee for purposes of casting the deciding vote on such matter. The Series B Directors shall be entitled to designate the Series B Director(s) to serve on each committee or subcommittee of the Board, provided that such Series B Directors meet the applicable requirements set forth in Section 1.2(a), and the Board shall take all actions necessary to appoint such Series B Directors to such committees or subcommittees.

          (c) Except for (i) routine commercial transactions entered into on an arms’ length basis in the ordinary course of business, (ii) contracts or arrangement involving expenditures, revenues or the incurrence of liabilities not in excess of $50,000, and (iii) the transactions contemplated by the Share Exchange Agreement, the entry into, termination or variation of any contract or arrangement between the Company and any Related Party shall be approved by the affirmative vote of a majority of the disinterested Directors. For purpose of this Section 1.2(c), a “Related Party” includes the Directors and officers of the Company, the spouses or children of such Directors and officers, the Investor, any of the Series B Holders, any

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other stockholder that (together with its Affiliates) Beneficially Owns more than ten percent (10%) of the outstanding Voting Stock of the Company, or any Affiliate of any of the foregoing.

          (d) Notwithstanding the foregoing, any Board committee may hold executive sessions at which one (1) or more Directors is not permitted to be present to the extent the committee determines in good faith that such exclusion is appropriate.

     Section 1.3 Voting.

          (a) Change of Control Transactions. Subject to compliance with Section 1.3(c), Section 1.3(d) and Section 3.2, the Investor and its Affiliates may vote any Voting Stock Beneficially Owned by any of them in their sole discretion on any Change of Control transaction submitted to the stockholders of the Company for approval, provided that on and after the fourth anniversary of the date of this Agreement, the Investor may, notwithstanding Section 1.3(c) or Section 1.3(d) hereof, but subject to compliance with Section 3.2 hereof, vote in its discretion on any proposal to replace Directors that is made by an unaffiliated third party in connection with a Change of Control transaction proposed by such unaffiliated third party.

          (b) Amendments to Certificate of Incorporation or Bylaws. The Investor and its Affiliates may vote the Voting Stock Beneficially Owned by any of them on any proposal related to any amendment or restatement of the Certificate of Incorporation or Bylaws of the Company which is in any way adverse to the Investor in their sole discretion.

          (c) Stockholders Agreement. The Investor shall, and shall cause its Permitted Transferees to and shall use commercially reasonable efforts to cause its Affiliates to, vote the Voting Stock Beneficially Owned by any them in favor of each matter required to effectuate any provision of this Agreement and against any matter the approval of which would be inconsistent with any provision of this Agreement.

          (d) Directors. With respect to the election, removal, replacement and classification of Directors (other than Series B Directors) the Investor and its Affiliates shall either (i) vote all of the Voting Stock Beneficially Owned by any of them in accordance with the recommendation of the Board approved by a majority of the At-Large Directors or (ii) vote all of the Voting Stock Beneficially Owned by any of them in the same proportion (for, against, abstain or withheld, or as otherwise indicated) as the votes cast by all other holders of Voting Stock.

          (e) Other Matters. Except as provided in Sections 1.3(a), 1.3(b), 1.3(c) and 1.3(d), for so long as the Investor and its Affiliates in the aggregate Beneficially Own in excess of thirty percent (30%) of the outstanding Voting Stock of the Company (the “Voting Limit”), the Investor shall, and shall cause its Affiliates to, either (i) vote all of the Voting Stock Beneficially Owned by any of them in excess of the Voting Limit in accordance with the recommendation of the Board approved by a majority of the At-Large Directors or (ii) vote all of the Voting Stock Beneficially Owned by any of them in excess of the Voting Limit in the same proportion (for, against, abstain or withheld, or as otherwise indicated) as the votes cast by all other holders of Voting Stock on all matters to be voted on by holders of Voting Stock. Subject to the other provisions of this Agreement, the Investor and its Affiliates may vote the Voting

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Stock Beneficially Owned up to and including (but not in excess of) the Voting Limit on any proposal in its sole discretion.

          (f) Quorum. At every meeting (or action by written consent, if applicable) of the stockholders of the Company called, and at every postponement or adjournment thereof, the Investor shall, and shall cause its Affiliates to, cause any and all shares of Common Stock Beneficially Owned by it or them and entitled to be voted thereat to be present in person or represented by proxy at the meeting so that all such shares shall be counted as present for purposes of determining the presence of a quorum at such meeting.

     Section 1.4 Information Rights.

          (a) Subject to Section 1.5, the Company will deliver to the Investor the following information:

               (i) with respect to each fiscal year: (A) promptly after it has been made available (but in no event later than fifteen (15) Business Days of the end of each fiscal year) the unaudited consolidated financial statements of the Company and its Subsidiaries, (B) promptly after it has been made available (but in no event later than twenty-five (25) Business Days of the end of each fiscal year) the audited consolidated financial statements of the Company and its Subsidiaries, audited in accordance with U.S. GAAS, and (C) promptly after it has been made available (but in no event later than seventy (70) Business Days of the end of each fiscal year) the international financial reporting standards (“IFRS”) consolidated financial statements of the Company and its Subsidiaries; provided, that if the Company properly extends the date for filing of any such statements specified in subparagraph (B) or (C) above with the SEC (i.e., by means of a filing on Form 12b-25), then the date set forth above for delivery to the Investor shall be extended for a corresponding period;

               (ii) with respect to each quarterly period, promptly after it has been made available, quarterly unaudited U.S. GAAP consolidated financial statements of the Company and its Subsidiaries, including (i) a detailed profit and loss statement, balance sheet and cash flow statement (which may be unreviewed and subject to further adjustment) to be provided within ten (10) Business Days of the end of each quarter, (ii) such information as may reasonably be required for the Investor to prepare an update of the IFRS reconciliation for net income and shareholders equity, (iii) a management discussion & analysis, including an analysis of revenue, (iv) a rolling forecast in relation to the current quarter as presented to the Board of Directors and (vi) financial information on related party matters, which information shall, to the extent possible, be directly extracted from the Company’s information technology systems;

               (iii) with respect to each monthly period, promptly after it has been made available (but in no event later than ten (10) Business Days of the end of each month) information including net income and net assets and equity (which may be unreviewed and subject to adjustment) (provided, that if such information is not delivered earlier, estimates of such information shall be made available within seven (7) Business Days of the end of each month);

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               (iv) draft business plans for the Company and its Subsidiaries for the subsequent three (3) year period no later than two (2) Business Days after approval thereof by the Board, in the form presented to the Board (but subject to Section 1.4(b));

               (v) copies of all reports, certificates, and other information delivered to the Company’s lenders or creditors in respect of any material indebtedness of the Company; and

               (vi) any other financial information, reports and workpapers in the possession or under the control of the Company or any of its Subsidiaries that the Investor reasonably requires to comply with reporting, disclosure, filing or other requirements imposed on the Investor or any of its Subsidiaries (A) by a Governmental Authority having jurisdiction over the Investor or any of its Subsidiaries, including under applicable securities or tax laws, including the Sarbanes-Oxley Act of 2002, as amended, (B) by IFRS adopted by the International Accounting Standards Board or any successor entity, (C) by the covenants in financing arrangements to which the Investor is a party, and (D) the rules and regulations thereunder, or applicable rules of any self-regulatory organization.

          (b) The Investor shall be entitled to confer with each Series B Director regarding the business, affairs, financial condition, results of operations and prospects of the Company and may discuss any and all information (other than confidential compensation information) provided to the Investor or any such Series B Director, subject to Section 1.5 below; provided, that if the Board determines in good faith that any Company information must be held in confidence in order to (i) preserve attorney-client privilege, (ii) comply with any applicable confidentiality or non-disclosure agreement, or (iii) prevent a dissemination of competitively sensitive information regarding (A) products, services or other activities of the Company with respect to which the Investor or its Subsidiaries competes with the Company or (B) proposed products, services or other activities of the Company that the Board reasonably determines that the Company may develop, acquire or pursue that would be competitive with the current products, services or other activities of the Investor or any of its Subsidiaries or (C) any other matter as to which the Board has determined in good faith that the Company and the Investor have a material conflict of interest based on a reasonable expectation that disclosure of such information may be harmful to the Company, then the Series B Directors shall hold such information in confidence and not discuss such information with the Investor except to the degree, if any, approved by the Board.

     Section 1.5 Confidentiality. (a) The Investor shall keep confidential (x) all proprietary and non-public information regarding the Company and its Subsidiaries received pursuant to Sections 1.3 or 1.4 or otherwise, (y) all “Information” (as defined in the Confidentiality Agreement) provided to the Investor or its representatives under the Confidentiality Agreement prior to the date hereof (notwithstanding the termination of the Confidentiality Agreement), and (z) all non-public information furnished or disclosed to or otherwise acquired by any Series B Director in such Person’s capacity as a Director (clauses (x), (y) and (z) collectively, “Confidential Information”), and in each case shall not disclose or reveal any such information to any Person without the prior written consent of the Company, other than those of its employees, officers, directors, First Tier Affiliates, attorneys, accountants and financial advisors (“Permitted Representatives”) who need to know such information for

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the purpose of evaluating, monitoring or taking any other action with respect to the investment by the Investor in the Common Shares or the Series B Share and shall cause those Permitted Representatives to observe the terms of this Section 1.5 and agree for the benefit of the Company to do so (and any violation or breach of the terms of this Section 1.5 by any Permitted Representative shall be deemed a breach hereof by the Investor). Notwithstanding the foregoing, no officer, employee or director of any Entity that is a Company Competitor shall be a Permitted Representative, and no Confidential Information shall be furnished or disclosed to any such Company Competitor.

          (b) The Investor shall not, and shall cause its First Tier Affiliates and Permitted Representatives not to, use such proprietary and non-public information for any purpose other than in connection with evaluating, monitoring or taking any other action with respect to the investment by the Investor in the Common Shares or the Series B Share; provided, that nothing herein shall prevent the Investor or any of its Permitted Representatives from disclosing any such information that (1) is or becomes generally available to the public other than as a result of a disclosure by the Investor or its Permitted Representatives in violation of this Section 1.5 or any other confidentiality agreement between the Company and the Investor or any of its Permitted Representatives or any other legal duty, fiduciary duty, or other duty of trust and confidence of the Investor, any of its Permitted Representatives, or any Series B Director, (2) was within the Investor’s or its Permitted Representative’s possession on a non-confidential basis prior to being furnished with such information (provided that the source of such information was not known by the Investor at the time of such disclosure by the Investor or any of its Permitted Representatives to be bound by a confidentiality agreement with, or other contractual, legal or fiduciary obligation of confidentiality to or other duty of trust and confidence to, the Company with respect to such information), (3) was independently developed by Investor without use of any information furnished to Investor, any of its Permitted Representatives or any Series B Director, or (4) becomes available to the Investor or its Permitted Representative on a non-confidential basis from a source other than the Company (provided that such source is not known by the Investor at the time of such disclosure by the Investor or any of its Permitted Representatives to be bound by a confidentiality agreement with, or other contractual, legal or fiduciary obligation of confidentiality to or other duty of trust and confidence to, the Company with respect to such information).

          (c) If any Confidential Information is required to be disclosed by applicable law or judicial order, then the Investor will notify the Company in writing and will cooperate with the Company if the Company elects to seek a protective order or other appropriate remedy with respect to such required disclosure. If no such protective order is obtained, and if Investor or any of its Permitted Representatives has been advised by legal counsel in writing that it is legally compelled to disclose any Confidential Information, then the Investor or such Permitted Representative may disclose such Confidential Information, but will furnish only that portion of the Confidential Information which Investor or is Permitted Representatives is advised by counsel is legally required and will exercise its reasonable efforts to obtain reliable assurance that confidential treatment will be accorded such Confidential Information.

          (d) Upon the redemption of all of the Series B Shares and the termination of the Investor’s right to information under Section 1.4, the Investor shall return to the Company all written Confidential Information that has been provided to the Investor by the Company;

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provided, that in lieu of being returned to the Company such Confidential Information may be destroyed by Investor, in which case Investor shall provide the Company with a written certification that such written Confidential Information has been destroyed.

     Section 1.6 Major Decisions. The approval of any of the following matters shall require an affirmative vote of at least two-thirds (2/3) of the Directors present (in person or by telephone or video conference) and voting for or against approval of any such matter at any meeting at of which proper notice is provided to the Board in accordance with the Company’s Bylaws (or is waived by all Directors) and such matter is considered:

               (i) any amendment to the Company’s Certificate of Incorporation, Bylaws or any other organizational documents of the Company;

               (ii) the consummation of any merger, business combination, consolidation, corporate reorganization or any transaction constituting a Change of Control, by the Company with or into any Entity;

               (iii) any sale, transfer or other disposition (including by way of issuance of Equity Securities of a Subsidiary) of assets of the Company and its Subsidiaries in an amount in excess of $50,000,000;

               (iv) any acquisition, capital expenditure, investment (or any commitment in respect thereof) by the Company or any of its Subsidiaries (or series of related acquisitions, expenditures, investments or commitments) of the assets or securities of any other Entity in an amount in excess of $50,000,000;

               (v) any Liquidation Proceeding;

               (vi) the removal or termination of employment of the Company’s Chief Executive Officer or the selection of a replacement of the Chief Executive Officer;

               (vii) any transactions with the Investor or any of its Affiliates that involve more than $1,000,000 or that are otherwise material to the Company;

               (viii) any authorization or approval of any amendment to or waiver under this Agreement;

               (ix) any payment or declaration of dividends on the Company’s capital stock, special or otherwise;

               (x) any repurchase by the Company of any of its Equity Securities in an amount exceeding $5,000,000 in any 12-month period;

               (xi) any equity or debt financing in an amount in excess of $50,000,000; and

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               (xii) any other matters requiring stockholder approval under the listing rules of the NASDAQ Stock Market or any other Exchange on which the Common Stock is listed.

ARTICLE 2
TRANSFERS

     Section 2.1 Transfer Restrictions.

          (a) General Restriction. The Investor shall not Transfer any of the Series B Shares or any Common Shares or other Equity Securities acquired pursuant to Section 3.1 hereof other than as expressly permitted by, and in compliance with, the other provisions of this Section 2.1, and any attempted Transfer in violation of this Agreement shall be of no effect and null and void, and shall not be recorded on the stock transfer books of the Company, regardless of whether the purported Transferee has any actual or constructive knowledge of the Transfer restrictions set forth in this Agreement.

          (b) Two Year Lock-up Restriction.

               (i) Prior to the second anniversary of the Closing (the “Lock-up Period”), the Investor shall not Transfer any Common Shares or other Equity Securities acquired pursuant to Section 3.1 hereof, except that the Investor may Transfer any or all of its Common Shares or Equity Securities acquired pursuant to Section 3.1 hereof (1) pursuant to any Approved Transaction in which stockholders of the Company are offered, permitted or required to participate as holders of any of the Company’s Equity Securities; (2) as a pledge of its assets pursuant to a bona fide financing transaction; or (3) to one (1) or more First Tier Affiliates of the Investor; provided that in the case of clause (3), any Transferee of Common Shares or other Equity Securities acquired pursuant to Section 3.1 hereof (x) agrees to be bound hereunder as an Investor, and (y) executes a counterpart to this Agreement agreeing to the terms of this Agreement (including, without limitation, this Section 2.1 and Section 3.2) (the Transfers referred to in clauses (1) through (3) collectively referred to as the “Exempt Transfers”). Upon a Transfer contemplated by clause (3) above, any Transferee of Common Stock shall be deemed an Investor hereunder and shall be entitled to the rights (including, but not limited to the registration rights pursuant to Article 4), and subject to the obligations and restrictions (including, without limitation, the provisions of this Section 2.1 and Section 3.2), contained herein. As used herein, “Approved Transaction” means any tender offer, exchange offer, merger, sale of the Company, reclassification, reorganization, recapitalization or other transaction that has been approved or recommended by a majority of the At-Large Directors who are Independent Directors (and which at the time of Transfer continues to be approved or recommended by a majority of the At-Large Directors who are Independent Directors).

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               (ii) Notwithstanding clause (i) above, the Investor may Transfer Common Shares or other Equity Securities acquired pursuant to Section 3.1 hereof to one or more Persons that are Eligible Transferees in an aggregate amount not to exceed 15% of the outstanding Voting Stock if and to the extent that the Investor determines (after consultation with its independent registered public accounting firm) that the Investor would otherwise be required to consolidate the Company’s financial results in the Investor’s consolidated financial statements prepared under IFRS or US generally accepted accounting principles. In connection with any such Transfer, (x) the Company shall not have any obligation to register such transferred shares under the Securities Act or any other applicable law in order to permit such Transfer, (y) any such Transfer must comply with all of the provisions of Section 2.1(c), and (z) as a condition to any such Transfer the Transferee must (1) agree in writing to be bound by and comply with this Section 2.1 and (2) agree in writing to be bound by and comply with the provisions of Section 1.3 and Section 3.2 hereof until the end of the Lock-up Period (with the reference to “Standstill Limit” to be replaced by a reference to the percentage of the outstanding Voting Stock subject to such Transfer). Any Transferee under this Section 2.1(b)(ii) shall not be considered an Investor under this Agreement and shall have no rights under this Agreement (including, without limitation, under Sections 1.4, 3.1 and 4.1 hereof) other than the right to participate in Piggyback Registrations (if any) under Section 4.2. Upon any Transfer pursuant to this Section 2.1(b)(ii), the Standstill Limit shall immediately be permanently reduced by a number of shares of Common Stock equal to the number of shares of Common Stock so Transferred.

          (c) Ongoing Restrictions. After the Lock-up Period, unless otherwise approved by a majority of the At-Large Directors (which approval shall not be unreasonably withheld or delayed), the Investor shall not, and shall not permit any of its Affiliates to, Transfer any Common Stock or agree to Transfer, directly or indirectly, any Common Stock, other than any Transfer:

               (i) that would have been an Exempt Transfer permitted during the Lock-up Period under clauses (1), (2) or (3) of Section 2.1(b) (which, in the case of clause (3) of Section 2.1(b), the Transferee shall be deemed an Investor hereunder and shall be entitled to the rights (including, but not limited to the registration rights pursuant to Article 4), and subject to the obligations and restrictions (including, without limitation, any applicable provisions of this Section 2.1 and Section 3.2), contained herein);

               (ii) pursuant to and in compliance with the restrictions of Rule 144 under the Securities Act applicable to sales by affiliates of an issuer;

               (iii) pursuant to a firm commitment underwritten distribution to the public, registered under the Securities Act;

               (iv) pursuant to a distribution registered under the Securities Act (other than as provided in clause (iii) above), in an amount not exceeding, on any trading day, 25% of the ADTV as in effect on such trading day; or

               (v) to any Person that after consummation of such Transfer would Beneficially Own (A) in the case of an Eligible Transferee, less than fifteen percent (15%), and

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(B) in the case of an Ineligible Transferee, less than five percent (5%), of the outstanding Voting Stock of the Company;

provided, that, in the case of a Transfer pursuant to clause (ii) or clause (iv), the Investor shall not knowingly Transfer any shares of Common Stock to any Person that, after consummation of such Transfer, would Beneficially Own (I) in the case of an Eligible Transferee, more than fifteen percent (15%), and (II) in the case of an Ineligible Transferee, more than five percent (5%), of the outstanding Voting Stock of the Company; and provided further, that in the case of a Transfer pursuant to clause (iii) that is effected through a firm commitment underwriting, the Investor shall instruct the underwriters to use their reasonable best efforts to (A) effect as wide a distribution as practicable of the Common Stock Transferred, consistent with best execution standards and (B) not knowingly sell Common Stock to any Person that, after consummation of such Transfer, would Beneficially Own (I) in the case of an Eligible Transferee, more than fifteen percent (15%), and (II) in the case of an Ineligible Transferee, more than five percent (5%), of the outstanding Voting Stock of the Company.

     Any Transferee acquiring Common Stock pursuant to clauses (ii), (iii), (iv) or (v) of this Section 2.1(c) (other than the Investor, an Affiliate of the Investor or any member of a 13D Group of which the Investor or any of its Affiliates are members) shall take such Common Stock free of the obligations of the Investor under this Agreement (including, without limitation, this Section 2.1 and Section 3.2) and shall have no rights as an Investor or Permitted Transferee under this Agreement (including, without limitation, any rights under Article 1, Section 3.1 or Article 4).

          (d) Restrictions on the Series B Share. Neither the Investor nor any other Series B Holder may Transfer any of the Series B Shares to any other Person, except that the Investor shall have the right to Transfer Series B Shares to any Permitted Transferee that acquires twenty percent (20%) or more of the Investor Registrable Securities in compliance with the provisions of this Section 2.1. Upon such a Transfer, such Transferee shall be deemed an Investor and a Series B Holder hereunder and shall be entitled to the rights, and subject to the obligations and restrictions, contained herein.

     Section 2.2 Legends; Securities Act Compliance.

          (a) Each certificate representing Common Shares, Series B Shares or other Equity Securities acquired by the Investor or any of its Affiliates pursuant to Section 3.1 will bear a legend conspicuously thereon to the following effect:

“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS REGISTERED OR EXEMPT FROM REGISTRATION UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS. IN ADDITION, THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF A

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STOCKHOLDER AGREEMENT AND MAY NOT BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH SUCH AGREEMENT.”

          (b) In addition to the restrictions set forth in Section 2.1, the Investor shall not offer, sell or legally transfer any Common Shares or Equity Securities acquired pursuant to Section 3.1 hereof except pursuant to: (i) an effective Registration Statement under the Securities Act; (ii) an opinion of legal counsel reasonably acceptable to the Company that such Transfer is exempt from the registration requirements of Section 5 of the Securities Act; (iii) pursuant to Rule 144 under the Securities Act; or (iv) a “no action” letter from the staff of the SEC addressed to the Investor or a Permitted Transferee to the effect that the Transfer without registration would not result in a recommendation by the staff to the SEC that action be taken with respect thereto.

          (c) In the event that any Common Shares Beneficially Owned by the Investor or any of its Affiliates is Transferred in a Public Offering as provided in Section 2.1(c)(iii) or 2.1(c)(iv), the Company shall promptly, upon request, but in any event not later than is necessary in order to consummate the sale of such securities pursuant to such Public Offering, remove the legend set forth above in connection with such Transfer. In the event that any Common Shares Beneficially Owned by the Investor or any of its Affiliates is Transferred pursuant to Rule 144 under the Securities Act in compliance with Section 2.1(c)(ii), the Company shall upon request, upon receipt of documentation reasonably required by the Company to confirm such Investor’s eligibility to sell such Common Shares pursuant to Rule 144 under the Securities Act, promptly but in any event not later than is necessary in order to consummate the sale of such securities pursuant to Rule 144 under the Securities Act (subject to receipt of such documentation a reasonable period of time prior to such sale), remove the second sentence of the legend set forth above in connection with such Transfer.

          (d) In the event that any Common Shares are transferable without volume or manner of sale restrictions pursuant to Rule 144 under the Securities Act and the terms of this Article 2 no longer restrict the Transfer of such Common Shares by the holder thereof, the Company shall promptly upon request remove the legends set forth above from the certificates representing such Common Shares.

          (e) Upon the termination of the restrictions set forth in Section 2.1, the Company shall promptly, upon request, deliver a replacement certificate not containing the second sentence of the legend set forth above.

ARTICLE 3
CERTAIN COVENANTS

     Section 3.1 Right to Maintain. During the Right to Maintain Period:

          (a) The Company shall provide the Investor the opportunity to purchase in any Offering up to its Pro Rata Share; provided, however, in no event shall the Investor be

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entitled to purchase an amount of Equity Securities in any such Offering that would cause Section 3.2 to be violated.

          (b) No later than fifteen (15) Business Days prior to the anticipated consummation of an Offering, the Company shall send a written notice (the “Offering Notice”) to the Investor, indicating the material terms and conditions of the proposed Offering, including, without limitation, (i) the number and type of Equity Securities expected to be offered or sold and the material terms of such Equity Securities, (ii) the expected price at which it proposes to offer or sell such Equity Securities, or the expected formula for determining such price, (iii) the expected timing of the Offering, and (iv) the name, telephone and facsimile number or e-mail address of the Person at the Company to whom the Investor should deliver a Response Notice (as defined below). If, prior to the consummation of the Offering, the terms and conditions of the proposed Offering change, with the result that the price will be less than the minimum price set forth in the Offering Notice or the other principal terms and conditions will be materially more favorable to potential subscribers in the Offering than those set forth in the Offering Notice, it will be necessary for a separate Offering Notice to be furnished, and the terms and provisions of this Section 3.1 separately complied with, in order to consummate the Offering pursuant to this Section 3.1.

          (c) The Investor shall have the right, by providing written notice to the Company no later than five (5) Business Days prior to the anticipated consummation of an Offering and indicating the name, telephone number, facsimile number or e-mail address of the Person or Persons that the underwriter(s) of the Offering should call to coordinate with respect to any sales to the Investor, to either (i) purchase Equity Securities up to its Pro Rata Share in the Offering upon the terms and conditions specified in the Offering Notice and upon the same terms and conditions applicable to all other participants in such proposed Offering, or (ii) waive its right to so purchase Equity Securities up to its Pro Rata Share in the Offering (in either case, a “Response Notice”). If the Investor or a Permitted Transferee shall fail to provide the Company with a Response Notice no later than five (5) Business Days prior to the date of the expected Offering as set forth in the Offering Notice, then the Investor shall not be entitled to purchase Equity Securities in the Offering. In any event, it shall be a condition to the Investor’s or a Permitted Transferee’s opportunity to purchase Equity Securities in an Offering that it comply with the reasonable requests of the underwriter(s) necessary for it to purchase shares in the Offering (e.g., establishing an account with an underwriter in the Offering). The election by the Investor not to exercise its rights to purchase up to its Pro Rata Share in, or failure to deliver a Response Notice with respect to, any Offering shall not affect its rights as to future Offerings pursuant to this Section 3.1. In the event that the Company has not sold the Equity Securities within sixty (60) calendar days after the date of the expected Offering as set forth in the Offering Notice, then the Company shall not thereafter issue or sell the Equity Securities without again first complying with the provisions of this Section 3.1 and offering the Investor the right to purchase its Pro Rata Share thereof.

          (d) For the avoidance of doubt, under no circumstances shall any pledgee of any Common Stock or any Transferee from such pledgee be deemed an Investor for purposes of this Section 3.1, and no such pledgee or Transferee shall have any rights under this Section 3.1.

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     Section 3.2 Standstill.

          (a) For a period of six (6) years from the Closing (the “Standstill Period”), the Investor shall not, and the Investor shall ensure that none of its Affiliates shall, nor shall any of the foregoing Persons act in concert with any other Person to, directly or indirectly, without the prior consent of a majority of the At-Large Directors who are Independent Directors:

               (i) acquire or agree to acquire (whether by purchase, tender or exchange offer, through acquisition of control of another Person, by joining a 13D Group, through the use of a derivative instrument or voting agreement, or otherwise), Beneficial Ownership of any Equity Securities, or any Economic Right or Voting Right to or regarding any Equity Securities, or authorize or make a tender offer, exchange offer or other offer or proposal, whether oral or written, to acquire Equity Securities, in each case, if the effect of such acquisition would be that the Common Stock Beneficially Owned in the aggregate by the Investor and its Affiliates (including, without limitation, any 13D Group of which any Investor or any Affiliate thereof is a member), or with respect to which the Investor, its Affiliates or any such 13D Group would have Economic Rights or Voting Rights, would exceed the Standstill Limit (it being understood that in the event that there shall be more than one (1) Investor, all shares Beneficially Owned and all Economic Rights and Voting Rights held by all Investors and all other Persons that are participants in any 13D Group of which any Investor is a member shall be aggregated, and deemed Beneficially Owned and held by each Investor, for purposes of this Section 3.2(a)(i));

               (ii) (A) make or in any way participate in any “solicitation” of “proxies” (as such terms are used in the rules and regulations of the SEC) with respect to any Voting Stock, or (B) seek to advise or influence any Person with respect to the voting of any Voting Stock (other than (x) the Investor or any Affiliate or (y) in accordance with and consistent with the recommendation of the Board);

               (iii) deposit any Voting Stock or Series B Shares in a voting trust or, except as otherwise provided or contemplated herein, subject any Voting Stock or Series B Shares to any arrangement or agreement with any Person (other than between the Investor and any of its First Tier Affiliates) with respect to the voting of such Voting Stock or Series B Shares;

               (iv) join a 13D Group (other than a group comprising solely of the Investor and its Permitted Transferees) or other group, or otherwise act in concert with any third Person for the purpose of acquiring, holding, voting or disposing of Voting Stock, Series B Shares or Convertible Securities;

               (v) effect or seek, offer or propose (whether publicly or otherwise) to effect any Change of Control or any acquisition of Equity Securities in excess of the Standstill Limit;

               (vi) otherwise act, alone or in concert with others, to effect or seek, offer or propose (whether publicly or otherwise) to effect control of the management, Board or policies of the Company; or

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               (vii) otherwise take any action that would or could reasonably be expected to compel the Company to make a public announcement (including any disclosure required to be made in any SEC filing under the rules and regulations of the SEC) regarding any of the matters set forth in this Section 3.2(a).

     Notwithstanding the foregoing, the restrictions contained in this Section 3.2(a) shall not (A) apply with respect to the election of the Series B Directors by Investor and its Permitted Transferees in accordance with the Certificate of Designation, (B) prevent, restrict, encumber or in any way limit the ability of any Series B Director to vote on matters, make non-public statements to officers, employees, agents, management or other Directors or to take any action or make any statement at any meeting of the Board or any committee or subcommittee thereof in his or her capacity as a Director, (C) apply to or restrict any non-public discussions or other non-public communications between or among directors, members, officers, employees or agents of the Investor or any First Tier Affiliate of the Investor, or (D) restrict any disclosure or statements required to be made by any Series B Director or the Investor under applicable law.

          (b) If during the Standstill Period the Investor is entitled (as a result of dilution due to future share issuances by the Company) to purchase shares of Common Stock (up to the Standstill Limit) in compliance with this Section 3.2, then unless the Board otherwise approves such purchases shall be made in full compliance with all applicable securities laws, but shall not be made by means of any tender offer.

          (c) The restrictions set forth in Section 3.2(a) shall terminate if, at any time during the Standstill Period, (i) the Company publicly announces its entry into a definitive agreement, the consummation of which would result in a Change of Control, and such agreement has not been approved by a majority of the Series B Directors, (ii) the Company shall have waived the terms of its Rights Agreement to permit any Person (other than the Investor or any 13D Group of which the Investor is a member) to effect a Change of Control or otherwise acquire more than fifteen percent (15%) of the outstanding Common Stock, and such transaction has not been approved by a majority of the Series B Directors, or (iii) any Person (other than the Investor or any Affiliate of the Investor or any 13D Group of which the Investor or any Affiliate of the Investor is a member) shall have commenced a bona fide public tender or exchange offer which if consummated would result in a Change of Control, unless the Board recommends against such tender or exchange offer within ten (10) Business Days after the commencement (as such term is defined in Rule 14d-2 under the Exchange Act) thereof and thereafter continues to oppose such tender or exchange offer. If (x) the restrictions set forth in Section 3.2(a) shall have terminated as provided in this Section 3.2(c), and (y) any definitive agreement described in clause (i) above, or transaction described in clause (ii) above, or tender or exchange offer described in clause (iii) above, as the case may be, shall have been terminated or abandoned prior to consummation thereof, and (z) any alternative offer or proposal by Investor in response to any such agreement, transaction, tender offer or exchange offer shall also have been abandoned or withdrawn prior to consummation thereof, then the restrictions set forth in Section 3.2(a) shall be reinstated.

          (d) If during the Standstill Period the Board elects to commence a process intended to lead to a proposal with respect to Change of Control of the Company (whether in response to a proposal from a third party or otherwise), the Company will notify the Investor of

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the Board’s election and will permit the Investor to participate in such process as a potential bidder, if the Investor so elects, on the same terms and conditions as third party participants. As a condition to the Investor’s participation in such process, the Board may require that the Investor agree in writing with the Company that if such process results in the Board’s approval of a Change of Control transaction with a Person other than the Investor that is a Superior Proposal as compared to any bona fide written proposal from the Investor, then the Investor will consent to such transaction, will raise no objection to the consummation thereof, and will tender shares of Equity Securities Beneficially Owned by it, as applicable, upon the consummation of such transaction. In the event that any such transaction requires the approval of the Company’s stockholders, the Investor agrees, if the matter is brought to a vote at a stockholder meeting, that the Investor will be present, in person or by proxy, as holders of Voting Stock, at all such meetings and be counted for determining the presence of a quorum at such meetings and will vote for the approval of any such transaction approved and recommended by the Board. So long as the Board continues to recommend such transaction, the Investor agrees to vote and to use reasonable efforts to cause its Affiliates, as the case may be, to vote all shares of Voting Stock Beneficially Owned by the Investor and its Affiliates in favor of such transaction and for the approval of the terms thereof and in opposition to any and all other proposals that are intended, or could reasonably be expected to delay, prevent, impair, interfere with, postpone or adversely affect the ability of the Company to consummate the proposals that are approved and recommended by the Board.

     Section 3.3 Other Share Acquisitions. Following the expiration of the Standstill Period, if the Investor and its Affiliates desire to acquire Beneficial Ownership of Equity Securities that would cause the aggregate Beneficial Ownership of the Investor and its Affiliates to exceed (a) seventy percent (70%) of the number of shares of Common Stock outstanding , if prior to such proposed acquisition the Beneficial Ownership of the Investor and its Affiliates is at least forty percent (40%) of the number of shares of Common Stock outstanding, or (b) fifty percent (50%) of the number of shares of Common Stock outstanding , if prior to such proposed acquisition the Beneficial Ownership of the Investor and its Affiliates is less than forty percent (40%) of the number of shares of Common Stock outstanding, such acquisition may be made only pursuant to a tender offer, exchange offer, merger or other business combination involving the offer to acquire 100% of the Common Stock not owned by the Investor and its Affiliates which in the case of any such transaction to be effected by means of a tender or exchange offer, includes a commitment by the Investor or such Affiliate to promptly consummate a merger (which may be a short-form merger) to acquire any remaining shares of Common Stock at the same price.

     Section 3.4 Section 203 of the DGCL. The Board, prior to the execution of the Share Exchange Agreement, has taken all necessary action to ensure that the transactions contemplated by the Share Exchange Agreement and the consummation of any of the transactions contemplated thereby (including the execution, delivery and performance of this Agreement) will be deemed to be exceptions to the provisions of Section 203 of the Delaware General Corporation Law (the “DGCL”), including the approval of any transaction contemplated thereby that results in any “affiliate” or “associate” (as each such term is defined in Section 203 of the DGCL) of the Investor becoming an “interested stockholder” (as defined in Section 203 of the DGCL) by virtue of the Investor or its “affiliates” or “associates” owning any Common Stock acquired pursuant to the Share Exchange Agreement or after the Closing pursuant to Section 3.1

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of this Agreement. Accordingly, the ownership by the Investor, its “affiliates” and its “associates” of Common Stock acquired pursuant to the Share Exchange Agreement or after the Closing pursuant to Section 3.1 of this Agreement will not result in the provisions of Section 203 of the DGCL applicable to a “business combination” (as defined in Section 203 of the DGCL) to apply between such persons (or their “affiliates” or “associates”) and the Company.

     Section 3.5 Rights Agreement. The Board, prior to the execution of the Share Exchange Agreement, has taken all necessary action to render the Rights Agreement inapplicable to the transactions contemplated by the Share Exchange Agreement and the consummation of any of the transactions contemplated thereby (including the execution, delivery and performance of this Agreement)..

ARTICLE 4
REGISTRATION RIGHTS

     Section 4.1 Demand Registrations.

          (a) Requests for Registration. After the expiration of the Lock-up Period and subject to the terms, conditions and limitations of this Article 4, the holders of twenty-five percent (25%) or more of the Investor Registrable Securities then outstanding may request that the Company effect a registration for a Public Offering in the United States of all or any portion of the Investor Registrable Securities; provided that the Investor Registrable Securities to be included in such registration shall (i) have a market value on the date such request for registration is received of at least $25 million based on the closing price of the Common Stock on the trading day immediately preceding the day on which such request is delivered, or (ii) represent at least six percent (6%) of the total shares of Common Stock then outstanding, or (iii) represent all Investor Registrable Securities then outstanding. All registrations requested as described in and meeting the requirements of this Section 4.1 are referred to herein as “Demand Registrations.” Each request for a Demand Registration shall specify the approximate number of Registrable Securities requested to be registered. Subject to Section 4.1(c) below, any such Demand Registration may include registration of shares on a “shelf” Registration Statement pursuant to Rule 415 under the Securities Act. Promptly after receipt of any such request pursuant to this Section 4.1, the Company shall give written notice of such requested registration to all other holders of Registrable Securities and, subject to the terms of this Agreement, shall include in such registration all Registrable Securities with respect to which the Company has received written requests indicating the holder of such Registrable Securities and the number of Registrable Securities that such holder elects to include in such registration within twenty (20) days after the receipt of the Company’s notice.

          (b) Priority on Demand Registrations. If a Demand Registration is an Underwritten Offering and the managing underwriters, which shall be one (1) or more nationally recognized investment banks selected by the Company and reasonably acceptable to the holders of a majority of the Investor Registrable Securities to be included in such Demand Registration, advise the Company in writing that they have determined in good faith that the number of Registrable Securities and, if permitted hereunder, other securities requested to be included in

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such offering exceeds the number of Registrable Securities and other securities, if any, which can be sold therein without adversely affecting the marketability of the offering or the trading price of the Common Stock, the Company shall include in such registration (i) first, the quantity of Investor Registrable Securities requested to be included in such Demand Registration, pro rata among the respective holders thereof on the basis of the number of Investor Registrable Securities requested to be included in such registration by each such holder, (ii) second, securities to be sold by the Company for its own account, to the extent that in the opinion of such underwriters such securities can be sold without adversely affecting the marketability of the offering or the trading price of the Common Stock, (iii) third, other Registrable Securities requested to be included in such registration, which in the opinion of such underwriters can be sold without adversely affecting the marketability of the offering or the trading price of the Common Stock, pro rata among the respective holders thereof on the basis of the number of shares requested to be included in such registration, and (iv) fourth, other securities requested to be included in such registration, which in the opinion of such underwriters can be sold without adversely affecting the marketability of the offering or the trading price of the Common Stock, pro rata among the respective holders thereof on the basis of the number of shares requested to be included in such registration by each such holder. Any Persons other than holders of Registrable Securities who participate in Demand Registrations which are not at the Company’s or its Subsidiaries’ expense must pay their share of the Registration Expenses.

          (c) Restrictions on Demand Registrations. Notwithstanding anything to the contrary in this Section 4.1:

               (i) The Company shall not be obligated (A) to effect more than two (2) Demand Registrations in any period of fifteen (15) months, (B) any Demand Registration within one hundred thirty-five (135) days after the effective date of a previous Demand Registration or a previous registration in which the holders of Registrable Securities were given piggyback rights pursuant to Section 4.2 hereof (in which the number of Investor Registrable Securities requested to be included in such Piggyback Registration were not reduced by more than 50% pursuant to Section 4.2(b) or (c) hereof) or (C) to have more than one (1) “shelf” Registration Statement pursuant to Rule 415 effective under the Securities Act at any time (other than shelf registrations filed pursuant to Rule 429 under the Securities Act).

               (ii) A Demand Registration will not be deemed to have been effected for purposes of this Section 4.1 unless the Registration Statement relating thereto (A) has become effective under the Securities Act, (B) has remained effective for a period of at least sixty (60) days (or such shorter period in which all Registrable Securities of the holders included in such registration have actually been sold thereunder), and (C) at least seventy-five percent (75%) of the Registrable Securities requested to be included in such Demand Registration by the holders of the Investor Registrable Securities are so included.

               (iii) If the majority of the At-Large Directors determines in good faith that the filing or effectiveness of a Registration Statement in connection with any requested Demand Registration (A) would be reasonably likely to interfere with any pending or contemplated acquisition, divestiture, financing, registered primary offering or other transaction involving the Company or (B) would require disclosure of facts or circumstances and which the Company would not otherwise be required to then disclose, which disclosure would, in the good

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faith judgment of the Board, be disadvantageous to the Company, or (C) would otherwise be materially detrimental to the Company, then the Company may delay (or if necessary or advisable withdraw) the filing, or delay the effectiveness, of such registration (or offers and sales of securities registered under a shelf Demand Registration) for a period of up to one hundred twenty (120) days so long as the basis for such delay continues (it being agreed that the Company may not apply the provisions of this clause (iii) to delay requested registrations for an aggregate period of more than one hundred eighty (180) days in any twelve (12)-month period).

               (iv) In order to delay the filing of a Registration Statement pursuant to Section 4.1(c)(iii), the Company shall promptly (but in any event within ten (10) calendar days) upon determining to make such deferral, deliver to each holder requesting such Demand Registration a certificate of an authorized officer stating that the Company is delaying such filing pursuant to Section 4.1(c)(iii) and an approximation of the anticipated delay. Within twenty (20) calendar days after receiving such certificate, the holders of a majority of the Investor Registrable Securities participating in such offering may withdraw their request for a Demand Registration by giving written notice to the Company, and if withdrawn, the request for Demand Registration shall be deemed not to have been made for all purposes of this Agreement. In the event the Company delays or suspends the sale of securities registered under a shelf Demand Registration pursuant to Section 4.1(c)(iii), then the required period of effectiveness set forth in Section 4.1(c)(ii)(B) shall be extended by the number of days of such delay or suspension that occurred during the effectiveness of such Registration Statement.

          (d) Demand Withdrawal. Any holder of Registrable Securities that has requested its Registrable Securities be included in a Demand Registration pursuant to Section 4.1(a) may withdraw all or any portion of its Registrable Securities included in a Demand Registration from a Demand Registration at any time prior to the effectiveness of the applicable Registration Statement. Upon receipt of a notice to such effect from holders of Registrable Securities with respect to all of the Registrable Securities included in such Demand Registration, the Company shall cease all efforts to secure effectiveness of the applicable Demand Registration Statement and such registration nonetheless shall be deemed a Demand Registration for purposes of Section 4.1(c) unless the withdrawal is made (i) following the occurrence of a Material Adverse Change or (ii) after a delay of more than ninety (90) days in the effectiveness of the registration statement from the date on which the Demand Registration was requested.

          (e) Underwritings. In the case of any Demand Registration that is an Underwritten Registration, the managing underwriters shall be selected by the Company and shall be reasonably acceptable to the Investor. No holder of Registrable Securities may participate or have any of such holder’s Registrable Securities included in such Underwritten Registration unless such holder accepts the terms of such underwriting as approved by the Company and enters into such underwriting, custody, indemnity and other agreements, each in customary form and containing such representations, warranties and other provisions as are customarily made by selling stockholders in connection with similar Underwritten Registrations, and completes and delivers such questionnaires and other documents as reasonably requested by the managing underwriters of such Underwritten Offering.

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     Section 4.2 Piggyback Registrations.

          (a) Right to Piggyback. Following the expiration of the Lock-up Period, whenever the Company proposes to register any of its securities (other than pursuant to a Demand Registration or any registration effected pursuant to Form S-4, S-8 or any successor forms and other than a registration relating solely to the sale of securities to participants in a Company plan, a registration relating to a reorganization of the Company or other transaction under Rule 145 of the Securities Act, or a registration on any form that does not include substantially the same information as would be required to be included in a Registration Statement covering the sale of Registrable Securities) and the registration form to be used may be used for the registration of Registrable Securities (a “Piggyback Registration”), the Company shall give prompt written notice (but in no event less than twenty (20) calendar days prior to the proposed filing of such Registration Statement) to all holders of Registrable Securities of its intention to effect such a registration, setting forth (to the extent then known) the principal terms and conditions of such issuance, including the anticipated proposed offering price (or range of offering prices), the anticipated date of the filing of the Registration Statement and the number and type of securities to be registered, and shall, subject to the other provisions of this Section 4.2, include in such registration all Registrable Securities with respect to which the Company has received written requests for inclusion therein within ten (10) calendar days after the receipt of the Company’s notice. No registration of Registrable Securities effected under this Section 4.2 will relieve the Company of any of its obligations to effect registrations of Investor Registrable Securities pursuant to Section 4.1 hereof. The election by any holder of Registrable Securities not to exercise its rights to have any or all of its Registrable Securities registered pursuant to this Section 4.2 shall not affect its rights as to future issuances.

          (b) Priority on Primary Registrations. If a Piggyback Registration is a primary Underwritten Registration on behalf of the Company, and the managing underwriters advise the Company in writing that they have determined in good faith that the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without adversely affecting the marketability of the offering, the Company shall include, subject to Section 4.2(d), in such registration (i) first, the securities the Company proposes to sell, (ii) second, Registrable Securities requested to be included in such registration, pro rata among the respective holders thereof on the basis of the number of shares requested to be included in such registration by each such holder and (iii) third, at the discretion of the Company, other securities of the Company requested to be included in such registration, pro rata among the respective holders thereof on the basis of the number of shares requested to be included in such registration by each such holder.

          (c) Priority on Secondary Registrations. If a Piggyback Registration is an secondary Underwritten Registration on behalf of holders of the Company’s securities who have the contractual right to initiate such a registration (including pursuant to a Demand Registration), and the managing underwriters advise the Company in writing that they have determined in good faith that the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without adversely affecting the marketability of the offering, the Company shall include, subject to the other provisions of this Section 4.2, in such registration, (i) first, the securities requested to be included therein by the holders initially requesting such registration, pro rata among the respective holders thereof on the basis of the

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number of shares requested to be included in such registration by each such holder, and (ii) second, any Registrable Securities requested (including under this Section 4.2) to be included therein, pro rata among the respective holders thereof on the basis of the number of shares owned by each such holder.

          (d) Withdrawal. Any holder of Registrable Securities shall have the right to withdraw all or part of its request for inclusion of its Registrable Securities in a Piggyback Registration at any time prior to later of (1) the filing of the applicable Registration Statement, or (2) five (5) Business Days prior to the effectiveness of the applicable Registration Statement, in each case by giving written notice to the Company of its request to withdraw. The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 4.2 prior to the effectiveness of the applicable Registration Statement whether or not any holder of Registrable Securities has elected to include securities in such Registration Statement.

          (e) Certain Conditions. If any Piggyback Registration is an Underwritten Registration, no holder of Registrable Securities may participate or have any of such holder’s Registrable Securities included in such Underwritten Registration unless such holder accepts the terms of such underwriting as approved by the Company and enters into such underwriting, custody, indemnity and other agreements, each in customary form and containing such representations, warranties and other provisions as are customarily entered into by selling stockholders in connection with similar Underwritten Registrations, and completes and delivers such questionnaires and other documents as reasonably requested by the managing underwriters of such Underwritten Offering. No holders of Registrable Securities shall have any right to participate in or approve the selection of the underwriters for an offering described in this Section 4.2.

     Section 4.3 Holdback Agreements.

          (a) Holders of Registrable Securities. Notwithstanding anything contained herein to the contrary and to the extent not inconsistent with applicable law, each holder of Registrable Securities shall not effect any public sale or distribution (including sales pursuant to Rule 144 under the Securities Act, but excluding, to the extent permitted by the underwriter managing the registered public offering, sales effected to pay the exercise price of a stock option pursuant to any broker-assisted exercise or “cashless” exercise of such stock option) of Equity Securities, enter into a transaction which would have the same effect, or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any economic consequences of ownership of such securities, whether any such aforementioned transaction is to be settled by delivery of such securities or other securities, in cash or otherwise, or publicly disclose the intention to make any such offer, sale, pledge or disposition, or to enter into any such transaction, swap, hedge or other arrangement, in each case during the ten (10) days prior to and the ninety (90) days after the effective time of any (x) underwritten Demand Registration (except as part of such Underwritten Registration) or (y) underwritten Piggyback Registration in which any of such holder’s Registrable Securities are included (except as part of such Underwritten Registration) (a “Stand-off Period”), except as otherwise agreed to by the underwriter managing the Underwritten Registration. If (i) the Company issues an earnings release or other material news or a material event relating to the Company and its Subsidiaries during the last seventeen (17) days of the Stand-off Period or (ii) prior to the expiration of the Stand-off Period, the Company

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announces that it will release earnings results during the sixteen (16)-day period beginning upon the expiration of the Stand-off Period, then to the extent necessary for a managing or co-managing underwriter of a registered offering required hereunder to comply with NASD Rule 2711(f)(4), the Stand-off Period shall be extended until eighteen (18) days after the earnings release or the occurrence of the material news or event, as the case may be.

          (b) The Company. The Company shall agree to such limitation on its public sale or distribution of its Equity Securities as may be reasonably requested by the managing underwriters in connection with any Underwritten Registration; provided, that such limitations shall not continue beyond the one hundred thirty-fifth (135^th) day after the effective date of the Registration Statement in question.

     Section 4.4 Registration Procedures.

          (a) Whenever the holders of Investor Registrable Securities have requested that any Investor Registrable Securities be registered pursuant to Section 4.1, the Company shall use its reasonable best efforts to effect the registration and the sale of such Investor Registrable Securities in accordance with the intended method of disposition thereof, and pursuant thereto the Company shall as promptly as reasonably practicable (unless waived by the holders of a majority of Investor Registrable Securities participating in such):

               (i) prepare the required Registration Statement including all exhibits and financial statements required under the Securities Act to be filed therewith, and before filing a Registration Statement, prospectus or any issuer free writing prospectus, or any amendments or supplements thereto, (x) furnish to the underwriters, if any, and to the selling holders, copies of all documents prepared to be filed, and to consider in good faith and discuss with such underwriters, selling holders and counsel, any comments thereon by such underwriters, selling holders and counsel and (y) not file any Registration Statement, prospectus or any amendments or supplements thereto to which the holders of fifty percent (50%) of the Investor Registrable Securities or the underwriters, if any, shall reasonably object (other any amendments or supplements that, in the good faith judgment of the Company, are required to correct any misstatement or omission of a material fact, or make any statement in any such Registration Statement or prospectus not misleading, or are otherwise required to comply with applicable law, rules or regulations);

               (ii) file with the SEC, a Registration Statement with respect to such Registrable Securities and use its reasonable best efforts to cause such Registration Statement to become effective and to remain effective until the earlier of eighteen (18) months (in the case of a shelf Demand Registration Statement) or sixty (60) days (in the case of any other Demand Registration Statement) from the effective time of such Registration Statement or such earlier time as the Registrable Securities covered by such Registration Statement have been sold in accordance with the intended method of distribution therefore; and

               (iii) prepare and file with the SEC such supplements and amendments to such Registration Statement as may be required to keep such Registration Statement effective for the period of time provided in Section 4.4(a)(ii) above.

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          (b) With respect to each Registration Statement that includes Registrable Securities (unless waived by the holders of a majority of Registrable Securities participating in such), the Company shall:

               (i) notify the selling holders and the managing underwriters, if any, and (if requested) confirm such advice in writing, as soon as practicable after notice thereof is received by the Company (a) when the Registration Statement or any amendment thereto has been filed or becomes effective or the prospectus or any amendment or supplement to the prospectus has been filed, (b) of any written comments or requests by the SEC or any other federal, state or regulatory authority for amendments or supplements to the Registration Statement (or the related prospectus), (c) of the issuance by the SEC of any stop order or cease trade order suspending the effectiveness of the Registration Statement or any order preventing or suspending the use of any preliminary prospectus or prospectus, or the initiation or threatening of any proceedings for such purposes, (c) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Registrable Securities for offering or sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose, and (d) if, at any time, the representations and warranties of the Company in any applicable underwriting agreement cease to be true and correct in all material respects;

               (ii) furnish to each selling holder and each managing underwriter, without charge, one (1) copy of the Registration Statement and any post-effective amendment or supplement thereto, including without limitation financial statements and schedules, all documents incorporated therein by reference and all exhibits (including without limitation those incorporated by reference);

               (iii) deliver to each selling holder and each underwriter, if any, without charge, as many copies of the applicable prospectus (including each preliminary prospectus) and any amendment or supplement thereto, and such other documents as such selling holder or underwriter may reasonably request in order to facilitate the disposition of the Registrable Securities by such selling holder or underwriter, it being understood that the Company consents (subject to the provisions of Section 4.4(b)(v) below) to the use of such prospectus or any amendment or supplement thereto by such selling holder and the underwriters, if any, in connection with the offering and sale of the Registrable Securities covered by such prospectus or any amendment or supplement thereto;

               (iv) use its reasonable best efforts to register or qualify such Registrable Securities under such other securities or blue sky laws of such jurisdictions as the managing underwriter of any Underwritten Registration reasonably requests; provided, that the Company shall not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subsection, (ii) subject itself to taxation in any such jurisdiction or (iii) consent to general service of process in any such jurisdiction;

               (v) promptly notify the selling holders and the managing underwriters, if any, at any time during the period of effectiveness set forth in Section 4.4(a) above, when the Company becomes aware of the happening of any event as a result of which the prospectus included in such Registration Statement (as then in effect) contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein when such

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prospectus was delivered not misleading in light of the circumstances then existing or, if for any other reason it shall be necessary during such time period to amend or supplement the prospectus in order to comply with the Securities Act, as promptly as practicable thereafter, prepare and file with the SEC, a supplement or amendment to such prospectus, which will correct such statement or omission or effect such compliance. Each holder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in this Section 4.4(b)(v) such holder will forthwith discontinue disposition of Registrable Securities pursuant to such Registration Statement until such holder’s receipt of the copies of the supplemented or amended prospectus contemplated by this Section 4.4(b)(v) or until it is advised in writing by the Company that the use of the prospectus may be resumed, and has received copies of any additional or supplemental filings which are incorporated by reference in the prospectus and, if so directed by the Company, such holder will deliver to the Company (at the Company’s expense) all copies, other than permanent file copies then in such holder’s possession, of the prospectus, covering such Registrable Securities current at the time of receipt of such notice;

               (vi) use its reasonable best efforts to prevent, or obtain the withdrawal of, any stop order or other order or notice preventing or suspending the use of any preliminary or final prospectus or any issuer free writing prospectus;

               (vii) promptly incorporate in a prospectus supplement or post-effective amendment such information as the managing underwriter or underwriters reasonably determines should be included therein relating to the plan of distribution with respect to such Registrable Securities; and make all required filings of such prospectus supplement or post-effective amendment as soon as reasonably practicable after being notified of the matters to be incorporated in such prospectus supplement or post-effective amendment;

               (viii) cause all Registrable Securities covered by the Registration Statement to be listed on each securities exchange or automated quotation system on which similar securities issued by the Company are then listed or quoted;

               (ix) provide a transfer agent and registrar and, if applicable, a CUSIP number for all such Registrable Securities not later than the effective date of the first Registration Statement relating to Registrable Securities or securities of any class of the Company;

               (x) cooperate with the selling holders and the managing underwriter or underwriters, if any, to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any restrictive legends; and enable such Registrable Securities to be in such denominations and registered in such names as the managing underwriters may request; and

               (xi) if the Registration Statement is an Underwritten Registration, enter into an underwriting agreement with the underwriters in customary form and containing such representations, warranties and other provisions as are customarily made by issuers in connection with similar Underwritten Registrations.

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          (c) It shall be a condition precedent to the obligations of the Company to take any action pursuant to Section 4.1 or 4.2 that each seller of Registrable Securities as to which any registration is being effected shall furnish to the Company such information regarding such seller, the Registrable Securities held by such seller, and the intended method of disposition of such securities as shall be required to timely effect the registration of such seller’s Registrable Securities.

          (d) If, at any time at a shelf registration under Rule 415 under the Securities Act and under which Investor Registrable Securities have been registered is in effect, the Company shall furnish to the Investor a certificate of an authorized officer stating that the continued use of such shelf Registration Statement would require the Company to make an Adverse Disclosure, then the Company may suspend the use by the Investor of such Registration Statement for period of up to ninety (90) days (a “Shelf Suspension”); provided however, that the Company shall not be permitted to exercise a Shelf Suspension more than twice in any twelve (12)-month period for each Registration Statement. In the case of a Shelf Suspension, the Investor agrees to suspend use of the applicable prospectus. The Company shall promptly notify the Investor of the termination of any Shelf Suspension, and shall promptly amend or supplement the prospectus, if necessary, so it does not contain any untrue statement or omission and furnish to the Investor such numbers of copies of the amended or supplemented prospectus as it may reasonably request. The Company agrees, if necessary, to supplement or amend the Registration Statement, if required by the Securities Act or the rules or regulations promulgated thereunder. In the event the Company exercises a Shelf Suspension, then the required period of effectiveness set forth in Section 4.1(c)(ii)(B) shall be extended by the number of days of such Shelf Suspension that occurred during the effectiveness of such Registration Statement. As used herein, “Adverse Disclosure” means public disclosure of material non-public information that, in the good faith judgment of the At-Large Directors, (i) would be required to be made in any report or Registration Statement filed with the SEC by the Company so that such report or Registration Statement would not be materially misleading; (ii) would not be required to be made at such time but for the filing, effectiveness or continued use of such report or Registration Statement, and (iii) the Company has a bona fide business purpose for not disclosing publicly.

          (e) No holder of Investor Registrable Securities shall have any right to obtain or seek an injunction restraining or otherwise delaying any registration as a result of any controversy that might arise with respect to the interpretation or implementation of any provision of this Agreement.

     Section 4.5 Registration Expenses.

          (a) All expenses incident to the Company’s performance of or compliance with this Agreement, including all registration and filing fees, fees and expenses of compliance with securities or blue sky laws, printing expenses, messenger and delivery expenses, fees and disbursements of custodians, and fees and disbursements of counsel for the Company and all independent certified public accountants, underwriters (excluding discounts and commissions and taxes imposed with respect to Registrable Securities on the sale and transfer thereof) and other Persons retained by the Company (all such expenses being herein called “Registration Expenses”), shall be borne by the Company, and the Company shall pay its internal expenses (including all salaries and expenses of its officers and employees performing legal or accounting

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duties), the expense of any annual audit or quarterly review, the expense of any liability insurance and the expenses and fees for listing the securities to be registered on the Exchange.

          (b) All other Registration Expenses to the extent not expressly reimbursed in this Section 4.5, shall be borne by all of the sellers of securities included in such registration in proportion to the aggregate selling price of the securities to be so registered (it being understood that all fees and expenses (including with respect to any fees and expenses of counsel and other advisors) of any holder of Registrable Securities shall be borne by such holder).

     Section 4.6 Indemnification.

          (a) The Company agrees to indemnify and hold harmless, to the full extent permitted by law, each holder of Registrable Securities, such holder’s officers, directors, stockholders, members, partners, agents, advisors, representatives and employees, and each Person who controls such holder (within the meaning of the Securities Act) against all losses, claims, damages, liabilities, judgments, costs (including reasonable and documented costs of investigation) and expenses (including reasonable attorney’s fees) arising out of or based upon, any untrue or alleged untrue statement of a material fact contained in any Registration Statement, prospectus or preliminary prospectus with respect to such Registrable Securities or any amendment thereof or supplement thereto, or any document incorporated by reference therein or any omission in any application or other document or communication executed by or on behalf of the Company filed in any jurisdiction in order to qualify any securities covered by such Registration Statement under the “blue sky” or securities laws thereof, or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, provided, that the Company shall not be obligated to indemnify any holder of Registrable Securities (or any officer, director or controlling Person of such holder) to the extent that any such loss, claim, damage, liability, judgment, cost or expense arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in reliance on and in conformity with written information furnished to the Company by such holder expressly for use therein.

          (b) In connection with any Registration Statement in which a holder of Registrable Securities is participating, each such holder shall furnish to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with any such Registration Statement or prospectus and, to the extent permitted by law, shall indemnify the Company, its Directors and officers and each Person who controls the Company (within the meaning of the Securities Act), any underwriter and each other holder of Registrable Securities participating in the offering contemplated by such Registration Statement against any losses, claims, damages, liabilities, judgments, costs (including reasonable and documented costs of investigation) and expenses (including reasonable attorney’s fees) arising out of or based upon any untrue or alleged untrue statement of material fact contained in the Registration Statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, to the extent (but only to the extent) that such untrue statement or omission is made in reliance on and in conformity with any written information furnished to the Company by such holder or its agents expressly for use therein; provided that such obligation to indemnify shall be individual, not joint and several, for each holder and shall

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be limited to the net amount of proceeds received by such holder from the sale of Registrable Securities pursuant to such Registration Statement. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such holder or any indemnified party and shall survive the transfer of such Registrable Securities by such holder.

          (c) Any Person entitled to indemnification hereunder shall (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification or the commencement of any action or proceeding for which the indemnified party intends to claim indemnification or contribution pursuant to this Agreement and (ii) permit such indemnifying party to participate in such claim, action or proceeding and, to the extent it may wish to assume the defense at its own expense of such claim with counsel reasonably satisfactory to the indemnified party, permit such indemnifying party to assume such defense; provided, that any Person entitled to indemnification hereunder shall have the right to select and employ separate counsel and to participate in the defense of such claim, which fees and expenses of such separate counsel shall be at the expense of the indemnified party unless (A) the indemnifying party has agreed in writing to pay such fees or expenses, (B) the indemnifying party shall have elected not to, or shall have failed to assume the defense of such claim within a reasonable time after receipt of notice of such claim from the indemnified party and employ counsel reasonably satisfactory to such indemnified party, (C) there may be legal defenses available to it or other indemnified parties that are different from or in addition to those available to the indemnifying party, or (D) the indemnified shall have been advised by counsel that a conflict of interest may exist between such Person and the indemnifying party with respect to such claims (in which case, if the indemnified party notifies the indemnifying party in writing that such indemnified party elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such Person). In no event shall an indemnifying party be responsible, in any one action or separate but similar actions arising out of the same general allegations, for the fees and expenses of more than one separate counsel (plus one local counsel, if reasonably required) for all indemnified parties. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, suit, proceeding or investigation shall not relieve such indemnifying party of any liability to the indemnified party under this Section 4.6 except to the extent that the indemnifying party is actually prejudiced thereby. The omission of an indemnified party to deliver written notice to the indemnifying party will not relieve such indemnifying party of any liability that it may have to any indemnified party otherwise than under this Section 4.6.

          (d) If the indemnification provided for in this Section 4.6 from the indemnifying party is applicable by its terms but is unavailable to a party that would have been entitled to indemnification pursuant to the provisions of this Section 4.6 or insufficient in respect of any losses, claims, damages, liabilities, judgments, costs (including reasonable and documented costs of investigation) and expenses (including reasonable attorney’s fees) referred to herein, then the indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities, judgments, costs (including reasonable and documented costs of investigation) and expenses (including reasonable attorney’s fees) in such proportion as is appropriate to reflect the relative fault of the indemnifying party and indemnified parties in connection with the actions which resulted in such losses, claims, damages, liabilities,

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judgments, costs (including reasonable and documented costs of investigation) and expenses (including reasonable attorney’s fees), as well as other relevant equitable considerations. The relative fault of such indemnifying party and indemnified parties shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such indemnifying party or indemnified parties, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of losses, claims, damages, liabilities, judgments, costs (including reasonable and documented costs of investigation) and expenses (including reasonable attorney’s fees) referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding. The parties hereto agree that it would not be just or equitable if contribution pursuant to this Section 4.6(d) were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in this Section 4.6(d). No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. Notwithstanding the provisions of this Section 4.6(d), in connection with any Registration Statement filed by the Company, a selling holder of Registrable Securities shall not be required to contribute any amount in excess of the net amount of proceeds received by such holder from the sale of Registrable Securities giving rise to such contribution obligation.

          (e) No indemnifying party shall, without the prior written consent of each indemnified party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise, or judgment (A) includes an unconditional release of the indemnified party from all liability arising out of such action or claim without any payment or consideration provided or obligation incurred by any indemnified party and (B) does not include a statement as to or an admission of fault, culpability, or a failure to act, by or on behalf of any indemnified party. No indemnification shall be available under this Agreement in respect of any settlement of any action or claim effected by any indemnified party without the prior written consent of the indemnifying party, which shall not be unreasonably withheld or delayed.

          (f) The indemnification and contribution by any such party provided for under this Agreement shall be in addition to any other rights to indemnification or contribution which any indemnified party may have pursuant to law or contract and will remain in full force and effect regardless of any investigation made or omitted by or on behalf of the indemnified party or any officer, director, or controlling Person of such indemnified party and will survive the transfer of securities.

     Section 4.7 Relation to Article 2. Nothing contained in this Article 4 shall be deemed to affect any provision of Article 2 of this Agreement, and any sales made in Demand Registrations or Piggyback Registrations contemplated by this Article 4 may be made only in full compliance with all of the restrictions and limitations set forth in Article 2.

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ARTICLE 5

MISCELLANEOUS

     Section 5.1 Termination. This Agreement shall terminate, except for (a) this Article 5 and Section 4.6 (which shall survive such termination), (b) Section 1.5 (which shall survive until the second anniversary of the date on which this Agreement otherwise terminates as provided below), (c) Section 3.2 (which shall survive until the first anniversary of the date on which this Agreement otherwise terminates as provided below), and (d) Section 2.1 (which shall survive until the earlier of (A) the second anniversary of the date on which Investor and its Affiliates no longer hold shares of Common Stock representing in the aggregate eleven percent (11%) or more of the total outstanding shares of Common Stock or (B) such time as Investor and its Affiliates no longer hold shares of Common Stock representing, in the aggregate, five percent (5%) or more of the total outstanding shares of Common Stock), as follows: (i) at such time as Investor and its Affiliates no longer hold shares of Common Stock representing in the aggregate eleven percent (11%) or more of the total outstanding shares of Common Stock, and (ii) upon the written consent of the parties hereto in such number and manner required for amendments hereto as provided in Section 5.7. No termination under this Agreement will relieve any Person of liability for breach prior to such termination.

     Section 5.2 Expenses. Except as otherwise provided herein (and except as provided in the Share Exchange Agreement), all expenses incurred in connection with this Agreement and the transactions contemplated hereby, including any fees and disbursements of counsel, independent accountants and other advisors, shall be paid by the party incurring such expenses.

     Section 5.3 Successors and Assigns; Assignment. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, permitted assigns, heirs, executors and administrators of the parties hereto. Except as provided in Section 2.1, this Agreement may not be assigned by the Investor or a Permitted Transferee without the prior written consent of the Company. In the event of any such assignment as a result of which more than one (1) Person shall be an Investor hereunder, all references to “the Investor” shall be deemed to refer to all such Investors.

     Section 5.4 No Third Party Beneficiaries. This Agreement is not intended, and shall not be deemed, to confer any rights or remedies upon any Person other than the parties hereto or otherwise create any third-party beneficiary hereto.

     Section 5.5 Entire Agreement. This Agreement and the other agreements or documents referred to herein, constitutes the full and entire understanding and agreement among the parties with respect to the subject matter hereof and supersede any prior understandings, agreements or representations by or among the parties, written or oral, that may have related to the subject matter hereof in any way.

     Section 5.6 Severability. If any provision of this Agreement, or the application thereof, shall for any reason and to any extent be invalid or unenforceable, then the remainder of this Agreement and the application of such provision to other persons or circumstances shall be interpreted so as reasonably to effect the intent of the parties hereto.

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     Section 5.7 Amendment and Waiver. Any term or provision of this Agreement may be amended, and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only by a writing signed by the Company and the Investor (or, to the extent additional Persons have joined this Agreement as Investors, by the Investors holding a majority of the Common Shares owned by all such Investors). The waiver by a party of any breach hereof or default in the performance hereof shall not be deemed to constitute a waiver of any other default or any succeeding breach or default. The failure of any party to enforce any of the provisions hereof shall not be construed to be a waiver of the right of such party thereafter to enforce such provisions.

     Section 5.8 Notices. Except as otherwise provided herein, all notices required or permitted hereunder shall be in writing and shall be deemed effectively given and received: (a) upon personal hand delivery to the party to be notified; (b) when sent by confirmed facsimile if sent during normal business hours of the recipient, if not, then on the next Business Day; or (c) one (1) Business Day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent, with respect to the Company, the Investor and any Permitted Transferee, to their respective addresses specified in the Share Exchange Agreement (or at such other address as any such party may specify by like notice). The Investor will promptly provide the Company with written notice if at any time an Investor or other Permitted Transferee no longer satisfies the criteria of a Permitted Transferee.

     Section 5.9 Interpretation. The words “hereof”, “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. When reference is made in this Agreement to an Article or a Section, such reference shall be to an Article or Section of this Agreement, unless otherwise indicated. The table of contents, table of defined terms and headings contained in this Agreement are for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement. The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any party. Whenever the context may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural, and vice versa. All references to agreements shall mean such agreement as may be amended or otherwise modified from time to time. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.”

     Section 5.10 Governing law.

          (a) This Agreement shall be governed in all respects by the laws of the State of Delaware. Any disagreement, issue, dispute, claim, demand or controversy arising out of or relating to this Agreement (each, a “Dispute”) shall be brought in the Chancery Court of Delaware, so long as such court shall have subject matter jurisdiction over such Dispute, or if it does not have subject matter jurisdiction over such Dispute, the United States District Court or other state court in Delaware having jurisdiction of the Dispute. Each of the parties hereby irrevocably consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such Dispute and irrevocably waives, to the fullest extent permitted by law,

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any objection that it may now or hereafter have to the laying of the venue of any such Dispute in any such court and that any such Dispute which is brought in any such court has been brought in an inconvenient forum. Process in any such Dispute may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 5.8 shall be deemed effective service of process on such party.

          (b) TO THE FULLEST EXTENT PERMITTED BY LAW, EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH OF THE PARTIES HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 5.10(b).

     Section 5.11 Specific Performance; No Special Damages.

          (a) The parties hereto agree that the obligations imposed on them in this Agreement are special, unique and of an extraordinary character, and that, in the event of breach by any party, damages would not be an adequate remedy and each of the other parties shall be entitled to specific performance and injunctive and other equitable relief in addition to any other remedy to which it may be entitled, at law or in equity; and the parties hereto further agree to waive any requirement for the securing or posting of any bond in connection with the obtaining of any such injunctive or other equitable relief.

          (b) Each party agrees that there shall be no special, exemplary, punitive or multiple damages connected with or resulting from any breach of this Agreement, or actions undertaken in connection with or related hereto, including any such damages which are based upon breach of contract, tort, breach of warranty, strict liability, statute, operation of law or any other theory of recovery, except to the extent such damages are actually incurred by a party hereunder to a third party, and hereby waives any rights to claim such damages. For purposes of clarity, the foregoing does not exclude consequential, indirect or incidental damages. Notwithstanding anything to the contrary in the foregoing, no damages (including lost profits) based on potential appreciation of the value of the Common Stock or of hypothetical investment returns or of potential alternative investments shall be taken into account in determining the amount of damages.

     Section 5.12 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument.

[Remainder of Page Intentionally Left Blank.]

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

TRIDENT MICROSYSTEMS, INC.
By:	/s/ Sylvia Summers Couder
	Name:	Sylvia Summers Couder
	Title:	CEO Trident Microsystems, Inc.
NXP B.V.
By:	/s/ Guido Diereck
	Name:	Guido Diereck
	Title:	Authorized Signatory

EXHIBIT A

Defined Terms

     “ADTV” means, as of any trading day, the average daily reported trading volume for the Common Stock on all national securities exchanges for the twelve full calendar weeks immediately preceding such trading day.

     “Activist Investor” means, as of any date of determination, a Person that has, within the five year period immediately preceding such date of determination, (i) made or been a “participant” in any “solicitation” of “proxies” (as such terms are used in Regulations 14A or 14C under the Exchange Act) for an issuer’s equity securities in connection with a proposed Change of Control or a proposal for the election or replacement of directors not approved (at the time of the first such proposal) by the board of directors of such issuer, or (ii) commenced a “tender offer” (as such term is used in Regulation 14D under the Exchange Act) to acquire the equity securities of an issuer that was not approved (at the time of commencement) by the board of directors of such issuer in a Schedule 14D-9 filed under such Regulation 14D, or (iii) publicly indicated an intention or expectation to do any of the foregoing.

     “Affiliate” means, with respect to any Person, means any other Person that directly, or indirectly through one (1) or more intermediaries, controls, or is controlled by or under common control with such Person. For purposes of this definition, “control” (including the terms “controlling,” “controlled” and “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise; provided, that possession of ten percent (10%) of the voting securities of any Person shall be deemed to constitute “control” for purposes of this Agreement.

     “Beneficially Own” and “Beneficial Ownership” and similar terms have the meaning set forth in Rule 13d-3 under the Securities and Exchange Act of 1934, as amended.

     “Board” means the Board of Directors of the Company.

     “Business Day” means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by law to be closed in New York, New York.

     “Bylaws” means the Bylaws of the Company, as in effect on the Agreement Date and as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof and the terms of the Certificate of Incorporation.

     “Capital Stock” means any and all shares of capital stock of the Company, including without limitation, any and all shares of Common Stock and Preferred Stock.

     “Certificate of Designation” means the Certificate of Designation with respect to the Company’s Series B Preferred Stock, par value $0.001 per share, as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof and hereof.

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     “Certificate of Incorporation” means the Second Amended and Restated Certificate of Incorporation (including the Certificate of Designation) of the Company, as in effect on the Agreement Date and as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof and the terms of this Agreement.

     “Change of Control” means any of: (a) the purchase or other acquisition by any Person or group of Persons, directly or indirectly, in one transaction or a series of related transactions, of Common Stock that, immediately following consummation of the transaction(s), when combined with any other Common Stock Beneficially Owned by such Person or group, represent more than fifty percent (50%) of the Diluted Common Shares Outstanding; (b) the consummation of any tender offer or exchange offer by any Person or group that results in such Person or group Beneficially Owning, when combined with any other Common Stock Beneficially Owned by such Person or group, more than fifty percent (50%) of the Diluted Common Shares Outstanding immediately following the consummation of such tender or exchange offer; (c) the consummation of a merger, consolidation, amalgamation, joint venture, business combination or other similar transaction involving the Company pursuant to which the stockholders of the Company immediately preceding such transaction hold less than fifty percent (50%) of the voting equity interests in the surviving or resulting entity of such transaction; or (d) the purchase or other acquisition of a substantial portion of the assets of the Company by any Person or group of Persons.

     “Committee Qualification Requirements” shall mean that the Series B Director shall, in the good faith judgment of the Board, meet at all times during the Series B Director’s service on a particular committee: (i) all independence requirements applicable to companies listed for quotation on any Exchange on which the Common Stock is listed for members of the particular committee pursuant to Exchange listing requirements and applicable law, (ii) in the case of the Compensation Committee, be a “non-employee director” (within the meaning of Rule 16b-3) and an “outside director” (within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder), and (iii) in the case of the Audit Committee, satisfy the requirements of NASDAQ Marketplace Rule 5605(c) and any other requirements of any Exchange on which the Common Stock is listed for serving on the Audit Committee.

