3Ware 2003 Annual Report Download - page 13

As a general matter, the semiconductor industry is characterized by substantial litigation regarding patent
and other intellectual property rights. In the past we have been, and in the future may be, notified that we may be
infringing on the intellectual property rights of third parties. We have certain indemnification obligations to
customers with respect to the infringement of third party intellectual property rights by our products. There can
be no assurance that infringement claims by third parties or claims for indemnification by customers or end users
of our products resulting from infringement claims will not be asserted in the future or that such assertions, if
proven to be true, will not materially adversely affect our business, financial condition or operating results. In the
event of any adverse ruling in any such matter, we could be required to pay substantial damages, which could
include treble damages, cease the manufacture, use and sale of infringing products, discontinue the use of certain
processes or obtain a license under the intellectual property rights of the third party claiming infringement. There
can be no assurance that a license would be available on reasonable terms or at all. Any limitations on our ability
to market our products, any delays and costs associated with redesigning our products or payments of license fees
to third parties or any failure by us to develop or license a substitute technology on commercially reasonable
terms could have a material adverse effect on our business, financial condition and operating results.
Environmental Matters
We are subject to a variety of federal, state and local governmental regulations related to the use, storage,
discharge and disposal of toxic, volatile or otherwise hazardous chemicals that were used in our manufacturing
process. Any failure to comply with present or future regulations could result in the imposition of fines, the
suspension of production or a cessation of operations. Such regulations could require us to acquire costly
equipment or incur other significant expenses to comply with environmental regulations or clean up prior
discharges. Since 1993, we have been named as a potentially responsible party, also known as a PRP, along with
a large number of other companies that used Omega Chemical Corporation in Whittier, California to handle and
dispose of certain hazardous waste material. We are a member of a large group of PRPs that has agreed to fund
certain remediation efforts at the Omega Chemical site, which efforts are ongoing.
8