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Table of Contents
the possibility it would have a material adverse impact on the Company’s financial position and results of operations for the period in which the
unfavorable outcome occurs or becomes probable. In addition, the Company is subject to legal proceedings, claims and litigation arising in the
ordinary course of business, including litigation related to intellectual property and employment matters.
Based on currently available information, the Company does not believe that the ultimate outcomes of any unresolved matters, individually
and in the aggregate, are likely to have a material adverse effect on the Company’
s financial position, liquidity or results of operations within the
next twelve months. However, litigation is subject to inherent uncertainties, and the Company’s view of these matters may change in the future.
Were an unfavorable outcome to occur, there exists the possibility of a material adverse impact on the Company’s financial position and results
of operations or liquidity for the period in which the unfavorable outcome occurs or becomes probable, and potentially in future periods.
Environmental Regulation
The European Union (“EU”) has enacted the Waste Electrical and Electronic Equipment Directive, which makes producers of electrical
goods, including home and commercial business networking products, financially responsible for specified collection, recycling, treatment and
disposal of past and future covered products. The deadline for the individual member states of the EU to transpose the directive into law in their
respective countries was August 13, 2004 (such legislation, together with the directive, the “WEEE Legislation”). Producers participating in the
market are financially responsible for implementing these responsibilities under the WEEE Legislation beginning in August 13, 2005. Similar
WEEE Legislation has been or may be enacted in other jurisdictions, including in the United States, Canada, Mexico, China, India, Australia and
Japan. The Company adopted the authoritative guidance for asset retirement and environmental obligations in the third quarter of fiscal 2005 and
has determined that its effect did not have a material impact on the Company’s consolidated results of operations and financial position for the
three months ended October 3, 2010. The Company is continuing to evaluate the impact of the WEEE Legislation and similar legislation in other
jurisdictions as individual countries issue their implementation guidance.
Additionally, the EU has enacted the Restriction of Hazardous Substances Directive (“RoHS Legislation”), the REACH Directive and the
Battery Directive. EU RoHS Legislation, along with similar legislation in China, requires manufacturers to ensure certain substances, including
polybrominated biphenyls (“PBD”), polybrominated diphenyl ethers (“PBDE”), mercury, cadmium, hexavalent chromium and lead (except for
allowed exempted materials and applications), are below specified maximum concentration values in certain products put on the market after
July 1, 2006. The REACH Directive similarly requires manufacturers to ensure the published list of substances of very high concern in certain
products are below specified maximum concentration values. The Battery Directive prohibits use of certain types of battery technology in certain
products. The Company believes it has met the requirements of the RoHS Legislation, the REACH Directive and the Battery Directive.
Additionally, the EU has enacted the Energy Using Product (“EuP”) Directive, which requires manufacturers of certain products to meet
minimum energy efficiency limits. These limits are documented in EuP implementing measures issued for specific types of equipment and
document minimum power supply efficiencies and may include required equipment standby modes which also reduce energy consumption. The
Company believes it has met the requirements of the applicable EuP implementing measures.
Employment Agreements
The Company has signed various employment agreements with key executives pursuant to which if their employment is terminated
without cause, such employees are entitled to receive their base salary (and commission or bonus, as applicable) for 52 weeks (for the Chief
Executive Officer), 39 weeks (for the Senior Vice President of Worldwide Operations and Support) and up to 26 weeks (for other key
executives) and such
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