     “Company Competitor” means any Person listed on Exhibit B hereto, together with any Subsidiaries or controlled Affiliates of such Person. The Company shall be entitled to amend Exhibit B annually by adding or substituting Persons reasonably believed by the Company to be significant competitors of the Company and deleting Persons no longer reasonably believed to be significant competitors of the Company. The Company will consult in good faith with Investor regarding any proposed amendment of Exhibit B, but any such amendment shall be in the Company’s sole discretion and Investor shall have no right to approve or object to any such amendment.

     “Common Stock” means the Common Stock, par value $0.001 per share, of the Company and any securities issued in respect thereof, or in substitution therefor, in connection with any stock split, dividend or combination, or any reclassification, recapitalization, merger, consolidation, exchange or other similar reorganization.

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     “Confidentiality Agreement” means the confidentiality agreement, dated as of January 14, 2009 between the Company and the Investor.

     “Convertible Securities” means any outstanding securities which are convertible into, exchangeable for or otherwise exercisable to acquire Voting Stock of the Company, including convertible securities, warrants, rights or options to purchase Voting Stock.

     “Diluted Common Shares Outstanding” means the sum of (i) the number of outstanding shares of Common Stock plus (ii) the number of shares of Common Stock issuable upon the conversion, exercise, exchange or issuance of any other Equity Securities of the Company.

     “Director” means any member of the Board.

     “Economic Rights” means, with respect to a security, (i) the right to any pecuniary interest in the security, including, without limitation, the right to receive dividends and distributions, proceeds upon liquidation and receive the proceeds of disposition or conversion (if applicable) of the security, (ii) or the right or ability to realize any profit or loss based on changes in the trading price of the security, whether by means of any hedging, swap, option, short sale, borrowing, lending, put, call or other derivative transaction or agreement.

     “Eligible Transferee” means any Person other than an Ineligible Transferee.

     “Equity Securities” means (a) any Capital Stock of the Company (including, without limitation, Common Stock), (b) any warrants, options, or other rights to subscribe for or to acquire, directly or indirectly, Capital Stock of the Company, whether or not then exercisable or convertible, (c) any stock, notes, or other securities which are convertible into or exchangeable for, directly or indirectly, Capital Stock of the Company, whether or not then convertible or exchangeable, (d) any Capital Stock of the Company issued or issuable upon the exercise, conversion, or exchange of any of the securities referred to in clauses (a) through (c) above, and (e) any securities issued or issuable directly or indirectly with respect to the securities referred to in clauses (a) through (d) above by way of stock dividend or stock split or in connection with a combination of shares, recapitalization, reclassification, merger, consolidation, or other reorganization.

     “Exchange” means the stock exchange on which the Company’s securities are then traded, as the case may be. For the avoidance of doubt, The NASDAQ Stock Market, or any successor thereto, shall constitute an Exchange for purposes of this Agreement.

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

     “First Tier Affiliate” means any of (i) any Subsidiary of the Investor and (ii) the Persons listed in Exhibit C hereto.

     “Governmental Authority” means any: (A) nation, state, commonwealth, province, territory, county, municipality, district or other jurisdiction of any nature; (B) national, federal, state, local, municipal, foreign or other government; (C) governmental authority of any nature

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(including any governmental division, department, agency, commission, instrumentality, official, ministry, fund, foundation, center, organization, unit, body or Entity and any court or other tribunal); or (D) entity to whom a Governmental Authority has assigned or delegated any authority or oversight responsibilities.

     “Independent Director” means a Director who is independent of the Company under applicable law and the rules of the Exchange.

     “Ineligible Transferee” means a Strategic Investor or an Activist Investor.

     “Investor Maximum Ownership Percentage” shall initially mean sixty percent (60%). Thereafter, upon the disposition by the Investor or its Affiliates of any Common Stock or other Equity Securities to any Person other than a Permitted Transferee, the Investor Maximum Ownership Percentage shall be reduced to an amount (expressed as a percentage) equal to the lesser of (a) the Investor Maximum Ownership Percentage immediately prior to such disposition, and (b) a fraction, of which the numerator is the number of shares of Voting Stock Beneficially Owned by the Investor and its Affiliates immediately following such disposition and the denominator of which is the total number of shares of Voting Stock outstanding immediately following such disposition. The Investor Maximum Ownership Percentage shall not be adjusted other than following dispositions of Equity Securities by the Investor or its Affiliates to Persons other than the Investor and its Permitted Transferees; provided, that if (i) pursuant to Section 3.1 Investor is offered the opportunity to purchase Equity Securities in any Offering and does not elect to purchase its full Pro Rata Share in such Offering, and (ii) within one year after the closing of such Offering Investor has not purchased (in the manner provided in Section 3.2(b)) additional shares of Common Stock equal to the difference between Investor’s Pro Rata Share of such Offering and the number of shares of Common Stock actually purchased by Investor under Section 3.1 in connection with such Offering, then the Investor Maximum Ownership Percentage shall be reduced as if (x) Investor had purchased its full Pro Rata Share in such Offering and (y) Investor had thereafter sold a number of shares of Common Stock equal to the amount (if any) by which such Pro Rata Share exceeds the sum of (A) the number of share of Common Stock actually purchased by Investor under Section 3.1 in connection with such Offering and (B) the number of shares of Common Stock actually purchased by Investor in the manner provided in Section 3.2(b) during the one-year period immediately following the closing of such Offering. Once reduced, the Investor Maximum Ownership Percentage shall never be increased following any subsequent disposition or acquisition of Common Stock or other event or transaction. The Investor Maximum Ownership Percentage shall never exceed sixty percent (60%).

     “Investor Registrable Securities” means (i) the Common Shares and any Common Stock acquired pursuant to Section 3.1 hereof, (ii) all shares of Common Stock transferred to any Person in accordance with clause (3) of Section 2.1(b)(i), or (iii) any shares of Common Stock issued or issuable with respect to any other Equity Securities acquired pursuant to Section 3.1 upon conversion or exercise of any security directly or indirectly convertible into or exchangeable or exercisable for shares of Common Stock or (iv) any Common Stock issued with respect to any of the foregoing by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization. As to any particular Investor Registrable Securities, such securities shall cease to be Investor Registrable Securities when (a) a Registration Statement with respect to the sale of such securities has

A-4

become effective under the Securities Act and such securities have been disposed of in accordance with the plan of distribution set forth in such Registration Statement, (b) they have been sold to the public through a broker, dealer, or market maker in compliance with Rule 144 under the Securities Act, (c) they have been repurchased by the Company or any Subsidiary thereof, (d) they have been transferred as provided in Section 2.1(b)(ii) hereof (provided, that shares so transferred shall nonetheless be entitled to piggyback registration rights as provided in Section 4.2 and shall be considered Investor Registrable Securities solely for purposes of participation in such a Piggyback Registration), (e) they have been transferred as contemplated by clause (1) of Section 2.1(b) hereof or by Section 2.1(c)(v) hereof, (f) in the case of a holder which is a limited partnership or limited liability company, unless such holder otherwise elects, when they have been distributed to the partners or members of such holder, (g) they have been otherwise transferred, new certificates for them not bearing a legend restricting further transfer shall have been delivered by the Company and subsequent public distribution of them shall not require registration under the Securities Act, or (h) all of such securities held by an Investor may be sold without volume or manner of sale restrictions pursuant to Rule 144 under the Securities Act; provided, that nothing in this sentence shall be deemed to permit any Transfer of any Common Stock or other Equity Security other than in full compliance with Section 2.1 hereof. For purposes of this Agreement, a Person shall be deemed to be a holder of Investor Registrable Securities, and the Investor Registrable Securities shall be deemed to be in existence, whenever such Person has the right to acquire directly or indirectly such Investor Registrable Securities (upon conversion or exercise in connection with a transfer of securities or otherwise, but disregarding any restrictions or limitations upon the exercise of such right), whether or not such acquisition has actually been effected, and such Person shall be entitled to exercise the rights of a holder of Investor Registrable Securities hereunder.

     “Liquidation Proceeding” means any liquidation, dissolution or winding up of the Company or any of its Subsidiaries or the commencement of proceedings to adjudicate the Company or any of its Subsidiaries as bankrupt, or consenting to the filing of a bankruptcy proceeding against any of them, or filing a petition or answer or consent seeking reorganization of any of them under any bankruptcy or insolvency law, or consenting to the filing of any such petition, or consenting to the appointment of a receiver or liquidator or trustee or assignee in bankruptcy or insolvency, or making an assignment for the benefit of creditors, or admitting inability to pay debts generally as they become due.

     “Material Adverse Change” means (i) any general suspension of trading in, or limitation on prices for, securities on any national securities exchange or in the over-the-counter market in the United States; (ii) the declaration of a banking moratorium or any suspension of payments in respect of banks in the United States; (iii) a material outbreak or escalation of armed hostilities or other international or national calamity involving the United States or the declaration by the United States of a national emergency or war; and (iv) any event, change, circumstance or effect that is or is reasonably likely to be materially adverse to the business, properties, assets, liabilities, financial condition, operations or results of operations of the Company and its subsidiaries taken as a whole.

     “Offering” means (i) a firm commitment underwritten public offering of shares of Common Stock by the Company, or (ii) any offering or sale of Common Stock or of Equity Securities convertible into, or exchangeable or exercisable for, Common Stock by the Company

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conducted primarily for financing purposes (and expressly excluding offers or sales of Common Stock or other Equity Securities offered or issued (A) to directors, officers or employees of the Company or its Subsidiaries (excluding the Investor or any of its Affiliates) pursuant to incentive compensation plans or similar arrangements approved by the Board, or (B) in connection with any stock split, stock consolidation or stock dividend or any recapitalization in which all of the Company’s stockholders are treated in the same manner and which does not affect the percentage of the outstanding shares owned by the Investor, or (C) in any merger, consolidation or business combination approved by the Board, or (D) as consideration for the purchase of any assets or securities of any other Person, in a transaction approved by the Board).

     “Other Registrable Securities” means the Common Stock issued or issuable upon the exercise, conversion or exchange of all Equity Securities subject to any contractual or other right of registration with the Company, excepting such Equity Securities as are unvested, subject to repurchase by the Company or otherwise not then exercisable, convertible or exchangeable into Common Stock.

     “Own” and “Ownership” shall mean, with respect to any Person and any Series B Shares, that such Person is the record owner of such Series B Shares.

     “PE Investor” shall mean any entity that is commonly referred to as a “private equity fund” or a “venture capital firm”. This definition is intended to apply to any entity that (i) qualifies under an exclusion from the definition of “investment company” under Section 3(c)(1) or 3(c)(7) of the Investment Company Act of 1940, (ii) is intended to be of limited duration and (iii) is primarily in the business of using capital to purchase assets, businesses or securities with the intention of profiting (or enabling its general or limited partners, members or shareholders to profit) from the resale of such assets, businesses or securities or, in the case of non-controlling investments, from distributions from entities in which such non-controlling investments are made).

     “Permitted Transferee” means the Company or any of its Subsidiaries or any First Tier Affiliate of the Investor that is not a Company Competitor. In the event that any First Tier Affiliate of the Investor, subsequent to a Transfer hereunder, ceases to be a Permitted Transferee (any such cessation, a “Disqualifying Event”), such Disqualifying Event shall be considered a Transfer and shall be subject to the terms hereof with respect thereto, including Section 2.1. If such Transfer fails to comply with the provisions of Section 2.1, such Person that shall have ceased to be a First Tier Affiliate as a result of such Disqualifying Event shall cease to be considered an Investor or Permitted Transferee for any purpose hereunder, but for all purposes of Sections 1.3, 1.5, 2.1 and 3.2, such Person shall continue to be bound by the provisions of this Agreement as an Investor.

     “Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, governmental authority or other entity.

     “Preferred Stock” means the shares of preferred stock, par value $0.001 per share, of the Company and any securities issued in respect thereof, or in substitution therefor, in connection with any stock split, dividend or combination, or any reclassification, recapitalization, merger, consolidation, exchange or other similar reorganization.

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     “Pro Rata Share” means, for any Investor, such number of Equity Securities (of the same type as the Equity Securities being sold in the Offering) as shall equal the product obtained by multiplying (i) the quotient obtained by dividing (A) the number of shares of Common Stock (on an as converted basis) Beneficially Owned by such Investor, by (B) the number of Diluted Common Shares Outstanding as of the most recent practicable date prior to the Offering, by (ii) the aggregate number of such Equity Securities being sold in the Offering.

     “Public Offering” means a public offering of shares of Common Stock pursuant to an effective registration statement (other than a registration statement on Form S-8 or Form S-4, or their successors, or any other form for a similar limited purpose) under the Securities Act that meets the requirements of Section 2.1(c)(iii).

     “Registrable Securities” means the Investor Registrable Securities and Other Registrable Securities.

     “Registration Statement” shall mean any registration statement filed by the Company with the SEC for a Public Offering under the Securities Act (other than a registration statement on Form S-8 or Form S-4, or their successors, or any other form for a similar limited purpose) and all amendments and supplements to any such Registration Statement, including pre- and post-effective amendments, in each case including the prospectus contained therein, all exhibits thereto and all material incorporated by reference (or deemed to be incorporated by reference) therein.

     “Right to Maintain Period” means the period beginning on the Agreement Date and ending upon the earliest to occur of (i) the first date on which the Investor (or one of its Affiliates) ceases to own at least one Series B Share, (ii) the first date on which the Investor and its Affiliates collectively own less than eleven percent (11%) of the outstanding Voting Stock, and (iii) a Change of Control.

     “Rights Agreement” means the Amended and Restated Rights Agreement between the Company and Mellon Investor Services, LLC, as Rights Agent dated as of July 23, 2008, as amended from time to time.

     “SEC” means the U.S. Securities and Exchange Commission or any other federal agency then administering the Securities Act or the Exchange Act and other federal securities laws.

     “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

     “Standstill Limit” shall mean, at any time and with respect to any contemplated acquisition of Equity Securities by the Investor or any of its Affiliates, a number of shares of Common Stock equal to the product of (x) the Investor Maximum Ownership Percentage at such time and (y) the number of outstanding shares of Common Stock.

     “Strategic Investor” means, with respect to the Company, a Person that (whether directly or through one or more Subsidiaries) (a) conducts business in the same industry as that in which the Company conducts business (or in an industry functionally related to the industry in which the Company conducts business), or (b) develops, manufactures, licenses or sells products,

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services or technology that are of relevance to, or are reasonably likely in the future to be of relevance with respect to, a strategic transaction involving the purchase of equity securities of the Company, in each case whether or not such purchases or equity securities are registered under the Securities Act; provided that the term “Strategic Investor” shall not include any PE Investor.

     “Subsidiary” means, with respect to any Person, each and all corporations, partnerships, limited liability companies, limited liability partnerships, joint ventures or other entities (A) of which such Person owns (directly or indirectly, beneficially or of record) at least a fifty percent (50%) equity, beneficial or financial interest; (B) of which such Person owns (directly or indirectly, beneficially or of record) an amount of voting securities of other interests sufficient to enable such Person to elect at least a majority of the members of such entity’s board of directors or other governing body; or (C) that is otherwise, directly or indirectly, controlled by such Person.

     “Superior Proposal” means a bona fide written proposal with respect to a Change of Control transaction by a third party that is determined by Board, in its good faith judgment, after consultation with a financial advisor of nationally recognized reputation, and after taking into account the likelihood and anticipated timing of consummation and all legal, financial and regulatory aspects of the offer and the Person making the offer, to be more favorable from a financial point of view to the Company’s stockholders than a transaction proposed by the Investor under Section 3.2(d).

     “13D Group” means any group of Persons formed for the purpose of acquiring, holding, voting or disposing of Equity Securities which would be required under Section 13(d) of the Exchange Act, and the rules and regulations promulgated thereunder, to file a statement on Schedule 13D (a “Schedule 13D”) pursuant to Rule 13d-1(a) of the rules and regulations promulgated under the Exchange Act or a Schedule 13G of the rules and regulations promulgated under the Exchange Act pursuant to Rule 13d-1(c) of the rules and regulations promulgated under the Exchange Act with the SEC as a “person” within the meaning of Section 13(d)(3) of the Exchange Act if such group Beneficially Owns Equity Securities representing more than five percent (5%) of any class of Equity Securities then outstanding.

     “Transfer” means, directly or indirectly, to sell, transfer, assign, pledge, encumber, hypothecate or similarly dispose of, either voluntarily or involuntarily, or to enter into any contract, option or other arrangement or understanding with respect to the sale, transfer, assignment, pledge, encumbrance, hypothecation or similar disposition of, any Common Stock or Series B Shares Beneficially Owned by a Person or any interest (including any Economic Rights or Voting Rights) in any Common Stock or Series B Shares Beneficially Owned by a Person, and any transaction which would have the same effect, or any swap, hedge or other arrangement that transfers, in whole or in part, any economic consequences of ownership of any Common Stock, whether any such aforementioned transaction is to be settled by delivery of Common Stock or other securities, in cash or otherwise,. “Transferred” shall have the correlative meaning.

     “Transferee” means any Person to whom any Investor or any Permitted Transferee or any Transferee thereof Transfers Equity Securities of the Company in accordance with the terms hereof.

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     “Underwritten Registration” or “Underwritten Offering” shall mean a sale of securities of the Company to an underwriter for reoffering to the public pursuant to an effective Registration Statement.

     “U.S. GAAP” means United States generally accepted accounting principles.

     “U.S. GAAS” means United States generally accepted auditing standards.

     “Voting Rights” means any rights to vote, or cause or direct any other Person to vote, any shares of Common Stock, whether conditional or unconditional, and whether limited to specified matters or generally.

     “Voting Stock” means any Equity Securities of the Company or its successor having the power to vote in the election of At-Large Directors or members of the board of directors of the Company’s successor (including voting in accordance with Section 1.3 hereof), including, without limitation, all shares of Common Stock.

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EX-10.42

Exhibit 10.42

CONFIDENTIAL TREATMENT REQUESTED — REDACTED COPY

*** Confidential Treatment has been requested for portions of this Exhibit. Confidential portions of this Exhibit are designated by [****]. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.

INTELLECTUAL PROPERTY TRANSFER AND LICENSE AGREEMENT

BETWEEN

NXP B.V.

AND

NXP HOLDING 1 B.V.

DATED AS OF

FEBRUARY 7, 2010

CONFIDENTIAL TREATMENT REQUESTED — REDACTED COPY

Table of Contents
(cont’d)

	Page(s)
ARTICLE I TERM AND TERMINATION		2
1.1 Term		2
1.2 No Termination of Agreement		2
ARTICLE II TRANSFERS AND LICENSES		3
2.1 Transfer and Assignment of Transferred IP		3
2.2 Patent Licenses		3
2.3 Licenses to Non-Patent Intellectual Property		5
2.4 No Sublicensing		6
2.5 Delivery.		6
2.6 Assumed IP Contracts		7
2.7 [****]		7
2.8 Subsidiaries		7
2.9 [****]		7
2.10 Unidentified Contracts		8
ARTICLE III INTELLECTUAL PROPERTY RIGHTS		8
3.1 Transferred IP		8
3.2 Patents		8
3.3 Retained IP		9
3.4 Acquired [****] Technology		9
3.5 Prior Obligations		9
3.6 Maintenance		9
3.7 Trademarks		9
3.8 Reasonable Assistance in Connection with Third Party Claims		10
3.9 Other Limitations and Restrictions		10
3.10 Composite and Component IP Blocks		10
3.11 Covenants with Respect to Sublicenses		10
3.12 Shared Masks		10
ARTICLE IV CONFIDENTIALITY		11
4.1 Trade Secrets and Confidential Information		11

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Table of Contents
(cont’d)

	Page(s)
4.2 Exceptions		11
4.3 Source Code		12
4.4 Terms of the Agreement		12
ARTICLE V DEFINITIONS AND CONSTRUCTION		12
5.1 Definitions		12
5.2 Other Terms		19
5.3 Interpretation		19
ARTICLE VI MISCELLANEOUS		19
6.1 No Implied Licenses		19
6.2 Amendments and Waivers		19
6.3 Entire Agreement		19
6.4 Governing Law		20
6.5 Submission to Jurisdiction; Selection of Forum; Waiver of Trial By Jury		20
6.6 Notices		20
6.7 Counterparts		21
6.8 Severability		21
6.9 Remedies		22
6.10 Assignment		22
6.11 [****]		22
6.12 Independent Contractors		22
6.13 Power and Authority		22
6.14 Disclaimer		22
6.15 Third Party Beneficiary Rights		23
6.16 Section 365(n)		23
6.17 Export Control		23

Exhibits

Exhibit A: Form of Patent Assignment

Exhibit B: Form of Trademark Assignment

Exhibit C: NXP Logo and Trademark

Exhibit D: [****]

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Table of Contents
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Schedules

Schedule 2.1(b): Chain of Title

Schedule 3.8: Pending Litigation

Schedule 5.1(a): Assumed IP Contracts

Schedule 5.1(b): Exclusive IP Contracts

Schedule 5.1(c): Identified Exclusive IP Contracts

Schedule 5.1(d): Specified Exclusive IP Contracts

Schedule 5.1(e): Licensed NXP IP

Schedule 5.1(f) ME/MC Transferred Patents

Schedule 5.1(g): Retained ME/MC and Demod Patents

Schedule 5.1(h): Third Party IP

Schedule 5.1(i): Transferred Patents

Schedule 5.1(j): Transferred Technology

Schedule 5.1(k): Transferred Trademarks

Schedule 5.1(l): Trimedia Core

Schedule 5.1(m): Acquired [****] Technology

Schedule 5.1(n): Demod Transferred Patents

Schedule 5.1(o): Demod Transferred Technology

Schedule 5.1(p): Current NXP Car Products

Schedule 5.1(q): Video Decoding Transferred Patents

Schedule 5.1(r): CA Security Transferred Patents

Schedule 5.1(s): ME/MC Transferred Technology

Schedule 5.1(t): CA Security Transferred Technology

Schedule 5.1(u): Video Decoding Transferred Technology

Schedule 5.1(v): Retained Reliable Motion ME/MC Patents

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INTELLECTUAL PROPERTY TRANSFER AND LICENSE AGREEMENT

     This Intellectual Property Transfer and License Agreement (“Agreement”) is made and entered into, as of February 7, 2010 (the “Closing Date”), by and between NXP B.V., a Dutch besloten venootshap (“NXP”), and NXP Holding 1 B.V., a Dutch besloten venootshap (“Dutch Newco”).

RECITALS

     WHEREAS, NXP and Trident Microsystems, Inc., a corporation organized under the laws of the State of Delaware (“Trident”), have entered into that certain Share Exchange Agreement, dated as of October 4, 2009 (the “Share Exchange Agreement”), pursuant to which NXP will exchange all of the shares of the Transferred Newcos (as defined in the Share Exchange Agreement), including Dutch Newco, as well as certain other assets and rights, for certain shares of common stock, par value $0.001 per share, of Trident;

     WHEREAS, pursuant to the terms and conditions of this Agreement, NXP shall transfer and license certain Intellectual Property relating to the Business to Dutch Newco and Dutch Newco will license certain of such Intellectual Property back to NXP;

     WHEREAS, pursuant to the terms and conditions of this Agreement, NXP shall transfer certain Trademarks relating to the Business to Dutch Newco without any right or license being granted back to NXP pursuant to this Agreement;

     WHEREAS, in consideration for the grants, transfers and assignments made by NXP to Dutch Newco under this Agreement, Dutch Newco shall issue a promissory note to NXP for the fair market value of the rights, transfers and assignments made by NXP to Dutch Newco pursuant to the terms set forth in such promissory note; and

     WHEREAS, the parties hereto desire to set forth the terms and conditions of such transfer and license of Intellectual Property.

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

ARTICLE I

TERM AND TERMINATION

     1.1 Term. The term of this License Agreement is perpetual, with the licenses continuing for as long as the applicable Intellectual Property licensed hereunder exist. This Agreement may only be terminated by mutual written agreement of the parties.

     1.2 No Termination of Agreement. Each party acknowledges and agrees that its remedy for breach by the other party or exceeding the scope of the licenses granted to it under this Agreement, or of any other provision hereof, is to bring a claim to recover damages or to bring a claim to seek injunctive relief for activities outside the scope of the applicable license

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grants or both, but in no event is this Agreement terminable. A party may, in its discretion as Licensee, terminate one or more of the licenses granted to it by written notice to the Licensor.

ARTICLE II

TRANSFERS AND LICENSES

     2.1 Transfer and Assignment of Transferred IP.

     NXP hereby sells, transfers, conveys, and assigns to Dutch Newco all right, title and interest in and to the Transferred IP.

     NXP hereby agrees to execute such documents of sale, transfer and assignment, including the assignments substantially in the form attached hereto as Exhibits A (Form of Patent Assignment) and B (Form of Trademark Assignment), and, at NXP’s expense, take such other actions, in each case as may be reasonably requested by Dutch Newco to effect the sale, transfer and assignment in and to the Transferred IP. Dutch Newco is responsible for registration and/or recordation of the transfers and assignments hereunder, and the out-of-pocket fees paid to the US Patent and Trademark Office or any other government intellectual property office in connection therewith shall be shared equally by NXP and Dutch Newco, except that NXP shall bear 100% of the out-of-pocket fees and reasonable expenses incurred in connection with addressing the chain of title, recordation and other issues previously identified by Dutch Newco’s counsel, which issues are generally identified on Schedule 2.1(b). NXP shall pay or reimburse Dutch Newco for its portion of the fees within 30 days of the date of invoice.

     It is understood and agreed that the only Patents being sold, transferred, conveyed and assigned to Dutch Newco hereunder are the Transferred Patents.

     2.2 Patent Licenses.

          (a) Licenses to Dutch Newco.

     (i) Retained Patents – Business Field. Subject to the terms and conditions of this Agreement, NXP hereby grants to the Dutch Newco Group an irrevocable, non-terminable, non-transferable (except as set forth in Section 6.10 below), non-exclusive, fully-paid, royalty-free license, under the Retained Patents and solely with respect to the Business Fields, to make (solely for any member of the Dutch Newco Group), have made (solely for any member of the Dutch Newco Group), use, sell, offer for sale, and import any products and to practice any method or process in connection with the exercise of the foregoing license, except that the license granted under this Section 2.2(a)(i) does not extend to any [****].

     (ii) Retained ME/MC and Demod Patents – All Fields. Subject to the terms and conditions of this Agreement, NXP hereby grants to the Dutch Newco Group a non-exclusive, irrevocable, non-terminable, non-transferable (except as set forth in Section 6.10 below), fully-paid, royalty-free license, under the Retained ME/MC and Demod Patents, to make, have made, use, sell, offer for

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sale, and import any products and to practice any method or process in connection with the exercise of the foregoing license.

     (iii) Retained Reliable Motion ME/MC Patents – All Fields and Exclusive within Business Fields. Subject to the terms and conditions of this Agreement, NXP hereby grants to the Dutch Newco Group an irrevocable, non-terminable, non-transferable (except as set forth in Section 6.10 below), fully-paid, royalty-free license, under the Retained Reliable Motion ME/MC Patents and with full rights to sublicense with respect to the practice of the Retained Reliable Motion ME/MC Patents in the Business Fields, to make, have made, use, sell, offer for sale, and import any products and to practice any method or process in connection with the exercise of the foregoing license. This license is exclusive with respect to the Business Fields (even as to NXP and its Affiliates) and non-exclusive with respect to all other fields.

          (b) License to NXP.

     (i) Demod Transferred Patents. Subject to the terms and conditions of this Agreement and Section 7.10 of the Share Exchange Agreement, Dutch Newco hereby grants to NXP and its Subsidiaries a non-exclusive, irrevocable, non-terminable, non-transferable (except as set forth in Section 6.10 below), fully-paid, royalty-free license, under the Demod Transferred Patents and solely with respect to the NXP Fields, to make (solely for NXP or a NXP Subsidiary), have made (solely for NXP or a NXP Subsidiary), use, sell, offer for sale, and import any TV Front End Products and to practice any method or process in connection with the exercise of the foregoing license.

     (ii) ME/MC Transferred Patents. Subject to the terms and conditions of this Agreement and Section 7.10 of the Share Exchange Agreement, Dutch Newco hereby grants to NXP and its Subsidiaries, for use by the NXP Software business, a non-exclusive, irrevocable, non-terminable, non-transferable (except as set forth in Section 6.10 below), fully-paid, royalty-free license, under the ME/MC Transferred Patents and solely with respect to the NXP Fields, to make (solely for NXP or a NXP Subsidiary), have made (solely for NXP or a NXP Subsidiary), use, sell, offer for sale, and import only software implementations that satisfy both of the following requirements: (i) they are used solely in mobile phones and handsets and (ii) they are NXP Software branded.

     (iii) Current NXP Car Products. Subject to the terms and conditions of this Agreement and Section 7.10 of the Share Exchange Agreement, Dutch Newco hereby grants to NXP and its Subsidiaries a non-exclusive, irrevocable, non-terminable, non-transferable (except as set forth in Section 6.10 below), fully-paid, royalty-free license, under the Video Decoding Transferred Patents and ME/MC Transferred Patents and solely with respect to the NXP Fields, to make (solely for NXP or a NXP Subsidiary), have made (solely for NXP or a NXP Subsidiary), use, sell, offer for sale, and import each Current NXP Car

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Product and to practice any method or process in connection with the exercise of the foregoing license.

     (iv) NXP Patent Licensed Products. Subject to the terms and conditions of this Agreement and Section 7.10 of the Share Exchange Agreement, Dutch Newco hereby grants to NXP and its Subsidiaries a non-exclusive, irrevocable, non-terminable, non-transferable (except as set forth in Section 6.10 below), fully-paid, royalty-free license, under the Other Transferred Patents and solely with respect to the NXP Fields, to make (solely for NXP or a NXP Subsidiary), have made (solely for NXP or a NXP Subsidiary), use, sell, offer for sale, and import the NXP Patent Licensed Products and to practice any method or process in connection with the exercise of the foregoing license.

     2.3 Licenses to Non-Patent Intellectual Property.

     (a) License to Dutch Newco. Subject to the terms and conditions of this Agreement, NXP hereby grants to the Dutch Newco Group an irrevocable, non-terminable, non-transferable (except as set forth in Section 6.10 below), non-exclusive, perpetual, fully-paid, royalty-free license, solely with respect to the Business Fields, to use, reproduce, display, perform, distribute, modify, prepare derivative works of and otherwise exploit the Retained Technology as part of or in connection with the design, development, manufacture, support and sale of products of any member of the Dutch Newco Group.

          (b) License to NXP.

     (i) TV Front End Products. Subject to the terms and conditions of this Agreement and Section 7.10 of the Share Exchange Agreement, Dutch Newco hereby grants to NXP and its Subsidiaries, on a quitclaim basis, a non-exclusive, irrevocable, non-terminable, non-transferable (except as set forth in Section 6.10 below), perpetual, fully-paid, royalty-free license, solely with respect to the NXP Fields, to use, reproduce, display, perform, distribute, modify, prepare derivative works of and otherwise exploit the Demod Transferred Technology as part of or in connection with the design, development, manufacture, support and sale of TV Front End Products.

     (ii) Current NXP Car Products. Subject to the terms and conditions of this Agreement and Section 7.10 of the Share Exchange Agreement, Dutch Newco hereby grants to NXP and its Subsidiaries, on a quitclaim basis, a non-exclusive, irrevocable, non-terminable, non-transferable (except as set forth in Section 6.10 below), perpetual, fully-paid, royalty-free license, solely with respect to the NXP Fields, to use, reproduce, display, perform, distribute, modify, prepare derivative works of and otherwise exploit the Video Decoding Technology, the ME/MC Transferred Technology and the Shared Masks as part of or in connection with the design, development, manufacture, support and sale of Current NXP Car Products.

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     (iii) NXP Technology Licensed Products. Subject to the terms and conditions of this Agreement and Section 7.10 of the Share Exchange Agreement, Dutch Newco hereby grants to NXP and its Subsidiaries, on a quitclaim basis, a non-exclusive, irrevocable, non-terminable, non-transferable (except as set forth in Section 6.10 below), perpetual, fully-paid, royalty-free license, solely with respect to the NXP Fields, to use, reproduce, display, perform, distribute, modify, prepare derivative works of and otherwise exploit the Other Transferred Technology as part of or in connection with the design, development, manufacture, support and sale of the NXP Technology Licensed Products.

     2.4 No Sublicensing. Except as authorized by Section 2.2(a)(iii) of this Agreement, each party hereby (a) agrees that it shall not sublicense any of the other party’s Patents or Licensed Materials that are licensed hereunder, and (b) acknowledges that it receives no right to grant any sublicenses.

     2.5 Delivery.

          (a) Obligations.

     (i) At or as promptly as practicable after the Closing, NXP will deliver to Dutch Newco any tangible or electronic copies of the Intellectual Property assigned or licensed under this Agreement that are in the physical possession, custody or control of NXP or its Subsidiaries at the Closing and not otherwise delivered in connection with the transactions contemplated by the Share Exchange Agreement or that Dutch Newco cannot locate following a reasonable search.

     (ii) Upon request from time to time by NXP, a member of the Dutch Newco Group will deliver any tangible or electronic copies of the Intellectual Property licensed by Dutch Newco to NXP and its Subsidiaries under this Agreement that were, prior to the Closing Date, owned or possessed by NXP and are assigned to Dutch Newco under Section 2.1 of this Agreement, but only if and to the extent that they were not retained by NXP or NXP cannot locate them after a reasonable search and they are in the physical possession, custody or control of Dutch Newco Group at the time of the request.

     (iii) Dutch Newco is only obligated to deliver items in the form that they exist as of the Closing Date. Without limitation, NXP is not entitled to receive any modifications, derivative works or improvements to any such Intellectual Property made by or for any member of Dutch Newco after the Closing Date.

     (iv) Notwithstanding subparts (i) and (ii) above, NXP is not required to take any action under Section 2.5(a)(i) on a request first made more than twenty-four (24) months following the Closing Date, and Dutch Newco is not required to take any action under Section 2.5(a)(ii) on a request first made more than six (6) months following the Closing Date.

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     (v) The delivery in each case will be made by electronic or other means mutually acceptable to NXP and Dutch Newco.

     (vi) Dutch Newco is not entitled to receive any source code or related documentation with respect to the Trimedia Core instruction set architecture that is licensed to the Dutch Newco Group under Section 2.3.

     (b) Relationship to R&D Services Agreement. This Section 2.5 does not apply to any deliveries to be made under the R&D Services Agreement.

     2.6 Assumed IP Contracts. Subject to Section 2.10, NXP hereby transfers and assigns its and its Subsidiaries’ right in and to the Assumed IP Contracts. Dutch Newco hereby accepts the assignment of the Assumed IP Contracts and assumes all Liabilities in respect thereof arising after the Closing.

     2.7 [****]

     2.8 Subsidiaries. Any reference in this Agreement to a liability or obligation of a party’s Subsidiary (or, in the case of Dutch Newco, any member of the Dutch Newco Group) shall be deemed to incorporate a reference to an obligation on the part of that party to ensure that the relevant liability is discharged or obligation is performed by the relevant Subsidiary or member of the Dutch Newco Group, as the case may be. Any breach by the other party’s Subsidiary (or, in the case of Dutch Newco, any member of the Dutch Newco Group) will be deemed a breach by the other party. Any license granted to a party’s Subsidiary hereunder will terminate on the date that Person ceases to be a Subsidiary of such party, and any license granted to any member of the Dutch Newco Group hereunder will terminate on the date that Person ceases to be a member of the Dutch Newco Group, except that, without limiting a Licensor’s obligations under Section 6.11, during the period up to the ninetieth (90th) day following the date on which a Person ceases to be a Subsidiary, upon that Person’s request, Licensor shall use commercially reasonable efforts to negotiate a successor license with that Person on commercial terms that are satisfactory to Licensor.

     2.9 [****]

     2.10 Unidentified Contracts. Notwithstanding anything in Section 2.6 or 2.7, Trident is not required to assume (and if Trident so elects, NXP shall retain and bear the costs and expenses of) any IP Contract that was not identified to Trident and considered by Trident and NXP by October 1, 2009, in generating the final financial model developed immediately prior to the Agreement Date for the operation of Trident following the Closing (“Unidentified Contracts”), provided that if such model reflected a basket or expense for such contracts, Trident shall accept an aggregate liability for Unidentified Contracts up to the amount of such basket or expense, and NXP shall retain and pay such liabilities in excess of such basket or expense.

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ARTICLE III

INTELLECTUAL PROPERTY RIGHTS

     3.1 Transferred IP. NXP agrees that, as between NXP and Dutch Newco, as of the Closing, Dutch Newco is the sole and exclusive owner of all right, title and interest in and to the Transferred IP, and that, under this Agreement, NXP acquires no right, title or interest in or to any of the foregoing, other than the rights expressly granted hereunder.

     3.2 Patents. To the extent that a license granted hereunder by a Licensor includes the right to practice under one or more Patents that are part of the Transferred IP or Retained IP, each such license includes not only Patents in existence as of the Closing Date that are part of the Transferred IP or Retained IP, as the case may be, but also: (i) all subsequent divisions, continuations, continuations-in-part (but these only to the extent based on inventions existing as of the Closing Date), re-examinations, re-issues, provisionals, extensions and counterparts relating thereto; (ii) all Patents issuing after the Closing Date that arise from inventions first made, conceived or reduced to practice prior to the Closing Date that are part of the Transferred IP or Retained IP, as the case may be; and (iii) all Patent claims entitled to the benefit of a priority date from any of the foregoing Patents.

     3.3 Retained IP. Dutch Newco agrees that, as between Dutch Newco and NXP, NXP is the sole and exclusive owner of all right, title and interest in and to the Retained IP, and that under this Agreement, Dutch Newco acquires no right, title or interest in or to any of the foregoing, other than the rights expressly granted hereunder.

     3.4 Acquired [****] Technology. Dutch Newco agrees, on behalf of itself and the Dutch Newco Group, not to use any of the Acquired [****] Technology in connection with the [****] and [****] markets until[****], and NXP, on behalf of itself and its Affiliates, hereby covenants to the same.

     3.5 Prior Obligations. Each party, as Licensee, acknowledges that all rights in or to Intellectual Property and Trademarks granted by assignment, license or otherwise hereunder are subject to (x) any rights granted to or retained by, and any restrictions validly imposed by, any third party with respect to such Intellectual Property or Trademarks as of the Closing Date and (y) any rights required to be granted to or retained by, and any restrictions to be validly imposed by, any third party with respect to such Intellectual Property or Trademarks pursuant to obligations in existence as of the Closing Date. This includes, without limitation, [****].

     3.6 Maintenance. Licensor, in its sole discretion, shall have the sole right to protect the Intellectual Property being licensed by it hereunder and nothing contained herein shall be construed as obligating Licensor to file any patent or other intellectual property rights application or to prosecute, maintain or enforce Intellectual Property licensed hereunder. Except as set forth in Section 2.4 with respect to the delivery of the Intellectual Property licensed or assigned under this Agreement, nothing contained in this Agreement shall be construed as obligating Licensor to provide any maintenance, support or other services, materials or information to Licensee.

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     3.7 Trademarks. Dutch Newco shall not use, including as or as part of any of its trademarks, service marks, trade names, domain names or other commercial or corporate indicia, after the Closing Date, any NXP Trademarks, including the element “NXP” or any derivate or combination Trademark containing the element “NXP.” Notwithstanding the foregoing, each member of the Dutch Newco Group shall have the right: (i) until the end of the Finished Goods Period (as defined in the Manufacturing Services Agreement) to use the NXP Logo and Trademark (defined as the trademark rights listed in Exhibit C hereto) on all product packing material with respect to the Products (as defined in the Manufacturing Services Agreement), including labels, boxes, invoices, and customs documents, and all related documentation, including manuals, brochures, data sheets, collateral and other product related materials; (ii) to sell, transfer, import, export and/or ship products bearing a NXP Trademark, which products were included in the Finished Goods and WIP (as those terms are defined in the Share Exchange Agreement) or were sold under the Manufacturing Services Agreement to Dutch Newco Group bearing an NXP Trademark, and without deleting, altering or obscuring such Trademark; and (iii) on its and their websites, in marketing collateral, datasheets and elsewhere to advise their actual and potential customers that the Business was acquired from NXP. The foregoing rights granted under subparts (i) and (iii) are subject to NXP’s standard Trademark usage guidelines, as they may be amended or modified from time to time, and NXP reserves the right to practice quality control with regard to its marks.

     3.8 Reasonable Assistance in Connection with Third Party Claims. In the event that, as of the Closing Date, NXP or any of its Subsidiaries is contractually obligated to or otherwise is under a legally binding obligation to indemnify or undertake the defense of any third party in any action in which it is alleged that any of the Transferred IP infringes any third party’s intellectual property rights and a third party makes a claim against NXP or any of its Subsidiaries after the Closing Date or any such claim is pending as of the Closing Date (which pending claims are listed on Schedule 3.8), then, at NXP’s request and expense, Dutch Newco shall provide NXP with assistance as reasonably requested by NXP in connection with such proceedings. In the event that Trident or Dutch Newco is contractually obligated to or otherwise is under a legally binding obligation to indemnify or undertake the defense of any third party in any action in which it is alleged that any of the Transferred IP infringes any third party’s intellectual property rights and a third party makes a claim against Trident or Dutch Newco, then, at Trident or Dutch Newco’s request and expense, NXP shall provide Trident or Dutch Newco with assistance as reasonably requested by Trident or Dutch Newco in connection with such proceedings.

     3.9 Other Limitations and Restrictions. Notwithstanding anything in this Agreement to the contrary, no member of the Dutch Newco Group shall modify or create derivative works of the Trimedia Core instruction set architecture that is licensed to the Dutch Newco Group under Section 2.3.

     3.10 Composite and Component IP Blocks. Trident acknowledges that the Intellectual Property identified on Schedule 5.1(e) (the “Composite IP Blocks”) may be comprised of sub-blocks and components, some of which may be Retained Technology or Third Party IP (those sub-blocks and components, the “Component IP Blocks”). Trident acknowledges that, as of the Closing, it owns all right, title and interest in and to the Composite IP Blocks, subject to any rights that NXP or third parties may have in the underlying Component IP Blocks.

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Likewise, NXP acknowledges that it receives the license from Dutch Newco to Dutch Newco’s applicable Licensed Materials subject to any rights third parties may have in the underlying Component IP Blocks, and NXP alone is responsible for obtaining all rights and licenses from third parties necessary to use any of Dutch Newco’s Licensed Materials.

     3.11 Covenants with Respect to Sublicenses. Dutch Newco agrees that it and all members of the Dutch Newco Group will comply with all of the applicable terms of any license agreement with respect to which it is granted a sublicense hereunder or to which it may have rights because of an affiliated relationship with NXP. Likewise, NXP, on behalf of itself and its Affiliates, hereby covenants to the same with respect to any Assumed Contract under which it may have rights because of an affiliated relationship with the Dutch Newco Group.

     3.12 Shared Masks. Dutch Newco Group shall make and keep available to NXP and its Subsidiaries the physical embodiments of the Shared Masks at Taiwan Semiconductor Manufacturing Company (“TSMC”). Dutch Newco Group shall inform TSMC that NXP and its Subsidiaries have limited license rights with respect to the Shared Masks and, at NXP’s expense, take such other actions as NXP may reasonably request to provide NXP access to such Shared Masks, which access is subject to the rules, limitations, policies and requirements of TSMC.

ARTICLE IV

CONFIDENTIALITY

     4.1 Trade Secrets and Confidential Information. Each party agrees that it and its Subsidiaries shall (i) maintain in confidence the other party’s Confidential Information, (ii) not use the other party’s Confidential Information (a) except as may be reasonably required in connection with the performance of this Agreement by Dutch Newco or NXP, as the case may be, and (b) except as may be reasonably required after the Closing Date (i) by Dutch Newco in connection with the licensed use of any Retained Technology, or (ii) by NXP in connection with the licensed use of any Transferred Technology, and (iii) disclose such Confidential Information only to those Subsidiaries, agents, contractors, employees and potential or actual manufacturers, customers, licensees and sublicensees who have a need to know the same for the receiving party to exploit the benefits of the licenses granted to it hereunder and who agree in writing not to disclose such Confidential Information to any unauthorized person, consistent with the confidentiality obligations herein. Notwithstanding these restrictions, either party and its Subsidiaries may produce products contemplated under this Agreement that inherently disclose the other party’s Confidential Information, on condition that such party and its Subsidiaries has made commercially reasonable efforts to avoid disclosing the other party’s Confidential Information in the products. The receiving party will protect the disclosing party’s Confidential Information from unauthorized use, access, or disclosure in the same manner as the receiving party protects its own confidential or proprietary information of a similar nature and with no less than reasonable care. Each party agrees and acknowledges that violation of these provisions by the receiving party (or third parties receiving Confidential Information from any of them) will cause irreparable harm to the disclosing party and that the disclosing party shall be entitled to seek an injunction or other temporary relief in addition to the disclosing party’s other rights at law or in equity.

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     4.2 Exceptions. The obligations in Section 4.1 do not apply to any information that (i) is already or, through no fault of the receiving party, becomes publicly available; (ii) rightfully and lawfully comes into the possession of the receiving party from a third party without the imposition of any duty of confidentiality by that third party and who was authorized to make such disclosure; (iii) was independently developed by a party without reference to or use of the Confidential Information of the other party; or (iv) was already lawfully known to the receiving party at the time of disclosure by the disclosing party, except with respect to Confidential Information of a disclosing party that was known to the receiving party prior to the Closing Date due to (i) the ownership of the specific Confidential Information by the receiving party prior to the Closing Date or (ii) the fact the employees of the receiving party were employees of the disclosing party prior to the Closing Date. A party is allowed to disclose Confidential Information if it is required to be disclosed as a matter of Law or pursuant to a legal proceeding or the rules of a recognized stock exchange, on condition that the receiving party promptly notifies the disclosing party of any such requirement, discloses no more information than it believes in good faith based on the advice of counsel is required and cooperates, at the disclosing party’s request and expense, with all reasonable attempts by the disclosing party to contest or limit the scope of the required disclosure and to obtain a protective order or similar confidential treatment.

     4.3 Source Code. Each Licensee will use the same degree of care and employ the same procedural safeguards to protect the Licensor’s source code that it uses to protect its own most valuable source code, but in no event less than reasonable care.

     4.4 Terms of the Agreement. The parties agree that the terms of this Agreement are considered Confidential Information of both parties. Notwithstanding the foregoing, each party shall have the right to provide a copy of this Agreement in confidence to its Affiliates, advisors, accountants, counsel, any bona fide potential investor, financing source, investment banker, acquirer, merger partner or other potential financial or strategic partner, on condition that the disclosure is (a) on a strictly limited, need-to-know basis, (b) when the disclosing party believes that the transaction is reasonably likely to take place, and (c) on terms applicable to other highly confidential or sensitive information disclosed by that party in connection with the transaction and those terms prohibit disclosure, prohibit use for any purpose other than as required for due diligence in connection with the potential transaction and provide for reasonable care. A party may also disclose this Agreement under seal or equivalent non-public treatment in connection with any litigation or other legal action concerning this Agreement.

ARTICLE V

DEFINITIONS AND CONSTRUCTION

     5.1 Definitions. As used in this Agreement, the following capitalized terms shall have the following meanings:

     “Acquired [****] Technology” means the non-Patent Intellectual Property identified on Schedule 5.1(m), [****]

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     “Affiliate” of any Person means any other Person directly or indirectly controlling or controlled by, or under direct or indirect common control with such Person, except that, for purposes of this Agreement, NXP will not be considered an Affiliate of any member of Dutch Newco Group, and no member of Dutch Newco Group will be considered an Affiliate of NXP. A Person is considered an Affiliate of another Person only for so long as that control exists. For purposes of this definition, the term “control” (including the correlative meanings of the terms “controlled by” and “under common control with”), as used with respect to any Person, means the possession, direct or indirect, of the power to direct or cause the direction of the policies, operations or activities of that Person, directly or indirectly, whether through the ownership of, or right to vote, or to direct the manner of voting of, voting securities, by Law or agreement, or otherwise.

     “Agreement” has the meaning set forth in the Preamble.

     “Agreement Date” has the meaning set forth in the Share Exchange Agreement.

     “Ancillary Agreements” has the meaning set forth in the Share Exchange Agreement.

     “Assumed IP Contracts” means the Contracts identified on Schedule 5.1(a).

     “Bankruptcy Code” has the meaning set forth in Section 6.16.

     “Business” has the meaning set forth in the Share Exchange Agreement.

     “Business Day” has the meaning set forth in the Share Exchange Agreement.

     “Business Fields” means any and all of the following markets worldwide:

               (1) [****]

               (2) [****]

               (3) [****]

               (4) [****]

          [****]

     “CA Security Transferred Patents” means the Patents listed on Schedule 5.1(r).

     “CA Security Transferred Technology” means the Intellectual Property listed on Schedule 5.1(t).

     “Chosen Courts” has the meaning set forth in the Share Exchange Agreement.

     “Closing” has the meaning set forth in the Share Exchange Agreement.

     “Closing Date” has the meaning set forth in the Preamble.

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     [****]

     “Company Products” has the meaning set forth in the Share Exchange Agreement.

     “Component IP Blocks” has the meaning set forth in Section 3.10.

     “Composite IP Blocks” has the meaning set forth in Section 3.10.

     “Confidential Information” means any and all technical and non-technical information either party provides the other hereunder that the receiving party knows or reasonably should know is confidential to the disclosing party, including, without limitation, trade secrets, know-how, firmware, designs, schematics, techniques, software code, technical documentation, specifications and plans, whether in written, oral, graphic or electronic form. Notwithstanding the foregoing, after the Closing Date, (i) all Transferred Technology (to the extent included within the definition of “Confidential Information”) will be deemed the Confidential Information of Dutch Newco, not NXP, and (ii) all Retained Technology (to the extent included within the definition of “Confidential Information”) will be deemed the Confidential Information of NXP, not Dutch Newco.

     “Contracts” has the meaning set forth in the Share Exchange Agreement.

     “Copyrights” means the copyrights in works of authorship (including rights in databases and other compilations of information, mask works and semiconductor device rights, computer and electronic data processing programs, operating programs and software, flow charts, diagrams, descriptive texts and programs and computer print-outs), registrations and applications therefor, and all similar rights throughout the world, and all renewals, extensions, restorations and reversions thereof.

     “Current NXP Car Products” means the three NXP integrated circuit products listed on Schedule 5.1(p), as such products exist on the Closing Date and their Natural Successors and Derivatives.

     “Demod Transferred Patents” means the Patents listed on Schedule 5.1(n).

     “Demod Transferred Technology” means the Intellectual Property listed on Schedule 5.1(o), including all associated copyrights and trade secrets.

     [****]

     “Divested Entity” means any former Subsidiary of a Licensee as and from the moment it no longer qualifies as a Subsidiary hereunder because of a sale, conveyance or other transfer of such Subsidiary, and any former unincorporated business or division of the Licensee as and from the moment it is divested by the Licensee to a transferee that is not a Subsidiary of the Licensee.

     “Dutch Newco” has the meaning set forth in the Preamble.

     “Dutch Newco Group” means Dutch Newco and at and following the Closing, Trident and its Subsidiaries.

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     [****]

     “Exclusive IP Contracts” means the Contracts identified in Schedule 5.1(b).

     “Governmental Authority” has the meaning set forth in the Share Exchange Agreement.

     “Identified Exclusive IP Contracts” means those Contracts identified in Schedule 5.1(c).

     [****]

     “Intellectual Property” means Patents, Copyrights, Trade Secrets and all other intellectual property rights (other than Trademarks).

     “Licensed NXP IP” means the Intellectual Property identified on Schedule 5.1(e).

     “Licensed Materials” means either the Retained Technology or the Transferred Technology, as the case may be.

     “Licensee” shall mean NXP or Dutch Newco, or NXP’s Subsidiaries or any member of the Dutch Newco Group, as the case may be, in its or any of their capacity as licensee hereunder.

     “Licensor” shall mean NXP or Dutch Newco, or their respective Subsidiaries, as the case may be, in its or any of their capacity as licensor hereunder.

     “Manufacturing Services Agreement” has the meaning set forth in the Share Exchange Agreement.

     “ME/MC Transferred Patents” means the Patents listed on Schedule 5.1(f).

     “ME/MC Transferred Technology” means the Intellectual Property listed on Schedule 5.1(s).

     “NXP” has the meaning set forth in the Preamble.

     “NXP Fields” means [****]

     “NXP Patent Licensed Products” means (a) for the automotive, software and TV front-end fields, any products of NXP and its Subsidiaries (other than the Company Products), and (b) for all other fields, the products of NXP and its Subsidiaries as of the Closing Date (other than the Company Products), and products on the then-existing roadmap of NXP and its Subsidiaries as of the Closing Date, the making, use, importing, offering for sale, sale or supply of which would, in the absence of the license granted by this Agreement, infringe a patent of the Other Transferred Patents, and Natural Successors and Derivatives of any of the foregoing.

     “NXP Technology Licensed Products” means (a) TV Front-end Products, (b) software for mobile phones and handsets, (c) any products of NXP and its Subsidiaries (other than the Company Products) in the automotive field, and (d) the products of NXP and its Subsidiaries as of the Closing Date (other than the Company Products), and products on the then-existing

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roadmap of NXP and its Subsidiaries as of the Closing Date, and Natural Successors and Derivatives of any of the foregoing.

     “NXP Trademarks” means all Trademarks of NXP or its Affiliates as of the Closing Date, excluding any Trademarks acquired by Dutch Newco in connection with the Transaction.

     [****]

     “Natural Successors and Derivatives” means (a) for a software product, any subsequent release of that product which constitutes a bug fix or error correction or contains other minor variations, enhancements or improvements for which the licensor does not generally charge a separate fee to its customers, and (b) for an integrated circuit product, any new versions of that product which fixes bugs, shrinks geometry, improves yield, reduces power or improves device performance, but does not contain new features or functionality.

     [****]

     “Other Transferred Patents” means all Transferred Patents other than the following Patents: (i) the Demod Transferred Patents; (ii) the ME/MC Transferred Patents; (iii) the CA Security Transferred Patents; and (iv) the Video Decoding Transferred Patents.

     “Other Transferred Technology” means all Transferred Technology other than the following: (i) Demod Transferred Technology; (ii) ME/MC Transferred Technology; (iii) CA Security Transferred Technology; (iv) Video Decoding Transferred Technology, (v) the reference designs and masks relevant to each of the Company Products, and (vi) all copyright and trade secret rights associated with the items described in subparts (i) – (v) of this definition.

     “Patents” means all patents (including utility and design patents, industrial designs and utility models), rights in inventions, and the registrations, invention disclosures and applications therefor, including divisions, supplementary protection certificates, continuations, continuations-in-part, provisional and renewal applications, and any renewals, extensions, reissues and re-examinations thereof.

     [****]

     “Person” has the meaning set forth in the Share Exchange Agreement.

     [****]

     [****]

     “R&D Services Agreement” has the meaning set forth in the Share Exchange Agreement.

     “Retained Reliable Motion ME/MC Patents” means the Patents listed on Schedule 5.1(v).

     “Retained IP” means the Retained Technology and the Retained Patents.

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     “Retained Patents” means all Patents directly or indirectly owned or controlled (in the sense of having the right to grant licenses or sublicenses thereunder of or within the scope granted herein and without requiring payment of royalties or other consideration by NXP or any of its Subsidiaries to an unaffiliated third party, unless Dutch Newco agrees to and satisfies such payment obligations) by NXP or any of its Subsidiaries as of the Closing Date, other than Transferred Patents.

     “Retained ME/MC and Demod Patents” means the Patents listed on Schedule 5.1(g).

     “Retained Technology” means all NXP Intellectual Property (other than Patents) that (a) NXP or any of its Affiliates owns (after the assignment of the Transferred IP to Dutch Newco) or controls (in the sense of having the right to grant licenses or sublicenses thereunder of or within the scope granted herein and without requiring payment of royalties or other consideration by NXP or any of its Subsidiaries to an unaffiliated third party, unless Dutch Newco agrees to and satisfies such payments obligations) as of the Closing Date, and (b) is used in connection with the development, manufacture, test, packaging, process architecture and know-how, reproduction, distribution, modification, adaptation, display, performance, use, offer for sale or sale of the Company Products prior to or as of the Closing Date. Retained Technology includes, without limitation, the Licensed NXP IP.

     “Shared Masks” means the mask works for the Current NXP Car Products and all Intellectual Property rights thereto.

     “Share Exchange Agreement” has the meaning set forth in the Recitals.

     “SoC” has the meaning set forth in the Share Exchange Agreement.

     [****]

     “Subsidiary” of any Person shall mean any legal entity (a) the majority of whose shares or other securities entitled to vote for election of directors (or other managing authority) is now or hereafter owned or controlled by such Person either directly or indirectly or (b) that does not have outstanding shares or securities, but the majority of the equity interest of which is now or hereafter owned or controlled by such Person either directly or indirectly; except that, in the case of both (a) and (b) above, the entity is a Subsidiary of that Person only for so long as that ownership or control exists. For purposes of this Agreement, following the Closing, Dutch Newco will be considered a Subsidiary of Trident and not of NXP and no member of Dutch Newco Group will be considered a Subsidiary of NXP.

     “Third Party IP” means the Intellectual Property licensed to NXP or its Subsidiaries from third parties, the agreements for which are identified on Schedule 5.1(h). Third Party IP includes all Exclusive IP Contracts.

     “Trademarks” means trademarks, service marks, Internet domain names, logos, product names and slogans, symbols, trade dress, assumed names, fictitious names, trade names, brand names, business names, and any other form of trade identity and other indicia of origin, all applications and registrations for the foregoing and any renewals thereof, and the goodwill associated therewith and symbolized thereby.

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     “Trade Secrets” means trade secrets, including confidential business and technical information, ideas, research and development, know-how, formulae, drawings, prototypes, models, designs, schematics, technical data, engineering, production and other designs, drawings, engineering notebooks, industrial models, specifications, business methods, customer lists and supplier lists, and any information meeting the definition of a trade secret under the Uniform Trade Secrets Act or other similar legislation governing protection of trade secrets anywhere in the world.

     “Transferred IP” means the Transferred Technology, the Transferred Patents and the Transferred Trademarks.

     “Transferred Patents” means the Patents listed on Schedule 5.1(i).

     “Transferred Technology” means the Intellectual Property identified on Schedule 5.1(j), including all associated copyright and trade secret rights. The Transferred Technology includes, for each entry in Schedule 5.1(j), all software (including RTL), firmware, libraries, IP cores, functional blocks, GDS, netlists, timing specifications, specifications, tools, test plans, test programs, characterization reports, validation reports, schematics, designs, database tapes, algorithms and documentation. The Transferred Technology also includes reference designs and masks relevant to each of the Company Products.

     “Transferred Trademarks” means the Trademarks identified on Schedule 5.1(k).

     “Trident” has the meaning set forth in the Recitals.

     “Trimedia Core” means the IP core listed on Schedule 5.1(l).

     “TV Front End Product” means an integrated circuit that receives a broadcast signal via a tuner and demodulates that signal for purposes of display on a TV screen.

     “Unassumed Exclusive IP Contracts” means those Exclusive IP Contracts that are not Identified Exclusive IP Contracts.

     “Unidentified Contracts” has the meaning set forth in the Share Exchange Agreement.

     “Video Decoding Transferred Patents” means the Patents listed on Schedule 5.1(q).

     “Video Decoding Transferred Technology” means the Intellectual Property listed on Schedule 5.1(u).

     [****]

     5.2 Other Terms. Other terms may be defined elsewhere in the text of this Agreement and, unless otherwise indicated, shall have such meaning throughout this Agreement.

     5.3 Interpretation. When a reference is made in this Agreement to Exhibits, such reference shall be to an Exhibit to this Agreement unless otherwise indicated. When a reference is made in this Agreement to Sections, such reference shall be to a Section of this Agreement

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

ARTICLE VI

MISCELLANEOUS

     6.1 No Implied Licenses. Nothing contained in this Agreement shall be construed as conferring any rights by implication, estoppel or otherwise, under any Intellectual Property or Trademarks other than the rights expressly granted in this Agreement.

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

     6.3 Entire Agreement. This Agreement, the exhibits and schedules hereto, the Share Exchange Agreement and the other Ancillary Agreements constitute the entire understanding and agreement of the parties hereto with respect to the subject matter hereof and thereof and supersede all prior and contemporaneous agreements or understandings, inducements or conditions, express or implied, written or oral, between the parties with respect hereto. The express terms hereof control and supersede any course of performance or usage of the trade inconsistent with any of the terms hereof.

     6.4 Governing Law. The internal law, without regard for conflicts of laws principles, of the State of New York shall govern the validity of this Agreement, the construction of its terms, and the interpretation and enforcement of the rights and duties of the parties hereto. The rights and obligations of the parties under this Agreement will not be governed by the provisions of the 1980 United Nations Convention on Contracts for the International Sale of Goods or the United Nations Convention on the Limitation Period in the International Sale of Goods, as amended.

     6.5 Submission to Jurisdiction; Selection of Forum; Waiver of Trial By Jury. Each party hereto agrees that it shall bring any action or proceeding in respect of any claim arising out of or related to this Agreement or the transactions contained in or contemplated by this Agreement exclusively in the Chosen Courts, and solely in connection with claims arising

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under this Agreement (i) irrevocably submits to the exclusive jurisdiction of the Chosen Courts, (ii) waives any objection to laying venue in any such action or proceeding in the Chosen Courts, (iii) waives any objection that the Chosen Courts are an inconvenient forum or do not have jurisdiction over any party hereto and (iv) agrees that service of process upon such party in any such action or proceeding shall be effective if notice is given in accordance with Section 6.6 of this Agreement. Each party hereto irrevocably waives any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.

     6.6 Notices. All notices and other communications required or permitted under this Agreement shall be in writing and shall be either hand delivered in person, sent by facsimile, sent by certified or registered first-class mail, postage pre-paid, or sent by internationally recognized express courier service. Such notices and other communications shall be effective upon receipt if hand delivered or sent by facsimile, three (3) days after mailing if sent by mail, and one (1) day after dispatch if sent by express courier, to the following addresses, or such other addresses as any party may notify the other party in accordance with this Section 6.6:

If to NXP:

NXP
High Tech Campus 60
5656 AG Eindhoven
The Netherlands
Fax: + 31 40 27 29655
Attention: Guido R.C. Dierick

With a copy (which shall not constitute notice) to:

NXP
1109 McKay Drive
San Jose, California 95131
Fax: +1 (408) 474-7100
Attention: James N. Casey

and

Sullivan & Cromwell LLP
1870 Embarcadero Road
Palo Alto, California 94303
Fax: +1 (650) 461-5777
Attention: Scott D. Miller

If to Dutch Newco:

NXP Holding 1 B.V.
3408 Garrett Drive
Santa Clara, CA 95054
Fax: +1 (408) 988-9176

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Attention: David Teichmann

With a copy (which shall not constitute notice) to:

Trident Microsystems, Inc.
3408 Garrett Drive
Santa Clara, CA 95054
Fax: +1 (408) 988-9176
Attention: David Teichmann

and

DLA Piper US LLP
2000 University Avenue
East Palo Alto, CA 94303-2215
Fax: +1(650) 687-1189
Attention: Sally Rau

     6.7 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original as regards any party whose signature appears thereon and all of which together shall constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all parties reflected hereon as signatories.

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

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

     6.10 Assignment. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors, legal representatives and permitted assigns. Neither party may assign any of its rights or delegate any performance under this Agreement, by operation of Law or otherwise, without the prior written consent of the other party, which consent shall not be unreasonably withheld or delayed, except that either party may transfer or assign its rights under this Agreement without the consent of the other party: (a) to one or more

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of its current Subsidiaries or an Affiliate created due to an internal reorganization; and/or (b) to a third party merger partner or the purchaser in connection with a merger, consolidation or sale of all or substantially all of its stock or assets or of any portions of its business to which this Agreement relates. Any purported assignment made without the consent provided for in this Section 6.10 is null and void.

     6.11 [****]

     6.12 Independent Contractors. Nothing contained in this Agreement shall be deemed or construed as creating a joint venture or partnership between any of the parties hereto. No party is by virtue of this Agreement authorized as an agent, employee or legal representative of any other party. No party shall have the power to control the activities and operations of any other and their status is, and at all times shall continue to be, that of independent contractors with respect to each other. No party shall have any power or authority to bind or commit any other party. No party shall hold itself out as having any authority or relationship in contravention of this Section 6.12.

     6.13 Power and Authority. Each party hereby represents and warrants to the other party that it has full power and authority to enter into this Agreement and to grant the rights and licenses set forth herein and has not executed, and will not execute, any agreement or other instrument in conflict herewith.

     6.14 Disclaimer. THE PARTIES ACKNOWLEDGE AND AGREE THAT, EXCEPT FOR THE EXPLICIT REPRESENTATIONS CONTAINED IN SECTION 6.13 ABOVE AND FOR ANY REPRESENTATION OR WARRANTY EXPRESSLY MADE BY NXP IN THE SHARE EXCHANGE AGREEMENT, THE ASSIGNMENTS AND TRANSFERS MADE AND LICENSES GRANTED HEREUNDER ARE ON AN “AS IS” BASIS, NEITHER NXP NOR DUTCH NEWCO MAKES ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND IN CONNECTION WITH THIS AGREEMENT, AND NXP AND DUTCH NEWCO EACH HEREBY EXPRESSLY DISCLAIM AND EXCLUDE ALL WARRANTIES, WHETHER STATUTORY, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, AND NON-INFRINGEMENT. WITHOUT LIMITING THE FOREGOING, NEITHER PARTY MAKES ANY WARRANTY OR REPRESENTATION THAT ANY MANUFACTURE, USE, IMPORTATION, OFFER FOR SALE OR SALE OF ANY PRODUCT OR SERVICE WILL BE FREE FROM INFRINGEMENT OF ANY PATENT OR OTHER INTELLECTUAL PROPERTY RIGHT OF ANY THIRD PARTY OR AS TO THE VALIDITY AND/OR SCOPE OF ANY PATENT LICENSED BY SUCH PARTY TO THE OTHER PARTY UNDER THIS AGREEMENT OR A WARRANTY OR REPRESENTATION THAT A PARTY WILL ENFORCE ANY PATENT AGAINST A THIRD PARTY OR THAT A PATENT WILL ISSUE OR ANY PATENT WILL BE PROSECUTED OR MAINTAINED. THIS SECTION 6.14 DOES NOT SUPERSEDE, MODIFY OR NEGATE ANY REPRESENTATION OR WARRANTY EXPRESSLY MADE BY NXP IN THE SHARE EXCHANGE AGREEMENT.

     6.15 Third Party Beneficiary Rights. Other than Subsidiaries and members of the Dutch Newco Group, no provisions of this Agreement are intended, nor shall be interpreted, to

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provide or create any third party beneficiary rights or any other rights of any kind in any client, customer, employee, affiliate, stockholder, partner of any party hereto or any other Person unless specifically provided otherwise herein and, except as so provided, all provisions hereof shall be personal solely between the parties to this Agreement, except that Section 6.11 is intended to benefit the Divested Entities.

     6.16 Section 365(n). All rights and licenses granted under or pursuant to this Agreement are, and will otherwise be, for purposes of Section 365(n) of Title 11, U.S. Code (the “Bankruptcy Code”), licenses of rights to “intellectual property” as defined in the Bankruptcy Code. The parties agree that Licensee and its Affiliates will retain and may fully exercise all of its and their rights and elections under the Bankruptcy Code. All rights, powers and remedies of Licensee and its Affiliates provided under this Section 6.16 are in addition to, and not in substitution for, any and all other rights, powers and remedies now or hereafter existing at law or in equity in the event of any commencement of a bankruptcy proceeding by or against the Licensor.

     6.17 Export Control. A Licensee shall comply with all applicable export control Laws in its use of the Licensor’s software and technology, and, in particular, a Licensee shall not export or re-export the Licensor’s software and technology without all required United States and foreign government licenses. A Licensor shall reasonably cooperate with any written requests from a Licensee to provide information solely in the Licensor’s possession to assist a Licensee in determining where any licenses are required with respect to the Licensor’s software and technology.

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     IN WITNESS WHEREOF, this Agreement has been signed on behalf of each of the parties hereto as of the date first written above.

NXP
By	/s/ Guido Diereck
	Name: Guido Diereck
	Title: Authorized Signatory
NXP HOLDING 1 B.V.
By	/s/ Guido Diereck, Jean Schreurs
	Name: Guido Diereck, Jean Schreurs
	Title: Authorized Signatory

Signature Page for IPTLA

CONFIDENTIAL TREATMENT REQUESTED — REDACTED COPY

GUARANTEE

     Trident Microsystems, Inc., a corporation organized under the laws of the State of Delaware, hereby irrevocably and unconditionally guarantees to NXP B.V. the full and timely performance by NXP Holding 1 B.V. of its obligations under the foregoing Intellectual Property Transfer and License Agreement, and agrees to take all actions, and cause its direct and indirect subsidiaries to take all actions which NXP Holding 1 B.V. is obligated to take under the Intellectual Property Transfer and License Agreement. This Guarantee shall take effect as of the Closing.

Trident Microsystems, Inc.
By	/s/ Sylvia Summers Couder
	Name: Sylvia Summers Couder
	Title: CEO Trident Microsystems

EX-10.43

Exhibit 10.43

CONFIDENTIAL TREATMENT REQUESTED – REDACTED COPY

*** Confidential Treatment has been requested for portions of this Exhibit. Confidential portions of this Exhibit are designated by [****]. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.

TRANSITION SERVICES AGREEMENT

This Transition Services Agreement (this “Agreement”) is made and entered into as of the Effective Date by and between Trident Microsystems (Far East) Ltd., a Cayman Islands company (“Trident Cayman”), and NXP B.V., a Dutch besloten vennootschap (“NXP”). Trident Cayman and NXP are each referred to individually as “Party” and collectively as the “Parties.”

Background

WHEREAS, pursuant to that certain Share Exchange Agreement, dated as of October 4, 2009, by and among Trident Microsystems, Inc., a Delaware corporation (“Trident”), NXP and Trident Cayman (the “Share Exchange Agreement”), Trident Cayman has acquired the Acquired Assets from NXP and its Affiliates (the “Acquisition”).

WHEREAS, in connection with the Acquisition, and subject to the terms and conditions of this Agreement, Trident Cayman desires to obtain from NXP and NXP’s Affiliates, and NXP is willing to provide, and cause its Affiliates to provide, certain transitional services and support for Trident Cayman, Trident and Trident’s Subsidiaries.

WHEREAS, in connection with the Acquisition, and subject to the terms and conditions of this Agreement, NXP desires to obtain from Trident Cayman and Trident Cayman’s Affiliates, and Trident Cayman is willing to provide, and cause its Affiliates to provide, certain transitional services and support for NXP and NXP’s Subsidiaries.

Now, Therefore, in consideration of the mutual covenants herein and for good and valuable consideration, receipt of which is hereby acknowledged, the Parties agree as follows.

Agreement

1. Definitions. The following terms, when used in this Agreement with initial capital letters, have the meanings given to such terms in this Section 1. Capitalized terms used but not expressly defined in this Agreement have the meanings given such terms in the Share Exchange Agreement.

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     1.1 “Books and Records” shall have the meaning set forth in Section 6.7(a).

     1.2 “Confidential Information” shall have the meaning set forth in Section 7.1.

     1.3 “Costs” means the sum of Direct Costs and Indirect Costs.

     1.4 “Direct Costs” means all of the Service Provider’s actual costs of labor (including, but not limited to, wages, bonuses, equity compensation, fringe benefits and employer taxes and contributions), and equipment and materials that are specifically attributable to the Services provided by the Service Provider under this Agreement (including allowances for the depreciation of equipment and other capital assets used in the performance of the Services, as reported in the Service Provider’s local records of account), but does not include travel costs, extraordinary expenses or financing expenses (which means interest income or expense, but may include, if any, all exchange gains or losses and other financial costs).

     1.5 “Dispute Notice” shall have the meaning set forth in Section 12.4(b).

     1.6 “Effective Date” means February 8, 2010.

     1.7 “ERP” shall have the meaning set forth in Section 6.8(a)(i).

     1.8 “Facility” shall have the meaning set forth in paragraph 1a of Schedule 2 hereto.

     1.9 “Financial Reporting Services” shall have the meaning set forth in paragraph 2a of Schedule 3 hereto.

     1.10 “IT/ICT Schedule” means Schedule 4 hereto.

     1.11 “Indirect Costs” means that portion of the Service Provider’s general and administrative expenses that are specifically allocated to the Services under this Agreement on a basis consistent with the Service Provider’s current accounting practices as reflected in Schedule 7 hereto.

     1.12 “JAMS” shall have the meaning set forth in Section 12.4(c).

     1.13 “JAMS Arbitrator” shall have the meaning set forth in Section 12.4(c).

     1.14 “NXP Services” means the following transitional services and support to be provided to Trident Cayman, Trident and Trident’s Subsidiaries:

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          (a) human resources management (i.e., compensation and benefit plans, payroll services, training), as more specifically described in Schedule 1 hereto;

          (b) office and infrastructure, as more specifically described in Schedule 2 hereto;

          (c) financial administration, as more specifically described in chedule 3 hereto;

          (d) ICT hardware, ICT software, ICT infrastructure, telecommunications, and general IT services, as more specifically described in Schedule 4 hereto;

          (e) for the German Transition Period, maintenance, servicing, housing and all other services related to the operation and maintenance of the German Assets; and

          (f) for the four month period following the Closing, export, customs and licensing, as more specifically described in Schedule 5 hereto.

     1.15 “NXP Subsidiaries” means NXP’s Subsidiaries. For the avoidance of doubt, NXP Subsidiaries does not include Trident and Trident’s Subsidiaries.

     1.16 “Permitted Representatives” shall have the meaning set forth in Section 7.1.

     1.17 “Service Manager” shall have the meaning set forth in Section 5.

     1.18 “Service Provider” means the entity providing the relevant Services.

     1.19 “Service Recipient” means the entity receiving the relevant Services.

     1.20 “Services” means the Trident Services or the NXP Services, as applicable.

     1.21 “Service Schedule” means each of the Schedules attached to this Agreement (including the annexes or any other attachments thereto) that set forth the Services to be provided by the Service Provider to the Service Recipient and any future schedules setting forth additional transitional services as agreed upon between the Parties.

     1.22 “Senior Executive” shall have the meaning set forth in Section 5.

     1.23 “Subsequently Identified Additional Service” shall have the meaning set forth in Section 2.6(a).

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     1.24 “Taxes” shall have the meaning set forth in Section 6.5.

     1.25 “Trident Services” means the transitional services and support to be provided to NXP and NXP Subsidiaries as set forth on Schedule 6 hereto.

2. Service Provider’s Obligations

     2.1 Services Generally. Subject to the terms and conditions of this Agreement, during the applicable term set forth in the applicable Service Schedule, a Service Provider will provide the Services to the Service Recipient. The Services shall be of a scope and delivered in a manner substantially consistent with past practice of the Service Provider on an internal or, where applicable, intra-company basis. Without limitation, the Services listed on a Service Schedule include the specific activities, tasks, and responsibilities that have been historically provided by that party internally on a customary and regular basis and those that are inherent and reasonably necessary as part of, or for the proper performance of, the Services, even if not specified on a Service Schedule.

     2.2 Service Provider Responsibility. All Services shall be performed, and all information shall be delivered, in a professional and workmanlike manner and in accordance with prevailing professional standards, using personnel with appropriate training and expertise as determined by the Service Provider in good faith and in accordance with any specifications or requirements of the Service Recipient set forth in the applicable Service Schedule, but without other warranties as to results, quality or performance, fitness for purpose, non-existence of errors or the like.

     2.3 Subcontracting. The Service Provider has the right to subcontract the performance of any portion of the Services to a third party with the prior written consent of the Service Recipient (not to be unreasonably withheld); provided, that (i) any such subcontracting shall be on terms that are consistent with, and no less protective than, the confidentiality terms of this Agreement and are otherwise sufficient to enable Service Provider to comply with this Agreement, (ii) the Service Provider remains responsible for the performance of the Services in accordance with this Agreement and monitors and manages such performance, (iii) the Services provided by third parities shall be performed and delivered with at least the same standards and level of performance, priority and quality to which the Service Provider is accountable under the terms of this Agreement, and (iv) the Service Provider shall make commercially reasonable efforts to cause the third party service provider to enter into a direct contractual relationship with the Service Recipient for the provision of the relevant Services, on such terms and conditions as reasonably agreed upon by the Service Recipient. Notwithstanding the foregoing, the prior written consent of the Service Recipient shall not be required (A) where the Services to be performed by the Service Provider are already provided to the Service Provider by a third party on a subcontracted basis or (B) for new contracts between the Service Provider and a third party regarding Services currently provided by such third party to the Service Provider on terms

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substantially the same as those presently in effect or (C) where such subcontract is in connection with a merger, acquisition or sale of the portion of the Service Provider’s assets to which the Service relates. The Service Provider will be responsible for the payment of all subcontractors such Service Provider engages for the performance of Services.

     2.4 Certain Limitations. Unless expressly provided herein and/or in any Service Schedule: (i) the NXP Services shall be available only for the purposes of conducting the Business transferred to Trident and Trident Cayman substantially in the manner it was conducted immediately prior to the Effective Date, and (ii) the Trident Services shall be available only to the extent necessary to sustain the businesses and operations of NXP not included in the Business transferred to Trident and Trident Cayman. Unless expressly provided herein and/or in any Service Schedule, the Service Provider is not required to hire any additional employees or maintain the employment of any specific employee, modify any existing systems, equipment or software or acquire additional systems, equipment or software so long as the Service Provider meets the requirements of Section 2.1.

     2.5 Compliance with Laws. The Service Provider shall provide the Services in accordance with all Applicable Laws. The Service Provider shall not be obligated to provide, or cause to be provided, any Service if the provision of such Service would require a Party or any of its employees, agents or representatives to violate any Applicable Law.

     2.6 Additional Services.

          (a) Should a Party, in its reasonable judgment, after the Effective Date, identify a particular need for a transitional service that should be provided under this Agreement, then that Party has the right, at any time after the Effective Date until the end of the day on May 8, 2010, to request that such transitional service be provided under this Agreement. Following that request, the Service Provider shall negotiate in good faith with the Service Recipient to prepare and sign an additional Service Schedule covering such additional transitional service or amend an existing Service Schedule to provide for such additional transitional service (each, a “Subsequently Identified Additional Service”). In the event the Parties agree on such Subsequently Identified Additional Service, “Trident Services” or “NXP Services,” as applicable, and therefore “Services,” shall be deemed to include such Subsequently Identified Additional Service. A form of services addendum, to be completed for each country/region where Subsequently Identified Additional Services are to be performed, is attached hereto as Exhibit A.

          (b) Notwithstanding anything to the contrary in Section 2.6(a), Subsequently Identified Additional Services shall not include, and the Service Provider shall not be required to provide, the following services (except as expressly provided in the Share Exchange Agreement): (i) tax related services; (ii) legal services; (iii) treasury services; (iv) manufacturing services (which are

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covered by the Manufacturing Services Agreement); or (v) research and development services (which are covered by the R&D Services Agreement).

     2.7 Treatment of Employees. All employees and representatives of a Service Provider are considered, for purposes of all compensation and employee benefits matters, to be employees or representatives of that Service Provider, as applicable, and not employees or representatives of the Service Recipient.

     2.8 Viruses. Each Party, as Service Provider, shall use commercially reasonable efforts to prevent the introduction of viruses and other unauthorized software or mechanisms into the Service Recipient’s software and computer systems.

     2.9 Audit Rights. Each Party shall cooperate with the other in connection with any financial audits the Service Recipient may conduct, including by providing access, upon reasonable notice, for the Service Recipient, its auditors, and designees to the Service Provider’s and its Affiliates’ computer systems and records.

3. Additional Obligations

     3.1 Service Recipient Policies. Both Parties shall maintain, and shall cause their personnel to comply with, confidentiality and security policies in accordance with standard industry practice, including, without limitation, network access and source code handling policies. While working at a Service Recipient’s site, the Service Provider shall also: (a) observe and comply with all of the Service Recipient’s security procedures, rules, regulations, policies, working hours and holiday schedules that are made available or provided in writing to the Service Provider; (b) use commercially reasonable efforts to minimize any disruption to the Service Recipient’s business and operations; and (c) keep Service Recipient’s facilities in good order, not commit or permit waste or damage to those facilities and not use the facilities for any unlawful purpose or act. .

     3.2 Cooperation. In order to enable the Service Provider to provide the Services, the Service Recipient will provide the Service Provider with cooperation and assistance as the Service Provider reasonably requests as required to facilitate provision of the Services.

4. Non-Exclusive. Subject to Section 11.2(b), nothing in this Agreement will preclude a Party from obtaining from its own employees or from providers other than the other Party, in whole or in part, services of any nature.

5. Coordination and Communication. The Service Recipient and the Service Provider will each appoint a single service manager who will serve as the primary point of contact for the other Party for matters related to this Agreement, including handling of requests for changes in the Services (the “Service Manager”). Each Party shall also appoint one senior executive to serve as the primary contact for discussing material issues and handling escalations (“Senior Executive”). A Party

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may replace its Service Manager or Senior Executive with an individual of comparable qualifications and experience by notifying the other of such new appointment. Each Party will use reasonable efforts to minimize changes to the person who is serving as its Service Manager or Senior Executive, as applicable.

6. Compensation

     6.1 Compensation of Service Provider.

          (a) As compensation for each Service provided under the terms of this Agreement, each Party, as the Service Recipient, shall pay the Service Provider the fee for the Service as set forth in the applicable Service Schedule.

          (b) To the extent pricing for a Service is not set forth in the applicable Service Schedule or in Section 6.8, the Parties will in good faith negotiate the price of each such transitional Service, [****].

     6.2 Invoice. Each Service Provider shall invoice each Service Recipient for the applicable Services provided or will provide on a monthly basis. By the fifteenth (15th) day of each month, the Service Provider shall provide the Service Recipient with an invoice setting forth the estimated Costs that the Service Provider has incurred or will incur for that month. Any differences between the invoiced estimated Costs and the actual Costs incurred by the Service Provider in a given month shall be reflected in the invoice of the following month. The Service Recipient shall be entitled to dispute, in good faith and in writing, any invoice, including any estimated Costs included in such invoice. Any dispute shall be resolved pursuant to the provisions of Section 12.4.

     6.3 Payment. The Service Recipient shall pay the fees then payable under this Section 6 on or prior to [****] following the date of the receipt of each invoice. Payment shall be made by the Service Recipient in the form of a bank draft, wire transfer or other form of payment as may be determined by mutual agreement of the Parties. The Service Recipient shall not have the right to set off any payment made to the Service Provider by any outstanding balance owed to Service Recipient by Service Provider or any losses or damages Service Recipient suffers that are attributable to the provisions of Services by or on behalf of the Service Provider.

     6.4 Currency. Unless otherwise agreed, all prices and fees will be calculated in local currencies as set forth in the applicable Service Schedule and will be converted on the date of invoice into United States Dollars for payment based on the exchange rate of NXP as consistently applied in accordance with NXP’s accounting principles.

     6.5 Taxes. The fees and charges of the Service Provider under this Agreement do not include any taxes, including, without limitation, any value-added taxes, sales taxes or withholding taxes (collectively, “Taxes”). The Service

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Provider shall include the amount of any applicable Taxes on the invoices provided to the Service Recipient pursuant to Section 6.2, and the Service Recipient shall be responsible for payment of all Taxes that are legally required to be charged or withheld on fees payable for Services provided under this Agreement, other than Taxes based on the Service Provider’s net income.

     6.6 Expenses. Except as otherwise expressly provided in this Agreement, each Party will bear its own costs and expenses incurred in the performance of this Agreement.

     6.7 Examination of Books and Records.

          (a) Each Party, as Service Provider, shall keep complete, true and correct books and records (including worksheets, invoices or other supporting documents demonstrating the time and expenses incurred and calculation of all amounts due) in respect of the Services provided hereunder to substantiate and confirm all expenses and charges (collectively, the “Books and Records”). During the term of this Agreement, at the Service Recipient’s reasonable request, but in any event no more than twice in any twelve (12) month period and solely in order to substantiate and confirm any expenses and charges set forth on any invoice, the Service Provider shall (x) provide the Service Recipient with copies of the relevant Books and Records, or (y) after receiving ten (10) Business Days’ advance notice from the Service Recipient, grant an independent, reputable audit firm appointed by the Service Recipient reasonable access (during normal business hours) to the relevant Books and Records; provided, however, that granting access to such Books and Records shall not unduly interfere with the normal business and operations of the Service Provider.

          (b) If an audit reveals that the Service Provider overcharged the Service Recipient, then the Service Provider shall reimburse the overcharged amount, which reimbursement the Service Provider shall make within thirty (30) days after receipt of the written demand from the Service Recipient. Additionally, if the Service Recipient was overcharged by [****], then the Service Provider shall pay the cost of the audit.

          (c) If an audit reveals that the Service Provider undercharged the Service Recipient, then the Service Recipient shall pay the undercharged amount, which payment the Service Recipient shall make within thirty (30) days after receipt of the written demand from the Service Provider.

     6.8 Costs Borne and Discount provided by NXP.

          (a) Notwithstanding anything to the contrary in this Agreement or any Service Schedule, NXP shall provide the following NXP Services and bear the following Costs of such NXP Services:

               (i) Enterprise, Resource and Planning (“ERP”):

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                    (1) NXP Service: NXP will create an ERP environment based on SAP^®, B2B^® protocol and MarCS^® with booking, billing and shipping in respect of sales transactions for sole use by Trident based on the scope, functionality and milestones as described in the IT/ICT Schedule.

                    (2) Cost: NXP will bear Costs estimated to be [****].

               (ii) BP&A transition services:

                    (1) NXP Service: NXP will provide BP&A transition services commencing on the Closing Date and ending at the end of the Finished Goods Period (as defined in the Manufacturing Service Agreement).

                    (2) Cost: NXP will bear Costs up to a maximum of [****].

          (b) Any Costs in excess of the amounts stated in (i) Section 6.8(a)(i) to the extent Trident Cayman requests any deviations in the scope, functionality and milestones as described in the in the IT/ICT Schedule and (ii) Section 6.8(a)(ii), shall be borne by Trident Cayman as set forth in the other Sections of this Agreement and the IT/ICT Schedule.

          (c) During the term of this Agreement, NXP shall apply a [****] discount on Costs of generic IT NXP Services up to a maximum aggregate discount of [****].

          (d) NXP shall report to Trident the Costs incurred to render the NXP Services provided pursuant to Section 6.8(a) on a monthly basis.

7. Confidentiality

     7.1 Confidentiality Information. Each Party shall keep confidential this Agreement and all proprietary and non-public information regarding the other Party and its Affiliates received pursuant to this Agreement that is known to be or otherwise would be reasonably understood as confidential given the nature of the information disclosed and the context of its disclosure (the “Confidential Information”), and shall not disclose or reveal any such information to any Person without the prior written consent of the other Party, other than those of its employees, officers, directors, Affiliates, attorneys, accountants, financial advisors and contractors or subcontractors providing Services pursuant to Section 2.3 (“Permitted Representatives”) who need to know such information for the purpose of taking any action required with respect to this Agreement and shall cause those Permitted Representatives to observe the terms of this Section 7 and agree for the benefit of the other Party to do so (and any violation or breach of the terms of this Section 7 by any Permitted Representative shall be deemed a breach hereof by the applicable Party).

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     7.2 No Other Use. Each Party shall not, and shall cause its respective Permitted Representatives not to, use the other Party’s Confidential Information for any purpose other than in connection with this Agreement; provided, that nothing herein shall prevent a Party or any of its Permitted Representatives from disclosing any such information that:

          (a) is or becomes generally available to the public other than as a result of a disclosure by such Party or its Permitted Representatives in violation of this Section 7.2 or any other confidentiality agreement between the Parties or any of their respective Permitted Representatives or any other legal duty, fiduciary duty, or other duty of trust and confidence of the Parties, any of their Permitted Representatives;

          (b) was within such Party’s or its Permitted Representative’s possession on a non-confidential basis prior to being furnished with such information (provided that the source of such information was not known by such Party at the time of such disclosure by such Party or any of its Permitted Representatives to be bound by a confidentiality agreement with, or other contractual, legal or fiduciary obligation of confidentiality to or other duty of trust and confidence to, the other Party with respect to such information);

          (c) was independently developed by such Party without use of any information furnished to such Party, any of its Permitted Representatives; or

          (d) becomes available to such Party or its Permitted Representative on a non-confidential basis from a source other than the other Party; provided that such source is not known by such Party at the time of such disclosure by such Party or any of its Permitted Representatives to be bound by a confidentiality agreement with, or other contractual, legal or fiduciary obligation of confidentiality to or other duty of trust and confidence to, the other Party with respect to such information.

     7.3 Disclosure Required by Law. If any Confidential Information is required to be disclosed by a Party in accordance with Applicable Law or judicial order, then such Party shall notify the other Party in writing and shall cooperate with the other Party if the other Party elects to seek a protective order or other appropriate remedy with respect to such required disclosure. If no such protective order is obtained, and if the Party or any of its Permitted Representatives has been advised by legal counsel in writing that it is legally compelled to disclose any Confidential Information, then such Party or such Permitted Representative may disclose such Confidential Information, but shall furnish only that portion of the Confidential Information which such Party or its Permitted Representatives is advised by counsel is legally required and shall exercise its reasonable efforts to obtain reliable assurance that confidential treatment shall be accorded such Confidential Information.

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     7.4 Return of Confidential Information. Upon the termination of this Agreement, each Party shall return to the other Party all written Confidential Information that has been provided to such Party under this Agreement; provided, that in lieu of returning such Confidential Information to the other Party, each Party may destroy such Confidential Information and provide the other Party with a written certification that such written Confidential Information has been destroyed.

     7.5 Access to Computer Systems. If a Party is given access to any equipment, computer, software, network, electronic files, or electronic data storage system owned or controlled by the other Party, such accessing Party will limit such access and use solely to provide or receive Services under this Agreement and shall not access or attempt to access any equipment, computer, software, network, electronic files, or electronic data storage system, other than those specifically required to provide or receive the Services. Each Party will limit its access to those employees with a requirement to have such access in connection with this Agreement, will advise the other Party in writing of the name of each person who will be granted access if requested to do so, and will strictly follow all security rules and procedures for use of electronic resources. All user identification numbers and passwords disclosed to a Party and any Confidential Information obtained by a Party as a result of its access to and use of any equipment, computers, software, networks, clean-rooms electronic files, and electronic data storage systems owned or controlled by the other Party, is deemed to be, and will be treated as, Confidential Information under applicable provisions of this Agreement. The Parties agree to cooperate in the investigation of any apparent unauthorized access to any equipment, computer, software, network, clean-room, electronic file, or electronic data storage systems owned or controlled by the other Party, or any apparent unauthorized release of Confidential Information.

     7.6 Injunctive Relief. Each of the Parties acknowledges and agrees that (a) any breach of the provisions of this Section 7 by either Party will result in irreparable injury to the other Party; (b) the remedy at law alone will be an inadequate remedy for such breach; (c) in addition to any other undertaking, such Party is entitled, notwithstanding any provision of Section 12 below, to an injunction or injunctions or other equitable relief from any court of competent jurisdiction to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Section 7 in accordance herewith (to the extent permitted by law), this being in addition to any other remedy to which such Party is entitled at law or in equity; and (d) in the event that any action, suit or proceeding is brought in equity to enforce the provisions of this Section 7, no Party shall allege, and each party waives the defense or counterclaim, that there is an adequate remedy at law.

8. Limitations of Liability

     8.1 Consequential Damages Waiver. EXCEPT FOR ANY BREACH OF THE CONFIDENTIALITY OBLIGATIONS UNDER SECTION 7, IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY LOSS OF PROFIT,

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INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR RELATING TO THIS AGREEMENT.

     8.2 Limitation of Liability. Each Party’s liability under this Agreement (for its own conduct and the conduct of its Subsidiary(ies) in performing the Services) shall be limited to such Party’s willful misconduct or gross negligence.

     8.3 Basis of the Bargain. EACH PARTY ACKNOWLEDGES THAT THE MUTUAL LIMITATIONS OF LIABILITY CONTAINED IN THIS SECTION 8 REFLECT THE ALLOCATION OF RISK SET FORTH IN THIS AGREEMENT AND THAT NO PARTY WOULD ENTER INTO THIS AGREEMENT WITHOUT THESE LIMITATIONS ON LIABILITY.

9. Disclaimer. OTHER THAN AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR A SERVICE SCHEDULE, THE SERVICES, AND ALL OTHER FACILITIES, EQUIPMENT, SOFTWARE, AND SERVICES PROVIDED UNDER THIS AGREEMENT ARE PROVIDED “AS IS” AND THE SERVICE PROVIDER MAKES NO OTHER REPRESENTATIONS OR WARRANTIES UNDER THIS AGREEMENT, AND DISCLAIMS ANY AND ALL OTHER REPRESENTATIONS OR WARRANTIES, STATUTORY, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND NON-INFRINGEMENT.

10. No Indemnification. Each Party has no obligation to indemnify the other for claims, actions, demands, suits, losses, liabilities, judgments, expenses or costs (including attorneys’ fees) made by third parties arising out of or related to the Services. Each Party hereby expressly disclaims any such indemnification obligation.

11. Term and Termination

     11.1 Term of Agreement.

          (a) The term of this Agreement begins on the Effective Date and, unless earlier terminated as provided herein, will continue until the termination or expiration of each of the Service-specific terms set forth in the Service Schedules.

          (b) Except as otherwise provided in a Service Schedule, the term for an individual IT Service shall be three (3) months. For all other Services, and except as otherwise provided in a Service Schedule, the Service Recipient may select a term for an individual transitional Service of two (2), six (6), twelve (12), or eighteen (18) months, in accordance with feasible alternatives for obtaining the transitional Services available to the Service Recipient.

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          (c) The provision of the Services hereunder may be extended to the extent mutually agreed in writing between the Parties.

     11.2 Termination.

          (a) Either Party may terminate this Agreement or any one or more of the Service Schedules immediately, upon written notice, a copy of which shall also be provided to the other Party’s Senior Executive: (i) if the other Party materially breaches any material term of this Agreement and fails to cure such breach within forty-five (45) days after receipt by the breaching Party of written notice from the non-breaching Party describing in reasonable detail such breach; (ii) upon the institution by or against the other Party of insolvency, receivership or bankruptcy proceedings or any other proceedings for the settlement of the other Party’s debts, which case is not dismissed within sixty (60) days of filing; (iii) upon the other Party’s making an assignment for the benefit of creditors; or (iv) upon the other Party’s dissolution or ceasing to conduct business in the normal course, or the other Party’s failure to pay its debts as they mature in the ordinary course of business.

          (b) Except as set forth on the applicable Service Schedule in regards to a longer or shorter termination notice period, a Service Recipient may terminate any Service Schedule without cause upon three (3) months’ prior written notice. Any such termination shall be effective on the first day after such notice period.

     11.3 Effect of Termination. Upon termination or expiration of this Agreement for any reason, (a) the Service Provider will cooperate with the Service Recipient in completing all work in progress and such other matters which may require the Service Provider’s assistance; (b) within five (5) business days of any termination or expiration of this Agreement or any Service Schedule, the Service Provider will deliver to the Service Recipient all deliverables, whether completed or in progress, as well as all materials which were furnished to the Service Provider by the Service Recipient or which were prepared or procured by the Service Provider as a part of the Services, and will disclose to the Service Recipient all of the Service Provider’s work product related to the provision of the Services; (c) the Service Provider will cooperate with the Service Recipient in transitioning all work in progress to the Service Recipient or the Service Recipient’s designee, and will otherwise cooperate with the Service Recipient as reasonably requested to prevent disruption to the Service Recipient’s business and operations; and (d) each Party shall return to the other Party or certify in writing to the other Party that it has destroyed all documents and other tangible items that it or its employees, contractors and agents have received or created pertaining, referring or relating to the Confidential Information of the other Party furnished under this Agreement, and erase or destroy all electronic or magnetic records in computer memory, tape or other media containing any Confidential Information. Termination of this Agreement shall not limit either Party from pursuing any other remedies available to it at law or in equity. Neither the Service Recipient, on the one hand, nor the

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Service Provider, on the other hand, will be liable to the other because of any proper termination of this Agreement for compensation, reimbursement, or damages for the loss of prospective profits, anticipated sales or goodwill. The provisions of this Agreement that by their nature continue and survive will survive any termination or expiration, including, without limitation, Sections 1, 6, 7, 8, 9, 10, 11.3, 11.4 and 12. In the event of any termination with respect to one or more, but less than all, of the Service Schedules, this Agreement will continue in full force and effect with respect to any Service Schedules not so terminated.

     11.4 Further Assurances. During the term of this Agreement and following the expiration of the term a Service Schedule or following any termination of this Agreement, the Service Provider shall cooperate in good faith with the Service Recipient and take all other actions reasonably requested by the Service Recipient to enable the Service Recipient to make alternative arrangements for the provision of Services.

12. General

     12.1 Notices. All notices or other communications hereunder shall be given in accordance with Section 12.9 of the Share Exchange Agreement.

     12.2 Governing Law. The internal law, without regard for conflicts of laws principles, of the State of New York shall govern the validity of this Agreement, the construction of its terms and the interpretation and enforcement of the rights and duties of the Parties.

     12.3 Assignment. Except as set forth in Section 2.3, neither this Agreement nor any of the rights, interests or obligations under this Agreement may be assigned or delegated, in whole or in part, by operation of law or otherwise by any of the Parties without the prior written consent of the other Party, and any such assignment or delegation without such prior written consent shall be null and void, except that a Party may assign or otherwise transfer its rights without the prior consent of the other Party (i) to a direct or indirect wholly owned Subsidiary, or (ii) in connection with a merger, acquisition or sale of substantially all of such Party’s assets, or of the portion of such Party’s assets to which this Agreement relates. Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of, and be enforceable by, the Parties and their respective successors and assigns.

     12.4 Dispute Resolution.

          (a) The Parties shall attempt in good faith to resolve promptly any dispute arising out of or relating to this Agreement.

          (b) In the event a dispute arises between the Parties under this Agreement that cannot be resolved after good faith negotiation as contemplated by Section 12.4(a) within ten (10) Business Days of a Party’s request, NXP or Trident Cayman, as applicable, shall provide a written notice to the other describing, in

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reasonable detail, the substance of such dispute or disagreement (the “Dispute Notice”). The Senior Executive of each of NXP or Trident Cayman shall meet, confer and attempt to resolve the dispute or disagreement within a period of thirty (30) days following delivery of such Dispute Notice. If such Senior Executives are unable to resolve the dispute or disagreement within such thirty (30) day period, then either Party shall be entitled to commence dispute resolution pursuant to Section 12.4(c) below.

          (c) Any dispute or disagreement arising under this Agreement that cannot first be resolved as provided in Section 12.4(b) shall be finally and exclusively settled by binding arbitration to be held in New York, New York. Either NXP or Trident Cayman shall make written application to Judicial Arbitration and Mediation Services (“JAMS”), New York, New York, for the appointment of a single arbitrator (the “JAMS Arbitrator”) to resolve the dispute by arbitration. The arbitration shall be administered by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures. At the request of JAMS, the Parties shall meet with JAMS at its offices within ten (10) Business Days of such request to discuss the dispute and the qualifications and experience which each Party respectively believes the JAMS Arbitrator should have. The Parties shall cooperate with each other and JAMS to select a JAMS Arbitrator within thirty (30) days of the written application to JAMS. The arbitrator shall have the authority to grant any equitable and legal remedies that would be available in any judicial proceeding instituted under New York law to resolve the dispute. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. The losing party shall bear the cost of the arbitration, including the arbitrator’s fee. The Parties hereto expressly waive all rights whatsoever to file an appeal against or otherwise to challenge any award by the arbitrator hereunder, except that the foregoing does not limit the rights of either Party to bring a proceeding in any applicable jurisdiction to conform, enforce or enter judgment upon such award (and the rights of the other Party, if such proceeding is brought, to contest such confirmation, enforcement or entry of judgment).

          (d) Nothing in this Section 12.4 shall preclude either Party from seeking injunctive relief or any other equitable remedy in any applicable jurisdiction sought to protect such party’s name, technology, Confidential Information or Intellectual Property.

     12.5 Entire Agreement. This Agreement and the schedules and exhibits hereto constitute the entire understanding and agreement of the Parties with respect to the subject matter hereof and supersede all prior and contemporaneous agreements or understandings, inducements or conditions, express or implied, written or oral, between the Parties with respect hereto. The express terms hereof control and supersede any course of performance or usage of the trade inconsistent with any of the terms hereof.

     12.6 Amendments and Waivers. Any term or provision of this Agreement may be amended, and the observance of any term of this Agreement

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may be waived (either generally or in a particular instance and either retroactively or prospectively), only by a writing signed by the Party to be bound thereby. The waiver by a Party of any breach hereof or default in the performance hereof shall not be deemed to constitute a waiver of any other default or any succeeding breach or default. The failure of any Party to enforce any of the provisions hereof shall not be construed to be a waiver of the right of such Party thereafter to enforce such provisions.

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

     12.8 Interpretation; Rules of Construction. When a reference is made in this Agreement to Exhibits, such reference shall be to an Exhibit to this Agreement unless otherwise indicated. When a reference is made in this Agreement to Schedules, such reference shall be to a Schedule to this Agreement unless otherwise indicated. When a reference is made in this Agreement to Sections, such reference shall be to a Section of this Agreement unless otherwise indicated. The words “include”, “include” and “including” when used herein shall be deemed in each case to be followed by the words “without limitation.” The term “$” means United States Dollars. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Reference to the subsidiaries of an entity shall be deemed to include all direct and indirect subsidiaries of such entity. The Parties agree that they have been represented by legal counsel during the negotiation and execution of this Agreement and, therefore, waive the application of any law, regulation, holding or rule of construction providing that ambiguities in an agreement or other document shall be construed against the Party drafting such agreement or document. In the event of a conflict between this Agreement and the Share Exchange Agreement, the Share Exchange Agreement shall govern unless the context otherwise requires.

     12.9 Third Party Beneficiary Rights. No provisions of this Agreement are intended, nor shall be interpreted, to provide or create any third party beneficiary rights or any other rights of any kind in any client, customer, employee, affiliate, stockholder, partner of any Party or any other Person unless specifically provided otherwise herein and, except as so provided, all provisions hereof shall be personal solely between the Parties to this Agreement.

     12.10 No Joint Venture. Nothing contained in this Agreement shall be deemed or construed as creating a joint venture or partnership between the Parties. Neither Party is by virtue of this Agreement authorized as an agent, employee, or

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legal representative of the other Party. Neither Party shall have the power to control the activities and operations of the other Party and their status is, and at all times shall continue to be, that of independent contractors with respect to each other. Neither Party shall have any power or authority to bind or commit the other Party. Neither Party shall hold itself out as having any authority or relationship in contravention of this Section 12.10.

     12.11 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original as regards any Party whose signature appears thereon and all of which together shall constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all Parties reflected hereon as signatories.

     12.12 Attorneys Fees. The prevailing party is entitled to recover from the losing party the prevailing party’s attorneys’ fees and costs incurred in any arbitration or other action with respect to any claim arising out or relating to this Agreement.

     12.13 Execution. This Agreement may be executed by facsimile signatures and such signature will be deemed binding for all purposes of this Agreement, without delivery of an original signature being thereafter required.

[Signature Page follows]

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The Parties have executed this Agreement as of the Effective Date.

Trident Microsystems (Far East) Ltd.			NXP B.V.
By:	/s/ Pete J. Mangan		By:	/s/ Guido Diereck
	Name:	Pete J. Mangan		Name:	Guido Diereck
	Title:	President		Title:	Authorized Signatory

EX-10.44

Exhibit 10.44

CONFIDENTIAL TREATMENT REQUESTED-REDACTED COPY

*** Confidential Treatment has been requested for portions of this Exhibit. Confidential portions of this Exhibit are designated by [****]. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.

MANUFACTURING SERVICES AGREEMENT

between

TRIDENT MICROSYSTEMS (FAR EAST) LTD.

and

NXP SEMICONDUCTORS NETHERLANDS B.V.

DATED
February 8, 2010

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Table of Contents

	ARTICLE 1
	Definitions 1
	ARTICLE 2
	Services 4
2.1	Finished Goods Period	4
2.2	Post-Finished Goods Period Services	4
2.3	Quality of Performance by Third Party Providers	5
2.4	Returns	5
2.5	Purchase of Inventory	5
2.6	Quarterly Review of Services	5
2.7	Additional Services	6
	ARTICLE 3
	Pricing, Payment and Taxes 6
3.1	General Pricing Terms	6
3.2	Finished Goods Period Pricing	6
3.3	Post-Finished Goods Period Pricing	7
3.4	Payment	8
	ARTICLE 4
	Planning and Capacity Reservation 8
4.1	General	8
4.2	Long Term Plan	8
4.3	Short-Term Plan	8
4.4	NXP Group Capacity Commitment for Pending Orders	9
4.5	NXP Group Capacity Commitment	9
	ARTICLE 5
	Minimum Volume Commitment and Capacity Reservation 10
5.1	Trident Minimum Volume Commitment	10
5.2	Audit Rights	10
	ARTICLE 6
	Purchase Orders, Order Placement, Management and Batch Releases 10
6.1	Finished Goods Period Ordering	10
6.2	Finished Goods Period Wafer Production and Purchase Orders	11
6.3	Post-Finished Goods Period Ordering	11
6.4	Lead Times; Issue of Purchase Orders	11
6.5	Binding Purchase Order	11
6.6	Adjustment of Purchase Order	11

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6.7	Non-Compliance of Purchase Order	12
6.8	Cancellation of Purchase Orders	12
6.9	Production Hold	13
6.10	Wafer Bank Storage	13
	ARTICLE 7
	Consignment of Wafers, Risk of Loss, Packing and Date of Shipment 13
7.1	Consignment of Wafers	13
7.2	Risk of Loss	13
7.3	Packing	13
7.4	Timely Delivery Performance	14
7.5	Date of Shipment	14
	ARTICLE 8 Product Qualification and Changes 14
8.1	Product Qualification	14
8.2	Quality Standards	14
8.3	Changes to Products Initiated by NXP	15
8.4	Changes to Products Initiated by Trident	15
8.5	Discontinuance	15
	ARTICLE 9 Warranties 15
9.1	Services Warranty	15
	ARTICLE 10 Limitation of Liability 16
10.1	Direct Damages	16
10.2	Cap on Direct Damages	16
10.3	Indirect Damages	16
	ARTICLE 11
	Confidentiality 16
11.1	Confidential Information	16
11.2	No Other Use	16
11.3	Disclosure Required by Law	17
11.4	Return of Confidential Information	17

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	ARTICLE 12
	Licensing Arrangements 18
	ARTICLE 13
	Intellectual Property Indemnification 18
13.1	Infringement by Trident Group	18
13.2	Infringement by NXP Group	18
13.3	Separate Obligations	19
13.4	Indemnification Procedures	19
	ARTICLE 14
	Transfer of Manufacturing Processes 19
14.1	Transfers Initiated by NXP	19
	ARTICLE 15
	Term; Termination 20
15.1	Term of the Agreement	20
15.2	Extension of the Term	20
15.3	Termination	20
	ARTICLE 16
	Miscellaneous 20
16.1	Force Majeure	20
16.2	Export Control	20
16.3	Assignment	20
16.4	Interpretations; Rules of Construction	21
16.5	Survival	21
16.6	Entire Agreement	21
16.7	Amendments and Waivers	21
16.8	Third Party Rights	22
16.9	Severability	22
16.10	Notices	22
16.11	Dispute Resolution	22
16.12	Governing Law	23
16.13	Attorneys Fees	23
16.14	Counterparts	23

Annex A: Manufacturing Processes
Annex B: NXP Calendar
Annex C: Purchase and Supply Chain Services
Annex D: Service Tariffs
Annex E: Product Data and Yields
Annex F: Product Prices
Annex G: Product Flows

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Annex H: First Confirmed STP
Annex I: Total Relevant Demand Percentage
Annex J: Product Qualification
Annex K: Buy Back Agreement
Annex L: Lead Time Exceptions

CONFIDENTIAL TREATMENT REQUESTED – REDACTED COPY

Manufacturing Services Agreement

          This Manufacturing Services Agreement (this “Agreement”) is made and entered into as of February 8, 2010 by and between Trident Microsystems (Far East) Ltd. (“Trident”), a Cayman Islands company, and NXP Semiconductors Netherlands B.V., a private company with limited liability incorporated under the laws of The Netherlands, (“NXP Semiconductors”). Trident and NXP Semiconductors are collectively referred to herein as the “Parties”, or individually as a “Party”, as the case may be.

          WHEREAS, NXP B.V., a private company with limited liability incorporated under the laws of The Netherlands (“NXP B.V.”), Trident and Trident Microsystems, Inc., a Delaware corporation, have entered into that certain Share Exchange Agreement (the “SEA”), dated as of October 4, 2009; and

          WHEREAS, in connection with and as a condition precedent to the closing of the transactions contemplated by the SEA, NXP B.V. has agreed to provide, and Trident desires to contract for, the manufacturing and related services described herein.

          NOW, THEREFORE, in consideration of the foregoing and the mutual promises, covenants and conditions contained herein, the Parties hereby agree as follows.

ARTICLE 1
Definitions

          As used in this Agreement, the following terms have the meanings set forth below. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the SEA.

          “Adjusted Binding Purchase Order” shall have the meaning set forth in Section 6.6(a).

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

          “Back End Services” shall mean any operation performed on a Wafer after it has left the wafer manufacturing site, including, but not limited to, wafer testing, grinding, sawing, assembly, final test, marking and packing, as further described in Annex A.

          “Binding Purchase Order” shall have the meaning set forth in Section 6.5(a).

          “Confidential Information” shall have the meaning set forth in Section 11.1.

          “Confirmed Line Item Performance” shall have the meaning set forth in Section 7.4(a)(i).

          “Confirmed STP” shall have the meaning set forth in Section 4.3(d).

          “Dispute Notice” shall have the meaning set forth in Section 16.11(b).

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          “Dual Sourced Products” shall have the meaning set forth in Section 3.2(c)(ii).

          “Finished Goods Period” shall have the meaning set forth in Section 2.1(a).

          “Force Majeure” shall mean an action or event beyond the reasonable control of a Party, as a result of which it cannot fulfill or cannot reasonably be required to fulfill its obligations hereunder. Such circumstances include but are not limited to war, strikes, insurrection, terrorism, fire and explosion, natural disasters, lock-outs, epidemics, industrial espionage or governmental law or regulations.

          “Front End Services” shall mean the manufacturing of Wafers up to and including the process control module electrical test and any other services performed on a Wafer before it leaves the wafer manufacturing facility, as further described in Annex A, but excluding Back End Services (even if performed in a Front End Services manufacturing facility).

          “Hold” shall have the meaning set forth in Section 6.9(a).

          “JAMS” shall have the meaning set forth in Section 16.11(c).

          “JAMS Arbitrator” shall have the meaning set forth in Section 16.11(c).

          “LTP” shall have the meaning set forth in Section 4.2(a).

          “Manufacturing Processes” shall mean the manufacturing processes relevant for the supply of Products and provision of Manufacturing Services to Trident Group pursuant to this Agreement, as described in Annex A.

          “Manufacturing Services” shall mean, collectively, Front End Services and Back End Services.

          “Minimum Volume Commitment” shall have the meaning set forth in Section 5.1(a).

          “NXP B.V.” shall have the meaning set forth in the Recitals of this Agreement.

          “NXP Calendar” shall mean the calendar set forth in Annex B.

          “NXP Group” shall mean NXP Semiconductors and its Affiliates.

          “NXP Plant” shall mean any majority owned or controlled NXP Group facility which shall be used for the manufacturing of Products and the providing of Manufacturing Services pursuant to this Agreement.

          “NXP Semiconductors” shall have the meaning set forth in the Preamble of this Agreement.

          “Party” or “Parties” shall have the meaning set forth in the Preamble of this Agreement.

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          “Permitted Representatives” shall have the meaning set forth in Section 11.1.

          “Post-Finished Goods Period” shall have the meaning set forth in Section 2.2.

          “Price Factors” shall have the meaning set forth in Section 3.2(a)(i).

          “Products” shall mean the end products resulting from the Back End Services to be supplied by NXP Group to Trident Group pursuant to this Agreement.

          “Purchase Order” shall mean any purchase order issued by Trident Group to NXP Group in accordance with Section 6.1.

          “Purchasing and Supply Chain Services” shall mean the services to be provided by NXP Group to Trident Group as described in Annex C.

          “Remaining Inventory” shall have the meaning set forth in Section 2.5(a).

          “Remaining Inventory Price” shall have the meaning set forth in Section 2.5(b).

          “Requested Line Item Performance” shall have the meaning set forth in Section 7.4(a)(ii).

          “SEA” shall have the meaning set forth in the Recitals of this Agreement.

          “Service Tariff” shall have the meaning set forth in Section 3.1(a).

          “Service Type” shall have the meaning set forth in Section 5.1(c).

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

          “Term” shall have the meaning set forth in Section 15.1.

          “Third Party Plant” shall mean any facility majority owned or controlled by a Third Party Provider which shall be used for the manufacturing of Products and the providing of Manufacturing Services pursuant to this Agreement.

          “Third Party Provider” shall mean any current or future third party provider of Front End Services or Back End Services. For the avoidance of doubt, NXP Group is not a Third Party Provider.

          “Total Relevant Demand Percentage” shall have the meaning set forth in Section 5.1(b).

          “Trident” shall have the meaning set forth in the Preamble of this Agreement.

          “Trident Group” shall mean Trident and its Affiliates.

          “VC Products” shall have the meaning set forth in Section 3.2(a)(i).

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          “Wafer” shall mean the basic unit of production in semiconductor fabrication that is comprised of a thin circular wafer of silicon upon which the transistor and other circuit elements that comprise an integrated circuit are formed.

          “Wafer Bank” shall mean a wafer bank maintained by NXP Group at one or more NXP Plants for the storage of partly manufactured (but not yet completed, pre-tested, assembled and final-tested) ROM-coded Products.

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

          “Warranty Period” shall have the meaning set forth in Section 9.1(a).

ARTICLE 2
Services

          2.1 Finished Goods Period.

          (a) During the period commencing on the Closing Date and ending on the earlier of (i) June 30, 2011 and (ii) the readiness of Trident’s enterprise resource planning system (the “Finished Goods Period”), NXP Group shall provide Trident Group with Products produced using the following:

(i)	Front End Services by NXP Plants;
(ii)	Back End Services by NXP Plants; and
(iii)	Purchasing and Supply Chain Services

          (b) Prior to the end of the Finished Goods Period, upon Trident’s reasonable request and subject to mutual agreement between NXP Semiconductors and Trident, NXP Group shall render to Trident Group the Manufacturing Services set forth in Section 2.2 with respect to specified agreed-upon Products; provided that prior to the commencement of such Manufacturing Services, Trident Group shall purchase from NXP Group the Remaining Inventory related to such Products in the manner set forth in Section 2.5.

          2.2 Post-Finished Goods Period Services. From the day following the last day of the Finished Goods Period until the end of the Term (the “Post-Finished Goods Period”), NXP Group shall render to Trident Group, in respect of the Business, any combination of the following Manufacturing Services:

          (a) Front End Services by NXP Plants;

          (b) Back End Services by NXP Plants solely with respect to consigned Wafers owned by Trident Group; and

          (c) Subject to mutual written agreement, Manufacturing Services for mutually agreed legacy exceptions (i.e., Products provided during the Finished Goods

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Period which the parties agree will continue to be provided during the Post-Finished Goods Period).

          2.3 Quality of Performance by Third Party Providers. [****]

          2.4 Returns. From and after the Closing Date, Trident Group shall be responsible for interfacing with customers of the Business with regards to all returns of Products purchased (i) prior to the Closing Date; provided, however, that all Liabilities incurred with respect to Products sold prior to the Closing Date shall be governed by the provisions of the SEA, and (ii) after the Closing Date. NXP Group shall provide support to Trident Group in accordance with NXP Group’s normal return policies and procedures, including quality levels previously committed by NXP Group to its customers prior to the Closing Date, and shall make available tools and manpower to analyze such returns and quality improvement efforts consistent with common industry practices applied by third party foundries and subcontractors.

          2.5 Purchase of Inventory.

          (a) On the last day of the Finished Goods Period, Trident Group shall purchase from NXP Group the following (collectively, the “Remaining Inventory”):

               (i) All Products and Wafers in NXP Group’s possession or acquired by NXP Group in the course of executing Purchasing and Supply Chain Services for Trident Group;

               (ii) All Wafers produced for the Business that have left the front end NXP Plant,`

               (iii) All work in progress Related to the Business; and

               (iv) All Open Outgoing POs with Third Party Providers.

          (b) [****]

          (c) Payment by Trident of the Remaining Inventory Price shall be effectuated first, by offsetting the amount owed by NXP B.V. under the WIP Note by a corresponding amount and second, upon the exhaustion of the amount owed by NXP B.V. under the WIP Note, by cash payment made by Trident to NXP Semiconductors within ten (10) Business Days after the end of the Finished Goods Period.

          (d) To the extent the amount owed by NXP B.V. under the WIP Note has not been exhausted by offsets made pursuant to Section 2.5(c), NXP Semiconductors shall make a compensating cash payment to Trident within ten (10) Business Days after the end of the Finished Goods Period.

          2.6 Quarterly Review of Services. Trident shall conduct quarterly operations reviews to assess performance of services provided pursuant to this Agreement. NXP Semiconductors shall participate in these reviews and provide any information required by

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Trident to support such reviews and shall promptly implement any commercially reasonable corrective action plans arising as a result of such reviews.

          2.7 Additional Services. [****]

ARTICLE 3
Pricing, Payment and Taxes

          3.1 General Pricing Terms.

          (a) The quarterly tariffs (“Service Tariff”) for Front End Services and Back End Services are set forth in Annex D hereto. Except for any Third Party Provider prices included in such Service Tariffs, the Service Tariffs are fixed for the duration of this Agreement, unless otherwise agreed by the Parties in writing; it being understood that the prices of Third Party Providers included in the Service Tariffs are current estimates as of the date of this Agreement and will be subject to changes to reflect actual prices charged by such Third Party Providers.

          (b) All pricing and Service Tariffs shall be in U.S. dollars unless otherwise agreed.

          (c) Pricing and price quotes shall not include costs of value-added taxes, withholding taxes and duties.

          (d) [****] At Trident’s reasonable request and expense, NXP Group shall (i) arrange to transport Products to Hong Kong, P.R.C. and/or (ii) provide warehousing services for Trident Group in Hong Kong, P.R.C., with respect to the Products.

          (e) [****] The Parties shall agree on a change management process with respect to test programs.

          3.2 Finished Goods Period Pricing.

          (a) General.

               (i) Prices for existing or new Products that are or will be subject to the Minimum Volume Commitment (“VC Products”) shall be determined and revised by [****] (collectively, the “Price Factors”).

               (ii) [****]

               (iii) [****]

               (iv) For large volume orders of Products that are not reflected in the current Confirmed STP, the Parties shall use good faith efforts to determine an appropriate price taking into account the then-current pricing and shall adjust such pricing accordingly to reflect the size of the transaction.

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          (b) Prices for VC Products as of the Closing Date. The prices for VC Products as of the Closing Date are set forth in Annex F.

          (c) Quarterly Prices for VC Products

               (i) During the Finished Goods Period, the Parties shall, on a quarterly basis, review the pricing for VC Products and make applicable adjustments, to be effective the subsequent quarter, reflecting the anticipated changes in the Price Factors relating to such VC Products.

               (ii) [****]

          (d) Quarterly Reconciliation

               (i) [****]

               (ii) [****]

               (iii) [****]

          (e) Prices for Non-VC Products. The pricing for Products that that are not subject to the Minimum Volume Commitment shall be mutually agreed upon by the Parties from time to time, and shall be subject to quarterly review.

          3.3 Post-Finished Goods Period Pricing.

          (a) The Parties shall determine the pricing for each Manufacturing Service that is subject to the Minimum Volume Commitment based on the applicable Service Tariff.

          (b) During the Post-Finished Goods Period, the Parties shall, on a quarterly basis, review the pricing for Manufacturing Services that are subject to the Minimum Volume Commitment, and make applicable adjustments, to be effective the subsequent quarter, reflecting changes in yields and test times.

          (c) The pricing for Manufacturing Services that that are not subject to the Minimum Volume Commitment shall be mutually agreed upon by the Parties from time to time, and shall be subject to quarterly review.

          (d) For large volume orders of Manufacturing Services that are not reflected in the current STP, the Parties shall use good faith efforts to determine an appropriate price taking into account the then-current pricing and shall adjust such pricing accordingly to reflect the size of the transaction.

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          3.4 Payment.

          (a) NXP Group shall invoice Products and Manufacturing Services on a monthly basis. On the 15th calendar day of each month, NXP Group shall invoice the costs for Products delivered and Manufacturing Services provided for that month.

          (b) Payment by Trident Group for Products provided by NXP Group during the Finished Goods Period shall be effectuated by cash payment within [****]  of the date of invoice.

ARTICLE 4
Planning and Capacity Reservation

          4.1 General.

          (a) The provisions of this Article 4 shall apply to the entire Term, unless otherwise provided.

          (b) Trident Group shall regularly provide NXP Group with appropriate visibility on Trident Group’s anticipated Product and Manufacturing Services needs during the Term.

          (c) Any LTP or STP provided by Trident Group, and any confirmation thereof by NXP Group, supersedes and replaces any previously provided LTP or STP or confirmation thereof.

          4.2 Long Term Plan.

          (a) In the first quarter of each calendar year, Trident shall provide to NXP Semiconductors a non-binding long term plan (“LTP”), which shall describe Trident Group’s anticipated Product and/or Manufacturing Services needs in a reasonably equal spread of volumes, for the remainder of the Term.

          (b) In the second quarter of each calendar year, NXP Group shall provide a non-binding confirmation to Trident Group if, according to NXP Group’s reasonably best estimate at such time, NXP Group would be able to deliver the requested Products and/or Manufacturing Services.

          4.3 Short-Term Plan.

          (a) No later than the end of the first full week of each calendar month of the NXP Calendar, Trident shall provide to NXP Semiconductors its non-binding short-term plan (“STP”) for the following 12 (twelve) months; provided that any STP provided by Trident during the third quarter of a calendar year shall include Trident’s non-binding short-term plan for the full subsequent calendar year.

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          (b) The STP shall describe Trident Group’s anticipated Product and/or Manufacturing Services demand with a monthly breakdown per Manufacturing Process and fab mix, taking into account an equal spread of volumes over the applicable weeks.

          (c) Within three (3) Business Days after the receipt of an STP, NXP Semiconductors shall provide to Trident an initial indication with respect to availability of capacity.

          (d) Within ten (10) Business Days after the receipt of an STP, NXP Semiconductors shall provide a final confirmation, subject to the provisions of Section 4.5 below, upon which the STP shall then be a “Confirmed STP”. The first Confirmed STP that shall apply at the Closing Date is set forth in Annex H.

          (e) NXP Group shall use commercially reasonable efforts to procure necessary long lead time raw materials and components based on any Confirmed STP; provided, however, that Trident Group shall assume all Liabilities for any such long lead time raw materials and components that are not used as more particularly described in the Buy Back Agreement attached hereto as Annex K.

          4.4 NXP Group Capacity Commitment for Pending Orders. For orders in process as of the Closing Date, NXP Group shall make capacity available consistent with the demand required by the Business in the ordinary course of the Business as operated in the pre-Closing period (i.e., supplies that were secured pre-Closing, shall be secured post-Closing).

          4.5 NXP Group Capacity Commitment.

          (a) [****]

          (b) If NXP Group, after compliance with Section 4.5(a), cannot provide sufficient capacity to satisfy Trident’s demand for Products or Manufacturing Services, Trident shall be free to source the Products or Manufacturing Services from Third Party Providers and NXP Group shall provide reasonable support to Trident Group in such sourcing efforts. The volume of any such third-party outsourced Products or Manufacturing Services, shall count towards any Minimum Volume Commitment of Trident Group.

          (c) Until the date that is nine (9) months after the Closing Date, NXP Group shall not be permitted to claim insufficient capacity pursuant to Section 4.5(a) if NXP Group would have had sufficient capacity but for the fact that NXP Group had not made investments in fixed manufacturing or testing assets for rendering of Products and Manufacturing Services that were planned to be made at the Closing Date.

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ARTICLE 5
Minimum Volume Commitment and Capacity Reservation

          5.1 Trident Minimum Volume Commitment.

          (a) Trident Group shall source the following volumes of NXP Group Products and Manufacturing Services, in each case as related to the products included in the current roadmaps of the Business (the “Minimum Volume Commitment”):

               (i) [****]

               (ii) [****]

               (iii) [****]

          (b) “Total Relevant Demand Percentage” for a Service Type shall mean the percentage of total needs for such Service Type sourced by the Business in 2009 from NXP Plants, as set forth on Annex I.

          (c) “Service Type” shall mean:

               (i) Front End Services relating to non-advanced CMOS Wafers (larger than .12 microns);

               (ii) Back End Services relating to assembly services; and

               (iii) Back End Services relating to testing services (Wafer testing and final testing taken together).

          5.2 Audit Rights.

          (a) No more than once per calendar year, Trident shall have the right to have external independent auditors, selected by Trident and reasonably acceptable to NXP Semiconductors, perform an audit with respect to NXP Group’s compliance with Section 5.1 above.

          (b) No more than once per calendar year, NXP Semiconductors shall have the right have external independent auditors, selected by NXP Semiconductors and reasonably acceptable to Trident, perform an audit with respect to Trident Group’s compliance with Section 5.1 above.

ARTICLE 6
Purchase Orders, Order Placement, Management and Batch Releases

          6.1 Finished Goods Period Ordering. During the Finished Goods Period, Trident Group shall issue purchase orders (“Purchase Orders”) for Products, and NXP Group shall invoice Trident Group for Products delivered pursuant to such Purchase Orders.

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          6.2 Finished Goods Period Wafer Production and Purchase Orders. During the Finished Goods Period, Trident shall be required to approve any Wafer starts in NXP Plants as well as purchase orders by NXP Group with Third Party Providers necessary for NXP Group to comply with a Confirmed STP. Any such approved Wafers and purchase orders shall be for the economic benefit and risk of Trident and shall be used by NXP Group in the provision of Back End Services for Products of Trident ordered in the Finished Goods Period.

          6.3 Post-Finished Goods Period Ordering. During the Post-Finished Goods Period, Trident Group shall issue Purchase Orders for Front End Services and Back End Services, and NXP Group shall invoice Trident Group for Front End Services and Back End Services provided pursuant to such Purchase Orders.

          6.4 Lead Times; Issue of Purchase Orders.

          (a) [****]

          (b) Any Purchase Orders by Trident Group to NXP Group shall reflect the Products or Manufacturing Services, as applicable, in quantities consistent with the applicable Confirmed STP. NXP Group shall confirm Purchase Orders as executable on specified call-off dates within forty-eight (48) hours.

          (c) All Purchase Orders (including confirmations and changes relating thereto) issued by Trident Group to NXP Group shall be forwarded by electronic means.

          6.5 Binding Purchase Order.

          (a) A Purchase Order shall be confirmed by NXP Group (a “Binding Purchase Order”) if:

               (i) the Purchase Order is in line with the applicable Confirmed STP; or

               (ii) the Purchase Order is not in line with the applicable Confirmed STP, but NXP Group shall use commercially reasonable efforts to confirm to Trident Group within two (2) Business Days, and in no event later than ten (10) Business Days, after receipt of the Purchase Order that it accepts such Purchase Order.

          (b) For the avoidance of doubt, all Purchase Orders confirmed by NXP which have been issued by Trident Group to NXP Group prior to the Closing Date shall remain binding between the Parties and unaffected by this Agreement.

          6.6 Adjustment of Purchase Order.

          (a) Trident Group may at any time, by written notice to NXP Group, make adjustments to the following provisions of any Binding Purchase Order, which after acceptance and confirmation by NXP Group, shall become an “Adjusted Binding Purchase Order”:

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               (i) The quantity of Products or Manufacturing Services, provided that the volume remains in accordance with the Confirmed STP and requested delivery schedule;

               (ii) The method of shipping or packing;

               (iii) The place of delivery, inspection or acceptance and package marking; and

               (iv) The requested ship date.

          (b) In the event that Trident Group requests excess volume for a Purchase Order (i.e., the volume exceeds the volume of the Confirmed STP or Binding Purchase Order), NXP Group shall use commercially reasonable efforts to accommodate such request.

          (c) In the event that an Adjusted Binding Purchase Order leads to increases or decreases of the cost of or the time required for the timely completion of the relevant Binding Purchase Order (and Trident Group has approved such cost increases or decreases), the agreed adjusted price and/or delivery schedule shall automatically become part of the Adjusted Binding Purchase Order.

          6.7 Non-Compliance of Purchase Order. If a Purchase Order is not in line with the applicable Confirmed STP or is otherwise not in compliance with this Agreement, and NXP Group does not confirm such Purchase Order pursuant to Section 6.5(a)(ii), NXP Group shall as soon as reasonably practicable provide Trident Group with written notice describing the non-compliance and shall provide Trident Group a reasonable opportunity to remedy such non-compliance. If Trident Group remedies such non-compliant Purchase Order, such Purchase Order shall become a Binding Purchase Order.

          6.8 Cancellation of Purchase Orders. Trident Group may cancel any Purchase Order, Binding Purchase Order or Adjusted Binding Purchase Order or portion thereof at any time by submitting a written cancellation notice to NXP Group. In such event, Trident Group shall compensate NXP Group for any actual work already completed by NXP Group pursuant to such cancelled Purchase Order, Binding Purchase Order or Adjusted Binding Purchase Order as follows:

          (a) [****]

          (b) [****]

          (c) [****]

          (d) [****]

          (e) [****]

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     6.9 Production Hold.(a) In the event that Trident Group requests NXP Group to hold the manufacturing of any Products ordered in a Binding Purchase Order or an Adjusted Binding Purchase Order (the “Hold”), such Hold shall be subject to terms to be mutually agreed upon by the Parties. In no event shall a Hold last more than three (3) months. If Trident Group requests a Hold, it shall submit its request together with a written plan on when and how the manufacturing process shall be resumed within such three (3) month period.

          (b) At the end of the Hold, NXP Group shall deliver the unfinished Products to Trident Group, unless Trident Group requests NXP Group to (i) scrap the ordered Products, or (ii) complete the manufacturing of the Products.

          (c) NXP Group shall invoice Trident Group in case of a scrap or delivery of unfinished Products and Trident Group shall make payment to NXP Group equitably prorated based on the stage of completion of the manufacturing process. Trident Group shall pay any such received invoice within [****] of the date of invoice.

          6.10 Wafer Bank Storage. NXP Group shall maintain a Wafer Bank consistent with generally accepted industry practices in order to store all ROM-coded Wafers in accordance with current practices, and subject to Trident approval of Wafer starts.

ARTICLE 7
Consignment of Wafers, Risk of Loss, Packing and Date of Shipment

          7.1 Consignment of Wafers. During the Post-Finished Goods Period, or such earlier time for Back End Services provided by NXP Group during the Finished Goods Period in accordance with Section 2.1(b), Trident Group shall consign Wafers that are the subject of Back End Services by NXP Plants to NXP Group, and NXP Group shall keep such Wafers in custody for the sole purpose of using in Back End Services. NXP Group shall keep, store and use Wafers with the same care that it extends to its own wafers. NXP Group shall insure, and shall provide at Trident’s request evidence of such insurance, such Wafers against the risk of loss, damage or theft in accordance with its insurance policies for its own products and shall make available to Trident any insurance proceeds NXP Group shall receive under such insurance as a result of an insured event; provided, that Trident shall be responsible for any applicable deductible or other setoff.

          7.2 Risk of Loss. Transfer of ownership of Wafers or Products supplied by NXP Group to Trident Group shall occur at the time of shipment to Trident Group. Title and risk of loss shall pass to Trident Group upon delivery to a carrier.

          7.3 Packing. NXP Group shall package the Wafers and Products in accordance with NXP Group’s practices immediately prior to Closing, as applicable. If the instructions from Trident Group are determined by NXP, acting in good faith, to not be commercially reasonable, NXP Group shall provide Trident Group with an estimate of the excess cost of complying with such instructions. Upon written acceptance by Trident Group of such estimate, NXP Group shall comply with such instructions within the scope of such estimate.

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          7.4 Timely Delivery Performance.

          (a) NXP Group shall use commercial reasonable efforts to achieve the following levels of on-time delivery performance, based on a monthly resolution period:

               (i) “Confirmed Line Item Performance” shall equal [****] based on NXP Group internal performance excluding factors outside of NXP Group’s control, and shall be calculated as follows: 100% times (x) order lines delivered to Trident Group before or on the first confirmed delivery date, divided by (y) total number of order lines.

               (ii) “Requested Line Item Performance” shall equal [****] based on manufacturing and capacity constraints only, and shall be calculated as follows: 100% times (x) order lines delivered to Trident Group two (2) days before or one (1) day after the last requested deliver date, divided by (y) total number of order lines.

          (b) Both Confirmed Line Item Performance and Requested Line Item Performance are subject to (i) the provisions in Section 4.5(a), (ii) timely approval of Wafer starts by Trident in accordance with Section 6.2, and (iii) the provisions in Sections 6.2 through 6.10, inclusive. For the avoidance of doubt, Requested Line Item Performance will be the result of order acceptance in accordance with the Sections referenced in clauses (i), (ii) and (iii) of this Section 7.4(b) and the order fulfillment (Confirmed Line Item Performance) as described under Section 7.4(a)(i).

          7.5 Date of Shipment. The date on the bill of lading issued by the first carrier shall be conclusive proof of the date and fact of shipment of the Wafers or Products.

ARTICLE 8
Product Qualification and Changes

          8.1 Product Qualification.

          (a) NXP Group shall perform Product qualifications in accordance with the Quality and Reliability Specifications set forth in Annex J.

          (b) NXP shall release diffusion processes in accordance with NXP Group’s procedure SNW-SQ-020 set forth in Annex J and shall release new packages in accordance with NXP Group’s procedure SNW-FA-03-04 in Annex J.

          8.2 Quality Standards. NXP Group shall maintain the following certifications, with such certifications to be provided by an internationally accredited certification body:

          (a) ISO9001 certification for its quality management system; and

          (b) ISO/TS16949 certification for NXP Plants.

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          8.3 Changes to Products Initiated by NXP. Any proposed changes affecting Products shall be handled in compliance with JEDEC Standard JESD 46C; Customer Notification of Production/Process Changes by Semiconductor Suppliers.

          8.4 Changes to Products Initiated by Trident. Trident shall provide all relevant data (Product BOM) in a format acceptable to NXP.

          8.5 Discontinuance. NXP Group shall be entitled to discontinue Products or Manufacturing Processes in accordance with JEDEC Standard JESD48B20.1.

ARTICLE 9
Warranties

          9.1 Services Warranty.

          (a) NXP Group warrants that it shall render the Manufacturing Services in accordance with international good workmanship standards in the foundry and back end services industry and consistent with past practice. NXP Group warrants that it shall use commercially reasonable efforts to render the Manufacturing Services such that Products delivered to Trident Group under this Agreement shall substantially meet the agreed specifications set out in Annex J under normal use for a period (the “Warranty Period”) of one (1) year from the date of shipment (the “Warranty”). The Warranty shall in any event not extend to (i) defects to Products caused by accident, abuse, misuse, neglect, improper installation or packaging, repair or alteration by someone other than NXP Group or its suppliers or subcontractors, or improper testing or use, or (ii) defects caused by any Third Party Providers.

          (b) If, during the Warranty Period, a valid Warranty claim is made, and:

               (i) NXP Semiconductors is notified promptly, but in any event within ten (10) Business Days after discovery, of the underlying facts in writing by Trident; and

               (ii) any affected Products are returned to NXP Group without delay;

then NXP Group shall, as a sole and exclusive remedy, at its discretion, either repair, replace, or compensate Trident Group with the applicable prices paid for such defective Products.

          (c) Subject to Section 9.1(b), NXP Group shall promptly return to Trident Group all Products repaired or replaced under the Warranty, transportation prepaid, and shall reimburse Trident Group for the transportation charges paid by it for returning such proven defective Products to NXP Group. Nothing in this Section 9.1(c) shall extend the above twelve (12) month period for any Product beyond the original Warranty Period.

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          (d) OTHER THAN AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE PRODUCTS AND SERVICES PROVIDED UNDER THIS AGREEMENT ARE PROVIDED “AS IS” AND NXP GROUP MAKES NO OTHER REPRESENTATIONS OR WARRANTIES UNDER THIS AGREEMENT, AND DISCLAIMS ANY AND ALL OTHER REPRESENTATIONS OR WARRANTIES, STATUTORY, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT.

ARTICLE 10
Limitation of Liability

          10.1 Direct Damages. In no event shall either Party be liable for direct damages resulting from, arising out of, or in connection with a Party’s performance or failure to perform under this Agreement, whether due to a breach of contract, breach of warranty, tort, negligence or otherwise, except for actions constituting gross negligence or willful misconduct of such Party or its Affiliates.

          10.2 Cap on Direct Damages. Except for any breach of the confidentiality obligations under Article 11, in no event shall a Party’s liability for direct damages arising out of or relating to this Agreement exceed, with respect to a claim, the total amounts paid or payable to, or paid or payable by, such Party for services or Products to which the claim pertains.

          10.3 Indirect Damages. In no event shall either Party be liable for any indirect or consequential damages (including loss of profits and loss of use) resulting from, arising out of, or in connection with a Party’s performance or failure to perform under this Agreement, whether due to a breach of contract, breach of warranty, tort, negligence or otherwise, even if a Party has been advised of the possibility of such damages.

ARTICLE 11
Confidentiality

          11.1 Confidential Information. Each Party shall keep confidential this Agreement and all proprietary and non-public information regarding the other Party and its Affiliates received pursuant to this Agreement that is known to be or otherwise would be reasonably understood as confidential given the nature of the information disclosed and the context of its disclosure (the “Confidential Information”), and shall not disclose or reveal any such information to any Person without the prior written consent of the other Party, other than those of its employees, officers, directors, Affiliates, attorneys, accountants and financial advisors (“Permitted Representatives”) who need to know such information for the purpose of taking any action required with respect to this Agreement and shall cause those Permitted Representatives to observe the terms of this Article 11 and agree for the benefit of the other Party to do so (and any violation or breach of the terms of this Article 11 by any Permitted Representative shall be deemed a breach hereof by the applicable Party).

          11.2 No Other Use. Each Party shall not, and shall cause its respective Permitted Representatives not to, use the other Party’s Confidential Information for any purpose

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other than in connection with this Agreement; provided, that nothing herein shall prevent a Party or any of its Permitted Representatives from disclosing any such information that:

          (a) is or becomes generally available to the public other than as a result of a disclosure by the such Party or its Permitted Representatives in violation of this Section 11.2 or any other confidentiality agreement between the Parties or any of their respective Permitted Representatives or any other legal duty, fiduciary duty, or other duty of trust and confidence of the Parties, any of their Permitted Representatives;

          (b) was within such Party’s or its Permitted Representative’s possession on a non-confidential basis prior to being furnished with such information (provided that the source of such information was not known by such Party at the time of such disclosure by such Party or any of its Permitted Representatives to be bound by a confidentiality agreement with, or other contractual, legal or fiduciary obligation of confidentiality to or other duty of trust and confidence to, the other Party with respect to such information);

          (c) was independently developed by such Party without use of any information furnished to such Party, any of its Permitted Representatives; or

          (d) becomes available to such Party or its Permitted Representative on a non-confidential basis from a source other than the other Party (provided that such source is not known by such Party at the time of such disclosure by such Party or any of its Permitted Representatives to be bound by a confidentiality agreement with, or other contractual, legal or fiduciary obligation of confidentiality to or other duty of trust and confidence to, the other Party with respect to such information).

          11.3 Disclosure Required by Law. If any Confidential Information is required to be disclosed by a Party in accordance with Applicable Law or judicial order, then such Party shall notify the other Party in writing and shall cooperate with the other Party if the other Party elects to seek a protective order or other appropriate remedy with respect to such required disclosure. If no such protective order is obtained, and if the Party or any of its Permitted Representatives has been advised by legal counsel in writing that it is legally compelled to disclose any Confidential Information, then such Party or such Permitted Representative may disclose such Confidential Information, but shall furnish only that portion of the Confidential Information which such Party or is Permitted Representatives is advised by counsel is legally required and shall exercise its reasonable efforts to obtain reliable assurance that confidential treatment shall be accorded such Confidential Information.

          11.4 Return of Confidential Information. Upon the termination of this Agreement, each Party shall return to the other Party all written Confidential Information that has been provided to such Party under this Agreement; provided, that in lieu of returning such Confidential Information to the other Party, each Party may destroy such Confidential Information and provide the other Party with a written certification that such written Confidential Information has been destroyed.

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ARTICLE 12
Licensing Arrangements

          Unless otherwise agreed, ownership by NXP Group of any Manufacturing Process shall be governed as follows:

          (a) NXP Group solely owns all intellectual property rights, including, but not limited to, patents, patent applications, inventions, know-how, trade secrets and mask works, embodied in such Manufacturing Process and any improvements thereto.

          (b) In the event a specific Manufacturing Process is transferred to a Third Party Provider in accordance with Article 14, NXP Group shall grant a restricted license to such Third Party Provider with regard to such transferred Manufacturing Process to manufacture products exclusively for Trident Group.

ARTICLE 13
Intellectual Property Indemnification

          13.1 Infringement by Trident Group.

          (a) Trident shall, at its own expense:

                    (i) defend any claims brought by a third party alleging that any Products developed or supplied hereunder infringes any of such third party’s patent, trademark, copyright, mask work right, trade secret or other intellectual property rights to the extent arising from (x) NXP Group’s compliance with or implementation of any of Trident Group’s written instructions, specifications, designs or requirements to manufacture, sell, and/or ship the Products for or to Trident Group, or (y) use of equipment, materials supplies, know-how, methodologies or technology owned by Trident Group and/or provided to NXP Group by Trident Group or a third party on the instructions of Trident Group; and

                    (ii) indemnify and hold NXP Group harmless from all damages and costs directly attributable to such claims.

          (b) Without limiting the foregoing, Trident shall, at its own expense, defend any claims (whether based in contract, tort, patent infringement or otherwise) brought against NXP Group, by Tessera Inc. or any of its Affiliates or any party purporting to act on their behalf, arising out of or in connection with this Agreement or any of the Products or Manufacturing Services provided hereunder. Trident shall furthermore hold NXP Group harmless and indemnify NXP Group from all damages and costs directly attributable to such claims.

          13.2 Infringement by NXP Group. NXP Semiconductors shall, at its own expense:

          (a) defend any claims brought by a third party against Trident Group that the Manufacturing Processes or any other technologies used by NXP Group to manufacture the Products purchased hereunder infringes any of such third party’s patent,

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trademark, copyright, mask work right, trade secret, or other intellectual property rights; and

          (b) indemnify and hold Trident Group harmless from damages and costs directly attributable to such claims; in each case excluding, however, infringement arising from or in connection with compliance with or implementation of Trident’s instructions, specifications, designs or requirements as set forth in Section 13.1 above.

          13.3 Separate Obligations. For the avoidance of doubt, this Article 13 does not change, alter or add to NXP Group’s or Trident Group’s liability under the IP Transfer and License Agreement.

          13.4 Indemnification Procedures. Any claims for indemnification by either Party shall follow the indemnification procedures set forth in Section 11.4 of the SEA.

ARTICLE 14
Transfer of Manufacturing Processes

          14.1 Transfers Initiated by NXP.

          (a) Subject to consent by Trident, which shall not unreasonably be withheld, NXP Group shall have the right to:

               (i) outsource any of the Manufacturing Processes to a reasonably acceptable Third Party Provider;

               (ii) close any NXP Plant; or

               (iii) sell any NXP Plant;

provided, that any change that will impact cost, quality or service shall only be made with reasonable notice in accordance with customary foundry practices (including, but not limited to, JEDEC Standards) as necessary to avoid material liabilities, material financial impacts or material threats to Trident Group’s business continuity, to the extent that such liabilities, impacts or threats may be avoided by giving such reasonable notice.

          (b) Any required requalification shall be done in consultation with Trident.

          (c) For a transfer initiated by NXP Group, NXP Group shall bear the costs of any required requalification, masks, engineering material and any required NXP Group manpower.

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ARTICLE 15
Term; Termination

          15.1 Term of the Agreement. This Agreement shall be effective as of the Closing Date and shall remain in force until January 1, 2013 (the “Term”), subject to extension or earlier termination as provided in this Article 15.

          15.2 Extension of the Term.

          (a) Upon the second anniversary of the Closing Date, if requested by either Party, the Parties shall commence negotiations in good faith to agree an extension of the Term for the continued provision by NXP Group to Trident Group of all or part of the Manufacturing Services.

          (b) Subject to any extension of the Term, the Parties shall develop a plan for the orderly wind down of the provision of Manufacturing Services during the remaining Term, including the provision of Manufacturing Services for a limited period beyond such Term to the extent necessary to avoid any undue negative impact upon the operations of either Party.

          15.3 Termination. Neither Party may terminate this Agreement prior to the expiration of the Term; provided, however, that each Party may terminate this Agreement with immediate effect by written notice to the other Party and without incurring any liability on its part in the event that:

          (a) any proceeding under any bankruptcy or insolvency laws is brought against the other Party, or a liquidator for a Party is appointed or applied for, or an assignment for the benefit of creditors is made by a Party; or

          (b) a material breach of this Agreement by the other Party has occurred (which breach, to the extent it is capable of being remedied, shall not have been remedied within thirty (30) Business Days of the receipt of a written request by the non-breaching Party to remedy such material breach).

ARTICLE 16
Miscellaneous

          16.1 Force Majeure. In the event of a Force Majeure, the affected Party shall immediately notify the other Party of the occurrence.

          16.2 Export Control. Each Party shall take all appropriate measures to comply in all material respects with applicable provisions of export control laws and regulations, including any applicable provisions of the United States Export Administration Act and implementing Export Administration Regulation, and shall hold the other Party harmless from all damages arising out of or in connection with any violation of any of the foregoing.

          16.3 Assignment. Neither this Agreement nor any of the rights, interests or obligations under this Agreement may be assigned or delegated, in whole or in part, by operation

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of law or otherwise by any of the Parties without the prior written consent of the other Party, and any such assignment or delegation without such prior written consent shall be null and void, except that a Party may assign or otherwise transfer its rights without the prior consent of the other Party (i) to a direct or indirect wholly owned Subsidiary, or (ii) in connection with a merger, acquisition or sale of substantially all of such Party’s assets. Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of, and be enforceable by, the Parties and their respective successors and assigns.

          16.4 Interpretations; Rules of Construction. When a reference is made in this Agreement to Annexes, such reference shall be to an Annex to this Agreement unless otherwise indicated. When a reference is made in this Agreement to Schedules, such reference shall be to a Schedule to this Agreement unless otherwise indicated. When a reference is made in this Agreement to Sections, such reference shall be to a Section of this Agreement unless otherwise indicated. The words “include”, “include” and “including” when used herein shall be deemed in each case to be followed by the words “without limitation.” The term “$” means United States Dollars. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Reference to the subsidiaries of an entity shall be deemed to include all direct and indirect subsidiaries of such entity. The Parties agree that they have been represented by legal counsel during the negotiation and execution of this Agreement and, therefore, waive the application of any law, regulation, holding or rule of construction providing that ambiguities in an agreement or other document shall be construed against the Party drafting such agreement or document. In the event of a conflict between this Agreement and the SEA, the SEA shall govern unless the context otherwise requires.

          16.5 Survival. The following Articles shall survive termination or expiration of this Agreement: Article 9 (Warranties), Article 10 (Limitation of Liability), Article 11 (Confidentiality), Article 12 (Licensing Arrangements), Article 13 (Intellectual Property Indemnification) and Article 16 (Miscellaneous).

          16.6 Entire Agreement. This Agreement and the annexes and schedules hereto constitute the entire understanding and agreement of the Parties with respect to the subject matter hereof and supersede all prior and contemporaneous agreements or understandings, inducements or conditions, express or implied, written or oral, between the Parties with respect hereto. The express terms hereof control and supersede any course of performance or usage of the trade inconsistent with any of the terms hereof. Any additional or different terms on purchase orders, order confirmations and acknowledgements or invoices are hereby rejected by the Parties, are void and not binding on either Party.

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

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          16.8 Third Party Rights. No provisions of this Agreement are intended, nor shall be interpreted, to provide or create any third party beneficiary rights or any other rights of any kind in any client, customer, employee, affiliate, stockholder, partner of any Party or any other Person unless specifically provided otherwise herein and, except as so provided, all provisions hereof shall be personal solely between the Parties to this Agreement.

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

          16.10 Notices. All notices or other communications hereunder shall be given in accordance with Section 12.9 of the SEA.

          16.11 Dispute Resolution.

          (a) The Parties shall attempt in good faith to resolve promptly any dispute arising out of or relating to this Agreement.

          (b) In the event a dispute arises between the Parties under this Agreement that cannot be resolved after good faith negotiation as contemplated by Section 16.11(a) within ten (10) Business Days of a Party’s request, NXP Semiconductors or Trident, as applicable, shall provide a written notice to the other describing, in reasonable detail, the substance of such dispute or disagreement (the “Dispute Notice”). The chief executive officer of each of NXP Semiconductors or Trident shall meet, confer and attempt to resolve the dispute or disagreement within a period of thirty (30) days following delivery of such Dispute Notice. If such chief executive officers are unable to resolve the dispute or disagreement within such thirty (30) day period, then either party shall be entitled to commence dispute resolution pursuant to Section 16.11(c) below.

          (c) Any dispute or disagreement arising under this Agreement that cannot first be resolved as provided in Section 16.11(b) shall be finally and exclusively settled by binding arbitration to be held in New York, New York. Either NXP Semiconductors or Trident shall make written application to Judicial Arbitration and Mediation Services (“JAMS”), New York, New York, for the appointment of a single arbitrator (the “JAMS Arbitrator”) to resolve the dispute by arbitration. The arbitration shall be administered by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures. At the request of JAMS, the Parties shall meet with JAMS at its offices within ten (10) Business Days of such request to discuss the dispute and the qualifications and experience which each party respectively believes the JAMS Arbitrator should have. The Parties shall cooperate with each other and JAMS to select a JAMS Arbitrator within thirty (30) days of the written application to JAMS. The arbitrator shall have the authority to grant any equitable and legal remedies that would be available in any judicial

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CONFIDENTIAL TREATMENT REQUESTED – REDACTED COPY

proceeding instituted under New York law to resolve the dispute. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. The losing party shall bear the cost of the arbitration, including the arbitrator’s fee. The Parties hereto expressly waive all rights whatsoever to file an appeal against or otherwise to challenge any award by the arbitrator hereunder, except that the foregoing does not limit the rights of either Party to bring a proceeding in any applicable jurisdiction to conform, enforce or enter judgment upon such award (and the rights of the other Party, if such proceeding is brought, to contest such confirmation, enforcement or entry of judgment).

          (d) Nothing in this Section 16.11 shall preclude either Party from seeking injunctive relief or any other equitable remedy in any applicable jurisdiction sought to protect such party’s name, technology, Confidential Information or intellectual property.

          16.12 Governing Law. The internal law, without regard for conflicts of laws principles, of the State of New York shall govern the validity of this Agreement, the construction of its terms, and the interpretation and enforcement of the rights and duties of the Parties.

          16.13 Attorneys Fees. The prevailing party is entitled to recover from the losing party the prevailing party’s attorneys’ fees and costs incurred in any arbitration or other action with respect to any claim arising out or relating to this Agreement.

          16.14 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original as regards any Party whose signature appears thereon and all of which together shall constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all Parties reflected hereon as signatories.

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CONFIDENTIAL TREATMENT REQUESTED – REDACTED COPY

          IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first above written

TRIDENT MICROSYSTEMS (FAR EAST) LTD.
By:	/s/ Pete J. Mangan
	Name:	Pete J. Mangan
	Title:	President

[Signature Page to Manufacturing Services Agreement]

CONFIDENTIAL TREATMENT REQUESTED – REDACTED COPY

NXP SEMICONDUCTORS NETHERLANDS B.V.
By:	/s/ Charles Smit
	Name:	Charles Smit
	Title:	Authorized Signatory

[Signature Page to Manufacturing Services Agreement]

EX-10.45

Exhibit 10.45

TRIDENT MICROSYSTEMS, INC.
FORM OF STOCK OPTION AGREEMENT
(For US Participant)

     Trident Microsystems, Inc. (the “Company”) has granted to the Participant named in the Notice of Grant of Stock Option (the “Grant Notice”) to which this Stock Option Agreement (the “Option Agreement”) is attached an option (the “Option”) to purchase certain shares of Stock upon the terms and conditions set forth in the Grant Notice and this Option Agreement. The Option has been granted pursuant to and shall in all respects be subject to the terms and conditions of the Trident Microsystems, Inc. 2010 Equity Incentive Plan (the “Plan”), as amended to the Date of Grant, the provisions of which are incorporated herein by reference. By signing the Grant Notice, the Participant: (a) acknowledges receipt of, and represents that the Participant has read and is familiar with, the Grant Notice, this Option Agreement, the Plan and a prospectus for the Plan prepared in connection with the registration with the Securities and Exchange Commission of shares issuable pursuant to the Option (the “Plan Prospectus”), (b) accepts the Option subject to all of the terms and conditions of the Grant Notice, this Option Agreement and the Plan and (c) agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions arising under the Grant Notice, this Option Agreement or the Plan.

     1. Definitions and Construction.

          1.1 Definitions. Unless otherwise defined herein, capitalized terms shall have the meanings assigned to such terms in the Grant Notice or the Plan.

          1.2 Construction. Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of this Option Agreement. Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular. Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise.

     2. Tax Consequences.

          2.1 Tax Status of Option. This Option is intended to have the tax status designated in the Grant Notice.

               (a) Incentive Stock Option. If the Grant Notice so designates, this Option is intended to be an Incentive Stock Option within the meaning of Section 422(b) of the Code, but the Company does not represent or warrant that this Option qualifies as such. The Participant should consult with the Participant’s own tax advisor regarding the tax effects of this Option and the requirements necessary to obtain favorable income tax treatment under Section 422 of the Code, including, but not limited to, holding period requirements. (NOTE TO PARTICIPANT: If the Option is exercised more than three (3) months after the date on which you cease to be an Employee (other than by reason of your death or permanent and total disability as defined in Section 22(e)(3) of the Code), the Option will be treated as a Nonstatutory Stock Option and not as an Incentive Stock Option to the extent required by Section 422 of the Code.)

               (b) Nonstatutory Stock Option. If the Grant Notice so designates, this Option is intended to be a Nonstatutory Stock Option and shall not be treated as an Incentive Stock Option within the meaning of Section 422(b) of the Code.

          2.2 ISO Fair Market Value Limitation. If the Grant Notice designates this Option as an Incentive Stock Option, then to the extent that the Option (together with all Incentive Stock Options granted to the Participant under all stock option plans of the Participating Company Group, including the Plan) becomes exercisable for the first time during any calendar year for shares having a Fair Market Value greater than One Hundred Thousand Dollars ($100,000), the portion of such options which exceeds such amount will be treated as Nonstatutory Stock Options. For purposes of this Section 2.2, options designated as Incentive Stock Options are taken into account in the order in which they were granted, and the Fair Market Value of stock is determined as of the time the option with respect to such stock is granted. If the Code is amended to provide for a different limitation from that set forth in this Section 2.2, such different limitation shall be deemed incorporated herein effective as of the date required or permitted by such amendment to the Code. If the Option is treated as an Incentive Stock Option in part and as a Nonstatutory Stock Option in part by reason of the limitation set forth in this Section 2.2, the Participant may designate which portion of such Option the Participant is exercising. In the absence of such designation, the Participant shall be deemed to have exercised the Incentive Stock Option portion of the Option first. Separate certificates representing each such portion shall be issued upon the exercise of the Option. (NOTE TO PARTICIPANT: If the aggregate Exercise Price of the Option (that is, the Exercise Price multiplied by the Number of Option Shares) plus the aggregate exercise price of any other Incentive Stock Options you hold (whether granted pursuant to the Plan or any other stock option plan of the Participating Company Group) is greater than $100,000, you should contact the Chief Financial Officer of the Company to ascertain whether the entire Option qualifies as an Incentive Stock Option.)

     3. Administration.

          All questions of interpretation concerning the Grant Notice, this Option Agreement, the Plan or any other form of agreement or other document employed by the Company in the administration of the Plan or the Option shall be determined by the Committee. All such determinations by the Committee shall be final, binding and conclusive upon all persons having an interest in the Option, unless fraudulent or made in bad faith. Any and all actions, decisions and determinations taken or made by the Committee in the exercise of its discretion pursuant to the Plan or the Option or other agreement thereunder (other than determining questions of interpretation pursuant to the preceding sentence) shall be final, binding and conclusive upon all persons having an interest in the Option. Any Officer shall have the authority to act on behalf of the Company with respect to any matter, right, obligation, or election which is the responsibility of or which is allocated to the Company herein, provided the Officer has apparent authority with respect to such matter, right, obligation, or election.

     4. Exercise of the Option.

          4.1 Right to Exercise. Except as otherwise provided herein, the Option shall be exercisable on and after the Initial Vesting Date and prior to the termination of the Option (as

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provided in Section 5) in an amount not to exceed the number of Vested Shares less the number of shares previously acquired upon exercise of the Option. In no event shall the Option be exercisable for more shares than the Number of Option Shares, as adjusted pursuant to Section 9.

          4.2 Method of Exercise. Exercise of the Option shall be by means of electronic or written notice (the “Exercise Notice”) in a form authorized by the Company. An electronic Exercise Notice must be digitally signed or authenticated by the Participant in such manner as required by the notice and transmitted to the Company or an authorized representative of the Company (including a third-party administrator designated by the Company). In the event that the Participant is not authorized or is unable to provide an electronic Exercise Notice, the Option shall be exercised by a written Exercise Notice addressed to the Company, which shall be signed by the Participant and delivered in person, by certified or registered mail, return receipt requested, by confirmed facsimile transmission, or by such other means as the Company may permit, to the Company, or an authorized representative of the Company (including a third-party administrator designated by the Company). Each Exercise Notice, whether electronic or written, must state the Participant’s election to exercise the Option, the number of whole shares of Stock for which the Option is being exercised and such other representations and agreements as to the Participant’s investment intent with respect to such shares as may be required pursuant to the provisions of this Option Agreement. Further, each Exercise Notice must be received by the Company prior to the termination of the Option as set forth in Section 5 and must be accompanied by full payment of the aggregate Exercise Price for the number of shares of Stock being purchased. The Option shall be deemed to be exercised upon receipt by the Company of such electronic or written Exercise Notice and the aggregate Exercise Price.

          4.3 Payment of Exercise Price.

               (a) Forms of Consideration Authorized. Except as otherwise provided below, payment of the aggregate Exercise Price for the number of shares of Stock for which the Option is being exercised shall be made (i) in cash, by check or in cash equivalent; (ii) if permitted by the Company and subject to the limitations contained in Section 4.3(b), by means of (1) a Cashless Exercise, (2) a Net-Exercise, or (3) a Stock Tender Exercise; or (iii) by any combination of the foregoing.

               (b) Limitations on Forms of Consideration. The Company reserves, at any and all times, the right, in the Company’s sole and absolute discretion, to establish, decline to approve or terminate any program or procedure providing for payment of the Exercise Price through any of the means described below, including with respect to the Participant notwithstanding that such program or procedures may be available to others.

                    (i) Cashless Exercise. A “Cashless Exercise” means the delivery of a properly executed Exercise Notice together with irrevocable instructions to a broker in a form acceptable to the Company providing for the assignment to the Company of the proceeds of a sale or loan with respect to shares of Stock acquired upon the exercise of the Option in an amount not less than the aggregate Exercise Price for such shares (including, without limitation, through an exercise complying with the provisions of Regulation T as promulgated from time to time by the Board of Governors of the Federal Reserve System).

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                    (ii) Net-Exercise. A “Net-Exercise” means the delivery of a properly executed Exercise Notice electing a procedure pursuant to which (1) the Company will reduce the number of shares otherwise issuable to the Participant upon the exercise of the Option by the largest whole number of shares having a Fair Market Value that does not exceed the aggregate Exercise Price for the shares with respect to which the Option is exercised, and (2) the Participant shall pay to the Company in cash the remaining balance of such aggregate Exercise Price not satisfied by such reduction in the number of whole shares to be issued. Following a Net-Exercise, the number of shares remaining subject to the Option, if any, shall be reduced by the sum of (1) the net number of shares issued to the Participant upon such exercise, and (2) the number of shares deducted by the Company for payment of the aggregate Exercise Price.

                    (iii) Stock Tender Exercise. A “Stock Tender Exercise” means the delivery of a properly executed Exercise Notice accompanied by (1) the Participant’s tender to the Company, or attestation to the ownership, in a form acceptable to the Company of whole shares of Stock having a Fair Market Value that does not exceed the aggregate Exercise Price for the shares with respect to which the Option is exercised, and (2) the Participant’s payment to the Company in cash of the remaining balance of such aggregate Exercise Price not satisfied by such shares’ Fair Market Value. A Stock Tender Exercise shall not be permitted if it would constitute a violation of the provisions of any law, regulation or agreement restricting the redemption of the Company’s stock. If required by the Company, the Option may not be exercised by tender to the Company, or attestation to the ownership, of shares of Stock unless such shares either have been owned by the Participant for a period of time required by the Company (and not used for another option exercise by attestation during such period) or were not acquired, directly or indirectly, from the Company.

          4.4 Tax Withholding.

               (a) In General. At the time the Option is exercised, in whole or in part, or at any time thereafter as requested by a Participating Company, the Participant hereby authorizes withholding from payroll and any other amounts payable to the Participant, and otherwise agrees to make adequate provision for (including by means of a Cashless Exercise to the extent permitted by the Company), any sums required to satisfy the federal, state, local and foreign tax (including any social insurance) withholding obligations of the Participating Company Group, if any, which arise in connection with the Option. The Company shall have no obligation to deliver shares of Stock until the tax withholding obligations of the Participating Company Group have been satisfied by the Participant.

               (b) Withholding in Shares. The Company shall have the right, but not the obligation, to require the Participant to satisfy all or any portion of a Participating Company’s tax withholding obligations upon exercise of the Option by deducting from the shares of Stock otherwise issuable to the Participant upon such exercise a number of whole shares having a fair market value, as determined by the Company as of the date of exercise, not in excess of the amount of such tax withholding obligations determined by the applicable minimum statutory withholding rates.

          4.5 Beneficial Ownership of Shares; Certificate Registration. The Participant hereby authorizes the Company, in its sole discretion, to deposit for the benefit of the

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Participant with any broker with which the Participant has an account relationship of which the Company has notice any or all shares acquired by the Participant pursuant to the exercise of the Option. Except as provided by the preceding sentence, a certificate for the shares as to which the Option is exercised shall be registered in the name of the Participant, or, if applicable, in the names of the heirs of the Participant.

          4.6 Restrictions on Grant of the Option and Issuance of Shares. The grant of the Option and the issuance of shares of Stock upon exercise of the Option shall be subject to compliance with all applicable requirements of federal, state or foreign law with respect to such securities. The Option may not be exercised if the issuance of shares of Stock upon exercise would constitute a violation of any applicable federal, state or foreign securities laws or other law or regulations or the requirements of any stock exchange or market system upon which the Stock may then be listed. In addition, the Option may not be exercised unless (i) a registration statement under the Securities Act shall at the time of exercise of the Option be in effect with respect to the shares issuable upon exercise of the Option or (ii) in the opinion of legal counsel to the Company, the shares issuable upon exercise of the Option may be issued in accordance with the terms of an applicable exemption from the registration requirements of the Securities Act. THE PARTICIPANT IS CAUTIONED THAT THE OPTION MAY NOT BE EXERCISED UNLESS THE FOREGOING CONDITIONS ARE SATISFIED. ACCORDINGLY, THE PARTICIPANT MAY NOT BE ABLE TO EXERCISE THE OPTION WHEN DESIRED EVEN THOUGH THE OPTION IS VESTED. The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the lawful issuance and sale of any shares subject to the Option shall relieve the Company of any liability in respect of the failure to issue or sell such shares as to which such requisite authority shall not have been obtained. As a condition to the exercise of the Option, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company.

          4.7 Fractional Shares. The Company shall not be required to issue fractional shares upon the exercise of the Option.

     5. Nontransferability of the Option.

          During the lifetime of the Participant, the Option shall be exercisable only by the Participant or the Participant’s guardian or legal representative. The Option shall not be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors of the Participant or the Participant’s beneficiary, except transfer by will or by the laws of descent and distribution. Following the death of the Participant, the Option, to the extent provided in Section 7, may be exercised by the Participant’s legal representative or by any person empowered to do so under the deceased Participant’s will or under the then applicable laws of descent and distribution.

     6. Termination of the Option.

          The Option shall terminate and may no longer be exercised after the first to occur of (a) the close of business on the Option Expiration Date, (b) the close of business on the last

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date for exercising the Option following termination of the Participant’s Service as described in Section 7, or (c) a Change in Control to the extent provided in Section 8.

     7. Effect of Termination of Service.

          7.1 Option Exercisability. The Option shall terminate immediately upon the Participant’s termination of Service to the extent that it is then unvested and shall be exercisable after the Participant’s termination of Service to the extent it is then vested only during the applicable time period as determined below and thereafter shall terminate.

               (a) Disability. If the Participant’s Service terminates because of the Disability of the Participant, the Option, to the extent unexercised and exercisable for Vested Shares on the date on which the Participant’s Service terminated, may be exercised by the Participant (or the Participant’s guardian or legal representative) at any time prior to the expiration of twelve (12) months after the date on which the Participant’s Service terminated, but in any event no later than the Option Expiration Date.

               (b) Death. If the Participant’s Service terminates because of the death of the Participant, the Option, to the extent unexercised and exercisable for Vested Shares on the date on which the Participant’s Service terminated, may be exercised by the Participant’s legal representative or other person who acquired the right to exercise the Option by reason of the Participant’s death at any time prior to the expiration of twelve (12) months after the date on which the Participant’s Service terminated, but in any event no later than the Option Expiration Date. The Participant’s Service shall be deemed to have terminated on account of death if the Participant dies within three (3) months after the Participant’s termination of Service.

               (c) Termination for Cause. Notwithstanding any other provision of this Option Agreement to the contrary, if the Participant’s Service is terminated for Cause or if, following the Participant’s termination of Service and during any period in which the Option otherwise would remain exercisable, the Participant engages in any act that would constitute Cause, the Option shall terminate in its entirety and cease to be exercisable immediately upon such termination of Service or act.

               (d) Other Termination of Service. If the Participant’s Service terminates for any reason, except Disability, death or Cause, the Option, to the extent unexercised and exercisable for Vested Shares by the Participant on the date on which the Participant’s Service terminated, may be exercised by the Participant at any time prior to the expiration of three (3) months after the date on which the Participant’s Service terminated, but in any event no later than the Option Expiration Date.

          7.2 Extension if Exercise Prevented by Law. Notwithstanding the foregoing, other than termination of the Participant’s Service for Cause, if the exercise of the Option within the applicable time periods set forth in Section 7.1 is prevented by the provisions of Section 4.6, the Option shall remain exercisable until the later of (a) thirty (30) days after the date such exercise first would no longer be prevented by such provisions, or (b) the end of the applicable time period under Section 7.1, but in any event no later than the Option Expiration Date.

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     8. Effect of Change in Control.

          In the event of a Change in Control, except to the extent that the Committee determines to cash out the Option in accordance with Section 13.1(c) of the Plan, the surviving, continuing, successor, or purchasing entity or parent thereof, as the case may be (the “Acquiror”), may, without the consent of the Participant, assume or continue in full force and effect the Company’s rights and obligations under all or any portion of the Option or substitute for all or any portion of the Option a substantially equivalent option for the Acquiror’s stock. For purposes of this Section, the Option or any portion thereof shall be deemed assumed if, following the Change in Control, the Option confers the right to receive, subject to the terms and conditions of the Plan and this Option Agreement, for each share of Stock subject to such portion of the Option immediately prior to the Change in Control, the consideration (whether stock, cash, other securities or property or a combination thereof) to which a holder of a share of Stock on the effective date of the Change in Control was entitled (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares of Stock); provided, however, that if such consideration is not solely common stock of the Acquiror, the Committee may, with the consent of the Acquiror, provide for the consideration to be received upon the exercise of the Option, for each share of Stock subject to the Option, to consist solely of common stock of the Acquiror equal in Fair Market Value to the per share consideration received by holders of Stock pursuant to the Change in Control. The Option shall terminate and cease to be outstanding effective as of the time of consummation of the Change in Control to the extent that the Option is neither assumed or continued by the Acquiror in connection with the Change in Control nor exercised as of the time of the Change in Control.

     9. Adjustments for Changes in Capital Structure.

          Subject to any required action by the stockholders of the Company and the requirements of Sections 409A and 424 of the Code to the extent applicable, in the event of any change in the Stock effected without receipt of consideration by the Company, whether through merger, consolidation, reorganization, reincorporation, recapitalization, reclassification, stock dividend, stock split, reverse stock split, split-up, split-off, spin-off, combination of shares, exchange of shares, or similar change in the capital structure of the Company, or in the event of payment of a dividend or distribution to the stockholders of the Company in a form other than Stock (excepting normal cash dividends) that has a material effect on the Fair Market Value of shares of Stock, appropriate and proportionate adjustments shall be made in the number, Exercise Price and kind of shares subject to the Option, in order to prevent dilution or enlargement of the Participant’s rights under the Option. For purposes of the foregoing, conversion of any convertible securities of the Company shall not be treated as “effected without receipt of consideration by the Company.” Any fractional share resulting from an adjustment pursuant to this Section shall be rounded down to the nearest whole number and the Exercise Price shall be rounded up to the nearest whole cent. In no event may the Exercise Price be decreased to an amount less than the par value, if any, of the stock subject to the Option. Such adjustments shall be determined by the Committee, and its determination shall be final, binding and conclusive.

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     10. Rights as a Stockholder, Director, Employee or Consultant.

          The Participant shall have no rights as a stockholder with respect to any shares covered by the Option until the date of the issuance of the shares for which the Option has been exercised (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). No adjustment shall be made for dividends, distributions or other rights for which the record date is prior to the date the shares are issued, except as provided in Section 9. If the Participant is an Employee, the Participant understands and acknowledges that, except as otherwise provided in a separate, written employment agreement between a Participating Company and the Participant, the Participant’s employment is “at will” and is for no specified term. Nothing in this Option Agreement shall confer upon the Participant any right to continue in the Service of a Participating Company or interfere in any way with any right of the Participating Company Group to terminate the Participant’s Service as a Director, an Employee or Consultant, as the case may be, at any time.

     11. Notice of Sales Upon Disqualifying Disposition.

          The Participant shall dispose of the shares acquired pursuant to the Option only in accordance with the provisions of this Option Agreement. In addition, if the Grant Notice designates this Option as an Incentive Stock Option, the Participant shall (a) promptly notify the Chief Financial Officer of the Company if the Participant disposes of any of the shares acquired pursuant to the Option within one (1) year after the date the Participant exercises all or part of the Option or within two (2) years after the Date of Grant and (b) provide the Company with a description of the circumstances of such disposition. Until such time as the Participant disposes of such shares in a manner consistent with the provisions of this Option Agreement, unless otherwise expressly authorized by the Company, the Participant shall hold all shares acquired pursuant to the Option in the Participant’s name (and not in the name of any nominee) for the one-year period immediately after the exercise of the Option and the two-year period immediately after Date of Grant. At any time during the one-year or two-year periods set forth above, the Company may place a legend on any certificate representing shares acquired pursuant to the Option requesting the transfer agent for the Company’s stock to notify the Company of any such transfers. The obligation of the Participant to notify the Company of any such transfer shall continue notwithstanding that a legend has been placed on the certificate pursuant to the preceding sentence.

     12. Legends.

          The Company may at any time place legends referencing any applicable federal, state or foreign securities law restrictions on all certificates representing shares of stock subject to the provisions of this Option Agreement. The Participant shall, at the request of the Company, promptly present to the Company any and all certificates representing shares acquired pursuant to the Option in the possession of the Participant in order to carry out the provisions of this Section. Unless otherwise specified by the Company, legends placed on such certificates may include, but shall not be limited to, the following:

“THE SHARES EVIDENCED BY THIS CERTIFICATE WERE ISSUED BY THE CORPORATION TO THE REGISTERED HOLDER UPON EXERCISE

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OF AN INCENTIVE STOCK OPTION AS DEFINED IN SECTION 422 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (“ISO"). IN ORDER TO OBTAIN THE PREFERENTIAL TAX TREATMENT AFFORDED TO ISOs, THE SHARES SHOULD NOT BE TRANSFERRED PRIOR TO [INSERT DISQUALIFYING DISPOSITION DATE HERE]. SHOULD THE REGISTERED HOLDER ELECT TO TRANSFER ANY OF THE SHARES PRIOR TO THIS DATE AND FOREGO ISO TAX TREATMENT, THE TRANSFER AGENT FOR THE SHARES SHALL NOTIFY THE CORPORATION IMMEDIATELY. THE REGISTERED HOLDER SHALL HOLD ALL SHARES PURCHASED UNDER THE INCENTIVE STOCK OPTION IN THE REGISTERED HOLDER’S NAME (AND NOT IN THE NAME OF ANY NOMINEE) PRIOR TO THIS DATE OR UNTIL TRANSFERRED AS DESCRIBED ABOVE.”

     13. Miscellaneous Provisions.

          13.1 Termination or Amendment. The Committee may terminate or amend the Plan or the Option at any time; provided, however, that except as provided in Section 8 in connection with a Change in Control, no such termination or amendment may adversely affect the Option or any unexercised portion hereof without the consent of the Participant unless such termination or amendment is necessary to comply with any applicable law or government regulation. No amendment or addition to this Option Agreement shall be effective unless in writing.

          13.2 Further Instruments. The parties hereto agree to execute such further instruments and to take such further action as may reasonably be necessary to carry out the intent of this Option Agreement.

          13.3 Binding Effect. This Option Agreement shall inure to the benefit of the successors and assigns of the Company and, subject to the restrictions on transfer set forth herein, be binding upon the Participant and the Participant’s heirs, executors, administrators, successors and assigns.

          13.4 Delivery of Documents and Notices. Any document relating to participation in the Plan or any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given (except to the extent that this Option Agreement provides for effectiveness only upon actual receipt of such notice) upon personal delivery, electronic delivery at the e-mail address, if any, provided for the Participant by a Participating Company, or upon deposit in the U.S. Post Office or foreign postal service, by registered or certified mail, or with a nationally recognized overnight courier service, with postage and fees prepaid, addressed to the other party at the address of such party set forth in the Grant Notice or at such other address as such party may designate in writing from time to time to the other party.

               (a) Description of Electronic Delivery. The Plan documents, which may include but do not necessarily include: the Plan, the Grant Notice, this Option Agreement, the Plan Prospectus, and any reports of the Company provided generally to the Company’s stockholders, may be delivered to the Participant electronically. In addition, if permitted by the

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Company, the Participant may deliver electronically the Grant Notice and Exercise Notice called for by Section 4.2 to the Company or to such third party involved in administering the Plan as the Company may designate from time to time. Such means of electronic delivery may include but do not necessarily include the delivery of a link to a Company intranet or the Internet site of a third party involved in administering the Plan, the delivery of the document via e-mail or such other means of electronic delivery specified by the Company.

               (b) Consent to Electronic Delivery. The Participant acknowledges that the Participant has read Section 13.4(a) of this Option Agreement and consents to the electronic delivery of the Plan documents and, if permitted by the Company, the delivery of the Grant Notice and Exercise Notice, as described in Section 13.4(a). The Participant acknowledges that he or she may receive from the Company a paper copy of any documents delivered electronically at no cost to the Participant by contacting the Company by telephone or in writing. The Participant further acknowledges that the Participant will be provided with a paper copy of any documents if the attempted electronic delivery of such documents fails. Similarly, the Participant understands that the Participant must provide the Company or any designated third party administrator with a paper copy of any documents if the attempted electronic delivery of such documents fails. The Participant may revoke his or her consent to the electronic delivery of documents described in Section 13.4(a) or may change the electronic mail address to which such documents are to be delivered (if Participant has provided an electronic mail address) at any time by notifying the Company of such revoked consent or revised e-mail address by telephone, postal service or electronic mail. Finally, the Participant understands that he or she is not required to consent to electronic delivery of documents described in Section 13.4(a).

          13.5 Integrated Agreement. The Grant Notice, this Option Agreement and the Plan, together with the Superseding Agreement, if any, shall constitute the entire understanding and agreement of the Participant and the Participating Company Group with respect to the subject matter contained herein and supersede any prior agreements, understandings, restrictions, representations, or warranties among the Participant and the Participating Company Group with respect to such subject matter. To the extent contemplated herein, the provisions of the Grant Notice, the Option Agreement and the Plan shall survive any exercise of the Option and shall remain in full force and effect.

          13.6 Applicable Law. This Option Agreement shall be governed by the laws of the State of California as such laws are applied to agreements between California residents entered into and to be performed entirely within the State of California.

          13.7 Counterparts. The Grant Notice may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

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TRIDENT MICROSYSTEMS, INC.
FORM OF STOCK OPTION AGREEMENT
(For Non-US Participant)

     Trident Microsystems, Inc. (the “Company”) has granted to the Participant named in the Notice of Grant of Stock Option (the “Grant Notice”) to which this Stock Option Agreement (the “Option Agreement”) is attached an option (the “Option”) to purchase certain shares of Stock upon the terms and conditions set forth in the Grant Notice and this Option Agreement. The Option has been granted pursuant to and shall in all respects be subject to the terms and conditions of the Trident Microsystems, Inc. 2010 Equity Incentive Plan (the “Plan”), as amended to the Date of Grant, the provisions of which are incorporated herein by reference. By signing the Grant Notice, the Participant: (a) acknowledges receipt of, and represents that the Participant has read and is familiar with, the Grant Notice, this Option Agreement, the Plan and a prospectus for the Plan prepared in connection with the registration with the Securities and Exchange Commission of shares issuable pursuant to the Option (the “Plan Prospectus”), (b) accepts the Option subject to all of the terms and conditions of the Grant Notice, this Option Agreement and the Plan and (c) agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions arising under the Grant Notice, this Option Agreement or the Plan.

     1. Definitions and Construction.

          1.1 Definitions. Unless otherwise defined herein, capitalized terms shall have the meanings assigned to such terms in the Grant Notice or the Plan.

          1.2 Construction. Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of this Option Agreement. Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular. Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise.

     2. Certain Conditions of the Option.

          2.1 Compliance with Local Law. The Participant agrees that the Participant will not acquire shares pursuant to the Option or transfer, assign, sell or otherwise deal with such shares except in compliance with Local Law.

          2.2 Employment Conditions. In accepting the Option, the Participant acknowledges that:

               (a) Any notice period mandated under Local Law shall not be treated as Service for the purpose of determining the vesting of the Option; and the Participant’s right to exercise the Option after termination of Service, if any, will be measured by the date of termination of the Participant’s active Service and will not be extended by any notice period mandated under Local Law. Subject to the foregoing and the provisions of the Plan, the Company, in its sole discretion, shall determine whether the Participant’s Service has terminated and the effective date of such termination.

               (b) The vesting of the Option shall cease upon, and no shares shall become Vested Shares following, the Participant’s termination of Service for any reason except as may be explicitly provided by the Plan or this Agreement.

               (c) The Plan is established voluntarily by the Company. It is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time, unless otherwise provided in the Plan and this Option Agreement.

               (d) The grant of the Option is voluntary and occasional and does not create any contractual or other right to receive future grants of Options, or benefits in lieu of Options, even if Options have been granted repeatedly in the past.

               (e) All decisions with respect to future Option grants, if any, will be at the sole discretion of the Company.

               (f) The Participant’s participation in the Plan shall not create a right to further Service with any Participating Company and shall not interfere with the ability of any Participating Company to terminate the Participant’s Service at any time, with or without cause.

               (g) The Participant is voluntarily participating in the Plan.

               (h) The Option is an extraordinary item that does not constitute compensation of any kind for Service of any kind rendered to any Participating Company, and which is outside the scope of the Participant’s employment contract, if any.

               (i) The Option is not part of normal or expected compensation or salary for any purpose, including, but not limited to, calculating any severance, resignation, termination, redundancy, end-of-service payments, bonuses, long-service awards, pension or retirement benefits or similar payments.

               (j) In the event that the Participant is not an employee of the Company, the Option grant will not be interpreted to form an employment contract or relationship with the Company; and furthermore the Option grant will not be interpreted to form an employment contract with any other Participating Company.

               (k) The future value of the underlying shares is unknown and cannot be predicted with certainty. If the underlying shares do not increase in value, the Option will have no value. If the Participant exercises the Option and obtains shares, the value of those shares acquired upon exercise may increase or decrease in value, even below the Exercise Price.

               (l) No claim or entitlement to compensation or damages arises from termination of the Option or diminution in value of the Option or shares purchased through exercise of the Option resulting from termination of the Participant’s Service (for any reason whether or not in breach of Local Law) and the Participant irrevocably releases the Company and each other Participating Company from any such claim that may arise. If, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen then, by signing this Option Agreement, the Participant shall be deemed irrevocably to have waived the Participant’s entitlement to pursue such a claim.

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          2.3 Data Privacy Consent.

               (a) The Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of the Participant’s personal data as described in this document by and among the members of the Participating Company Group for the exclusive purpose of implementing, administering and managing the Participant’s participation in the Plan.

               (b) The Participant understands that the Participating Company Group holds certain personal information about the Participant, including, but not limited to, the Participant’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares or directorships held in the Company, details of all Options or any other entitlement to shares awarded, canceled, exercised, vested, unvested or outstanding in the Participant’s favor, for the purpose of implementing, administering and managing the Plan (“Data”). The Participant understands that Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in the Participant’s country or elsewhere, and that the recipient’s country may have different data privacy laws and protections than the Participant’s country. The Participant understands that he or she may request a list with the names and addresses of any potential recipients of the Data by contacting the Participant’s local human resources representative. The Participant authorizes the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing the Participant’s participation in the Plan, including any requisite transfer of such Data as may be required to a broker or other third party with whom the Participant may elect to deposit any shares acquired upon exercise of the Option. The Participant understands that Data will be held only as long as is necessary to implement, administer and manage the Participant’s participation in the Plan. The Participant understands that he or she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing the Participant’s local human resources representative. The Participant understands, however, that refusing or withdrawing the Participant’s consent may affect the Participant’s ability to participate in the Plan. For more information on the consequences of the Participant’s refusal to consent or withdrawal of consent, the Participant understands that he or she may contact the Participant’s local human resources representative.

     3. Administration.

          All questions of interpretation concerning the Grant Notice, this Option Agreement, the Plan or any other form of agreement or other document employed by the Company in the administration of the Plan or the Option shall be determined by the Committee. All such determinations by the Committee shall be final, binding and conclusive upon all persons having an interest in the Option, unless fraudulent or made in bad faith. Any and all actions, decisions and determinations taken or made by the Committee in the exercise of its discretion pursuant to the Plan or the Option or other agreement thereunder (other than determining questions of interpretation pursuant to the preceding sentence) shall be final, binding and conclusive upon all persons having an interest in the Option. Any Officer shall have the

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authority to act on behalf of the Company with respect to any matter, right, obligation, or election which is the responsibility of or which is allocated to the Company herein, provided the Officer has apparent authority with respect to such matter, right, obligation, or election.

     4. Exercise of the Option.

          4.1 Right to Exercise. Except as otherwise provided herein, the Option shall be exercisable on and after the Initial Vesting Date and prior to the termination of the Option (as provided in Section 5) in an amount not to exceed the number of Vested Shares less the number of shares previously acquired upon exercise of the Option. In no event shall the Option be exercisable for more shares than the Number of Option Shares, as adjusted pursuant to Section 9.

          4.2 Method of Exercise. Exercise of the Option shall be by means of electronic or written notice (the “Exercise Notice”) in a form authorized by the Company. An electronic Exercise Notice must be digitally signed or authenticated by the Participant in such manner as required by the notice and transmitted to the Company or an authorized representative of the Company (including a third-party administrator designated by the Company). In the event that the Participant is not authorized or is unable to provide an electronic Exercise Notice, the Option shall be exercised by a written Exercise Notice addressed to the Company, which shall be signed by the Participant and delivered in person, by certified or registered mail, return receipt requested, by confirmed facsimile transmission, or by such other means as the Company may permit, to the Company, or an authorized representative of the Company (including a third-party administrator designated by the Company). Each Exercise Notice, whether electronic or written, must state the Participant’s election to exercise the Option, the number of whole shares of Stock for which the Option is being exercised and such other representations and agreements as to the Participant’s investment intent with respect to such shares as may be required pursuant to the provisions of this Option Agreement. Further, each Exercise Notice must be received by the Company prior to the termination of the Option as set forth in Section 5 and must be accompanied by full payment of the aggregate Exercise Price for the number of shares of Stock being purchased. The Option shall be deemed to be exercised upon receipt by the Company of such electronic or written Exercise Notice and the aggregate Exercise Price.

          4.3 Payment of Exercise Price.

               (a) Forms of Consideration Authorized. Except as otherwise provided below, payment of the aggregate Exercise Price for the number of shares of Stock for which the Option is being exercised shall be made (i) in cash, by check or in cash equivalent; (ii) if permitted by the Company and subject to the limitations contained in Section 4.3(b), by means of (1) a Cashless Exercise, (2) a Net-Exercise, or (3) a Stock Tender Exercise; or (iii) by any combination of the foregoing.

               (b) Limitations on Forms of Consideration. The Company reserves, at any and all times, the right, in the Company’s sole and absolute discretion, to establish, decline to approve or terminate any program or procedure providing for payment of the Exercise Price through any of the means described below, including with respect to the Participant notwithstanding that such program or procedures may be available to others.

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                    (i) Cashless Exercise. A “Cashless Exercise” means the delivery of a properly executed Exercise Notice together with irrevocable instructions to a broker in a form acceptable to the Company providing for the assignment to the Company of the proceeds of a sale or loan with respect to shares of Stock acquired upon the exercise of the Option in an amount not less than the aggregate Exercise Price for such shares (including, without limitation, through an exercise complying with the provisions of Regulation T as promulgated from time to time by the Board of Governors of the Federal Reserve System).

                    (ii) Net-Exercise. A “Net-Exercise” means the delivery of a properly executed Exercise Notice electing a procedure pursuant to which (1) the Company will reduce the number of shares otherwise issuable to the Participant upon the exercise of the Option by the largest whole number of shares having a Fair Market Value that does not exceed the aggregate Exercise Price for the shares with respect to which the Option is exercised, and (2) the Participant shall pay to the Company in cash the remaining balance of such aggregate Exercise Price not satisfied by such reduction in the number of whole shares to be issued. Following a Net-Exercise, the number of shares remaining subject to the Option, if any, shall be reduced by the sum of (1) the net number of shares issued to the Participant upon such exercise, and (2) the number of shares deducted by the Company for payment of the aggregate Exercise Price.

                    (iii) Stock Tender Exercise. A “Stock Tender Exercise” means the delivery of a properly executed Exercise Notice accompanied by (1) the Participant’s tender to the Company, or attestation to the ownership, in a form acceptable to the Company of whole shares of Stock having a Fair Market Value that does not exceed the aggregate Exercise Price for the shares with respect to which the Option is exercised, and (2) the Participant’s payment to the Company in cash of the remaining balance of such aggregate Exercise Price not satisfied by such shares’ Fair Market Value. A Stock Tender Exercise shall not be permitted if it would constitute a violation of the provisions of any law, regulation or agreement restricting the redemption of the Company’s stock. If required by the Company, the Option may not be exercised by tender to the Company, or attestation to the ownership, of shares of Stock unless such shares either have been owned by the Participant for a period of time required by the Company (and not used for another option exercise by attestation during such period) or were not acquired, directly or indirectly, from the Company.

     4.4 Tax Withholding.

          (a) In General. Regardless of any action taken by the Company or any other Participating Company with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related withholding (the “Tax Obligations”), the Participant acknowledges that the ultimate liability for all Tax Obligations legally due by the Participant is and remains the Participant’s responsibility and that the Company (a) makes no representations or undertakings regarding the treatment of any Tax Obligations in connection with any aspect of the Option, including the grant, vesting or exercise of the Option, the subsequent sale of shares acquired pursuant to such exercise, or the receipt of any dividends and (b) does not commit to structure the terms of the grant or any other aspect of the Option to reduce or eliminate the Participant’s liability for Tax Obligations. At the time of exercise of the Option, the Participant shall pay or make adequate arrangements satisfactory to the Company to satisfy all withholding obligations of the Company and any other Participating Company. In this

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regard, at the time the Option is exercised, in whole or in part, or at any time thereafter as requested by the Company or any other Participating Company, the Participant hereby authorizes withholding of all applicable Tax Obligations from payroll and any other amounts payable to the Participant, and otherwise agrees to make adequate provision for withholding of all applicable Tax Obligations, if any, by each Participating Company which arise in connection with the Option. Alternatively, or in addition, if permissible under applicable law, including Local Law, the Company or any other Participating Company may sell or arrange for the sale of shares acquired by the Participant to satisfy the Tax Obligations. Finally, the Participant shall pay to the Company or any other Participating Company any amount of the Tax Obligations that any such company may be required to withhold as a result of the Participant’s participation in the Plan that cannot be satisfied by the means previously described. The Company shall have no obligation to process the exercise of the Option or to deliver shares until the Tax Obligations as described in this Section have been satisfied by the Participant.

               (b) Withholding in Shares. If permissible under applicable law, including Local Law, the Company shall have the right, but not the obligation, to require the Participant to satisfy all or any portion of the Tax Obligations upon exercise of the Option by deducting from the shares of Stock otherwise issuable to the Participant upon such exercise a number of whole shares having a fair market value, as determined by the Company as of the date of exercise, not in excess of the amount of such Tax Obligations determined by the applicable minimum statutory withholding rates.

          4.5 Beneficial Ownership of Shares; Certificate Registration. The Participant hereby authorizes the Company, in its sole discretion, to deposit for the benefit of the Participant with any broker with which the Participant has an account relationship of which the Company has notice any or all shares acquired by the Participant pursuant to the exercise of the Option. Except as provided by the preceding sentence, a certificate for the shares as to which the Option is exercised shall be registered in the name of the Participant, or, if applicable, in the names of the heirs of the Participant.

          4.6 Restrictions on Grant of the Option and Issuance of Shares. The grant of the Option and the issuance of shares of Stock upon exercise of the Option shall be subject to compliance with all applicable requirements of United States federal or state or Local Law with respect to such securities. The Option may not be exercised if the issuance of shares of Stock upon exercise would constitute a violation of any applicable United States federal or state or foreign securities laws, including Local Law, or other law or regulations or the requirements of any stock exchange or market system upon which the Stock may then be listed. In addition, the Option may not be exercised unless (i) a registration statement under the Securities Act shall at the time of exercise of the Option be in effect with respect to the shares issuable upon exercise of the Option or (ii) in the opinion of legal counsel to the Company, the shares issuable upon exercise of the Option may be issued in accordance with the terms of an applicable exemption from the registration requirements of the Securities Act. THE PARTICIPANT IS CAUTIONED THAT THE OPTION MAY NOT BE EXERCISED UNLESS THE FOREGOING CONDITIONS ARE SATISFIED. ACCORDINGLY, THE PARTICIPANT MAY NOT BE ABLE TO EXERCISE THE OPTION WHEN DESIRED EVEN THOUGH THE OPTION IS VESTED. The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the lawful

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issuance and sale of any shares subject to the Option shall relieve the Company of any liability in respect of the failure to issue or sell such shares as to which such requisite authority shall not have been obtained. As a condition to the exercise of the Option, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company.

          4.7 Fractional Shares. The Company shall not be required to issue fractional shares upon the exercise of the Option.

     5. Nontransferability of the Option.

          During the lifetime of the Participant, the Option shall be exercisable only by the Participant or the Participant’s guardian or legal representative. The Option shall not be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors of the Participant or the Participant’s beneficiary, except transfer by will or by the laws of descent and distribution. Following the death of the Participant, the Option, to the extent provided in Section 7, may be exercised by the Participant’s legal representative or by any person empowered to do so under the deceased Participant’s will or under the then applicable laws of descent and distribution.

     6. Termination of the Option.

          The Option shall terminate and may no longer be exercised after the first to occur of (a) the close of business on the Option Expiration Date, (b) the close of business on the last date for exercising the Option following termination of the Participant’s Service as described in Section 7, or (c) a Change in Control to the extent provided in Section 8.

     7. Effect of Termination of Service.

          7.1 Option Exercisability. The Option shall terminate immediately upon the Participant’s termination of Service to the extent that it is then unvested and shall be exercisable after the Participant’s termination of Service to the extent it is then vested only during the applicable time period as determined below and thereafter shall terminate.

               (a) Disability. If the Participant’s Service terminates because of the Disability of the Participant, the Option, to the extent unexercised and exercisable for Vested Shares on the date on which the Participant’s Service terminated, may be exercised by the Participant (or the Participant’s guardian or legal representative) at any time prior to the expiration of twelve (12) months after the date on which the Participant’s Service terminated, but in any event no later than the Option Expiration Date.

               (b) Death. If the Participant’s Service terminates because of the death of the Participant, the Option, to the extent unexercised and exercisable for Vested Shares on the date on which the Participant’s Service terminated, may be exercised by the Participant’s legal representative or other person who acquired the right to exercise the Option by reason of the Participant’s death at any time prior to the expiration of twelve (12) months after the date on which the Participant’s Service terminated, but in any event no later than the Option Expiration

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Date. The Participant’s Service shall be deemed to have terminated on account of death if the Participant dies within three (3) months after the Participant’s termination of Service.

               (c) Termination for Cause. Notwithstanding any other provision of this Option Agreement to the contrary, if the Participant’s Service is terminated for Cause or if, following the Participant’s termination of Service and during any period in which the Option otherwise would remain exercisable, the Participant engages in any act that would constitute Cause, the Option shall terminate in its entirety and cease to be exercisable immediately upon such termination of Service or act.

               (d) Other Termination of Service. If the Participant’s Service terminates for any reason, except Disability, death or Cause, the Option, to the extent unexercised and exercisable for Vested Shares by the Participant on the date on which the Participant’s Service terminated, may be exercised by the Participant at any time prior to the expiration of three (3) months after the date on which the Participant’s Service terminated, but in any event no later than the Option Expiration Date.

          7.2 Extension if Exercise Prevented by Law. Notwithstanding the foregoing, other than termination of the Participant’s Service for Cause, if the exercise of the Option within the applicable time periods set forth in Section 7.1 is prevented by the provisions of Section 4.6, the Option shall remain exercisable until the later of (a) thirty (30) days after the date such exercise first would no longer be prevented by such provisions, or (b) the end of the applicable time period under Section 7.1, but in any event no later than the Option Expiration Date.

     8. Effect of Change in Control.

          In the event of a Change in Control, except to the extent that the Committee determines to cash out the Option in accordance with Section 13.1(c) of the Plan, the surviving, continuing, successor, or purchasing entity or parent thereof, as the case may be (the “Acquiror”), may, without the consent of the Participant, assume or continue in full force and effect the Company’s rights and obligations under all or any portion of the Option or substitute for all or any portion of the Option a substantially equivalent option for the Acquiror’s stock. For purposes of this Section, the Option or any portion thereof shall be deemed assumed if, following the Change in Control, the Option confers the right to receive, subject to the terms and conditions of the Plan and this Option Agreement, for each share of Stock subject to such portion of the Option immediately prior to the Change in Control, the consideration (whether stock, cash, other securities or property or a combination thereof) to which a holder of a share of Stock on the effective date of the Change in Control was entitled (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares of Stock); provided, however, that if such consideration is not solely common stock of the Acquiror, the Committee may, with the consent of the Acquiror, provide for the consideration to be received upon the exercise of the Option, for each share of Stock subject to the Option, to consist solely of common stock of the Acquiror equal in Fair Market Value to the per share consideration received by holders of Stock pursuant to the Change in Control. The Option shall terminate and cease to be outstanding effective as of the time of consummation of the Change in

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Control to the extent that the Option is neither assumed or continued by the Acquiror in connection with the Change in Control nor exercised as of the time of the Change in Control.

     9. Adjustments for Changes in Capital Structure.

          Subject to any required action by the stockholders of the Company, in the event of any change in the Stock effected without receipt of consideration by the Company, whether through merger, consolidation, reorganization, reincorporation, recapitalization, reclassification, stock dividend, stock split, reverse stock split, split-up, split-off, spin-off, combination of shares, exchange of shares, or similar change in the capital structure of the Company, or in the event of payment of a dividend or distribution to the stockholders of the Company in a form other than Stock (excepting normal cash dividends) that has a material effect on the Fair Market Value of shares of Stock, appropriate and proportionate adjustments shall be made in the number, Exercise Price and kind of shares subject to the Option, in order to prevent dilution or enlargement of the Participant’s rights under the Option. For purposes of the foregoing, conversion of any convertible securities of the Company shall not be treated as “effected without receipt of consideration by the Company.” Any fractional share resulting from an adjustment pursuant to this Section shall be rounded down to the nearest whole number and the Exercise Price shall be rounded up to the nearest whole cent. In no event may the Exercise Price be decreased to an amount less than the par value, if any, of the stock subject to the Option. Such adjustments shall be determined by the Committee, and its determination shall be final, binding and conclusive.

     10. Rights as a Stockholder, Director, Employee or Consultant.

          The Participant shall have no rights as a stockholder with respect to any shares covered by the Option until the date of the issuance of the shares for which the Option has been exercised (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). No adjustment shall be made for dividends, distributions or other rights for which the record date is prior to the date the shares are issued, except as provided in Section 9. If the Participant is an Employee, the Participant understands and acknowledges that, except as otherwise provided in a separate, written employment agreement between a Participating Company and the Participant, the Participant’s employment is for no specified term. Nothing in this Option Agreement shall confer upon the Participant any right to continue in the Service of a Participating Company or interfere in any way with any right of the Participating Company Group to terminate the Participant’s Service as a Director, an Employee or Consultant, as the case may be, at any time.

     11. Legends.

          The Company may at any time place legends referencing any applicable United States federal or state or foreign securities law, including Local Law, restrictions on all certificates representing shares of stock subject to the provisions of this Option Agreement. The Participant shall, at the request of the Company, promptly present to the Company any and all certificates representing shares acquired pursuant to the Option in the possession of the Participant in order to carry out the provisions of this Section.

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     12. Miscellaneous Provisions.

          12.1 Termination or Amendment. The Committee may terminate or amend the Plan or the Option at any time; provided, however, that except as provided in Section 8 in connection with a Change in Control, no such termination or amendment may adversely affect the Option or any unexercised portion hereof without the consent of the Participant unless such termination or amendment is necessary to comply with any applicable law or government regulation. No amendment or addition to this Option Agreement shall be effective unless in writing.

          12.2 Further Instruments. The parties hereto agree to execute such further instruments and to take such further action as may reasonably be necessary to carry out the intent of this Option Agreement.

          12.3 Binding Effect. This Option Agreement shall inure to the benefit of the successors and assigns of the Company and, subject to the restrictions on transfer set forth herein, be binding upon the Participant and the Participant’s heirs, executors, administrators, successors and assigns.

          12.4 Delivery of Documents and Notices. Any document relating to participation in the Plan or any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given (except to the extent that this Option Agreement provides for effectiveness only upon actual receipt of such notice) upon personal delivery, electronic delivery at the e-mail address, if any, provided for the Participant by a Participating Company, or upon deposit in the U.S. Post Office or foreign postal service, by registered or certified mail, or with a nationally recognized overnight courier service, with postage and fees prepaid, addressed to the other party at the address of such party set forth in the Grant Notice or at such other address as such party may designate in writing from time to time to the other party.

               (a) Description of Electronic Delivery. The Plan documents, which may include but do not necessarily include: the Plan, the Grant Notice, this Option Agreement, the Plan Prospectus, and any reports of the Company provided generally to the Company’s stockholders, may be delivered to the Participant electronically. In addition, if permitted by the Company, the Participant may deliver electronically the Grant Notice and Exercise Notice called for by Section 4.2 to the Company or to such third party involved in administering the Plan as the Company may designate from time to time. Such means of electronic delivery may include but do not necessarily include the delivery of a link to a Company intranet or the Internet site of a third party involved in administering the Plan, the delivery of the document via e-mail or such other means of electronic delivery specified by the Company.

               (b) Consent to Electronic Delivery. The Participant acknowledges that the Participant has read Section 12.4(a) of this Option Agreement and consents to the electronic delivery of the Plan documents and, if permitted by the Company, the delivery of the Grant Notice and Exercise Notice, as described in Section 12.4(a). The Participant acknowledges that he or she may receive from the Company a paper copy of any documents delivered electronically at no cost to the Participant by contacting the Company by telephone or in writing. The Participant further acknowledges that the Participant will be provided with a

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paper copy of any documents if the attempted electronic delivery of such documents fails. Similarly, the Participant understands that the Participant must provide the Company or any designated third party administrator with a paper copy of any documents if the attempted electronic delivery of such documents fails. The Participant may revoke his or her consent to the electronic delivery of documents described in Section 12.4(a) or may change the electronic mail address to which such documents are to be delivered (if Participant has provided an electronic mail address) at any time by notifying the Company of such revoked consent or revised e-mail address by telephone, postal service or electronic mail. Finally, the Participant understands that he or she is not required to consent to electronic delivery of documents described in Section 12.4(a).

          12.5 Integrated Agreement. The Grant Notice, this Option Agreement and the Plan, together with the Superseding Agreement, if any, shall constitute the entire understanding and agreement of the Participant and the Participating Company Group with respect to the subject matter contained herein and supersede any prior agreements, understandings, restrictions, representations, or warranties among the Participant and the Participating Company Group with respect to such subject matter. To the extent contemplated herein, the provisions of the Grant Notice, the Option Agreement and the Plan shall survive any exercise of the Option and shall remain in full force and effect.

          12.6 Country-Specific Terms and Conditions. Notwithstanding any other provision of this Option Agreement to the contrary, the Option shall be subject to the specific terms and conditions, if any, set forth in the Appendix to this Option Agreement which are applicable to the Participant’s country of residence, the provisions of which are incorporated in and constitute part of this Option Agreement. Moreover, if the Participant relocates to one of the countries included in the Appendix, the specific terms and conditions applicable to such country will apply to the Option to the extent the Company determines that the application of such terms and conditions is necessary or advisable in order to comply with local law or facilitate the administration of the Plan or this Option Agreement.

          12.7 Applicable Law. Except as provided pursuant to Section 12.6, this Option Agreement shall be governed by the laws of the State of California as such laws are applied to agreements between California residents entered into and to be performed entirely within the State of California. For purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties as evidenced by this Option Agreement, the parties hereby submit to and consent to the jurisdiction of the State of California and agree that such litigation shall be conducted only in the courts of the County of Santa Clara, California, or the federal courts of the United States for the Northern District of California, and no other courts, where this Option Agreement is made and/or performed.

          12.8 Counterparts. The Grant Notice may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

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APPENDIX

ADDITIONAL TERMS AND CONDITIONS OF
TRIDENT MICROSYSTEMS, INC.
STOCK OPTION AGREEMENT
FOR NON-US PARTICIPANTS

This Appendix includes additional terms and conditions that govern the Option granted to the Participant if he or she resides in one of the countries listed below. Capitalized terms used but not defined in this Appendix have the meanings set forth in the Plan or the Option Agreement.

NETHERLANDS

Notification for Dutch Employees

The Participant has been granted an Option pursuant to which the Participant may acquire shares of Stock. The Participant should be aware of the Dutch insider trading rules, which may affect the sale of Stock. In particular, the Participant may be prohibited from effecting certain share transactions if the Participant has “inside information” regarding the Company. The applicable restrictions are further discussed below. The Participant is advised to read the discussion carefully to determine whether the insider trading rules could apply to the Participant. If it is uncertain whether the insider trading rules apply, the Company recommends that the Participant consult with his or her legal advisor. Please note that the Company cannot be held liable if the Participant violates the Dutch insider trading rules. The Participant is responsible for ensuring compliance with these rules.

Prohibition Against Insider Trading. Dutch securities law prohibits insider trading. Under Article 46 of the Act on the Supervision of the Securities Trade 1995, anyone who has “inside information” related to the Company is prohibited from effectuating a transaction in securities in or from the Netherlands. “Inside information” is knowledge of a detail concerning the issuer to which the securities relate that is not public and which, if published, would reasonably be expected to affect the stock price, regardless of the development of the price. The insider could be any employee of the Company or its Dutch subsidiary or affiliate who has inside information.

Given the broad scope of the definition of inside information, certain employees of the Company or of a Participating Company working at its Dutch subsidiary or affiliate may have inside information and thus are prohibited from engaging in a transaction in securities of the Company in the Netherlands at a time when they have such inside information.

By entering into the Option Agreement, the Participant acknowledges having read and understood the notification above and acknowledges that it is the Participant’s responsibility to comply with the Dutch insider trading rules.

UNITED KINGDOM

Tax and National Insurance Contributions Acknowledgment. The following provision supplements Section 4.4 of the Option Agreement:

The Participant agrees that if he or she does not pay, or the Company or another Participating Company does not withhold from the Participant, the full amount of the Tax Obligations that the Participant owes due to the exercise of the Option, or the release or assignment of the Option for consideration, or the receipt of any other benefit in connection with the Option (the “Taxable Event”) within ninety (90) days after the Taxable Event, or such other period specified in Section 222(1)(c) of the U.K. Income Tax (Earnings and Pensions) Act 2003, then the amount that should have been withheld shall constitute a loan owed by the Participant to the Participant’s employer, effective ninety (90) days after the Taxable Event. The Participant agrees that the loan will bear interest at the official rate of HM Revenue and Customs (“HMRC”) and will be immediately due and repayable by the Participant, and the Company or another Participating Company may recover the loan at any time thereafter by withholding the funds from salary, bonus or any other funds due to the Participant by the Participating Company, by withholding in shares of Stock issued upon exercise of the Option or from the cash proceeds from the sale of shares of Stock or by demanding cash or a cheque from the Participant. The Participant also authorizes the Company to delay the issuance of any shares of Stock to him or her unless and until the loan is repaid in full.

Notwithstanding the foregoing, if the Participant is an executive officer or director (within the meaning of Section 13(k) of the U.S. Securities and Exchange Act of 1934, as amended), the terms of the immediately foregoing provision will not apply. In the event that the Participant is an executive officer or director and Tax Obligations are not collected from or paid by him or her within ninety (90) days after the taxable event, the amount of any uncollected Tax Obligations may constitute a benefit to the Participant on which additional income tax and national insurance contributions may be payable. The Participant will be responsible for reporting any income tax and National Insurance Contributions due on this additional benefit directly to HMRC under the self-assessment regime.

Joint Election for Pass-Through of Employer National Insurance Contributions. The Participant acknowledges and agrees that participation in the Plan and the exercise of the Option may, at the Company’s discretion, be subject to and contingent upon the Participant’s prompt execution of the Inland Revenue approved joint election in the form provided by the Company or its subsidiary, transferring all or a portion of the Company’s (or its subsidiary’s) National Insurance Contribution liability to the Participant.

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TRIDENT MICROSYSTEMS, INC.
FORM OF RESTRICTED STOCK AGREEMENT
(For US Participant)

     Trident Microsystems, Inc. (the “Company”) has granted to the Participant named in the Notice of Grant of Restricted Stock (the “Grant Notice”) to which this Restricted Stock Agreement (the “Agreement”) is attached an Award consisting of Shares subject to the terms and conditions set forth in the Grant Notice and this Agreement. The Award has been granted pursuant to and shall in all respects be subject to the terms and conditions of the Trident Microsystems, Inc. 2010 Equity Incentive Plan (the “Plan”), as amended to the Date of Grant, the provisions of which are incorporated herein by reference. By signing the Grant Notice, the Participant: (a) acknowledges receipt of and represents that the Participant has read and is familiar with the Grant Notice, this Agreement, the Plan and a prospectus for the Plan prepared in connection with the registration with the Securities and Exchange Commission of the Shares (the “Plan Prospectus”), (b) accepts the Award subject to all of the terms and conditions of the Grant Notice, this Agreement and the Plan and (c) agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions arising under the Grant Notice, this Agreement or the Plan.

     1. Definitions and Construction.

          1.1 Definitions. Unless otherwise defined herein, capitalized terms shall have the meanings assigned to such terms in the Grant Notice or the Plan.

          1.2 Construction. Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of this Agreement. Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular. Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise.

     2. Administration.

          All questions of interpretation concerning the Grant Notice, this Agreement, the Plan or any other form of agreement or other document employed by the Company in the administration of the Plan or the Award shall be determined by the Committee. All such determinations by the Committee shall be final, binding and conclusive upon all persons having an interest in the Award, unless fraudulent or made in bad faith. Any and all actions, decisions and determinations taken or made by the Committee in the exercise of its discretion pursuant to the Plan or the Award or other agreement thereunder (other than determining questions of interpretation pursuant to the preceding sentence) shall be final, binding and conclusive upon all persons having an interest in the Award. Any Officer shall have the authority to act on behalf of the Company with respect to any matter, right, obligation, or election which is the responsibility of or which is allocated to the Company herein, provided the Officer has apparent authority with respect to such matter, right, obligation, or election.

     3. The Award.

          3.1 Grant and Issuance of Shares. On the Date of Grant, the Participant shall acquire and the Company shall issue, subject to the provisions of this Agreement, a number of Shares equal to the Total Number of Shares. As a condition to the issuance of the Shares, the Participant shall execute and deliver the Grant Notice to the Company, and, if required by the Company, an Assignment Separate from Certificate duly endorsed (with date and number of shares blank) in the form provided by the Company.

          3.2 No Monetary Payment Required. The Participant is not required to make any monetary payment (other than to satisfy applicable tax withholding, if any, with respect to the issuance or vesting of the Shares) as a condition to receiving the Shares, the consideration for which shall be past services actually rendered or future services to be rendered to a Participating Company or for its benefit. Notwithstanding the foregoing, if required by applicable law, the Participant shall furnish consideration in the form of cash or past services rendered to a Participating Company or for its benefit having a value not less than the par value of the Shares issued pursuant to the Award.

          3.3 Beneficial Ownership of Shares; Certificate Registration. The Participant hereby authorizes the Company, in its sole discretion, to deposit the Shares with the Company’s transfer agent, including any successor transfer agent, to be held in book entry form during the term of the Escrow pursuant to Section 6. Furthermore, the Participant hereby authorizes the Company, in its sole discretion, to deposit, following the term of such Escrow, for the benefit of the Participant with any broker with which the Participant has an account relationship of which the Company has notice any or all Shares which are no longer subject to such Escrow. Except as provided by the foregoing, a certificate for the Shares shall be registered in the name of the Participant, or, if applicable, in the names of the heirs of the Participant.

          3.4 Issuance of Shares in Compliance with Law. The issuance of the Shares shall be subject to compliance with all applicable requirements of federal, state or foreign law with respect to such securities. No Shares shall be issued hereunder if their issuance would constitute a violation of any applicable federal, state or foreign securities laws or other law or regulations or the requirements of any stock exchange or market system upon which the Stock may then be listed. The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the lawful issuance of any Shares shall relieve the Company of any liability in respect of the failure to issue such Shares as to which such requisite authority shall not have been obtained. As a condition to the issuance of the Shares, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company.

     4. Vesting of Shares.

          Shares acquired pursuant to this Agreement shall become Vested Shares as provided in the Grant Notice. For purposes of determining the number of Vested Shares following an Ownership Change Event, credited Service shall include all Service with any

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corporation which is a Participating Company at the time the Service is rendered, whether or not such corporation is a Participating Company both before and after the Ownership Change Event.

     5. Company Reacquisition Right.

          5.1 Grant of Company Reacquisition Right. Except to the extent otherwise provided by the Superseding Agreement, if any, in the event that (a) the Participant’s Service terminates for any reason or no reason, with or without cause, or (b) the Participant, the Participant’s legal representative, or other holder of the Shares, attempts to sell, exchange, transfer, pledge, or otherwise dispose of (other than pursuant to an Ownership Change Event), including, without limitation, any transfer to a nominee or agent of the Participant, any Shares which are not Vested Shares (“Unvested Shares”), the Participant shall forfeit and the Company shall automatically reacquire the Unvested Shares, and the Participant shall not be entitled to any payment therefor (the “Company Reacquisition Right”).

          5.2 Ownership Change Event, Non-Cash Dividends, Distributions and Adjustments. Upon the occurrence of an Ownership Change Event, a dividend or distribution to the stockholders of the Company paid in shares of Stock or other property, or any other adjustment upon a change in the capital structure of the Company as described in Section 9, any and all new, substituted or additional securities or other property (other than regular, periodic cash dividends paid on Stock pursuant to the Company’s dividend policy) to which the Participant is entitled by reason of the Participant’s ownership of Unvested Shares shall be immediately subject to the Company Reacquisition Right and included in the terms “Shares,” “Stock” and “Unvested Shares” for all purposes of the Company Reacquisition Right with the same force and effect as the Unvested Shares immediately prior to the Ownership Change Event, dividend, distribution or adjustment, as the case may be. For purposes of determining the number of Vested Shares following an Ownership Change Event, dividend, distribution or adjustment, credited Service shall include all Service with any corporation which is a Participating Company at the time the Service is rendered, whether or not such corporation is a Participating Company both before and after any such event.

          5.3 Obligation to Repay Certain Cash Dividends and Distributions. The Participant shall, at the discretion of the Company, be obligated to promptly repay to the Company upon termination of the Participant’s Service any dividends and other distributions paid to the Participant in cash with respect to Unvested Shares reacquired by the Company pursuant to the Company Reacquisition Right.

     6. Escrow.

          6.1 Appointment of Agent. To ensure that Shares subject to the Company Reacquisition Right will be available for reacquisition, the Participant and the Company hereby appoint the Secretary of the Company, or any other person designated by the Company, as their agent and as attorney-in-fact for the Participant (the “Agent”) to hold any and all Unvested Shares and to sell, assign and transfer to the Company any such Unvested Shares reacquired by the Company pursuant to the Company Reacquisition Right. The Participant understands that appointment of the Agent is a material inducement to make this Agreement and that such appointment is coupled with an interest and is irrevocable. The Agent shall not be personally

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liable for any act the Agent may do or omit to do hereunder as escrow agent, agent for the Company, or attorney in fact for the Participant while acting in good faith and in the exercise of the Agent’s own good judgment, and any act done or omitted by the Agent pursuant to the advice of the Agent’s own attorneys shall be conclusive evidence of such good faith. The Agent may rely upon any letter, notice or other document executed by any signature purporting to be genuine and may resign at any time.

          6.2 Establishment of Escrow. The Participant authorizes the Company to deposit the Unvested Shares with the Company’s transfer agent to be held in book entry form, as provided in Section 3.3, and the Participant agrees to deliver to and deposit with the Agent each certificate, if any, evidencing the Shares and, if required by the Company, an Assignment Separate from Certificate with respect to such book entry shares and each such certificate duly endorsed (with date and number of Shares blank) in the form attached to this Agreement, to be held by the Agent under the terms and conditions of this Section 6 (the “Escrow”). Upon the occurrence of an Ownership Change Event, a dividend or distribution to the stockholders of the Company paid in shares of Stock or other property (other than regular, periodic dividends paid on Stock pursuant to the Company’s dividend policy) or any other adjustment upon a change in the capital structure of the Company, as described in Section 9, any and all new, substituted or additional securities or other property to which the Participant is entitled by reason of his or her ownership of the Shares that remain, following such Ownership Change Event, dividend, distribution or change described in Section 9, subject to the Company Reacquisition Right shall be immediately subject to the Escrow to the same extent as the Shares immediately before such event. The Company shall bear the expenses of the Escrow.

          6.3 Delivery of Shares to Participant. The Escrow shall continue with respect to any Shares for so long as such Shares remain subject to the Company Reacquisition Right. Upon termination of the Company Reacquisition Right with respect to Shares, the Company shall so notify the Agent and direct the Agent to deliver such number of Shares to the Participant. As soon as practicable after receipt of such notice, the Agent shall cause the Shares specified by such notice to be delivered to the Participant, and the Escrow shall terminate with respect to such Shares.

     7. Tax Matters.

          7.1 Tax Withholding.

               (a) In General. At the time the Grant Notice is executed, or at any time thereafter as requested by a Participating Company, the Participant hereby authorizes withholding from payroll and any other amounts payable to the Participant, and otherwise agrees to make adequate provision for, any sums required to satisfy the federal, state, local and foreign tax (including any social insurance) withholding obligations of the Participating Company, if any, which arise in connection with the Award, including, without limitation, obligations arising upon (a) the transfer of Shares to the Participant, (b) the lapsing of any restriction with respect to any Shares, (c) the filing of an election to recognize tax liability, or (d) the transfer by the Participant of any Shares. The Company shall have no obligation to deliver the Shares or to release any Shares from the Escrow established pursuant to Section 6 until the tax withholding obligations of the Participating Company have been satisfied by the Participant.

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               (b) Assignment of Sale Proceeds. Subject to compliance with applicable law and the Company’s Trading Compliance Policy, if permitted by the Company, the Participant may satisfy the Participating Company’s tax withholding obligations in accordance with procedures established by the Company providing for delivery by the Participant to the Company or a broker approved by the Company of properly executed instructions, in a form approved by the Company, providing for the assignment to the Company of the proceeds of a sale with respect to some or all of the shares becoming Vested Shares on a Vesting Date as provided in the Grant Notice.

               (c) Withholding in Shares. The Company shall have the right, but not the obligation, to require the Participant to satisfy all or any portion of a Participating Company’s tax withholding obligations by withholding a number of whole, Vested Shares otherwise deliverable to the Participant or by the Participant’s tender to the Company of a number of whole, Vested Shares or vested shares acquired otherwise than pursuant to the Award having, in any such case, a fair market value, as determined by the Company as of the date on which the tax withholding obligations arise, not in excess of the amount of such tax withholding obligations determined by the applicable minimum statutory withholding rates.

          7.2 Election Under Section 83(b) of the Code.

               (a) The Participant understands that Section 83 of the Code taxes as ordinary income the difference between the amount paid for the Shares, if anything, and the fair market value of the Shares as of the date on which the Shares are “substantially vested,” within the meaning of Section 83. In this context, “substantially vested” means that the right of the Company to reacquire the Shares pursuant to the Company Reacquisition Right has lapsed. The Participant understands that he or she may elect to have his or her taxable income determined at the time he or she acquires the Shares rather than when and as the Company Reacquisition Right lapses by filing an election under Section 83(b) of the Code with the Internal Revenue Service no later than thirty (30) days after the date of acquisition of the Shares. The Participant understands that failure to make a timely filing under Section 83(b) will result in his or her recognition of ordinary income, as the Company Reacquisition Right lapses, on the difference between the purchase price, if anything, and the fair market value of the Shares at the time such restrictions lapse. The Participant further understands, however, that if Shares with respect to which an election under Section 83(b) has been made are forfeited to the Company pursuant to its Company Reacquisition Right, such forfeiture will be treated as a sale on which there is realized a loss equal to the excess (if any) of the amount paid (if any) by the Participant for the forfeited Shares over the amount realized (if any) upon their forfeiture. If the Participant has paid nothing for the forfeited Shares and has received no payment upon their forfeiture, the Participant understands that he or she will be unable to recognize any loss on the forfeiture of the Shares even though the Participant incurred a tax liability by making an election under Section 83(b).

               (b) The Participant understands that he or she should consult with his or her tax advisor regarding the advisability of filing with the Internal Revenue Service an election under Section 83(b) of the Code, which must be filed no later than thirty (30) days after the date of the acquisition of the Shares pursuant to this Agreement. Failure to file an election under Section 83(b), if appropriate, may result in adverse tax consequences to the Participant. The Participant acknowledges that he or she has been advised to consult with a tax advisor

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regarding the tax consequences to the Participant of the acquisition of Shares hereunder. ANY ELECTION UNDER SECTION 83(b) THE PARTICIPANT WISHES TO MAKE MUST BE FILED NO LATER THAN 30 DAYS AFTER THE DATE ON WHICH THE PARTICIPANT ACQUIRES THE SHARES. THIS TIME PERIOD CANNOT BE EXTENDED. THE PARTICIPANT ACKNOWLEDGES THAT TIMELY FILING OF A SECTION 83(b) ELECTION IS THE PARTICIPANT’S SOLE RESPONSIBILITY, EVEN IF THE PARTICIPANT REQUESTS THE COMPANY OR ITS REPRESENTATIVE TO FILE SUCH ELECTION ON HIS OR HER BEHALF.

               (c) The Participant will notify the Company in writing if the Participant files an election pursuant to Section 83(b) of the Code. The Company intends, in the event it does not receive from the Participant evidence of such filing, to claim a tax deduction for any amount which would otherwise be taxable to the Participant in the absence of such an election.

     8. Effect of Change in Control.

          In the event of a Change in Control, the surviving, continuing, successor, or purchasing corporation or other business entity or parent thereof, as the case may be (the “Acquiror”), may, without the consent of the Participant, assume or continue in full force and effect the Company’s rights and obligations under the Award or substitute for the Award a substantially equivalent award for the Acquiror’s stock. For purposes of this Section, the Award shall be deemed assumed if, following the Change in Control, the Award confers the right to receive, subject to the terms and conditions of the Plan and this Agreement, for each Share subject to the Award immediately prior to the Change in Control, the consideration (whether stock, cash, other securities or property or a combination thereof) to which a holder of a share of Stock on the effective date of the Change in Control was entitled. Notwithstanding the foregoing, Shares acquired pursuant to the Award prior to the Change in Control and any consideration received pursuant to the Change in Control with respect to such shares shall continue to be subject to all applicable provisions of this Agreement except as otherwise provided herein.

     9. Adjustments for Changes in Capital Structure.

          Subject to any required action by the stockholders of the Company, in the event of any change in the Stock effected without receipt of consideration by the Company, whether through merger, consolidation, reorganization, reincorporation, recapitalization, reclassification, stock dividend, stock split, reverse stock split, split-up, split-off, spin-off, combination of shares, exchange of shares, or similar change in the capital structure of the Company, or in the event of payment of a dividend or distribution to the stockholders of the Company in a form other than Stock (other than regular, periodic cash dividends paid on Stock pursuant to the Company’s dividend policy) that has a material effect on the Fair Market Value of shares of Stock, appropriate and proportionate adjustments shall be made in the number and kind of shares of stock or other property subject to the Award, in order to prevent dilution or enlargement of the Participant’s rights under the Award. For purposes of the foregoing, conversion of any convertible securities of the Company shall not be treated as “effected without receipt of consideration by the Company.” Any and all new, substituted or additional securities or other

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property (other than regular, periodic cash dividends paid on Stock pursuant to the Company’s dividend policy, subject to Section 5.3) to which Participant is entitled by reason of ownership of shares acquired pursuant to this Award will be immediately subject to the provisions of this Award on the same basis as all shares originally acquired hereunder. Any fractional share resulting from an adjustment pursuant to this Section shall be rounded down to the nearest whole number. Such adjustments shall be determined by the Committee, and its determination shall be final, binding and conclusive.

     10. Rights as a Stockholder, Director, Employee or Consultant.

          The Participant shall have no rights as a stockholder with respect to any Shares subject to the Award until the date of the issuance of the Shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). No adjustment shall be made for dividends, distributions or other rights for which the record date is prior to the date the Shares are issued, except as provided in Section 9. Subject to the provisions of this Agreement, the Participant shall exercise all rights and privileges of a stockholder of the Company with respect to Shares deposited in the Escrow pursuant to Section 6, including the right to vote such Shares and to receive all dividends and other distributions paid with respect to such Shares, subject to Section 5.3. If the Participant is an Employee, the Participant understands and acknowledges that, except as otherwise provided in a separate, written employment agreement between a Participating Company and the Participant, the Participant’s employment is “at will” and is for no specified term. Nothing in this Agreement shall confer upon the Participant any right to continue in the Service of a Participating Company or interfere in any way with any right of the Participating Company Group to terminate the Participant’s Service at any time.

     11. Legends.

          The Company may at any time place legends referencing the Company Reacquisition Right and any applicable federal, state or foreign securities law restrictions on all certificates representing the Shares. The Participant shall, at the request of the Company, promptly present to the Company any and all certificates representing the Shares in the possession of the Participant in order to carry out the provisions of this Section. Unless otherwise specified by the Company, legends placed on such certificates may include, but shall not be limited to, the following:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS SET FORTH IN AN AGREEMENT BETWEEN THIS CORPORATION AND THE REGISTERED HOLDER, OR HIS PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THIS CORPORATION.”

     12. Transfers in Violation of Agreement.

          No Shares may be sold, exchanged, transferred, assigned, pledged, hypothecated or otherwise disposed of, including by operation of law, in any manner which violates any of the provisions of this Agreement and, except pursuant to an Ownership Change Event, until the date

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on which such shares become Vested Shares, and any such attempted disposition shall be void. The Company shall not be required (a) to transfer on its books any Shares which will have been transferred in violation of any of the provisions set forth in this Agreement or (b) to treat as owner of such Shares or to accord the right to vote as such owner or to pay dividends to any transferee to whom such Shares will have been so transferred. In order to enforce its rights under this Section, the Company shall be authorized to give a stop transfer instruction with respect to the Shares to the Company’s transfer agent.

     13. Miscellaneous Provisions.

          13.1 Termination or Amendment. The Committee may terminate or amend the Plan or this Agreement at any time; provided, however, that no such termination or amendment may adversely affect the Participant’s rights under this Agreement without the consent of the Participant unless such termination or amendment is necessary to comply with applicable law or government regulation. No amendment or addition to this Agreement shall be effective unless in writing.

          13.2 Nontransferability of the Award. The right to acquire Shares pursuant to the Award shall not be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors of the Participant or the Participant’s beneficiary, except transfer by will or by the laws of descent and distribution. All rights with respect to the Award shall be exercisable during the Participant’s lifetime only by the Participant or the Participant’s guardian or legal representative.

          13.3 Further Instruments. The parties hereto agree to execute such further instruments and to take such further action as may reasonably be necessary to carry out the intent of this Agreement.

          13.4 Binding Effect. This Agreement shall inure to the benefit of the successors and assigns of the Company and, subject to the restrictions on transfer set forth herein, be binding upon the Participant and the Participant’s heirs, executors, administrators, successors and assigns.

          13.5 Delivery of Documents and Notices. Any document relating to participation in the Plan or any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given (except to the extent that this Agreement provides for effectiveness only upon actual receipt of such notice) upon personal delivery, electronic delivery at the e-mail address, if any, provided for the Participant by a Participating Company, or upon deposit in the U.S. Post Office or foreign postal service, by registered or certified mail, or with a nationally recognized overnight courier service, with postage and fees prepaid, addressed to the other party at the address of such party set forth in the Grant Notice or at such other address as such party may designate in writing from time to time to the other party.

               (a) Description of Electronic Delivery. The Plan documents, which may include but do not necessarily include: the Plan, the Grant Notice, this Agreement, the Plan Prospectus, and any reports of the Company provided generally to the Company’s stockholders, may be delivered to the Participant electronically. In addition, if permitted by the Company, the

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parties may deliver electronically any notices called for in connection with the Escrow and the Participant may deliver electronically the Grant Notice to the Company or to such third party involved in administering the Plan as the Company may designate from time to time. Such means of electronic delivery may include but do not necessarily include the delivery of a link to a Company intranet or the Internet site of a third party involved in administering the Plan, the delivery of the document via e-mail or such other means of electronic delivery specified by the Company.

               (b) Consent to Electronic Delivery. The Participant acknowledges that the Participant has read Section 13.5(a) of this Agreement and consents to the electronic delivery of the Plan documents and, if permitted by the Company, the delivery of the Grant Notice and notices in connection with the Escrow, as described in Section 13.5(a). The Participant acknowledges that he or she may receive from the Company a paper copy of any documents delivered electronically at no cost to the Participant by contacting the Company by telephone or in writing. The Participant further acknowledges that the Participant will be provided with a paper copy of any documents if the attempted electronic delivery of such documents fails. Similarly, the Participant understands that the Participant must provide the Company or any designated third party administrator with a paper copy of any documents if the attempted electronic delivery of such documents fails. The Participant may revoke his or her consent to the electronic delivery of documents described in Section 13.5(a) or may change the electronic mail address to which such documents are to be delivered (if Participant has provided an electronic mail address) at any time by notifying the Company of such revoked consent or revised e-mail address by telephone, postal service or electronic mail. Finally, the Participant understands that he or she is not required to consent to electronic delivery of documents described in Section 13.5(a).

          13.6 Integrated Agreement. The Grant Notice, this Agreement and the Plan, together with the Superseding Agreement, if any, shall constitute the entire understanding and agreement of the Participant and the Participating Company Group with respect to the subject matter contained herein or therein and supersede any prior agreements, understandings, restrictions, representations, or warranties among the Participant and the Participating Company Group with respect to such subject matter. To the extent contemplated herein or therein, the provisions of the Grant Notice, this Agreement and the Plan shall survive any settlement of the Award and shall remain in full force and effect.

          13.7 Applicable Law. This Agreement shall be governed by the laws of the State of California as such laws are applied to agreements between California residents entered into and to be performed entirely within the State of California.

          13.8 Counterparts. The Grant Notice may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

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ASSIGNMENT SEPARATE FROM CERTIFICATE

     FOR VALUE RECEIVED the undersigned does hereby sell, assign and transfer unto

                                                                                  (                                        ) shares of the Capital Stock of TRIDENT MICROSYSTEMS, INC. standing in the undersigned’s name on the books of said corporation represented by Certificate No.                                          herewith and does hereby irrevocably constitute and appoint                                                              Attorney to transfer the said stock on the books of said corporation with full power of substitution in the premises.

Dated:                                                                                 

Signature

Print Name

Instructions: Please do not fill in any blanks other than the signature line. The purpose of this assignment is to enable the Company to exercise its Company Reacquisition Right set forth in the Restricted Stock Agreement without requiring additional signatures on the part of the Participant.

SAMPLE

Internal Revenue Service

  [IRS Service Center
where Form 1040 is Filed]

Re: Section 83(b) Election

Dear Sir or Madam:

The following information is submitted pursuant to section 1.83-2 of the Treasury Regulations in connection with this election by the undersigned under section 83(b) of the Internal Revenue Code of 1986, as amended (the “Code”).

1. The name, address and taxpayer identification number of the taxpayer are:

Name:

Address:

Social Security Number:

2. The following is a description of each item of property with respect to which the election is made:

                                        shares of common stock of Trident Microsystems, Inc. (the “Shares”), acquired from Trident Microsystems, Inc. (the “Company”) pursuant to a restricted stock grant.

3. The property was transferred to the undersigned on:

Restricted stock grant date:                                                             

The taxable year for which the election is made is:

Calendar Year                     

4. The nature of the restriction to which the property is subject:

The Shares are subject to automatic forfeiture to the Company upon the occurrence of certain events. This forfeiture provision lapses with regard to a

portion of the Shares based upon the continued performance of services by the taxpayer over time.

5. The following is the fair market value at the time of transfer (determined without regard to any restriction other than a restriction which by its terms will never lapse) of the property with respect to which the election is made:

$                                                             (                                         Shares at $                     per share).

The property was transferred to the taxpayer pursuant to the grant of an award of restricted stock.

6. The following is the amount paid for the property:

No monetary consideration was provided in exchange for the Shares.

7. A copy of this election has been furnished to the Company, the corporation for which the services were performed by the undersigned.

Please acknowledge receipt of this election by date or received-stamping the enclosed copy of this letter and returning it to the undersigned. A self-addressed stamped envelope is provided for your convenience.

Very truly yours,

Date:  

Enclosures
cc: Trident Microsystems, Inc.

TRIDENT MICROSYSTEMS, INC.
FORM OF RESTRICTED STOCK UNITS AGREEMENT
(For US Participant)

     Trident Microsystems, Inc. has granted to the Participant named in the Notice of Grant of Restricted Stock Units (the “Grant Notice”) to which this Restricted Stock Units Agreement (the “Agreement”) is attached an Award consisting of Restricted Stock Units subject to the terms and conditions set forth in the Grant Notice and this Agreement. The Award has been granted pursuant to and shall in all respects be subject to the terms conditions of the Trident Microsystems, Inc. 2010 Equity Incentive Plan (the “Plan”), as amended to the Date of Grant, the provisions of which are incorporated herein by reference. By signing the Grant Notice, the Participant: (a) acknowledges receipt of and represents that the Participant has read and is familiar with the Grant Notice, this Agreement, the Plan and a prospectus for the Plan prepared in connection with the registration with the Securities and Exchange Commission of the shares issuable pursuant to the Award (the “Plan Prospectus”), (b) accepts the Award subject to all of the terms and conditions of the Grant Notice, this Agreement and the Plan and (c) agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions arising under the Grant Notice, this Agreement or the Plan.

     1. Definitions and Construction.

          1.1 Definitions. Unless otherwise defined herein, capitalized terms shall have the meanings assigned to such terms in the Grant Notice or the Plan.

               (a) “Dividend Equivalent Units” mean additional Restricted Stock Units credited pursuant to Section 3.3.

               (b) “Units” mean the Restricted Stock Units originally granted pursuant to the Award and the Dividend Equivalent Units credited pursuant to the Award, as both shall be adjusted from time to time pursuant to Section 9.

          1.2 Construction. Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of this Agreement. Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular. Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise.

     2. Administration.

          All questions of interpretation concerning the Grant Notice, this Agreement, the Plan or any other form of agreement or other document employed by the Company in the administration of the Plan or the Award shall be determined by the Committee. All such determinations by the Committee shall be final, binding and conclusive upon all persons having an interest in the Award, unless fraudulent or made in bad faith. Any and all actions, decisions and determinations taken or made by the Committee in the exercise of its discretion pursuant to the Plan or the Award or other agreement thereunder (other than determining questions of interpretation pursuant to the preceding sentence) shall be final, binding and conclusive upon all

persons having an interest in the Award. Any Officer shall have the authority to act on behalf of the Company with respect to any matter, right, obligation, or election which is the responsibility of or which is allocated to the Company herein, provided the Officer has apparent authority with respect to such matter, right, obligation, or election.

     3. The Award.

          3.1 Grant of Units. On the Date of Grant, the Participant shall acquire, subject to the provisions of this Agreement, the Number of Restricted Stock Units set forth in the Grant Notice, subject to adjustment as provided in Section 3.3 and Section 9. Each Unit represents a right to receive on a date determined in accordance with the Grant Notice and this Agreement one (1) share of Stock.

          3.2 No Monetary Payment Required. The Participant is not required to make any monetary payment (other than applicable tax withholding, if any) as a condition to receiving the Units or shares of Stock issued upon settlement of the Units, the consideration for which shall be past services actually rendered or future services to be rendered to a Participating Company or for its benefit. Notwithstanding the foregoing, if required by applicable law, the Participant shall furnish consideration in the form of cash or past services rendered to a Participating Company or for its benefit having a value not less than the par value of the shares of Stock issued upon settlement of the Units.

          3.3 Dividend Equivalent Units. On the date that the Company pays a cash dividend to holders of Stock generally, the Participant shall be credited with a number of additional whole Dividend Equivalent Units determined by dividing (a) the product of (i) the dollar amount of the cash dividend paid per share of Stock on such date and (ii) the total number of Restricted Stock Units and Dividend Equivalent Units previously credited to the Participant pursuant to the Award and which have not been settled or forfeited pursuant to the Company Reacquisition Right (as defined below) as of such date, by (b) the Fair Market Value per share of Stock on such date. Any resulting fractional Dividend Equivalent Unit shall be rounded to the nearest whole number. Such additional Dividend Equivalent Units shall be subject to the same terms and conditions and shall be settled or forfeited in the same manner and at the same time as the Restricted Stock Units originally subject to the Award with respect to which they have been credited.

     4. Vesting of Units.

          Units acquired pursuant to this Agreement shall become Vested Units as provided in the Grant Notice. Dividend Equivalent Units shall become Vested Units at the same time as the Restricted Stock Units originally subject to the Award with respect to which they have been credited. For purposes of determining the number of Vested Units following an Ownership Change Event, credited Service shall include all Service with any corporation which is a Participating Company at the time the Service is rendered, whether or not such corporation is a Participating Company both before and after the Ownership Change Event.

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     5. Company Reacquisition Right.

          5.1 Grant of Company Reacquisition Right. Except to the extent otherwise provided by the Superseding Agreement, if any, in the event that the Participant’s Service terminates for any reason or no reason, with or without cause, the Participant shall forfeit and the Company shall automatically reacquire all Units which are not, as of the time of such termination, Vested Units (“Unvested Units”), and the Participant shall not be entitled to any payment therefor (the “Company Reacquisition Right”).

          5.2 Ownership Change Event, Dividends, Distributions and Adjustments. Upon the occurrence of an Ownership Change Event, a dividend or distribution to the stockholders of the Company paid in shares of Stock or other property, or any other adjustment upon a change in the capital structure of the Company as described in Section 9, any and all new, substituted or additional securities or other property (other than regular, periodic cash dividends paid on Stock pursuant to the Company’s dividend policy, which shall be treated in accordance with Section 3.3) to which the Participant is entitled by reason of the Participant’s ownership of Unvested Units shall be immediately subject to the Company Reacquisition Right and included in the terms “Units” and “Unvested Units” for all purposes of the Company Reacquisition Right with the same force and effect as the Unvested Units immediately prior to the Ownership Change Event, dividend, distribution or adjustment, as the case may be. For purposes of determining the number of Vested Units following an Ownership Change Event, dividend, distribution or adjustment, credited Service shall include all Service with any corporation which is a Participating Company at the time the Service is rendered, whether or not such corporation is a Participating Company both before and after any such event.

     6. Settlement of the Award.

          6.1 Issuance of Shares of Stock. Subject to the provisions of Section 6.3 below, the Company shall issue to the Participant on the Settlement Date with respect to each Vested Unit to be settled on such date one (1) share of Stock. Shares of Stock issued in settlement of Units shall not be subject to any restriction on transfer other than any such restriction as may be required pursuant to Section 6.3, Section 7 or the Company’s Trading Compliance Policy.

          6.2 Beneficial Ownership of Shares; Certificate Registration. The Participant hereby authorizes the Company, in its sole discretion, to deposit any or all shares acquired by the Participant pursuant to the settlement of the Award with the Company’s transfer agent, including any successor transfer agent, to be held in book entry form, or to deposit such shares for the benefit of the Participant with any broker with which the Participant has an account relationship of which the Company has notice. Except as provided by the foregoing, a certificate for the shares acquired by the Participant shall be registered in the name of the Participant, or, if applicable, in the names of the heirs of the Participant.

          6.3 Restrictions on Grant of the Award and Issuance of Shares. The grant of the Award and issuance of shares of Stock upon settlement of the Award shall be subject to compliance with all applicable requirements of federal, state or foreign law with respect to such securities. No shares of Stock may be issued hereunder if the issuance of such shares would

3

constitute a violation of any applicable federal, state or foreign securities laws or other law or regulations or the requirements of any stock exchange or market system upon which the Stock may then be listed. The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the lawful issuance of any shares subject to the Award shall relieve the Company of any liability in respect of the failure to issue such shares as to which such requisite authority shall not have been obtained. As a condition to the settlement of the Award, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company.

          6.4 Fractional Shares. The Company shall not be required to issue fractional shares upon the settlement of the Award.

     7. Tax Withholding.

          7.1 In General. At the time the Grant Notice is executed, or at any time thereafter as requested by a Participating Company, the Participant hereby authorizes withholding from payroll and any other amounts payable to the Participant, and otherwise agrees to make adequate provision for, any sums required to satisfy the federal, state, local and foreign tax (including any social insurance) withholding obligations of the Participating Company, if any, which arise in connection with the Award, the vesting of Units or the issuance of shares of Stock in settlement thereof. The Company shall have no obligation to deliver shares of Stock until the tax withholding obligations of the Participating Company have been satisfied by the Participant.

          7.2 Assignment of Sale Proceeds. Subject to compliance with applicable law and the Company’s Trading Compliance Policy, if permitted by the Company, the Participant may satisfy the Participating Company’s tax withholding obligations in accordance with procedures established by the Company providing for delivery by the Participant to the Company or a broker approved by the Company of properly executed instructions, in a form approved by the Company, providing for the assignment to the Company of the proceeds of a sale with respect to some or all of the shares being acquired upon settlement of Units.

          7.3 Withholding in Shares. The Company shall have the right, but not the obligation, to require the Participant to satisfy all or any portion of a Participating Company’s tax withholding obligations by deducting from the shares of Stock otherwise deliverable to the Participant in settlement of the Award a number of whole shares having a fair market value, as determined by the Company as of the date on which the tax withholding obligations arise, not in excess of the amount of such tax withholding obligations determined by the applicable minimum statutory withholding rates.

     8. Effect of Change in Control.

          In the event of a Change in Control, except to the extent that the Committee determines to cash out the Award in accordance with Section 13.1(c) of the Plan, the surviving, continuing, successor, or purchasing corporation or other business entity or parent thereof, as the

4

case may be (the “Acquiror”), may, without the consent of the Participant, assume or continue in full force and effect the Company’s rights and obligations with respect to all or any portion of the outstanding Units or substitute for all or any portion of the outstanding Units substantially equivalent rights with respect to the Acquiror’s stock. For purposes of this Section, a Unit shall be deemed assumed if, following the Change in Control, the Unit confers the right to receive, subject to the terms and conditions of the Plan and this Agreement, the consideration (whether stock, cash, other securities or property or a combination thereof) to which a holder of a share of Stock on the effective date of the Change in Control was entitled; provided, however, that if such consideration is not solely common stock of the Acquiror, the Committee may, with the consent of the Acquiror, provide for the consideration to be received upon settlement of the Unit to consist solely of common stock of the Acquiror equal in Fair Market Value to the per share consideration received by holders of Stock pursuant to the Change in Control. The Award shall terminate and cease to be outstanding effective as of the time of consummation or the Change in Control to the extent that the Award is neither assumed or continued by the Acquiror in connection with the Change in Control nor settled as of the time of the Change in Control.

     9. Adjustments for Changes in Capital Structure.

          Subject to any required action by the stockholders of the Company and the requirements of Section 409A of the Code to the extent applicable, in the event of any change in the Stock effected without receipt of consideration by the Company, whether through merger, consolidation, reorganization, reincorporation, recapitalization, reclassification, stock dividend, stock split, reverse stock split, split-up, split-off, spin-off, combination of shares, exchange of shares, or similar change in the capital structure of the Company, or in the event of payment of a dividend or distribution to the stockholders of the Company in a form other than Stock (other than regular, periodic cash dividends paid on Stock pursuant to the Company’s dividend policy) that has a material effect on the Fair Market Value of shares of Stock, appropriate and proportionate adjustments shall be made in the number of Units subject to the Award and/or the number and kind of shares or other property to be issued in settlement of the Award, in order to prevent dilution or enlargement of the Participant’s rights under the Award. For purposes of the foregoing, conversion of any convertible securities of the Company shall not be treated as “effected without receipt of consideration by the Company.” Any and all new, substituted or additional securities or other property (other than regular, periodic cash dividends paid on Stock pursuant to the Company’s dividend policy, which shall be treated in accordance with Section 3.3) to which Participant is entitled by reason of ownership of Units acquired pursuant to this Award will be immediately subject to the provisions of this Award on the same basis as all Units originally acquired hereunder. Any fractional Unit or share resulting from an adjustment pursuant to this Section shall be rounded down to the nearest whole number. Such adjustments shall be determined by the Committee, and its determination shall be final, binding and conclusive.

     10. Rights as a Stockholder, Director, Employee or Consultant.

          The Participant shall have no rights as a stockholder with respect to any shares which may be issued in settlement of this Award until the date of the issuance of such shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). No adjustment shall be made for dividends, distributions or other rights

5

for which the record date is prior to the date the shares are issued, except as provided in Section 3.3 and Section 9. If the Participant is an Employee, the Participant understands and acknowledges that, except as otherwise provided in a separate, written employment agreement between a Participating Company and the Participant, the Participant’s employment is “at will” and is for no specified term. Nothing in this Agreement shall confer upon the Participant any right to continue in the Service of a Participating Company or interfere in any way with any right of the Participating Company Group to terminate the Participant’s Service at any time.

     11. Legends.

          The Company may at any time place legends referencing any applicable federal, state or foreign securities law restrictions on all certificates representing shares of stock issued pursuant to this Agreement. The Participant shall, at the request of the Company, promptly present to the Company any and all certificates representing shares acquired pursuant to this Award in the possession of the Participant in order to carry out the provisions of this Section.

     12. Compliance with Section 409A.

          It is intended that any election, payment or benefit which is made or provided pursuant to or in connection with this Award that may result in Section 409A Deferred Compensation shall comply in all respects with the applicable requirements of Section 409A (including applicable regulations or other administrative guidance thereunder, as determined by the Committee in good faith) to avoid the unfavorable tax consequences provided therein for non-compliance. In connection with effecting such compliance with Section 409A, the following shall apply:

          12.1 Separation from Service; Required Delay in Payment to Specified Employee. Notwithstanding anything set forth herein to the contrary, no amount payable pursuant to this Agreement on account of the Participant’s termination of Service which constitutes a “deferral of compensation” within the meaning of the Treasury Regulations issued pursuant to Section 409A of the Code (the “Section 409A Regulations”) shall be paid unless and until the Participant has incurred a “separation from service” within the meaning of the Section 409A Regulations. Furthermore, to the extent that the Participant is a “specified employee” within the meaning of the Section 409A Regulations as of the date of the Participant’s separation from service, no amount that constitutes a deferral of compensation which is payable on account of the Participant’s separation from service shall paid to the Participant before the date (the “Delayed Payment Date”) which is first day of the seventh month after the date of the Participant’s separation from service or, if earlier, the date of the Participant’s death following such separation from service. All such amounts that would, but for this Section, become payable prior to the Delayed Payment Date will be accumulated and paid on the Delayed Payment Date.

          12.2 Other Delays in Payment. Neither the Participant nor the Company shall take any action to accelerate or delay the payment of any benefits under this Agreement in any manner which would not be in compliance with the Section 409A Regulations.

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          12.3 Amendments to Comply with Section 409A; Indemnification. Notwithstanding any other provision of this Agreement to the contrary, the Company is authorized to amend this Agreement, to void or amend any election made by the Participant under this Agreement and/or to delay the payment of any monies and/or provision of any benefits in such manner as may be determined by the Company, in its discretion, to be necessary or appropriate to comply with the Section 409A Regulations without prior notice to or consent of the Participant. The Participant hereby releases and holds harmless the Company, its directors, officers and stockholders from any and all claims that may arise from or relate to any tax liability, penalties, interest, costs, fees or other liability incurred by the Participant in connection with the Award, including as a result of the application of Section 409A.

          12.4 Advice of Independent Tax Advisor. The Company has not obtained a tax ruling or other confirmation from the Internal Revenue Service with regard to the application of Section 409A to the Award, and the Company does not represent or warrant that this Agreement will avoid adverse tax consequences to the Participant, including as a result of the application of Section 409A to the Award. The Participant hereby acknowledges that he or she has been advised to seek the advice of his or her own independent tax advisor prior to entering into this Agreement and is not relying upon any representations of the Company or any of its agents as to the effect of or the advisability of entering into this Agreement.

     13. Miscellaneous Provisions.

          13.1 Termination or Amendment. The Committee may terminate or amend the Plan or this Agreement at any time; provided, however, that except as provided in Section 8 in connection with a Change in Control, no such termination or amendment may adversely affect the Participant’s rights under this Agreement without the consent of the Participant unless such termination or amendment is necessary to comply with applicable law or government regulation, including, but not limited to, Section 409A. No amendment or addition to this Agreement shall be effective unless in writing.

          13.2 Nontransferability of the Award. Prior to the issuance of shares of Stock on the applicable Settlement Date, neither this Award nor any Units subject to this Award shall be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors of the Participant or the Participant’s beneficiary, except transfer by will or by the laws of descent and distribution. All rights with respect to the Award shall be exercisable during the Participant’s lifetime only by the Participant or the Participant’s guardian or legal representative.

          13.3 Further Instruments. The parties hereto agree to execute such further instruments and to take such further action as may reasonably be necessary to carry out the intent of this Agreement.

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          13.4 Binding Effect. This Agreement shall inure to the benefit of the successors and assigns of the Company and, subject to the restrictions on transfer set forth herein, be binding upon the Participant and the Participant’s heirs, executors, administrators, successors and assigns.

          13.5 Delivery of Documents and Notices. Any document relating to participation in the Plan or any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given (except to the extent that this Agreement provides for effectiveness only upon actual receipt of such notice) upon personal delivery, electronic delivery at the e-mail address, if any, provided for the Participant by a Participating Company, or upon deposit in the U.S. Post Office or foreign postal service, by registered or certified mail, or with a nationally recognized overnight courier service, with postage and fees prepaid, addressed to the other party at the address of such party set forth in the Grant Notice or at such other address as such party may designate in writing from time to time to the other party.

               (a) Description of Electronic Delivery. The Plan documents, which may include but do not necessarily include: the Plan, the Grant Notice, this Agreement, the Plan Prospectus, and any reports of the Company provided generally to the Company’s stockholders, may be delivered to the Participant electronically. In addition, if permitted by the Company, the Participant may deliver electronically the Grant Notice to the Company or to such third party involved in administering the Plan as the Company may designate from time to time. Such means of electronic delivery may include but do not necessarily include the delivery of a link to a Company intranet or the Internet site of a third party involved in administering the Plan, the delivery of the document via e-mail or such other means of electronic delivery specified by the Company.

               (b) Consent to Electronic Delivery. The Participant acknowledges that the Participant has read Section 13.5(a) of this Agreement and consents to the electronic delivery of the Plan documents and, if permitted by the Company, the delivery of the Grant Notice, as described in Section 13.5(a). The Participant acknowledges that he or she may receive from the Company a paper copy of any documents delivered electronically at no cost to the Participant by contacting the Company by telephone or in writing. The Participant further acknowledges that the Participant will be provided with a paper copy of any documents if the attempted electronic delivery of such documents fails. Similarly, the Participant understands that the Participant must provide the Company or any designated third party administrator with a paper copy of any documents if the attempted electronic delivery of such documents fails. The Participant may revoke his or her consent to the electronic delivery of documents described in Section 13.5(a) or may change the electronic mail address to which such documents are to be delivered (if Participant has provided an electronic mail address) at any time by notifying the Company of such revoked consent or revised e-mail address by telephone, postal service or electronic mail. Finally, the Participant understands that he or she is not required to consent to electronic delivery of documents described in Section 13.5(a).

          13.6 Integrated Agreement. The Grant Notice, this Agreement and the Plan, together with the Superseding Agreement, if any, shall constitute the entire understanding and agreement of the Participant and the Participating Company Group with respect to the subject matter contained herein or therein and supersede any prior agreements, understandings,

8

restrictions, representations, or warranties among the Participant and the Participating Company Group with respect to such subject matter. To the extent contemplated herein or therein, the provisions of the Grant Notice, this Agreement and the Plan shall survive any settlement of the Award and shall remain in full force and effect.

          13.7 Applicable Law. This Agreement shall be governed by the laws of the State of California as such laws are applied to agreements between California residents entered into and to be performed entirely within the State of California.

          13.8 Counterparts. The Grant Notice may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

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TRIDENT MICROSYSTEMS, INC.
FORM OF RESTRICTED STOCK UNITS AGREEMENT
(For Non-US Participant)

     Trident Microsystems, Inc. has granted to the Participant named in the Notice of Grant of Restricted Stock Units (the “Grant Notice”) to which this Restricted Stock Units Agreement (the “Agreement”) is attached an Award consisting of Restricted Stock Units subject to the terms and conditions set forth in the Grant Notice and this Agreement. The Award has been granted pursuant to and shall in all respects be subject to the terms conditions of the Trident Microsystems, Inc. 2010 Equity Incentive Plan (the “Plan”), as amended to the Date of Grant, the provisions of which are incorporated herein by reference. By signing the Grant Notice, the Participant: (a) acknowledges receipt of and represents that the Participant has read and is familiar with the Grant Notice, this Agreement, the Plan and a prospectus for the Plan prepared in connection with the registration with the Securities and Exchange Commission of the shares issuable pursuant to the Award (the “Plan Prospectus”), (b) accepts the Award subject to all of the terms and conditions of the Grant Notice, this Agreement and the Plan and (c) agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions arising under the Grant Notice, this Agreement or the Plan.

     1. Definitions and Construction.

          1.1 Definitions. Unless otherwise defined herein, capitalized terms shall have the meanings assigned to such terms in the Grant Notice or the Plan.

               (a) “Dividend Equivalent Units” mean additional Restricted Stock Units credited pursuant to Section 4.3.

               (b) “Units” mean the Restricted Stock Units originally granted pursuant to the Award and the Dividend Equivalent Units credited pursuant to the Award, as both shall be adjusted from time to time pursuant to Section 10.

          1.2 Construction. Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of this Agreement. Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular. Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise.

     2. Certain Conditions of the Award.

          2.1 Compliance with Local Law. The Participant agrees that the Participant will not acquire shares pursuant to the Award or transfer, assign, sell or otherwise deal with such shares except in compliance with Local Law.

          2.2 Employment Conditions. In accepting the Award, the Participant acknowledges that:

               (a) Any notice period mandated under Local Law shall not be treated as Service for the purpose of determining the vesting of the Award; and the Participant’s right to receive shares in settlement of the Award after termination of Service, if any, will be measured by the date of termination of the Participant’s active Service and will not be extended by any notice period mandated under Local Law. Subject to the foregoing and the provisions of the Plan, the Company, in its sole discretion, shall determine whether the Participant’s Service has terminated and the effective date of such termination.

               (b) The vesting of the Award shall cease upon, and no Units shall become Vested Units following, the Participant’s termination of Service for any reason except as may be explicitly provided by the Plan or this Agreement.

               (c) The Plan is established voluntarily by the Company. It is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time, unless otherwise provided in the Plan and this Agreement.

               (d) The grant of the Award is voluntary and occasional and does not create any contractual or other right to receive future grants of Awards, or benefits in lieu of Awards, even if Awards have been granted repeatedly in the past.

               (e) All decisions with respect to future Award grants, if any, will be at the sole discretion of the Company.

               (f) The Participant’s participation in the Plan shall not create a right to further Service with any Participating Company and shall not interfere with the ability of with any Participating Company to terminate the Participant’s Service at any time, with or without cause.

               (g) The Participant is voluntarily participating in the Plan.

               (h) The Award is an extraordinary item that does not constitute compensation of any kind for Service of any kind rendered to any Participating Company, and which is outside the scope of the Participant’s employment contract, if any.

               (i) The Award is not part of normal or expected compensation or salary for any purpose, including, but not limited to, calculating any severance, resignation, termination, redundancy, end-of-service payments, bonuses, long-service awards, pension or retirement benefits or similar payments.

               (j) In the event that the Participant is not an employee of the Company, the Award grant will not be interpreted to form an employment contract or relationship with the Company; and furthermore the Award grant will not be interpreted to form an employment contract with any other Participating Company.

               (k) The future value of the underlying shares is unknown and cannot be predicted with certainty. If the Participant obtains shares upon settlement of the Award, the value of those shares may increase or decrease.

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               (l) No claim or entitlement to compensation or damages arises from termination of the Award or diminution in value of the Award or shares acquired upon settlement of the Award resulting from termination of the Participant’s Service (for any reason whether or not in breach of Local Law) and the Participant irrevocably releases the Company and each other Participating Company from any such claim that may arise. If, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen then, by signing this Agreement, the Participant shall be deemed irrevocably to have waived the Participant’s entitlement to pursue such a claim.

          2.3 Data Privacy Consent.

               (a) The Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of the Participant’s personal data as described in this document by and among the members of the Participating Company Group for the exclusive purpose of implementing, administering and managing the Participant’s participation in the Plan.

               (b) The Participant understands that the Participating Company Group holds certain personal information about the Participant, including, but not limited to, the Participant’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares or directorships held in the Company, details of all Awards or any other entitlement to shares awarded, canceled, exercised, vested, unvested or outstanding in the Participant’s favor, for the purpose of implementing, administering and managing the Plan (“Data”). The Participant understands that Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in the Participant’s country or elsewhere, and that the recipient’s country may have different data privacy laws and protections than the Participant’s country. The Participant understands that he or she may request a list with the names and addresses of any potential recipients of the Data by contacting the Participant’s local human resources representative. The Participant authorizes the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing the Participant’s participation in the Plan, including any requisite transfer of such Data as may be required to a broker or other third party with whom the Participant may elect to deposit any shares acquired upon settlement of the Award. The Participant understands that Data will be held only as long as is necessary to implement, administer and manage the Participant’s participation in the Plan. The Participant understands that he or she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing the Participant’s local human resources representative. The Participant understands, however, that refusing or withdrawing the Participant’s consent may affect the Participant’s ability to participate in the Plan. For more information on the consequences of the Participant’s refusal to consent or withdrawal of consent, the Participant understands that he or she may contact the Participant’s local human resources representative.

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     3. Administration.

          All questions of interpretation concerning the Grant Notice, this Agreement, the Plan or any other form of agreement or other document employed by the Company in the administration of the Plan or the Award shall be determined by the Committee. All such determinations by the Committee shall be final, binding and conclusive upon all persons having an interest in the Award, unless fraudulent or made in bad faith. Any and all actions, decisions and determinations taken or made by the Committee in the exercise of its discretion pursuant to the Plan or the Award or other agreement thereunder (other than determining questions of interpretation pursuant to the preceding sentence) shall be final, binding and conclusive upon all persons having an interest in the Award. Any Officer shall have the authority to act on behalf of the Company with respect to any matter, right, obligation, or election which is the responsibility of or which is allocated to the Company herein, provided the Officer has apparent authority with respect to such matter, right, obligation, or election.

     4. The Award.

          4.1 Grant of Units. On the Date of Grant, the Participant shall acquire, subject to the provisions of this Agreement, the Number of Restricted Stock Units set forth in the Grant Notice, subject to adjustment as provided in Section 4.3 and Section 10. Each Unit represents a right to receive on a date determined in accordance with the Grant Notice and this Agreement one (1) share of Stock.

          4.2 No Monetary Payment Required. The Participant is not required to make any monetary payment (other than applicable tax withholding, if any) as a condition to receiving the Units or shares of Stock issued upon settlement of the Units, the consideration for which shall be past services actually rendered or future services to be rendered to a Participating Company or for its benefit. Notwithstanding the foregoing, if required by applicable law, the Participant shall furnish consideration in the form of cash or past services rendered to a Participating Company or for its benefit having a value not less than the par value of the shares of Stock issued upon settlement of the Units.

          4.3 Dividend Equivalent Units. On the date that the Company pays a cash dividend to holders of Stock generally, the Participant shall be credited with a number of additional whole Dividend Equivalent Units determined by dividing (a) the product of (i) the dollar amount of the cash dividend paid per share of Stock on such date and (ii) the total number of Restricted Stock Units and Dividend Equivalent Units previously credited to the Participant pursuant to the Award and which have not been settled or forfeited pursuant to the Company Reacquisition Right (as defined below) as of such date, by (b) the Fair Market Value per share of Stock on such date. Any resulting fractional Dividend Equivalent Unit shall be rounded to the nearest whole number. Such additional Dividend Equivalent Units shall be subject to the same terms and conditions and shall be settled or forfeited in the same manner and at the same time as the Restricted Stock Units originally subject to the Award with respect to which they have been credited.

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     5. Vesting of Units.

          Units acquired pursuant to this Agreement shall become Vested Units as provided in the Grant Notice. Dividend Equivalent Units shall become Vested Units at the same time as the Restricted Stock Units originally subject to the Award with respect to which they have been credited. For purposes of determining the number of Vested Units following an Ownership Change Event, credited Service shall include all Service with any corporation which is a Participating Company at the time the Service is rendered, whether or not such corporation is a Participating Company both before and after the Ownership Change Event.

     6. Company Reacquisition Right.

          6.1 Grant of Company Reacquisition Right. In the event that the Participant’s Service terminates for any reason or no reason, with or without cause, the Participant shall forfeit and the Company shall automatically reacquire all Units which are not, as of the time of such termination, Vested Units (“Unvested Units”), and the Participant shall not be entitled to any payment therefor (the “Company Reacquisition Right”).

          6.2 Ownership Change Event, Dividends, Distributions and Adjustments. Upon the occurrence of an Ownership Change Event, a dividend or distribution to the stockholders of the Company paid in shares of Stock or other property, or any other adjustment upon a change in the capital structure of the Company as described in Section 10, any and all new, substituted or additional securities or other property (other than regular, periodic cash dividends paid on Stock pursuant to the Company’s dividend policy, which shall be treated in accordance with Section 4.3) to which the Participant is entitled by reason of the Participant’s ownership of Unvested Units shall be immediately subject to the Company Reacquisition Right and included in the terms “Units” and “Unvested Units” for all purposes of the Company Reacquisition Right with the same force and effect as the Unvested Units immediately prior to the Ownership Change Event, dividend, distribution or adjustment, as the case may be. For purposes of determining the number of Vested Units following an Ownership Change Event, dividend, distribution or adjustment, credited Service shall include all Service with any corporation which is a Participating Company at the time the Service is rendered, whether or not such corporation is a Participating Company both before and after any such event.

     7. Settlement of the Award.

          7.1 Issuance of Shares of Stock. Subject to the provisions of Section 7.3 below, the Company shall issue to the Participant on the Settlement Date with respect to each Vested Unit to be settled on such date one (1) share of Stock. Shares of Stock issued in settlement of Units shall not be subject to any restriction on transfer other than any such restriction as may be required pursuant to Section 7.3, Section 7 or the Company’s Trading Compliance Policy.

          7.2 Beneficial Ownership of Shares; Certificate Registration. The Participant hereby authorizes the Company, in its sole discretion, to deposit any or all shares acquired by the Participant pursuant to the settlement of the Award with the Company’s transfer agent, including any successor transfer agent, to be held in book entry form, or to deposit such

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shares for the benefit of the Participant with any broker with which the Participant has an account relationship of which the Company has notice. Except as provided by the foregoing, a certificate for the shares acquired by the Participant shall be registered in the name of the Participant, or, if applicable, in the names of the heirs of the Participant.

          7.3 Restrictions on Grant of the Award and Issuance of Shares. The grant of the Award and issuance of shares of Stock upon settlement of the Award shall be subject to compliance with all applicable requirements of United States federal and state law and Local Law with respect to such securities. No shares of Stock may be issued hereunder if the issuance of such shares would constitute a violation of any applicable United States federal, state or foreign securities laws, including Local Law, or other law or regulations or the requirements of any stock exchange or market system upon which the Stock may then be listed. The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the lawful issuance of any shares subject to the Award shall relieve the Company of any liability in respect of the failure to issue such shares as to which such requisite authority shall not have been obtained. As a condition to the settlement of the Award, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company.

          7.4 Fractional Shares. The Company shall not be required to issue fractional shares upon the settlement of the Award.

     8. Tax Withholding.

          8.1 In General. Regardless of any action taken by the Company or any other Participating Company with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related withholding obligations (the “Tax Obligations”), the Participant acknowledges that the ultimate liability for all Tax Obligations legally due by the Participant is and remains the Participant’s responsibility and that the Company (a) makes no representations or undertakings regarding the treatment of any Tax Obligations in connection with any aspect of the Award, including the grant, vesting or settlement of the Award, the subsequent sale of shares acquired pursuant to such settlement, or the receipt of any dividends and (b) does not commit to structure the terms of the grant or any other aspect of the Award to reduce or eliminate the Participant’s liability for Tax Obligations. The Participant shall pay or make adequate arrangements satisfactory to the Company to satisfy all Tax Obligations of the Company and any other Participating Company at the time such Tax Obligations arise. In this regard, the Participant hereby authorizes withholding of all applicable Tax Obligations from payroll and any other amounts payable to the Participant, and otherwise agrees to make adequate provision for withholding of all applicable Tax Obligations, if any, by each Participating Company which arise in connection with the Award. The Company shall have no obligation to process the settlement of the Award or to deliver shares until the Tax Obligations as described in this Section have been satisfied by the Participant.

          8.2 Assignment of Sale Proceeds. Subject to compliance with applicable law, including Local Law, and the Company’s Trading Compliance Policy, if permitted by the

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Company, the Participant may satisfy the Tax Obligations in accordance with procedures established by the Company providing for delivery by the Participant to the Company or a broker approved by the Company of properly executed instructions, in a form approved by the Company, providing for the assignment to a Participating Company of the proceeds of a sale with respect to some or all of the shares being acquired upon settlement of Units.

          8.3 Withholding in Shares. If permissible under applicable law, including Local Law, the Company shall have the right, but not the obligation, to require the Participant to satisfy all or any portion of the Tax Obligations by deducting from the shares of Stock otherwise deliverable to the Participant in settlement of the Award a number of whole shares having a fair market value, as determined by the Company as of the date on which the Tax Obligations arise, not in excess of the amount of such Tax Obligations determined by the applicable minimum statutory withholding rates.

     9. Effect of Change in Control.

          In the event of a Change in Control, except to the extent that the Committee determines to cash out the Award in accordance with Section 13.1(c) of the Plan, the surviving, continuing, successor, or purchasing corporation or other business entity or parent thereof, as the case may be (the “Acquiror”), may, without the consent of the Participant, assume or continue in full force and effect the Company’s rights and obligations with respect to all or any portion of the outstanding Units or substitute for all or any portion of the outstanding Units substantially equivalent rights with respect to the Acquiror’s stock. For purposes of this Section, a Unit shall be deemed assumed if, following the Change in Control, the Unit confers the right to receive, subject to the terms and conditions of the Plan and this Agreement, the consideration (whether stock, cash, other securities or property or a combination thereof) to which a holder of a share of Stock on the effective date of the Change in Control was entitled; provided, however, that if such consideration is not solely common stock of the Acquiror, the Committee may, with the consent of the Acquiror, provide for the consideration to be received upon settlement of the Unit to consist solely of common stock of the Acquiror equal in Fair Market Value to the per share consideration received by holders of Stock pursuant to the Change in Control. The Award shall terminate and cease to be outstanding effective as of the time of consummation or the Change in Control to the extent that the Award is neither assumed or continued by the Acquiror in connection with the Change in Control nor settled as of the time of the Change in Control.

     10. Adjustments for Changes in Capital Structure.

          Subject to any required action by the stockholders of the Company, in the event of any change in the Stock effected without receipt of consideration by the Company, whether through merger, consolidation, reorganization, reincorporation, recapitalization, reclassification, stock dividend, stock split, reverse stock split, split-up, split-off, spin-off, combination of shares, exchange of shares, or similar change in the capital structure of the Company, or in the event of payment of a dividend or distribution to the stockholders of the Company in a form other than Stock (other than regular, periodic cash dividends paid on Stock pursuant to the Company’s dividend policy) that has a material effect on the Fair Market Value of shares of Stock, appropriate and proportionate adjustments shall be made in the number of Units subject to the Award and/or the number and kind of shares or other property to be issued in settlement of the

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Award, in order to prevent dilution or enlargement of the Participant’s rights under the Award. For purposes of the foregoing, conversion of any convertible securities of the Company shall not be treated as “effected without receipt of consideration by the Company.” Any and all new, substituted or additional securities or other property (other than regular, periodic cash dividends paid on Stock pursuant to the Company’s dividend policy, which shall be treated in accordance with Section 4.3) to which the Participant is entitled by reason of ownership of Units acquired pursuant to this Award will be immediately subject to the provisions of this Award on the same basis as all Units originally acquired hereunder. Any fractional Unit or share resulting from an adjustment pursuant to this Section shall be rounded down to the nearest whole number. Such adjustments shall be determined by the Committee, and its determination shall be final, binding and conclusive.

     11. Rights as a Stockholder, Director, Employee or Consultant.

          The Participant shall have no rights as a stockholder with respect to any shares which may be issued in settlement of this Award until the date of the issuance of such shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). No adjustment shall be made for dividends, distributions or other rights for which the record date is prior to the date the shares are issued, except as provided in Section 4.3 and Section 10. If the Participant is an Employee, the Participant understands and acknowledges that, except as otherwise provided in a separate, written employment agreement between a Participating Company and the Participant, the Participant’s employment is for no specified term. Nothing in this Agreement shall confer upon the Participant any right to continue in the Service of a Participating Company or interfere in any way with any right of the Participating Company Group to terminate the Participant’s Service at any time.

     12. Legends.

          The Company may at any time place legends referencing any applicable United States federal or state or foreign securities law, including Local Law, restrictions on all certificates representing shares of stock issued pursuant to this Agreement. The Participant shall, at the request of the Company, promptly present to the Company any and all certificates representing shares acquired pursuant to this Award in the possession of the Participant in order to carry out the provisions of this Section.

     13. Miscellaneous Provisions.

          13.1 Termination or Amendment. The Committee may terminate or amend the Plan or this Agreement at any time; provided, however, that except as provided in Section 8 in connection with a Change in Control, no such termination or amendment may adversely affect the Participant’s rights under this Agreement without the consent of the Participant unless such termination or amendment is necessary to comply with applicable law or government regulation. No amendment or addition to this Agreement shall be effective unless in writing.

          13.2 Nontransferability of the Award. Prior to the issuance of shares of Stock on the applicable Settlement Date, neither this Award nor any Units subject to this Award shall be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment,

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pledge, encumbrance, or garnishment by creditors of the Participant or the Participant’s beneficiary, except transfer by will or by the laws of descent and distribution. All rights with respect to the Award shall be exercisable during the Participant’s lifetime only by the Participant or the Participant’s guardian or legal representative.

          13.3 Further Instruments. The parties hereto agree to execute such further instruments and to take such further action as may reasonably be necessary to carry out the intent of this Agreement.

          13.4 Binding Effect. This Agreement shall inure to the benefit of the successors and assigns of the Company and, subject to the restrictions on transfer set forth herein, be binding upon the Participant and the Participant’s heirs, executors, administrators, successors and assigns.

          13.5 Delivery of Documents and Notices. Any document relating to participation in the Plan or any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given (except to the extent that this Agreement provides for effectiveness only upon actual receipt of such notice) upon personal delivery, electronic delivery at the e-mail address, if any, provided for the Participant by a Participating Company, or upon deposit in the U.S. Post Office or foreign postal service, by registered or certified mail, or with a nationally recognized overnight courier service, with postage and fees prepaid, addressed to the other party at the address of such party set forth in the Grant Notice or at such other address as such party may designate in writing from time to time to the other party.

               (a) Description of Electronic Delivery. The Plan documents, which may include but do not necessarily include: the Plan, the Grant Notice, this Agreement, the Plan Prospectus, and any reports of the Company provided generally to the Company’s stockholders, may be delivered to the Participant electronically. In addition, if permitted by the Company, the Participant may deliver electronically the Grant Notice to the Company or to such third party involved in administering the Plan as the Company may designate from time to time. Such means of electronic delivery may include but do not necessarily include the delivery of a link to a Company intranet or the Internet site of a third party involved in administering the Plan, the delivery of the document via e-mail or such other means of electronic delivery specified by the Company.

               (b) Consent to Electronic Delivery. The Participant acknowledges that the Participant has read Section 13.5(a) of this Agreement and consents to the electronic delivery of the Plan documents and, if permitted by the Company, the delivery of the Grant Notice, as described in Section 13.5(a). The Participant acknowledges that he or she may receive from the Company a paper copy of any documents delivered electronically at no cost to the Participant by contacting the Company by telephone or in writing. The Participant further acknowledges that the Participant will be provided with a paper copy of any documents if the attempted electronic delivery of such documents fails. Similarly, the Participant understands that the Participant must provide the Company or any designated third party administrator with a paper copy of any documents if the attempted electronic delivery of such documents fails. The Participant may revoke his or her consent to the electronic delivery of documents described in Section 13.5(a) or may change the electronic mail address to which such documents are to be

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delivered (if Participant has provided an electronic mail address) at any time by notifying the Company of such revoked consent or revised e-mail address by telephone, postal service or electronic mail. Finally, the Participant understands that he or she is not required to consent to electronic delivery of documents described in Section 13.5(a).

          13.6 Integrated Agreement. The Grant Notice, this Agreement and the Plan, together with the Superseding Agreement, if any, shall constitute the entire understanding and agreement of the Participant and the Participating Company Group with respect to the subject matter contained herein or therein and supersede any prior agreements, understandings, restrictions, representations, or warranties among the Participant and the Participating Company Group with respect to such subject matter. To the extent contemplated herein or therein, the provisions of the Grant Notice, this Agreement and the Plan shall survive any settlement of the Award and shall remain in full force and effect.

          13.7 Country-Specific Terms and Conditions. Notwithstanding any other provision of this Agreement to the contrary, the Award shall be subject to the specific terms and conditions, if any, set forth in the Appendix to this Agreement which are applicable to the Participant’s country of residence, the provisions of which are incorporated in and constitute part of this Agreement. Moreover, if the Participant relocates to one of the countries included in the Appendix, the specific terms and conditions applicable to such country will apply to the Award to the extent the Company determines that the application of such terms and conditions is necessary or advisable in order to comply with local law or facilitate the administration of the Plan or this Agreement.

          13.8 Applicable Law. Except as provided pursuant to Section 13.7, this Agreement shall be governed by the laws of the State of California as such laws are applied to agreements between California residents entered into and to be performed entirely within the State of California. For purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties as evidenced by this Agreement, the parties hereby submit to and consent to the jurisdiction of the State of California and agree that such litigation shall be conducted only in the courts of the County of Santa Clara, California, or the federal courts of the United States for the Northern District of California, and no other courts, where this Agreement is made and/or performed.

          13.9 Counterparts. The Grant Notice may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

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APPENDIX

ADDITIONAL TERMS AND CONDITIONS OF
TRIDENT MICROSYSTEMS, INC.
RESTRICTED STOCK UNITS AGREEMENT
FOR NON-US PARTICIPANTS

This Appendix includes additional terms and conditions that govern the Award granted to the Participant if he or she resides in one of the countries listed below. Capitalized terms used but not defined in this Appendix have the meanings set forth in the Plan or the Agreement.

PEOPLE’S REPUBLIC OF CHINA

The following terms and conditions are applicable only to citizens or passport holders of the People’s Republic of China:

Discretionary Sale of Shares Upon Settlement by Non-Insider Employee. This paragraph shall apply if the Participant is not subject to the Company’s Trading Compliance Policy on the applicable Settlement Date under the Award. The Participant acknowledges that the Company, in its sole discretion, may determine it to be necessary or advisable to require an immediate sale by the Participant of the shares of Stock issued to the Participant on any Settlement Date in order to comply with Local Law. If the Company so determines, then by accepting this Award, and without prior notification of such determination by the Company, the Participant hereby:

(i)	authorizes and directs the Company to deposit the shares of Stock issuable to the Participant on the Settlement Date to an account established for the benefit of the Participant in accordance with Section 7.3 of the Agreement with a brokerage firm designated by the Company (the “Brokerage Firm”); and
(ii)	irrevocably appoints the Company as the Participant’s agent to instruct the Brokerage Firm to sell on behalf of the Participant at the prevailing market price on the Settlement Date (or on the next trading day if the Settlement Date is not a day on which the markets are open for trading) the shares of Stock deposited with the Brokerage Firm on such Settlement Date; and
(iii)	irrevocably assigns to the Company or any other Participating Company out of the proceeds of such sale of shares an amount equal to the Tax Obligations required to be withheld in accordance with Section 8 of the Agreement, and authorizes the Company to instruct the Brokerage Firm to pay to the Company or another Participating Company an amount equal to the Tax Obligations required to be withheld; and
(iv)	authorizes and directs the Company to instruct the Brokerage Firm to deliver the proceeds of such sale of shares, net of brokerage commissions, fees and Tax

	Obligations withheld, to the Company for the benefit of the Participant and to be deposited to a designated custodial account for payment to the Participant; and
(v)	authorizes the Company and any other Participating Company to provide to the Brokerage Firm information regarding the details of the Award and the Tax Obligations, and authorizes the Brokerage Firm to provide to the Company and any other Participating Company confirmation of the details of the sale of the shares of Stock.

Mandatory Sale of Shares Upon Settlement by Insider Employee. This paragraph shall apply if the Participant is subject to the Company’s Trading Compliance Policy on the applicable Settlement Date under the Award. The Company shall require an immediate sale by the Participant of the shares of Stock issued to the Participant on each such Settlement Date under the Award. By accepting this Award, the Participant hereby irrevocably appoints the Company as the Participant’s agent and authorizes the Company, any other Participating Company, and the Brokerage Firm to take each of the enumerated actions described in the preceding paragraph in connection with each such sale of shares.

Special Administration in China. The vesting of the Award and the Participant’s ability to receive funds upon the sale of shares to be issued in settlement of the Award, as described above, will be contingent upon the Company or its Affiliate obtaining approval from the State Administration of Foreign Exchange (“SAFE”) of the People’s Republic of China for the related foreign exchange transaction and the establishment of a SAFE-approved bank account. The receipt of funds by the Participant from the sale of the shares and the conversion of those funds to the local currency must be approved by SAFE. In order to comply with the SAFE regulations, the proceeds from the sale of the shares must be repatriated to China through a SAFE-approved bank account established and monitored by the Company or its Affiliate.

FRANCE

Acknowledgment. “En signant et renvoyant le présent document décrivant les termes et conditions de mon attribution de récompense, je confirme ainsi avoir lu et compris les documents relatifs à cette attribution (le Plan et ce contrat) qui m’ont été communiqués en langue anglaise. J’en accepte les termes en connaissance de cause.”

“By signing and returning this document providing for the terms and conditions of my Award grant, I confirm having read and understood the documents relating to this grant (the Plan and this Agreement) which were provided to me in English. I accept the terms of those documents accordingly.”

HONG KONG

Securities Law Notice. The Award and shares of Stock issued upon settlement of the Award do not constitute a public offering of securities under Hong Kong law and are available only to employees of the Company and its affiliates. The Agreement, including this Appendix, the Plan and other incidental communication materials have not been prepared in accordance with and are not intended to constitute a “prospectus” for a public offering of securities under the applicable

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securities legislation in Hong Kong. These documents have not been reviewed by any regulatory authority in Hong Kong. The Award is intended only for the personal use of the Participant and may not be distributed to any other person. If the Participant is in any doubt about any of the contents of the Agreement, including this Appendix or the Plan, the Participant should obtain independent professional advice.

Vesting of Awards and Sale of Shares. In the event that the Award vests and shares of Stock are issued to the Participant within six months after the Date of Grant, the Participant agrees that he or she will not dispose of any of such shares prior to the date six months following the Date of Grant.

INDIA

The Participant must repatriate all proceeds received from the sale of shares of Stock acquired upon settlement of the Award to India within ninety (90) days following the date of sale. The Participant must maintain the foreign inward remittance certificate received from the bank where the foreign currency is deposited in the event that the Reserve Bank of India or the Participant’s employer requests proof of repatriation. It is the Participant’s responsibility to comply with applicable exchange control laws in India.

NETHERLANDS

Notification for Dutch Employees

The Participant has been granted an Award pursuant to which the Participant may acquire shares of Stock. The Participant should be aware of the Dutch insider trading rules, which may affect the sale of Stock. In particular, the Participant may be prohibited from effecting certain share transactions if the Participant has “inside information” regarding the Company. The applicable restrictions are further discussed below. The Participant is advised to read the discussion carefully to determine whether the insider trading rules could apply to the Participant. If it is uncertain whether the insider trading rules apply, the Company recommends that the Participant consult with his or her legal advisor. Please note that the Company cannot be held liable if the Participant violates the Dutch insider trading rules. The Participant is responsible for ensuring compliance with these rules.

Prohibition Against Insider Trading. Dutch securities law prohibits insider trading. Under Article 46 of the Act on the Supervision of the Securities Trade 1995, anyone who has “inside information” related to the Company is prohibited from effectuating a transaction in securities in or from the Netherlands. “Inside information” is knowledge of a detail concerning the issuer to which the securities relate that is not public and which, if published, would reasonably be expected to affect the stock price, regardless of the development of the price. The insider could be any employee of the Company or its Dutch subsidiary or affiliate who has inside information.

Given the broad scope of the definition of inside information, certain employees of the Company or of a Participating Company working at its Dutch subsidiary or affiliate may have inside information and thus are prohibited from engaging in a transaction in securities of the Company in the Netherlands at a time when they have such inside information.

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By entering into the Agreement, the Participant acknowledges having read and understood the notification above and acknowledges that it is the Participant’s responsibility to comply with the Dutch insider trading rules.

SINGAPORE

Securities Law Notice

The Award and the shares of Stock to be acquired upon settlement of the Award are offered on a private basis and are therefore exempt from registration in Singapore.

UNITED KINGDOM

Tax and National Insurance Contributions Acknowledgment. The following provision supplements Section 8 of the Agreement:

The Participant agrees that if he or she does not pay, or the Company or another Participating Company does not withhold from the Participant, the full amount of the Tax Obligations that the Participant owes due to the vesting of the Award, or the release or assignment of the Award for consideration, or the receipt of any other benefit in connection with the Award (the “Taxable Event”) within ninety (90) days after the Taxable Event, or such other period specified in Section 222(1)(c) of the U.K. Income Tax (Earnings and Pensions) Act 2003, then the amount that should have been withheld shall constitute a loan owed by the Participant to the Participant’s employer, effective ninety (90) days after the Taxable Event. The Participant agrees that the loan will bear interest at the official rate of HM Revenue and Customs (“HMRC”) and will be immediately due and repayable by the Participant, and the Company or another Participating Company may recover the loan at any time thereafter by withholding the funds from salary, bonus or any other funds due to the Participant by the Participating Company, by withholding in shares of Stock issued upon settlement of the Award or from the cash proceeds from the sale of shares of Stock or by demanding cash or a cheque from the Participant. The Participant also authorizes the Company to delay the issuance of any shares of Stock to him or her unless and until the loan is repaid in full.

Notwithstanding the foregoing, if the Participant is an executive officer or director (within the meaning of Section 13(k) of the U.S. Securities and Exchange Act of 1934, as amended), the terms of the immediately foregoing provision will not apply. In the event that the Participant is an executive officer or director and Tax Obligations are not collected from or paid by him or her within ninety (90) days after the Taxable Event, the amount of any uncollected Tax Obligations may constitute a benefit to the Participant on which additional income tax and national insurance contributions may be payable. The Participant will be responsible for reporting any income tax and National Insurance Contributions due on this additional benefit directly to HMRC under the self-assessment regime.

Joint Election for Pass-Through of Employer National Insurance Contributions. The Participant acknowledges and agrees that participation in the Plan and the vesting of the Award

4

may, at the Company’s discretion, be subject to and contingent upon the Participant’s prompt execution of the Inland Revenue approved joint election in the form provided by the Company or its subsidiary, transferring all or a portion of the Company’s (or its subsidiary’s) National Insurance Contribution liability to the Participant.

5

EX-10.46

Exhibit 10.46

CONFIDENTIAL RETIREMENT AGREEMENT
AND GENERAL RELEASE OF CLAIMS

     1. Donna Hamlin (“Executive”) has been employed by Trident Microsystems, Inc. (the “Company”) since January 2008, and she is currently employed by the Company as its Vice President of Human Resources and Administration. Executive wishes to retire from her employment with the Company (and her employment, if any, with any of the Company’s direct or indirect subsidiaries), and it is the Company’s desire to ensure that there is a smooth and orderly transition of Executive’s duties, to provide Executive with certain separation benefits that she would not otherwise be entitled to receive upon her retirement, and to resolve any claims that Executive has or may have against the Company. Accordingly, Executive and the Company agree as set forth below. This Agreement will become effective on the eighth day after it is signed by Executive (the “Effective Date”), provided that Executive has not revoked this Agreement (by email notice to dteichmann@tridentmicro.com) prior to that date.

     2. Executive hereby elects to retire voluntarily from her employment with the Company (and, to the extent applicable, its direct and indirect subsidiaries) effective as of January 12, 2010 (the “Retirement Date”), and thus the parties agree that all such employment will terminate upon the Retirement Date.

     3. During the period between the date of this Agreement and the Retirement Date (the “Transition Period”), Executive will continue to perform her duties for the Company in a professional and timely manner to the full satisfaction of the Company. Executive shall also work with the Company to ensure an orderly and complete transition of her duties by the Retirement Date. During the Transition Period, the Company will continue to provide Executive with her current base salary and employee fringe benefits, and Executive’s unvested stock options shall continue to vest during the Transition Period. Upon the Retirement Date, Executive will be paid all of her accrued, unused paid time off that she earned during her employment with the Company. Executive will also receive the earned portion of her first half of FY2010 Incentive Bonus (i.e, for the period July 1, 2009 through December 31, 2009), which bonus will be paid to her at the same time that it is paid to other Company executives, provided the Company’s targets have been achieved for such period.

     4. Subject to Executive’s strict compliance with all the terms of this Agreement, and to her extension of the release of claims in Paragraphs 5 and 6 as described below, the Company will provide Executive with the following:

          (a) a lump sum retirement payment of $245,916.67, which shall be subject to applicable withholding and will be paid to Executive on January 12, 2010;

          (b) in the event that Executive timely elects to obtain continued group health insurance coverage under COBRA following the Retirement Date, the Company will pay the premiums for such coverage through the earlier of (i) January 31, 2011, or (ii) the first date on which Executive becomes eligible to obtain other group health insurance coverage; thereafter, Executive may elect to purchase continued group health insurance coverage under COBRA at her own expense; and

Confidential

1

          (c) with respect to any stock options granted to Executive by the Company that have become fully or partially vested by the Retirement Date, Executive shall be entitled to exercise her right to purchase such vested stock options at any time up to and including the one year anniversary of the Retirement Date; Executive shall not be entitled to any additional vesting of her Company stock options after the Retirement Date, and except as modified by this Paragraph 4(c), Executive’s Company stock options shall continue to be subject to and governed by the terms and conditions of the applicable Company stock option plans and stock option agreements between Executive and the Company.

     In the event of any material breach by Executive of any of the provisions of this Agreement, Executive shall not be entitled to receive any payments or benefits under this Paragraph 4, and her failure to receive any of these payments and/or benefits as a result of her material breach shall not affect or impair the validity of the remainder of this Agreement, including, but not limited to, Paragraphs 5 through 9. Executive acknowledges and agrees that she shall not be entitled to any payments or benefits from the Company other than those expressly set forth in Paragraphs 3 and 4.

     5. In consideration of the payments and benefits described in Paragraph 4, Executive and her successors release the Company, its parents, divisions, direct and indirect subsidiaries, and affiliated entities, and each of their respective current and former shareholders, investors, directors, officers, employees, agents, attorneys, insurers, legal successors and assigns of and from any and all claims, actions and causes of action, whether now known or unknown, which Executive now has, or at any other time had, or shall or may have against those released parties based upon or arising out of any matter, cause, fact, thing, act or omission whatsoever occurring or existing at any time up to and including the date on which Executive signs this Agreement, including, but not limited to, any claims of breach of contract, wrongful termination, retaliation, fraud, defamation, infliction of emotional distress or national origin, race, age, sex, sexual orientation, disability or other discrimination or harassment under the Civil Rights Act of 1964, the Age Discrimination In Employment Act of 1967, the Americans with Disabilities Act, the Fair Employment and Housing Act or any other applicable law. As further consideration for the payments and benefits described in Paragraph 4, Executive shall extend this release of claims through and including the Retirement Date by re-executing this Agreement on the space provided at the end of the Agreement on or after the Retirement Date. Notwithstanding the above release of claims, it is expressly understood that this release does not apply to, and shall not be construed as, a waiver or release of any claims or rights that cannot lawfully be released by private agreement, including any applicable statutory indemnity rights under the California Labor Code.

     6.Executive acknowledges that she has read section 1542 of the Civil Code of the State of California, which states in full:

A general release does not extend to claims which the creditor does not know or suspect to exist in her or her favor at the time of executing the release, which if known by her or her must have materially affected her or her settlement with the debtor.

Executive waives any rights that she has or may have under section 1542 (or any similar provision of the laws of any other jurisdiction) to the full extent that she may lawfully waive

Confidential

2

such rights pertaining to this general release of claims, and affirms that she is releasing all known and unknown claims that she has or may have against the parties listed above.

     7. Executive acknowledges and agrees that she shall continue to be bound by and comply with the terms of any proprietary rights, assignment of inventions and/or confidentiality agreements between the Company and Executive. On or before the Retirement Date, Executive will return to the Company, in good working condition, all Company property and equipment that is in Executive’s possession or control, including, but not limited to, any files, records, computers, computer equipment, cell phones, credit cards, keys, programs, manuals, business plans, financial records, and all electronic or paper documents (and any copies thereof) that Executive prepared or received in the course of her employment with the Company.

     8. Executive agrees that she shall not directly or indirectly disclose any of the terms of this Agreement to anyone other than her immediate family or counsel, except as such disclosure may be required for accounting or tax reporting purposes or as otherwise may be required by law. Executive further agrees that she will not, at any time in the future, make any critical or disparaging statements about the Company, or any of its products or its employees, except to the extent that such statements are made truthfully in response to a subpoena or other compulsory legal process.

     9. Executive agrees that for a period of one year following the Retirement Date, she will not, on behalf of herself or any other person or entity, directly or indirectly solicit any employee of the Company to terminate her/her employment with the Company.

     10. If any provision of this Agreement is deemed invalid, illegal, or unenforceable, that provision will be modified so as to make it valid, legal, and enforceable, or if it cannot be so modified, it will be stricken from this Agreement, and the validity, legality, and enforceability of the remainder of the Agreement shall not in any way be affected. In the event of any legal action relating to or arising out of this Agreement, the prevailing party shall be entitled to recover from the losing party its attorneys’ fees and costs incurred in that action.

     11. The Company intends that income provided to the Executive pursuant to this Agreement will not be subject to taxation under Section 409A of the Internal Revenue Code (“Section 409A”). The provisions of this Agreement shall be interpreted and construed in favor of satisfying any applicable requirements of Section 409A of the Code. However, the Company does not guarantee any particular tax effect for income provided to the Executive pursuant to this Agreement. In any event, except for the Company’s responsibility to withhold applicable income and employment taxes from compensation paid or provided to the Executive, the Company shall not be responsible for the payment of any applicable taxes incurred by the Executive on compensation paid or provided to the Executive pursuant to this Agreement. In the event that any compensation to be paid or provided to Executive pursuant to this Agreement may be subject to the excise tax described in Section 409A, the Company may delay such payment for the minimum period required in order to avoid the imposition of such excise tax.

     12. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior negotiations and agreements between the parties, whether written or oral, with the exception of any stock option or other equity agreements between the parties and any agreements described in Paragraph 7. This Agreement

Confidential

3

may not be modified or amended except by a document signed by an authorized officer of the Company and Executive.

EXECUTIVE UNDERSTANDS THAT SHE SHOULD CONSULT WITH AN ATTORNEY PRIOR TO SIGNING THIS AGREEMENT AND THAT SHE IS GIVING UP ANY LEGAL CLAIMS (AS DESCRIBED ABOVE IN PARAGRAPHS 5 AND 6) SHE HAS AGAINST THE PARTIES RELEASED ABOVE BY SIGNING THIS AGREEMENT. EXECUTIVE FURTHER UNDERSTANDS THAT SHE MAY HAVE UP TO 21 DAYS TO CONSIDER THIS AGREEMENT, THAT SHE MAY REVOKE IT AT ANY TIME DURING THE 7 DAYS AFTER SHE SIGNS IT, AND THAT IT SHALL NOT BECOME EFFECTIVE UNTIL THAT 7-DAY PERIOD HAS PASSED. EXECUTIVE ACKNOWLEDGES THAT SHE IS SIGNING THIS AGREEMENT KNOWINGLY, WILLINGLY AND VOLUNTARILY IN EXCHANGE FOR THE COMPENSATION AND BENEFITS DESCRIBED IN PARAGRAPH 4, WHICH COMPENSATION AND BENEFITS SHE WOULD NOT OTHERWISE BE ENTITLED TO RECEIVE.

Dated: January 6, 2010	/s/ Donna Hamlin
	TRIDENT MICROSYSTEMS, INC.
Dated: January 7, 2010	By:	/s/ David L. Teichmann
		Its: Senior Vice President, General Counsel
		& Corporate Secretary

By re-signing this Agreement on or after the Retirement Date, I hereby extend the release of claims set forth in Paragraphs 5 and 6 above so as to include any and all such claims that exist or arise at any time up to and including the Retirement Date. I also acknowledge and agree that I have been paid all wages (including base salary, paid time off, and bonuses) that I earned during my employment with the Company.* I understand that I may revoke this extension of the release of claims at anytime within the seven days following my re-execution of the Agreement, which revocation must be made in the manner described in the last sentence of Paragraph 1.

Dated: January 14, 2010  /s/ Donna Hamlin

* Subject to any FY2010 bonus which may become payable in the future in accordance with the last sentence of Paragraph 3 of this Agreement.

Confidential

4

EX-10.47

Exhibit 10.47

Lease Agreement

By and Between

Kifer Tech Investors llc,
a Delaware limited liability company

as Landlord

and

Trident Microsystems, Inc.,
a Delaware corporation

as Tenant

Dated March 5, 2010

Table of Contents

	Page
Index of Defined Terms	iv
Basic Lease Information	v
1. Demise		1
2. Premises		1
3. Term		2
4. Rent		2
5. Utility Expenses		10
6. Late Charge		11
7. Security Deposit		12
8. Possession		13
9. Use of Premises		13
10. Acceptance of Premises		16
11. Surrender		16
12. Alterations and Additions		17
13. Maintenance and Repairs of Premises		19
14. Landlord’s Insurance		21
15. Tenant’s Insurance		21
16. Indemnification		22
17. Subrogation		22
18. Signs		23
19. Free From Liens		24
20. Entry By Landlord		24
21. Destruction and Damage		25
22. Condemnation		27
23. Assignment and Subletting		28
24. Default		34
25. Landlord’s Remedies		36

i

	Page
26. Right to Perform Obligations		39
27. Attorneys’ Fees		40
28. Taxes		41
29. Effect of Conveyance		41
30. Estoppel Certificates		41
31. Subordination		41
32. Environmental Covenants		43
33. Notices		46
34. Waiver		46
35. Holding Over		46
36. Successors and Assigns		46
37. Time		47
38. Brokers		47
39. Limitation of Liability		47
40. Financial Statements		48
41. Rules and Regulations		48
42. Mortgagee Protection		48
43. Parking		49
44. Entire Agreement		50
45. Interest		50
46. Construction		50
47. Representations and Warranties of Tenant		50
48. Name of Building		52
49. Renewal Option (with FMV Rent)		52
50. Security		54
51. Judicial Reference		55
52. Recordation		56
53. Force Majeure		56

ii

	Page
54. Acceptance		57
55. Furniture		57
56. Miscellaneous		58

Index of Exhibits

A   Diagram of the Premises

B   Tenant Work Letter

C   Commencement and Expiration Date Memorandum

D   Rules and Regulations

E   Form of Estoppel

F   Form of Subordination, Non-Disturbance and Attornment Agreement

G   Hazardous Materials Disclosure Certificate

H   Furniture List

iii

Index of Defined Terms

ADA	14
Additional Rent	2
Affiliates	33
Alteration	17
Alterations	17
Anti-Terrorism Law	52
Appraisal Panel	54
Base Rent	2
Basic Lease Information	1
Building	1
Building Systems	16
Casualty Discovery Date	25
Chronic delinquency	35
Chronic overuse	36
Commencement Date	2
Common Areas	1
Comparable Buildings	55
Comparison Leases	54
Condemnation	27
Controllable Expenses	6
controlling persons	32
CPA	9
Default	34
Electric Service Provider	11
Environmental Laws	44
Executive Order No. 13224	52
Expense Adjustment Deadline	5
Expense Exclusions	6
Expenses	3
Expiration Date	2
Extension Notice	53
Extension Term	53
Force Majeure	57
Furniture	57
Guarantor	34
Hazardous Materials	43
Holder	49
Identification Signs	24
Initial Disclosure Certificate	43
JAMS	56
Landlord	41
Landlord Parties	47
Landlord’s Agents	13
Landlord’s Determination	53
Landlord’s Hazardous Materials	46
Landlord’s Insureds	21
Laws	14
Lease	1
Negotiation Period	53
Non-Disturbance Agreement	42
Option	53
organizational documents	32
Parking Areas	1
Premises	1
Prevailing Market Rate	54
Private Restrictions	14
Prohibited Person	52
Project	1
Proportionate Share	8
Public Company	32
Rent	9
Report Date	10
Rooftop Equipment	15
Rules and Regulations	14
Signage Criteria	24
Strategic Partners	34
Successor Landlord	42
Superior Lease(s)	42
Superior Lessor	42
Superior Mortgage(s)	42
Superior Mortgagee	42
Systems	4
Taxes and assessments	3
Tenant’s Agents	13
Tenant’s Determination	53
Tenant’s Property	22
Term	2
Third CPA	10
Transfer Premium	30
Updated Disclosure Certificate	43
USA Patriot Act	52
Utilities	10
Utility Expenses	4
Visitors	50
worth at the time of award	38

iv

Lease Agreement

Basic Lease Information

Lease Date:	March 5, 2010
Landlord:	Kifer Tech Investors llc, a Delaware limited liability company
Landlord’s Address:	c/o UBS Realty Investors llc 455 Market Street, Suite 1540 San Francisco, California 94105 Attention: Kifer Technology Center — Asset Manager
	All notices sent to Landlord under this Lease shall be sent to the above address, with copies to:
	CB Richard Ellis      225 West Santa Clara Street, Suite 1050      San Jose, California 95113      Attention: Kifer Technology Center — Property Manager
Tenant:	Trident Microsystems, Inc., a Delaware corporation
Tenant’s Contact Person:	General Counsel
Tenant’s Address Prior to Commencement Date and Telephone Number:	3408 Garrett Drive Santa Clara, California 95054 (408) 764-8808
Tenant’s Address After Commencement Date	1170 Kifer Road Sunnyvale, California
Premises Square Footage:	Approximately fifty-seven thousand six hundred forty-nine (57,649) rentable square feet
Premises Address:	1170 Kifer Road Sunnyvale, California
Project:	Kifer Technology Center, 1150-1170 Kifer Road, Sunnyvale, California, together with the land on which the Project is situated and all Common Areas
Building (if not the same as the Project):	1170 Kifer Road Sunnyvale, California

v

Tenant’s Proportionate Share of Building:	100%
Tenant’s Proportionate Share of Project:	55.83%
Length of Term:	Sixty (60) months
Estimated Commencement Date:	April 1, 2010
Estimated Expiration Date:	March 31, 2015

Base Rent:				Monthly	Monthly
	Period	Sq. Ft.		Base Rate	Base Rent
	1 – 12		57,649	× $0.00	= $0.00
	13 – 24		57,649	× $0.85	= $49,001.65
	25 – 36		57,649	× $1.00	= $57,649.00
	37 – 48		57,649	× $1.05	= $60,531.45
	49 – 60		57,649	× $1.10	= $63,413.90

Prepaid Base Rent:	Forty-Nine Thousand One and 65/100 Dollars ($49,001.65)
Month to which Prepaid Base Rent will be Applied:	Thirteenth (13th) month of the Term
Prepaid Estimated Additional Rent:	Twenty One Thousand Six Hundred Seventeen Dollars ($21,617.00)
Month to which Prepaid Estimated Additional Rent will be Applied:	First (1st) month of the Term
Security Deposit:	Sixty-Three Thousand Four Hundred Thirteen and 90/100 Dollars ($63,413.90)
Permitted Use:	General office, research and development, lab and warehouse uses
Undesignated Parking Spaces:	Two Hundred Twenty Four (224) nonexclusive and undesignated parking spaces

vi

Designated Visitor Parking Spaces:	Five (5) designated visitor parking spaces
Broker(s):	CB Richard Ellis, Inc.

vii

Lease Agreement

     This Lease Agreement is made and entered into by and between Landlord and Tenant on the Lease Date. The defined terms used in this Lease which are defined in the Basic Lease Information attached to this Lease Agreement (“Basic Lease Information”) shall have the meaning and definition given them in the Basic Lease Information. The Basic Lease Information, the exhibits, and this Lease Agreement are and shall be construed as a single instrument and are referred to herein as the “Lease.”

     1. Demise. In consideration for the rents and all other charges and payments payable by Tenant, and for the agreements, terms and conditions to be performed by Tenant in this Lease, Landlord does hereby lease to Tenant, and Tenant does hereby hire and take from Landlord, the Premises described below (the “Premises”), upon the agreements, terms and conditions of this Lease for the Term hereinafter stated.

     2. Premises. The Premises demised by this Lease is located in that certain building (the “Building”) specified in the Basic Lease Information, which Building is located in that certain real estate development (the “Project”) specified in the Basic Lease Information. The Premises has the address and contains the square footage specified in the Basic Lease Information; provided, however, that any statement of square footage set forth in this Lease, or that may have been used in calculating any of the economic terms hereof, is an approximation which Landlord and Tenant agree is reasonable and, except as expressly set forth in Paragraphs 4(d)(iii) and 4(d)(v) below, no economic terms based thereon shall be subject to revision whether or not the actual square footage is more or less. The location and dimensions of the Premises are depicted on Exhibit A, which is attached hereto and incorporated herein by this reference. Tenant shall have the non-exclusive right (in common with other tenants, Landlord and any other person granted use by Landlord) to use the Common Areas (as hereinafter defined), except that, with respect to parking, Tenant shall have only a license to use the number of non exclusive parking spaces set forth in the Basic Lease Information in the Project’s parking areas (the “Parking Areas”). No easement for light or air is incorporated in the Premises. For purposes of this Lease, “Common Areas” means all areas and facilities outside the Premises and within the exterior boundary line of the Project that are provided and designated by Landlord for the non-exclusive use of Landlord, Tenant and other tenants of the Project and their respective employees, and Visitors (as defined below).

     Landlord has the right, in its sole discretion, from time to time, to: (a) make changes to the Common Areas, including, without limitation, changes in the location, size, shape and number of driveways, entrances, parking spaces, parking areas, ingress, egress, direction of driveways, entrances, corridors and walkways; (b) close temporarily any of the Common Areas so long as reasonable access to the Premises remains available; (c) add additional buildings and improvements to the Common Areas or remove existing buildings or improvements therefrom; (d) use the Common Areas while engaged in making additional improvements, repairs or alterations to the Project or any portion thereof; and (e) do and perform any other acts or make any other changes in, to or with respect to the Common Areas and the Project as Landlord may, in its sole discretion, deem to be appropriate; provided, however that Landlord’s rights in subheadings (a) through (e) of this sentence shall be subject to the condition that the exercise of

1

such rights (i) do not materially and permanently reduce the number of parking spaces provided to Tenant in the Basic Lease Information, or (ii) materially and adversely impact Tenant’s use of or access to the parking or the Building. Without limiting the foregoing, Landlord reserves the right from time to time to install, use, maintain, repair, relocate and replace pipes, ducts, conduits, wires, meters, and equipment for service to the Premises or to other parts of the Building which are above the ceiling surfaces, below the floor surfaces, within the walls and in the central core areas of the Building which are located within the Premises or located elsewhere in the Building. Landlord shall use commercially reasonable efforts while conducting such activities to minimize any interference with Tenant’s use of the Premises.

     No rights to any view or to light or air over any property, whether belonging to Landlord or any other person, are granted to Tenant by this Lease. If at any time any windows of the Premises are temporarily darkened or the light or view therefrom is obstructed, the same shall be without liability to Landlord and without any reduction or diminution of Tenant’s obligations under this Lease. Landlord shall have the absolute right at all times, including an emergency situation, to limit, restrict, or prevent access to the Premises, the Building, and/or the Project in response to an actual, suspected, perceived, or publicly or privately announced health or security threat.

     3. Term. The term of this Lease (the “Term”) shall be for the period of months specified in the Basic Lease Information, commencing on the date that is the earliest of (i) the Estimated Commencement Date, or (ii) substantial completion of the Tenant Improvements (the “Commencement Date”). In the event the actual Commencement Date, as determined pursuant to the foregoing, is a date other than the Estimated Commencement Date specified in the Basic Lease Information, then Landlord and Tenant shall promptly execute a Commencement and Expiration Date Memorandum in the form attached hereto as Exhibit C, wherein the parties shall specify the Commencement Date, the date on which the Term expires (the “Expiration Date”) and the date on which Tenant is to commence paying Rent.

     4. Rent.

          (a) Base Rent. Tenant shall pay to Landlord, in advance on the first day of each month, without further notice or demand and without offset, rebate, credit or deduction for any reason whatsoever, the monthly installments of rent specified in the Basic Lease Information (the “Base Rent”).

     Upon execution of this Lease, Tenant shall pay to Landlord the Security Deposit, Prepaid Rent and first monthly installment of estimated Additional Rent (as hereinafter defined) specified in the Basic Lease Information to be applied toward Base Rent and Additional Rent for the month of the Term specified in the Basic Lease Information.

          (b) Additional Rent. As used in this Lease, the term “Additional Rent” shall mean all sums of money, other than Base Rent, that shall become due from and payable by Tenant pursuant to this Lease. This Lease is intended to be a triple-net lease with respect to Landlord; subject to Paragraph 13(b) below and except as otherwise expressly provided in this Lease, the Base Rent owing hereunder is (i) to be paid by Tenant absolutely net of all costs and expenses relating to Landlord’s ownership and operation of the Project and the Building, and (ii) not to be

2

reduced, offset or diminished, directly or indirectly, by any cost, charge or expense payable hereunder by Tenant or by others in connection with the Premises, the Building and/or the Project, or any part thereof. The provisions of this Paragraph 4(b) for the payment of Tenant’s Proportionate Share(s) of Expenses (as hereinafter defined) are intended to pass on to Tenant, Tenant’s Proportionate Share of all such costs and expenses relating to Landlord’s ownership and operation of the Premises, the Building and/or the Project. Landlord may from time to time, at its option, allocate and charge Expenses to an individual Building(s) or Tenant(s) in the Project in its reasonable discretion.

     During the term, in addition to the Base Rent, Tenant shall pay to Landlord, in accordance with this Paragraph 4, Tenant’s Proportionate Share(s) of all costs and expenses paid or incurred by Landlord in connection with the ownership, operation, maintenance, management and repair of the Premises, the Building and/or the Project or any part thereof, including, without limitation, all the following items (collectively, the “Expenses”):

               (i) Taxes and Assessments. All real estate taxes and assessments, which shall include any form of tax, assessment, fee, license fee, business license fee, levy, penalty (if a result of Tenant’s delinquency), or tax (other than net income, estate, succession, inheritance, transfer or franchise taxes), imposed by any authority having the direct or indirect power to tax, or by any city, county, state or federal government or any improvement or other district or division thereof, whether such tax is: (A) determined by the area of the Premises, the Building and/or the Project or any part thereof, or the Rent and other sums payable hereunder by Tenant or by other tenants, including, but not limited to, any gross income or excise tax levied by any of the foregoing authorities with respect to receipt of Rent and/or other sums due under this Lease; (B) upon any legal or equitable interest of Landlord in the Premises, the Building and/or the Project or any part thereof; (C) upon this transaction or any document to which Tenant is a party creating or transferring any interest in the Premises, the Building and/or the Project; (D) levied or assessed in lieu of, in substitution for, or in addition to, existing or additional taxes against the Premises, the Building and/or the Project, whether or not now customary or within the contemplation of the parties; or (E) surcharged against the Premises, the Building or the Project. It is the intention of the parties that all new and increased assessments, taxes, fees, levies and charges due to any cause whatsoever are to be included within the definition of real property taxes for purposes of this Lease. “Taxes and assessments” shall also include reasonable legal and consultants’ fees, costs and disbursements incurred in connection with proceedings to contest, determine or reduce taxes that Tenant would otherwise be required to reimburse Landlord for under this Paragraph 4, Landlord specifically reserving the right, but not the obligation, to contest by appropriate legal proceedings the amount or validity of any such taxes.

               (ii) Insurance. All insurance premiums for the Building and/or the Project or any part thereof, including premiums for “all risk” fire and extended coverage insurance, commercial general liability insurance, rent loss or abatement insurance, earthquake insurance, flood or surface water coverage, and other insurance as Landlord deems necessary in its reasonable discretion, and any deductibles paid under policies of any such insurance; provided, however, that with respect to any particular casualty event affecting the Project, in no event shall Tenant’s Proportionate Share any individual insurance deductible under Landlord’s casualty insurance exceed an amount equal to Thirty Thousand Dollars ($30,000.00).

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               (iii) Utilities. The cost of all Utilities (as hereinafter defined) serving the Premises, the Building and the Common Areas that are not separately metered to Tenant, any assessments or charges for Utilities or similar purposes included within any tax bill for the Building or the Common Areas, including, without limitation, entitlement fees, allocation unit fees, and/or any similar fees or charges and any penalties (if a result of Tenant’s delinquency) related thereto, and any amounts, taxes, charges, surcharges, assessments or impositions levied, assessed or imposed upon the Premises, the Building or the Common Areas or any part thereof, or upon Tenant’s use and occupancy thereof, as a result of any rationing of Utility services or restriction on Utility use affecting the Premises, the Building and/or the Common Areas, as contemplated in Paragraph 5 below (collectively, “Utility Expenses”).

               (iv) Common Area Operating Expenses. All costs to operate, maintain, repair, replace, supervise, insure and administer the Common Areas, including supplies, materials, labor and equipment used in or related to the operation and maintenance of the Common Areas, including parking areas (including, without limitation, all costs of resurfacing and restriping parking areas), signs and directories on the Building and/or the Project, landscaping (including maintenance contracts and fees payable to landscaping consultants), amenities, sprinkler systems, sidewalks, walkways, driveways, curbs, lighting systems and security services, if any, provided by Landlord for the Common Areas, and any charges, assessments, costs or fees levied by any association or entity of which the Project or any part thereof is a member or to which the Project or any part thereof is subject.

               (v) Parking Charges. Any parking charges or other costs levied, assessed or imposed by, or at the direction of, or resulting from statutes or regulations, or interpretations thereof, promulgated by any governmental authority or insurer in connection with the use or occupancy of the Building or the Project.

               (vi) Maintenance and Repair Costs. Except for costs which are the responsibility of Landlord pursuant to Paragraph 13(b) below, all costs to maintain, repair, and replace the Premises, the Building and/or the Project or any part thereof, including, without limitation, (A) all costs paid under maintenance, management and service agreements such as contracts for janitorial, security and refuse removal, (B) all costs to maintain, repair and replace the roof coverings of the Building or the Project or any part thereof, (C) all costs to maintain, repair and replace the Project’s common heating, ventilating, air conditioning, plumbing, gas, sewer, drainage, electrical, fire protection and life safety systems and other mechanical and electrical systems and equipment (collectively, “Systems”), (D) the cost of maintenance, depreciation and replacement of machinery, tools and equipment (if owned by Landlord) and for rental paid for such machinery, tools and equipment (if rented) used in connection with the operation or maintenance of the Building, and (E) costs for improvements made to the Project which, although capital in nature, Landlord determines, in its sole discretion, are necessary to enhance and improve security at the Project.

               (vii) Life Safety and Security Costs. All costs to install, maintain, repair and replace all life safety systems, including, without limitation, (A) all fire alarm systems, serving the Premises, the Building and/or the Project or any part thereof (including all maintenance contracts and fees payable to life safety consultants) whether such systems are or shall be required by Landlord’s insurance carriers, Laws (as hereinafter defined) or otherwise, and (B) all

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costs of security and security systems at the Project, including, without limitation, (1) wages and salaries (including management fees) of all employees engaged in the security of the Project; (2) all supplies, materials, equipment, and devices used in the security of the Project, and any upgrades thereto; and (3) all service or maintenance contracts with independent contractors for Project security, including, without limitation, alarm service personnel, security guards, watchmen, and any other security personnel.

               (viii) Management and Administration. All costs for management and administration of the Premises, the Building and/or the Project or any part thereof, including, without limitation, a property management fee (provided, however, that in no event shall Tenant’s Proportionate Share of any management fee exceed three percent (3%) of the Building’s gross receipts), accounting, auditing, billing, postage, salaries and benefits for all employees and contractors engaged in the management, operation, maintenance, repair and protection of the Building and the Project, whether located on the Project or off-site, payroll taxes and legal and accounting costs, and fees for licenses and permits related to the ownership and operation of the Project, and office rent for the Building and/or the Project management office or the rental value of such office if it is located within the Building and/or the Project.

               (ix) Capital Improvements. Amounts paid for capital improvements or other costs incurred in connection with the Project (A) which are intended to effect economies in the operation or maintenance of the Project, or any portion thereof, (B) that are required to comply with present or anticipated conservation programs, (C) which are replacements or modifications of structural or nonstructural items located in the Common Areas, (D) that are required under any governmental law or regulation which goes into effect after the Commencement Date, (E) which Landlord determines, in its reasonable discretion are necessary to enhance and improve security at the Project. All such capital improvements and costs must be capitalized by Landlord under generally accepted real estate accounting principles and the amortized portion of such cost passed through to Tenant pursuant to the next paragraph.

          Notwithstanding anything in this Paragraph 4(b) to the contrary, with respect to all sums payable by Tenant as Additional Rent under this Paragraph 4(b) for the replacement of any item or the construction of any new item in connection with the physical operation of the Premises, the Building or the Project (e.g., roof membrane or coverings and parking area) which is a capital item the replacement of which would be capitalized under Landlord’s commercial real estate accounting practices, Tenant shall be required to pay only Tenant’s Proportionate Share of the cost of the item falling due within the Term (including any Renewal Term) based upon the amortization of the same over the useful life of such item, as reasonably determined by Landlord.

               (x) Expense Adjustment Deadline. “Expense Adjustment Deadline” means the date which is fifteen (15) months after the Expiration Date or earlier termination date of this Lease. Notwithstanding anything to the contrary contained in this Lease, Tenant shall have no obligation to pay any Expenses to Landlord which are first billed by Landlord after the Expense Adjustment Deadline; provided, however, that nothing contained herein shall be deemed to relieve Tenant from its liability to pay Tenant’s Proportionate Share of Expenses under this Lease which were billed by Landlord prior to the Expense Adjustment Deadline. Similarly,

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Landlord shall have no obligation to return, rebate or credit to Tenant any refund, rebate, or return of Expenses received by Landlord after the Expense Adjustment Deadline.

               (xi) Cap on Controllable Expenses. “Controllable Expenses” mean Expenses other than Taxes and assessments, Insurance and Utilities. Commencing as of January 2011 and continuing through the remainder of the Term, Tenant shall not be required to pay for any calendar year any Controllable Expenses that exceed the aggregate Controllable Expenses incurred by Landlord in, or otherwise attributable to, the calendar year 2010 (the “Cap Year”) as increased thereafter by an annually cumulative compounded five percent (5%). Additionally, in no event shall the Controllable Expenses during the Cap Year exceed by more than five percent (5%) the estimated Controllable Expenses for the Cap Year. For example, in the event Controllable Expenses were $100 during the calendar year 2010, then Tenant would have no liability for Controllable Expenses in excess of $110.25 for the calendar year 2012. If Tenant exercises the Option as set forth in Paragraph 49, then the Cap Year shall be reset to be the first calendar year within the Extension Term (i.e. calendar year 2015) and Tenant shall not be required to pay for any calendar year thereafter any Controllable Expenses that exceed the aggregate Controllable Expenses incurred by Landlord in, or otherwise attributable to, the calendar year 2015 as increased thereafter by an annually compounded five percent (5%). For the avoidance of doubt, nothing contained herein shall limit in any way Tenant’s liability for Taxes and assessments, Insurance and Utilities.

          (c) Exclusions from Expenses. Notwithstanding anything to the contrary contained in Paragraph 4(b), Expenses shall not include the following (the “Expense Exclusions”):

               (i) Any costs or expenses that are not attributable to the Common Areas or the Project as a whole and are properly attributable solely to the other building located within the Project;

               (ii) The cost of damage and repairs necessitated by the gross negligence or willful misconduct of Landlord or of Landlord’s agents, employees, contractors or invitees;

               (iii) Any cost or expense incurred by reason of the remediation or clean-up of any contamination of the Building or the Project, or the soils or ground water underlying the Building or the Project, by Hazardous Materials, except to the extent such contamination results from Tenant’s activities or except for de minimus amounts of Hazardous Materials commonly encountered in connection with the operation and ownership of commercial property (e.g. the clean-up of automotive oil leaks in the Parking Areas);

               (iv) Expenses in connection with services or other benefits which are not offered to Tenant or for which Tenant is charged for directly but which are provided to another tenant or occupant of the Project;

               (v) Costs incurred in connection with upgrading the Building to comply with disability, life, fire and safety codes, ordinances, statutes, or other laws in effect prior to the Commencement Date, including, without limitation, the ADA, including penalties or damages incurred due to such non-compliance;

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               (vi) Any ground lease rental or any interest, principal, points and fees on debts or amortization on any mortgage or mortgages or any other debt instrument encumbering the Project or any portion thereof;

               (vii) Cost of any capital improvements not specifically provided for above in Paragraph 4(b)(ix);

               (viii) Overhead costs and profit increment paid to subsidiaries or affiliates of Landlord for services on or for the Building or the Project, to the extent only that the cost of such services exceed competitive costs of such services were they not so rendered by a subsidiary or affiliate;

               (ix) Costs of any items (including, but not limited to, costs incurred by Landlord for the repair of damage to the Project or for items which are reimbursable under any contractor, manufacturer or supplier warranty), to the extent Landlord receives such reimbursement;

               (x) Legal fees, brokerage commissions, advertising costs, or other related expenses incurred in connection with the leasing of the Building or the Project or with the enforcement of Landlord’s title to or interest in the Building or the Project or any part thereof;

               (xi) Executive salaries or salaries of service personnel to the extent that such executives or service personnel perform services other than in connection with the management, operation, repair or maintenance of the Building or the Project; and

               (xii) Landlord’s general corporate overhead and general and administrative expenses not related to the Building or Project.

          (d) Payment of Additional Rent.

               (i) Upon commencement of this Lease, Landlord shall submit to Tenant an estimate of monthly Additional Rent for the period between the Commencement Date and the following December 31 and Tenant shall pay such estimated Additional Rent on a monthly basis, in advance, on the first day of each month. Tenant shall continue to make said monthly payments until notified by Landlord of a change therein. If at any time or times Landlord reasonably determines that the amounts payable under Paragraph 4(b) for the current Computation Year will vary from Landlord’s estimate given to Tenant, Landlord, by notice to Tenant, may revise the estimate for such year, and subsequent payments by Tenant for such year shall be based upon such revised estimate; provided that Landlord shall not adjust the estimated monthly payments of Additional Rent more than one time in any calendar year. By April 1 of each calendar Year following the initial Computation Year, Landlord shall endeavor to provide to Tenant a statement showing the actual Additional Rent due to Landlord for the prior Computation Year, to be prorated during the first year from the Commencement Date. Such statement shall be certified by Landlord’s authorized representative showing: (A) the amount of the actual Expenses for the preceding calendar year, with a breakdown of amounts by major categories of the Expenses; (B) the amounts paid by Tenant toward the estimated Expenses during the preceding calendar year; and (C) any applicable limitation under this Paragraph 4. If the total of the monthly payments of Additional Rent that Tenant has made for the prior Computation Year is less than the actual Additional Rent chargeable to Tenant for such prior

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Computation Year, then Tenant shall pay the difference in a lump sum within ten (10) days after receipt of such statement from Landlord. Any overpayment by Tenant of Additional Rent for the prior calendar year shall be credited towards the Additional Rent next due or returned to Tenant in a lump sum payment within ten (10) days after delivery of such statement.

               (ii) Landlord’s then-current annual operating and capital budgets for the Building and the Project or the pertinent part thereof shall be used for purposes of calculating Tenant’s monthly payment of estimated Additional Rent for the current year, subject to adjustment as provided above. Landlord shall make the final determination of Additional Rent for the year in which this Lease terminates as soon as possible after the end of such year. Even though the Term has expired and Tenant has vacated the Premises, Tenant shall remain liable for payment of any amount due to Landlord in excess of the estimated Additional Rent previously paid by Tenant, and, conversely, Landlord shall promptly return to Tenant any overpayment. Failure of Landlord to submit statements as called for herein shall not be deemed a waiver of Tenant’s obligation to pay Additional Rent as herein provided.

               (iii) With respect to Expenses which Landlord allocates to the Building, Tenant’s “Proportionate Share” shall be the percentage set forth in the Basic Lease Information as Tenant’s Proportionate Share of the Building, as adjusted by Landlord from time to time for a remeasurement of or changes in the physical size of the Premises or the Building, whether such changes in size are due to an addition to or a sale or conveyance of a portion of the Building or otherwise. With respect to Expenses which Landlord allocates to the Project as a whole or to only a portion of the Project, Tenant’s “Proportionate Share” shall be with respect to expenses which Landlord allocates to the entire Project, the percentage set forth in the Basic Lease Information as Tenant’s Proportionate Share of the Project and, with respect to Expenses which Landlord allocates to only a portion of the Project, a percentage calculated by Landlord from time to time in its reasonable discretion and furnished to Tenant in writing, in either case as adjusted by Landlord from time to time for a remeasurement of or changes in the physical size of the Premises or the Project, whether such changes in size are due to an addition to or a sale or conveyance of a portion of the Project or otherwise. Notwithstanding the foregoing, Landlord may equitably adjust Tenant’s Proportionate Share(s) for all or part of any item of expense or cost reimbursable by Tenant that relates to a repair, replacement, or service that benefits only a portion of the Project or that varies with the occupancy of the Project. Landlord shall have the right to adjust Tenant’s Proportionate Share(s) of any Utility Expenses based upon Tenant’s use of the Utilities or similar services as reasonably estimated and determined by Landlord based upon factors such as size of the Premises and intensity of use of such Utilities by Tenant such that Tenant shall pay the portion of such charges reasonably consistent with Tenant’s use of such Utilities and other services and costs. If Tenant disputes any such estimate or determination of Utility Expenses, then Tenant shall either pay the estimated amount or cause the Premises to be separately metered at Tenant’s sole expense.

               (iv) In the event the average occupancy level of the Building or the Project is not one hundred percent (100%), then the Expenses shall be adjusted by Landlord to reflect those costs which would have incurred had the Building or the Project, as applicable, been one hundred percent (100%) occupied during such year. Landlord agrees that since one of the purposes of Expenses and the gross up provision is to allow Landlord to require Tenant to pay for the costs attributable to its Premises, Landlord agrees that (A) Landlord will not collect or be

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entitled to collect Expenses from all of its tenants in an amount which is in excess of one hundred percent (100%) of the Expenses actually paid by Landlord in connection with the operation of the Building and the Project, and (B) Landlord shall make no profit from Landlord’s collections of Expenses.

               (v) Landlord reserves the right from time to time to remeasure the Premises, the Building and/or the Project in accordance with the current or revised generally accepted measurement standards utilized by Landlord and to thereafter adjust the Proportionate Share(s) of Tenant and any other affected tenants of the Building and/or the Project.

          (e) General Payment Terms. The Base Rent, Additional Rent and all other sums payable by Tenant to Landlord hereunder, including, without limitation, any late charges assessed pursuant to Paragraph 6 below and any interest assessed pursuant to Paragraph 45 below, are referred to as the “Rent.” Except as expressly set forth in this Lease, all Rent shall be paid without deduction, offset or abatement in lawful money of the United States of America and through a domestic branch of a United States financial institution, by check or electronic payment. Checks are to be made payable to “Kifer Tech Investors, LLC” and shall be mailed to: Kifer Tech Investors LLC, CBRE — #7945, P.O. Box 82551, Goleta, California 93118-2551 or to such other person or place as Landlord may, from time to time, designate to Tenant in writing. Wiring instructions for electronic payments will be provided separately. Rent for any fractional part of a calendar month at the commencement or termination of the Lease term shall be a prorated amount of the Rent for a full calendar month based upon a thirty (30) day month.

          (f) Statements Binding. Every statement given by Landlord pursuant to Paragraph 4(d)(i) of this Paragraph 4 shall be conclusive and binding upon Tenant unless (i) within three (3) years after the receipt of such statement Tenant shall notify Landlord that it disputes the correctness thereof, specifying the particular respects in which the statement is claimed to be incorrect, and (ii) if such dispute shall not have been settled by agreement, Tenant shall submit the dispute to binding arbitration within three (3) years after receipt of the statement. Pending the determination of such dispute by agreement or binding arbitration as aforesaid, Tenant shall, within ten (10) days after receipt of such statement, pay Additional Rent in accordance with Landlord’s statement and such payment shall be without prejudice to Tenant’s position. If the dispute shall be determined in Tenant’s favor, Landlord shall forthwith pay Tenant the amount of Tenant’s overpayment of Additional Rent resulting from compliance with Landlord’s statement.

          (g) Audit Rights. Provided that Tenant notifies Landlord in accordance with the terms of Paragraph 4(f) above that Tenant disputes a statement received from Landlord, Tenant or its CPA (as defined below) shall have the right, at Tenant’s sole cost and expense, provided that Tenant utilizes a Certified Public Accountant (the “CPA”) that is not compensated on a contingency basis, upon at least thirty (30) days’ prior notice to Landlord at any time during regular business hours to audit, review and photocopy Landlord’s records pertaining to Expenses for the immediately previous three (3) calendar years of the Term. Tenant shall complete the audit and present any disputed charges to Landlord, in writing, within three (3) months of commencing such audit. If Tenant fails to complete the audit and present any disputed charges to Landlord within the foregoing three (3) month period, then Tenant shall forfeit any rights to claim a refund, rebate, or return of the Expenses set forth in the statement. If, following

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Landlord’s receipt of the audit and any disputed charges (the “Report Date”), Landlord disputes the findings contained therein, and Landlord and Tenant are not able to resolve their differences within thirty (30) days following the Report Date, the dispute shall be resolved by binding arbitration as follows: Landlord and Tenant shall each designate an independent certified public accountant, which shall in turn jointly select a third independent Certified Public Accountant (the “Third CPA”). The Third CPA, within thirty (30) days of selection, shall, at Tenant’s sole expense, audit the relevant records and certify the proper amount within. That certification shall be final and conclusive. If the Third CPA determines that the amount of Expenses billed to Tenant was incorrect, the appropriate party shall pay to the other party the deficiency or overpayment, as applicable, within thirty (30) days following delivery of the Third Party CPA’s decision, without interest. Tenant agrees to keep all information thereby obtained by Tenant confidential and to obtain the agreement of its CPA and Third CPA to keep all such information confidential. Tenant shall provide a copy of such CPA agreements to Landlord promptly upon request. Notwithstanding anything herein to the contrary, if such certification by the Third CPA indicates that a refund owing Tenant exceeds the aggregate amount properly payable by Tenant pursuant to the terms of this Lease by five percent (5%) or more, then Landlord shall reimburse Tenant at such time any reasonable out-of-pocket audit expenses.

     5. Utility Expenses.

          (a) Tenant shall pay the cost of all water, sewer use, sewer discharge fees, permit costs, sewer connection fees, gas, water, heat, electricity, refuse pick-up, janitorial service, telephone and all materials and services or other utilities (collectively, “Utilities”) billed or metered separately to the Premises and/or Tenant, together with all taxes, assessments, charges and penalties added to or included within such cost. Tenant shall also be directly responsible for any nonstandard usage of electricity. The Premises, the Building and/or the Project may become subject to the rationing of Utility services or restrictions on Utility use as required by a public utility company, governmental agency or other similar entity having jurisdiction thereof, and Tenant’s occupancy hereunder shall be subject to such rationing or restrictions as may be imposed upon Landlord, Tenant, the Premises, the Building and/or the Project. Tenant shall in no event be excused or relieved from any covenant or obligation to be kept or performed by Tenant by reason of any such rationing or restrictions. Tenant shall comply with energy conservation programs implemented by Landlord by reason of rationing, restrictions or Laws.

          (b) Landlord shall not be liable for any loss, injury or damage to property caused by or resulting from any variation, interruption, or failure of Utilities due to any cause whatsoever, or from failure to make any repairs or perform any maintenance. No temporary interruption or failure of such services incident to the making of repairs, alterations, improvements, or due to accident, strike, or conditions or other events shall be deemed an eviction of Tenant or relieve Tenant from any of its obligations hereunder. In no event shall Landlord be liable to Tenant for any damage to the Premises or for any loss, damage or injury to any property therein or thereon occasioned by bursting, rupture, leakage or overflow of any plumbing or other pipes (including, without limitation, water, steam, and/or refrigerant lines), sprinklers, tanks, drains, drinking fountains or washstands, or other similar cause in, above, upon or about the Premises, the Building, or the Project. Tenant hereby waives the provisions of California Civil Code Section 1932(1) or any other applicable Laws permitting the termination of this Lease due to such failure or interruption.

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          (c) Landlord makes no representation with respect to the adequacy or fitness of the air-conditioning, insulation, or ventilation equipment in the Building to maintain temperatures which may be required for, or because of, any equipment of Tenant or occupancy level. Landlord shall have no liability for loss or damage in connection therewith. Any supplementary air-conditioning, insulation, or ventilation equipment required for Tenant’s needs shall be at Tenant’s sole expense.

          (d) Without limiting the terms of Paragraph 5(a) above, Landlord has contracted with Pacific Gas & Electric Company to provide electricity for the Building, and Landlord reserves the right to change the provider of such service at any time and from time to time in Landlord’s sole discretion (any such provider being referred to herein as the “Electric Service Provider”); provided that if Landlord elects to switch the Electric Service Provider, it must select one that provides electricity at commercially competitive prices and with a high level of service in providing a consistent level of electrical output with rare interruptions. Tenant shall obtain and accept electrical service for the Premises only from and through Landlord, in the manner and to the extent expressly provided in this Lease, at all times during the Term of this Lease, and Tenant shall have no right (and hereby waives any right Tenant may otherwise have) (i) to contract with or otherwise obtain any electrical service for or with respect to the Premises or Tenant’s operations therein from any provider of electrical service other than the Electric Service Provider, or (ii) to enter into any separate or direct contract or other similar arrangement with the Electric Service Provider for electrical service to Tenant at the Premises. Tenant shall cooperate with Landlord and the Electric Service Provider at all times to facilitate the delivery of electrical service to Tenant at the Premises and to the Building, including, without limitation, allowing Landlord and the Electric Service Provider, and their respective agents, employees, and contractors, (A) to install, repair, replace, improve and remove any and all electric lines, feeders, risers, junction boxes, wiring, and other electrical equipment, machinery and facilities now or hereafter located within the Building or the Premises for the purpose of providing electrical service to or within the Premises or the Building, and (B) reasonable access for the purpose of maintaining, repairing, replacing or upgrading such electrical service from time to time. Tenant shall provide such information and specifications regarding Tenant’s use or projected use of electricity at the Premises as shall be required from time to time by Landlord or the Electric Service Provider to efficiently provide electrical service to the Premises or the Building. In no event shall Landlord be liable or responsible for any loss, damage, expense or liability, including, without limitation, loss of business or consequential damages, arising from any failure or inadequacy of the electrical service being provided to the Premises or the Building, whether resulting from any change, failure, interference, disruption, or defect in the supply or character of the electrical service furnished to the Premises or the Building, or arising from the partial or total unavailability of electrical service to the Premises or the Building, from any cause whatsoever, or otherwise, nor shall any such failure, inadequacy, change, interference, disruption, defect or unavailability constitute an actual or constructive eviction of Tenant, or entitle Tenant to any abatement or diminution of Rent or otherwise relieve Tenant from any of its obligations under this Lease.

     6. Late Charge. Late payment to Landlord of Rent, or other amounts due hereunder will cause Landlord to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. If any Rent or other sums due from Tenant are not received by Landlord or by Landlord’s designated agent when due and such failure continues for

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five (5) days after written notice from Landlord to Tenant, or if for a second or subsequent time in any calendar year Tenant fails to pay any Rent when due, then Tenant shall pay to Landlord a late charge equal to five percent (5%) of such overdue amount, plus any costs and attorneys’ fees incurred by Landlord by reason of Tenant’s failure to pay Rent and/or other charges when due. Such late charges represent a fair and reasonable estimate of the cost that Landlord will incur by reason of Tenant’s late payment and shall not be construed as a penalty. Landlord’s acceptance of such late charges shall not constitute a waiver of Tenant’s default with respect to such overdue amount or estop Landlord from exercising any of the other rights and remedies granted under this Lease.

     7. Security Deposit. Concurrently with Tenant’s execution of the Lease, Tenant shall deposit with Landlord the Security Deposit specified in the Basic Lease Information as security for Tenant’s full and faithful performance of this Lease. Landlord may use, apply or retain the whole or any part of the Security Deposit as may be reasonably necessary (a) to remedy Tenant’s Default in the payment of any Rent, (b) to repair damage to the Premises caused by Tenant if Tenant fails to repair such damage within the cure period set forth in Paragraph 24(a), (c) to perform Tenant’s obligations under Paragraph 11, if Tenant fails to do so, (d) to reimburse Landlord for the payment of any amount which Landlord may reasonably spend or be required to spend by reason of Tenant’s Default, or (e) to compensate Landlord for any other loss or damage which Landlord may suffer by reason of Tenant’s Default, including, without limitation, future rent and all other damages recoverable pursuant to California Civil Code Section 1951.2. Tenant waives the provisions of California Civil Code Section 1950.7, and all other provisions of law now in force or that become in force after the date of execution of this Lease, that restrict Landlord’s use or application of the Security Deposit or that provide specific time periods for return of the Security Deposit. Without limiting the generality of the foregoing, Tenant expressly agrees that if Landlord terminates this Lease due to Tenant’s Default or if Tenant terminates this Lease in a bankruptcy proceeding, Landlord shall be entitled to hold the Security Deposit until the amount of damages recoverable pursuant to California Civil Code Section 1951.2 is finally determined. If Tenant faithfully and fully complies with this Lease, within thirty (30) days following the expiration of the Term, the Security Deposit or any balance thereof shall be returned to Tenant or, at the option of Landlord, to the last assignee of Tenant’s interest in this Lease. Landlord shall not be required to keep the Security Deposit separate from its general funds, and Tenant shall not be entitled to any interest on such deposit. If Landlord so uses or applies all or any portion of said deposit, within five (5) days after written demand therefor Tenant shall deposit cash with Landlord in an amount sufficient to restore the Security Deposit to the full extent of the above amount, and Tenant’s failure to do so shall be a default under this Lease. If Landlord transfers its interest in this Lease, Landlord shall transfer the then remaining amount of the Security Deposit to Landlord’s successor in interest, and thereafter Landlord shall have no further liability to Tenant with respect to such Security Deposit. Tenant hereby waives any and all rights under and the benefits of Section 1950.7 of the California Civil Code, and all other provisions of law now in force or that become in force after the date of execution of this Lease, that provide that Landlord may claim from a security deposit only those sums reasonably necessary to remedy defaults in the payment of Rent, to repair damage caused by Tenant, or to clean the Premises. Landlord and Tenant agree that Landlord may, in addition, claim those sums reasonably necessary to compensate Landlord for any other foreseeable or unforeseeable loss or damage caused by the act or omission of Tenant or Tenant’s officers,

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agents, employees, independent contractors, or invitees which a court would award Landlord as damages for such Default by Tenant.

     8. Possession.

          (a) Tenant’s Right of Possession. Tenant shall be permitted to enter upon the Premises within three (3) days following mutual execution hereof, at all reasonable times for the sole purpose of constructing the Tenant Improvements and otherwise readying the Premises for Tenant’s occupancy; provided, however, that prior to any such entry, Tenant shall provide Landlord with proof of Tenant’s insurance as set forth in Paragraph 15 below. Such entry upon the Premises shall be subject to all of the provisions of this Lease, except that Tenant shall not be required to pay Base Rent or Expenses until the Commencement Date as set forth in Paragraph 3 above. Landlord shall not be liable in any way for any injury, loss or damage which may occur to any such work being performed by Tenant, the same being solely at Tenant’s risk. In no event shall the failure of Tenant’s contractors to complete any work in the Premises delay the Commencement Date of this Lease.

          (b) Delay in Delivering Possession. If for any reason whatsoever, Landlord cannot deliver possession of the Premises to Tenant as provided in Paragraph 8(a), this Lease shall not be void or voidable, nor shall Landlord, or Landlord’s agents, advisors, employees, partners, shareholders, directors, invitees, independent contractors, or Landlord’s Manager or Investment Adviser (collectively, “Landlord’s Agents”), be liable to Tenant for any loss or damage resulting therefrom but the Commencement Date shall be extended by each day Landlord is delayed in delivering the Premises to Tenant in accordance with Paragraph 8(a).

     9. Use of Premises.

          (a) Permitted Use. The use of the Premises by Tenant and Tenant’s agents, advisors, employees, partners, shareholders, directors, invitees and independent contractors (collectively, “Tenant’s Agents”) shall be solely for the Permitted Use specified in the Basic Lease Information and for no other use. Tenant shall not permit any objectionable or unpleasant odor, smoke, dust, gas, noise or vibration to emanate from or near the Premises. The Premises shall not be used to create any nuisance or trespass, for any illegal purpose, for any purpose not permitted by Laws (as hereinafter defined), for any purpose that would invalidate the insurance or increase the premiums for insurance on the Premises, the Building or the Project or for any purpose or in any manner that would interfere with other tenants’ use or occupancy of the Project. If any of Tenant’s machines or equipment disturb any other tenant in the Building, then Tenant shall provide adequate insulation or take such other action as may be necessary to eliminate the noise or disturbance. Tenant shall pay to Landlord, as Additional Rent, any increases in premiums on policies resulting from Tenant’s Permitted Use or any other use or action by Tenant or Tenant’s Agents which increases Landlord’s premiums or requires additional coverage by Landlord to insure the Premises. Tenant agrees not to overload the floor(s) of the Building.

          (b) Compliance with Governmental Regulations and Private Restrictions. Tenant and Tenant’s Agents shall, at Tenant’s expense, faithfully observe and comply with (i) all municipal, state and federal laws, statutes, codes, rules, regulations, ordinances, requirements, and orders (collectively, “Laws”), now in force or which may hereafter be in force pertaining to

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the Premises or Tenant’s use of the Premises, the Building or the Project, including, without limitation, any Laws requiring installation of fire sprinkler systems, seismic reinforcement and related alterations, and removal of asbestos, whether substantial in cost or otherwise; provided, however, that except as provided in Paragraph 9(c) below, Tenant shall not be required to make or, except as provided in Paragraph 4 above, pay for, structural changes to the Premises or the Building not related to Tenant’s specific use of the Premises unless the requirement for such changes is imposed as a result of any improvements or additions made or proposed to be made at Tenant’s request; (ii) all recorded covenants, conditions and restrictions affecting the Project (“Private Restrictions”) which may hereafter be in force, provided that Landlord shall not voluntarily agree to any new Private Restrictions which adversely impact Tenant’s rights under this Lease; and (iii) any and all rules and regulations set forth in Exhibit D and any other reasonable rules and regulations now or hereafter promulgated by Landlord related to parking or the operation of the Premises, the Building and/or the Project (collectively, the “Rules and Regulations”), provided Landlord shall not impose any new Rules and Regulations which adversely impact Tenant’s rights under this Lease. The judgment of any court of competent jurisdiction, or the admission of Tenant in any action or proceeding against Tenant, whether Landlord be a party thereto or not, that Tenant has violated any such Laws or Private Restrictions, shall be conclusive of that fact as between Landlord and Tenant.

          (c) Compliance with Americans with Disabilities Act. The Premises, the Building and/or the Project may be subject to, among other Laws, the requirements of the Americans with Disabilities Act, 42 U.S.C. § 12101 et seq., including, but not limited to, Title III thereof, and all regulations and guidelines related thereto, together with any and all laws, rules, regulations, ordinances, codes and statutes now or hereafter enacted by local or state agencies having jurisdiction thereof, including, without limitation, all requirements of Title 24 of the State of California Code, as the same may be in effect on the date of this Lease and may be hereafter modified, amended or supplemented (collectively, the “ADA”). Any Tenant Improvements to be constructed hereunder shall comply with the ADA, and all costs incurred to comply therewith shall be a part of and included in the cost of the Tenant Improvements. Tenant shall be solely responsible for conducting its own independent investigation of these requirements and for ensuring that the design of all Tenant Improvements strictly complies with all requirements of the ADA. Subject to possible reimbursement in accordance with Paragraph 4 above, if any barrier removal work or other work is required to the Building, the Common Areas or the Project under the ADA, then such work shall be the responsibility of Landlord; provided that, if such work is required under the ADA as a result of Tenant’s use of the Premises or any work or Alteration (as hereinafter defined) made to the Premises by or on behalf of Tenant, then such work shall be performed by Landlord at the sole cost and expense of Tenant.

     Except as otherwise expressly provided in this Lease, Tenant shall be responsible at its sole cost and expense for fully and faithfully complying with all applicable requirements of the ADA, including, without limitation, not discriminating against any disabled persons in the operation of Tenant’s business in or about the Premises, and offering or otherwise providing auxiliary aids and services as, and when, required by the ADA. Within ten (10) days after receipt, Tenant shall advise Landlord in writing, and provide Landlord with copies of (as applicable), any notices alleging violation of the ADA relating to any portion of the Premises, the Building or the Project; any claims made or threatened orally or in writing regarding noncompliance with the ADA and relating to any portion of the Premises, the Building, or the Project; or any governmental or

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regulatory actions or investigations instituted or threatened regarding noncompliance with the ADA and relating to any portion of the Premises, the Building or the Project. Tenant shall and hereby agrees to protect, defend (with counsel acceptable to Landlord) and hold Landlord and Landlord’s Agents harmless and indemnify Landlord and Landlord’s Agents from and against all liabilities, damages, claims, losses, penalties, judgments, charges and expenses (including attorneys’ fees, costs of court and expenses necessary in the prosecution or defense of any litigation including the enforcement of this provision) arising from or in any way related to, directly or indirectly, Tenant’s or Tenant’s Agents’ violation or alleged violation of the ADA. Tenant agrees that the obligations of Tenant herein shall survive the expiration or earlier termination of this Lease.

          (d) Roof Access. Tenant, at its sole cost and expense, shall have the non-exclusive right (it being understood that Landlord may grant, extend or renew similar rights to others) to install, maintain, and from time to time replace a satellite dish, antenna or similar telecommunications equipment (“Rooftop Equipment”) on the roof of the Building, provided that (a) Tenant shall (i) prior to commencing any installation or maintenance, obtain Landlord’s prior approval of the proposed size, weight and location of the Rooftop Equipment and method for fastening the Rooftop Equipment to the roof, (ii), use the Rooftop Equipment solely for its internal use, (iii) not grant any right to use of the Rooftop Equipment to any other party, and (iv) obtain and maintain in effect, at Tenant’s sole cost and expense, any necessary federal, state, and municipal permits, licenses and approvals, and deliver copies thereof to Landlord and that (b) such installation and/or replacement shall comply strictly with all Laws and the conditions of any bond or warranty maintained by Landlord on the roof. Landlord may supervise or perform any roof penetration related to the installation of a Rooftop Equipment, and Landlord may charge the cost thereof to Tenant. Tenant agrees that all installation, construction and maintenance shall be performed in a neat, responsible, and workmanlike manner, using generally acceptable construction standards, consistent with such reasonable requirements as shall be imposed by Landlord. Tenant further agrees to label each cable or wire placed by Tenant in the telecommunications pathways of the Building, with identification information as required by Landlord. Tenant shall repair any damage to the Building caused by Tenant’s installation, maintenance, replacement, use or removal of the Rooftop Equipment. The Rooftop Equipment shall remain the property of Tenant, and Tenant may remove the Rooftop Equipment at its cost at any time during the Term, after five (5) days’ written notice to Landlord. Tenant shall remove the Rooftop Equipment at Tenant’s cost and expense upon the expiration or termination of this Lease. Tenant agrees that the Rooftop Equipment, and any wires, cables or connections relating thereto, and the installation, maintenance and operation thereof shall in no way interfere with the use and enjoyment of the Building, or the operation of communications (including, without limitation, other satellite dishes) or computer devices by Landlord or by other current tenants or occupants of the Project. If such interference shall occur, Landlord shall give Tenant written notice thereof and Tenant shall correct the same within twenty-four (24) hours of receipt of such notice. Landlord reserves the right to disconnect power to any Rooftop Equipment if Tenant fails to correct such interference within twenty-four (24) hours after such notice. Additionally, Landlord shall require any new occupant of the Project that is permitted rooftop communication facility rights to cooperate with Tenant in adopting commercially reasonable measures to ensure the mutual compatibility between the operation of such facilities and the operation of Tenant’s Rooftop Equipment. If, notwithstanding the commercially reasonable efforts of Tenant and such other occupant of the Project to prevent the same, such new occupant’s rooftop facilities

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materially interfere with Tenant’s operation of its Rooftop Equipment, then Landlord shall cause such other occupant of the Project to discontinue the use of such rooftop facilities, unless and until such facilities may be operated without material interference with Tenant’s operation of its Rooftop Equipment. Landlord makes no warranty or representation that the Building or any portions thereof are suitable for the use of a Rooftop Equipment, and Tenant shall satisfy itself thereof. Tenant shall protect, defend, indemnify and hold harmless Landlord and Landlord’s Agents from and against claims, damages, liabilities, costs and expenses of every kind and nature, including attorneys’ fees, incurred by or asserted against Landlord arising out of Tenant’s installation, maintenance, replacement, use or removal of the Rooftop Equipment. Tenant’s obligations under this paragraph shall survive any termination of this Lease.

     10. Acceptance of Premises.

          (a) By accepting delivery of the Premises, Tenant accepts the Premises as suitable for Tenant’s intended use and as being in good and sanitary operating order, condition and repair, AS IS, and without representation or warranty by Landlord as to the condition, use or occupancy which may be made thereof. Any exceptions to the foregoing must be by written agreement executed by Landlord and Tenant.

          (b) Notwithstanding the provisions of Paragraph 10(a) above or any other provision in this Lease, Landlord shall cause the Building’s Systems and all components of the Building Systems to be in good working order on the Commencement Date. Any claims by Tenant under the preceding sentence shall be made in writing not later than the one hundred twentieth (120th) day after the Commencement Date and shall be corrected by Landlord at its sole cost and expense (and not as an Expense). In the event Tenant fails to deliver a written claim to Landlord on or before such one hundred twentieth (120th) day, then Landlord shall be conclusively deemed to have satisfied its obligations under this Paragraph 10(b). Landlord’s obligations under this Paragraph 10(b) shall specifically exclude any obligation to repair any damage caused to the Building Systems by Tenant or Tenant’s Agents. “Building Systems” shall include all mechanical, electrical and plumbing systems serving the Premises.

     11. Surrender. On the last day of the Term, or on the sooner termination of this Lease, Tenant shall surrender the Premises to Landlord (a) in the same condition and repair as the Premises are delivered to Tenant (damage by acts of God, fire, and normal wear and tear excepted), and (b) otherwise in accordance with Paragraph 32(h). Normal wear and tear shall not include any damage or deterioration to the floors of the Premises arising from the use of forklifts in, on or about the Premises (including any marks or stains on any portion of the floors), and any damage or deterioration that would have been prevented by proper maintenance by Tenant, or Tenant otherwise performing all of its obligations under this Lease. On or before the expiration or sooner termination of this Lease, (i) Tenant shall remove all of Tenant’s Property (as hereinafter defined) and Tenant’s signage from the Premises, the Building and the Project and repair any damage caused by such removal, and (ii) Landlord may by notice to Tenant given not later than ninety (90) days prior to the Expiration Date (except in the event of a termination of this Lease prior to the scheduled Expiration Date, in which event no advance notice shall be required), require Tenant at Tenant’s expense to remove any or all Alterations that Landlord has not consented to or that Landlord has not informed Tenant may remain in the Premises pursuant to Paragraph 12(h) below and/or the initial Tenant Improvements constructed and installed

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pursuant to Exhibit B hereto, and to repair any damage caused by such removal. Any of Tenant’s Property not so removed by Tenant as required herein shall be deemed abandoned if Tenant does not remove it within five (5) days of written notice from Landlord and such abandoned Tenant’s Property may be stored, removed, and disposed of by Landlord at Tenant’s expense, and Tenant waives all claims against Landlord for any damages resulting from Landlord’s retention and disposition of such property, provided that Tenant shall remain liable to Landlord for all costs incurred in storing and disposing of such abandoned property of Tenant. All Tenant Improvements and Alterations except those which Landlord requires Tenant to remove in accordance with the terms of this Lease shall remain in the Premises as the property of Landlord. If the Premises are not surrendered at the end of the Term or sooner termination of this Lease, and in accordance with the provisions of this Paragraph 11 and Paragraph 32(h) below, Tenant shall continue to be responsible for the payment of Rent (as the same may be increased pursuant to Paragraph 35 below) until the Premises are so surrendered in accordance with said Paragraphs. Tenant shall indemnify, defend and hold Landlord harmless from and against any and all loss or liability resulting from delay by Tenant in so surrendering the Premises including, without limitation, any loss or liability resulting from any claim against Landlord made by any succeeding tenant or prospective tenant founded on or resulting from such delay and losses to Landlord due to lost opportunities to lease any portion of the Premises together with, in each case, actual attorneys’ fees and costs.

     12. Alterations and Additions.

          (a) Tenant shall not make, or permit to be made, any alteration, addition or improvement (hereinafter referred to individually as an “Alteration” and collectively as the “Alterations”) to the Premises or any part thereof without the prior written consent of Landlord, which consent shall not be unreasonably withheld, provided that it shall be deemed reasonable for Landlord to withhold its consent to any Alteration which conflicts with the Construction Rules and Regulations or which affects structural portions of the Premises, the Building or the Project or the Systems serving the Premises, the Building and/or the Project or any portion thereof. Construction Rules and Regulations means Landlord’s standard rules and regulations relating to construction and alterations, as updated and revised from time to time. Notwithstanding the foregoing, Tenant shall have the right to make Alterations to the Premises with prior written notice to, but without the consent of, Landlord, provided that such Alterations (i) do not affect the structural portions of the Building or the Project or the Systems serving the Building and/or the Project, (ii) are “generic” office and R&D improvements (as determined by Landlord in good faith), (iii) consist of improvements and finishes that are similar to, and of equal or higher quality than, the Tenant Improvements, (iv) do not cost in excess of Fifty Thousand Dollars ($50,000.00) to construct and install on an individual basis or in the aggregate during a twelve (12) month period, and (v) are performed in full compliance with the terms of Paragraphs 12(b) through 12(g) below.

          (b) Any Alteration to the Premises shall be at Tenant’s sole cost and expense, in compliance with all applicable Laws and such reasonable requirements requested by Landlord, including the requirements of any insurer providing coverage for the Premises or the Project or any part thereof, and in accordance with plans and specifications approved in writing by Landlord, and shall be constructed and installed by a contractor reasonably approved in writing by Landlord. As a further condition to giving consent to any Alterations which will exceed Two

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Hundred Fifty Thousand Dollars ($250,000), Landlord may require Tenant to provide Landlord, at Tenant’s sole cost and expense, a payment and performance bond in form acceptable to Landlord, in a principal amount not less than one and one-half times the estimated costs of such Alterations, to ensure Landlord against any liability for mechanics’ and materialmen’s liens and to ensure completion of work. Before Alterations may begin, valid building permits or other required permits or licenses required must be furnished to Landlord, and, once the Alterations begin, Tenant shall diligently and continuously pursue their completion and issuance of any final permit and certificate of occupancy, as applicable. Landlord may monitor construction of the Alterations and Tenant shall reimburse Landlord for its reasonable costs (including, without limitation, the costs of any construction manager retained by Landlord) in reviewing plans and documents and in monitoring construction. Tenant shall maintain during the course of construction, at its sole cost and expense, builders’ risk insurance for the amount of the completed value of the Alterations on an all-risk non-reporting form covering all improvements under construction, including building materials, and other insurance in amounts and against such risks as Landlord shall reasonably require in connection with the Alterations. In addition to and without limitation on the generality of the foregoing, Tenant shall ensure that its contractor(s) procure and maintain in full force and effect during the course of construction a “broad form” commercial general liability and property damage policy of insurance naming Landlord, Landlord’s Manager and investment advisor and agent, Tenant, and Landlord’s Property Manager and lenders as additional insureds. The minimum limit of coverage of the aforesaid policy shall be in the amount of not less than Three Million Dollars ($3,000,000.00) for injury or death of one person in any one accident or occurrence and in the amount of not less than Three Million Dollars ($3,000,000.00) for injury or death of more than one person in any one accident or occurrence, and shall contain a severability of interest clause or a cross liability endorsement. Such insurance shall further insure Landlord and Tenant against liability for property damage of at least One Million Dollars ($1,000,000.00).

          (c) All Alterations, including heating, lighting, electrical, air conditioning, fixed partitioning, drapery, wall covering and paneling, built-in cabinet work and carpeting installations made by Tenant, together with all property that has become an integral part of the Premises or the Building, shall at once be and become the property of Landlord, and shall not be deemed trade fixtures or Tenant’s Property.

          (d) No private telephone systems and/or other related computer or telecommunications equipment or lines may be installed without Landlord’s prior written consent, which shall not be unreasonably withheld. If Landlord gives such consent, all equipment must be installed within the Premises and, at the request of Landlord made at any time prior to the expiration of the Term, removed upon the expiration or sooner termination of this Lease and the Premises restored to the same condition as before such installation.

          (e) Notwithstanding anything herein to the contrary, before installing any equipment or lights which generate an undue amount of heat in the Premises, or if Tenant plans to use any high-power usage equipment in the Premises, Tenant shall obtain the written permission of Landlord. Landlord may refuse to grant such permission unless Tenant agrees to pay the costs to Landlord for installation of supplementary air conditioning capacity or electrical systems necessitated by such equipment.

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          (f) Tenant shall not make any Alterations, notwithstanding consent from Landlord to do so, until Tenant notifies Landlord in writing of the date Tenant desires to commence construction or installation of such Alterations and Landlord has approved such date in writing, in order that Landlord may post appropriate notices to avoid any liability to contractors or material suppliers for payment for Tenant’s improvements. Tenant will at all times permit such notices to be posted and to remain posted until the completion of work.

          (g) Tenant shall not, at any time prior to or during the Term, directly or indirectly employ, or permit the employment of, any contractor, mechanic or laborer in the Premises, whether in connection with any Alteration or otherwise, if it is reasonably foreseeable that such employment will materially interfere or cause any material conflict with other contractors, mechanics, or laborers engaged in the construction, maintenance or operation of the Project by Landlord, Tenant or others. In the event of any such interference or conflict, Tenant, upon demand of Landlord, shall cause all contractors, mechanics or laborers causing such interference or conflict to leave the Project immediately.

          (h) At the time of requesting Landlord’s consent to any Alterations, Tenant shall have the right to request that Landlord inform Tenant whether such Alterations may remain in the Premises following, or must be removed from the Premises prior to, the expiration or sooner termination of this Lease.

     13. Maintenance and Repairs of Premises.

          (a) Maintenance by Tenant. Subject to the provisions of Paragraphs 13(b), 21 and 22, Tenant shall, at its sole expense, (i) keep and maintain in good order and condition the Premises and Tenant’s Property, and repair and replace every part thereof, including without limitation the glass, windows, window frames, window casements, skylights, interior and exterior doors, door frames and door closers, all communications systems serving the Premises, Tenant’s signage, interior demising walls and partitions, equipment, interior painting and interior walls and floors, and roll-up doors, ramps and dock equipment (including, without limitation, dock bumpers, dock plates, dock seals, dock levelers and dock lights located in or on the Premises), (ii) keep and maintain in good order and condition, repair and replace all of Tenant’s security systems in or about or serving the Premises, and (iii) maintain and replace all lamps, bulbs, starters and ballasts. Tenant shall not do nor shall Tenant allow Tenant’s Agents to do anything to cause any damage, deterioration or unsightliness to the Premises, the Building or the Project.

          (b) Maintenance by Landlord.

               (i) Subject to the provisions of Paragraphs 21 and 22, and as an Operating Expense subject to the terms of Paragraph 4, Landlord shall repair and maintain in good order and condition the following items: the roof coverings (provided that Tenant installs no additional air conditioning or other equipment on the roof that damages the roof coverings, in which event Tenant shall pay all costs resulting from the presence of such additional equipment); the Parking Areas, and the Common Areas (including pavement, landscaping, sprinkler systems, sidewalks, driveways, curbs, and lighting systems).

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               (ii) Subject to the provisions of Paragraphs 21 and 22, Landlord, at its own cost and expense, shall repair and maintain in good order and condition the following items: the structural portions of the roof (specifically excluding the roof coverings), the foundation, the footings, the floor slab, and the load bearing walls and exterior walls of the Building (excluding any glass and any routine maintenance, including, without limitation, any painting, sealing, patching and waterproofing of such walls).

               (iii) Subject to the provisions of Paragraphs 21 and 22, Landlord, at Tenant’s sole cost and expense, shall repair and maintain in good order and condition the Building Systems, including without limitation plumbing, HVAC, backup generator system, electrical systems, lifesafety and fire alarm systems. Without limiting the generality of the foregoing, and in connection therewith, Landlord shall obtain and keep in force preventive maintenance contracts providing for regular (at least quarterly) inspection and maintenance of the HVAC systems and the emergency backup generator by a qualified service contractor(s) selected by Landlord. All costs and expenses incurred by Landlord in connection with the repairs and maintenance set forth in this Paragraph 13(b)(iii) shall be payable by Tenant as Additional Rent (but not as Expenses). Other than scheduled service appointments, Landlord’s obligations under this Paragraph 13(b)(iii) are subject to the condition precedent that Landlord shall have received written notice of the need for such repairs and maintenance and a reasonable time to perform such repair and maintenance. Notwithstanding anything in this Paragraph 13(b)(iii) to the contrary, in the event any equipment replacements that are capitalized under generally accepted real estate accounting principles are required in order to repair and maintain the Building Systems in good order and condition, then Tenant shall only be required to pay an amortized portion of the cost of such capital replacement falling due within the Term (including any Renewal Term) based upon the amortization of such capital replacement over its useful life, as reasonably determined by Landlord.

               (iv) Notwithstanding anything in this Paragraph 13 to the contrary, Landlord shall have the right to either repair or to require Tenant to repair any damage to any portion of the Premises, the Building and/or the Project caused by or created due to any act, omission, negligence or willful misconduct of Tenant or Tenant’s Agents and to restore the Premises, the Building and/or the Project, as applicable, to the condition existing prior to the occurrence of such damage; provided, however, that in the event Landlord elects to perform such repair and restoration work, Tenant shall reimburse Landlord for all costs and expenses incurred by Landlord in connection therewith to the extent not covered by insurance proceeds, and such reimbursement shall be paid, in full, within ten (10) days after Landlord’s demand therefor. Landlord’s obligations hereunder are subject to the condition precedent that Landlord shall have received written notice of the need for such repairs and maintenance and a reasonable time to perform such repair and maintenance. Tenant shall promptly report in writing to Landlord any defective condition known to it which Landlord is required to repair, and failure to so report such defects shall make Tenant responsible to Landlord for any liability incurred by Landlord by reason of such condition.

          (c) Tenant’s Waiver of Rights. Tenant hereby expressly waives all rights to make repairs at the expense of Landlord or to terminate this Lease, as provided for in California Civil Code Sections 1941 and 1942, and 1932(l), respectively, and any similar or successor statute or law in effect or any amendment thereof during the Term.

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     14. Landlord’s Insurance. Landlord shall purchase and keep in force fire, extended coverage and “all risk” insurance covering the Building and the Project. Tenant shall, at its sole cost and expense, comply with any and all reasonable requirements of any insurer providing fire and commercial general liability insurance covering the Building and the Project.

     15. Tenant’s Insurance.

          (a) Commercial General Liability Insurance. Tenant shall, at Tenant’s expense, secure and keep in force a “broad form” commercial general liability insurance and property damage policy covering the Premises, insuring Tenant, and naming Landlord, Landlord’s investment advisors and agents from time to time, including, without limitation, UBS Realty Investors llc and Landlord’s lenders (collectively, “Landlord’s Insureds”), as additional insureds against any liability arising out of the ownership, use, occupancy or maintenance of the Premises. The minimum limit of coverage of such policy shall be in the amount of not less than Three Million Dollars ($3,000,000.00) for injury or death of one person in any one accident or occurrence and in the amount of not less than Three Million Dollars ($3,000,000.00) for injury or death of more than one person in any one accident or occurrence, shall include an extended liability endorsement providing contractual liability coverage (including coverage for Tenant’s indemnification obligations in this Lease), and shall contain a severability of interest clause or a cross liability endorsement. Such insurance shall further insure Landlord and Tenant against liability for property damage of at least Three Million Dollars ($3,000,000.00). Landlord may from time to time require reasonable increases in any such limits if Landlord believes that additional coverage is necessary or desirable. The limit of any insurance shall not limit the liability of Tenant hereunder. No policy maintained by Tenant under this Paragraph 15(a) shall contain a deductible greater than Two Thousand Five Hundred Dollars ($2,500.00). No policy shall be cancelable or subject to reduction of coverage without thirty (30) days’ prior written notice to Landlord, and loss payable clauses shall be subject to Landlord’s approval. Such policies of insurance shall be issued as primary policies and not contributing with or in excess of coverage that Landlord may carry, by an insurance company authorized to do business in the State of California for the issuance of such type of insurance coverage and rated A:XIII or better in Best’s Key Rating Guide.

          (b) Personal Property Insurance. Tenant shall maintain in full force and effect on all of its personal property, furniture, furnishings, trade or business fixtures and equipment (collectively, “Tenant’s Property”) on the Premises, a policy or policies of fire and extended coverage insurance with standard coverage endorsement to the extent of the full replacement cost thereof. No such policy shall contain a deductible greater than Two Thousand Five Hundred Dollars ($2,500.00). During the term of this Lease the proceeds from any such policy or policies of insurance shall be used for the repair or replacement of the fixtures and equipment so insured. Landlord shall have no interest in the insurance upon Tenant’s equipment and fixtures and will sign all documents reasonably necessary in connection with the settlement of any claim or loss by Tenant. Landlord will not carry insurance on Tenant’s possessions.

          (c) Worker’s Compensation Insurance; Employer’s Liability Insurance. Tenant shall, at Tenant’s expense, maintain in full force and effect worker’s compensation insurance with not less than the minimum limits required by law, and employer’s liability insurance with a minimum limit of coverage of One Million Dollars ($1,000,000.00).

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          (d) Evidence of Coverage. Tenant shall deliver to Landlord certificates of insurance and true and complete copies of any and all endorsements required herein for all insurance required to be maintained by Tenant hereunder at the time of execution of this Lease by Tenant. Tenant shall, at least thirty (30) days prior to expiration of each policy, furnish Landlord with certificates of renewal or “binders” thereof. Each certificate shall expressly provide that such policies shall not be cancelable or otherwise subject to modification except after thirty (30) days’ prior written notice to Landlord and the other parties named as additional insureds as required in this Lease (except for cancellation for nonpayment of premium, in which event cancellation shall not take effect until at least ten (10) days’ notice has been given to Landlord).

     16. Indemnification. Tenant shall defend, protect, indemnify and hold harmless Landlord and Landlord’s Agents against and from any and all claims, suits, liabilities, judgments, costs, demands, causes of action and expenses (including, without limitation, reasonable attorneys’ fees, costs and disbursements) arising from (1) the use of the Premises, the Building or the Project by Tenant or Tenant’s Agents, or from any activity done, permitted or suffered by Tenant or Tenant’s Agents in or about the Premises, the Building or the Project, including any Hazardous Materials, (2) any act, neglect, fault, willful misconduct or omission of Tenant or Tenant’s Agents, or from any Default in the terms of this Lease by Tenant or Tenant’s Agents, and (3) any action or proceeding brought on account of any matter in items (1) or (2), except to the extent caused by the gross negligence or willful misconduct of Landlord or Landlord’s Agents or by the failure of Landlord to observe any of the terms and conditions of this Lease, if such failure has persisted for an unreasonable period of time after written notice of such failure. If any action or proceeding is brought against Landlord by reason of any such claim, upon notice from Landlord, Tenant shall defend the same at Tenant’s expense by counsel reasonably satisfactory to Landlord. As a material part of the consideration to Landlord, Tenant hereby releases Landlord and Landlord’s Agents from responsibility for, waives its entire claim of recovery for and assumes all risk of (i) damage to property or injury to persons in or about the Premises, the Building or the Project from any cause whatsoever (except to the extent caused by the gross negligence or willful misconduct of Landlord or Landlord’s Agents or by the failure of Landlord to observe any of the terms and conditions of this Lease, if such failure has persisted for an unreasonable period of time after written notice of such failure), or (ii) loss resulting from business interruption or loss of income at the Premises. The obligations of Tenant under this Paragraph 16 shall survive any termination of this Lease. The foregoing indemnity shall not relieve any insurance carrier of its obligations under any policies required to be carried by either party pursuant to this Lease, to the extent that such policies cover the peril or occurrence that results in the claim that is subject to the foregoing indemnity.

     17. Subrogation. Landlord and Tenant hereby mutually waive any claim against the other and its Agent(s) for any loss or damage to any of their property located on or about the Premises, the Building or the Project that is caused by or results from perils covered by property insurance carried by the respective parties, to the extent of the proceeds of such insurance actually received with respect to such loss or damage, whether or not due to the negligence of the other party or its Agents. Because the foregoing waivers will preclude the assignment of any claim by way of subrogation to an insurance company or any other person, each party shall immediately notify its insurer, in writing, of the terms of these mutual waivers and have their insurance policies endorsed to prevent the invalidation of the insurance coverage because of

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these waivers. Nothing in this Paragraph 17 shall relieve a party of liability to the other for failure to carry insurance required by this Lease.

     18. Signs.

          (a) Exterior Signage. Tenant shall be entitled to exclusive Building exterior signage and Building monument signage (collectively, the “Building Signage”). The Building Signage, including, without limitation, the exact location of the Building Signage and the manner in which it is attached, shall be subject to all applicable Laws and Landlord’s prior written approval, which approval shall not be unreasonably withheld or delayed, provided that the location does not detract from the first-class quality of the Building. Such right to the Building Signage is personal to Tenant or any assignee of Tenant’s rights under this Lease and is subject to the following terms and conditions: (a) Tenant shall submit plans and drawings for the Building Signage to Landlord and to the City of Sunnyvale and to any other public authorities having jurisdiction and shall obtain written approval from Landlord and each such jurisdiction prior to installation, and shall fully comply with all applicable Laws; (b) Tenant shall, at Tenant’s sole cost and expense, design, construct and install the Building Signage; (c) the size, color and design of the Building Signage shall be subject to Landlord’s prior written approval, which Landlord shall have the right to withhold in its reasonable discretion; and (d) Tenant shall maintain the Building Signage in good condition and repair, and all costs of maintenance and repair shall be borne by Tenant. Maintenance shall include, without limitation, cleaning and, if the Building Signage is illuminated, relamping at reasonable intervals. Tenant shall be responsible for any electrical energy used in connection with the Building Signage. Upon the expiration or earlier termination of this Lease or at such other time that Tenant’s signage rights are terminated pursuant to the terms hereof, if Tenant fails to remove the Building Signage and repair the Building in accordance with the terms of this Lease, Landlord shall cause the Building Signage to be removed from the Building and the Building to be repaired and restored to the condition which existed prior to the installation of the Building Signage (including, if necessary, the replacement of any precast concrete panels), all at the sole cost and expense of Tenant and otherwise in accordance with this Lease, without further notice from Landlord notwithstanding anything to the contrary contained in this Lease. Tenant shall pay all costs and expenses for such removal and restoration within five (5) business days following delivery of an invoice therefor. The rights provided in this Paragraph 18(a) shall be non-transferable unless transferred in connection with an assignment of all of Tenant’s rights under this Lease in accordance with Paragraph 23 below.

          (b) General Restrictions. Subject to the terms of Paragraph 18(a), Tenant shall not place or permit to be placed in, upon, or about the Premises, the Building or the Project any exterior lights, decorations, balloons, flags, pennants, banners, advertisements or notices, or erect or install any signs, windows or door lettering, placards, decorations, or advertising media of any type which can be viewed from the exterior the Premises without obtaining Landlord’s prior written consent or without complying with Landlord’s signage criteria (the “Signage Criteria”), as the same may be reasonably established and modified by Landlord from time to time, and with all applicable Laws, and will not conduct, or permit to be conducted, any sale by auction on the Premises or otherwise on the Project. Notwithstanding the foregoing, Tenant shall have the right to install building standard identification signage (the “Identification Signs”) in locations designated by Landlord; provided, however, that Landlord shall have the right to approve the

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size, design and graphics of such Identification Signs; and provided, further, that such Identification Signs shall comply with the Signage Criteria and all applicable Laws. Notwithstanding anything to the contrary contained herein, Landlord reserves the right to withhold consent to any sign that, in the good faith judgment of Landlord, is offensive, political or otherwise not harmonious with first-class Buildings. Tenant shall be responsible for obtaining all governmental approvals (including, without limitation, the approval of the City of Sunnyvale) required for the installation of the Identification Signs, and Tenant shall pay all costs of installing (including all costs of obtaining any permits or approvals required for such installation) and subsequently removing the Identification Signs and of repairing any damage to the Premises and/or the monument pillar, as applicable, caused by such removal. Without limiting the foregoing, Tenant shall remove any sign, advertisement or notice placed on the Premises, the Building or the Project by Tenant upon the expiration of the Term or sooner termination of this Lease, and Tenant shall repair any damage or injury to the Premises, the Building or the Project caused thereby, all at Tenant’s expense. If any signs are not removed, or necessary repairs not made, Landlord shall have the right to remove the signs and repair any damage or injury to the Premises, the Building or the Project at Tenant’s sole cost and expense. In addition to any other rights or remedies available to Landlord, in the event that Tenant erects or installs any sign in violation of this Paragraph 18, and Tenant fails to remove same within three (3) business days after notice from Landlord or erects or installs a similar sign in the future, Landlord shall have the right to charge Tenant a signage charge equal to $100.00 per day for each day thereafter that such sign is not removed or a similar sign is installed or erected in the future. Landlord’s election to charge such fee shall not be deemed to be a consent by Landlord to such sign and Tenant shall remain obligated to remove such sign in accordance with Landlord’s notice.

     19. Free From Liens. Tenant shall keep the Premises, the Building and the Project free from any liens arising out of any work performed, material furnished or obligations incurred by or for Tenant. If Tenant shall not, within twenty (20) days following the imposition of any such lien, cause the lien to be released of record by payment or posting of a proper bond, Landlord shall have in addition to all other remedies provided herein and by law the right but not the obligation to cause same to be released by such means as it shall deem proper, including payment of the claim giving rise to such lien. All such sums paid by Landlord and all expenses incurred by it in connection therewith (including, without limitation, attorneys’ fees) shall be payable to Landlord by Tenant upon demand. Landlord shall have the right at all times to post and keep posted on the Premises any notices permitted or required by law or that Landlord shall deem proper for the protection of Landlord, the Premises, the Building and the Project, from mechanics’ and materialmen’s liens. Tenant shall give to Landlord at least five (5) business days’ prior written notice of commencement of any repair or construction on the Premises.

     20. Entry By Landlord. Tenant shall permit Landlord and Landlord’s Agents to enter the Premises at all reasonable times, upon reasonable notice of at least twenty-four (24) hours (except in the case of an emergency, for which no notice shall be required), and subject to Tenant’s reasonable security arrangements, for the purpose of inspecting the same or showing the Premises to prospective purchasers, lenders or tenants (provided that Landlord can only show the Premises to perspective tenants during the last nine (9) months of the Term) or to provide services, alter, improve, maintain and repair the Premises or the Building as required or permitted by Landlord under the terms hereof, or for any other business purpose, without any rebate of Rent and without any liability to Tenant for any loss of occupation or quiet enjoyment

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of the Premises thereby occasioned (except for actual damages resulting from the sole active gross negligence or willful misconduct of Landlord); and Tenant shall permit Landlord to post notices of non-responsibility and “for sale” or “for lease” signs, except that Landlord may only post “for lease” signs at the Premises during the last nine (9) months of the Term. No such entry shall be construed to be a forcible or unlawful entry into, or a detainer of, the Premises, or an eviction of Tenant from the Premises. Landlord may temporarily close entrances, doors, corridors, elevators or other facilities without liability to Tenant by reason of such closure in the case of an emergency and when Landlord otherwise deems such closure necessary. Landlord shall use commercially reasonable efforts while entering the Premises pursuant to this Paragraph 20 to minimize any interference with Tenant’s use of the Premises.

     21. Destruction and Damage.

          (a) If the Premises are damaged by fire or other perils covered by extended coverage insurance, Landlord shall, at Landlord’s option:

               (i) In the event of total destruction (which means destruction or damage in excess of twenty-five percent (25%) of the full insurable value thereof) of the Premises, elect either to commence promptly to repair and restore the Premises and prosecute the same diligently to completion, in which event this Lease shall remain in full force and effect; or not to repair or restore the Premises, in which event this Lease shall terminate. Landlord shall give Tenant written notice of its intention within sixty (60) days after the date Landlord obtains actual knowledge of such destruction (the “Casualty Discovery Date”). If Landlord elects not to restore the Premises, this Lease shall be deemed to have terminated as of the Casualty Discovery Date.

               (ii) In the event of a partial destruction (which means destruction or damage not exceeding twenty-five percent (25%) of the full insurable value thereof) of the Premises for which Landlord will receive insurance proceeds sufficient to cover the cost to repair and restore such partial destruction and, if the damage thereto is such that the Premises may be substantially repaired or restored to its condition existing immediately prior to such damage or destruction within two hundred seventy (270) days from the Casualty Discovery Date, Landlord shall commence and proceed diligently with the work of repair and restoration, in which event the Lease shall continue in full force and effect. If such repair and restoration requires longer than two hundred seventy (270) days or if the insurance proceeds therefor (plus any amounts Tenant may elect or is obligated to contribute) are not sufficient to cover the cost of such repair and restoration, Landlord may elect either to so repair and restore, in which event the Lease shall continue in full force and effect, or not to repair or restore, in which event the Lease shall terminate. In either case, Landlord shall give written notice to Tenant of its intention within sixty (60) days after the Casualty Discovery Date. If Landlord elects not to restore the Premises, this Lease shall be deemed to have terminated as of the Casualty Discovery Date.

               (iii) Notwithstanding anything to the contrary contained in this Paragraph, in the event of damage to the Premises which costs in excess of One Hundred Thousand Dollars ($100,000) to repair occurring during the last twelve (12) months of the Term, either Landlord or, if such damage to the Premises materially impairs Tenant’s ability to continue its business operations therein, then Tenant may elect to terminate this Lease by written notice of such election given to the other party within thirty (30) days after the Casualty Discovery Date.

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          (b) If the Premises are damaged by any peril not covered by extended coverage insurance, and the cost to repair such damage exceeds any amount Tenant may agree to contribute, Landlord may elect either to commence promptly to repair and restore the Premises and prosecute the same diligently to completion, in which event this Lease shall remain in full force and effect; or not to repair or restore the Premises, in which event this Lease shall terminate. Landlord shall give Tenant written notice of its intention within sixty (60) days after the Casualty Discovery Date. If Landlord elects not to restore the Premises, this Lease shall be deemed to have terminated as of the date on which Tenant surrenders possession of the Premises to Landlord, except that if the damage to the Premises materially impairs Tenant’s ability to continue its business operations in the Premises, then this Lease shall be deemed to have terminated as of the date such damage occurred.

          (c) In the event of repair and restoration as herein provided, the monthly installments of Base Rent shall be abated proportionately in the ratio which Tenant’s use of the Premises is impaired during the period from the Casualty Discovery Date until substantial completion of such repair or restoration; provided, however, that if such damage or destruction resulted from the negligent acts of Tenant or Tenant’s Agents, then such abatement shall be limited to the extent of rental abatement insurance proceeds received by Landlord. Except as expressly provided in the immediately preceding sentence with respect to abatement of Base Rent, Tenant shall have no claim against Landlord for, and hereby releases Landlord and Landlord’s Agents from responsibility for and waives its entire claim of recovery for any cost, loss or expense suffered or incurred by Tenant as a result of any damage to or destruction of the Premises, the Building or the Project or the repair or restoration thereof, including, without limitation, any cost, loss or expense resulting from any loss of use of the whole or any part of the Premises, the Building or the Project and/or any inconvenience or annoyance occasioned by such damage, repair or restoration.

          (d) If the Premises is damaged or destroyed to the extent that the Premises cannot be substantially repaired or restored by Landlord within two hundred seventy (270) days after the Casualty Discovery Date, Tenant may terminate this Lease immediately upon notice thereof to Landlord, which shall be given, if at all, not later than fifteen (15) days after Landlord notifies Tenant of Landlord’s estimate of the period of time required to repair such damage or destruction.

          (e) If Landlord is obligated to or elects to repair or restore as herein provided, Landlord shall repair or restore only the initial tenant improvements, if any, constructed by Landlord in the Premises pursuant to the terms of this Lease, substantially to their condition existing immediately prior to the occurrence of the damage or destruction; and Tenant shall promptly repair and restore, at Tenant’s expense, Tenant’s Alterations which were not constructed by Landlord.

          (f) Tenant hereby waives the provisions of California Civil Code Section 1932(2) and Section 1933(4) which permit termination of a lease upon destruction of the leased premises, and the provisions of any similar law now or hereinafter in effect, and the provisions of this Paragraph 21 shall govern exclusively in case of such destruction.

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     22. Condemnation.

          (a) If twenty-five percent (25%) or more of either the Premises or the Building or the parking areas for the Building is permanently taken for any public or quasi-public purpose by any lawful governmental power or authority, by exercise of the right of appropriation, inverse condemnation, condemnation or eminent domain, or sold to prevent such taking (each such event being referred to as a “Condemnation”), Landlord may, at its option, terminate this Lease as of the date title vests in the condemning party. If a portion of the Premises is taken and if the Premises remaining after such Condemnation and any repairs by Landlord would be objectively and reasonably untenantable for the conduct of Tenant’s business operations, then Tenant shall have the right to terminate this Lease as of the date title vests in the condemning party. If either party elects to terminate this Lease as provided herein, such election shall be made by written notice to the other party given within thirty (30) days after the nature and extent of such Condemnation have been finally determined. If neither Landlord nor Tenant elects to terminate this Lease to the extent permitted above, Landlord shall promptly restore the Premises, to the extent of any Condemnation award received by Landlord, to substantially the same condition as existed prior to such Condemnation, allowing for the reasonable effects of such Condemnation, and a proportionate abatement shall be made to the Base Rent corresponding to the time during which, and to the portion of the floor area of the Premises (adjusted for any increase thereto resulting from any reconstruction) of which, Tenant is deprived on account of such Condemnation and restoration, as reasonably determined by Landlord. Except as expressly provided in the immediately preceding sentence with respect to abatement of Base Rent, Tenant shall have no claim against Landlord for, and hereby releases Landlord and Landlord’s Agents from responsibility for and waives its entire claim of recovery for any cost, loss or expense suffered or incurred by Tenant as a result of any Condemnation, whether permanent or temporary, or the repair or restoration of the Premises, the Building or the Project or the Parking Areas following such Condemnation, including any cost, loss or expense resulting from any loss of use of the whole or any part of the Premises, the Building, the Project or the Parking Areas and/or any inconvenience or annoyance occasioned by such Condemnation, repair or restoration. The provisions of California Code of Civil Procedure Section 1265.130, which allows either party to petition the Superior Court to terminate the Lease in the event of a partial taking of the Premises, the Building or the Project or the parking areas for the Building or the Project, and any other applicable law now or hereafter enacted, are hereby waived by Tenant.

          (b) Landlord shall be entitled to any and all compensation, damages, income, rent, awards, or any interest therein whatsoever which may be paid or made in connection with any Condemnation, and Tenant shall have no claim against Landlord for the value of any unexpired term of this Lease or otherwise, provided that Tenant shall be entitled to receive any award separately allocated by the condemning authority to Tenant for Tenant’s relocation expenses or the value of Tenant’s Property (specifically excluding fixtures, Alterations and other components of the Premises which under this Lease or by law are or at the expiration of the Term will become the property of Landlord), provided that such award does not reduce any award otherwise allocable or payable to Landlord.

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     23. Assignment and Subletting.

          (a) Tenant shall not voluntarily or by operation of law, (1) mortgage, pledge, hypothecate or encumber this Lease or any interest herein, (2) assign or transfer this Lease or any interest herein, sublease the Premises or any part thereof, or any right or privilege appurtenant thereto, or allow any other person (the employees and invitees of Tenant excepted) to occupy or use the Premises, or any portion thereof, without first obtaining the written consent of Landlord, which consent shall not be withheld unreasonably as set forth below in this Paragraph 23, provided that (i) Tenant is not then in Default under this Lease nor is any event then occurring which with the giving of notice or the passage of time, or both, would constitute a Default hereunder, (ii) Tenant has not previously assigned or transferred this Lease or any interest herein or subleased the Premises or any part thereof, and (iii) Tenant provides a fully completed Hazardous Materials Disclosure Certificate for such assignee or subtenant in the form of Exhibit G attached hereto.

     Tenant shall not voluntarily or by operation of law assign or transfer any right or interest under this Lease, including, but not limited to, the right to initiate any collections, lawsuits, audits or other findings of fact.

          (b) When Tenant requests Landlord’s consent to such assignment or subletting, it shall notify Landlord in writing of the name and address of the proposed assignee or subtenant, the nature and character of the business of the proposed assignee or subtenant, and the proposed assignee’s or subtenant’s proposed use for the Premises, and shall provide current and prior annual financial statements for the preceding three (3) years (or less than three (3) years if assignee or subtenant has been in existence for less than three (3) years) for the proposed assignee or subtenant, which financial statements shall be audited, or if audited financial statements are unavailable, such statements shall be certified by the chief financial officer of the proposed assignee or subtenant, and shall in any event be prepared in accordance with generally accepted accounting principles. Tenant shall also provide Landlord with a copy of the proposed sublease or assignment agreement, or, in the case of an assignment by operation of law, a copy of the proposed agreement that would effect the assignment, in all cases including all material terms and conditions thereof, and all other information reasonably requested by Landlord concerning the proposed sublease or assignment and the parties involved therein. Landlord shall have the option, to be exercised within fifteen (15) days of receipt of the foregoing, to (1) terminate this Lease as of the commencement date of the proposed sublease of the entire Premises (as opposed to a portion of the Premises) for substantially the remainder of the Term or assignment of all of Tenant’s rights under this Lease, (2) sublease or take an assignment, as the case may be, from Tenant of the portion of Tenant’s interest in this Lease and/or the Premises that Tenant proposes to assign or sublease, on the same terms and conditions as stated in the proposed agreement, (3) consent to the proposed assignment or sublease, or (4) refuse its consent to the proposed assignment or sublease, provided that (A) such consent shall not be unreasonably withheld so long as Tenant is not then in Default under this Lease nor is any event then occurring which, with the giving of notice or the passage of time, or both, would constitute a Default hereunder, and (B) in the case of a sublease, as a condition to providing such consent, Landlord may require attornment from the proposed subtenant on terms and conditions set forth in such subtenant’s sublease. In the event Landlord elects to terminate this Lease or sublease or take an assignment from Tenant of the interest, or portion thereof, in the Lease and/or the Premises that Tenant

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proposes to assign or sublease as provided in the foregoing clauses (1) and (2), respectively, then Landlord shall have the additional right to negotiate directly with Tenant’s proposed assignee or subtenant and to enter into a direct lease or occupancy agreement with such party on such terms as shall be acceptable to Landlord in its sole and absolute discretion, and Tenant hereby waives any claims against Landlord related thereto, including, without limitation, any claims for any compensation or profit related to such lease or occupancy agreement. If Landlord elects to terminate this Lease as to a portion of the Premises as provided in this Paragraph 23(b), Tenant shall execute an amendment to this Lease to that effect within ten (10) days after Landlord’s written request, and if Landlord elects to sublease a portion of the Premises as provided in this Paragraph 23(b), Tenant shall be responsible for all demising and tenant improvement costs to effectuate the sublease.

          (c) Without otherwise limiting the criteria upon which Landlord may withhold its consent, Landlord shall be entitled to consider all commercially reasonable criteria including, but not limited to, the following: (1) the creditworthiness and financial stability of the proposed assignee or subtenant, (2) the proposed sublessee or assignee conducts “freight forwarding,” “logistics” or any other use that results in truck usage greater than Tenant’s approved use, and (3) whether the proposed sublessee or assignee uses Hazardous Materials that pose a greater risk to the Property in the reasonable opinion of Landlord.

     Landlord may withhold its consent to any assignment or sublease, if any one or more of the following circumstances apply: (i) the actual use proposed to be conducted in the Premises or portion thereof conflicts with the provisions of Paragraph 9(a) or (b) above or with any other lease which restricts the use to which any space in the Building or the Project may be put, (ii) the proposed assignment or sublease requires alterations, improvements or additions to the Premises or portions thereof, (iii) the portion of the Premises proposed to be sublet is irregular in shape and/or does not permit safe or otherwise appropriate means of ingress and egress, or does not comply with governmental safety and other codes, (iv) the proposed sublessee or assignee is either a governmental or quasi-governmental agency or instrumentality thereof; (v) the proposed sublessee or assignee, or any person or entity which directly or indirectly, controls, is controlled by, or is under common control with, the proposed sublessee or assignee occupies space in the Project at the time of the request for Landlord’s consent; and (vi) if the proposed subtenant or assignee is a Prohibited Person, as defined in Paragraph 47.

          (d) If Landlord approves an assignment or subletting as herein provided, Tenant shall pay to Landlord, as Additional Rent, fifty percent (50%) of the excess, if any, of (1) the rent and any additional rent, and any other consideration payable by the assignee or sublessee to Tenant, less (i) leasing commissions that are reasonable and customary for the local market in which the Premises are located, (ii) reasonable attorneys’ fees, and (iii) sublease related tenant improvement costs, if any, to the extent any such costs are incurred by Tenant in connection with such assignment or sublease; minus (2) Base Rent plus Additional Rent allocable to that part of the Premises affected by such assignment or sublease pursuant to the provisions of this Lease. For purposes of the aforesaid calculation, the foregoing costs shall be amortized on a straight-line basis over the term of such assignment or sublease. Such excess shall be referred to as the “Transfer Premium.” If part of the consideration for such transfer shall be payable other than in cash, Landlord’s share of such non-cash consideration shall be in such form as is reasonably satisfactory to Landlord. If Tenant shall enter into multiple transfers, the Transfer Premium shall

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be calculated independently with respect to each transfer. The Transfer Premium due Landlord hereunder shall be paid within five (5) days after Tenant receives any Transfer Premium from the transferee. Landlord or its authorized representatives shall have the right at all reasonable times to audit the books, records and papers of Tenant relating to any transfer, and shall have the right to make copies thereof. If the Transfer Premium respecting any transfer shall be found to be understated, Tenant shall within thirty (30) days after demand pay the deficiency, and if understated by more than five percent (5%), Tenant shall pay Landlord’s costs of such audit. The assignment or sublease agreement, as the case may be, after approval by Landlord, shall not be amended or terminated without Landlord’s prior written consent, and shall contain a provision directing the assignee or subtenant to pay the rent and other sums due thereunder directly to Landlord upon receiving written notice from Landlord that Tenant is in Default under this Lease with respect to the payment of Rent. In the event that, notwithstanding the giving of such notice, Tenant collects any rent or other sums from the assignee or subtenant, then Tenant shall hold such sums in trust for the benefit of Landlord and shall immediately forward the same to Landlord. Landlord’s collection of such rent and other sums shall not constitute an acceptance by Landlord of attornment by such assignee or subtenant.

          (e) Notwithstanding any assignment or subletting, Tenant and any guarantor or surety of Tenant’s obligations under this Lease shall at all times remain fully and primarily responsible and liable for the payment of the Rent and for compliance with all of Tenant’s other obligations under this Lease (regardless of whether the approval of Landlord, or any such guarantor or surety, has been obtained for any such assignment or subletting).

          (f) Tenant shall pay Landlord’s reasonable fees (including, without limitation, the fees and expenses of Landlord’s counsel), incurred in connection with Landlord’s review and processing of documents regarding any proposed assignment or sublease.

          (g) A consent to one assignment, subletting, occupation or use shall not be deemed to be a consent to any other or subsequent assignment, subletting, occupation or use, and consent to any assignment or subletting shall in no way relieve Tenant of any liability under this Lease. Any assignment or subletting without Landlord’s consent shall be void, and shall, at the option of Landlord, constitute a Default under this Lease.

          (h) Tenant acknowledges and agrees that the restrictions, conditions and limitations imposed by this Paragraph 23 on Tenant’s ability to assign or transfer this Lease or any interest herein, to sublet the Premises or any part thereof, to transfer or assign any right or privilege appurtenant to the Premises, or to allow any other person to occupy or use the Premises or any portion thereof, are, for the purposes of California Civil Code Section 1951.4, as amended from time to time, and for all other purposes, reasonable at the time that the Lease was entered into, and shall be deemed to be reasonable at the time that Tenant seeks to assign or transfer this Lease or any interest herein, to sublet the Premises or any part thereof, to transfer or assign any right or privilege appurtenant to the Premises, or to allow any other person to occupy or use the Premises or any portion thereof.

          (i) Notwithstanding anything in this Lease to the contrary, if Landlord consents to an assignment or subletting by Tenant in accordance with the terms of this Paragraph 23, Tenant’s assignee or subtenant shall have no right to further assign this Lease or any interest therein or

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thereunder or to further sublease all or any portion of the Premises. In furtherance of the foregoing, Tenant acknowledges and agrees on behalf of itself and any assignee or subtenant claiming under it (and any such assignee or subtenant by accepting such assignment or sublease shall be deemed to acknowledge and agree) that no sub-subleases or further assignments of this Lease shall be permitted at any time.

          (j) If this Lease is assigned, whether or not in violation of the provisions of this Lease, Landlord may collect Rent from the assignee. If the Premises or any part thereof is sublet or used or occupied by anyone other than Tenant, whether or not in violation of this Lease, Landlord may, after a Default by Tenant, collect Rent from the subtenant or occupant. In either event, Landlord may apply the net amount collected to Rent, but no such assignment, subletting, occupancy or collection shall be deemed a waiver of any of the provisions of this Paragraph 23, or the acceptance of the assignee, subtenant or occupant as tenant, or a release of Tenant from the further performance by Tenant of Tenant’s obligations under this Lease. If a third party (other than an assignee of this Lease or a subtenant or occupant of the Premises) pays Landlord Rent (whether or not on behalf of Tenant) or otherwise performs Tenant’s obligations under this Lease, Landlord’s acceptance of such Rent or performance shall not release Tenant from Tenant’s obligations under this Lease, but such third party, at Landlord’s option, shall be deemed a tenant under this Lease and, in such event, Tenant and such third party shall be jointly and severally liable for Tenant’s Lease obligations. The consent by Landlord to an assignment, mortgaging, pledging, encumbering, transfer, use, occupancy or subletting pursuant to any provision of this Lease shall not, except as otherwise provided herein, relieve Tenant from obtaining the express consent of Landlord to any other or further assignment, mortgaging, pledging, encumbering, transfer, use, occupancy or subletting.

          (k) Without limiting the other transaction(s) that may constitute or result in an assignment of this Lease, each of the following shall be deemed to be an assignment under this Lease: (1) the merger or consolidation of Tenant with or into another entity, whether or not Tenant is the surviving entity, except a merger of Tenant into a wholly-owned subsidiary to effect a reincorporation in another state; (2) except in the case of a public offering of securities registered with the Securities and Exchange Commission, a transfer, issuance, or dilution of greater than fifty percent (50%) of the ownership or beneficial interests (whether stock, partnership interest, membership interest or otherwise) in Tenant, either in a single transaction or a series of transactions (whether related or unrelated), such that the ultimate owners or holders (whether direct or indirect) of such interests on the date of this Lease cease to own more than fifty percent (50%) of the ownership or beneficial interest in Tenant; (3) the commencement of liquidation proceedings or the dissolution of Tenant (whether or not in connection with liquidation proceedings); (4) the conversion or change of Tenant into another type of entity (e.g., the conversion of a corporation into a limited liability company); (5) the reorganization or restructuring of Tenant, including, without limitation, by a spin-off or split-off; and (6) the change in the identity of such number of “controlling persons” as, under the organizational documents of Tenant, is the minimum number of persons required to approve any act involving the management or operation of the business of Tenant; provided that subheading (1) if Tenant is the surviving entity, and subheadings (2) and (6) will not apply to Tenant if Tenant is a corporation the stock of which is listed on a national securities exchange (as this term is used in the Securities Exchange Act of 1934, as amended) or is publicly traded on the over-the-counter market and prices therefor are published daily on business days in a recognized financial journal

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(a “Public Company”). For purposes of this Paragraph 23, (A) the term “controlling persons” means the directors if Tenant is a corporation, Tenant’s member(s) or managers if Tenant is a limited liability company, Tenant’s general partner(s) if Tenant is a partnership, or other persons having equivalent control over said approval if another entity, and (B) the term “organizational documents” means the charter, bylaws, and shareholders’ agreement if Tenant is a corporation, the articles of organization or certificate of formation and operating agreement if Tenant is a limited liability company, the partnership agreement if Tenant is a partnership, or equivalent documents governing Tenant’s organization and governance if Tenant is another entity.

     References in this Lease to use or occupancy by anyone other than Tenant shall not be construed as limited to subtenants and those claiming under or through subtenants but as including also licensees or others claiming under or through Tenant, immediately or remotely. The listing of any name other than that of Tenant on any door of the Premises or on any sign or directory or in any elevator in the Building, or otherwise, shall not, except as otherwise provided herein, operate to vest in the person so named any right or interest in this Lease or in the Premises, or be deemed to constitute, or serve as a substitute for, or any waiver of, any prior consent of Landlord required under this Paragraph 23. Tenant shall deliver to Landlord, within fifteen (15) days after Landlord’s request, which request Landlord may make from time to time, the following: (i) if Tenant is a limited liability company, a list of Tenant’s members and their membership interest in Tenant, and the name and contact information for Tenant’s manager(s); (ii) if Tenant is a partnership, a list of Tenant’s partners, and their partnership interests in Tenant, and if any of Tenant’s general partner(s) is a corporation or limited liability company, a list of such general partner’s corporate directors and officers or members and managers, respectively; (iii) if Tenant is a corporation, a list of Tenant’s shareholders that own five percent (5%) or greater of Tenant’s stock and their ownership interest in Tenant, and a list of Tenant’s directors; and (iv) a copy of Tenant’s organizational documents; provided that this sentence will not apply to Tenant if Tenant is a Public Company. The foregoing shall be certified by Tenant’s authorized representative.

          (l) No assignment or sublease shall be binding on Landlord unless the proposed assignee or subtenant delivers to Landlord a fully executed counterpart of the assignment, sublease or other agreement that contains (1) in the case of an assignment, the assumption by the assignee of all obligations of Tenant under this Lease, or (2) in the case of a sublease, recognition by the subtenant of the provisions of this Paragraph 23 (including that such sublease is subject to this Lease and all of the terms, covenants and conditions contained in this Lease), and which assignment, sublease or other agreement shall otherwise be in form and substance reasonably satisfactory to Landlord, but the failure or refusal of a proposed assignee or subtenant to deliver such instrument shall not release or discharge such assignee or subtenant from the provisions and obligations of this Paragraph 23, and, at Landlord’s option, shall constitute a Default under this Lease. Each subletting and/or assignment pursuant to this Paragraph shall be subject to all of the covenants, agreements, terms, provisions and conditions contained in this Lease and each of the covenants, agreements, terms, provisions and conditions of this Lease shall be automatically incorporated therein, except as otherwise provided in any such sublease. By accepting such assignment or entering into such sublease, an assignee or subtenant shall be deemed to have assumed and agreed to comply with each and every covenant, agreement, term, provision and conditions of this Lease, other than such contrary or inconsistent obligations to which landlord has specifically consented in writing. If Landlord shall consent to, or reasonably

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withhold its consent to, any proposed assignment or sublease, Tenant shall indemnify, defend and hold harmless Landlord against and from any and all loss, liability, damages, costs and expenses (including reasonable counsel fees and expenses) resulting from any claims that may be made against Landlord by the proposed assignee or sublessee or by any brokers or other persons claiming a commission or similar fee in connection with the proposed assignment or sublease.

          (m) Tenant acknowledges and agrees that the restrictions, conditions and limitations imposed by this Paragraph 23 on Tenant’s ability to assign or transfer this Lease or any interest herein, to sublet the Premises or any part thereof, to transfer or assign any right or privilege appurtenant to the Premises, or to allow any other person to occupy or use the Premises or any portion thereof, are, for the purposes of California Civil Code Section 1951.4, as amended from time to time, and for all other purposes, reasonable at the time that this Lease was entered into, and shall be deemed to be reasonable at the time that Tenant seeks to assign or transfer this Lease or any interest herein, to sublet the Premises or any part thereof, to transfer or assign any right or privilege appurtenant to the Premises, or to allow any other person to occupy or use the Premises or any portion thereof. Tenant’s sole remedy if Landlord unreasonably withholds its consent to an assignment, sublet or transfer in violation of Tenant’s rights under this Lease shall be injunctive relief, and Tenant hereby expressly waives California Civil Code Section 1995.310, which permits all remedies provided by law for breach of contract, including, without limitation, the right to contract damages and the right to terminate this Lease if Landlord unreasonably withholds consent to a transfer in violation of Tenant’s rights under this Lease, and any similar or successor statute or law in effect or any amendment thereof during the Term.

          (n) Notwithstanding anything to the contrary contained in this Paragraph 23, Tenant, upon written notice to Landlord, but without Landlord’s consent, may assign this Lease or sublet all or any part of the Premises to any related entity, subsidiary, successor or affiliate of Tenant (collectively, “Affiliates”, provided that any such Affiliate (other than a subsidiary that is majority owned or controlled by Tenant) must have a net worth equal to or greater than the net worth of Tenant as of the Lease Date. Concurrently with providing notice to Landlord of the making of a sublease to an Affiliate, Tenant shall be required to submit to Landlord (i) reasonably satisfactory evidence that the transferee is an Affiliate, (ii) reasonably satisfactory evidence of the Affiliate’s net worth, and (iii) an executed counterpart of the transfer document. Similar evidence that such transferee continues to be an Affiliate shall be furnished by Tenant to Landlord within fifteen (15) days after request therefor, provided that such request is not made more often than annually. Any assignment of sublease to an Affiliate shall not relieve Tenant from liability under this Lease.

          (o) Notwithstanding anything to the contrary contained in this Paragraph 23, provided Tenant occupies at least fifty-one (51%) of the Premises, Tenant may license space in the Premises to any one or more Strategic Partners (as hereinafter defined) upon written notice to Landlord but without Tenant being required to obtain Landlord’s prior written consent, provided (i) the aggregate square feet of space so licensed to all Strategic Partners at each and every point in time during the Lease Term is no more than forty-nine percent (49%) of the Premises, (ii) the term of each such license shall expire on or before the expiration or sooner termination of the Lease, (iii) each such license is expressly subject and subordinate to this Lease, (iv) Tenant shall ensure that each such license does not violate any of the provisions of this Lease or cause Tenant to violate any such provisions, and (v) no such licensee shall use, store, generate, release or

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otherwise handle in, on or about the Premises any hazardous materials except for minor amounts thereof commonly used for office purposes (e.g., white out, copier toner). As used herein “Strategic Partners” mean a person or entity that Tenant is working jointly with on a product or project as part of Tenant’s business strategy. If at any time during the Lease Term Tenant is no longer Trident Microsystems, Inc. or an Affiliate of Trident Microsystems, Inc., then the provisions of this Paragraph 23(o) shall no longer be applicable, and all further licenses shall be effectuated, if at all, only after Tenant first obtains Landlord’s prior written consent thereto in accordance with this Paragraph 23. If Landlord determines in its good faith discretion that any license to an Strategic Partner effected pursuant to this Paragraph 23(o) is inconsistent with the standards of a Class A office project, is detrimental to the reputation or standing of the Project, or violates any exclusives within the Project, then Tenant shall cause such license to be terminated within thirty (30) days’ written notice from Landlord.

     24. Default.

          (a) Tenant’s Default. The occurrence of any one of the following events shall constitute an event of default on the part of Tenant (“Default”):

               (i) The abandonment of the Premises by Tenant for a period of ten (10) consecutive days or which would cause any insurance policy to be invalidated or otherwise lapse. Tenant agrees to notice and service of notice as provided in this Lease and waives any right to any other or further notice or service notice;

               (ii) Failure to pay any installment of Rent or any other monies due and payable hereunder, and such failure shall not have been cured within five (5) days after written notice thereof from Landlord;

               (iii) A general assignment by Tenant or any guarantor or surety of Tenant’s obligations hereunder (collectively, “Guarantor”) for the benefit of creditors;

               (iv) The filing of a voluntary petition in bankruptcy by Tenant or any Guarantor, the filing by Tenant or any Guarantor of a voluntary petition for an arrangement, the filing by or against Tenant or any Guarantor of a petition, voluntary or involuntary, for reorganization, or the filing of an involuntary petition by the creditors of Tenant or any Guarantor, said involuntary petition remaining undischarged for a period of sixty (60) days;

               (v) Receivership, attachment, or other judicial seizure of substantially all of Tenant’s Property, such attachment or other seizure remaining undismissed or undischarged for a period of sixty (60) days after the levy thereof;

               (vi) Death or disability of Tenant or any Guarantor, if Tenant or such Guarantor is a natural person, or the failure by Tenant or any Guarantor to maintain its legal existence, if Tenant or such Guarantor is a corporation, partnership, limited liability company, trust or other legal entity;

               (vii) Failure of Tenant to execute and deliver to Landlord any estoppel certificate, subordination agreement, or lease amendment within the time periods and in the manner required

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by Paragraphs 30, 31 or 42, and/or failure by Tenant to deliver to Landlord any financial statement within the time period and as required by Paragraph 40;

               (viii) An assignment or sublease, or attempted assignment or sublease, of this Lease or the Premises by Tenant contrary to the provision of Paragraph 23, unless such assignment or sublease is expressly conditioned upon Tenant having received Landlord’s consent thereto;

               (ix) Failure of Tenant to restore the Security Deposit to the amount and within the time period provided in Paragraph 7 above;

               (x) Failure to perform any of Tenant’s covenants, agreements or obligations hereunder (except those failures specified as events of Default in any other subparagraphs of this Paragraph 24, which shall be governed by such other Paragraphs), which failure continues for thirty (30) days after written notice thereof from Landlord to Tenant, provided that, if Tenant has exercised reasonable diligence to cure such failure and such failure cannot be cured within such thirty (30) day period despite reasonable diligence, Tenant shall not be in default under this subparagraph so long as Tenant thereafter diligently and continuously prosecutes the cure to completion and actually completes such cure within sixty (60) days after the giving of such written notice;

               (xi) Chronic delinquency by Tenant in the payment of Rent, or any other periodic payments required to be paid by Tenant under this Lease. “Chronic delinquency” means failure by Tenant to pay Rent, or any other payments required to be paid by Tenant under this Lease within three (3) business days after written notice thereof for any three (3) months (consecutive or nonconsecutive) during any period of twelve (12) months. In the event of a Chronic delinquency, in addition to Landlord’s other remedies for Default provided in this Lease, at Landlord’s option, Landlord shall have the right to require that Rent be paid by Tenant quarterly, in advance;

               (xii) Chronic overuse by Tenant or Tenant’s Agents of the number of undesignated parking spaces set forth in the Basic Lease Information. “Chronic overuse” means use by Tenant or Tenant’s Agents of a number of parking spaces greater than the number of parking spaces set forth in the Basic Lease Information more than three (3) times during any calendar year, after written notice by Landlord;

               (xiii) Any insurance required to be maintained by Tenant pursuant to this Lease shall be canceled or terminated or shall expire or be reduced or materially changed, except as permitted in this Lease;

               (xiv) Any failure by Tenant to discharge any lien or encumbrance placed on the Project or any part thereof in violation of this Lease within twenty (20) business days after the date such lien or encumbrance is filed or recorded against the Project or any part thereof;

               (xv) Tenant’s failure to commence business operations in the Premises within one hundred eighty (180) days following the Commencement Date, subject to delays beyond Tenant’s reasonable control (other than financial difficulty); and

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               (xvi) Any representation of Tenant herein or in any financial statement or other materials provided by Tenant or any guarantor of Tenant’s obligations under this Lease shall prove to be untrue or inaccurate in any material respect, or any such financial statements or other materials shall have omitted any material fact.

Tenant agrees that any notice given by Landlord pursuant to Paragraph 24(a)(xi) or (xii) above shall satisfy the requirements for notice under California Code of Civil Procedure Section 1161, et seq., and Landlord shall not be required to give any additional notice in order to be entitled to commence an unlawful detainer proceeding.

          (b) Landlord’s Default. If Landlord fails to perform its obligations under this Lease, Landlord shall not be in default unless Landlord fails to perform such obligations within thirty (30) days after notice by Tenant to Landlord specifying the nature of the obligations Landlord has failed to perform; provided, however, that if the nature of Landlord’s obligations is such that more than thirty (30) days are required for performance, then Landlord shall not be in default if Landlord commences performance within such thirty (30) day period and thereafter diligently prosecutes the same to completion. If Landlord is unable to fulfill or is delayed in fulfilling any of Landlord’s obligations under this Lease by reason of floods, earthquakes, lightning, or any other acts of God, accidents, breakage, repairs, strikes, lockouts, other labor disputes, inability to obtain utilities or materials, or by any other reason beyond Landlord’s reasonable control, or if Landlord enters the Premises or makes any Alterations to the Premises, the Building or any portion thereof pursuant to this Lease, then no such inability or delay by Landlord and no such entry or work by Landlord shall constitute an actual or constructive eviction, in whole or in part, or entitle Tenant to any abatement or diminution of Rent, or relieve Tenant from any of its obligations under this Lease, or impose any liability upon Landlord or its agents. This Lease shall be construed as though the covenants herein between Landlord and Tenant are independent, and Tenant shall not be entitled to any setoff, offset, abatement or deduction of Rent or other amounts due Landlord hereunder if Landlord fails to perform its obligations hereunder. Notwithstanding any provision of this Lease to the contrary, Tenant’s sole remedy for a default of this Lease by Landlord shall be an action for damages, injunction or specific performance; Tenant shall have no right to terminate this Lease on account of any breach or default by Landlord.

     25. Landlord’s Remedies.

          (a) Termination. In the event of any Default by Tenant, then in addition to any other remedies available to Landlord at law or in equity and under this Lease, Landlord may terminate this Lease immediately and all rights of Tenant hereunder by giving written notice to Tenant of such intention to terminate. If Landlord shall elect to so terminate this Lease, then Landlord may recover from Tenant:

               (i) the worth at the time of award of any unpaid Rent and any other sums due and payable which have been earned at the time of such termination; plus

               (ii) the worth at the time of award of the amount by which the unpaid Rent and any other sums due and payable which would have been earned after termination until the time

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of award exceeds the amount of such rental loss Tenant proves could have been reasonably avoided; plus

               (iii) the worth at the time of award of the amount by which the unpaid Rent and any other sums due and payable for the balance of the term of this Lease after the time of award exceeds the amount of such rental loss that Tenant proves could be reasonably avoided; plus

               (iv) any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant’s failure to perform its obligations under this Lease or which in the ordinary course would be likely to result therefrom, including, without limitation, (A) any costs or expenses incurred by Landlord (1) in retaking possession of the Premises; (2) in maintaining, repairing, preserving, restoring, replacing, cleaning, altering, remodeling or rehabilitating the Premises or any affected portions of the Building or the Project, including such actions undertaken in connection with the reletting or attempted reletting of the Premises to a new tenant or tenants; (3) for leasing commissions, advertising costs and other expenses of reletting the Premises; or (4) in carrying the Premises, including taxes, insurance premiums, utilities and security precautions; (B) any unearned brokerage commissions paid in connection with this Lease; and (C) any concession made or paid by Landlord to the benefit of Tenant including, but not limited to, any moving allowances, contributions, payments or loans by Landlord for tenant improvements or build-out allowances (including, without limitation, any unamortized portion of the Tenant Improvements Allowance (such Tenant Improvements Allowance to be amortized over the Term in the manner reasonably determined by Landlord), if any, and any outstanding balance (principal and accrued interest) of the Tenant Improvements Loan, if any), or assumptions by Landlord of any of Tenant’s previous lease obligations; plus

               (v) such reasonable attorneys’ fees and expenses incurred by Landlord as a result of a Default, and costs in the event suit is filed by Landlord to enforce such remedy; and plus

               (vi) at Landlord’s election, such other amounts in addition to or in lieu of the foregoing as may be permitted from time to time by applicable law.

As used in subparagraphs (i) and (ii) above, the “worth at the time of award” is computed by allowing interest at an annual rate equal to twelve percent (12%) per annum or the maximum rate permitted by law, whichever is less. As used in subparagraph (iii) above, the “worth at the time of award” is computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award, plus one percent (1%). Tenant hereby waives for Tenant and all those claiming under Tenant all right now or hereafter existing to redeem by order or judgment of any court or by any legal process or writ, Tenant’s right of occupancy of the Premises after any termination of this Lease.

          (b) No Right of Redemption. Tenant waives redemption or relief from forfeiture under California Code of Civil Procedure Sections 1174 and 1179, or under any other pertinent present or future Law, in the event Tenant is evicted or Landlord takes possession of the Premises by reason of any Default of Tenant hereunder.

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          (c) Continuation of Lease. In the event of any Default by Tenant, then in addition to any other remedies available to Landlord at law or in equity and under this Lease, Landlord shall have the remedy described in California Civil Code Section 1951.4 (Landlord may continue this Lease in effect after Tenant’s Default and abandonment and recover Rent as it becomes due, provided that Tenant has the right to sublet or assign, subject only to reasonable limitations). In addition, Landlord shall not be liable in any way whatsoever for its failure or refusal to relet the Premises. For purposes of this Paragraph 25(c), the following acts by Landlord will not constitute the termination of Tenant’s right to possession of the Premises:

               (i) Acts of maintenance or preservation or efforts to relet the Premises, including, but not limited to, alterations, remodeling, redecorating, repairs, replacements and/or painting as Landlord shall consider advisable for the purpose of reletting the Premises or any part thereof, or

               (ii) The appointment of a receiver upon the initiative of Landlord to protect Landlord’s interest under this Lease or in the Premises.

          (d) Re-entry. In the event of any Default by Tenant, Landlord shall also have the right to re-enter the Premises and remove all persons and property from the Premises in accordance with applicable Laws; such property may be removed and stored in a public warehouse or elsewhere at the cost of and for the account of Tenant.

          (e) Reletting. In the event of the abandonment of the Premises by Tenant or if Landlord elects to re-enter as provided in Paragraph 25(d) or takes possession of the Premises pursuant to legal proceeding or pursuant to any notice provided by law, then without terminating Tenant’s contractual liability for Landlord’s damages, Landlord may from time to time relet the Premises or any part thereof for such term or terms and at such rental or rentals and upon such other terms and conditions as Landlord in its sole discretion may deem advisable with the right to make alterations and repairs to the Premises in Landlord’s sole discretion. If Landlord shall elect to so relet, then rentals received by Landlord from such reletting shall be applied in the following order: (i) to reasonable attorneys’ fees incurred by Landlord as a result of a Default and costs in the event suit is filed by Landlord to enforce such remedies; (ii) to the payment of any indebtedness other than Rent due hereunder from Tenant to Landlord; (iii) to the payment of any costs of such reletting; (iv) to the payment of the costs of any alterations and repairs to the Premises; (v) to the payment of Rent due and unpaid hereunder; and (vi) the residue, if any, shall be held by Landlord and applied in payment of future Rent and other sums payable by Tenant hereunder as the same may become due and payable hereunder. Should that portion of such rentals received from such reletting during any month, which is applied to the payment of Rent hereunder, be less than the Rent payable during such month by Tenant, then Tenant shall pay such deficiency to Landlord. Such deficiency shall be calculated and paid monthly. Tenant shall also pay to Landlord, as soon as ascertained, any costs and expenses incurred by Landlord in such reletting or in making such alterations and repairs not covered by the rentals received from such reletting.

          (f) Termination. No re-entry or taking of possession of the Premises by Landlord pursuant to this Paragraph 25 shall be construed as an election to terminate this Lease unless a written notice of such intention is given to Tenant or unless the termination thereof is decreed by

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a court of competent jurisdiction. Notwithstanding any reletting without termination by Landlord because of any Default by Tenant, Landlord may at any time after such reletting elect to terminate this Lease for any such Default.

          (g) Cumulative Remedies. The remedies herein provided are not exclusive and Landlord shall have any and all other remedies provided herein or by law or in equity including, without limitation, any and all rights and remedies of Landlord under California Civil Code Section 1951.8, California Code of Civil Procedure Section 1161 et seq., or any similar, successor or related provision of applicable Laws.

          (h) No Surrender. No act or conduct of Landlord, whether consisting of the acceptance of the keys to the Premises, or otherwise, shall be deemed to be or constitute an acceptance of the surrender of the Premises by Tenant prior to the expiration of the Term, and such acceptance by Landlord of surrender by Tenant shall only flow from and must be evidenced by a written acknowledgment of acceptance of surrender signed by Landlord. The surrender of this Lease by Tenant, voluntarily or otherwise, shall not work a merger unless Landlord elects in writing that such merger take place, but shall operate as an assignment to Landlord of any and all existing subleases, or Landlord may, at its option, elect in writing to treat such surrender as a merger terminating Tenant’s estate under this Lease, and thereupon Landlord may terminate any or all such subleases by notifying the sublessee of its election so to do within five (5) days after such surrender.

     26. Right to Perform Obligations.

          (a) Without limiting the rights and remedies of Landlord contained in Paragraph 25 above, if Tenant shall be in Default in the performance of any of the terms, provisions, covenants or conditions to be performed or complied with by Tenant pursuant to this Lease, then Landlord may at Landlord’s option, without any obligation to do so, and without notice to Tenant perform any such term, provision, covenant, or condition, or make any such payment and Landlord by reason of so doing shall not be liable or responsible for any loss or damage thereby sustained by Tenant or anyone holding under or through Tenant or any of Tenant’s Agents.

          (b) Without limiting the rights of Landlord under Paragraph 26(a) above, Landlord shall have the right at Landlord’s option, without any obligation to do so, to perform any of Tenant’s covenants or obligations under this Lease without notice to Tenant in the case of an emergency, as reasonably determined by Landlord.

          (c) If Landlord performs any of Tenant’s obligations hereunder in accordance with this Paragraph 26, the full amount of the cost and expense incurred or the payment so made or the amount of the loss so sustained shall immediately be owing by Tenant to Landlord, and Tenant shall promptly pay to Landlord upon demand, as Additional Rent, the full amount thereof with interest thereon from the date of payment by Landlord at the lower of (i) twelve percent (12%) per annum, or (ii) the highest rate permitted by applicable Law.

          (d) Notwithstanding any provision set forth in the Lease to the contrary, if (i) Tenant provides prior written notice to Landlord of an event or circumstance which requires the action of Landlord with respect to repair and/or maintenance, (ii) Landlord is, in fact, required to

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perform repairs and/or maintenance under the terms of this Lease, (iii) Landlord fails to commence such action within a reasonable period of time, given the circumstances, after the receipt of such notice, but in any event not later than thirty (30) days after receipt of such notice (or within five (5) business days in the case of an emergency), and (d) Landlord’s failure to take such action materially and adversely affects Tenant’s use and/or occupancy of the Premises, then Tenant may proceed to take the required action after delivery of an additional ten (10) business days notice to Landlord specifying that the thirty (30) day period has expired, the specific action required, and that Tenant intends to take or commence such required action. If such action is required under the terms of this Lease to be taken by Landlord and is not commenced by Landlord within such ten (10) business day period, then Tenant shall be entitled to prompt reimbursement by Landlord of Tenant’s reasonable and necessary, actual out-of-pocket costs and expenses in taking such action (and only such action as specified in the ten (10) day notice given to Landlord). Such amounts shall be promptly reimbursed by Landlord on the receipt from Tenant of a detailed invoice setting forth a particularized breakdown of the costs and expenses incurred in connection with the action taken by Tenant. If Landlord fails to reimburse Tenant for any such costs and expenses and Tenant subsequently obtains a judgment against Landlord for the amount of any such costs and expenses, then unless Landlord pays the amount of such judgment to Tenant within thirty (30) days after a final judgment has been entered, Tenant may offset the amount of such judgment against the rent payable under this Lease until such time as the amount of such judgment has been paid in full. In the event Tenant takes such action, and such work affects the Systems serving the Building or the Building structure, Tenant shall use only those contractors used by Landlord in the Building for work on such Systems or structure unless such contractors are unwilling or unable to perform, or timely perform, such work, in which event Tenant may utilize the services of any other qualified contractor which normally and regularly performs similar work in other first-class buildings in the greater San Francisco Bay Area.

     27. Attorneys’ Fees.

          (a) If either party hereto fails to perform any of its obligations under this Lease or if any dispute arises between the parties hereto concerning the meaning or interpretation of any provision of this Lease, then the defaulting party or the party not prevailing in such dispute, as the case may be, shall pay any and all costs and expenses incurred by the other party on account of such default and/or in enforcing or establishing its rights hereunder, including, without limitation, court costs and reasonable attorneys’ fees and disbursements. Any such attorneys’ fees and other expenses incurred by either party in enforcing a judgment in its favor under this Lease shall be recoverable separately from and in addition to any other amount included in such judgment, and such attorneys’ fees obligation is intended to be severable from the other provisions of this Lease and to survive and not be merged into any such judgment.

          (b) Without limiting the generality of Paragraph 27(a) above, if Landlord utilizes the services of an attorney for the purpose of collecting any Rent due and unpaid by Tenant or in connection with any other breach of this Lease by Tenant, Tenant agrees to pay Landlord actual attorneys’ fees and expenses as determined by Landlord for such services, regardless of the fact that no legal action may be commenced or filed by Landlord.

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     28. Taxes. Tenant shall be liable for and shall pay directly to the taxing authority, prior to delinquency, all taxes levied against Tenant’s Property. If any Alteration installed by Tenant or any of Tenant’s Property is assessed and taxed with the Project or the Building, Tenant shall pay such taxes to Landlord within ten (10) days after delivery to Tenant of a statement therefor.

     29. Effect of Conveyance. “Landlord” means, from time to time, the then current owner of the Building or the Project. In the event of any sale of the Building or the Project, Landlord shall be and hereby is entirely freed and relieved of all covenants and obligations of Landlord hereunder that become due after the date of such sale, and it shall be deemed and construed, without further agreement between the parties and the purchaser at any such sale, that the purchaser of the Building or the Project has assumed and agreed to carry out any and all covenants and obligations of Landlord hereunder.

     30. Estoppel Certificates.

          (a) From time to time, upon written request of Landlord, Tenant shall execute, acknowledge and deliver to Landlord or its designee, an Estoppel Certificate in substantially the form attached hereto as Exhibit E and with any other statements reasonably requested by Landlord or its designee. Any such Estoppel Certificate may be relied upon by a prospective purchaser of Landlord’s interest or a mortgagee of (or holder of a deed of trust encumbering) Landlord’s interest or assignee of any mortgage or deed of trust upon Landlord’s interest in the Premises. If Tenant fails to provide such certificate within ten (10) days of receipt by Tenant of a written request by Landlord as herein provided, such failure shall, at Landlord’s election, constitute a Default under this Lease, and Tenant shall be deemed to have given such certificate without modification and admitted the accuracy of any information supplied by Landlord to a prospective purchaser or mortgagee or deed of trust holder.

          (b) Landlord hereby agrees to provide to Tenant an estoppel certificate signed by Landlord, containing the same types of information, and within the same periods of time, as are required by Tenant above in Paragraph 31(a), except such changes as are reasonably necessary to reflect that the Estoppel Certificate is being granted and signed by Landlord to Tenant or Tenant’s lender, assignee or sublessee, rather than from Tenant to Landlord or to a lender or purchaser.

     31. Subordination. At the option of Landlord, this Lease, and all rights of Tenant hereunder, are and shall be subject and subordinate to all ground leases, overriding leases and underlying leases affecting the Building or the Project now or hereafter existing and each of the terms, covenants and conditions thereto (the “Superior Lease(s)”), and to all mortgages or deeds of trust which may now or hereafter affect the Building, the Property or any of such leases and each of the terms, covenants and conditions thereto (the “Superior Mortgage(s)”), whether or not such mortgages or deeds of trust shall also cover other lands, buildings or leases, to each and every advance made or hereafter to be made under such mortgages or deeds of trust, and to all renewals, modifications, replacements and extensions of such leases and such mortgages or deeds of trust and spreaders and consolidations of such mortgages or deeds of trust; provided Tenant must receive from the holder of such Superior Lease or Superior Mortgage a non-disturbance agreement in the form attached hereto as Exhibit F or otherwise in form and substance reasonably acceptable to Tenant (the “Non-Disturbance Agreement”, in consideration of,

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and as a condition precedent to Tenant agreeing to subordinate this Lease to such Superior Lease or such Superior Mortgage in accordance with this Paragraph 31. Landlord hereby represents and warrants to Tenant that no Superior Lease or Superior Mortgage exists on the Premises or the Building as of the execution date of this Lease.

     Tenant shall promptly execute, acknowledge and deliver any reasonable instrument that Landlord, the lessor under any such lease or the holder of any such mortgage or trust deed or any of their respective successors in interest may reasonably request to evidence such subordination, provided such instrument contains the protections provided to Tenant in the Non-Disturbance Agreement. Without limiting the foregoing, Tenant’s failure to execute, acknowledge and deliver such instrument within the aforesaid time period shall constitute a Default hereunder. As used herein the lessor of a Superior Lease or its successor in interest is herein called “Superior Lessor”; and the holder of a Superior Mortgage is herein called “Superior Mortgagee.”

     Notwithstanding the foregoing provisions of this Paragraph 31 or any other provision in this Lease, if a Superior Lease or Superior Mortgage is hereafter placed against or affecting any or all of the Building or the Premises or any or all of the Building and improvements now or at any time hereafter constituting a part of or adjoining the Building, Tenant will only be required to subordinate this Lease to such Superior Lease or Superior Mortgage if the holder thereof provides a Non-Disturbance Agreement, whereby the holder of such Superior Lease or Superior Mortgage agrees that Tenant, upon paying the Base Rent and all of the Additional Rent and other charges herein provided for, and observing and complying with this Lease, shall lawfully and quietly hold, occupy and enjoy the Premises during the Term (including any exercised renewal term), without hindrance or interference from anyone claiming by or through said Superior Mortgagee or Superior Lessor and that said Superior Mortgagee or Superior Lessor shall respect Tenant’s rights under the Lease and, upon succeeding to Landlord’s interest in the Building and Lease, shall observe and comply with all of Landlord’s duties under the Lease.

     If any Superior Lessor or Superior Mortgagee shall succeed to the rights of Landlord under this Lease, whether through possession or foreclosure action or delivery of a new lease or deed (such party so succeeding to Landlord’s rights herein called “Successor Landlord”) and acknowledges Tenant’s rights under this Lease, then Tenant shall attorn to and recognize such Successor Landlord as Tenant’s landlord under this Lease (without the need for further agreement) and shall promptly execute and deliver any reasonable instrument that such Successor Landlord may reasonably request to evidence such attornment. This Lease shall continue in full force and effect as a direct lease between the Successor Landlord and Tenant upon all of the terms, conditions and covenants as are set forth in this Lease, except that the Successor Landlord shall not (a) be liable for any previous act or omission of Landlord under this Lease, except to the extent such act or omission shall constitute a continuing Landlord default hereunder; (b) be subject to any offset, not expressly provided for in this Lease; or (c) be bound by any previous modification of this Lease or by any previous prepayment of more than one month’s Base Rent, unless such modification or prepayment shall have been expressly approved in writing by the Successor Landlord (or predecessor in interest).

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     32. Environmental Covenants.

          (a) Prior to executing this Lease, Tenant has completed, executed and delivered to Landlord a Hazardous Materials Disclosure Certificate (“Initial Disclosure Certificate”), a fully completed copy of which is attached hereto as Exhibit G and incorporated herein by this reference. Tenant covenants, represents and warrants to Landlord that the information on the Initial Disclosure Certificate is true and correct and accurately describes the Hazardous Materials which will be manufactured, treated, used or stored on or about the Premises by Tenant or Tenant’s Agents. Tenant shall, on each anniversary of the Commencement Date and at such other times as Tenant desires to manufacture, treat, use or store on or about the Premises new or additional Hazardous Materials which were not listed on the Initial Disclosure Certificate, complete, execute and deliver to Landlord an updated Disclosure Certificate (each, an “Updated Disclosure Certificate”) describing Tenant’s then current and proposed future uses of Hazardous Materials on or about the Premises, which Updated Disclosure Certificates shall be in the same format as set forth in Exhibit G or in such updated format as Landlord may require from time to time. Tenant shall deliver an Updated Disclosure Certificate to Landlord not less than thirty (30) days prior to the date Tenant intends to commence the manufacture, treatment, use or storage of new or additional Hazardous Materials on or about the Premises, and Landlord shall have the right to approve or disapprove such new or additional Hazardous Materials in its sole and absolute discretion. Tenant shall make no use of Hazardous Materials on or about the Premises except as described in the Initial Disclosure Certificate or as otherwise approved by Landlord in writing in accordance with this Paragraph 32(a).

          (b) As used in this Lease, the term “Hazardous Materials” means (i) any substance or material that is included within the definitions of “hazardous substances,” “hazardous materials,” “toxic substances,” “pollutant,” “contaminant,” “hazardous waste,” or “solid waste” in any Environmental Law; (ii) petroleum or petroleum derivatives, including crude oil or any fraction thereof, all forms of natural gas, and petroleum products or by-products or waste; (iii) polychlorinated biphenyls (“PCBs”); (iv) asbestos and asbestos containing materials (whether friable or non-friable); (v) lead and lead-based paint or other lead containing materials (whether friable or non-friable); (vi) urea formaldehyde; (vii) microbiological pollutants; (viii) batteries or liquid solvents or similar chemicals; (ix) radon gas; and (x) mildew, fungus, mold, bacteria and/or other organic spore material.

          (c) “Environmental Laws” means all statutes, terms, conditions, limitations, restrictions, standards, prohibitions, obligations, schedules, plans and timetables that are contained in or promulgated pursuant to any federal, state or local laws (including rules, regulations, ordinances, codes, judgments, orders, decrees, contracts, permits, stipulations, injunctions, the common law, court opinions, and demand or notice letters issued, entered, promulgated or approved thereunder), relating to pollution or the protection of the environment, including laws relating to emissions, discharges, releases or threatened releases of Hazardous Materials into ambient air, surface water, ground water or lands or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials including, but not limited to, the: Comprehensive Environmental Response Compensation and Liability Act of 1980 (CERCLA), as amended by the Superfund Amendments and Reauthorization Act of 1986 (SARA), 42 U.S.C. 9601 et seq.; Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976 (RCRA), 42 U.S.C. 6901

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et seq.; Federal Water Pollution Control Act, 33 U.S.C. 1251 et seq.; Toxic Substances Control Act, 15 U.S.C. 2601 et seq.; Clean Air Act, 42 U.S.C. 7401 et seq.; and the Safe Drinking Water Act, 42 U.S.C. § 300f et seq. “Environmental Laws” shall not include laws relating to industrial hygiene or worker safety, except to the extent that such laws address asbestos and asbestos containing materials (whether friable or non-friable) or lead and lead based paint or other lead containing materials.

          (d) During its use and occupancy of the Premises Tenant shall: (i) not (A) permit Hazardous Materials to be present on or about the Premises except in a manner and quantity necessary for the ordinary performance of Tenant’s business or for normal quantities of cleaning and other business supplies customarily used in a warehouse (B) release, discharge or dispose of any Hazardous Materials on, in, at, under, or emanating from, the Premises, the Building or the Project; (ii) comply with all Environmental Laws relating to the Premises and the use of Hazardous Materials on or about the Premises and not engage in or permit others to engage in any activity at the Premises in violation of any Environmental Laws; and (iii) immediately notify Landlord of (A) any inquiry, test, investigation or enforcement proceeding by any governmental agency or authority against Tenant, Landlord or the Premises, the Building or the Project relating to any Hazardous Materials or under any Environmental Laws or (B) the occurrence of any event or existence of any condition that would cause a breach of any of the covenants set forth in this Paragraph 32.

          (e) If Tenant’s use of Hazardous Materials on or about the Premises results in a release, discharge or disposal of Hazardous Materials on, in, at, under, or emanating from, the Premises, the Building or the Project, or if Tenant becomes aware of Hazardous Materials at the Premises. Tenant shall promptly notify Landlord of same (and, in any event, deliver such notice within two (2) days of learning of same) and to the extent caused by Tenant or its Agents, investigate, clean up, remove or remediate such Hazardous Materials in full compliance with: (i) the requirements of (A) all Environmental Laws and (B) any governmental agency or authority responsible for the enforcement of any Environmental Laws; and (ii) any additional requirements of Landlord that are reasonably necessary to protect the value of the Premises, the Building or the Project.

     Landlord shall also have the right, but not the obligation, to take whatever action with respect to any such Hazardous Materials that it deems necessary, in Landlord’s sole discretion, to protect the value of the Premises or the property in which the Premises are located. All costs and expenses paid or incurred by Landlord in the exercise of such right shall be payable by Tenant promptly upon demand.

          (f) Upon reasonable notice to Tenant, Landlord may inspect the Premises and surrounding areas for the purpose of determining whether there exists on or about the Premises any Hazardous Material or other condition or activity that is in violation of this Lease or of any Environmental Laws.

          (g) Landlord shall have the right, but not the obligation, subsequent to a Default, without in any way limiting Landlord’s other rights and remedies under this Lease, to enter upon the Premises, or to take such other actions as it deems necessary or advisable, to investigate, clean up, remove or remediate any Hazardous Materials or contamination by Hazardous

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Materials present on, in, at, under, or emanating from, the Premises, the Building or the Project in violation of Tenant’s obligations under this Lease or under any Environmental Laws. Notwithstanding any other provision of this Lease, if Tenant is in Default, Landlord shall also have the right, at its election, in its own name or as Tenant’s agent, to negotiate, defend, approve and appeal, at Tenant’s expense, any action taken or order issued by any governmental agency or authority with regard to any such Hazardous Materials or contamination by Hazardous Materials. All costs and expenses paid or incurred by Landlord in the exercise of the rights set forth in this Paragraph 32 shall be payable by Tenant promptly upon demand.

          (h) Tenant shall surrender the Premises to Landlord upon the expiration or earlier termination of this Lease free of Hazardous Materials and in a condition which complies with all Environmental Laws and any additional requirements of Landlord that are reasonably necessary to protect the value of the Premises, the Building or the Project. Such Tenant obligations shall be in addition to any other surrender requirements in this Lease and shall survive the expiration or earlier termination of this Lease. If it is determined by Landlord that the condition of all or any portion of the Premises, the Building, and/or the Project is not in compliance with this Lease with respect to Hazardous Materials, debris, or waste, including, without limitation, all Environmental Laws, at the expiration or earlier termination of this Lease, then at Landlord’s sole option, Landlord may require Tenant to hold over possession of the Premises until Tenant can surrender the Premises to Landlord in the condition in which the Premises existed as of the Commencement Date. The burden of proof hereunder shall be upon Tenant. For purposes hereof, the term “normal wear and tear” shall not include any deterioration in the condition or diminution of the value of any portion of the Premises, the Building, and/or the Project in any manner whatsoever related to directly, or indirectly, Hazardous Materials. Any such holdover by Tenant will be with Landlord’s consent, will not be terminable by Tenant in any event or circumstance and will otherwise be subject to the provisions of Paragraph 35 of this Lease.

          (i) Tenant shall indemnify and hold harmless Landlord from and against any and all claims, damages, fines, judgments, penalties, costs, losses (including, without limitation, loss in value of the Premises, the Building or the Project, liabilities and expenses (including attorneys’, consultants’ and experts’ fees)) incurred by Landlord during or after the Term and directly attributable to (i) any Hazardous Materials placed on or about the Premises, the Building or the Project by Tenant or Tenant’s Agents or resulting from the action or inaction of Tenant or Tenant’s Agents, or (ii) Tenant’s breach of any provision of this Paragraph 32. This indemnification includes, without limitation, any and all costs incurred by Landlord due to any investigation of the site or any cleanup, removal or restoration mandated by a federal, state or local agency or political subdivision.

          (j) Notwithstanding anything to the contrary in this Paragraph 32 or any other provision of this Lease, Tenant shall have no liability, responsibility or indemnity obligations for any Hazardous Materials located in, on or about the Premises, the Building or the Project (i) as of the execution date of this Lease, or (ii) released, discharged or disposed of in, on or about the Premises, the Building or the Project by Landlord or Landlord’s Agents at any time (“Landlord’s Hazardous Materials”).

          (k) The provisions of this Paragraph 32 shall survive the expiration or earlier termination of this Lease.

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     33. Notices. All notices and demands which are required or may be permitted to be given to either party by the other hereunder shall be in writing and shall be sent by United States mail, postage prepaid, certified, or by personal delivery or overnight courier, addressed to the addressee at Tenant’s Address or Landlord’s Address as specified in the Basic Lease Information, or to such other place as either party may from time to time designate in a notice to the other party given as provided herein. Copies of all notices and demands given to Landlord shall additionally be sent to Landlord’s property manager at the address specified in the Basic Lease Information or at such other address as Landlord may specify in writing from time to time. Notice shall be deemed given upon actual receipt (or attempted delivery if delivery is refused). In no event shall either party use a post office box or other address which does not accept overnight delivery.

     34. Waiver. The waiver of any breach of any term, covenant or condition of this Lease shall not be deemed to be a waiver of such term, covenant or condition or of any subsequent breach of the same or any other term, covenant or condition herein contained. The subsequent acceptance of Rent by Landlord shall not be deemed a waiver of any preceding breach by Tenant, other than the failure of Tenant to pay the particular rental so accepted, regardless of Landlord’s knowledge of such preceding breach at the time of acceptance of such Rent. No delay or omission in the exercise of any right or remedy of Landlord in regard to any Default by Tenant shall impair such a right or remedy or be construed as a waiver. Any waiver by Landlord of any Default must be in writing and shall not be a waiver of any other Default concerning the same or any other provisions of this Lease.

     35. Holding Over. Any holding over after the expiration of the Term, without the express written consent of Landlord, shall constitute a Default and, without limiting Landlord’s remedies provided in this Lease, such holding over shall be construed to be a tenancy at sufferance, at a rental rate equal to (i) the greater of the Base Rent last due in this Lease or fair market value for the Premises (as reasonably determined by Landlord) for the first thirty (30) days after the expiration of the Term, and (ii) the greater of one hundred fifty percent (150%) of the Base Rent last due in this Lease or fair market value for the Premises (as reasonably determined by Landlord) for any period after such thirty (30) day period, plus Additional Rent, and shall otherwise be on the terms and conditions herein specified, so far as applicable; provided, however, that in no event shall any renewal or expansion option, option to purchase, or other similar right or option contained in this Lease be deemed applicable to any such tenancy at sufferance. If the Premises are not surrendered at the end of the Term or sooner termination of this Lease, and in accordance with the provisions of Paragraphs 11 and 32(h), Tenant shall indemnify, defend and hold Landlord harmless from and against any and all loss or liability resulting from delay by Tenant in so surrendering the Premises including, without limitation, any loss or liability resulting from any claim against Landlord made by any succeeding tenant or prospective tenant founded on or resulting from such delay and losses to Landlord due to lost opportunities to lease any portion of the Premises to any such succeeding tenant or prospective tenant, together with, in each case, actual attorneys’ fees and costs.

     36. Successors and Assigns. The terms, covenants and conditions of this Lease shall, subject to the provisions as to assignment, apply to and bind the heirs, successors, executors, administrators and assigns of all of the parties hereto. If Tenant shall consist of more than one entity or person, the obligations of Tenant under this Lease shall be joint and several.

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     37. Time. Time is of the essence of this Lease and each and every term, condition and provision herein.

     38. Brokers. Landlord and Tenant each represents and warrants to the other that neither it nor its officers or agents nor anyone acting on its behalf has dealt with any real estate broker except the Broker specified in the Basic Lease Information in the negotiating or making of this Lease, and each party agrees to indemnify and hold harmless the other from any claim or claims, and costs and expenses, including attorneys’ fees, incurred by the indemnified party in conjunction with any such claim or claims of any other broker or brokers to a commission in connection with this Lease as a result of the actions of the indemnifying party. Provided that this Lease is fully executed by the parties hereto, then Landlord shall pay a commission to Broker pursuant to a separate written agreement between Landlord and Broker.

     39. Limitation of Liability. In the event of any default or breach by Landlord under this Lease or arising in connection herewith or with Landlord’s operation, management, leasing, repair, renovation, alteration or any other matter relating to the Project or the Premises, Tenant’s remedies shall be limited solely and exclusively to an amount which is equal to the lesser of (a) the interest in the Buildings of the then current Landlord or (b) the equity interest Landlord would have in the Buildings if the Buildings were encumbered by third party debt in an amount equal to eighty percent (80%) of the value of the Buildings (as such value is determined by Landlord), including any sales or insurance proceeds received by Landlord or the “Landlord Parties” in connection with the Project, any Building or the Premises. For purposes of this Lease, “Landlord Parties” means, collectively Landlord’s member(s) managers, partners, beneficiaries, shareholders, officers, directors, trustees, employees, agents, investment advisors, or any successor in interest of any of them. None of the Landlord Parties shall have any personal liability hereunder, and Tenant hereby expressly waives and releases such personal liability on behalf of itself and all persons claiming by, through or under Tenant. The limitations of liability contained in this Paragraph 39 shall inure to the benefit of Landlord’s and the Landlord Parties’ present and future member, manager, partners, beneficiaries, officers, directors, trustees, shareholders, agents and employees, and their respective partners, heirs, successors and assigns. Under no circumstances shall any present or future partner of Landlord (if Landlord is a partnership), future member or manager in Landlord (if Landlord is a limited liability company) or trustee or beneficiary (if Landlord or any partner or member of Landlord is a trust), have any liability for the performance of Landlord’s obligations under this Lease. Notwithstanding any contrary provision herein, neither Landlord nor the Landlord Parties shall be liable under any circumstances for injury or damage to, or interference with Tenant’s business, including, but not limited to, loss of profits, loss of rents or other revenues, loss of business opportunity, loss of goodwill or loss of use, in each case, however occurring. The provisions of this Paragraph shall apply only to the Landlord and the parties herein described, and shall not be for the benefit of any insurer or any other third party.

     Notwithstanding anything to the contrary contained in this Lease, nothing in this Lease shall impose any obligations on Tenant or Landlord to be responsible or liable for, and each hereby waives and releases the other from all liability for consequential damages; provided, however, that this waiver and release shall expressly exclude those consequential damages incurred by Landlord in connection with (i) the holdover of the Premises by Tenant after the expiration or earlier termination of this Lease, or (ii) the contamination of the Premises or any property

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resulting from the presence or use of Hazardous Materials caused or permitted by Tenant or Tenant’s Agents.

     40. Financial Statements. Within ten (10) days after Landlord’s request, Tenant shall deliver to Landlord the then current audited financial statements of Tenant (including interim periods following the end of the last fiscal year for which annual statements are available), prepared or compiled by a certified public accountant, including a balance sheet and profit and loss statement for the most recent prior year, all prepared in accordance with generally accepted accounting principles consistently applied. For so long as Tenant is a Publicly Company, Tenant’s obligations under this Paragraph 40 may be satisfied by the financial information that is disclosed in the publicly available 10K and 10Q reports.

     41. Rules and Regulations. Tenant shall comply with such reasonable rules and regulations as Landlord may adopt from time to time for the orderly and proper operation of the Building and the Project. Such rules may include but shall not be limited to the following: (a) restriction of employee parking to a limited, designated area or areas; and (b) regulation of the removal, storage and disposal of Tenant’s refuse and other rubbish. The then current rules and regulations shall be binding upon Tenant upon delivery of a copy of them to Tenant. Landlord shall not be responsible to Tenant for the failure of any other person to observe and abide by any of said rules and regulations. Landlord’s current rules and regulations are attached to this Lease as Exhibit D. Notwithstanding anything to the contrary contained in this Paragraph, if any future modification, amendment or supplement to the Rules or Regulations are in conflict with any term, covenant or condition of this Lease, then this Lease shall prevail. In the event any other tenant or other occupant of the Project fails to comply with the Rules and Regulations, and such non-compliance unreasonably interferes with Tenant’s use of the Premises, then Landlord shall use commercially reasonable efforts, following a written request from Tenant, to enforce such Rules and Regulations against other tenants of the Building; provided, however, that Landlord shall not be responsible to Tenant for the failure of any other person to observe and abide by any of said Rules and Regulations. The Rules and Regulations shall be uniformly applied without discrimination; provided, however, that nothing contained herein shall prevent Landlord from waiving any of the Rules and Regulations for individual tenants in the exercise of its good faith business judgment, any such waiver shall not waive the applicability or enforceability of such rule or regulation as to any other tenant.

     42. Mortgagee Protection.

          (a) Modifications for Lender. If, in connection with obtaining financing for the Project or any portion thereof, Landlord’s lender shall request reasonable modifications to this Lease, Tenant shall not unreasonably withhold, delay or defer its consent to such modifications, provided that such modifications do not adversely affect Tenant’s rights or increase Tenant’s obligations under this Lease.

          (b) Rights to Cure. Tenant shall give to any trust deed or mortgage holder (“Holder”), by the method provided for in Paragraph 33 above, at the same time as it is given to Landlord, a copy of any notice of default given to Landlord, provided that, prior to such notice, Tenant has been notified, in writing (by way of notice of assignment of rents and leases, or otherwise) of the address of such Holder. Tenant further agrees that if Landlord shall have failed

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to cure such default within the time provided for in this Lease, then the Holder shall have an additional twenty (20) days after expiration of such period, or after receipt of such notice from Tenant (if such notice to the Holder is required by this Paragraph 42(b)), whichever shall last occur within which to cure such default or if such default cannot be cured within that time, then such additional time as may be necessary if within such twenty (20) days, any Holder has commenced and is diligently pursuing the remedies necessary to cure such default (including, but not limited to, commencement of foreclosure proceedings, if necessary to effect such cure) and actually completes such cure within sixty (60) days after receipt of such written notice, in which event this Lease shall not be terminated.

     43. Parking.

          (a) Provided that Tenant shall not then be in Default under the terms and conditions of the Lease; and provided, further, that Tenant shall comply with and abide by Landlord’s reasonable parking rules and regulations from time to time in effect, Tenant shall have a license to use for the parking of its employees’ and Visitors’ standard size passenger automobiles, pick-up trucks, vans and SUVs the number of non exclusive parking spaces set forth in the Basic Lease Information in the Parking Areas; provided, however, that the number of parking spaces allocated to Tenant hereunder shall be reduced on a proportionate basis in the event any of the parking spaces in the Parking Areas are taken or otherwise eliminated as a result of any Condemnation (as hereinafter defined) or casualty event affecting such Parking Areas. All spaces will be on a first-come, first-served basis in common with other tenants of and visitors to the Project in parking spaces provided by Landlord from time to time in the Project’s Parking Areas. Landlord shall designate the number of Designated Visitor Parking Spaces as set forth in the Basic Lease Information as Visitor parking for the Building in the front area of the Building, but otherwise in an area reasonably selected by Landlord. Tenant’s license to use the parking spaces provided for herein shall be subject to such reasonable terms, conditions, rules and regulations as Landlord or the operator of the Parking Area may impose from time to time, except Tenant shall not be required to pay any parking charge.

          (b) Each vehicle shall, at Landlord’s option to be exercised from time to time, bear a permanently affixed and visible identification sticker to be provided by Landlord. Tenant shall not and shall not permit its Agents and Visitors to park any vehicles in locations other than those specifically designated by Landlord for Tenant’s use. The license granted hereunder is for self-service parking only and does not include additional rights or services. Neither Landlord nor its Agents shall be liable for: (i) loss or damage to any vehicle or other personal property parked or located upon or within such parking spaces or any Parking Areas whether pursuant to this license or otherwise and whether caused by fire, theft, explosion, strikes, riots or any other cause whatsoever; or (ii) injury to or death of any person in, about or around such parking spaces or any Parking Areas or any vehicles parking therein or in proximity thereto whether caused by fire, theft, assault, explosion, riot or any other cause whatsoever and Tenant hereby waives any claim for or in respect to the above and against all claims or liabilities arising out of loss or damage to property or injury to or death of persons, or both, relating to any of the foregoing, except to the extent caused by Landlord’s gross negligence or willful misconduct. Tenant shall not assign any of its rights hereunder and in the event an attempted assignment is made, it shall be void.

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          (c) Visitors, clients and/or customers (collectively, “Visitors”) to the Project and the Premises shall park automobiles or other vehicles only in areas designated by Landlord from time to time as being for the use of such Visitors and Tenant hereby agrees to ask its Visitors to park only in the areas designated by Landlord from time to time for the use of Tenant’s Visitors.

     If any tax, surcharge or fee is at any time imposed by any governmental authority upon or with respect to parking or vehicles parking in the parking spaces referred to herein, Tenant shall pay such tax, surcharge or fee as Additional Rent, such payments to be made in advance and from time to time as required by Landlord (except that they shall be paid monthly with Base Rent payments if permitted by the governmental authority).

     In addition to any other rights or remedies available to Landlord, if Tenant parks trucks or trailers in violation of this Paragraph 43, and fails to remove same within one (1) business day after notice from Landlord, Landlord shall have the right to charge Tenant a parking charge equal to $100.00 per day per truck or trailer. Landlord’s election to charge such a fee shall not be deemed to be a consent by Landlord to such parking, and Tenant shall remain obligated to remove such trucks and trailers in accordance with Landlord’s notice.

     44. Entire Agreement. This Lease, including the Exhibits and any Addenda attached hereto, which are hereby incorporated herein by this reference, contains the entire agreement of the parties hereto, and no representations, inducements, promises or agreements, oral or otherwise, between the parties, not embodied herein or therein, shall be of any force and effect. If there is more than one Tenant, the obligations hereunder imposed shall be joint and several.

     45. Interest. Any installment of Rent and any other sum due from Tenant under this Lease which is not received by Landlord within ten (10) days from when the same is due shall bear interest from the date such payment was originally due under this Lease until paid at the lesser of (a) an annual rate equal to the maximum rate of interest permitted by law, or (b) an annual rate equal to twelve percent (12%) per annum. Payment of such interest shall not excuse or cure any Default by Tenant. In addition, Tenant shall pay all costs and attorneys’ fees incurred by Landlord in collection of such amounts.

     46. Construction. This Lease shall be construed and interpreted in accordance with the laws of the State where the Project is located. No rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall be employed in the interpretation of this Lease, including the Exhibits attached hereto. All captions in this Lease are for reference only and shall not be used in the interpretation of this Lease. Whenever required by the context of this Lease, the singular shall include the plural, the masculine shall include the feminine, and vice versa. If any provision of this Lease shall be determined to be illegal or unenforceable, such determination shall not affect any other provision of this Lease and all such other provisions shall remain in full force and effect.

     47. Representations and Warranties of Tenant. Tenant (and, if Tenant is a corporation, partnership, limited liability company or other legal entity, such corporation, partnership, limited liability company or entity) hereby makes the following representations and warranties, each of which is material and being relied upon by Landlord, is true in all respects as of the date of this Lease, and shall survive the expiration or termination of the Lease. Tenant

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shall re-certify such representations to Landlord periodically, upon Landlord’s reasonable request.

          (a) If Tenant is an entity, Tenant is duly organized, validly existing and in good standing under the laws of the state of its organization and the persons executing this Lease on behalf of Tenant have the full right and authority to execute this Lease on behalf of Tenant and to bind Tenant without the consent or approval of any other person or entity. Tenant has full power, capacity, authority and legal right to execute and deliver this Lease and to perform all of its obligations hereunder. This Lease is a legal, valid and binding obligation of Tenant, enforceable in accordance with its terms.

          (b) Tenant has not (i) made a general assignment for the benefit of creditors, (ii) filed any voluntary petition in bankruptcy or suffered the filing of an involuntary petition by any creditors, (iii) suffered the appointment of a receiver to take possession of all or substantially all of its assets, (iv) suffered the attachment or other judicial seizure of all or substantially all of its assets, (v) admitted in writing its inability to pay its debts as they come due, or (vi) made an offer of settlement, extension or composition to its creditors generally.

          (c) (i) Tenant is not in violation of any Anti-Terrorism Law;

               (ii) To the best of its knowledge neither Tenant or any holder of any direct or indirect equitable, legal or beneficial interest in Tenant is, as of the date hereof:

               (A) conducting any business or engaging in any transaction or dealing with any Prohibited Person, or any “forbidden entity” (as defined in Illinois Public Act 094-0079), including the governments of Cuba, Iran, North Korea, Myanmar, Sudan, Syria and Venezuela and, including the making or receiving of any contribution of funds, goods or services to or for the benefit of any Prohibited Person or forbidden entity;

               (B) dealing in, or otherwise engaging in any transaction relating to, any property or interests in property blocked pursuant to Executive Order No. 13224; or

               (C) engaging in or conspiring to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate any of the prohibitions set forth in, any Anti-Terrorism Law; and

               (iii) Neither Tenant nor any of its affiliates, officers, directors, shareholders, members or lease guarantor, as applicable, is a Prohibited Person.

     If at any time any of these representations becomes false, then it shall be considered a material default under this Lease.

     As used herein, “Anti-Terrorism Law” is defined as any law relating to terrorism, anti-terrorism, money-laundering or anti-money laundering activities, including, without limitation, the United States Bank Secrecy Act, the United States Money Laundering Control Act of 1986, Executive Order No. 13224, Title 3 of the USA Patriot Act, Illinois Public Act 094-0079, and any regulations promulgated under any of them. As used herein, “Executive Order No. 13224” is defined as Executive Order No. 13224 on Terrorist Financing effective September 24, 2001, and

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relating to “Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism,” as may be amended from time to time. “Prohibited Person” is defined as (i) a person or entity that is listed in the Annex to Executive Order No. 13224, or a person or entity owned or controlled by an entity that is listed in the Annex to Executive Order No. 13224; (ii) a person or entity with whom Landlord is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law; or (iii) a person or entity that is named as a “specially designated national and blocked person” on the most current list published by the U.S. Treasury Department Office of Foreign Assets Control at its official website, http://www.treas.gov/ofac/t11sdn.pdf or at any replacement website or other official publication of such list. “USA Patriot Act” is defined as the “Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001” (Public Law 107-56), as may be amended from time to time.

     48. Name of Building. If Landlord chooses to change the name or address of the Building and/or the Project, such change shall not affect in any way Tenant’s obligations under this Lease, and, except for the name or address change, all terms and conditions of this Lease shall remain in full force and effect; provided that Landlord must obtain Tenant’s prior written consent before changing the name of the Building. Such name or address change shall not require a formal amendment to this Lease, but shall be effective upon Tenant’s receipt of written notification from Landlord of said change and Tenant providing written notice approving any such name change for the Building.

     49. Renewal Option (with FMV Rent).

          (a) Exercise of Options. Provided Tenant is not in Default (beyond applicable notice and grace periods) pursuant to any of the terms and conditions of this Lease, at the date of both the Extension Notice and the effective date of the Option, Tenant shall have the option (the “Option”) to renew this Lease for an additional five (5) year period (the “Extension Term”) for the period commencing on the date following the Expiration Date upon the terms and conditions contained in this Paragraph 49. To exercise the Option, Tenant shall give Landlord notice (the “Extension Notice”) of intent to exercise said Option not more than twelve (12) nor less than nine (9) months prior to the date on which the Extension Term which is the subject of the notice will commence. The notice shall be given as provided in Paragraph 33 hereof. In the event Tenant exercises the Option, this Lease will terminate in its entirety at the end of the Extension Term and Tenant will have no further option to renew or extend the Term of this Lease.

          (b) Procedures for Determining Prevailing Market Rate.

               (i) If Tenant timely exercises the Extension Option, not later than [six (6)] months prior to the commencement of the Extension Term, Landlord shall deliver to Tenant a good faith written proposal of the Prevailing Market Rate for the Premises for the Extension Term. Within thirty (30) days after receipt of Landlord’s proposal, Tenant shall notify Landlord in writing that (A) Tenant accepts Landlord’s proposal or (B) Tenant rejects Landlord’s proposal. If Tenant does not give Landlord a timely notice in response to Landlord’s proposal, Landlord’s proposal of Prevailing Market Rate for the Extension Term shall be deemed rejected by Tenant.

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               (ii) If Tenant timely rejects Landlord’s proposal, Landlord and Tenant shall first negotiate in good faith in an attempt to agree upon the Prevailing Market Rate for the Extension Term. If Landlord and Tenant are able to agree within thirty (30) days following the earlier of (A) Landlord’s receipt of Tenant’s notice rejecting Landlord’s proposal or (B) the expiration of the thirty (30) day period referred to in subparagraph (a) above (the “Negotiation Period”), such agreement shall constitute a determination of Prevailing Market Rate for purposes of this Article. If Landlord and Tenant are unable to agree upon the Prevailing Market Rate during the Negotiation Period, then within thirty (30) days after expiration of the Negotiation Period, the parties shall meet and concurrently deliver to each other their respective written estimates of the Prevailing Market Rate for the Extension Term, supported by the reasons therefore (respectively, “Landlord’s Determination” and “Tenant’s Determination”). Landlord’s Determination may be more or less than its initial proposal of Prevailing Market Rate. If either party fails to deliver its Determination in a timely manner, then the Prevailing Market Rate shall be the amount specified by the other party. If the higher of such Determinations is not more than one hundred five percent (105%) of the lower of such Determinations, then the Prevailing Market Rate shall be the average of the two Determinations. If the Prevailing Market Rate is not resolved by exchange of the Determinations, the Prevailing Market Rate shall be determined as follows, each party being bound to its Determination and such Determinations constituting the only two choices available to the Appraisal Panel (as hereinafter defined).

               (iii) Within thirty (30) days after the parties exchange Landlord’s and Tenant’s Determinations, the parties shall each appoint a neutral and impartial appraiser who shall be certified as an MAI or ASA appraiser and shall have at least ten (10) years’ experience, immediately prior to his or her appointment, as a real estate appraiser of office properties in the City and County where the Project is located. For purposes hereof, an “MAI” appraiser means an individual who holds an MAI designation conferred by, and is an independent member of, the American Institute of Real Estate Appraisers (or its successor organization, or, if there is no successor organization, the organization and designation most similar), and an “ASA” appraiser means an individual who holds the Senior Member designation conferred by, and is an independent member of, the American Society of Appraisers (or its successor organization, or, if there is no successor organization, the organization and designation most similar). If either Landlord or Tenant fails to appoint an appraiser within said thirty (30) day period, the Prevailing Market Rate for the Extension Term shall be the Determination of the other party who timely appointed an appraiser.

     Landlord’s and Tenant’s appraisers shall work together in good faith to appoint a neutral or impartial third party appraiser within fifteen (15) days, and notify both Landlord and Tenant of such selection. The three appraisers shall then work together in good faith to decide which of the two Determinations more closely reflects the Prevailing Market Rate of the Premises for the Extension Term. The Determination selected by such appraisers shall be binding upon Landlord and Tenant. If all three appraisers cannot agree upon which of the two Determinations more closely reflects the Prevailing Market Rate within forty-five (45) days, the decision of a majority of the appraisers shall prevail.

               (iv) Within five (5) days following notification of the identity of the third appraiser, Landlord and Tenant shall submit copies of Landlord’s Determination and Tenant’s Determination to the third appraiser. The three appraisers are referred to herein as the “Appraisal

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Panel.” The Appraisal Panel, if it so elects, may conduct a hearing, at which Landlord and Tenant may each make supplemental oral and/or written presentations, with an opportunity for rebuttal by the other party and for questioning by the members of the Appraisal Panel. Within forty-five (45) days following the appointment of the third appraiser, the Appraisal Panel, by majority vote, shall select either Landlord’s Determination or Tenant’s Determination as the Prevailing Market Rate of the Premises for the Extension Term, and shall have no right to propose a middle ground or to modify either of the two proposals or the provisions of this Lease. The decision of the Appraisal Panel shall be final and binding upon the parties, and may be enforced in accordance with the provisions of California law. In the event of the failure, refusal or inability of any member of the Appraisal Panel to act, a successor shall be appointed in the manner that applied to the selection of the member being replaced.

               (v) Each party shall pay the fees and expenses of the appraiser appointed by such party, and one-half of the fees and expenses of the third appraiser and the expenses incident to the proceedings of the Appraisal Panel (excluding attorneys’ fees and similar expenses of the parties which shall be borne separately by each of the parties).

          (c) Prevailing Market Rate. As used in this Lease, the phrase “Prevailing Market Rate” means the amount that a landlord under no compulsion to lease the Premises, and a tenant under no compulsion to lease the Premises, would agree upon at arm’s length as Base Rent for the Premises for the Extension Term, as of the commencement of the Extension Term. The Prevailing Market Rate shall be based upon non-sublease, non-encumbered, non-equity lease transactions recently entered into for space in the Building and in Comparable Buildings (“Comparison Leases”) and may include periodic increases. Rental rates payable under Comparison Leases shall be adjusted to account for variations between this Lease and the Comparison Leases with respect to: (i) the length of the Extension Term compared to the lease term of the Comparison Leases; (ii) rental structure, including additional rent, and taking into consideration any “base year” or “expense stops”; (iii) the size of the Premises compared to the size of the premises under the Comparison Leases; (iv) utility, location, number of docks and efficiencies of the Premises compared to the premises under the Comparison Leases; (v) the age and quality of construction of the Building; (vi) the value of existing leasehold improvements to Tenant; and (vii) the financial condition and credit history of Tenant compared to the tenants under the Comparison Leases. In determining the Prevailing Market Rate, no consideration shall be given to (i) any rental abatement period granted to tenants in Comparison Leases in connection with the design and construction of tenant improvements, (ii) whether Landlord or the landlords under Comparison Leases are paying real estate brokerage commissions in connection with Tenant’s exercise of the Extension Option or in connection with the Comparison Leases, and (iii) moving allowances paid. For purposes of this Article, (“Comparable Buildings”) shall mean comparable class two story office/R&D buildings in the Sunnyvale market area.

          (d) This option is personal to the original Tenant under the Lease or any Affiliate that has been assigned Tenant’s rights under this Lease.

     50. Security.

          (a) While Landlord may in its sole and absolute discretion, engage security personnel to patrol the Building or the Project, Landlord is not providing any security services with respect

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to the Premises, and Landlord shall not be liable to Tenant for, and Tenant waives any claim against Landlord with respect to, any bodily injury, loss by theft or any other damage suffered or incurred by Tenant or Tenant’s employees or Visitors in connection with any unauthorized entry into the Premises or any other breach of security with respect to the Premises, the Building or the Project.

          (b) Tenant hereby agrees to the exercise by Landlord and Landlord’s Agents, within their sole discretion, of such security measures as, but not limited to, the evacuation of the Premises, the Building or the Project for cause, suspected cause or for drill purposes, the denial of access to the Premises, the Building or the Project and other related actions that it deems necessary to prevent any threat of property damage or bodily injury. The exercise of such security measures by Landlord and Landlord’s Agents, and the resulting interruption of service and cessation of Tenant’s business, if any, shall not be deemed an eviction or disturbance of Tenant’s use and possession of the Premises, or any part thereof, or render Landlord or Landlord’s Agents liable to Tenant for any resulting damages or relieve Tenant from Tenant’s obligations under this Lease.

     51. Judicial Reference.

          (a) This Lease shall be construed and enforced in accordance with the laws of the State of California. Landlord and Tenant agree that, other than an action by Landlord to obtain possession of the Premises or any action which seeks relief which can only be obtained by court proceeding, any action or proceeding by either of them against the other arising out of or in connection with this Lease, Tenant’s use or occupancy of the Premises, or any claim of injury or damage occurring in or about the Building or the Premises shall, upon the motion of either party, be submitted to general judicial reference pursuant to California Code of Civil Procedure Sections 638 et seq. or any successor statutes thereto. The parties shall cooperate in good faith to ensure that all necessary and appropriate parties are included in the judicial reference proceeding. The general referee shall have the authority to try all issues, whether of fact or law, and to report a statement of decision to the court. Landlord and Tenant shall use the procedures adopted by Judicial Arbitration and Mediation Services/Endispute (“JAMS”) for judicial reference (or any other entity offering judicial reference dispute resolution procedures as may be mutually acceptable to the parties), provided that the following rules and procedures shall apply in all cases unless the parties agree otherwise:

               (i) The proceedings shall be heard in the County where the Project is located;

               (ii) The referee must be a retired judge or a licensed attorney with substantial experience in relevant real estate matters;

               (iii) Any dispute regarding the selection of the referee shall be resolved by JAMS or the entity providing the reference services, or, if no entity is involved, by the court with appropriate jurisdiction;

               (iv) The referee may require one or more pre-hearing conferences;

               (v) The parties shall be entitled to discovery, and the referee shall oversee discovery and may enforce all discovery orders in the same manner as any trial court judge;

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               (vi) A stenographic record of the trial shall be made, provided that the record shall remain confidential except as may be necessary for post-hearing motions and any appeals;

               (vii) The referee’s statement of decision shall contain findings of fact and conclusions of law to the extent applicable; and

               (viii) The referee shall have the authority to rule on all post-hearing motions in the same manner as a trial judge.

     The statement of decision of the referee upon all of the issues considered by the referee shall be binding upon the parties, and upon filing of the statement of decision with the clerk of the court, or with the judge where there is no clerk, judgment may be entered thereon. The decision of the referee shall be appealable as if rendered by the court. This provision shall in no way be construed to limit any valid cause of action which may be brought by any of the parties.

     If Landlord commences any summary proceedings or action for non-payment of rent, Tenant shall not interpose any counterclaim of any nature or description (unless such counterclaim shall be mandatory) in any such proceeding or action, and any such counterclaim shall be relegated to an independent action at law. In addition, in any action, proceeding or counterclaim arising in connection with this Lease, Landlord and Tenant hereby (i) subject to the foregoing provisions of this Paragraph 51, waive any objection to venue in the county in which the Project is located, and consent to personal jurisdiction of the courts of the State of California, and (ii) consent to service of process by any means authorized by California law. The provisions of this Paragraph 51 shall survive the expiration of the lease term or earlier termination of this Lease.

          (b) Landlord and Tenant hereby waive any rights they may have in the selection of venue with respect to any action or proceeding (i) brought by Landlord, Tenant, or any other party, relating to (A) this Lease and/or any understandings or prior dealings between the parties hereto, or (B) the Premises, the Building or the Project or any part thereof, or (ii) to which Landlord is a party. Landlord and Tenant hereby stipulate and agree that the venue of any such suit shall be in Santa Clara County.

     52. Recordation. Neither this Lease, nor any memorandum, affidavit or other writing with respect thereto, shall be recorded by Tenant or by any one acting through, under or on behalf of Tenant, and the recording thereof in violation of this provision shall make this Lease null and void at Landlord’s election.

     53. Force Majeure. Any prevention, delay or stoppage due to strikes, lockouts, labor disputes, acts of God, inability to obtain services, labor, or materials or reasonable substitutes therefor, governmental actions, civil commotions, fire or other casualty, and other causes beyond the reasonable control of the party obligated to perform, except with respect to the obligations imposed with regard to Rent and other charges to be paid by Tenant or Landlord pursuant to this Lease (collectively, the “Force Majeure”), notwithstanding anything to the contrary contained in this Lease, shall excuse the performance of such party for a period equal to any such prevention,

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delay or stoppage and therefore, if this Lease specifies a time period for performance of an obligation of either party, that time period shall be extended by the period of any delay in such party’s performance cause by a Force Majeure.

     54. Acceptance. This Lease shall only become effective and binding upon full execution hereof by Landlord and delivery of a signed copy to Tenant and Landlord’s receipt of any Security Deposit.

     55. Furniture.

          (a) During the Term of this Lease, Tenant shall have the right, at no cost to Tenant, to use the furniture that was previously located within the Premises and as identified on Exhibit H hereto (collectively, the “Furniture”), subject to the terms and conditions contained in this Paragraph 55. Landlord shall cause the Furniture to be installed within the Premises, but Landlord shall have no obligation for any wiring or cabling to the Furniture, all of which shall be performed by Tenant in accordance with the terms of this Lease.

          (b) Tenant shall: (i) at its sole expense, repair and maintain each item of Furniture in the same condition as when received, ordinary wear and tear excepted, and in compliance with all applicable Laws and all instructions and recommendations as to the repair and maintenance of such item of Furniture issued at any time by the vendor and/or manufacturer thereof; (ii) maintain conspicuously on any of Furniture such labels, plates, decals or other markings as Landlord may reasonably place thereon, stating that Landlord is the owner of the same; (iii) furnish to Landlord such information concerning the condition, location, use and operation of the Furniture as Landlord reasonably may reasonable request; (iv) make no additions, alterations, modifications or improvements to any item of Furniture without Landlord’s prior written consent, which shall not be unreasonably withheld; (v) not, directly or indirectly, create, incur or permit to exist any lien, encumbrance, mortgage, pledge, attachment or security interest on or with respect to the Furniture ; and (vi) use the Furniture solely in the conduct of Tenant’s business and keep the Furniture within the Premises.

          (c) TENANT ACKNOWLEDGES THAT LANDLORD IS NOT THE MANUFACTURER OR SUPPLIER OF THE FURNITURE, NOR THE AGENT THEREOF, AND THAT LANDLORD MAKES NO EXPRESS OR IMPLIED REPRESENTATIONS OR WARRANTIES AS TO ANY MATTER WHATSOEVER IN CONNECTION WITH THE FURNITURE, INCLUDING WITHOUT LIMITATION, THE MERCHANTABILITY OF THE FURNITURE, ITS FITNESS FOR A PARTICULAR PURPOSE, ITS DESIGN OR CONDITION, ITS CAPACITY OR DURABILITY, OR THE QUALITY OF THE MATERIAL OR WORKMANSHIP IN THE MANUFACTURE OR ASSEMBLY OF THE FURNITURE. Landlord is not responsible for any repairs or service to Furniture , defects therein or failures in the operation thereof. Landlord shall have no liability in connection with or arising out of the furnishing, performance or use of the Furniture or, in any event, any special, indirect, incidental or consequential damages of any character, including, without limitation, loss of use of production facilities or equipment, loss of profits, property damage or lost production, whether suffered by Tenant or any third party.

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     56. Miscellaneous. The words “include,” “includes,” and “including” shall be deemed to be followed by the phrase “without limitation.” The phrase “business days” means Monday through Friday, excluding holidays. If there shall be more than one person or entity comprising Tenant, the act of or notice from, or notice or refund to, or the signature of, any one or more of them, in connection with any matter arising under this Lease, including, but not limited to, any renewal, extension, expiration, termination or modification of this Lease, shall be binding upon each and all of the persons and entities comprising Tenant with the same force and effect as if each and all of them had so acted or so given or received such notice or refund or so signed.

     In Witness Whereof, Landlord and Tenant have executed and delivered this Lease as of the Lease Date specified in the Basic Lease Information.

Landlord:	Kifer Tech Investors llc, a Delaware limited liability company
	By:	TPI Equity REIT Operating Partnership LP, its sole member
		By:	TPI Equity REIT Operating Partnership GP llc, its general partner
			By:	/s/ THOMAS ENGER
			Name:	Thomas Enger
			Title:	Executive Director

Tenant:	Trident Microsystems, Inc., a Delaware corporation
	By:	/s/ PETE J. MANGAN
	Name:	Pete J. Mangan
	Title:	CFO
	By:	/s/ DAVID L. TEICHMANN
	Name:	David L. Teichmann
	Title:	Executive Vice President, General Counsel and Corporate Secretary Trident Microsystems, Inc.

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Exhibit A

Diagram of the Premises

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Exhibit B

Tenant Work Letter

     This Exhibit is attached to and made a part of the Lease Agreement (the “Lease”) by and between Kifer Tech Investors llc, a Delaware limited liability company(“Landlord”) and Trident Microsystems, Inc., a Delaware corporation (“Tenant”) for certain premises located at 1170 Kifer Road, Sunnyvale, California (the “Premises”).

     This Tenant Work Letter shall set forth the terms and conditions relating to the construction of improvements to the Premises. This Tenant Work Letter is essentially organized chronologically and addresses the issues of the construction within the Premises, in sequence, as such issues will arise during such construction. All references in this Tenant Work Letter to Paragraphs of “this Lease” shall mean the relevant portions of the Lease, and all references in this Tenant Work Letter to Sections of “this Tenant Work Letter” shall mean the relevant portions of Sections 1 through 5 of this Tenant Work Letter.

1. Delivery of the Premises.

     1.1 Delivery. Subject to Paragraph 8(b) of the Lease, Landlord shall deliver the Premises promptly following the full execution and unconditional delivery of this Lease.

     1.2 Condition. Subject to Paragraph 10(b) of the Lease, Landlord shall deliver the Premises in their currently existing, “as-is” condition.

2. Tenant Improvements

     2.1 Tenant Improvement Allowance. Tenant shall be entitled to a one-time tenant improvement allowance (the “Tenant Improvement Allowance”) in the amount of seven dollars ($7.00) for each rentable square foot of the Premises for the costs relating to the initial design (including consultant and project management fees), permitting and construction of Tenant’s improvements which are affixed to the Premises (collectively, the “Tenant Improvements”) and for the “Tenant Improvement Allowance Items,” as that term is defined in Section 2.2(a) below. In no event shall Landlord be obligated to make disbursements pursuant to this Tenant Work Letter in a total amount which exceeds the Tenant Improvement Allowance. Tenant shall have no claim for any Tenant Improvement Allowance, and Landlord shall have no obligation to reimburse Tenant for any Tenant Improvement costs, that have not been requested by January 31, 2011, but such unused Tenant Improvement Allowance shall be available for a credit in accordance with Paragraph 2.2(d) of this Tenant Work Letter.

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     2.2 Disbursement of the Tenant Improvement Allowance.

          (a) Tenant Improvement Allowance Items. Except as otherwise set forth in this Tenant Work Letter, the Tenant Improvement Allowance shall be disbursed by Landlord only for the following items and costs (collectively the “Tenant Improvement Allowance Items”) and, except as otherwise specifically and expressly provided in this Tenant Work Letter, Landlord shall not deduct any other expenses from the Tenant Improvement Allowance. The Tenant Improvement Allowance Items shall consist of:

               (i) Payment of the fees and costs of the “Architect” and the “Engineers,” as those terms are defined in Section 3.1 of this Tenant Work Letter, costs paid to Tenant’s consultants in connection with the design, construction and move into the Premises and all related design and construction costs, including the fees and costs of Tenant’s project management consultants;

               (ii) The payment of plan check, permit and license fees relating to construction of the Tenant Improvements;

               (iii) The cost of construction of the Tenant Improvements, including, without limitation, testing and inspection costs, and trash removal costs, after hours utility usage, and contractors’ fees and general conditions;

               (iv) The cost of any changes in the base Building when such changes are required by the Construction Drawings (including if such changes are due to the fact that such work is prepared on an unoccupied basis) or to comply with Laws, such cost to include all direct architectural and/or engineering fees and expenses incurred in connection therewith;

               (v) The cost of any changes to the Construction Drawings or Tenant Improvements required by all applicable building codes; and

               (vi) any applicable sales and use taxes; and

               (vii) the cost of furniture and fixtures installed in the Premises, not to exceed two dollars ($2.00) for each rentable square foot of the Premises.

          (b) Disbursement of Tenant Improvement Allowance. During the construction of the Tenant Improvements, Landlord shall make monthly disbursements of the Tenant Improvement Allowance for the benefit of Tenant and shall authorize the release of monies for the benefit of Tenant as follows.

               (i) Monthly Disbursements. Once each month on a day designated by Landlord or if no date is designated by Landlord, then on the first Tuesday of each month (in either event, a “Submittal Date”) during the period from the date hereof through the construction of the Tenant Improvements, Tenant shall deliver to Landlord: (A) a request for payment of the “Contractor,” as that term is defined in Section 4.1 of this Tenant Work Letter, and/or to the “Architect” and/or to the “Engineers,” as such terms are defined in Section 3.1 below, and/or to Tenant’s various consultants or other persons or entities entitled to payment (or reimbursement to Tenant if Tenant has already paid the Contractor or other person or entity entitled to payment), approved by

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Tenant, in a form to be provided by Landlord, showing the schedule, by trade, of percentage of completion of the Tenant Improvements in the Premises, detailing the portion of the work completed; (B) invoices from all of Tenant’s Agents (hereinafter defined) for labor rendered and materials delivered to the Premises for the applicable payment period; (C) executed conditional mechanics’ lien releases from all of Tenant’s Agents which shall substantially comply with the appropriate provisions of California Civil Code Section 3262(d) or unconditional releases if appropriate; provided, however, that with respect to fees and expenses of the Architect, Engineers, or construction or project managers or other similar consultants, and/or any other pre-construction items for which the payment scheme set forth in items (A) through (C) above of this Tenant Work Letter, is not applicable (collectively, the “Non-Construction Allowance Items”), Tenant shall only be required to deliver to Landlord on or before the applicable Submittal Date, reasonable evidence of incurring the cost for the applicable Non-Construction Allowance Items (unless Landlord has received a preliminary notice in connection with such costs in which event conditional lien releases must be submitted in connection with such costs); and (D) all other information reasonably requested in good faith by Landlord. Tenant’s request for payment shall be deemed Tenant’s acceptance and approval of the work furnished and/or the materials supplied as set forth in Tenant’s payment request vis-à-vis Landlord. Within thirty (30) days following the Submittal Date, and assuming Landlord receives all of the information described in items (A) through (D) above, Landlord shall deliver a check to Tenant made jointly payable to Contractor and Tenant or if Tenant elects, to the Contractor, subcontractor, architect, engineer or consultant designated by Tenant and/or a separate check to Tenant where Tenant has provided evidence reasonably satisfactory to Landlord that Tenant has paid such Contractor (or other supplier of services or goods) accompanied when appropriate by unconditional lien releases, or any other provider of goods and services designated by Tenant to Landlord, and Tenant in payment of the lesser of: (1) the amounts so requested by Tenant, as set forth above in this Section 2.2(b)(i), less a ten percent (10%) retention (the aggregate amount of such retentions to be known as the “Final Retention”); provided, however, that no such retention shall be duplicative of the retention Tenant would otherwise withhold (but will not withhold) pursuant to its agreement with such Contractor and no such deduction shall be applicable to amounts due to Tenant’s consultants, the Architect, or the Engineer or for Non-Construction Allowance Items or other Tenant Improvement Allowance Items in connection with the payment of suppliers for materials delivered to the Premises and subcontractors for completing performance of their work substantially in advance of the completion of the Tenant Improvements pursuant to the Approved Construction Drawings, and (2) the balance of any remaining available portion of the Tenant Improvement Allowance (not including the Final Retention). In the event that Landlord or Tenant identifies any material non-compliance with the Approved Construction Drawings, or substandard work, Landlord or Tenant as appropriate shall be provided a detailed statement identifying such material non-compliance or substandard work by the party claiming the same, and Tenant shall cause such work to be corrected so that such work is no longer substandard. Such procedure shall also be applicable in connection with the payment of the Final Retention. Landlord’s payment of such amounts shall not be deemed Landlord’s approval or acceptance of the work furnished or materials supplied as set forth in Tenant’s payment request. If Tenant receives a check payable to anyone other than solely to Tenant, Tenant may return such check to Landlord and receive a replacement check made payable only to Tenant within ten (10) business days, if Tenant provides the releases and evidence to the extent required above to receive a check payable solely to Tenant.

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               (ii) Final Retention. A check for the Final Retention payable jointly to Tenant and Contractor (or payable solely to Tenant if Contractor is no longer owed any money by Tenant for work performed in the Premises) shall be delivered by Landlord to Tenant following the completion of construction of the Premises, provided that (A) Tenant delivers to Landlord properly executed mechanics lien releases in compliance with both California Civil Code Section 3262(d)(2) and either Section 3262(d)(3) or Section 3262(d)(4), (B) Architect delivers to Landlord a certificate, in a form reasonably acceptable to Landlord, certifying that the construction of the Tenant Improvements in the Premises has been substantially completed in accordance with the terms of this Tenant Work Letter, and (C) Tenant fulfills its obligations pursuant to Section 4.3 of this Tenant Work Letter.

               (iii) Other Terms. Landlord shall only be obligated to make disbursements from the Tenant Improvement Allowance to the extent costs are incurred by Tenant for Tenant Improvement Allowance Items or are otherwise expressly permitted hereunder.

          (c) Standard Tenant Improvement Package. The quality of Tenant Improvements shall be equal to, or of greater quality than, those commonly found in first class office and R&D buildings in the greater San Francisco Bay Area (the “Specifications”).

          (d) Unused Allowance. Upon the completion of the Tenant Improvements, Tenant shall have the right, exercisable by written notice to Landlord following the twelfth (12th) month of the commencement of the Term, to elect to use the unused amount of the Tenant Improvement Allowance to offset Base Rent and other sums next becoming due under this Lease, not to exceed two dollars ($2.00) for each rentable square foot of the Premises and such credit for the unused Tenant Improvement Allowance shall be spread equally over the thirteenth (13th) through sixteenth (16th) months following the commencement of the Term (a credit of 1/4 of the unused Tenant Improvement Allowance shall be available for a credit each of these months).

3. Construction Drawings

     3.1 Selection of Architect/Construction Drawings. Tenant shall retain an architect/space planner approved by Landlord, which approval shall not be unreasonably withheld or delayed (the “Architect”) to prepare the “Construction Drawings,” as that term is defined in this Section 3. Tenant shall retain the engineering consultants approved by Landlord (the “Engineers”), which approval shall not be unreasonably withheld or delayed, to prepare all plans and engineering working drawings relating to the structural, mechanical, electrical, plumbing, HVAC, lifesafety, and sprinkler work in the Premises as part of the Tenant Improvements. The plans and drawings to be prepared by Architect and the Engineers hereunder shall be known collectively as the “Construction Drawings.” All Construction Drawings shall comply at a minimum with Landlord’s Specifications and shall be in a drawing format reasonably acceptable to Landlord. Landlord’s review of the Construction Drawings as set forth in this Section 3, shall be for its sole purpose and shall not imply Landlord’s review of the same, or obligate Landlord to review the same, for quality, design, code compliance or other like matters. Accordingly, notwithstanding that any Construction Drawings are reviewed by Landlord or its space planner, architect, engineers and consultants, and notwithstanding any advice or assistance which may be rendered to Tenant by Landlord or Landlord’s space planner, architect, engineers, and consultants, Landlord shall have no liability whatsoever in connection therewith, except to the

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extent that Landlord has specifically requested a modification to the Construction Drawings as a condition to Landlord’s approval of the Construction Drawings, and shall not be responsible for any omissions or errors contained in the Construction Drawings, and Tenant’s waiver and indemnity set forth in this Lease shall specifically apply to the Construction Drawings. Each time Landlord is granted the right to review, consent or approve the Construction Drawings or any component thereof (collectively, “Consent”), such Consent shall not be unreasonably withheld, conditioned or delayed.

     3.2 Final Space Plan. Tenant and the Architect shall prepare the final space plan for the Tenant Improvements (the “Final Space Plan”), and shall deliver the Final Space Plan to Landlord for Landlord’s approval. The Final Space Plan shall show all corridors, internal and external offices and partitions, and exiting. Landlord shall, within five (5) business days after Landlord’s receipt of the Final Space Plan (i) approve the Final Space Plan, (ii) approve the Final Space Plan subject to specified conditions to be complied with when the Final Working Drawings are submitted by Tenant to Landlord, or (iii) reasonably disapprove the Final Space Plan. If Landlord disapproves the Final Space Plan, Tenant may resubmit the Final Space Plan to Landlord at any time, and Landlord shall approve or disapprove of the resubmitted Final Space Plan, based upon the criteria set forth in this Section 3.2, within five (5) business days after Landlord receives such resubmitted Final Space Plan. Such procedures shall be repeated until the Final Space Plan is approved. The Final Space Plan may be provided by Tenant to Landlord in one or more stages and at one or more times and the time periods set forth herein shall apply to each portion submitted.

     3.3 Completion of Construction Drawings. Once Landlord has approved the Final Space Plan, Tenant, the Architect and the Engineers shall complete the Construction Drawings for the Premises in a form which is sufficient to obtain applicable permits and shall submit such Construction Drawings to Landlord for Landlord’s approval. Landlord shall, within ten (10) business days after Landlord’s receipt of the Construction Drawings, either (i) approve the Construction Drawings, which approval shall not be unreasonably withheld if the same are logical evolutions of the Final Space Plan and do not deviate in any material respect therefrom, (ii) approve the Construction Drawings subject to specified conditions which must be stated in a reasonably clear and complete manner to be satisfied by Tenant prior to submitting the Approved Construction Drawings for permits as set forth in Section 3.4 below of this Tenant Work Letter, or (iii) disapprove and return the Construction Drawings to Tenant with requested revisions. If Landlord disapproves the Construction Drawings, Tenant may resubmit the Construction Drawings to Landlord at any time, and Landlord shall approve or disapprove the resubmitted Construction Drawings, based upon the criteria set forth in this Section 3.3, within five (5) business days after Landlord receives such resubmitted Construction Drawings. Such procedure shall be repeated until the Construction Drawings are approved.

     3.4 Approved Construction Drawings. The Construction Drawings for the Tenant Improvements shall be approved by Landlord (the “Approved Construction Drawings”) prior to the commencement of construction of the Tenant Improvements. Tenant shall, at its sole cost and expense, cause to be obtained all applicable building permits required in connection with the construction of the Tenant Improvements (“Permits”). Tenant hereby agrees that neither Landlord nor Landlord’s consultants shall be responsible for obtaining any Permits or certificate of occupancy for the Premises and that obtaining the same shall be Tenant’s responsibility;

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provided, however, that Landlord shall cooperate at no cost to Landlord with Tenant in performing ministerial acts reasonably necessary to enable Tenant to obtain any such Permits or certificate of occupancy. No changes, modifications or alterations in the Approved Construction Drawings may be made without the prior written consent of Landlord pursuant to the terms of Section 3.5 below.

     3.5 Change Orders. In the event Tenant desires to change the Approved Construction Drawings, Tenant shall deliver notice (the “Drawing Change Notice”) of the same to Landlord, setting forth in detail the changes (the “Tenant Change”) Tenant desires to make to the Approved Construction Drawings. Landlord shall, within four (4) business days of receipt of a Drawing Change Notice, either (i) approve the Tenant Change, which approval shall not be unreasonably withheld if the same is consistent with the Final Space Plan or (ii) disapprove the Tenant Change and deliver a notice to Tenant specifying in reasonably sufficient detail the reasons for Landlord’s disapproval. Any additional costs which arise in connection with such Tenant Change shall be paid by Tenant.

4. Construction of the Tenant Improvements

     4.1 Tenant’s Selection of Contractors.

          (a) The Contractor. Tenant shall retain a licensed general contractor (the “Contractor”) pre-approved by Landlord, which approval shall not be unreasonably withheld or delayed, prior to Tenant causing the Contractor to construct the Tenant Improvements.

          (b) Tenant’s Agents. All major trade subcontractors and suppliers used by Tenant (such major trade subcontractors and material suppliers along with all other laborers, materialmen, and suppliers, and the Contractor to be known collectively as “Tenant’s Agents”) must be approved in writing by Landlord, which approval shall not be unreasonably withheld, conditioned or delayed, provided that, subject to the terms hereof, Tenant shall cause Landlord’s designated structural, mechanical and life safety subcontractors to be retained in connection with the Tenant Improvements. If Landlord does not approve any of Tenant’s proposed subcontractors, laborers, materialmen or suppliers, Tenant shall submit other proposed subcontractors, laborers, materialmen or suppliers for Landlord’s written approval. The Contractor and the Contractor’s subcontractors (collectively, “Tenant’s Contractors”) and their respective workers shall conduct their activities in and around the Premises, the Building and the Project in a harmonious relationship with all other subcontractors, laborers, materialmen and supplies at the Premises, the Building and the Project.

     4.2 Construction of Tenant Improvements by Tenant’s Agents.

          (a) Construction Contract. Prior to Tenant’s execution of the construction contract and general conditions with Contractor (the “Contract”), Tenant shall submit the Contract to Landlord for its approval, which approval shall not be unreasonably withheld or delayed. Prior to the commencement of the construction of the Tenant Improvements, and after Tenant has accepted all bids for the Tenant Improvements, Tenant shall provide Landlord with a detailed breakdown, by trade, of the final costs to be incurred or which have been incurred in connection

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with the design and construction of the Tenant Improvements to be performed by or at the direction of Tenant or the Contractor.

          (b) Tenant’s Agents.

               (i) Landlord’s General Conditions for Tenant’s Agents and Tenant Improvement Work. Tenant’s and Tenant’s Agent’s construction of the Tenant Improvements shall comply with the following: (A) the Tenant Improvements shall be constructed in conformance with the Approved Construction Drawings; (B) Tenant’s Contractors shall submit schedules of all work relating to the Tenant Improvements to Landlord and Landlord shall, within five (5) business days of receipt thereof, inform Tenant and Tenant’s Contractors of any changes which are reasonably necessary thereto in order to avoid interference with Landlord’s work or unreasonable disruption of existing tenants and Tenant’s Contractors shall adhere to such corrected schedule; and (C) Tenant shall abide by all construction guidelines and reasonable rules made by Landlord’s Project manager with respect to any matter, within reason, in connection with this Tenant Work Letter, including, without limitation, the construction of the Tenant Improvements.

               (ii) Indemnity. Tenant’s indemnity of Landlord as set forth, qualified and conditioned in this Lease shall also apply with respect to any and all costs, losses, damages, injuries and liabilities related in any way to any act or omission of Tenant or Tenant’s Agents, or anyone directly or indirectly employed by any of them, or in connection with Tenant’s non-payment of any amount arising out of the Tenant Improvements and/or Tenant’s disapproval of all or any portion of any request for payment. The waivers of subrogation set forth in this Lease pertaining to property damage shall be fully applicable to damage to property arising as a result of any work performed pursuant to the terms of this Tenant Work Letter.

               (iii) Requirements of Tenant’s Agents. Tenant’s Contractor shall guarantee to Tenant and for the benefit of Landlord that the portion of the Tenant Improvements for which it is responsible shall be free from any defects in workmanship and materials for a period of not less than one (1) year from the date of completion thereof. Tenant’s Contractor shall be responsible for the replacement or repair, without additional charge, of all work done or furnished in accordance with its contract that shall become defective within one (1) year after final completion. All such warranties or guarantees as to materials or workmanship of or with respect to the Tenant Improvements shall be contained in the Contract or subcontract and shall be written such that such guarantees or warranties shall inure to the benefit of both Landlord and Tenant, as their respective interests may appear, and can be directly enforced by either. Tenant covenants to give to Landlord any assignment or other assurances which may be necessary to effect such right of direct enforcement.

               (iv) Insurance Requirements.

               (A) General Coverages. All of Tenant’s Agents shall carry worker’s compensation insurance covering all of their respective employees, and shall also carry public liability insurance, including property damage, all with limits, in form and with companies as are required to be carried by Tenant as set forth in this Lease (provided that the limits of liability to be carried by Tenant’s Agents and Contractor, shall be in an amount

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which is customary for such respective Tenant’s Agents employed by tenants constructing improvements in the Comparable Buildings), and the policies therefor shall insure Landlord and Tenant, as their interests may appear, as well as the Contractor and subcontractors.

               (B) Special Coverages. Contractor shall carry “Builder’s All Risk” insurance, in an amount approved by Landlord but not more than the amount of the Contract, covering the construction of the Tenant Improvements, and such other insurance as Landlord may reasonably require, it being understood and agreed that the Tenant Improvements shall be insured by Tenant pursuant to this Lease immediately upon completion thereof. Such insurance shall be in amounts and shall include such extended coverage endorsements as may be reasonably required by Landlord (to the extent they are generally required by landlords of Comparable Buildings) and shall be in a form and with companies as are required to be carried by Tenant pursuant to the terms of this Lease.

               (C) General Terms. Certificates for all insurance carried pursuant to this Section 4.2(b)(iv) shall be delivered to Landlord before the commencement of construction of the Tenant Improvements and before the Contractor’s equipment is moved onto the Project. All such policies of insurance must contain a provision that the company writing said policy will give Landlord thirty (30) days’ prior notice of any cancellation or lapse of the effective date or any reduction in the amounts of such insurance. In the event that the Tenant Improvements are damaged by any cause during the course of the construction thereof and this Lease is not terminated, Tenant shall immediately repair the same at Tenant’s sole cost and expense. Tenant’s Agents shall maintain all of the foregoing insurance coverage in force until the completion of the Tenant Improvements. All such insurance relating to property, except Workers’ Compensation, maintained by Tenant’s Agents shall preclude subrogation claims by the insurer against anyone insured thereunder. Such insurance shall provide that it is primary insurance as respects the owner and that any other insurance maintained by Landlord is excess and noncontributing with the insurance required hereunder. The requirements for the foregoing insurance shall not derogate from the provisions for indemnification of Landlord by Tenant under Section 4.2(b)(ii) of this Tenant Work Letter and Tenant’s right with respect to the waiver of subrogation.

          (c) Governmental Compliance. The Tenant Improvements shall comply in all respects with the following: (i) all Laws; (ii) applicable standards of the American Insurance Association (formerly, the National Board of Fire Underwriters) and the National Electrical Code; and (iii) building material manufacturer’s specifications.

          (d) Inspection by Landlord. Landlord shall have the right to inspect the Tenant Improvements at all reasonable times; provided, however, that Landlord’s failure to inspect the Tenant Improvements shall in no event constitute a waiver of any of Landlord’s rights hereunder nor shall Landlord’s inspection of the Tenant Improvements constitute Landlord’s approval of the same. In the event that Landlord should disapprove any portion of the Tenant Improvements during an inspection, Landlord shall notify Tenant in writing within a reasonable time of such inspection of such disapproval and shall specify in reasonably sufficient detail the items disapproved. Any defects or deviations in, and/or disapprovals in accordance herewith by Landlord of, the Tenant Improvements shall be rectified by Tenant at Tenant’s expense and at no expense to Landlord; provided, however, that in the event Landlord determines that a defect or

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deviation exists or reasonably disapproves of any matter in connection with any portion of the Tenant Improvements, Landlord may, following notice to Tenant and a reasonable period of time for Tenant to cure, take such action as Landlord deems necessary to correct the same, at Tenant’s expense, and at no additional expense to Landlord, and without incurring any liability on Landlord’s part.

          (e) Meetings. Commencing upon the execution of this Lease, Tenant shall hold periodic meetings at a reasonable time, with the Architect and the Contractor regarding the progress of the preparation of Construction Drawings and the construction of the Tenant Improvements, which meetings shall be held at a location reasonably designated by Landlord, and Landlord and/or its agents shall receive prior notice of, and shall have the right to attend, all such meetings, and, upon Landlord’s request, certain of Tenant’s Agents shall attend such meetings. In addition, minutes shall be taken at all such meetings, a copy of which minutes shall be promptly delivered to Landlord. One such meeting each month shall include the review of Contractor’s current request for payment.

     4.3 Notice of Completion; Copy of Record Set of Plans. Within ten (10) days after completion of construction of the Tenant Improvements, Tenant shall prepare a Notice of Completion, which Landlord shall execute if factually correct, and Tenant shall cause such Notice of Completion to be recorded in the appropriate office of the county recorder in accordance with Section 3093 of the Civil Code of the State of California or any successor statute, and shall furnish a copy thereof to Landlord upon such recordation. If Tenant fails to do so, Landlord may execute and file the same on behalf of Tenant as Tenant’s agent for such purpose, at Tenant’s sole cost and expense. At the conclusion of construction, (i) Tenant shall cause the Architect and Contractor (A) to update the Approved Construction Drawings as necessary to reflect all changes made to the Approved Construction Drawings during the course of construction, (B) to certify to the best of their knowledge that the updated drawings are true and correct, which certification shall survive the expiration or termination of this Lease, and (C) to deliver to Landlord two (2) CD-ROMs of such updated Approved Construction Drawings, in CAD format, within thirty (30) days following issuance of a certificate of occupancy for the Premises, and (ii) Tenant shall deliver to Landlord a copy of all warranties, guaranties, and operating manuals and information relating to the improvements, equipment, and systems in the Premises.

5. Miscellaneous

     5.1 Tenant’s Representative. Tenant has designated [please provide] as its sole representative with respect to the matters set forth in this Tenant Work Letter, who shall have full authority and responsibility to act on behalf of the Tenant as required in this Tenant Work Letter.

     5.2 Landlord’s Representative. Landlord has designated [to be provided] as its sole representative with respect to the matters set forth in this Tenant Work Letter, who, until further notice to Tenant, shall have full authority and responsibility to act on behalf of the Landlord as required in this Tenant Work Letter.

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     5.3 Time of the Essence in This Tenant Work Letter. Unless otherwise indicated, all references herein to a “number of days” shall mean and refer to calendar days. If any item requiring approval is timely disapproved by Landlord, the procedure for preparation of the document and approval thereof shall be repeated until the document is approved by Landlord.

     5.4 Tenant’s Lease Default. Notwithstanding any terms to the contrary contained in this Lease, if Tenant is in Default of this Lease (including, without limitation, this Tenant Work Letter) at any time on or before the completion of the Tenant Improvements, then (i) in addition to all other rights and remedies granted to Landlord pursuant to the Lease, Landlord shall have the right to withhold payment of all or any portion of the Tenant Improvement Allowance and/or Landlord may cause Contractor to cease the construction of the Tenant Improvements (in which case, Tenant shall be responsible for any delay in the completion of the Tenant Improvements caused by such work stoppage), and (ii) all other obligations of Landlord under the terms of this Tenant Work Letter shall be suspended until such time as such default is cured pursuant to the terms of the Lease (in which case, Tenant shall be responsible for any delay in the completion of the Tenant Improvements caused by such inaction by Landlord). Notwithstanding the forgoing, if a default by Tenant is cured, forgiven or waived, Landlord’s suspended obligations shall be fully reinstated and resumed, effective immediately.

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Exhibit C

Commencement and Expiration Date Memorandum

Landlord:	Kifer Tech Investors llc
Tenant:	Trident Microsystems, Inc.
Lease Date:	March 5, 2010
Premises:	Located at

     Tenant hereby accepts the Premises as being in the condition required under the Lease, but subject to Landlord’s obligations under Paragraph 10(b) of the Lease.

     The Commencement Date of the Lease is hereby established as                     , 20___ and the Expiration Date is                     , 20___.

Tenant:	Trident Microsystems, Inc.,
	a Delaware corporation
	By:
	Name:
	Title:

Approved and Agreed:

Landlord:

Kifer Tech Investors llc,
a Delaware limited liability company

By:	TPI Equity REIT Operating Partnership LP,
	its sole member
	By:	TPI Equity REIT Operating Partnership GP llc,
		its general partner
		By:
		Name:
		Title:

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Exhibit D

Rules and Regulations

     This exhibit, entitled “Rules and Regulations,” is and shall constitute Exhibit D to the Lease Agreement, dated as of the Lease Date, by and between landlord and Tenant for the Premises. The terms and conditions of this Exhibit D are hereby incorporated into and are made a part of the Lease. Capitalized terms used, but not otherwise defined, in this Exhibit D have the meanings ascribed to such terms in the Lease.

     1. Tenant shall not use any method of heating or air conditioning other than that supplied by Landlord without the consent of Landlord.

     2. All window coverings installed by Tenant and visible from the outside of the building require the prior written approval of Landlord.

     3. Tenant shall not use, keep or permit to be used or kept any foul or noxious gas or substance or any flammable or combustible materials on or around the Premises, except to the extent that Tenant is permitted to use the same under the terms of Paragraph 32 of the Lease.

     4. Tenant shall not alter any lock or install any new locks or bolts on any door at the Premises without the prior consent of Landlord.

     5. Tenant shall park motor vehicles in parking areas designated by Landlord except for loading and unloading. During those periods of loading and unloading, Tenant shall not unreasonably interfere with traffic flow around the Building or the Project and loading and unloading areas of other tenants. Tenant shall not park motor vehicles in designated parking areas after the conclusion of normal daily business activity.

     6. Tenant shall not disturb, solicit or canvas any tenant or other occupant of the Building or the Project and shall cooperate to prevent same.

     7. No person shall go on the roof without Landlord’s permission.

     8. Business machines and mechanical equipment belonging to Tenant which cause noise or vibration that may be transmitted to the structure of the Building, to such a degree as to be objectionable to Landlord or other tenants, shall be placed and maintained by Tenant, at Tenant’s expense, on vibration eliminators or in noise-dampening housing or other devices sufficient to eliminate noise or vibration.

     9. All goods, including material used to store goods, delivered to the Premises of Tenant shall be immediately moved into the Premises and shall not be left in parking or receiving areas overnight.

     10. Tractor trailers which must be unhooked or parked with dolly wheels beyond the concrete loading areas must use steel plates or wood blocks under the dolly wheels to prevent damage to the asphalt paving surfaces. No parking or storing of such trailers will be permitted in the auto parking areas of the Project or on streets adjacent thereto.

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     11. Forklifts which operate on asphalt paving areas shall not have solid rubber tires and shall only use tires that do not damage the asphalt.

     12. Tenant is responsible for the storage and removal of all trash and refuse. All such trash and refuse shall be contained in suitable receptacles stored behind screened enclosures at locations approved by Landlord.

     13. Tenant shall not store or permit the storage or placement of goods or merchandise in or around the common areas surrounding the Premises. No displays or sales of merchandise shall be allowed in the parking lots or other common areas.

     14. Tenant shall not permit any animals, including, but not limited to, any household pets (but excluding service animals, which are permitted), to be brought or kept in or about the Premises, the Building, the Project or any of the common areas.

     15. Smoking is permitted only in designated areas.

     16. Tenant shall cooperate with Landlord’s efforts to obtain LEED certification for the Property, including complying with Landlord’s then-current energy saving efforts and participating in any recycling program.

     17. Tenant shall report maintenance problems involving water and moist conditions to the Property Manager promptly and conduct its business in a manner to prevent unusual moisture conditions or mold growth.

     18. Tenant shall not block or inhibit the flow of return or make up air into the HVAC system and shall maintain the Premises at a consistent temperature and humidity level in accordance with the Property Manager’s instructions.

     19. Tenant shall regularly conduct cleaning and janitorial activities, especially in bathrooms, kitchens and janitorial spaces, to remove mildew and prevent moist conditions.

     20. Tenant shall maintain water in all drain taps at all times.

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Exhibit E

Form of Estoppel Certificate

                                             , a                      (“Tenant”) hereby certifies to                      and its successors and assigns that Tenant leases from                     , a                      (“Landlord”) approximately ___ square feet of space (the “Premises”) in                      pursuant to that certain Lease Agreement dated                     , 20___by and between Landlord and Tenant, as amended by                                          (collectively, the “Lease”), a true and correct copy of which is attached hereto as Exhibit A. Tenant hereby certifies to                                         , that as of the date hereof:

     1. The Lease is in full force and effect and has not been modified, supplemented or amended, except as set forth in the introductory paragraph hereof.

     2. Tenant is in actual occupancy of the Premises under the Lease and Tenant has accepted the same. Landlord has performed all obligations under the Lease to be performed by Landlord, including, without limitation, completion of all tenant work required under the Lease and the making of any required payments or contributions therefor. Tenant is not entitled to any further payment or credit for tenant work.

     3. The initial term of the lease commenced                     , 20___ and shall expire                     , 20___. Tenant has the following rights to renew or extend the Term or to expand the Premises:                                         .

     4. Tenant has not paid any rentals or other payments more than one (1) month in advance except as follows:                                         .

     5. Base Rent payable under the Lease is                      Dollars ($                    ). Base Rent and additional Rent have been paid through                     , 20___. There currently exists no claims, defenses, rights of set-off or abatement to or against the obligations of Tenant to pay Base Rent or Additional Rent or relating to any other term, covenant or condition under the Lease.

     6. There are no concessions, bonuses, free months’ rent, rebates or other matters affecting the rentals except as follows:                                         .

     7. No security or other deposit has been paid with respect to the Lease except as follows:                                         .

     8. To Tenant’s actual knowledge, Landlord is not currently in default under the Lease and there are no events or conditions existing which, with or without notice or the lapse of time, or both, could constitute a default of Landlord under the Lease or entitle Tenant to offsets or defenses against the prompt payment of rent except as follows:

                                        . To Tenant’s actual knowledge, Tenant is not in default under any of the terms and conditions of the lease nor is there now any fact or condition which, with notice or lapse of time or both, will become such a default.

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     9. Tenant has not assigned, transferred, mortgaged or otherwise encumbered its interest under the lease, nor subleased any of the Premises nor permitted any person or entity to use the Premises except as follows:                                         .

     10. Tenant has no rights of first refusal or options to purchase the property of which the Premises is a part.

     11. The Lease represents the entire agreement between the parties with respect to Tenant’s right to use and occupy the Premises.

     Tenant acknowledges that the parties to whom this certificate is addressed will be relying upon the accuracy of this certificate in connection with their acquisition and/or financing of the Premises.

     In Witness Whereof, Tenant has caused this certificate to be executed this ___ day of                     , 20___.

Tenant:		‚
	a

By:

Name:

Title:

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Exhibit F

Form of Subordination, Non-Disturbance and Attornment Agreement

     This Agreement is dated the            day of                     , 20     , and is made between , a                                           having a place of business and mailing address of                                             (“Mortgagee”), and , a                                             having a place of business and mailing address of                                             (“Tenant”).

Recitals:

I. Tenant has entered into a certain lease (the “Lease”) dated                     , 20     , with                                         , as lessor (“Landlord”) covering certain premises known as                                         , being part of a premises commonly known as                                           , and located in                                          (the “Premises”).

II. Mortgagee has agreed to make a mortgage loan in the amount of                                          Dollars ($                    ) (together with all amendments, modifications, supplements, renewals, extensions, spreaders and consolidations thereto, the “Mortgage”) to Landlord, secured by the Premises, and the parties desire to set forth their agreement herein.

     Now, Therefore, in consideration of the Premises, and of the sum of One Dollar ($1.00) by each party in hand paid to the other, the receipt of which is hereby acknowledged, the parties hereby agree as follows:

     A. Said Lease is and shall be subject and subordinate to the Mortgage insofar as it affects the real property of which the Premises form a part to the full extent of the amounts secured thereby and interest thereon.

     B. Tenant agrees that it will attorn to and recognize any purchaser at a foreclosure sale under the Mortgage, any transferee who acquires the Premises by deed in lieu of foreclosure, and the successors and assigns of such purchaser(s) (a “Successor Landlord”), as its landlord for the unexpired balance (and any extensions, if exercised) of the term of said Lease upon the same terms and conditions set forth in said Lease.

     C. If it becomes necessary to foreclose the Mortgage, Mortgagee will not terminate said Lease nor join Tenant in summary or foreclosure proceedings (unless such joinder shall be required to protect Mortgagee’s interest under the Mortgage and in which case Mortgagee shall not seek affirmative relief from Tenant in such action or proceeding) so long as Tenant is not in default beyond any applicable cure periods under any of the terms, covenants, or condition of said Lease.

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     D. In the event of a foreclosure sale under the Mortgage or deed in lieu thereof, the Successor Landlord will be bound to Tenant under all the terms of the Lease and Tenant will, from and after such event, have the same remedies against Successor Landlord for the breach of any covenant contained in the Lease that Tenant might have had under the Lease against Landlord; provided, however, that Successor Landlord will not be:

          1. liable for any act or omission of any prior landlord (including Landlord); or

          2. liable for the return of any security deposit, except to the extent the Successor Landlord received any portion of the security deposit made by Tenant; or

          3. subject to any offsets or defenses which Tenant might have against any prior landlord (including Landlord); or

          4. bound by any rent or additional rent which Tenant might have paid for more than the current month to any prior landlord (including Landlord); or

          5. bound by any amendment, modification, extensions or renewal of the Lease made without Lender’s consent; or

          6. bound by any representation or warranty made by any prior landlord (including Landlord).

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

     F. Tenant agrees to give Mortgagee, by registered or certified mail, return receipt requested, or by a recognized overnight courier, a copy of any notice of default served upon Landlord, provided that prior to such notice Tenant has been notified in writing (by way of Notice of Assignment of Rent and Leases, or otherwise) of the address of such Mortgagee. Tenant further agrees that Tenant shall not terminate the Lease nor abate rents thereunder or claim an offset against rents thereunder unless notice has been given to Mortgagee and Mortgagee has been given a reasonable period of time (including a period of time to commence and complete a foreclosure proceeding) to cure such default, except in the case of any abatement of rent for damage and destruction as specifically permitted by the Lease.

     G. Tenant acknowledges that it has notice that Landlord’s interest under the Lease and the rents thereunder have been collaterally assigned to Mortgagee as part of the security for the obligations secured by the Mortgage. Notice from Mortgagee to Tenant directing payment of rent and all other sums due under the Lease shall have the same effect under the Lease as a notice to Tenant from Landlord and Tenant agrees to be bound by such notice. In the event of any conflict or inconsistency between a notice from Landlord and a notice from Mortgagee, the notice from Mortgagee shall control.

     H. This Agreement shall not be modified, amended or terminated except by a writing duly executed by the party against whom the same is sought to be enforced.

F-2

     I. This Agreement shall be governed by and construed in accordance with the internal laws (as opposed to the laws of conflicts) of the state in which the Premises are located.

     In Witness Whereof, the parties hereto have executed these presents as of the day and year first above written..

	Mortgagee:
Date

By:

Its:

Address:

	Tenant:
Date

By:

Its:

F-3

Exhibit G

Hazardous Materials Disclosure Certificate

     Your cooperation in this matter is appreciated. Initially, the information provided by you in this Hazardous Materials Disclosure Certificate is necessary for Landlord to evaluate your proposed uses of the premises (the “Premises”) and to determine whether to enter into a lease agreement with you as tenant. If a lease agreement is signed by you and Landlord (the “Lease Agreement”), on an annual basis in accordance with the provisions of Paragraph 32 of the Lease Agreement, you are to provide an update to the information initially provided by you in this certificate. Any questions regarding this certificate should be directed to, and when completed, the certificate should be delivered to:

     Landlord: Kifer Tech Investors llc
c/o UBS Realty Investors llc
455 Market Street, Suite 1540
San Francisco, California 94105
Attention: Kifer Technology Center Manager

Name of (Prospective) Tenant:

Mailing Address:

Contact Person, Title and Telephone Number(s):

Contact Person for Hazardous Waste Materials Management and Manifests and Telephone Number(s):

Address of (Prospective) Premises:

Length of (Prospective) initial Term:

1. GENERAL INFORMATION:

     Describe the proposed operations to take place in, on, or about the Premises, including, without limitation, principal products processed, manufactured or assembled, and services and activities to be provided or otherwise conducted. Existing tenants should describe any proposed changes to on-going operations.

G-1

2. USE, STORAGE AND DISPOSAL OF HAZARDOUS MATERIALS

2.1	Will any Hazardous Materials (as hereinafter defined) be used, generated, treated, stored or disposed of in, on or about the Premises? Existing tenants should describe any Hazardous Materials which continue to be used, generated, treated, stored or disposed of in, on or about the Premises.
	Wastes                                          Yes o            No o
	Chemical Products                       Yes o            No o
	Other                                            Yes o            No o
	If Yes is marked, please explain:
2.2	If Yes is marked in Section 2.1, attach a list of any Hazardous Materials to be used, generated, treated, stored or disposed of in, on or about the Premises, including the applicable hazard class and an estimate of the quantities of such Hazardous Materials to be present on or about the Premises at any given time; estimated annual throughput; the proposed location(s) and method of storage (excluding nominal amounts of ordinary household cleaners and janitorial supplies which are not regulated by any Environmental Laws, as hereinafter defined); and the proposed location(s) and method(s) of treatment or disposal for each Hazardous Material, including the estimated frequency, and the proposed contractors or subcontractors. Existing tenants should attach a list setting forth the information requested above and such list should include actual data from on-going operations and the identification of any variations in such information from the prior year’s certificate.

3. STORAGE TANKS AND SUMPS

3.1	Is any above or below ground storage or treatment of gasoline, diesel, petroleum, or other Hazardous Materials in tanks or sumps proposed in, on or about the Premises? Existing tenants should describe any such actual or proposed activities.
	Yes o                     No o
	If yes, please explain:

G-2

4. WASTE MANAGEMENT

4.1	Has your company been issued an EPA Hazardous Waste Generator I.D. Number? Existing tenants should describe any additional identification numbers issued since the previous certificate.
	Yes o                     No o
4.2	Has your company filed a biennial or quarterly reports as a hazardous waste generator? Existing tenants should describe any new reports filed.
	Yes o                     No o
	If yes, attach a copy of the most recent report filed.

5. WASTEWATER TREATMENT AND DISCHARGE

5.1	Will your company discharge wastewater or other wastes to:
	storm drain?                                         sewer?
	surface water?                                      no wastewater or other wastes discharged.
	Existing tenants should indicate any actual discharges. If so, describe the nature of any proposed or actual discharge(s).
5.2	Will any such wastewater or waste be treated before discharge?
	Yes o                     No o
	If yes, describe the type of treatment proposed to be conducted. Existing tenants should describe the actual treatment conducted.

G-3

6. AIR DISCHARGES

6.1	Do you plan for any air filtration systems or stacks to be used in your company’s operations in, on or about the Premises that will discharge into the air; and will such air emissions be monitored? Existing tenants should indicate whether or not there are any such air filtration systems or stacks in use in, on or about the Premises which discharge into the air and whether such air emissions are being monitored.
	Yes o                      No o
	If yes, please describe:
6.2	Do you propose to operate any of the following types of equipment, or any other equipment requiring an air emissions permit? Existing tenants should specify any such equipment being operated in, on or about the Premises.

Spray booth(s)	Incinerator(s)
Dip tank(s)	Other (Please describe)
Drying oven(s)	No Equipment Requiring Air Permits

If yes, please describe:

6.3

Please describe (and submit copies of with this Hazardous Materials Disclosure Certificate) any reports you have filed in the past [thirty-six] months with any governmental or quasi-governmental agencies or authorities related to air discharges or clean air requirements and any such reports which have been issued during such period by any such agencies or authorities with respect to you or your business operations.

G-4

7. HAZARDOUS MATERIALS DISCLOSURES

7.1	Has your company prepared or will it be required to prepare a Hazardous Materials management plan (“Management Plan”) or Hazardous Materials Business Plan and Inventory (“Business Plan”) pursuant to Fire Department or other governmental or regulatory agencies’ requirements? Existing tenants should indicate whether or not a Management Plan is required and has been prepared.
	Yes o                      No o
	If yes, attach a copy of the Management Plan or Business Plan. Existing tenants should attach a copy of any required updates to the Management Plan or Business Plan.
7.2	Are any of the Hazardous Materials, and in particular chemicals, proposed to be used in your operations in, on or about the Premises listed or regulated under Proposition 65? Existing tenants should indicate whether or not there are any new Hazardous Materials being so used which are listed or regulated under Proposition 65.
	Yes o                      No o
	If yes, please explain:

8. ENFORCEMENT ACTIONS AND COMPLAINTS

8.1	With respect to Hazardous Materials or Environmental Laws, has your company ever been subject to any agency enforcement actions, administrative orders, or consent decrees or has your company received requests for information, notice or demand letters, or any other inquiries regarding its operations? Existing tenants should indicate whether or not any such actions, orders or decrees have been, or are in the process of being, undertaken or if any such requests have been received.
	Yes o                      No o
	If yes, describe the actions, orders or decrees and any continuing compliance obligations imposed as a result of these actions, orders or decrees and also describe any requests, notices or demands, and attach a copy of all such documents. Existing tenants should describe and attach a copy of any new actions, orders, decrees, requests, notices or demands not already delivered to Landlord pursuant to the provisions of Paragraph 32 of the Lease Agreement.

G-5

8.2	Have there ever been, or are there now pending, any lawsuits against your company regarding any environmental or health and safety concerns?
	Yes o                      No o
	If yes, describe any such lawsuits and attach copies of the complaint(s), cross-complaint(s), pleadings and other documents related thereto as requested by Landlord. Existing tenants should describe and attach a copy of any new complaint(s), cross-complaint(s), pleadings and other related documents not already delivered to Landlord pursuant to the provisions of Paragraph 32 of the Lease Agreement.
8.3	Have there been any problems or complaints from adjacent tenants, owners or other neighbors at your company’s current facility with regard to environmental or health and safety concerns? Existing tenants should indicate whether or not there have been any such problems or complaints from adjacent tenants, owners or other neighbors at, about or near the Premises and the current status of any such problems or complaints.
	Yes o                      No o
	If yes, please describe. Existing tenants should describe any such problems or complaints not already disclosed to Landlord under the provisions of the signed Lease Agreement and the current status of any such problems or complaints.

9. PERMITS AND LICENSES

9.1 Attach copies of all permits and licenses issued to your company with respect to its proposed operations in, on or about the Premises, including, without limitation, any Hazardous Materials permits, wastewater discharge permits, air emissions permits, and use permits or approvals. Existing tenants should attach copies of any new permits and licenses as well as any renewals of permits or licenses previously issued.

     As used herein, “Hazardous Materials” shall mean and include any substance that is or contains (a) any “hazardous substance” as now or hereafter defined in § 101(14) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (“CERCLA”) (42 U.S.C. § 9601 et seq.) or any regulations promulgated under CERCLA; (b) any “hazardous waste” as now or hereafter defined in the Resource Conservation and Recovery Act, as amended (“RCRA”) (42 U.S.C. § 6901 et seq.) or any regulations promulgated under RCRA;

G-6

(c) any substance now or hereafter regulated by the Toxic Substances Control Act, as amended (“TSCA”) (15 U.S.C. § 2601 et seq.) or any regulations promulgated under TSCA; (d) petroleum, petroleum by-products, gasoline, diesel fuel, or other petroleum hydrocarbons; (e) asbestos and asbestos-containing material, in any form, whether friable or non-friable; (f) polychlorinated biphenyls; (g) lead and lead-containing materials; or (h) any additional substance, material or waste (i) the presence of which on or about the Premises (A) requires reporting, investigation or remediation under any Environmental Laws (as hereinafter defined), (B) causes or threatens to cause a nuisance on the Premises or any adjacent property or poses or threatens to pose a hazard to the health or safety of persons on the Premises or any adjacent property, or (C) which, if it emanated or migrated from the Premises, could constitute a trespass, or (ii) which is now or is hereafter classified or considered to be hazardous or toxic under any Environmental Laws; and “Environmental Laws” shall mean and include (a) CERCLA, RCRA and TSCA; and (b) any other federal, state or local laws, ordinances, statutes, codes, rules, regulations, orders or decrees now or hereinafter in effect relating to (i) pollution, (ii) the protection or regulation of human health, natural resources or the environment, (iii) the treatment, storage or disposal of Hazardous Materials, or (iv) the emission, discharge, release or threatened release of Hazardous Materials into the environment.

     The undersigned hereby acknowledges and agrees that this Hazardous Materials Disclosure Certificate is being delivered to Landlord in connection with the evaluation of a Lease Agreement and, if such Lease Agreement is executed, will be attached thereto as an exhibit. The undersigned further acknowledges and agrees that if such Lease Agreement is executed, this Hazardous Materials Disclosure Certificate will be updated from time to time in accordance with Paragraph 32 of the Lease Agreement. The undersigned further acknowledges and agrees that Landlord and its partners, lenders and representatives may, and will, rely upon the statements, representations, warranties, and certifications made herein and the truthfulness thereof in entering into the Lease Agreement and the continuance thereof throughout the Term, and any renewals thereof, of the Lease Agreement. I [print name]                     , acting with full authority to bind the (proposed) Tenant and on behalf of the (proposed) Tenant, certify, represent and warrant that the information contained in this certificate is true and correct.

(Prospective) Tenant:

Trident Microsystems, Inc.,

a Delaware corporation

By:

Title:

Date:

G-7

Exhibit H

Furniture List

• 121 Cubicles

• 60 Offices -Desk-Bookcase-Whiteboard

• 6 Conference Rooms

• Cafeteria Tables

• Food Warmers

• Lobby Furniture

• Task Chair — For cubicles and offices

• Conference Chairs for all rooms

• Stack Chairs for Lunch Room

H-1

EX-21.1

EXHIBIT 21.1

TRIDENT MICROSYSTEMS, INC.

LIST OF SUBSIDIARIES

Name of Subsidiary	Jurisdiction of Incorporation	Ownership Percentage
Trident Microsystems (Far East) Ltd.	Cayman Islands, B.W.I.		100	%
Trident Microelectronics Ltd.	Taiwan, R.O.C.		100	%
Trident Multimedia Technologies (Shanghai) Co. Ltd.	People’s Republic of China		100	%
Trident Microsystems (Beijing) Co. Ltd.	People’s Republic of China		100	%
Trident Microsystems (Hong Kong) Ltd	Hong Kong, SAR		100	%
Trident Microsystems (Europe) GmbH	Germany		100	%
Trident Microsystems Nederland B.V.	The Netherlands		100	%
Trident Microsystems Holding B.V.	The Netherlands		100	%
Trident Microsystems (Korea) Limited	Korea		100	%
Trident Microsystems (Taiwan) Ltd	Taiwan, R.O.C.		100	%
Trident Microsystems (Singapore) Pte. Ltd.	Singapore		100	%
Trident Microsystems (Japan) GK	Japan		100	%
NG Microsystems India Pvt. Ltd.*	India		100	%
Trident Microsystems (Haifa) Ltd.	Israel		100	%
Trident Digital Systems (UK) Ltd.	United Kingdom		100	%
Trident Microsystems (Europe) B.V.	The Netherlands		100	%
Trident MS (Taiwan) Ltd.	Taiwan, R.O.C.		100	%

*  d/b/a Trident Microsystems (India) Pvt. Ltd.

EX-23.1

EXHIBIT 23.1

Consent of Independent Registered Public Accounting Firm

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-164532, 333-151100, 333-145637, 333-125644, 333-110151, 333-76895, 333-71770, 033-57610, 333-29667 and 333-09383) of Trident Microsystems, Inc. of our report dated March 12, 2010 relating to the consolidated financial statements, financial statement schedule and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLC
San Jose, California
March 12, 2010

EX-31.1

EXHIBIT 31.1

RULE 13a-14(a) CERTIFICATION

I, Sylvia Summers Couder, certify that:

1. I have reviewed this Transition Report on Form 10-K of Trident Microsystems, Inc. for the period ended December 31, 2009;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: March 12, 2010	/s/ Sylvia Summers Couder
	Sylvia Summers Couder
	Chief Executive Officer

EX-31.2

EXHIBIT 31.2

RULE 13a-14(a) CERTIFICATION

I, Pete J. Mangan, certify that:

1. I have reviewed this Transition Report on Form 10-K of Trident Microsystems, Inc. for the period ended December 31, 2009;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: March 12, 2010	/s/ PETE J. MANGAN
	Pete J. Mangan
	Executive Vice President and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

SECTION 1350 CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Sylvia Summers Couder, Chief Executive Officer of Trident Microsystems, Inc. (the “Registrant”), do hereby certify in accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, based on my knowledge:

(1) the Transition Report on Form 10-K of the Registrant for the period ended December 31, 2009, to which this certification is attached as an exhibit (the “Report”), fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Dated: March 12, 2010	/s/ Sylvia Summers Couder
	Sylvia Summers Couder
	Chief Executive Officer

EX-32.2

EXHIBIT 32.2

SECTION 1350 CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Pete J. Mangan, the Executive Vice President and Chief Financial Officer of Trident Microsystems, Inc. (the “Registrant”), do hereby certify in accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, which, based on my knowledge:

(1) the Transition Report on Form 10-K of the Registrant for the period ended December 31, 2009, to which this certification is attached as an exhibit (the “Report”), fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Dated: March 12, 2010	/s/ PETE J. MANGAN
	Pete J. Mangan
	Executive Vice President and Chief Financial Officer